Document:

AMENDED CERT OF DESIGNATIONS, PREFERENCES ETC.

 

Exhibit 4.5

AMENDED CERTIFICATE OF

DESIGNATIONS, PREFERENCES AND RIGHTS OF

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

of

ASTORIA FINANCIAL CORPORATION

Pursuant to Section 151 of the General Corporation Law

of the State of Delaware

         We, George L. Engelke, Jr. and Alan P. Eggleston, being the Chairman,
President and Chief Executive Officer and the Executive Vice President, General
Counsel and Secretary, respectively, of Astoria Financial Corporation, a
corporation organized and existing under the General Corporation Law of the
State of Delaware (the “Corporation”), in accordance with the provisions of
Sections 103 and 151 thereof, DO HEREBY CERTIFY:

         That, pursuant to the authority conferred upon the Board of Directors by
the Certificate of Incorporation of the Corporation, the Board of Directors of
the Corporation at a meeting duly called and held on July 17, 1996, at which a
quorum was present and acting throughout, by resolution duly created a series
of 325,000 shares of preferred stock, par value $.01 per share, designated
“Series A Junior Participating Preferred Stock.” Pursuant to such authority,
the Certificate of Designations, Preferences and Rights of Series A Junior
Participating Preferred Stock was filed with the Secretary of State of the
State of Delaware on July 22, 1996.

         That, pursuant to the authority conferred upon the Board of Directors by
the Certificate of Incorporation of the Corporation, the Board of Directors of
the Corporation at a meeting duly called and held on October 17, 2001, at which
a quorum was present and acting throughout, duly approved and adopted the
following resolution increasing the Series A Junior Participating Preferred
Stock from 325,000 to 1,225,000 shares:

		
	 	         RESOLVED, that the number of shares constituting the Series A
Junior Participating Preferred Stock, par value $1.00 per share
(the “Series A Preferred Stock”), of Astoria Financial Corporation
(the “Company”) be, and it hereby is, increased from 325,000 to
1,225,000 shares.

         That, pursuant to the authority conferred upon the Board of Directors by
the Certificate of Incorporation of the Corporation, the Board of Directors of
the Corporation at a meeting duly called and held on October 17, 2001, at which
a quorum was present and acting throughout, by resolution duly adopted and
approved this Amended Certificate of Designations, Preferences and Rights of
Series A Junior Participating Preferred Stock to reflect the foregoing:

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	 	         Series A Junior Participating Preferred Stock:

         Section 1. Designation and Amount.

                  The shares of such series shall be designated as “Series A Junior
Participating Preferred Stock,” par value $1.00 per share, and the number of
shares constituting such series shall be 1,225,000. Such number of shares may
be increased or decreased by resolution of the Board of Directors of the
Corporation (the “Board of Directors”); provided, that no decrease shall reduce
the number of shares of Series A Junior Participating Preferred Stock to a
number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options, rights
or warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Junior Participating Preferred Stock.

         Section 2. Dividends and Distributions.

                  (a) Subject to the rights of the holders of any shares of any series of
preferred stock (or any similar stock) ranking prior and superior to the Series
A Junior Participating Preferred Stock with respect to dividends, the holders
of shares of Series A Junior Participating Preferred Stock, in preference to
the holders of Common Stock, par value $.01 per share (the “Common Stock”), of
the Corporation, and of any other junior stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the first day
of March, June, September and December in each year (each such date being
referred to herein as a “Quarterly Dividend Payment Date”), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Junior Participating Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $1
or (b) subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly
Dividend Payment Date, since the fast issuance of any share or fraction of a
share of Series A Junior Participating Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise, than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series A Junior Participating Preferred
Stock were entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

                  (b) The Corporation shall declare a dividend or distribution on the Series
A Junior Participating Preferred Stock as provided in paragraph (a) of this
Section immediately

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 after it declares a dividend or distribution on the Common Stock (other
than a dividend payable in shares of Common Stock); provided that, in the event
no dividend or distribution shall have been declared on the Common Stock during
the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1 per share on the Series A
Junior Participating Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.

                  (c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Junior Participating
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Junior Participating Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date
for the determination of holders of shares of Series A Junior Participating
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.

         Section 3. Voting Rights.

                  The holders of shares of Series A Junior Participating Preferred Stock
shall have the following voting rights:

                  (a) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Junior Participating Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the number of votes per share to which holders of shares
of Series A Junior Participating Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

                  (b) Except as otherwise provided herein, in any other resolution creating
a series of preferred stock or any similar stock, in any amendment to the
Certificate of Incorporation of the Corporation or by law, the holders of
shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock and any other capital stock of the

3

 

 Corporation having general voting rights shall vote together as one class
on all matters submitted to a vote of stockholders of the Corporation.

Except as set forth herein, or as otherwise provided by law, holders of Series
A Junior Participating Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.

         Section 4. Certain Restrictions.

                  (a) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series A Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:

		
	 	         (i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock;

		
	 	         (ii) declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, except dividends paid ratably on the
Series A Junior Participating Preferred Stock and all such parity stock
on which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;

		
	 	         (iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the Corporation ranking
junior, (either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Junior Participating Preferred Stock; or

		
	 	         (iv) redeem or purchase or otherwise acquire for consideration any
shares of Series A Junior Participating Preferred Stock, or any shares of
stock ranking on a parity with the Series A Junior Participating
Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment
among the respective series or classes.

                  (b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section
4, purchase or otherwise acquire such shares at such time and in such manner.

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         Section 5. Reacquired Shares.

                  Any shares of Series A Junior Participating Preferred Stock purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired
and cancelled promptly after the acquisition thereof. All such shares shall
upon their cancellation become authorized but unissued shares of preferred
stock and may be reissued as part of a new series of preferred Stock subject to
the conditions and restrictions on issuance set forth herein, in a resolution
of the Board of Directors, in the Certificate of Incorporation of the
Corporation, or in any other Certificate of Amendment creating a series of
preferred stock or any similar stock or as otherwise required by law.

         Section 6. Liquidation, Dissolution or Winding Up.

                  Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (a) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Preferred Stock unless, prior thereto, the
holders of shares of Series A Junior Participating Preferred Stock shall have
received the greater of (i) $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment, or (ii) an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the
aggregate amount to be distributed per share to holders of shares of Common
Stock, or (b) to the holders of shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with the Series A
Junior Participating Preferred Stock, except distributions made ratably on the
Series A Junior Participating Preferred Stock and all such parity stock in
proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up. In the event the
Corporation shall at any time declare or pay any dividend on, the Common Stock
payable in shares of Common Stock, or effect a subdivision. or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Junior Participating
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (a) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.

         Section 7. Consolidation, Merger, etc.

                  In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case each share of Series A Junior Participating
Preferred Stock shall at the same time be similarly exchanged or changed into
an amount per share, subject to the provision for adjustment hereinafter set
forth, equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time declare or pay any dividend on the

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 Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Junior Participating Preferred Stock
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.

         Section 8. No Redemption.

                  The shares of Series A Junior Participating Preferred Stock shall not be
redeemable, except as otherwise provided herein.

         Section 9. Rank.

                  The Series A Junior Participating Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets, junior to all other
series of the Corporation’s preferred stock.

         Section 10. Amendment.

                  At any time that any shares of Series A Preferred Stock are outstanding,
the Certificate of Incorporation of the Corporation shall not be amended in any
manner, nor shall the Board of Directors take any action, which would
materially alter or change the powers, preferences or special rights of the
Series A Junior Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Series A Junior Participating Preferred Stock, voting
together as a single class.

         Section 11. Fractional Shares.

                  Series A Junior Participating Preferred Stock may be issued in fractions
of a share, which shall entitle the holder, in proportion to such holder’s
fractional shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of Series
A Junior Participating Preferred Stock.

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                  IN WITNESS WHEREOF, Astoria Financial Corporation has caused this
certificate to be executed by its Chairman, President and Chief Executive
Officer and by its Executive Vice President, General Counsel and Secretary this
1st day of November, 2001.

	 	 	 	 	 	 	 
	 	 	ASTORIA FINANCIAL CORPORATION	 	 
	
	
	
	

	 
	 	 	
By:
	 	/S/ George L. Engelke, Jr.	 	 
	 	 	 	 	
	 	 
	 	 	 	 	George L. Engelke, Jr.

Chairman, President and

Chief Executive Officer	 	 
	 
	
	
	
	

	 	 	
By:
	 	/S/ Alan P. Eggleston	 	 
	 	 	 	 	
	 	 
	 	 	 	 	Alan P. Eggleston

Executive Vice President,

General Counsel and Secretary	 	 

7<PAGE>
                                                                   EXHIBIT 10.25

                                    MORTGAGE

         This MORTGAGE (hereinafter referred to as the "Mortgage"), is made and
executed this 20th day of December, 2001, by Agree Limited Partnership, a
Delaware limited partnership (hereinafter referred to as "Borrower"), having its
principal office at 31850 Northwestern Avenue, Farmington Hills, Michigan 48334
to and in favor of NATIONWIDE LIFE INSURANCE COMPANY, an Ohio corporation, its
successors and assigns (hereinafter referred to as "Lender"), having its
principal office at One Nationwide Plaza, Columbus, Ohio 43215-2220, Attention:
Real Estate Investment Department, or at such other place either within or
without the State of Ohio, as Lender may from time to time designate;

                              W I T N E S S E T H:

         WHEREAS, Borrower is justly indebted to Lender in the original
principal sum of Nineteen Million and 00/100 Dollars ($19,000,000.00) with
interest thereon (hereinafter referred to as the "Loan"), which Loan is
evidenced and represented by that certain "Note" of even date herewith from
Borrower to Lender in the amount of the Loan (hereinafter referred to as the
"Note"), both principal and interest being payable as therein provided, with the
first payment on the Note becoming due and payable on the date of disbursement,
and all amounts remaining unpaid thereon being finally due and payable on the
January 1, 2020, and the term "Note" shall include all other notes given in
substitution, modification, increase, renewal or extension of the original Note
described herein, in whole or in part; and

         WHEREAS, Lender, as a condition precedent to the extension of credit
and the making of the Loan evidenced by the Note, has required that Borrower
provide Lender with security for the repayment of the Loan as well as for the
performance, observance and discharge by Borrower of various terms, covenants,
conditions and agreements made by Borrower to, with, in favor of and for the
benefit of Lender with respect to the Loan and such security;

         NOW THEREFORE, in consideration of and in order to secure the repayment
of the Loan evidenced and represented by the Note, together with interest on
such Loan, as well as the payment of all other sums of money secured hereby, as
hereinafter provided; to secure the observance, performance and discharge by
Borrower of all terms, covenants, conditions and

                                       1
<PAGE>
agreements set forth in the Note, this Mortgage and in all other documents and
instruments executed and delivered by Borrower to and in favor of Lender for the
purpose of further securing the repayment of the Loan evidenced and represented
by the Note; in order to charge the properties, interests and rights hereinafter
described with such payment, observance, performance and discharge; and in
consideration of the sum of One AND 00/100 DOLLAR ($1.00) paid by Lender to
Borrower, and other good and valuable considerations, the receipt and
sufficiency of which are hereby acknowledged by Borrower, Borrower does hereby
grant, bargain, sell, convey, assign, transfer, pledge, deliver, hypothecate,
warrant and confirm unto Lender forever, all of Borrower's right, title and
interest in and to the following described properties, including all rights,
interests, replacements, substitutions and additions thereto, therein or
therefore, to wit:

         (i) All that certain pieces, parcels or tracts of land or real property
of which Borrower is now seized and in actual or constructive possession,
situated in the State of Michigan, and being more particularly described as
Parcels 1-5 on Exhibit A attached hereto and by this reference made a part
hereof (together with the property described in the next succeeding paragraph
being hereinafter referred to as the "Real Property"); and

         (ii) All of Borrower's leasehold interest in and to that certain
leasehold estate of the parcel of land situated in the State of Michigan , such
estate and parcel being more particularly described as Parcel 6 on Exhibit A,
such interest and parcel being included within the definition of Real Property
as hereinbefore defined: and

         (iii) All buildings, structures and other improvements of any kind,
nature or description now or hereafter erected, constructed, placed or located
upon the Real Property (hereinafter sometimes together referred to as the
"Improvements"), including, without limitation, any and all additions to,
substitutions for or replacements of such Improvements; and

         (iv) All minerals, royalties, gas rights, water, water rights, water
stock, flowers, shrubs, lawn plants, crops, trees, timber and other emblements
now or hereafter located on, under or above all or any part of the Real
Property; and

         (v) All and singular, the tenements, hereditaments, strips and gores,
rights-of-way, easements, privileges, profits and other appurtenances now or
hereafter belonging or in any way appertaining to the Real Property, including,
without limitation, all right, title and interest of the Borrower in any
after-acquired right, title, interest, remainder or reversion in and to the beds
of any ways, streets, avenues, roads, alleys, passages and public places, open
or proposed, in front of, running through, adjoining or adjacent to said Real
Property (hereinafter sometimes together referred to as "Appurtenances"); and

         (vi) Any and all leases, subleases licenses, contracts, rents, license
fees, royalties, issues, revenues, profits, proceeds, deposits, income and other
benefits, including accounts receivable, termination fees, of, accruing to or
derived from the Real Property, Improvements and

                                       2
<PAGE>
Appurtenances, and any business or enterprise presently situated or hereafter
operated thereon and therewith and all of Borrower's right, title and interest
under any and all lease guaranties, letters of credit, and any other credit
support furnished to Borrower in connection with any of the foregoing
(hereinafter sometimes together referred to as the "Rents"); and

