Document:

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                       ACADEMY STORE, L.P., as mortgagor
                                   (Borrower)

                                       to

                     THE CHASE MANHATTAN BANK, as mortgagee
                                    (Lender)

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

                                  MORTGAGE AND
                               SECURITY AGREEMENT

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

                         Dated: As of February 12, 1998

                       Location: 3200-3280 Red Lion Road
                           Philadelphia, Pennsylvania

                              County: Philadelphia

                  PREPARED BY AND UPON RECORDATION RETURN TO:

                        MESSRS. THACHER PROFFITT & WOOD
                             Two World Trade Center
                            New York, New York 10048

                         Attention: David S. Hall, Esq.

                             File No.: 86000-00482

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         THIS MORTGAGE AND SECURITY AGREEMENT (the "Security Instrument") is
made as of the last day of February, 1998, by ACADEMY STORE, L.P., a Delaware
limited partnership, having its principal place of business at c/o * Bryant
Development Corp., 2900 Westchester Avenue, Purchase, New York 10577, as
mortgagor ("Borrower") to THE CHASE MANHATTAN BANK, a New York banking
corporation, having an address at 380 Madison Avenue, 11th Floor, New York, New
York 10017 as mortgagee ("Lender").

                                   RECITALS:

         Borrower by its promissory note of even date herewith given to Lender
is indebted to Lender in the principal sum of ELEVEN MILLION EIGHTY THOUSAND AND
00/100 DOLLARS ($11,080,000) in lawful money of the United States of America
(the note together with all extensions, renewals, modifications, substitutions
and amendments thereof shall collectively be referred to as the "Note"), with
interest from the date thereof at the rates set forth in the Note, principal and
interest to be payable in accordance with the terms and conditions provided in
the Note.

Borrower desires to secure the payment of the Debt (as defined in Article 2) and
the performance of all of its obligations under the Note and the Other
Obligations (as defined in Article 2).

                         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, and grant a security interest to Lender in, the following property,
rights, interests and estates now owned, or hereafter acquired by Borrower
(collectively, the "Property"):

         (a)      Land. 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 (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,

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                  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)      Fixtures and Personal Property. All machinery, equipment,
                  fixtures (including, but not limited to, all heating, air
                  conditioning, plumbing, lighting, communications and elevator
                  fixtures) and other property of every kind and nature
                  whatsoever owned by Borrower, or in which Borrower has or
                  shall have an interest, now or hereafter located upon the Land
                  and the Improvements, or appurtenant thereto, and usable in
                  connection with the present or future operation and occupancy
                  of the Land and the Improvements and all building equipment,
                  materials and supplies of any nature whatsoever owned by
                  Borrower, or in which Borrower has or shall have an interest,
                  now or hereafter located upon the Land and the Improvements,
                  or appurtenant thereto, or usable in connection with the
                  present or future operation and occupancy of the Land and the
                  Improvements (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;

         (f)      Leases and Rents. All leases, subleases and other agreements
                  affecting the use, enjoyment or occupancy of the Land and/or
                  the Improvements heretofore or hereafter entered into and all
                  extensions, amendments and modifications thereto, 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")
                  (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 (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;

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         (g)      Condemnation Awards. 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;

         (h)      Insurance Proceeds. All proceeds of and any unearned premiums
                  on any insurance policies covering the Property, including,
                  without limitation, the right to receive and apply the
                  proceeds of any insurance, judgments, or settlements made in
                  lieu thereof, for damage to the Property;

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

         (j)      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;

         (k)      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;

         (1)      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;

         (m)      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; and

         (n)      Other Rights. Any and all other rights of Borrower in and to
                  the items set forth in Subsections (a) through (m) above.

         Section 1.2 ASSIGNMENT OF RENTS. Borrower hereby absolutely and
unconditionally assigns to Lender 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

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the terms of this Section 1.2 and Section 3.7, Lender grants to Borrower a
revocable license to collect and receive 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 mortgage 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 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 (defined in
Section 2.3), a security interest in the Personal Property to the full extent
that the Personal Property may be subject to the Uniform Commercial Code.

         Section 1.4 PLEDGE OF MONIES HELD. Borrower hereby pledges to Lender
any and all monies now or hereafter held by Lender, including, without
limitation, any sums deposited in the Escrow Fund (as defined in Section 3.5),
Net Proceeds (as defined in Section 4.4) and condemnation awards or payments
described in Section 3.6, 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 the successors and assigns of Lender,
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 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, these presents and the estate
hereby granted shall cease, terminate and be void.

                    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
following, in such order of priority as Lender may determine in its sole
discretion (the "Debt"):

                  (a) the payment of the indebtedness evidenced by the Note in
          lawful money of the United States of America;

                  (b) the payment of interest, default interest, late charges
          and other sums, as provided in the Note, this Security
          Instrument or the Other Security Documents (defined below);

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                  (c) the payment of the Prepayment Consideration (as defined in
          the Note), if any;

                  (d) the payment of all other moneys agreed or provided to be
          paid by Borrower in the Note, this Security Instrument or the
          Other Security Documents;

                  (e) the payment of all sums advanced pursuant to this Security
          Instrument to protect and preserve the Property and the lien
          and the security interest created hereby; and

                  (f) the payment of all sums advanced and costs and expenses
          incurred by Lender in connection with the Debt or any part
          thereof, any renewal, extension, or change of or substitution
          for the Debt or any part thereof, or the acquisition or
          perfection of the security therefor, whether made or incurred
          at the request of Borrower or Lender.

         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;

                  (b) the performance of each obligation of Borrower contained
         in any other agreement given by Borrower to Lender which is
         for the purpose of further securing the obligations secured
         hereby, and any amendments, modifications and changes thereto;
         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, this Security Instrument or the
         Other Security Documents.

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

         Section 2.4 PAYMENTS. Unless payments are made in the required amount
in immediately available funds at the place where the Note is payable,
remittances in payment of all or any part of the Debt shall not, regardless of
any receipt or credit issued therefor, constitute payment until the required
amount is actually received by Lender in funds immediately available at the
place where the Note is payable (or any other place as Lender, in Lender's sole
discretion, may have established by delivery of written notice thereof to
Borrower) and shall be made and accepted subject to the condition that any check
or draft may be handled for collection in accordance with the practice of the
collecting bank or banks. Acceptance by Lender of any payment in an amount less
than the amount then due shall be deemed an acceptance on account only, and the
failure to pay the entire amount then due shall be and continue to be an Event
of Default (defined below).

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                         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 Note and in this Security Instrument.

         Section 3.2 INCORPORATION BY REFERENCE. All the covenants, conditions
and agreements contained in (a) the Note and (b) all and any of the documents
other than the Note or this Security Instrument now or hereafter executed by
Borrower and/or others and by or in favor of Lender, which wholly or partially
secure or guaranty payment of the Note (the "Other Security Documents"), are
hereby made a part of this Security Instrument to the same extent and with the
same force as if fully set forth herein.

         Section 3.3 INSURANCE.

         (a) Borrower shall obtain and maintain, or cause to be maintained,
insurance for Borrower and the Property providing at least the following
coverages:

                       (i)     comprehensive all risk insurance on the
                  Improvements and the Personal Property, in each case (A) in an
                  amount equal to 100% of the "Full Replacement Cost," which for
                  purposes of this Security Instrument shall mean actual
                  replacement value (exclusive of costs of excavations,
                  foundations, underground utilities and footings) with a waiver
                  of depreciation, but the amount shall in no event be less than
                  the outstanding principal balance of the Note; (B) containing
                  an agreed amount endorsement with respect to the Improvements
                  and Personal Property waiving all co-insurance provisions; (C)
                  providing for no deductible in excess of $25,000; and (D)
                  providing coverage for contingent liability from Operation of
                  Building Laws, Demolition Costs and Increased Cost of
                  Construction Endorsements together with an "Ordinance or Law
                  Coverage" or "Enforcement" endorsement if any of the
                  Improvements or the use of the Property shall at any time
                  constitute legal non-conforming structures or uses. The Full
                  Replacement Cost shall be redetermined from time to time (but
                  not more frequently than once in any twelve (12) calendar
                  months) at the request of Lender by an appraiser or contractor
                  designated and paid by Borrower and approved by Lender, or by
                  an engineer or appraiser in the regular employ of the insurer.
                  After the first appraisal, additional appraisals may be based
                  on construction cost indices customarily employed in the
                  trade. No omission on the part of Lender to request any such
                  ascertainment shall relieve Borrower of any of its obligations
                  under this Subsection;

                      (ii) commercial general liability insurance against
                  claims for personal injury, bodily injury, death or property
                  damage occurring upon, in or about the Property, such
                  insurance (A) to be on the so-called "occurrence" form with a
                  combined single limit of not less than $2,000,000; (B) to
                  continue at not less than

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                  the aforesaid limit until required to be changed by Lender in
                  writing by reason of changed economic conditions making such
                  protection inadequate; and (C) to cover at least the following
                  hazards: (1) premises and operations; (2) products and
                  completed operations on an "if any" basis; (3) independent
                  contractors; (4) blanket contractual liability for all written
                  and oral contracts; and (5) contractual liability covering the
                  indemnities contained in Article 13 hereof to the extent the
                  same is available;

                           (iii) loss of rents insurance (A) with loss payable
                  to Lender; (B) covering all risks required to be covered by
                  the insurance provided for in Subsection 3.3(a)(i); and (C) in
                  an amount equal to 100% of the projected gross income from the
                  Property for a period of twelve (12) months. The amount of
                  such loss of rents insurance shall be determined prior to the
                  date hereof and at least once each year thereafter based on
                  Borrower's reasonable estimate of the gross income from the
                  Property for the succeeding twelve-month period. All insurance
                  proceeds payable to Lender pursuant to this Subsection shall
                  be held by Lender and shall be applied to the obligations
                  secured hereunder from time to time due and payable hereunder
                  and under the Note; provided, however, that nothing herein
                  contained shall be deemed to relieve Borrower of its
                  obligations to pay the obligations secured hereunder on the
                  respective dates of payment provided for in the Note except to
                  the extent such amounts are actually paid out of the proceeds
                  of such loss of rents insurance;

                           (iv) at all times during which structural
                  construction, repairs or alterations are being made with
                  respect to the Improvements (A) owner's contingent or
                  protective liability insurance covering claims not covered by
                  or under the terms or provisions of the above mentioned
                  commercial general liability insurance policy; and (B) the
                  insurance provided for in Subsection 3.3(a)(i) written in a
                  so-called builder's risk completed value form (1) on a
                  non-reporting basis, (2) against all risks insured against
                  pursuant to Subsection 3.3(a)(i), (3) including permission to
                  occupy the Property, and (4) with an agreed amount endorsement
                  waiving co-insurance provisions;

                           (v) workers' compensation, subject to the statutory
                  limits of the state in which the Property is located, and
                  employer's liability insurance with a limit of at least
                  $1,000,000 per accident and per disease per employee, and
                  $1,000,000 for disease aggregate in respect of any work or
                  operations on or about the Property, or in connection with the
                  Property or its operation (if applicable);

                           (vi) comprehensive boiler and machinery insurance,
                  if applicable, in amounts as shall be reasonably required by
                  Lender;

                           (vii) if any portion of the Improvements is at any
                  time located in an area identified by the Secretary of Housing
                  and Urban Development or any successor thereto as an area
                  having special flood hazards pursuant to the National Flood

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                  Insurance Act of 1968, the Flood Disaster Protection Act of
                  1973 or the National Flood Insurance Reform Act of 1994, as
                  each may be amended, or any successor law (the "Flood
                  Insurance Acts"), flood hazard insurance in an amount equal to
                  the lesser of (A) the principal balance of the Note, and (B)
                  the maximum limit of coverage available for the Property under
                  the Flood Insurance Acts;

                           (viii) earthquake, sinkhole and mine subsidence
                  insurance, if required in amounts, form and substance
                  satisfactory to Lender, provided that the insurance pursuant
                  to this Subsection (viii) shall be on terms consistent with
                  the all risk insurance policy required under Section
                  3.3(a)(i);

                           (ix) such other insurance and in such amounts as
                  Lender from time to time may reasonably request against such
                  other insurable hazards which at the time are commonly insured
                  against for property similar to the Property located in or
                  around the region in which the Property is located.

         (b) All insurance provided for in Subsection 3.3(a) hereof shall be
obtained under valid and enforceable policies (the "Policies" or in the
singular, the "Policy"), in such forms and, from time to time after the date
hereof, in such amounts as may from time to time be satisfactory to Lender,
issued by financially sound and responsible insurance companies authorized to do
business in the state in which the Property is located and approved by Lender.
The insurance companies must have a general policy rating of A or better and a
financial class of VII or better by A.M. Best Company, Inc., and if there are
any Securities (defined in Section 19.1 below) issued which have been assigned a
rating by a credit rating agency approved by Lender (a "Rating Agency"), the
insurance company shall have a claims paying ability rating by such Rating
Agency of not less than one rating category below the highest rating at any time
assigned to the Securities, but in no event less than BBB by Standard & Poor's
Corp. or such comparable rating by such other Rating Agency (each such insurer
shall be referred to below as a "Qualified Insurer"). Not less than thirty (30)
days prior to the expiration dates of the Policies theretofore furnished to
Lender pursuant to Subsection 3.3(a), certified copies of the Policies marked
"premium paid" or accompanied by evidence satisfactory to Lender of payment of
the premiums due thereunder (the "Insurance Premiums"), shall be delivered by
Borrower to Lender; provided, however, that in the case of renewal Policies,
Borrower may furnish Lender with binders therefor to be followed by the
original Policies when issued.

         (c) Borrower shall not obtain (i) any umbrella or blanket liability or
casualty Policy unless, in each case, such Policy is approved in advance in
writing by Lender and Lender's interest is included therein as provided in this
Security Instrument and such Policy is issued by a Qualified Insurer, or (ii)
separate insurance concurrent in form or contributing in the event of loss with
that required in Subsection 3.3(a) to be furnished by, or which may be
reasonably required to be furnished by, Borrower. In the event Borrower obtains
separate insurance or an umbrella or a blanket Policy, Borrower shall notify
Lender of the same and shall cause certified copies of each Policy to be
delivered

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as required in Subsection 3.3(a). Any blanket insurance Policy shall
specifically allocate to the Property the amount of coverage from time to time
required hereunder and shall otherwise provide the same protection as would a
separate Policy insuring only the Property in compliance with the provisions of
Subsection 3.3(a). Notwithstanding Lender's approval of any umbrella or blanket
liability or casualty Policy hereunder, upon the occurrence of an Event of
Default, Lender reserves the right, in its sole discretion, to require Borrower
to obtain a separate Policy in compliance with this Section 3.3.

         (d) All Policies of insurance provided for or contemplated by
Subsection 3.3(a), except for the Policy referenced in Subsection 3.3(a)(v),
shall name Lender and Borrower as the insured or additional insured, as their
respective interests may appear, and in the case of property damage, boiler and
machinery, and flood insurance, shall contain a so-called New York standard
non-contributing mortgagee clause in favor of Lender providing that the loss
thereunder shall be payable to Lender.

         (e) All Policies of insurance provided for in Subsection 3.3(a) shall
contain clauses or endorsements to the effect that:

                  (i) no act or negligence of Borrower, or anyone acting for
         Borrower, or of any tenant under any Lease or other occupant, or
         failure to comply with the provisions of any Policy which might
         otherwise result in a forfeiture of the insurance or any part thereof,
         shall in any way affect the validity or enforceability of the insurance
         insofar as Lender is concerned;

                  (ii) the Policy shall not be materially changed (other than to
         increase the coverage provided thereby) or cancelled without
         at least 30 days' written notice to Lender and any other party
         named therein as an insured; and

                  (iii) each Policy shall provide that the issuers thereof shall
         give written notice to Lender if the Policy has not been renewed thirty
         (30) days prior to its expiration; and

                  (iv) Lender shall not be liable for any Insurance Premiums
          thereon or subject to any assessments thereunder.

         (f) Borrower shall furnish to Lender, on or before thirty (30) days
after the close of each of Borrower's fiscal years, a statement certified by
Borrower or a duly authorized officer of Borrower of the amounts of insurance
maintained in compliance herewith, of the risks covered by such insurance and of
the insurance company or companies which carry such insurance and, if requested
by Lender, verification of the adequacy of such insurance by an independent
insurance broker or appraiser acceptable to Lender.

         (g) If at any time Lender is not in receipt of written evidence that
all insurance required hereunder is in full force and effect, Lender shall have
the right, upon

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reasonable notice to Borrower to take such action as Lender deems necessary to
protect its interest in the Property, including, without limitation, the
obtaining of such insurance coverage as Lender in its sole discretion deems
appropriate, and all expenses incurred by Lender in connection with such action
or in obtaining such insurance and keeping it in effect shall be paid by
Borrower to Lender upon demand and until paid shall be secured by this Security
Instrument and shall bear interest in accordance with Section 10.3 hereof.

         (h) If the Property shall be damaged or destroyed, in whole or in part,
by fire or other casualty, Borrower shall give prompt notice of such damage to
Lender and shall promptly commence and diligently prosecute the completion of
the repair and restoration of the Property as nearly as possible to the
condition the Property was in immediately prior to such fire or other casualty,
with such alterations as may be approved by Lender (the "Restoration") and
otherwise in accordance with Section 4.4 of this Security Instrument. Borrower
shall pay all costs of such Restoration whether or not such costs are covered by
insurance.

         Section 3.4 PAYMENT OF TAXES, ETC.

         (a) Borrower shall promptly pay all taxes, assessments, water rates,
sewer rents, governmental impositions, and other charges, including without
limitation vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Land, now or hereafter levied or assessed or imposed
against the Property or any part thereof (the "Taxes"), all ground rents,
maintenance charges and similar charges, now or hereafter levied or assessed or
imposed against the Property or any part thereof (the "Other Charges"), and all
charges for utility services provided to the Property as same become due and
payable. Borrower will deliver to Lender, promptly upon Lender's request,
evidence satisfactory to Lender that the Taxes, Other Charges and utility
service charges have been so paid or are not then delinquent. Borrower shall not
suffer and shall promptly cause to be paid and discharged any lien or charge
whatsoever which may be or become a lien or charge against the Property. Except
to the extent sums sufficient to pay all Taxes and Other Charges have been
deposited with Lender in accordance with the terms of this Security Instrument,
Borrower shall furnish to Lender paid receipts for the payment of the Taxes and
Other Charges prior to the date the same shall become delinquent.

         (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 Taxes, provided that (i) no Event of Default has
occurred and is continuing under the Note, this Security Instrument or any of
the Other Security 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 proceeding shall suspend the collection of the Taxes
from Borrower and from the Property or Borrower shall have paid all of the Taxes
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

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interest therein will be in danger of being sold, forfeited, terminated,
cancelled or lost, (vi) Borrower shall have deposited with Lender adequate
reserves for the payment of the Taxes, together with all interest and penalties
thereon, unless Borrower has paid all of the Taxes under protest, and (vii)
Borrower shall have furnished the security as may be required in the proceeding,
or as may be requested by Lender to insure the payment of any contested Taxes,
together with all interest and penalties thereon.

         Section 3.5 ESCROW FUND. In addition to the initial deposits with
respect to Taxes and, if applicable, Insurance Premiums made by Borrower to
Lender on the date hereof to be held by Lender in escrow, Borrower shall pay to
Lender on the first day of each calendar month (a) one-twelfth of an amount
which would be sufficient to pay the Taxes payable, or estimated by Lender to be
payable, during the next ensuing twelve (12) months and (b) at the option of
Lender, if the liability or casualty Policy maintained by Borrower covering the
Property shall not constitute an approved blanket or umbrella Policy pursuant to
Subsection 3.3(c) hereof, or Lender shall require Borrower to obtain a
separate Policy pursuant to Subsection 3.3(c) hereof, one-twelfth of an amount
which would be sufficient to pay the Insurance Premiums due for the renewal of
the coverage afforded by the Policies upon the expiration thereof (the amounts
in (a) and (b) above shall be called the "Escrow Fund"). In the event Lender
shall elect to collect payments in escrow for Insurance Premiums, Borrower shall
pay to Lender an initial deposit to be determined by Lender, in its sole
discretion, to increase the amounts in the Escrow Fund to an amount which,
together with anticipated monthly escrow payments, shall be sufficient to pay
all Insurance Premiums and Taxes as they become due. Borrower agrees to notify
Lender immediately of any changes to the amounts, schedules and instructions for
payment of any Taxes and Insurance Premiums of which it has or obtains knowledge
and authorizes Lender or its agent to obtain the bills for Taxes directly from
the appropriate taxing authority. The Escrow Fund and the payments of interest
or principal or both, payable pursuant to the Note shall be added together and
shall be paid as an aggregate sum by Borrower to Lender. Lender will apply the
Escrow Fund to payments of Taxes and Insurance Premiums required to be made by
Borrower pursuant to Sections 3.3 and 3.4 hereof. If the amount of the Escrow
Fund shall exceed the amounts due for Taxes and Insurance Premiums pursuant to
Sections 3.3 and 3.4 hereof, Lender shall, in its discretion, return any excess
to Borrower or credit such excess against future payments to be made to the
Escrow Fund. In allocating such excess, Lender may deal with the person shown on
the records of Lender to be the owner of the Property. If the Escrow Fund is not
sufficient to pay the items set forth in (a) and (b) above, Borrower shall
promptly pay to Lender, upon demand, an amount which Lender shall estimate as
sufficient to make up the deficiency. The Escrow Fund shall not constitute a
trust fund and may be commingled with other monies held by Lender. No earnings
or interest on the Escrow Fund shall be payable to Borrower.

