Document:

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                                                                    Exhibit 10.8

                                  MY-TECH, INC.
                                1905 Astor Avenue
                              TAMPA, FLORIDA 33612
                               TEL: (813) 935-6704
                               Fax: (813) 935-5885

March 8, 2001

Mr. Steve Rosner
Sure Medical Inc.
3509 Cord Grass Drive
Valrico, FL 33594

Dear Steve:

In agreement with the change in management of Sure Medical, Inc. (SMI), this
letter will confirm our conversations, whereby My-Tech, Inc will modify the
agreement between SMI and My-Tech, Inc. dated March 23, 2000 as follows:

My-tech, Inc. agrees to accept as payment in full the amount of three million,
two hundred thirty thousand shares of SMI common stock in lieu of three million,
five hundred dollars ($3,500,000.00) in cash as described in items 1-4 of the
March, 2000 agreement.

All other portions of the March 23, 2000 agreement will remain in force and
unaffected.

Sincerely,

W. A. Stafford
President<PAGE>
                                                                  EXHIBIT 10.4.1

                                 LOAN AGREEMENT

                  THIS AGREEMENT is entered as of this 21st day of February,
2002, by and between ROBERTS PROPERTIES RESIDENTIAL, L.P., a Georgia limited
partnership authorized to do business in North Carolina as Roberts Properties
Residential, Limited Partnership (the "Borrower"), and AMSOUTH BANK, a state
banking corporation (the "Lender").

                                    Recitals

                  A. The Borrower has applied to the Lender for a loan in the
principal amount not to exceed $24,000,000 to finance the construction of a
319-unit luxury apartment community (the "Apartments") on approximately 23.75
acres of real property located in Charlotte, North Carolina (the "Real Estate").

                  B. The Lender has agreed to make such loan on the terms,
conditions and agreements hereinafter set forth.

                                    Agreement

                  NOW, THEREFORE, in consideration of the Recitals and of the
covenants and agreements hereinafter set forth, and of other valuable
considerations, the Borrower and the Lender hereby agree as follows:

                                   ARTICLE I.

                                   DEFINITIONS

                  For the purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:

                  The terms defined in this Article have the meanings assigned
         to them in this Article and include the plural as well as the singular,
         and vice versa.

                  All accounting terms not otherwise defined herein have the
         meanings assigned to them, and all computations herein provided for
         shall be made in accordance with generally accepted accounting
         principles. All references herein to "generally accepted accounting
         principles" refer to such principles as they exist at the date of
         application thereof.

                  All references in this instrument to designated "Articles",
         "Sections" and other subdivisions are to the designated Articles,
         Sections and subdivisions of this instrument as originally executed.

                  The terms "herein", "hereof" and "hereunder" and other words
         of similar import refer to this Agreement as a whole and not to any
         particular Article, Section or other subdivision.

                                       1

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                  Actual/360 Basis shall mean a method of computing interest or
other charges hereunder on the basis of an assumed year of 360 days for the
actual number of days elapsed, meaning that interest or other charges accrued
for each day will be computed by multiplying the rate applicable on that day by
the unpaid principal balance (or other relevant sum) on that day and dividing
the result by 360.

                  Advances shall have the meaning attributed to that term in
Section 2.02.

                  Apartments shall mean the 319-unit luxury apartment community
described in Recital A.

                  Assessment Rate shall mean any assessment rate required to be
paid by the Lender from time to time to the Federal Deposit Insurance
Corporation (or any successor) for the insurance provided by such corporation
(or any successor) of the Lender's time deposits in the United States; any
change in the Assessment Rate shall be effective immediately and shall result in
an automatic adjustment, on and as of the effective date of any such change, in
the LIBOR-Based Rate.

                  Assignment shall have the meaning attributed to that term in
Section 2.05.

                  Business Day shall mean a day when state banks located in
Birmingham, Alabama, are generally open for business.

                  Collateral shall mean the Real Estate, the Improvements, the
Personal Property, the Leases, the Rents, and all other property covered by the
Security Documents.

                  Completion Date shall mean 24 months from the date hereof.

                  Construction Consultant shall mean any architect and/or
engineer designated by the Lender to be the Construction Consultant with respect
to the Project pursuant to Section 5.19.

                  Contractor shall mean Roberts Properties Construction, Inc.,
the general contractor of the Project, or another contractor that shall be
acceptable to the Lender.

                  Cumulative Net Operating Income Available for Debt Service
shall mean net operating income from the Apartments for a certain period, plus
amounts that have been deducted for depreciation and amortization and interest
expense in determining net income for such period. In determining net operating
income, operating expenses to be deducted shall be the greater of the actual
operating expenses for such period (which shall include all cash expenses and
any expenses that are accruing, including property taxes and insurance) or
twenty-seven percent (27%) of gross revenues generated by the Apartments for
such period.

                  Debt Service shall be calculated as the amount of monthly
installments of principal and interest that would be required to be paid on the
Loan during a 6-month period, based on actual principal payments made and the
interest rate then in effect for such period, but in no event less than

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the greater of (i) two percent (2.0%) above the then current 10-year Treasury
Note or (ii) seven percent (7.0%).

                  Debt Service Coverage Ratio shall mean the ratio of Cumulative
Net Operating Income Available For Debt Service for any consecutive 6-month
period to Debt Service for such period.

                  Development Budget shall mean a budget for the Project showing
in reasonable detail the cost of all materials and work necessary to acquire and
complete the Project in accordance with the Plans.

                  Event of Default shall have the meaning attributed to that
term in Article VI.

                  Final Certificates of Occupancy shall mean those certificates
of occupancy and/or other applicable governmental or quasi-governmental
certificates of completion for the Apartments, issued by the Governmental
Authority having jurisdiction over the Apartments, and certifying that with
respect to the residential components of the Apartments, as well as the leasing
office, clubhouse, maintenance building and similar components of the
Apartments, all portions of such components may be lawfully occupied and used
for the uses and purposes set forth in the Loan Documents.

                  Final Completion shall mean the completion of the construction
of the Improvements and the Project. For purposes of this Agreement, Final
Completion shall be deemed to have occurred when (i) all work contemplated by
the Plans and the construction contract with the Contractor shall have been
completed to the reasonable satisfaction of the Construction Consultant free of
liens (or, in the Lender's reasonable discretion, with liens bonded off); (ii)
Final Certificates of Occupancy covering the entire Project have been issued and
remain in full force and effect and the residential components of the Apartments
are ready for occupancy; and (iii) the Contractor shall have issued its final
request for payment which shall have been approved by Borrower, the Lender and
the Construction Consultant.

                  Governmental Authority shall mean any federal, state, county
or municipal agency, authority, department, commission, bureau, board or court.

                  Governmental Requirements shall mean all laws, rules,
ordinances, judgments, decrees, codes, and orders of any Governmental Authority
applicable to the Borrower, the Guarantor or any of the Collateral.

                  Guarantor shall mean Roberts Realty Investors, Inc., a Georgia
corporation.

                  Guaranty Agreement shall have the meaning attributed to that
term in Section 2.06.

                  Improvements shall have the meaning attributed to that term in
the Mortgage.

                  Leases shall have the meaning attributed to that term in the
Mortgage.

                                       3

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                  Liabilities shall mean (i) the indebtedness evidenced by the
Note, and all interest thereon and any and every extension, renewal and
modification thereof and all costs, expenses and charges payable with respect to
the Loan Documents, (ii) the compliance with all of the stipulations, covenants,
agreements, representations, warranties and conditions contained in the Loan
Documents and (iii) all indebtedness, obligations and liabilities of the
Borrower to the Lender with regard to any interest rate swap or interest rate
hedge agreement (or other similar derivative product) now existing or hereafter
executed that is related to the Note.

                  LIBOR-Based Rate shall mean a rate per annum determined
pursuant to the following formula:

                           LBR = LDQ+M

                           Where:

                           LBR = LIBOR-Based Rate

                           LDQ = LIBOR Dealer Quote, and

                           M   = 200 basis points

                  LIBOR-Based Rate Period shall mean a 30, 60 or 90-day period
of time with respect to which the Loan (or an outstanding portion thereof) bears
interest at a LIBOR-Based Rate.

                  LIBOR Dealer Quote shall mean, with respect to any time at
which the LIBOR-Based Rate is to be determined, the rate of interest with
respect to any interest period during which interest is accruing at a rate based
upon LIBOR, the rate per annum equal to the quotient of (i) the indicated
offered rate at 10:00 A.M. (Birmingham, Alabama time) (or as soon thereafter as
practicable) in the London interbank market for deposits in U.S. dollars as
published in the Wall Street Journal or such other comparable financial
information reporting service used by the Lender at the time such rate is
determined, in an amount comparable to the then current outstanding principal
balance on which interest is accruing at a rate based upon LIBOR and for a
period comparable to the LIBOR-Based Rate Period during which the LIBOR-Based
Rate is to be in effect, divided by (ii) a number equal to 1.00 minus the LIBOR
Reserve Requirement, the rate so determined to be rounded upwards to the nearest
whole multiple of 1/100 of 1%.

                  LIBOR Reserve Requirement shall mean the percentage (expressed
as a decimal) prescribed by the Board of Governors of the Federal Reserve System
(or any successor), on the date on which the LIBOR-Based Rate is determined, for
determining the reserve requirements of the Lender with respect to liabilities
relating to time deposits purchased in the London interbank market having a
maturity equal to the period during which the LIBOR-Based Rate will be in effect
and in an amount equal to the applicable outstanding amount of the Loan, without
any benefit or credit for any proration, exemptions or offsets under any now or
hereafter applicable regulations.

                                       4

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                  Lien shall mean any mortgage, pledge, assignment, charge,
encumbrance, lien, security interest or other preferential arrangement of any
kind or nature whatsoever.

                  Loan shall have the meaning attributed to that term in Section
2.01.

                  Loan Documents shall mean this Agreement, the Note, the
Security Documents and all other documents now or hereafter executed or
delivered in connection with the Loan or any of the foregoing documents, or to
evidence or secure the Loan, and all amendments thereto.

                  Margin shall mean the margin (expressed in terms of basis
points) to be used to determine the LIBOR-Based Rate in accordance with the
following:

                           LIBOR-Based
                           Rate Margin: 200 basis points

                  Margin Stock shall have the meaning attributed to that term in
Regulation U of the Federal Reserve Board, as amended.

                  Material Deviation shall mean a change or changes in the
construction contract for the Project exceeding $100,000 per single change order
or $350,000 in the aggregate for all change orders.

                  Maturity Date shall mean March 10, 2006, unless extended to
March 10, 2007 or March 10, 2008, pursuant to Section 2.10 hereof.

                  Mortgage shall have the meaning attributed to that term in
Section 2.05.

                  Note shall have the meaning attributed to that term in Section
2.01.

                  Obligors shall mean the Borrower and the Guarantor.

                  Person shall include natural persons, sole proprietorships,
corporations (which shall be deemed to include business trusts), unincorporated
organizations, associations, companies, institutions, entities, joint ventures,
partnerships, limited liability companies, governments (whether national,
federal, state, county, city, municipal or otherwise) and any governmental
instrumentality, division, agency, body or department.

                  Personal Property shall have the meaning attributed to that
term in the Mortgage.

                  Plans shall mean the final working plans and specifications
for the Project prepared by (i) The Preston Phillips Partnership, Inc., dated
July 28, 1999 (with most recent revision date of February 10, 2000) and (ii)
Watts Leaf Architects, P.A., dated January 31, 2001, and all amendments and
modifications thereto, as approved by the Lender.

                                       5

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                  Prime Rate shall mean the rate of interest established by the
Lender from time to time as its "prime rate". The prime rate is an index rate
used by the Lender to establish lending rates and may not necessarily be the
Lender's most favorable lending rate. Any change in the interest rate on said
debt caused by a change in the prime rate shall take effect on the effective
date of such change in the prime rate as established by the Lender without
notice to the Borrower or any other action by the Lender. Interest shall be
computed on an Actual/360 Basis.

                  Project shall mean the construction project described in the
Plans.

                  Real Estate shall have the meaning attributed to that term in
the Mortgage.

                  Rents shall have the meaning attributed to that term in the
Mortgage.

                  Security Documents shall mean the Mortgage, the Assignment,
the Guaranty Agreement and any other documents and agreements now or hereafter
executed by the Borrower or the Guarantor in favor of the Lender securing,
guaranteeing or relating to the Loan.

                                   ARTICLE II.

                            LOAN TERMS AND COLLATERAL

                  SECTION 2.01. Note. On the terms and conditions set forth in
this Agreement, the Lender agrees to make a loan to the Borrower in a principal
amount not exceeding $24,000,000 (the aggregate principal amount of Advances
outstanding from time to time shall be herein referred to as the "Loan"). The
Loan shall be evidenced by a promissory note (the "Note") payable to the order
of the Lender, duly executed by the Borrower, dated the date of this Agreement,
in the principal amount of $24,000,000, bearing interest on amounts advanced and
outstanding thereunder from the date advanced until paid at the rate per annum
as set forth therein.

                  SECTION 2.02. Advances. The Lender shall, upon the terms and
subject to the conditions set forth in this Agreement, advance the proceeds of
the Loan to the Borrower in installments ("Advances") from time to time at the
request of the Borrower. Advances shall be made no more frequently than once in
each calendar month, and the Loan must be current and not in default prior to
any Advance. The Lender may, at its option, make Advances by (i) depositing to
the Borrower's account with the Lender or (ii) if an Event of Default has
occurred, delivering to the Borrower a check payable to the Borrower and any
persons owed money with respect to the Project; provided, however, that nothing
in this Agreement shall be construed to impose on the Lender any duty to pay
bills related to the Project or to see that such bills are paid. The Lender's
obligation to make Advances hereunder shall terminate, if not sooner terminated
pursuant to the provisions of this Agreement, six (6) months after the
Completion Date. Notwithstanding anything to the contrary set forth in this
Agreement, the Lender may, at its option, without any request therefor by the
Borrower, make Advances on the 10th day of each month for the Lender's account
for the purpose of paying any interest or expenses then due to the Lender with
respect to the Loan.