         (vii) Any and all awards, payments or settlements, including interest
thereon, and the right to receive the same, as a result of: (a) the exercise of
the right of eminent domain; (b) the alteration of the grade of any way, street,
avenue, road, alley, passage or public place; (c) any other injury, damage,
casualty or claim relating to the taking of, or decrease in the value of, the
Real Property, Improvements or Appurtenances; or (d) proceeds of insurance
awards, to the extent of all amounts which may be secured by this Mortgage at
the date of any such award or payment including but not limited to Reasonable
Attorneys' Fees (as hereinafter defined), costs and disbursements incurred by
Lender in connection with the collection of such award or payment; and

         (viii) All of the right, title and interest of Borrower in and to all
fixtures, goods, inventory, chattels, construction supplies and materials,
fittings, furniture, furnishings, equipment, machinery, apparatus, appliances,
and other items of personal property, whether tangible or intangible, of any
kind, nature or description, whether now owned or hereafter acquired by
Borrower, including, without limitation, all signs and displays; all heating,
air conditioning, water, gas, lighting, incinerating and power equipment; all
engines, compressors, pipes, pumps, tanks, motors, conduits, wiring, and
switchboards; all plumbing, lifting, cleaning, fire prevention, fire
extinguishing, sprinkling, refrigerating, ventilating, waste removal and
communications equipment and apparatus; all boilers, furnaces, oil burners,
vacuum cleaning systems, elevators, and escalators; all stoves, ovens, ranges,
disposal units, dishwashers, water heaters, exhaust systems, refrigerators,
cabinets and partitions; all rugs, attached floor coverings, curtains, rods,
draperies, and carpets; all building materials, tools, shades, awnings, blinds,
screens, storm doors and windows; and all other Goods (including Consumer Goods,
Inventory, Equipment and Farm Products), Accounts, Chattel Paper (including
Electronic Chattel Paper and Tangible Chattel Paper), Instruments; General
Intangibles (including Payment Intangibles and Software), Letter-of-Credit
Rights, Documents and Deposit Accounts (all as such terms are defined in the
Uniform Commercial Code as now adopted or amended from time to time in the State
of Michigan of every kind, including, without limitation, any and all licenses,
permits, franchises, trademarks, trade names, service marks, or logos; any of
which is, are or shall hereafter be located upon, attached, affixed to or used
or useful, either directly or indirectly, in connection with the complete and
comfortable use, occupancy and operation of the Real Property, Improvements and
Appurtenances as retail properties, or any other business, enterprise or
operation as may hereafter be conducted upon or within said Real Property,
Improvements and Appurtenances, as well as the proceeds thereof or therefrom
regardless of form (hereinafter sometimes together referred to as the "Fixtures
and Personal Property," which term expressly excludes any toxic waste or
substance deemed hazardous under federal, regional, state or local laws, codes,
ordinances, statutes, rules, regulations, decisions or orders). Borrower hereby
expressly grants to Lender a present security interest in, and a lien and
encumbrance upon, the

                                       3
<PAGE>
Fixtures and Personal Property.

         The Real Property, Improvements, Appurtenances, Rents, Fixtures,
Personal Property and all other property of any kind described herein and in
which Borrower has granted Lender a security interest is collectively
hereinafter referred to as the "Property."

         TO HAVE AND TO HOLD the foregoing Property and the rights hereby
granted for the use and benefit of Lender in fee simple forever.

         Borrower hereby covenants and warrants with and to Lender that Borrower
is indefeasibly seized of the Property and has good right, full power, and
lawful authority to convey and encumber all of the same as aforesaid; that
Borrower hereby fully warrants the title to the Property and will defend the
same and the validity and priority of the lien and encumbrance of this Mortgage
against the lawful claims of all persons whomsoever; and Borrower further
warrants that the Property is free and clear of all liens and encumbrances of
any kind, nature or description, save and except only (with respect to said Real
Property, Improvements and Appurtenances) for real property taxes for years
subsequent to 2001 (which are not yet due and payable) and those exceptions
accepted by Lender as set forth in the title insurance commitment or proforma
policy issued to Lender precedent to the issuance of a Lender's Policy of Title
Insurance insuring the first lien priority of this Mortgage (hereinafter
referred to as the "Permitted Exceptions").

         If Borrower shall pay to Lender the Loan evidenced by the Note, and if
Borrower shall duly, promptly and fully perform, discharge, execute, effect,
complete and comply with and abide by each and every one of the terms,
covenants, conditions and agreements of the Note, this Mortgage and all other
documents and instruments executed as further evidence of or as security for the
Loan secured hereby, then this Mortgage and the estates and interests hereby
granted and created shall cease, terminate and be null and void, and shall be
discharged of record at the expense of Borrower.

         Borrower, for the benefit of Lender does hereby expressly covenant and
agree:

         PAYMENT OF PRINCIPAL AND INTEREST

          1. To pay the principal of the Loan evidenced by the Note, together
with all interest thereon, in accordance with the terms, covenants and
conditions of the Note, promptly at the times, at the place and in the manner
that said principal and interest shall become due. To promptly and punctually
pay all other sums required to be paid by Borrower pursuant to the terms,
covenants and conditions of the Note, this Mortgage, the Assignment of Leases,
Rents and Profits (hereinafter referred to as the "Assignment") and all other
documents and instruments executed as further evidence of, as additional
security for or executed in connection with the Loan evidenced by the Note and
secured by this Mortgage (which documents are collectively hereinafter referred
to as the "Loan Documents").

                                       4
<PAGE>
         PERFORMANCE OF OTHER OBLIGATIONS

          2. To perform, comply with and abide by each and every one of the
terms, covenants, conditions and agreements contained and set forth in the Note,
this Mortgage, and the other Loan Documents. To comply with all laws, codes,
ordinances, statutes, rules, regulations, decisions and orders of any
governmental authorities having jurisdiction over the parties hereto or the
Property which now or hereafter affect the Property or which require or would
require any alterations or improvements to be made to the Property. To perform
all of its obligations under any term, covenant, condition, restriction or
agreement of record affecting the Property including without limitation, the
Ground Lease as defined in Exhibit A, and to insure that at all times the
Property constitutes one or more legal lots capable of being conveyed without
violation of any subdivision or platting laws, codes, ordinances, statutes,
rules, regulations, or other laws relating to the division or separation of real
property and without the prior written consent of Lender, not to surrender,
terminate, assign, or modify the Ground Lease, nor to take any action which
would effect or permit the termination of the Ground Lease.

         PRESERVATION AND MAINTENANCE OF PROPERTY; ACCESSIBILITY; HAZARDOUS
WASTE

          3.      (a) To keep or cause to be kept all Improvements now existing
or hereafter erected on the Real Property in good order and repair, and not to
do or permit any waste, impairment or deterioration thereof or thereon, nor to
alter, remove or demolish any of the Improvements or any Fixtures and Personal
Property attached or appertaining thereto, without the prior written consent of
Lender, nor to initiate, join in or consent to any change in any private
restrictive covenant, zoning ordinance or other public or private restrictions
limiting or defining the uses which may be made of the Property or any part
thereof, nor to do or permit any other act whereby the Property shall become
less valuable, be used for purposes contrary to applicable law or be used in any
manner which will increase the premium for or result in a termination or
cancellation of the insurance policies hereinafter required to be kept and
maintained on the Property. In furtherance of, and not by way of limitation
upon, the foregoing covenant, Borrower shall effect such repairs as Lender may
reasonably require, and from time to time make all needful and proper
replacements so that the Improvements, Appurtenances, Fixtures and Personal
Property will, at all times, be in good condition, fit and proper for the
respective purposes for which they were originally erected or installed. In
connection with the making of such repairs, Borrower shall use contractors who
are properly licensed, who carry workers' compensation insurance and appropriate
liability insurance, who generally have a good reputation for completing their
work in a neat, prompt and workmanlike manner, and use only new or
re-manufactured goods of a quality as good or better than that originally used
on the Property. As provided herein, Borrower shall insure that no liens are
filed against the Property that relate in any way to the repair work provided
for herein.

                  (b) Borrower at all times shall keep the Property and ground
water of the

                                       5
<PAGE>
Property free of Hazardous Materials (as hereinafter defined) and any liens
arising in connection therewith. Borrower shall not and shall not knowingly
permit its tenants or any third party requiring the consent of Borrower to enter
the Property, to use, generate, manufacture, treat, store, release, threaten
release, transport on or over, emit or dispose of Hazardous Materials in, on,
over, under or about the Property including the ground water of the Property in
violation of any federal, regional, state or local law, code, ordinance,
statute, rule, regulation, decision or order currently in existence or
hereinafter enacted or rendered (hereinafter collectively referred to as
"Hazardous Waste Laws"). Borrower shall give Lender prompt Written Notice (as
hereinafter defined) of any claim by any person, entity, or governmental agency
that a significant release or disposal of Hazardous Materials has occurred in,
on, over, under or about the Property, including the ground water of the
Property, in excess of those permitted by the Hazardous Waste Laws, whether
caused by the Borrower, tenant or any third party. Borrower, through its
professional engineers and at Borrower's sole cost, shall promptly and
thoroughly investigate any suspected release of Hazardous Materials in, on,
over, under or about the Property, including the ground water of the Property.
Borrower shall, when required by appropriate governmental authorities, forthwith
remove, repair, remediate, clean up, and/or detoxify any Hazardous Materials
found in, on, over, under or about the Property or in the ground water of the
Property to the extent such actions are required by any applicable Hazardous
Waste Laws, and whether or not Borrower was responsible for the existence of the
Hazardous Materials in, on, over, under or about the Property or the ground
water of the Property. Hazardous Materials shall include, but not be limited to,
substances defined as "hazardous substances," "hazardous materials," or "toxic
substances" in The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by The Superfund Amendments and
Reauthorization Act of 1986, The Hazardous Materials Transportation Act, The
Resource Conservation and Recovery Act of 1976, as amended by The Used Oils
Recycling Act of 1980, The Solid Waste Disposal Act amendment of 1984, The Toxic
Substances Control Act, The Clean Air Act, The Clean Water Act, , or in any
other Hazardous Waste Laws. In addition, Borrower shall not incorporate any
underground storage tanks into the Real Property without the prior written
consent of Lender, and shall insure that all tanks currently on the Real
Property comply with current Hazardous Waste Laws and underground storage tank
regulations and are properly registered.

         Borrower hereby agrees to indemnify Lender and hold Lender harmless
from and against any and all losses, liabilities, damages, injuries, costs,
expenses, fines, fees and claims of any and every kind whatsoever paid, incurred
or suffered by, or asserted against, Lender for, with respect to, or as a direct
or indirect result of, the presence in, on, over, under or about, or the escape,
seepage, leakage, spillage, discharge, emission or release from, the Property of
any Hazardous Materials (including, without limitation, any losses, liabilities,
damages, injuries, costs, expenses or claims asserted or arising under any
Hazardous Waste Laws), regardless of the source of origination and whether or
not caused by, or within the control of, Borrower.

         Liability under this Paragraph 3(b) and similar provisions in this
Mortgage and the other Loan Documents concerning Hazardous Materials shall
survive repayment of the Note and

                                       6
<PAGE>
satisfaction of this Mortgage; provided, however, Borrower shall have no
liability under this Paragraph 3(b) regarding Hazardous Materials if either (i)
the Property becomes contaminated subsequent to Lender's acquisition of the
Property by foreclosure, acceptance by Lender of a deed in lieu thereof, or
subsequent to any transfer of ownership of the Property which was approved or
authorized by Lender in writing, pursuant to this Mortgage, provided that such
transferee assumes in writing all of the obligations of Borrower with respect to
Hazardous Materials pursuant to the Loan Documents, or (ii) at such time
Borrower provides Lender with an environmental assessment report acceptable to
Lender, in Lender's sole discretion, showing the Property to be free of
Hazardous Materials and not in violation of any Hazardous Waste Laws. The burden
of proof under this Paragraph 3(b) with regard to establishing the date upon
which any Hazardous Materials was released in, on, over, under or about the
Property shall be upon Borrower.

                  (c) Borrower at all times shall maintain the Property in full
compliance with all federal, state, county, regional or local laws, codes,
ordinances, rules, regulations, decisions and orders currently in existence or
hereafter enacted or rendered, governing accessibility for the disabled,
including but not limited to: The Architectural Barriers Act of 1968; The
Rehabilitation Act of 1973; The Fair Housing Act of 1988; The Americans with
Disabilities Act; and the Michigan Elimination of Architectural Barriers Act
(MCL 125.1351 et seq.) (hereinafter collectively referred to as the
"Accessibility Laws").

                  Borrower hereby agrees to indemnify Lender and hold Lender
harmless from and against any and all losses, liabilities, damages, injuries,
costs, expenses and claims of any and every kind whatsoever paid, incurred or
suffered by, or asserted against Lender for, with respect to, or as a direct or
indirect result of, the non-compliance of the Property with the Accessibility
Laws whether or not caused by, or within the control of, Borrower.

         Liability under this Paragraph 3(c) and similar provisions in this
Mortgage and the other Loan Documents concerning Accessibility Laws shall
survive repayment of the Note and satisfaction of this Mortgage; provided,
however, Borrower shall not be liable under this Paragraph 3(c) for compliance
with any Accessibility Laws if such Accessibility Laws first become effective,
or such violations result from alterations or improvements to the Property that
are performed subsequent to Lender's acquisition of the Property by foreclosure
or acceptance of a deed in lieu thereof or subsequent to any transfer which was
approved or authorized by Lender pursuant to this Mortgage, provided that such
transferee assumes in writing all obligations pertaining to the Accessibility
Laws pursuant to this Mortgage and the other Loan Documents.

