Document:

<PAGE>   1
                                                                EXHIBIT 10.14.05
================================================================================

PREPARED BY AND UPON
RECORDATION RETURN TO:
McCullough Sherrill, LLP
1409 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: Paul P. Mattingly

                     ROBERTS PROPERTIES RESIDENTIAL, L.P.
                                  (Borrower)

                                      to

                  THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
                                   (Lender)

                       ---------------------------------

                            DEED TO SECURE DEBT AND
                              SECURITY AGREEMENT

                       ---------------------------------

                     Dated:       As of October 25, 1999

                     Location:    5100 Abbotts Bridge Road, Alpharetta, Georgia
                     County:      Fulton

                     Loan Number: 6 103 461

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

<PAGE>   2

                               TABLE OF CONTENTS

<TABLE>

<S>                                                                                                              <C>
ARTICLE I - OBLIGATIONS........................................................................................   2
                  Section 1.01      Obligations................................................................   2
                  Section 1.02      Documents..................................................................   3

ARTICLE II - REPRESENTATIONS AND WARRANTIES....................................................................   3
                  Section 2.01      Title, Legal Status and Authority..........................................   3
                  Section 2.02      Validity of Documents......................................................   3
                  Section 2.03      Litigation.................................................................   3
                  Section 2.04      Status of Property.........................................................   4
                  Section 2.05      Tax Status of Borrower.....................................................   4
                  Section 2.06      Bankruptcy and Equivalent Value............................................   4
                  Section 2.07      Disclosure.................................................................   5
                  Section 2.08      Illegal Activity...........................................................   5

ARTICLE III - COVENANTS AND AGREEMENTS.........................................................................   5
                  Section 3.01      Payment of Obligations.....................................................   5
                  Section 3.02      Continuation of Existence..................................................   5
                  Section 3.03      Taxes and Other Charges....................................................   5
                  Section 3.04      Defense of Title, Litigation, and Rights under Documents...................   6
                  Section 3.05      Operation and Maintenance of Property......................................   6
                  Section 3.06      Insurance..................................................................   7
                  Section 3.07      Damage and Destruction of Property.........................................   9
                  Section 3.08      Condemnation...............................................................  10
                  Section 3.09      Liens and Liabilities......................................................  11
                  Section 3.10      Tax and Insurance Deposits.................................................  11
                  Section 3.11      ERISA......................................................................  12
                  Section 3.12      Environmental Representations, Warranties, and Covenants...................  12
                  Section 3.13      ...........................................................................  14
                  Section 3.14      Inspection.................................................................  14
                  Section 3.15      Records, Reports, and Audits...............................................  14
                  Section 3.16      Borrower's Certificates....................................................  15
                  Section 3.17      Full Performance Required; Survival of Warranties..........................  15
                  Section 3.18      Additional Security........................................................  15
                  Section 3.19      Further Acts...............................................................  15

ARTICLE IV - ADDITIONAL ADVANCES; EXPENSES; SUBROGATION........................................................  16
                  Section 4.01      Expenses and Advances......................................................  16
                  Section 4.02      Subrogation................................................................  16

ARTICLE V - SALE, TRANSFER, OR ENCUMBRANCE OF THE PROPERTY.....................................................  16
                  Section 5.01      Due-on-Sale or Encumbrance.................................................  16
                  Section 5.02      One-time Transfer..........................................................  17
                  Section 5.03      Permitted Transfers Without Fee............................................  18
</TABLE>

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<PAGE>   3

<TABLE>

<S>                                                                                                             <C>
ARTICLE VI - DEFAULTS AND REMEDIES.............................................................................  19
                  Section 6.01      Events of Default..........................................................  19
                  Section 6.02      Remedies...................................................................  20
                  Section 6.03      Expenses...................................................................  21
                  Section 6.04      Rights Pertaining to Sales.................................................  22
                  Section 6.05      Application of Proceeds....................................................  22
                  Section 6.06      Additional Provisions as to Remedies.......................................  22
                  Section 6.07      Waiver of Rights and Defenses..............................................  22

ARTICLE VII - SECURITY AGREEMENT...............................................................................  23
                  Section 7.01      Security Agreement.........................................................  23

ARTICLE VIII - LIMITATION ON PERSONAL LIABILITY AND INDEMNITIES................................................  23
                  Section 8.01      Limited Recourse Liability.................................................  23
                  Section 8.02      General Indemnity..........................................................  23
                  Section 8.03      Transaction Taxes Indemnity................................................  23
                  Section 8.04      ERISA Indemnity............................................................  23
                  Section 8.05      Environmental Indemnity....................................................  23
                  Section 8.06      Duty to Defend, Costs and Expenses.........................................  24
                  Section 8.07      Recourse Obligation and Survival...........................................  24

ARTICLE IX - ADDITIONAL PROVISIONS.............................................................................  24
                  Section 9.01      Usury Savings Clause.......................................................  24
                  Section 9.02      Notices....................................................................  24
                  Section 9.03      Sole Discretion of Lender..................................................  25
                  Section 9.04      Applicable Law and Submission to Jurisdiction..............................  25
                  Section 9.05      Construction of Provisions.................................................  25
                  Section 9.06      Transfer of Loan...........................................................  26
                  Section 9.07      Miscellaneous..............................................................  26
                  Section 9.08      Entire Agreement...........................................................  27
                  Section 9.09      WAIVER OF TRIAL BY JURY....................................................  27

ARTICLE X - LOCAL LAW PROVISIONS...............................................................................  27
                  Section 10.01     WAIVER.....................................................................  27
                  Section 10.02     Nature of Instrument.......................................................  27
                  Section 10.03     No Novation................................................................  27
                  Section 10.04     Georgia Remedies...........................................................  28
</TABLE>

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<PAGE>   4

DEFINITIONS

The terms set forth below are defined in the following sections of this
Mortgage and Security Agreement:

<TABLE>

                 <S>                           <C>
                Action                         Section 9.04
                Additional Funds               Section 3.07 (c)
                Affecting the Property         Section 3.12 (a)
                All                            Section 9.05 (m)
                Any                            Section 9.05 (m)
                Assessments                    Section 3.03 (a)
                Assignment                     Recitals, Section 2 (B)
                Awards                         Section 3.08 (b)
                Bankruptcy Code                Recitals, Section 2 (A) (ix)
                Borrower                       Preamble
                Costs                          Section 4.01
                Damage                         Section 3.07 (a)
                Default Rate                   Section 1.01 (a)
                Demand                         Section 9.12 (n)
                Depository                     Section 3.07 (c)
                Deposits                       Section 3.10
                Documents                      Section 1.02
                Environmental Indemnity        Section 8.05
                Environmental Law              Section 3.12 (a)
                Environmental Liens            Section 3.12 (b)
                Environmental Report           Section 3.12 (a)
                ERISA                          Section 3.11
                Event of Default               Section 6.01
                Flood Acts                     Section 2.04 (a)
                Foreign Person                 Section 2.05
                Full Insurable Value           Section 3.06 (a)
                GAAP                           Section 3.15 (a)
                Grace Period                   Section 6.01(b)
                Hazardous Materials            Section 3.12 (a)
                Impositions                    Section 3.10
                Improvements                   Recitals, Section 2 (A) (ii)
                Include, Including             Section 9.05 (f)
                Indemnified Parties            Section 8.02
                Indemnify                      Section 8.02
                Instrument                     Preamble
                Insurance Premiums             Section 3.10
                Investors                      Section 9.06
                Land                           Recitals, Section 2 (A) (I)
                Laws                           Section 3.05 (c)
                Lease                          Section 9.05 (k)
                Leases                         Recitals, Section 2 (A) (ix)
                Lender                         Preamble
                Lessee                         Section 9.05 (k)
                Lessor                         Section 9.05 (k)
                Liens                          Section 3.09
</TABLE>

                                     i
<PAGE>   5

<TABLE>
                 <S>                            <C>
                 Loan                           Recitals, Section 1
                 Losses                         Section 8.02
                 Major Tenants                  Section 3.08 (d)
                 Net Proceeds                   Section 3.07 (d)
                 Note                           Recitals, Section 1
                 Notice                         Section 9.02
                 Obligations                    Section 1.01
                 On Demand                      Section 9.05 (n)
                 Organization State             Section 2.01
                 Owned                          Section 9.05 (l)
                 Permitted Encumbrances         Recitals, Section 2 (B)
                 Person                         Section 9.05 (i)
                 Personal Property              Section 6.02 (j)
                 Prepayment Premium             Section 1.01(a)
                 Property                       Recitals, Section 2 (A)
                 Property State                 Section 2.1
                 Provisions                     Section 9.05 (j)
                 Rating Agency                  Section 3.06 (d)
                 Release                        Section 3.12 (a)
                 Rent Loss Proceeds             Section 3.07 (c)
                 Rents                          Recitals, Section 2 (A) (x)
                 Restoration                    Section 3.07 (a)
                 Securities                     Section 9.06
                 Security agreement             Section 7.01
                 Taking                         Section 3.08 (a)
                 Tenant                         Recitals, Section 2 (A) (vi)
                 Tenants                        Section 9.05 (k)
                 Transaction Taxes              Section 3.03 (c)
                 U.C.C.                         Section 2.02
                 Upon Demand                    Section 9.05 (n)
                 Violation                      Section 3.11
</TABLE>

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<PAGE>   6

                  DEED TO SECURE DEBT AND SECURITY AGREEMENT

THIS DEED TO SECURE DEBT AND SECURITY AGREEMENT (this "INSTRUMENT") is made as
of the ___ day of October, 1999, by ROBERTS PROPERTIES RESIDENTIAL, L.P., a
Georgia limited partnership, having its principal office and place of business
c/o Roberts Properties, Inc., 8010 Roswell Road, Suite 120, Atlanta, Georgia
30350, as mortgagor ("BORROWER"), to THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, a New Jersey corporation, having an office at Two Ravinia Drive,
Suite 1400, Atlanta, Georgia 30346, as mortgagee ("LENDER").

A POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT, PURSUANT TO WHICH LENDER
MAY TAKE THE PROPERTY AND SELL IT WITHOUT GOING TO COURT IN A JUDICIAL
FORECLOSURE ACTION UPON DEFAULT BY BORROWER UNDER THIS INSTRUMENT.

                                   RECITALS:

1.       Borrower, by the terms of its Promissory Note executed on the same
date as this Instrument ("NOTE") and in connection with the loan ("LOAN") from
Lender to Borrower, is indebted to Lender in the principal sum of NINE MILLION
FIVE HUNDRED THOUSAND AND NO/100 U.S. DOLLARS ($9,500,000.00).

2.       Borrower desires to secure the payment of and the performance of all
of its obligations under the Note and certain additional Obligations (as
defined in Section 1.01). THE MATURITY DATE (AS THAT TERM IS DEFINED IN THE
NOTE) OF THE NOTE IS NOVEMBER 15, 2009.

IN CONSIDERATION of the principal sum of the Note, and other good and valuable
consideration, the receipt and sufficiency of which is acknowledged, Borrower
irrevocably:

A.       Grants, bargains, sells, assigns, transfers, pledges, warrants, and
conveys to Lender in FEE SIMPLE, subject only to the matters listed in Exhibit
C, WITH POWER OF SALE, and grants Lender security title to, and a security
interest in, the following property, rights, interests and estates owned by
Borrower (collectively, the "PROPERTY"):

         (i)      The real property in Fulton County, Georgia and described in
Exhibit A ("LAND");

         (ii)     All buildings, structures and improvements (including
fixtures) now or later located in or on the Land ("IMPROVEMENTS");

         (iii)    All easements, estates, and interests including hereditaments,
servitudes, appurtenances, tenements, mineral and oil/gas rights, water
rights, air rights, development power or rights, options, reversion and
remainder rights, and any other rights owned by Borrower and relating to or
usable in connection with or access to the Property;

         (iv)     All right, title, and interest owned by Borrower in and to
all land lying within the rights-of-way, roads, or streets, open or proposed,
adjoining the Land to the center line thereof, and all sidewalks, alleys, and
strips and gores of land adjacent to or used in connection with the Property;

         (v)      All right, title, and interest of Borrower in, to, and under
all plans, specifications, surveys, studies, reports, permits, licenses,
agreements, contracts, instruments, books of account, insurance policies, and
any other documents relating to the use, construction, occupancy, leasing,
activity, or operation of the Property;

<PAGE>   7

         (vi)     All of the fixtures and personal property described in
Exhibit B owned by Borrower and replacements thereof; but excluding all
personal property owned by any tenant (a "TENANT") of the Property;

         (vii)    All of Borrower's right, title and interest in the proceeds
(including conversion to cash or liquidation claims) of (A) insurance relating
to the Property and (B) all awards made for the taking by eminent domain (or
by any proceeding or purchase in lieu thereof ) of the Property, including
awards resulting from a change of any streets (whether as to grade, access, or
otherwise) and for severance damages;

         (viii)   All tax refunds, including interest thereon, tax rebates, tax
credits, and tax abatements, and the right to receive the same, which may be
payable or available with respect to the Property;

         (ix)     All leasehold estates, ground leases, leases, subleases,
licenses, or other agreements affecting the use, enjoyment or occupancy of the
Property now or later existing (including any use or occupancy arrangements
created pursuant to Title 7 or 11 of the United States Code, as amended from
time to time, or any similar federal or state laws now or later enacted for
the relief of debtors (the "BANKRUPTCY CODE") and all extensions and
amendments thereto (collectively, the "LEASES") and all Borrower's right,
title and interest under the Leases, including all guaranties thereof; and

         (x)      All rents, issues, profits, royalties, receivables, use and
occupancy charges (including all oil, gas or other mineral royalties and
bonuses), income and other benefits now or later derived from any portion or
use of the Property (including any payments received with respect to any
Tenant or the Property pursuant to the Bankruptcy Code) and all cash, security
deposits, advance rentals, or similar payments relating thereto (collectively,
the "RENTS") and all proceeds from the cancellation, termination, surrender,
sale or other disposition of the Leases, and the right to receive and apply
the Rents to the payment of the Obligations.

B.       Absolutely and unconditionally assigns, sets over, and transfers to
Lender all of Borrower's right, title, interest and estates in and to the
Leases and the Rents, subject to the terms and license granted to the Borrower
under that certain Assignment of Leases and Rents made by Borrower to Lender
dated the same date as this Instrument (the "ASSIGNMENT"), which document
shall govern and control the provisions of this assignment.

TO HAVE AND TO HOLD the Property unto the Lender and its successors and
assigns forever, subject to the matters listed in Exhibit C ("PERMITTED
ENCUMBRANCES") and the provisions of this Instrument.

SHOULD THE OBLIGATIONS BE PAID according to the tenor and effect thereof when
the same shall become due and payable, then this Instrument shall be canceled
and surrendered (except for the obligations of Borrower set forth in Section
3.11 and 3.12 and Article VIII hereof, which shall survive such cancellation
and surrender).

IN FURTHERANCE of the foregoing, Borrower warrants, represents, covenants and
agrees as follows:

                            ARTICLE I - OBLIGATIONS

SECTION 1.01      OBLIGATIONS. This Instrument is intended (i) to operate and
to be construed as a deed passing title to the Property 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 (ii) to constitute a
security agreement pursuant to the Uniform Commercial Code as enacted in the
State of Georgia, and (iii) executed, acknowledged, and delivered by Borrower
to secure and enforce the following obligations (collectively, the
"OBLIGATIONS"):

         (a)      Payment of all obligations, indebtedness and liabilities
under the Documents including (i) the Prepayment Premium (as defined in the
Note) ("PREPAYMENT PREMIUM"), (ii) interest at both the rate specified in the
Note and at the Default Rate (as defined in the Note) ("DEFAULT RATE"), if
applicable and to the extent permitted by Laws (defined below), and (iii)
renewals, extensions, and amendments of the Documents;

                                       2
<PAGE>   8

         (b)      Performance of every obligation, covenant, and agreement
under the Documents including renewals, extensions, and amendments of the
Documents; and

         (c)      Payment of all sums advanced (including costs and expenses)
by Lender pursuant to the Documents including renewals, extensions, and
amendments of the Documents.

SECTION 1.02      DOCUMENTS. The "DOCUMENTS" shall mean this Instrument, the
Note, the Assignment, and any other written agreement executed in connection
with the closing of the Loan (but excluding the Loan application and Loan
commitment) and by the party against whom enforcement is sought, including
those given to evidence or further secure the payment and performance of any
of the Obligations, and any written renewals, extensions, and amendments of
the foregoing, executed by the party against whom enforcement is sought. All
of the provisions of the Documents are incorporated into this Instrument as if
fully set forth in this Instrument.