                                       6

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                  SECTION 2.03. Applicable Interest Rates. The Loan shall bear
interest at the LIBOR-Based Rate subject to the requirements hereinafter stated.
For any period of time with respect to which the Borrower does not elect an
interest rate, the Loan shall bear interest at the LIBOR-Based Rate with a
30-day LIBOR-Based Rate Period. The Borrower's right to elect the LIBOR-Based
Rate shall be subject to the following requirements: (i) no more than three (3)
LIBOR Contracts (as defined in Section 2.03A below) may be outstanding at any
one time and (ii) each LIBOR-Based Rate Period shall have a maturity selected by
the Borrowers of 30, 60 or 90 days; provided, however, that no LIBOR-Based Rate
Period selected for the Loan shall have a maturity date later than the Maturity
Date.

                  A.       Procedure for Exercising Interest Rate Options. The
Borrower may elect to have a particular LIBOR-Based Rate apply to the Loan
(which election shall be known hereunder as a "LIBOR Contract") by giving the
Lender at least one Business Day's prior written notice, using the notice of
interest rate selection attached hereto as Schedule 2.03A. Such notice shall set
forth the following: (a) the date on which the LIBOR-Based Rate will become
applicable, (b) the duration of the said LIBOR Contract and (c) the outstanding
principal amount of the Loan to be subject to such LIBOR Contract. On the day
that a requested LIBOR-Based Rate is to become applicable, the Lender shall use
its best efforts to notify the Borrower by telephone of the Lender's estimate of
the applicable LIBOR-Based Rate by 10:00 a.m., Birmingham, Alabama time, or as
early on that day as may be practical in the circumstances. The Lender shall not
be required to provide an estimate of the LIBOR-Based Rate on any day on which
dealings in deposits in U.S. dollars are not transacted in the London interbank
market. If the Borrower does not immediately accept a LIBOR-Based Rate quoted by
the Lender, the Lender may, in view of changing market conditions, review the
quoted LIBOR-Based Rate at anytime. If the Lender and the Borrower attempt to
agree on a LIBOR-Based Rate but fail so to agree, or if there is any uncertainty
as to whether or not the Lender and the Borrower have agreed upon a LIBOR-Based
Rate, interest shall accrue on the Loan at the then applicable LIBOR-Based Rate
with a 30-day LIBOR-Based Rate Period. At the request of the Borrower, the
Lender shall confirm in writing or by telephone the setting of a LIBOR-Based
Rate, the amount of such rate and the LIBOR-Based Rate Period.

                  B.       LIBOR-Based Rate. An Advance or the Loan, as the case
may be, shall bear interest from the date a LIBOR-Based Rate becomes applicable
thereto until the end of the applicable LIBOR-Based Rate Period on the unpaid
principal balance of the Advance or the Loan, as the case may be, at the
LIBOR-Based Rate on an Actual/360 Basis.

                  C.       Termination of LIBOR-Based Rate; Increase in
LIBOR-Based Rate.

         (a) If at any time the Lender shall reasonably determine (which
determination, if reasonable, shall be final, conclusive and binding upon all
parties) that:

                  (i) by reason of any changes arising after the date of this
         Agreement affecting the London interbank market or affecting the
         position of the Lender in such market, adequate and fair means do not
         exist for ascertaining the LIBOR-Based Rate by reference to the LIBOR
         Dealer Quote; or

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                  (ii) the continuation by the Lender of Advances or the Loan at
         the LIBOR-Based Rate or the funding thereof in the London interbank
         market would be unlawful by reason of any law, governmental rule,
         regulation, guidelines or order; or

                  (iii) the continuation by the Lender of Advances or the Loan
         at the LIBOR-Based Rate or the funding thereof in the London interbank
         market would be impracticable as a result of a contingency occurring
         after the date of this Agreement that materially and adversely affects
         the London interbank market;

then, and in any such event, the Lender shall on such date give notice (by
telephone and confirmed in writing) to the Borrower of such determination. The
obligation of the Lender to permit interest to be computed thereon at the
LIBOR-Based Rate shall be terminated, and interest shall thereafter be computed
on the Loan at the then applicable Prime Rate. Notwithstanding anything
contained to the contrary in this Section 2.03C, the then-outstanding Loan
bearing interest at a LIBOR-Based Rate shall continue to bear such rate until
the end of its applicable LIBOR-Based Rate Period.

         (b) It is the intention of the parties that the LIBOR-Based Rate shall
accurately reflect the cost actually incurred by the Lender of maintaining the
applicable outstanding amount of the Loan during any LIBOR-Based Rate Period in
which interest accrues thereon at a LIBOR-Based Rate. Accordingly, if by reason
of any change after the date hereof in any applicable law or governmental rule,
regulation or order (or any interpretation thereof and including the
introduction of any new law or governmental rule, regulation or order),
including but not limited to any change in the Assessment Rate or the LIBOR
Reserve Requirement, the cost actually incurred by the Lender of maintaining the
LIBOR-Based Rate or funding the same by means of a London interbank market time
deposit, shall increase, the LIBOR-Based Rate shall be adjusted as necessary to
reflect such actual change in cost incurred by the Lender, effective as of the
next date on which the Borrower requests that the Loan bear interest at a
LIBOR-Based Rate.

                  D.       Breakage Costs. If any prepayment of all or any
portion of the Loan shall occur on any day other than the last day of the
applicable LIBOR-Based Rate Period, the Borrower shall pay to Lender, within
three (3) Business Days of any written demand sent by the Lender to the
Borrower, any amounts required to compensate the Lender for any additional
losses, out-of-pocket costs or expenses which Lender incurs as a result of such
prepayment, including, without limitation, any loss, cost or expense incurred by
reason of the liquidation or re-employment of deposits or other funds acquired
by the Lender to maintain the Loan.

                  SECTION 2.04. Payments. Principal and interest on the Note
shall be due and payable as follows:

                  (a) Interest Only Period. Commencing April 10, 2002, and
         continuing on the same day of each month thereafter through March 10,
         2005, interest only shall be payable on the then outstanding principal
         balance of the Note.

                  (b) Amortization Period. Commencing on April 10, 2005, and
         continuing on the same day of each month thereafter through the payment
         due on February 10, 2006, principal

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         and interest shall be payable in monthly installments, with the
         principal portion of such installments calculated on an assumed
         amortization period of thirty (30) years at an assumed interest rate of
         seven percent (7.0%), plus actual interest. The entire principal
         balance of said debt, together with accrued interest thereon, shall be
         due and payable in full on March 10, 2006, which PAYMENT SHALL BE a
         balloon payment.

                  (c) First Extension Option. If the Borrower exercises the
         first extension option described in Section 2.10 below and is granted a
         twelve (12)-month extension of the Loan, the March 10, 2006 payment
         shall be another payment of principal and interest, and similar
         payments of principal and interest (utilizing the same amortization
         schedule) shall be made on the 10th day of each consecutive month
         through the payment due on February 10, 2007. The entire principal
         balance of said debt, together with accrued interest thereon, shall be
         due and payable in full on March 10, 2007, which payment shall be a
         balloon payment.

                  (d) Second Extension Option. If the Borrower exercises the
         second extension option described in Section 2.10 below and is granted
         another twelve (12)-month extension of the Loan, the March 10, 2007
         payment shall be another payment of principal and interest, and similar
         payments of principal and interest (utilizing the same amortization
         schedule) shall be made on the 10th day of each consecutive month
         through the payment due on February 10, 2008. The entire principal
         balance of said debt, together with accrued interest thereon, shall be
         due and payable in full on March 10, 2008, which payment shall be a
         balloon payment.

                  SECTION 2.05. Security Documents. As security for the
Liabilities, the Borrower shall execute and deliver to the Lender at closing (a)
a Deed of Trust, Security Agreement and Assignment of Rents and Leases (the
"Mortgage") dated the date of this Agreement, granting to the Lender, among
other things, a first priority lien on the Real Estate and the Improvements, a
first priority security interest in the Personal Property and a first priority
assignment of the Leases and the Rents; and (b) an Assignment of Contract
Documents (the "Assignment") dated the date hereof and granting to the Lender a
first priority security interest in the design and construction contracts
related to the Project.

                  SECTION 2.06. Guaranty Agreement. Concurrently with the
execution of this Agreement, the Guarantor shall execute and deliver to the
Lender a Guaranty Agreement (the "Guaranty Agreement") wherein the Guarantor
irrevocably and unconditionally guarantees the Loan, all interest accrued
thereon, all costs and expenses incurred in connection therewith and all
extensions and renewals thereof.

                  SECTION 2.07. Prepayment.

                  (a) The Borrower may at any time prepay all or any part of the
         Loan without penalty or fee but subject to the terms of Section 2.03D
         above. The Borrower shall pay all interest accrued to the date of
         prepayment on any amount prepaid. The Borrower shall not reborrow any
         amount that is prepaid.

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                  (b) Any insurance proceeds or condemnation award received as a
         result of damage to or condemnation of the Collateral, to the extent
         that such proceeds or award are not used to repair or restore the
         Collateral as provided in the Mortgage, shall be applied promptly to
         the prepayment of the Loan, without prepayment penalty or premium.

                  SECTION 2.08. Loan Fee. The Borrower shall pay the Lender at
closing a loan fee in the amount of $165,000. The loan fee was fully earned by
the Lender when the Lender's commitment was accepted and shall be
non-refundable, whether or not any credit is extended hereunder.

                  SECTION 2.09. Time, Place and Application of Payments. All
amounts payable under the Loan Documents, including principal, interest, other
fees and charges, and reimbursement for expenses, shall be made to the Lender on
or before 2:00 p.m. (Birmingham time) on the date on which such payment is due,
at the main office of the Lender in Birmingham, Alabama, in immediately
available funds. Payments received by the Lender shall be applied first to
expenses, fees and charges, then to interest and finally to principal.

                  SECTION 2.10. Options to Extend Loan.

                  A.       Period of Extension. The Borrower may elect to extend
the term of the Loan as follows:

         (i)      Upon payment of a fee equal to 6.25 basis points of the then
                  outstanding principal balance of the Loan (which fee shall be
                  due at the time of election), the term of the Loan may be
                  extended until March 10, 2007.

         (ii)     Upon payment of a fee equal to 12.5 basis points of the then
                  outstanding principal balance of the Loan (which fee shall be
                  due at the time of election), the term of the Loan may be
                  extended until March 10, 2008.

                  B.       Conditions of Extension. The options to extend as set
out in (A) above may be exercised only upon fulfillment of the following
conditions:

         (i)      The election is made by written notice to the Lender no
                  earlier than ninety (90) days prior to the then applicable
                  Maturity Date, and no later than thirty (30) days prior to the
                  then applicable Maturity Date;

         (ii)     Final Completion has occurred;

         (iii)    No Event of Default has occurred hereunder and is continuing;
                  and

         (iv)     The Apartments have achieved (a) a Debt Service Coverage Ratio
                  of no less than 1.2 to 1.0 (in order to be granted the first
                  extension option) or (ii) a Debt Service Coverage Ratio of no
                  less than 1.25 to 1.0 (in order to be granted the second
                  extension option). If the Apartments have not achieved the
                  applicable Debt Service

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                  Coverage Ratio required hereunder, the borrower shall
                  nonetheless be granted the applicable twelve (12)-month
                  extension (assuming all other conditions imposed herein are
                  fulfilled) if the Borrower makes a principal prepayment on the
                  Loan in an amount which, if taken into consideration when
                  calculating the Debt Service Coverage Ratio, would have
                  resulted in a Debt Service Coverage Ratio which complies with
                  the terms of this Section 2.10(B)(v). No prepayment penalty or
                  fee shall be assessed by the Lender in the event of any such
                  principal prepayment.

                  C.       Costs and Expenses. All costs and expenses of the
Lender in connection with the matters addressed in this Section 2.10, including
attorneys' fees, recording costs and title premiums, shall be borne by the
Borrower.

                                  ARTICLE III.

                         REPRESENTATIONS AND WARRANTIES

                  The Borrower represents and warrants to Lender as follows:

                  SECTION 3.01. Organization, Powers, Existence, etc. (a) The
Borrower is a limited partnership duly organized, validly existing and in good
standing under the laws of the State of Georgia. (b) The Borrower has the
partnership power and authority to own its properties and assets (including,
without limitation, the Collateral) and to carry on its business as now being
conducted and is duly qualified to do business in every jurisdiction wherein
such qualification is necessary, specifically including but not limited to the
State of North Carolina. (c) The Borrower has the partnership power to execute
and perform this Agreement, to borrow hereunder and to execute and deliver the
Note and the Security Documents.

                  SECTION 3.02. Authorization of Borrowing, etc. The execution,
delivery and performance of this Agreement, the borrowings hereunder and the
execution and delivery of the Note and the Security Documents by the Borrower
(a) have been duly authorized by all requisite partnership action (including any
necessary general partner action), and (b) will not violate any provision of
law, any order of any court or other agency of government, the partnership
agreement of the Borrower or any indenture, agreement or other instrument to
which Borrower is a party, or by which the Borrower or any of its properties or
assets (including, without limitation, the Collateral) are bound, or be in
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under, any such indenture, agreement or other
instrument, or result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the properties or assets
(including, without limitation, the Collateral) of the Borrower, except as
contemplated by this Agreement and the Security Documents.

