<PAGE>
                                                                  Exhibit 10.123


                         MORTGAGE AND SECURITY AGREEMENT

                              Dated: August 2, 2001

----------------------------------- -----------------------------------
Mortgagor:                          Mortgagee:
----------                          ----------
GLIMCHER WESTPARK PLAZA, LLC        LEHMAN BROTHERS BANK, FSB
20 South Third Street               Three World Financial Center
Columbus, Ohio 3215                 200 Vesey Street
                                    New York, New York 10285
----------------------------------- -----------------------------------

Mortgaged Property:
-------------------
Common Address: Westpark Plaza, 2431-2467 West Main Street, Carbondale, Illinois

P.I.N. No.: 15-18-476-006-0060
            15-18-476-007-0060



----------------------------------- -----------------------------------
Prepared By:                        When Recorded, Please Return To:
------------                        --------------------------------
Stroock & Stroock & Lavan LLP       Stroock & Stroock & Lavan LLP
180 Maiden Lane                     180 Maiden Lane
New York, New York  10038           New York, New York  10038
(212) 806-5400                      Attention: Oumar Diop

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


<PAGE>


                                TABLE OF CONTENTS
                                -----------------

                         Article 1 - GRANTS OF SECURITY

Section 1.1          Property Mortgaged.........................................
Section 1.2          Assignment of Rents........................................
Section 1.3          Security Agreement.........................................
Section 1.4          FIXTURE FILING.............................................
Section 1.5          Pledges of Monies Held.....................................


                    Article 2 - DEBT AND OBLIGATIONS SECURED

Section 2.1          DEBT.......................................................
Section 2.2          Other Obligations..........................................
Section 2.3          Debt And Other Obligations.................................


                         Article 3 - BORROWER COVENANTS

Section 3.1          Payment of Debt............................................
Section 3.2          Incorporation by Reference.................................
Section 3.3          INSURANCE..................................................
Section 3.4          Maintenance of Property....................................
Section 3.5          WASTE......................................................
Section 3.6          Payment for Labor and Materials............................
Section 3.7          Performance of Other Agreements............................
Section 3.8          Change of Name, Identity or Structure......................


                      Article 4 - OBLIGATIONS AND RELIANCES

Section 4.1          Relationship of Borrower and Lender........................
Section 4.2          No Reliance on Lender......................................
Section 4.3          No Lender Obligations......................................
Section 4.4          RELIANCE...................................................


                         Article 5 - FURTHER ASSURANCES

Section 5.1          Recording of Security Instrument, etc......................
Section 5.2          Further Acts, etc..........................................
Section 5.3          Changes in Tax, Debt, Credit and Documentary Stamp Laws....
Section 5.4          Splitting of Mortgage......................................
Section 5.5          Replacement Documents......................................


                       Article 6 - DUE ON SALE/ENCUMBRANCE

Section 6.1          Lender Reliance............................................
Section 6.2          No Sale/Encumbrance........................................
Section 6.3          Sale/Encumbrance Defined...................................
Section 6.4          Lender's Rights............................................


                  Article 7 - RIGHTS AND REMEDIES UPON DEFAULT

Section 7.1          REMEDIES...................................................
Section 7.2          Application of Proceeds....................................
Section 7.3          Right to Cure Defaults.....................................


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Section 7.4          Actions and Proceedings....................................
Section 7.5          Recovery of Sums Required To be Paid.......................
Section 7.6          Examination of Books and Records...........................
Section 7.7          Other Rights, Etc..........................................
Section 7.8          Right to Release Any Portion of the Property...............
Section 7.9          Violation of Laws..........................................
Section 7.10         Recourse and Choice of Remedies............................
Section 7.11         RIGHT OF ENTRY.............................................


                        Article 8 - ENVIRONMENTAL HAZARDS

Section 8.1          Environmental Representations and Warranties...............
Section 8.2          Environmental Covenants....................................
Section 8.3          Lender's Rights............................................


                           Article 9 - INDEMNIFICATION

Section 9.1          General Indemnification....................................
Section 9.2          Mortgage and/or Intangible Tax.............................
Section 9.3          ERISA Indemnification......................................
Section 9.4          Environmental Indemnification..............................
Section 9.5          Duty to Defend; Attorneys' Fees and Other Fees and Expenses


                              Article 10 - WAIVERS

Section 10.1         Waiver of Counterclaim.....................................
Section 10.2         Marshalling and Other Matters..............................
Section 10.3         Waiver of Notice...........................................
Section 10.4         Waiver of Statute of Limitations...........................
Section 10.5         SURVIVAL...................................................


                            Article 11 - EXCULPATION

                              Article 12 - NOTICES

                           Article 13 - APPLICABLE LAW

Section 13.1         GOVERNING LAW..............................................
Section 13.2         USURY LAWS.................................................
Section 13.3         Provisions Subject to Applicable Law.......................


                            Article 14 - DEFINITIONS

                      Article 15 - MISCELLANEOUS PROVISIONS

Section 15.1         NO ORAL CHANGE.............................................
Section 15.2         Successors and Assigns.....................................
Section 15.3         Inapplicable Provisions....................................
Section 15.4         HEADINGS, ETC..............................................
Section 15.5         Number and Gender..........................................
Section 15.6         SUBROGATION................................................
Section 15.7         Entire Agreement...........................................
Section 15.8         Limitation on Lender's Responsibility......................


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<PAGE>


                       Article 16 - INTENTIONALLY DELETED

                     Article 17 - STATE-SPECIFIC PROVISIONS

Section 17.1         Waiver of Redemption and Other Rights......................
Section 17.2         Future Advances............................................
Section 17.3         Conflicting Provisions.....................................



                                      iii
<PAGE>


                         MORTGAGE AND SECURITY AGREEMENT

                  THIS MORTGAGE AND SECURITY AGREEMENT (this "SECURITY
INSTRUMENT") is made as of this 2 day of August, 2001, by GLIMCHER WESTPARK
PLAZA, LLC, a Delaware limited liability company, having its principal place of
business at 20 South Third Street, Columbus, Ohio 43215, as grantor ("BORROWER")
to LEHMAN BROTHERS BANK, FSB, a federal stock savings bank, having an address at
Three World Financial Center, New York, New York 10285, as beneficiary
("LENDER").

                              W I T N E S S E T H:
                               - - - - - - - - - -

                  WHEREAS, this Security Instrument is given to secure a loan
(the "LOAN") in the principal sum of TWO MILLION FIVE HUNDRED THIRTY EIGHT
THOUSAND AND 00/100 DOLLARS ($2,538,000.00) or so much thereof as may be
advanced pursuant to that certain Loan Agreement dated as of the date hereof
between Borrower and Lender (as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time, the "LOAN AGREEMENT") and
evidenced by that certain Promissory Note dated the date hereof made by Borrower
to Lender (such Note, together with all extensions, renewals, replacements,
restatements or modifications thereof being hereinafter referred to as the
"NOTE"); and

                  WHEREAS, Borrower desires to secure the payment of the Debt
(as defined in the Loan Agreement) and the performance of all of its obligations
under the Note, the Loan Agreement and the other Loan Documents; and

                  WHEREAS, this Security Instrument is given pursuant to the
  Loan Agreement, and payment, fulfillment, and performance by Borrower of its
  obligations thereunder and under the other Loan Documents are secured hereby,
  and each and every term and provision of the Loan Agreement and the Note,
  including the rights, remedies, obligations, covenants, conditions,
  agreements, indemnities, representations and warranties of the parties
  therein, are hereby incorporated by reference herein as though set forth in
  full and shall be considered a part of this Security Instrument (the Loan
  Agreement, the Note, this Security Instrument, that certain Assignment of
  Leases and Rents of even date herewith made by Borrower in favor of Lender
  (the "ASSIGNMENT OF LEASES") and all other documents evidencing or securing
  the Debt are hereinafter referred to collectively as the "LOAN DOCUMENTS").

                  NOW THEREFORE, in consideration of the making of the Loan by
Lender and the covenants, agreements, representations and warranties set forth
in this Security Instrument:


<PAGE>


                         Article 1 - GRANTS OF SECURITY

         Section 1.1 PROPERTY MORTGAGED. Borrower does hereby irrevocably
mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey to
Lender, the following property, rights, interests and estates now owned, or
hereafter acquired by Borrower (collectively, the "PROPERTY"):

                  (a) GROUND LEASE. All right, title and interest of Borrower
         lease, as lessee under that certain Lease Agreement dated July 16, 1979
         by and between P. Michael Kimmel, Trustee under Trust Agreement dated
         June 16, 1979 and known as the Phillip M. Kimmel Trust, as Lessor and
         Carbondale Plaza Development Company as Lessee (the "ORIGINAL LEASE");
         as amended by Lease Agreement Number 1, dated February 26, 1982; as
         amended by Lease Agreement Number 2, dated March 25, 1982; as disclosed
         by Memorandum of Lease, dated March 25, 1982, and recorded April 20,
         1982 in Book 593, Page 693; as assigned to K & E Development Co. by
         Assignment dated March 31, 1982 and recorded April 20, 1982 in Book
         593, Page 698; as further amended by Amendment and Restatement pf Lease
         Agreement dated December 19, 1984, and recorded in Book 636, Page 279;
         as assigned to Westbrook Plaza Inc., by Assignment dated December 19,
         1984 and recorded January 2, 1985 in Book 636, Page 406; as assigned to
         Sutton Square Plaza Associates by Assignment dated June 1, 1985, and
         recorded in Book 645, Page 53; as conveyed and assigned to Sutton
         Square II Plaza Associates, L.P. by quitclaim deed dated as of July 1,
         1993, and recorded August 3, 1993 in Book 823, Page 191; as further
         assigned to Glimcher Centers Limited Partnership by Assignment dated
         January 17, 1994, and recorded February 4, 1994 in Book 838, Page 355;
         and as further assigned to Glimcher Properties Limited Partnership by
         Assignment dated as of July 28, 2000 and recorded August __, 2000 in
         Book ____, Page ____; as further assigned to Borrower by Assignment
         dated July __, 2001 and recorded in Book ___, Page ___ (the Original
         Lease as amended and assigned, being hereinafter referred to as the
         "GROUND LEASE"), of the real property described in EXHIBIT A attached
         hereto and made a part hereof (the "LAND");

                  (b) ADDITIONAL LAND. All additional lands, estates and
         development rights hereafter acquired by Borrower for use in connection
         with the Land and the development of the Land and all additional lands
         and estates therein which may, from time to time, by supplemental
         mortgage or otherwise be expressly made subject to the lien of this
         Security Instrument;

                  (c) IMPROVEMENTS. The buildings, structures, fixtures,
         additions, enlargements, extensions, modifications, repairs,
         replacements and improvements now or hereafter erected or located on
         the Land (collectively, the "IMPROVEMENTS");

                  (d) EASEMENTS. All easements, rights-of-way or use, rights,
         strips and gores of land, streets, ways, alleys, passages, sewer
         rights, water, water courses, water rights and powers, air rights and
         development rights, and all estates, rights, titles, interests,
         privileges, liberties, servitudes, tenements, hereditaments and
         appurtenances of any nature whatsoever, in any way now or hereafter
         belonging, relating or pertaining to the Land and the Improvements and
         the reversion and reversions, remainder and remainders, and all land
         lying in the bed of any street, road or avenue, opened or proposed, in
         front of or adjoining the Land, to the center line thereof and all the
         estates, rights, titles, interests, dower and rights of dower, curtesy
         and rights of curtesy, property, possession, claim and demand
         whatsoever, both at law and in equity, of Borrower of, in and to the
         Land and the Improvements and every part and parcel thereof, with the
         appurtenances thereto;

                  (e) EQUIPMENT. All "equipment," as such term is defined in
         Article 9 of the Uniform Commercial Code, now owned or hereafter
         acquired by Borrower, which is used at or in connection with the
         Improvements or the Land or is located thereon or therein (including,
         but not limited to, all machinery, equipment, furnishings, and
         electronic data-processing and other office equipment now owned or
         hereafter acquired by Borrower and any and all additions, substitutions
         and replacements of any of the foregoing), together with all
         attachments, components, parts, equipment and accessories installed
         thereon or affixed thereto (collectively, the "EQUIPMENT").
         Notwithstanding the foregoing, Equipment shall not include any property
         belonging to tenants under leases except to the extent that Borrower
         shall have any right or interest therein;


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<PAGE>


                  (f) FIXTURES. All Equipment now owned, or the ownership of
         which is hereafter acquired, by Borrower which is so related to the
         Land and Improvements forming part of the Property that it is deemed
         fixtures or real property under the law of the particular state in
         which the Equipment is located, including, without limitation, all
         building or construction materials intended for construction,
         reconstruction, alteration or repair of or installation on the
         Property, construction equipment, appliances, machinery, plant
         equipment, fittings, apparatuses, fixtures and other items now or
         hereafter attached to, installed in or used in connection with
         (temporarily or permanently) any of the Improvements or the Land,
         including, but not limited to, engines, devices for the operation of
         pumps, pipes, plumbing, cleaning, call and sprinkler systems, fire
         extinguishing apparatuses and equipment, heating, ventilating,
         plumbing, laundry, incinerating, electrical, air conditioning and air
         cooling equipment and systems, gas and electric machinery,
         appurtenances and equipment, pollution control equipment, security
         systems, disposals, dishwashers, refrigerators and ranges, recreational
         equipment and facilities of all kinds, and water, gas, electrical,
         storm and sanitary sewer facilities, utility lines and equipment
         (whether owned individually or jointly with others, and, if owned
         jointly, to the extent of Borrower's interest therein) and all other
         utilities whether or not situated in easements, all water tanks, water
         supply, water power sites, fuel stations, fuel tanks, fuel supply, and
         all other structures, together with all accessions, appurtenances,
         additions, replacements, betterments and substitutions for any of the
         foregoing and the proceeds thereof (collectively, the "FIXTURES").
         Notwithstanding the foregoing, "Fixtures" shall not include any
         property which tenants are entitled to remove pursuant to leases except
         to the extent that Borrower shall have any right or interest therein;