                  ARTICLE II - REPRESENTATIONS AND WARRANTIES

Borrower hereby represents and warrants to Lender as follows:

SECTION 2.01      TITLE, LEGAL STATUS AND AUTHORITY. Borrower (i) is seised of
the Land and Improvements in fee simple and has good and marketable title to
the Property, free and clear of all liens, deeds to secure debt, charges,
encumbrances, and security interests, except the Permitted Encumbrances; (ii)
will forever warrant and defend its title to the Property and the validity,
enforceability, and priority of the security title and security interest
created by this Instrument against the claims of all persons; (iii) is a
limited partnership duly organized, validly existing, and in good standing and
qualified to transact business under the laws of its state of organization or
incorporation ("ORGANIZATION STATE") and the state where the Property is
located ("PROPERTY STATE"); and (iv) has all necessary approvals, governmental
and otherwise, and full power and authority to own its properties (including
the Property) and carry on its business.

SECTION 2.02      VALIDITY OF DOCUMENTS. The execution, delivery and performance
of the Documents and the borrowing evidenced by the Note (i) are within the
power of Borrower; (ii) have been authorized by all requisite action; (iii)
have received all necessary approvals and consents; (iv) will not violate,
conflict with, breach, or constitute (with notice or lapse of time, or both) a
default under (1) any law, order or judgment of any court, governmental
authority, or the governing instrument of Borrower or (2) any indenture,
agreement, or other instrument to which Borrower is a party or by which it or
any of its property is bound or affected; (v) will not result in the creation
or imposition of any lien, charge, security title, or encumbrance upon any of
its properties or assets except for those in this Instrument; and (vi) will
not require any authorization or license from, or any filing with, any
governmental or other body (except for the recordation of this Instrument and
Uniform Commercial Code ("U.C.C.") filings). The Documents constitute legal,
valid, and binding obligations of Borrower.

SECTION 2.03      LITIGATION. There is no action, suit, or proceeding, judicial,
administrative, or otherwise (including any condemnation or similar
proceeding), pending or, to the best knowledge of Borrower, threatened or
contemplated against, or affecting, Borrower or the Property which would have
a material adverse affect on either the Property or Borrower's ability to
perform its obligations.

                                       3

<PAGE>   9

SECTION 2.04      STATUS OF PROPERTY.

         (a)      The Land and Improvements are not located in an area
identified by the Secretary of Housing and Urban Development, or any
successor, as an area having special flood hazards pursuant to the National
Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973, or the
National Flood Insurance Reform Act of 1994, as each have been or may be
amended, or any successor law (collectively, the "FLOOD ACTS") or, if located
within any such area, Borrower has and will maintain the insurance prescribed
in Section 3.06 below.

         (b)      Borrower has all necessary (i) certificates, licenses, and
other approvals, governmental and otherwise, for the operation of the Property
and the conduct of its business and (ii) zoning, building code, land use,
environmental and other similar permits or approvals, all of which are
currently in full force and effect and not subject to revocation, suspension,
forfeiture, or modification. The Property and its use and occupancy is in full
compliance with all Laws and Borrower has received no notice of any violation
or potential violation of the Laws which has not been remedied or satisfied.

         (c)      The Property is served by all utilities (including water and
sewer) required for its use.

         (d)      All public roads and streets necessary to serve the Property
for its use have been completed, are serviceable, are legally open, and have
been dedicated to and accepted by the appropriate governmental entities.

         (e)      The Property is free from damage caused by fire or other
casualty.

         (f)      All costs and expenses for labor, materials, supplies, and
equipment used in the construction of the Improvements have been paid in full
except for the Permitted Encumbrances.

         (g)      Borrower owns and has paid in full for all furnishings,
fixtures, and equipment (other than Tenants' property) used in connection with
the operation of the Property, free of all security interests, liens, security
titles, or encumbrances except the Permitted Encumbrances and those created by
this Instrument.

         (h)      The Property (1/) is assessed for real estate tax purposes as
one or more wholly independent tax lot(s), separate from any adjoining land or
improvements, and (2/) no other land or improvements are assessed and taxed
together with the Property. (3/)

SECTION 2.05      TAX STATUS OF BORROWER. Borrower is not a "foreign person"
within the meaning of Sections 1445 and 7701 of the Internal Revenue Code of
1986, as amended, and the regulations thereunder.

SECTION 2.06      BANKRUPTCY AND EQUIVALENT VALUE. No bankruptcy,
reorganization, insolvency, liquidation, or other proceeding for the relief of
debtors has been instituted by or against Borrower, any general partner of
Borrower (if Borrower is a partnership), or any manager or managing member of
Borrower (if Borrower is a limited liability company). Borrower has received
reasonably equivalent value for granting this Instrument.

------------------------------

         (1)      not, as of the date of this Instrument,

         (2)      certain

         (3)      Borrower agrees to cause the Property to be assessed for real
                  estate tax purposes as one wholly independent tax lot,
                  separate from any adjoining land or improvements, within one
                  hundred eighty (180) days of the date of this Instrument.
                  Failure to satisfy this obligation shall constitute a
                  default under the Documents.

                                       4

<PAGE>   10

SECTION 2.07      DISCLOSURE. Borrower has disclosed to Lender all material
facts and has not failed to disclose any material fact that could cause any
representation or warranty made herein to be materially misleading. There has
been no adverse change in any condition, fact, circumstance, or event that
would make any such information materially inaccurate, incomplete or otherwise
misleading.

SECTION 2.08      ILLEGAL ACTIVITY. No portion of the Property has been or will
be purchased, improved, fixtured, equipped or furnished with proceeds of any
illegal activity and, to the best of Borrower's knowledge, there are no
illegal activities at or on the Property.

                    ARTICLE III - COVENANTS AND AGREEMENTS

Borrower covenants and agrees with Lender as follows:

SECTION 3.01      PAYMENT OF OBLIGATIONS.  Borrower shall timely pay and cause
to be performed the Obligations.

SECTION 3.02      CONTINUATION OF EXISTENCE. Borrower shall not (a) dissolve,
terminate, or otherwise dispose of, directly, indirectly or by operation of
law, all or substantially all of its assets; (b) reorganize or change its
legal structure without Lender's prior written consent (4/); (c) change its
name, address, or the name under which Borrower conducts its business without
promptly notifying Lender; or (d) do anything to cause the representations in
Section 2.02 to become untrue.

SECTION 3.03      TAXES AND OTHER CHARGES.

         (a)      Payment of Assessments. Borrower shall pay when due all taxes,
liens, assessments, utility charges (public or private and including sewer
fees), ground rents, maintenance charges, dues, fines, impositions, and public
and other charges of any character (including penalties and interest) assessed
against, or which could become a lien against, the Property ("ASSESSMENTS")
ten (10) days prior to the date any fine, penalty, interest or charge for
nonpayment may be imposed. Unless Borrower is making deposits per Section
3.10, Borrower shall provide Lender with receipts evidencing such payments
(except for income taxes, franchise taxes, ground rents, maintenance charges,
and utility charges) within thirty (30) days after their due date.

         (b)      Right to Contest. So long as no Event of Default (defined
below) is continuing, Borrower may, prior to delinquency and at its sole
expense, contest any Assessment, but this shall not change or extend
Borrower's obligation to pay the Assessment as required above unless (i)
Borrower gives Lender prior written notice of its intent to contest an
Assessment; (ii) Borrower demonstrates to Lender's reasonable satisfaction
that (1) the Property will not be sold to satisfy the Assessment prior to the
final determination of the legal proceedings, (2) it has taken such actions as
are required or permitted to accomplish a stay of any such sale, or (3) it has
furnished a bond or surety (satisfactory to Lender in form and amount)
sufficient to prevent a sale of the Property; (iii) at Lender's option,
Borrower has deposited the full amount necessary to pay any unpaid portion of
the Assessments with Lender; and (iv) such proceeding shall be permitted under
any other instrument to which Borrower or the Property is subject (whether
superior or inferior to this Instrument); provided, however, that the
foregoing shall not apply to the contesting of any income taxes, franchise
taxes, ground rents, maintenance charges, and utility charges.

         (c)      Documentary Stamps and Other Charges. Borrower shall pay all
taxes, assessments, charges, expenses, costs and fees (including registration
and recording fees and revenue, transfer, stamp, intangible, indebtedness and
any similar taxes)(collectively, the "TRANSACTION TAXES") required in
connection with the making and/or recording of the Documents. If Borrower
fails to pay the Transaction Taxes after demand,

------------------------------

         (4)      (which consent shall not be unreasonably withheld)

                                       5

<PAGE>   11

Lender may (but is not obligated to) pay these and Borrower shall reimburse
Lender on demand for any amount so paid with interest at the applicable
interest rate specified in the Note, which shall be the Default Rate unless
prohibited by Laws.

         (d)      Changes in Laws Regarding Taxation. If any law (i) deducts
from the value of real property for the purpose of taxation any lien or
encumbrance thereon, (ii) taxes deeds to secure debt or other security
instruments for federal, state or local purposes or changes the manner of the
collection of any such existing taxes, and/or (iii) imposes a tax, either
directly or indirectly, on any of the Documents or the Obligations, Borrower
shall, if permitted by law, pay such tax within the statutory period or within
twenty (20) days after demand by Lender, whichever is less; provided, however,
that if, in the opinion of Lender, Borrower is not permitted by law to pay
such taxes, Lender shall have the option to declare the Obligations
immediately due and payable (without any Prepayment Premium) upon sixty (60)
days' notice to Borrower.

         (e)      No Credits on Account of the Obligations. Borrower will not
claim or be entitled to any credit(s) on account of the Obligations for any
part of the Assessments and no deduction shall be made or claimed from the
taxable value of the Property for real estate tax purposes by reason of the
Documents or the Obligations. If such claim, credit or deduction is required
by law, Lender shall have the option to declare the Obligations immediately
due and payable (without any Prepayment Premium) upon sixty (60) days' notice
to Borrower.

SECTION 3.04      DEFENSE OF TITLE, LITIGATION, AND RIGHTS UNDER DOCUMENTS.
Borrower shall forever warrant, defend and preserve Borrower's title to the
Property, the validity, enforceability and priority of this Instrument and the
lien, security title, or security interest created thereby, and any rights of
Lender under the Documents against the claims of all persons, and shall
promptly notify Lender of any such claims. Lender (whether or not named as a
party to such proceedings) is authorized and empowered (but shall not be
obligated) to take such additional steps as it may deem necessary or proper
for the defense of any such proceeding or the protection of the lien, security
title, security interest, validity, enforceability, or priority of this
Instrument, title to the Property, or any rights of Lender under the
Documents, including the employment of counsel, the prosecution and/or defense
of litigation, the compromise, release, or discharge of such adverse claims,
the purchase of any tax title, the removal of such any liens, security title
and security interests, and any other actions Lender deems necessary to
protect its interests. Borrower authorizes Lender to take any actions required
to be taken by Borrower, or permitted to be taken by Lender, in the Documents
in the name and on behalf of Borrower. Borrower shall reimburse Lender on
demand for all expenses (including attorneys' fees) incurred by it in
connection with the foregoing and Lender's exercise of its rights under the
Documents. All such expenses of Lender, until reimbursed by Borrower, shall be
part of the Obligations, bear interest at the applicable interest rate
specified in the Note, which shall be the Default Rate unless prohibited by
Laws, and shall be secured by this Instrument.

SECTION 3.05      OPERATION AND MAINTENANCE OF PROPERTY.

         (a)      Repair and Maintenance. Borrower will operate and maintain the
Property in good order, repair, and operating condition. Borrower will
promptly make all necessary repairs, replacements, additions, and improvements
necessary to ensure that the Property shall not in any way be diminished or
impaired. Borrower will not cause or allow any of the Property to be misused,
wasted, or to deteriorate and Borrower will not abandon the Property. No new
building, structure, or other improvement shall be constructed on the Land nor
shall any material part of the Improvements be removed, demolished, or
structurally or materially altered, without Lender's prior written consent.

         (b)      Replacement of Property. Borrower will keep the Property
fully equipped and will replace all worn out or obsolete Property with new,
comparable fixtures or Property. Borrower will not, without Lender's prior
written consent, remove any Property covered by this Instrument unless the
same is replaced by Borrower with a new, comparable article (i) owned by
Borrower free and clear of any lien, security title or

                                       6

<PAGE>   12

security interest (other than the Permitted Encumbrances and those created by
this Instrument) or (ii) leased by Borrower (A) with Lender's prior written
consent or (B) if the replaced Property was leased at the time of execution of
this Instrument.

         (c)      Compliance with Laws. Borrower and the Property shall be
maintained, used, and operated in compliance with all (i) present and future
laws, Environmental Laws (defined below), ordinances, regulations, and
requirements (including zoning and building codes) of any governmental or
quasi-governmental authority or agency applicable to Borrower or the Property
(collectively, the "LAWS"); (ii) orders, rules, and regulations of any
regulatory, licensing, accrediting, insurance underwriting or rating
organization, or other body exercising similar functions; (iii) duties or
obligations of any kind imposed under any Permitted Encumbrance or by law,
covenant, condition, agreement, or easement, public or private; and (iv)
policies of insurance at any time in force with respect to the Property. If
proceedings are initiated or Borrower receives notice that it or the Property
is not in compliance with any of the foregoing, Borrower will promptly send
Lender notice and a copy of the proceeding or violation notice. If the
Property is not in compliance with all Laws, Lender may impose additional
requirements upon Borrower including monetary reserves or financial
equivalents.

         (d)      Zoning and Title Matters. Borrower shall not, without Lender's
prior written consent, (i) initiate or support any zoning reclassification of
the Property or variance under existing zoning ordinances; (ii) modify or
supplement any of the Permitted Encumbrances; (iii) impose any restrictive
covenants or encumbrances upon the Property; (iv) execute or file any
subdivision plat affecting the Property; (v) consent to the annexation of the
Property to any municipality; (vi) permit the Property to be used by the
public or any person in a way that might make a claim of adverse possession or
any implied dedication or easement possible; (vii) cause or permit the
Property to become a non-conforming use under zoning ordinances or any present
or future non-conforming use of the Property to be discontinued; or (viii)
fail to comply with the terms of the Permitted Encumbrances.

SECTION 3.06      INSURANCE.

         (a)      Casualty Insurance. Borrower shall keep the Property insured
for the benefit of Lender by (i) an "All Risk of Physical Loss" policy or the
broadest form of extended coverage endorsement in an amount sufficient to
prevent Lender from ever becoming a co-insurer under the policy or Laws, but
in no event less than the lesser of (A) the Obligations or (B) the Full
Insurable Value (defined below) of the Property, subject to verification by
Lender and with a deductible not to exceed Ten Thousand Dollars ($10,000.00).
"FULL INSURABLE VALUE" shall mean the one hundred percent (100%) replacement
cost of the Property, without allowance for depreciation and exclusive of the
cost of excavations, foundations, and footings, as determined, at Borrower's
expense, periodically (but at least once per year) by the insurance company or
an appraiser, engineer, architect, or contractor approved by said company and
Lender; (ii) rent, business interruption, and/or use and occupancy insurance
in an amount equal to one (1) year's total income from the Property including
all rent, other income, and reimbursement of operating expenses; (iii) against
damage by flood if the Property is located in an area identified by the
Secretary of Housing and Urban Development, or any successor, as an area
having special flood hazards and in which flood insurance has been made
available under the Flood Acts in an amount equal to the lesser of (1) the
original amount of the Note or (2) the maximum limit of coverage available for
the Property under the Flood Acts; (iv) against damage or loss from (1)
sprinkler system leakage and (2) boilers, boiler tanks, heating and
air-conditioning equipment, pressure vessels, auxiliary piping, and similar
apparatus, in the amount required by Lender; (v) during the period of any
construction, repair, restoration, or replacement of the Property, a standard
builder's risk policy with extended coverage in an amount at least equal to
the Full Insurable Value of such Property, and worker's compensation,

                                       7
<PAGE>   13

in statutory amounts; and (vi) against damage or loss by earthquake(5/) and
other natural phenomenon in the amounts reasonably required by Lender.

         (b)      Liability and Other Insurance. Borrower shall maintain
comprehensive general liability insurance on an occurrence basis covering
Borrower and Lender, as an additional insured, against claims for bodily
injury or death or property damage occurring in, upon, or about the Property
or any street, drive, sidewalk, curb, or passageway adjacent thereto, in the
amount required by Lender (but in no event less than Ten Million Dollars
($10,000,000.00) combined single limit per occurrence, which may be based on a
combination of primary coverage plus umbrella coverage), which insurance shall
include operations and blanket contractual liability coverage which insures
contractual liability under the indemnifications set forth in Section 8.02
below (but such coverage or the amount thereof shall in no way limit such
indemnifications). Upon request, Borrower shall maintain insurance or carry
additional amounts of insurance covering Borrower or the Property as Lender
shall reasonably require(6/).

         (c)      Form of Policy. All insurance required under this Section
shall be fully paid for, non-assessable, and the policies shall contain such
provisions, endorsements, and expiration dates as Lender shall reasonably
require. The policies shall be issued by insurance companies authorized to do
business in the Property State, approved by Lender, and having (i) an
investment grade rating or claims paying ability assigned by one or more
credit rating agencies approved by Lender (a "RATING AGENCY") and (ii) a
general policy rating of A or better and a financial class of VI or better by
A.M. Best Company, Inc. (or if a rating of A.M. Best Company, Inc. is no
longer available, a similar rating from a similar or successor service). In
addition, all policies shall (x)include a standard mortgagee clause, without
contribution, in the name of Lender and (y) provide that they shall not be
canceled, amended, or materially altered (including reduction in the scope or
limits of coverage) without at least thirty (30) days' prior notice to Lender.