                  SECTION 3.03. Liabilities. The most recent balance sheet for
the Borrower furnished to the Lender accurately reflects the Borrower's
obligations for borrowed money or other debts, obligations and liabilities,
direct or contingent.

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<PAGE>

                  SECTION 3.04. Taxes. Each Obligor has filed or caused to be
filed all federal, state and local tax returns which are required to be filed,
and has paid or has caused to be paid all taxes as shown on said returns or on
any assessment received by it to the extent that such taxes have become due.

                  SECTION 3.05. Title to Collateral. The Borrower has good and
marketable title to all its properties and assets (including, without
limitation, the Collateral) reflected on the balance sheet referred to in
Section 3.03 hereof except as encumbered by any liens reflected on said balance
sheet and except for such properties and assets (other than the Collateral) as
have been disposed of since the date of said balance sheet as no longer used or
useful in the conduct of its business or as have been disposed of in the
ordinary course of the business thereof. The Collateral is free and clear of
mortgages, pledges, liens, charges and other encumbrances, except as otherwise
permitted or required by the provisions of this Agreement or the Security
Documents.

                  SECTION 3.06. Litigation. There are no actions, suits or
proceedings (whether or not purportedly on behalf of the Borrower) pending or,
to the best knowledge of the Borrower, threatened against or affecting the
Borrower, at law or in equity or by or before any court or any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which involve any of the transactions
contemplated in this Agreement or the Security Documents or the possibility of
any judgment or liability that may result in any material adverse change in the
business, operations, properties or assets (including, without limitation, the
Collateral), or in the condition, financial or otherwise, of the Borrower, and
the Borrower is not, to the best knowledge of the Borrower, in default with
respect to any judgment, writ, injunction, decree, rule or regulation of any
court or federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign.

                  SECTION 3.07. Agreements. To the best of its knowledge, the
Borrower is not a party to any agreement or instrument, or subject to any
charter or other partnership restriction, materially and adversely affecting its
business, properties or assets (including, without limitation, the Collateral),
operations or condition, financial or otherwise, and the Borrower, to the best
of its knowledge, is not in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which it is a party, which default would have a
material adverse effect upon its business, properties or assets (including,
without limitation, the Collateral), operations or condition, financial or
otherwise.

                  SECTION 3.08. Federal Reserve Board Regulations. The Borrower
does not intend to use any part of the proceeds of the Loan for the purpose of
purchasing or carrying any Margin Stock or retiring any debt incurred to
purchase or carry any Margin Stock.

                  SECTION 3.09. The Project.

                  (a)      The construction and use of the Apartments as an
         apartment complex will not violate any restrictive covenant or any
         applicable zoning, planning or building restriction or other
         Governmental Requirements.

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                  (b)      The Real Estate has convenient and adequate access to
         all electric, gas, water, sewer, telephone and other utility services
         necessary for the construction and intended use of the Apartments.

                  (c)      The Real Estate has access to existing public roads
         and highways (including all necessary rights and governmental approvals
         for related ingress and egress) that is adequate for the intended use
         of the Apartments.

                  (d)      The Apartments, when completed, will comply with all
         applicable building codes and standards and other applicable
         Governmental Requirements.

                  SECTION 3.10. Construction. The Project will be constructed by
the Contractor substantially in accordance with the Plans. The Lender shall be
furnished with fully executed counterparts of all contracts with architects,
engineers and the Contractor (and upon request, any subcontractors) in regard to
the Project, which contracts shall include any and all amendments and
modifications thereto. Any Material Deviation from the Plans must be approved by
the Lender in writing.

                                  ARTICLE IV.

                              CONDITIONS OF LENDING

                  SECTION 4.01. Representations and Warranties. On the date of
each Advance hereunder, the representations and warranties set forth in Article
III hereof shall be true and correct on and as of such date with the same effect
as though such representations and warranties had been made on and as of such
date, except to the extent that such representations and warranties expressly
relate to an earlier date.

                  SECTION 4.02. No Default. On and as of the date hereof and on
and as of the date of each Advance hereunder, Borrower shall be in compliance
with all the terms and provisions set forth in this Agreement on its part to be
observed or performed, and no Event of Default, nor any event which upon notice
or lapse of time or both would constitute such an Event of Default, shall have
occurred and be continuing.

                  SECTION 4.03. Supporting Documents. The Lender shall have
received no less than one (1) Business Day before the date of the first Advance
(or such other date or dates as shall be satisfactory to the Lender in its sole
discretion) the following documents, which must be satisfactory in form and
content to the Lender in its sole discretion:

                  (a)      Plans and Specifications. A copy of the final Plans,
         certified by the Borrower and approved by the Lender. The Plans shall
         not be changed or added to without the prior written consent of the
         Lender, if such change or addition constitutes a Material Deviation.

                  (b)      Lien Waiver. A lien waiver affidavit executed by the
         Contractor.

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<PAGE>

                  (c)      Survey. A current survey of the Real Estate prepared
         and certified by a registered land surveyor or engineer, dated not
         earlier than thirty (30) days prior to the date of the first Advance,
         showing the relation of the Real Estate to public roads for access
         purposes, the location of all structures then situated on the Real
         Estate and all easements, rights-of-way, encroachments, setback lines
         and other encumbrances visible or listed in the title insurance policy
         delivered to the Lender, and certifying that no part of the Project is
         located within a flood plain. The surveyor's certification must be in
         the form of Exhibit A attached hereto, and such certification must be
         true and correct in all respects.

                  (d)      Governmental Approvals. Copies of all permits,
         licenses, certificates, authorizations and other governmental approvals
         required for the commencement of construction of the Project and
         written evidence that the intended use of the Apartments is in
         accordance with all applicable zoning, planning and building
         restrictions.

                  (e)      Development Budget: Sources and Uses of Funds
         Statement. The Development Budget for the Project and a sources and
         uses of funds statement for the Project, together with a detailed
         breakdown of all hard construction costs submitted on AIA Form
         G702-703.

                  (f)      Insurance Policies. The original or copies certified
         by the agent as to be true and correct of all insurance policies as
         described in Schedule 4.03(f) attached hereto.

                  (g)      Title Insurance. A loan or mortgagee title insurance
         policy issued by a company acceptable to the Lender in standard ALTA
         form insuring the mortgage lien created by the Mortgage in an amount
         not less than the maximum principal amount of the Loan. Such policy
         must contain an endorsement that affirmatively insures against
         mechanics' and materialmen's liens in the form specified on Exhibit B
         attached hereto. Such policy must not contain an exception for matters
         that would be disclosed by an inspection or accurate survey of the Real
         Estate or any other exceptions or limitations that are not "Permitted
         Exceptions" under the Mortgage. The title policy shall also contain a
         pending disbursements clause stating: Pending disbursement of the full
         proceeds of the loan secured by the mortgage insured herein, this
         policy insures only to the extent of the amount actually disbursed but
         increases as each disbursement is made, up to the face amount of the
         policy, notwithstanding anything to the contrary set forth in this
         policy.

                  (h)      Utilities. Evidence satisfactory to the Lender that
         the Real Estate has adequate access to all electric, gas, water, sewer,
         telephone and other utilities necessary for the construction and
         intended use of the Apartments.

                  (i)      Opinion of Counsel. A favorable opinion by Holt Ney
         Zatcoff & Wasserman, LLP and Parker, Poe, Adams & Bernstein L.L.P., as
         counsel to the Obligors, in the form required by the Lender.

                  (j)      Hazardous Waste Investigation. Such studies,
         investigations and reports as the Lender shall deem necessary or
         desirable to determine that no hazardous substances or

                                       14

<PAGE>

         pollutants, including asbestos, are now, or have ever been, located on
         the Real Estate or real estate adjacent thereto, including the
         Improvements, or if they have, what requirements must be met to bring
         the Real Estate, the adjacent real estate and any Improvements into
         compliance with all environmental Governmental Requirements.

                  (k)      Geological Evaluation. Such studies, investigations
         and reports as the Lender shall deem necessary or desirable to
         determine the adequacy of soil compaction and the existence of any
         subsurface geological deficiencies or problems.

                  (1)      Appraisal. An appraisal prepared by a state licensed
         or certified appraiser selected and retained by the Lender, which
         appraisal must show the value of the Real Estate and the Project to be
         at least $30,769,231, which appraisal must be in all respects
         satisfactory to the Lender.

                  SECTION 4.04. Required Equity. The Borrower shall furnish to
the Lender at or prior to closing evidence satisfactory to the Lender that the
Borrower has expended in connection with the Project an amount no less than
$6,826,000. Once Final Completion has occurred, all construction costs related
to the Project have been paid and the net operating income being generated by
the Apartments is at least equal to the interest expense on the Loan, $225,000
(or whatever amount up to a maximum amount of $225,000 remains unadvanced under
the Note) will be advanced to the Borrower as an equity refund so long as no
Event of Default has occurred and is continuing. If the net operating income of
the Apartments at such time is less than such interest expense, whatever amount
remains unadvanced under the Note will be made available to the Borrower by the
Lender (so long as no Event of Default has occurred and is continuing) in order
to cover operating deficits at the Apartments. Notwithstanding anything to the
contrary set forth in this Section 4.04, the Lender shall be under no obligation
to advance any unadvanced proceeds of the Note to the Borrower after six (6)
months after the Completion Date.

                  SECTION 4.05. Payments for Construction Costs. The Lender
shall have received no less than three (3) Business Days before the date of each
Advance, the proceeds of which will be used in whole or in part to pay costs
incurred in the construction of the Project (or to reimburse the Borrower for
such a payment), (i) an AIA Document G702 and G703 standard draw request form
and certificate for payment, certified by both the Borrower and the Construction
Consultant, and (ii) a date-down endorsement to the Lender's title insurance
policy, showing that there are no new exceptions to said policy and that the
amount of title insurance coverage has increased to the full amount advanced by
the Lender hereunder, which amount shall include the amount of the proposed
Advance. If the Advance is the final Advance, the Borrower shall provide to the
Lender with the request for the Advance: (i) a certificate certifying that the
construction of the Project has been substantially completed in accordance with
the Plans; (ii) a certificate from each subcontractor with respect to the
Project satisfactory to the Lender certifying that such subcontractor has been
paid in full for all work performed or to be performed with respect to the
Project, or if not, the amounts payable for such work, and releasing all lien
rights with respect to the Project; (iii) a certificate of occupancy for each
building included in the Project from the relevant Governmental Authority; and
(iv) an "as built" survey of the Real Estate, certified by a licensed surveyor
satisfactory to the Lender, showing that the Project has been completed
substantially in accordance with the Plans.

                                       15

<PAGE>

                  SECTION 4.06. Other Payments. The Lender shall have received,
no less than three (3) Business Days before the date of each Advance, the
proceeds of which will be used in whole or in part to pay a cost or expense
other than construction costs (or to reimburse the Borrower for such a payment),
an invoice, bill or statement describing in reasonable detail the purpose for
which such payment is made and a statement relating to the payment of an item or
category in the Development Budget.

                  SECTION 4.07. Undated Sources and Uses of Funds Statement. The
Lender shall have received, no less than three (3) Business Days before the date
of each Advance subsequent to the first Advance, an updated sources and uses of
funds statement. Such statement must demonstrate that the amount of the Loan
remaining to be disbursed after such Advance is made will be sufficient to pay
all remaining costs to be incurred with respect to the Project.

                  SECTION 4.08. Certification of Borrower. The Lender shall have
received, no less than three (3) Business Days before the date of each Advance
subsequent to the first Advance, a written statement from the Borrower that
there have been no changes in the Development Budget for the Project or a
written certification specifying the changes which have been made in such
budget.

                  SECTION 4.09. Retention of Counsel or Consultants. The Lender
may, in its sole discretion, and at the expense of the Borrower, retain legal
counsel or other consultants to review any documents and information delivered
to the Lender pursuant to an Advance, and the Lender shall have no obligation to
make an Advance until the Lender is satisfied that such documents and
information are in good order and comply with this Agreement. The Lender will
make each Advance within three (3) Business Days of the date on which the
Borrower requests the Advance unless the Lender shall reasonably determine and
notify the Borrower that Borrower has not satisfied the conditions precedent
applicable to the Advance specified in this Agreement.

                  SECTION 4.10. Status of Project. On the date of each Advance
hereunder, (a) the Project shall not have been materially damaged by fire, wind,
flood, vandalism or other casualty, (b) neither the Project nor the Real Estate
shall be subject to condemnation proceedings or negotiations for sale in lieu
thereof and (c) the Lender must be reasonably satisfied that the Project is
completed to an extent appropriate for the amount of the Loan advanced to the
Borrower through such date and that all documents submitted to the Lender are in
good order and comply with the terms and conditions of this Agreement.

                                   ARTICLE V.

                              COVENANTS OF BORROWER

                  From the date on which this Agreement is delivered until
payment in full of the principal of and interest on the Loan and all other
amounts payable by the Borrower under the Loan Documents and the termination of
the Lender's obligation to make any further Advances hereunder, the Borrower
covenants and agrees that, unless the Lender shall otherwise consent in writing:

                                       16

<PAGE>

                  SECTION 5.01. Construction of Project, Survey, etc. The
Borrower shall locate and construct the Project substantially in accordance with
the Plans and with all applicable ordinances, statutes, regulations and
restrictions (including any building restrictions or use restrictions), and the
requirements of all regulatory authorities. At the request of the Lender, the
survey provided at closing shall be revised periodically during the construction
of the Project to show progress in construction and shall be revised upon
completion of the construction.

                  SECTION 5.02. Use of Loan Proceeds. The Borrower shall use the
Loan proceeds only for the purpose of constructing the Project and for the
payment of debts created in connection therewith and shall not commingle any of
the Loan proceeds or any of the funds of the Borrower which are to be invested
in the Project with the funds of any other entity or person or use any of the
Loan proceeds for the construction of other improvements or another project. The
Lender reserves the right, at any time, to require satisfactory proof as to the
disposition made of any of the Loan proceeds. Nothing contained herein shall be
construed to require the Lender to follow the disposition, or to monitor the
proper application, of any funds advanced by the Lender.