         Section 3.6 CONDEMNATION. Borrower shall promptly give Lender notice of
the actual or threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to Lender copies of any and all papers served in
connection with such proceedings. Notwithstanding any taking by any public or
quasi-public authority through eminent domain or otherwise (including but not
limited to any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Security Instrument and
the Debt shall not be

                                       12
<PAGE>

reduced until any award or payment therefor shall have been actually received
and applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. Lender shall not be limited to the interest
paid on the award by the condemning authority but shall be entitled to receive
out of the award interest at the rate or rates provided herein or in the Note.
Lender may apply any award or payment to the reduction or discharge of the Debt
whether or not then due and payable. If the Property is sold, through
foreclosure or otherwise, prior to the receipt by Lender of the award or
payment, Lender shall have the right, whether or not a deficiency judgment on
the Note shall have been sought, recovered or denied, to receive the award or
payment, or a portion thereof sufficient to pay the Debt.

         Section 3.7 LEASES AND RENTS.

                  (a) Except as otherwise consented to by Lender, all Leases
         shall be written on the standard form of lease which shall have been
         approved by Lender. Upon request, Borrower shall furnish Lender with
         executed copies of all Leases. No material changes may be made to the
         Lender-approved standard lease without the prior written consent of
         Lender. In addition, all renewals of Leases and all proposed Leases
         shall provide for rental rates and terms comparable to existing local
         market rates and terms and shall be arms-length transactions with bona
         fide, independent third party tenants. All proposed Leases and renewals
         of existing Leases (other than residential Leases relating to a
         residential multifamily property) shall be subject to the prior
         approval of Lender and its counsel, at Borrower's expense. All Leases
         shall provide that they are subordinate to this Security Instrument and
         that the lessee agrees to attorn to Lender. Borrower (i) shall observe
         and perform all the obligations imposed upon the lessor under the
         Leases and shall not do or permit to be done anything to impair the
         value of any of the Leases as security for the Debt; (ii) shall
         promptly send copies to Lender of all notices of default which Borrower
         shall send or receive thereunder; (iii) shall enforce all of the terms,
         covenants and conditions contained in the Leases upon the part of the
         lessee thereunder to be observed or performed, short of termination
         thereof; provided however, with respect to multifamily residential
         property, a residential Lease may be terminated in the event of a
         default by the tenant thereunder; (iv) shall not collect any of the
         Rents more than one (1) month in advance; (v) shall not execute any
         other assignment of the lessor's interest in any of the Leases or the
         Rents; (vi) shall not alter, modify or change the terms of any Leases
         without the prior written consent of Lender, or cancel or terminate any
         Leases or accept a surrender thereof or convey or transfer or suffer or
         permit a conveyance or transfer of the Land or of any interest therein
         so as to effect a merger of the estates and rights of or a termination
         or diminution of the obligations of, lessees thereunder; (vii) shall
         not alter, modify or change the terms of any guaranty, letter of credit
         or other credit support with respect to any of the Leases (the "Lease
         Guaranty") or cancel or terminate such Lease Guaranty without the prior
         written consent of Lender; and (viii) shall not consent to any
         assignment of or subletting under any Leases not in accordance with
         their terms, without the prior written consent of Lender.

                  (b) Notwithstanding the provisions of Subsection 3.7(a) above,
         renewals of existing Leases and Leases for commercial space for in-line
         stores (as determined by

                                       13
<PAGE>

            Lender) shall not be subject to the prior approval of Lender
            provided all of the following conditions are satisfied: (i) the
            rental income pursuant to the renewal or proposed Lease is not more
            than ten percent (10%) of the total rental income for the in-line
            stores, (ii) the renewal or proposed Lease covers less than ten
            percent (10%) of the in-line store space, in the aggregate, (iii)
            the renewal or proposed Lease shall have a lease term not to exceed
            ten (10) years including options to renew, (iv) no rent credits,
            free rents or concessions in excess of one (1) month for each two
            (2) years of lease term (not to exceed three (3) months in the
            aggregate) have been granted under the renewal or proposed Lease,
            (v) the renewal or proposed Lease shall provide for rental rates
            and terms comparable to existing local market rates and terms, (vi)
            the renewal or proposed Lease shall be an arms-length transaction
            with a bona fide, independent third party tenant, (vii) the renewal
            or proposed Lease is subject and subordinate to the Security
            Instrument and the lessee thereunder shall have agreed to attorn to
            Lender, (viii) the renewal or proposed Lease is on the standard
            form of lease approved by Lender, and (ix) the renewal or proposed
            Lease shall satisfy other criteria as shall be required by Lender
            in its sole discretion. Borrower shall deliver to Lender copies of
            all Leases which are entered into pursuant to this Subsection (b)
            together with Borrower's certification that it has satisfied all of
            the conditions of the preceding sentence within thirty (30) days
            after the execution of the Lease.

            Notwithstanding the provisions above, to the extent Lender's prior
            written approval is required pursuant to this Section 3.7, Lender
            shall, with respect to such proposed Leases and/or modifications,
            amendments or terminations of existing Leases, have eleven (11)
            Business Days (as defined in Article 16) from receipt of such
            written request and any and all required material information and
            documentation relating thereto in which to approve or disapprove
            such material information and documentation, provided, such request
            to Lender is marked in bold lettering with the following language:
            "LENDER'S RESPONSE IS REQUIRED WITHIN ELEVEN (11) BUSINESS DAYS OF
            RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A MORTGAGE AND
            SECURITY AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER" and the
            envelope containing the request must be marked "PRIORITY". In the
            event Lender fails to respond to the information and proposed
            documentation within such time, Lender's approval shall be deemed
            given. Borrower shall be required to provide Lender with such
            material information and documentation as may be required by
            Lender, in its sole discretion, including without limitation, lease
            comparables and other market information as required by Lender. If
            Lender disapproves any new Leases, or any amendment, modification
            or termination of any existing Leases, Lender shall provide
            Borrower with a written explanation of its disapproval.

                  (c) Upon the occurrence of an Event of Default, to the extent
            permitted by law, Borrower shall promptly deposit with Lender any
            and all monies representing security deposits under the Leases,
            whether or not Borrower actually received such monies (the
            "Security Deposits"). Lender shall hold the Security Deposits in
            accordance with the terms of the respective Lease, and shall only
            release the Security Deposits in order to return a tenant's
            Security Deposit to such tenant if such tenant is entitled to the
            return of the Security Deposit under the terms of the Lease and is
            not otherwise in default under the

                                     -14-

<PAGE>

            Lease. To the extent required by Applicable Laws (defined below),
            Lender shall hold the Security Deposits in an interest bearing
            account selected by Lender in its sole discretion. In the event
            Lender is not permitted by law to hold the Security Deposits,
            Borrower shall deposit the Security Deposits into an account with a
            federally insured institution as approved by Lender.

                  Section 3.8 MAINTENANCE OF PROPERTY. Borrower shall cause the
Property to be maintained in a good and safe condition and repair. The
Improvements and the Personal Property shall not be removed, demolished or
materially altered (except for normal replacement of the Personal Property)
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 or which may be affected by any proceeding
of the character referred to in Section 3.6 hereof and shall complete and pay
for any structure at any time in the process of construction or repair on the
Land. Borrower shall not initiate, join in, acquiesce in, or consent to any
change in any private restrictive covenant, zoning law or other public or
private restriction, limiting or defining the uses which may be made of the
Property or any part thereof. If under applicable zoning provisions the use of
all or any portion of the Property is or shall become a nonconforming use,
Borrower will not cause or permit the nonconforming use to be discontinued or
abandoned without the express written consent of Lender.

                  Section 3.9 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 give
cause for cancellation of any Policy, or do or permit to be done thereon
anything that may in any way 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 3.10 COMPLIANCE WITH LAWS.

                  (a) Borrower shall promptly comply with all existing and
         future federal, state and local laws, orders, ordinances, governmental
         rules and regulations or court orders affecting or which may be
         interpreted to affect the Property, or the use thereof ("Applicable
         Laws").

                  (b) Borrower shall from time to time, upon Lender's request,
         provide Lender with evidence satisfactory to Lender that the Property
         complies with all Applicable Laws or is exempt from compliance with
         Applicable Laws.

                  (c) Notwithstanding any provisions set forth herein or in any
         document regarding Lender's approval of alterations of the Property,
         Borrower shall not alter the Property in any manner which would
         increase Borrower's responsibilities for compliance with Applicable
         Laws without the prior written approval of Lender. Lender's approval
         of the plans, specifications, or working drawings for alterations of
         the Property shall create

                                     -15-
<PAGE>

         no responsibility or liability on behalf of Lender for their
         completeness, design, sufficiency or their compliance with Applicable
         Laws. The foregoing shall apply to tenant improvements constructed by
         Borrower or by any of its tenants. Lender may condition any such
         approval upon receipt of a certificate of compliance with Applicable
         Laws from an independent architect, engineer, or other person
         acceptable to Lender.

                  (d) Borrower shall give prompt notice to Lender of the
         receipt by Borrower of any notice related to a violation of any
         Applicable Laws and of the commencement of any proceedings or
         investigations which relate to compliance with Applicable Laws.

                  Section 3.11 BOOKS AND RECORDS.

                  (a) Borrower and any Guarantors (defined in Subsection
         10.1(e)) and Indemnitor(s) (defined in Subsection 10.1(o)), if any,
         shall keep adequate books and records of account in accordance with
         generally accepted accounting principles ("GAAP"), or in accordance
         with other methods acceptable to Lender in its sole discretion,
         consistently applied and furnish to Lender:

                           (i) monthly certified rent rolls signed and dated by
                  Borrower, detailing the names of all tenants of the
                  Improvements, the portion of Improvements occupied by each
                  tenant, the base rent and any other charges payable under
                  each Lease and the term of each Lease, including the
                  expiration date, and any other information as is reasonably
                  required by Lender, within twenty (20) days after the end of
                  each calendar month;

                           (ii) quarterly operating statements of the Property,
                  prepared and certified by Borrower in the form required by
                  Lender, detailing the revenues received, the expenses
                  incurred and the net operating income before and after debt
                  service (principal and interest) and major capital
                  improvements for that quarter and containing appropriate year
                  to date information, within thirty (30) days after the end of
                  each fiscal quarter;

                           (iii) an annual operating statement of the Property
                  detailing the total revenues received, total expenses
                  incurred, total cost of all capital improvements, total debt
                  service and total cash flow, to be prepared and certified by
                  Borrower in the form required by Lender, or if required by
                  Lender, an audited annual operating statement prepared and
                  certified by an independent certified public accountant
                  acceptable to Lender, within ninety (90) days after the close
                  of each fiscal year of Borrower;

                           (iv) an annual balance sheet and profit and loss
                  statement of Borrower, any Guarantors and any Indemnitor(s)
                  in the form required by Lender, prepared and certified by the
                  respective Borrower, Guarantors and/or Indemnitor(s), or if
                  required by Lender, audited financial statements prepared by
                  an independent certified public accountant acceptable to
                  Lender, within ninety (90) days after the

                                     -16-
<PAGE>

                  close of each fiscal year of Borrower, Guarantors and
                  Indemnitor(s), as the case may be; and

                           (v) an annual operating budget presented on a
                  monthly basis consistent with the annual operating statement
                  described above for the Property, including cash flow
                  projections for the upcoming year, and all proposed capital
                  replacements and improvements at least fifteen (15) days
                  prior to the start of each fiscal year.

                  (b) Upon request from Lender, Borrower, any Guarantor and any
         Indemnitor shall furnish in a timely manner to Lender:

                           (i) a property management report for the Property,
                  showing the number of inquiries made and/or rental
                  applications received from tenants or prospective tenants and
                  deposits received from tenants and any other information
                  requested by Lender, in reasonable detail and certified by
                  Borrower (or an officer, general partner, member or principal
                  of Borrower if Borrower is not an individual) under penalty
                  of perjury to be true and complete, but no more frequently
                  than quarterly; and

                           (ii) an accounting of all security deposits held in
                  connection with any Lease of any part of the Property,
                  including the name and identification number of the accounts
                  in which such security deposits are held, the name and
                  address of the financial institutions in which such security
                  deposits are held and the name of the person to contact at
                  such financial institution, along with any authority or
                  release necessary for Lender to obtain information regarding
                  such accounts directly from such financial institutions.

                  (c) Borrower, any Guarantor and any Indemnitor shall furnish
         Lender with such other additional financial or management information
         (including State and Federal tax returns) as may, from time to time,
         be reasonably required by Lender in form and substance satisfactory to
         Lender.

                  (d) Borrower, any Guarantor and any Indemnitor shall furnish
         to Lender and its agents convenient facilities for the examination and
         audit of any such books and records.

                  Section 3.12 PAYMENT FOR LABOR AND MATERIALS. Borrower will
promptly pay when due all bills and costs for labor, materials, and
specifically fabricated materials 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 Exceptions (defined below).

                                     -17-
<PAGE>

         Section 3.13 PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe
and perform each and every term to be observed or performed by Borrower
pursuant to the terms of any agreement or recorded instrument affecting or
pertaining to the Property, or given by Borrower to Lender for the purpose of
further securing an Obligation and any amendments, modifications or changes
thereto.

                         Article 4 - SPECIAL COVENANTS

         Borrower covenants and agrees that:

                  Section 4.1 PROPERTY USE. The Property shall be used only
for a community shopping center, and for no other use without the prior written
consent of Lender, which consent maybe withheld in Lender's sole and absolute
discretion.

                  Section 4.2 ERISA.

                  (a) It shall not engage in any transaction which would cause
         any obligation, or action taken or to be taken, hereunder (or the
         exercise by Lender of any of its rights under the Note, this Security
         Instrument and the Other Security Documents) to be a non-exempt (under
         a statutory or administrative class exemption) prohibited transaction
         under the Employee Retirement Income Security Act of 1974, as amended
         ("ERISA").

                  (b) Borrower further covenants and agrees to deliver to
         Lender such certifications or other evidence from time to time
         throughout the term of the Security Instrument, as requested by Lender
         in its sole discretion, that (i) Borrower is not an "employee benefit
         plan" as defined in Section 3(3) of ERISA, which is subject to Title I
         of ERISA, or a "governmental plan" within the meaning of Section 3(32)
         of ERISA; (ii) Borrower is not subject to state statutes regulating
         investments and fiduciary obligations with respect to governmental
         plans; and (iii) one or more of the following circumstances is true:

                           (A) Equity interests in Borrower are publicly
                  offered securities, within the meaning of 29 C.F.R. ss.
                  2510.3-101(b)(2);

                           (B) Less than 25 percent of each outstanding class
                  of equity interests in Borrower are held by "benefit plan
                  investors" within the meaning of 29 C.F.R.
                  ss.2510.3-101(f)(2); or

                           (C) Borrower qualifies as an "operating company" or
                  a "real estate operating company" within the meaning of
                  29 C.F.R. ss. 2510.3-101(c) or (e) or an investment company
                  registered under The Investment Company Act of 1940.

                                     -18-
<PAGE>

                  Section 4.3 SINGLE PURPOSE ENTITY. Borrower covenants and
agrees that it has not and shall not and agrees that its general partner(s), if
Borrower is a partnership, its managing member(s), if Borrower is a limited
liability company, or its principal shareholders, if Borrower is a corporation
(in each case, "Principal"), has not and shall not:

                  (i) with respect to Borrower, engage in any business or
activity other than the ownership, operation and maintenance of the Property,
and activities incidental thereto and with respect to Principal, engage in any
business or activity other than the ownership of its interest in Borrower, and
activities incidental thereto including the management of the Property;

                  (ii) with respect to Borrower, acquire or own any material
assets other than (i) the Property, and (ii) such incidental Personal Property
as may be necessary for the operation of the Property and with respect to
Principal, acquire or own any material asset other than its interest in
Borrower;

                  (iii) merge into or consolidate with any person or entity or
dissolve, terminate or liquidate in whole or in part, transfer or otherwise
dispose of all or substantially all of its assets or change its legal
structure; without in each case Lender's consent;

                  (iv) fail to preserve its existence as an entity duly
organized, validly existing and in good standing (if applicable) under the laws
of the jurisdiction of its organization or formation, or without the prior
written consent of Lender, amend, modify, terminate or fail to comply with the
provisions of Borrower's Partnership Agreement, Articles or Certificate of
Incorporation, Articles of Organization or similar organizational documents, as
the case may be, or of Principal's Partnership Agreement, Articles or
Certificate of Incorporation, Articles of Organization or similar
organizational documents, as the case may be, whichever is applicable;

                  (v) own any subsidiary or make any investment in, any person
or entity without the consent of Lender;

                  (vi) commingle its assets with the assets of any of its
members, general partners, affiliates, principals or of any other person or
entity;

                  (vii) with respect to Borrower, incur any debt, secured or
unsecured, direct or contingent (including guaranteeing any obligation), other
than the Debt, except for trade payables in the ordinary course of its business
of owning and operating the Property, provided that such debt is not evidenced
by a note and paid when due and with respect to Principal, incur any debt
secured or unsecured, direct or contingent (including guaranteeing any
obligations);

                  (viii) become insolvent and fail to pay its debts and
liabilities from its assets as the same shall become due;

                  (ix) fail to maintain its records, books of account and bank
accounts separate and apart from those of the members, general partners,
principals and affiliates of Borrower or of

                                     -19-
<PAGE>

Principal, as the case may be, the affiliates of a member, general partner or
principal of Borrower or Principal, as the case may be, and any other person or
entity;

                  (x) enter into any contract or agreement with any member,
general partner, principal or affiliate of Borrower or of Principal, as the
case may be, Guarantor or Indemnitor, or any member, general partner,
principal or affiliate thereof, except upon terms and conditions that are
intrinsically fair and substantially similar to those that would be available
on an arms-length basis with third parties other than any member, general
partner, principal or affiliate of Borrower or of Principal, as the case may
be, Guarantor or Indemnitor, or any member, general partner, principal or
affiliate thereof;

                  (xi) seek the dissolution or winding up in whole, or in part,
of Borrower or of Principal, as the case may be;

                  (xii) fail to correct any known misunderstandings regarding
the separate identity of Borrower, or of Principal, as the case may be, or any
member, general partner, principal or affiliate thereof or any other person;

                  (xiii) hold itself out to be responsible for the debts of
another person;

                  (xiv) make any loans or advances to any third party,
including any member, general partner, principal or affiliate of Borrower, or
of Principal, as the case may be, or any member, general partner, principal or
affiliate thereof;

                  (xv) fail to file its own tax returns;

                  (xvi) agree to, enter into or consummate any transaction
which would render Borrower or Principal, as the case may be, unable to furnish
the certification or other evidence referred to in Section 4.2(b) hereof;

                  (xvii) fail either to hold itself out to the public as a
legal entity separate and distinct from any other entity or person or to
conduct its business solely in its own name in order not (i) to mislead others
as to the identity with which such other party is transacting business, or (ii)
to suggest that Borrower or Principal, as the case may be, is responsible for
the debts of any third party (including any member, general partner, principal
or affiliate of Borrower, or of Principal, as the case may be, or any member,
general partner, principal or affiliate thereof);

                  (xviii) fail to maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations;

                  (xix) file or consent to the filing of any petition, either
voluntary or involuntary, to take advantage of any applicable insolvency,
bankruptcy, liquidation or reorganization statute, or make an assignment for
the benefit of creditors; or

                                     -20-
<PAGE>

                  (xx) share any common logo with or hold itself out as or be
considered as a department or division of (i) any general partner, principal,
member or affiliate of Borrower or of Principal, as the case may be, (ii) any
affiliate of a general partner, principal or member of Borrower or of
Principal, as the case may be, or (iii) any other person or entity.

                  Section 4.4 RESTORATION. The following provisions shall
apply in connection with the Restoration of the Property:

                  (a) If the Net Proceeds (defined below) shall be less than
         $75,000 and the costs of completing the Restoration shall be less than
         $75,000, the Net Proceeds will be disbursed by Lender to Borrower upon
         receipt, provided that all of the conditions set forth in Subsection
         4.4(b)(i) are met and Borrower delivers to Lender a written
         undertaking to expeditiously commence and to satisfactorily complete
         with due diligence the Restoration in accordance with the terms of
         this Security Instrument.

                  (b) If the Net Proceeds are equal to or greater than $75,000
         or the costs of completing the Restoration is equal to or greater
         than $75,000, Lender shall make the net amount of all insurance
         proceeds received by Lender pursuant to Subsections 3.3(a)(i), (iv),
         (vi) and (vii) of this Security Instrument as a result of such damage
         or destruction, after deduction of its reasonable costs and expenses
         (including, but not limited to, reasonable counsel fees), if any, in
         collecting the same (the "Net Proceeds") available for the Restoration
         in accordance with the provisions of this Subsection 4.4(b).