         (d)      Original Policies. Borrower shall deliver to Lender (i)
original or certified copies of all policies (and renewals) required under
this Section and (ii) receipts evidencing payment of all premiums on such
policies at least thirty (30) days prior to their expiration. If original and
renewal policies are unavailable or if coverage is under a blanket policy,
Borrower shall deliver duplicate originals, or, if unavailable, original
certificates evidencing that such policies are in full force and effect
together with certified copies of the original policies.

         (e)      General Provisions. Borrower shall not carry separate or
additional insurance concurrent in form or contributing in the event of loss
with that required under this Section unless endorsed in favor of Lender as
per this Section and approved by Lender in all respects. In the event of
foreclosure of this Instrument or other transfer of title or assignment of the
Property in extinguishment, in whole or in part, of the Obligations, all
right, title, and interest of Borrower in and to all policies of insurance
then in force regarding the Property and all proceeds payable thereunder and
unearned premiums thereon shall immediately vest in the purchaser or other
transferee of the Property. No approval by Lender of any insurer shall be
construed to be a representation, certification, or warranty of its solvency.
No approval by Lender as to the amount, type, or form of any insurance shall
be construed to be a representation, certification, or warranty of its
sufficiency.

------------------------------

       (5)        (Lender acknowledges that the Property is located in an area
                  that is not considered to be at risk for earthquake damage
                  and, accordingly, Lender, as of the date of this Instrument,
                  has not required insurance against earthquake damage. Lender
                  reserves the right to require insurance against earthquake
                  damage if (i) Lender reasonably determines that the area in
                  which the Property is located is considered to be at risk
                  for earthquake damage, and (ii) Lender is generally
                  requiring such insurance of other borrowers of commercial
                  mortgage loans in the metropolitan Atlanta, Georgia area).

       (6)        (provided that Lender is generally requiring such insurance
                  of other borrowers of commercial mortgage loans in the
                  metropolitan Atlanta, Georgia area)

                                       8

<PAGE>   14

Borrower shall comply with all insurance requirements and shall not cause or
permit any condition to exist which would be prohibited by an insurance
requirement or would invalidate the insurance coverage on the Property.

SECTION 3.07      DAMAGE AND DESTRUCTION OF PROPERTY.

         (a)      Borrower's Obligations. If any damage to, loss, or destruction
of the Property occurs (any "DAMAGE"), (i) Borrower shall promptly notify
Lender and take all necessary steps to preserve any undamaged part of the
Property and (ii) if the insurance proceeds are made available for Restoration
(defined below) (but regardless of whether any proceeds are sufficient for
Restoration), Borrower shall promptly commence and diligently pursue to
completion the restoration, replacement, and rebuilding of the Property as
nearly as possible to its value and condition immediately prior to the Damage
or a Taking (defined below) in accordance with plans and specifications
approved by Lender ("RESTORATION"). Borrower shall comply with other
reasonable requirements established by Lender to preserve the security under
this Instrument.

         (b)      Lender's Rights. If any Damage occurs and some or all of it is
covered by insurance, then (i) Lender may, but is not obligated to, make proof
of loss if not made promptly by Borrower and Lender is authorized and
empowered by Borrower to settle, adjust, or compromise any claims for the
Damage; (ii) each insurance company concerned is authorized and directed to
make payment directly to Lender for the Damage; and (iii) Lender may apply the
insurance proceeds in any order it determines (1) to reimburse Lender for all
Costs (defined below) related to collection of the proceeds and (2) subject to
Section 3.07(c) and at Lender's option, to (A) payment (without any Prepayment
Premium) of all or part of the Obligations, whether or not then due and
payable, in the order determined by Lender (provided that if any Obligations
remains outstanding after this payment, the unpaid Obligations shall continue
in full force and effect and Borrower shall not be excused in the payment
thereof); (B) the cure of any default under the Documents; or (C) the
Restoration. Any insurance proceeds held by Lender shall be held without the
payment of interest thereon. If Borrower receives any insurance proceeds for
the Damage, Borrower shall promptly deliver the proceeds to Lender.
Notwithstanding anything in this Instrument or at law or in equity to the
contrary, none of the insurance proceeds paid to Lender shall be deemed trust
funds and Lender may dispose of these proceeds as provided in this Section.
Borrower expressly assumes all risk of loss from any Damage, whether or not
insurable or insured against.

         (c)      Application of Proceeds to Restoration. Lender shall make the
Net Proceeds (defined below) available to Borrower for Restoration if: (i) there
shall then be no Event of Default; (ii) Lender shall be satisfied that (A)
Restoration can and will be completed within one (1) year after the Damage
occurs and at least (7/) prior to the maturity of the Note and (B) Leases which
are terminated or terminable as a result of the Damage cover an aggregate of
less than (8/) of the total rentable square footage contained in the Property at
the closing of the Loan or such Tenants agree in writing to continue their
Leases; (iii) Borrower shall have entered into a general construction contract
acceptable in all respects to Lender for Restoration, which contract must
include provision for retainage of not less than ten percent (10%) until final
completion of the Restoration; and (iv) in Lender's reasonable judgment, after
Restoration has been completed the net cash flow of the Property will be
sufficient to cover all costs and operating expenses of the Property, including
payments due and reserves required under the Documents. Notwithstanding any
provision of this Instrument to the contrary, Lender shall not be obligated to
make any portion of the Net Proceeds available for Restoration unless, at the
time of the disbursement request, Lender has determined in its reasonable
discretion that (y) Restoration can be completed at a cost which does not exceed
the aggregate of the remaining Net

------------------------------

         (7)      six (6) months

         (8)      twenty percent (20%)

                                       9
<PAGE>   15

Proceeds and any funds deposited with Lender by Borrower ("ADDITIONAL FUNDS")
and (z) the aggregate of any loss of rental income insurance proceeds which
the carrier has acknowledged to be payable ("RENT LOSS PROCEEDS") and any
funds deposited with Lender by Borrower are sufficient to cover all costs and
operating expenses of the Property, including payments due and reserves
required under the Documents.

         (d)      Disbursement of Proceeds. If Lender elects or is required to
make insurance proceeds available for Restoration, Lender shall, through a
disbursement procedure established by Lender, periodically make available to
Borrower in installments the net amount of all insurance proceeds received by
Lender after deduction of all reasonable costs and expenses incurred by Lender
in connection with the collection and disbursement of such proceeds ("NET
PROCEEDS") and, if any, the Additional Funds. The amounts periodically
disbursed to Borrower shall be based upon the amounts currently due under the
construction contract for Restoration and Lender's receipt of (i) appropriate
lien waivers, (ii) a certification of the percentage of Restoration completed
by an architect or engineer acceptable to Lender, and (iii) title insurance
protection against materialmen's and mechanic's liens. At Lender's election,
the disbursement of funds may be handled by a disbursing agent selected by
Lender, and such agent's reasonable fees and expenses shall be paid by
Borrower. The Net Proceeds, Rent Loss Proceeds, and any Additional Funds shall
constitute additional security for the Loan and Borrower shall execute,
deliver, file and/or record, at its expense, such instruments as Lender
requires to grant to Lender a perfected, first-priority security interest in
these funds. If the Net Proceeds are made available for Restoration and (x)
Borrower refuses or fails to complete the Restoration, (y) an Event of Default
occurs, or (z) the Net Proceeds or Additional Funds are not applied to
Restoration, then any undisbursed portion may, at Lender's option, be applied
to the Obligations in any order of priority and any application to principal
shall be deemed a voluntary prepayment subject to the Prepayment Premium.

SECTION 3.08      CONDEMNATION.

         (a)      Borrower's Obligations. Borrower will promptly notify Lender
of any threatened or instituted proceedings for the condemnation or taking by
eminent domain of the Property including any change in any street (whether as
to grade, access, or otherwise) (a "TAKING"). Borrower shall, at its expense,
(i) diligently prosecute these proceedings, (ii) deliver to Lender copies of
all papers served in connection therewith, and (iii) consult and cooperate
with Lender in the handling of these proceedings. No settlement of these
proceedings shall be made by Borrower without Lender's prior written consent.
Lender may participate in these proceedings (but shall not be obligated to do
so) and Borrower will sign and deliver all instruments requested by Lender to
permit this participation.

         (b)      Lender's Rights to Proceeds. All condemnation awards,
judgments, decrees, or proceeds of sale in lieu of condemnation ("AWARD") are
assigned and shall be paid to Lender. Borrower authorizes Lender to collect
and receive them, to give receipts for them, to accept them in the amount
received without question or appeal, and/or to appeal any judgment, decree, or
award. Borrower will sign and deliver all instruments requested by Lender to
permit these actions.

         (c)      Application of Award. Lender shall have the right to apply any
Award, subject to Section 3.08(d), as per Section 3.07 for insurance proceeds
held by Lender, including the waiver of Prepayment Premium. If Borrower
receives any Award, Borrower shall promptly deliver it to Lender.
Notwithstanding anything in this Instrument or at law or in equity to the
contrary, none of the Award paid to Lender shall be deemed trust funds and
Lender may dispose of these proceeds as provided in this Section.

         (d)      Application of Award to Restoration. With respect to any
portion of the Award that is not for loss of value or property, Lender shall
permit the application of the Award to Restoration in accordance with the
provisions of Section 3.07 if: (i) no more than (A) twenty (20%) of the gross
area of the Improvements or (B) ten percent (10%) of the parking spaces is
affected by the Taking, (ii) the amount of the loss does not exceed twenty
percent (20%) of the original amount of the Note; (iii) the Taking does not
affect access to the Property

                                      10

<PAGE>   16

from any public right-of-way; (iv) there is no Event of Default at the time of
application; (v) after Restoration, the Property and its use will be in
compliance with all Laws; (vi) in Lender's reasonable judgment, Restoration is
practical and can be completed within one (1) year after the Taking and at
least (9/) prior to the maturity of the Note; and (vii) the Tenants listed in
Exhibit "D" ("MAJOR TENANTS") agree in writing to continue their Leases
without abatement of rent. Any portion of the Award that is (i) for loss of
value or property or (ii) in excess of the cost of any Restoration permitted
above, may, in Lender's sole discretion, be applied against the Obligations or
paid to Borrower.

         (e)      Effect on the Obligations. Notwithstanding any Taking,
Borrower shall continue to pay and perform the Obligations as provided in the
Documents. Any reduction in the Obligations due to application of the Award
shall take effect only upon Lender's actual receipt and application of the
Award to the Obligations. If the Property shall have been foreclosed, sold
pursuant to any power of sale granted hereunder, or transferred by
deed-in-lieu of foreclosure prior to Lender's actual receipt of the Award,
Lender may apply the Award received to the extent of any deficiency upon such
sale and Costs incurred by Lender in connection with such sale.

SECTION 3.09      LIENS AND LIABILITIES. Borrower shall pay, bond, or otherwise
discharge all claims and demands of mechanics, materialman, laborers, and
others which, if unpaid, might result in a lien, security title, or
encumbrance on the Property or the Rents (collectively, "LIENS") and Borrower
shall, at its sole expense, do everything necessary to preserve the lien,
security title and security interest created by this Instrument and its
priority. Nothing in the Documents shall be deemed or construed as
constituting the consent or request by Lender, express or implied, to any
contractor, subcontractor, laborer, mechanic or materialman for the
performance of any labor or the furnishing of any material for any
improvement, construction, alteration, or repair of the Property. Borrower
further agrees that Lender does not stand in any fiduciary relationship to
Borrower. Any contributions made, directly or indirectly, to Borrower by or on
behalf of any of its partners, members, principals or any party related to
such parties shall be treated as equity and shall be subordinate and inferior
to the rights of Lender under the Documents.

SECTION 3.10      TAX AND INSURANCE DEPOSITS. (10/), Borrower shall make
monthly deposits ("DEPOSITS") with Lender equal to one-twelfth (1/12) of the
annual Assessments (except for income taxes, franchise taxes, ground rents,
maintenance charges and utility charges) and the premiums for insurance
required under Section 3.06 (the "INSURANCE PREMIUMS") together with amounts
sufficient to pay these items thirty (30) days before they are due
(collectively, the "IMPOSITIONS"). Lender shall estimate the amount of the
Deposits until ascertainable. At that time, Borrower shall promptly deposit
any deficiency. Borrower shall promptly notify Lender of any changes to the
amounts, schedules and instructions for payment of the Impositions. Borrower
authorizes Lender or its agent to obtain the bills for Assessments directly
from the appropriate tax or governmental authority. All Deposits are pledged
to Lender and shall constitute additional security for the Obligations. The
Deposits shall be held by Lender without interest (except to the extent
required under Laws) and may be commingled with other funds. If (i) there is
no Event of Default at the time of payment, (ii) Borrower has delivered bills
or invoices to Lender for the Impositions in sufficient time to pay them when
due, (iii) the Deposits are sufficient to pay the Impositions or Borrower has
deposited the necessary additional amount, then Lender shall pay the
Impositions prior to their due date. Any Deposits remaining after payment of
the Impositions shall, at Lender's option, be credited against the Deposits
required for the following year or paid to Borrower. If an Event of Default
occurs, the Deposits may, at Lender's option, be applied to the Obligations in
any order of priority. Any application to principal shall be deemed a
voluntary prepayment subject to the Prepayment Premium. Borrower shall not
claim any credit against the principal and interest due

------------------------------

       (9)        six (6) months

       (10)       Upon the occurrence of an Event of Default

                                      11

<PAGE>   17

under the Note for the Deposits. Upon an assignment or other transfer of this
Instrument, Lender may pay over the Deposits in its possession to the assignee
or transferee and then it shall be completely released from all liability with
respect to the Deposits. Borrower shall look solely to the assignee or
transferee with respect thereto. This provision shall apply to every transfer
of the Deposits to a new assignee or transferee. Subject to Article V, a
transfer of title to the Land shall automatically transfer to the new owner
the beneficial interest in the Deposits. Upon full payment and satisfaction of
this Instrument or, at Lender's option, at any prior time, the balance of the
Deposits in Lender's possession shall be paid over to the record owner of the
Land and no other party shall have any right or claim to the Deposits. Lender
may transfer all its duties under this Section to such service or financial
institution as Lender may periodically designate and Borrower agrees to make
the Deposits to such service or institution.

SECTION 3.11      ERISA. Borrower represents and warrants to Lender that (i)
Borrower is not an "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or a
"governmental plan" within the meaning of Section 3(32) of ERISA; (ii)
Borrower is not subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; (iii) the assets of the
Borrower do not constitute "plan assets" of one or more plans within the
meaning of 29 C.F.R. Section 2510.3-101; and (iv) one or more of the following
circumstances is true: (1) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. Section 2510.3-101(b)(2); (2) Less
than twenty-five percent (25%) of all equity interests in Borrower are held by
"benefit plan investors" within the meaning of 29 C.F.R. Section
2510.3-101(f)(2); or (3) Borrower qualifies as an "operating company" or a
"real estate operating company" within the meaning of 29 C.F.R. Section
2510.3-101(c) or (e). Borrower shall deliver to Lender such certifications
and/or other evidence periodically requested by Lender, in its sole
discretion, to verify these representations and warranties. Failure to deliver
these certifications or evidence, breach of these representations and
warranties, or consummation of any transaction which would cause this
Instrument or any exercise of Lender's rights under this Instrument to (i)
constitute a non-exempt prohibited transaction under ERISA or (ii) violate
ERISA or any state statute regulating governmental plans (collectively, a
"VIOLATION"), shall be an Event of Default. Notwithstanding anything in the
Documents to the contrary, no sale, assignment, or transfer of any direct or
indirect right, title, or interest in Borrower or the Property (including
creation of a junior lien, security title, encumbrance or leasehold interest)
shall be permitted which would, in Lender's opinion, negate Borrower's
representations in this Section or cause a Violation. At least fifteen (15)
days before consummation of any of the foregoing, Borrower shall obtain from
the proposed transferee or lienholder (i) a certification to Lender that the
representations and warranties of this Section will be true after consummation
and (ii) an agreement to comply with this Section.

SECTION 3.12      ENVIRONMENTAL REPRESENTATIONS, WARRANTIES, AND COVENANTS.