                  SECTION 5.03. Payment of Bills, etc. The Borrower shall pay
promptly all bills for labor and materials going into the construction of the
Project and all other charges related to the Project, and shall submit to the
Lender all invoices in an amount in excess of $500.00 relating to those costs.
The Borrower shall, on each check used to pay costs related to the Project,
identify the bill, invoice or statement being paid.

                  SECTION 5.04. Non-Sale or Encumbrance; Transfer. The Borrower
will not, without the prior written consent of the Lender, sell, assign,
transfer, convey or otherwise dispose of, or grant any mortgage, lien or other
encumbrance on, or security interest in, any of the Collateral and will not
permit or suffer any liens, statements of lien or suits seeking to establish or
enforce a lien to be filed against any of the Collateral; provided, however,
that the Borrower shall be permitted to convey the Collateral to the Guarantor
(i) in the event of a merger or consolidation transaction between the Borrower
and the Guarantor or (ii) in the event all of the limited partnership units in
the Borrower are converted to stock in the Guarantor. The Lender shall not seek
reimbursement from the Borrower for any costs incurred by the Lender in
conjunction with any such conveyance of the Collateral by the Borrower to the
Guarantor so long as Borrower furnishes the Lender with an opinion letter from
Borrower's counsel confirming the continued enforceability of the Loan Documents
and first priority security interest in the Collateral (which opinion letter
must be acceptable to the Lender in its reasonable discretion). The Borrower
shall not be dissolved, liquidated or terminated, whether by operation of law or
otherwise, except as otherwise provided in this Section 5.04. The liquidation or
dissolution of the Borrower, the merger or consolidation of the Borrower with
any Person other than the Guarantor, or the participation by the Borrower in a
statutory share exchange with any other Person, shall be treated as a transfer
of the Real Estate for purposes of this Section 5.04. Notwithstanding anything
to the contrary set forth herein, the Borrower shall be permitted to request
that the Lender allow the Borrower to convey the Collateral to a third party
subject to the Mortgage and the other Loan Documents. Whether such a request
will be granted shall be in the sole and absolute discretion of the Lender. In
the event the Lender agrees to allow such a conveyance, the Lender shall require
that (i) no Event of Default has occurred that is continuing (both at the time
of the Borrower's request and at the time of the conveyance); (ii) the

                                       17

<PAGE>

Borrower and the prospective purchaser execute any documents deemed necessary by
the Lender to reflect the conveyance, the assumption by said purchaser of all
obligations under the Note and the other Loan Documents and the Lender's
continued perfected security interest in the Collateral; and (iii) the Borrower
pays all costs and expenses of the Lender related to such conveyance and loan
assumption transaction, including without limitation, attorney's fees. The
Borrower acknowledges that the foregoing list of requirements is not intended to
be exhaustive and may be modified by the Lender in its sole and absolute
discretion.

                  SECTION 5.05. Payment of Taxes, Insurance, etc. The Borrower
shall pay all taxes, insurance premiums, recording fees, cost of title
insurance, surveys, appraisals, attorneys' fees (including the reasonable fees
and disbursements of counsel to the Lender) and all other expenses and costs of
every kind reasonably incurred by the Lender in connection with (a) the making
or collecting of the Loan, (b) the preparation and review of this Agreement
(whether or not the transactions contemplated by this Agreement shall be
consummated), the Note, the Security Documents and any other documents related
thereto, (c) the enforcement of this Agreement, the Note and the Security
Documents or any of the documents executed in connection with the Loan, (d)
maintaining unimpaired the Lender's security and lien under the Security
Documents, and (e) otherwise connected with, or growing out of, this
transaction, including any such expenses and costs incurred in connection with
the successful defense of any action, counterclaim, cross-claim or other claim
asserted by any other party against the Lender in connection with any of the
foregoing. The provisions of this Section 5.05 shall survive (i) the payment in
full of the principal and interest on the Loan and all fees and charges with
respect thereto and (ii) the termination of this Agreement.

                  SECTION 5.06. Insurance. The Borrower shall keep all
Improvements fully insured at all times during construction and after
completion, and shall keep fully insured the Personal Property, including,
without limitation, all building materials at any time located on the Real
Estate. All such insurance policies shall be issued by such companies and insure
against such hazards as the Lender may reasonably require, and shall contain
appropriate loss payable clauses in favor of the Lender and copies of said
policies shall be deposited with the Lender. All premiums for such insurance
shall be paid by the Borrower. All such policies shall contain a provision that
they may not be canceled without giving the Lender at least thirty (30) days'
prior written notice of such cancellation. All such insurance shall be for the
full insurable replacement value of the property insured.

                  SECTION 5.07. Existence. The Borrower shall do or cause to be
done all things necessary to preserve and keep in full force and effect its
partnership existence, rights and franchises and comply with all laws applicable
to it; at all times maintain, preserve and protect all franchises and trade
names and preserve all the remainder of its property (including, without
limitation, the Collateral) used or useful in the conduct of its business and
keep the same in good repair, working order and condition, and from time to time
make, or cause to be made, all needful and proper repairs, renewals and
replacements, betterments and improvements thereto, so that the business carried
on in connection therewith may be properly and advantageously conducted at all
times.

                  SECTION 5.08. Payment of Indebtedness, Taxes. The Borrower
shall (i) pay its indebtedness and obligations in accordance with normal terms
and (ii) pay and discharge or cause

                                       18

<PAGE>

to be paid and discharged promptly all taxes, assessments and governmental
charges or levies imposed upon it or upon its income and profits or upon any of
its properties, including without limitation the Collateral, before the same
shall become in default; provided, however, that the BORROWER shall not be
required to pay and discharge or cause to be paid and discharged any such tax,
assessment, charge, levy or claim so long as the validity thereof shall be
contested in good faith by appropriate proceedings and Borrower shall have set
aside on its books adequate reserves with respect to any such tax, assessment,
charge, levy or claim so contested.

                  SECTION 5.09. Financial Statements. The Borrower shall furnish
to Lender:

                  (a) by March 31 of each year, the balance sheet of the
         Borrower as of the end of such year and the related statements of
         income and changes in financial position of the Borrower for such
         fiscal year, together with supporting schedules, all on a comparative
         basis with the prior fiscal year, in reasonable detail, prepared in
         accordance with generally accepted accounting principles consistently
         applied throughout the periods involved, and audited and certified by
         independent certified public accountants of recognized standing
         selected by the Borrower and satisfactory to the Lender (the form of
         such certification also to be satisfactory to Lender), showing the
         financial condition, assets, liabilities and partners' equity of the
         Borrower at the close of such year and the results of the operations of
         the Borrower during such year;

                  (b) within forty-five (45) days after the end of the first
         three fiscal quarters in each fiscal year, financial statements similar
         to those referred to in Section 5.09(a), unaudited but certified by the
         President or Treasurer of the general partner of the Borrower, such
         balance sheet to be as of the end of each such quarter and such
         statement of income and changes in financial position to be for the
         period from the beginning of the fiscal year to the end of such
         quarter, in each case subject to audit and to year-end adjustments;

                  (c) with the statements submitted under Sections 5.09(a) and
         (b), a certificate signed by the President or Treasurer of the general
         partner of the Borrower to the effect that no Event of Default, nor any
         event which, upon notice or lapse of time or both, would constitute an
         Event of Default, has occurred or, if any such Event of Default or
         event has occurred, specifying the nature and extent thereof;

                  (d) no later than July 31 and January 31 of each year, an
         internally prepared operating statement for the Apartments (for the
         January through June or June through December period, as applicable)
         and current rent roll for the Apartments;

                  (e) promptly upon receipt thereof, copies of all other
         reports, management letters and other documents submitted to the
         Borrower by independent accountants in connection with any annual or
         interim audit of the books of Borrower made by such accountants; and

                  (f) as soon as practical, from time to time, such other
         information regarding the operations, business affairs and financial
         condition of the Borrower and the Apartments as the Lender may
         reasonably request.

                                       19

<PAGE>

                  SECTION 5.10. Litigation Notice. THE BORROWER shall promptly
after the same shall have become known to any officer of the general partner of
the Borrower, notify the Lender in writing of any action, suit or proceeding at
law or in equity or by or before any governmental instrumentality or other
agency which, if adversely determined, might impair the ability of the Borrower
to perform its obligations under this Agreement, might impair the right of the
Borrower to carry on its business substantially as now conducted, or might
materially and adversely affect the business, operations, properties (including,
without limitation, the Collateral), assets or condition, financial or
otherwise, of the Borrower.

                  SECTION 5.11. Default Notice. The Borrower shall promptly give
notice in writing to the Lender of the occurrence of any Event of Default, or
any event which upon notice or lapse of time or both would constitute such an
Event of Default.

                  SECTION 5.12. Payment of Debt. The Borrower shall (i) make
full and timely payment of the principal of, and interest on, the Loan and all
other indebtedness, obligations and liabilities of the Borrower to the Lender,
whether now existing or hereafter arising, and (ii) duly comply with all the
terms and covenants contained in the Note, the Security Documents and all other
instruments and documents given to the Lender in connection with or pursuant to
this Agreement, all at the times and places and in the manner set forth therein.

                  SECTION 5.13. Further Assurances. The Borrower shall at its
cost and expense, upon request of the Lender, duly execute and deliver, or cause
to be duly executed and delivered, to the Lender such further instruments and do
and cause to be done such further acts as may be reasonably necessary or proper
to carry out more effectively the provisions and purposes of this Agreement and
the Security Documents.

                  SECTION 5.14. Lender's Right of Access, etc. The Lender and
its agents shall, at all reasonable times during the construction of the
Project, have the right of entry and free access to the Project and the right to
inspect all work done, labor performed and materials furnished in, on or
connected with the Project, to inspect all books, subcontracts and records of
the Borrower relating to the Project, and to demand and receive from the
Borrower and the Borrower's Contractor, agents and employees any information
regarding the Project, the Apartments and the finances connected therewith.

                  SECTION 5.15. Undisbursed Proceeds. At all times the Borrower
will leave as the undisbursed portion of the Loan an amount sufficient to
complete the Project in accordance with the Plans and to pay all bills and
charges in connection therewith. If the Lender at any time reasonably believes
that the undisbursed portion of the Loan is inadequate to complete the Project,
the Borrower will, upon the Lender's request, pay out of the Borrower's own
funds all costs of the Project until such time as the undisbursed portion of the
Loan is, in the Lender's opinion, sufficient to complete the Project and pay all
bills and charges in connection therewith.

                  SECTION 5.16. Re-Appraisals. The Borrower shall pay all
expenses associated with any re-appraisals which may be requested by the Lender
from time to time, if such appraisals are required by regulation or law.

                                       20

<PAGE>

                  SECTION 5.17. Further Documents. The Borrower shall execute
all other agreements, affidavits, powers of attorney, pledges, assignments,
conveyances, notes and other instruments which may reasonably be requested by
the Lender in connection with the Loan.

                  SECTION 5.18. Construction Sign. The Borrower agrees, at the
Lender's expense, to have a sign constructed and placed on the Real Estate in a
location satisfactory to the Lender and the Borrower stating that the Project is
being built with the proceeds of a construction loan by the Lender, said sign to
be in the form and to conform to the specifications set forth in Exhibit C
attached hereto, so long as such specifications do not violate any Governmental
Requirements.

                  SECTION 5.19. Construction Consultant. The Lender shall
commission, at the expense of the Borrower, a preliminary review of the Project
and all related contracts, plans and specifications, geotechnical reports,
environmental assessments and any other information relevant to the preparation
of the site and completion of the Improvements. The purpose of the review is to
confirm the feasibility of Project construction and the adequacy of the
Borrower's projected Development Budget. The Lender shall have the right to
employ the services of an inspecting architect or engineer to serve as the
Lender's Construction Consultant to review the Borrower's request for Advances.
The Borrower shall pay all reasonable fees and expenses of such inspecting
architect or engineer. The Construction Consultant may from time to time, at
such intervals as may be acceptable to the Lender, review the Plans and inspect
the Project on the Lender's behalf. The Borrower shall cooperate fully with the
Construction Consultant and give the Construction Consultant convenient access
to the Project.

                  SECTION 5.20. Construction Contract. The Borrower's
construction contract with the Contractor must provide for all work required to
complete the Project and must contain the following items:

                  (a) a completion date (specified by day, month and year)
         satisfactory to the Lender, which shall not exceed the Completion Date;

                  (b) a cost-plus provision satisfactory to the Lender;

                  (c) a provision that no change (by change order or otherwise)
         shall be executed without the prior written consent of the Lender where
         said change constitutes a Material Deviation from the Plans, and no
         extension of the completion date may be made without the prior written
         consent of the Lender; and

                  (d) a provision for retainage from progress payments to the
         Contractor of at least 10% of each payment until the work is
         substantially complete; provided, however, that (i) no retainage will
         be withheld with regard to costs of materials, the Contractor's fee and
         the Contractor's overhead and (ii) payment in full may be made to those
         subcontractors whose work has been fully completed, but only if such
         subcontractors have submitted final lien waivers in a form acceptable
         to the Lender.

                                       21

<PAGE>

                  SECTION 5.21. Bank Accounts. All depository accounts relating
to the construction of the Project must be maintained with the Lender throughout
the term of the Loan.

                  SECTION 5.22. Tenant Lease Agreements. All tenant lease
agreements for apartment units at the Apartments shall be substantially in the
form attached hereto as Exhibit D.

                                   ARTICLE VI.