                  (g) PERSONAL PROPERTY. All furniture, furnishings, objects of
         art, machinery, goods, tools, supplies, appliances, general
         intangibles, contract rights, accounts, accounts receivable,
         franchises, licenses, certificates and permits, and all other personal
         property of any kind or character whatsoever (as defined in and subject
         to the provisions of the Uniform Commercial Code as hereinafter
         defined), other than Fixtures, which are now or hereafter owned by
         Borrower and which are located within or about the Land and the
         Improvements, together with all accessories, replacements and
         substitutions thereto or therefor and the proceeds thereof
         (collectively, the "PERSONAL PROPERTY"), and the right, title and
         interest of Borrower in and to any of the Personal Property which may
         be subject to any security interests, as defined in the Uniform
         Commercial Code, as adopted and enacted by the state or states where
         any of the Property is located (the "UNIFORM COMMERCIAL CODE"),
         superior in lien to the lien of this Security Instrument and all
         proceeds and products of the above;

                  (h) LEASES AND RENTS. All leases and other agreements
         affecting the use, enjoyment or occupancy of the Land and the
         Improvements heretofore or hereafter entered into, whether before or
         after the filing by or against Borrower of any petition for relief
         under 11 U.S.C. ss.101 et seq., as the same may be amended from time to
         time (the "BANKRUPTCY CODE") (collectively, the "LEASES") and all
         right, title and interest of Borrower, its successors and assigns
         therein and thereunder, including, without limitation, cash or
         securities deposited thereunder to secure the performance by the
         lessees of their obligations thereunder and all rents, additional
         rents, revenues, issues and profits (including all oil and gas or other
         mineral royalties and bonuses) from the Land and the Improvements
         whether paid or accruing before or after the filing by or against
         Borrower of any petition for relief under the Bankruptcy Code
         (collectively, the "RENTS") and all proceeds from the sale or other
         disposition of the Leases and the right to receive and apply the Rents
         to the payment of the Debt;

                  (i) CONDEMNATION AWARDS. Except to the extent required to be
         applied under the Ground Lease with respect to the Ground Lease Land,
         all awards or payments, including interest thereon, which may
         heretofore and hereafter be made with respect to the Property, whether
         from the exercise of the right of eminent domain (including but not
         limited to any transfer made in lieu of or in anticipation of the
         exercise of the right), or for a change of grade, or for any other
         injury to or decrease in the value of the Property;

                  (j) INSURANCE PROCEEDS. Except to the extent required to be
         applied under the Ground Lease, all proceeds in respect of the Property
         under any insurance policies covering the Property, including, without
         limitation, the right to receive and apply the


                                       3
<PAGE>


         proceeds of any insurance, judgments, or settlements made in lieu
         thereof, for damage to the Property;

                  (k) TAX CERTIORARI. All refunds, rebates or credits in
         connection with reduction in real estate taxes and assessments charged
         against the Property as a result of tax certiorari or any applications
         or proceedings for reduction;

                  (l) CONVERSION. All proceeds of the conversion, voluntary or
         involuntary, of any of the foregoing including, without limitation,
         proceeds of insurance and condemnation awards, into cash or liquidation
         claims;

                  (m) RIGHTS. The right, in the name and on behalf of Borrower,
         to appear in and defend any action or proceeding brought with respect
         to the Property and to commence any action or proceeding to protect the
         interest of Lender in the Property;

                  (n) AGREEMENTS. All agreements, contracts, certificates,
         instruments, franchises, permits, licenses, plans, specifications and
         other documents, now or hereafter entered into, and all rights therein
         and thereto, respecting or pertaining to the use, occupation,
         construction, management or operation of the Land and any part thereof
         and any Improvements or respecting any business or activity conducted
         on the Land and any part thereof and all right, title and interest of
         Borrower therein and thereunder, including, without limitation, the
         right, upon the happening of any default hereunder, to receive and
         collect any sums payable to Borrower thereunder;

                  (o) TRADEMARKS. All tradenames, trademarks, servicemarks,
         logos, copyrights, goodwill, books and records and all other general
         intangibles relating to or used in connection with the operation of the
         Property;

                  (p) GROUND LEASE RIGHTS. Any contract right, option or right
         of first refusal, now owned or hereafter acquired by Borrower, to
         purchase or otherwise acquire the interest of the lessor (the "Lessor")
         under the Ground Lease or any other estate, title or interest in or to
         the property subject to the Ground Lease; (q) any right of Borrower to
         reject or terminate, or to agree to or acquiesce in any rejection or
         termination of the Ground Lease, whether made with respect to any
         election under Section 365(b) of the Bankruptcy Code (or any successor
         provision) or under any similar law or right of any nature, or
         otherwise; and all other rights and privileges (including but not
         limited to any credit, security, deposit and offset) of the Borrower as
         lessee under the Ground Lease and all rights, privileges and
         prerogatives to terminate, cancel, modify, change, supplement, alter,
         amend or renew the Ground Lease.

                  (p) OTHER RIGHTS. Any and all other rights of Borrower in and
         to the items set forth in Subsections (a) through (p) above.

         AND without limiting any of the other provisions of this Security
Instrument, to the extent permitted by applicable law, Borrower expressly grants
to Lender, as secured party, a security interest in the portion of the Property
which is or may be subject to the provisions of the Uniform Commercial Code
which are applicable to secured transactions; it being understood and agreed
that the Improvements and Fixtures are part and parcel of the Land (the Land,
the Improvements and the Fixtures collectively referred to as the "REAL
PROPERTY") appropriated to the use thereof and, whether affixed or annexed to
the Real Property or not, shall for the purposes of this Security Instrument be
deemed conclusively to be real estate and conveyed hereby.

         Section 1.2 ASSIGNMENT OF RENTS. Borrower hereby absolutely and
unconditionally assigns to Lender all of Borrower's right, title and interest in
and to all current and future Leases and Rents; it being intended by Borrower
that this assignment constitutes a present, absolute assignment and not an
assignment for additional security only. Nevertheless, subject to the terms of
the Assignment of Leases and Section 7.1(h) of this Security Instrument, Lender
grants to Borrower a revocable license to collect, receive, use and enjoy the
Rents. Borrower shall hold the Rents, or a portion thereof sufficient to
discharge all current sums due on the Debt, for use in the payment of such sums.

         Section 1.3 SECURITY AGREEMENT. This Security Instrument is both a real
property deed of trust and a "security agreement" within the meaning of the
Uniform Commercial Code. The Property includes both real and personal property
and all other rights and interests, whether tangible or


                                       4
<PAGE>


intangible in nature, of Borrower in the Property. By executing and delivering
this Security Instrument, Borrower hereby grants to Lender, as security for the
Obligations (hereinafter defined), a security interest in the Fixtures, the
Equipment and the Personal Property to the full extent that the Fixtures, the
Equipment and the Personal Property may be subject to the Uniform Commercial
Code (said portion of the Property so subject to the Uniform Commercial Code
being called the "COLLATERAL"). If an Event of Default shall occur and be
continuing, Lender, in addition to any other rights and remedies which it may
have, shall have and may exercise immediately and without demand, any and all
rights and remedies granted to a secured party upon default under the Uniform
Commercial Code, including, without limiting the generality of the foregoing,
the right to take possession of the Collateral or any part thereof, and to take
such other measures as Lender may deem necessary for the care, protection and
preservation of the Collateral. Upon request or demand of Lender after the
occurrence and during the continuance of an Event of Default, Borrower shall, at
its expense, assemble the Collateral and make it available to Lender at a
convenient place (at the Land if tangible property) reasonably acceptable to
Lender. Borrower shall pay to Lender on demand any and all expenses, including
reasonable legal expenses and attorneys' fees, incurred or paid by Lender in
protecting its interest in the Collateral and in enforcing its rights hereunder
with respect to the Collateral after the occurrence and during the continuance
of an Event of Default. Any notice of sale, disposition or other intended action
by Lender with respect to the Collateral sent to Borrower in accordance with the
provisions hereof at least ten (10) business days prior to such action, shall,
except as otherwise provided by applicable law, constitute reasonable notice to
Borrower. The proceeds of any disposition of the Collateral, or any part
thereof, may, except as otherwise required by applicable law, be applied by
Lender to the payment of the Debt in such priority and proportions as Lender in
its discretion shall deem proper. Borrower's (Debtor's) principal place of
business is as set forth on page one hereof and the address of Lender (Secured
Party) is as set forth on page one hereof.

         Section 1.4 FIXTURE FILING. Certain of the Property is or will become
"fixtures" (as that term is defined in the Uniform Commercial Code) on the Land,
described or referred to in this Security Instrument, and this Security
Instrument, upon being filed for record in the real estate records of the city
or county wherein such fixtures are situated, shall operate also as a financing
statement naming Borrower as the Debtor and Lender as the Secured Party filed as
a fixture filing in accordance with the applicable provisions of said Uniform
Commercial Code upon such of the Property that is or may become fixtures.

         Section 1.5 PLEDGES OF MONIES HELD. Borrower hereby pledges to Lender
any and all monies now or hereafter held by Lender or on behalf of Lender,
including, without limitation, any sums deposited in the Clearing Account, the
Reserve Funds and Net Proceeds, as additional security for the Obligations until
expended or applied as provided in this Security Instrument.

                               CONDITIONS TO GRANT

         TO HAVE AND TO HOLD the above granted and described Property unto and
to the use and benefit of Lender and its successors and assigns, forever;

         PROVIDED, HOWEVER, these presents are upon the express condition that,
if Borrower shall well and truly pay to Lender the Debt at the time and in the
manner provided in the Note, the Loan Agreement and this Security Instrument,
shall well and truly perform the Other Obligations as set forth in this Security
Instrument and shall well and truly abide by and comply with each and every
covenant and condition set forth herein and in the Note, the Loan Agreement and
the other Loan Documents, these presents and the estate hereby granted shall
cease, terminate and be void; provided, however, that Borrower's obligation to
indemnify and hold harmless Lender pursuant to the provisions hereof shall
survive any such payment or release.

                  Article 2 - DEBT AND OBLIGATIONS SECURED

         Section 2.1 DEBT. This Security Instrument and the grants, assignments
and transfers made in Article 1 are given for the purpose of securing the Debt
which by its definition (as set forth in Loan Agreement) includes, but is not
limited to, the obligations of Borrower to pay to Lender the principal and
interest owing pursuant to the terms and conditions of the Note.

         Section 2.2 OTHER OBLIGATIONS. This Security Instrument and the grants,
assignments and transfers made in Article 1 are also given for the purpose of
securing the following (the "OTHER OBLIGATIONS"):

                           (a) the performance of all other obligations of
                  Borrower contained herein;


                                       5
<PAGE>


                           (b) the performance of each obligation of Borrower
                  contained in the Loan Agreement and any other Loan Document;
                  and

                           (c) the performance of each obligation of Borrower
                  contained in any renewal, extension, amendment, modification,
                  consolidation, change of, or substitution or replacement for,
                  all or any part of the Note, the Loan Agreement or any other
                  Loan Document.

A copy of each of the Loan Documents is available for review during regular
business hours at the office of Lender at the address first set forth above.

         Section 2.3 DEBT AND OTHER OBLIGATIONS. Borrower's obligations for the
payment of the Debt and the performance of the Other Obligations may sometimes
be referred to collectively herein as the "OBLIGATIONS."

                         Article 3 - BORROWER COVENANTS

         Borrower covenants and agrees that:

         Section 3.1 PAYMENT OF DEBT. Borrower will pay the Debt at the time and
in the manner provided in the Loan Agreement, the Note and this Security
Instrument.

         Section 3.2 INCORPORATION BY REFERENCE. All the covenants, conditions
and agreements contained in (a) the Loan Agreement, (b) the Note and (c) all and
any of the other Loan Documents, are hereby made a part of this Security
Instrument.

         Section 3.3 INSURANCE. Borrower shall obtain and maintain, or cause to
be maintained, in full force and effect at all times insurance with respect to
Borrower and the Property as required pursuant to the Loan Agreement.

         Section 3.4 MAINTENANCE OF PROPERTY. Borrower shall cause the Property
to be maintained in a good and safe condition and repair. The Improvements, the
Fixtures, the Equipment and the Personal Property shall not be removed,
demolished or materially altered (except for normal replacement of the Fixtures,
the Equipment or the Personal Property, tenant finish and refurbishment of the
Improvements) without the consent of Lender. Borrower shall promptly repair,
replace or rebuild any part of the Property which may be destroyed by any
casualty, or become damaged, worn or dilapidated and shall complete and pay for
any structure at any time in the process of construction or repair on the Land.

         Section 3.5 WASTE. Borrower shall not commit or suffer any waste of the
Property or make any change in the use of the Property which will in any way
materially increase the risk of fire or other hazard arising out of the
operation of the Property, or take any action that might invalidate or allow the
cancellation of any Policy, or do or permit to be done thereon anything that may
in any way materially impair the value of the Property or the security of this
Security Instrument. Borrower will not, without the prior written consent of
Lender, permit any drilling or exploration for or extraction, removal, or
production of any minerals from the surface or the subsurface of the Land,
regardless of the depth thereof or the method of mining or extraction thereof.