         (a)      Environmental Representations and Warranties. (11/) Borrower
represents and warrants, to the best of Borrower's knowledge (after due
inquiry and investigation) and additionally based upon the environmental site
assessment report of the Property (the "ENVIRONMENTAL REPORT"), that except as
fully disclosed in the Environmental Report delivered to and approved by
Lender: (i) there are no Hazardous Materials (defined below) or underground
storage tanks affecting the Property ("AFFECTING THE PROPERTY" shall mean "in,
on, under, stored, used or migrating to or from the Property") except for (A)
routine office, cleaning, janitorial and other materials and supplies
necessary to operate the Property for its current use and (B) Hazardous
Materials that are (1) in compliance with Environmental Laws (defined below),
(2) have all required permits, and (3) are in only the amounts necessary to
operate the Property; (ii) there are no past, present or threatened Releases
(defined below) of Hazardous Materials in violation of any Environmental Law
affecting the Property; (iii) there is no past or present non-compliance with
Environmental Laws or with permits issued

------------------------------

         (11)     Based solely upon the environmental reports prepared for
                  Lender,

                                      12

<PAGE>   18

pursuant thereto; (iv) Borrower does not know of, and has not received, any
written or oral notice or communication from any person relating to Hazardous
Materials affecting the Property; and (v) Borrower has provided to Lender, in
writing, all information relating to environmental conditions affecting the
Property known to Borrower or contained in Borrower's files. "ENVIRONMENTAL
LAW" means any present and future federal, state and local laws, statutes,
ordinances, rules, regulations, standards, policies and other government
directives or requirements, as well as common law, that apply to Borrower or
the Property and relate to Hazardous Materials including the Comprehensive
Environmental Response, Compensation and Liability Act and the Resource
Conservation and Recovery Act. "HAZARDOUS MATERIALS" shall mean petroleum and
petroleum products and compounds containing them, including gasoline, diesel
fuel and oil; explosives, flammable materials; radioactive materials;
polychlorinated biphenyls ("PCBs") and compounds containing them; lead and
lead-based paint; asbestos or asbestos-containing materials in any form that
is or could become friable; underground or above-ground storage tanks, whether
empty or containing any substance; any substance the presence of which on the
Property is prohibited by any federal, state or local authority; any substance
that requires special handling; and any other material or substance now or in
the future defined as a "hazardous substance," "hazardous material",
"hazardous waste," "toxic substance," "toxic pollutant," "contaminant," or
"pollutant" within the meaning of any Environmental Law. "RELEASE" of any
Hazardous Materials includes any release, deposit, discharge, emission,
leaking, spilling, seeping, migrating, pumping, pouring, escaping, dumping,
disposing or other movement of Hazardous Materials.

         (b)      Environmental Covenants. Borrower covenants and agrees that:
(i) all use and operation of the Property shall be in compliance with all
Environmental Laws and required permits; (ii) there shall be no Releases of
Hazardous Materials affecting the Property; (iii) there shall be no Hazardous
Materials affecting the Property except (A) routine office, cleaning and
janitorial supplies, (B) in compliance with all Environmental Laws, (c) with
all required permits, and (D) (1) in only the amounts necessary to operate the
Property or (2) fully disclosed to and approved by Lender in writing; (iv)
Borrower shall keep the Property free and clear of all liens and encumbrances
imposed by any Environmental Laws due to any act or omission by Borrower or
any person (the "ENVIRONMENTAL LIENS"); (v) Borrower shall, at its sole
expense, fully and expeditiously cooperate in all activities in Section
3.12(c) including providing all relevant information and making knowledgeable
persons available for interviews; (vi) Borrower shall, at its sole expense,
(A) perform any environmental site assessment or other investigation of
environmental conditions at the Property upon Lender's request based on
Lender's reasonable belief that the Property is not in compliance with all
Environmental Laws, (B) share with Lender the results and reports and Lender
and the Indemnified Parties (defined below) shall be entitled to rely on such
results and reports, and (c) complete any remediation of Hazardous Materials
affecting the Property or other actions required by any Environmental Laws;
(vii) Borrower shall not allow any Tenant or other user of the Property to
violate any Environmental Law; and (viii) Borrower shall immediately notify
Lender in writing after it becomes aware of (A) the presence, Release, or
threatened Release of Hazardous Materials affecting the Property, (B) any
non-compliance of the Property with any Environmental Laws, (C) any actual or
potential Environmental Lien, (D) any required or proposed remediation of
environmental conditions relating to the Property, or (E) any written or oral
communication or notice from any person relating to Hazardous Materials. Any
failure of Borrower to perform its obligations under this Section 3.12 shall
constitute bad faith waste of the Property.

         (c)      Lender's Rights. Lender and any person designated by Lender
may enter the Property to assess the environmental condition of the Property
and its use including (i) conducting any environmental assessment or audit
(the scope of which shall be determined by Lender) and (ii) taking samples of
soil, groundwater or other water, air, or building materials, and conducting
other invasive testing at all reasonable times when (A) a default has occurred
under the Documents, (B) Lender reasonably believes that a Release has
occurred or the Property is not in compliance with all Environmental Laws, or
(C) the Loan is being considered for sale. Borrower shall cooperate with and
provide access to Lender and such person.

                                      13

<PAGE>   19

SECTION 3.13      (12/)

SECTION 3.14      INSPECTION. Borrower shall allow Lender and any person
designated by Lender (13/) to enter upon the Property and conduct tests or
inspect the Property at all reasonable times. Borrower shall assist Lender and
such person in effecting said inspection.

SECTION 3.15      RECORDS, REPORTS, AND AUDITS.

         (a)      Records and Reports. Borrower shall maintain, in accordance
with generally-accepted accounting principles ("GAAP"), complete and accurate
books and records with respect to all operations of or transactions involving
the Property. Annually, Borrower shall furnish Lender financial statements for
the most current fiscal year (including a schedule of all related Obligations
and contingent liabilities) for (i) Borrower, (ii) any general partner(s) of
Borrower and any general partners of such partners, (14/) (iii) any guarantors
or sureties of the Note. Annually (or quarterly upon Lender's request),
Borrower shall furnish Lender (i) operating statements for the Property
including income and expenses (before and after Obligations service), major
capital improvements; (ii) copies of paid tax receipts for the Property;
(iii) a certified rent roll including security deposits held, the expiration
of the terms of the Leases, and identification and explanation of any Tenants
in default; (iv) (15/) a budget showing projected income and expenses (before
and after Obligations service) for the next twelve (12) month budget period;
and (v) upon Lender's request (16/), (A) a schedule showing the Borrower's tax
basis in the Property, (B) the distribution of economic interests in the
Property, and (C) copies of any other loan documents affecting the Property.

         (b)      Delivery of Reports. All of the reports, statements, and
items required under this Section shall be (i) certified as being true,
correct, and accurate by an authorized person, partner, or officer of the
delivering party or, at the deliverer's option, audited by a Certified Public
Accountant; (ii) prepared in accordance with GAAP and satisfactory to Lender
in form and substance; and (iii) delivered within (A) ninety (90) days after
the end of Borrower's fiscal year for annual reports and (B) fifteen (15) days
after the end of each calendar quarter for quarterly reports. If any one
report, statement, or item is not received by Lender on its due date, a late
fee of Five Hundred and No/100 Dollars ($500.00) per month shall be due and
payable by Borrower. If any one report, statement, or item is not received
within thirty (30) days of its due date, Lender may immediately declare (17/)
under the Documents. Borrower shall (i) provide Lender with such additional
financial, management, or other information regarding Borrower, any general
partner of Borrower, or the Property, as

------------------------------

         (12)     [Intentionally Omitted]

         (13)     , upon at least two (2) days advance notice from Lender to
                  Borrower (except that no such notice shall be required in
                  the event of an emergency),

         (14)     and

         (15)     upon Lender's request (and in no event more often than once
                  every two (2) years during the term of this Loan),

         (16)     following the occurrence of an Event of Default

         (17)     a default

                                      14

<PAGE>   20

Lender may reasonably request and (ii) upon Lender's request (18/), deliver all
items required by Section 3.15 in an electronic format (i.e., on computer
disks) or by electronic transmission acceptable to Lender.

         (c)      Inspection of Records. Borrower shall allow Lender or any
person designated by Lender to examine, audit, and make copies of all such
books and records and all supporting data at the place where these items are
located at all reasonable times after reasonable advance notice; provided that
no notice shall be required after any default under the Documents. Borrower
shall assist Lender in effecting such examination. Upon five (5) days' prior
notice, Lender may inspect and make copies of Borrower's or any general
partner of Borrower's income tax returns with respect to the Property for the
purpose of verifying any items referenced in this Section.

SECTION 3.16      BORROWER'S CERTIFICATES. Within ten (10) days after Lender's
request, Borrower shall furnish a written certification to Lender and any
Investors as to (a) the amount of the Obligations outstanding; (b) the
interest rate, terms of payment, and maturity date of the Note; (c) the date
to which payments have been paid under the Note; (d) whether any offsets or
defenses exist against the Obligations and a detailed description of any
listed; (e) whether all Leases are in full force and effect and have not been
modified (or if modified, setting forth all modifications); (f) the date to
which the Rents have been paid; (g) whether, to the best knowledge of
Borrower, any defaults exist under the Leases and a detailed description of
any listed; (h) the security deposit held by Borrower under each Lease and
that such amount is the amount required under such Lease; (i) whether there
are any defaults (or events which with the passage of time and/or notice would
constitute a default) under the Documents and a detailed description of any
listed; (j) whether the Documents are in full force and effect; and (k) any
other matters reasonably requested by Lender related to the Leases, the
Obligations, the Property, or the Documents. For all non-residential
properties and promptly upon Lender's request, Borrower shall use its best
efforts to deliver a written certification to Lender and Investors from
Tenants specified by Lender that: (a) their Leases are in full force and
effect; (b) there are no defaults (or events which with the passage of time
and/or notice would constitute a default) under their Leases or a detailed
description of any listed; (c) none of the Rents have been paid more than one
month in advance; (d) there are no offsets or defenses against the Rents and a
detailed description of any listed; and (e) any other matters reasonably
requested by Lender related to the Leases; provided, however, that Borrower
shall not have to pay money to a Tenant to obtain such certification, but it
will deliver a landlord's certification for any certification it cannot
obtain.

SECTION 3.17      FULL PERFORMANCE REQUIRED; SURVIVAL OF WARRANTIES. All
representations and warranties of Borrower in the Loan application or made in
connection with the Loan shall survive the execution and delivery of the
Documents and shall remain continuing warranties and representations of
Borrower.

SECTION 3.18      ADDITIONAL SECURITY. No other security now existing or taken
later to secure the Obligations shall be affected by the execution of the
Documents and all additional security shall be held as cumulative. The taking
of additional security, execution of partial releases, or extension of the
time of payment obligations of Borrower shall not diminish the effect,
security title, and security interest of this Instrument and shall not affect
the liability or obligations of any maker or guarantor. Neither the acceptance
of the Documents nor their enforcement shall prejudice or affect Lender's
right to realize upon or enforce any other security now or later held by
Lender. Lender may enforce the Documents or any other security in such order
and manner as it may determine in its discretion.

SECTION 3.19      FURTHER ACTS. Borrower shall take all necessary actions to (i)
keep valid and effective the security title, security interest and rights of
Lender under the Documents and (ii) protect the lawful owner of the Documents.
Promptly upon request by Lender and at Borrower's expense, Borrower shall
execute additional instruments and take such actions as Lender reasonably
believes are necessary or desirable to (a) maintain or grant Lender a
first-priority, perfected security title and security interest in the
Property, (b) correct any error

------------------------------

         (18)     and if readily achievable without significant expenditure by
                  Borrower

                                      15

<PAGE>   21

or omission in the Documents, and (c) effect the intent of the Documents,
including filing/recording the Documents, additional deeds to secure debt,
financing statements, and other instruments.

            ARTICLE IV - ADDITIONAL ADVANCES; EXPENSES; SUBROGATION

SECTION 4.01      EXPENSES AND ADVANCES. Borrower shall pay all reasonable
appraisal, recording, filing, registration, brokerage, abstract, title
insurance (including premiums), U.C.C. search, escrow, attorneys' (both
in-house staff and retained attorneys), engineers', environmental engineers',
environmental testing, and architects' fees, costs (including travel),
expenses, and disbursements incurred by Borrower or Lender in connection with
the granting, closing, servicing, and enforcement of (a) the Loan and
Documents or (b) attributable to Borrower as owner of the Property. The term
"COSTS" shall mean any of the foregoing incurred in connection with (a) any
default by Borrower under the Documents, (b) the servicing of the Loan, or (c)
the exercise, enforcement, compromise, defense, litigation, or settlement of
any of Lender's rights or remedies under the Documents or relating to the Loan
or the Obligations. If Borrower fails to pay any amounts or perform any
actions required under the Documents, Lender may (but shall not be obligated
to) advance sums to pay such amounts or perform such actions. Borrower grants
Lender the right to enter upon and take possession of the Property to prevent
or remedy any such failure and the right to take such actions in Borrower's
name. No advance or performance shall be deemed to have cured a default by
Borrower. All (a) sums advanced by or payable to Lender per this Section or
under applicable Laws, (b) except as expressly provided in the Documents,
payments due under the Documents which are not paid in full when due, and (c)
all Costs, shall: (i) be deemed demand obligations, (ii) bear interest at the
applicable interest rate specified in the Note, which shall be the Default
Rate unless prohibited by Laws, until paid if not paid on demand, (iii) be
part of, together with such interest, the Obligations, and (iv) be secured by
the Documents. Lender, upon making any such advance, shall also be subrogated
to rights of the person receiving such advance.

SECTION 4.02      SUBROGATION. If any proceeds of the Note were used to
extinguish, extend or renew any indebtedness on the Property, then, to the
extent of the funds so used, (a) Lender shall be subrogated to all rights,
claims, liens, titles and interests existing on the Property held by the
holder of such indebtedness and (b) these rights, claims, liens, titles and
interests are not waived but rather shall (i) continue in full force and
effect in favor of Lender and (ii) are merged with the security title and
security interest created by the Documents as cumulative security for the
payment and performance of the Obligations.

          ARTICLE V - SALE, TRANSFER, OR ENCUMBRANCE OF THE PROPERTY

SECTION 5.01      DUE-ON-SALE OR ENCUMBRANCE. It shall be an Event of Default
and, at the sole option of Lender, Lender may accelerate the Obligations and
the entire Obligations (including any Prepayment Premium) shall become
immediately due and payable, if Borrower, without Lender's prior written
consent (which may be withheld for any or no reason including the possibility
of an ERISA violation or the proposed transferee's failure to agree in writing
to Lender increasing the interest payable on the Obligations to any rate,
changing any other terms (including maturity) of the Obligations or Documents,
or requiring the payment of a transfer fee), (a) shall sell, convey, assign,
transfer, dispose of or be divested of its title to, convey security title to,
mortgage, encumber or cause to be encumbered (except for the imposition of
mechanics' or materialmen's liens) the Property or any interest therein, in
any manner or way, whether voluntary or involuntary, or (b) in the event of
(i) any merger, consolidation (19/), sale, transfer, assignment, or dissolution
involving all or substantially all of the assets of Borrower or any general
partner of Borrower, (ii) the transfer, pledge, voluntary or involuntary sale,
or

------------------------------

         (19)     (unless Borrower or such general partner of Borrower is the
                  surviving entity in such merger or consolidation)

                                      16

<PAGE>   22

encumbrance (or any of the foregoing (20/) ) of (A) (21/) or more of (1) the
voting stock of a corporate Borrower, any corporate general partner of
Borrower, or any corporation directly or indirectly owning (22/) or more of any
such corporation, (2) the beneficial interests in Borrower if a trust or the
interest in any owner of fifty percent (50%) or more of such beneficial
interests, or (3) the ownership interests in Borrower or any general partner
of Borrower if either is a limited liability company; (B) any general
partnership interest in Borrower; or (C) any partnership which is a direct or
indirect general partner of Borrower or any general partner of Borrower; (iii)
the conversion of any general partnership interest in Borrower to a limited
partnership interest; (iv) any change, removal, or resignation of any general
partner of Borrower; or (v) any change, removal, or resignation of a managing
member (or if no managing member, any member) if Borrower is a limited
liability company. This provision shall not apply to transfers under any will
or applicable law of descent. This provision does not prohibit the transfer of
any existing limited partnership interest in (i) Borrower, (ii) any general
partner of Borrower, or (iii) any partner of a general partner of Borrower (23/)
 .

SECTION 5.02      ONE-TIME TRANSFER. (24/) Section 5.01 and so long as there is
no default under the Documents (or event which with the passage of time or the
giving of notice or both would be a default), Lender agrees, upon thirty (30)
days prior written request, to consent to one transfer of the entire Property
(25/) if:

         (i)      the proposed transferee of the Property is a person which, in
the judgment of Lender, has financial capability and creditworthiness,
reputation and experience in the ownership, operation, management, and leasing
of similar properties, equal to or greater than Borrower;

         (ii)     at the time of transfer the Loan to Value Ratio (defined
below) does not exceed sixty-five percent (65%);

         (iii)    Borrower pays Lender a non-refundable servicing fee (26/) at
the time of the request and an additional fee equal to 1.0% of the outstanding
principal balance of the Loan at the time of the transfer;

         (iv)     at Lender's option, Lender's title policy is endorsed to
verify the first priority of the Documents at Borrower's expense;

------------------------------

       (20)       in one transaction

       (21)       49%

       (22)       49%

       (23)       Notwithstanding the foregoing, if Borrower or a corporate
                  general partner of Borrower is a corporation whose shares
                  are traded on a major stock exchange, the transfer of such
                  shares shall in no event constitute a default under this
                  Instrument.