                           (i) The Net Proceeds shall be made available to
                  Borrower for the Restoration provided that each of the
                  following conditions are met:

                                    (A) no Event of Default shall have occurred
                           and be continuing under the Note, this Security
                           Instrument or any of the Other Security Documents;

                                    (B) less than fifty percent (50%) of the
                           total floor area of the Improvements has been
                           damaged, destroyed or rendered unusable as a result
                           of such fire or other casualty;

                                    (C) Leases demising in the aggregate at
                           least 50% of the total rentable space in the
                           Property which has been demised under executed and
                           delivered Leases in effect as of the date of the
                           occurrence of such fire or other casualty shall
                           remain in full force and effect during and after the
                           completion of the Restoration, and Borrower
                           furnishes to Lender evidence satisfactory to Lender
                           that Acme Markets, Inc. shall continue to operate
                           its retail store at the Property after the
                           completion of the Restoration;

                                    (D) Borrower shall commence the Restoration
                           as soon as reasonably practicable (but in no event
                           later than thirty (30) days after such

                                     -21-
<PAGE>

                           damage or destruction occurs) and shall diligently
                           pursue the same to satisfactory completion;

                                    (E) Lender shall be satisfied that any
                           operating deficits which will be incurred with
                           respect to the Property as a result of the
                           occurrence of any such fire or other casualty will
                           be covered out of (1) the Net Proceeds, (2) the
                           insurance coverage referred to in Subsection
                           3.3(a)(iii), or (3) by other funds of Borrower;

                                    (F) Lender shall be satisfied that, upon
                           the completion of the Restoration, the gross cash
                           flow and the net cash flow of the Property will be
                           restored to a level sufficient to cover all carrying
                           costs and operating expenses of the Property,
                           including, without limitation, debt service on the
                           Note at a coverage ratio (after deducting all
                           required reserves as required by Lender from net
                           operating income) of at least 1.25 to 1.0, which
                           coverage ratio shall be determined by Lender in
                           its sole and absolute discretion on the basis of the
                           Applicable Interest Rate (as defined in the Note);

                                    (G) Lender shall be satisfied that the
                           Restoration will be completed on or before the
                           earliest to occur of (1) six (6) months prior to the
                           Maturity Date (as defined in the Note), (2) six (6)
                           months after the occurrence of such fire or other
                           casualty, or (3) the earliest date required for such
                           completion under the terms of any Leases which are
                           required in accordance with the provisions of this
                           Subsection 4.4(b) to remain in effect subsequent to
                           the occurrence of such fire or other casualty and
                           the completion of the Restoration or under the terms
                           of the Lease(s) with Acme Markets, Inc., or (4) such
                           time as may be required under applicable zoning law,
                           ordinance, rule or regulation in order to repair and
                           restore the Property to the condition it was in
                           immediately prior to such fire or other casualty;

                                    (H) Borrower shall execute and deliver to
                           Lender a completion guaranty in form and substance
                           satisfactory to Lender and its counsel pursuant to
                           the provisions of which Borrower shall guaranty to
                           Lender the lien-free completion by Borrower of the
                           Restoration in accordance with the provisions of
                           this Subsection 4.4(b);

                                    (I) the Property and the use thereof after
                           the Restoration will be in compliance with and
                           permitted under all applicable zoning laws,
                           ordinances, rules and regulations; and

                                    (J) the Restoration shall be done and
                           completed by Borrower in an expeditious and diligent
                           fashion and in compliance with all applicable

                                     -22-
<PAGE>

                           governmental laws, rules and regulations (including,
                           without limitation, all applicable Environmental
                           Laws (defined below).

                           (ii) The Net Proceeds shall be held by Lender and,
                  until disbursed in accordance with the provisions of this
                  Subsection 4.4(b), shall constitute additional security for
                  the Obligations. The Net Proceeds shall be disbursed by
                  Lender to, or as directed by, Borrower from time to time
                  during the course of the Restoration, upon receipt of
                  evidence satisfactory to Lender that (A) all materials
                  installed and work and labor performed (except to the extent
                  that they are to be paid for out of the requested
                  disbursement) in connection with the Restoration have been
                  paid for in full, and (B) there exist no notices of pendency,
                  stop orders, mechanic's or materialman's liens or notices of
                  intention to file same, or any other liens or encumbrances of
                  any nature whatsoever on the Property arising out of the
                  Restoration which have not either been fully bonded to the
                  satisfaction of Lender and discharged of record or in the
                  alternative fully insured to the satisfaction of Lender by
                  the title company insuring the lien of this Security
                  Instrument.

                           (iii) All plans and specifications required in
                  connection with the Restoration shall be subject to prior
                  review and acceptance in all respects by Lender and by an
                  independent consulting engineer selected by Lender (the
                  "Casualty Consultant"). Lender shall have the use of the
                  plans and specifications and all permits, licenses and
                  approvals required or obtained in connection with the
                  Restoration. The identity of the contractors, subcontractors
                  and materialmen engaged in the Restoration, as well as the
                  contracts under which they have been engaged, shall be
                  subject to prior review and acceptance by Lender and the
                  Casualty Consultant. All costs and expenses incurred by
                  Lender in connection with making the Net Proceeds available
                  for the Restoration including, without limitation, reasonable
                  counsel fees and disbursements and the Casualty Consultant's
                  fees, shall be paid by Borrower.

                           (iv) In no event shall Lender be obligated to make
                  disbursements of the Net Proceeds in excess of an amount
                  equal to the costs actually incurred from time to time for
                  work in place as part of the Restoration, as certified by the
                  Casualty Consultant, minus the Casualty Retainage. The term
                  "Casualty Retainage" as used in this Subsection 4.4(b) shall
                  mean an amount equal to 10% of the costs actually incurred
                  for work in place as part of the Restoration, as certified by
                  the Casualty Consultant, until such time as the Casualty
                  Consultant certifies fo Lender that Net Proceeds representing
                  50% of the required Restoration have been disbursed. There
                  shall be no Casualty Retainage with respect to costs actually
                  incurred by Borrower for work in place in completing the last
                  50% of the required Restoration. The Casualty Retainage shall
                  in no event, and notwithstanding anything to the contrary set
                  forth above in this Subsection 4.4(b), be less than the
                  amount actually held back by Borrower from contractors,
                  subcontractors and materialmen engaged in the Restoration.
                  The Casualty Retainage shall not be released until the
                  Casualty Consultant certifies to Lender that the Restoration
                  has been completed in

                                     -23-
<PAGE>

                  accordance with the provisions of this Subsection 4.4(b) and
                  that all approvals necessary for the re-occupancy and use of
                  the Property have been obtained from all appropriate
                  governmental and quasi-governmental authorities, and Lender
                  receives evidence satisfactory to Lender that the costs of
                  the Restoration have been paid in full or will be paid in
                  full out of the Casualty Retainage, provided, however, that
                  Lender will release the portion of the Casualty Retainage
                  being held with respect to any contractor, subcontractor or
                  materialman engaged in the Restoration as of the date upon
                  which the Casualty Consultant certifies to Lender that the
                  contractor, subcontractor or materialman has satisfactorily
                  completed all work and has supplied all materials in
                  accordance with the provisions of the contractor's,
                  subcontractor's or materialman's contract, and the
                  contractor, subcontractor or materialman delivers the lien
                  waivers and evidence of payment in full of all sums due to
                  the contractor, subcontractor or materialman as may be
                  reasonably requested by Lender or by the title company
                  insuring the lien of this Security Instrument. If required by
                  Lender, the release of any such portion of the Casualty
                  Retainage shall be approved by the surety company, if any,
                  which has issued a payment or performance bond with respect
                  to the contractor, subcontractor or materialman.

                           (v) Lender shall not be obligated to make
                  disbursements of the Net Proceeds more frequently than once
                  every calendar month.

                           (vi) If at any time the Net Proceeds or the
                  undisbursed balance thereof shall not, in the opinion of
                  Lender, be sufficient to pay in full the balance of the costs
                  which are estimated by the Casualty Consultant to be incurred
                  in connection with the completion of the Restoration,
                  Borrower shall deposit the deficiency (the "Net Proceeds
                  Deficiency") with Lender before any further disbursement of
                  the Net Proceeds shall be made. The Net Proceeds Deficiency
                  deposited with Lender shall be held by Lender and shall be
                  disbursed for costs actually incurred in connection with the
                  Restoration on the same conditions applicable to the
                  disbursement of the Net Proceeds, and until so disbursed
                  pursuant to this Subsection 4.4(b) shall constitute
                  additional security for the Obligations.

                           (vii) The excess, if any, of the Net Proceeds and
                  the remaining balance, if any, of the Net Proceeds Deficiency
                  deposited with Lender after the Casualty Consultant certifies
                  to Lender that the Restoration has been completed in
                  accordance with the provisions of this Subsection 4.4(b), and
                  the receipt by Lender of evidence satisfactory to Lender that
                  all costs incurred in connection with the Restoration have
                  been paid in full, shall be remitted by Lender to Borrower,
                  provided no Event of Default shall have occurred and shall be
                  continuing under the Note, this Security Instrument or any of
                  the Other Security Documents.

                  (c) All Net Proceeds not required (i) to be made available
         for the Restoration or (ii) to be returned to Borrower as excess Net
         Proceeds pursuant to Subsection 4.4(b)(vii) may be retained and
         applied by Lender toward the payment of the Debt whether or not then

                                     -24-
<PAGE>

         due and payable in such order, priority and proportions as Lender in
         its discretion shall deem proper or, at the discretion of Lender, the
         same may be paid, either in whole or in part, to Borrower for such
         purposes as Lender shall designate, in its discretion. If Lender shall
         receive and retain Net Proceeds, the lien of this Security Instrument
         shall be reduced only by the amount thereof received and retained by
         Lender and actually applied by Lender in reduction of the Debt:

                   Article 5 - REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Lender that:

                  Section 5.1 WARRANTY OF TITLE. Borrower has good title to the
Property and has the right to mortgage, grant, bargain, sell, pledge, assign,
warrant, transfer and convey the same and that Borrower possesses an
unencumbered fee simple absolute estate in the Land and the Improvements and
that it owns the Property and clear of all liens, encumbrances and charges
whatsoever except for those exceptions shown in the title insurance policy
insuring the lien of this Security Instrument (the "Permitted Exceptions").
Borrower shall forever warrant, defend and preserve the title and the validity
and priority of the lien of this Security Instrument and shall forever warrant
and defend the same to Lender against the claims of all persons whomsoever.

                  Section 5.2 AUTHORITY. Borrower (and the undersigned
representative of Borrower, if any) has full power, authority and legal right
to execute this Security Instrument, and to mortgage, grant, bargain, sell,
pledge, assign, warrant, transfer and convey the Property pursuant to the terms
hereof and to keep and observe all of the terms of this Security Instrument on
Borrower's part to be performed.

                  Section 5.3 LEGAL STATUS AND AUTHORITY. Borrower (a) is duly
organized, validly existing and in good standing under the laws of its state of
organization or incorporation; (b) is duly qualified to transact business and
is in good standing in the State where the Property is located; and (c) has all
necessary approvals, governmental and otherwise, and full power and authority
to own the Property and carry on its business as now conducted and proposed to
be conducted. Borrower now has and shall continue to have the full right, power
and authority to operate and lease the Property, to encumber the Property as
provided herein and to perform all of the other obligations to be performed by
Borrower under the Note, this Security Instrument and the Other Security
Documents.

               Section 5.4 VALIDITY OF DOCUMENTS. (a) The execution, delivery
and performance of the Note, this Security Instrument and the Other Security
Documents and the borrowing evidenced by the Note (i) are within the
corporate/partnership/company power of Borrower; (ii) have been authorized by
all requisite corporate/partnership/company action; (iii) have received all
necessary approvals and consents, corporate, governmental or otherwise; (iv)
will not violate, conflict with, result in a breach of or constitute (with
notice or lapse of time, or both) a default under any provision of law, any
order or judgment of any court or governmental authority, the articles of
incorporation,  by-laws, partnership or trust agreement, articles of

                                     -25-
<PAGE>

organization, operating agreement, or other governing instrument of Borrower, or
any indenture, agreement or other instrument to which Borrower is a party or by
which it or any of its assets or the Property is or may be bound or affected;
(v) will not result in the creation or imposition of any lien, charge or
encumbrance whatsoever upon any of its assets, except the lien and security
interest created hereby; and (vi) will not require any authorization or license
from, or any filing with, any governmental or other body (except for the
recordation of this Security Instrument in appropriate land records in the State
where the Property is located and except for Uniform Commercial Code filings
relating to the security interest created hereby); and (b) the Note, this
Security Instrument and the Other Security Documents constitute the legal, valid
and binding obligations of Borrower.

                  Section 5.5 LITIGATION. There is no action, suit or
proceeding, judicial, administrative or otherwise (including any condemnation
or similar proceeding), pending or, to the best of Borrower's knowledge,
threatened or contemplated against, or affecting, Borrower, a Guarantor, if
any, an Indemnitor, if any, or the Property.

                  Section 5.6 STATUS of PROPERTY.

                  (a) No portion of the Improvements is located in an area
         identified by the Secretary of Housing and Urban Development or any
         successor thereto as an area having special flood hazards pursuant to
         the Flood Insurance Acts or, if any portion of the Improvements is
         located within such area, Borrower has obtained and will maintain the
         insurance prescribed in Section 3.3 hereof.

                  (b) Borrower has obtained all necessary certificates,
         licenses and other approvals, governmental and otherwise, necessary
         for the operation of the Property and the conduct of its business and
         all required zoning, building code, land use, environmental and other
         similar permits or approvals, all of which are in full force and
         effect as of the date hereof and not subject to revocation,
         suspension, forfeiture or modification.

                  (c) The Property and the present and contemplated use and
         occupancy thereof are in full compliance with all applicable zoning
         ordinances, building codes, land use and environmental laws and other
         similar laws.

                  (d) The Property is served by all utilities required for the
         current or contemplated use thereof. All utility service is provided
         by public utilities and the Property has accepted or is equipped to
         accept such utility service.

                  (e) All public roads and streets necessary for service of and
         access to the Property for the current or contemplated use thereof
         have been completed, are serviceable and all-weather and are
         physically and legally open for use by the public.

                  (f) The Property is served by public water and sewer systems.

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

                                     -26-
<PAGE>

                  (h) All costs and expenses of any and all labor, materials,
         supplies and equipment used in the construction of the Improvements
         have been paid in full.

                  (i) Borrower has paid in full for, and is the owner of, all
         furnishings, fixtures and equipment (other than tenants' property)
         used in connection with the operation of the Property, free and clear
         of any and all security interests, liens or encumbrances, except the
         lien and security interest created hereby.

                  (j) All liquid and solid waste disposal, septic and sewer
         systems located on the Property are in a good and safe condition and
         repair and in compliance with all Applicable Laws.

                  Section 5.7 NO FOREIGN PERSON. Borrower is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Internal Revenue Code
of 1986, as amended and the related Treasury Department regulations, including
temporary regulations.

                  Section 5.8 SEPARATE TAX LOT. The Property is assessed for
real estate tax purposes as one or more wholly independent tax lot or lots,
separate from any adjoining land or improvements not constituting a part of
such lot or lots, and no other land or improvements is assessed and taxed
together with the Property or any portion thereof.

                  Section 5.9 ERISA COMPLIANCE.

                  (a) As of the date hereof and throughout the term of this
         Security Instrument, (i) Borrower is not and will not be an "employee
         benefit plan" as defined in Section 3(3) of ERISA, which is subject to
         Title I of ERISA, and (ii) the assets of Borrower do not and will not
         constitute "plan assets" of one or more such plans for purposes of
         Title I of ERISA; and

                  (b) As of the date hereof and throughout the term of this
         Security Instrument (i) Borrower is not and will not be a
         "governmental plan" within the meaning of Section 3(3) of ERISA and
         (ii) transactions by or with Borrower are not and will not be subject
         to state statutes applicable to Borrower regulating investments of and
         fiduciary obligations with respect to governmental plans.

                  Section 5.10 LEASES. (a) Borrower is the sole owner of the
entire lessor's interest in the Leases; (b) the Leases are valid and
enforceable and in full force and effect; (c) all of the Leases are arms-length
agreements with bona fide, independent third parties; (d) no party (other than
Formal Celebrations) under any Lease is in default; (e) all Rents due have been
paid in full; (f) the terms of all alterations, modifications and amendments to
the Leases are reflected in the certified occupancy statement delivered to and
approved by Lender; (g) none of the Rents reserved in the Leases have been
assigned or otherwise pledged or hypothecated; (h) none of the Rents have been
collected for more than one (1) month in advance; (i) the premises demised
under the Leases (other than the Leases with Acme Markets, Inc. and Essex
Restaurants, Inc., a franchisee of Wendy's International) have been completed
and the tenants under the Leases have accepted the

                                     -27-

<PAGE>

same and have taken possession of the same on a rent-paying basis; (j) there
exist no offsets or defenses to the payment of any portion of the Rents; (k) no
Lease contains an option to purchase, right of first refusal to purchase, or any
other similar provision; (1) no person or entity has any possessory interest in,
or right to occupy, the Property except under and pursuant to a Lease; (m) each
Lease is subordinate to this Security Instrument, either pursuant to its terms
or a recorded subordination agreement; and (n) no Lease has the benefit of a
non-disturbance agreement that would be considered unacceptable to prudent
institutional lenders.

               Section 5.11 FINANCIAL CONDITION. (a) (i) Borrower is solvent,
and no bankruptcy, reorganization, insolvency or similar proceeding under any
state or federal law with respect to Borrower has been initiated, and (ii)
Borrower has received reasonably equivalent value for the granting of this
Security Instrument.

               (b) No petition in bankruptcy has ever been filed by or against
Borrower; any Guarantor, any Indemnitor or any related entity, or any principal,
general partner or member thereof, in the last seven (7) years and neither
Borrower, any Guarantor, any Indemnitor nor any related entity, or any
principal, general partner or member thereof, in the last seven (7) years has
ever made any assignment for the benefit of creditors or taken advantage of any
insolvency act or any act for the benefit of debtors.

               Section 5.12 BUSINESS PURPOSES. The loan evidenced by the Note
secured by the Security Instrument and the Other Security Documents (the "Loan")
is solely for the business purpose of Borrower, and is not for personal, family,
household, or agricultural purposes.

               Section 5.13 TAXES. Borrower, any Guarantor and any Indemnitor
have filed all federal, state, county, municipal, and city income and other tax
returns required to have been filed by them and have paid all taxes and related
liabilities which have become due pursuant to such returns or pursuant to any
assessments received by them. Neither Borrower, any Guarantor nor any Indemnitor
knows of any basis for any additional assessment in respect of any such taxes
and related liabilities for prior years.

               Section 5.14 MAILING ADDRESS. Borrower's mailing address, as set
forth in the opening paragraph hereof or as changed in accordance with the
provisions hereof, is true and correct.

               Section 5.15 NO CHANGE IN FACTS OR CIRCUMSTANCES. All information
in the application for the Loan submitted to Lender (the "Loan Application") and
in all financing statements, rent rolls, reports, certificates and other
documents submitted in connection with the Loan Application or in satisfaction
of the terms thereof, are accurate, complete and correct in all respects. There
has been no material adverse change in any condition, fact, circumstance or
event that would make any such information inaccurate, incomplete or otherwise
misleading.

               Section 5.16 DISCLOSURE. Borrower has disclosed to Lender all
material facts and has not failed to disclose any material fact that could cause
any representation or warranty made herein to be materially misleading.

                                     -28-
<PAGE>

                  Section 5.17 THIRD PARTY REPRESENTATIONS. Each of the
representations and the warranties made by each Guarantor and Indemnitor herein
or in any Other Security Document(s) is true and correct in all material
respects.

                  Section 5.18 ILLEGAL ACTIVITIES. No portion of the Property
has been or will be purchased with proceeds of any illegal activity.

                  Section 5.19 CONTRACTS. All contracts, agreements, consents,
waivers, documents and writings of every kind or character at any time to which
Borrower is a party to be delivered to Lender pursuant to any of the provisions
of this Security Instrument are valid and enforceable against Borrower and, to
the best knowledge of Borrower, are enforceable against all other parties
thereto, and, to Borrower's actual knowledge, in all respects are what they
purport to be and, to the best knowledge of Borrower, to the extent that any
such writing shall impose any obligation or duty on the party thereto or
constitute a waiver of any rights which any such party might otherwise have,
said writing shall be valid and enforceable against said party in accordance
with its terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization or similar laws affecting the rights of
creditors generally.

                     Article 6 - OBLIGATIONS AND RELIANCES

                  Section 6.1 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 Note, this Security Instrument and the Other
Security Documents shall be construed so as to deem the relationship between
Borrower and Lender to be other than that of debtor and creditor.

                  Section 6.2 NO RELIANCE ON LENDER. The members, general
partners, 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 6.3 NO LENDER OBLIGATIONS. (a) Notwithstanding the
provisions of Subsections 1.1(f) and (1) 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 Note or the Other Security 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

                                     -29-

<PAGE>

legality or effectiveness of same, and such acceptance or approval thereof shall
not constitute any warranty or affirmation with respect thereto by Lender.