                         EVENTS OF DEFAULT AND REMEDIES

                  SECTION 6.01. Events of Default. The following shall
constitute Events of Default under this Agreement:

                  (a) if the Borrower shall fail to pay to the Lender when due
         the principal or interest on the Loan or any other sum due under this
         Agreement, the Mortgage or any of the other Security Documents and such
         default shall continue unremedied for a period of five (5) days after
         the date the Lender gives the Borrower written notice of such default;
         or

                  (b) if the proceeds of the Loan or any part thereof are being,
         or shall at any time have been, diverted to a purpose other than those
         permitted hereunder; or

                  (c) if the Borrower fails to comply with any of the other
         provisions of this Agreement or of the Note, the Mortgage or the other
         Security Documents and such default shall continue unremedied for a
         period of thirty (30) days after the date the Lender gives the Borrower
         written notice of such default; or

                  (d) if any statement, representation or warranty contained
         herein or in the Mortgage or any of the other Security Documents or in
         any report, certificate or other instrument delivered to the Lender
         under this Agreement shall be untrue in any material respect at the
         time it was made; or

                  (e) if the Borrower conveys or further encumbers all or any
         part of the Collateral, without the prior written consent of the
         Lender; or

                  (f) if any lien, statement of lien or suit to enforce a lien
         is filed against any of the Collateral and the Borrower fails to have
         such lien satisfied or suit dismissed or to cause such lien to be
         removed from the Real Estate by the filing of a bond to discharge the
         lien, within forty-five (45) days after the date that Borrower received
         actual notice of such lien, statement of lien or suit; or

                  (g) if the Borrower at any time prior to the completion of the
         Project abandons the Project, or ceases work thereon for a period of
         more than twenty (20) consecutive calendar days, or fails diligently to
         prosecute the work on the Project; or

                                       22

<PAGE>

                  (h) if any Obligor fails to pay such Obligor's debts generally
         as they come due, or if a receiver, trustee, liquidator or other
         custodian is appointed for any Obligor or for any of the property of
         any Obligor, or if a petition in bankruptcy (whether for liquidation,
         reorganization, arrangement, wage earner's plan or otherwise) is filed
         by or against any Obligor, or if any Obligor applies for the benefits
         of, or takes advantage of, any law for relief of debtors, or enters
         into an arrangement or composition with, or makes an assignment for the
         benefit of, creditors; or

                  (i) if the Borrower becomes insolvent, or if of the Guarantor
         becomes insolvent or is replaced or withdraws as the general partner of
         the Borrower; or

                  (j) if any other event of default occurs under the Note, the
         Mortgage or any other Security Document; or

                  (k) if the Guarantor terminates its obligations under the
         Guaranty Agreement; or

                  (1) if the Guarantor fails to comply with the financial
         covenants described in the Guaranty Agreement or to provide the
         financial statements required under the Guaranty Agreement.

                  SECTION 6.02. Remedies. Upon the happening of any Event of
Default hereunder, and after the notice and right to cure as provided in Section
6.01 hereof, the Lender may at its option take any or all of the following
actions: (a) refuse to make any further Advances; (b) declare the total
outstanding Advances and all other indebtedness, obligations and liabilities of
the Borrower to the Lender, whether now existing or hereafter incurred,
contracted or arising, immediately due and payable; (c) declare the Note in
default and subject to foreclosure and foreclose the Mortgage by suit in equity
or under power of sale and foreclose any other of the Security Documents in such
manner as provided for therein and by applicable law; (d) enter into possession
of the Real Estate and the Project, perform any work and labor and purchase any
materials and fixtures which the Lender deems necessary or desirable to complete
the Project substantially in accordance with the Plans or to protect the Project
from damage or destruction, and employ watchmen to protect the Project from
injury; all sums so advanced or paid by the Lender shall be deemed paid to the
Borrower and shall be secured by the Mortgage and other Security Documents; and
(e) exercise any other remedies or rights which the Lender may have hereunder,
under any other instruments executed in connection with this Loan or under
applicable law. For the purposes set forth in this Section 6.02, the Borrower
hereby constitutes and appoints the Lender its true and lawful attorney-in-fact,
with full power of substitution in the premises, to complete the Project in the
name of the Borrower, and hereby empowers the Lender to use any funds of the
Borrower, including any funds which remain unadvanced under the Loan, for the
purpose of completing the Project, and to perform all acts which in the judgment
of the Lender are desirable or advisable to complete the Project, including,
without limitation, the right to make additions or changes (if deemed reasonably
necessary by the Lender in order to properly complete the Project) or
corrections in the Plans; to employ contractors, subcontractors, agents,
architects and inspectors; to pay, settle and compromise all bills and claims
incurred in completing the Project and all existing bills and claims which may
be liens against any of the Collateral; to execute all applications and
certificates in the name of the Borrower which may

                                       23

<PAGE>

be required by any of the contract documents entered into by the Borrower in
connection with the construction of THE PROJECT; and to do any other act which
the Borrower could do in its own behalf in order to enable the Lender to
complete the Project. This power of attorney shall be deemed to be a power
coupled with an interest and cannot be revoked. In addition to the other
remedies set forth above, during the continuation of any event which upon notice
or lapse of time or both would become an Event of Default, the Lender shall have
no obligation to make any further Advances hereunder.

                                  ARTICLE VII.

                                  MISCELLANEOUS

                  SECTION 7.01. Notices. Any notice or other communication
required or permitted to be given by this Agreement or the other Loan Documents
or by applicable law shall be in writing and shall be deemed received (a) on the
date delivered, if sent by hand delivery (to the person or department if one is
specified below) with receipt acknowledged by the recipient thereof, (b) five
(5) Business Days following the date deposited in U.S. mail, certified or
registered, with return receipt requested, or (c) one (1) Business Day following
the date deposited with Federal Express or other national overnight carrier, and
in each case addressed as follows:

                           to the Borrower:

                           8010 Roswell Road
                           Suite 120
                           Atlanta, Georgia 30350

                           to the Lender:

                           AmSouth Bank
                           P.0. Box 11007
                           Birmingham, Alabama 35288
                           Attention: Commercial Real Estate Loan Department

                  SECTION 7.02. Survival of Warranties: etc. All covenants,
agreements, representations and warranties made in this Agreement, in the
certificates delivered pursuant to this Agreement and in the Security Documents
shall survive the making by the Lender of each Advance and the execution and
delivery to the Lender of the Note and the Security Documents and shall continue
in full force and effect so long as the Note is outstanding and unpaid and this
Agreement has not been terminated by the Lender in writing. Whenever in this
Agreement or in the Security Documents any party is referred to, such reference
shall be deemed to include the successors and assigns of such party, except that
the Borrower may not assign or transfer this Agreement or the Security Documents
without the prior written consent of the Lender. All covenants, promises and
agreements by or on behalf of the Borrower which are contained in this
Agreement, the Note or the Security Documents shall bind the Borrower's
successors and assigns and shall inure to the benefit of the successors and
assigns of the Lender.

                                       24

<PAGE>

                  SECTION 7.03. Governing Law. This Agreement and the Note shall
be construed in accordance with and governed by the laws of the State of
Alabama.

                  SECTION 7.04. Non-Waiver. Neither any failure nor any delay on
the part of the Lender in exercising any right, power or privilege UNDER THIS
Agreement, the Security Documents or the Note shall operate as a waiver thereof,
nor shall a single or partial exercise thereof preclude any other or further
exercise or the exercise of any OTHER right, power or privilege.

                  SECTION 7.05. Non-Business Days. Should any installment of the
principal of, or interest on, the Note become due and payable on other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day, and in the case of an installment of principal, interest shall be
payable thereon at the rate per annum specified in this Agreement during such
extension.

                  SECTION 7.06. Modification; etc. No modification, amendment or
waiver of any provision of this Agreement, the Security Documents or the Note,
and no consent to any departure by the Borrower therefrom, shall be effective
unless the same shall be in writing and signed by the Lender, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No notice to, or demand on, the Borrower in any case
shall entitle the Borrower to any other or further notice or demand in the same,
similar or other circumstances.

                  SECTION 7.07. Set-off. Upon the occurrence and during the
continuance of any Event of Default the Lender is hereby authorized at any time
and from time to time, without notice to the Borrower (any such notice being
expressly waived by the Borrower), to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by the Lender to or for the credit or the
account of the Borrower against any and all of the obligations of the Borrower
now or hereafter existing under this Agreement or the Security Documents,
irrespective of whether or not the Lender shall have made any demand under this
Agreement and although such obligations may be unmatured. The Lender agrees
promptly to notify the Borrower after any such set-off and application, provided
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Lender under this Section 7.07 are in
addition to all other rights and remedies (including, without limitation, other
rights of set-off or pursuant to any banker's lien) which the Lender may have.

                  SECTION 7.08. Severability. Any provision of this Agreement,
the Security Documents or any other Loan Document to which the Borrower is or is
to be a party which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or thereof
or affecting the validity or enforceability of such provision in any other
jurisdiction.

                  SECTION 7.09. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but when
taken together all such counterparts shall constitute but one agreement, and any
party may execute this Agreement by executing any one or more of such
counterparts.

                                       25
<PAGE>
                  SECTION 7.10. Participation. The Borrower understands that
the Lender may from time to time enter into a participation agreement or
agreements with one or more participants pursuant to which each such
participant shall be given a participation in the Loan and that any such
participant may from time to time similarly grant to one or more
subparticipants subparticipations in the Loan. The Borrower agrees that any
participant or subparticipant may exercise any and all rights of banker's lien
or set-off with respect to the Borrower, as fully as if such participant or
subparticipant had made a loan directly to the Borrower in the amount of the
participation or subparticipation given to such participant or subparticipant
in the Loan. For the purposes of this Section 7.10 only, the Borrower shall be
deemed to be directly obligated to each participant or subparticipant in the
amount of its participating interest in the amount of the principal of, and
interest on, the Loan. Nothing contained in this Section 7.10 shall affect the
Lender's right of set-off (under Section 7.07 or applicable law) with respect
to the entire amount of the Loan, notwithstanding any such participation or
subparticipation. The Lender may divulge to any participant or subparticipant
all information, reports, financial statements, certificates and documents
obtained by it from the Borrower or any other person under any provision of
this Agreement or otherwise.

                  SECTION 7.11. Non-Liability of the Lender. The parties agree
that notwithstanding anything to the contrary set forth elsewhere in this
Agreement or any of the other Loan Documents:

                  (a) The Lender is not the agent, principal, co-venturer,
         partner or representative of the Borrower, and the Lender shall not be
         liable to materialmen, contractors, craftsmen, laborers or others for
         goods or services delivered by them to the Project, or for debts or
         claims accruing to them against the Borrower. There is to be no
         contractual relation, either express or implied, between the Lender
         and any materialmen, contractors, subcontractors, craftsmen, laborers,
         or any other person supplying any work, labor or materials to the
         Project by virtue of anything set forth in this Agreement or any of
         the other Loan Documents or otherwise.

                  (b) The Lender shall have no liability or obligation to any
         person in connection with the acquisition, construction, development
         or completion of the Project or any work performed thereon; and
         without limiting the generality of the foregoing, the Lender shall not
         be or become liable for (i) the performance or default of any
         contractor or subcontractor, (ii) any failure to construct, complete,
         protect or insure the Project, or any part thereof, or for the payment
         of any cost or expenses incurred in connection therewith, (iii) the
         performance or nonperformance of any obligation of any Obligor to the
         Lender or to any other person, or (iv) any act or omission in
         connection with the inspection of the Project or failure or refusal to
         inspect the Project.

                  (c) The Lender shall not have, and hereby expressly
         disclaims, any obligation or responsibility to any other person for
         the management, conduct or operation of the business and affairs of
         the Obligors.

                  (d) Any term or condition of any of the Loan Documents
         permitting the Lender to take or refrain from taking any action with
         respect to the Loan, any Obligor, or any of the Collateral shall be
         deemed to be solely for the benefit of the Lender, and the Lender may

                                       26

<PAGE>

         exercise or refrain from exercising any of its rights and remedies
         under any of the Loan Documents as in its sole discretion it deems
         necessary or desirable in order to ensure the timely payment of the
         Loan and to maintain and preserve the security afforded by the
         Collateral and to otherwise further the interests of the Lender, and
         such rights and remedies may not be relied upon by any other person.

                  (e) Nothing in this Agreement (including, without limitation,
         the provisions of Section 2.02) shall impose on the Lender any duty to
         pay any bills related to the Project or to see that such bills are
         paid.

                  (f) The engagement of a Construction Consultant shall not
         impose on the Lender any duty or responsibility to the Borrower or any
         other party to inspect the Project or cause the Project to be
         inspected, nor shall it impose on the Lender or the Construction
         Consultant any obligation or liability with respect to the manner in
         which the Project is constructed.

                  SECTION 7.12. Successors and Assigns, etc. Plural or singular
words used in this Agreement to designate the Borrower shall be construed to
refer to the person or persons, firm, partnership or corporation, whether one
or more than one, obtaining the Loan from the Lender; all covenants and
agreements made herein by the Borrower shall bind the heirs, personal
representatives, successors and assigns of all those undersigned designated as
the Borrower; and every option, right and privilege herein reserved or secured
to the Lender shall inure to the benefit of the Lender's successors and
assigns.

                                      27

<PAGE>

                  IN WITNESS WHEREOF, the undersigned have caused this
Agreement to be executed by their respective duly authorized representatives,
as of the date first set forth above.