       (24)       Beginning six (6) months from Closing, and notwithstanding

       (25)       (with all terms and conditions of the Loan Documents
                  remaining the same)

       (26)       of $2,500.00

                                      17

<PAGE>   23

         (v)      the Debt Service Coverage Ratio (defined below) is at least
1.60 to 1.00 for the preceding (27/) month period and Lender receives
satisfactory evidence that this Debt Service Coverage Ratio will be maintained
for the next succeeding twelve (12) months;

         (vi)     the transferee expressly assumes all obligations under the
Documents and executes any documents reasonably required by Lender, and all of
these documents are satisfactory in form and substance to Lender;

         (vii)    Lender reasonably approves the form and content of all
transfer documents, and Lender is furnished with a certified copy of the
recorded transfer documents;

         (viii)   the transferee complies with and delivers the ERISA
Certification and Environmental Indemnity Agreement, both of even date
herewith; and

         (ix)     Borrower or the transferee pays all reasonable fees, costs,
and expenses incurred by Lender in connection with the proposed transfer,
including, without limitation, all legal (for both outside counsel and
Lender's staff attorneys), accounting, title insurance, documentary stamps
taxes, intangible taxes, mortgage taxes, recording fees, and appraisal fees,
whether or not the transfer is actually consummated.

         The term "LOAN TO VALUE RATIO" shall mean the ratio, as reasonably
determined by Lender, of (i) the aggregate principal balance of all
encumbrances against the Obligations to (ii) the fair market value of the
Property. The term "DEBT SERVICE COVERAGE RATIO" shall mean the ratio, as
reasonably determined by Lender, calculated by dividing (i) net operating
income ("NOI") by (ii) total annual debt service ("TADS"). NOI is the gross
annual income realized from operations of the Obligations for the applicable
twelve (12) month period after subtracting all necessary and ordinary
operating expenses (both fixed and variable) for that twelve (12) month period
(assuming for expense purposes only that the Property is 95% leased and
occupied if actual leasing is less than 95%), including, without limitation,
utilities, administrative, cleaning, landscaping, security, repairs, and
maintenance, ground rent payments, management fees, reserves for replacements,
real estate and other taxes, assessments and insurance, but excluding
deduction for federal, state and other income taxes, debt service expenses,
depreciation or amortization of capital expenditures, and other similar
non-cash items. Gross income shall not be anticipated for any greater time
period than that approved by generally accepted accounting principles and
ordinary operating expenses shall not be prepaid. Documentation of NOI and
expenses shall be certified by an officer of Borrower with detail satisfactory
to Lender and shall be subject to the approval of Lender. TADS shall mean the
aggregate debt service payments for any given calendar year on the Loan and on
all other indebtedness secured, or to be secured, by any part of the (28/) .

SECTION 5.03      PERMITTED TRANSFERS WITHOUT FEE. Notwithstanding Section 5.01,
the original Borrower, and any transferee of the original Borrower permitted
below, may engage in the transactions described below after at least fifteen
(15) days' prior written notice to Lender, provided that all of the following
conditions are met: (i) there is no default under the Documents (or event
which with the passage of time or the giving of notice or both would be a
default); (ii) the proposed transferee complies with and delivers the ERISA
certification and indemnification agreement described herein (or, if the
statements required by the certification are not true with respect to the
proposed transferee, Lender shall have received such evidence as it may
require in its sole discretion to determine that the proposed transfer is not
and would not render the Loan a prohibited transaction under ERISA); (iii) if
all of the Property is transferred, the proposed transferee shall have signed
an assumption agreement acceptable to Lender with respect to the Documents;
(iv) the proposed transferee shall have provided such information about the
proposed transferee as requested by Lender, and Lender shall have approved the

------------------------------

       (27)       six (6)

       (28)       Property

                                      18

<PAGE>   24

proposed transferee, including, but not limited to, a review of the proposed
transferee's creditworthiness, good character and reputation, and demonstrated
ability and experience (by itself or through its manager) in the ownership,
operation, and leasing of property similar to the Property; and (v) payment by
Borrower or the proposed transferee of (1) all costs and expenses incurred by
Lender for the processing of said transfer including a processing fee, (2) any
documentary stamp taxes, intangibles taxes, recording fees, and other costs
and expenses required in connection with the assumption agreement and any
modification of the Documents, and (3) all other costs and expenses (including
attorneys' fees and expenses for Lender's staff attorneys and outside counsel)
of the preparation of the assumption agreement and any modification of the
Documents. Provided all of the foregoing conditions are fulfilled with respect
to each such transfer, Borrower may engage in the following transaction:

         (a)      Borrower may transfer the entire Property (or all the
                  ownership interests in borrower) to Roberts Realty
                  Investors, Inc. ("RRII"), a real estate investment trust.
                  Lender shall not be entitled to accelerate the indebtedness
                  evidenced by the Note nor change the Loan terms in the event
                  of a conveyance to RRII; and

         (b)      Any merger or consolidation of Borrower or a general partner
                  of Borrower when borrower or such general partner is the
                  surviving entity.

                      ARTICLE VI - DEFAULTS AND REMEDIES

SECTION 6.01      EVENTS OF DEFAULT.  The following shall be an "EVENT OF
                  DEFAULT":

         (a)      if Borrower fails to make any payment required under the
Documents when due and such failure continues for five (5) days after written
notice; provided, however, that if Lender gives one (1) notice of default
within any twelve (12) month period, Borrower shall have no further right to
any notice of monetary default during that twelve (12) month period;

         (b)      except for defaults listed in the other subsections of this
Section 6.01, if Borrower fails to perform or comply with any other provision
contained in the Documents and the default is not cured within thirty (30)
days after written notice (the "GRACE PERIOD"); provided, however, that Lender
may extend the Grace Period up to an additional sixty (60) days (for a total
of ninety (90) days from the date of default) if (i) Borrower immediately
commences and diligently pursues the cure of such default and delivers (within
the Grace Period) to Lender a written request for more time and (ii) Lender
determines in good faith that (1) such default cannot be cured within the
Grace Period but can be cured within ninety (90) days after the default, (2)
no security title or security interest created by the Documents will be
impaired prior to completion of such cure, and (3) Lender's immediate exercise
of any remedies provided hereunder or by law is not necessary for the
protection or preservation of the Property or Lender's security interest;

         (c)      if any representation made (i) in connection with the Loan or
Obligations or (ii) in the Loan application or Documents shall be false or
misleading in any material respect;

         (d)      if any default under Article V occurs;

         (e)      if Borrower shall (i) become insolvent, (ii) make a transfer
in fraud of creditors, (iii) make an assignment for the benefit of its
creditors, (iv) not be able to pay its debts as such debts become due, or (v)
admit in writing its inability to pay its debts as they become due;

         (f)      if any bankruptcy, reorganization, arrangement, insolvency,
or liquidation proceeding, or any other proceedings for the relief of debtors,
is instituted by or against Borrower, and, if instituted against Borrower, is
allowed, consented to, or not dismissed within the earlier to occur of (i)
ninety (90) days after such institution or (ii) the filing of an order for
relief;

                                      19

<PAGE>   25

         (g)      if any of the events in Sections 6.01 (e) or (f) shall occur
with respect to any (i) general partner of Borrower or (ii) guarantor of
payment or performance of any of the Obligations;

         (h)      if the Property shall be taken, attached, or sequestered on
execution or other process of law in any action against Borrower;

         (i)      if any default occurs under the Environmental and ERISA
Indemnity Agreement and such default is not cured within any applicable grace
period in that document;

         (j)      if Borrower shall fail at any time to obtain, maintain,
renew, or keep in force the insurance policies required by Section 3.06 within
ten (10) days after written notice;

         (k)      if Borrower shall be in default under any other mortgage,
deed of trust, deed to secure debt or security agreement covering any part of
the Property, whether it be superior or junior in lien or security title to
this Instrument;

         (l)      if any claim of priority (except based upon a Permitted
Encumbrance) to the Documents by title, lien, or otherwise shall be upheld by
any court of competent jurisdiction or shall be consented to by Borrower; or

         (m)      (i) the consummation by Borrower of any transaction which
would cause (A) the Loan or any exercise of Lender's rights under the
Documents to constitute a non-exempt prohibited transaction under ERISA or (B)
a violation of a state statute regulating governmental plans; (ii) the failure
of any representation in Section 3.11 to be true and correct in all respects;
or (iii) the failure of Borrower to provide Lender with the written
certifications required by Section 3.11.

SECTION 6.02      REMEDIES. If an Event of Default occurs, Lender or any person
designated by Lender may (but shall not be obligated to) take any action
(separately, concurrently, cumulatively, and at any time and in any order)
permitted under any Laws, without notice, demand, presentment, or protest (all
of which are hereby waived), to protect and enforce Lender's rights under the
Documents or Laws including the following actions:

         (a)      accelerate and declare the entire unpaid Obligations
immediately due and payable, except for defaults under Section 6.01 (f), (g),
or (h) which shall automatically make the Obligations immediately due and
payable;

         (b)      judicially or otherwise, (i) completely foreclose this
Instrument or (ii) partially foreclose this Instrument for any portion of the
Obligations due and the security title and security interest created by this
Instrument shall continue unimpaired and without loss of priority as to the
remaining Obligations not yet due;

         (c)      sell for cash or upon credit the Property and all right,
title and interest of Borrower therein and rights of redemption thereof,
pursuant to power of sale;

         (d)      recover judgment on the Note either before, during or after
any proceedings for the enforcement of the Documents and without any
requirement of any action being taken to (i) realize on the Property or (ii)
otherwise enforce the Documents;

         (e)      seek specific performance of any provisions in the Documents;

         (f)      apply for the appointment of a receiver, custodian, trustee,
liquidator, or conservator of the Property without (i) notice to any person,
(ii) regard for (A) the adequacy of the security for the Obligations or (B)
the solvency of Borrower or any person liable for the payment of the
Obligations; and Borrower and any person so liable waives or shall be deemed
to have waived the foregoing and any other objections to the fullest extent
permitted by Laws and consents or shall be deemed to have consented to such
appointment;

         (g)      with or without entering upon the Property, (i) exclude
Borrower and any person from the Property without liability for trespass,
damages, or otherwise; (ii) take possession of, and Borrower shall

                                      20

<PAGE>   26

surrender on demand, all books, records, and accounts relating to the
Property; (iii) give notice to Tenants or any person, make demand for,
collect, receive, sue for, and recover in its own name all Rents and cash
collateral derived from the Property; (iv) use, operate, manage, preserve,
control, and otherwise deal with every aspect of the Property including (A)
conducting its business, (B) insuring it, (C) making all repairs, renewals,
replacements, alterations, additions, and improvements to or on it, (D)
completing the construction of any Improvements in manner and form as Lender
deems advisable, and (E) executing, modifying, enforcing, and terminating new
and existing Leases on such terms as Lender deems advisable and evicting any
Tenants in default; (v) apply the receipts from the Property to payment of the
Obligations, in any order or priority determined by Lender, after first
deducting all Costs, expenses, and liabilities incurred by Lender in
connection with the foregoing operations and all amounts needed to pay the
Impositions and other expenses of the Property, as well as just and reasonable
compensation for the services of Lender and its attorneys, agents, and
employees; and/or (vi) in every case in connection with the foregoing,
exercise all rights and powers of Borrower or Lender with respect to the
Property, either in Borrower's name or otherwise;

         (h)      release any portion of the Property for such consideration,
if any, as Lender may require without, as to the remainder of the Property,
impairing or affecting the security title or priority of this Instrument or
improving the position of any subordinate lien or security title holder with
respect thereto, except to the extent that the Obligations shall have been
actually reduced, and Lender may accept by assignment, pledge, or otherwise
any other property in place thereof as Lender may require without being
accountable for so doing to any other lien or security title holder;

         (i)      apply any Deposits to the following items in any order and in
Lender's sole discretion: (A) the Obligations, (B) Costs, (C) advances made by
Lender under the Documents, and/or (D) Impositions;

         (j)      take all actions permitted under the U.C.C. of the Property
State including (i) the right to take possession of all tangible and
intangible personal property included within the Property ("PERSONAL
PROPERTY") and take such actions as Lender deems advisable for the care,
protection and preservation of the Personal Property and (ii) request Borrower
at its expense to assemble the Personal Property and make it available to
Lender at a convenient place acceptable to Lender. Any notice of sale,
disposition or other intended action by Lender with respect to the Personal
Property sent to Borrower at least five (5) days prior to such action shall
constitute commercially reasonable notice to Borrower; or

         (k)      take any other action permitted under any Laws. If Lender
exercises any of its rights under Section 6.02(g), Lender shall not (a) be
deemed to have entered upon or taken possession of the Property except upon
the exercise of its option to do so, evidenced by its demand and overt act for
such purpose; (b) be deemed a beneficiary or mortgagee in possession by reason
of such entry or taking possession; nor (c) be liable (i) to account for any
action taken pursuant to such exercise other than for Rents actually received
by Lender, (ii) for any loss sustained by Borrower resulting from any failure
to lease the Property, or (iii) any other act or omission of Lender except for
losses caused by Lender's willful misconduct or gross negligence. Borrower
hereby consents to, ratifies, and confirms the exercise by Lender of its
rights under this Instrument and appoints Lender as its attorney-in-fact,
which appointment shall be deemed to be coupled with an interest and
irrevocable, for such purposes.

SECTION 6.03      EXPENSES. All Costs, expenses, or other amounts paid or
incurred by Lender in the exercise of its rights under the Documents, together
with interest thereon at the applicable interest rate specified in the Note,
which shall be the Default Rate unless prohibited by Laws, shall be (a) part
of the Obligations, (b) secured by this Instrument, and (c) allowed and
included as part of the Obligations in any foreclosure, decree for sale, power
of sale, or other judgment or decree enforcing Lender's rights under the
Documents.

                                      21

<PAGE>   27

SECTION 6.04      RIGHTS PERTAINING TO SALES. To the extent permitted under
(and in accordance with) any Laws, the following provisions shall, as Lender
may determine in its sole discretion, apply to any sales of the Property under
Article VI, whether by judicial proceeding, judgment, decree, power of sale,
foreclosure or otherwise: (a) Lender may conduct multiple sales of any part of
the Property in separate tracts or in its entirety and Borrower waives any
right to require otherwise; (b) any sale may be postponed or adjourned by
public announcement at the time and place appointed for such sale or for such
postponed or adjourned sale without further notice; and (c) Lender may acquire
the Property and, in lieu of paying cash, may pay by crediting against the
Obligations the amount of its bid, after deducting therefrom any sums which
Lender is authorized to deduct under the provisions of the Documents.

SECTION 6.05      APPLICATION OF PROCEEDS. Any proceeds received from any sale
or disposition under Article VI or otherwise, together with any other sums
held by Lender, shall, except as expressly provided to the contrary, be
applied in the order determined by Lender to: (a) payment of all Costs and
expenses of any enforcement action or foreclosure sale, including interest
thereon at the applicable interest rate specified in the Note, which shall be
the Default Rate unless prohibited by Laws, (b) all taxes, Assessments, and
other charges unless the Property was sold subject to these items; (c) payment
of the Obligations in such order as Lender may elect; (d) payment of any other
sums secured or required to be paid by Borrower; and (e) payment of the
surplus, if any, to any person lawfully entitled to receive it. Borrower and
Lender intend and agree that during any period of time between any foreclosure
judgment that may be obtained and the actual foreclosure sale that the
foreclosure judgment will not extinguish the Documents or any rights contained
therein including the obligation of Borrower to pay all Costs and to pay
interest at the applicable interest rate specified in the Note, which shall be
the Default Rate unless prohibited by Laws.

SECTION 6.06      ADDITIONAL PROVISIONS AS TO REMEDIES. No failure, refusal,
waiver, or delay by Lender to exercise any rights under the Documents upon any
default or Event of Default shall impair Lender's rights or be construed as a
waiver of, or acquiescence to, such or any subsequent default or Event of
Default. No recovery of any judgment by Lender and no levy of an execution
upon the Property or any other property of Borrower shall affect the security
title and security interest created by this Instrument and such liens,
security title, rights, powers, and remedies shall continue unimpaired as
before. Lender may resort to any security given by this Instrument or any
other security now given or hereafter existing to secure the Obligations, in
whole or in part, in such portions and in such order as Lender may deem
advisable, and no such action shall be construed as a waiver of any of the
liens, security title, rights, or benefits granted hereunder. Acceptance of
any payment after any Event of Default shall not be deemed a waiver or a cure
of such Event of Default and such acceptance shall be deemed an acceptance on
account only. If Lender has started enforcement of any right by foreclosure,
sale, entry, or otherwise and such proceeding shall be discontinued,
abandoned, or determined adversely for any reason, then Borrower and Lender
shall be restored to their former positions and rights under the Documents
with respect to the Property, subject to the security title and security
interest hereof.