         Section 3.6 PAYMENT FOR LABOR AND MATERIALS. (a) Borrower will promptly
pay when due all bills and costs for labor, materials, and specifically
fabricated materials ("LABOR AND MATERIAL COSTS") incurred in connection with
the Property and never permit to exist beyond the due date thereof in respect of
the Property or any part thereof any lien or security interest, even though
inferior to the liens and the security interests hereof, and in any event never
permit to be created or exist in respect of the Property or any part thereof any
other or additional lien or security interest other than the liens or security
interests hereof except for the Permitted Encumbrances.

                  (b) After prior written notice to Lender, Borrower, at its own
expense, may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the amount or validity or
application in whole or in part of any of the Labor and Material Costs, provided
that (i) no Event of Default has occurred and is continuing under the Loan
Agreement, the Note, this Security Instrument or any of the other Loan
Documents, (ii) Borrower is permitted to do so under the provisions of any other
mortgage, deed of trust or deed to secure debt affecting the Property, (iii)
such


                                       6
<PAGE>


proceeding shall suspend the collection of the Labor and Material Costs from
Borrower and from the Property or Borrower shall have paid all of the Labor and
Material Costs under protest, (iv) such proceeding shall be permitted under and
be conducted in accordance with the provisions of any other instrument to which
Borrower is subject and shall not constitute a default thereunder, (v) neither
the Property nor any part thereof or interest therein will be in danger of being
sold, forfeited, terminated, canceled or lost, and (vi) Borrower shall have
furnished the security as may be required in the proceeding, or as may be
reasonably requested by Lender to insure the payment of any contested Labor and
Material Costs, together with all interest and penalties thereon.

                  Section 3.7 ADDITIONAL PROVISIONS REGARDING GROUND LEASE.

                  (a) Borrower shall promptly pay all rent, additional rent,
contingent rent, taxes and all other sums and charges when due and payable under
the terms of the Ground Lease, shall fully and promptly perform and observe all
of the agreements, terms, covenants and conditions required to be performed and
observed by Borrower under the Ground Lease within the grace periods provided
therein for Borrower's performance (in contrast to any additional grace periods
provided for therein or by any separate agreement for curative action by the
Lender), and shall do all things necessary to preserve and keep unimpaired
Borrower's rights under the Ground Lease. Upon demand, Borrower shall furnish to
Lender proof of payment of all sums which the Ground Lease requires Borrower to
pay.

                  (b) Borrower shall immediately notify Lender in writing of:
(i) any default (or alleged default) by Borrower or Lessor in the performance or
observance of any of the terms, covenants or conditions on the part of Borrower
or Lessor to be performed or observed under the Ground Lease; (ii) the receipt
by Borrower of any notice or other writing or communication from Lessor noting
or claiming any default by Borrower in such performance or observance under the
Ground Lease; and (iii) the receipt by Borrower of any notice from Lessor of any
termination of the Ground Lease pursuant to the terms thereof or otherwise.
Borrower shall immediately cause a copy of each such notice to be delivered to
Lender.

                  (c) If Borrower fails to observe or perform any covenant or
agreement to be observed or performed under the Ground Lease on the part of
Borrower, or if Lender receives from Lessor any notice of any default by
Borrower thereunder, Lender may rely on such notice and may take any action that
Lender in its sole discretion deems necessary or advisable to cure such default,
even if the existence of such default or the nature thereof is questioned or
denied by Borrower; provided, however, that Lender shall not take any action to
cure such default if, and so long as (i) Borrower shall take all steps necessary
to challenge or take any action to cure such default; and (ii) during such
challenge or cure: (A) the interests of Lender may in no way be adversely
affected, (B) no time limits or grace periods under the Ground Lease would
expire which would give Lessor any right or option to terminate the Ground
Lease, and (C) no additional right or remedy would become available to Lessor by
reason of the deferral by Lender of any action to effect a cure of the claimed
default; and (iii) if the default is a default in the payment of a sum of money,
Borrower shall post with Lender security acceptable to Lender to pay the amount
in dispute. Borrower hereby expressly grants to Lender the absolute and
immediate right to enter in and upon the Land to such extent and as often as
Lender in its sole discretion deems necessary or desirable to prevent or cure
any default by Borrower under the Ground Lease or this Security Instrument.
Lender may pay and expend such sums of money as Lender in its sole discretion
deems necessary for any such purpose, and upon so doing shall be subrogated to
any and all rights of Borrower, as lessee, and all such sums shall be secured by
the lien of this Security Instrument, shall be added to the principal amount of
the Debt and shall accrue interest at the Default Rate (as defined in the Loan
Agreement).

                  (d) Without the prior written consent of the Lender, which
Lender may grant or withhold in its sole discretion, Borrower shall not: (i)
surrender the Ground Lease or terminate, cancel or release, or assign the Ground
Lease (nor permit any of the foregoing to occur), whether under Section 365 of
the Bankruptcy Code (or any successor provision) or under any similar law or
right of any nature, or otherwise; nor (ii) modify, abridge, change, supplement,
alter or amend the Ground Lease, either orally or in writing and hereby
irrevocably grants and assigns to Lender the power and right to modify, abridge,
change, supplement, alter or amend the Ground Lease, and no agreement seeking to
modify, abridge, change, supplement, alter or amend the Ground Lease shall be
valid or binding without the prior written consent of Lender; nor (iii) waive
any of its rights against Lessor under the Ground Lease; nor (iv) subordinate
the Ground Lease to any mortgage encumbering any portion of the Land ; nor (v)
agree to or acquiesce in any rejection or termination of the Ground Lease by
Lessor or Lessor's trustee in bankruptcy, whether under Section 365 of the
Bankruptcy Code (or any successor provision) or under any similar law or
provision, and any such surrender, abandonment, termination, cancellation,
release, modification, change, supplement, alteration, amendment, waiver,
subordination, agreement or acquiescence without


                                       7
<PAGE>


Lender's prior written consent shall be ineffective as against Lender, and shall
constitute a default under this Security Instrument for which no grace or
curative period shall apply. In addition to the provisions of this Section
3.7(d):

                  (i) If any action, proceeding, motion or notice shall be
         commenced or filed in respect of the Ground Lease by any party thereto,
         in connection with any case under the Bankruptcy Code, Lender shall
         have the option, to the exclusion of Borrower, to conduct and control
         any such litigation with counsel of Lender's choice. Lender may proceed
         in its own name or in the name of Borrower in connection with any such
         litigation, and Borrower agrees to execute any and all powers,
         authorizations, consents and other documents required by the Lender in
         connection therewith. Borrower shall, upon demand, pay to Lender all
         costs and expenses (including attorneys' fees and costs) paid or
         incurred by Lender in connection with the prosecution or conduct of any
         such proceedings. Any such costs and expenses not paid by Borrower as
         aforesaid shall be secured by the lien of this Security Instrument,
         shall be added to the principal amount of the Debt and shall accrue
         interest at the Default Rate. Borrower shall not commence any action,
         suit, proceeding or case, or file any application or make any motion,
         in respect of the Ground Lease, in any case under the Bankruptcy Code
         as amended from time to time without the prior written consent of
         Lender.

                  (ii) Borrower shall promptly after obtaining knowledge
         thereof, notify Lender orally of any filing by or against Borrower of a
         petition under the Bankruptcy Code. Borrower shall thereafter forthwith
         deliver written notice of such filing to Lender, setting forth any
         information available to Borrower as of the date of such filing, the
         court in which such petition was filed, and the relief sought therein.
         Upon its receipt thereof, Borrower shall promptly deliver to Lender any
         and all notices, summonses, pleadings, applications and other documents
         received by Borrower in connection with any such petition and any
         proceedings relating thereto.

                  (iii) The lien of this Security Instrument attaches to all of
         Borrower's and Lessor's rights and remedies at any time arising under
         or pursuant to Section 365 of the Bankruptcy Code (whether as Land lord
         or tenant under any lease), including, without limitation, all of
         Borrower's rights to remain in possession of the Land and Improvements
         in the event of Lessor's rejection of the Ground Lease. Borrower shall
         not, without Lender's prior written consent, elect to treat the Ground
         Lease as terminated under Section 365 of the Bankruptcy Code. Any such
         election made without Lender's prior written consent shall be void.

                  (iv) Borrower hereby unconditionally assigns, transfers and
         sets over to Lender all of Borrower's claims and rights to the payment
         of damages (including but not limited to the right to any offsets or
         credits) arising from any rejection of the Ground Lease by Lessor under
         the Bankruptcy Code. Lender shall have the right to proceed in its own
         name or in the name of Borrower in respect of any claim, suit, action
         or proceeding relating to the rejection of the Ground Lease, including,
         without limitation, the right to file and prosecute, to the exclusion
         of Borrower, any proofs of claim, complaints, motions, applications,
         notices and other documents, in any case under the Bankruptcy Code.
         This assignment constitutes a present, irrevocable and unconditional
         assignment of the foregoing claims, rights and remedies, and shall
         continue in effect until all of the Debt shall have been satisfied and
         discharged in full. Any amounts received by Lender as damages arising
         out of the rejection of the Ground Lease as aforesaid shall be applied
         first to all costs and expenses of Lender (including, without
         limitation, attorneys' fees and costs) incurred in connection with the
         exercise of any of its rights or remedies under this Security
         Instrument. For the purposes of construing Section 365(h) of the
         Bankruptcy Code, the intention of the parties hereto is that the term
         "possession" shall mean the right to possession of all of the leased
         premises granted to Borrower under the Ground Lease, whether or not all
         or part of the leased premises is covered by any of the Leases.

                  (v) If there shall be filed by or against Borrower a petition
         under the Bankruptcy Code, and Borrower, as lessee under the Ground
         Lease or lessor under the Leases, shall determine to reject the Ground
         Lease or any of the Leases pursuant to Section 365 of the Bankruptcy
         Code, Borrower shall give the Lender not less than ten days' prior
         written notice of the date on which Borrower shall apply to the
         bankruptcy court for authority to reject the Ground Lease or any of the
         Leases. Lender shall have the right, but not the obligation, to serve
         upon Borrower within such ten day period a notice stating that (A) the
         Lender demands that Borrower assume and assign the Lease in question to
         the Lender pursuant to Section 365


                                       8
<PAGE>


         of the Bankruptcy Code and (B) the Lender covenants to cure (or provide
         adequate assurance of prompt cure of) all defaults and provide adequate
         assurance of future performance under such Lease. If the Lender serves
         upon Borrower the notice described in the preceding sentence, Borrower
         shall not seek to reject such Lease and shall comply with the demand
         provided for in clause (A) of the preceding sentence within thirty (30)
         days after the notice shall have been given, subject to the performance
         by the Lender of the covenant provided for in clause (B) of the
         preceding sentence.

                  (e) Borrower shall require strict and full performance by
Lessor of all the agreements, terms, covenants and conditions required to be
performed and observed by Lessor under the Ground Lease.

                  (f) Borrower shall promptly notify Lender in writing of any
claim, action or proceeding (including, but not limited to, any request for
arbitration or institution of such arbitration) made by any party to the Ground
Lease, and the progress thereof and any determination made by the court and/or
arbitrators thereunder. Lender shall have the right to participate in any such
claim, action or proceedings as an interested party.

                  (g) Borrower shall use its best efforts to obtain from Lessor
under the Ground Lease, and deliver to Lender within thirty (30) days after
demand from the Lender, a statement in writing certifying that the Ground Lease
is in full force and effect and the dates to which the ground rent and other
charges, if any, have been paid in advance, and stating whether or not, to the
best knowledge of Lessor, Borrower is in default in the performance of any
covenant, agreement or condition contained in the Ground Lease and if so,
specifying each such default of which Lessor has knowledge.

                  (h) Unless Lender shall otherwise consent in writing, the fee
simple title to the property subject to the Ground Lease shall not merge with
the leasehold estate under the Ground Lease for so long as any obligations
secured by this Security Instrument remain outstanding, but such estates shall
always remain separate and distinct estates, notwithstanding the union of any
thereof in any person whatsoever, whether by purchase or otherwise.

                  (i) No release or forbearance of any of Borrower's obligations
under the Ground Lease, pursuant to the Ground Lease or otherwise, shall release
the Borrower from any of its obligations under this Security Instrument, the
Loan Agreement, the Note or the other Loan Documents.

                  (j) Borrower acknowledges and agrees that it shall not have
any right to terminate the Ground Lease without the prior written consent of
Lender, and any attempt to terminate, or purported exercise of termination,
shall be void.

         Section 3.8 PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe and
perform each and every term, covenant and provision to be observed or performed
by Borrower pursuant to the Loan Agreement, any other Loan Document and any
other agreement or recorded instrument affecting or pertaining to the Property
and any amendments, modifications or changes thereto.

         Section 3.9 CHANGE OF NAME, IDENTITY OR STRUCTURE. Borrower shall not
change Borrower's name, identity (including its trade name or names) or, if not
an individual, Borrower's corporate, partnership or other structure without
notifying Lender of such change in writing at least thirty (30) days prior to
the effective date of such change and, in the case of a change in Borrower's
structure, without first obtaining the prior written consent of Lender. Borrower
shall execute and deliver to Lender, prior to or contemporaneously with the
effective date of any such change, any financing statement or financing
statement change required by Lender to establish or maintain the validity,
perfection and priority of the security interest granted herein. At the request
of Lender, Borrower shall execute a certificate in form satisfactory to Lender
listing the trade names under which Borrower intends to operate the Property,
and representing and warranting that Borrower does business under no other trade
name with respect to the Property.