                                    ROBERTS PROPERTIES RESIDENTIAL, L.P.,
                                    a Georgia limited partnership authorized to
                                    do business in North Carolina as Roberts
                                    Properties Residential, Limited Partnership

                                    By: Roberts Realty Investors, Inc., a
                                        Georgia corporation, sole general
                                        partner

                                        By: /s/ Charles R. Elliott
                                           -------------------------------------
                                           Charles R. Elliott, Secretary and
                                           Treasurer

                                    AMSOUTH BANK

                                    By
                                      ---------------------------
                                      Its Vice President

 STATE OF GEORGIA          )

 FULTON COUNTY             )

         I, the undersigned, a Notary Public in and for said county in said
State, hereby certify that Charles R. Elliott, whose name as Secretary and
Treasurer of Roberts Realty Investors, Inc., a Georgia corporation and the sole
general partner of Roberts Properties Residential, L.P., a Georgia limited
partnership authorized to do business in North Carolina as Roberts Properties
Residential, Limited Partnership, is signed to the foregoing instrument and who
is known to me, acknowledged before me on this day that, being informed of the
contents of said instrument, he, as such officer and with full authority,
executed the same voluntarily for and as the act of said corporation, acting in
its capacity as sole general partner of said limited partnership.

         Given under my hand and official seal this 19th day of February, 2002.

                                       /s/ ABIGAIL M. CARMICHAEL
                                       --------------------------------
                                       Notary Public
[SEAL]
AFFIX SEAL

My commission expires: June 17, 2005

                                       28

<PAGE>

STATE OF ALABAMA           )

JEFFERSON COUNTY           )

         I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that Lawrence Clark, whose name as Vice President of
AmSouth Bank, a state banking corporation, is signed to the foregoing
instrument and who is known to me, acknowledged before me on this day that,
being informed of the contents of said instrument, he, as such officer and with
full authority, executed the same voluntarily for and as the act of said
banking corporation.

         Given under my hand and official seal this the ______ day of February,
2002.

                                       ---------------------------------
                                       Notary Public

 AFFIX SEAL

My commission expires:______________

                                       29

<PAGE>

                                   EXHIBIT A

                             SURVEYOR'S CERTIFICATE

         The undersigned hereby certifies to AmSouth Bank and ________________
(the "Title Insurance Company"): (a) that he is a duly registered land surveyor
in the State of North Carolina; (b) that the plat to which this certificate is
affixed (the "Plat") is a true, complete and correct survey of the property
described therein (the "Property") being approximately _____ acres as further
described by the Property Description on the Plat; (c) that the Plat is based
upon a field survey made on _______________, by me or directly under my
supervision in accordance with "Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys" jointly established by ALTA/ACSM in 1999 and that
such field survey meets the accuracy requirement of a Class "A" survey as
defined therein; (d) that the Plat correctly shows the location of all
buildings, structures and other improvements on the Property; (e) that the Plat
correctly shows the location of all easements, restrictions and rights-of-way
described in title insurance commitment number ___________ dated as of
_________________, issued by the Title Insurance Company (the "Title
Commitment"); (f) that the legal description set forth in the Title Commitment
is identical in all respects to the Property Description set forth on the Plat;
(g) except as shown on the Plat there are no discrepancies between the boundary
lines of the Property as shown on the Plat and as described in the legal
description of record; (h) that the Plat indicates existing surface and
underground transmission lines or utilities, such as natural gas, telephone,
telegraph, TV cable, water, sewage and electrical power, including pipeline
type and sizes with all utility pole locations with overhead wires indicated
and the nearest available services clearly shown and dimensional; (i) that,
except as shown on the Plat, there are (i) no visible easements or
rights-of-way on the Property or any other easements or rights-of-way thereon
of which the undersigned has knowledge, (ii) no party walls on the Property,
(iii) no encroachments from the Property over adjoining premises, streets or
roads by any buildings, structures or other improvements located on the
Property, (iv) no encroachments on the Property by buildings, structures or
other improvements located on adjoining property, (v) the boundary line
dimensions as shown on the Plat form a mathematically closed figure within +/-
0.01 foot, and (vi) the boundary lines of the Property are contiguous with the
boundary lines of all adjoining parcels, roads, highways, streets or alleys as
described in their most recent respective legal description of record; (j) that
the buildings, structures and other improvements located on the Property do not
violate any building or setback lines; (k) that adequate ingress to and egress
from the Property is provided by _____________________________ [list all
streets], the same being a paved, dedicated public right of way maintained by
____________________ (name of maintaining authority); (1) that the undersigned
has consulted the National Flood Insurance Program Maps and has found that, in
accordance with said maps, Panel Number ______, dated ___________, no portion
of the Property lies within a flood hazard area; (m) the Property does not
serve any adjoining property for drainage, utilities, or ingress or egress; and
(n) the Property is not served by any adjoining property for drainage,
utilities, or ingress or egress. All utilities, vehicular access and drainage
necessary for the operations of the Property access the Property directly
through public rights of way or publicly dedicated easements without reliance
on private easement agreements or access through private property.

                                       -----------------------------------
                                       (Name of Surveyor, Registration No.)

<PAGE>

                                   EXHIBIT B

Affirmative Insurance:

         Anything contained in the policy to the contrary notwithstanding, the
company insures against loss or damage incurred by the insured by reason of the
enforcement or attempted enforcement of any mechanic's or materialmen's lien or
other liens for labor or materials arising at any time from the construction or
installation of improvements on the real property described herein.

<PAGE>

                                   EXHIBIT C

Financing Sign Specifications

                           SIGNAGE SPECIFICATIONS FOR
                               CONSTRUCTION SITE

         This exhibit should be given to sign painter to be used as opaque
projection art.

                                [AMSOUTH LOGO]

       White Prime board or metal with dark royal blue letters / PMS 293

<PAGE>

                                   EXHIBIT D

                              [Tenant Lease Form]

                                 see attached

<PAGE>
                          RESIDENTIAL LEASE AGREEMENT
[ROBERTS                                                        [EQUAL HOUSING
  LOGO]               ROBERTS PROPERTIES RESIDENTIAL, L.P.     OPPORTUNITY LOGO]

This Agreement made the ____________ day of ________________, 20_____ is between
Roberts Properties Residential, L.P. (hereinafter called "Management"), and
_______________________________________________ (hereinafter called "Resident"),
Management leases to Resident, and Resident rents from Management, Unit #______,
located at ____________________________________________________________________
in the ______________________________________________________________ apartment
complex under the following conditions.

WITNESSETH: That in consideration of the mutual covenants hereinafter set forth,
the parties do hereby covenant and agree as follows:

1. TERMS. The initial term of this lease shall commence on ___________, 20_____,
beginning at 12 Noon and shall expire on ___________ 20_____, at 12 Noon. If
actual commencement of occupancy of the premises is delayed because of
construction or the holding over of a prior resident, Management shall not be
liable to Resident in any respect for such delay, and this lease shall remain
in force subject to the following: a) the rent shall be abated on a daily basis
during such delay, and b) Resident may terminate this lease by giving notice in
writing to Management no later than the third day of such delay, whereupon
Resident shall be entitled to a refund of resident security deposit.

2. RENT. Resident agrees to pay Management the sum of $____________ per month
as rental. All rental shall be payable in advance either on or before the 1st
day of each month during the term of this lease. Rent shall be payable at the
Office of Management or at any such other place Management may designate. All
rent shall be paid by personal check, cashiers check, certified funds, or money
order. Management shall have the right to refuse any tender of payment in cash.
As a convenience to residents, payments may be made or tendered by personal
check issued and drawn on Resident's personal account at Management's option.
No third party checks will be accepted or considered a proper tender for
payment of rent. Only one (1) check can be accepted for rent per apartment
home. Only after total rent is received will rent payment be accepted. Any
additional sums or charges due from Resident, because of a breach or violation
of this rental agreement, shall be due as additional rent. Such additional sum
or charges shall include, but are not limited to, damages exceeding normal wear
and tear to the apartment, or the apartment community property, when such
damages are caused by Resident, Resident's family, occupant, guest, or
invitee(s).
Management may increase the monthly rent during any month-to-month extension of
the initial lease term by giving Resident at least thirty (30) days prior
written notice whereupon Resident shall be liable for the increased rent unless
Resident a) terminates this Agreement by written notice delivered to Management
within thirty (30) days after receipt of the rent increase notice, such
termination to be effective as of the effective date of the rent increase; b)
vacates the apartment before said effective date, and c) pays all monies due
through the effective date of termination.

3. LATE PAYMENT AND RETURNED CHECKS. Time is of the essence of this Agreement
and if Management agrees to accept rent after the fifth of the month, a late
charge of 10% shall be due as additional rent. In the event any check is
dishonored by the bank for any reason, Resident agrees to pay Management $25
per check as a handling charge and all accrued late charges as additional rent.
Replacement funds must be in certified funds or money order. In the event two
(2) checks are dishonored by the bank during any term of occupancy, Resident
agrees to pay all future rent and charges in the form of a cashiers check,
certified check, or money order. Management reserves the right to refuse
payment of late rent, late fees, and returned check fees after Management
serves Resident with a demand for rent or possession as provided for in
Georgia's statutes.

4. SECURITY DEPOSIT. Resident agrees to deposit $_____________ with Management
before taking possession of the unit as security for Resident's fulfillment of
the conditions of this Agreement. Management agrees to refund this security
deposit to Resident upon satisfaction of all of the following conditions or as
otherwise required by applicable law. Deposit will be returned to Resident
within 30 days after unit is vacated if:

   a) Lease term has expired or Agreement has been terminated by both parties
      in accordance with the expressed provisions thereof.

   b) Resident has paid all rentals required under the Agreement up to and
      including the date of expiration or termination of the term of the lease
      or the full notice period whichever is longer.

   c) The premises have been thoroughly cleaned and there are no defects or
      damages to the premises, normal wear and tear expected.

   d) Resident has given Management 60 days written notice prior to the date of
      expiration or termination of the term of the lease.

   e) Resident has provided Management with a written copy of the forwarding
      address of the Resident.

Deposit may be applied by Management to satisfy all or part of the Resident's
obligations and such act shall not prevent Management from claiming damages in
excess of the deposit. A charge of $50 will be made for replacing locks if all
keys are not returned upon vacation of the premises.
Resident's Security Deposit will be retained in Escrow Account No. ____________
at ________________________________. Management retains interest earned on this
account to cover processing expenses.

5. NON-REFUNDABLE PORTION OF GOOD FAITH DEPOSIT. Resident acknowledges that
Resident has previously submitted to Management a good faith deposit in the
amount of $_________________, $_________________, of which has been applied
toward the security deposit listed in Paragraph 4 after Resident received a
comprehensive list of existing damages and was afforded the opportunity to
inspect the premises. Resident agrees that the remaining $_________________ is
nonrefundable in accordance with the terms of the Application for Residency
which Resident executed on _________________________.

6. MOVE-IN DATE. The proposed move-in date shall be _____________________,
20______. Rental shall be due from that date until the end of the month in the
sum of $______________. Performance of all obligations, covenants, and
conditions of this lease shall be due from both Management and Resident as of
the move-in date.

7. ACCEPTANCE OF PREMISES. Resident accepts premises in "as is" condition as
suited for the use intended. Defects and damages not reported to management
shall be presumed to have first occurred during Resident's occupancy of the
premises. Resident shall use reasonable diligence in care of the premises and
shall maintain the premises in a safe and sanitary condition. All alterations,
additions, and improvements made to the premises must have prior written
approval of Management. Resident may not remodel or structurally change unit
nor remove any fixture therefrom.

8. EARLY TERMINATION. Provided Resident is not in default hereunder at the time
of giving the notice, Resident may terminate this Agreement before the
expiration of the original lease term by satisfying all of the following
conditions:

   a) Giving Management 60 days written notice of intent to cancel Lease
      Agreement.

   b) Paying all rentals and charges due through date of termination.

   c) Paying a termination fee equal to one month's rent.

   d) Forfeiting the security deposit to be applied to turnkey and preparation
      for new residency.

The foregoing shall not relieve Resident of his responsibilities and
obligations regarding any damage to the unit.

9. RENEWAL TERMS. Either party may terminate this Agreement at the end of the
initial term by giving the other party 60 days written notice prior to the end
of the term. If notice is not given, then this Agreement will be extended on a
month-to-month basis with all terms remaining the same until terminated by
either party upon 30 days written notice; provided, however, that in such event
the term "rent" as used in this Agreement shall be increased to the current
market rate and shall include in addition a monthly payment equal to 10% of the
current market rate as a month-to-month fee. Thirty (30) days written notice by
either party is required prior to termination during such month-to-month term,
notwithstanding the provisions of Paragraph 2 hereof allowing Resident to
terminate this Agreement upon written notice to Management within thirty (30)
days of Resident's receipt of a rent increase notice.

10. UTILITIES. Management shall furnish, without charge to Resident, the
following utility:

       [ ] Garbage Collection

Resident agrees all utilities not checked above shall be Resident's sole
responsibility and expense. Resident agrees to put said utilities in his/her
name immediately upon signing this Agreement and promptly pay same when due.
Resident acknowledges that continued occupancy in the apartment when any utility
service has been cut off is hazardous. Resident agrees not to terminate, cut
off, interrupt, or discontinue any utility service to the apartment, including,
but not limited to, electricity, natural gas, sewer, sanitation and water.
Breach of this provision shall constitute a default giving Management the right
to termination immediately and to obtain possession of the apartment. Any
charges billed to Management for utilities, due to Resident's breach of this
provision, shall be due as additional rent.

Management shall in no event be liable for any interruption or failure of
utility services required to be furnished by Management to the premises or any
damages directly or proximately caused thereby, the only obligation of
Management being reasonable diligence in its efforts to restore such services.
Resident shall make a written request for any repairs or services to such
utilities to any representative of Management at Premises, except in an extreme
emergency in which event such notice may initially be given by telephone and
later confirmed in writing to Management. Management shall not be responsible
for stopped-up plumbing, drains, or disposals where such stoppage is caused by
the introduction of foreign objects not intended for sewer disposal. Resident
shall pay on demand all charges of repair for such stoppage.