                  (d) Subject to the rights of tenant's in possession, Lender,
and/or its agents, shall have the right and shall be permitted, but shall not be
required, at all reasonable times, to enter upon and inspect the Property to
insure compliance with the foregoing covenants, and any and all other terms,
covenants, conditions and agreements set forth in this Mortgage.

                                       7
<PAGE>
         PAYMENT OF TAXES, ASSESSMENTS AND OTHER CHARGES

          4. To pay all taxes, assessments and other charges as already levied
or assessed, or that may be hereafter levied or assessed, upon or against the
Property, when the same shall become due and payable according to law, before
delinquency, and before any interest or penalty shall attach thereto, and to
deliver official receipts evidencing the payment of the same to Lender not later
than thirty (30) days following the payment of the same. Borrower shall have the
right to contest, in good faith, the proposed assessment of ad valorem taxes or
special assessments by governmental authorities having jurisdiction over the
Property; provided, however, Borrower shall give Written Notice of its intent to
bring such an action to Lender, and Lender may, in its sole discretion, require
Borrower to post a bond or other collateral satisfactory to Lender (and
acceptable to the title company insuring this Mortgage) as a result of
Borrower's act..

         PAYMENT OF LIENS, CHARGES AND ENCUMBRANCES

          5. To immediately pay and discharge from time to time when the same
shall become due, all lawful claims and demands of mechanics, materialmen,
laborers, realtors, brokers and others which, if unpaid, might result in, or
permit the creation of, a lien, charge or encumbrance upon the Property or any
part thereof, or on the rents, license fees, issues, income, revenues, profits
and proceeds, including termination fees and taking proceeds, arising therefrom
and, in general, to do or cause to be done everything necessary so that the lien
of this Mortgage shall be fully preserved, at the sole cost of Borrower, without
expense to Lender. Borrower shall have the right to contest, in good faith and
in accordance with applicable laws and procedures, mechanics', materialmens' and
other such liens filed against the Property; provided however, that Borrower
shall give Written Notice to Lender of its intent to bring such action, and
Lender may, in Lender's sole discretion, require Borrower to post a bond or
other collateral satisfactory to Lender (and acceptable to the title company
insuring this Mortgage) as a result of Borrower's act.

         PAYMENT OF JUNIOR ENCUMBRANCES

          6. To permit no default or delinquency under any other lien,
imposition, charge or encumbrance against the Property, even though junior and
inferior to the lien of this Mortgage; provided however, the foregoing shall not
be construed to permit any additional lien or encumbrance against the Property,
other than the Permitted Exceptions.

         PAYMENT OF MORTGAGE TAXES

          7. To pay any and all taxes which may be levied or assessed directly
or indirectly upon the Note and/or this Mortgage (except for income taxes
payable by Lender) or the Loan secured hereby, without regard to any law which
may be hereafter enacted imposing payment of the whole or any part thereof upon
Lender, its successors or assigns. Upon violation of this agreement to pay such
taxes levied or assessed upon the Note and/or this Mortgage, or upon the

                                       8
<PAGE>
rendering by any court of competent jurisdiction of a decision that such an
agreement by Borrower is legally inoperative, or if any court of competent
jurisdiction shall render a decision that the rate of said tax when added to the
rate of interest provided for in the Note exceeds the then maximum rate of
interest allowed by law, then, and in any such event, the debt hereby secured
shall, at the option of Lender, its successors or assigns, become immediately
due and payable, anything contained in this Mortgage or in the Note secured
hereby notwithstanding, without the imposition of a Prepayment Premium (as
defined in the Note). The additional amounts which may become due and payable
hereunder shall become a part of the Loan secured by this Mortgage.

         HAZARD INSURANCE

          8. To continuously, during the term of this Mortgage, keep the
Improvements, the Fixtures and Personal Property, now or hereafter existing,
erected, installed and located in or upon the Real Property, insured with
extended coverage insurance against loss or damage resulting from fire,
windstorm, flood, sinkhole, earthquake and such other hazards, casualties,
contingencies and perils including, without limitation, other risks insured
against by persons operating like properties in the locality of the Property, or
otherwise deemed necessary or advisable by Lender, on such forms and with such
deductibles as may be required by Lender, covering the Property in the amount of
the full replacement cost thereof, less excavating and foundation costs, and
covering all loss or abatement of rental or other income, without a provision
for co-insurance, in an amount equal to the scheduled rental income of the
Property for at least twelve (12) months, or if applicable, business
interruption insurance in an amount sufficient to pay debt service on the Note,
operating expenses, taxes and insurance on the Property for a period of twelve
(12) months, and covering loss by flood (if the Property lies in a Special Flood
Hazard Area as designated on the Department of Housing and Urban Development's
Maps, or other flood prone designation) in an amount equal to the outstanding
principal balance of the Loan secured hereby or such other amount as approved by
Lender, and earthquake insurance with a deductible amount of no more than ten
percent (10%) of the policy amount, if the Property is located within one-half
(1/2) mile of an Alquist-Priolo Special Earthquake Study Zone or if, in the
judgement of Lender's inspecting architect, the Property lies in an area of
anticipated significant seismic activity. All such insurance shall be carried
with a company or companies licensed to do business in the state where the
property is located, which is acceptable to Lender, which company or companies
shall have a rating at the time this Mortgage is executed equivalent to at least
A:X as shown in the most recent Best's Key Rating Guide. The original policy or
policies and renewals thereof (or, at the sole option of Lender, duplicate
originals or certified copies thereof), together with receipts evidencing
payment of the premium therefor, shall be deposited with, held by and are hereby
assigned to, Lender as additional security for the Loan secured hereby. Each
such policy of insurance shall contain a noncontributing loss payable clause in
favor of and in a form acceptable to Lender, and shall provide for not less than
thirty (30) days prior Written Notice to Lender of any intent to modify,
non-renew, cancel or terminate the policy or policies, or the expiration of such
policies of insurance. If the insurance required under this Paragraph 8 or any
portion thereof is maintained

                                       9
<PAGE>
pursuant to a blanket policy, Borrower shall furnish to Lender a certified copy
of such policy, together with an original Evidence of Insurance Certificate
(Acord Form 27) for hazard insurance indicating that Lender is an insured under
such policy in regard to the Property and showing the amount of coverage
apportioned to the Property, which coverage shall be in an amount sufficient to
satisfy the requirements hereof. Not less than fifteen (15) days prior to the
expiration dates of each policy required of Borrower hereunder, Borrower will
deliver to Lender a renewal policy or policies marked "premium paid" or
accompanied by other evidence of payment and renewal satisfactory to Lender. In
the event of foreclosure of this Mortgage or other transfer of title to the
Property in extinguishment of the Loan secured hereby, all right, title and
interest of Borrower, in and to any insurance policies then in force including
any rights to unearned premiums, and in and to insurance proceeds then payable,
shall pass to the purchaser or grantee. Notwithstanding anything contained
herein to the contrary, to the extent any tenant or subtenant self insures,
Lender will accept self insurance in lieu of any insurance required to be
purchased by the Borrower pursuant to this paragraph, provided that the tenant
or subtenant maintains a minimum net worth of $100,000,000.00 or the minimum net
worth required by its lease, whichever is greater, the self insurance otherwise
complies with the requirements of this Paragraph 8, the tenant or subtenant
provides the Lender with written verification of such coverage and the lease or
sublease is approved by Lender

         In the event of loss by reason of hazards, casualties, contingencies
and perils for which insurance has been required by Lender hereunder, Borrower
shall give immediate notice thereof to Lender. Lender is hereby irrevocably
appointed attorney-in-fact coupled with an interest, for Lender to, at its
option, make proof of loss and/or to file a claim thereunder. Each insurance
company concerned is hereby notified, authorized and directed to make payment
for such loss directly to Lender, instead of to Borrower and Lender jointly, and
Borrower hereby authorizes Lender to adjust and compromise any losses for which
insurance proceeds are payable under any of the aforesaid insurance policies
and, after deducting the costs of collection, to apply the proceeds of such
insurance, at its option either: (a) to the restoration or repair of the insured
Improvements, and the Fixtures and Personal Property, provided that, in the
opinion and sole discretion of Lender, such restoration or repair is reasonably
practical and, provided further, that, in the opinion and sole discretion of
Lender, either: (i) the insurance proceeds so collected are sufficient to cover
the cost of such restoration or repair of the damage or destruction with respect
to which such proceeds were paid; or (ii) the insurance proceeds so collected
are not sufficient alone to cover the cost of such restoration or repair, but
are sufficient therefor when taken together with funds provided and made
available by Borrower from other sources; in which event Lender shall make such
insurance proceeds available to Borrower for the purpose of effecting such
restoration or repair; but Lender shall not be obligated to see to the proper
application of such insurance proceeds nor shall the amount of funds so released
or used be deemed to be payment of or on account of the Loan secured hereby, or
(b) to the reduction of the Loan secured hereby, notwithstanding the fact that
the amount owing thereon may not then be due and payable or that said Loan is
otherwise adequately secured, in which event such proceeds shall be applied at
par against the Loan secured hereby and the monthly payment due on account of
such Loan shall be reduced accordingly. None of such actions taken by Lender
shall be

                                       10
<PAGE>
deemed to be or result in a waiver or impairment of any equity, lien or right of
Lender under and by virtue of this Mortgage, nor will the application of such
insurance proceeds to the reduction of the Loan serve to cure any default in the
payment thereof. In the event of foreclosure of this Mortgage or other transfer
of title to the Property in extinguishment of the Loan secured hereby, all
right, title and interest of Borrower in and to any insurance policies then in
force including any rights to unearned premiums and in and to insurance proceeds
then payable, shall pass to the purchaser or grantee.

         In case of Borrower's failure to keep the Property properly insured as
required herein, Lender, its successors or assigns, may, at its option (but
shall not be required to) acquire such insurance as required herein at
Borrower's sole expense.

         Notwithstanding anything set forth in this Paragraph 8 to the contrary,
in the event of loss or damage to the Property by fire or other casualty for
which insurance has been required by Lender and provided by Borrower, and the
amount of such loss or damage does not exceed fifty percent (50%) of the unpaid
principal balance of the Note, Lender hereby agrees to allow the proceeds of
insurance to be used for the restoration of the Property and to release such
insurance proceeds to Borrower as such restoration progresses, provided:

                  (a)      Borrower is not in default under any of the terms,
covenants and conditions of this Mortgage, the Note or any of the other Loan
Documents;

                  (b)      The Improvements, after such restoration, shall be at
least eighty percent (80%) leased pursuant to leases approved in writing by
Lender;

                  (c)      The plans and specifications for the restoration of
the Property are approved in writing by Lender in advance;

                  (d)      At all times during such restoration, Borrower has
deposited with Lender funds which, when added to the insurance proceeds received
by Lender, are sufficient to complete the restoration of the Property in
accordance with the approved plans and specifications, and all applicable
building codes, zoning ordinances, regulations and Accessibility Laws, and
further, that the funds retained by Lender are sufficient to complete the
restoration of the Property as certified to Lender by Lender's inspecting
architect/engineer;

                  (e)      Borrower provides suitable completion, payment and
performance bonds, builders' all risk insurance, and all necessary licenses and
permits for such restoration in form and amount acceptable to Lender;

                  (f)      The insurer under such policies of fire or other
casualty insurance does not assert any defense to payment under such policies
against Borrower, any tenant, or third party of Borrower with regard to of the
Property;

                                       11
<PAGE>
                  (g)      Lender shall have the option, upon the completion of
such restoration of the Property, to apply any surplus insurance proceeds
remaining after the completion of such restoration, at par, to the reduction of
the outstanding principal balance of the Note; notwithstanding the fact that the
amount owing thereon may not then be due and payable or that said Loan is
otherwise adequately secured;

                  (h)      The funds held by Lender shall be disbursed no more
often than once per month and in not more than five (5) increments of not less
than Fifty Thousand and 00/100 Dollars ($50,000.00) each, except the final
disbursement of such funds which may be in an amount less than Fifty Thousand
and 00/100 Dollars ($50,000.00);

                  (i)      Lender's obligation to make any such disbursement
shall be conditioned upon Lender's receipt of written certification from
Lender's inspecting architect/engineer (whose fees shall be reimbursed to Lender
by Borrower) that all construction and work for which such disbursement is
requested has been completed in accordance with the approved plans and
specifications and in accordance with all applicable building codes, zoning
ordinances and all other local, state or federal laws, codes, ordinances,
statutes, rules and regulations, and, further, that Borrower has deposited with
Lender sufficient funds to complete such restoration in accordance with
subparagraph 8(d) above; and

                  (j)      Lender shall be entitled to require and to impose
such other conditions to the release of such funds as would be customarily or
reasonably be required and imposed by local construction lenders for a project
of similar nature and cost.

                  Notwithstanding the foregoing, if a lease or sublease approved
by Lender requires Borrower to rebuild, the right to use the proceeds of
insurance or self insurance for that purpose will be made available by the
Lender and disbursed in the manner hereinbefore provided. Further
notwithstanding the foregoing, if a Major Tenant is required to rebuild in
accordance with its lease (as approved by Lender), then the proceeds shall be
disbursed or made available in accordance with the lease or sublease and
Borrower shall, without limitation, diligently enforce the provisions of the
lease or sublease with respect to rebuilding and/or reconstruction.