                      Article 4 - OBLIGATIONS AND RELIANCES

         Section 4.1 RELATIONSHIP OF BORROWER AND LENDER. The relationship
between Borrower and Lender is solely that of debtor and creditor, and Lender
has no fiduciary or other special relationship with Borrower, and no term or
condition of any of the Loan Agreement, the Note, this Security Instrument and
the other Loan Documents shall be construed so as to deem the relationship
between Borrower and Lender to be other than that of debtor and creditor.


                                       9
<PAGE>


         Section 4.2 NO RELIANCE ON LENDER. The general partners, members,
principals and (if Borrower is a trust) beneficial owners of Borrower are
experienced in the ownership and operation of properties similar to the
Property, and Borrower and Lender are relying solely upon such expertise and
business plan in connection with the ownership and operation of the Property.
Borrower is not relying on Lender's expertise, business acumen or advice in
connection with the Property.

         Section 4.3 NO LENDER OBLIGATIONS. (a) Notwithstanding the provisions
of SUBSECTIONS 1.1(h) AND (n) or SECTION 1.2, Lender is not undertaking the
performance of (i) any obligations under the Leases; or (ii) any obligations
with respect to such agreements, contracts, certificates, instruments,
franchises, permits, trademarks, licenses and other documents.

                  (b) By accepting or approving anything required to be
observed, performed or fulfilled or to be given to Lender pursuant to this
Security Instrument, the Loan Agreement, the Note or the other Loan Documents,
including, without limitation, any officer's certificate, balance sheet,
statement of profit and loss or other financial statement, survey, appraisal, or
insurance policy, Lender shall not be deemed to have warranted, consented to, or
affirmed the sufficiency, the legality or effectiveness of same, and such
acceptance or approval thereof shall not constitute any warranty or affirmation
with respect thereto by Lender.

         Section 4.4 RELIANCE. Borrower recognizes and acknowledges that in
accepting the Loan Agreement, the Note, this Security Instrument and the other
Loan Documents, Lender is expressly and primarily relying on the truth and
accuracy of the warranties and representations set forth in Section 4.1 of the
Loan Agreement without any obligation to investigate the Property and
notwithstanding any investigation of the Property by Lender; that such reliance
existed on the part of Lender prior to the date hereof, that the warranties and
representations are a material inducement to Lender in making the Loan; and that
Lender would not be willing to make the Loan and accept this Security Instrument
in the absence of the warranties and representations as set forth in Section 4.1
of the Loan Agreement.

                         Article 5 - FURTHER ASSURANCES

         Section 5.1 RECORDING OF SECURITY INSTRUMENT, ETC. Borrower forthwith
upon the execution and delivery of this Security Instrument and thereafter, from
time to time, will cause this Security Instrument and any of the other Loan
Documents creating a lien or security interest or evidencing the lien hereof
upon the Property and each instrument of further assurance to be filed,
registered or recorded in such manner and in such places as may be required by
any present or future law in order to publish notice of and fully to protect and
perfect the lien or security interest hereof upon, and the interest of Lender
in, the Property. Borrower will pay all taxes, filing, registration or recording
fees, and all expenses incident to the preparation, execution, acknowledgment
and/or recording of the Note, this Security Instrument, the other Loan
Documents, any note, deed of trust or mortgage supplemental hereto, any security
instrument with respect to the Property and any instrument of further assurance,
and any modification or amendment of the foregoing documents, and all federal,
state, county and municipal taxes, duties, imposts, assessments and charges
arising out of or in connection with the execution and delivery of this Security
Instrument, any deed of trust or mortgage supplemental hereto, any security
instrument with respect to the Property or any instrument of further assurance,
and any modification or amendment of the foregoing documents, except where
prohibited by law so to do.

         Section 5.2 FURTHER ACTS, ETC. Borrower will, at the cost of Borrower,
and without expense to Lender, do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, deeds of trust, assignments,
notices of assignments, transfers and assurances as Lender shall, from time to
time, reasonably require, for the better assuring, conveying, assigning,
transferring, and confirming unto Lender the property and rights hereby deeded,
granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and
transferred or intended now or hereafter so to be, or which Borrower may be or
may hereafter become bound to convey or assign to Lender, or for carrying out
the intention or facilitating the performance of the terms of this Security
Instrument or for filing, registering or recording this Security Instrument, or
for complying with all Legal Requirements. Borrower, on demand, will execute and
deliver, and in the event it shall fail to so execute and deliver, hereby
authorizes Lender to execute in the name of Borrower or without the signature of
Borrower to the extent Lender may lawfully do so, one or more financing
statements to evidence more effectively the security interest of Lender in the
Property. Borrower grants to Lender an irrevocable power of attorney coupled
with an interest for the purpose of exercising and perfecting any and all rights
and remedies available to Lender at law and in equity, including without
limitation such rights and remedies available to Lender pursuant to this SECTION
5.2. Nothing contained in this SECTION 5.2 shall be deemed to create an
obligation on the part


                                       10
<PAGE>


of Borrower to pay any costs and expenses incurred by Lender in connection with
the Securitization or other sale or transfer of the Loan.

         Section 5.3 CHANGES IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS.
(a) If any law is enacted or adopted or amended after the date of this Security
Instrument which deducts the Debt from the value of the Property for the purpose
of taxation or which imposes a tax, either directly or indirectly, on the Debt
or Lender's interest in the Property, Borrower will pay the tax, with interest
and penalties thereon, if any. If Lender is advised by counsel chosen by it that
the payment of tax by Borrower would be unlawful or taxable to Lender or
unenforceable or provide the basis for a defense of usury then Lender shall have
the option by written notice of not less than one hundred twenty (120) days to
declare the Debt immediately due and payable.

                  (b) Borrower will not claim or demand or be entitled to any
credit or credits on account of the Debt for any part of the Taxes or Other
Charges assessed against the Property, or any part thereof, and no deduction
shall otherwise be made or claimed from the assessed value of the Property, or
any part thereof, for real estate tax purposes by reason of this Security
Instrument or the Debt. If such claim, credit or deduction shall be required by
law, Lender shall have the option, by written notice of not less than one
hundred twenty (120) days, to declare the Debt immediately due and payable.

                  (c) If at any time the United States of America, any State
thereof or any subdivision of any such State shall require revenue or other
stamps to be affixed to the Note, this Security Instrument, or any of the other
Loan Documents or impose any other tax or charge on the same, Borrower will pay
for the same, with interest and penalties thereon, if any.

         Section 5.4 SPLITTING OF MORTGAGE. This Security Instrument and the
Note shall, at any time until the same shall be fully paid and satisfied, at the
sole election of Lender, be split or divided into two or more notes and two or
more security instruments, each of which shall cover all or a portion of the
Property to be more particularly described therein. To that end, Borrower, upon
written request of Lender, shall execute, acknowledge and deliver, or cause to
be executed, acknowledged and delivered by the then owner of the Property, to
Lender and/or its designee or designees substitute notes and security
instruments in such principal amounts, aggregating not more than the then unpaid
principal amount of this Security Instrument, and containing terms, provisions
and clauses similar to those contained herein and in the Note, and such other
documents and instruments as may be required by Lender.

         Section 5.5 REPLACEMENT DOCUMENTS. Upon receipt of an affidavit of an
officer of Lender as to the loss, theft, destruction or mutilation of the Note
or any other Loan Document which is not of public record, and, in the case of
any such mutilation, upon surrender and cancellation of such Note or other Loan
Document, Borrower will issue, in lieu thereof, a replacement Note or other Loan
Document, dated the date of such lost, stolen, destroyed or mutilated Note or
other Loan Document in the same principal amount thereof and otherwise of like
tenor.

                       Article 6 - DUE ON SALE/ENCUMBRANCE

         Section 6.1 LENDER RELIANCE. Borrower acknowledges that Lender has
examined and relied on the experience of Borrower and its general partners,
members, principals and (if Borrower is a trust) beneficial owners in owning and
operating properties such as the Property in agreeing to make the Loan, and will
continue to rely on Borrower's ownership of the Property as a means of
maintaining the value of the Property as security for repayment of the Debt and
the performance of the Other Obligations. Borrower acknowledges that Lender has
a valid interest in maintaining the value of the Property so as to ensure that,
should Borrower default in the repayment of the Debt or the performance of the
Other Obligations, Lender can recover the Debt by a sale of the Property.

         Section 6.2 NO SALE/ENCUMBRANCE. Borrower agrees that Borrower shall
not, without the prior written consent of Lender, sell, convey, mortgage, grant,
bargain, encumber, pledge, assign, or otherwise transfer the Property or any
part thereof or permit the Property or any part thereof to be sold, conveyed,
mortgaged, granted, bargained, encumbered, pledged, assigned, or otherwise
transferred, unless Lender shall consent thereto in accordance with SECTION 6.4
hereof.

         Section 6.3 SALE/ENCUMBRANCE DEFINED. A sale, conveyance, mortgage,
grant, bargain, encumbrance, pledge, assignment, or transfer within the meaning
of this Article 6 shall be deemed to include, but not be limited to, (a) an
installment sales agreement wherein Borrower agrees to sell the Property or any
part thereof for a price to be paid in installments; (b) an agreement by
Borrower


                                       11
<PAGE>


leasing all or a substantial part of the Property for other than actual
occupancy by a space tenant thereunder or a sale, assignment or other transfer
of, or the grant of a security interest in, Borrower's right, title and interest
in and to any Leases or any Rents; (c) the voluntary or involuntary sale,
conveyance, transfer or pledge of the stock of the general partner of Borrower
(or the stock of any corporation directly or indirectly controlling such general
partner by operation of law or otherwise) or the creation or issuance of new
stock by which an aggregate of more than ten percent (10%) of such general
partner's stock shall be vested in a party or parties who are not now
stockholders; (d) the voluntary or involuntary sale, conveyance, transfer or
pledge of any general or limited partnership interest in Borrower; (e) if
Borrower, any general partner of Borrower, any guarantor or any indemnitor is a
limited liability company, the change, removal or resignation of a member or
managing member or the transfer or pledge of the interest of any member or
managing member or any profits or proceeds relating to such interest; or (f) any
other transfer prohibited by the terms of the Loan Agreement.

         Section 6.4 LENDER'S RIGHTS. Lender reserves the right to condition the
consent required hereunder upon (a) a modification of the terms hereof and of
the Loan Agreement, the Note or the other Loan Documents; (b) an assumption of
the Loan Agreement, the Note, this Security Instrument and the other Loan
Documents as so modified by the proposed transferee, subject to the provisions
of Section 9.4 of the Loan Agreement; (c) payment of all of Lender's reasonable
expenses incurred in connection with such transfer; (d) the confirmation in
writing by the applicable Rating Agencies that the proposed transfer will not,
in and of itself, result in a downgrade, qualification or withdrawal of the
initial, or, if higher, then current ratings assigned in connection with any
Securitization; (e) the delivery of a nonconsolidation opinion reflecting the
proposed transfer satisfactory in form and substance to Lender; (f) the proposed
transferee's continued compliance with the representations and covenants set
forth in Section 4.1.30 and 5.2.14 of the Loan Agreement; (g) the delivery of
evidence satisfactory to Lender that the single purpose nature and bankruptcy
remoteness of Borrower, its shareholders, partners or members, as the case may
be, following such transfers are in accordance with the standards of the Rating
Agencies; (h) the proposed transferee's ability to satisfy Lender's then-current
underwriting standards; (i) payment of a transfer fee to Lender equal to 1% of
the outstanding principal balance of the Loan at the time of such transfer; or
(j) such other conditions as Lender shall determine in its reasonable discretion
to be in the interest of Lender, including, without limitation, the
creditworthiness, reputation and qualifications of the transferee with respect
to the Loan and the Property. Lender shall not be required to demonstrate any
actual impairment of its security or any increased risk of default hereunder in
order to declare the Debt immediately due and payable upon Borrower's sale,
conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or
transfer of the Property without Lender's consent. This provision shall apply to
every sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment, or transfer of the Property regardless of whether voluntary or not,
or whether or not Lender has consented to any previous sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the
Property.