11. PETS. No animals, birds, or pets of any kind shall be permitted in the unit
without written consent of Management. If approved by Management, a Pet
Addendum must be executed and will become a part of this lease agreement.
Reasonable wear and tear does not include damage by pets.

12. USE. Premises shall be used for Residential purposes only and shall be
occupied only by the persons named in Resident's Rental Application. Premises
shall be used so as to comply with all state, county, and municipal laws and
ordinances. Resident shall not use premises or permit it to be used for any
disorderly or unlawful purpose or in any manner so as to interfere with other
residents' quiet enjoyment of their unit.

13. REPAIRS. Resident accepts apartment in as-is condition as suited for the
use intended. Resident understands and agrees the apartment equipment and
fixtures will be under the control of Resident and agrees to keep said
apartment together with the fixtures therein in a clean, sightly and sanitary
condition. Management will make necessary repairs to apartment with reasonable
promptness after receipt of written notice from Resident. If any damage beyond
normal wear and tear is caused by Resident, then Resident shall be charged as
additional rent the cost to repair or replace such damage.

<PAGE>
14.  RULES AND REGULATIONS. Resident and Resident's family and guests shall
comply with all rules and regulations now or hereafter promulgated by Management
including, without limitation, the printed Rules and Regulations; Addendum
attached hereto.

15.  DAMAGE OR DESTRUCTION OF PREMISES. In the event of damage to the premises
by fire or other hazard and damages are such that occupancy can be continued,
Management shall make repairs as needed with reasonable promptness and rent
shall not abate during the period of such repairs. If the premises is made
uninhabitable by fire, not the fault of Resident, this Agreement shall be
terminated.

16.  REIMBURSEMENT BY RESIDENT. Management will make necessary repairs to unit
with reasonable promptness after receipt of written notice from Resident. If any
damage, beyond normal wear and tear, is caused by Resident or his guests,
Resident agrees to pay Management the cost of repair with the next rent payment.

17.  ALTERATIONS. Resident shall make no changes, alterations or improvements of
any kind in or to the apartment without Management's prior written consent.
Resident shall not mark, paint, wallpaper, affix any flooring to, drill into, or
in any way deface any part of the apartment, nor shall the Resident deface the
inside or the outside of the building. If permission is given for any
installations or improvements, they shall be made strictly in accordance with
the direction and specifications of Management and in accordance with all
requirements of law. All alterations, additions or improvements upon apartment
made by either party pursuant to the provisions of this Agreement shall become
the property of Management, and shall remain upon and be surrendered with the
apartment as a part thereof at the end of the term hereof unless Management
elects by written notice to Resident given not less than fifteen (15) days prior
to the expiration or other termination of the term to have them removed, in
which event the same shall be removed by resident forthwith at Resident's
expense. All property and all installations and improvements required to be
removed by Resident at the end of the Term which remain in the apartment after
the end of the term shall be deemed abandoned by Resident and, at the election
of Management, may either be retained in the apartment as Management's property
or may be removed from the apartment by Management. In the event that Management
incurs expenses in either removing Resident's abandoned property from the
apartment or in restoring the damage caused to the apartment by the
installations of Resident which have been removed, Resident shall be liable for
the same. The provisions of this clause shall survive the expiration of the
lease term.

18.  HOLD OVER. Resident shall remove all of Resident's property and deliver
possession of premises in a clean condition in good order and repair to
Management upon termination or expiration of this Agreement. If Resident gives
notice to vacate the premises and fails to completely vacate prior to the
expiration of the notice, Resident shall be liable for two times the daily
rental for each day he remains in the premises after expiration of the notice.

19.  RIGHT OF ACCESS. Management shall have the right of access to premises,
without notice, for inspection and maintenance during reasonable hours. In case
of emergency, Management may enter at any time to protect life and prevent
damage to the property. Resident authorizes Management to show the unit to
prospective residents after Resident has given notice of termination.

20.  SUBLET. Resident may not sublet premises or assign this lease without
written consent of Management.

21.  ABANDONMENT. If resident removes or attempts to remove personal property
from the premises other than in the usual course of continuing occupancy without
first having paid Management all monies due for proper termination of this
agreement, the apartment may be considered abandoned, and Management shall have
the right, without notice, to store and dispose of any property left on the
premises by resident. Management shall also have the right to store or dispose
of any Resident's property remaining on the premises after termination of this
Agreement. Any such property shall be considered Management's property and title
shall vest in Management. Management shall also have the right to re-rent the
apartment after Resident abandons the same. Management, in its sole discretion,
shall have the right to determine those other circumstances under which it
considers the apartment to be abandoned. Resident agrees that such circumstances
as evidence of his abandonment of the premises include, but are not limited to,
the failure to pay rent or other charges, discontinuance of any utility service,
failure to respond to any notices, phone calls or correspondence from Management
within 3 days, or removal of resident's personal property from the apartment.
Any one of the foregoing circumstances or other circumstances shall be
sufficient to evidence an abandonment. In the event the apartment is abandoned,
Management shall have the right, without notice, to secure the apartment with
new locks, to store or dispose of any property or personal possessions left on
the premises by Resident or Resident's family, occupants, guests or invitees, or
to re-rent the apartment for new occupancy. Resident agrees that Management
shall have no liability for any actions taken to secure the apartment, obtain
possession of the premises, or store or dispose of any personal property or
possessions found in the apartment when the Management deems the apartment to
have been abandoned. Resident acknowledges and agrees that Management's acts or
failure to act with regard to securing the apartment, obtaining possession of
the premises or storing or disposing of any personal property or possessions
found in the apartment under circumstances which are or may indicate abandonment
are a contractual matter to which the resident has given his consent, and any
alleged breach shall not give rise to a claim in tort nor to a claim for
punitive damages.

22.  DEFAULT BY RESIDENT. If Resident fails to pay any rent or other charges as
and when due hereunder, or if Resident abandons the apartment or fails to
perform any of its obligations hereunder, or if any facts contained in
Resident's rental application are untrue or misleading, or in violation of
rules/regulations, then, upon the happening of any said events, Resident shall
be in default hereunder and Management may at its option terminate this
Agreement by written notice to resident. Resident shall surrender possession of
the apartment to Management upon the effective date of such termination notice
and Resident shall be liable to Management for, and shall indemnify Management
against, all rent loss and other expenses (for reletting, refurbishing, cleaning
or otherwise making the apartment suitable for reletting) suffered or incurred
by Management as a result of Resident's default and the termination of the
agreement Management's application of the security deposit (if any) shall not
relieve resident of liability for any other rent, charges, damages or other
costs which may be due. Notwithstanding the commencement of a dispossessory
proceeding and the issuance and execution of a writ of possession on account of
any default by Resident, Resident shall remain liable to Management for all rent
and other charges accrued through the date on which possession was obtained by
Management and shall continue to be liable for any rental accruing thereafter
until the earliest (a) the expiration of the terms of this lease or (b) the
rerental of the apartment.

23.  INDEMNIFICATION.  Resident releases Management from liability for and
agrees to indemnify Management against all losses incurred by Management as a
result of a) Resident's failure to fulfill any condition of this agreement, b)
any damage or injury happening in or about unit or premises to Resident's
invitees or licensees or Management's other residents or such persons' property;
if such damage or injury be due to the act or neglect of Resident, any guest of
Resident or anyone in Resident's control or employ or if such damage or injury
be due to any failure of resident to report in writing to Management any such
defective condition, c) Resident's failure to comply with any of the
requirements and posed by any governmental authority; and d) any judgment, lien
or other encumbrance filed against unit as the result of resident's actions.
Management shall not be liable for damage or loss or Resident's personal
property and hereby advises Resident to obtain a policy of renter's insurance to
protect such personal property.

24.  NOTICES. Any notice required by this Agreement shall be in writing and
shall be deemed to be given if delivered personally or mailed by registered or
certified mail to resident at the address in the first sentence of this
Agreement, and to Management at the apartment complex identified in the first
sentence of this Agreement.

25.  LIENS OR SALE. Residents' rights under this lease shall at all times be
automatically junior and subject to any deed to secure debt which is now or
shall hereafter be placed on premises of which unit is a part; if requested
Resident shall execute promptly any certificate that Management may request to
specifically implement the subordination of this paragraph. Any sale of the
premises shall not affect this lease or any of the obligations of Residents
hereunder, but upon such sale Management shall be released from all obligations
hereunder and Resident shall look solely to the then owner of the premises for
the performance of the deed of "Management" hereunder from and after the date of
such sale. Resident further recognizes and agrees that not withstanding the
subordination contained in the preceding sentence, any lender having a deed to
secure debt on the premises may at the option of such lender, foreclose its deed
to secure debt subject to Resident's rights under this lease.

26.  REMEDIES CUMULATIVE.  All remedies under this Agreement or by law or equity
shall be cumulative. If a suit for any breach of this Agreement establishes a
breach by Resident, Resident shall pay to Management all expenses incurred in
connection therewith.

27.  CONTINGENCY. This lease Agreement is contingent upon written approval of
Resident's Rental Application.

28.  RESIDENT LIABILITY. In the event of more than one Resident, each Resident
is jointly and severally liable for each provision of this lease.

29.  MANAGEMENT'S PERMISSION OR CONSENT. If any provision of this Agreement
requires the written permission or consent of Management as a condition to any
act of Resident, such written permission or consent may be granted or withheld
in the sole discretion of Management, may contain conditions as Management deems
appropriate and shall be effective only so long as Resident complies with such
conditions. Moreover, any written permission or consent given by Management to
Resident may be modified, revoked or withdrawn by Management at any time, at
Management's sole discretion, upon written notice to Resident.

30.  GENDER. In all references herein to Resident, the use of the singular
number is intended to include the appropriate number as the text of this lease
may require, and all gender references to male or female are intended to be
gender neutral.

31.  ENTIRE AGREEMENT. This Agreement and any attached Addendums constitute the
entire Agreement between the parties and no oral statements shall be binding.

32.  NO WAIVER. Failure of Management to insist upon the strict performance of
any provision or to exercise any option or any rules and regulations shall not
be construed as a waiver for the future of any such provision, rule or option.
The receipt by Management of rent with knowledge of the breach of any provision
of this Agreement shall not be deemed a waiver of such breach. No provision of
this Agreement shall be deemed to have been waived unless such waiver be in
writing signed by Management. No payment by Resident or receipt by Management of
a lesser amount than the monthly rent shall be deemed to be other than on
account of the earliest rent then unpaid nor shall any endorsement or statement
on any check or any letter accompanying any check or payment as rent be deemed
an accord and satisfaction and Management may accept such check or payment
without prejudice to Management's right to recover the balance of such rent or
pursue any other remedy in this Agreement.

33.  SEVERABILITY. If any provision of this Agreement or application thereof to
any person or circumstances shall to any extent be invalid, the remainder of
this Agreement or the application of such provision to persons or circumstances
other than those as to which it is held invalid shall not be affected thereby
and each provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.

34.  CAPTIONS. The captions used herein are for the convenience of the reader
and shall not be used in construing this Agreement.

MANAGEMENT:                                 RESIDENT(S):

By:
   ---------------------------------        ----------------------------------

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

                                            ----------------------------------
<PAGE>

                                 SCHEDULE 2.03 A

                             INTEREST RATE SELECTION

To:      AmSouth Bank

                  ROBERTS PROPERTIES RESIDENTIAL, L.P. (the "Borrower") hereby
requests a LIBOR Based Rate for the period beginning _________, 200_ and ending
____________, 200_, and further requests that a principal amount of $_______ be
subject to said LIBOR-Based Rate.

                  The Borrower hereby acknowledges that the Lender shall use its
best efforts to notify the Borrower by telephone of the Lender's estimate of the
LIBOR-Based Rate by 10:00 a.m., Birmingham time on the day on which the
LIBOR-Based Rate shall become applicable. The Borrower also acknowledges that if
the Borrower does not immediately accept a LIBOR-Based Rate quoted by the
Lender, the Lender may review the quoted LIBOR-Based Rate at any time. If there
is any uncertainty as to whether or not the Borrower and the Lender have agreed
upon a LIBOR-Based Rate, interest shall accrue at the then applicable
LIBOR-Based Rate with a 30-day LIBOR-Based Rate Period.

                                           ROBERTS PROPERTIES RESIDENTIAL, L.P.,
                                           a Georgia limited partnership

                                           By: Roberts Realty Investors, Inc., a
                                               Georgia corporation, sole general
                                               partner

                                               By:
                                                  ------------------------------
                                                  Charles R. Elliott, Secretary
                                                  and Treasurer

** The persons authorized to execute this document shall be Charles R. Elliott
or Charles S. Roberts, or their respective designees.

<PAGE>

                                SCHEDULE 4.03(F)

                             INSURANCE REQUIREMENTS

I.       GENERAL REQUIREMENTS

         The General Requirements set forth herein shall be applicable to the
insurance requirements outlined below in Paragraph II and III throughout the
term of this Commitment Agreement.

         (A)      RELATING TO INSURER.

         All insurance coverages required by the Commitment must be provided by
insurance companies acceptable to the Lender that are rated at least an "A-XII"
or better by Best's Insurance Guide and Key Ratings and a claim payment rating
by Standard & Poor's Corporation of AA or better. The aggregate amount of
coverage provided by a single company must not exceed 5% of the company's
policyholders' surplus. All insurance companies must be licensed and qualified
to do business in the state where the insured collateral is located.

         Each insurance policy must (i) provide primary insurance without right
of contribution from any other insurance carried by the Lender, (ii) contain an
express waiver by the insurer of any right of subrogation, setoff or
counterclaim against any insured party thereunder including the Lender, (iii)
permit the Lender to pay premiums at the Lender's discretion and (iv) as
respects any third party liability claim brought against the Lender, obligate
the insurer to defend Lender as an additional insured thereunder.