SECTION 6.07      WAIVER OF RIGHTS AND DEFENSES. To the fullest extent Borrower
may do so under Laws, Borrower (a) will not at any time insist on, plead,
claim, or take the benefit of any statute or rule of law now or later enacted
providing for any appraisement, valuation, stay, extension, moratorium,
redemption, or any statute of limitations; (b) for itself, its successors and
assigns, and for any person ever claiming an interest in the Property (other
than Lender), waives and releases all rights of redemption, reinstatement,
valuation, appraisement, notice of intention to mature or declare due the
whole of the Obligations, all rights to a marshaling of the assets of
Borrower, including the Property, or to a sale in inverse order of alienation,
in the event of foreclosure of the security title and security interests
created under the Documents; (c) shall not be relieved of its obligation to
pay the Obligations as required in the Documents nor shall the lien, security
title or priority of the Documents be impaired by any agreement renewing,
extending, or modifying the time of payment or the provisions of the Documents
(including a modification of any interest rate), unless expressly released,
discharged, or modified by such agreement. Regardless of consideration and
without any notice to or consent by the holder

                                      22

<PAGE>   28

of any subordinate lien, security title, security interest, encumbrance,
right, title, or interest in or to the Property, Lender may (a) release any
person liable for payment of the Obligations or any portion thereof or any
part of the security held for the Obligations or (b) modify any of the
provisions of the Documents without impairing or affecting the Documents or
the security title, security interest, or the priority of the modified
Documents as security for the Obligations over any such subordinate lien,
security title, security interest, encumbrance, right, title, or interest.

                       ARTICLE VII - SECURITY AGREEMENT

SECTION 7.01      SECURITY AGREEMENT. This Instrument constitutes both a real
property mortgage and a "SECURITY AGREEMENT" within the meaning of the U.C.C.
The Property includes real and personal property and all tangible and
intangible rights and interest of Borrower in the Property. Borrower grants to
Lender, as security for the Obligations, a security interest in the Personal
Property to the fullest extent that the same may be subject to the U.C.C.
Borrower authorizes Lender to file any financing or continuation statements
and amendments thereto relating to the Personal Property without the signature
of Borrower if permitted by Laws.

        ARTICLE VIII - LIMITATION ON PERSONAL LIABILITY AND INDEMNITIES

SECTION 8.01      LIMITED RECOURSE LIABILITY. The provisions of Paragraph 8 and
Paragraph 9 of the Note are incorporated into this Instrument as if such
provisions were set forth in their entirety in this Instrument.

SECTION 8.02      GENERAL INDEMNITY. Borrower agrees that while Lender has no
liability to any person in tort or otherwise as lender and that Lender is not
an owner or operator of the Property, Borrower shall, at its sole expense,
protect, defend, release, indemnify and hold harmless ("INDEMNIFY") the
Indemnified Parties (defined below) from any Losses (defined below) imposed
on, incurred by, or asserted against the Indemnified Parties, directly or
indirectly, arising out of or in connection with the Property, Loan, or
Documents, including Losses; provided, however, that the foregoing indemnities
shall not apply to any Losses caused by the gross negligence or willful
misconduct of the Indemnified Parties. The term "LOSSES" shall mean any
claims, suits, liabilities (including strict liabilities), actions,
proceedings, obligations, debts, damages, losses, Costs, expenses, fines,
penalties, charges, fees, judgments, awards, and amounts paid in settlement of
whatever kind including attorneys' fees (both in-house staff and retained
attorneys) and all other costs of defense. The term "INDEMNIFIED PARTIES"
shall mean (a) Lender, (b) any prior owner or holder of the Note, (c) any
existing or prior servicer of the Loan, (d) the officers, directors,
shareholders, partners, employees and trustees of any of the foregoing, and
(e) the heirs, legal representatives, successors and assigns of each of the
foregoing.

SECTION 8.03      TRANSACTION TAXES INDEMNITY. Borrower shall, at its sole
expense, indemnify the Indemnified Parties from all Losses imposed upon,
incurred by, or asserted against the Indemnified Parties or the Documents
relating to Transaction Taxes.

SECTION 8.04      ERISA INDEMNITY. Borrower shall, at its sole expense,
indemnify the Indemnified Parties against all Losses imposed upon, incurred
by, or asserted against the Indemnified Parties (a) as a result of a
Violation, (b) in the investigation, defense, and settlement of a Violation,
(c) as a result of a breach of the representations in Section 3.11 or default
thereunder, (d) in correcting any prohibited transaction or the sale of a
prohibited loan, and (e) in obtaining any individual prohibited transaction
exemption under ERISA that may be required, in Lender's sole discretion.

SECTION 8.05      ENVIRONMENTAL INDEMNITY. Borrower and other persons, if any,
have executed and delivered the Environmental and ERISA Indemnity Agreement
dated the date hereof to Lender ("ENVIRONMENTAL INDEMNITY").

                                      23

<PAGE>   29

SECTION 8.06      DUTY TO DEFEND, COSTS AND EXPENSES. Upon request, whether
Borrower's obligation to indemnify Lender arises under Article VIII or in the
Documents, Borrower shall defend the Indemnified Parties (in Borrower's or the
Indemnified Parties name) by attorneys and other professionals approved by the
Indemnified Parties. Notwithstanding the foregoing, the Indemnified Parties
may, in their sole discretion, engage their own attorneys and professionals to
defend or assist them and, at their option, their attorneys shall control the
resolution of any claims or proceedings. Upon demand, Borrower shall pay or,
in the sole discretion of the Indemnified Parties, reimburse and/or indemnify
the Indemnified Parties for all Costs imposed on, incurred by, or asserted
against the Indemnified Parties by reason of any items set forth in this
Article VIII and/or the enforcement or preservation of the Indemnified
Parties' rights under the Documents. Any amount payable to the Indemnified
Parties under this Section shall (a) be deemed a demand obligation, (b) be
part of the Obligations, (c) bear interest at the applicable interest rate
specified in the Note, which shall be the Default Rate unless prohibited by
Laws, until paid if not paid on demand, and (d) be secured by this Instrument.

SECTION 8.07      RECOURSE OBLIGATION AND SURVIVAL. Notwithstanding anything to
the contrary in the Documents and in addition to the recourse obligations in
the Note, the obligations of Borrower under Sections 8.03, 8.04, 8.05, and
8.06 shall be a full recourse obligation of Borrower, shall not be subject to
any limitation on personal liability in the Documents, and shall survive (a)
repayment of the Obligations, (b) any termination, satisfaction, assignment or
foreclosure of this Instrument, (c) the acceptance by Lender (or any nominee)
of a deed in lieu of foreclosure, (d) a plan of reorganization filed under the
Bankruptcy Code, or (e) the exercise by the Lender of any rights in the
Documents. Borrower's obligations under Article VIII shall not be affected by
the absence or unavailability of insurance covering the same or by the failure
or refusal by any insurance carrier to perform any obligation under any
applicable insurance policy.

                      ARTICLE IX - ADDITIONAL PROVISIONS

SECTION 9.01      USURY SAVINGS CLAUSE. All agreements in the Documents are
expressly limited so that in no event whatsoever shall the amount paid or
agreed to be paid under the Documents for the use, forbearance, or detention
of money exceed the highest lawful rate permitted by Laws. If, at the time of
performance, fulfillment of any provision of the Documents shall involve
transcending the limit of validity prescribed by Laws, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such validity. If
Lender shall ever receive as interest an amount which would exceed the highest
lawful rate, the receipt of such excess shall be deemed a mistake and (a)
shall be canceled automatically or (b) if paid, such excess shall be (i)
credited against the principal amount of the Obligations to the extent
permitted by Laws or (ii) rebated to Borrower if it cannot be so credited
under Laws. Furthermore, all sums paid or agreed to be paid under the
Documents for the use, forbearance, or detention of money shall to the extent
permitted by Laws be amortized, prorated, allocated, and spread throughout the
full stated term of the Note until payment in full so that the rate or amount
of interest on account of the Obligations does not exceed the maximum lawful
rate of interest from time to time in effect and applicable to the Obligations
for so long as the Obligations is outstanding.

SECTION 9.02      NOTICES. Any notice, request, demand, consent, approval,
direction, agreement, or other communication (any "NOTICE") required or
permitted under the Documents shall be in writing and shall be validly given
if sent by a nationally-recognized courier that obtains receipts, delivered
personally by a courier that obtains receipts, or mailed by United States
certified mail (with return receipt requested and postage prepaid) addressed
to the applicable person as follows:

                                      24

<PAGE>   30

<TABLE>

<S>                                                         <C>
If to Borrower:                                             With a copy to notices sent to Borrower to:

ROBERTS PROPERTIES RESIDENTIAL, L.P.                        HOLT NEY ZATCOFF & WASSERMAN, LLP
c/o Roberts Properties, Inc.                                100 Galleria Parkway, Suite 600
8010 Roswell Road, Suite 120                                Atlanta, Georgia 30339
Atlanta, Georgia 30350                                      Attention: Gregory A. Randall, Esq.
Attention: Charles R. Elliott

If to Lender:                                               With a copy of notices sent to Lender to:

THE PRUDENTIAL INSURANCE COMPANY                            THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA                                                  OF AMERICA
Prudential Capital Group                                    Prudential Capital Group
Two Ravinia Drive, Suite 1400                               Two Ravinia Drive, Suite 1400
Atlanta, Georgia 30346                                      Atlanta, Georgia 30346
Attention:  Mortgage Loan Customer Service                  Attention:  Regional Counsel
Reference Loan No. 6 103 461                                Reference Loan No. 6 103 461
</TABLE>

Each notice shall be effective upon being so sent, delivered, or mailed, but
the time period for response or action shall run from the date of receipt as
shown on the delivery receipt. Refusal to accept delivery or the inability to
deliver because of a changed address for which no notice was given shall be
deemed receipt. Any party may periodically change its address for notice and
specify up to two (2) additional addresses for copies by giving the other
party at least ten (10) days' prior notice.

SECTION 9.03      SOLE DISCRETION OF LENDER. Except as otherwise expressly
stated, whenever Lender's judgment, consent, or approval is required or Lender
shall have an option or election under the Documents, such judgment, the
decision as to whether or not to consent to or approve the same, or the
exercise of such option or election shall be in the sole and absolute
discretion of Lender.

SECTION 9.04      APPLICABLE LAW AND SUBMISSION TO JURISDICTION. The Documents
shall be governed by and construed in accordance with the laws of the Property
State and the applicable laws of the United States of America. Without
limiting Lender's right to bring any action or proceeding against Borrower or
the Property relating to the Obligations (an "ACTION") in the courts of other
jurisdictions, Borrower irrevocably (a) submits to the jurisdiction of any
state or federal court in the Property State, (b) agrees that any Action may
be heard and determined in such court, and (c) waives, to the fullest extent
permitted by Laws, the defense of an inconvenient forum to the maintenance of
any Action in such jurisdiction.

SECTION 9.05      CONSTRUCTION OF PROVISIONS. The following rules of
construction shall apply for all purposes of this Instrument unless the
context otherwise requires: (a) all references to numbered Articles or
Sections or to lettered Exhibits are references to the Articles and Sections
hereof and the Exhibits annexed to this Instrument and such Exhibits are
incorporated into this Instrument as if fully set forth in the body of the
Instrument; (b) all Article, Section, and Exhibit captions are used for
convenience and reference only and in no way define, limit, or in any way
affect this Instrument; (c) words of masculine, feminine, or neuter gender
shall mean and include the correlative words of the other genders, and words
importing the singular number shall mean and include the plural number, and
vice versa; (d) no inference in favor of or against any party shall be drawn
from the fact that such party has drafted any portion of this Instrument; (e)
all obligations of Borrower hereunder shall be performed and satisfied by or
on behalf of Borrower at Borrower's sole expense; (f) the terms "INCLUDE,"
"INCLUDING," and similar terms shall be construed as if followed by the phrase
"WITHOUT BEING LIMITED TO"; (g) the terms "PROPERTY," "LAND," "IMPROVEMENTS,"
and "PERSONAL PROPERTY" shall be construed as if followed by

                                      25

<PAGE>   31

the phrase "OR ANY PART THEREOF"; (h) the term "OBLIGATIONS" shall be
construed as if followed by the phrase "OR ANY OTHER SUMS SECURED HEREBY, OR
ANY PART THEREOF"; (i) the term "PERSON" shall include natural persons, firms,
partnerships, corporations, governmental authorities or agencies, and any
other public or private legal entities; (j) the term "PROVISIONS," when used
with respect hereto or to any other document or instrument, shall be construed
as if preceded by the phrase "TERMS, COVENANTS, AGREEMENTS, REQUIREMENTS,
AND/OR CONDITIONS"; (k) the term "LEASE" shall mean "TENANCY, SUBTENANCY,
LEASE, SUBLEASE, OR RENTAL AGREEMENT," the term "LESSOR" shall mean "LANDLORD,
SUBLANDLORD, LESSOR, AND SUBLESSOR," and the term "TENANTS" or "LESSEE" shall
mean "TENANT, SUBTENANT, LESSEE, AND SUBLESSEE"; (l) the term "OWNED" shall
mean "NOW OWNED OR LATER ACQUIRED"; (m) the terms "ANY" and "ALL" shall mean
"ANY OR ALL"; and (n) the term "ON DEMAND" or "UPON DEMAND" shall mean "WITHIN
FIVE (5) BUSINESS DAYS AFTER WRITTEN NOTICE."

SECTION 9.06      TRANSFER OF LOAN. Lender may, at any time, (i) sell, transfer
or assign the Documents and any servicing rights with respect thereto or (ii)
grant participations therein or issue mortgage pass-through certificates or
other securities evidencing a beneficial interest in a rated or unrated public
offering or private placement (collectively, the "SECURITIES"). Lender may
forward to any purchaser, transferee, assignee, servicer, participant, or
investor in such Securities (collectively, "INVESTORS"), any Rating Agency
rating such Securities and any prospective Investor, all documents and
information which Lender now has or may later acquire relating to the
Obligations, Borrower, any guarantor, any indemnitor(s), the Leases, and the
Property, whether furnished by Borrower, any guarantor, any indemnitor(s) or
otherwise, as Lender determines advisable. Borrower, any guarantor and any
indemnitor agree to cooperate with Lender in connection with any transfer made
or any Securities created pursuant to this Section including the delivery of
an estoppel certificate in accordance with Section 3.16 and such other
documents as may be reasonably requested by Lender.

SECTION 9.07      MISCELLANEOUS. If any provision of the Documents shall be
held to be invalid, illegal, or unenforceable in any respect, this shall not
affect any other provisions of the Documents and such provision shall be
limited and construed as if it were not in the Documents. If title to the
Property becomes vested in any person other than Borrower, Lender may, without
notice to Borrower, deal with such person regarding the Documents or the
Obligations in the same manner as with Borrower without in any way vitiating
or discharging Borrower's liability under the Documents or being deemed to
have consented to the vesting. If both the lessor's and lessee's interest
under any Lease ever becomes vested in any one person, this Instrument and the
security title and security interest created hereby shall not be destroyed or
terminated by the application of the doctrine of merger and Lender shall
continue to have and enjoy all its rights and privileges as to each separate
estate. Upon foreclosure of this Instrument, none of the Leases shall be
destroyed or terminated as a result of such foreclosure, by application of the
doctrine of merger or as a matter of law, unless Lender takes all actions
required by law to terminate the Leases as a result of foreclosure. All of
Borrower's covenants and agreements under the Documents shall run with the
land and time is of the essence. Borrower appoints Lender as its
attorney-in-fact, which appointment is irrevocable and shall be deemed to be
coupled with an interest, with respect to the execution, acknowledgment,
delivery, filing or recording for and in the name of Borrower of any of the
documents listed in Sections 3.04, 3.19, 4.01 and 6.02. The Documents cannot
be amended, terminated, or discharged except in a writing signed by the party
against whom enforcement is sought. No waiver, release, or other forbearance
by Lender will be effective unless it is in a writing signed by Lender and
then only to the extent expressly stated. The provisions of the Documents
shall be binding upon Borrower and its heirs, devisees, representatives,
successors, and assigns including successors in interest to the Property and
inure to the benefit of Lender and its heirs, successors, substitutes, and
assigns. Where two or more persons have executed the Documents, the
obligations of such persons shall be joint and several, except to the extent
the context clearly indicates otherwise. The Documents may be executed in any
number of counterparts with the same effect as if all parties had executed the
same document. All such counterparts shall be construed together and shall
constitute one instrument, but in making proof hereof it shall only be
necessary to produce one such counterpart. Upon receipt of an affidavit of an
officer of Lender as to the loss, theft, destruction or mutilation of any

                                      26

<PAGE>   32

Document which is not of public record, and, in the case of any mutilation,
upon surrender and cancellation of the Document, Borrower will issue, in lieu
thereof, a replacement Document, dated the date of the lost, stolen, destroyed
or mutilated Document containing the same provisions.

SECTION 9.08      ENTIRE AGREEMENT. Except as provided in Section 3.17, (a) the
Documents constitute the entire understanding and agreement between Borrower
and Lender with respect to the Loan and supersede all prior written or oral
understandings and agreements with respect to the Loan including the Loan
application and Loan commitment and (b) Borrower is not relying on any
representations or warranties of Lender except as expressly set forth in the
Documents.