         Notwithstanding anything to the contrary contained in this Article 6,
and in addition to the transfers permitted hereunder, following the sale of the
Loan in a securitization, Lender's consent to a sale, assignment, or other
transfer of the Property shall not be withheld provided that Lender receives
sixty (60) days prior written notice of such transfer hereunder and no Event of
Default has occurred and is continuing, and further provided that, the following
additional requirements are satisfied:

                    (a) Borrower shall pay Lender a transfer fee equal to 1% of
         the outstanding principal balance of the Loan at the time of such
         transfer;

                    (b) Borrower shall pay any and all out-of-pocket costs
         incurred in connection with the transfer of the Property (including,
         without limitation, Lender's counsel fees and disbursements and all
         recording fees, title insurance premiums and mortgage and intangible
         taxes and the fees and expenses of the Rating Agencies pursuant to
         clause (x) below);

                    (c) The proposed transferee (the "Transferee") or
         Transferee's Principals (hereinafter defined) must have demonstrated
         expertise in owning and operating properties similar in location, size
         and operation to the Property, which expertise shall be reasonably
         determined by Lender. The term "Transferee's Principals" shall include
         Transferee's (A) managing members, general partners or principal
         shareholders and (B) such other members, partners or shareholders which
         directly or indirectly shall own a 15% or greater interest in
         Transferee;

                    (d) Transferee and Transferee's Principals shall, as of the
         date of such transfer, have an aggregate net worth and liquidity
         reasonably acceptable to Lender;


                                       12
<PAGE>


                    (e) Transferee, Transferee's Principals and all other
         entities which may be owned or controlled directly or indirectly by
         Transferee's Principals ("Related Entities") must not have been a party
         to any bankruptcy proceedings, voluntary or involuntary, made an
         assignment for the benefit of creditors or taken advantage of any
         insolvency act, or any act for the benefit of debtors within seven (7)
         years prior to the date of the proposed transfer of the Property;

                    (f) Transferee shall assume all of the obligations of
         Borrower under the Loan Documents in a manner satisfactory to Lender in
         all respects, including, without limitation, by entering into an
         assumption agreement in form and substance satisfactory to Lender and
         one or more Transferee's Principals having an aggregated net worth and
         liquidity reasonably acceptable to Lender shall execute in favor of
         Lender a Guaranty of Recourse Obligations and Environmental Indemnity
         Agreement in form acceptable to Lender;

                    (g) There shall be no material litigation or regulatory
         action pending or threatened against Transferee, Transferee's
         Principals or Related Entities which is not reasonably acceptable to
         Lender;

                    (h) Transferee, Transferee's Principals and Related Entities
         shall not have defaulted under its or their obligations with respect to
         any other indebtedness in a manner which is not reasonably acceptable
         to Lender;

                    (i) No Event of Default or event which, with the giving of
         notice, passage of time or both, shall constitute an Event of Default,
         shall otherwise occur as a result of such transfer, and Transferee and
         Transferee's Principals shall deliver (A) all organization
         documentation reasonably requested by Lender, which shall be reasonably
         satisfactory to Lender, and (B) all certificates, agreements and
         covenants reasonably required by Lender; and

                    (j) Borrower shall deliver, at its sole cost and expense, an
         endorsement to the existing title policy insuring this Security
         Instrument, as modified by the assumption agreement, as a valid first
         lien on the Property and naming the Transferee as owner of the
         Property, which endorsement shall insure that, as of the date of the
         recording of the assumption agreement, the Property shall not be
         subject to any additional exceptions or liens other than those
         contained in the title policy issued on the date hereof.

                  In addition to the foregoing, Lender shall have the right to
condition the consent required hereunder upon the confirmation in writing by the
applicable Rating Agencies that the proposed transfer to, and assumption of the
Loan by, the Transferee will not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
assigned in connection with any Securitization.

                  Immediately upon a transfer of the Property to such Transferee
and the satisfaction of all of the above requirements, the named Borrower herein
shall be released from all liability under this Security Instrument, the Note
and the other Loan Documents accruing after such transfer. The foregoing release
shall be effective upon the date of such transfer, but Lender agrees to provide
written evidence thereof reasonably requested by Borrower.

                  Article 7 - RIGHTS AND REMEDIES UPON DEFAULT

         Section 7.1 REMEDIES. Upon the occurrence and during the continuance of
any Event of Default, Borrower agrees that Lender may take such action, without
notice or demand, as it deems advisable to protect and enforce its rights
against Borrower and in and to the Property, including, but not limited to, the
following actions, each of which may be pursued concurrently or otherwise, at
such time and in such order as Lender may determine, in their sole discretion,
without impairing or otherwise affecting the other rights and remedies of
Lender:

                  (a) declare the entire unpaid Debt to be immediately due and
         payable;

                  (b) institute proceedings, judicial or otherwise, for the
         complete foreclosure of this Security Instrument under any applicable
         provision of law, in which case the Property or any interest therein
         may be sold for cash or upon credit in one or more parcels or in
         several interests or portions and in any order or manner;


                                       13
<PAGE>


                  (c) with or without entry, to the extent permitted and
         pursuant to the procedures provided by applicable law, institute
         proceedings for the partial foreclosure of this Security Instrument for
         the portion of the Debt then due and payable, subject to the continuing
         lien and security interest of this Security Instrument for the balance
         of the Debt not then due, unimpaired and without loss of priority;

                  (d) sell for cash or upon credit the Property or any part
         thereof and all estate, claim, demand, right, title and interest of
         Borrower therein and rights of redemption thereof, pursuant to power of
         sale or otherwise, at one or more sales, as an entity or in parcels, at
         such time and place, upon such terms and after such notice thereof, all
         as may be required or permitted by law; and, without limiting the
         foregoing:

                           (i) In connection with any sale or sales hereunder,
                  Lender shall be entitled to elect to treat any of the Property
                  which consists of a right in action or which is property that
                  can be severed from the Real Property covered hereby or any
                  improvements without causing structural damage thereto as if
                  the same were personal property, and dispose of the same in
                  accordance with applicable law, separate and apart from the
                  sale of Real Property. Where the Property consists of Real
                  Property, Personal Property, Equipment or Fixtures, whether or
                  not such Personal Property or Equipment is located on or
                  within the Real Property, Lender shall be entitled to elect to
                  exercise its rights and remedies against any or all of the
                  Real Property, Personal Property, Equipment and Fixtures in
                  such order and manner as is now or hereafter permitted by
                  applicable law;

                           (ii) Lender shall be entitled to elect to proceed
                  against any or all of the Real Property, Personal Property,
                  Equipment and Fixtures in any manner permitted under
                  applicable law; and if Lender so elects pursuant to applicable
                  law, the power of sale herein granted shall be exercisable
                  with respect to all or any of the Real Property, Personal
                  Property, Equipment and Fixtures covered hereby, as designated
                  by Lender, and Lender is hereby authorized and empowered to
                  conduct any such sale of any Real Property, Personal Property,
                  Equipment and Fixtures in accordance with the procedures
                  applicable to Real Property;

                           (iii) Should Lender elect to sell any portion of the
                  Property which is Real Property or which is Personal Property,
                  Equipment or Fixtures that the Lender has elected under
                  applicable law to sell together with Real Property in
                  accordance with the laws governing a sale of Real Property,
                  Lender shall give such notice of Event of Default, if any, and
                  election to sell as may then be required by law. Thereafter,
                  upon the expiration of such time and the giving of such notice
                  of sale as may then be required by law, and without the
                  necessity of any demand on Borrower, Lender at the time and
                  place specified in the notice of sale, shall sell such Real
                  Property or part thereof at public auction to the highest
                  bidder for cash in lawful money of the United States. Lender
                  may from time to time postpone any sale hereunder by public
                  announcement thereof at the time and place noticed therefor;

                           (iv) If the Property consists of several lots,
                  parcels or items of property, Lender shall, subject to
                  applicable law, (A) designate the order in which such lots,
                  parcels or items shall be offered for sale or sold, or (B)
                  elect to sell such lots, parcels or items through a single
                  sale, or through two or more successive sales, or in any other
                  manner Lender designates. Any Person, including Borrower or
                  Lender, may purchase at any sale hereunder. Should Lender
                  desire that more than one sale or other disposition of the
                  Property be conducted, Lender shall, subject to applicable
                  law, cause such sales or dispositions to be conducted
                  simultaneously, or successively, on the same day, or at such
                  different days or times and in such order as Lender may
                  designate, and no such sale shall terminate or otherwise
                  affect the lien of this Security Instrument on any part of the
                  Property not sold until all the Debt has been paid in full. In
                  the event Lender elects to dispose of the Property through
                  more than one sale, except as otherwise provided by applicable
                  law, Borrower agrees to pay the costs and expenses of each
                  such sale and of any judicial proceedings wherein such sale
                  may be made;

                  (e) institute an action, suit or proceeding in equity for the
         specific performance of any covenant, condition or agreement contained
         herein, in the Note, the Loan Agreement or in the other Loan Documents;


                                       14
<PAGE>


                  (f) recover judgment on the Note either before, during or
         after any proceedings for the enforcement of this Security Instrument
         or the other Loan Documents;

                  (g) apply for the appointment of a receiver, trustee,
         liquidator or conservator of the Property, without notice and Lender
         shall be entitled to the appointment of such a receiver as a matter of
         right without regard for the adequacy of the security for the Debt and
         without regard for the solvency of Borrower, any guarantor, indemnitor
         with respect to the Loan or of any Person, liable for the payment of
         the Debt;

                  (h) the license granted to Borrower under SECTION 1.2 hereof
         shall automatically be revoked and Lender may enter into or upon the
         Property, either personally or by its agents, nominees or attorneys and
         dispossess Borrower and its agents and servants therefrom, without
         liability for trespass, damages or otherwise and exclude Borrower and
         its agents or servants wholly therefrom, and take possession of all
         books, records and accounts relating thereto and Borrower agrees to
         surrender possession of the Property and of such books, records and
         accounts to Lender upon demand, and thereupon Lender may (i) use,
         operate, manage, control, insure, maintain, repair, restore and
         otherwise deal with all and every part of the Property and conduct the
         business thereat; (ii) complete any construction on the Property in
         such manner and form as Lender deems advisable; (iii) make alterations,
         additions, renewals, replacements and improvements to or on the
         Property; (iv) exercise all rights and powers of Borrower with respect
         to the Property, whether in the name of Borrower or otherwise,
         including, without limitation, the right to make, cancel, enforce or
         modify Leases, obtain and evict tenants, and demand, sue for, collect
         and receive all Rents of the Property and every part thereof; (v)
         require Borrower to pay monthly in advance to Lender, or any receiver
         appointed to collect the Rents, the fair and reasonable rental value
         for the use and occupation of such part of the Property as may be
         occupied by Borrower; (vi) require Borrower to vacate and surrender
         possession of the Property to Lender or to such receiver and, in
         default thereof, Borrower may be evicted by summary proceedings or
         otherwise; and (vii) apply the receipts from the Property to the
         payment of the Debt, in such order, priority and proportions as Lender
         shall deem appropriate in its sole discretion after deducting therefrom
         all expenses (including reasonable attorneys' fees) incurred in
         connection with the aforesaid operations and all amounts necessary to
         pay the Taxes, Other Charges, insurance and other expenses in
         connection with the Property, as well as just and reasonable
         compensation for the services of Lender, its counsel, agents and
         employees;

                  (i) exercise any and all rights and remedies granted to a
         secured party upon default under the Uniform Commercial Code,
         including, without limiting the generality of the foregoing: (i) the
         right to take possession of the Fixtures, the Equipment, the Personal
         Property or any part thereof, and to take such other measures as Lender
         may deem necessary for the care, protection and preservation of the
         Fixtures, the Equipment, the Personal Property, and (ii) request
         Borrower at its expense to assemble the Fixtures, the Equipment, the
         Personal Property and make it available to Lender at a convenient place
         acceptable to Lender. Any notice of sale, disposition or other intended
         action by Lender with respect to the Fixtures, the Equipment, the
         Personal Property sent to Borrower in accordance with the provisions
         hereof at least ten (10) days prior to such action, shall constitute
         commercially reasonable notice to Borrower;

                  (j) apply any sums then deposited or held in escrow or
         otherwise by or on behalf of Lender in accordance with the terms of the
         Loan Agreement, this Security Instrument or any other Loan Document to
         the payment of the following items in any order in its uncontrolled
         discretion:

                           (i)      Taxes and Other Charges;

                           (ii)     Insurance Premiums;

                           (iii)    Interest on the unpaid principal balance of
                                    the Note;

                           (iv)     Amortization of the unpaid principal balance
                                    of the Note;

                           (v)      All other sums payable pursuant to the Note,
                                    the Loan Agreement, this Security Instrument
                                    and the other Loan Documents, including
                                    without limitation advances made by Lender
                                    pursuant to the terms of this Security
                                    Instrument;


                                       15
<PAGE>


                  (k) pursue such other remedies as Lender may have under
         applicable law; or

                  (l) apply the undisbursed balance of any Net Proceeds
         Deficiency deposit, together with interest thereon, to the payment of
         the Debt in such order, priority and proportions as Lender shall deem
         to be appropriate in its discretion.

In the event of a sale, by foreclosure, power of sale or otherwise, of less than
all of Property, this Security Instrument shall continue as a lien and security
interest on the remaining portion of the Property unimpaired and without loss of
priority.

         Lender reserves the right at any time to subordinate the lien of this
Security Instrument to any one or more of the leases now or in the future
pertaining to any part of the Property upon the unilateral execution and
recording by Lender of said subordination agreement prior to the filing of any
action by Lender to foreclose upon the Property, such subordination agreement to
be effective as of the date of execution of this Security Instrument as to those
leases identified by Lender in such subordination agreement.

         Section 7.2 APPLICATION OF PROCEEDS. The purchase money, proceeds and
avails of any disposition of the Property, and or any part thereof, or any other
sums collected by Lender pursuant to the Note, this Security Instrument or the
other Loan Documents, may be applied by Lender to the payment of the Debt in
such priority and proportions as Lender in its discretion shall deem proper, to
the extent consistent with law.

         Section 7.3 RIGHT TO CURE DEFAULTS. Upon the occurrence and during the
continuance of any Event of Default, Lender may remedy such Event of Default in
such manner and to such extent as Lender may deem necessary to protect the
security hereof, but without any obligation to do so and without notice to or
demand on Borrower, and without releasing Borrower from any obligation
hereunder. Lender is authorized to enter upon action or proceeding to the
Property for such purposes, or appear in, defend, or bring any action or
proceeding to protect its interest in the Property or to foreclose this Security
Instrument or collect the Debt, and the cost and expense thereof (including
reasonable attorneys' fees to the extent permitted by law), with interest as
provided in this SECTION 7.3, shall constitute a portion of the Debt and shall
be due and payable to Lender upon demand. All such costs and expenses incurred
by Lender in remedying such Event of Default or such failed payment or act or in
appearing in, defending, or bringing any such action or proceeding shall bear
interest at the Default Rate, for the period after notice from Lender that such
cost or expense was incurred to the date of payment to Lender. All such costs
and expenses incurred by Lender together with interest thereon calculated at the
Default Rate shall be deemed to constitute a portion of the Debt and be secured
by this Security Instrument and the other Loan Documents and shall be
immediately due and payable upon demand by Lender therefor.

