Document:

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                                                                  Exhibit 10.154

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                         GLIMCHER ASHLAND VENTURE, LLC,
                      a Delaware limited liability company

                                   (Borrower)

                                   in favor of

                          KEYBANK NATIONAL ASSOCIATION,
                         A national banking association
                                    (Lender)

                    MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
                     SECURITY AGREEMENT, AND FIXTURE FILING

Dated:  October 15, 2001

Location: 500 Winchester Avenue, Ashland, Kentucky 41101

This instrument Prepared by:

Jason W. Lee
Polsinelli Shalton & Welte
700 West 47th Street, Suite 1000
Kansas City, Missouri  64112

_____________________ [signature of preparer]

Loan No.: 10015129

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                                TABLE OF CONTENTS
                                                                                                       PAGE

<S>                   <C>                                                                              <C>
RECITALS.................................................................................................1

DEFINITIONS..............................................................................................1

ARTICLE 1 - GRANTS OF SECURITY...........................................................................2
     SECTION 1.1     PROPERTY MORTGAGED..................................................................2
                     (a)   Land..........................................................................2
                     (b)   Additional Land...............................................................2
                     (c)   Improvements..................................................................2
                     (d)   Easements and Appurtenances...................................................2
                     (e)   Fixtures and Tangible Personal Property.......................................3
                     (f)   Leases and Rents..............................................................3
                     (g)   Condemnation Awards...........................................................4
                     (h)   Insurance Proceeds............................................................4
                     (i)   Tax Certiorari................................................................4
                     (j)   Miscellaneous Personal Property...............................................4
                     (k)   Personal Property As Defined In Uniform Commercial Code.......................4
                     (l)   Conversion....................................................................4
                     (m)   Other Rights..................................................................5
     SECTION 1.2     ASSIGNMENT OF LEASES AND RENTS......................................................5
     SECTION 1.3     SECURITY AGREEMENT..................................................................5
     SECTION 1.4     PLEDGE OF MONIES HELD...............................................................5
     SECTION 1.5     COMMON LAW PLEDGE/ASSIGNMENT........................................................6

CONDITIONS TO GRANT......................................................................................6

ARTICLE 2 - DEBT AND OBLIGATIONS SECURED.................................................................6
     SECTION 2.1     DEBT................................................................................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
                     (a)   Insurance.....................................................................7
                           (i)    Property Insurance.....................................................7
                           (ii)   Business Interruption..................................................7
                           (iii)  Boiler and Machinery...................................................7
                           (iv)   Builder's Risk.........................................................8
                           (v)    Ordinance/Law Coverage.................................................8
                           (vi)   Personal Property......................................................8
                           (vii)  Liability Insurance....................................................8
                           (viii) Workers Compensation Insurance.........................................8
                           (ix)   Other Insurance........................................................8
                     (b)   Insurance Policies............................................................8
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<S>  <C>             <C>   <C>                                                                        <C>

                     (c)   Compliance With Insurance Requirements........................................9
                     (d)   Restoration...................................................................9
                     (e)   Blanket Insurance Policies....................................................9
                     (f)   Absolute Transfer On Foreclosure..............................................9
     SECTION 3.4     PAYMENT OF TAXES, ETC...............................................................9
     SECTION 3.5     TAX AND INSURANCE ESCROW FUND......................................................10
     SECTION 3.6     CONDEMNATION.......................................................................10
     SECTION 3.7     LEASES AND RENTS...................................................................11
     SECTION 3.8     MAINTENANCE OF PROPERTY............................................................11
     SECTION 3.9     WASTE..............................................................................11
     SECTION 3.10    COMPLIANCE WITH LAWS...............................................................12
     SECTION 3.11    BOOKS AND RECORDS..................................................................12
     SECTION 3.12    PAYMENT FOR LABOR AND MATERIALS....................................................13
     SECTION 3.13    PERFORMANCE OF OTHER AGREEMENTS....................................................14
     SECTION 3.14    CHANGE OF NAME, IDENTITY OR STRUCTURE..............................................14
     SECTION 3.15    EXISTENCE..........................................................................14

ARTICLE 4 - SPECIAL COVENANTS...........................................................................14
     SECTION 4.1     PROPERTY USE.......................................................................14
     SECTION 4.2     ERISA..............................................................................14
     SECTION 4.3     SINGLE PURPOSE ENTITY..............................................................15
     SECTION 4.4     RESTORATION AFTER CASUALTY.........................................................18

ARTICLE 5 - REPRESENTATIONS AND WARRANTIES..............................................................21
     SECTION 5.1     WARRANTY OF TITLE..................................................................21
     SECTION 5.2     AUTHORITY..........................................................................22
     SECTION 5.3     LEGAL STATUS AND AUTHORITY.........................................................22
     SECTION 5.4     VALIDITY OF DOCUMENTS..............................................................22
     SECTION 5.5     LITIGATION.........................................................................22
     SECTION 5.6     STATUS OF PROPERTY.................................................................22
     SECTION 5.7     NO FOREIGN PERSON..................................................................23
     SECTION 5.8     SEPARATE TAX LOT...................................................................23
     SECTION 5.9     ERISA COMPLIANCE...................................................................24
     SECTION 5.10    LEASES.............................................................................24
     SECTION 5.11    FINANCIAL CONDITION................................................................24
     SECTION 5.12    BUSINESS PURPOSES..................................................................24
     SECTION 5.13    TAXES..............................................................................24
     SECTION 5.14    MAILING ADDRESS....................................................................24
     SECTION 5.15    NO CHANGE IN FACTS OR CIRCUMSTANCES................................................25
     SECTION 5.16    DISCLOSURE.........................................................................25
     SECTION 5.17    THIRD PARTY REPRESENTATIONS........................................................25
     SECTION 5.18    ILLEGAL ACTIVITY...................................................................25

ARTICLE 6 - DEBTOR/CREDITOR RELATIONSHIP................................................................25
     SECTION 6.1     RELATIONSHIP OF BORROWER AND LENDER................................................25
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<S>     <C>          <C>                                                                                <C>
ARTICLE 7 - FURTHER ASSURANCES..........................................................................25
     SECTION 7.1     RECORDING OF SECURITY INSTRUMENT, ETC..............................................25
     SECTION 7.2     FURTHER ACTS, ETC..................................................................25
     SECTION 7.3     CHANGES IN TAX, DEBT CREDIT AND DOCUMENTARY STAMP LAWS.............................26
     SECTION 7.4     ESTOPPEL CERTIFICATES..............................................................26
     SECTION 7.5     FLOOD INSURANCE....................................................................26
     SECTION 7.6     SPLITTING OF SECURITY INSTRUMENT...................................................27
     SECTION 7.7     REPLACEMENT DOCUMENTS..............................................................27
     SECTION 7.8     AMENDED FINANCING STATEMENTS.......................................................27

ARTICLE 8 - DUE ON SALE/ENCUMBRANCE/CHANGE IN BORROWER..................................................27
     SECTION 8.1     NO SALE/ENCUMBRANCE/CHANGE OF OWNERSHIP WITHOUT CONSENT............................27
     SECTION 8.2     CONDITIONS TO LENDER'S CONSENT.....................................................28

ARTICLE 9 - PREPAYMENT..................................................................................28

ARTICLE 10 - DEFAULT....................................................................................29
    SECTION 10.1     EVENTS OF DEFAULT..................................................................29
    SECTION 10.2     LATE CHARGE........................................................................30
    SECTION 10.3     DEFAULT INTEREST...................................................................30

ARTICLE 11 - RIGHTS AND REMEDIES........................................................................30
     SECTION 11.1    REMEDIES...........................................................................30
     SECTION 11.2    APPLICATION OF PROCEEDS............................................................32
     SECTION 11.3    RIGHT TO CURE DEFAULTS.............................................................32
     SECTION 11.4    ACTIONS AND PROCEEDINGS............................................................33
     SECTION 11.5    RECOVERY OF SUMS REQUIRED TO BE PAID...............................................33
     SECTION 11.6    EXAMINATION OF BOOKS AND RECORDS...................................................33
     SECTION 11.7    OTHER RIGHTS, ETC..................................................................33
     SECTION 11.8    RIGHT TO RELEASE ANY PORTION OF THE PROPERTY.......................................34
     SECTION 11.9    VIOLATION OF LAWS..................................................................34
     SECTION 11.10   RIGHT OF ENTRY.....................................................................34
     SECTION 11.11   RIGHTS PERTAINING TO SALES.........................................................34

ARTICLE 12 - ENVIRONMENTAL HAZARDS......................................................................36
     SECTION 12.1    ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES.......................................36
     SECTION 12.2    ENVIRONMENTAL COVENANTS............................................................37
     SECTION 12.3    LENDER'S RIGHTS....................................................................37

ARTICLE 13 - INDEMNIFICATION............................................................................38
     SECTION 13.1    GENERAL INDEMNIFICATION............................................................38
     SECTION 13.2    MORTGAGE AND/OR INTANGIBLE TAX.....................................................39
     SECTION 13.3    ERISA INDEMNIFICATION..............................................................39
     SECTION 13.4    ENVIRONMENTAL INDEMNIFICATION......................................................39
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<S>           <C>                                                                                       <C>
      SECTION 13.5    DUTY TO DEFEND, ATTORNEYS' FEES AND OTHER FEES AND EXPENSES........................40

ARTICLE 14 - WAIVERS.....................................................................................40
      SECTION 14.1    WAIVER OF COUNTERCLAIM.............................................................40
      SECTION 14.2    MARSHALLING AND OTHER MATTERS......................................................40
      SECTION 14.3    WAIVER OF NOTICE...................................................................41
      SECTION 14.4    WAIVER OF STATUTE OF LIMITATIONS...................................................41
      SECTION 14.5    SURVIVAL...........................................................................41
      SECTION 14.6    WAIVER OF TRIAL BY JURY............................................................41

ARTICLE 15 - EXCULPATION.................................................................................41

ARTICLE 16 - NOTICES.....................................................................................41
      SECTION 16.1    NOTICES............................................................................41

ARTICLE 17 - APPLICABLE LAW..............................................................................42
      SECTION 17.1    CHOICE OF LAW/JURISDICTION AND VENUE...............................................42
      SECTION 17.2    USURY LAWS.........................................................................42
      SECTION 17.3    PROVISIONS SUBJECT TO APPLICABLE LAW...............................................42
      SECTION 17.4    INAPPLICABLE PROVISION.............................................................43

ARTICLE 18 - SECONDARY MARKET............................................................................43
     SECTION 18.1     DISSEMINATION OF INFORMATION.......................................................43
     SECTION 18.2     CONVERSION TO REGISTERED FORM......................................................43

ARTICLE 19 - COSTS.......................................................................................43
     SECTION 19.1     PERFORMANCE AT BORROWER'S EXPENSE..................................................43
     SECTION 19.2     ATTORNEY'S FEES FOR ENFORCEMENT....................................................43

ARTICLE 20 - CERTAIN DEFINITIONS, HEADINGS, RULE OF CONSTRUCTION.........................................44
     SECTION 20.1     GENERAL DEFINITIONS................................................................44
     SECTION 20.2     HEADINGS, ETC......................................................................44
     SECTION 20.3     RULES OF CONSTRUCTION..............................................................44

ARTICLE 21 - MISCELLANEOUS...............................................................................45
     SECTION 21.1     NO ORAL CHANGE.....................................................................45
     SECTION 21.2     LIABILITY..........................................................................45
     SECTION 21.3     DUPLICATE ORIGINALS; COUNTERPARTS..................................................45
     SECTION 21.4     NUMBER AND GENDER..................................................................45
     SECTION 21.5     SUBROGATION........................................................................45
     SECTION 21.6     ENTIRE AGREEMENT...................................................................45
     SECTION 21.7     LENDER'S RIGHT TO SUBORDINATE......................................................46

ARTICLE 22 - LOCAL LAW PROVISIONS........................................................................46
     SECTION 22.1     INCONSISTENCIES....................................................................46
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<S>     <C>                                                                                              <C>
ARTICLE 23 - ADDITIONAL OR SPECIAL PROVISIONS OR MODIFICATIONS............................................46
       SECTION 23.1    INCONSISTENCIES....................................................................46
</TABLE>

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                                    PREAMBLE
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         THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT, AND
FIXTURE FILING ("SECURITY INSTRUMENT") is made as of October 15, 2001, by and
among GLIMCHER ASHLAND VENTURE, LLC, a Delaware limited liability company having
its principal place of business or residing at c/o Glimcher Realty Trust, 20
South Third Street, Columbus, Ohio 43215 ("BORROWER," such term includes any
successors or assigns of Borrower and any future owners of all or any part of
the Property, as hereinafter defined) and KEYBANK NATIONAL ASSOCIATION, a
national banking association having a place of business at 911 Main Street,
Suite 1500, Kansas City, Jackson County, Missouri 64105 , as mortgagee
("LENDER," such term includes all successors and assigns and all subsequent
holders, if any, of the Promissory Note that this Security Instrument secures).

PROPERTY ADDRESS:     500 Winchester Avenue, Ashland, Kentucky 41101

                                    RECITALS
                                    --------

         Borrower by its promissory note of even date herewith given to Lender
is indebted to Lender in the principal sum of $27,000,000.00 in lawful money of
the United States of America (the note together with all extensions, renewals,
modifications, consolidations, substitutions, replacements, restatements and
increases 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 and the performance
of all of its obligations under the Note and other Loan Documents.

                                   DEFINITIONS
                                   -----------

         The terms set forth below are defined in the following Loan Documents
or Sections and Subsections of this Security Instrument and when used in this
Security Instrument shall have the meanings set forth in such Loan Documents
(such Loan Documents being incorporated herein by reference for such purposes),
Sections, and Subsections unless the context clearly otherwise requires. Certain
other capitalized words and phrases that are used on a more limited basis are
defined in the Sections in which they are used.

         Applicable Laws: Subsection 3.10(a);
         Borrower: Preamble and Section 20.1;
         Debt: Section 2.1;
         Default Rate: Note;
         Environmental Law: Section 12.1;
         ERISA: Subsection 4.2(a);
         Escrow Fund: Section 3.5;
         Event of Default: Section 10.1;
         Financial Statement Reporting Deposit: Note;
         Guarantor: Section 5.5;
         Hazardous Substances: Section 12.1;
         Indemnified Parties: Section 13.1;
         Indemnitor: Subsection 5.5;
         Insurance Premiums: Subsection 3.3(b);
         Investor: Section 18.1;
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         Land: Subsection 1.1(a);
         Late Charges: Note;
         Leases: Subsection 1.1(f);
         Lender: Preamble and Section 20.1;
         Loan: Subsection 2.1(a);
         Loan Documents: Subsection 2.1(a);
         Maturity Date: Note;
         Monthly Payment: Note;
         Net Proceeds: Subsection 4.4(b);
         Note: Recitals and Section 20.1;
         O&M Plan: Section 12.2;
         Other Charges: Subsection 3.4(a);
         Permitted Exceptions: Section 5.1;
         Personal Property: Subsection 1.1(e);
         Policies/Policy: Subsection 3.3(b);
         Prepayment Consideration: Note;
         Property: Section 1.1 and Section 20.1;
         Release: Section 12.1;
         Remediation: Section 12.1;
         Rents: Subsection 1.1 (f);
         Restoration: Subsection 3.3(d);
         Securities: Section 18.1;
         Security Instrument: Preamble;
         Taxes: Subsection 3.4(a);
         Transfer: Section 8.1;
         Uniform Commercial Code: Subsection 1.1(e).

                         ARTICLE 1 - GRANTS OF SECURITY

         SECTION 1.1 PROPERTY MORTGAGED. Borrower does hereby irrevocably deed,
mortgage, grant, bargain, sell, alien, enfeoff, hypothecate, remise, release,
pledge, assign, warrant, transfer, confirm, convey, and grant to Lender a lien
on, pledge of, and security interest in, the following property, rights,
interests, and estates now owned or hereafter acquired by Borrower to the full
extent of Borrower's right, title, and interest therein, including hereafter
acquired rights, interests, and property, and all products and proceeds thereof
and additions and accessions thereto (sometimes collectively referred to herein
as the "PROPERTY"):

         (a) LAND. The real property described in Exhibit A attached hereto and
made a part hereof (the "LAND"); TOGETHER with

         (b) ADDITIONAL LAND. All additional lands, estates, and development
rights now owned or hereafter acquired by Borrower for use in connection with
the Land and the development of the Land that 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 AND APPURTENANCES. 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,

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air rights and development rights, riparian rights, and all estates, rights,
titles, interests, privileges, liberties, servitudes, tenements, hereditaments
and appurtenances of any nature whatsoever, in any way now or hereafter
belonging, relating or pertaining to the Land and the Improvements and the
reversion and reversions, remainder and remainders, including any homestead or
other claim at law or in equity and any after-acquired title, franchises,
licenses, and any reversions and remainders thereof, 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 TANGIBLE PERSONAL PROPERTY. All inventory, machinery,
furniture, equipment, and fixtures (including all heating, air conditioning,
plumbing, lighting, communications and elevator fixtures) and other property of
every kind and nature whatsoever located upon the Land or the Improvements or
appurtenant thereto or used in connection with the present or future operation
or occupancy of the Land or the Improvements, including all materials intended
for construction, reconstruction, refurbishment, renovation, alterations, and
repairs to the Property (whether stored or located on or off the Property) (all
of the items described in Subsections 1.1(e) through 1.1(m) below are herein
sometimes collectively called the "PERSONAL PROPERTY"), including the right,
title and interest of Borrower in and to any of the Personal Property that may
be subject to any security interests, as defined in the Uniform Commercial Code,
as adopted and enacted by any state or states where any of the Property is
located (the "UNIFORM COMMERCIAL CODE") superior in lien to the lien of this
Security Instrument, such Personal Property to include, for example, the
following: (1) all furniture and furnishings, including carpets, rugs and other
floor coverings, draperies, drapery rods and brackets, awnings, window shades,
Venetian blinds, curtains, lighting fixtures, desk chairs, stools, pictures,
lamps, ash trays, waste baskets, clocks, radios, and all other furniture and
furnishings of every kind and nature whatsoever; (2) all cash registers, coin
machines, computers, word processing equipment, adding machines, calculators,
check protectors, postage meters, desks, chairs, tables, room dividers, filing
cabinets, safes, vaults, time clocks, time card machines, and other office
furniture, equipment and supplies of every kind and nature whatsoever; (3) all
right and interest of the Borrower in and to all equipment leases, personal
property leases, conditional sales contracts and similar agreements in and to
the telephone system (including the switching components thereof), television
sets, computer systems, refrigerator/bars, and point of sale computer systems
and/or inventory control systems; (4) all apparatus, machinery, motors, tools,
insurance proceeds, leases, and equipment, including fire sprinklers and alarm
systems, air conditioning, heating, refrigerating, electronic monitoring, window
or structural cleaning rigs, maintenance equipment, equipment for the
extermination or exclusion of vermin or insects, equipment for removal of dust,
debris, snow, refuse or garbage, and all other equipment of every kind; (5)
elevators, fittings, radiators, gas ranges, mechanical equipment, and all
plumbing, heating, lighting, cooking, laundry, ventilating, refrigerating,
incinerating, air conditioning, central energy and sprinkler equipment and
fixtures and appurtenances thereto; and (6) all renewals or replacements of any
of the foregoing, whether or not the same are or shall be attached to the
Improvements;

         (f) LEASES AND RENTS. All leases and other agreements affecting or
relating to the use, enjoyment or occupancy of all or any part of the Land or
the Improvements heretofore or hereafter entered into, whether before or after
the filing by or against Borrower of any petition for relief under 11 U.S.C.
sec. 101 ET SEQ. (the "BANKRUPTCY CODE"), as the same may be amended from time
to time (the "LEASES") and all right, title and interest of Borrower, its
successors and assigns therein and thereunder, including cash or securities
deposited thereunder to secure the performance by the lessees of their
obligations thereunder and all rents, additional rents, royalties, licenses,
payments (including payments pursuant to the exercise of any purchase option by
any tenant under any Lease), fees, revenues, income, receipts, charges,
accounts, accounts receivable, issues and profits and other benefits (including
all oil and

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gas or other mineral royalties and bonuses) from the Land or the Improvements
whether paid or accruing before or after the filing by or against Borrower of
any petition for relief under the Bankruptcy Code (collectively, the "RENTS")
and all proceeds from the sale or other disposition of the Leases and the right
to receive and apply the Rents to the payment of the Debt;