                  Section 6.4 RELIANCE. Borrower recognizes and acknowledges
that in accepting the Note, this Security Instrument and the Other Security
Documents, Lender is expressly and primarily relying on the truth and accuracy
of the warranties and representations set forth in Article 5 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 accepting the Note, this Security Instrument and the
Other Security Documents; 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 Article 5.

                        Article 7 - FURTHER ASSURANCES

                  Section 7.1 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 Security 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 Security Documents, any note 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 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 7.2 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, mortgages, assignments,
notices of assignments, transfers and assurances as Lender shall, from time to
time, require, for the better assuring, conveying, assigning, transferring, and
confirming unto Lender the Property and rights hereby mortgaged, 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 Applicable Laws. Borrower, on demand, will execute and
deliver and 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, chattel mortgages or other

                                     -30-

<PAGE>

instruments, 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
7.2.

                  Section 7.3 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 ninety (90)
         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 ninety (90) 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 Security 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 7.4 ESTOPPEL CERTIFICATES.

                  (a) After request by Lender, Borrower, within ten (10) days,
         shall furnish Lender or any proposed assignee with a statement, duly
         acknowledged and certified, setting forth (i) the amount of the
         original principal amount of the Note, (ii) the unpaid principal
         amount of the Note, (iii) the rate of interest of the Note, (iv) the
         terms of payment and maturity date of the Note, (v) the date
         installments of interest and/or principal were last paid. (vi) that,
         except as provided in such statement, there are no defaults or events
         which with the passage of time or the giving of notice or both, would
         constitute an event of default under the Note or the Security
         Instrument, (vii) that the Note and this Security Instrument are
         valid, legal and binding obligations and have not been modified or if
         modified, giving particulars of such modification, (viii) whether any
         offsets or defenses exist against the obligations secured hereby and,
         if any are alleged to exist, a

                                     -31-
<PAGE>

         detailed description thereof, (ix) that all Leases are in full force
         and effect and (provided the Property is not a residential multifamily
         property) have not been modified (or if modified, setting forth all
         modifications), (x) the date to which the Rents thereunder have been
         paid pursuant to the Leases, (xi) whether or not, to the best
         knowledge of Borrower, any of the lessees under the Leases are in
         default under the Leases, and, if any of the lessees are in default,
         setting forth the specific nature of all such defaults, (xii) the
         amount of security deposits held by Borrower under each Lease and that
         such amounts are consistent with the amounts required under each
         Lease, and (xiii) as to any other matters reasonably requested by
         Lender and reasonably related to the Leases, the obligations secured
         hereby, the Property or this Security Instrument.

                  (b) Borrower shall deliver to Lender, promptly upon request,
         duly executed estoppel certificates from any one or more lessees as
         required by Lender attesting to such facts regarding the Lease as
         Lender may require, including but not limited to attestations that
         each Lease covered thereby is in full force and effect with no
         defaults thereunder on the part of any party, that none of the Rents
         have been paid more than one month in advance, and that the lessee
         claims no defense or offset against the full and timely performance of
         its obligations under the Lease.

                  (c) Upon any transfer or proposed transfer contemplated by
         Section 19.1 hereof, at Lender's request, Borrower, any Guarantors and
         any Indemnitor(s) shall provide an estoppel certificate to the
         Investor (defined in Section 19.1) or any prospective Investor in such
         form, substance and detail as Lender, such Investor or prospective
         Investor may require.

                  Section 7.5 FLOOD INSURANCE. After Lender's request, Borrower
shall deliver evidence satisfactory to Lender that no portion of the
Improvements is situated in a federally designated "special flood hazard area"
or if it is, that Borrower has obtained insurance meeting the requirements of
Section 3.3(a)(vii).

                  Section 7.6 SPLITTING OF SECURITY INSTRUMENT. 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 7.7 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 Security Document which is not of public record, and, in the
case of any such mutilation, upon surrender and cancellation of such Note or
Other Security Document, Borrower will issue, in lieu thereof,

                                     -32-
<PAGE>

a replacement Note or Other Security Document, dated the date of such lost,
stolen, destroyed or mutilated Note or Other Security Document in the same
principal amount thereof and otherwise of like tenor.

                      Article 8 - DUE ON SALE/ENCUMBRANCE

                  Section 8.1 LENDER RELIANCE. Borrower acknowledges that
Lender has examined and relied on the experience of Borrower and its members,
general partners, principals and (if Borrower is a trust) beneficial owners in
owning and operating properties such as the Property in agreeing to make the
loan secured hereby, 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 8.2 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.

                  Section 8.3 SALE/ENCUMBRANCE DEFINED. A sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer within
the meaning of this Article 8 shall be deemed to include, but not 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 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) if Borrower, any Guarantor,
any Indemnitor, or any general or limited partner or member of Borrower, any
Guarantor or any Indemnitor is a corporation, the voluntary or involuntary
sale, conveyance, transfer or pledge of such corporation's stock (or the stock
of any corporation directly or indirectly controlling such corporation by
operation of law or otherwise) or the creation or issuance of new stock by
which an aggregate of more than 33% of such corporation's stock shall be
vested in a party or parties who are not now stockholders; (d) if Borrower, any
Guarantor or any Indemnitor or any general or limited partner or member of
Borrower, any Guarantor or any Indemnitor is a limited or general partnership
or joint venture, the change, removal or resignation of a general partner or
managing partner or the transfer or pledge of the partnership interest of any
general partner or managing partner or any profits or proceeds relating to such
partnership interest or the voluntary or involuntary sale, conveyance, transfer
or pledge of limited partnership interests (or the limited partnership
interests of any limited partnership directly or indirectly controlling such
limited partnership by operation of law or otherwise) or the creation or
issuance of new limited partnership interests, by which an aggregate of more
than 33% of such limited partnership interests are held by parties who are not
currently limited partners; and (e) if Borrower, any

                                     -33-
<PAGE>

Guarantor, any Indemnitor or any general or limited partner or member of
Borrower, any Guarantor or any Indemnitor is a limited liability company, the
change, removal or resignation of a managing member or the transfer of the
membership interest of any managing member or any profits or proceeds relating
to such membership interest or the voluntary or involuntary sale, conveyance,
transfer or pledge of membership interests (or the membership interests of any
limited liability company directly or indirectly controlling such limited
liability company by operation of law or otherwise) or the creation or issuance
of new membership interests, by which an aggregate of more than 33% of such
membership interests are held by parties who are not currently members.
Notwithstanding the foregoing, the following transfer shall not be deemed to be
a sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment,
or transfer within the meaning of this Article 8: transfer by devise or descent
or by operation of law upon the death of a member, partner or stockholder of
Borrower, any Guarantor or any Indemnitor or any general partner or member
thereof. Notwithstanding the provisions of this Security Instrument to the
contrary, and provided that no default has occurred and is continuing under the
Note, this Security Instrument or the Other Security Documents, Lender's prior
written consent shall not be required with respect to transfers of stock in the
general partner of Borrower, provided (i) Andrew B. Hascoe maintains at least a
fifty-one percent (51%) ownership interest in said general partner of Borrower
and (ii) Lender receives sixty (60) days prior written notice of any such
transfer.

                  Section 8.4 LENDER'S RIGHTS. Lender reserves the right to
condition the consent required hereunder upon a modification of the terms
hereof and on assumption of the Note, this Security Instrument and the Other
Security Documents as so modified by the proposed transferee, payment of a
transfer fee of one percent (1%) of the principal balance of the Note, a
$4,000 processing fee, and all of Lender's expenses incurred in connection with
such transfer, the approval by a Rating Agency of the proposed transferee, the
proposed transferee's continued compliance with the covenants set forth in this
Security Instrument, including, without limitation, the covenants in Section
4.3 hereof, or such other conditions as Lender shall determine in its sole
discretion to be in the interest of Lender. All of Lender's expenses incurred
and the $4,000 processing fee shall be payable by Borrower whether or not
Lender consents to the transfer. 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.

                             Article 9 - PREPAYMENT

                  Section 9.1 PREPAYMENT BEFORE EVENT OF DEFAULT. The Debt may
be prepaid only in strict accordance with the express terms and conditions of
the Note including the payment of any prepayment consideration.

                                     -34-
<PAGE>

                  Section 9.2 PREPAYMENT ON CASUALTY OR CONDEMNATION. Provided
no Event of Default exists under the Note, this Security Instrument or the
Other Security Documents, in the event of any prepayment of the Debt pursuant
to the terms of Sections 3.3 or 3.6 hereof, no Prepayment Consideration
(defined in the Note) shall be due in connection therewith, but Borrower shall
be responsible for the Interest Shortfall Payment (defined in the Note), if
any, and all other amounts due under the Note, this Security Instrument and
the Other Security Documents.

                  Section 9.3 PREPAYMENT AFTER EVENT OF DEFAULT. If a Default
Prepayment (defined below) occurs, Borrower shall pay to Lender the entire
Debt, including without limitation, the following amounts:

                  (a) if the Default Prepayment occurs prior to the time when
         prepayment of the principal balance of the Note is permitted, an
         amount equal to the sum of (i) the present value of the interest
         payments which would have accrued on the principal balance of the Note
         (outstanding as of the date of such Default Prepayment) at the
         Applicable Interest Rate (as defined in the Note) from the date of
         such Default Prepayment to the first day prepayment is permitted
         pursuant to the Note discounted at a rate equal to the Treasury Rate
         (as defined in the Note) except that such Treasury Rate shall be based
         on the U.S. Treasury constant maturity most nearly approximating the
         date upon which prepayment is first permitted pursuant to the Note,
         and (ii) the Prepayment Consideration (defined in the Note) which
         would have been payable to Lender as of the first day of the fourth
         (4th) Loan Year (as defined in the Note) based on the Treasury Rate in
         effect at the time of such Default Prepayment; and

                  (b) if the Default Prepayment occurs at a time when
         prepayment of the principal balance of the Note is permitted, the
         Prepayment Consideration and the Interest Shortfall Payment (defined
         in the Note), if applicable.

For purposes of this Section 9.3, the term "Default Prepayment" shall mean a
prepayment of the principal amount of the Note made after the occurrence of any
Event of Default or an acceleration of the Maturity Date (as defined in the
Note) under any circumstances, including, without limitation, a prepayment
occurring in connection with reinstatement of this Security Instrument provided
by statute under foreclosure proceedings or exercise of a power of sale, any
statutory right of redemption exercised by Borrower or any other party having a
statutory right to redeem or prevent foreclosure, any sale in foreclosure or
under exercise of a power of sale or otherwise.

                              Article 10 - DEFAULT

                  Section 10.1 EVENTS OF DEFAULT. The occurrence of any one or
more of the following events shall constitute an "Event of Default":

                  (a) if any portion of the Debt is not paid on or prior to
         the date the same is due;

                                     -35-
<PAGE>

                  (b) if any of the Taxes or Other Charges is not paid when the
         same is due and payable except to the extent sums sufficient to pay
         such Taxes and Other Charges have been deposited with Lender in
         accordance with the terms of this Security Instrument;

                  (c) if the Policies are not kept in full force and effect, or
         if the Policies are not delivered to Lender upon request;

                  (d) if Borrower violates or does not comply with any of the
         provisions of Section 3.7 or Article 12 within thirty (30) days after
         notice from Lender or if Borrower or Principal, as applicable,
         violates or does not comply with any of the provisions of Section 4.3
         or Article 8;

                  (e) if any representation or warranty of Borrower, any
         Indemnitor or any person guaranteeing payment of the Debt or any
         portion thereof or performance by Borrower of any of the terms of this
         Security Instrument (a "Guarantor"), or any member, general partner,
         principal or beneficial owner of any of the foregoing, made herein or
         in the Environmental Indemnity (defined below) or any guaranty, or in
         any certificate, report, financial statement or other instrument or
         document furnished to Lender shall have been false or misleading in
         any material respect when made;

                  (f) if (i) Borrower or any managing member or general partner
         of Borrower, or any Guarantor or Indemnitor shall commence any case,
         proceeding or other action (A) under any existing or future law of any
         jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
         reorganization, conservatorship or relief of debtors, seeking to have
         an order for relief entered with respect to it, or seeking to
         adjudicate it a bankrupt or insolvent, or seeking reorganization,
         arrangement, adjustment, winding-up, liquidation, dissolution,
         composition or other relief with respect to it or its debts, or (B)
         seeking appointment of a receiver, trustee, custodian, conservator or
         other similar official for it or for all or any substantial part of
         its assets, or the Borrower or any managing member or general partner
         of Borrower, or any Guarantor or Indemnitor shall make a general
         assignment for the benefit of its creditors; or (ii) there shall be
         commenced against Borrower or any managing member or general partner
         of Borrower, or any Guarantor or Indemnitor any case, proceeding or
         other action of a nature referred to in clause (i) above which (A)
         results in the entry of an order for relief or any such adjudication
         or appointment or (B) remains undismissed, undischarged or unbonded
         for a period of sixty (60) days; or (iii) there shall be commenced
         against the Borrower or any managing member or general partner of
         Borrower, or any Guarantor or Indemnitor any case, proceeding or other
         action seeking issuance of a warrant of attachment, execution,
         distraint or similar process against all or any substantial part of
         its assets which results in the entry of any order for any such relief
         which shall not have been vacated, discharged, or stayed or bonded
         pending appeal within sixty (60) days from the entry thereof; or (iv)
         the Borrower or any managing member or general partner of Borrower, or
         any Guarantor or Indemnitor shall take any action in furtherance of,
         or indicating its consent to, approval of, or acquiescence in, any of
         the acts set forth in clause (i), (ii), or (iii) above; or (v) the
         Borrower or any managing member or general partner of Borrower, or any
         Guarantor or

                                     -36-
<PAGE>

         Indemnitor shall generally not, or shall be unable to, or shall admit
         in writing its inability to, pay its debts as they become due;

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

                  (h) if the Property becomes subject to any mechanic's,
         materialman's or other lien other than a lien for local real estate
         taxes and assessments not then due and payable and the lien shall
         remain undischarged of record (by payment, bonding or otherwise) for a
         period of thirty (30) days;

                  (i) if any federal tax lien is filed against Borrower, any
         member or general partner of Borrower, any Guarantor, any Indemnitor
         or the Property and same is not discharged of record within thirty
         (30) days after same is filed;

                  (j) if any condemnation or eminent domain proceeding has been
         concluded which renders the use or occupancy of the Property
         economically unfeasible;

                  (k) if (i) Borrower fails to timely provide Lender with the
         written certification and evidence referred to in Section 4.2 hereof,
         or (ii) Borrower consummates a transaction which would cause the
         Security Instrument or Lender's exercise of its rights under this
         Security Instrument, the Note or the Other Security Documents to
         constitute a nonexempt prohibited transaction under ERISA or result in
         a violation of a state statute regulating governmental plans,
         subjecting Lender to liability for a violation of ERISA or a state
         statute;

                  (1) if Borrower shall fail to reimburse Lender on demand,
         with interest calculated at the Default Rate, for all Insurance
         Premiums or Taxes, together with interest and penalties imposed
         thereon, paid by Lender pursuant to this Security Instrument;

                  (m) if Borrower shall fail to deliver to Lender, within ten
         (10) days after request by Lender, the estoppel certificates required
         pursuant to the terms of Subsections 7.4(a) and (c);

                  (n) if Borrower shall fail to deliver to Lender, within ten
         (10) days after request by Lender, the statements referred to in
         Section 3.11 in accordance with the terms thereof;

                  (o) if any default occurs under that certain environmental
         indemnity agreement dated the date hereof given by Borrower and Andrew
         B. Hascoe (at times hereinafter referred to collectively as
         "Indemnitor(s)") to Lender (the "Environmental Indemnity") and such
         default continues after the expiration of applicable notice and grace
         periods, if any;

                                     -37-
<PAGE>

                  (p) if any default occurs under any guaranty or indemnity
         executed in connection herewith and such default continues after the
         expiration of applicable grace periods, if any; or

                  (q) if for more than ten (10) days after notice from Lender,
         Borrower shall continue to be in default under any other term,
         covenant or condition of the Note, this Security Instrument or the
         Other Security Documents in the case of any default which can be cured
         by the payment of a sum of money or for thirty (30) days after notice
         from Lender in the case of any other default, provided that if such
         default cannot reasonably be cured within such thirty (30) day period
         and Borrower shall have commenced to cure such default within such
         thirty (30) day period and thereafter diligently and expeditiously
         proceeds to cure the same, such thirty (30) day period shall be
         extended for so long as it shall require Borrower in the exercise of
         due diligence to cure such default, it being agreed that no such
         extension shall be for a period in excess of sixty (60) days.

                  Section 10.2 LATE PAYMENT CHARGE. If any monthly installment
of principal and interest is not paid on or prior to the date on which it is
due, Borrower shall pay to Lender upon demand an amount equal to the lesser of
five percent (5%) of such unpaid portion of the outstanding monthly
installment of principal and interest then due or the maximum amount permitted
by applicable law, to defray the expense incurred by Lender in handling and
processing such delinquent payment and to compensate Lender for the loss of the
use of such delinquent payment, and such amount shall be secured by this
Security Instrument and the Other Security Documents.

                  Section 10.3 DEFAULT INTEREST. Borrower will pay, from the
date of an Event of Default through the earlier of the date upon which the
Event of Default is cured or the date upon which the Debt is paid in full,
interest on the unpaid principal balance of the Note at a per annum rate equal
to the lesser of (a) five percent (5%) plus the Applicable Interest Rate (as
defined in the Note), and (b) the maximum interest rate which Borrower may by
law pay or Lender may charge and collect (the "Default Rate").

                       Article 11 - RIGHTS AND REMEDIES

                  Section 11.1 REMEDIES. Upon the occurrence 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 its 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

                                     -38-
<PAGE>

         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;

                  (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 as may be required or permitted by law;

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

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

                  (g) apply for the appointment of a receiver, trustee,
         liquidator or conservator of the Property, without notice and without
         regard for the adequacy of the security for the Debt and without
         regard for the solvency of Borrower, any Guarantor, Indemnitor or of
         any person, firm or other entity liable for the payment of the Debt;

                  (h) subject to any applicable law, the license granted to
         Borrower under Section 1.2 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

                                     -39-
<PAGE>

         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 Premiums 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 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 Personal Property, and (ii)
         request Borrower at its expense to assemble the Personal Property and
         make it available to Lender at a convenient place acceptable to
         Lender. Any notice of sale, disposition or other intended action by
         Lender with respect to the Personal Property sent to Borrower in
         accordance with the provisions hereof at least five (5) days prior to
         such action, shall constitute commercially reasonable notice to
         Borrower;

                  (j) apply any sums then deposited in the Escrow Fund and any
         other sums held in escrow or otherwise by Lender in accordance with
         the terms of this Security Instrument or any Other Security 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, this
         Security Instrument and the Other Security Documents, including
         without limitation advances made by Lender pursuant to the terms of
         this Security Instrument;

                  (k) surrender the Policies maintained pursuant to Article 3
         hereof, collect the unearned Insurance Premiums and apply such sums as
         a credit on the Debt in such priority and proportion as Lender in its
         discretion shall deem proper, and in connection therewith, Borrower
         hereby appoints Lender as agent and attorney-in-fact (which is coupled
         with an interest and is therefore irrevocable) for Borrower to collect
         such Insurance Premiums;

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

                                     -40-
<PAGE>

                  (m) 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 the 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. Notwithstanding the provisions of this Section 11.1 to
the contrary, if any Event of Default as described in clause (i) or (ii) of
Subsection 10.1 (f) shall occur, the entire unpaid Debt shall be automatically
due and payable, without any further notice, demand or other action by Lender.

                  Section 11.2 APPLICATION OF PROCEEDS. The purchase money,
proceeds and avails of any disposition of the Property, or any part thereof, or
any other sums collected by Lender pursuant to the Note, this Security
Instrument or the Other Security 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.

                  Section 11.3 RIGHT TO CURE DEFAULTS. Upon the occurrence of
any Event of Default or if Borrower fails to make any payment or to do any act
as herein provided, Lender may, but without any obligation to do so and without
notice to or demand on Borrower and without releasing Borrower from any
obligation hereunder, make or do the same in such manner and to such extent as
Lender may deem necessary to protect the security hereof. Lender is authorized
to enter upon 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 11.3, 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 Security Documents and shall be immediately due and payable upon
demand by Lender therefor.

                  Section 11.4 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 11.5 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

                                     -41-
<PAGE>

any other action, for a default or defaults by Borrower existing at the time
such earlier action was commenced.

                  Section 11.6 EXAMINATION OF BOOKS AND RECORDS. Lender, its
agents, accountants and attorneys shall have the right to examine the records,
books, management and other papers of Borrower and its affiliates which reflect
upon their financial condition, at the Property or at any office regularly
maintained by Borrower, its affiliates 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, Lender, its agents,
accountants and attorneys shall have the right to examine and audit the books
and records of Borrower and its affiliates pertaining to the income, expenses
and operation of the Property during reasonable business hours at any office of
Borrower, its affiliates where the books and records are located.