         (B)      RELATING TO DOCUMENTATION OF COVERAGE.

         The original copy of each insurance policy required hereunder shall be
furnished to the Lender, or in the case of a blanket policy, a copy of the
original policy certified in writing by a duly authorized Agent for the
insurance company as a "true and certified" copy of the policy. The Borrower
shall not submit a Certificate of Insurance, in lieu of the certified copy of
the policy. The original policy(ies) or certified copy of the policy(ies) must
be delivered to the Lender, effective with the commencement of the Project and
furnished annually thereafter, prior to the expiration date of the preceding
policy(ies).

         (C)      CANCELLATION AND MODIFICATION CLAUSE.

         1.       The insurer hereby agrees that its policy will not lapse,
terminate, or be canceled, or be amended or modified to reduce limits or
coverage terms unless and until AmSouth Bank has received not less than thirty
(30) days' prior written notice thereof at the following address:

AmSouth Bank
Attention: Commercial Real Estate Department, P.O. Box 11007, Birmingham,
Alabama 35288.

         2.       Notwithstanding the foregoing, in the event of cancellation
due to non-payment of premium, the insurer shall provide not less than ten (10)
days' Notice of Cancellation to AmSouth Bank, Attention: Commercial Real Estate
Department, P.O. Box 11007, Birmingham, Alabama 35288.

         (D)      MORTGAGEE CLAUSE.

         All policies providing physical damage type coverages on the building
or improvements shall show the mortgage interest as follows:

         AmSouth Bank, its successors and assigns, Attention: Commercial Real
Estate Department, P.O. Box 11007, Birmingham, Alabama 35288

         (E)      LOSS PAYABLE CLAUSE.

         All policies providing physical damage type coverages on the personal
property or construction materials not yet a part of the improvements shall show
a Loss Payee interest as follows:

         Loss, if any, under this policy shall be payable to AmSouth Bank, its
successors and assigns, as their interests may appear.

         Attention: Commercial Real Estate Department, P.O. Box 11007,
Birmingham, Alabama 35288

II.      TYPES OF INSURANCE - DURING THE CONSTRUCTION PERIOD

         The Borrower will at all times keep the Project insured prior to
completion of the improvements against loss or damage from such causes as are
customarily insured against, by prudent owners of similar facilities. Without
limiting the generality of the foregoing, the Borrower will obtain or shall
cause its contractor to obtain, and maintain in effect, the following amounts
and types of insurance.

         (A)      "ALL RISKS" or "SPECIAL" FORM BUILDERS' RISK INSURANCE.

         All Risks or Special Form Builders' Risk insurance against loss or
damage to the Project, including but not limited to, perils of fire, lightning,
water, wind, theft, vandalism and malicious mischief, plate glass breakage,
off-site materials storage, in-transit coverage, expediting expense coverage and
perils typically provided under an Extended Coverage Endorsement and other forms
of broadened risk perils, and insured on a "replacement cost" value basis to the
extent of the full

<PAGE>
replacement value of the Project. The deductible amount thereunder shall be
borne by the Borrower in the event of a loss and the deductible must not exceed
$5,000 per occurrence. Further, in the event of a loss, the Borrower shall abide
by all provisions of the insurance contract, including proper and timely notice
of the loss to the insurer, and the Borrower further agrees it will notify
Lender of any loss in the amount of $25,000 or greater and that no claim at or
in excess of $25,000 thereunder shall be settled without the prior written
consent of the Lender, which consent shall not be unreasonably withheld or
delayed by the Lender.

         Subject to notice provisions contained above in Paragraph I(C),
Cancellation and Modification Clause, the Builders Risk policy shall contain a
Standard Mortgage Holder Endorsement to guarantee to the benefit of Lender said
coverages shall not be voided or canceled, without proper notice, by reason of
(i) any act of negligence, or breach of any condition, declaration or warranty
contained in any such policy by the Borrower or any third party, (ii) the
occupation, operation or use of the Project for purposes more hazardous than
those permitted by the terms of the policy, (iii) any foreclosure or other
proceeding or notice of sale relating to the Project, or (iv) any change in the
title to or ownership of all or any portion of the Project.

         Debris Removal coverage shall be included in an amount deemed
appropriate by the Borrower, but in no event less than $250,000 for removal from
a casualty loss and no less than $10,000 for debris removal of pollutants.

         (B)      BOILER AND MACHINERY EQUIPMENT INSURANCE.

         Such form of coverage whether permanent or under the Builders Risk
shall be in place at the appropriate time during the Project period in order to
include and insure "Hot Testing" of the new equipment and systems for a minimum
of thirty days prior to Project completion and occupancy. The Boiler and
Machinery Equipment policy shall then remain in force after Project completion
throughout the term of the Loan as part of the required coverages enumerated in
Paragraph III. Amount of insurance shall be in an amount equal to the
replacement cost value of the equipment, and shall include coverage for
expediting permanent repairs and permanent replacement. The deductible for any
loss thereunder shall not exceed $5,000 per occurrence.

         (C)      FLOOD AND EARTHQUAKE INSURANCE.

         Insurance in an amount equal to the full replacement cost value of the
Project, subject to no more than a $25,000 per occurrence deductible. The policy
shall include coverage for subsidence.

         (D)      DELAY-LOSS OF EARNINGS AND RENTS INSURANCE.

         Throughout the Project construction period until its completion,
insurance against loss of earnings and rents as a result of delay (when delay is
caused by an insured peril under the Builder's Risk Policy, Boiler and Machinery
Policy and any other property insurance coveting the Project) written in an "all
risks" form, either as an endorsement to the insurance required under Paragraph
I(A), or under a separate policy, in an amount sufficient (in the Lender's
opinion) to cover mortgage payments for a period of at least six months.

         (E)      WORKERS COMPENSATION INSURANCE.

         Workers Compensation insurance covering all employees of the Borrower
and its contractor and subcontractors for the Project to the extent required by
Statutory Law, including an "All States Endorsement". Policy shall also provide
Employer's Liability coverage for

Bodily Injury by Accident $1,000,000 Each Accident

Bodily Injury by Disease $1,000,000 Policy Limit

Bodily Injury by Disease $1,000,000 Each Employee

         The Borrower shall require or shall cause its general contractor to
require evidence of Workers Compensation coverage from each and every
subcontractor in form and limits acceptable to the Lender.

         (F)      LIABILITY INSURANCE.

         COMMERCIAL GENERAL LIABILITY: Commercial General Liability in a primary
amount of at least $500,000 per occurrence, Bodily Injury for injury or death of
any one person and $100,000 for Property Damage for damage to or loss of
property of others, subject to a $1,000,000 annual aggregate policy limit for
all Bodily Injury and Property Damage claims occurring on or about the Land or
in any way related to the Project. Such policy shall include coverages of a
Broad Form nature, including, but not limited to, Explosion, Collapse and
Underground (XCU), Products Liability, Completed Operations, Broad Form
Contractual Liability, Broad Form Property Damage, Personal Injury, Incidental
Malpractice Liability, and Host Liquor Liability.

         VEHICLE LIABILITY: Automobile and Vehicle Liability insurance coverage
for all owned, non-owned, leased or hired automobiles and vehicles in a primary
limit amount of $500,000 per occurrence for Bodily Injury; $100,000 per
occurrence for Property Damage.

         UMBRELLA LIABILITY: Umbrella Liability insurance in the minimum amount
of $10,000,000 for each occurrence and aggregate combined single limit for all
liability, with a $10,000 self-insured retention for exposure not covered in
underlying primary policies. The Umbrella Liability policy shall name in its
underlying schedule the policies of Commercial General Liability,
Automobile Vehicle Liability and Employer's Liability under the Workers
Compensation Policy.
<PAGE>
         (G)      COMMERCIAL BLANKET FIDELITY BOND INSURANCE.

         A Commercial Blanket Bond covering employees of the Borrower and the
general contractor, including their officers, and the individual owners, of the
insured business entity, whether a joint-venture, partnership, proprietorship or
incorporated entity, against loss as a result of their dishonesty. Policy limit
shall be in an amount of at least $1,000,000, subject to a deductible of no more
than $25,000 per occurrence.

         (H)      CONTRACTOR'S EQUIPMENT.

         The Borrower shall require or shall cause its general contractor to
require, insurance to protect the contractor or its subcontractors for damage
to, including loss use of any tools, equipment or vehicles whether licensed or
not for road use, including owned, leased, hired, or borrowed equipment or
vehicles. The Lender shall assume no responsibility for loss or damage to the
above.

III.     TYPES OF PERMANENT INSURANCE - AFTER THE CONSTRUCTION PERIOD

         The Borrower will at all times keep the Project insured after
completion of the improvements against loss or damage from such causes as are
customarily insured against, by prudent owners of similar facilities. Without
limiting the generality of the foregoing, the Borrower will obtain and maintain
in effect the following amounts and types of insurance throughout the term of
the Loan.

         (A)      "ALL RISKS" OR "SPECIAL" FORM PROPERTY INSURANCE.

         All Risks or Special Form Property insurance against loss or damage to
the building and improvements, including but not limited to, perils of fire,
lightning, water, wind, theft, vandalism and malicious mischief, plate glass
breakage, and perils typically provided under an Extended Coverage Endorsement
and other forms of broadened risk perils, and insured on a "replacement cost"
value basis to the extent of the full replacement value of the Project. The
deductible amount thereunder shall be borne by the Borrower in the event of a
loss and the deductible must not exceed $5,000 per occurrence. Further, in the
event of a loss, the Borrower shall abide by all provisions of the insurance
contract, including proper and timely notice of the loss to the insurer, and the
Borrower further agrees it will notify Lender of any loss in the amount of
$25,000 or greater and that no claim at or in excess of $25,000 thereunder shall
be settled without the prior written consent of the Lender, which consent shall
not be unreasonably withheld or delayed by the Lender.

         (B)      BOILER AND MACHINERY EQUIPMENT INSURANCE.

         Such permanent form of coverage shall be in place at the appropriate
time during the Project period in order to include and insure "Hot Testing" of
the new equipment and systems for a minimum of thirty days prior to Project
completion and occupancy. The Boiler and Machinery Equipment policy shall then
remain in force After Project completion throughout the term of the Loan. Amount
of insurance shall be in an amount equal to the replacement cost value of the
equipment, and shall include coverage for expediting permanent repairs and
permanent replacement. The deductible for any loss thereunder shall not exceed
$5,000 per occurrence.

         (C)      FLOOD AND EARTHQUAKE INSURANCE.

         Insurance in an amount equal to the full replacement cost value of the
Project, subject to no more than a $25,000 per occurrence, deductible. The
policy shall include coverage for subsidence.

         (D)      LOSS OF EARNINGS AND RENTS

         Insurance against loss of earnings and rents in an amount sufficient
(in the Lender's opinion) to cover not less than 12 months' lost earnings and
rents written in an "all risks" form, either as an endorsement to the insurance
required under Paragraph II (A), or under a separate policy.

         (E)      WORKERS COMPENSATION INSURANCE.

         Workers Compensation insurance covering all employees of the Borrower,
or any contractor employed to run or maintain the facility to the extent
required by Statutory Law, including an "All States Endorsement". Policy shall
also provide Employer's Liability coverage for

Bodily Injury by Accident $1,000,000 Each Accident

Bodily Injury by Disease $1,000,000 Policy Limit

Bodily Injury by Disease $1,000,000 Each Employee

         The Borrower shall require any contractor hired to manage or maintain
the facility to provide evidence of Workers Compensation coverage to Borrower in
such form and with such limits deemed acceptable to Borrower.

         (F)      LIABILITY INSURANCE.

         COMMERCIAL GENERAL LIABILITY: Commercial General Liability in a primary
amount of at least $500,000 per occurrence, Bodily Injury for injury or death of
any one person and $100,000 for Property Damage for damage to or loss of
property of others, subject to a $1,000,000 annual aggregate policy limit for
all Bodily Injury and Property damage claims, occurring on or about the Land or
in any way related to the Project, including but not limited to, any swimming
pools, golf courses or other recreational facilities or areas that are located
on the Land or otherwise related to the Project. Such policy shall include
coverages of a Broad Form nature, including, but not limited to, Explosion,
Collapse
<PAGE>

and Underground (XCU), Products Liability, Completed Operations, Broad Form
Contractual Liability, Broad Form Property Damage, Personal Injury, Incidental
Malpractice Liability, and Host Liquor Liability.

         VEHICLE LIABILITY: Automobile and Vehicle Liability insurance coverage
for all owned, non-owned, leased or hired automobiles and vehicles in a primary
limit amount of $500,000 per occurrence for Bodily Injury; $100,000 per
occurrence for Property Damage; subject to an annual aggregate policy limit of
$l,000,000.

         UMBRELLA LIABILITY: Umbrella Liability insurance in the minimum amount
of $10,000,000 for each occurrence and aggregate combined single limit for all
liability, with a $10,000 self-insured retention for exposure not covered in
underlying primary policies. The Umbrella Liability policy shall name in its
underlying schedule the policies of Commercial General Liability, Garage Keepers
Liability, Automobile/Vehicle Liability and Employer's Liability under the
Workers Compensation Policy.

         (G)      COMMERCIAL BLANKET FIDELITY BOND INSURANCE.

         A Commercial Blanket Bond covering all employees of the Borrower,
including its officers, and the individual owners of the insured business
entity, whether a joint-venture, partnership, proprietorship or incorporated
entity, against loss as a result of their dishonesty. Policy limit shall be in
an amount of at least $100,000, subject to a deductible of no more than $10,000
per occurrence.

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