         (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
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 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) MISCELLANEOUS PERSONAL PROPERTY. All intangible property used in
connection with or generated by, located on or at or pertaining to the Property
including all general intangibles, payment intangibles, software, goodwill,
trademarks, trade names, service marks, logos, copyrights, option rights,
purchase contracts, contract rights, or leases of personal property and security
deposits received pursuant thereto, utility contracts, service contracts,
guaranties, warranties, telephone exchange numbers, licenses, government permits
and applications, approvals and other government rights relating to the Property
or the operation of the business thereon; all books and records; deposit
accounts, letter-of-credit rights, accounts, contract rights, instruments,
chattel paper, investment property, all rights of Borrower for payment of money
for property sold, rented or lent, for services rendered, for money lent, or
advances or deposits made; all claims, actions, and causes of action (including
those arising in tort, including commercial tort claims) of Borrower against
others; all agreements, contracts, certificates, instruments (including
promissory notes, guaranties, liens and all writings which evidence a right to
the payment of money), 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 Property or any part thereof or respecting any
business or activity conducted on the Property or any part thereof and all
right, title and interest of Borrower therein and thereunder, including the
right to receive and collect any sums payable to Borrower thereunder; all
extensions, improvements, betterments, replacements, renewals, or additions and
accessions to any of the foregoing; and any other intangible property of
Borrower related to the Property; and

         (k) PERSONAL PROPERTY AS DEFINED IN UNIFORM COMMERCIAL CODE. In
addition to any other property mentioned in this Section 1.1, all property in
which a security interest may be created pursuant to the Uniform Commercial Code
(or any similar laws) including all goods, inventory, equipment, accounts,
accounts receivable, contract rights, general intangibles, chattel paper,
documents, documents of title, instruments, deposit accounts, letter-of-credit
rights, investment property, tort claims (including commercial tort claims), and
securities located on or generated by or used in connection with the ownership
or operation of the Property;

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

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

         SECTION 1.2 ASSIGNMENT OF LEASES AND 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 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 a portion of the Rents
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 Debt, a security interest
in any of the Property that is deemed to be personal property to the full extent
that such property may be subject to the Uniform Commercial Code. This Security
Instrument shall be and is intended to serve as a financing statement under the
Uniform Commercial Code with respect to the Personal Property, and when filed
shall serve as a financing statement for all intents and purposes thereunder.
Borrower authorizes Lender to file financing statements describing the Personal
Property. Lender shall be entitled to all rights and remedies of a "secured
party" under the Uniform Commercial Code. Upon its recording in the real
property records, this Security Instrument shall be effective as a financing
statement filed as a fixture filing and when filed shall serve as a financing
statement for all intents and purposes thereunder. For purposes of this filing,
Borrower is the record owner of the Property. The name and mailing address of
Borrower, as debtor, and the name and mailing address of Lender, as secured
party, from which information concerning this Financing Statement may be
obtained, are set forth in the Preamble of this Security Instrument. The
Borrower shall immediately advise the Lender in writing of the opening of any
new place of business or the closing of any of its existing places of business,
or of any change in the location of the chief executive office of Borrower, or
the state of Borrower's organization, or Borrower's exact legal name, or the
places where the Personal Property, or any part thereof, or the books and
records concerning the Personal Property, or any part thereof, are kept.

         If any of the Property is deemed to be personal property, this Security
Instrument shall also constitute a security agreement with respect to such
personal property executed by Borrower as debtor in favor of Lender as Secured
Party. Upon the occurrence of an Event of Default, Lender may, in addition to
and not in derogation of any other rights and remedies of Lender under the Loan
Documents or applicable law, in accordance with Section 9-501(4) or 9-604 of the
Uniform Commercial Code, as applicable, or other such provisions of the Uniform
Commercial Code, elect (i) to proceed under and have all the rights and remedies
of a secured party under Article 9 of the Uniform Commercial Code and any other
applicable law, or (ii) to proceed as to both the real property and the personal
property in accordance with Lender's rights and remedies in respect of the real
property encumbered by this Security Instrument, whereupon at any foreclosure
sale conducted pursuant to this Security Instrument may offer the real and
personal property together as part of the same sale, with bids to be taken on
the whole of the real and personal property rather than separately.

         SECTION 1.4 PLEDGE OF MONIES HELD. Borrower hereby pledges to Lender
any and all items and monies now or hereafter held by Lender including any sums
deposited in escrow including in the Escrow Fund as additional security for the
Debt until expended or applied as provided in this Security Instrument.

                                       5
<PAGE>

         SECTION 1.5 COMMON LAW PLEDGE/ASSIGNMENT. To the extent that the
Uniform Commercial Code does not apply to any item of the Personal Property, it
is the intention of this Security Instrument that Lender have a common law
pledge and/or collateral assignment of such item of Personal Property.

                               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 Loan Documents, and shall abide by and comply with each
and every covenant and condition set forth in the Loan Documents, these presents
and the estate hereby granted shall terminate.

                    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 and obligations evidenced by or
arising under the following, which, together with all amendments or
modifications thereto and substitutions or replacements thereof are sometimes
herein collectively called the "LOAN DOCUMENTS": the Note; this Security
Instrument; any other documents or instruments evidencing and/or securing the
Note or now or hereafter executed by Borrower or others in connection with or
related to the indebtedness and loan that is evidenced by the Note ("LOAN")
including any assignments of leases and rents, security agreements, financing
statements, guarantys, indemnity agreements (including environmental indemnity
agreements), letters of credit, and escrow/holdback arrangements;

         (b) the payment of interest, default interest, late charges and other
sums, as provided in the Note, this Security Instrument, or any other Loan
Document;

         (c) Prepayment Consideration (as defined in the Note);

         (d) the payment of all other monies agreed or provided to be paid by
Borrower in the Note, this Security Instrument, or any other Loan Document;

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

         (f) the payment of all loans, debts, and advances by Lender, all
liabilities and claims of any kind or nature (in contract, tort or otherwise),
and costs and expenses (including reasonable attorneys' fees) incurred by Lender
in connection with the Debt or any part thereof, any renewal, extension,
modification, consolidation, change, substitution, replacement, restatement or
increase of 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 and whether or not evidenced by additional promissory notes or other
instruments;

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

                                       6
<PAGE>

         (h) the performance of each obligation of Borrower contained in the
Note in addition to the payment of the Debt and of Borrower contained in any
Loan Document; and

         (i) the performance of each obligation of Borrower contained in any
renewal, extension, modification, consolidation, change, substitution,
replacement for, restatement or increase of all or any part of the Note, this
Security Instrument or any other Loan Document.

                         ARTICLE 3 - BORROWER COVENANTS

         Borrower covenants and agrees that:

         SECTION 3.1 PAYMENT OF DEBT. Borrower shall 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 of the covenants,
conditions and agreements contained in the Note and each other Loan Document 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) INSURANCE. Borrower shall obtain and maintain, or cause to be
maintained, insurance for Borrower and the Property providing at least the
following coverages:

                  (i) PROPERTY INSURANCE. Insurance against loss or damage by,
or abatement of rental income resulting from, fire, lightning, windstorm, hail,
explosion, riot attending a strike, riot, civil commotion, aircraft, vehicles,
smoke, vandalism, malicious mischief, burglary and theft, earthquake (if
required by Lender), flood (meeting the requirements of the Federal Insurance
Administration, if any part of the Property is located in an area having special
flood hazards and for which flood insurance has been made available under the
National Flood Insurance Act of 1968 and any amendments or successor acts
thereto) and such other hazards, casualties and contingencies (including, but
not limited to, so-called "all risk" coverage), in an amount not less than the
lesser of (1) the full replacement cost of the Property, without deduction for
physical depreciation, or (2) the outstanding balance of the Debt, but in either
case in an amount sufficient to ensure that the insurer issuing such policies
would not deem Borrower to be a co-insurer under such policies;

                  (ii) BUSINESS INTERRUPTION. Business interruption and/or loss
of "rental income" insurance in an amount sufficient to avoid any co-insurance
penalty and to provide proceeds that will cover a period of not less than one
(1) year from the date of casualty or loss, the term "rental income" to mean the
sum of (A) the total then ascertainable Rents payable under the Leases and (B)
the total ascertainable amount of all other amounts to be received by Borrower
from third parties which are the legal obligation of the tenants, reduced to the
extent such amounts would not be received because of operating expenses not
incurred during a period of non-occupancy of that portion of the Property then
not being occupied;

                  (iii) BOILER AND MACHINERY. Broad form boiler and machinery
insurance (without exclusion for explosion) covering all boilers or other
pressure vessels, machinery, and equipment located in, on or about the Property
and insurance against loss of occupancy or use arising from any breakdown in
such amounts as are generally available at commercially reasonable premiums and
are generally required by institutional lenders for properties comparable to the
Property;

                                       7
<PAGE>

                  (iv) BUILDER'S RISK. During the course of any substantial
construction, repair, renovation or refurbishment of the Property, builder's
completed value risk insurance against all risks of physical loss, including
collapse and transit coverage, with a deductible not to exceed $25,000.00, in
non-reporting form, covering the total value of the work performed and
equipment, supplies and materials furnished;

                  (v) ORDINANCE/LAW COVERAGE. Ordinance or law coverage to
compensate for the cost of demolition and the increased cost of construction if
the Property is a non-conforming use;

                  (vi) PERSONAL PROPERTY. Insurance against loss or damage to
the Personal Property described herein, by fire and other risks covered by "All
Risk Replacement Cost Insurance," in an amount not less than the full
replacement cost of the Personal Property, including the cost of debris removal,
with a deductible of not more than $25,000.00;

                  (vii) LIABILITY INSURANCE. Borrower agrees to carry and
maintain liability and indemnity insurance, including without limitation water
damage insurance and the so-called assumed and contractual liability coverage,
in forms, in the minimum amount of $3,000,000.00 per occurrence, including broad
form property damage, blanket contractual and personal injuries (including death
resulting therefrom) coverages;

                  (viii) WORKERS COMPENSATION INSURANCE. Workers' compensation
insurance (including employer's liability insurance) for all employees of
Borrower or affiliated entities which are engaged on or with respect to the
Property or the business operations thereon, in such amount as is satisfactory
to Lender. Borrower shall also require the managing agent for the Property to
carry such insurance; and

                  (ix) OTHER INSURANCE. Such other insurance with respect to the
Property against loss or damage of the kinds from time to time customarily
insured against and in such amounts as are generally available at commercially
reasonable premiums and are generally required by institutional lenders for
properties comparable to the Property.

         (b) INSURANCE POLICIES. 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") issued by one or more insurers satisfactory to
Lender in its sole discretion and having a rating of A:V or better by Best's Key
Rating Guide. All insurers providing insurance required by this Security
Instrument shall be authorized to issue insurance in the state in which the
Property is located. The Policy referred to in Subsection 3.3(a)(i) above shall
name Lender as an additional named insured and all Policies other than those
referred to in Sections 3.3(a)(vii) and (viii) above shall provide that all
proceeds be payable to Lender as set forth in Section 4.4 hereof and shall also:
(1) contain a standard "non-contributory mortgagee" endorsement or its
equivalent relating, inter alia, to recovery by Lender notwithstanding the
negligent or willful acts or omission of Lender; (2) contain a waiver of
subrogation endorsement as to Lender; and (3) be approved by Lender in its sole
discretion as to amounts, form, risk coverage, deductibles, loss payees and
insureds. All Policies shall contain (i) a provision that such Policies shall
not be cancelled or terminated, nor shall they expire, without at least thirty
(30) days prior written notice to Lender in each instance; and (ii) include
effective waivers by the insurer of all claims for Insurance Premiums against
any loss payees, additional insureds and named insureds (other than Borrower).
Certificates of insurance with respect to all renewal and replacement Policies
shall be delivered to Lender not less than thirty (30) days prior to the
expiration date of any of the Policies required to be maintained hereunder which
certificates shall bear notations evidencing payment of applicable premiums (the
"INSURANCE PREMIUMS"). Duplicate originals of such replacement Policies shall be
delivered to Lender promptly after Borrower's receipt thereof but in any case
within thirty (30) days after the effective date thereof. If Borrower fails to
maintain and deliver to Lender the original Policies or certificates of

                                       8
<PAGE>

insurance required by this Security Instrument, upon ten (10) days prior notice
to Borrower, Lender may procure such insurance at Borrower's sole cost and
expense.

         (c) COMPLIANCE WITH INSURANCE REQUIREMENTS. Borrower shall comply with
all insurance requirements and shall not bring or keep or permit to be brought
or kept any Article upon any of the Property or cause or permit any condition to
exist thereon which would be prohibited by an insurance requirement, or would
invalidate the insurance coverage required hereunder to be maintained by
Borrower on or with respect to any part of the Property pursuant to this Section
3.3.

         (d) RESTORATION. 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 provided that Borrower shall have received the Net
Proceeds, Borrower 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.

         (e) BLANKET INSURANCE POLICIES. The insurance coverage required under
Section 3.3(a) may be effected under a blanket policy or policies covering the
Property and other properties and assets not constituting a part of the security
hereunder; provided that any such blanket policy shall specify, except in the
case of public liability insurance, the portion of the total coverage of such
policy that is allocated to the Property, and any sub-limit in such blanket
policy applicable to the Property, and shall in any case comply in all other
respects with the requirements of this Section 3.3. Lender may make such other
requirements with respect to blanket insurance as Lender may deem appropriate or
desirable from time to time.

         (f) ABSOLUTE TRANSFER ON FORECLOSURE. In the event of a foreclosure of
this Security Instrument or other transfer of title to the Property
extinguishing the Debt or the lien of this Security Instrument, all right, title
and interest of Borrower in and to any insurance policies then in force shall
pass to and are hereby assigned by Borrower to the purchaser or grantee.

         SECTION 3.4 PAYMENT OF TAXES, ETC.

         (a) Borrower shall pay by their due date 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 shall 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 Loan Documents, (ii) Borrower is permitted to do so under the provisions of
any other mortgage, deed of trust

                                       9
<PAGE>

or deed to secure Debt affecting the Property (it not being implied by this
clause that any such encumbrance will be permitted), (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 interest
therein will be in danger of being sold, forfeited, terminated, cancelled or
lost, (vi) Borrower shall have set aside 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 reasonably requested
by Lender to insure the payment of any contested Taxes, together with all
interest and penalties thereon, taking into consideration the amount in the
Escrow Fund available for payment of Taxes.

         SECTION 3.5 TAX AND INSURANCE ESCROW FUND. At the option of the Lender,
Lender may require Borrower to establish an Escrow Fund sufficient to discharge
its obligations for the payment of Insurance Premiums and Taxes one month prior
to their due dates pursuant to Sections 3.3 and 3.4 hereof. Initial deposits of
Taxes and Insurance Premiums shall be made by Borrower to Lender in amounts
determined by Lender in its discretion on the date hereof to be held by Lender
in escrow. Additionally, 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 one month prior to the due
dates established by the appropriate taxing authority during the next ensuing
twelve (12) months and (b) 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 one month prior to the expiration thereof (the initial deposits
together with the amounts in (a) and (b) above shall be called the "ESCROW
FUND"). 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 obtained knowledge and authorizes Lender or its agent
to obtain the bills for Taxes and Other Charges directly from the appropriate
tax 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. Provided there are sufficient amounts in
the Escrow Fund and no Event of Default exists, Lender shall be obligated to pay
the Taxes and Insurance Premiums as they become due on their respective due
dates on behalf of Borrower by applying the Escrow Fund to the payments of such
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 reasonably 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. Unless otherwise required by
Applicable Law, 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. Lender may participate in any such proceedings
to the extent permitted by law. Borrower shall deliver to Lender all instruments
requested by it to permit such participation. Borrower shall, at its expense,
diligently prosecute any such proceedings, and shall consult with Lender, its
attorneys and experts, and cooperate with them in the carrying on or defense of
any 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

                                       10
<PAGE>

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 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.
Borrower shall cause any award or payment payable to Borrower in any
condemnation to be paid directly to Lender. Lender shall apply any such award or
payment (after deducting any expenses of collection) to the reduction or
discharge of the Debt (whether or not then due and payable). No Prepayment
Consideration (as defined in the Note) shall be payable solely in connection
with such application; provided, however, that notwithstanding the foregoing, if
an Event of Default is existing as of the date of the condemnation, or an event
has occurred as of the date of the condemnation that with notice and/or the
passage of time, or both, would constitute an Event of Default hereunder, then
any condemnation awards or proceeds applied to the Debt pursuant to this Section
shall be subject to the Prepayment Consideration (as defined in the Note)
computed in accordance with the terms of the Note. If the Property or any
portion thereof is taken by the power of eminent domain, Borrower shall promptly
commence and diligently prosecute the restoration of the Property in accordance
with Section 4.4 of this Security Instrument. 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 fully satisfy the Debt.

         SECTION 3.7 LEASES AND RENTS. Borrower shall comply at all times with
that certain Assignment of Leases and Rents of even date herewith executed by
Borrower in favor of Lender, which is incorporated herein by this reference as
though fully set forth herein.

         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
(unless such Personal Property is replaced with personal property of equal or
better quality) 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 or Improvement 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 ("waste" meaning the diminution in the Property's value resulting from
Borrower's negligent or willful failure to manage, maintain, repair and
otherwise operate the Property in a commercially reasonable manner) 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
shall 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.

                                       11
<PAGE>

         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 the Property and the use thereof
("APPLICABLE LAW").

         (b) Borrower shall from time to time, upon Lender's request, provide
Lender with evidence reasonably 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 that would materially 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 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.

         (e) 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 Applicable Laws affecting the Property,
provided that (i) no Event of Default has occurred and is continuing under the
Note, this Security Instrument or any of the Loan Documents; (ii) Borrower is
permitted to do so under the provisions of any other mortgage, deed of trust or
deed to secure Debt affecting the Property; (iii) such 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; (iv) neither the Property nor any part thereof or interest therein
nor any of the tenants or occupants thereof shall be affected in any material
adverse way as a result of such proceeding; and (v) Borrower shall have
furnished to Lender all other items reasonably requested by Lender.

         SECTION 3.11 BOOKS AND RECORDS.

         (a) Borrower shall keep adequate books and records of account in
accordance with methods acceptable to Lender in its sole discretion and
consistently applied and shall furnish to Lender:

                  (i) Within ninety (90) days after the close of each fiscal
year of Borrower, Borrower shall deliver or cause to be delivered to Lender: (A)
an annual rent roll, certified by the Borrower's chief financial officer (or
other person acceptable to Lender); (B) an annual operating statement of the
Property, certified by the Borrower's chief financial officer (or other person
acceptable to Lender); and (C) an annual balance sheet of Borrower certified by
the Borrower's chief financial officer (or other person acceptable to Lender).

                  (ii) For each Guarantor, Borrower shall deliver, or cause to
be delivered to Lender within ninety (90) days after the close of the fiscal
year of such Guarantor (A) an annual balance sheet and profit and loss statement
of such Guarantor certified by such Guarantor's chief financial officer (or
other person acceptable to Lender) if such Guarantor is an entity, or (B) a
signed personal financial

                                       12
<PAGE>

statement (on a financial statement form satisfactory to Lender in its sole
discretion) if such Guarantor is an individual.

                  (iii) For the first 12 months after the date of this Security
Instrument, Borrower shall deliver, or cause to be delivered, all of the
following with respect to the previous calendar month within 21 days after the
close of each calendar month, all to be certified by the Borrower's chief
financial officer (or other person acceptable to Lender): (A) monthly rent
roll(s); (B) monthly operating statement(s) of the Property; and (C) year to
date operating statement(s) of the Property.

                  (iv) Beginning 13 months after the date of this Security
Instrument, Borrower shall deliver, or cause to be delivered, all of the
following with respect to the previous fiscal quarter within 30 days after the
close of each fiscal quarter, all to be certified by the Borrower's chief
financial officer (or other person acceptable to Lender): (A) a quarterly rent
roll; (B) a quarterly operating statement of the Property; and (C) a year to
date operating statement of the Property.

         (b) Annually, no later than each February 1 during the term of the
Note, Borrower shall deliver to Lender, for Lender's approval in its sole
discretion, a report (the "LEASING REPORT") setting forth the minimum economic
terms that Borrower proposes for use in connection with the standard lease form
for leases of portions of the Property during the twelve month period beginning
upon such anniversary date. The terms set forth in the Leasing Report shall
reflect the prevailing market conditions for like properties in the locality of
the Property.