                  Section 11.7 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, any Guarantor or any Indemnitor to take
any action to foreclose this Security Instrument or otherwise enforce any of
the provisions hereof or of the Note or the Other Security 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 Security 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 11.8 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,

                                     -42-
<PAGE>

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 11.9 VIOLATION OF LAWS. If the Property is not in
compliance with Applicable Laws, Lender may impose additional requirements upon
Borrower in connection herewith including, without limitation, monetary
reserves or financial equivalents.

                  Section 11.10 RECOURSE AND CHOICE OF REMEDIES.
Notwithstanding any other provision of this Security Instrument, including but
not limited to Article 15 hereof, Lender and other Indemnified Parties (defined
in Section 13.1 below) are entitled to enforce the obligations of Borrower,
Guarantor and Indemnitor contained in Sections 13.2, 13.3 and 13.4 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 or
acceptance of a deed in lieu of foreclosure or otherwise, and in the event
Lender commences a foreclosure action against the Property, Lender is entitled
to pursue a deficiency judgment with respect to such obligations against
Borrower, any Guarantor and/or Indemnitor. The provisions of Sections 13.2,
13.3 and 13.4 are exceptions to any non-recourse or exculpation provisions in
the Note, this Security Instrument or the Other Security Documents, and
Borrower, Guarantor and Indemnitor are fully and personally liable for the
obligations pursuant to Subsections 13.2, 13.3 and 13.4. The liability of
Borrower, Guarantor and Indemnitor is not limited to the original principal
amount of the Note. Notwithstanding the foregoing, nothing herein shall inhibit
or prevent Lender from foreclosing pursuant to this Security Instrument or
exercising any other rights and remedies pursuant to the Note, this Security
Instrument and the Other Security Documents, whether simultaneously with
foreclosure proceedings or in any other sequence. A separate action or actions
may be brought and prosecuted against Borrower, whether or not action is
brought against any other person or entity or whether or not any other person
or entity 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 elects, any administrative or judicial proceedings or actions initiated in
connection with any matter addressed in Article 12 or Section 13.4.

                  Section 11.11 RIGHT OF ENTRY. Lender and its agents shall
have the right to enter and inspect the Property at all reasonable times.

                      Article 12 - ENVIRONMENTAL HAZARDS

                  Section 12.1 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants, based upon an environmental assessment of the
Property and information that Borrower knows or should reasonably have known,
that: (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 to the
written reports

                                     -43-
<PAGE>

resulting from the environmental assessments of the Property delivered to Lender
(the "Environmental Report"); (b) there are no past, present or threatened
Releases (defined below) of Hazardous Substances in, on, under or from the
Property except as described in the Environmental Report; (c) there is no threat
of any Release of Hazardous Substances migrating to the Property except as
described in the Environmental Report; (d) there is no past or present
non-compliance with Environmental Laws, or with permits issued pursuant thereto,
in connection with the Property except as described in the Environmental Report;
(e) Borrower does not know of, and has not received, any written or oral notice
or other communication from any person or entity (including but not limited to a
governmental entity) relating to Hazardous Substances or Remediation (defined
below) thereof, of possible liability of any person or entity 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 or entity, 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

                                     -44-
<PAGE>

environment, including but not limited to petroleum and petroleum products,
asbestos and asbestos-containing materials, polychlorinated biphenyls, lead,
radon, radioactive materials, flammables and explosives. "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 12.

                  Section 12.2 ENVIRONMENTAL COVENANTS. Borrower covenants and
agrees that: (a) all uses and operations on or of the Property, whether by
Borrower or any other person or entity, 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 or entity (the "Environmental
Liens"); (e) Borrower shall, at its sole cost and expense, fully and
expeditiously cooperate in all activities pursuant to Section 12.3 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 (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 to (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 or
entity (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

                                     -45-
<PAGE>

relating to the Property; and (E) any written or oral notice or other
communication 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 or entity
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 12. Any
failure of Borrower to perform its obligations pursuant to this Section 12.2
shall constitute bad faith waste with respect to the Property.

                  Section 12.3 LENDER'S RIGHTS. Lender and any other person or
entity 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, 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 conducting other invasive
testing. Borrower shall cooperate with and provide access to Lender and any
such person or entity designated by Lender.

                         Article 13 - INDEMNIFICATION

                  Section 13.1 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, 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 attorneys' fees and other
costs of defense) (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, this
Security Instrument, or any Other Security 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 Note or any of the Other Security
Documents, whether or not suit is filed in connection with same, or in
connection with Borrower, any Guarantor or Indemnitor and/or any member,
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

                                     -46-
<PAGE>

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 the 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 Applicable Laws;
(j) the enforcement by any Indemnified Party of the provisions of this Article
13; (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
which may be payable in connection with the funding of the Loan evidenced by the
Note and secured by this Security Instrument; or (m) any misrepresentation made
by Borrower in this Security Instrument or any Other Security Document. Any
amounts payable to Lender by reason of the application of this Section 13.1
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 13, the term "Indemnified Parties" means Lender and any
person or entity who is or will have been involved in the origination of the
Loan, any person or entity who is or will have been involved in the servicing of
the Loan, any person or entity 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
(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 for the benefit of third
parties) as well as the respective directors, officers, shareholders, partners,
members, 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
or entity who holds or acquires or will have held a participation or other full
or partial interest in the Loan or the Property, 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 13.2 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 this Security Instrument, the Note or any of the Other
Security Documents.

                  Section 13.3 ERISA INDEMNIF7CATION. 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, 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 4.2 or 5.9 or Subsection 4.3(p).

                                     -47-
<PAGE>

                  Section 13.4 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 or entity 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 time located in, under, on or
above the Property; (d) any activity by Borrower, any person or entity
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, present or threatened 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 person or entity affiliated with 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 or the threatened 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 12 and this Section 13.4; (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 or entity and containing such or similar Hazardous Substances; (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 12.

                  Section 13.5 DUTY TO DEFEND ATTORNEYS' FEES AND OTHER FEES
AND EXPENSES. Upon written request by any Indemnified Party, Borrower shall
defend such

                                     -48-
<PAGE>

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, any Indemnified Parties
may, in their sole and absolute discretion, engage their own attorneys and
other professionals to defend or assist them, and, at the option of Indemnified
Parties, their attorneys shall control the resolution of any claim or
proceeding. 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 14 - WAIVERS

                  Section 14.1 WAIVER OF COUNTERCLAIM. 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 Note, any of
the Other Security Documents, or the Obligations.

                  Section 14.2 MARSHALLING AND OTHER MATTERS. 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 14.3 WAIVER of NOTICE. Borrower shall not be
entitled to any notices of any nature whatsoever from Lender except with
respect to matters for which this Security Instrument specifically and
expressly provides 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 14.4 WAIVER OF STATUTE OF LIMITATIONS. 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 14.5 SOLE DISCRETION of LENDER. Wherever pursuant to
this Security Instrument (a) Lender exercises any right given to it to approve
or disapprove, (b) any arrangement or term is to be satisfactory to Lender, or
(c) any other decision or determination is to be made by Lender, the decision
of Lender to approve or disapprove, all decisions that arrangements or terms
are satisfactory or not satisfactory and all other decisions and determinations
made by Lender, shall be in the sole and absolute discretion of Lender and shall
be final and conclusive, except as may be otherwise expressly and specifically
provided herein.

                                     -49-
<PAGE>

                  Section 14.6 SURVIVAL. The indemnifications made pursuant to
Subsections 13.3 and 13.4 and the representations and warranties, covenants,
and other obligations arising under Article 12. shall continue indefinitely in
full force and effect and shall survive and shall in no way be impaired by: any
satisfaction 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 Note or any of the Other Security 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 Note or the Other
Security Documents, and any act or omission that might otherwise be construed
as a release or discharge of Borrower from the obligations pursuant hereto.

                  SECTION 14.7 WAIVER OF TRIAL BY JURY. BORROWER HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE,
RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE
APPLICATION FOR THE LOAN EVIDENCED BY THE NOTE, THE NOTE, THIS SECURITY
INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER,
ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.

                            Article 15 - EXCULPATION

                  Section 15.1 EXCULPATION. Except as otherwise provided,
Lender shall not enforce the liability and obligation of Borrower to perform
and observe the obligations contained in the Note or this Security Instrument
by any action or proceeding wherein a money judgment shall be sought against
Borrower, except that Lender may bring a foreclosure action, action for
specific performance or other appropriate action or proceeding to enable Lender
to enforce and realize upon this Security Instrument, the Other Security
Documents, and the interest in the Property, the Rents and any other collateral
given to Lender created by this Security Instrument and the Other Security
Documents; provided, however, that any judgment in any action or proceeding
shall be enforceable against Borrower only to the extent of Borrower's
interest in the Property, in the Rents and in any other collateral given to
Lender. Lender, by accepting the Note and this Security Instrument, agrees that
it shall not, except as otherwise provided in Section 11.10, sue for, seek or
demand any deficiency judgment against Borrower in any action or proceeding,
under or by reason of or under or in connection with the Note, the Other
Security Documents or this Security Instrument.

                  Section 15.2 RESERVATION OF CERTAIN RIGHTS. The provisions of
Section 15.1 shall not (a) constitute a waiver, release or impairment of any
obligation evidenced or secured by the Note, the Other Security Documents or
this Security Instrument; (b) impair the right of Lender to name Borrower as a
party defendant in any action or suit for judicial foreclosure and sale under

                                    -50-
<PAGE>

this Security Instrument; (c) affect the validity or enforceability of any
indemnity, guaranty, master lease or similar instrument made in connection with
the Note, this Security Instrument, or the Other Security Documents; (d) impair
the right of Lender to obtain the appointment of a receiver; (e) impair the
enforcement of the Assignment of Leases and Rents executed in connection
herewith; or (f) impair the right of Lender to enforce the provisions of
Sections 11.10, 13.2, 13.3 and 13.4 of this Security Instrument.

                  Section 15.3 EXCEPTIONS TO EXCULPATION. Notwithstanding the
provisions of this Article to the contrary, Borrower shall be personally liable
to Lender for the Losses it incurs due to: (i) fraud or intentional
misrepresentation by Borrower or any other person or entity in connection with
the execution and the delivery of the Note, this Security Instrument or the
Other Security Documents; (ii) Borrower's misapplication or misappropriation of
Rents received by Borrower after the occurrence of an Event of Default; (iii)
Borrower's misappropriation of tenant security deposits or Rents collected in
advance; (iv) the misapplication or the misappropriation of insurance proceeds
or condemnation awards; (v) Borrower's failure to pay Taxes, Other Charges
(except to the extent that sums sufficient to pay such amounts have been
deposited in escrow with Lender pursuant to the terms of this Security
Instrument), charges for labor or materials or other charges that can create
liens on the Property (unless properly bonded); (vi) Borrower's failure to
return or to reimburse Lender for all Personal Property taken from the Property
by or on behalf of Borrower and not replaced with Personal Property of the same
utility and of the same or greater value; (vii) any act of actual waste or
arson by Borrower, any principal, affiliate, member or general partner thereof
or by any Indemnitor or Guarantor; (viii) any fees or commissions paid by
Borrower to any principal, affiliate, member or general partner of Borrower,
Indemnitor or Guarantor in violation of the terms of the Note, this Security
Instrument or the Other Security Documents; or (ix) Borrower's failure to
comply with the provisions of Sections 4.2, 7.1, 12.1 and 12.2 of this Security
Instrument.

                  Section 15.4 RECOURSE. Notwithstanding the foregoing, the
agreement of Lender not to pursue recourse liability as set forth in Section
15.1 above SHALL BECOME NULL AND VOID and shall be of no further force and
effect in the event of Borrower's default under Sections 3.11 (for ten (10)
days after notice by Lender), 4.3, or 8.1, 8.2, 8.3 or 8.4, or in the event of
Principal's default under Section 4.3 of this Security Instrument, or if the
Property or any part thereof shall become an asset in (i) a voluntary
bankruptcy or insolvency proceeding, or (ii) an involuntary bankruptcy or
insolvency proceeding which is not dismissed within ninety (90) days of filing.

                  Section 15.5 BANKRUPTCY CLAIMS. Nothing herein shall be deemed
to be a waiver of any right which Lender may have under Sections 506(a),
506(b), 1111(b) or any other provisions of the U.S. Bankruptcy Code to file a
claim for the full amount of the Debt secured by this Security Instrument or to
require that all collateral shall continue to secure all of the Debt owing to
Lender in accordance with the Note, this Security Instrument and the Other
Security Documents.

                              Article 16 - NOTICES

                                     -51-
<PAGE>

                  Section 16.1 NOTICES. All notices or other written
communications hereunder shall be deemed to have been properly given (i) upon
delivery, if delivered in person or by facsimile transmission with receipt
acknowledged by the recipient thereof and confirmed by telephone by sender,
(ii) one (1) Business Day after having been deposited for overnight delivery
with any reputable overnight courier service, or (iii) three (3) Business Days
after having been deposited in any post office or mail depository regularly
maintained by the U.S. Postal Service and sent by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:

If to Borrower:                     Academy Store, L.P.
                                    c/o Bryant Development Corp.
                                    2900 Westchester Avenue
                                    Purchase, New York 10577
                                    Attention: Daniel Weinreb
                                    Facsimile No.: (914) 251-1787

With a copy to:                     Wachtel & Masyr
                                    110 East 59th Street
                                    New York, New York 10022
                                    Attention: Robert Stone, Esq.
                                    Facsimile No.: (212) 909-9490

If to Lender:                       The Chase Manhattan Bank
                                    c/o Chase Commercial Mortgage Banking Corp.
                                    Servicing Department
                                    380 Madison Avenue
                                    11th Floor
                                    New York, New York 10017
                                    Attention: Ms. Janice Smith
                                    Facsimile No.: (212) 622-3553

                                                and

                                    The Chase Manhattan Bank
                                    Legal Department
                                    270 Park Avenue
                                    39th Floor
                                    New York, New York 10017
                                    Attention: Ronald A. Wilcox, Esq.
                                    Facsimile No.: (212) 270-2934

                                     -52-
<PAGE>

With a copy to:                     Thacher Proffitt & Wood
                                    Two World Trade Center
                                    New York, New York 10048
                                    Attention: Joseph Philip Forte, Esq.
                                    Facsimile No.: (212) 912-7751

or addressed as such party may from time to time designate by written notice to
the other parties.

                  Either party by notice to the other may designate additional
or different addresses for subsequent notices or communications.

                  For purposes of this Subsection, "Business Day" shall mean a
day on which commercial banks are not authorized or required by law to close in
New York, New York.

                        Article 17 - SERVICE OF PROCESS

                  Section 17.1 CONSENT TO SERVICE.

                  (a) Borrower will maintain a place of business or an agent
         for service of process in New York, New York and give prompt notice to
         Lender of the address of such place of business and of the name and
         address of any new agent appointed by it, as appropriate. Borrower
         further agrees that the failure of its agent for service of process to
         give it notice of any service of process will not impair or affect the
         validity of such service or of any judgment based thereon. If, despite
         the foregoing, there is for any reason no agent for service of process
         of Borrower available to be served, and if it at that time has no
         place of business in New York, New York, then Borrower irrevocably
         consents to service of process by registered or certified mail,
         postage prepaid, to it at its address given in or pursuant to the
         first paragraph hereof.

                  (b) Borrower initially and irrevocably designates Wachtel &
         Masyr, with offices on the date hereof at 110 East 59th Street, New
         York, New York 10022, to receive for and on behalf of Borrower service
         of process in New York, New York with respect to this Security
         Instrument.

                  Section 17.2 SUBMISSION TO JURISDICTION. With respect to any
claim or action arising hereunder or under the Note or the Other Security
Documents, Borrower (a) irrevocably submits to the nonexclusive jurisdiction of
the courts of the State of New York and the United States District Court
located in the Borough of Manhattan in New York, New York, and appellate courts
from any thereof, and (b) irrevocably waives any objection which it may have at
any time to the laying on venue of any suit, action or proceeding arising out
of or relating to this Security Instrument brought in any such court,
irrevocably waives any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum.

                                     -53-
<PAGE>

                  Section 17.3 JURISDICTION NOT EXCLUSIVE. Nothing in this
Security Instrument will be deemed to preclude Lender from bringing an action
or proceeding with respect hereto in any other jurisdiction.

                          Article 18 - APPLICABLE LAW

                  Section 18.1 CHOICE OF LAW. THIS SECURITY INSTRUMENT SHALL
BE DEEMED TO BE A CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE STATE OF
NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, PROVIDED HOWEVER, THAT
WITH RESPECT TO THE CREATION, PERFECTION, PRIORITY AND ENFORCEMENT OF THE LIEN
OF THIS SECURITY INSTRUMENT, AND THE DETERMINATION OF DEFICIENCY JUDGMENTS, THE
LAWS OF THE STATE WHERE THE PROPERTY IS LOCATED SHALL APPLY.

                  Section 18.2 USURY LAWS. This Security Instrument and the
Note are subject to the express condition that at no time shall Borrower be
obligated or required to pay interest on the Debt at a rate which could subject
the holder of the Note to either civil or criminal liability as a result of
being in excess of the maximum interest rate which Borrower is permitted by
applicable law to contract or agree to pay. If by the terms of this Security
Instrument or the Note, Borrower is at any time required or obligated to pay
interest on the Debt at a rate in excess of such maximum rate, the rate of
interest under the Security Instrument and the Note shall be deemed to be
immediately reduced to such maximum rate and the interest payable shall be
computed at such maximum rate and all prior interest payments in excess of such
maximum rate shall be applied and shall be deemed to have been payments in
reduction of the principal balance of the Note. All sums paid or agreed to be
paid to Lender for the use, forbearance, or detention of the Debt shall, to the
extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full stated term of the Note until payment in full so
that the rate or amount of interest on account of the Debt does not exceed the
maximum lawful rate of interest from time to time in effect and applicable to
the Debt for so long as the Debt is outstanding.

                  Section 18.3 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.

                                     -54-
<PAGE>

                         Article 19 - SECONDARY MARKET

                  Section 19.1 TRANSFER OF LOAN. Lender may, at any time, sell,
transfer or assign the Note, this Security Instrument and the Other Security
Documents, and any or all servicing rights with respect thereto, or grant
participations therein (the "Participations") or issue mortgage pass-through
certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement (the "Securities"). Lender may
forward to each purchaser, transferee, assignee, servicer, participant, or
investor in such Participations and/or Securities (collectively, the
"Investor") or any Rating Agency rating such Participations and/or Securities
and each prospective Investor, all documents and information which Lender now
has or may hereafter acquire relating to the Debt and to Borrower, any
Guarantor, any Indemnitor(s) and the Property, whether furnished by Borrower,
any Guarantor, any Indemnitor(s) or otherwise, as Lender determines necessary
or desirable. Borrower, any Guarantor and any Indemnitor agree to cooperate
with Lender in connection with any transfer made or any Securities created
pursuant to this Section, including, without limitation, the delivery of an
estoppel certificate required in accordance with Subsection 7.4(c) hereof and
such other documents as may be reasonably requested by Lender. Borrower shall
also furnish and Borrower, any Guarantor and any Indemnitor consent to Lender
furnishing to such Investors or such prospective Investors or such Rating
Agency any and all information concerning the Property, the Leases, the
financial condition of Borrower, any Guarantor and any Indemnitor as may be
requested by Lender, any Investor, any prospective Investor or any Rating
Agency in connection with any sale, transfer, Participations or Securities.

                              Article 20 - COSTS

                  Section 20.1 PERFORMANCE AT BORROWER'S EXPENSE. Borrower
acknowledges and confirms that Lender shall impose certain administrative
processing and/or commitment fees in connection with (a) the extension,
renewal, modification, amendment and termination of the Loan, (b) the release
or substitution of collateral therefor, (c) obtaining certain consents, waivers
and approvals with respect to the Property, or (d) the review of any Lease or
proposed Lease or the preparation or review of any subordination,
non-disturbance agreement (the occurrence of any of the above shall be called
an "Event"). Borrower further acknowledges and confirms that it shall be
responsible for the payment of all costs of reappraisal of the Property or any
part thereof, whether required by law, regulation, Lender or any governmental
or quasi-governmental authority. Borrower hereby acknowledges and agrees to
pay, immediately, with or without demand, all such fees (as the same may be
increased or decreased from time to time), and any additional fees of a similar
type or nature which may be imposed by Lender from time to time, upon the
occurrence of any Event or otherwise. Wherever it is provided for herein that
Borrower pay any costs and expenses, such costs and expenses shall include, but
not be limited to, all reasonable legal fees and disbursements of Lender with
respect to retained firms.

                  Section 20.2 ATTORNEY'S FEES FOR ENFORCEMENT. (a) Borrower
shall pay all legal fees incurred by Lender in connection with (i) the
preparation of the Note, this Security

                                     -55-
<PAGE>

Instrument and the Other Security Documents and (ii) the items set forth in
Section 20.1 above, and (b) Borrower shall pay to Lender on demand any and all
expenses, including legal expenses and attorneys' fees, incurred or paid by
Lender in protecting its interest in the Property or Personal Property or in
collecting any amount payable hereunder or in enforcing its rights hereunder
with respect to the Property or Personal Property, whether or not any legal
proceeding is commenced hereunder or thereunder and whether or not any default
or Event of Default shall have occurred and is continuing; together with
interest thereon at the Default Rate from the date paid or incurred by Lender
until such expenses are paid by Borrower.