         Section 7.4 ACTIONS AND PROCEEDINGS. Lender has the right to appear in
and defend any action or proceeding brought with respect to the Property and to
bring any action or proceeding, in the name and on behalf of Borrower, which
Lender, in its discretion, decides should be brought to protect its interest in
the Property.

         Section 7.5 RECOVERY OF SUMS REQUIRED TO BE PAID. Lender shall have the
right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due, and without prejudice to the right
of Lender thereafter to bring an action of foreclosure, or any other action, for
a default or defaults by Borrower existing at the time such earlier action was
commenced.

         Section 7.6 EXAMINATION OF BOOKS AND RECORDS. At reasonable times and
upon reasonable notice, Lender, its agents, accountants and attorneys shall have
the right to examine the records, books, management and other papers of Borrower
which reflect upon their financial condition, at the Property or at any office
regularly maintained by Borrower where the books and records are located. Lender
and its agents shall have the right to make copies and extracts from the
foregoing records and other papers. In addition, at reasonable times and upon
reasonable notice, Lender, its agents, accountants and attorneys shall have the
right to examine and audit the books and records of Borrower pertaining to the
income, expenses and operation of the Property during reasonable business hours
at any office of Borrower where the books and records are located. This SECTION
7.6 shall apply throughout the term of the Note and without regard to whether an
Event of Default has occurred or is continuing.


                                       16
<PAGE>


         Section 7.7 OTHER RIGHTS, ETC. (a) The failure of Lender to insist upon
strict performance of any term hereof shall not be deemed to be a waiver of any
term of this Security Instrument. Borrower shall not be relieved of Borrower's
obligations hereunder by reason of (i) the failure of Lender to comply with any
request of Borrower or any guarantor or indemnitor with respect to the Loan to
take any action to foreclose this Security Instrument or otherwise enforce any
of the provisions hereof or of the Note or the other Loan Documents, (ii) the
release, regardless of consideration, of the whole or any part of the Property,
or of any person liable for the Debt or any portion thereof, or (iii) any
agreement or stipulation by Lender extending the time of payment or otherwise
modifying or supplementing the terms of the Note, this Security Instrument or
the other Loan Documents.

                  (b) It is agreed that the risk of loss or damage to the
Property is on Borrower, and Lender shall have no liability whatsoever for
decline in value of the Property, for failure to maintain the Policies, or for
failure to determine whether insurance in force is adequate as to the amount of
risks insured. Possession by Lender shall not be deemed an election of judicial
relief, if any such possession is requested or obtained, with respect to any
Property or collateral not in Lender's possession.

                  (c) Lender may resort for the payment of the Debt to any other
security held by Lender in such order and manner as Lender, in its discretion,
may elect. Lender may take action to recover the Debt, or any portion thereof,
or to enforce any covenant hereof without prejudice to the right of Lender
thereafter to foreclose this Security Instrument. The rights of Lender under
this Security Instrument shall be separate, distinct and cumulative and none
shall be given effect to the exclusion of the others. No act of Lender shall be
construed as an election to proceed under any one provision herein to the
exclusion of any other provision. Lender shall not be limited exclusively to the
rights and remedies herein stated but shall be entitled to every right and
remedy now or hereafter afforded at law or in equity.

         Section 7.8 RIGHT TO RELEASE ANY PORTION OF THE PROPERTY. Lender may
release any portion of the Property for such consideration as Lender may require
without, as to the remainder of the Property, in any way impairing or affecting
the lien or priority of this Security Instrument, or improving the position of
any subordinate lienholder with respect thereto, except to the extent that the
obligations hereunder shall have been reduced by the actual monetary
consideration, if any, received by Lender for such release, and may accept by
assignment, pledge or otherwise any other property in place thereof as Lender
may require without being accountable for so doing to any other lienholder. This
Security Instrument shall continue as a lien and security interest in the
remaining portion of the Property.

         Section 7.9 VIOLATION OF LAWS. If the Property is not in material
compliance with Legal Requirements, Lender may impose additional requirements
upon Borrower in connection herewith including, without limitation, monetary
reserves or financial equivalents.

         Section 7.10 RECOURSE AND CHOICE OF REMEDIES. Notwithstanding any other
provision of this Security Instrument or the Loan Agreement, including, without
limitation, Section 9.4 of the Loan Agreement, Lender and other Indemnified
Parties (as hereinafter defined) are entitled to enforce the obligations of
Borrower, any guarantor and indemnitor contained in Sections 9.2, 9.3 and 9.4
herein and Section 9.2 of the Loan Agreement without first resorting to or
exhausting any security or collateral and without first having recourse to the
Note or any of the Property, through foreclosure, exercise of a power of sale or
acceptance of a deed in lieu of foreclosure or otherwise, and in the event
Lender commences a foreclosure action against the Property, or exercises the
power of sale pursuant to this Security Instrument, Lender is entitled to pursue
a deficiency judgment with respect to such obligations against Borrower and any
guarantor or indemnitor with respect to the Loan. The provisions of Sections
9.2, 9.3 and 9.4 herein and Section 9.2 of the Loan Agreement are exceptions to
any non-recourse or exculpation provisions in the Loan Agreement, the Note, this
Security Instrument or the other Loan Documents, and Borrower and any guarantor
or indemnitor with respect to the Loan are fully and personally liable for the
obligations pursuant to Sections 9.2, 9.3 and 9.4 herein and Section 9.2 of the
Loan Agreement. The liability of Borrower and any guarantor or indemnitor with
respect to the Loan pursuant to Sections 9.2, 9.3 and 9.4 herein and Section 9.2
of the Loan Agreement is not limited to the original principal amount of the
Note. Notwithstanding the foregoing, nothing herein shall inhibit or prevent
Lender from foreclosing or exercising a power of sale pursuant to this Security
Instrument or exercising any other rights and remedies pursuant to the Loan
Agreement, the Note, this Security Instrument and the other Loan Documents,
whether simultaneously with foreclosure proceedings or in any other sequence. A
separate action or actions may be brought and prosecuted against Borrower
pursuant to Sections 9.2, 9.3 and 9.4 herein and Section 9.2 of the Loan
Agreement, whether or not action is brought against any other Person or whether
or not any other Person is joined in the action or actions. In addition, Lender
shall have the right but not the obligation to join and participate in, as a
party if it so


                                       17
<PAGE>


elects, any administrative or judicial proceedings or actions initiated in
connection with any matter addressed in Article 8 or Section 9.4 herein.

         Section 7.11 RIGHT OF ENTRY. Upon reasonable notice to Borrower, Lender
and its agents shall have the right to enter and inspect the Property at all
reasonable times.

                        Article 8 - ENVIRONMENTAL HAZARDS

         Section 8.1 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES. Based upon an
environmental assessment of the Property and information that Borrower knows
after due inquiry of the Manager, and except as otherwise disclosed by that
certain Environmental Site Assessment of the Property delivered to Lender (such
report is referred to below as the "ENVIRONMENTAL REPORT"), (a) there are no
Hazardous Substances (defined below) or underground storage tanks in, on, or
under the Property, except those that are both (i) in compliance with
Environmental Laws (defined below) and with permits issued pursuant thereto and
(ii) fully disclosed to Lender in writing pursuant the Environmental Report; (b)
there are no past, present or threatened Releases (defined below) of Hazardous
Substances in, on, under or from the Property which has not been fully
remediated in accordance with Environmental Law; (c) there is no threat of any
Release of Hazardous Substances migrating to the Property; (d) there is no past
or present non-compliance with Environmental Laws, or with permits issued
pursuant thereto, in connection with the Property which has not been fully
remediated in accordance with Environmental Law; (e) Borrower does not know of,
and has not received, any written or oral notice or other communication from any
Person (including but not limited to a governmental entity) relating to
Hazardous Substances or Remediation (defined below) thereof, of possible
liability of any Person pursuant to any Environmental Law, other environmental
conditions in connection with the Property, or any actual or potential
administrative or judicial proceedings in connection with any of the foregoing;
and (f) Borrower has truthfully and fully provided to Lender, in writing, any
and all information relating to conditions in, on, under or from the Property
that is known to Borrower and that is contained in Borrower's files and records,
including but not limited to any reports relating to Hazardous Substances in,
on, under or from the Property and/or to the environmental condition of the
Property.

         "ENVIRONMENTAL LAW" means any present and future federal, state and
local laws, statutes, ordinances, rules, regulations and the like, as well as
common law, relating to protection of human health or the environment, relating
to Hazardous Substances, relating to liability for or costs of Remediation or
prevention of Releases of Hazardous Substances or relating to liability for or
costs of other actual or threatened danger to human health or the environment.
Environmental Law includes, but is not limited to, the following statutes, as
amended, any successor thereto, and any regulations promulgated pursuant
thereto, and any state or local statutes, ordinances, rules, regulations and the
like addressing similar issues: the Comprehensive Environmental Response,
Compensation and Liability Act; the Emergency Planning and Community
Right-to-Know Act; the Hazardous Substances Transportation Act; the Resource
Conservation and Recovery Act (including but not limited to Subtitle I relating
to underground storage tanks); the Solid Waste Disposal Act; the Clean Water
Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking
Water Act; the Occupational Safety and Health Act; the Federal Water Pollution
Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the
Endangered Species Act; the National Environmental Policy Act; and the River and
Harbors Appropriation Act. Environmental Law also includes, but is not limited
to, any present and future federal, state and local laws, statutes, ordinances,
rules, regulations and the like, as well as common law: conditioning transfer of
property upon a negative declaration or other approval of a governmental
authority of the environmental condition of the Property; requiring notification
or disclosure of Releases of Hazardous Substances or other environmental
condition of the Property to any governmental authority or other Person, whether
or not in connection with transfer of title to or interest in property; imposing
conditions or requirements in connection with permits or other authorization for
lawful activity; relating to nuisance, trespass or other causes of action
related to the Property; and relating to wrongful death, personal injury, or
property or other damage in connection with any physical condition or use of the
Property.

         "HAZARDOUS SUBSTANCES" include but are not limited to any and all
substances (whether solid, liquid or gas) defined, listed, or otherwise
classified as pollutants, hazardous wastes, hazardous substances, hazardous
materials, extremely hazardous wastes, or words of similar meaning or regulatory
effect under any present or future Environmental Laws or that may have a
negative impact on human health or the environment, including but not limited to
petroleum and petroleum products, asbestos and asbestos-containing materials,
polychlorinated biphenyls, lead, radon, radioactive materials, flammables and
explosives, but excluding substances of kinds and in amounts ordinarily and
customarily used or


                                       18
<PAGE>


stored in similar properties for the purpose of cleaning or other maintenance or
operations and otherwise in compliance with all Environmental Laws.

         "RELEASE" of any Hazardous Substance includes but is not limited to any
release, deposit, discharge, emission, leaking, spilling, seeping, migrating,
injecting, pumping, pouring, emptying, escaping, dumping, disposing or other
movement of Hazardous Substances.

         "REMEDIATION" includes but is not limited to any response, remedial,
removal, or corrective action, any activity to cleanup, detoxify, decontaminate,
contain or otherwise remediate any Hazardous Substance, any actions to prevent,
cure or mitigate any Release of any Hazardous Substance, any action to comply
with any Environmental Laws or with any permits issued pursuant thereto, any
inspection, investigation, study, monitoring, assessment, audit, sampling and
testing, laboratory or other analysis, or evaluation relating to any Hazardous
Substances or to anything referred to in Article 8.

         Section 8.2 ENVIRONMENTAL COVENANTS. Borrower covenants and agrees
that: (a) all uses and operations on or of the Property, whether by Borrower or
any other Person, shall be in compliance with all Environmental Laws and permits
issued pursuant thereto; (b) there shall be no Releases of Hazardous Substances
in, on, under or from the Property; (c) there shall be no Hazardous Substances
in, on, or under the Property, except those that are both (i) in compliance with
all Environmental Laws and with permits issued pursuant thereto and (ii) fully
disclosed to Lender in writing; (d) Borrower shall keep the Property free and
clear of all liens and other encumbrances imposed pursuant to any Environmental
Law, whether due to any act or omission of Borrower or any other Person (the
"ENVIRONMENTAL LIENS"); (e) Borrower shall, at its sole cost and expense, fully
and expeditiously cooperate in all activities pursuant to SECTION 8.3 below,
including but not limited to providing all relevant information and making
knowledgeable persons available for interviews; (f) Borrower shall, at its sole
cost and expense, perform any environmental site assessment or other
investigation of environmental conditions in connection with the Property,
pursuant to any reasonable written request of Lender made in the event that
Lender has reason to believe that an environmental hazard exists on the Property
(including but not limited to sampling, testing and analysis of soil, water,
air, building materials and other materials and substances whether solid, liquid
or gas), and share with Lender the reports and other results thereof, and Lender
and other Indemnified Parties shall be entitled to rely on such reports and
other results thereof; (g) Borrower shall, at its sole cost and expense, comply
with all reasonable written requests of Lender made in the event that Lender has
reason to believe that an environmental hazard exists on the Property (i)
reasonably effectuate Remediation of any condition (including but not limited to
a Release of a Hazardous Substance) in, on, under or from the Property; (ii)
comply with any Environmental Law; (iii) comply with any directive from any
governmental authority; and (iv) take any other reasonable action necessary or
appropriate for protection of human health or the environment; (h) Borrower
shall not do or allow any tenant or other user of the Property to do any act
that materially increases the dangers to human health or the environment, poses
an unreasonable risk of harm to any Person (whether on or off the Property),
impairs or may impair the value of the Property, is contrary to any requirement
of any insurer, constitutes a public or private nuisance, constitutes waste, or
violates any covenant, condition, agreement or easement applicable to the
Property; and (i) Borrower shall immediately notify Lender in writing of (A) any
presence or Releases or threatened Releases of Hazardous Substances in, on,
under, from or migrating towards the Property; (B) any non-compliance with any
Environmental Laws related in any way to the Property; (C) any actual or
potential Environmental Lien; (D) any required or proposed Remediation of
environmental conditions relating to the Property; and (E) any written or oral
notice or other communication of which Borrower becomes aware from any source
whatsoever (including but not limited to a governmental entity) relating in any
way to Hazardous Substances or Remediation thereof, possible liability of any
Person pursuant to any Environmental Law, other environmental conditions in
connection with the Property, or any actual or potential administrative or
judicial proceedings in connection with anything referred to in this Article 8.