         (c) Immediately upon Borrower's receipt of such information, but in no
event less frequently than annually, Borrower shall deliver to Lender, in form
satisfactory to Lender, information regarding the sales and/or receipts of each
tenant of the Property who is required to report such information to Borrower
pursuant to such tenant's Lease or otherwise.

         (d) Upon reasonable request from Lender, Borrower and its affiliates
shall furnish 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 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.

         (e) Borrower and its affiliates shall furnish Lender with such other
additional financial or management information as may, from time to time, be
reasonably required by Lender in form and substance satisfactory to Lender.

         SECTION 3.12 PAYMENT FOR LABOR AND MATERIALS. Borrower shall 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

                                       13
<PAGE>

thereof any other or additional lien or security interest other than the liens
or security interests hereof, except for the Permitted Exceptions.

         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.

         SECTION 3.14 CHANGE OF NAME, IDENTITY OR STRUCTURE. Borrower shall not
change Borrower's name, identity (including its trade name or names) or, if not
an individual, Borrower's corporate, partnership or other structure, or its
state of organization, without notifying the Lender of such change in writing at
least thirty (30) days prior to the effective date of such change and, in the
case of a change in Borrower's structure, without first obtaining the prior
written consent of the Lender.

         SECTION 3.15 EXISTENCE. Borrower shall continuously maintain (a) its
existence and shall not dissolve or permit its dissolution, (b) its rights to do
business in the state where the Property is located and (c) its franchises and
trade names.

                          ARTICLE 4 - SPECIAL COVENANTS

         Borrower covenants and agrees that:

         SECTION 4.1 PROPERTY USE. The Property shall be used only for the use
approved by Lender in connection with the making of the Loan and for no other
use without the prior written consent of Lender.

         SECTION 4.2 ERISA.

         (a) Borrower shall not engage in any transaction that 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 any other Loan
Document) 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(3) 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:

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

                  (ii) 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. sec. 2510.3-101(f)(2); or

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

                                       14
<PAGE>

         SECTION 4.3 SINGLE PURPOSE ENTITY.

         (a) LIMITED PURPOSE. As long as the Loan is outstanding, Borrower by
execution of this Security Instrument represents, warrants and covenants that it
(i) has been and shall continue to be organized solely for the limited purpose
of acquiring, owning, improving, leasing, managing, operating, holding for
investment and selling or otherwise disposing of the Property and doing only
those things necessary in connection therewith, (ii) shall not engage in any
other business, (iii) shall have no other purpose, (iv) shall not own or acquire
any real property other than the real estate included in the Property or any
personal (tangible or intangible) property other than personal property included
in the Property or in furtherance of the purposes of Borrower as stated herein,
and (v) shall not incur, create, or assume any indebtedness or liabilities,
secured or unsecured, direct or contingent, other than (A) the Loan and (B)
unsecured indebtedness that represents trade payables or accrued expenses
occurring in the normal course of business of owning and operating the Property
that are due and payable within thirty (30) days after the date incurred.

         (b) PROHIBITED ACTIONS. Borrower by execution of this Security
Instrument represents, warrants, and covenants that it has not taken and shall
not take any of the following actions:

                  (i) without the unanimous written consent of all of its
         partners or members, as applicable, and the unanimous written consent
         of all of the members of the board of Managers including without
         limitation the Independent Manager (as hereinafter defined), take any
         "BANKRUPTCY ACTION", which is defined to include without limitation:

                           (A) taking any action that might cause Borrower to
                  become insolvent;

                           (B) commencing any case, proceeding or other action
                  on behalf of Borrower or under any existing or future law of
                  any jurisdiction relating to bankruptcy, insolvency,
                  reorganization or relief of debtors;

                           (C) instituting proceedings to have Borrower
                  adjudicated as bankrupt or insolvent;

                           (D) consenting to the institution of bankruptcy or
                  insolvency proceedings against Borrower;

                           (E) filing a petition or consent to a petition
                  seeking reorganization, arrangement, adjustment, winding-up,
                  dissolution, composition, liquidation or other relief on
                  behalf of Borrower of its debts under any federal or state law
                  relating to bankruptcy;

                           (F) seeking or consenting to the appointment of a
                  receiver, liquidator, assignee, trustee, sequestrator,
                  custodian or any similar official for Borrower or a
                  substantial portion of its properties;

                           (G) admitting in writing Borrower's inability to pay
                  debts generally as they become due;

                           (H) making any assignment for the benefit of
                  Borrower's creditors; or

                           (I) taking any action in furtherance of the
                  foregoing;

                                       15
<PAGE>

                  (ii) dissolve, liquidate or terminate in whole or in part, or
         consolidate with or merge into any person or entity, or sell, transfer
         or otherwise dispose of or encumber all or substantially all of its
         assets or change its legal structure;

                  (iii) amend or recommend the amendment of any formation or
         organizational document of Borrower unless (i) Lender consents to such
         amendment and (ii) following any securitization of the Loan, the
         applicable rating agencies confirm in writing that such change will not
         result in the qualification, withdrawal or downgrade of any securities
         ratings;

                  (iv) fail to preserve its existence as an entity duly
         organized, validly existing and in good standing (if required) under
         the applicable laws of the jurisdiction of its organization or
         formation;

                  (v) terminate or fail to comply with the provisions of its
         organizational documents; or

                  (vi) engage in any business or activity that is not consistent
         with the purposes of Borrower as set forth in Section 4.3(a) above.

         (c) SEPARATENESS COVENANTS. Except as otherwise expressly required by
any Loan Document, Borrower by execution of this Security Instrument represents,
warrants, and covenants that it shall at all times:

                  (i) not commingle assets with those of any other entity,

                  (ii) hold its assets in its own name;

                  (iii) conduct its own business in its own name;

                  (iv) maintain its bank accounts, books, records and financial
         statements in accordance with generally accepted accounting principles,
         keep such bank accounts, books, records and financial statements
         separate from those of any other person or entity, and not permit the
         listing of its assets on the financial statement of any other person or
         entity;

                  (v) maintain its books, records, resolutions and agreements as
         official records;

                  (vi) pay its own liabilities out of its own funds;

                  (vii) maintain adequate capital in light of its contemplated
         business operations;

                  (viii) observe all organizational formalities;

                  (ix) maintain an arm's-length relationship with Affiliates and
         enter into transactions with Affiliates only on a commercially
         reasonable basis;

                  (x) pay the salaries of only its own employees and maintain a
         sufficient number of employees in light of contemplated business
         operations;

                  (xi) not guarantee or become obligated for the debts of any
         other entity or hold out its credit as being available to satisfy the
         obligations of others;

                                       16
<PAGE>

                  (xii) not acquire the obligations or securities of its
         Affiliates or owners, including partners, members or shareholders;

                  (xiii) not make loans or advances to any other person or
         entity;

                  (xiv) allocate fairly and reasonably any overhead for shared
         office space;

                  (xv) use separate stationery, invoices and checks;

                  (xvi) file its own tax returns (unless prohibited by
         applicable laws from doing so);

                  (xvii) not pledge its assets for the benefit of any other
         person or entity;

                  (xviii) hold itself out as a separate entity, and not fail to
         correct any known misunderstanding regarding its separate identity;

                  (xix) not identify itself as a division of any other person or
         entity; and

                  (xx) observe the single purpose entity and separateness
         covenants and requirements set forth herein.

         (d) ORGANIZATIONAL DOCUMENTS. The organizational documents of Borrower
shall provide that:

                  (i) the business and affairs of Borrower shall be managed by
         or under the direction of a board of one or more managers, provided
         that at all times there shall be at least two duly appointed
         independent directors (collectively "INDEPENDENT MANAGERS") of Borrower
         reasonably satisfactory to Lender who shall not have been at the time
         of each individual's initial appointment, and shall not have been at
         anytime during the proceeding five years, either:

                           (A) an equity owner, officer, director, manager,
                  partner, attorney, counsel, member or employee of Borrower or
                  its members, subsidiaries or Affiliates;

                           (B) a customer of, a supplier to, or any other person
                  or entity that derives any of its purchases or revenues from
                  activities with, Borrower or any of its members, subsidiaries
                  or Affiliates;

                           (C) a person or entity who controls or is under
                  common control with any such shareholder, partner, officer,
                  director, member, employee, supplier, customer or Affiliates;
                  or

                           (D) a member of the immediate family of any such
                  shareholder, director, officer, partner, member, employee,
                  supplier, customer or Affiliates;

                  (ii) Borrower shall not take any action which, under the terms
         of its articles of organization, operating agreement or other
         organizational documents, requires the written consent of the
         Independent Managers without obtaining the written consent of the
         Independent Managers.

         (e) The organizational documents of Borrower shall provide that, as
long as any Debt remains outstanding, upon the occurrence of any event that
causes the sole member of Borrower to cease to be a member of Borrower (other
than (i) upon an assignment by such member of all of its limited liability
company interest in Borrower and the admission of the transferee, if permitted
pursuant to the

                                       17
<PAGE>
organizational documents of Borrower and the Loan Documents, or (ii) the
resignation of such member and the admission of an additional member of
Borrower, if permitted pursuant to the organizational documents of Borrower and
the Loan Documents), each person acting as an Independent Manager of Borrower
shall, without any action of any person or entity and simultaneously with the
sole member of Borrower ceasing to be a member of Borrower, automatically be
admitted as a member of Borrower (the "Special Member") and shall preserve and
continue the existence of Borrower without dissolution. The organizational
documents of Borrower shall further provide that for so long as any Debt is
outstanding, no Special Member may resign or transfer its rights as Special
Member unless (i) a successor Special Member has been admitted to Borrower as a
Special Member, and (ii) such successor Special Member has also accepted its
appointment as an Independent Manager.

         (f) Borrower agrees to deliver to Lender such legal opinions as may be
requested by Lender (rendered by counsel satisfactory to Lender) relating to (i)
the enforceability of Borrower's organizational documents and (ii) any other
matters related to or affected by Borrower's organizational existence as a
Delaware single member limited liability company. All such legal opinions will
be addressed to Lender and, if applicable, to the applicable rating agencies,
and shall be in form and substance satisfactory to Lender.

         (g) DEFINITIONS. As used in this Section, the following terms shall
have the meanings set forth herein:

                  (i) "AFFILIATE" means a person or entity that directly or
         indirectly (through one or more intermediaries) controls, is controlled
         by, or is under common control of or with, the person or entity
         specified; and

                  (ii) "CONTROL" means (A) whether directly or indirectly,
         ownership or control of the power to vote ten percent (10%) or more of
         the outstanding equity interests of any such entity, (B) the control in
         any manner of the election of more than one director or trustee (or
         persons exercising similar functions) of such entity, or (C) the
         possession of the power to direct or cause the direction of the
         management and/or policies of such entity, whether through the
         ownership of voting securities, by contract, or otherwise.

         (h) INJUNCTIVE RELIEF. Borrower by execution of this Security
Instrument acknowledge and agree with Lender that Lender would be irreparably
damaged if any of the covenants of this Section 4.3 are breached or not
performed in accordance with their specific terms and that monetary damages
would not provide an adequate remedy in such event. Accordingly, it is agreed
that, in addition to any other remedy to which Lender may be entitled, at law or
in equity, Lender shall be entitled to injunctive relief to prevent or remedy
breaches of the provisions of this Section 4.3 and specifically to enforce the
terms and provisions of this Section 4.3 in any action instituted in any court
of the United States or any state thereof having subject matter jurisdiction
thereof.

         SECTION 4.4 RESTORATION AFTER CASUALTY. In the event of a casualty, the
following provisions shall apply in connection with the Restoration of the
Property:

         (a) If (i) the Net Proceeds do not exceed $30,000.00 ("CASUALTY
AMOUNT"), (ii) the costs of completing the Restoration as reasonably estimated
by Borrower shall be less than or equal to the Casualty Amount, (iii) no Event
of Default shall have occurred and be continuing under the Note, this Security
Instrument or any other Loan Document, (iv) 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 (including, without
limitation, all applicable Environmental Laws, and (v) such fire or other
casualty does not materially impair access to the Property or the Improvements,
then the Net Proceeds will be disbursed directly to Borrower and Borrower shall
commence and diligently prosecute to

                                       18
<PAGE>

completion, the Restoration of the Property to as nearly as possible the
condition it was in immediately prior to such fire or other casualty or to such
taking. Except upon the occurrence and continuance of an Event of Default,
Borrower shall settle any insurance claims with respect to the Net Proceeds that
in the aggregate are less than or equal to the Casualty Amount. Lender shall
have the right to participate in and reasonably approve any settlement for
insurance claims with respect to the Net Proceeds that in the aggregate are
equal to or greater than the Casualty Amount. If an Event of Default shall have
occurred and be continuing, Borrower hereby irrevocably empowers Lender, in the
name of Borrower as its true and lawful attorney-in-fact, to file and prosecute
such claim and to collect and to make receipt for any such payment. If the Net
Proceeds are received by Borrower, such Net Proceeds shall, until the completion
of the related work, be held in trust for Lender and shall be segregated from
other funds of Borrower to be used to pay for the cost of the Restoration in
accordance with the terms hereof.

         (b) If the Net Proceeds are greater than the Casualty Amount, such Net
Proceeds shall, subject to the provisions of the Leases that are superior to the
lien of this Security Instrument or with respect to which subordination,
non-disturbance agreements binding upon Lender have been entered into concerning
the deposits of Net Proceeds, be forthwith paid to Lender to be held by Lender
in a segregated account to be made available to Borrower for the Restoration in
accordance with the provisions of this Subsection 4.4(b). Borrower shall
commence and diligently prosecute to completion, the Restoration. The term "NET
PROCEEDS" for purposes of this Section 4.4 shall mean the net amount of all
insurance proceeds under the Policies carried pursuant to Subsections 3.3(a)(i)
(Property Insurance), (ii) (Business Interruption), (iii) (Boiler and
Machinery), (iv) (Builder's Risk), (v) (Ordinance/Law Coverage), and (vi)
(Personal Property) of this Security Instrument as a result of such damage or
destruction, after deduction of Borrower's reasonable costs and expenses
(including, but not limited to reasonable counsel fees), if any, in collecting
the same.

                  (i) The Net Proceeds shall be made available to Borrower for
payment of, or reimbursement of Borrower's reasonable and customary expenses in
connection with, the Restoration, subject to the following conditions:

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

                           (B) Lender shall, within a reasonable period of time
prior to request for initial disbursement, be furnished with an estimate of the
cost of the Restoration accompanied by an independent architect's certification
as to such costs and appropriate plans and specifications for the Restoration,
which plans and specifications shall be subject to Lender's approval;

                           (C) the Net Proceeds, together with any cash or cash
equivalent deposited by Borrower with Lender, are sufficient to cover the cost
of the Restoration as such costs are certified by the independent architect;

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

                           (E) Lender shall be satisfied that any operating
deficits, including all scheduled payments of principal and interest under the
Note that will be incurred with respect to the Property as a result of the
occurrence of any such fire or other casualty or taking, whichever the case may
be, will be covered out of (1) the Net Proceeds, or (2) other funds of Borrower;

                           (F) Lender shall be satisfied that, upon the
completion of the Restoration and related lease-up, if applicable, the net cash
flow of the Property will be restored to a level sufficient to

                                       19
<PAGE>

cover all carrying costs and operating expenses of the Property, including,
without limitation, debt service on the Note at a coverage ratio (after
deducting replacement reserve requirements and reserves for tenant improvements
and leasing commissions from net operating income) equal to or greater than the
coverage ratio calculated and assumed by Lender in connection with the
origination of the Loan or, if lower, the coverage ratio that existed as of the
date immediately preceding such casualty;

                           (G) the Restoration can reasonably 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) the earliest date required for such completion
under the terms of any Leases and (3) such time as may be required under
applicable zoning law, ordinance, rule or regulation in order to repair and
restore the Property to as nearly as possible the condition it was in
immediately prior to such casualty;

                           (H) 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 (including, without limitation,
all applicable Environmental Laws); and

                           (I) such casualty does not materially impair
post-Restoration access to the Land or the Improvements.

                  (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 other than
the Net Proceeds paid under the Policy described in Subsection 3.3(a)(ii)
(Business Interruption) 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 that have not either been fully bonded 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) 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 an independent consulting engineer, architect, or other expert
selected by Lender (the "CASUALTY CONSULTANT"), such acceptance not to be
unreasonably withheld or delayed. 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. 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
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

                                       20
<PAGE>

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 that 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 other Loan
Document.

         (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) shall be retained and applied by Lender toward the
payment of the Debt whether or not then due and payable in such order, priority
and proportions as Lender in its discretion shall deem proper or, at the sole
discretion of Lender, the same shall be paid, either in whole or in part, to
Borrower. If Lender shall receive and retain Net Proceeds, the lien of this
Security Instrument shall be reduced only by the amount 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, marketable and
indefeasible 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 free 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

                                       21
<PAGE>

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 Loan Documents.

         SECTION 5.4 VALIDITY OF DOCUMENTS. (a) The execution, delivery and
performance of the Note, this Security Instrument and the Loan Documents and the
borrowing evidenced by the Note (i) are within the power and authority of
Borrower; (ii) have been authorized by all requisite organizational 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 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
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
Loan 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 Borrower, any person guaranteeing the payment of the Debt
or any portion thereof or performance by Borrower of any terms of this Security
Instrument (a "GUARANTOR"), if any, any person liable under that certain
Environmental Indemnity Agreement of even date herewith or any other indemnity
agreement entered into in favor of Lender in connection with the Loan
("INDEMNITOR"), if any, or against or affecting the Property that (a) has not
been disclosed to Lender, and has a material, adverse effect on the Property or
Borrower's, any Guarantor's or any Indemnitor's ability to perform its
obligations under the Note, this Security Instrument or the Loan Documents, or
(b) is not adequately covered by insurance, each as determined by Lender in its
sole and absolute discretion.

         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 National Flood Insurance Act
of 1968 or 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, or,
if any

                                       22
<PAGE>

portion of the Improvements is now or at any time in the future located within
any 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.

         (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.

         (k) All security deposits relating to the Leases reflected on the
certified rent roll delivered to Lender have been collected by Borrower except
as noted on the certified rent roll.

         (l) Borrower has received no notice of an actual or threatened
condemnation or eminent domain proceeding by any public or quasi-public
authority.

         (m) All the Improvements lie within the boundaries of the Property.

         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.

                                       23
<PAGE>

         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. Except as disclosed in the rent roll for the
Property delivered to and approved by Lender, (a) Borrower is the sole owner of
the entire lessor's interest in the Leases; (b) the Leases are valid and
enforceable; (c) the current terms of the Leases including all effective
alterations, modifications and amendments to the Leases are reflected in the
certified rent roll delivered to and approved by Lender; (d) none of the Rents
reserved in the Leases have been assigned or otherwise pledged or hypothecated
(except to Lender); (e) none of the Rents have been collected for more than one
(1) month in advance (except a security deposit shall not be deemed rent
collected in advance); (f) the premises demised under the Leases have been
completed and the tenants under the Leases have accepted the same and have taken
possession of the same on a rent-paying basis; (g) there exist no offsets or
defenses to the payment of any portion of the Rents; (h) Borrower has received
no notice from any tenant challenging the validity or enforceability of any
Lease; (i) there are no agreements with the tenants under the Leases other than
expressly set forth in each Lease; (j) the Leases are valid and enforceable
against Borrower and the tenants set forth therein; (k) no Lease contains an
option to purchase, right of first refusal to purchase, or any other similar
provision; (l) 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 (other
than a Residential Lease, as defined in the Assignment of Leases and Rents of
even date herewith) is subordinate to this Security Instrument, either pursuant
to its terms or a recorded subordination agreement; (n) no Lease has the benefit
of a non-disturbance agreement that would be considered unacceptable to prudent
institutional lenders; and (o) no brokerage commissions or finders fees are due
and payable regarding any Lease.

         SECTION 5.11 FINANCIAL CONDITION. 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 it has received
reasonably equivalent value for the granting of this Security Instrument.

         SECTION 5.12 BUSINESS PURPOSES.

         [Reserved.]

         SECTION 5.13 TAXES. Borrower, any Guarantor and any Indemnitor have
filed, or timely obtained extensions for the filing of, 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 Article 16, is
true and correct.

                                       24
<PAGE>

         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 financial 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 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.

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

         SECTION 5.18 ILLEGAL ACTIVITY. No portion of the Property has been or
will be purchased, improved, fixtured, equipped or furnished with proceeds of
any criminal or other illegal activity and to the best of Borrower's knowledge,
there are no illegal activities or activities relating to controlled substances
at the Property.