                            Article 21 - DEFINITIONS

                  Section 21.1 GENERAL DEFINITIONS. 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 "person" shall
include an individual, corporation, partnership, limited liability company,
trust, unincorporated association, government, governmental authority, and any
other entity, the word "Property" shall include any portion of the Property and
any interest therein, and the phrases "attorneys' 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 22 - MISCELLANEOUS PROVISIONS

                  Section 22.1 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 22.2 LIABILITY. If Borrower consists of more than one
person, the obligations and liabilities of each such person hereunder shall be
joint and several. This Security Instrument shall be binding upon and inure to
the benefit of Borrower and Lender and their respective successors and assigns
forever.

                  Section 22.3 INAPPLICABLE PROVISIONS. If any term, covenant
or condition of the Note or this Security Instrument is held to be invalid,
illegal or unenforceable in any respect, the Note and this Security Instrument
shall be construed without such provision.

                                     -56-
<PAGE>

                  Section 22.4 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 22.5 DUPLICATE ORIGINAL: COUNTERPARTS. This Security
Instrument may be executed in any number of duplicate originals and each
duplicate original shall be deemed to be an original. This Security Instrument
may be executed in several counterparts, each of which counterparts shall be
deemed an original instrument and all of which together shall constitute a
single Security Instrument. The failure of any party hereto to execute this
Security Instrument, or any counterpart hereof, shall not relieve the other
signatories from their obligations hereunder.

                  Section 22.6 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.

                  Section 22.7 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 Note and the Other
Security Documents and the performance and discharge of the Other Obligations.

                  Article 23 - SPECIAL PENNSYLVANIA PROVISIONS

                  Section 23.1 INCONSICTENCIES. In the event of any
inconsistencies between the terms and conditions of Article 23 of this Security
Instrument and any other terms of this Security Instrument, the terms and
conditions of Article 23 shall control and be binding.

                  Section 23.2 EJECTMENT. For the purpose of procuring
possession of the Property in the event of any default hereunder or under the
Note, this Security Instrument or the Other Security Documents, Borrower hereby
authorizes and empowers any attorney of any Court of record in the Commonwealth
of Pennsylvania or elsewhere, as attorney for Borrower and all persons claiming
under or through Borrower, to sign an agreement for entering in any competent
court an amicable action in ejectment for possession of the Property and to
appear for and confess judgment against Borrower, and against all persons
claiming under or through Borrower, for the recovery by Lender of possession of
the Property, without any stay of execution, for which this Security
Instrument, or a copy thereof verified by affidavit, shall be a sufficient
warrant; and thereupon a writ of possession may be issued forthwith, without
any prior writ or proceeding whatsoever. Borrower hereby releases Lender from
all errors and defects whatsoever in entering such action and judgment and in
causing such writ or writs to be issued, and hereby agrees that no writ of
error, appeal, petition to open or strike off judgment, or other objection
shall be filed

                                     -57-
<PAGE>

or made with respect thereto. If for any reason after such action has been
commenced the same shall be discontinued or possession of the Property shall
remain in or be restored to Borrower, Lender shall have the right for the same
default or any subsequent default to bring one or more further amicable actions
as above provided to recover possession of the Property. Lender may bring such
amicable action in ejectment before or after the institution of foreclosure
proceedings upon this Security Instrument, or after judgment thereon or on said
obligation, or after a sale of the Property by the Sheriff.

                  Section 23.3 REMEDIES. The text of Section 11.1 of this
Security Instrument entitled "Remedies" is hereby deleted and the following is
substituted therefor:

         Upon the occurrence 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 its sole discretion, without impairing or otherwise affecting the
other rights and remedies of Lender:

                  (a) Lender may declare the entire unpaid principal balance of
the Note to be due and payable immediately, whereupon the obligations secured
hereby shall become immediately due and payable. Thereafter, the default may be
cured only by the payment of the entire Debt.

                  (b) Lender may (i) institute and maintain an action of
mortgage foreclosure against any of the Property, through judicial proceedings
or by advertisement, at the option of Lender, pursuant to the applicable
statutes, ordinances, or rules of civil procedure, (ii) institute and maintain
an action on the obligations secured hereby, (iii) have judgment entered
pursuant to any power to confess judgment contained in the Note or this
Security Instrument, (iv) sell or cause to be sold any of the Property at
public sale, and convey the same to the purchaser in accordance with said
statutes in a single parcel or in several parcels at the option of Lender, or
(v) take such other action at law or in equity for the enforcement of any
document evidencing or securing the obligations secured hereby as the law may
allow. Lender may proceed in any such action to final judgment and execution
thereon for all sums due under Subsection (a) of this Section 11.1, together
with interest on such sums as provided in the Note, all costs of suit and an
attorneys' commission for fees and expenses actually incurred. Interest at a
rate equal to the Default Rate shall be due on any judgment obtained by Lender
from the date of judgment until actual payment is made of the full amount of
the judgment by the Sheriff or otherwise.

                  (c) Lender may, without releasing Borrower from any
obligation under any document evidencing or securing the obligations secured
hereby or under any lease or waiving any default: (i) collect any or all of the
rents, including any rents past due and unpaid, (ii) perform any obligation or
exercise any right or remedy of Borrower under any lease, or (iii) enforce any
obligation of any tenant of any of the Property. Lender shall not be obligated
to do any of the foregoing, even if Lender may have performed any obligation or
exercised any remedy of landlord or have enforced any obligation of a tenant.
Lender may exercise any right under this subsection (c) whether or not Lender
shall have entered into possession of any of the Property, and nothing

                                     -58-
<PAGE>

contained herein shall be construed as constituting Lender a "mortgagee in
possession" unless Lender shall have entered into and shall remain in actual
possession of the Property. Borrower hereby authorizes and instructs each and
every present and future tenant of any of the Property to pay all rents directly
to Lender and to perform all other obligations of that tenant for the direct
benefit of Lender as if Lender were the landlord under the lease with that
tenant immediately upon receipt of a demand by Lender to make such payment or
perform such obligations. No tenant shall have any responsibility to ascertain
whether such demand is permitted hereunder or whether an Event of Default shall
have occurred; Borrower hereby waives any right, claim or demand it may now or
hereafter have against any such tenant by reason of such payment of rents or
performance of obligations to Lender; and any such payment or performance to
Lender shall discharge the obligations of the tenant to make such payment or
performance to Borrower. Borrower agrees to indemnify Lender and hold Lender
harmless from any and all liability under any lease and from any and all claims
and demands which may be asserted against Lender by reason of any alleged
obligations to perform any provision of any lease, except as to Lender's own
negligence or wilful misconduct.

                  (d) Lender may, without releasing Borrower from any
obligation under any document evidencing or securing the obligations secured
hereby or under any lease or waiving any default, enter upon and take
possession of any of the Property, with or without legal action and by force if
necessary, or have a receiver appointed without proof of depreciation or
inadequacy of the value of the Property or other security or proof of the
insolvency of Borrower. Lender or said receiver may manage and operate any of
the Property; make, cancel, enforce or modify leases; obtain and evict tenants;
establish or change the amount of any rents; and perform any acts which Lender
deems proper to protect the security of this Security Instrument. After
deduction of all costs and expenses of operation and management of the Property
and of collection of the rents (including attorneys' fees actually incurred,
administration expenses, management fees and brokers' commissions), Lender may
apply the rents received by Lender to the payment of any or all of the
following, in such order and amounts as Lender, in its sole discretion, may
elect: liens on any of the Property, taxes, claims, insurance premiums, other
carrying charges, invoices of persons who have supplied goods or services to or
for the benefit of any of the Property, costs and expenses of maintenance,
repair, restoration, alteration or improvement of any of the Property, costs
and expenses of maintenance, repair, restoration, alteration or improvement of
any of the Property, or any amount outstanding on the obligations secured
hereby. Lender may, in its sole discretion, determine the method by which, and
extent to which, the rents will be collected and obligations of tenants
enforced; and Lender may waive or fail to enforce any right or remedy of the
landlord under a lease. Lender shall not be accountable for any rents or other
sums it does not actually receive. Borrower hereby appoints Lender as its
attorney-in-fact to perform all acts which Borrower is required or permitted to
perform under any and all leases.

                  (e) UPON THE OCCURRENCE OF AN EVENT OF DEFAULT BORROWER
HEREBY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR ATTORNEYS OF ANY COURT OF THE
COMMONWEALTH OF PENNSYLVANIA TO APPEAR FOR BORROWER AND, AS ATTORNEY FOR
BORROWER, TO SIGN AN AGREEMENT FOR ENTERING AN AMICABLE ACTION OF EJECTMENT FOR
POSSESSION OF ANY OF THE PROPERTY, AND TO CONFESS JUDGMENT THEREIN AGAINST
BORROWER IN FAVOR OF

                                     -59-
<PAGE>

LENDER. FOR SO DOING, THIS SECURITY INSTRUMENT OR A COPY HEREOF CERTIFIED BY
AFFIDAVIT SHALL BE A SUFFICIENT WARRANT. THEREUPON, A WRIT OF POSSESSION MAY
IMMEDIATELY ISSUE FOR THE POSSESSION OF ANY OF THE PROPERTY, WITHOUT ANY PRIOR
WRIT OR PROCEEDING WHATSOEVER. LENDER MAY BRING SUCH AMICABLE ACTION IN
EJECTMENT BEFORE OR AFTER: (I) THE INSTITUTION OF FORECLOSURE PROCEEDINGS UNDER
THIS SECURITY INSTRUMENT, (II) THE ENTRY OF JUDGMENT THEREUNDER OR UNDER THE
NOTE, OR (III) A SHERIFF'S SALE OF ANY OF THE PROPERTY.

        BORROWER HEREBY WAIVES THE BENEFIT OF ANY LAWS WHICH NOW OR HEREAFTER
MIGHT OTHERWISE AUTHORIZE THE STAY OF ANY EXECUTION TO BE ISSUED ON ANY JUDGMENT
RECOVERED ON THIS NOTE, OR THE EXEMPTION OF ANY PROPERTY FROM LEVY OR SALE
THEREUNDER.

                  (f) Lender may obtain a receiver to manage the Property and
collect the rents, issues, profits and income therefrom.

                  (g) Lender may disaffirm and cancel any lease which is
subordinate to this Security Instrument at any time before the expiration of
sixty (60) days after Lender acquires legal title to the Property by any
transfer pursuant to the exercise of a remedy hereunder or otherwise, even
though Lender shall have enforced such lease, collected rents thereunder or
taken any action that might be deemed by law to constitute an affirmance of the
lease. Such disaffirmance shall be made by notice addressed to the tenant at
the Property or, at Lender's option, such other address of the tenant as may be
provided in that tenant's lease.

                  (h) Lender may take possession of any of the Property and may
sell such property pursuant to the provisions of the applicable Uniform
Commercial Code and exercise such other rights and remedies with respect to
such property as may be provided by said Code.

                  (i) Lender may apply on account of the obligations secured
hereby the balance of the accumulated installment payments made by Borrower for
taxes, water and sewer rents and insurance premiums, and all other items for
which Lender has made payment, as set forth herein.

                  (j) Upon the acceleration of the maturity of the obligations
secured hereby as herein provided, a tender of payment of the amount necessary
to satisfy the entire Debt made at any time prior to foreclosure sale by
Borrower, its successors or assigns, shall, to the extent permitted by law,
constitute an evasion of the prepayment terms of the obligations secured hereby
and be deemed to be a voluntary prepayment thereunder, and Lender shall not be
obligated to accept any such tender of payment unless such tender of payment
includes the additional prepayment premium required under the terms of the
prepayment privilege, if any, contained in the Note.

                  (k) If Lender retains the services of counsel in order to
enforece any remedy available to Lender under the Note, this Security
Instrument, or any of the Other Security Documents, an attorney's commission
equal to five percent (5%) of the outstanding principal amount of the Note
shall be payable on demand by Borrower to Lender, and Borrower shall also

                                     -60-
<PAGE>

pay on demand the cost of any title search and all other costs incurred by
Lender in connection with proceedings to recover any sums due hereunder. Any
such amounts not paid promptly on demand shall be added to the outstanding
principal amount of the Note, shall bear interest at the Default Rate from the
date of such demand until paid in full and shall be secured by this Security
Instrument. Borrower shall also pay on demand any reasonable charge of Lender in
connection with the cancellation of this Note and/or the satisfaction of this
Security Instrument of record. Nothing contained herein shall limit or impair
the obligation of Borrower to pay any and all costs and expenses for which
Borrower is otherwise liable under the Note, this Security Instrument, or any of
the Other Security Documents, and all costs and expenses provided by law.

In the event of a sale, by foreclosure, power of sale, or otherwise, of less
than all of the 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. Notwithstanding the provisions of this Section 11.1 to
the contrary, if any Event of Default as described in clause (i) or (ii) of
Subsection 10.1 (f) shall occur, the entire unpaid Debt shall be automatically
due and payable, without any further notice, demand or other action by Lender.

                  Section 23.4 FUTURE ADVANCES. It is understood and agreed
that this Security Instrument covers present and future advances made by Lender
to or for the benefit of Borrower on account of interest which may be deferred
and accrued and added to the principal balance of the Note in the maximum
amount of $22,160,000 and that the lien of such future advances shall relate
back to the date of this Security Instrument.

                  Section 23.5 PURCHASE MONEY INSTRUMENT This Security
Instrument is intended to be a purchase money mortgage and shall be entitled to
all the benefits as such under the lien priority provisions of the Pennsylvania
Judicial Code, 42 Pa. C.S.A. ss. 8141, as amended.

                  Section 23.6 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES.
The text of Section 12.1 of this Security Instrument entitled "Environmental
Representations and Warranties" is hereby amended by inserting after the words
"addressing similar issues:" and before the words "the Comprehensive
Environmental Response" the words "the Pennsylvania Hazardous Sites Cleanup
Act, the Pennsylvania Solid Waste Management Act,".

                  Section 23.7 CONSTRUCTION MORTGAGE. This Security Instrument
is intended to be a Construction Mortgage within the meaning of 13 Pa.
C.S.A. ss.9313(a).

                                     -61-
<PAGE>

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

ATTEST:                             ACADEMY STORE, L.P., a Delaware limited
                                    partnership

                                    By: Academy Land, Inc., a Delaware
----------------------                  corporation, its general partner
Name

/s/ Emma Dickson                        By:  /s/ Andrew B. Hascoe
----------------------                       ----------------------
Name: Emma Dickson                           Andrew B. Hascoe
                                             President

The mailing address of the
within-named Lender is:

The Chase Manhattan Bank
380 Madison Avenue, 11th Floor
New York, New York 10017

/s/
------------------------------
On behalf of Lender

<PAGE>

STATE OF NEW YORK      )
                       :ss.:
COUNTY OF NEW YORK     )

                  On this, the 11th day of February 1998, before me, the
subscriber, a Notary Public in and for the State and county aforesaid,
personally appeared Andrew B. Hascoe, who acknowledged himself to be President
of Academy Land, Inc., a Delaware corporation, the sole general partner of
Academy Store, L.P., a Delaware limited partnership, who I am satisfied is the
person who signed the within instrument and who acknowledged that he executed
same as such President of the general partner on behalf of the limited
partnership, being authorized to do so, and that the within instrument is the
voluntary act and deed of such limited partnership.

                  WITNESS my hand and seal the day and year aforesaid.

                                               /s/ David Lowery
                                       --------------------------------
                                                Notary Public

My Commission Expires:                          DAVID LOWERY
                                       NOTARY PUBLIC, State of New York
January 20, 2000                               No. 01LO6001592
------------------------------            Qualified in Nassau County
                                       Commission Expires Jan. 20, 2000

<PAGE>

                                   EXHIBIT A

                                PARCEL 495 & 498
                                 Academy Plaza
                              City of Philidelphla
                      County of Philadelphia, Pennsylvania

Beginning at a point on the southwesterly line of Red Lion Road (64 feet wide),
said point being the intersection of the southwesterly line of Red Lion Road
with the common boundary line of Parcel 499 and Parcel 498; thence,

1.    Southeasterly along said line of Red Lion Road, South 43(degree)50'13"
      East, a distance of 873.42 feet to the beginning of a curve tangent to
      said line; thence,

2.    Southeasterly, on a curve to the right, having a radius of 20.05 feet
      and an arc length of 34.12 feet to a point of tangency, said point being
      on the westerly line of Calera Road (64 feet wide); thence,

3.    Southwesterly along said line of Calera Road, South 53(degree)39'47" West
      a distance of 438.90 feet to the beginning of a curve tangent to said
      line; thence,

4.    Northwesterly, on a curve to the right having a radius of 20.05 feet and
      an arc length of 30.87 feet to a point of tangency; said point being on
      the northwesterly line of Cromwell Road (64 feet wide); thence,

5.    Northwesterly along said line of Cromwell Road, North 38(degree)06'44"
      West, a distance of 358.44 feet to point; thence,

6.    Continuing along said line, North 43(degree)50'13" West, a distance of
      601.50 feet to the beginning of a curve tangent to said line; thence,

7.    Northeasterly, on a curve to the right having a radius of 20.05 feet and
      an arc length of 33.35 feet to a point of tangency, said point being on
      the easterly line of Academy Road (100 feet wide); thence,

8.    Northeasterly along said line of Academy Road, North 51(degree)27'22"
      East, a distance of 28.35 feet to a point; said point being the common
      boundary line of Parcel 482 and Parcel 498; thence,

9.    Leaving the easterly line of Academy Road along the common boundary line,
      South 43(degree)50'13" East, a distance of 78.50 legit to a point; thence,

10.   North 46(degree)09'47" East, a distance of 89.82 feet to a point; thence,

11.   North 43(degree)50'13" West, a distance of 70.18 feet to a point on the
      easterly line of Academy Road; thence,

12.   Northeasterly along said line of Academy Road, North 51(degree)27'22"
      East, a distance of 175.41 feet to a point, said point being the common
      boundary line of Parcel 499 and Parcel 498; thence,

13.   Leaving said line of Academy Road, South 43(degree)50'13" East, a distance
      of 125.31 feet; to a point; thence,

14.   North 51(degree)27'22" East, a distance of 125.31 feet to the point and
      place of beginning.

Encompassing an area of 9.86 acres, more or less.

The above description is prepared in accordance with a plan entitled "ALTA/ACSM
(1992) Land Title Survey, Acme Store 122-1642, Tax Map Parcels 497, 498 City of
Philadelphia, County of Philadelphia, Pennsylvania", prepared by Taylor Wiseman
& Taylor, dated October 1996.