         LIABILITY INSURANCE

                  9.     To carry and maintain such commercial general liability
insurance as may from time to time be required by Lender, taking into
consideration the type of property being insured and the corresponding liability
exposure, on forms, with deductibles, in amounts and with such company or
companies licensed to do business in the state where the Property is located and
as may be acceptable to Lender. All such commercial general liability insurance
shall be carried with a company or companies which have a rating at the time
this Mortgage is executed equivalent to at least A:X as shown in the most recent
Best's Key Rating Guide. The original policy or policies and all renewals
thereof (or, at the sole option of Lender, duplicate originals or certified
copies thereof), together with a Certificate of Insurance (Acord Form 25S)

                                       12
<PAGE>
and receipts evidencing payment of the premium therefor, shall be deposited
with, held by and are hereby assigned to, Lender as additional security for the
Loan secured hereby. Such policy or policies of insurance shall name Lender as
an additional insured and shall provide for not less than thirty (30) days prior
Written Notice to Lender of any intent to modify, cancel, non-renew, or
terminate the policy or policies or the expiration of such policy or policies of
insurance. Not less than fifteen (15) days prior to the expiration dates of each
policy or policies required of Borrower hereunder, Borrower will deliver to
Lender a renewal policy or policies marked "premium paid" or accompanied by
other evidence of payment and renewal satisfactory to Lender. In the event of
foreclosure of this Mortgage or other transfer of title to the Property in
extinguishment of the Loan secured hereby, all right, title and interest of
Borrower, in and to any insurance policies then in force including any rights to
unearned premiums, and in and to insurance proceeds then payable, shall pass to
the purchaser or grantee. In case of Borrower's failure to keep the Property
properly insured as required herein, Lender, its successors or assigns, may, at
its option (but shall not be required to) acquire such insurance as required
herein at Borrower's sole expense. . Notwithstanding anything contained herein
to the contrary, to the extent any tenant or subtenant self insures, Lender will
accept self insurance in lieu of any insurance required to be purchased by the
Borrower under this paragraph, provided that the tenant or subtenant maintains a
minimum net worth of $100,000,000.00 or the minimum net worth required by its
lease or sublease, whichever is greater, the self insurance otherwise complies
with the requirements of this Paragraph 9, the tenant or subtenant provides the
Lender with written verification of such coverage and the lease or sublease is
approved by Lender

         COMPLIANCE WITH LAWS

         10.      To observe, abide by and comply with all federal, regional,
state and local laws, codes, ordinances, statutes, rules, regulations,
decisions, orders, requirements or decrees relating to the Property enacted,
promulgated or issued by any federal, state, county or local governmental or
quasi-governmental authority or any agency or subdivision thereof having
jurisdiction over Borrower or the Property (hereinafter collectively referred to
as "Laws"), and to observe and comply with all conditions and requirements
necessary to preserve and extend any and all rights, licenses, permits
(including, but not limited to, zoning, variances, special exceptions and
nonconforming uses), privileges, franchises and concessions which are applicable
to the Property, or which have been granted to or contracted for by Borrower in
connection with any existing, presently contemplated or future uses of the
Property.

         MAINTENANCE OF PERMITS

         11.      To obtain, keep and constantly maintain or cause to be
maintained in full force and effect during the entire term of this Mortgage, all
certificates, licenses and permits necessary to keep the Property operating as
retail projects and, except as specifically provided for in this Mortgage, not
to assign, transfer or in any manner change such certificates, licenses or
permits without first receiving the written consent of Lender.

                                       13
<PAGE>
         OBLIGATIONS OF BORROWER AS LESSOR

         12.      To perform every obligation of Borrower (as the lessor) and to
enforce every obligation of the lessee in any and every lease, license or other
occupancy agreement of or affecting the Property or any part thereof
(hereinafter referred to as the "Occupancy Leases"), and not to modify, alter,
waive or cancel any such Occupancy Leases or any part thereof or rights
thereunder, without the prior written consent of Lender (but such consent shall
not be required for such action as to Occupancy Leases of 3,000 square feet or
less if such action is in the ordinary course of business of owning and
operating the Property in a prudent and business-like manner), nor collect for
more than thirty (30) days in advance of the date due any rents that may be
collectible under any such Occupancy Leases and, except as provided for in this
Mortgage, not to assign any such Occupancy Lease(s) or any such rents relating
thereto, to any party other than Lender, without the prior written consent of
Lender. In the event of default under any such Occupancy Lease by reason of
failure of the Borrower to keep or perform one or more of the covenants,
agreements or conditions thereof, Lender is hereby authorized and empowered, and
may, at its sole option, remedy, remove or cure any such default, and further,
Lender may, at its sole option and in its sole discretion but without obligation
to do so, pay any sum of money deemed necessary by Lender for the performance of
said covenants, agreements and conditions, or for the curing or removal of any
such default, and incur all expenses and obligations which Lender may consider
necessary or reasonable in connection therewith, and Borrower shall repay on
demand all such sums so paid or advanced by Lender together with interest
thereon until paid at the lesser of either: (i) the highest rate of interest
then allowed by the laws of the State of Michigan, or, if controlling, the laws
of the United States, or (ii) the then applicable interest rate of the Note plus
five hundred (500) basis points; all of such sums, if unpaid, shall be added to
and become part of the Loan secured hereby. All such Occupancy Leases hereafter
made shall be subject to the approval of Lender and: (i) shall be at competitive
market rental rates then prevailing in the geographic area for retail property
comparable to the Property; (ii) shall have lease terms of not less than three
(3) years; and (iii) at Lender's option, shall be superior or subordinate in all
respects to the lien of this Mortgage. Provided, however, that Lender shall not
require approval in advance of any Occupancy Leases which conform to the
Borrower's Form Lease (as hereinafter defined) as previously approved by Lender,
except as set forth below. Neither the right nor the exercise of the right
herein granted unto Lender to keep or perform any such covenants, agreements or
conditions as aforesaid shall preclude Lender from exercising its option to
cause the whole Loan secured hereby to become immediately due and payable by
reason of Borrower's default in keeping or performing any such covenants,
agreements or conditions as hereinabove required.

         Lender has heretofore approved a form of Occupancy Lease to be used by
Borrower in connection with the Property (hereinafter referred to as the "Form
Lease"). Borrower shall not, without the prior written consent of Lender, modify
or alter the Form Lease in any material respect. In addition, Borrower shall
not, without the prior written consent of Lender, surrender or terminate, either
orally or in writing, any Occupancy Lease now existing or hereafter made with
any Major Tenant (as hereinafter defined) for all or part of the Property,
permit an

                                       14
<PAGE>
assignment or sublease of any such Occupancy Lease, or request or consent to the
subordination of any Occupancy Lease to any lien subordinate to this Mortgage.
Borrower shall furnish Lender with copies of all executed Occupancy Leases of
all or any part of the Property now existing or hereafter made, and Borrower
shall assign to Lender (which assignment shall be in form and content acceptable
to Lender), as additional security for the Note and the Loan, all Occupancy
Leases now existing or hereafter made for all or any part of the Property.
Additionally, if any Occupancy Lease contains a provision allowing the tenant to
terminate their lease upon payment of a lease termination fee, Borrower agrees
that all such sums shall constitute rent, and shall be paid to Lender so long as
this Mortgage is in effect.

         Notwithstanding the foregoing approval by Lender of Borrower's Form
Lease, Lender hereby specifically reserves the right to approve all prospective
tenants under all Occupancy Leases hereafter proposed to be made if either: (i)
the term thereof, excluding options to renew the same, exceeds five (5) years;
or (ii) the net rentable area to be occupied thereunder, including expansion
options, exceeds ten percent (10%) of the net leasable area of each of the
buildings comprising the Improvements (the tenants under such leases being
hereinafter referred to as "Major Tenants"). Borrower shall notify Lender in
writing of all prospective Major Tenants, and shall deliver to Lender, at
Borrower's sole cost and expense, a copy of the prospective Major Tenant's
current financial statement and the most recent Dun & Bradstreet credit report
on said prospective Major Tenant. The financial statement delivered to Lender
hereunder shall be certified as true and correct by the Major Tenant, or, if
available, by a certified public accountant. As of the date of this Mortgage, as
security in addition to the Property, the Borrower hereby assigns to the Lender
all its right, title and interest in and to all Occupancy Leases, whether now in
existence or which may hereafter come into existence during the term of this
Mortgage, or any extension hereof, (but without an assumption by the Lender of
liabilities of the Borrower under any such Occupancy Leases by virtue of this
assignment), and the Borrower hereby assigns to the Lender the rents, issues and
profits of the Property. In the event of a default (or defaults) in the terms,
conditions, covenants or promises contained in this Mortgage or in the Note
which is not cured within the time specified in the applicable instrument, the
Lender may receive and collect said rents, issues and profits personally or
through a receiver so long as any such default shall exist and during the
pendency of any foreclosure proceedings and during any redemption period, and,
to the extent permitted by law, Borrower specifically waives its right to object
to the appointment of a receiver and hereby expressly agrees that such
appointment shall be made as an admitted equity and as a matter of absolute
right to Lender. The Lender shall be entitled to all of the rights and benefits
conferred by Act No. 210 of the Michigan Public Acts of 1953 as amended by Act
No. 151 of the Michigan Public Acts of 1966 (MCL 554.231 et seq.), and Act No.
228 of the Michigan Public Acts of 1925 as amended by Act No. 55 of the Michigan
Public Acts of 1933 (MCL 554.211 et seq.). The collection of rents by the Lender
shall in no way waive the right of the Lender to foreclose this Mortgage in the
event of any said default beyond applicable cure periods.

         MAINTENANCE OF PARKING & ACCESS; PROHIBITION AGAINST

                                       15
<PAGE>

         ALTERATION

         13.      To construct, keep and constantly maintain, as the case may
be, all curbs, drives, parking areas and the number of parking spaces heretofore
approved by Lender, or heretofore or hereafter required by any Laws or any
governmental body, agency or authority having jurisdiction over Borrower or the
Property, and as required by the terms of the Occupancy Leases, and not to
alter, erect, build or construct upon any portion of the Property, any building,
structure or improvement of any kind whatsoever, the erection, building or
construction of which has not been previously approved by Lender in writing,
which approval shall be at the sole discretion of Lender. Lender's consent shall
not be required as to tenants permitted to make improvements to the Property
under leases approved by Lender.

         EXECUTION OF ADDITIONAL DOCUMENTS

         14.      To do, make, execute, acknowledge, witness and deliver all
deeds, conveyances, mortgages, assignments, estoppel certificates, subordination
non-disturbance and attornments, notices of assignments, transfers, assurances,
security agreements, financing statements and renewals thereof, and all other
instruments or other acts necessary, as Lender shall from time to time require
for the purpose of better assuring, conveying, assigning, transferring, securing
and confirming unto Lender the Property and rights hereby encumbered, created,
conveyed, assigned or intended now or hereafter so to be encumbered, created,
conveyed or assigned, or which Borrower may now be or may hereafter become bound
to encumber, create, convey or assign to Lender, or for the purpose of carrying
out the intention or facilitating the performance of the terms of this Mortgage,
or for filing, registering or recording this Mortgage, and to pay all filing,
registration or recording fees and all taxes, costs and other expenses,
including Reasonable Attorneys' Fees, incident to the preparation, execution,
acknowledgment, delivery and recordation of any of the same. By signing this
Mortgage, Borrower authorizes Lender to file such financing statements, with or
without the signature of Borrower, as Lender may elect, as may be necessary or
desirable to perfect the lien of Lender's security interest in the Fixtures and
Personal Property. Borrower further authorizes Lender to file, with or without
any additional signature from Borrower, as Lender may elect, such amendments and
continuation statements as Lender may deem necessary or desirable from time to
time to perfect or continue the lien of Lender's security interest in the
Fixtures and Personal Property. Borrower hereby ratifies any financing
statements that may have been filed by Lender in advance of the date hereof to
perfect Lender's security interest in the Fixtures and Personal Property.

         AFTER-ACQUIRED PROPERTY SECURED

         15.      To subject to the lien of this Mortgage all right, title and
interest of Borrower in and to all extensions, improvements, betterments,
renewals, substitutions and replacements of, and all additions and appurtenances
to, the Property hereinabove described, hereafter acquired by or released to
Borrower, or constructed, assembled or placed by Borrower on the Real Property,
and all conversions of the security constituted thereby, immediately upon such
acquisition,

                                       16
<PAGE>
release, construction, assembling, placement or conversion, as the case may be,
and in each such case, without any further mortgage, encumbrance, conveyance,
assignment or other act by Borrower, as fully, completely and with the same
effect as though now owned by Borrower and specifically described herein, but at
any and all times, Borrower will execute and deliver to Lender any and all such
further assurances, mortgages, conveyances, security agreements, financing
statements or assignments thereof or security interests therein as Lender may
reasonably require for the purpose of expressly and specifically subjecting the
same to the lien of this Mortgage.