                    ARTICLE 6 - DEBTOR/CREDITOR RELATIONSHIP

         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 or the Loan Documents
shall be construed so as to deem the relationship between Borrower and Lender to
be other than that of debtor and creditor.

                         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, shall cause this Security Instrument and any of the Loan Documents
creating a lien or security interest or evidencing the lien hereof upon the
Property and each instrument of further assurance to be filed, registered or
recorded in such manner and in such places as may be required by any present or
future law in order to publish notice of and fully to protect and perfect the
lien or security interest hereof upon, and the interest of Lender in, the
Property. Borrower shall 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 Loan 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 shall, 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,
reasonably require, for the better assuring, conveying, assigning, transferring,
and confirming unto Lender the property and rights hereby mortgaged, granted,
bargained, sold, conveyed,

                                       25
<PAGE>

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, shall 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 instruments, to evidence or perfect 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
pursuant to this Section 7.2 or Section 7.1.

         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 shall 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 shall 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 or other governmental authorities shall
require revenue or other stamps to be affixed to the Note, this Security
Instrument, or any of the Loan Documents or impose any other tax or charge on
the same, Borrower shall pay for the same, with interest and penalties thereon,
if any.

         SECTION 7.4 ESTOPPEL CERTIFICATES.

         (a) Within ten days after any request by Lender, Borrower shall furnish
Lender with a statement, duly acknowledged and certified in such form as Lender
may reasonably request, setting forth (i) the original principal amount of the
Note, (ii) the then current unpaid principal balance of the Note, (iii) the then
applicable rate of interest on the Note, (iv) the date the most recent
installment of interest and/or principal under the Note was paid, (v) any
offsets or defenses to the payment of the Debt, if any, and (vi) that the Note,
this Security Instrument and the other Loan Documents are valid, legal and
binding obligations of Borrower and have not been modified or amended (or, if
so, giving the particulars of such modifications or amendments).

         (b) Within ten days after any request by Lender, Borrower shall furnish
Lender with estoppel certificates from any tenants of the Property (other than
tenants under Residential Leases) in such form and containing such information
as Lender may reasonably require.

         SECTION 7.5 FLOOD INSURANCE. Within fifteen (15) days after Lender's
request, Borrower shall deliver evidence satisfactory to Lender that no portion
of the Improvements is situated in a

                                       26
<PAGE>

federally designated "special flood hazard area" or, if it is, that Borrower has
obtained insurance meeting the requirements of Section 3.3(a)(i).

         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
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 secured by this Security Instrument, and containing terms,
provisions and clauses no less favorable to Borrower than those contained herein
and in the Note, and such other documents and instruments as may be required by
Lender to effect the splitting of the Note and this Security Instrument.

         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 Loan Document that is not of public record, and, in the case of any such
mutilation, upon surrender and cancellation of such Note or Loan Document,
Borrower shall issue, in lieu thereof, a replacement Note or Loan Document,
dated the date of such lost, stolen, destroyed or mutilated Note or Loan
Document in the same principal amount thereof and otherwise of like tenor.

         SECTION 7.8 AMENDED FINANCING STATEMENTS. Borrower shall execute and
deliver to the Lender, prior to or contemporaneously with the effective date of
any such change, any financing statement or financing statement change required
by the Lender to establish or maintain the validity, perfection and priority of
the security interest granted herein. At the request of the Lender, Borrower
shall execute a certificate in form satisfactory to the Lender listing the trade
names under which Borrower intends to operate the Property, and representing and
warranting that Borrower does business under no other trade name with respect to
the Property.

             ARTICLE 8 - DUE ON SALE/ENCUMBRANCE/CHANGE IN BORROWER

         SECTION 8.1 NO SALE/ENCUMBRANCE/CHANGE OF OWNERSHIP WITHOUT CONSENT.
Borrower acknowledges that Lender has examined and relied on the
creditworthiness and experience of Borrower and Guarantor (if any) and
Indemnitor (if any) in agreeing to make the Loan secured hereby. Borrower agrees
that Borrower shall not, without the prior written consent of Lender, which may
be given or withheld in its sole and absolute discretion, do or permit any of
the following (hereinafter any of the following is sometimes referred to as a
"TRANSFER"): sell, convey, mortgage, grant, bargain, encumber, pledge, assign,
or otherwise transfer the Property or any part thereof or interest therein
(legal or equitable) or permit the Property or any part thereof to be sold,
conveyed, mortgaged, granted, bargained, encumbered, pledged, assigned, or
otherwise transferred. A "Transfer" within the meaning of this Article 8 shall
be deemed to include (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 partner or managing
member (or if no managing member, any member) of Borrower, Guarantor or
Indemnitor is an entity (including a corporation, partnership, limited liability
company, or trust) rather than an individual, a transaction or series of
transactions involving (i) the creation or issuance of new legal or beneficial
ownership interests or (ii) the voluntary or involuntary sale, conveyance,
transfer or pledge, by operation of law or otherwise, of legal or beneficial
ownership interests in such entity or the legal or beneficial ownership
interests in any entity that directly or indirectly controls such

                                       27
<PAGE>

Borrower, Guarantor or Indemnitor pursuant to which transaction or series of
transactions any of such entity's legal or beneficial ownership interests shall
become vested in a party or parties who are not now owners of such entity's
legal or beneficial ownership interests as of the date of this Security
Instrument; (d) if Borrower, any Guarantor or Indemnitor or any general partner
or managing member (or if no managing member, any member) of Borrower, any
Guarantor or Indemnitor is a limited or general partnership or joint venture,
the change, removal or resignation of a general partner or the transfer or
pledge of the partnership interest of any general partner or any profits or
proceeds relating to such partnership interest, and (e) if Borrower, any
Guarantor, any Indemnitor or any general 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 if no managing member, any member) or
the transfer of the membership interest of a managing member (or if no managing
member, any member) or any profits or proceeds relating to such membership
interest. Notwithstanding the foregoing, a transfer by devise or descent or by
operation of law upon the death of a member, general partner or stockholder of
Borrower, any Guarantor or Indemnitor or any member or general partner thereof
shall not be deemed to be a "Transfer" within the meaning of this Article 8. As
used herein, the term "ownership interest" includes stock, partnership
interests, membership or other interests in limited liability companies, and
beneficial interests or other interests in trusts.

         SECTION 8.2 CONDITIONS TO LENDER'S CONSENT. Unless expressly waived in
writing by Lender at the time of the Transfer or other express written waiver by
Lender, Lender's prior written consent shall be given only upon the satisfaction
of all of the following minimum conditions: (i) Lender has received Borrower's
written request for a Transfer and Lender shall have expressly approved such
request in writing subject to the satisfaction of all requirements hereunder;
(ii) no Event of Default has occurred and is continuing; (iii) the proposed new
owner/assignee (the "NEW BORROWER") meets all of the Lender's Underwriting
Standards; (iv) the Property meets all of the Lender's Underwriting Standards
related to its financial condition, cash flow, operating income, physical
condition, management and operation; (v) Borrower reimburses Lender for all
underwriting costs incurred by Lender in connection with such Transfer
(including without limitation, engineering and/or architect's fees,
environmental studies, title searches, credit checks, attorney fees), whether or
not any requested Transfer is approved or consummated; (vi) Borrower remits to
Lender an assumption fee in the amount of one percent (1%) of the outstanding
balance of the Debt as of the date of such Transfer; and (vii) the execution by
New Borrower of an assumption agreement and other documents required by Lender
in its sole and absolute discretion. "LENDER'S UNDERWRITING STANDARDS" shall
mean the actual commercial loan underwriting standards of KeyBank National
Association (or any successor entity that is then servicing the Loan) in effect
at the time of the proposed Transfer, or, if no such standards exist, such
standards which are then customary for a commercial lender in connection with a
mortgage loan of the size and type of the Borrower's loan from Lender secured
hereby.

         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 a Transfer without Lender's consent.

         The provisions of this Article 8 shall apply to every Transfer
regardless of whether voluntary or not or whether or not Lender has consented to
any previous Transfer.

                             ARTICLE 9 - PREPAYMENT

         The Debt may be prepaid only in accordance with the terms of the Note.

                                       28
<PAGE>

                              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) Borrower fails to make full and punctual payment of the Monthly
Payment (as defined in the Note) or any other amount due on a monthly basis
under the Note, this Security Instrument, or any other Loan Document within five
(5) days after the date on which such payment is due;

         (b) Borrower fails to make full payment of the Debt when due, whether
on the Maturity Date (as defined in the Note), upon acceleration or prepayment,
or otherwise;

         (c) Borrower fails to make full and punctual payment of any Late
Charges (as defined in the Note), costs and expenses due hereunder, or any other
sum of money required to be paid to Lender hereunder or under the Note or any
other Loan Document (other than any payment described in subclauses (a), (b) or
(d) of this Article 10.1), which failure is not cured on or before the fifth
(5th) day after Lender's written notice to Borrower that such payment is
required; or

         (d) Borrower fails to make the full and punctual payment of Taxes or
Other Charges as required hereby;

         (e) Borrower fails to keep the Policies in full force and effect, or
fails to promptly deliver copies thereof to Lender upon request;

         (f) if a Transfer occurs in violation of the provisions of Article 8,
or Borrower violates or does not comply with the provisions of Article 12 or 13
of this Security Instrument;

         (g) if any representation or warranty of Borrower or any Guarantor or
Indemnitor in 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;

         (h) Borrower shall make an assignment for the benefit of creditors or
Borrower is not paying debts as and when the same become due;

         (i) if (i) 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 Guarantor or Indemnitor shall make a general
assignment for the benefit of its creditors; or (ii) there shall be commenced
against Borrower or any Guarantor or Indemnitor any case, proceeding or other
action of a nature referred to in clause (i) above; or (iii) there shall be
commenced against the 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; or (iv) the 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 Guarantor or Indemnitor shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay its debts as they
become due;

                                       29
<PAGE>

         (j) Borrower shall be in default under any other deed of trust,
mortgage or security agreement covering any part of the Property whether it be
superior or junior in priority to this Security Instrument (it not being implied
by this clause that any such encumbrance will be permitted);

         (k) 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 such lien shall remain undischarged of record (by
payment, bonding or otherwise) for a period of thirty (30) calendar days;

         (l) Borrower fails to promptly and diligently cure any material
violations of laws or ordinances affecting the Property;

         (m) the occurrence of an Event of Default under any other Loan Document
and the expiration of any applicable grace or cure period thereunder; or

         (n) any breach or default hereunder by Borrower (including breach of or
default under any covenant herein), other than a default or breach set forth in
any of Sections 10.1(a) through (m), if such breach or default is not cured
within thirty (30) days after written notice from Lender to Borrower (provided
that Borrower shall not be entitled to a cure period hereunder if such breach or
default is not capable of being cured as determined by Lender in its sole and
absolute discretion), provided that if such breach or 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 one hundred twenty (120) days, unless, only in the
case of cures that require construction or remedial work, such cure cannot with
diligence be completed within such one hundred twenty (120) day period, in which
case such period shall be extended for an additional one hundred twenty (120)
days or such longer period as Lender shall determine in its sole discretion.

         SECTION 10.2 LATE CHARGE. If any monthly installment of principal and
interest is not paid when due, Borrower shall pay any late payment charge
required by the Note.

         SECTION 10.3 DEFAULT INTEREST. Borrower shall 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 the Default Rate (as defined in the Note).

                        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, without notice or demand, 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 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;

                                       30
<PAGE>

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

         (d) sell for cash or upon credit the Property or any part thereof and
all estate, claim, demand, right, title and interest of Borrower therein and
rights of redemption thereof, pursuant to power of sale or otherwise, at one or
more sales, as an entity or in parcels, at such time and place, upon such terms
and after such notice thereof as may be required or permitted by law;

         (e) subject to the provisions of Article 15, 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 Loan Documents;

         (f) subject to the provisions of Article 15, recover judgment on the
Note either before, during or after any proceedings for the enforcement of this
Security Instrument or the Loan Documents;

         (g) apply for the appointment of a receiver, trustee, liquidator or
conservator of the Property on an ex parte basis (any required notice of such
appointment or any proceeding to appoint the same being hereby expressly waived)
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 possession of the Property to Lender or
to such receiver and, in default thereof, Borrower may be evicted by summary
proceedings or otherwise; and (vii) apply the receipts from the Property to the
payment of the Debt, in such order, priority and proportions as Lender shall
deem appropriate in its sole discretion after deducting therefrom all expenses
(including reasonable attorneys' fees) incurred in connection with the aforesaid
operations and all amounts necessary to pay the Taxes, Other Charges, insurance
and other expenses in connection with the Property, as well as just and
reasonable compensation for the services of Lender, its counsel, agents and
employees;

         (i) exercise any and all rights and remedies granted to a secured party
upon default under the Uniform Commercial Code, including, without limiting the
generality of the foregoing: (i) the right to take possession of the 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

                                       31
<PAGE>

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 ten
(10) 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 Loan Document to the payment of the following items
in any order in its sole and absolute 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;
and all other sums payable pursuant to the Note, this Security Instrument and
the Loan 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) apply the undisbursed balance of any Net Proceeds or 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; or

         (m) pursue such other remedies as Lender may have under applicable 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 Subsection 10.1(i)(i) or
(ii) 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
Loan Documents, may be applied by Lender to the payment of the Debt in such
priority and proportions as Lender in its discretion shall deem proper.

         SECTION 11.3 RIGHT TO CURE DEFAULTS. Upon the occurrence of any Event
of Default, 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, cure 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

                                       32
<PAGE>

upon demand. All such costs and expenses incurred by Lender in remedying such
Event of Default or in appearing in, defending, or bringing any such action or
proceeding shall bear interest at the Default Rate (as defined in the Note), 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 (as defined in the
Note) shall be deemed to constitute a portion of the Debt and be secured by this
Security Instrument and the Loan Documents and shall be immediately due and
payable upon demand by Lender therefor.

         SECTION 11.4 ACTIONS AND PROCEEDINGS. After the occurrence and during
the continuance of an Event of Default, 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 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 upon prior written notice to
examine the records, books, management and other papers of Borrower and its
affiliates or of any Guarantor or Indemnitor which reflect upon their financial
condition, at the Property or at any office regularly maintained by Borrower,
its affiliates or any Guarantor or Indemnitor where the books and records are
located. Lender and its agents shall have the right upon notice 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 or of any Guarantor or
Indemnitor pertaining to the income, expenses and operation of the Property
during reasonable business hours at any office of Borrower, its affiliates or
any Guarantor or Indemnitor 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 Loan Documents, (ii) the release, regardless of consideration, of the whole
or any part of the Property, or of any person liable for the Debt or any portion
thereof, or (iii) any agreement or stipulation by Lender extending the time of
payment or otherwise modifying or supplementing the terms of the Note, this
Security Instrument or the Loan Documents.

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

         (c) Lender may resort for the payment of the Debt to any other security
held by Lender in such order and manner as Lender, in its discretion, may elect.
Lender may take action to recover the Debt, or any portion thereof, or to
enforce any covenant hereof without prejudice to the right of Lender

                                       33
<PAGE>

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, 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 RIGHT OF ENTRY. Lender and its agents shall have the
right upon prior written notice to enter and inspect the Property at all
reasonable times upon notice to Borrower.

         SECTION 11.11 RIGHTS PERTAINING TO SALES. The following provisions
shall, to the extent permitted by law, apply to any sale or sales of all or any
portion of the Property under or by virtue of this Security Instrument, whether
under any power of sale herein granted or by virtue of judicial proceedings or
of a judgment or decree of foreclosure and sale:

         (a) The public officer or other person conducting such sale (herein
called the "Sale Officer") may conduct any number of sales from time to time.
The power of sale shall not be exhausted by any one or more of such sales as to
any part of the Property that has not been sold or by any sale that is not
completed or is defective until the Debt has been paid in full.

         (b) Any sale may be postponed or adjourned by public announcement at
the time and place appointed for such sale or for such postponed or adjourned
sale, and such sale may be completed at the time and place so announced without
further notice.

         (c) Lender is hereby appointed the true and lawful attorney-in-fact of
Borrower, which appointment is irrevocable and shall be deemed to be coupled
with an interest, in Borrower's name and stead, to make all necessary
conveyances, assignments, transfers and deliveries of the Property and rights so
sold, and for that purpose Lender may execute all necessary instruments to
accomplish the same, and may substitute one or more persons with like power, and
Borrower hereby ratifies and confirms all that said attorney or such substitute
or substitutes shall lawfully do by virtue thereof. Nevertheless, Borrower, if
requested by Lender, shall ratify and confirm any such sale or sales by
executing and delivering to Lender or such purchaser or purchasers, as
applicable, all such instruments as may be advisable, in Lender's judgment, for
the purposes designated in such request.

         (d) Any and all statements of fact or other recitals made in any of the
instruments referred to in Subsection 11.11(c) given by Lender concerning
nonpayment of the Debt, occurrence of any Event of Default, any declaration by
Lender that all or any of the Debt is due and payable, any request to sell, any
representation that notice of time, place and terms of sale and property or
rights to be sold was duly given,

                                       34
<PAGE>

or that any other act or thing was duly done by Lender, shall be taken as PRIMA
FACIE evidence of the truth of the facts so stated and recited.

         (e) The receipt by Sale Officer of the purchase money paid at any such
sale, or the receipt of any other person authorized to give the same, shall be
sufficient discharge therefor to any purchaser of any property or rights sold as
aforesaid, and no purchaser, or its representatives, grantees or assigns, after
paying such purchase price and receiving such receipt, shall be bound to see to
the application of such purchase price or any part thereof upon or for any trust
or purpose of this Security Instrument or, in any manner whatsoever, be
answerable for any loss, misapplication or non-application of any such purchase
money, or part thereof, or be bound to inquire as to the authorization,
necessity, expediency or regularity of any such sale.

         (f) Any such sale or sales shall operate to divest all of the estate,
right, title, interest, claim and demand whatsoever, whether at law or in
equity, of Borrower in and to the properties and rights so sold, and shall be a
perpetual bar both at law and in equity against Borrower and any and all persons
claiming or who may claim the same, or any part thereof, by, through or under
Borrower to the fullest extent permitted by applicable law.

         (g) Upon any such sale or sales, Lender may bid for and acquire the
Property and, in lieu of paying cash therefor, may make settlement for the
purchase price by crediting against the Debt the amount of the bid made
therefor, after deducting therefrom the expenses of the sale, the cost of any
enforcement proceeding hereunder and any other sums that Lender is authorized to
charge to Borrower under the terms of the Note, this Security Instrument, or any
other Loan Document to the extent necessary to satisfy such bid.

         (h) If Borrower, or any person claiming by, through or under Borrower,
shall transfer or refuse or fail to surrender possession of the Property after
any sale thereof, then Borrower or such person shall be deemed a tenant at
sufferance of the purchaser at such sale, subject to eviction by means of
unlawful detainer proceedings or other appropriate proceedings, and to any other
right or remedy available hereunder or under applicable law.

         (i) Upon any such sale, it shall not be necessary for Sale Officer,
Lender or any public officer acting under execution or order of court to have
present or constructively in its possession any or all of the Property.

         (j) In the event of any sale referred to in this Subsection 11.11, the
entire Debt, if not previously due and payable, immediately thereupon shall,
notwithstanding anything to the contrary in the Note, this Security Instrument
or any other Loan Document, become due and payable.

         (k) This instrument shall be effective as a mortgage. If a sale
hereunder shall be commenced by Sale Officer, Lender may, at any time before the
sale of the Property, direct the Sale Officer to abandon the sale, and may
institute suit for the collection of the Debt or part thereof and for the
foreclosure of this Security Instrument. If Lender shall institute suit for the
collection of the Debt or part thereof, and for the foreclosure of this Security
Instrument, Lender may at any time before the entry of final judgment in said
suit dismiss the same (or part thereof) and direct the Sale Officer to sell the
Property in accordance with the provisions of this Security Instrument. Lender
may pursue its rights and remedies against any guarantor or other party liable
for any of the obligations in such a suit for foreclosure or by separate suit,
whether or not the Sale Officer is also pursuing a sale under the terms hereof.