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                         Page
<S>                                                                                    <C>
Article
        1 - GRANTS OF SECURITY .....................................................     - 2 -
        Section l.1       PROPERTY MORTGAGE ........................................     - 2 -
        Section 1.2       ASSIGNMENT OF RENTS ......................................     - 4 -
        Section 1.3       SECURITY AGREEMENT .......................................     - 5 -
        Section 1.4       PLEDGE OF MONIES HELD ....................................     - 5 -

Article 2 - DEBT AND OBLIGATIONS SECURED ...........................................     - 5 -
        Section 2.1       DEBT .....................................................     - 5 -
        Section 2.2       OTHER OBLIGATIONS ........................................     - 6 -
        Section 2.3       DEBT AND OTHER OBLIGATIONS ...............................     - 6 -
        Section 2.4       PAYMENTS .................................................     - 6 -

Article 3 - BORROWER COVENANTS .....................................................     - 7 -
        Section 3.1       PAYMENT OF DEBT ..........................................     - 7 -
        Section 3.2       INCORPORATION BY REFERENCE ...............................     - 7 -
        Section 3.3       INSURANCE ................................................     - 7 -
        Section 3.4       PAYMENT OF TAXES, ETC ....................................    - 11 -
        Section 3.5       ESCROW FUND ..............................................    - 12 -
        Section 3.6       CONDEMNATION .............................................    - 12 -
        Section 3.7       LEASES AND RENTS .........................................    - 13 -
        Section 3.8       MAINTENANCE OF PROPERTY ..................................    - 14 -
        Section 3.9       WASTE ....................................................    - 14 -
        Section 3.10      COMPLIANCE WITH LAWS .....................................    - 15 -
        Section 3.11      BOOKS AND RECORDS ........................................    - 15 -
        Section 3.12      PAYMENT FOR LABOR AND MATERIALS ..........................    - 17 -
        Section 3.13      PERFORMANCE OF OTHER AGREEMENTS ..........................    - 17 -

Article 4 - SPECIAL COVENANTS ......................................................    - 17 -
        Section 4.1       PROPERTY USE .............................................    - 17 -
        Section 4.2       ERISA ....................................................    - 17 -
        Section 4.3       SINGLE PURPOSE ENTITY ....................................    - 18 -
        Section 4.4       RESTORATION ..............................................    - 20 -

Article 5 - REPRESENTATIONS AND WARRANTIES .........................................    - 24 -
        Section 5.1       WARRANTY OF TITLE ........................................    - 24 -
        Section 5.2       AUTHORITY ................................................    - 24 -
        Section 5.3       LEGAL STATUS AND AUTHORITY ...............................    - 24 -
        Section 5.4       VALIDITY OF DOCUMENTS ....................................    - 25 -
        Section 5.5       LITIGATION ...............................................    - 25 -
</TABLE>

                                      -i-

<PAGE>

<TABLE>
<S>                                                                                    <C>
        Section 5.6       STATUS OF PROPERTY .......................................    - 25 -
        Section 5.7       No FOREIGN PERSON ........................................    - 26 -
        Section 5.8       SEPARATE TAX LOT .........................................    - 26 -
        Section 5.9       ERISA COMPLIANCE .........................................    - 26 -
        Section 5.10      LEASES ...................................................    - 27 -
        Section 5.11      FINANCIAL CONDITION ......................................    - 27 -
        Section 5.12      BUSINESS PURPOSES ........................................    - 27 -
        Section 5.13      TAXES ....................................................    - 27 -
        Section 5.14      MAILING ADDRESS ..........................................    - 28 -
        Section 5.15      No CHANGE IN FACTS OR CIRCUMSTANCES ......................    - 28 -
        Section 5.16      DISCLOSURE ...............................................    - 28 -
        Section 5.17      THIRD PARTY REPRESENTATIONS ..............................    - 28 -
        Section 5.18      ILLEGAL ACTIVITY .........................................    - 28 -
        Section 5.19      CONTRACTS ................................................    - 28 -

Article 6 - OBLIGATIONS AND RELIANCES ..............................................    - 28 -
        Section 6.1       RELATIONSHIP OF BORROWER AND LENDER ......................    - 28 -
        Section 6.2       No RELIANCE ON LENDER ....................................    - 28 -
        Section 6.3       No LENDER OBLIGATIONS ....................................    - 29 -
        Section 6.4       RELIANCE .................................................    - 29 -

Article 7 - FURTHER ASSURANCES .....................................................    - 29 -
        Section 7.1       RECORDING OF SECURITY INSTRUMENT, ETC. ...................    - 29 -
        Section 7.2       FURTHER ACTS, ETC. .......................................    - 30 -
        Section 7.3       CHANGES IN TAX, DEBT CREDIT AND
                          DOCUMENTARY STAMP LAWS ...................................    - 30 -
        Section 7.4       ESTOPPEL CERTIFICATES ....................................    - 31 -
        Section 7.5       FLOOD INSURANCE ..........................................    - 31 -
        Section 7.6       SPLITTING OF SECURITY INSTRUMENT .........................    - 32 -
        Section 7.7       REPLACEMENT DOCUMENTS ....................................    - 32 -

Article 8 - DUE ON SALE/ENCUMBRANCE ................................................    - 32 -
        Section 8.1       LENDER RELIANCE ..........................................    - 32 -
        Section 8.2       NO SALE/ENCUMBRANCE ......................................    - 32 -
        Section 8.3       SALE/ENCUMBRANCE DEFINED .................................    - 32 -
        Section 8.4       LENDER'S RIGHTS ..........................................    - 33 -

Article 9 - PREPAYMENT .............................................................    - 34 -
        Section 9.1       PREPAYMENT BEFORE EVENT OF DEFAULT .......................    - 34 -
        Section 9.2       PREPAYMENT ON CASUALTY OR CONDEMNATION ...................    - 34 -
        Section 9.3       PREPAYMENT AFTER EVENT OF DEFAULT ........................    - 34 -

Article 10 - DEFAULT ...............................................................    - 35 -
        Section 10.1      EVENTS OF DEFAULT ........................................    - 35 -
        Section 10.2      LATE PAYMENT CHARGE ......................................    - 37 -
</TABLE>

                                     -ii-

<PAGE>

<TABLE>
<S>                                                                                    <C>
        Section 10.3      DEFAULT INTEREST .........................................    - 37 -

Article 11 - RIGHTS AND REMEDIES ...................................................    - 38 -
        Section ll.1      REMEDIES .................................................    - 38 -
        Section 11.2      APPLICATION OF PROCEEDS ..................................    - 40 -
        Section 11.3      RIGHT TO CURE DEFAULTS ...................................    - 40 -
        Section 11.4      ACTIONS AND PROCEEDINGS ..................................    - 41 -
        Section 11.5      RECOVERY OF SUMS REOUIRED TO BE PAID .....................    - 41 -
        Section 11.6      EXAMINATION OF BOOKS AND RECORDS .........................    - 41 -
        Section 11.7      OTHER RIGHTS, ETC. .......................................    - 41 -
        Section 11.8      RIGHT TO RELEASE ANY PORTION OF THE PROPERTY .............    - 42 -
        Section 11.9      VIOLATION OF LAWS ........................................    - 42 -
        Section 11.10     RECOURSE AND CHOICE OF REMEDIES ..........................    - 42 -
        Section ll.11     RIGHT OF ENTRY ...........................................    - 43 -

Article 12 - ENVIRONMENTAl HAZARDS .................................................    - 43 -
        Section 12.1      ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES .............    - 43 -
        Section 12.2      ENVIRONMENTAL COVENANTS ..................................    - 44 -
        Section 12.3      LENDER'S RIGHTS ..........................................    - 45 -

Article 13 - INDEMNIFICATION .......................................................    - 45 -
        Section 13.1      GENERAL INDEMNIFICATION ..................................    - 45 -
        Section 13.2      MORTGAGE AND/OR INTANGIBLE TAX ...........................    - 47 -
        Section l3.3      ERISA INDEMNIFICATION ....................................    - 47 -
        Section 13.4      ENVIRONMENTAL INDEMNIFICATION ............................    - 47 -
        Section 13.5      DUTY TO DEFEND, ATTORNEYS' FEES AND
                          OTHER FEES AND EXPENSES ..................................    - 48 -

Article l4 - WAIVERS ...............................................................    - 48 -
        Section 14.1      WAIVER OF COUNTERCLAIM ...................................    - 48 -
        Section 14.2      MARSHALLING AND OTHER MATTERS ............................    - 48 -
        Section 14.3      WAIVER OF NOTICE .........................................    - 48 -
        Section 14.4      WAIVER OF STATUTE OF LIMITATIONS .........................    - 49 -
        Section 14.5      SOLE DISCRETION OF LENDER ................................    - 49 -
        Section 14.6      SURVIVAL .................................................    - 49 -
        SECTION 14.7      WAIVER OF TRIAL BY JURY ..................................    - 49 -

Article 15 - EXCULPATION ...........................................................    - 50 -
        Section 15.1      EXCULPATION ..............................................    - 50 -
        Section 15.2      RESERVATION OF CERTAIN RIGHTS ............................    - 50 -
        Section 15.3      EXCEPTIONS TO EXCULPATION ................................    - 50 -
        Section 15.4      RECOURSE .................................................    - 51 -
        Section 15.5      BANKRUPTCY CLAIMS ........................................    - 51 -

Article 16 - NOTICES ...............................................................    - 51 -
</TABLE>

                                     -iii-

<PAGE>

<TABLE>
<S>                                                                                    <C>
Section 16.1              NOTICES ..................................................    - 51 -

Article 17 - SERVICE OF PROCESS ....................................................    - 52 -
        Section 17.1      CONSENT TO SERVICE .......................................    - 52 -
        Section 17.2      SUBMISSION TO JURISDICTION ...............................    - 53 -
        Section 17.3      JURISDICTION NOT EXCLUSIVE ...............................    - 53 -

Article 18 - APPLICABLE LAW ........................................................    - 53 -
        Section 18.1      CHOICE OF LAW ............................................    - 53 -
        Section 18.2      USURY LAWS ...............................................    - 53 -
        Section 18.3      PROVISIONS SUBJECT TO APPLICABLE LAW .....................    - 54 -

Article 19 - SECONDARY MARKET ......................................................    - 54 -
        Section 19.1      TRANSFER OF LOAN .........................................    - 54 -

Article 2O - COSTS
        Section 20.1      PERFORMANCE AT BORROWER'S EXPENSE ........................    - 55 -
        Section 20.2      ATTORNEY'S FEES FOR ENFORCEMENT ..........................    - 55 -

Article 21 - DEFINITIONS
        Section 21.1      GENERAL DEFINITIONS ......................................    - 55 -

Article 22 - MISCELLANEOUS PROVISIONS ..............................................    - 56 -
        Section 22.1      NO ORAL CHANGE ...........................................    - 56 -
        Section 22.2      LIABILITY ................................................    - 56 -
        Section 22.3      INAPPLICABLE PROVISIONS ..................................    - 56 -
        Section 22.4      HEADINGS, ETC. ...........................................    - 56 -
        Section 22.5      DUPLICATE ORIGINALS: COUNTERPARTS ........................    - 56 -
        Section 22.6      NUMBER AND GENDER ........................................    - 56 -
        Section 22.7      SUBROGATION ..............................................    - 56 -

Article 23 - SPECIAL PENNSYLVANIA PROVISIONS .......................................    - 57 -
        Section 23.1      INCONSISTENCIES ..........................................    - 57 -
        Section 23.2      EJECTMENT ................................................    - 57 -
        Section 23.3      REMEDIES .................................................    - 57 -
        Section 23.5      PURCHASE MONEY INSTRUMENT ................................    - 60 -
        Section 23.6      ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES .............    - 60 -
        Section 23.7      CONSTRUCTION MORTGAGE ....................................    - 60 -

        DEFINITIONS ................................................................    - v -
</TABLE>

                                      -iv-

<PAGE>

                                  DEFINITIONS

      The terms set forth below are defined in the following Sections of this
Security Instrument:

            (a)   Applicable Laws: Article 3, Subsection 3.10(a);

            (b)   Attorneys' Fees/Counsel Fees: Article 21, Section 21.1;

            (c)   Bankruptcy Code: Article 1, Subsection 1.1(f);

            (d)   Borrower: Preamble and Article 21, Section 21.1;

            (e)   Business Day: Article 16, Section 16.1;

            (f)   Casualty Consultant: Article 4, Subsection 4.4(b)(iii);

            (g)   Casualty Retainage: Article 4, Subsection 4.4(b)(iv);

            (h)   Debt: Article, Section 2.1;

            (i)   Default Prepayment: Article 9, Section 9.3;

            (j)   Default Rate: Article 10, Section 10.3;

            (k)   Environmental Indemnity: Article 10, Subsection 10.1(q);

            (1)   Environmental Law: Article 12, Section 12.1;

            (m)   Environmental Liens: Article 12, Subsection 12.2(d);

            (n)   Environmental Report: Article 12, Subsection 12.1(a)

            (o)   ERISA: Article 4, Subsection 4.2(a);

            (p)   Escrow Fund: Article 3, Section 3.5;

            (q)   Event: Article 20, Section 20.1;

            (r)   Event of Default: Article 10, Section 10.1;

            (s)   Flood Insurance Acts: Article 3, Subsection 3.3 (a)(vii);

            (t)   Full Replacement Cost: Article 3, Subsection 3.3(a)(i)(A);

                                      -v-

<PAGE>

            (u)   GAAP: Article 3, Subsection 3.11(a);

            (v)   Guarantor: Article 10, Subsection 10.1(e);

            (w)   Hazardous Substances: Article 12, Section 12.1;

            (x)   Improvements: Article 1, Subsection 1.1(c);

            (y)   Indemnified Parties: Article 13, Section 13.1;

            (z)   Indemnitor(s}: Article 10, Subsection 10.1(o);

            (aa)  Insurance Premiums: Article 3, Subsection 3.3(b);

            (bb)  Investor: Article 19, Section 19.1;

            (cc)  Land: Article 1, Subseciifr 1.1(a);

            (dd)  Lease Guaranty: Article 3, Subsection 3.7(a);

            (ee)  Leases: Article 1, Subsection 1.1(f);

            (ff)  Lender: Preamble and Article 21, Section 21.1;

            (gg)  Loan: Article 5, Subsection 5.12;

            (hh)  Loan Application: Article 5, Section 5.15;

            (ii)  Losses: Article 13, Section 13.1;

            (jj)  Net Proceeds: Article 4, Subsection 4.4(b);

            (kk)  Net Proceeds Deficiency: Article 4, Subsection 4.4(b)(vi);

            (11)  Note: Recitals and Article 21, Section 21.1;

            (mm)  Obligations: Article 2, Section 2.3;

            (nn)  Other Charges: Article 3, Subsection 3.4(a);

            (oo)  Other Obligations: Article 2, Section 2.2;

            (pp)  Other Security Documents: Article 3, Section 3.2;

                                     -vi-

<PAGE>

            (qq)  Participations: Article 19, Section 19.1;

            (rr)  Permitted Exceptions: Article 5, Section 5.1;

            (ss)  Person: Article 21, Section 21.1;

            (tt)  Personal Property: Article 1, Subsection 1.1(e);

            (uu)  Policies/Policy: Article 3, Subsection 3.3(b);

            (vv)  Principal: Article 4, Section 4.3;

            (ww)  Property: Article 1, Section 1.1 and Article 21, Section
                  21.1;

            (xx)  Qualifier Insurer: Article 3, Subsection 3.3(b);

            (yy)  Rating Agency: Article 3, Subsection 3.3(b);

            (zz)  Release: Article 12, Section 12.1;

            (aaa) Remediation: Article 12, Section 12.1;

            (bbb) Rents: Article 1, Subsection 1.1(f);

            (ccc) Restoration: Article 3, Subsection 3.3(h);

            (ddd) Securities: Article 19, Section 19.1;

            (eee) Security Deposits: Article 3, Subsection 3.7(c);

            (fff) Security Instrument: Preamble;

            (ggg) Taxes: Article 3, Subsection 3.4(a);

            (hhh) Uniform Commercial Code: Article 1, Subsection 1.1(e),

                                     -vii-<PAGE>

                                 PROMISSORY NOTE

$11,080,000                                         New York, New York
                                                    As of February 12, 1998

                  FOR VALUE RECEIVED, ACADEMY STORE, L.P., a Delaware limited
partnership, as maker, having its principal place of business at c/o Bryant
Development Corp., 2900 Westchester Avenue, Purchase, New York 10577
("Borrower"), hereby unconditionally promises to pay to the order of THE CHASE
MANHATTAN BANK, a New York banking corporation, as payee, having an address at
380 Madison Avenue, 11th Floor, New York, New York 10017 ("Lender"), or at
such other place as the holder hereof may from time to time designate in
writing, the principal sum of ELEVEN MILLION EIGHTY THOUSAND AND 00/100 DOLLARS
($11,080,000), in lawful money of the United States of America with interest
thereon to be computed from the date of this Note at the Applicable Interest
Rate (defined below), and to be paid in installments as follows:

                            ARTICLE 1: PAYMENT TERMS

                  (a) A payment of interest only on March 10, 1998;

                  (b) A payment of $74,648.01, or such other amount as may be
required pursuant to Section 5.1 and/or Section 14 of that certain Expansion
Reserve and Security Agreement dated the date hereof, by and between Borrower
and Lender, on the tenth day of April, 1998 and on the tenth day of each
calendar month thereafter up to and including the tenth day of February, 2013;

each of the payments to be applied as follows:

                  (i)      first, to the payment of interest computed at the
                           Applicable Interest Rate; and

                  (ii)     the balance toward the reduction of the principal
                           sum;

and the balance of the principal sum and all interest thereon shall be due and
payable on the tenth day of March, 2013 (the "Maturity Date"). Interest on the
principal sum of this Note shall be calculated on the basis of the actual number
of days elapsed in a three hundred sixty (360) day year.

                              ARTICLE 2: INTEREST

                  The term "Applicable Interest Rate" as used in the Security
Instrument (defined below) and this Note shall mean an interest rate equal to
seven and one eighth percent (7.125%) per annum.

<PAGE>

                      ARTICLE 3. DEFAULT AND ACCELERATION

                  (a) The whole of the principal sum of this Note, (b)
interest, default interest, late charges and other sums, as provided in this
Note, the Security Instrument or the Other Security Documents (defined below),
(c) all other monies agreed or provided to be paid by Borrower in this Note,
the Security Instrument or the Other Security Documents, (d) all sums advanced
pursuant to the Security Instrument to protect and preserve the Property
(defined below) and the lien and the security interest created thereby, and (e)
all sums advanced and costs and expenses incurred by Lender in connection with
the Debt (defined below) or any part thereof, any renewal, extension, or change
of or substitution for the Debt or any part thereof, or the acquisition or
perfection of the security therefor, whether made or incurred at the request of
Borrower or Lender (all the sums referred to in (a) through (e) above shall
collectively be referred to as the "Debt") shall without notice become
immediately due and payable at the option of Lender if any payment required in
this Note is not paid on or prior to the date when due or on the Maturity Date
or on the happening of any other default, after the expiration of any
applicable notice and grace periods, herein or under the terms of the Security
Instrument or any of the Other Security Documents (collectively, an "Event of
Default").

                          ARTICLE 4. DEFAULT INTEREST

                  Borrower does hereby agree that upon the occurrence of an
Event of Default, Lender shall be entitled to receive and Borrower shall pay
interest on the entire unpaid principal sum at a rate equal to the lesser of
(a) five percent (5%) plus the Applicable Interest Rate and (b) the maximum
interest rate which Borrower may by law pay (the "Default Rate"). The Default
Rate shall be computed from the occurrence of the Event of Default until the
earlier of the date upon which the Event of Default is cured or the date upon
which the Debt is paid in full. Interest calculated at the Default Rate shall
be added to the Debt, and shall be deemed secured by the Security Instrument.
This clause, however, shall not be construed as an agreement or privilege to
extend the date of the payment of the Debt, nor as a waiver of any other right
or remedy accruing to Lender by reason of the occurrence of any Event of
Default.

                             ARTICLE 5. PREPAYMENT

                  (a) The principal balance of this Note may not be prepaid in
whole or in part prior to the fourth Loan Year (defined below). During the
fourth Loan Year or any time thereafter, the principal balance of this Note may
be prepaid in whole, but not in part, upon not less than thirty (30) days and
not more than forty (40) days prior written notice to Lender specifying the
date on which prepayment is to be made (the "Prepayment Date") and upon payment
of:

         (i)      all accrued interest to and including the Prepayment Date;

         (ii)     all interest which would have accrued on the principal
                  balance of this Note after the Prepayment Date to and
                  including the next succeeding ninth day of a calendar month
                  following the Prepayment Date (the "Interest Shortfall

                                      -2-
<PAGE>

                  Payment"), if such prepayment occurs on a date which is not
                  the tenth day of a month;

         (iii)    all other sums due under this Note, the Security Instrument
                  and all Other Security Documents; and

         (iv)     a prepayment consideration (the "Prepayment Consideration")
                  in an amount equal to the greater of (A) one percent (1%)
                  of the principal balance of this Note outstanding on the
                  Prepayment Date, and (B) the present value as of the
                  Prepayment Date of the Calculated Payments (defined below)
                  from the Prepayment Date through the Maturity Date determined
                  by discounting such payments at the Discount Rate (defined
                  below).

Notwithstanding anything to the contrary herein, provided no Event of Default
exists under this Note, the Security Instrument or the Other Security Documents,
in the event of any prepayment which occurs during the three (3) months prior to
the Maturity Date, no Prepayment Consideration shall be due in connection
therewith, but Borrower shall be required to pay all other sums due hereunder,
including, without limitation, the Interest Shortfall Payment, if any.

                  (b) The "Calculated Payments" are monthly payments of
interest only which would be due based on the principal amount outstanding on
the Prepayment Date and assuming an interest rate per annum equal to the
difference (if such difference is greater than zero) between (i) the Applicable
Interest Rate minus (ii) the Treasury Rate (defined below). The "Discount Rate"
is the rate which, when compounded monthly, is equivalent to the Treasury Rate
(defined below) when compounded semi-annually. The "Treasury Rate" is the
yield calculated by the linear interpolation of the yields, as reported in the
Federal Reserve Statistical Release H.15-Selected Interest Rates under the
heading U.S. Government Securities/Treasury constant maturities for the week
ending prior to the Prepayment Date, of the U.S. Treasury constant maturities
with maturity dates (one longer and one shorter) most nearly approximating the
Maturity Date. In the event Release H.15 is no longer published, Lender shall
select a comparable publication to determine the Treasury Rate. Lender shall
notify Borrower of the amount and the basis of determination of the required
Prepayment Consideration which shall be conclusive and binding on Borrower
absent manifest error. "Loan Year" as used in this Note shall mean each 365 or
366, as applicable, day period commencing on the next succeeding tenth day of a
calendar month after the date of this Note (or the date of this Note if it is
dated the tenth day of a calendar month).

                  (c) If any notice of prepayment is given under this Article
5, the principal balance of this Note and the other sums required under this
prepayment section shall be due and payable on the Prepayment Date. Lender
shall not be obligated to accept any prepayment of the principal balance of
this Note unless it is accompanied by all sums due in connection therewith.
Notwithstanding anything contained in this Article 5 to the contrary, provided
no Event of Default exists, no Prepayment Consideration shall be due in
connection with a complete or partial prepayment resulting from the application
of insurance proceeds or condemnation awards pursuant to Sections 3.3 and 3.6
of the Security Instrument, but Borrower shall be required to pay all other
sums due hereunder, including, without limitation, the Interest Shortfall
Payment, if applicable.