SECTION 9.09      WAIVER OF TRIAL BY JURY. BORROWER WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM FILED BY EITHER PARTY, WHETHER IN CONTRACT, TORT OR OTHERWISE,
RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE DOCUMENTS, OR ANY ACTS OR
OMISSIONS OF BORROWER OR LENDER IN CONNECTION THEREWITH.

                       ARTICLE X - LOCAL LAW PROVISIONS

SECTION 10.01     WAIVER. BORROWER HEREBY WAIVES ANY RIGHT BORROWER MAY HAVE
UNDER THE CONSTITUTION OR THE LAWS OF THE STATE OF GEORGIA OR THE CONSTITUTION
OR THE LAWS OF THE UNITED STATES OF AMERICA TO NOTICE, OTHER THAN EXPRESSLY
PROVIDED FOR IN THIS INSTRUMENT, OR TO A JUDICIAL HEARING PRIOR TO THE
EXERCISE OF ANY RIGHT OR REMEDY PROVIDED BY THIS INSTRUMENT TO LENDER, AND
BORROWER WAIVES BORROWER'S RIGHTS, IF ANY, TO SET ASIDE OR INVALIDATE ANY SALE
DULY CONSUMMATED IN ACCORDANCE WITH THE PROVISIONS OF THIS INSTRUMENT ON THE
GROUND (IF SUCH BE THE CASE) THAT THE SALE WAS CONSUMMATED WITHOUT A PRIOR
JUDICIAL HEARING. ALL WAIVERS BY BORROWER IN THIS PARAGRAPH HAVE BEEN MADE
VOLUNTARILY, INTELLIGENTLY, AND KNOWINGLY, AFTER BORROWER HAS BY BORROWER'S
ATTORNEY BEEN FIRST APPRISED OF AND COUNSELED WITH RESPECT TO BORROWER'S
POSSIBLE ALTERNATIVE RIGHTS.

                         /s/ Charles S. Roberts
                  -----------------------------------------
                   (Initialed and Acknowledged by Borrower)

SECTION 10.02     NATURE OF INSTRUMENT. THIS INSTRUMENT is a deed passing title
to Lender and is made under the laws of the State of Georgia relating to deeds
to secure debt, and is not a mortgage, and is given to secure the performance
and repayment of the Obligations. All references in this Instrument to
Borrower as "mortgagor" shall be deemed to refer to Borrower as "grantor," and
all references in this Instrument to Lender as "mortgagee" shall be deemed to
refer to Lender as "grantee."

SECTION 10.03     NO NOVATION. Lender's acceptance of an assumption of the
obligations of this Instrument and of the Note, and any release of Borrower
(if any) in connection with such assumption, shall not constitute a novation.

                                      27

<PAGE>   33

SECTION 10.04     GEORGIA REMEDIES.  Section 6.02(b) above is hereby deleted in
its entirety and the following is substituted in lieu thereof:

"(b)     Lender, at its option, may sell the Property, or any part thereof, at
public sale or sales before the door of the courthouse of the county in which
the Property, or any part thereof, is situated, to the highest bidder for
cash, in order to pay the Obligations and insurance premiums, liens,
assessments, taxes and charges, including utility charges, if any, with
accrued interest thereon, and all Costs incurred by Lender in connection with
such sale and all other expenses of the sale and of all proceedings in
connection therewith, including reasonable attorneys' fees, 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. The foregoing
notwithstanding, Lender may sell, or cause to be sold, any tangible or
intangible personal property, or any part thereof, and which constitutes a
part of the security hereunder, in the foregoing manner, or as may otherwise
be provided by law. Lender may bid and purchase at any such sale and may
satisfy Lender's obligation to purchase pursuant to Lender's bid by canceling
an equivalent portion of any Obligations then outstanding and secured hereby.

         At any such sale, Lender may execute and deliver to the purchaser a
conveyance of the Property, or any part thereof, in fee simple (but without
covenants and warranties, express or implied), 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, and equity that Borrower may have in and to the Property 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 on Borrower. The aforesaid power of
sale and agency hereby granted are coupled with an interest and are
irrevocable by death or otherwise, are granted as cumulative of the other
remedies provided by law for collection of the Obligations secured hereby, and
shall not be exhausted by one exercise thereof but may be exercised until full
payment of all Obligations secured hereby."

         IN WITNESS WHEREOF, the undersigned have executed this Instrument
under seal as of the day first set forth above.

<TABLE>

<S>                                                       <C>
Signed, sealed, and delivered as to the foregoing         BORROWER:
date in the presence of the following witnesses:
                                                          ROBERTS PROPERTIES RESIDENTIAL, L.P.,
/S/ Charles R. Elliott                                    a Georgia limited partnership
------------------------------------------------
Witness                                                   BY: Roberts Realty Investors, Inc., a Georgia
                                                              corporation, its sole general partner

/S/ Laurie Heberle                                            By: /S/ Charles S. Roberts
------------------------------------------------                ----------------------------------------
Notary Public                                                       Charles S. Roberts, President

Commission Expiration Date:    8/19/03                           [CORPORATE SEAL]
                           ---------------------

         [NOTARY SEAL]
</TABLE>

                                      28

<PAGE>   34

                                   EXHIBIT A
                              (LEGAL DESCRIPTION)

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

To find the true point of beginning, commence at the corner common to Land Lots
197, 198, 230 and 231 of the 1st District, 1st Section, Fulton County,
Georgia; running thence along the land lot line common to said Land Lots 230
and 231 South 88 degrees 50 minutes 38 seconds East 771.67 feet to a property
corner found; thence South 51 degrees 09 minutes 57 seconds West 296.24 feet to
the TRUE POINT OF BEGINNING; from the TRUE POINT OF BEGINNING as thus
established, running thence South 65 degrees 22 minutes 41 seconds East 207.50
feet to a point; thence North 75 degrees 00 minutes 00 seconds East 190.00
feet to a point; thence North 87 degrees 15 minutes 00 seconds East 300.00
feet to a point; thence South 73 degrees 51 minutes 50 seconds East 173.42
feet to a property corner found; thence South 05 degrees 27 minutes 32 seconds
East 537.95 feet to a property corner found; thence South 69 degrees 52 minutes
35 seconds West 767.26 feet to a property corner found; thence South 69 degrees
38 minutes 04 seconds West 202.76 feet to a point on the northeast
right-of-way line of Abbotts Bridge Road (also known as State Route 120);
running thence along the northeast right-of-way line of Abbotts Bridge Road
(also known as State Route 120) the following courses and distances: (1) North
33 degrees 27 minutes 01 seconds West 459.30 feet to a point, and (2) along
the arc of a curve to the left (which arc is subtended by a chord having a
bearing and distance of North 40 degrees 56 minutes 58 seconds West 262.88
feet and a radius of 1,120.91 feet) 263.49 feet to a point; thence, leaving
said right-of-way line, North 51 degrees 09 minutes 57 seconds East 573.06
feet to the TRUE POINT OF BEGINNING, said tract containing approximately 19.23
acres as 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.

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.

<PAGE>   35

                                   EXHIBIT B
                   DESCRIPTION OF PERSONAL PROPERTY SECURITY

         1.       All machinery, apparatus, goods, equipment, materials,
fittings, fixtures, chattels, and tangible personal property, and all
appurtenances and additions thereto and betterments, renewals, substitutions,
and replacements thereof, owned by Borrower, wherever situate, and now or
hereafter located on, attached to, contained in, or used or usable in
connection with the real property described in Exhibit A attached hereto and
incorporated herein (the "LAND"), and all improvements located thereon (the
"IMPROVEMENTS") or placed on any part thereof, though not attached thereto,
including all screens, awnings, shades, blinds, curtains, draperies, carpets,
rugs, furniture and furnishings, heating, electrical, lighting, plumbing,
ventilating, air-conditioning, refrigerating, incinerating and/or compacting
plants, systems, fixtures and equipment, elevators, hoists, stoves, ranges,
vacuum and other cleaning systems, call systems, sprinkler systems and other
fire prevention and extinguishing apparatus and materials, motors, machinery,
pipes, ducts, conduits, dynamos, engines, compressors, generators, boilers,
stokers, furnaces, pumps, tanks, appliances, equipment, fittings, and
fixtures.

         2.       All funds, accounts, deposits, instruments, documents,
contract rights, general intangibles, notes, and chattel paper arising from or
by virtue of any transaction related to the Land, the Improvements, or any of
the personal property described in this Exhibit B.

         3.       All permits, licenses, franchises, certificates, and other
rights and privileges now held or hereafter acquired by Borrower in connection
with the Land, the Improvements, or any of the personal property described in
this Exhibit B.

         4.       All right, title, and interest of Borrower in and to the name
and style by which the Land and/or the Improvements is known, including
trademarks and trade names relating thereto.

         5.       All right, title, and interest of Borrower in, to, and under
all plans, specifications, maps, surveys, reports, permits, licenses,
architectural, engineering and construction contracts, books of account,
insurance policies, and other documents of whatever kind or character,
relating to the use, construction upon, occupancy, leasing, sale, or operation
of the Land and/or the Improvements.

         6.       All interests, estates, or other claims or demands, in law
and in equity, which Borrower now has or may hereafter acquire in the Land,
the Improvements, or the personal property described in this Exhibit B.

         7.       All right, title, and interest owned by Borrower in and to
all options to purchase or lease the Land, the Improvements, or any other
personal property described in this Exhibit B, or any portion thereof or
interest therein, and in and to any greater estate in the Land, the
Improvements, or any of the personal property described in this Exhibit B.

         8.       All of the estate, interest, right, title, other claim or
demand, both in law and in equity, including claims or demands with respect to
the proceeds of insurance relating thereto, which Borrower now has or may
hereafter acquire in the Land, the Improvements, or any of the personal
property described in this Exhibit B, or any portion thereof or interest
therein, and any and all awards made for the taking by eminent domain, or by
any proceeding or purchase in lieu thereof, of the whole or any part of such
property, including without limitation, any award resulting from a change of
any streets (whether as to grade, access, or otherwise) and any award for
severance damages.

         9.       All right, title, and interest of Borrower in and to all
contracts, permits, certificates, licenses, approvals, utility deposits,
utility capacity, and utility rights issued, granted, agreed upon, or
otherwise provided by any governmental or private authority, person or entity
relating to the ownership, development, construction, operation, maintenance,
marketing, sale, or use of the Land and/or the Improvements, including all of
the Borrower's rights and privileges hereto or hereafter otherwise arising in
connection with or pertaining to the Land

                                       1

<PAGE>   36

and/or the Improvements, including, without limiting the generality of the
foregoing, all water and/or sewer capacity, all water, sewer and/or other
utility deposits or prepaid fees, and/or all water and/or sewer and/or other
utility tap rights or other utility rights, any right or privilege of Borrower
under any loan commitment, lease, contract, Declaration of Covenants,
Restrictions and Easements or like instrument, Developer's Agreement, or other
agreement with any third party pertaining to the ownership, development,
construction, operation, maintenance, marketing, sale, or use of the Land
and/or the Improvements.

AND ALL PROCEEDS AND PRODUCTS OF THE FOREGOING PERSONAL PROPERTY DESCRIBED IN
THIS EXHIBIT B.

A PORTION OF THE ABOVE DESCRIBED GOODS ARE OR ARE TO BE AFFIXED TO THE REAL
PROPERTY DESCRIBED IN EXHIBIT A.

THE BORROWER IS THE RECORD TITLE HOLDER AND OWNER OF THE REAL PROPERTY
DESCRIBED IN EXHIBIT A.

                                       2

<PAGE>   37

                                   EXHIBIT C
                       Addison Place Townhomes Phase I
                            (Permitted Exceptions)

1.       Taxes and assessments for the year 1999 and subsequent years.

2.       The following 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:

         (a)      50-foot front building line along the southwesterly boundary
                  line of subject property;
         (b)      20-foot landscape buffer along the southwesterly boundary
                  line of subject property;
         (c)      10-foot landscape strip along the northwesterly boundary line
                  of subject property
         (d)      20-foot side yard setback line along the northwesterly
                  boundary line of subject property;
         (e)      60-foot side yard setback line along the southeasterly and
                  easterly boundary lines of subject property;
         (f)      50-foot landscape buffer along the southeasterly and easterly
                  boundary lines subject property;
         (g)      20-foot building setback lines running along interior drives;
         (h)      wooden fence located along the southeasterly and easterly
                  boundary lines of subject property;
         (i)      barbed wire fence located along the southeasterly boundary
                  line of subject property;
         (j)      Fulton County sanitary sewer manhole located in the easterly
                  boundary line of subject property;
         (k)      creek running through the northeasterly portion of subject
                  property;
         (1)      retention pond located in the northern portion of subject
                  property;
         (m)      drainage facilities located throughout the subject property.

3.       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.

4.       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.

<PAGE>   38

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 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.

7.       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.

         NOTE: Sawnee Electric Membership Corporation does retain all rights
         associated with and stated in the easements set forth as Exceptions 4
         through 7 hereof. Sawnee Electric Membership Corporation reserves the
         right to take whatever action it deems necessary within the existing
         easement corridor (thirty feet in width). Sawnee Electric Membership
         Corporation recognizes that said easements relate only to the
         existing corridors and thus will obtain written permission from the
         current property owner prior to action occurring outside said
         existing corridor.

         NOTE: A containment letter has been obtained from Sawnee Electric
         Membership Corporation stating that Sawnee Electric Membership
         Corporation claims no further interest in the Easements described in
         Exceptions 4 through 7 hereof except the right to operate, maintain,
         rebuild and renew its existing facilities within its presently
         maintained rights of way.

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

9.       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.

10.      Right-of-Way Easement from Roberts Properties Residential, L.P. to
         Sawnee Electric Membership Corporation, dated February 5, 1999,
         recorded in Deed Book 26823, page 085, aforesaid records.

         NOTE: A containment letter has been obtained from Sawnee Electric
         Membership Corporation stating that Sawnee Electric Membership
         Corporation claims no further interest in the Easements described in
         Exception 14 hereof except the right to operate, maintain, rebuild
         and renew its existing facilities within its presently maintained
         rights of way.

<PAGE>   39

11.      Rights of tenants in possession of individual apartment units under
         unrecorded leases, as tenants only.

12.      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, aforesaid records.

13.      All 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 (Affects Appurtenant Easement only).

<PAGE>   40

                                   EXHIBIT D

                             LIST OF MAJOR TENANTS

                                     NONE

                                      1<PAGE>   1
                               LIMITED GUARANTY

         FOR VALUE RECEIVED, the sufficiency of which is hereby acknowledged,
the undersigned, ROBERTS REALTY INVESTORS, INC. (whether one or more,
hereinafter together called "Guarantor" in the singular) absolutely guarantees
and agrees to pay to THE PRUDENTIAL INSURANCE COMPANY OF AMERICA (hereinafter
called "Lender") at the address designated in the Instrument (as hereinafter
defined) for payment thereof or as such address may be changed as provided in
the Instrument, all limited and full recourse indebtedness of ROBERTS
PROPERTIES RESIDENTIAL, L.P., a limited partnership organized under the laws
of the State of Georgia (hereinafter called "Borrower"), under Paragraphs 8
and 9 of that certain Promissory Note, dated October 25, 1999 in the original
principal amount of Nine Million Five Hundred Thousand and 00/100 Dollars
($9,500,000.00), payable to the order of Lender, and all modifications,
renewals and extensions of and substitutions for said Promissory Note (said
Promissory Note and all modifications, renewals and extensions thereof and all
substitutions therefor hereinafter called the "Note"), together with all
interest, attorneys' fees and collection costs provided in the Note (all such
indebtedness is hereinafter called the "Indebtedness"), which Note is secured
by the Deed to Secure Debt and Security Agreement (hereinafter called the
"Instrument") of even date herewith from Borrower to Lender and to pay any and
all costs, attorneys' fees and expenses incurred or expended by Lender in
collecting any of the Indebtedness or in enforcing any right granted
hereunder.

         Except as otherwise limited as provided herein, in the event Borrower
fails to pay the Indebtedness, Guarantor shall immediately upon written demand
of Lender promptly and with due diligence pay for the benefit of Lender all of
the Indebtedness.

         Guarantor expressly waives presentment for payment, demand, notice of
demand and of dishonor and nonpayment of the Indebtedness, notice of intention
to accelerate the maturity of the Indebtedness or any part thereof, notice of
disposition of collateral, notice of acceleration of the maturity of the
Indebtedness or any part thereof, protest and notice of protest, diligence in
collecting, and the bringing of suit against any other party. Lender shall be
under no obligation to notify Guarantor of its acceptance hereof or of any
advances made or credit extended on the faith hereof or the failure of
Borrower to pay any of the Indebtedness as it matures or any default in the
performance of any of the Obligations under the Instrument, or to use
diligence in preserving the liability of any person on the Indebtedness or the
Obligations or in bringing suit to enforce collection of the Indebtedness or
performance of the Obligations. Guarantor waives all defenses given to
sureties or guarantors at law or in equity other than the actual payment of
the Indebtedness and performance of the Obligations and all defenses based
upon questions as to the validity, legality or enforceability of the
Indebtedness and/or the Obligations and agrees that Guarantor shall be
primarily liable hereunder.