                                       35
<PAGE>

                       ARTICLE 12 - ENVIRONMENTAL HAZARDS

         SECTION 12.1 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES. Borrower
represents and warrants, that, to the best of Borrower's knowledge, after due
inquiry and investigation: (a) there are no Hazardous Substances or underground
storage tanks in, on, or under the Property, except those that are both (i) in
compliance with Environmental Laws and with permits issued pursuant thereto, if
any, and (ii) fully disclosed to Lender in writing pursuant to the written
reports resulting from the environmental assessments of the Property delivered
to Lender (the "ENVIRONMENTAL REPORT"); (b) there are no past or present
Releases of Hazardous Substances in violation of any Environmental Law or which
would require Remediation by a Governmental Authority in, on, under or from the
Property except as described in the Environmental Report; (c) 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; (d) 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 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 administrative or judicial proceedings in
connection with any of the foregoing; and (e) Borrower has truthfully and fully
provided to Lender, in writing, any and all information relating to
environmental 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 for the purposes of Sections 12.2,
12.3 and 13.4 only, 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 for the purposes of
Sections 12.2, 12.3 and 13.4 only, 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. "HAZARDOUS SUBSTANCES" include but are not limited to
any and all substances (whether solid, liquid or gas) (i) 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 for the purposes of Sections 12.2, 12.3
and 13.4 only, future, Environmental Laws or (ii) that may have a negative
impact on human health or the environment, including, but not limited to
petroleum and petroleum products, asbestos and asbestos-containing materials,
polychlorinated biphenyls, lead, radon, radioactive materials, flammables and
explosives. "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

                                       36
<PAGE>

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 this Article
12.

         SECTION 12.2 ENVIRONMENTAL COVENANTS. Borrower covenants and agrees
that so long as the Borrower owns, manages, is in possession of, or otherwise
controls the operation of the Property: (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 in compliance with all Environmental Laws and
with permits issued pursuant thereto, if and to the extent required; (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 after Lender has reason to
believe this Section 12.2 has been violated (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 the preparation of
any Operations and Maintenance Plan ("O&M PLAN") required by Lender), 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 or the correction of any conditions identified in any O&M Plan) 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 promptly after it has become aware of (A)
any presence or Releases or threatened Releases of Hazardous Substances in, on,
under, from or migrating towards the Property which is required to be reported
to a governmental authority under any Environmental Law, (B) any actual
Environmental Lien affecting the Property, (C) any required Remediation of
environmental conditions relating to the Property, and (D) any written or oral
notice or other communication of which Borrower becomes aware from any source
whatsoever (including, but not limited to a governmental entity) relating in any
way to Hazardous Substances or Remediation thereof, possible liability of any
person or entity pursuant to any Environmental Law, other environmental
conditions in connection with the Property, or any actual or threatened
administrative or judicial proceedings in connection with anything referred to
in this Article 12.

         SECTION 12.3 LENDER'S RIGHTS. Lender, its environmental consultant, and
any other person or entity designated by Lender, including, but not limited to
any receiver and any representative of a governmental entity, shall have the
right, but not the obligation, at intervals of not less than one year, or more
frequently if the Lender reasonably believes that a Hazardous Substance or other
environmental

                                       37
<PAGE>

condition violates or threatens to violate any Environmental Law, after notice
to Borrower, 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
of the Property or portions thereof to confirm Borrower's compliance with the
provisions of this Article 12 and performance of any Remediation required under
any O&M Plan, and Borrower shall cooperate in all reasonable ways with Lender in
connection with any such audit. Such audit shall be performed in a manner so as
to minimize interference with the conduct of business at the Property. If such
audit discloses that a violation of or a liability under any Environmental Law
exists or if such audit was required or prescribed by law, regulation or
governmental or quasi-governmental authority, Borrower shall pay all costs and
expenses incurred in connection with such audit; otherwise, the costs and
expenses of such audit shall, notwithstanding anything to the contrary set forth
in this Section, be paid 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, diminutions in value,
fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in
settlement, or punitive damages, of whatever kind or nature (including, but not
limited to attorneys' fees and other costs) (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 (but excluding Losses arising out of Lender's gross negligence or
willful misconduct): (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
Loan Document; (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 other Loan Document, 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 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; (l) 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 other Loan
Document.

         Any amounts payable to Lender by reason of the application of this
Article 13 shall become immediately due and payable and shall bear interest at
the Default Rate (as defined in the Note) from the date loss or damage is
sustained by Lender until paid, and be secured by this Security Instrument and
the

                                       38
<PAGE>

other Loan Documents. The obligations and liabilities of Borrower under this
Article 13 shall survive any termination, satisfaction, or assignment of this
Security Instrument and the exercise by Lender of any of its rights or remedies
hereunder including the acquisition of the Property by foreclosure or a
conveyance in lieu of foreclosure.

         As used in this Security Instrument, the term "INDEMNIFIED PARTIES"
means Lender and any person or entity who is or will have been involved in the
origination of this loan, any person or entity who is or will have been involved
in the servicing of this 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 this 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 this loan for
the benefit of third parties) as well as the respective directors, officers,
shareholders, members, partners, employees, agents, servants, representatives,
contractors, subcontractors, affiliates, subsidiaries, participants, successors
and assigns of any and all of the foregoing (including, but not limited to any
other person or entity who holds or acquires or will have held a participation
or other full or partial interest in this loan or the Property, whether during
the term of this loan or as a part of or following a foreclosure of this 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 Loan Documents.

         SECTION 13.3 ERISA INDEMNIFICATION. Borrower shall, at its sole cost
and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses (including, without
limitation, 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 Section 4.2 or 5.9.

         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 or required under any O&M Plan),
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 arising out of or in any way relating to any one or more of the following ,
unless caused by the gross negligence or willful misconduct of any Indemnified
Party: (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 tenant or other users 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
tenant or other users of the Property in connection with any actual or proposed
Remediation of any Hazardous Substances at any time located in, under, on or
above

                                       39
<PAGE>

the Property, whether or not such Remediation is voluntary or required under any
O&M Plan or pursuant to court or administrative order, including, but not
limited to any removal, remedial or corrective action; (e) any past, present or
threatened 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 tenant or other users of the Property to comply with
any order of any governmental authority in connection with Environmental Laws;
(f) the imposition, recording or filing of any Environmental Lien encumbering
the Property; (g) any administrative processes or proceedings or judicial
proceedings in any way connected with any matter addressed in Article 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
Substance; (j) any acts of Borrower or other users of the Property, in accepting
any Hazardous Substances for transport to disposal or treatment facilities,
incineration vessels or sites selected by Borrower or such other users, from
which there is a Release, or a threatened Release of any Hazardous Substance
which causes the incurrence of costs for Remediation; (k) any personal injury,
wrongful death, or property damage caused by Hazardous Substances 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 (l)
any intentional misrepresentation 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 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 Loan
Documents, or the Debt.

         SECTION 14.2 MARSHALLING AND OTHER MATTERS. Borrower hereby waives, to
the extent permitted by law, the benefit of all homestead, appraisement,
valuation, stay, extension, reinstatement and redemption laws now or hereafter
in force and all rights of marshalling in the event of or in connection with 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.

                                       40
<PAGE>

         SECTION 14.3 WAIVER OF NOTICE. To the extent permitted by Applicable
Law, Borrower shall not be entitled to any notices of any nature whatsoever from
Lender except with respect to matters for which this Security Instrument
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 under this Security Instrument.

         SECTION 14.5 SURVIVAL. Except as hereinafter specifically set forth
below, the representations and warranties, covenants, and other obligations
arising under Article 12 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 other Loan Document, 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 any other Loan Documents, and any act or
omission that might otherwise be construed as a release or discharge of Borrower
from the obligations pursuant hereto.

         SECTION 14.6 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 ANY OTHER
LOAN DOCUMENT OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES,
DIRECTORS OR AGENTS IN CONNECTION THEREWITH.

                            ARTICLE 15 - EXCULPATION

         To the extent of any conflict between the provisions of this Security
Instrument and Section 21 of the Note, the provisions of Section 21 of the Note
shall control.

                              ARTICLE 16 - NOTICES

         SECTION 16.1 NOTICES. Any notice required or permitted to be given
hereunder must be in writing and given (a) by depositing same in the United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested; (b) by delivering the
same in person to such party; (c) by transmitting a facsimile copy to the
correct facsimile phone number of the intended recipient (with a second copy
sent by registered or certified regular mail); or (d) by depositing the same
into the custody of a nationally recognized overnight delivery service addressed
to the party to be notified. In the event of mailing, notices shall be deemed
effective three (3) days after posting; in the event of overnight delivery,
notices shall be deemed effective on the next Business Day following deposit
with the delivery service; in the event of personal service or facsimile
transmissions, notices shall be deemed effective when delivered. For purposes of
notice, the addresses of the parties shall be as set forth in the Preamble to
this Security Instrument. From time to time either party may

                                       41
<PAGE>

designate another address than the address set forth for all purposes of this
Security Instrument by giving the other party no less than ten (10) days advance
notice of such change of address in accordance with the notice provisions
hereof.

         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 the
State in which the Land is located.

                           ARTICLE 17 - APPLICABLE LAW

         SECTION 17.1 CHOICE OF LAW/JURISDICTION AND VENUE. This Security
Instrument shall be governed, construed, applied and enforced in accordance with
the laws of the state where the Land is located without regard to the conflicts
of law provisions thereof ("GOVERNING STATE"). Borrower hereby consents to
personal jurisdiction in the Governing State. JURISDICTION AND VENUE OF ANY
ACTION BROUGHT TO ENFORCE THIS SECURITY INSTRUMENT OR ANY OTHER LOAN DOCUMENT OR
ANY ACTION RELATING TO THE LOAN OR THE RELATIONSHIPS CREATED BY OR UNDER THE
LOAN DOCUMENTS ("ACTION") SHALL, AT THE ELECTION OF LENDER, BE IN (AND IF ANY
ACTION IS ORIGINALLY BROUGHT IN ANOTHER VENUE, THE ACTION SHALL AT THE ELECTION
OF LENDER BE TRANSFERRED TO) A STATE OR FEDERAL COURT OF APPROPRIATE
JURISDICTION LOCATED IN THE GOVERNING STATE. BORROWER HEREBY CONSENTS AND
SUBMITS TO THE PERSONAL JURISDICTION OF THE STATE COURTS OF THE GOVERNING STATE
AND OF FEDERAL COURTS LOCATED IN THE GOVERNING STATE IN CONNECTION WITH ANY
ACTION AND HEREBY WAIVES ANY AND ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY OTHER
STATE TO OBJECT TO JURISDICTION WITHIN SUCH GOVERNING STATE FOR PURPOSES OF ANY
ACTION. Borrower hereby waives and agrees not to assert, as a defense to any
Action or a motion to transfer venue of any Action, (i) any claim that it is not
subject to such jurisdiction, (ii) any claim that any Action may not be brought
against it or is not maintainable in those courts or that this Security
Instrument may not be enforced in or by those courts, or that it is exempt or
immune from execution, (iii) that the Action is brought in an inconvenient
forum, or (iv) that the venue for the Action is in any way improper.

         SECTION 17.2 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 17.3 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.

                                       42
<PAGE>

         SECTION 17.4 INAPPLICABLE PROVISION. 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, at
the option of Lender, shall not be affected thereby.

                          ARTICLE 18 - SECONDARY MARKET

         SECTION 18.1 DISSEMINATION OF INFORMATION. If Lender determines at any
time to sell, transfer or assign the Note, this Security Instrument, or any
other Loan Document, or all servicing rights with respect thereto, or to 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,
investor, or their respective successors in such Participations and/or
Securities (collectively, the "INVESTOR") or any rating agency rating such
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 Indemnitors and the Property, which shall have been furnished
by Borrower, any Guarantor or any Indemnitors, as Lender determines necessary or
desirable.

         SECTION 18.2 CONVERSION TO REGISTERED FORM. At the request of Lender,
Borrower shall appoint, as its agent, a registrar and transfer agent (the
"REGISTRAR") which shall maintain, subject to such reasonable regulations as it
shall provide, such books and records as are necessary for the registration and
transfer of the Note in a manner that shall cause the Note to be considered to
be in registered form for purposes of Section 163(f) of the Internal Revenue
Code of 1986. The option to convert the Note into registered form once exercised
may not be revoked. Borrower's choice of Registrar and any agreement setting out
the rights and obligation of the Registrar shall be subject to the reasonable
approval of Lender. Borrower may revoke the appointment of any particular person
as Registrar, effective upon the effectiveness of the appointment of a
replacement Registrar. The costs and fees of the Registrar shall be borne by
Borrower and the Registrar shall not be entitled to any fee from Lender or any
other lender in respect of transfers of the Note and Security Instrument (other
than Taxes and governmental charges and fees).

                               ARTICLE 19 - COSTS

         SECTION 19.1 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 and non-disturbance agreement (the
occurrence of any of the above shall be called an "EVENT" when used in this
Subsection 19.1). 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 legal fees and disbursements of Lender, whether of retained firms, the
reimbursement for the expenses of in-house staff or otherwise.

         SECTION 19.2 ATTORNEY'S FEES FOR ENFORCEMENT AND DEFENSE. (a) Borrower
shall pay all reasonable legal fees incurred by Lender in connection with (i)
the preparation of the Note, this Security Instrument and any other Loan
Document; and (ii) the items set forth in

                                       43
<PAGE>

Section 19.1 above, and (b) Borrower shall pay to Lender on demand any and all
expenses, including reasonable legal expenses and attorneys' fees, incurred or
paid by Lender in protecting Lender or its interest in the Property (including
attorney's fees and litigation expenses related to or arising out of any lawsuit
or proceeding brought by or against Lender in any court or other forum,
including actions or proceedings brought by or on behalf of Borrower's
bankruptcy estate or any guarantor or indemnitor) or in connection with the
collection of any amounts payable hereunder or in enforcing Lender's rights
under the Loan Documents with respect to the 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 (as defined in the Note) from the date paid
or incurred by Lender until such expenses are paid by Borrower.

        ARTICLE 20 - CERTAIN DEFINITIONS, HEADINGS, RULE OF CONSTRUCTION

         SECTION 20.1 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, limited liability company, partnership, 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 (a) in protecting its interest in the Property, the
Leases and the Rents, (b) relating to or arising out of any lawsuit or
proceeding brought by or against Lender in any court or other forum (including
actions or proceedings brought by or on behalf of Borrower's bankruptcy estate
or any guarantor or indemnitor, or (c) in enforcing its rights under this
Security Instrument.

         SECTION 20.2 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 20.3 RULES OF CONSTRUCTION.

         The following rules of construction shall be applicable for all
purposes of this Security Instrument and all documents or instruments
supplemental hereto, unless the context otherwise requires:

         (a) The terms "include," "including" and similar terms shall be
construed as if followed by the phrase "without being limited to."

         (b) No inference in favor of or against any party shall be drawn from
the fact that such party has drafted any portion hereof or any other Loan
Document.

         (c) The cover page (if any) of, all recitals set forth in, and all
Exhibits to, this Security Instrument are hereby incorporated herein.

         (d) Wherever Lender's judgment, consent, or approval is required under
this Security Instrument or any other Loan Document for any matter or thing or
Lender shall have an option, election, or right of determination thereunder
including any right to determine that something is satisfactory or not
("DECISION Power"), such Decision Power shall be exercised in the sole and
absolute discretion of Lender

                                       44
<PAGE>

unless otherwise expressly stated to be reasonably exercised. Such Decision
Power and each other power granted to Lender upon this Security Instrument or
any other Loan Document may be exercised by lender or by any authorized agent of
Lender (including any servicer and/or attorney-in-fact), and Borrower hereby
expressly agrees to recognize the exercise of such Decision Power by such
authorized agent.

                           ARTICLE 21 - MISCELLANEOUS

         SECTION 21.1 NO ORAL CHANGE. This Security Instrument, and any
provisions hereof, including but not limited to the provisions of this Section,
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, and the parties hereby: (a) expressly agree that it
shall not be reasonable for any of them to rely on any alleged, non-written
amendment to this Security Instrument; (b) irrevocably waive any and all right
to enforce any alleged, non-written amendment to this Security Instrument; and
(c) expressly agree that it shall be beyond the scope of authority (apparent or
otherwise) for any of their respective agents to agree to any non-written
modification of this Security Instrument.

         SECTION 21.2 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 21.3 DUPLICATE ORIGINALS; 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 21.4 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 21.5 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 any other Loan
Document, and the performance and discharge of the obligations.

         SECTION 21.6 ENTIRE AGREEMENT. The Note, this Security Instrument and
any other Loan Document constitute the entire understanding and agreement
between Borrower and Lender with respect to the transactions arising in
connection with the Debt and supersede all prior written or oral understandings
and agreements between Borrower and Lender with respect thereto. Borrower hereby
acknowledges that, except as incorporated in writing in the Note, this Security
Instrument and any other Loan Document, there are not, and were not, and no
persons are or were authorized by Lender to make,

                                       45
<PAGE>

any representations, understandings, stipulations, agreements or promises, oral
or written, with respect to the transaction which is the subject of the Note,
this Security Instrument and any other Loan Document.

         SECTION 21.7 LENDER'S RIGHT TO SUBORDINATE. Lender may, at its election
in its sole and absolute discretion, subordinate the lien of this Security
Instrument and any or all of Lender's rights, titles or interests hereunder to
any lien, leasehold interest, easement, plat, covenant, restriction, dedication,
encumbrance or other matter affecting the Property or any part thereof by
recording a written declaration of such subordination in the office of the
register or recorder of deeds or similar filing officer for the county in which
the Land is located. If foreclosure sale occurs hereunder after the recording of
any such declaration, the title received by the purchaser at such sale shall be
subject to the matters specified in such declaration, but such declaration shall
not otherwise affect the validity or terms of this Security Instrument or any
other Loan Document or the priority of any lien or security interest created
hereunder or under any other Loan Document.

                        ARTICLE 22 - LOCAL LAW PROVISIONS

         SECTION 22.1 INCONSISTENCIES. In the event of any inconsistencies
between the terms and conditions of this Article 22 and the other provisions of
this Security Instrument (other than the terms and provisions of Article 23),
the terms and conditions of this Article 22 shall control and be binding.

         SECTION 22.2 MATURITY DATE. The maturity date of the Note is November
1, 2011.

         SECTION 22.3 REMEDIES. The second line of Section 11.1(g) is hereby
modified by inserting "and as a matter of strict right" between "basis" and
"(any".

         SECTION 22.4 FUTURE ADVANCES AND ADDITIONAL INDEBTEDNESS. This Security
Instrument shall secure any future advances of the principal amount of the Note.
This Security Instrument shall also secure any additional indebtedness not to
exceed $27,000,000.00 which Borrower may owe to Lender, whether direct,
indirect, existing, future, contingent, or otherwise, but this provision shall
not be construed to be an obligation on the part of Lender to make any future
advances to Borrower.

         SECTION 22.5 FIXTURE FILING. This Security Instrument is intended to be
and constitutes a fixture filing pursuant to the provisions of Sections 9-334
and 9-502(3) of the Uniform Commercial Code with respect to those portions of
the Property described herein consisting of goods which are now or are to become
fixtures relating to real estate. The name and address of the debtor is Glimcher
Ashland Venture, LLC, c/o Glimcher Realty Trust, 20 South Third Street,
Columbus, Ohio 43215, and the name and address of the secured party is KeyBank
National Association, 911 Main Street, Suite 1400, Kansas City, Missouri 64105.

         ARTICLE 23 - ADDITIONAL OR SPECIAL PROVISIONS OR MODIFICATIONS

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

         SECTION 23.2 INSURANCE. Section 3.3(b)(3) is hereby deleted and the
following substituted therefor: "(3) be approved by Lender in its reasonable
discretion (except as may be specifically set forth above) as to amounts, form,
risk coverage, deductibles, loss payees and insureds."

                                       46
<PAGE>

         SECTION 23.3 INSURANCE ESCROW The following is hereby inserted at the
end of Section 3.5: "Notwithstanding the foregoing, Lender hereby agrees to
waive the requirement of an Escrow Fund for Insurance Premiums provided that
each of the following conditions is satisfied at all times as determined by
Lender in its sole discretion: (i) Borrower submits to Lender paid insurance
premium receipts or other documentation evidencing timely payment of all
Insurance Premiums not less than thirty (30) days prior to each due date
thereof; (ii) the Property remains covered under a blanket policy in accordance
with Section 3.3(e) of this Security Instrument and Borrower submits to Lender a
certificate of insurance for such blanket policy not less than thirty (30) days
prior to the expiration date thereof; (iii) the blanket policy remains in full
force and effect without any reduction in coverage and no notice of termination
or cancellation has been issued; and (iv) no Event of Default exists. If
Borrower shall fail to satisfy any of the foregoing requirements as determined
by Lender in its sole discretion, Lender may immediately reinstate the
provisions of Section 3.5 relating to an Escrow Fund for Insurance Premiums. The
foregoing waiver shall not affect Borrower's requirement to establish and
deposit payments into the Escrow Fund for Taxes as set forth in Section 3.5
herein.