                                      -3-
<PAGE>

                  (d) If a Default Prepayment (defined below) occurs, Borrower
shall pay to Lender the entire Debt, including, without limitation, the
following amounts:

                  (i)      if the Default Prepayment occurs prior to the time
                           when prepayment of the principal balance of this
                           Note is permitted, an amount equal to the sum of (A)
                           the present value of the interest payments which
                           would have accrued on the principal balance of this
                           Note (outstanding as of the date of such Default
                           Prepayment) at the Applicable Interest Rate from the
                           date of such Default Prepayment to the first day
                           prepayment is permitted pursuant to this Note
                           discounted at a rate equal to the Treasury Rate
                           except that such Treasury Rate shall be based on the
                           U.S. Treasury constant maturity most nearly
                           approximating the date upon which prepayment is
                           first permitted pursuant to this Note, and (B) an
                           amount equal to the greater of (1) one percent (1%)
                           of the principal balance of this Note outstanding
                           on the date of such Default Prepayment, and (2) the
                           present value as of the first day of the fourth Loan
                           Year of the Calculated Payments based on the
                           Treasury Rate in effect at the time of such Default
                           Prepayment from the first day of the fourth Loan
                           Year through the Maturity Date determined by
                           discounting such payments at the Discount Rate; and

                  (ii)     if the Default Prepayment occurs at a time when
                           prepayment of the principal balance of this Note is
                           permitted, the Prepayment Consideration and the
                           Interest Shortfall Payment, if applicable.

For purposes of this Note, the term "Default Prepayment" shall mean a prepayment
of the principal amount of this Note made after the occurrence of any Event of
Default or an acceleration of the Maturity Date under any circumstances,
including, without limitation, a prepayment occurring in connection with
reinstatement of the Security Instrument provided by statute under foreclosure
proceedings or exercise of a power of sale, any statutory right of redemption
exercised by Borrower or any other party having a statutory right to redeem or
prevent foreclosure, any sale in foreclosure or under exercise of a power of
sale or otherwise.

                              ARTICLE 6. SECURITY

                  This Note is secured by the Security Instrument and the Other
Security Documents. The term "Security Instrument" as used in this Note shall
mean the mortgage and security agreement dated the date hereof in the principal
sum of $11,080,000 given by Borrower to (or for the benefit of) Lender covering
the fee estate of Borrower in certain premises located in Philadelphia County,
State (Commonwealth) of Pennsylvania, and other property, as more particularly
described therein (collectively, the "Property") and intended to be duly
recorded in said County. The term "Other Security Documents" as used in this
Note shall mean all and any of the documents other than this Note or the
Security Instrument now or hereafter executed by Borrower and/or others and by
or in favor of Lender, which wholly or partially secure or guarantee payment of
this Note. Whenever used, the singular number shall include the plural, the
plural number shall include the singular, and the words "Lender" and "Borrower"
shall include their respective successors, assigns, heirs, executors and
administrators.

                                      -4-
<PAGE>

         All of the terms, covenants and conditions contained in the Security
Instrument and the Other Security Documents are hereby made part of this Note
to the same extent and with the same force as if they were fully set forth
herein.

                           ARTICLE 7. SAVINGS CLAUSE

        This Note is subject to the express condition that at no time shall
Borrower be obligated or required to pay interest on the principal balance due
hereunder at a rate which could subject Lender to either civil or criminal
liability as a result of being in excess of the maximum interest rate which
Borrower is permitted by applicable law to contract or agree to pay. If by the
terms of this Note, Borrower is at any time required or obligated to pay
interest on the principal balance due hereunder at a rate in excess of such
maximum rate, the Applicable Interest Rate or the Default Rate, as the case may
be, shall be deemed to be immediately reduced to such maximum rate and all
previous payments in excess of the maximum rate shall be deemed to have been
payments in reduction of principal and not on account of the interest due
hereunder. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the Debt, shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full stated term of the Note until payment in full so that the rate or
amount of interest on account of the Debt does not exceed the maximum lawful
rate of interest from time to time in effect and applicable to the Debt for so
long as the Debt is outstanding.

                             ARTICLE 8. LATE CHARGE

         If any sum payable under this Note is not paid on or prior to the date
on which it is due, Borrower shall pay to Lender upon demand an amount equal to
the lesser of five percent (5%) of the unpaid sum or the maximum amount
permitted by applicable law to defray the expenses incurred by Lender in
handling and processing the delinquent payment and to compensate Lender for the
loss of the use of the delinquent payment and the amount shall be secured by
the Security Instrument and the Other Security Documents.

                           ARTICLE 9. NO ORAL CHANGE

         This Note 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.

                    ARTICLE 10. JOINT AND SEVERAL LIABILITY

         If Borrower consists of more than one person or party, the obligations
and liabilities of each person or party shall be joint and several.

                                      -5-
<PAGE>

                              ARTICLE 11. WAIVERS

         Borrower and all others who may become liable for the payment of all
or any part of the Debt do hereby severally waive presentment and demand for
payment, notice of dishonor, protest and notice of protest and non-payment and
all other notices of any kind. No release of any security for the Debt or
extension of time for payment of this Note or any installment hereof, and no
alteration, amendment or waiver of any provision of this Note, the Security
Instrument or the Other Security Documents made by agreement between Lender or
any other person or party shall release, modify, amend, waive, extend, change,
discharge, terminate or affect the liability of Borrower, and any other person
or entity who may become liable for the payment of all or any part of the Debt,
under this Note, the Security Instrument or the Other Security Documents. No
notice to or demand on Borrower shall be deemed to be a waiver of the
obligation of Borrower or of the right of Lender to take further action without
further notice or demand as provided for in this Note, the Security Instrument
or the Other Security Documents. If Borrower is a partnership, the agreements
contained herein shall remain in full force and effect, notwithstanding any
changes in the individuals or entities comprising the partnership, and the term
"Borrower," as used herein, shall include any alternate or successor
partnership, but any predecessor partnership and its partners shall not
thereby be released from any liability. If Borrower is a corporation, the
agreements contained herein shall remain in full force and effect
notwithstanding any changes in the shareholders comprising, or the officers and
directors relating to, the corporation, and the term "Borrower" as used herein,
shall include any alternate or successor corporation, but any predecessor
corporation shall not be relieved of liability hereunder. If Borrower is a
limited liability company, the agreements herein contained shall remain in full
force and effect, notwithstanding any changes in the individuals or entities
comprising the limited liability company and the term "Borrower," as used
herein, shall include any alternate or successor limited liability company, but
any predecessor limited liability company and its members shall not be released
from any liability. (Nothing in the foregoing sentence shall be construed as a
consent to, or a waiver of, any prohibition or restriction on transfers of
interests in such partnership, corporation or limited liability company which
may be set forth in the Security Instrument or any Other Security Document.)

                              ARTICLE 12. TRANSFER

         Upon the transfer of this Note, Borrower hereby waiving notice of any
such transfer, Lender may deliver all the collateral mortgaged, granted,
pledged or assigned pursuant to the Security Instrument and the Other Security
Documents, or any part thereof, to the transferee who shall thereupon become
vested with all the rights herein or under applicable law given to Lender with
respect thereto, and Lender shall thereafter forever be relieved and fully
discharged from any liability or responsibility in the matter; but Lender shall
retain all rights hereby given to it with respect to any liabilities and the
collateral not so transferred.

                                      -6-
<PAGE>

                      ARTICLE 13. WAIVER OF TRIAL BY JURY

         BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN
CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN
EVIDENCED BY THIS NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THIS NOTE,
THIS NOTE, THE SECURITY INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR ANY ACTS
OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN
CONNECTION THEREWITH.

                            ARTICLE 14. EXCULPATION

         (a) Except as otherwise provided herein, in the Security Instrument or
in the Other Security Documents, Lender shall not enforce the liability and
obligation of Borrower to perform and observe the obligations contained in
this Note or the Security Instrument by any action or proceeding wherein a
money judgment shall be sought against Borrower, except that Lender may bring a
foreclosure action, action for specific performance or other appropriate action
or proceeding to enable Lender to enforce and realize upon this Note, the
Security Instrument, the Other Security Documents, and the interest in the
Property, the Rents (as defined in the Security Instrument) and any other
collateral given to Lender created by this Note, the Security Instrument and
the Other Security Documents; provided, however, that any judgment in any such
action or proceeding shall be enforceable against Borrower only to the extent
of Borrower's interest in the Property, in the Rents and in any other
collateral given to Lender. Lender, by accepting this Note and the Security
Instrument, agrees that it shall not, except as otherwise provided in Section
11.10 of the Security Instrument, sue for, seek or demand any deficiency
judgment against Borrower in any such action or proceeding, under or by reason
of or under or in connection with this Note, the Other Security Documents or
the Security Instrument. The provisions of this Section shall not, however, (i)
constitute a waiver, release or impairment of any obligation evidenced or
secured by this Note, the Other Security Documents or the Security Instrument;
(ii) impair the right of Lender to name Borrower as a party defendant in any
action or suit for judicial foreclosure and sale under the Security Instrument;
(iii) affect the validity or enforceability of any indemnity, guaranty, master
lease or similar instrument made in connection with this Note, the Security
Instrument, or the Other Security Documents; (iv) impair the right of Lender to
obtain the appointment of a receiver; (v) impair the enforcement of the
Assignment of Leases and Rents executed in connection herewith; or (vi) impair
the right of Lender to enforce the provisions of Sections 11.10, 13.2, 13.3 and
13.4 of the Security Instrument.

         (b) Notwithstanding the provisions of this Article 14 to the contrary,
Borrower shall be personally liable to Lender for the Losses (as defined in the
Security Instrument) it incurs due to: (i) fraud or intentional
misrepresentation by Borrower or any other person or entity in connection with
the execution and the delivery of this Note, the Security Instrument or the
Other Security Documents; (ii) Borrower's misapplication or misappropriation of
Rents received by Borrower after the occurrence of an Event of Default; (iii)
Borrower's misapplication or misappropriation of tenant security deposits or
Rents collected in advance; (iv) the misapplication

                                      -7-
<PAGE>

or the misappropriation of insurance proceeds or condemnation awards; (v)
Borrower's failure to pay Taxes (as defined in the Security Instrument), Other
Charges (as defined in the Security Instrument) (except to the extent that sums
sufficient to pay such amounts have been deposited in escrow with Lender
pursuant to the terms of the Security Instrument), charges for labor or
materials or other charges that can create liens on the Property (unless bonded
pursuant to the terms of the Security Instrument); (vi) Borrower's failure to
return or to reimburse Lender for all Personal Property (as defined in the
Security Instrument) taken from the Property by or on behalf of Borrower and not
replaced with Personal Property of the same utility and of the same or greater
value; (vii) any act of actual waste or arson by Borrower, any principal,
affiliate, member or general partner thereof or by any Indemnitor (as defined in
the Security Instrument) or Guarantor (as defined in the Security Instrument);
(viii) any fees or commissions paid by Borrower to any principal, affiliate,
member or general partner of Borrower, Indemnitor or Guarantor in violation of
the terms of this Note, the Security Instrument or the Other Security Documents;
or (ix) Borrower's failure to comply with the provisions of Sections 4.2, 7.1,
12.1 and 12.2 of the Security Instrument.

         (c) Notwithstanding the foregoing, the agreement of Lender not to
pursue recourse liability as set forth in Subsection (a) above SHALL BECOME
NULL AND VOID and shall be of no further force and effect in the event of
Borrower's default under Sections 3.11 (for ten (10) days after notice by
Lender), 4.3 or 8.1, 8.2, 8.3 or 8.4 of the Security Instrument, or in the
event of Principal's (as defined in the Security Instrument) default under
Section 4.3 of the Security Instrument or if the Property or any part thereof
shall become an asset in (i) a voluntary bankruptcy or insolvency proceeding,
or (ii) an involuntary bankruptcy or insolvency proceeding which is not
dismissed within ninety (90) days of filing.

         (d) Nothing herein shall be deemed to be a waiver of any right which
Lender may have under Section 506(a), 506(b), 1111(b) or any other provision of
the U.S. Bankruptcy Code to file a claim for the full amount of the
indebtedness secured by the Security Instrument or to require that all
collateral shall continue to secure all of the indebtedness owing to Lender in
accordance with this Note, the Security Instrument and the Other Security
Documents.

                             ARTICLE 15. AUTHORITY

         Borrower (and the undersigned representative of Borrower, if any)
represents that Borrower has full power, authority and legal right to execute
and deliver this Note, the Security Instrument and the Other Security Documents
and that this Note, the Security Instrument and the Other Security Documents
constitute valid and binding obligations of Borrower.

                          ARTICLE 16. APPLICABLE LAW

         This Note shall be deemed to be a contract entered into pursuant to
the laws of the State of New York and shall in all respects be governed,
construed, applied and enforced in accordance with the laws of the State of New
York.

                                      -8-
<PAGE>

                        ARTICLE 17. SERVICE OF PROCESS

         (a) (i) Borrower will maintain a place of business or an agent for
service of process in New York, New York and give prompt notice to Lender of
the address of such place of business and of the name and address of any new
agent appointed by it, as appropriate. Borrower further agrees that the failure
of its agent for service of process to give it notice of any service of process
will not impair or affect the validity of such service or of any judgment based
thereon. If, despite the foregoing, there is for any reason no agent for
service of process of Borrower available to be served, and if it at that time
has no place of business in New York, New York, then Borrower irrevocably
consents to service of process by registered or certified mail, postage
prepaid, to it at its address given in or pursuant to the first paragraph
hereof.

             (ii) Borrower initially and irrevocably designates Wachtel &
Masyr, LLP, with offices on the date hereof at 110 East 59' Street, New York,
New York 10022, to receive for and on behalf of Borrower service of process in
New York, New York with respect to this Note.

         (b) With respect to any claim or action arising hereunAr or under the
Security Instrument or the Other Security Documents, Borrower (a) irrevocably
submits to the nonexclusive jurisdiction of the courts of the State of New York
and the United States District Court located in the Borough of Manhattan in New
York, New York, and appellate courts from any thereof, and (b) irrevocably
waives any objection which it may have at any time to the laying on venue of
any suit, action or proceeding arising out of or relating to this Note brought
in any such court, irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.

         (c) Nothing in this Note will be deemed to preclude Lender from
bringing an action or proceeding with respect hereto in any other jurisdiction.

                           ARTICLE 18. COUNSEL FEES

         In the event that it should become necessary to employ counsel to
collect the Debt or to protect or foreclose the security therefor, Borrower
also agrees to pay all reasonable fees and expenses of Lender, including,
without limitation, reasonable attorney's fees for the services of such counsel
whether or not suit be brought.

                              ARTICLE 19. NOTICES

         All notices or other written communications hereunder shall be deemed
to have been properly given (i) upon delivery, if delivered in person or by
facsimile transmission with receipt acknowledged by the recipient thereof and
confirmed by telephone by sender, (ii) one (1) Business Day (defined below)
after having been deposited for overnight delivery with any reputable overnight
courier service, or (iii) three (3) Business Days after having been
deposited in any post office or mail depository regularly maintained by the
U.S. Postal Service and sent by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:

                                      -9-
<PAGE>

If to Borrower:               Academy Store, L.P.
                              c/o Bryant Development Corp.
                              2900 Westchester Avenue
                              Purchase, New York 10577
                              Attention: Daniel Weinreb
                              Facsimile No.: (914) 251-1787

With a copy to:               Wachtel & Masyr
                              110 East 59th Street
                              New York, New York 10022
                              Attention: Robert Stone, Esq.
                              Facsimile No.: (212) 909-9490

If to Lender:                 The Chase Manhattan Bank
                              c/o Chase Commercial Mortgage Banking Corp.
                              Servicing Department
                              80 Madison Avenue
                              11th Floor
                              New York, New York 10017
                              Attention: Janice Smith
                              Facsimile No.: (212) 622-3553

                                     and

                              The Chase Manhattan Bank
                              Legal Department
                              270 Park Avenue
                              39th Floor
                              New York, New York 10017
                              Attention: Ronald A. Wilcox, Esq.
                              Facsimile No.: (212) 270-2934

With a copy to:               Thacher Proffitt & Wood
                              Two World Trade Center
                              New York, New York 10048
                              Attention: Joseph Philip Forte, Esq.
                              Facsimile No.: (212) 912-7751

or addressed as such party may from time to time designate by written notice to
the other parties.

         Either party by notice to the other may designate additional or
different addresses for subsequent notices or communications.

         "Business Day" shall mean a day upon which commercial banks are not
authorized or required by law to close in New York, New York.

                                     -10-
<PAGE>

                           ARTICLE 20. MISCELLANEOUS

               (a) Wherever pursuant to this Note (i) Lender exercises any right
given to it to approve or disapprove, (ii) any arrangement or term is to be
satisfactory to Lender, or (iii) any other decision or determination is to be
made by Lender, the decision of Lender to approve or disapprove, all decisions
that arrangements or terms are satisfactory or not satisfactory and all other
decisions and determinations made by Lender, shall be in the sole and absolute
discretion of Lender and shall be final and conclusive; except as may be
otherwise expressly and specifically provided herein.

         (b) Wherever pursuant to this Note it is provided that Borrower pay any
costs and expenses, such costs and expenses shall include, but not be limited
to, reasonable legal fees and disbursements of Lender with respect to retained
firms.

                            ARTICLE 21. DEFINITIONS

         The terms set forth below are defined in the following Sections of
this Note:

         (a) Applicable Interest Rate: Article 2;

         (b) Borrower: Preamble, Articles 6 and 11;

         (c) Business Day: Article 19;

         (d) Calculated Payments: Article 5, Section (b);

         (e) Debt: Article 3;

         (f) Default Prepayment: Article 5, Section (d);

         (g) Default Rate: Article 4;

         (h) Discount Rate: Article 5, Section (b);

         (i) Event of Default: Article 3;

         (j) Interest Shortfall Payment: Article 5, Subsection (a)(ii);

         (k) Lender: Preamble and Article 6;

         (l) loan Year: Article 5, Section (b);

         (m) Maturity Date: Article 1, Section (b);

         (n) Other Security Documents: Article 6;

                                     -11-
<PAGE>

         (o) Prepayment Consideration: Article 5, Subsection (a)(iv);

         (p) Prepayment Date: Article 5, Section (a);

         (q) Property: Article 6;

         (r) Securily Instrument: Article 6; and

         (s) Treasury Rate: Article 5, Section (b).

                  Article 22 - SPECIAL PENNSYLVANIA PROVISIONS

             Section 22.1 DEFAULT AND ACCELERATION. 1 Article 3 of this Note
entitled "Default and Acceleration" is hereby amended by inserting the
following words after "Other. Security Documents (collectively, an "Event of
Default")":

             If Lender retains the services of counsel in order to enforce any
remedy available to Lender under this Note, the Security Instrument or any of
the Other Security Document, an attorney's commission equal to five percent (5
%) of the outstanding principal amount of this Note shall be payable on demand
by Borrower to Lender, and Borrower shall also pay on demand the cost of any
title search and all other costs incurred by Lender in connection with
proceedings to recover any sums due hereunder. Any such amounts not paid
promptly on demand shall be added to the outstanding principal amount of this
Note, shall bear interest at the Default Rate from the date of such demand
until paid in full and shall be secured by the Security Instrument. Borrower
shall also pay on demand any actual charge of Lender in connection with the
cancellation of this Note and/or the satisfaction of the Security Instrument of
record. Nothing contained herein shall limit or impair the obligation of
Borrower to pay any and all costs and expenses for which Borrower is otherwise
liable under this Note, the Security Instrument or any of the Other Security
Document and all costs and expenses provided by law.

                         [NO FURTHER TEXT ON THIS PAGE]

                                     -12-
<PAGE>

         IN WITNESS WHEREOF, Borrower has duly executed this Note as of the day
and year first above written.

                                      ACADEMY STORE, L.P., a Delaware limited
                                      partnership

                                      By:  Academy Land, Inc., a Delaware
                                           corporation, its general partner

                                           By: /s/ Andrew B. Hascoe
                                               ---------------------------
                                               Andrew B. Hascoe
                                               President

                                     -13-
<PAGE>

STATE OF NEW YORK                    )
                                     :ss.:
COUNTY OF NEW YORK                   )

         On this, the 11th day of February 1998, before me, the subscriber, a
Notary Public in and for the State and county aforesaid, personally appeared
Andrew B. Hascoe, who acknowledged himself to be President of Academy Land,
Inc.,a Delaware corporation, the sole general partner of Academy Store, L.P., a
Delaware limited partnership, who I am satisfied is the person who signed the
within instrument and who acknowledged that he executed same as such President
of the general partner on behalf of the limited partnership, being authorized
to do so, and that the within instrument is the voluntary act and deed of such
limited partnership.

         WITNESS my hand and seal the day and year aforesaid.

                                                   /s/ David Lowery
                                              ---------------------------
                                                     Notary Public
                                                     DAVID LOWERY
My Commission Expres:                       NOTARY PUBLIC, State of New York
                                                    No. 01LO6001592
January 20, 2000                               Qualified in Nassau County
-----------------------------               Commission Expires Jan. 20, 2000

                                     -14-

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