Document:

SECURITY AGREEMENT

     THIS SECURITY AGREEMENT (this "Agreement"),  is entered into as of December
12, 2000, between  Starcraft  Corporation and Starcraft  Automotive Group, Inc.,
an  Indiana  corporation  (collectively  "Company"),  with a place  of  business
located at 2703 College Avenue,  Goshen,  Indiana 46526 and Kelly L. Rose and G.
Ray Stults (collectively "Lender"), 2703 College Avenue, Goshen, Indiana 46526.

     The parties agree as follows:

I.   DEFINITIONS AND CONSTRUCTION.

     A.   Definitions.

     As used in this  Agreement,  the  following  terms shall have the following
definitions:

     "Account Debtor" means any Person who is or who may become obligated under,
with respect to, or on account of, an Account.

     "Accounts"  means all currently  existing and hereafter  arising  accounts,
contract rights, and all other forms of obligations owing to Company arising out
of the  sale or  lease  of  goods  or the  rendition  of  services  by  Company,
irrespective of whether earned by performance, and any and all credit insurance,
guaranties, or security therefor.

     "Agreement" has the meaning set forth in the preamble hereto.

     "Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.ss. 101
et seq.), as amended, and any successor statute.

     "Company" has the meaning set forth in the preamble to this Agreement.

     "Company's  Books"  means all of  Company's  books and  records  including:
ledgers; records indicating,  summarizing, or evidencing Company's properties or
assets  (including the Collateral) or liabilities;  all information  relating to
Company's business operations or financial condition; and all computer programs,
disk or tape files, printouts, runs, or other computer prepared information.

     "Code" means the Indiana Uniform Commercial Code.

     "Collateral" means each of the following:

          a)   the Accounts,

          b)   Company's Books,

          c)   the Equipment,

          d)   the General Intangibles,

          e)   the Inventory,

          f)   the Negotiable Collateral,

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          g)   any money,  or other assets of Company that now or hereafter come
               into the possession, custody, or control of Lender, and

          h)   the proceeds and products, whether tangible or intangible, of any
               of the foregoing, including proceeds of insurance covering any or
               all of the Collateral, and any and all Accounts, Company's Books,
               Equipment, General Intangibles, Inventory, Negotiable Collateral,
               money, deposit accounts, or other tangible or intangible property
               resulting  from  the  sale,   exchange,   collection,   or  other
               disposition  of any of the foregoing,  or any portion  thereof or
               interest therein, and the proceeds thereof.

     "deems  itself  insecure"  means that the Person deems  itself  insecure in
accordance with the provisions of Section 1208 of the Code.

     "Default"  means an event,  condition,  or default that, with the giving of
notice, the passage of time, or both, would be an Event of Default.

     "Equipment"  means  all  of  Company's   present  and  hereafter   acquired
machinery, machine tools, motors, equipment, furniture,  furnishings,  fixtures,
vehicles  (including motor vehicles and trailers),  tools,  parts,  goods (other
than consumer goods, farm products, or Inventory),  wherever located,  including
any  interest  of  Company  in  any  of  the  foregoing,  and  all  attachments,
accessories,   accessions,   replacements,    substitutions,    additions,   and
improvements to any of the foregoing.

     "Event of Default" has the meaning set forth in Section 6.

     "FEIN" means Federal Employer Identification Number.

     "General  Intangibles"  means all of Company's  present and future  general
intangibles  and other personal  property  (including  contract  rights,  rights
arising under common law, statutes, or regulations, chooses or things in action,
goodwill,   patents,   trade  names,   trademarks,   servicemarks,   copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension  funds,  route lists,  rights to payment and other rights under any
royalty  or  licensing  agreements,   infringement  claims,  computer  programs,
information contained on computer disks or tapes, literature, reports, catalogs,
deposit  accounts,  insurance  premium  rebates,  tax  refunds,  and tax  refund
claims), other than goods, Accounts, and Negotiable Collateral.

     "Insolvency  Proceeding"  means any proceeding  commenced by or against any
Person under any provision of the Bankruptcy Code or under any other  bankruptcy
or insolvency law, assignments for the benefit of creditors,  formal or informal
moratoria,  compositions,  extensions  generally with creditors,  or proceedings
seeking reorganization, arrangement, or other similar relief.

     "Inventory" means all present and future inventory in which Company has any
interest,  including  goods  held for sale or lease or to be  furnished  under a
contract of service and all of Company's present and future raw materials,  work
in  process,  finished  goods,  and  packing and  shipping  materials,  wherever
located.

     "Lien" means any interest in property  securing an obligation owed to, or a
claim by, any Person other than the owner of the property, whether such interest
shall be based on the common law,  statute,  or contract,  whether such interest
shall be recorded or perfected,  and whether such  interest  shall be contingent
upon the  occurrence  of some future  event or events or the  existence  of some
future  circumstance or  circumstances,  including the lien or security interest
arising  from a mortgage,  deed of trust,  encumbrance,  pledge,  hypothecation,
assignment,  deposit arrangement,  security agreement,  adverse claim or charge,
conditional sale or trust receipt, or from a lease, consignment, or bailment for
security purposes and also including  reservations,  exceptions,  encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases, and other
title exceptions and encumbrances affecting Real Property.

     "Loan  Documents"  means this  Agreement  and the  Reimbursement  Agreement
issued by Company to Lender and any other agreement  entered into, now or in the
future, in connection with this Agreement.