         SECTION 23.4 TAX ESCROW FUND. The foregoing waivers shall only apply
with respect to the Goody's Parcel and Wal-Mart Parcel and not with respect to
any other portion of the Property."

         Notwithstanding any provision in Section 3.5 to the contrary, the
Escrow Fund for Taxes shall be interest bearing.

         The seventh sentence of Section 3.5 is hereby deleted and the following
substituted therefor: "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 either return any excess to Borrower or credit such excess against
future payments to be made to the Escrow Fund."

         SECTION 23.5 CONDEMNATION. The following is hereby added to the end of
Section 3.6 hereof: "Notwithstanding any provision in this Section 3.6 to the
contrary, to the extent the provisions hereof relating to condemnation conflict
with the provisions of any subordination, non-disturbance and attornment
agreement ("SNDA") or estoppel certificate in connection with any of the Leases
and executed as a part of this transaction, the provisions of the SNDA or
estoppel certificate shall control."

         SECTION 23.6 BOOKS AND RECORDS. The third line of Section 3.11(a)(iii)
is hereby modified by deleting "21" and substituting "30" therefor.

         The second line of Section 3.11(a)(iv) is hereby modified by deleting
"30" and substituting "45" therefor.

         SECTION 23.7 PROPERTY USE. Section 4.1 is hereby deleted and the
following substituted therefor: "The Property shall be used only for a retail
shopping mall and for no other use without the prior written consent of Lender."

         SECTION 23.8 ADDITIONAL DEBT. Notwithstanding any provision in Section
4.3 to the contrary, Lender hereby agrees that Borrower may incur additional
indebtedness for assets related to the operation of the Property including, but
not limited to, vehicles and trash compactors, so long as the following
conditions are satisfied at all times in Lender's sole discretion:

         (a) The combined amount of additional indebtedness shall be no more
than $100,000.00 or shall require lease payments of no more than $50,000.00 per
annum;

         (b) Such additional indebtedness shall not create a lien on the
Property; and

                                       47
<PAGE>

         (c) The additional indebtedness must at all times be a "non-recourse"
obligation of Borrower, and if at any time the additional indebtedness becomes a
"recourse" obligation of Borrower rather than a "non-recourse" obligation of
Borrower, the Debt secured by this Security Instrument shall automatically
become the "recourse" obligation of Borrower notwithstanding Section 21 of the
Note;

         SECTION 23.9 RESTORATION AFTER CASUALTY. The first line of Section
4.4(a) is hereby modified by deleting "$30,000.00" and substituting "$75,000.00"
therefor.

         The first line of Section 4.4(b)(i)(F) is hereby modified by inserting
"in its reasonable discretion" between "satisfied" and "that".

         The fifth line of Section 4.4(b)(iv) is hereby modified by inserting ",
until such time as 50% of the work has been completed, and 5% thereafter,"
between "10%" and "of".

         The following is hereby added to the end of Section 4.4 hereof:
"Notwithstanding any provision in this Section 4.4 to the contrary, to the
extent the provisions hereof relating to restoration conflict with the
provisions of any subordination, non-disturbance and attornment agreement
("SNDA") or estoppel certificate in connection with any of the Leases and
executed as a part of this transaction, the provisions of the SNDA or estoppel
certificate shall control."

         SECTION 23.10 WARRANTY OF TITLE. The third line of Section 5.1 is
hereby modified by deleting "unencumbered".

         SECTION 23.11 STATUS OF PROPERTY. Section 5.6(i) is hereby modified by
adding the following to the beginning thereof: "Except as previously disclosed
to Lender in that certain Disclosure Schedule Leased Personal Property at
Ashland Town Center."
         SECTION 23.12 LEASES. Section 5.10(f) is hereby deleted and the
following substituted therefor: "(f) the premises demised under the Leases have
been completed and the tenants under the Leases have accepted the same and have
taken possession of the same on a rent-paying basis, except for the premises
demised under and the tenants under the following Leases: 1) that certain lease
between Borrower, as landlord, and Benji Harley Davidson, as tenant, dated March
6, 2001; and 2) that certain lease between Borrower, as landlord, and Treasure
Chest, as tenant, dated June 6, 2001;"

         SECTION 23.13 CHANGES IN TAX, DEBT CREDIT AND DOCUMENTARY STAMP LAWS.
The third line of Section 7.3(a) is hereby modified by inserting "(not including
franchise or income taxes of Lender)" between "tax" and ", either".

         SECTION 23.14 ESTOPPEL CERTIFICATES. The first line of Section 7.4(a)
is hereby modified by deleting "ten" and substituting "thirty" therefor. The
second line of Section 7.4(a) is hereby modified by deleting "may reasonably
request" and substituting "has previously approved" therefor.

         The first line of Section 7.4(b) is hereby modified by deleting "ten"
and substituting "thirty" therefor and by inserting "use its best efforts to"
between "shall" and "furnish". The third line of Section 7.4(b) is hereby
modified by inserting "as Lender has previously approved" between "form" and
"and.

         SECTION 23.15 SPLITTING OF SECURITY INSTRUMENT. The fifth line of
Section 7.6 is hereby modified by inserting "and without cost to Borrower,"
between "Lender," and "shall".

                                       48
<PAGE>

         SECTION 23.16 REPLACEMENT DOCUMENTS. The following phrase is added to
the end of Section 7.7: "; provided, however, in the event Borrower becomes
legally obligated to pay a third party under the Note or Loan Documents by
operation of law or final judgment, then, to the extent Borrower does not
receive credit from such third party for any payments made to Lender under such
duplicate Note or Loan Document, Lender shall indemnify and hold Borrower
harmless in an amount not to exceed the sum of such payments made to Lender
under such duplicate Note or Loan Document; provided further, that in connection
with any litigation, arbitration or other proceeding pertaining to any such
claim of such third party, Borrower shall vigorously defend against such claim
and not confess any judgment pertaining thereto without Lender's prior written
consent, and, at Lender's option, permit Lender to assume and control such
defense with counsel acceptable to Lender, the costs of both of which shall be
borne by Lender."

         SECTION 23.17 CONDITIONS TO LENDER'S CONSENT. The third line of Section
8.2 is hereby modified by inserting "reasonable" between "checks," and
"attorney".

         Section 8.2(iv) is hereby deleted in its entirety.

         The second line of Section 8.2(vii) is hereby modified by deleting
"sole and absolute" and substituting "reasonable" therefor.

         Section 8.2 is hereby modified by adding the following to the end
thereof: "Notwithstanding the foregoing, the following shall be permitted
without the prior written consent of Lender or confirmation from the rating
agencies that such sale or conveyance shall not, in itself, result in a
downgrade, qualification or withdrawal of the then current ratings assigned to
rated single or multi-class securities: (x) transfers of interests in Glimcher
Properties Limited Partnership and (y) transfers of membership interests
aggregating not more than fifty percent (50%) of the membership interests in
Borrower provided that (i) the Glimcher Properties Limited Partnership retains
not less than fifty percent (50%) of the interests in Borrower, (ii) the
Property continues to be managed by Borrower or its managing agent, and (iii)
Borrower shall deliver to Lender a non-consolidation opinion which may be relied
upon by Lender, the rating agencies and their respective counsel, successors and
assigns, with respect to the proposed transfer, which opinion shall be
reasonably acceptable to Lender and, after a securitization, the rating
agencies."

         SECTION 23.18 EVENTS OF DEFAULT. The following phrase is hereby added
to the end of Section 10.1(i)(ii): "which is not dismissed within sixty (60)
days of filing in the case of an involuntary bankruptcy proceeding".

         Section 10.1(k) is hereby modified by adding "after Borrower receives
notice thereof" to the end thereof.

         SECTION 23.19 GENERAL INDEMNIFICATION. The first and second lines of
the third paragraph of Section 13.1 are hereby modified by deleting "and any
person or entity who is or will have been involved in the origination of this
loan".

         SECTION 23.20 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES. The
following is hereby added to the end of the definition of Hazardous Substances:
"but shall not include those substances that are both (1) in compliance with
current Environmental Laws and with permits issued pursuant thereto (if such
permits are required), and (2) either (a) in amounts not in excess of that
necessary to operate, clean, repair and maintain the applicable Property or each
tenant's respective business at such Property as set forth in their respective
leases, (b) held by a tenant for sale to the public

                                       49
<PAGE>

in its ordinary course of business, or (c) fully disclosed to and approved by
Lender in writing pursuant to the Environmental Reports."

         (THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK)

                                       50
<PAGE>

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

BORROWER:                GLIMCHER ASHLAND VENTURE, LLC,
                         a Delaware limited liability company

                         By:    Glimcher Properties Limited Partnership, a
                                Delaware limited partnership, its sole member

                                By:    Glimcher Properties Corporation, a
                                       Delaware corporation, its sole general
                                       partner

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

                                       51
<PAGE>

STATE OF  OHIO    )
                  ) sec.
COUNTY OF FRANKLIN)

         On this 12th day of October, 2001, before me, Maureen Connolly, a
Notary Public in and for said state, personally appeared George A. Schmidt, who
being by me duly sworn did say that s/he is the Executive Vice President of
Glimcher Properties Corporation, the sole general partner of Glimcher Properties
Limited Partnership, the sole member of Glimcher Ashland Venture, LLC, a
Delaware limited liability company, and that the within instrument was signed
and sealed in behalf of said corporation on behalf of said limited partnership
on behalf of said limited liability company by authority of its members, and
acknowledged said instrument to be the free act and deed of said limited
liability company for the purposes therein stated.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal, the day and year last above written.

                           /s/  Maureen Connolly
                           ------------------------------------------------
                           Notary Public in and for Said County and State

                           Maureen Connolly
                           ------------------------------------------------
                           (Type, print or stamp the Notary's name below his
                           or her signature.)

My Commission Expires:

No Expiration Date
----------------------

This Instrument Prepared By:

Jason W. Lee
Polsinelli Shalton & Welte
700 W. 47th Street, Ste. 1000
Kansas City, Missouri 64112
(816) 753-1000
FAX (816) 753-1536

                                       52
<PAGE>

                                    EXHIBIT A
                                    ---------

                              (DESCRIPTION OF LAND)

         ALL of that certain lot, piece or parcel of land, with the buildings
and improvements thereon, situate, lying and being<PAGE>
                                 PROMISSORY NOTE

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

                                LOAN TERMS TABLE

LENDER:      KeyBank National Association, a national banking association, its
             successors and assigns
LOAN NO.:  10015129
LENDER'S ADDRESS:  911 Main Street, Suite #1500, Kansas City, Missouri  64105
LENDER'S FACSIMILE NO.:  (816) 221-8848
BORROWER:  Glimcher Ashland Venture, LLC, a Delaware limited liability company
BORROWER'S ADDRESS:  c/o Glimcher Realty Trust, 20 South Third Street, Columbus,
           Ohio 43215
BORROWER'S FACSIMILE NO.:  _______________
BORROWER'S TAX IDENTIFICATION NUMBER: 31-1800370
PROPERTY:  Real property located at 500 Winchester Avenue, Ashland,
           Kentucky 41101 in Boyd County, Kentucky and certain personal
           property
NOTE DATE:  October 15, 2001
ORIGINAL PRINCIPAL AMOUNT:  $27,000,000.00
MATURITY DATE:  November 1, 2011
INTEREST RATE:  7.25 percent (7.25%) per annum
INITIAL INTEREST PAYMENT PER DIEM:  $5,437.50
MONTHLY PAYMENT: $195,157.85
MONTHLY PAYMENT DATE:  December 1, 2001 and on the first day of each successive
           month thereafter
FINANCIAL STATEMENT REPORTING DEPOSIT:  $625.00

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

         1. LOAN AMOUNT AND RATE. FOR VALUE RECEIVED, Borrower promises to pay
to the order of Lender, the Original Principal Amount (or so much thereof as is
outstanding from time to time, which is referred to herein as the "OUTSTANDING
PRINCIPAL BALANCE" or "OPB"), with interest on the unpaid OPB from the date of
disbursement of the Loan (as hereinafter defined) evidenced by this Promissory
Note ("NOTE") at the Interest Rate. Interest shall be calculated based on the
daily rate which is produced assuming a three hundred sixty (360) day year
multiplied by the actual number of days elapsed. The loan evidenced by this Note
will sometimes hereinafter be called the "LOAN". The above Loan Terms Table
(hereinafter referred to as the "TABLE") is a part of the Note and all terms
used in this Note that are defined in the Table shall have the meanings set
forth therein.

         2. PRINCIPAL AND INTEREST PAYMENTS. Payments of principal and interest
shall be made as follows:

         (a) An interest payment on the date of disbursement of the Loan
proceeds in an amount calculated by multiplying the Initial Interest Payment Per
Diem by the number of days from (and including) the date of the disbursement of
the Loan proceeds through the last day of the calendar month in which the
disbursement was made;

<PAGE>
         (b) A Monthly Payment on each Monthly Payment Date until the Maturity
Date, each of such payments to be applied: (i) to the payment of interest
computed at the Interest Rate; and (ii) the balance applied toward the reduction
of the principal balance of the Loan; and

         (c) If not sooner paid, the balance of the principal amount of the
Loan, all unpaid interest thereon, and all other amounts owed to Lender pursuant
to this Note or any other Loan Document (as hereinafter defined) or otherwise in
connection with the Loan or the security for the Loan shall be due and payable
on the Maturity Date.

         3. SECURITY FOR NOTE. This Note is secured by a first deed of trust,
mortgage, or deed to secure debt (which is herein called the "SECURITY
INSTRUMENT") encumbering the Property. This Note, the Security Instrument, and
all other documents and instruments evidencing and/or securing this Note whether
now or hereafter executed by Borrower or others in connection with or related to
the Loan, including any assignments of leases and rents, other assignments,
security agreements, financing statements, guaranties, indemnity agreements
(including environmental indemnity agreements), letters of credit, or
completion/repair, debt service, tenant finish/leasing commissions, earn-out or
other escrow/holdback or similar agreements or arrangements, together with all
amendments, modifications, substitutions or replacements thereof, are sometimes
herein collectively referred to as the "LOAN DOCUMENTS" or individually as a
"LOAN DOCUMENT". All amounts that are now or in the future become due and
payable under this Note, the Security Instrument, or any other Loan Document,
including any Prepayment Consideration (as hereinafter defined) and all
applicable expenses, costs, charges, and fees will be referred to herein as the
"DEBT." The remedies of Lender as provided in this Note, any other Loan
Document, or under applicable law shall be cumulative and concurrent, may be
pursued singularly, successively, or together at the sole discretion of Lender,
and may be exercised as often as an occasion shall occur. The failure to
exercise any right or remedy shall not be construed as a waiver or release of
the right or remedy respecting the same or any subsequent default.

         4. FINANCIAL STATEMENT REPORTING DEPOSIT; REBATE OF DEPOSIT. In
addition to and concurrently with each Monthly Payment, Borrower shall also pay
to Lender a constant monthly amount equal to the Financial Statement Reporting
Deposit. On the first day of the fourteenth (14th) month following the date of
the initial disbursement of funds under this Note (the "DISBURSEMENT DATE"), and
on an annual basis thereafter during the term of this Note, Lender shall remit
to Borrower a portion of the Financial Statement Reporting Deposit then held by
Lender in an amount equal to the aggregate amount of the Financial Statement
Reporting Deposit actually received by Lender during the twelve (12) month
period ending upon the immediately prior annual anniversary of the Disbursement
Date (the "ANNUAL COMPLIANCE PERIOD") provided that no Event of Default (as
hereinafter defined), including any failure by Borrower to strictly comply with
the financial reporting requirements set forth in the Security Instrument, is
currently existing or has occurred in the Annual Compliance Period.

         5. PAYMENTS. All amounts payable hereunder shall be payable in lawful
money of the United States of America to Lender at Lender's Address or such
other place as the holder hereof may designate in writing. Each payment made
hereunder shall be made in immediately available funds and must state the
Borrower's Loan Number. If any payment of principal or interest on this Note is
due on a day other than a Business Day (as hereinafter defined), such

                                       2
<PAGE>

payment shall be made on the next succeeding Business Day, and such extension of
time shall be included in computing interest in connection with such payment.
Any payment on this Note received after 2:00 o'clock p.m. (CST or other
applicable current time in Kansas City, Missouri) shall be deemed to have been
made on the next succeeding Business Day. All amounts due under this Note shall
be payable without set off, counterclaim, or any other deduction whatsoever. All
payments from Borrower to Lender following the occurrence of an Event of Default
shall be applied in such order and manner as Lender elects in its sole
discretion in reduction of costs, expenses, charges, disbursements and fees
payable by Borrower hereunder or under any other Loan Document, in reduction of
interest due on unpaid principal, or in reduction of principal. Lender may,
without notice to Borrower or any other person, accept one or more partial
payments of any sums due or past due hereunder from time to time while an
uncured Event of Default exists hereunder, after Lender accelerates the
indebtedness evidenced hereby, and/or after Lender commences enforcement of its
remedies under any Loan Document or applicable law, without thereby waiving any
Event of Default, rescinding any acceleration, or waiving, delaying, or
forbearing in the pursuit of any remedies under the Loan Documents. Lender may
endorse and deposit any check or other instrument tendered in connection with
such a partial payment without thereby giving effect to or being bound by any
language purporting to make acceptance of such instrument an accord and
satisfaction of the indebtedness evidenced hereby. As used herein, the term
"Business Day" shall mean a day upon which commercial banks are not authorized
or required by law to close in Kansas City, Missouri.

         6. LATE CHARGE. If any sum payable under this Note or any other Loan
Document is not received by Lender by close of business on the fifth (5th) day
after the date on which it was due, Borrower shall pay to Lender an amount (the
"LATE CHARGE") equal to the lesser of (a) five percent (5%) of the full amount
of such sum or (b) the maximum amount permitted by applicable law in order to
help defray the expenses incurred by Lender in handling and processing such
delinquent payment and to compensate Lender for the loss of the use of such
delinquent payment. Any such Late Charge shall be secured by the Security
Instrument and other Loan Documents. The collection of any Late Charge shall be
in addition to, and shall not constitute a waiver of or limitation of, a default
or Event of Default hereunder or a waiver of or limitation of any other rights
or remedies that Lender may be entitled to under any Loan Document or applicable
law.

         7. DEFAULT RATE. Upon the occurrence of an Event of Default (including
the failure of Borrower to make full payment on the Maturity Date), Lender shall
be entitled to receive and Borrower shall pay interest on the Outstanding
Principal Balance at the rate of five percent (5%) per annum above the Interest
Rate ("DEFAULT RATE") but in no event greater than the maximum rate permitted by
applicable law. Interest shall accrue and be payable at the Default Rate from
the occurrence of an Event of Default until all Events of Default have been
fully cured. Such accrued interest shall be added to the Outstanding Principal
Balance, and interest shall accrue thereon at the Default Rate until fully paid.
Such accrued interest shall be secured by the Security Instrument and other Loan
Documents. Borrower agrees that Lender's right to collect interest at the
Default Rate is given for the purpose of compensating Lender at reasonable
amounts for Lender's added costs and expenses that occur as a result of
Borrower's default and that are difficult to predict in amount, such as
increased general overhead, concentration of management resources on problem
loans, and increased cost of funds. Lender and Borrower agree that Lender's
collection of interest at the Default Rate is not a fine or penalty, but is

                                       3
<PAGE>

intended to be and shall be deemed to be reasonable compensation to Lender for
increased costs and expenses that Lender will incur if there occurs an Event of
Default hereunder. Collection of interest at the Default Rate shall not be
construed as an agreement or privilege to extend the Maturity Date or to limit
or impair any rights and remedies of Lender under any Loan Documents. If
judgment is entered on this Note, interest shall continue to accrue
post-judgment at the greater of (a) the Default Rate or (b) the applicable
statutory judgment rate.

         8. ENFORCEMENT AND DEFENSE EXPENSES. Borrower shall pay on demand, in
addition to the principal and interest due hereunder, all expenses of protecting
the security for this Note and all expenses incurred or paid by Lender in
connection with or relating to the Loan Documents and the enforcement thereof,
including costs and expenses incurred or paid in protecting Lender or its
interest in the Property (including attorney's fees and litigation expenses
related to or arising out of any lawsuit or proceeding brought by or against
Lender in any court or other forum, including actions or proceedings brought by
or on behalf of Borrower's bankruptcy estate or any guarantor or indemnitor) or
in connection with the collection of any amounts payable hereunder or in
enforcing Lender's rights under the Security Instrument and the other Loan
Documents with respect to the 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. Such costs and expenses shall include costs for title
insurance searches and endorsements, retention of collection agents, court costs
and litigation expenses in connection with any proceedings of any nature,
including appellate and bankruptcy proceedings, and all reasonable attorneys'
fees and expenses, whether incurred as part of or separately from any formal
legal proceedings.