         Section 8.3 LENDER'S RIGHTS. In the event that Lender has reason to
believe that an environmental hazard exists on the Property, upon reasonable
notice from Lender, Borrower shall, at Borrower's expense, promptly cause an
engineer or consultant satisfactory to Lender to conduct any environmental
assessment or audit (the scope of which shall be determined in Lender's sole and
absolute discretion) and take any samples of soil, groundwater or other water,
air, or building materials or any other invasive testing requested by Lender and
promptly deliver the results of any such assessment, audit, sampling or other
testing; provided, however, if such results are not delivered to Lender within a
reasonable period, upon reasonable notice to Borrower, Lender and any other
Person designated by Lender, including but not limited to any receiver, any
representative of a governmental entity, and any environmental consultant, shall
have the right, but not the obligation, to enter upon the Property at all
reasonable times to assess any and all aspects of the environmental condition of
the Property and its use,


                                       19
<PAGE>


including but not limited to conducting any environmental assessment or audit
(the scope of which shall be determined in Lender's sole and absolute
discretion) and taking samples of soil, groundwater or other water, air, or
building materials, and reasonably conducting other invasive testing. Borrower
shall cooperate with and provide access to Lender and any such Person designated
by Lender.

                           Article 9 - INDEMNIFICATION

         Section 9.1 GENERAL INDEMNIFICATION. Borrower shall, at its sole cost
and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all claims, suits, liabilities
(including, without limitation, strict liabilities), actions, proceedings,
obligations, debts, damages, losses, costs, expenses, diminutions in value,
fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in
settlement, punitive damages, foreseeable and unforeseeable consequential
damages, of whatever kind or nature (including but not limited to reasonable
attorneys' fees and other costs of defense) (collectively, the "LOSSES") imposed
upon or incurred by or asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way relating to any one or more of the
following: (a) ownership of this Security Instrument, the Property or any
interest therein or receipt of any Rents; (b) any amendment to, or restructuring
of, the Debt, and the Note, the Loan Agreement, this Security Instrument, or any
other Loan Documents; (c) any and all lawful action that may be taken by Lender
in connection with the enforcement of the provisions of this Security Instrument
or the Loan Agreement or the Note or any of the other Loan Documents, whether or
not suit is filed in connection with same, or in connection with Borrower, any
guarantor or indemnitor and/or any partner, joint venturer or shareholder
thereof becoming a party to a voluntary or involuntary federal or state
bankruptcy, insolvency or similar proceeding; (d) any accident, injury to or
death of persons or loss of or damage to property occurring in, on or about the
Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (e) any use, nonuse or
condition in, on or about the Property or any part thereof or on the adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;
(f) any failure on the part of Borrower to perform or be in compliance with any
of the terms of this Security Instrument; (g) performance of any labor or
services or the furnishing of any materials or other property in respect of the
Property or any part thereof; (h) the failure of any person to file timely with
the Internal Revenue Service an accurate Form 1099-B, Statement for Recipients
of Proceeds from Real Estate, Broker and Barter Exchange Transactions, which may
be required in connection with this Security Instrument, or to supply a copy
thereof in a timely fashion to the recipient of the proceeds of the transaction
in connection with which this Security Instrument is made; (i) any failure of
the Property to be in compliance with any Legal Requirements; (j) the
enforcement by any Indemnified Party of the provisions of this Article 9; (k)
any and all claims and demands whatsoever which may be asserted against Lender
by reason of any alleged obligations or undertakings on its part to perform or
discharge any of the terms, covenants, or agreements contained in any Lease; (1)
the payment of any commission, charge or brokerage fee to anyone claiming
through Borrower which may be payable in connection with the funding of the
Loan; or (m) any misrepresentation made by Borrower in this Security Instrument
or any other Loan Document. Notwithstanding the foregoing, Borrower shall not be
liable to the Indemnified Parties under this SECTION 9.1 for any Losses to which
the Indemnified Parties may become subject to the extent such Losses arise by
reason of the gross negligence, illegal acts, fraud or willful misconduct of the
Indemnified Parties. Any amounts payable to Lender by reason of the application
of this SECTION 9.1 shall become immediately due and payable and shall bear
interest at the Default Rate from the date loss or damage is sustained by Lender
until paid. For purposes of this Article 9, the term "INDEMNIFIED PARTIES" means
Lender and any Person who is or will have been involved in the origination of
the Loan, any Person who is or will have been involved in the servicing of the
Loan secured hereby, any Person in whose name the encumbrance created by this
Security Instrument is or will have been recorded, persons and entities who may
hold or acquire or will have held a full or partial interest in the Loan secured
hereby (including, but not limited to, investors or prospective investors in the
Securities, as well as custodians, trustees and other fiduciaries who hold or
have held a full or partial interest in the Loan secured hereby for the benefit
of third parties) as well as the respective directors, officers, shareholders,
partners, employees, agents, servants, representatives, contractors,
subcontractors, affiliates, subsidiaries, participants, successors and assigns
of any and all of the foregoing (including but not limited to any other Person
who holds or acquires or will have held a participation or other full or partial
interest in the Loan, whether during the term of the Loan or as a part of or
following a foreclosure of the Loan and including, but not limited to, any
successors by merger, consolidation or acquisition of all or a substantial
portion of Lender's assets and business).

         Section 9.2 MORTGAGE AND/OR INTANGIBLE TAX. Borrower shall, at its sole
cost and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses imposed upon or incurred
by or asserted against any Indemnified Parties and directly or indirectly
arising out of or in any way relating to any tax on the making and/or recording
of


                                       20
<PAGE>


this Security Instrument, the Note or any of the other Loan Documents, but
excluding any income, franchise or other similar taxes.

         Section 9.3 ERISA INDEMNIFICATION. Borrower shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless the Indemnified
Parties from and against any and all Losses (including, without limitation,
reasonable attorneys' fees and costs incurred in the investigation, defense, and
settlement of Losses incurred in correcting any prohibited transaction or in the
sale of a prohibited loan, and in obtaining any individual prohibited
transaction exemption under ERISA that may be required, in Lender's sole
discretion) that Lender may incur, directly or indirectly, as a result of a
default under Sections 4.1.9 or 5.2.12 of the Loan Agreement.

         Section 9.4 ENVIRONMENTAL INDEMNIFICATION. Borrower shall, at its sole
cost and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses and costs of Remediation
(whether or not performed voluntarily), engineers' fees, environmental
consultants' fees, and costs of investigation (including but not limited to
sampling, testing, and analysis of soil, water, air, building materials and
other materials and substances whether solid, liquid or gas) imposed upon or
incurred by or asserted against any Indemnified Parties, and directly or
indirectly arising out of or in any way relating to any one or more of the
following: (a) any presence of any Hazardous Substances in, on, above, or under
the Property; (b) any past, present or threatened Release of Hazardous
Substances in, on, above, under or from the Property; (c) any activity by
Borrower, any Person affiliated with Borrower or any tenant or other user of the
Property in connection with any actual, proposed or threatened use, treatment,
storage, holding, existence, disposition or other Release, generation,
production, manufacturing, processing, refining, control, management, abatement,
removal, handling, transfer or transportation to or from the Property of any
Hazardous Substances at any tine located in, under, on or above the Property;
(d) any activity by Borrower, any Person affiliated with Borrower or any tenant
or other user of the Property in connection with any actual or proposed
Remediation of any Hazardous Substances at any time located in, under, on or
above the Property, whether or not such Remediation is voluntary or pursuant to
court or administrative order, including but not limited to any removal,
remedial or corrective action; (e) any past or present non-compliance or
violations of any Environmental Laws (or permits issued pursuant to any
Environmental Law) in connection with the Property or operations thereon,
including but not limited to any failure by Borrower, any Affiliate of Borrower
or any tenant or other user of the Property to comply with any order of any
Governmental Authority in connection with any Environmental Laws; (f) the
imposition, recording or filing of any Environmental Lien encumbering the
Property; (g) any administrative processes or proceedings or judicial
proceedings in any way connected with any matter addressed in Article 8 and this
SECTION 9.4; (h) any past, present or threatened injury to, destruction of or
loss of natural resources in any way connected with the Property, including but
not limited to costs to investigate and assess such injury, destruction or loss;
(i) any acts of Borrower or other users of the Property in arranging for
disposal or treatment, or arranging with a transporter for transport for
disposal or treatment, of Hazardous Substances owned or possessed by such
Borrower or other users, at any facility or incineration vessel owned or
operated by another Person and containing such or any similar Hazardous
Substance; (j) any acts of Borrower or other users of the Property, in accepting
any Hazardous Substances for transport to disposal or treatment facilities,
incineration vessels or sites selected by Borrower or such other users, from
which there is a Release, or a threatened Release of any Hazardous Substance
which causes the incurrence of costs for Remediation; (k) any personal injury,
wrongful death, or property damage arising under any statutory or common law or
tort law theory, including but not limited to damages assessed for the
maintenance of a private or public nuisance or for the conducting of an
abnormally dangerous activity on or near the Property; and (1) any
misrepresentation or inaccuracy in any representation or warranty or material
breach or failure to perform any covenants or other obligations pursuant to
Article 8. Notwithstanding the foregoing, Borrower shall not be liable under
this SECTION 9.4 for any Losses or costs of Remediation to which the Indemnified
Parties may become subject to the extent such Losses or costs of Remediation
arise by reason of the gross negligence, illegal acts, fraud of willful
misconduct of the Indemnified Parties. This indemnity shall survive any
termination, satisfaction or foreclosure of this Security Instrument, subject to
the provisions of SECTION 10.5.

         Section 9.5 DUTY TO DEFEND; ATTORNEYS' FEES AND OTHER FEES AND
EXPENSES. Upon written request by any Indemnified Party, Borrower shall defend
such Indemnified Party (if requested by any Indemnified Party, in the name of
the Indemnified Party) by attorneys and other professionals approved by the
Indemnified Parties. Notwithstanding the foregoing, if the defendants in any
such claim or proceeding include both Borrower and any Indemnified Party and
Borrower and such Indemnified Party shall have reasonably concluded that there
are any legal defenses available to it and/or other Indemnified Parties that are
different from or additional to those available to Borrower, such Indemnified
Party shall have the right to select separate counsel to assert such legal
defenses and to


                                       21
<PAGE>


otherwise participate in the defense of such action on behalf of such
Indemnified Party, provided that no compromise or settlement shall be entered
without Borrower's consent, which consent shall not be unreasonably withheld.
Upon demand, Borrower shall pay or, in the sole and absolute discretion of the
Indemnified Parties, reimburse, the Indemnified Parties for the payment of
reasonable fees and disbursements of attorneys, engineers, environmental
consultants, laboratories and other professionals in connection therewith.

                              Article 10 - WAIVERS

         Section 10.1 WAIVER OF COUNTERCLAIM. To the extent permitted by
applicable law, Borrower hereby waives the right to assert a counterclaim, other
than a mandatory or compulsory counterclaim, in any action or proceeding brought
against it by Lender arising out of or in any way connected with this Security
Instrument, the Loan Agreement, the Note, any of the other Loan Documents, or
the Obligations.

         Section 10.2 MARSHALLING AND OTHER MATTERS. To the extent permitted by
applicable law, Borrower hereby waives, to the extent permitted by law, the
benefit of all appraisement, valuation, stay, extension, reinstatement and
redemption laws now or hereafter in force and all rights of marshalling in the
event of any sale hereunder of the Property or any part thereof or any interest
therein. Further, Borrower hereby expressly waives any and all rights of
redemption from sale under any order or decree of foreclosure of this Security
Instrument on behalf of Borrower, and on behalf of each and every person
acquiring any interest in or title to the Property subsequent to the date of
this Security Instrument and on behalf of all persons to the extent permitted by
applicable law.

         Section 10.3 WAIVER OF NOTICE. To the extent permitted by applicable
law, Borrower shall not be entitled to any notices of any nature whatsoever from
Lender except with respect to matters for which this Security Instrument or the
Loan Documents specifically and expressly provide for the giving of notice by
Lender to Borrower and except with respect to matters for which Lender is
required by applicable law to give notice, and Borrower hereby expressly waives
the right to receive any notice from Lender with respect to any matter for which
this Security Instrument does not specifically and expressly provide for the
giving of notice by Lender to Borrower.