         PAYMENTS BY LENDER ON BEHALF OF BORROWER

         16.      To make payment of or cause to be paid any and all taxes,
assessments or public charges on or with respect to the Property before the same
shall become delinquent, or to make payment of any insurance premiums or other
charges, impositions, or liens herein or elsewhere required to be paid by
Borrower, or if Borrower shall fail so to do, then Lender, at its sole option,
but without obligation to do so, may make payment or payments of the same and
also may redeem the Property from tax sale without any obligation to inquire
into the validity of such taxes, assessments and tax sales, charges, impositions
or liens. In the case of any such payment by Lender, Borrower agrees to
reimburse Lender, upon demand therefor, the amount of such payment and of any
fees and expenses attendant in making the same, together with interest thereon
at the lesser of either: (i) the highest rate of interest then allowed by the
laws of the State of Michigan or, if controlling, the laws of the United States
or (ii) the then applicable interest rate of the Note plus five hundred (500)
basis points; and until paid such amounts and interest shall be added to and
become part of the Loan secured hereby to the same extent that this Mortgage
secures the repayment of the Loan evidenced by the Note. In making payments
authorized by the provisions of this Paragraph 16, Lender may do so whenever, in
Lender's sole judgment and discretion, such advance or advances are necessary or
desirable to protect the full security intended to be afforded by this Mortgage.
Neither the right nor the exercise of the rights herein granted to Lender to
make any such payments as aforesaid shall preclude Lender from exercising its
option to cause the Loan secured hereby to become immediately due and payable by
reason of Borrower's default in making such payments as hereinabove required.

         FUNDS HELD BY LENDER FOR TAXES, ASSESSMENTS, INSURANCE PREMIUMS, AND
OTHER CHARGES

         17.      In order to more fully protect the security of this Mortgage,
Borrower shall deposit with Lender, together with and in addition to each
monthly payment due on account of the Loan evidenced by the Note, an amount
equal to one-twelfth (1/12) of the annual total of such taxes, assessments,
insurance premiums and other charges (all as estimated by Lender in its sole
discretion) so that, at least thirty (30) days prior to the due date thereof,
Lender shall be able to pay in full all such taxes, assessments, insurance
premiums and other charges as the same shall become due. Lender may hold the
sums so deposited without paying interest, commingle same with its general funds
and/or apply the same to the payment of said taxes, assessments, insurance

                                       17
<PAGE>
premiums or other charges as they become due and payable. If at any time the
funds so held by Lender are insufficient to pay such taxes, assessments,
insurance premiums or other charges as they become due and payable, Borrower
shall immediately, upon notice and demand by Lender, deposit with Lender the
amount of such deficiency. The failure on the part of Borrower to do so shall
entitle Lender, at Lender's sole option, to make such payments in accordance
with the rights and pursuant to the conditions elsewhere provided in this
Mortgage. Whenever any default exists under this Mortgage, Lender may, at
Lender's sole option but without an obligation so to do, apply any funds so held
by Lender pursuant to this Paragraph 17 toward the payment of the Loan secured
hereby, notwithstanding the fact that the amount owing thereon may not then be
due and payable or that the Loan may otherwise be adequately secured, in such
order and manner of application as Lender may elect.

         CONDEMNATION; EMINENT DOMAIN

         18.      All claims and rights of action for, and all awards and other
compensation heretofore or hereafter made to Borrower and all subsequent owners
of the Property in any taking by eminent domain, recovery for inverse
condemnation or by deed in lieu thereof, whether permanent or temporary, of all
or any part of the Property or any easement or any appurtenance thereto,
including severance and consequential damages and change in grade of any way,
street, avenue, road, alley, passage or public place are hereby assigned to
Lender. Borrower hereby irrevocably appoints Lender as its attorney-in-fact,
coupled with an interest, and authorizes, directs and empowers Lender, at the
option of Lender as said attorney-in-fact, on behalf of Borrower, its successors
and assigns, to adjust or compromise the claim for any such award, and alone to
collect and receive the proceeds thereof, to give proper receipts and
acquittances therefor and, after deducting any expenses of collection, at
Lender's sole option either:

                    (a)   to apply the net proceeds as a credit upon any portion
of the Loan secured hereby, as selected by Lender, notwithstanding the fact that
the amount owing thereon may not then be due and payable, or that the Loan is
otherwise adequately secured. In the event Lender applies such awards to the
reduction of the outstanding Loan evidenced by the Note, such proceeds shall be
applied at par, and the monthly installments due and payable under the Note
shall be reduced accordingly; however no such application shall serve to cure an
existing default in the payment of the Note; provided, however, such proceeds
shall be made available as hereinafter provided in the event a lease or sublease
approved by Lender requires the proceeds to be used for reconstruction; or

                   (b)    to hold said proceeds without any allowance of
interest, and make the same available for restoration or rebuilding of the
Improvements. In the event that Lender elects to make said proceeds available to
reimburse Borrower for the cost of the restoration or rebuilding of the
Improvements on the Real Property, such proceeds shall be made available in the
manner and under the same conditions as required under Paragraph 8 hereof. If
the proceeds are made available by Lender to reimburse Borrower for the cost of
said restoration or rebuilding, any surplus which may remain out of said award
after payment of such cost of

                                       18
<PAGE>
restoration or rebuilding, shall be applied on account of the Loan secured
hereby at par notwithstanding the fact that the amount owing thereon may not
then be due and payable or that the Loan may otherwise be adequately secured.

         Borrower further covenants and agrees to give Lender immediate notice
of the actual or threatened commencement of any proceedings under eminent
domain, and to deliver to Lender copies of any and all papers served in
connection with any such proceedings. Borrower further covenants and agrees to
make, execute and deliver to Lender, at any time or times, upon request, free,
clear and discharged of any encumbrance of any kind whatsoever, any and all
further assignments and/or other instruments deemed necessary by Lender for the
purpose of validly and sufficiently assigning all such awards and other
compensation heretofore or hereafter made to Lender (including the assignment of
any award from the United States government at any time after the allowance of
the claim therefor, the ascertainment of the amount thereof and the issuance of
the warrant for payment thereof).

         It shall be a default hereunder if either: (i) any part of any of the
Improvements situated on the Real Property shall be condemned by any
governmental authority having jurisdiction; or (ii) lands constituting a portion
of the Real Property shall be condemned by any governmental authority having
jurisdiction, such that the remaining Property is in violation of applicable
parking, zoning, platting, or other ordinances, or fails to comply with the
terms of the Occupancy Leases with Major Tenants. In either of said events,
Lender shall be entitled to exercise any or all remedies provided or referenced
in this Mortgage, including the application of condemnation proceeds to the
outstanding principal balance of the Note at par, and the right to accelerate
the maturity date of the Note and require payment in full without the imposition
of a Prepayment Premium.

         COSTS OF COLLECTION

         19.      In the event that the Note secured hereby is placed in the
hands of an attorney for collection, or in the event that Lender shall become a
party either as plaintiff or as defendant, in any action, suit, appeal or legal
proceeding (including, without limitation, foreclosure, condemnation,
bankruptcy, administrative proceedings or any proceeding wherein proof of claim
is by law required to be filed), hearing, motion or application before any court
or administrative body in relation to the Property or the lien and security
interest granted or created hereby or herein, or for the recovery or protection
of said Loan or the Property, or for the foreclosure of this Mortgage, or for
the enforcement of the terms and conditions of the Loan Documents, Borrower
shall indemnify, save, defend and hold Lender harmless from and against any and
all costs and expenses incurred by Lender on account thereof, including, but not
limited to, Reasonable Attorneys' Fees, title searches and abstract and survey
charges, at all trial and appellate levels, and Borrower shall repay, on demand,
all such costs and expenses, together with interest thereon until paid at the
lesser of either (i) the highest rate of interest then allowed by the laws of
the State of Michigan, or, if controlling, the laws of the United States, or
(ii) the then applicable rate of interest of the Note plus five hundred (500)
basis points; all of which sums, if

                                       19
<PAGE>
unpaid, shall be added to and become a part of the Loan secured hereby.

         DEFAULT RATE

         20.      Any sums not paid when due, whether maturing by lapse of time
or by reason of acceleration under the provisions of the Note or this Mortgage,
and whether principal, interest or money owing for advancements pursuant to the
terms of this Mortgage or any other Loan Document, shall bear interest until
paid at the lesser of either (i) the highest rate of interest then allowed by
the laws of the State of Michigan, or, if controlling, the laws of the United
States, or (ii) the then applicable rate of interest of the Note plus five
hundred (500) basis points; all of which sums shall be added to and become a
part of the Loan secured hereby.

         SAVINGS CLAUSE

         21.      Notwithstanding any provisions in the Note or in this Mortgage
to the contrary, the total liability for payments in the nature of interest,
including but not limited to Prepayment Premiums, default interest and late
payment charges, shall not exceed the limits imposed by the laws of the State of
Michigan or, if controlling, the laws of the United States, relating to maximum
allowable charges of interest. Lender shall not be entitled to receive, collect
or apply, as interest on the Loan evidenced by the Note, any amount in excess of
the maximum lawful rate of interest permitted to be charged by the Laws. In the
event Lender ever receives, collects or applies as interest any such excess,
such amount which would be excessive interest shall be applied to reduce the
unpaid principal balance of the Loan evidenced by the Note. If the unpaid
principal balance of such Loan has been paid in full, any remaining excess shall
be forthwith returned to Borrower.

         BANKRUPTCY, REORGANIZATION OR ASSIGNMENT

         22.      It shall be a default hereunder if Borrower or any general
partner of Borrower shall: (i) elect to dissolve and liquidate its business
organization and wind up its business affairs without receiving the prior
written approval of Lender; (ii) consent to the appointment of a receiver,
trustee or liquidator of all or a substantial part of Borrower's assets [or any
of Borrower's general partner's assets]; (iii) be adjudicated as bankrupt or
insolvent, or file a voluntary petition in bankruptcy, or admit in writing its
inability to pay its debts as they become due; (iv) make a general assignment
for the benefit of creditors; (v) file a petition under or take advantage of any
insolvency law; (vi) file an answer admitting the material allegations of a
petition filed against Borrower or any general partner of Borrower in any
bankruptcy, reorganization or insolvency proceeding, or fail to cause the
dismissal of such petition within thirty (30) days after the filing of said
petition; (vii) take action for the purpose of effecting any of the foregoing;
or (viii) if any order, judgment or decree shall be entered upon an application
of a creditor of Borrower [or any general partner of Borrower] by a court of
competent jurisdiction approving a petition seeking appointment of a receiver or
trustee of all or a substantial part of Borrower's assets [or any of Borrower's
general partner's assets] and such order, judgment or

                                       20
<PAGE>

decree shall continue unstayed and in effect for a period of thirty (30) days.

         TIME IS OF THE ESSENCE; MONETARY AND NON-MONETARY DEFAULTS

         23.      It is understood by Borrower that time is of the essence
hereof in connection with all obligations of Borrower herein, in the Note, the
Assignment and any of the other Loan Documents.

         Lender, at its sole option, may declare the Loan evidenced by the Note,
as well as all other monies secured hereby, including, without limitation, all
Prepayment Premiums (to the extent permitted by the laws of the State of
Michigan and late payment charges, to be forthwith due and payable, in the
event:

         (i)      Borrower defaults in the payment of any monthly installment of
                  the Note, whether of principal or interest, or both, or in the
                  payment of any other sums of money referred to herein or in
                  the Note, promptly and fully when the same shall be due,
                  without notice or demand from Lender to Borrower in regard to
                  such Monetary Default (as hereinafter defined);

         (ii)     Borrower breaches or defaults on any one of the terms,
                  covenants, conditions and agreements of the Note, this
                  Mortgage, the Assignment or any other Loan Documents
                  evidencing or securing the Note or the Loan; or in the event
                  that each and every one of said terms, covenants, conditions
                  and agreements is not otherwise either duly, promptly and
                  fully discharged or performed, and any such Non-Monetary
                  Default (as hereinafter defined) remains uncured for a period
                  of thirty (30) days after Written Notice thereof has been
                  delivered from Lender to Borrower; unless such Non-Monetary
                  Default cannot reasonably be cured within said thirty (30) day
                  period, in which event Borrower shall have an extended period
                  of time to complete cure, provided that action to cure such
                  Non-Monetary Default is promptly commenced within said thirty
                  (30) day period, and Borrower is, in Lender's sole judgment,
                  not diminishing or impairing the value of the Property, and is
                  diligently pursuing a cure to completion, bit in no event
                  longer than ninety (90) days;

         (iii)    Any default occurs in the performance of any covenant or
                  obligation of Borrower or any other party under any indemnity
                  or guaranty delivered to Lender in connection with the Loan
                  and such default continues beyond the expiration of applicable
                  notice and cure periods; and

         (iv)     Any default by Borrower under the Ground Lease beyond any
                  applicable cure periods.

         Upon the occurrence of any one of the above events, and at the option
of Lender, the

                                       21
<PAGE>
principal of and the interest accrued on the Loan (as evidenced by the Note) and
all other sums secured by this Mortgage shall immediately become due and payable
as if all of said sums of money were originally stipulated to be paid on such
day. In addition, Lender may avail itself of all rights and remedies provided by
law and may foreclose or prosecute a suit at law or in equity as if all monies
secured hereby had matured prior to its institution, anything in this Mortgage
or in the Note to the contrary notwithstanding. Lender shall have no obligation
to give Borrower notice of, or any period to cure, any Monetary Default or any
Incurable Default (as hereinafter defined) prior to exercising its rights,
powers, privileges and remedies to accelerate the maturity of the Loan secured
hereby.

         Notwithstanding the foregoing, Lender shall give Borrower written
notice of a Monetary Default and a five (5) day period after receipt in which to
cure the Monetary Default; provided, however, Lender shall only be required to
give such notice one (1) time during a Loan Year (as defined in the Note) and
further, provided, such notice shall not waive Lender's right to any late
payment charges as provided in the Note.