         9. PREPAYMENT; DEFEASANCE.

         (a) RESTRICTIONS. Voluntary prepayment of this Note is prohibited
except during the last ninety (90) days of the term when prepayment may be made
in whole, but not in part, without payment of any premium or penalty, on any
Monthly Payment Date.

         (b) DEFEASANCE.

                  (i) Provided that as of the Release Date (as hereinafter
defined) the Debt has not been accelerated, no Event of Default exists, and no
event has occurred that with the passage of time, giving of notice, or
modification or termination of the automatic stay of Section 362 of the United
States Bankruptcy Code may become an Event of Default ("DEFAULT"), Borrower may
cause the release of the Property from the lien of the Security Instrument and
the other Loan Documents ("DEFEASANCE") on any Monthly Payment Date following
the date which is two (2) years and fifteen (15) days after the "startup day"
within the meaning of Section 860G(a)(9) of the Internal Revenue Code of 1986,
as amended (together with any successor statute and the related Treasury
Department Regulations including temporary regulations, the "CODE") of any "real
estate mortgage investment conduit" within the meaning of Section 860D of the
Code ("REMIC") that holds this Note upon Borrower's satisfaction of the
following conditions:

                  (A) Borrower shall provide Lender not less than thirty (30)
         days prior written notice specifying a Monthly Payment Date (such Date,
         or any extended date upon which

                                       4
<PAGE>

         Borrower and Lender may mutually agree is referred to herein as the
         "RELEASE DATE") on which the Defeasance Collateral (as hereinafter
         defined) is to be delivered;

                  (B) On the Release Date Borrower shall pay in full all accrued
         and unpaid interest and all other sums due under this Note and under
         the other Loan Documents up to the Release Date, including all costs
         and expenses including attorneys' fees incurred by Lender or its
         servicers or other agent(s) or to or on behalf of any rating agencies
         in connection with such release and related transactions (including the
         review of the proposed Defeasance Collateral and the preparation of the
         Defeasance Security Agreement (as hereinafter defined) and related
         documentation) together with a defeasance processing fee in an amount
         equal to one-half of one percent (0.5%) of the then Outstanding
         Principal Balance but in no event less than (A) $10,000 or greater than
         (B) $20,000; and

                  (C) Borrower shall deliver the following, all of which must be
         satisfactory to Lender in its sole discretion, at or prior to the
         release of the Property and substitution of the Defeasance Collateral:

                           (1) Direct, non-callable and non-redeemable
         securities evidencing an obligation to pay principal and interest in a
         full and timely manner that are direct obligations of the United States
         of America for the payment of which its full faith and credit is
         pledged (the "DEFEASANCE COLLATERAL") in amounts sufficient to pay all
         scheduled principal and interest payments required under this Note,
         which securities provide for payments prior, but as close as possible,
         to the Business Day prior to each successive Monthly Payment Date
         occurring after the Release Date, with each such payment being equal to
         or greater than the amount of the corresponding Monthly Payment
         required to be made hereunder for the balance of the term hereof plus
         the amount required to be paid on the Maturity Date (the "SCHEDULED
         DEFEASANCE PAYMENTS"), each of which shall be duly endorsed by the
         holder thereof as directed by Lender or accompanied by a written
         instrument of transfer in form and substance satisfactory to Lender in
         its sole discretion (including such instruments as may be required by
         the depository institution or other entity holding such securities or
         the issuer thereof, as the case may be, to effectuate book-entry
         transfers and pledges through the book-entry facilities of such
         institution) in order to perfect upon the delivery of the Defeasance
         Security Agreement (as hereinafter defined) a valid, first priority
         lien and security interest therein in favor of Lender in conformity
         with all applicable state and federal laws governing granting of such
         security interest;

                           (2) any and all agreements, certificates, opinions,
         documents or instruments required by Lender in its sole discretion in
         connection with the Defeasance including (a) a pledge and security
         agreement, in form and substance satisfactory to Lender in its sole
         discretion, creating a first priority security interest in favor of
         Lender in the Defeasance Collateral (the "DEFEASANCE SECURITY
         AGREEMENT"), and (b) any and all agreements, certificates, opinions,
         documents, or instruments required by Lender in its sole discretion
         that affect or relate in any way to the maintenance by any REMIC that
         holds this Note of its qualification and status for tax purposes as a
         REMIC;

                                       5
<PAGE>

                           (3) a certificate of Borrower certifying that (a) all
         of the requirements set forth in this Section 9(b) have been satisfied,
         (b) the transactions that are being carried out pursuant to this
         Section 9(b) (including specifically the release of the lien of the
         Security Instrument) are being effected to facilitate the disposition
         of the Property or any other customary commercial transaction and not
         as part of an arrangement to collateralize a REMIC offering with
         obligations that are not real estate mortgages, and (c) the amounts of
         the Defeasance Collateral comply with all the requirements of this
         section including the requirement that the Defeasance Collateral shall
         generate monthly amounts equal to or greater than the Scheduled
         Defeasance Payments required to be paid under this Note through the
         Maturity Date;

                           (4) an opinion of counsel for Borrower, delivered by
         counsel acceptable to Lender in its sole discretion, stating, among
         other things but without substantive qualification, that (a) Lender has
         a valid, duly perfected, first priority security interest in the
         Defeasance Collateral and that the Defeasance Security Agreement is
         enforceable against Borrower in accordance with its terms, (b) neither
         the Defeasance nor any other transaction that occurs pursuant to the
         provisions of this Section 9(b) has caused or will cause the Loan
         (including for this purpose the Loan Documents) to cease to be a
         "qualified mortgage" within the meaning of Section 860G of the Code,
         either under the provisions of Treasury Regulation Sections
         1.860G-2(a)(8) or 1.860G-2(b) (as such regulations may be amended or
         superseded from time to time) or under any other provision of the Code
         or otherwise, and (c) the tax qualification and status of any REMIC or
         any other entity that holds this Note will not be adversely impaired or
         affected as a result of the Defeasance and/or any other transaction
         that occurs pursuant to the provisions of this Section 9(b);

                           (5) a certificate and opinion delivered by an
         independent certified public accounting firm acceptable to Lender in
         its sole discretion (a) certifying that the amounts of the Defeasance
         Collateral comply with all the requirements of this Section including
         the requirement that the Defeasance Collateral shall generate monthly
         amounts equal to or greater than the Scheduled Defeasance Payments
         required to be paid under this Note through the Maturity Date; and (b)
         setting forth the change in the yield of the Loan that results from the
         Defeasance and any other transactions that occur pursuant to the
         provisions of this Section 9(b), including supporting computations
         which shall be made in a manner that is consistent with the provisions
         of Treasury Regulation Sections 1.1001-3(e)(1);

                           (6) written confirmation from the rating agencies
         that have rated any of the securities issued by any REMIC that holds
         this Note to the effect that the Defeasance will not result in a
         downgrading, withdrawal or qualification of the respective ratings in
         effect immediately prior to such Defeasance for any rated securities
         then outstanding, and if required by any rating agency or Lender, a
         non-consolidation opinion with respect to the Defeasance Obligor (as
         hereinafter defined) in form and substance satisfactory to Lender and
         such rating agency; and

                           (7) Borrower shall (unless otherwise agreed to in
         writing by Lender in its sole discretion), at Borrower's sole expense,
         assign all of its obligations under this

                                       6
<PAGE>

         Note, together with the Defeasance Collateral, to a successor entity
         ("DEFEASANCE OBLIGOR") designated by Lender in its sole discretion
         (including to an entity that is owned and/or controlled by Lender) that
         is a single purpose, bankruptcy remote entity as determined by Lender
         in its sole discretion. The Defeasance Obligor shall execute an
         assumption agreement pursuant to which it shall assume Borrower's
         obligations under this Note, the Loan Documents, and the Defeasance
         Security Agreement. As conditions to such assignment and assumption,
         Borrower shall (a) deliver to Lender an opinion of counsel delivered by
         counsel acceptable to Lender in its sole discretion stating, among
         other things, that such assumption agreement has been duly authorized
         and is enforceable against Borrower and the Defeasance Obligor in
         accordance with its terms, that the Note, the Defeasance Security
         Agreement and the other Loan Documents, as so assumed, have been duly
         authorized and are enforceable against the Defeasance Obligor in
         accordance with their respective terms, and that the delivery of the
         Defeasance Collateral to the Defeasance Obligor does not constitute a
         fraudulent transfer, preferential payment, or other voidable transfer
         under applicable bankruptcy law and (b) pay all costs and expenses
         including attorneys' fees incurred by Lender or its servicer or other
         agent(s) in connection with such assignment and assumption (including
         the review of the proposed transferee and the preparation of the
         assumption agreement and related documentation). Upon such assumption,
         Borrower shall be relieved of its obligations under this Note, the
         Defeasance Security Agreement and the other Loan Documents, other than
         those obligations which are specifically intended to survive the
         payment of this Note and the termination, satisfaction or assignment of
         this Note, the Defeasance Security Agreement or the other Loan
         Documents or the exercise of Lender's rights and remedies under any of
         such documents and instruments.

                  (ii) Upon compliance with the requirements of this Section,
Lender shall release the Property from the lien of the Security Instrument and
the other Loan Documents, and the Defeasance Collateral shall constitute
collateral which shall secure this Note and all other obligations under the Loan
Documents. Lender will, at Borrower's expense, execute and deliver any
agreements reasonably requested by Borrower to release the lien of the Security
Instrument from the Property. Borrower, pursuant to the Defeasance Security
Agreement, shall authorize and direct that the payments received from Defeasance
Collateral be made directly to Lender and applied to satisfy the obligations of
Borrower under this Note.

                  (iii) Upon the release of the Property in accordance with this
Section 9(b), Borrower shall have no further right to prepay this Note. Borrower
shall pay any revenue, documentary stamp or intangible taxes or any other tax or
charge due in connection with the transfer of this Note or otherwise required to
accomplish the agreements of this Section.

                  (iv) If any notice of defeasance is given pursuant to Section
9(b)(i)(A), Borrower shall be required to defease the Loan on the Release Date
(unless such notice is revoked by Borrower prior to the Release Date in which
event Borrower shall immediately reimburse Lender for any and all reasonable
costs and expenses incurred by Lender in connection with Borrower's giving of
such notice and revocation).

                  (v) At Borrower's request, Lender may agree in its sole
discretion that Lender or its servicer or other agent, acting on Borrower's
behalf as Borrower's agent and attorney-in-

                                       7
<PAGE>

fact, shall purchase the Defeasance Collateral that Borrower is required to
deliver to Lender pursuant to Section 9(b)(i)(C)(1). If such an agreement is
made then Borrower shall deposit with Lender or Lender's servicer or other
agent, as directed by Lender or Lender's agent(s), on or prior to the Release
Date a sum of money sufficient to purchase the Defeasance Collateral. By making
such deposit Borrower shall thereby appoint Lender or Lender's servicer or other
agent as Borrower's agent and attorney-in-fact, with full power of substitution,
for the purpose of purchasing the Defeasance Collateral with the funds so
provided and delivering the Defeasance Collateral to Lender pursuant to Section
9(b)(i)(C)(1).

                  (vi) Notwithstanding any release of the Security Instrument or
any Defeasance hereunder, the Defeasance Obligor shall be bound by and obligated
under Sections 3.1 (Payment of Debt), 7.2 (Further Acts Etc.), 7.4(a) (Estoppel
Certificates), 11.2 (Application of Proceeds), 11.7 (Other Rights Etc.) and 14.2
(Marshalling and Other Matters) and Article 13 (Indemnification) of the Security
Instrument; provided, however, that all references therein to "PROPERTY" or
"PERSONAL PROPERTY" shall be deemed to refer only to the Defeasance Collateral
delivered to Lender.

         (c) DEFAULT PREPAYMENT. If a Default Prepayment (as hereinafter
defined) occurs, such Default Prepayment shall be deemed to be a voluntary
prepayment under this Note and in such case the applicable Prepayment
Consideration (as hereinafter defined) shall be due and payable to Lender in
connection with such Default Prepayment. The Prepayment Consideration shall be
secured by all security and collateral for the Loan and shall be added to the
Outstanding Principal Balance for all purposes including accrual of interest,
judgment on the Note, foreclosure (whether through power of sale, judicial
proceeding, or otherwise), redemption, and bankruptcy (including pursuant to
Section 506 of the United States Bankruptcy Code). The term "DEFAULT Prepayment"
shall mean a prepayment of any portion of the principal amount of this Note made
after occurrence of a Default or Event of Default under any circumstances
including a prepayment in connection with reinstatement of the Security
Instrument provided by statute under foreclosure proceedings or exercise of
power of sale, any statutory right of redemption exercised by Borrower or any
other party having a statutory right to redeem or prevent foreclosure or power
of sale, any sale in foreclosure or under exercise of a power of sale or
otherwise (including pursuant to a credit bid made by Lender in connection with
such sale), or any other collection action by Lender. Classification and
treatment of Lender's claim pursuant to a plan of reorganization in bankruptcy
shall also be deemed to be a Default Prepayment hereunder. The "PREPAYMENT
CONSIDERATION" (as the term is used in this Note) shall mean the present value,
as of the date of the occurrence of the Default, of the remaining scheduled
payments of principal and interest from the date of the occurrence of the
Default through the Maturity Date (including any balloon payment), which shall
be determined by discounting such payments at the Discount Rate (hereinafter
defined) less the amount of principal being prepaid. The term "DISCOUNT RATE"
shall mean the rate that, when compounded monthly, is equivalent to the Treasury
Rate (hereinafter defined) when compounded semi-annually. The term "TREASURY
RATE" shall mean the yield calculated by the linear interpolation of the yields,
as reported in 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 U.S. Treasury constant
maturities with maturity dates (one longer and one shorter) most nearly
approximating the Maturity Date. (If Release H.15 is no longer published, Lender
shall select a comparable publication to determine the Treasury Rate.)

                                       8
<PAGE>

         10. MAXIMUM RATE PERMITTED BY LAW. All agreements in this Note and all
other Loan Documents are expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of maturity of the indebtedness
evidenced hereby or otherwise, shall the amount agreed to be paid hereunder for
the use, forbearance, or detention of money exceed the highest lawful rate
permitted under applicable usury laws. If, from any circumstance whatsoever,
fulfillment of any provision of this Note or any other Loan Document at the time
performance of such provision shall be due shall involve exceeding any usury
limit prescribed by law that a court of competent jurisdiction may deem
applicable hereto, then, ipso facto, the obligations to be fulfilled shall be
reduced to allow compliance with such limit, and if, from any circumstance
whatsoever, Lender shall ever receive as interest an amount that would exceed
the highest lawful rate, the receipt of such excess shall be deemed a mistake
and shall be canceled automatically or, if theretofore paid, such excess shall
be credited against the principal amount of the indebtedness evidenced hereby to
which the same may lawfully be credited, and any portion of such excess not
capable of being so credited shall be refunded immediately to Borrower.

         11. EVENTS OF DEFAULT; ACCELERATION OF AMOUNT DUE. Lender may in its
sole discretion, without notice to Borrower, declare the entire Debt, including
the principal balance of the Loan, all accrued interest, and all costs,
expenses, charges and fees payable under any Loan Document, together with any
applicable Prepayment Consideration, immediately due and payable, and Lender
shall have all remedies available to it at law or equity for collection of the
amounts due, if any of the following (the "EVENTS OF DEFAULT") occurs:

                  (a) Borrower fails to make full and punctual payment of any
Monthly Payment or any other amount payable on a monthly basis under this Note,
the Security Instrument or any other Loan Document within five (5) days of the
date on which such payment was due; or

                  (b) Borrower fails to make full payment of the Debt when due,
whether on the Maturity Date, upon acceleration or prepayment, or otherwise; or

                  (c) Borrower fails to make full and punctual payment of any
Late Charges, costs and expenses due hereunder, or any other sum of money
required to be paid to Lender under this Note, the Security Instrument or under
any other Loan Document (other than any payment described in subclauses (a) and
(b) immediately above), which failure is not cured on or before the fifth (5th)
day after Lender's written notice to Borrower that such payment is required.

                  (d) an Event of Default occurs under the Security Instrument
or any other Loan Document.

         12. TIME OF ESSENCE. Time is of the essence with regard to each
provision contained in this Note.

         13. TRANSFER AND ASSIGNMENT. This Note may be freely transferred and
assigned by Lender. Borrower's right to transfer its rights and obligations with
respect to the Debt, and to be released from liability under this Note, shall be
governed by the Security Instrument.

         14. AUTHORITY OF PERSONS EXECUTING NOTE. Borrower warrants and
represents that the persons or officers who are executing this Note and the
other Loan Documents on behalf of

                                       9
<PAGE>

Borrower have full right, power and authority to do so, and that this Note and
the other Loan Documents constitute valid and binding documents, enforceable
against Borrower in accordance with their terms, and that no other person,
entity, or party is required to sign, approve, or consent to, this Note.

         15. SEVERABILITY. The terms of this Note are severable, and should any
provision be declared by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions shall, at the option of Lender, remain
in full force and effect and shall in no way be impaired.

         16. BORROWER'S WAIVERS. Borrower and all others liable hereon hereby
waive presentation for payment, demand, notice of dishonor, protest, and notice
of protest, notice of intent to accelerate, and notice of acceleration, stay of
execution and all other suretyship defenses to payment generally. No release of
any security held for the payment of this Note, or extension of any time periods
for any payments due hereunder, or release of collateral that may be granted by
Lender from time to time, and no alteration, amendment or waiver of any
provision of this Note or of any of the other Loan Documents, shall modify,
waive, extend, change, discharge, terminate or affect the liability of Borrower
and any others that may at any time be liable for the payment of this Note or
the performance of any covenants contained in any of the Loan Documents.

         17. GOVERNING LAW. This Note shall be governed and construed generally
according to the laws of the jurisdiction in which the real property collateral
for this Note is located without regard to the conflicts of law provisions
thereof ("GOVERNING STATE").

         18. JURISDICTION AND VENUE. BORROWER HEREBY CONSENTS TO PERSONAL
JURISDICTION IN THE GOVERNING STATE. VENUE OF ANY ACTION BROUGHT TO ENFORCE THIS
NOTE OR ANY OTHER LOAN DOCUMENT OR ANY ACTION RELATING TO THE LOAN OR THE DEBT
OR THE RELATIONSHIPS CREATED BY OR UNDER THE LOAN DOCUMENTS ("ACTION") SHALL, AT
THE ELECTION OF LENDER, BE IN (AND IF ANY ACTION IS ORIGINALLY BROUGHT IN
ANOTHER VENUE, THE ACTION SHALL AT THE ELECTION OF LENDER BE TRANSFERRED TO) A
STATE OR FEDERAL COURT OF APPROPRIATE JURISDICTION LOCATED IN THE GOVERNING
STATE. BORROWER HEREBY CONSENTS AND SUBMITS TO THE PERSONAL JURISDICTION OF THE
STATE COURTS OF THE GOVERNING STATE AND OF FEDERAL COURTS LOCATED IN THE
GOVERNING STATE IN CONNECTION WITH ANY ACTION AND HEREBY WAIVES ANY AND ALL
PERSONAL RIGHTS UNDER THE LAWS OF ANY OTHER STATE TO OBJECT TO JURISDICTION
WITHIN SUCH STATE FOR PURPOSES OF ANY ACTION. Borrower hereby waives and agrees
not to assert, as a defense to any Action or a motion to transfer venue of any
Action, (i) any claim that it is not subject to such jurisdiction, (ii) any
claim that any Action may not be brought against it or is not maintainable in
those courts or that this Note or any of the other Loan Documents may not be
enforced in or by those courts, or that it is exempt or immune from execution,
(iii) that the Action is brought in an inconvenient forum, or (iv) that the
venue for the Action is in any way improper.