         Section 10.4 WAIVER OF STATUTE OF LIMITATIONS. To the extent permitted
by applicable law, Borrower hereby expressly waives and releases to the fullest
extent permitted by law, the pleading of any statute of limitations as a defense
to payment of the Debt or performance of its Other Obligations.

         Section 10.5 SURVIVAL. The indemnifications made pursuant to SECTIONS
9.3 AND 9.4 herein and the representations and warranties, covenants, and other
obligations arising under Article 8, shall continue indefinitely in full force
and effect and shall survive and shall in no way be impaired by: any
satisfaction, release or other termination of this Security Instrument, any
assignment or other transfer of all or any portion of this Security Instrument
or Lender's interest in the Property (but, in such case, shall benefit both
Indemnified Parties and any assignee or transferee), any exercise of Lender's
rights and remedies pursuant hereto including but not limited to foreclosure or
acceptance of a deed in lieu of foreclosure, any exercise of any rights and
remedies pursuant to the Loan Agreement, the Note or any of the other Loan
Documents, any transfer of all or any portion of the Property (whether by
Borrower or by Lender following foreclosure or acceptance of a deed in lieu of
foreclosure or at any other time), any amendment to this Security Instrument,
the Loan Agreement, the Note or the other Loan Documents, and any act or
omission that might otherwise be construed as a release or discharge of Borrower
from the obligations pursuant hereto. Notwithstanding anything to the contrary
contained in this Security Instrument or the other Loan Documents, Borrower
shall not have any obligations or liabilities under the indemnification under
SECTION 9.4 herein or other indemnifications with respect to Hazardous
Substances contained in the other Loan Documents with respect to those
obligations and liabilities that Borrower can prove arose solely from Hazardous
Substances that (i) were not present on or a threat to the Property prior to the
date that Lender or its nominee acquired title to the Property, whether by
foreclosure, exercise by power of sale, acceptance of a deed-in-lieu of
foreclosure or otherwise and (ii) were not the result of any act or negligence
of Borrower or any of Borrower's affiliates, agents or contractors.

                            Article 11 - EXCULPATION

         The provisions of Section 9.4 of the Loan Agreement are hereby
incorporated by reference into this Security Instrument to the same extent and
with the same force as if fully set forth herein.


                                       22
<PAGE>


                              Article 12 - NOTICES

                  All notices or other written communications hereunder shall be
delivered in accordance with Section 10.6 of the Loan Agreement.

                           Article 13 - APPLICABLE LAW

                  Section 13.1 GOVERNING LAW. (A) THIS SECURITY INSTRUMENT WAS
NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY BORROWER AND ACCEPTED BY LENDER
IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTE SECURED HEREBY WERE
DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A
SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION
EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS
SECURITY INSTRUMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF
CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT
THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT
OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT HERETO AND PURSUANT TO THE
OTHER LOAN DOCUMENTS WITH RESPECT TO THE PROPERTY SHALL BE GOVERNED BY AND
CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT
BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE,
THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND
ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING
HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER JURISDICTION GOVERNS THIS SECURITY INSTRUMENT AND THE OR THE OTHER LOAN
DOCUMENTS, AND THIS SECURITY INSTRUMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

                  (B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR
BORROWER ARISING OUT OF OR RELATING TO THIS SECURITY INSTRUMENT MAY AT LENDER'S
OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK,
COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW, AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR
HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT,
ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES
HEREBY DESIGNATE AND APPOINT

                  CT CORPORATION SYSTEM, INC.
                  111 EIGHTH AVENUE, 13TH FLOOR
                  NEW YORK, NEW YORK 10011
                  ATTENTION: SERVICE OF PROCESS DEPARTMENT

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II)
MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A


                                       23
<PAGE>


SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH
SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR
SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS
AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED
WITHOUT LEAVING A SUCCESSOR.

         Section 13.2 USURY LAWS. Notwithstanding anything to the contrary, (a)
all agreements and communications between Borrower and Lender are hereby and
shall automatically be limited so that, after taking into account all amounts
deemed interest, the interest contracted for, charged or received by Lender
shall never exceed the maximum lawful rate or amount, (b) in calculating whether
any interest exceeds the lawful maximum, all such interest shall be amortized,
prorated, allocated and spread over the full amount and term of all principal
indebtedness of Borrower to Lender, and (c) if through any contingency or event,
Lender receives or is deemed to receive interest in excess of the lawful
maximum, any such excess shall be deemed to have been applied toward payment of
the principal of any and all then outstanding indebtedness of Borrower to
Lender, or if there is no such indebtedness, shall immediately be returned to
Borrower.

         Section 13.3 PROVISIONS SUBJECT TO APPLICABLE LAW. All rights, powers
and remedies provided in this Security Instrument may be exercised only to the
extent that the exercise thereof does not violate any applicable provisions of
law and are intended to be limited to the extent necessary so that they will not
render this Security Instrument invalid, unenforceable or not entitled to be
recorded, registered or filed under the provisions of any applicable law. If any
term of this Security Instrument or any application thereof shall be invalid or
unenforceable, the remainder of this Security Instrument and any other
application of the term shall not be affected thereby.

                            Article 14 - DEFINITIONS

         All capitalized terms not defined herein shall have the respective
meanings set forth in the Loan Agreement. Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Security Instrument may be used interchangeably in singular or plural form
and the word "BORROWER" shall mean "each Borrower and any subsequent owner or
owners of the Property or any part thereof or any interest therein," the word
"LENDER" shall mean "Lender and any subsequent holder of the Note," the word
"NOTE" shall mean "the Note and any other evidence of indebtedness secured by
this Security Instrument," the word "PROPERTY" shall include any portion of the
Property and any interest therein, and the phrases "ATTORNEYS' FEES", "LEGAL
FEES" and "COUNSEL FEES" shall include any and all attorneys', paralegal and law
clerk fees and disbursements, including, but not limited to, fees and
disbursements at the pre-trial, trial and appellate levels incurred or paid by
Lender in protecting its interest in the Property, the Leases and the Rents and
enforcing its rights hereunder.

                      Article 15 - MISCELLANEOUS PROVISIONS

         Section 15.1 NO ORAL CHANGE. This Security Instrument, and any
provisions hereof, may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part of
Borrower or Lender, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.

         Section 15.2 SUCCESSORS AND ASSIGNS. This Security Instrument shall be
binding upon and inure to the benefit of Borrower and Lender and their
respective successors and assigns forever.

         Section 15.3 INAPPLICABLE PROVISIONS. If any term, covenant or
condition of the Loan Agreement, the Note or this Security Instrument is held to
be invalid, illegal or unenforceable in any respect, the Loan Agreement, the
Note and this Security Instrument shall be construed without such provision.

         Section 15.4 HEADINGS, ETC. The headings and captions of various
Sections of this Security Instrument are for convenience of reference only and
are not to be construed as defining or limiting, in any way, the scope or intent
of the provisions hereof.

         Section 15.5 NUMBER AND GENDER. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.


                                       24
<PAGE>


         Section 15.6 SUBROGATION. If any or all of the proceeds of the Note
have been used to extinguish, extend or renew any indebtedness heretofore
existing against the Property, then, to the extent of the funds so used, Lender
shall be subrogated to all of the rights, claims, liens, titles, and interests
existing against the Property heretofore held by, or in favor of, the holder of
such indebtedness and such former rights, claims, liens, titles, and interests,
if any, are not waived but rather are continued in full force and effect in
favor of Lender and are merged with the lien and security interest created
herein as cumulative security for the repayment of the Debt, the performance and
discharge of Borrower's obligations hereunder, under the Loan Agreement, the
Note and the other Loan Documents and the performance and discharge of the Other
Obligations.

         Section 15.7 ENTIRE AGREEMENT. The Note, the Loan Agreement, this
Security Instrument and the other Loan Documents constitute the entire
understanding and agreement between Borrower and Lender with respect to the
transactions arising in connection with the Debt and supersede all prior written
or oral understandings and agreements between Borrower and Lender with respect
thereto. Borrower hereby acknowledges that, except as incorporated in writing in
the Note, the Loan Agreement, this Security Instrument and the other Loan
Documents, there are not, and were not, and no persons are or were authorized by
Lender to make, any representations, understandings, stipulations, agreements or
promises, oral or written, with respect to the transaction which is the subject
of the Note, the Loan Agreement, this Security Instrument and the other Loan
Documents.

         Section 15.8 LIMITATION ON LENDER'S RESPONSIBILITY. No provision of
this Security Instrument shall operate to place any obligation or liability for
the control, care, management or repair of the Property upon Lender, nor shall
it operate to make Lender responsible or liable for any waste committed on the
Property by the tenants or any other Person, or for any dangerous or defective
condition of the Property, or for any negligence in the management, upkeep,
repair or control of the Property resulting in loss or injury or death to any
tenant, licensee, employee or stranger. Nothing herein contained shall be
construed as constituting Lender a "mortgagee in possession."

                       Article 16 - INTENTIONALLY DELETED

                     Article 17 - STATE-SPECIFIC PROVISIONS

         Section 17.1 WAIVER OF RIGHT OF REDEMPTION AND OTHER RIGHTS. Without
limitation to anything contained herein, to the full extent permitted by law,
Borrower agrees that it will not at any time or in any manner whatsoever take
any advantage of any stay, exemption or extension law or any so-called
"Moratorium Law" now or at any time hereafter in force, nor take any advantage
of any law now or hereafter in force providing for the valuation or appraisement
of the Property, or any part thereof, prior to any sale thereof to be made
pursuant to any provisions herein contained, or to any decree, judgment or order
of any court of competent jurisdiction; or claim or exercise any rights under
any statute now or hereafter in force to redeem the property or any part
thereof, or relating to the marshalling thereof, on foreclosure sale or other
enforcement hereof. To the full extent permitted by law, Borrower hereby
expressly waives any and all rights it may have to require that the Property be
sold as separate tracts or units in the event of foreclosure. To the full extent
permitted by law, Borrower hereby expressly waives any and all rights to
redemption and reinstatement under 735 Illinois Compiled Statutes 5/15-1101 (the
"Act"), on its own behalf, on behalf of all persons claiming or having an
interest (direct or indirect) by, through or under Borrower and on behalf of
each and every person acquiring any interest in or title to the Property
subsequent to the date hereof, it being the intent hereof that any and all such
rights of redemption of Borrower and such other persons, are and shall be deemed
to be hereby waived to the full extent permitted by applicable law. To the full
extent permitted by law, Borrower agrees that it will not, by invoking or
utilizing any applicable law or laws or otherwise, hinder, delay or impede the
exercise of any right, power or remedy herein or otherwise granted or delegated
to Lender, but will permit the exercise of every such right, power and remedy as
though no such law or laws have been or will have been made or enacted. To the
full extent permitted by law, Borrower hereby agrees that no action for the
enforcement of the lien or any provision hereof shall be subject to any defense
which would not be good and valid on an action at law upon the Note. If the
Borrower is a trustee, Borrower represents that the provisions of this Section
(including the waiver of redemption rights) were made at the express direction
of Borrower's beneficiaries and the persons having the power of direction over
Borrower and are made on behalf of the trust estate of Borrower and all
beneficiaries of Borrower, as well as all other persons named above. Borrower
acknowledges that the Property does not constitute agricultural real estate as
defined in Section 15-1201of the Act or residential real estate as defined in
Section 15-1219 of the Act.


                                       25
<PAGE>


         Section 17.2 FUTURE ADVANCES. Without limitation to anything contained
herein, at all times, regardless of whether any loan proceeds have been
disbursed, this Security Instrument secures as part of the Debt the payment of
all loan commissions, service charges, liquidated damages, attorney's fees,
expenses and advances due to or incurred by lender in connection with the Debt,
all in accordance with the Note, the Loan Agreement, this Security Instrument,
and the other Loan Documents, provided, however, that in no event shall be total
amount of the Debt, including loan proceeds disbursed plus any additional
charges, exceed two hundred percent (200%) of the face amount of the Note.

         Section 17.3 CONFLICTING PROVISIONS. The provisions of this Article are
intended to supplement, and not limit, the other provisions of this Security
Instrument; PROVIDED, HOWEVER, that in the event the provisions of this Article
contradict any other provision of this Security Instrument, the provisions of
this Article shall govern.


                         [NO FURTHER TEXT ON THIS PAGE]


                                       26
<PAGE>


         IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by
Borrower as of the day and year first above written.


                   GLIMCHER WESTPARK PLAZA, LLC,
                   a Delaware limited liability company

                    By:  GLIMCHER PROPERTIES LIMITED PARTNERSHIP,
                         a Delaware limited partnership, its sole member

                         By:   GLIMCHER PROPERTIES CORPORATION,
                               a Delaware corporation, its sole general partner


                               By:   /s/ George A. Schmidt
                                     -----------------------------------------
                                     Name:  George A. Schmidt
                                     Title:  Executive Vice President



                                       27
<PAGE>


                                 ACKNOWLEDGMENT

State of:                       )
                                )ss.
County of:                      )


         The foregoing instrument was acknowledged before me this 30th day of
July, 2001, by George A. Schmidt, the Executive Vice President of Glimcher
Properties Corporation, a Delaware corporation, the general partner of Glimcher
Properties Limited Partnership, a Delaware limited partnership, the sole member
of, Glimcher Westpark Plaza LLC, a Delaware limited liability company, on behalf
of the company.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal.




                                            /s/ Eileen Papierowcz
                                            ----------------------------------
                                            Notary Public
Commission
Expiration:    1/29/03
               -------


                                       28
<PAGE>



                                    EXHIBIT A

                                LEGAL DESCRIPTION


                                [To Be Attached]