         As used herein, the term "Monetary Default" shall mean any default
which can be cured by the payment of money such as, but not limited to, the
payment of principal and interest due under the Note, taxes, assessments and
insurance premiums when due as provided in this Mortgage. As used herein, the
term "Non-Monetary Default" shall mean any default that is not a Monetary
Default or an Incurable Default. As used herein, the term "Incurable Default"
shall mean either: (i) any voluntary or involuntary sale, assignment,
mortgaging, encumbering or transfer in violation of the covenants contained
herein; or (ii) if Borrower, or any person or entity comprising Borrower or any
guarantor or indemnitor of the Loan, should make an assignment for the benefit
of creditors, become insolvent, or file a petition in bankruptcy (including but
not limited to, a petition seeking a rearrangement or reorganization) which is
not dismissed within thirty (30) days after the filing of same.

         Lender may institute an action to foreclose this Mortgage as to the
amount so declared due and payable, and thereupon, the Property shall be sold
according to law to satisfy and pay the same, together with all costs, expenses
and allowances thereof, including, without limitation, Reasonable Attorneys'
Fees. The Property may be sold in one parcel, several parcels or groups of
parcels, and Lender shall be entitled to bid at the sale, and, if Lender is the
highest bidder for the Property or any part or parts thereof, Lender shall be
entitled to purchase the same. The failure or omission on the part of Lender to
exercise the option for acceleration of maturity of the Note and foreclosure of
this Mortgage following any default as aforesaid or to exercise any other option
or remedy granted hereunder to Lender when entitled to do so in any one or more
instances, or the acceptance by Lender of partial payment of the Loan secured
hereby, whether before or subsequent to Borrower's default hereunder, shall not
constitute a waiver of any such default or the right to exercise any such option
or remedy, but such option or remedy shall remain continuously in force.
Acceleration of the maturity of the Note, once claimed hereunder by Lender, at
the option of Lender, may be rescinded by written acknowledgment to that effect
by Lender, but the tender and acceptance of partial payments alone shall not in
any way either

                                       22
<PAGE>
affect or rescind such acceleration of maturity, nor act as a waiver, accord and
satisfaction, modification, novation or similar defense.

         PROTECTION OF LENDER'S SECURITY

         24.      At any time after default hereunder, Lender, or Lender's
agents or contractors, is authorized, without notice and in Lender's sole
discretion, to enter upon and take possession of the Property or any part
thereof, and to perform any acts which Lender deems necessary or proper to
conserve the security interest herein intended to be provided by the Property,
to operate any business or businesses conducted thereon, and to collect and
receive all rents, license fees, issues, profits and income, including
termination fees and taking proceeds, thereof and therefrom, including those
past due as well as those accruing thereafter.

         APPOINTMENT OF RECEIVER

         25.      If, at any time after a default hereunder, Lender deems, in
Lender's sole discretion, that a receivership may be necessary to protect the
Property or its rents, license fees, issues, profits or income, including
termination fees and taking proceeds, whether before or after maturity of the
Note and whether before or at the time of or after the institution of suit to
collect such Loan or to enforce this Mortgage, Lender, as a matter of strict
right and regardless of the value of the Property or the amounts due hereunder
or secured hereby, or of the solvency of any party bound for the payment of such
indebtedness, shall have the right, upon ex parte application and without notice
to anyone, and by any court having jurisdiction, to the appointment of a
receiver to take charge of, manage, preserve, protect and operate the Property,
to collect the Rents thereof, to make all necessary and needful repairs, and to
pay all taxes, assessments, insurance premiums and other such charges against
and expenses of the Property, and to do such other acts as may by such court be
authorized and directed, and after payment of the expenses of the receivership
and the management of the Property, to apply the net proceeds of such
receivership in reduction of the Loan secured hereby or in such other manner as
the said court shall direct notwithstanding the fact that the amount owing
thereon may not then be due and payable or the said Loan is otherwise adequately
secured. Such receivership shall, at the option of Lender, continue until full
payment of all sums hereby secured or until title to the Property shall have
passed by sale under this Mortgage. Borrower hereby specifically waives its
right to object to the appointment of a receiver as aforesaid, and hereby
expressly agrees that such appointment shall be made as an admitted equity and
as a matter of absolute right to Lender.

         RIGHTS AND REMEDIES CUMULATIVE; FORBEARANCE NOT A WAIVER

         26.      The rights and remedies herein provided are cumulative, and
Lender, as the holder of the Note and of every other obligation secured hereby,
may recover judgment thereon, issue execution therefor and resort to every other
right or remedy available at law or in equity, without first exhausting any
right or remedy available to Lender and without affecting or impairing the
security of any right or remedy afforded hereby, and no enumeration of special
rights or powers

                                       23
<PAGE>
by any provisions hereof shall be construed to limit any grant of general rights
or powers, or to take away or limit any and all rights granted to or vested in
Lender by law. Borrower further agrees that no delay or omission on the part of
Lender to exercise any rights or powers accruing to it hereunder shall impair
any such right or power, or shall be construed to be a waiver of any such event
of default hereunder or an acquiescence therein; and every right, power and
remedy granted herein or by law to Lender may be exercised from time to time as
often as Lender deems expedient.

         MODIFICATION NOT AN IMPAIRMENT OF SECURITY

         27.     Lender, without notice and without regard to the consideration,
if any, paid therefor, and notwithstanding the existence at that time of any
inferior mortgages or other liens thereon, may release any part of the security
described herein, or may release any person or entity liable for the Loan
secured hereby without in any way affecting the priority of this Mortgage, to
the full extent of the Loan remaining unpaid hereunder, upon any part of the
security not expressly released. Lender may, at its option and within Lender's
sole discretion, also agree with any party obligated on the Loan, or having any
interest in the security described herein, to extend the time for payment of any
part or all of the Loan secured hereby, and such agreement shall not, in any
way, release or impair this Mortgage, but shall extend the same as against the
title of all parties having any interest in said security, which interest is
subject to this Mortgage.

         PROPERTY MANAGEMENT AND LEASING

         28.     The exclusive manager of the Property shall be Borrower, or
such other manager as may be first approved in writing by Lender. The exclusive
leasing agent of the Property, if other than Borrower or the foregoing party,
shall be first approved in writing by Lender. The management and leasing
contracts (or in the absence of any such written contract, a letter so stating
and further identifying the name of the person or entity charged with the
responsibility for managing and/or leasing the Property) shall be subordinate to
this Mortgage, and satisfactory to and subject to the prior written approval of
Lender throughout the term of the Loan secured hereby. Upon default in either of
these requirements, then the whole of the Loan hereby secured shall, at the
election of Lender, become immediately due and payable, together with any
default premium, late payment charges and all other sums required by the Note,
and Lender shall be entitled to exercise any or all remedies provided for or
referenced in this Mortgage.

         MODIFICATION NOT A WAIVER

         29.     In the event Lender (a) releases, as aforesaid, any part of the
security described herein or any person or entity liable for any Loan secured
hereby; (b) grants an extension of time for the payment of the Note; (c) takes
other or additional security for the payment of the Note; or (d) waives or fails
to exercise any rights granted herein, in the Note, or any of the other Loan
Documents, any said act or omission shall not release Borrower, subsequent
purchasers of the

                                       24
<PAGE>
Property or any part thereof, or makers, sureties, endorsers or guarantors of
the Note, if any, from any obligation or any covenant of this Mortgage, the Note
or any of the other Loan Documents, nor preclude Lender from exercising any
right, power or privilege herein granted or intended to be granted in the event
of any other default then made, or any subsequent default.

         TRANSFER OF PROPERTY OR CONTROLLING INTEREST IN BORROWER; ASSUMPTION

         30.      Except as set forth in Paragraph 36(b) hereof, without the
prior written consent of Lender, the sale, transfer, assignment or conveyance of
all or any portion of the Property, whether voluntary or by operation of law,
without the prior written consent of Lender, shall constitute a default under
the terms of this Mortgage, and entitle Lender, at Lender's sole option, to
accelerate all sums due on the Note, together with any Prepayment Premiums (to
the extent permitted by the laws of the State of Michigan) late payment charges
or any other amounts secured hereby. Lender may, however, elect to waive the
option to accelerate granted hereunder if, prior to any such sale, transfer,
assignment or conveyance of the Property, the following conditions shall be
fully satisfied: (a) Lender acknowledges in writing that, in Lender's sole
discretion, the creditworthiness of the proposed transferee and the ability and
experience of the proposed transferee to operate the Property are satisfactory
to Lender; (b) Lender and the proposed transferee shall enter into an agreement
in writing that (i) the rate of interest payable on the Loan secured hereby
shall be at such rate as Lender shall determine, (ii) the repayment schedule as
set forth in the Note shall be modified by Lender, in Lender's sole discretion,
to initiate amortization or modify the existing amortization schedule in order
to amortize the then remaining unpaid principal balance of the Note secured
hereby over a period of time as determined by Lender, in Lender's sole
discretion, without a change in the maturity date of the Note, and (iii) the
proposed transferee shall assume all obligations of Borrower under the Note,
this Mortgage and the other Loan Documents in writing and an assumption fee, to
be determined by Lender in Lender's sole discretion, may be charged by Lender;
(c) Lender shall receive, for Lender's review and approval, copies of all
transfer documents; and (d) Borrower or the transferee shall pay all costs and
expenses in connection with such transfer and assumption, including, without
limitation, all fees and expenses incurred by Lender.

         Borrower, or any subsequent owner of the Property or any portion
thereof, shall do all things necessary to preserve and keep in full force and
effect its and their legal existence, franchises, rights and privileges as a
corporation or partnership, as the case may be, under the laws of the state of
its formation and its right to own property and transact business in the State
of Michigan. It shall be a default hereunder if Borrower, or any subsequent
owner of the Property or any portion thereof, shall amend, modify, transfer,
assign or terminate the partnership agreement, certificate of partnership,
operating agreement, articles of organization or articles of incorporation, as
the case may be, of Borrower or such subsequent owner without the prior written
consent of Lender and, in the reasonable determination of Lender, such
amendment, modification, transfer, assignment or termination shall have a
material adverse effect on Lender, the Property or the security value thereof.
Borrower, or such subsequent owner of the Property,

                                       25
<PAGE>
shall provide Lender with copies of any proposed amendment to its partnership
agreement, certificate of partnership or articles of incorporation, as the case
may be, so that Lender may, in Lender's sole discretion, determine whether such
amendment adversely affects Lender, the Property or the security value thereof.
Provided, however, that any amendment, modification, transfer, assignment or
termination of Borrower's partnership agreement or any other action pursuant to
which the current managing general partner of Borrower shall either: (a) cease
to be the managing general partner of Borrower; or (b) except to the extent
permitted herein, cease to own or maintain a partnership interest in Borrower
equal to or greater than its partnership interest at the time this Mortgage is
executed, shall be deemed to have a material adverse effect upon Lender and the
Property, and shall be a default hereunder.

         Borrower shall not change its name or identity in any manner which may
make any financing or continuation statement filed in connection with the Loan
seriously misleading within the meaning of Section 9-402(7) of the UCC (or any
other then applicable provision of the UCC) enacted in the State unless Borrower
shall have delivered to Lender written notice thereof not less than thirty (30)
days before the effective date of such change and shall have taken all action
which Lender determines to be reasonably necessary or desirable to amend such
financing statement or continuation statement so that it is not seriously
misleading. Borrower will not change its principal places of business unless it
shall have given the Lender prior written notice of its intent to do so not less
than thirty (30) days in advance of the effective date of such change. Borrower
shall bear all costs incurred by Lender in connection with any such change,
including, without limitation Reasonable Attorney's Fees.

         In the event the ownership of the Property, or any part thereof, shall
become vested in a person or entity other than Borrower, whether with or without
the prior written consent of Lender, Lender may, without notice to Borrower,
deal with such successor or successors in interest with reference to the
Property, this Mortgage and the Note, in the same manner and to the same extent
as with Borrower without in any way vitiating or discharging Borrower's
liability hereunder or under the Note. No sale, transfer or conveyance of the
Property, no forbearance on the part of Lender and no extension of time given by
Lender to Borrower for the payment of the Note hereby secured shall operate to
release, discharge, modify, change or affect the original liability of Borrower,
either in whole or in part, unless expressly set forth in writing executed by
Lender. Notwithstanding anything contained herein to the contrary, Borrower
hereby waives any right it now has or may hereafter have to require Lender to
prove an impairment of its security as a condition to the exercise Lender's
rights under this Paragraph 30.

         A sale, transfer, assignment or conveyance within the meaning of this
Paragraph shall be deemed to include, but not be limited to, (a) an installment
sales agreement wherein Borrower agrees to sell the Property or any part thereof
for a price to be paid in installments; (b) an agreement by Borrower leasing all
or a substantial part of the Property for other than actual occupancy by a
tenant under an Occupancy Lease 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 of Borrower, any

                                       26
<PAGE>
guarantor or indemnitor is a corporation, the voluntary or involuntary sale,
conveyance, transfer or pledge of such corporation's stock (or the stock of any
corporation directly or indirectly controlling such corporation by operation of
law or otherwise), or the creation or issuance of new stock by which an
aggregate of more than ten percent (10%) of such corporation's stock shall be
vested in a party or parties who are not now stockholders; and (d) if Borrower,
any guarantor or indemnitor or any general partner of Borrower, any guarantor or
indemnitor is a limited partnership, general partnership, limited liability
partnership, limited liability company, or joint venture, the change, removal or
resignation of a general partner, managing partner, or member, or the transfer
or pledge of the interest of any general partner, managing partner, or member or
any profits or proceeds relating to such interest.