         Lender, without authorization from or notice to Guarantor and without
impairing, modifying, changing, releasing, limiting or affecting the liability
of Guarantor hereunder, may from time to time at its discretion and with or
without valuable consideration, alter, compromise, accelerate, renew, extend
or change the time or manner for the payment of any or all of the
Indebtedness, increase or reduce the rate of interest thereon, take and
surrender security, exchange security by way of substitution, or in any way it
deems necessary take, accept, withdraw, subordinate, alter, amend, modify or
eliminate security, add or release or discharge endorsers, guarantors or other
obligors, make changes of any sort whatever in the terms of payment of the
Indebtedness, in the Obligations or in the manner of doing business with
Borrower, or settle or compromise with Borrower or any other person or persons
liable on the Indebtedness or the Obligations on such terms as it may see fit,
and may apply all moneys received from the Borrower or others, or from any
security held (whether held under a security instrument or not), in such
manner upon the Indebtedness (whether then due or not) as it may determine

                                       1

<PAGE>   2

to be in its best interest, without in any way being required to marshal
securities or assets or to apply all or any part of such moneys upon any
particular part of the Indebtedness. It is specifically agreed that Lender is
not required to retain, hold, protect, exercise due care with respect thereto,
perfect security interests in or otherwise assure or safeguard any security
for the Indebtedness; no failure by Lender to do any of the foregoing and no
exercise or nonexercise by Lender of any other right or remedy of Lender shall
in any way affect any of Guarantor's obligations hereunder or any security
furnished by Guarantor or give Guarantor any recourse against Lender.

         The liability of Guarantor hereunder shall not be modified, changed,
released, limited or impaired in any manner whatsoever on account of any or
all of the following: (a) the incapacity, death, disability, dissolution or
termination of Guarantor, Borrower, Lender or any other person or entity; (b)
the failure by Lender to file or enforce a claim against the estate (either in
administration, bankruptcy or other proceeding) of Borrower or any other
person or entity; (c) recovery from Borrower or any other person or entity
becomes barred by any statute of limitations or is otherwise prevented; (d)
any defenses, set-offs or counterclaims which may be available to Borrower or
any other person or entity; (e) any transfer or transfers of any of the
property covered by the Instrument or any other instrument securing the
payment of the Note; (f) any modifications, extensions, amendments, consents,
releases or waivers with respect to the Note, the Deed to Secure Debt and
Security Agreement, any other instrument now or hereafter securing the payment
of the Note, or this Guaranty; (g) any failure of Lender to give any notice to
Guarantor of any default under the Note, the Deed to Secure Debt and Security
Agreement, any other instrument securing the payment of the Note, or this
Guaranty; (h) Guarantor is or becomes liable for any indebtedness owing by
Borrower to Lender other than under this Guaranty; or (i) any impairment,
modification, change, release or limitation of the liability of, or stay of
actions or lien enforcement proceedings against, Borrower, its property, or
its estate in bankruptcy resulting from the operation of any present or future
provision of the Federal Bankruptcy Code or any other present or future
federal or state insolvency, bankruptcy or similar law (all of the foregoing
hereinafter collectively called "applicable Bankruptcy Law") or from the
decision of any court.

         Lender shall not be required to pursue any other remedies before
invoking the benefits of the guaranties contained herein, and specifically it
shall not be required to make demand upon or institute suit or otherwise
pursue or exhaust its remedies against Borrower or any surety other than
Guarantor or to proceed against any security now or hereafter existing for the
payment of any of the Indebtedness. Lender may maintain an action on this
Guaranty without joining Borrower therein and without bringing a separate
action against Borrower.

         If for any reason whatsoever (including but not limited to ultra
vires, lack of authority, illegality, force majeure, act of God or
impossibility) the Indebtedness or the Obligations cannot be enforced against
Borrower, such unenforceability shall in no manner affect the liability of
Guarantor hereunder and Guarantor shall be liable hereunder notwithstanding
that Borrower may not be liable for such Indebtedness or such Obligations and
to the same extent as Guarantor would have been liable if such Indebtedness or
Obligations had been enforceable against Borrower.

         Guarantor absolutely and unconditionally covenants and agrees that in
the event that Borrower does not or is unable so to pay the Indebtedness or
perform the Obligations for any reason, including, without limitation,
liquidation, dissolution, receivership, conservatorship, insolvency,
bankruptcy, assignment for the benefit of creditors, sale of all or
substantially all assets, reorganization, arrangement, composition, or
readjustment of, or other similar proceedings affecting the status,
composition, identity, existence, assets or obligations of Borrower, or the
disaffirmance or termination of any of the Indebtedness or Obligations in or
as a result of any such proceeding, Guarantor shall pay the Indebtedness and
perform the Obligations and no such occurrence shall in any way affect
Guarantor's obligations hereunder.

                                       2

<PAGE>   3

         Should the status of Borrower change, this Guaranty shall continue
and also cover the Indebtedness and Obligations of Borrower under the new
status according to the terms hereof. This Guaranty shall remain in full force
and effect notwithstanding any transfer of the property covered by the
Instrument.

         In the event any payment by Borrower to Lender is held to constitute
a preference under any applicable Bankruptcy Law, or if for any other reason
Lender is required to refund such payment or pay the amount thereof to any
other party, such payment by Borrower to Lender shall not constitute a release
of Guarantor from any liability hereunder, but Guarantor agrees to pay such
amount to Lender upon demand and this Guaranty shall continue to be effective
or shall be reinstated, as the case may be, to the extent of any such payment
or payments.

         Guarantor agrees that it shall not have (a) the right to the benefit
of, or to direct the application of, any security held by Lender (including
the property covered by the Deed to Secure Debt and Security Agreement and any
other instrument securing the payment of the Note), any right to enforce any
remedy which Lender now has or hereafter may have against Borrower, or any
right to participate in any security now or hereafter held by Lender, or (b)
any defense arising out of the absence, impairment or loss of any right of
reimbursement or subrogation or other right or remedy of Guarantor against
Borrower or against any security resulting from the exercise or election of
any remedies by Lender (including the exercise of the power of sale under the
Instrument), or any defense arising by reason of any disability or other
defense of Borrower or by reason of the cessation, from any cause, of the
liability of Borrower.

         The payment by Guarantor of any amount pursuant to this Guaranty
shall not in any way entitle Guarantor to any right, title or interest
(whether by way of subrogation or otherwise) in and to any of the Indebtedness
or any proceeds thereof, or any security therefor, unless and until the full
amount owing to Lender on the Indebtedness has been fully paid, but when the
same has been fully paid Guarantor shall be subrogated as to any payments made
by it to the rights of Lender as against Borrower and/or any endorsers,
sureties or other guarantors.

         Notwithstanding any payments made by or for the account of Guarantor
on account of the Indebtedness, Guarantor shall not be subrogated to any
rights of Lender until such time as Lender shall have received payment of the
full amount of all Indebtedness. For the purposes of the preceding sentence
only, the Indebtedness shall not be deemed to have been paid in full by
foreclosure of the Instrument or by acceptance of a deed in lieu thereof, and
Guarantor hereby waives and disclaims any interest which it might have in the
property covered by the Instrument or other collateral security for the
Indebtedness, by subrogation or otherwise, following foreclosure of the
Instrument or Lender's acceptance of a deed in lieu thereof.

         Guarantor expressly subordinates its rights to payment of any
indebtedness owing from Borrower to Guarantor, whether now existing or arising
at any time in the future, to the prior right of Lender to receive or require
payment in full of the Indebtedness and until payment in full of the
Indebtedness (and including interest accruing on the Note after any petition
under applicable Bankruptcy Law, which post-petition interest Guarantor agrees
shall remain a claim that is prior and superior to any claim of Guarantor
notwithstanding any contrary practice, custom or ruling in proceedings under
such applicable Bankruptcy Law generally), Guarantor agrees not to accept any
payment or satisfaction of any kind of indebtedness of Borrower to Guarantor
or any security for such indebtedness. If Guarantor should receive any such
payment, satisfaction or security for any indebtedness of Borrower to
Guarantor, Guarantor agrees forthwith to deliver the same to Lender in the
form received, endorsed or assigned as may be appropriate for application on
account of, or as security for, the Indebtedness and until so delivered,
agrees to hold the same in trust for Lender.

                                       3

<PAGE>   4

         Under no circumstances shall the aggregate amount paid or agreed to
be paid hereunder exceed the highest lawful rate permitted under applicable
usury law (the "Maximum Rate") and the payment obligations of Guarantor
hereunder are hereby limited accordingly. If under any circumstances, whether
by reason of advancement or acceleration of the unpaid principal balance of
the Note or otherwise, the aggregate amounts paid hereunder shall include
amounts which by law are deemed interest and which could exceed the Maximum
Rate, Guarantor stipulates that payment and collection of such excess amounts
shall have been and will be deemed to have been the result of a mistake on the
part of both Guarantor and Lender, and Lender shall promptly credit such
excess (to the extent only of such interest payments in excess of the Maximum
Rate) against the unpaid principal balance of the Note, and any portion of
such excess payments not capable of being so credited shall be refunded to
Guarantor. The term "applicable law" as used in this paragraph shall mean the
laws of the State of Georgia or the laws of the United States, whichever laws
allow the greater rate of interest, as such laws now exist or may be changed
or amended or come into effect in the future.

         Guarantor hereby represents, warrants and covenants to and with
Lender as follows: (a) the making of the Loan by Lender to Borrower is and
will be of direct interest, benefit and advantage to Guarantor; (b) Guarantor
is solvent, is not bankrupt and has no outstanding liens, garnishments,
bankruptcies or court actions which could render Guarantor insolvent or
bankrupt, and there has not been filed by or against Guarantor a petition in
bankruptcy or a petition or answer seeking an assignment for the benefit of
creditors, the appointment of a receiver, trustee, custodian or liquidator
with respect to Guarantor or any substantial portion of Guarantor's property,
reorganization, arrangement, rearrangement, composition, extension,
liquidation or dissolution or similar relief under applicable Bankruptcy Law;
(c) all reports, financial statements and other financial and other data which
have been or may hereafter be furnished by Guarantor to Lender in connection
with this Guaranty are or shall be true and correct in all material respects
and do not and will not omit to state any fact or circumstance necessary to
make the statements contained therein not misleading and do or shall fairly
represent the financial condition of Guarantor as of the dates and the results
of Guarantor's operations for the periods for which the same are furnished,
and no material adverse change has occurred since the dates of such reports,
statements and other data in the financial condition of Guarantor; (d) the
execution, delivery and performance of this Guaranty do not contravene, result
in the breach of or constitute a default under any mortgage, deed of trust,
lease, promissory note, loan agreement or other contract or agreement to which
Guarantor is a party or by which Guarantor or any of its properties may be
bound or affected and do not violate or contravene any law, order, decree,
rule or regulation to which Guarantor is subject; (e) there are no judicial or
administrative actions, suits or proceedings pending or, to the best of
Guarantor's knowledge, threatened against or affecting Guarantor or involving
the validity, enforceability or priority of this Guaranty; and (f) this
Guaranty constitutes the legal, valid and binding obligation of Guarantor
enforceable in accordance with its terms.

         Guarantor will deliver to Lender within sixty (60) days after each
Note anniversary date financial statements of Guarantor in scope and detail
satisfactory to Lender. The statements shall be sworn and certified as to
accuracy by Guarantor.

         Where two or more persons or entities have executed this Guaranty,
unless the context clearly indicates otherwise, all references herein to
"Guarantor" shall mean the guarantors hereunder or either or any of them. All
of the obligations and liability of said guarantors hereunder shall be joint
and several. Suit may be brought against said guarantors, jointly and
severally, or against any one or more of them, less than all, without
impairing the rights of Lender against the other or others of said guarantors;
and Lender may compound with any one or more of said guarantors for such sums
or sum as it may see fit and/or release such of said guarantors from all
further liability to Lender for such indebtedness without impairing the right
of Lender to demand and collect the balance of such indebtedness from the
other or others of said guarantors not so

                                       4

<PAGE>   5

compounded with or released; but it is agreed among said guarantors
themselves, however, that such compounding and release shall in nowise impair
the rights of said guarantors as among themselves.

         Except as otherwise provided herein, the rights of Lender are
cumulative and shall not be exhausted by its exercise of any of its rights
hereunder or otherwise against Guarantor or by any number of successive
actions until and unless all Indebtedness has been paid and each of the
obligations of Guarantor hereunder has been performed.

         All property of Guarantor now or hereafter in the possession or
custody of or in transit to Lender for any purpose, including safekeeping,
collection or pledge, for the account of Guarantor, or as to which Guarantor
may have any right or power, shall be held by Lender subject to a lien and
security interest in favor of Lender to secure payment and performance of all
obligations and liabilities of Guarantor to Lender hereunder. Guarantor hereby
transfers and conveys to Lender any and all balances, credits, deposits,
accounts, items and moneys of Guarantor now or hereafter in the possession or
control of or otherwise with Lender. Lender is hereby granted a first lien
upon, and security interest in, all property of Guarantor of every kind or
description now or hereafter in possession or control of Lender for any
purpose, including all dividends and distributions on or other rights in
connection therewith. The balance of every account of Guarantor with, and each
claim of Guarantor against, Lender existing from time to time shall be subject
to a lien and subject to set off against any and all liabilities of Guarantor
to Lender, and Lender may, at any time and from time to time at its option and
without notice, appropriate and apply toward the payment of any of such
liabilities the balance of each such account or claim of Guarantor against
Lender.

         Any notice or communication required or permitted hereunder shall be
given in writing, sent by (a) personal delivery, or (b) expedited delivery
service with proof of delivery, or (c) United States mail, postage prepaid,
registered or certified mail, or (d) prepaid telegram, telex or telecopy, sent
to the intended addressee at the address shown below, or to such other address
or to the attention of such other person as hereafter shall be designated in
writing by the applicable party sent in accordance herewith. Any such notice
or communication shall be deemed to have been given and received either at the
time of personal delivery or, in the case of delivery service or mail, as of
the date of first attempted delivery at the address and in the manner provided
herein, or in the case of telegram, telex or telecopy, upon receipt.

         This Guaranty shall be deemed to have been made under and shall be
governed by the laws of the State of Georgia in all respects.

         This Guaranty may be executed in any number of counterparts with the
same effect as if all parties hereto had signed the same document. All such
counterparts shall be construed together and shall constitute one instrument,
but in making proof hereof it shall only be necessary to produce one such
counterpart.

         This Guaranty may only be modified, waived, altered or amended by a
written instrument or instruments executed by the party against which
enforcement of said action is asserted. Any alleged modification, waiver,
alteration or amendment which is not so documented shall not be effective as
to any party.

         The books and records of Lender showing the accounts between Lender
and Borrower shall be admissible in any action or proceeding hereon as prima
facie evidence of the items set forth herein.

         Guarantor waives and renounces any and all homestead or exemption
rights Guarantor may have under the Constitution or the laws of any state as
against this Guarantor, and does transfer, convey and assign to

                                       5

<PAGE>   6

Lender a sufficient amount of such homestead or exemption as may be allowed,
including such homestead or exemption as may be set apart in bankruptcy, to
pay and perform the Indebtedness and Obligations. Guarantor hereby directs any
trustee in bankruptcy having possession of such homestead or exemption to
deliver to Lender a sufficient amount of property or money set apart as exempt
to pay and perform the Indebtedness and Obligations.

         The terms, provisions, covenants and conditions hereof shall be
binding upon Guarantor and the heirs, devisees, representatives, successors
and assigns of Guarantor and shall inure to the benefit of Lender and all
transferees, credit participants, successors, assignees and/or endorsees of
Lender. Within this Guaranty, words of any gender shall be held and construed
to include any other gender and words in the singular number shall be held and
construed to include the plural and words in the plural number shall be held
and construed to include the singular, unless the context otherwise requires.
A determination that any provision of this Guaranty is unenforceable or
invalid shall not affect the enforceability or validity of any other provision
and any determination that the application of any provision of this Guaranty
to any person or circumstance is illegal or unenforceable shall not affect the
enforceability or validity of such provision as it may apply to any other
persons or circumstances.

         EXECUTED this 25th day of October, 1999.

                  ROBERTS REALTY INVESTORS, INC.

                  By:  /s/ Charles S. Roberts
                     ---------------------------------------------
                           Name: Charles S. Roberts
                           Title:  President

                  Attest: /s/ Charles R. Elliott
                         -----------------------------------------
                           Name: Charles R. Elliott
                           Title:  Chief Financial Officer

                           [CORPORATE SEAL]

The address of Guarantor is:
Roberts Realty Investors, Inc.
8010 Roswell Road, Suite 120
Atlanta, Georgia 30350
Attention: President

The address of Lender is:
The Prudential Insurance Company of America
Prudential Capital Group
Two Ravinia Drive, Suite 1400
Atlanta, Georgia  30346
Attention: Regional Counsel

Prudential Loan No. 6 103 461
Roberts Residential:Guaranty

                                       6

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