                                       10
<PAGE>

         19. NOTICES. Any notice required or permitted to be given hereunder
must be in writing and given (a) by depositing same in the United States mail,
addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested; (b) by delivering the same in person to
such party; (c) by transmitting a facsimile copy to the correct facsimile phone
number of the intended recipient (with a second copy sent by registered or
certified regular mail); or (d) by depositing the same into the custody of a
nationally recognized overnight delivery service addressed to the party to be
notified. In the event of mailing, notices shall be deemed effective three (3)
days after posting; in the event of overnight delivery, notices shall be deemed
effective on the next Business Day following deposit with the delivery service;
in the event of personal service or facsimile transmissions, notices shall be
deemed effective when delivered. For purposes of notice, the addresses of the
parties shall be as set forth in the Table. From time to time either party may
designate another address than the address set forth for all purposes of this
Note by giving the other party no less than ten (10) days advance notice of such
change of address in accordance with the notice provisions hereof.

         20. AVOIDANCE OF DEBT PAYMENTS. To the extent that any payment to
Lender and/or any payment or proceeds of any collateral received by Lender in
reduction of the Debt is subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, to Borrower
(or Borrower's successor) as a debtor in possession, or to a receiver or any
other party under any bankruptcy law, state or federal law, common law or
equitable cause, then the portion of the Debt intended to have been satisfied by
such payment or proceeds shall remain due and payable hereunder, be evidenced by
this Note, and shall continue in full force and effect as if such payment or
proceeds had never been received by Lender whether or not this Note has been
marked "paid" or otherwise cancelled or satisfied and/or has been delivered to
Borrower, and in such event Borrower shall be immediately obligated to return
the original Note to Lender and any marking of "paid" or other similar marking
shall be of no force and effect.

         21. NONRECOURSE.

                  (a) Subject to the provisions of subsections (b) and (c) of
this Section 21, Lender shall not be entitled to recover any deficiency judgment
against Borrower or any general partner (if any) of Borrower on this Note,
provided, however, the foregoing shall not be interpreted to: (i) impair or
affect the right of Lender to enforce any of its rights or remedies (other than
any right to a deficiency judgment) provided for in any of the Loan Documents or
under applicable law in full accordance with the terms thereof including but not
limited to the right of Lender to name Borrower or any general partner of
Borrower as a party defendant in any action or suit for specific performance,
foreclosure, or sale (or similar remedy) under the Security Instrument, or any
other Loan Document; (ii) impair or affect the validity or enforceability of any
guaranty, indemnity agreement (including but not limited to any environmental
indemnity agreement), letter of credit, or other similar third party agreement
or undertaking made in connection with this Note, the Security Instrument, or
any other Loan Document; (iii) impair or affect Lender's right to offset any and
all amounts outstanding under any of the Loan Documents against any claim or
amount that may be asserted against Lender by Borrower or any partners, members,
shareholders, or other owners of legal or beneficial interests in Borrower; or
(iv) affect the validity or enforceability of or impair the right of Lender to
bring suit and obtain specific performance or personal, recourse judgment to
enforce the liability of

                                       11
<PAGE>

Borrower or any other person or entity to the extent of, and Borrower hereby
agrees to be personally liable for, any loss, damage, cost, expense, liability,
or claim incurred by or made against Lender (including all attorneys' fees and
expenses and other collection and litigation expenses) arising out of or in
connection with any of the following:

                           (A) Borrower or any affiliate, agent, or employee of
         Borrower misappropriates any rents or other Property income or
         collateral proceeds including but not limited to insurance or
         condemnation proceeds or awards;

                           (B) Borrower or any affiliate, agent, or employee of
         Borrower fails to apply or pay over any tenant security deposits or
         other refundable deposits in accordance with the terms of the
         applicable lease or other agreement or the Security Instrument or any
         other Loan Document;

                           (C) Borrower or any affiliate, agent, or employee of
         Borrower receives rents or other payments from tenants more than one
         month in advance and fails to apply them in accordance with the Loan
         Documents;

                           (D) following the occurrence of an Event of Default,
         Borrower or any affiliate, agent, or employee of Borrower (including
         Borrower in its capacity as a debtor or debtor in possession in a
         bankruptcy proceeding) fails either to apply rents or other Property
         income, whether collected before or after such Event of Default, to the
         ordinary, customary, and necessary expenses of operating the Property
         or, upon demand, to deliver such rents or other Property income to
         Lender;

                           (E) waste is committed on the Property during a
         period while Borrower or any affiliate, agent, or employee of Borrower
         is in possession thereof ("waste" meaning the diminution in the
         Property's value resulting from Borrower's negligent or willful failure
         to manage, maintain, repair and otherwise operate the Property in a
         commercially reasonable manner);

                           (F) any damage to the Property or the Lender is
         caused as a result of the intentional misconduct or gross negligence of
         Borrower or any affiliate, agent, or employee of Borrower;

                           (G) any Property is removed in violation of the
         terms of the Loan Documents;

                           (H) Borrower fails, in accordance with the terms of
         the Loan Documents, to maintain insurance or to pay taxes, assessments,
         or other liens or claims that could create liens affecting the Property
         (unless Lender is escrowing funds therefor and fails to make such
         payments or has taken possession of the Property following an Event of
         Default, has received all rents from the Property applicable to the
         period for which such insurance, taxes or other items are due, and
         thereafter fails to make such payments);

                           (I) there is any fraud or material misrepresentation
         by Borrower or any of its affiliates, any guarantor, any indemnitor or
         any agent, employee, or other

                                       12
<PAGE>

         person with actual or apparent authority to make statements or
         representations on behalf of Borrower, any affiliate of Borrower, or
         any guarantor or indemnitor ("apparent authority" meaning such
         authority as the principal knowingly or negligently permits the agent
         to assume, or which he holds the agent out as possessing); or

                           (J) Borrower fails, following an Event of Default, to
         deliver to Lender on demand all security deposits, books and records
         relating to the Property and in the possession or control of Borrower
         or any affiliate, agent, or employee of Borrower.

                  (b) Notwithstanding anything to the contrary in the provisions
of subsection (a) of this Section, Borrower and any general partner of Borrower
shall be personally liable for the Debt if the Property or any part thereof
shall at any time hereafter become property of the estate, or an asset in a
bankruptcy, insolvency, receivership, liquidation, winding up, or other similar
type of proceeding or if Borrower shall at any time hereafter make a general
assignment for the benefits of its creditors.

                  (c) Nothing herein shall be deemed to constitute a waiver by
Lender of any right Lender may have under Sections 506(a), 506(b), 1111(b) or
any other provision of the United States Bankruptcy Code to file a claim for the
full amount of the Debt (as defined in the Security Instrument) or to require
that all collateral shall continue to secure all of the Debt.

         22. MISCELLANEOUS. Neither this Note nor any of the terms hereof,
including but not limited to the provisions of this Section, may be terminated,
amended, supplemented, waived or modified orally, but only by an instrument in
writing executed by the party against which enforcement of the termination,
amendment, supplement, waiver or modification is sought, and the parties hereby:
(a) expressly agree that it shall not be reasonable for any of them to rely on
any alleged, non-written amendment to this Note; (b) irrevocably waive any and
all right to enforce any alleged, non-written amendment to this Note; and (c)
expressly agree that it shall be beyond the scope of authority (apparent or
otherwise) for any of their respective agents to agree to any non-written
modification of this Note. If Borrower consists of more than one person or
entity, then the obligations and liabilities of each person or entity shall be
joint and several. As used in this Note, (i) the terms "include," "including"
and similar terms shall be construed as if followed by the phrase "without being
limited to," (ii) words of masculine, feminine, or neuter gender shall mean and
include the correlative words of the other genders, and words importing the
singular number shall mean and include the plural number, and vice versa, (iii)
all captions to the Sections hereof are used for convenience and reference only
and in no way define, limit or describe the scope or intent of, or in any way
affect, this Note, (iv) no inference in favor of, or against, Lender or Borrower
shall be drawn from the fact that such party has drafted any portion hereof or
any other Loan Document, and (v) the words "Lender" and "Borrower" shall include
their respective successors, assigns, heirs, personal representatives, executors
and administrators. In the event of a conflict between or among the terms,
covenants, conditions or provisions of the Loan Documents, the term(s),
covenant(s), condition(s) and/or provision(s) that Lender may elect to enforce
from time to time so as to enlarge the interest of Lender in its security,
afford Lender the maximum financial benefits or security for the Debt, and/or
provide Lender the maximum assurance of payment of the Debt in full shall
control. BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS BEEN PROVIDED WITH
SUFFICIENT AND NECESSARY TIME AND OPPORTUNITY TO REVIEW THE TERMS OF THIS

                                       13
<PAGE>

NOTE, THE SECURITY INSTRUMENT, AND EACH OF THE LOAN DOCUMENTS, WITH ANY AND ALL
COUNSEL IT DEEMS APPROPRIATE, AND THAT NO INFERENCE IN FAVOR OF, OR AGAINST,
LENDER OR BORROWER SHALL BE DRAWN FROM THE FACT THAT EITHER SUCH PARTY HAS
DRAFTED ANY PORTION HEREOF, OR THE SECURITY INSTRUMENT, OR ANY OF THE LOAN
DOCUMENTS.

         23. WAIVER OF COUNTERCLAIM AND JURY TRIAL. BORROWER HEREBY KNOWINGLY
WAIVES THE RIGHT TO ASSERT ANY COUNTERCLAIM, OTHER THAN A COMPULSORY
COUNTERCLAIM, IN ANY ACTION OR PROCEEDING BROUGHT AGAINST BORROWER BY LENDER OR
ITS AGENTS. ADDITIONALLY, BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON THE LOAN OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THE
LOAN, THIS NOTE, THE SECURITY INSTRUMENT, OR ANY OTHER LOAN DOCUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN), OR
ACTION OF BORROWER OR LENDER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
LENDER'S MAKING OF THE LOAN.

         24. LOCAL LAW PROVISIONS. In the event of any inconsistencies between
the terms and conditions of this Section and any other terms and conditions of
this Note (other than the terms and conditions of Section 25), the terms and
conditions of this Section shall be binding.

                                      NONE.

         25. ADDITIONAL PROVISIONS. In the event of any inconsistencies between
the terms and conditions of this Section and any other terms and conditions of
this Note, the terms and conditions of this Section shall be binding.

                  25.1 SECURITY FOR NOTE. The fourth line of Section 3 is hereby
modified by deleting "or others" and substituting therefor: "its successors and
assigns, or its affiliates".

                  25.2 FINANCIAL STATEMENT REPORTING DEPOSIT. Section 4 is
deleted and the following substituted therefor:

                           "(a) Concurrently with the execution of this Note,
                  Borrower has deposited with Lender the sum of $3,750.00 (the
                  "ALTERNATE FSR DEPOSIT") in lieu of the monthly Financial
                  Statement Reporting Deposit as stated in the Loan Terms Table,
                  which shall be held by Lender throughout the term of the Loan
                  as security for Borrower's obligation to strictly comply with
                  the financial reporting requirements set forth in the Security
                  Instrument. If Borrower shall fail to strictly comply with the
                  financial reporting requirements set forth in the Security
                  Instrument or if an Event of Default shall occur, (i) Lender
                  shall be entitled to retain the Alternate FSR Deposit for the
                  purpose of compensating Lender for Lender's added costs and
                  expenses that occur as a result of Borrower's failure to
                  timely provide such information and that are difficult to
                  predict in amount, and

                                       14
<PAGE>

                  (ii) the provisions of Section 4(b) hereof with regard to the
                  Financial Statement Reporting Deposit shall immediately become
                  effective and Borrower shall henceforth be required to pay
                  Lender the constant monthly amount equal to the Financial
                  Statement Reporting Deposit as set forth in the Loan Terms
                  Table. Lender and Borrower agree that Lender's retention of
                  the Alternate FSR Deposit is not a fine or penalty, but is
                  intended to be and shall be deemed to be reasonable
                  compensation to Lender for increased costs and expenses that
                  Lender will incur. The foregoing provisions shall not in any
                  way limit Lender's other rights and remedies under the Loan
                  Documents or applicable law.

                           (b) If Borrower shall fail to strictly comply with
                  the financial reporting requirements set forth in the Security
                  Instrument or if an Event of Default shall occur which remains
                  uncured beyond the applicable cure period, if any, Borrower
                  shall immediately be required to pay Lender, in addition to
                  and concurrently with each Monthly Payment, an amount equal to
                  the Financial Statement Reporting Deposit set forth in the
                  Loan Terms Table. On the first day of the fourteenth (14th)
                  month following the date on which the provisions of this
                  Section 4(b) become effective (the "FSR EFFECTIVE DATE"), and
                  on an annual basis thereafter during the term of this Note,
                  Lender shall remit to Borrower a portion of the Financial
                  Statement Reporting Deposit then held by Lender in an amount
                  equal to the aggregate amount of the Financial Statement
                  Reporting Deposit actually received by Lender during the
                  twelve (12) month period ending upon the immediately prior
                  annual anniversary of the FSR Effective Date (the "ANNUAL
                  COMPLIANCE PERIOD") provided that no Event of Default exists
                  beyond any applicable cure period, including any failure by
                  Borrower to strictly comply with the financial reporting
                  requirements set forth in the Security Instrument."

                  25.3 PREPAYMENT; DEFEASANCE. The third line of Section
9(b)(i)(B) is hereby modified by inserting "reasonable" between "including" and
"attorneys'".

                  The first line of Section 9(b)(i)(C)(4) is hereby modified by
deleting "for Borrower".

                  The eighteenth line of Section 9(b)(i)(C)(7) is hereby
modified by inserting "reasonable" between "including" and "attorneys'".

                  25.4 EVENTS OF DEFAULT. Section 11(d) is hereby deleted and
the following substituted therefor: "(d) an `Event of Default' occurs under the
Security Instrument or any other Loan Document as such term is defined therein."

                  25.5 NOTICES. In addition to the requirements of Section 19
hereof, Lender shall use reasonable efforts to provide a courtesy copy of any
notice required or permitted to be given by Lender to Borrower hereunder to the
following addressees:

                                       15
<PAGE>

         Maureen Connolly
         Squire, Sanders & Dempsey L.L.P.
         1300 Huntington Center
         41 South High Street
         Columbus, Ohio 43215-6197
         Phone:  1-614-365-2714
         Fax:  1-614-365-2499.

                  Lender's failure to send such courtesy copies shall not impair
         the effect of the notice sent to Borrower.

                  25.6 NON-RECOURSE. Section 21 is hereby amended as follows:

                  (a) Section 21(a) is hereby modified by deleting the clause
         "Subject to the provisions of subsections (b) and (c) of this Section
         21," from the first line thereof.

                  (b) Subsection (E) of Section 21(a)(iv) is hereby deleted in
         its entirety and the following substituted therefor:

                           "(E) waste is committed on the Property during a
                  period while Borrower or any affiliate, agent, or employee of
                  Borrower is in possession thereof ("waste" meaning the
                  diminution in the Property's value resulting from Borrower's
                  grossly negligent or willful failure to maintain and repair
                  the Property in a commercially reasonable manner);"

                  (c) Subsection (I) of Section 21(a)(iv) is hereby deleted in
         its entirety and the following substituted therefor:

                           "(I) there is any fraud or material misrepresentation
                  by Borrower or any guarantor; or"

                  (d) The following is hereby added as Subsection 21(a)(iv)(K):

                           "(K) valid certificates of occupany have not been
                  issued for any portion of the Property which is occupied as of
                  the date hereof."

                  (e) Section 21(b) is hereby deleted in its entirety.

                  (f) Section 21(c) is hereby deleted in its entirety.

                  25.7 FULL RECOURSE UNTIL SECURITIZATION. Notwithstanding
anything in this Note to the contrary, Borrower hereby agrees to be personally
liable for, any loss, damage, cost, expense, liability, or claim incurred by or
made against Lender (including all attorneys' fees and expenses and other
collection and litigation expenses) arising out of or in connection with any of
the following: (i) all payments due under this Note, including the repayment of
all additional advances of any kind which may be made by Lender to Borrower,
whether at stated maturity, by acceleration or otherwise, (ii) any and all
renewals or extensions of any such item of indebtedness or obligation or any
part thereof; (iii) all obligations and indebtedness of any kind

                                       16
<PAGE>

or nature arising under any of the Loan Documents; (iv) any future advances
related to the Loan Documents which may be made by Lender to Borrower, whether
made to protect the security or otherwise, and whether or not evidenced by
additional promissory notes or other evidences of indebtedness executed and
delivered by Borrower or others on behalf of Borrower; (v) all interest due on
all of the same; (vi) all expenses, including attorney's fees, incurred by
Lender in connection with the collection of any of the liabilities or other
indebtedness now or hereafter owed by Borrower to Lender, the enforcement of all
rights and remedies under the Loan Documents or any other security therefor or
the enforcement of any of Lender's rights under this Guaranty or under any of
the Loan Documents, or incurred by Lender in protecting Lender or its interest
in any of the collateral securing the Loan (including attorney's fees and
litigation expenses related to or arising out of any lawsuit or proceeding
brought by or against Lender in any court or other forum, including actions or
proceedings brought by or on behalf of Borrower's bankruptcy estate or any
guarantor or indemnitor); PROVIDED HOWEVER, THIS PROVISION SHALL BE NULL AND
VOID upon the completion of any Securitization (as hereinafter defined) which
includes the Loan. As used herein, "SECURITIZATION" means any of (i) the sale,
assignment, or other transfer of the Obligations and the Loan Documents to one
or more investors, or (ii) the transfer or deposit of the Obligations or Loan
Documents to or with one or more trusts or other entities which may sell
certificates or other instruments to investors evidencing an ownership interest
in the assets of such trust or the right to receive income or proceeds therefrom
or (iii) any other securitization backed in whole or in part by the Loan or any
interest therein.

                  25.8 MANDATORY PREPAYMENT. Notwithstanding anything in this
Note or any other Loan Document to the contrary, if Lender has been unable to
include the Loan in a Securitization prior to the date which is one year from
the date hereof (the "SECURITIZATION OUTSIDE DATE"), the outstanding principal
balance of the Loan, together with all unpaid interest thereon, and all other
amounts owed to Lender pursuant to this Note or any other Loan Document or
otherwise in connection with the Loan or the security for the Loan, shall be due
and payable on that first business day immediately following the Securitization
Outside Date (the "MANDATORY PREPAYMENT DATE"). In addition to the foregoing
amounts, Borrower shall be obligated to pay Lender any hedge loss incurred by
Lender and all costs related thereto on the Mandatory Prepayment Date. For the
purposes of this Section 25.8, if, in connection with any Securitization, (i)
Lender is able to make all representations and warranties with respect to the
Loan that are required by any rating agency or investor in connection with a
Securitization without exception, and (ii) the pricing of the Loan and the
subordination levels pertaining thereto in connection with such Securitization
thereof are consistent with the pricing and subordination levels of other
similar loans included in the pool of loans that are being securitized, Lender
shall not require the mandatory prepayment of the Loan set forth herein.

         (THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK)

                                       17
<PAGE>

         Intending to be fully bound, Borrower has executed this Note effective
as of the day and year first above written.

BORROWER:                   GLIMCHER ASHLAND VENTURE, LLC,
                            a Delaware limited liability company

                            By:   Glimcher Properties Limited Partnership, a
                                  Delaware limited partnership, its sole member

                                  By:    Glimcher Properties Corporation, a
                                         Delaware corporation, its sole general
                                         partner

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

         Pay to the order of __________________________________, without
recourse.

                            KEYBANK NATIONAL ASSOCIATION,
                            a national banking association

                            By: _________________________________________
                            Print Name: _________________________________
                            Print Title: ________________________________

                                       18
<PAGE>

STATE OF OHIO                       )
                                    ) ss.
COUNTY OF FRANKLIN                  )

         On this 12th day of October, 2001, before me, Maureen Connolly, a
Notary Public in and for said state, personally appeared George A. Schmidt, who
being by me duly sworn did say that s/he is the Executive Vice President of
Glimcher Properties Corporation, the sole general partner of Glimcher Properties
Limited Partnership, the sole member of Glimcher Ashland Venture, LLC, a
Delaware limited liability company, and that the within instrument was signed
and sealed in behalf of said corporation on behalf of said limited partnership
on behalf of said limited liability company by authority of its members, and
acknowledged said instrument to be the free act and deed of said limited
liability company for the purposes therein stated.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal, the day and year last above written.

                                 /s/ Maureen Connolly
                                 ----------------------------------------------
                                 Notary Public in and for Said County and State

                                 Maureen Connolly
                                 ----------------------------------------------
                                 (Type, print or stamp the
                                 Notary's name below his or
                                 her signature.)

My Commission Expires:

No Expiration Date
------------------------

                                       19

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