         Notwithstanding anything contained in this Paragraph 30 to the
contrary, as long as no default, or event which, with notice or the passage of
time or both, could result in a default, has occurred hereunder, under the Note
or any of the other Loan Documents, Lender shall permit one (1) bona fide arm's
length transfer of the Property to another borrowing entity without a change in
the terms of the Loan; provided, however, that no such transfer shall be valid
or permitted hereunder unless: (i) Lender receives prior Written Notice of such
proposed transfer; (ii) such proposed transferee has been approved in writing by
Lender (taking into consideration such factors as transferee's creditworthiness,
business experience, financial condition and managerial capabilities); (iii)
Lender is paid a cash assumption fee in accordance with the following schedule:
two percent (2%) of the then outstanding principal balance of the Note if such
outstanding principal balance is less than or equal to $3 Million, one and
one-half percent (1 1/2%) of the then outstanding principal balance of the Note
if such outstanding principal balance is in excess of $3 Million but less than
or equal to $6 Million, and one percent (1%) of the then outstanding principal
balance of the Note if such outstanding principal balance exceeds $6 Million;
but not to exceed $100,000.00 iv) Borrower pays all fees and expenses incurred
by Lender in connection with such transfer and assumption, including, without
limitation, inspection and investigation fees, title insurance charges, and
Reasonable Attorneys' Fees; (v) such proposed transferee assumes in writing all
obligations of Borrower under the Note, this Mortgage and the other Loan
Documents, with the same degree of liability as Borrower; and (vi) Lender
approves the management agreement and the management company to be employed by
the proposed transferee. Any transfer of all or any portion of the Property
which does not strictly comply with the terms and conditions of the foregoing
shall be a default hereunder, and shall entitle Lender to exercise all rights
and remedies provided in this Mortgage and the other Loan Documents. This
one-time right of transfer shall apply to the Borrower named herein and not to
any subsequent owner of the Property.

         Notwithstanding anything contained herein to the contrary, it is
understood that Agree Realty Corporation, the general partner of Borrower, is a
publicly traded corporation and so long as Agree Realty Corporation is publicly
traded, the provisions of this paragraph restricting the transfer and issuance
of stock shall not apply to transfer or issuance of stock of Agree Realty
Corporation.

                                       27
<PAGE>
         FURTHER ENCUMBRANCE PROHIBITED; SUBROGATION

         31.      So long as the Note remains unpaid, Borrower shall not, either
voluntarily or involuntarily, permit the Property or any part thereof to become
subject to any secondary lien, mortgage, security interest or encumbrance of any
kind whatsoever without the prior written consent of Lender, and the imposition
of any such secondary lien, mortgage, security interest or encumbrance without
the approval of Lender shall constitute an event of default hereunder, and
entitle Lender, at Lender's sole option, to DECLARE the outstanding principal
balance of the Note, all accrued and unpaid interest thereon, Prepayment
Premiums (to the extent permitted by the laws of the State of Michigan late
payment charges and any other amounts secured hereby to be and become
immediately due and payable in full. In the event that Lender shall hereafter
give its written consent to the imposition of any such secondary lien, mortgage,
security interest or other encumbrance upon the Property, Lender, at Lender's
sole option, shall be entitled to accelerate the maturity of the Note and
exercise any and all remedies provided and available to Lender hereunder and in
the other Loan Documents in the event that the holder of any such secondary lien
or encumbrance shall institute foreclosure or other proceedings to enforce the
same; it being understood and agreed that a default under any instrument or
document evidencing, securing or secured by any such secondary lien or
encumbrance shall be and constitute an event of default hereunder. In the event
all or any portion of the proceeds of the Loan secured hereby are used for the
purpose of retiring debt or debts secured by prior liens on the Property, Lender
shall be subrogated to the rights and lien priority of the holder or holders of
the lien or liens so discharged.

         CONVEYANCE OF MINERAL RIGHTS PROHIBITED

         32.      Borrower agrees that the making of any oil, gas or mineral
lease, or the sale or conveyance of any mineral interest or right to explore for
minerals under, through or upon the Property, would impair the value of the
Property securing the Note, and that Borrower shall have no right, power or
authority to lease the Property, or any part thereof, for oil, gas or other
mineral purposes, or to grant, assign or convey any mineral interest of any
nature, or the right to explore for oil, gas and other minerals, without first
obtaining Lender's express written permission therefor, which permission shall
not be valid until recorded among the Public Records of (the county in which
each parcel of Property is located. Borrower further agrees that if Borrower
shall make, execute, or enter into any such lease or attempt to grant any such
mineral rights without such prior written permission of Lender, then Lender
shall have the option, without notice, to declare the same to be a default
hereunder, and to declare the Loan hereby secured immediately due and payable in
full. Whether or not Lender shall consent to such lease or grant of mineral
rights, Lender shall receive the entire consideration to be paid for any such
lease or grant of mineral rights, with the same to be applied to the Loan hereby
secured notwithstanding the fact that the amount owing thereon may not then be
due and payable or that the said Loan is otherwise adequately secured; provided,
however, that the acceptance of such consideration shall in no way impair the
lien of this Mortgage on the Property or cure any existing Monetary Default.

                                       28
<PAGE>

         ESTOPPEL CERTIFICATION BY BORROWER

         33.      Borrower, upon request of Lender therefor made either
personally or by mail, shall certify in writing to Lender (or any party
designated by Lender), in a form satisfactory to Lender or such designee, the
amount of principal and interest then outstanding under the terms of the Note
and any other sums due and owing under this Mortgage or any of the other Loan
Documents, and whether any offsets or defenses exist against the Loan. Such
certification shall be made by Borrower within ten (10) days if the request is
made personally, or within twenty (20) days if the request is made by mail.

         CROSS-DEFAULT

         34.      The Note is also secured by the terms, conditions and
provisions of the Assignment recorded among the Public Records of the counties
in which the Property is located and, additionally, may be secured by contracts
or agreements of guaranty or other security instruments. The terms, covenants,
conditions and agreements of each security instrument relating to this loan
shall be considered a part hereof as fully as if set forth herein verbatim. Any
default under this Mortgage or the Note secured hereby shall constitute an event
of default under the Assignment and any of the other Loan Documents, and any
default under the Assignment or other Loan Documents shall likewise constitute a
default hereunder and under the Note. Notwithstanding the foregoing, the
enforcement or attempted enforcement of this Mortgage or any of the other Loan
Documents now or hereafter held by Lender, shall not prejudice or in any manner
affect the right of Lender to enforce any other Loan Document; it being
understood and agreed that Lender shall be entitled to enforce this Mortgage and
any of the other Loan Documents now or hereafter held by it in such order and
manner as Lender, in its sole discretion, shall determine.

         EXAMINATION OF BORROWER'S RECORDS

         35.      Borrower will maintain complete and accurate books and records
showing in detail the income and expenses of the Property, and will permit
Lender and its agents, contractors or representatives, to examine said books and
records and all supporting vouchers and data during normal business hours and
from time to time upon request by Lender, in such place as such books and
records are customarily kept. Borrower will furnish to Lender, within one
hundred twenty (120) days after the close of each respective fiscal period
annual and semi-annual financial statements (income statements and a balance
sheet) for the Borrower and the Property. These statements shall be in form
acceptable to Lender, shall be prepared in accordance with generally accepted
accounting principles, and shall include a rent roll, certified as true and
correct by Borrower. The statements shall show in detail all income derived from
and expenses incurred in connection with the ownership of the Property,
including current annual sales figures for all Major Tenants of the Property if
required under the Major Tenant leases or if such financial information is
otherwise available. In the event Borrower fails to provide such

                                       29
<PAGE>
statements to Lender within the time prescribed above, Borrower shall pay Lender
the sum of Two Hundred and No/100 Dollars ($200.00) in administrative expenses
for each successive month for which the statements are delinquent. In the event
of a default hereunder, Lender shall have the right to require that said
financial statements be audited and certified by a certified public accountant
acceptable to Lender, at the sole cost and expense of Borrower.

         In addition, at the request of Lender, but in no case more often than
once a quarter or more than three times during the term of the Loan, Borrower
shall furnish to Lender (i) unaudited financial statements (balance sheet,
income statement, cash flow statement and current rent roll) covering operation
of the Property for periods other than those set forth in the preceding
paragraph; (ii) unaudited financial statements (balance sheets, income
statements, and cash flow statements) for the Borrower, its general partner(s),
shareholder(s) or member(s) (whichever is applicable) and for such other
principals of the Borrower as designated by Lender; and (iii) a portfolio
analysis showing annualized cash flow statements (including debt service
payments) for all real properties owned by Borrower, its general partner(s),
shareholder(s), member(s) (whichever is applicable) and for such designated
principals. All such statements shall be certified to Lender to be complete,
correct, and accurate by the individual (for an individual's statements) or by
an authorized representative of the entity (if statements are for a partnership,
corporation or limited liability company.

         ALTERATION, REMOVAL AND CHANGE IN USE OF PROPERTY PROHIBITED

         36.      Borrower covenants and agrees to permit or suffer none of the
following without the prior written consent of Lender:

                  (a)      Except as permitted under leases approved by Lender,
any structural alteration of, or addition to, the Improvements now or hereafter
situated upon the Real Property, or the addition of any new buildings or other
structure(s) thereto, other than the erection or removal of non-load bearing
interior walls; or

                  (b)      The removal, transfer, sale or lease of the Property,
except that the renewal, replacement or substitution of fixtures, equipment,
machinery, apparatus and articles of personal property (replacement or
substituted items must be of like or better quality than the removed items in
their original condition) encumbered hereby may be made in the normal course of
business; or

                  (c)      The use of any of the Improvements now or hereafter
situated on the Real Property for any purpose other than as retail projects and
related facilities.

         FUTURE ADVANCES SECURED

         37.      This Mortgage is a future advance mortgage under Act No. 348
of the Michigan Public Acts of 1990 (MCLA 565.901 et seq.). This Mortgage shall
secure not only existing

                                       30
<PAGE>
indebtedness, but also future advances, whether such advances are obligatory or
to be made at the option of Lender. Upon the request of Borrower, and at
Lender's option prior to release of this Mortgage, Lender may make future
advances to Borrower. All future advances with interest thereon shall be secured
by this Mortgage to the same extent as if such future advances were made on the
date of the execution of this Mortgage unless the parties shall agree otherwise
in writing, but the total secured indebtedness shall not exceed at any one time
a maximum principal amount equal to double the face amount of the Note plus
interest, and costs of collection including court costs and Reasonable
Attorneys' Fees. Any advances or disbursements made for the benefit or
protection of or the payment of taxes, assessments, levies or insurance upon the
Property, with interest on such disbursements as provided herein, shall be added
to the principal balance of the Note and collected as a part thereof. To the
extent that this Mortgage may secure more than one mortgage note, a default in
the payment of any such mortgage note shall constitute a default in the payment
of all such mortgage notes.

         EFFECT OF SECURITY AGREEMENT

         38.      Borrower does hereby grant, and this Mortgage is and shall be
deemed to create, grant, give and convey, a mortgage of, a lien and encumbrance
upon, and a present security interest in, both real and personal property,
including all improvements, goods, chattels, furniture, furnishings, fixtures,
equipment, apparatus, appliances and other items of tangible or intangible
personal property, hereinabove particularly or generally described and conveyed,
whether now or hereafter affixed to, located upon, necessary for or used or
useful, either directly or indirectly, in connection with the operation of the
Property as retail projects, and this Mortgage shall also serve as a "security
agreement" as that term is defined and used in the Uniform Commercial Code as
adopted and in force from time to time in the State of Michigan, and shall be
operative and effective as a security agreement in addition to, and not in
substitution for, any other security agreement executed by Borrower in
connection with the extension of credit transaction secured hereby. Borrower
agrees to, and shall upon the request of Lender, execute and deliver to Lender,
in form and content satisfactory to Lender, such financing statements,
descriptions of property and such further assurances as Lender, in Lender's sole
discretion, may from time to time consider necessary to create, perfect,
continue and preserve the lien and encumbrances hereof, and the security
interest granted herein, upon and in such real and personal property and
fixtures described herein, including all buildings, improvements, goods,
chattels, furniture, furnishings, fixtures, equipment, apparatus, appliances,
and other items of tangible and intangible personal property herein specifically
or generally described and intended to be the subject of the security interest,
lien and encumbrance hereby created, granted and conveyed. Without the prior
written consent of Lender, Borrower shall not create or suffer to be created,
pursuant to the Uniform Commercial Code, any other security interest in such
real and personal property and fixtures described herein. Upon the occurrence of
a default hereunder or Borrower's breach of any other covenants or agreements
between the parties entered into in conjunction herewith, Lender shall have the
remedies of a secured party under the Uniform Commercial Code and, at Lender's
option, the remedies provided for in this Mortgage. Lender, at the expense of
Borrower, may cause such statements, descriptions and assurances, as herein

                                       31
<PAGE>
provided in this Paragraph 38, and this Mortgage, to be recorded and
re-recorded, filed and refiled, at such times and in such places as may be
required or permitted by law to so create, perfect and preserve the lien and
encumbrance hereof upon all of the Property.

         TERMS OF CONTRACT SURVIVE CLOSING

         39.      The terms and provisions of the Application/Contract for
Mortgage Loan dated October 9, 2001 and any subsequent amendments thereto
(hereinafter referred to as the "Contract"), executed by and between Borrower
and Lender, are incorporated herein by reference. All terms, covenants,
conditions and agreements of the Contract not expressly set forth in this
Mortgage, the Note, the Assignment and any of the other Loan Documents
additionally securing the Note shall survive the execution and delivery hereof,
and remain in full force and effect. In the event any conflict exists between
the terms, covenants, conditions and agreements of the Contract and the Loan
Documents, the terms, covenants, conditions and agreements of the Loan Documents
shall prevail.

         SUCCESSORS AND ASSIGNS; TERMINOLOGY

         40.      The provisions hereof shall be binding upon Borrower and the
heirs, personal representatives, trustees, successors and assigns of Borrower,
and shall inure to the benefit of Lender, its successors and assigns. Where more
than one Borrower is named herein, the obligations and liabilities of said
Borrower shall be joint and several.

         Wherever used in this Mortgage, unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein: (i) the word
"Borrower" shall mean Borrower and/or any subsequent owner or owners of the
Property; (ii) the word "Lender" shall mean Lender or any subsequent holder or
holders of this Mortgage; (iii) the word "Note" shall mean the Note(s) secured
by this Mortgage; and (iv) the word "person" shall mean an individual, trustee,
trust, corporation, partnership, limited liability corporation, limited
liability partnership, joint venture or unincorporated association. As used
herein, the phrase "Reasonable Attorneys' Fees" shall mean fees charged by
attorneys selected by Lender based upon such attorneys' then prevailing hourly
rates as opposed to any statutory presumption specified by any statute then in
effect in the State of Michigan.

         NOTICES

         41.      All notices, reports, requests or other written instruments
required or permitted hereunder, shall be in writing, signed by the party giving
or making the same, and shall be sent hand-delivered, effective upon receipt,
sent by United States Express Mail or by a nationally recognized overnight
courier, effective upon receipt, or sent by United States registered or
certified mail, postage prepaid, with return receipt requested, deemed effective
on the earlier of the day of actual delivery as shown by the addressee's return
receipt or the expiration of three (3) business days after the date of mailing,
addressed to the party intended to receive the same at the

                                       32
<PAGE>
address set forth below or at such other address as shall be given in writing by
any party to another (herein referred to as "Written Notice"):

                  If to Borrower:  31850 Northwestern Highway
                                   Farmington Hills, Michigan 48334

                  If to Lender:    NATIONWIDE LIFE INSURANCE COMPANY
                                   One Nationwide Plaza
                                   Columbus, Ohio  43215-2220
                                   Attention: Real Estate Investment Department

         GOVERNING LAW; SEVERABILITY

         42.      This Mortgage is to be governed by and construed in accordance
with the laws of the State of Michigan if controlling, by the laws of the United
States. If any clauses or provisions herein contained shall operate or would
prospectively operate to invalidate this Mortgage, then such clauses or
provisions only shall be held for naught, as though not herein contained, and
the remainder of this Mortgage shall remain operative and in full force and
effect.

         RIGHTS OF LENDER CUMULATIVE

         43.      The rights of Lender arising under the terms, covenants,
conditions and agreements contained in this Mortgage shall be separate, distinct
and cumulative, and none of them shall be in 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 provisions, anything herein or otherwise to
the contrary notwithstanding. If the Borrower hereunder is comprised of more
than one person or entity, then the liability of each such person and entity
hereunder shall be joint and several.

         MODIFICATIONS

         44.      This Mortgage cannot be changed, altered, amended or modified
except by an agreement in writing and in recordable form, executed by both
Borrower and Lender.

         EXCULPATION

         45.      Notwithstanding anything contained herein to the contrary, the
liability of Borrower is subject to the limited recourse provisions contained in
the Exculpation section of the Note, which are incorporated herein and made a
part hereof by reference as if fully set forth herein.

                                       33
<PAGE>
         FULL RECOURSE

         46.      Notwithstanding any provisions in this Mortgage to the
contrary, including, without limitation the provisions set forth in the section
captioned "Exculpation" hereinabove, Borrower and the general partner of
Borrower shall be personally liable, jointly and severally, for the entire Loan
secured by this Mortgage (including all principal, interest and other charges)
in the event (i) Borrower violates the covenant governing the placing of
subordinate financing on the Property as set forth in Paragraph 31 of this
Mortgage; (ii) Borrower violates the covenant restricting transfers of interest
in the Property or transfers of ownership interests in Borrower as set forth in
Paragraph 30 of this Mortgage; or (iii) there is filed against Borrower or any
guarantor or indemnitor of the Loan, a petition in bankruptcy or for the
appointment of a receiver, or there commences under any bankruptcy or insolvency
law, proceedings for Borrower's relief, or for the compromise, extension,
arrangement or adjustment of Borrower's obligations which is not dismissed
within thirty (30) days after the filing of same.

         CAPTIONS

         47.      The captions set forth at the beginning of the various
paragraphs of this Mortgage are for convenience only, and shall not be used to
interpret or construe the provisions of this Mortgage.

         MARSHALLING OF ASSETS

         48.      To the extent permitted by law, Borrower hereby waives, in the
event of foreclosure of this Mortgage or the enforcement by the Lender of any
other rights and remedies hereunder, any right otherwise available in respect to
marshalling of assets which constitute the Property or to require the Lender to
pursue its remedies against any other such assets.

         NOTICE AND HEARING ON FORECLOSURE

         49.      The Borrower hereby waives all rights to a hearing prior to
sale in connection with any foreclosure of this Mortgage by advertisement and
all notice requirements except as set forth in this Mortgage or in the Michigan
statute providing for foreclosure by advertisement.

         PARTIAL RELEASES

         50.      Notwithstanding anything contained to the contrary, Borrower
shall have the right to sell all or a portion of the Parcels of Property
described in Exhibit A and be entitled to a release of such Property from the
lien of this Mortgage provided the following conditions are met: (a) Borrower is
not in default hereunder; (b) the stores situated on the remaining parcels are
open and operating under leases originally approved by Lender and the tenants
thereunder are still considered investment grade credit; (c) Borrower makes a
prepayment of principal equal to the following: (i) the MAI appraised value for
the parcel being sold as set forth in attached Exhibit A

                                       34
<PAGE>
divided by the total MAI appraised value of all parcels as set forth on Exhibit
A times the outstanding principal loan balance at the time of prepayment times
110%; and (d) Borrower makes a payment of a Prepayment Premium on such principal
balance as determined in the Note. Borrower shall be responsible for all costs
and expenses of Lender involved in completing such release, including payment of
Lender's attorney fees.

         GROUND LEASE

         51.      (a)      Borrower hereby represents that: (i) the Ground Lease
is, as of the date hereof, in full force and effect and unmodified; (ii) all
rents reserved in the Ground Lease have been paid to the extent they were
payable prior to the date hereof; and (iii) there is no existing default under
the Ground Lease or in the performance of any of the terms, covenants,
conditions or warrants thereof on the part of the parties therein named to be
observed and performed.

                  (b)      Borrower covenants and agrees it will at all times
fully perform and comply with all agreements, covenants, terms and conditions
imposed upon or assumed by it as tenant under the Ground Lease, and that if
Borrower shall fail to do so, Lender may (but shall not be obligated to) take
any action Lender deems necessary or desirable to prevent or to cure any default
by Borrower in the performance of or compliance with any of Borrower's covenants
or obligations under the Ground Lease. Upon receipt by Lender from Ground Lessor
of any written notice of default by Borrower thereunder, Lender may rely thereon
and take any action as aforesaid to cure such default even though the existence
of such default or the nature thereof may be questioned or denied by Borrower,
and Borrower agrees that Lender shall have, the absolute and immediate right to
enter in and upon the Property or any part thereof upon five(5) days prior
written notice to Borrower to such extent and as often as Lender, in its sole
discretion, deems necessary or desirable in order to prevent or to cure any such
default by Borrower. Lender may pay and expend such sums of money as Lender in
its sole discretion deems necessary for any such purpose, and Borrower hereby
agrees to pay to Lender, immediately and without demand, all such sums so paid
and expended by Lender together with interest thereon from the date of each such
payment at the default rate of interest as set forth in the Note. All sums so
paid and expended by Lender, and the interest thereon, shall be added to and be
secured by the lien of this Mortgage. Notwithstanding any provision contained in
this subparagraph 48 (b) to the contrary, in the event that Borrower is in good
faith and with due diligence contesting the existence of or the nature of a
default under the Ground Lease, then so long as Borrower delivers to Lender a
written notice setting forth in detail the basis of Borrower's contest,
Borrower's actions taken with respect to such contest and Borrower's planned
future course of action with respect thereto and so long as Lender determines,
in Lender's sole and absolute discretion, that Lender's collateral for the Loan
is not threatened by such default (which determination Lender may modify from
time to time in Lender's sole and absolute discretion), Lender shall refrain
from exercising its rights hereunder to cure Borrower's default under the Ground
Lease.

                  (c)      Borrower covenants and agrees that it will not
surrender its leasehold estate and interest hereinabove described, nor terminate
or cancel the Ground Lease, and that it

                                       35
<PAGE>
will not, without the express prior written consent of Lender, modify, change,
supplement, alter or amend the Ground Lease either orally or in writing, and as
further security for the repayment of the Note and for the performance of the
covenants herein and in the Ground Lease contained, Borrower hereby assigns to
Lender all of its rights, privileges and prerogatives as tenant under the Ground
Lease to terminate, cancel, modify, change, supplement, renew, alter or amend
the Ground Lease, and any such termination, cancellation, modification, change,
supplement, failure to renew, alteration or amendment of the Ground Lease
without the prior written consent thereto by Lender shall be void and of no
force and effect.

                  (d)      Borrower hereby agrees that, unless Lender shall
otherwise expressly consent in writing, the fee title to the real estate demised
by the Ground Lease and the leasehold estate shall not merge but shall always
remain separate and distinct, notwithstanding the union of either of said
estates either in the lessor or in the lessee, or in a third party by purchase
or otherwise.

                  (e)      In addition to all other rights and remedies of
Lender as set forth herein, the lien of this Mortgage attaches to all of
Borrower's rights and remedies at any time arising under or pursuant to Section
365(h) of the United States Bankruptcy Code, 11 U.S.C. Section 365(h), including
without limitation, all of Borrower's rights to elect to remain in possession of
the Property following a rejection of the Ground Lease. In the event of the
rejection of the Ground Lease by Ground Lessor or its trustee, Borrower shall be
deemed without further act or deed to have elected under Section 365(h)(1) of
the Bankruptcy Code to remain in possession of the Property for the balance of
the term of the rejected Ground Lease. Any election to treat the rejected Ground
Lease as terminated shall be void. Borrower hereby unconditionally assigns,
transfers and sets over to Lender all of Borrower's claims and rights to the
payment of damages arising from any rejection by Ground Lessor, or its trustee,
of the Ground Lease under the Bankruptcy Code. Lender shall have the right to
proceed in its own name or in the name of Borrower in respect of any claim,
suit, action or proceeding relating to the rejection of the Ground Lease. This
assignment constitutes a present, irrevocable and unconditional assignment of
the foregoing claims, rights and remedies, and shall continue in effect until
all the indebtedness and obligations secured by this Mortgage have been
satisfied and discharged in full.

         RELEASE

         52.      Borrower shall be entitled to release that portion of Parcel 3
which is more particularly described in attached Exhibit B with the consent of
Lender, which consent shall not be unreasonably withheld. Such release shall be
subject, without limitation, to the following terms and conditions:

                  (a)      Execution of a reciprocal easement agreement and such
other documentation that Lender deems necessary;

                  (b)      Compatibility of the improvements constructed or to
be constructed and the

                                       36
<PAGE>
usage thereon with the remainder of the Property and assurances that any such
improvements and usage is not in contravention of any existing leases or other
restrictions imposed upon the Property.

                  (c)      Reasonable approval by Lender of the tenants and
usage for the improvements.

                  (d)      Compliance with all governmental laws and regulations
appertaining to the improvements and the continued compliance with all
governmental laws and requirements, including zoning requirements and replatting
of the property to be released and the remaining property encumbered by the loan
and the obtaining of any necessary lot split or similar approvals.

                  (e)      Lender's determination that there will be adequate
parking on the remaining parcel.

                  (f)      Borrower shall pay all of Borrower's out of pocket
expenses associated with such release.

         IN WITNESS WHEREOF, Borrower has caused this Mortgage to be executed as
of the day and year first above written.

WITNESSES:

       /s/ Karen Benton                      Agree Limited Partnership, a
----------------------------------           Delaware limited partnership

Print Name: Karen Benton
            ----------------------
                                             By: Agree Realty Corporation,
    /s/ Leon M. Schurgin                     a Maryland corporation, Its General
----------------------------------           Partner

Print Name: Leon M. Schurgin
            ----------------------
                                             By:   /s/ Richard Agree
                                                --------------------
                                                Richard Agree, President

                                       37
<PAGE>
State of  Michigan                  )
                                    )SS
County of  ___________Oakland       )

         The forgoing instrument was acknowledged before me this 20th day of
December, 2001 by Richard Agree, President of Agree Realty Corporation, a
Maryland corporation as general partner of Agree Limited Partnership, a Delaware
limited partnership on behalf of such partnership.

                                                         /s/ Karen Benton
                                                      --------------------------
                                                      Signature of Notary

                                                           Sept 26, 2003
                                                      --------------------------
                                                      Commission Expiration Date

This Instrument Drafted By and
When Recorded Return To:

John B. Rohyans
Porter, Wright, Morris & Arthur LLP
41 S. High Street
Columbus, Ohio  43215

                                       38

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