     "Negotiable  Collateral"  means all of Company's present and future letters
of  credit,   notes,  drafts,   instruments,   investment   property,   security
entitlements,  securities  (including  the  shares of stock of  subsidiaries  of
Company),  documents,  personal property leases (wherein Company is the lessor),
chattel paper, and Company's Books relating to any of the foregoing.

                                       -2-

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     "Obligations"  means all loans, debts,  principal,  interest (including any
interest  that,  but for the  provisions  of the  Bankruptcy  Code,  would  have
accrued), liabilities, obligations, fees, charges, costs, guaranties, covenants,
and duties owing by Company to Starcraft  of any kind and  description  (whether
pursuant to or evidenced by the Loan Documents and  irrespective  of whether for
the payment of money), whether direct or indirect,  absolute or contingent,  due
or to become due, now existing or hereafter arising.

     "Permitted Liens" means Liens set forth on Schedule P-1.

     "Person"  means  and  includes  natural  persons,   corporations,   limited
liability  companies,  limited  partnerships,   general  partnerships,   limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other  organizations,  irrespective  of  whether  they are legal  entities,  and
governments and agencies and political subdivisions thereof.

     "Voidable Transfer" has the meaning set forth in Section 13.8.

     B.   Code.

     Any terms  used in this  Agreement  that are  defined  in the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein.

     C.   Construction.

     Unless the context of this Agreement clearly requires otherwise, references
to the plural  include the  singular,  references  to the  singular  include the
plural,  the term  "including"  is not limiting,  and the term "or" has,  except
where  otherwise  indicated,  the inclusive  meaning  represented  by the phrase
"and/or." The words "hereof," "herein," "hereby," "hereunder," and similar terms
in this  Agreement  refer to this Agreement as a whole and not to any particular
provision  of this  Agreement.  An  Event  of  Default  shall  "continue"  or be
"continuing"  until such Event of Default  has been waived in writing by Lender.
Section,  subsection,  clause,  schedule,  and  exhibit  references  are to this
Agreement unless otherwise specified.  Any reference in this Agreement or in the
Loan Documents to this Agreement or any of the Loan Documents  shall include all
alterations,   amendments,   changes,   extensions,   modifications,   renewals,
replacements,   substitutions,   and  supplements,   thereto  and  thereof,   as
applicable.

     D.   Schedules.

     All  of  the  schedules   attached  to  this  Agreement   shall  be  deemed
incorporated herein by reference.

II.  GRANT OF SECURITY INTEREST.

     A.   Grant of Security Interest.

     Company  hereby  grants to Lender a  continuing  security  interest  in all
currently  existing and  hereafter  acquired or arising  Collateral  in order to
secure prompt repayment of any and all Obligations and in order to secure prompt
performance  by  Company  of each of its  covenants  and  duties  under the Loan
Documents.  Lender's  security  interests in the Collateral  shall attach to all
Collateral  without  further  act on the part of  Lender  or  Company.  Anything
contained  in  this  Agreement  or any  other  Loan  Document  to  the  contrary
notwithstanding,  except  for the sale of  Inventory  to buyers in the  ordinary
course of business, Company has no authority,  express or implied, to dispose of
any item or portion of the Collateral.

     B.   Negotiable Collateral.

     In the event that any Collateral,  including  proceeds,  is evidenced by or
consists of  Negotiable  Collateral,  Company,  immediately  upon the request of
Lender,  shall  endorse  and  deliver  physical  possession  of such  Negotiable
Collateral to Lender.

                                       -3-

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     C.   Collection   of  Accounts,   General   Intangibles,   and   Negotiable
          Collateral.

     At any time,  Lender or  Lender's  designee  may (a)  notify  customers  or
Account Debtors of Company that the Accounts, General Intangibles, or Negotiable
Collateral  have been assigned to Lender or that Lender has a security  interest
therein,  and (b) collect the  Accounts,  General  Intangibles,  and  Negotiable
Collateral directly and apply the proceeds thereof to the Obligations.

     D.   Delivery of Additional Documentation Required.

     At any time upon the request of Lender,  Company  shall execute and deliver
to Lender all financing statements,  continuation financing statements,  fixture
filings, security agreements, pledges, assignments, endorsements of certificates
of title,  applications for title, affidavits,  reports,  notices,  schedules of
accounts,  letters of authority,  and all other documents that Lender reasonably
may request,  in form satisfactory to Lender, to perfect and continue  perfected
Lender's security interests in the Collateral,  and in order to fully consummate
all of the  transactions  contemplated  hereby  and  under  the  other  the Loan
Documents.

     E.   Power of Attorney.

     Company hereby irrevocably makes, constitutes, and appoints Lender (and any
of Lender's  officers,  employees,  or agents designated by Lender) as Company's
true and lawful  attorney,  with power to (a) if  Company  refuses  to, or fails
timely to execute and deliver any of the  documents  described  in Section  2.4,
sign the name of Company on any of the  documents  described in Section 2.4, (b)
at any time that an Event of Default has  occurred and is  continuing  or Lender
deems  itself  insecure,  sign  Company's  name on any invoice or bill of lading
relating  to  any  Account,  drafts  against  Account  Debtors,   schedules  and
assignments  of  Accounts,  verifications  of  Accounts,  and notices to Account
Debtors,  (c) send requests for verification of Accounts,  (d) endorse Company's
name on any collection item that may come into Lender's  possession,  (e) at any
time that an Event of Default has  occurred  and is  continuing  or Lender deems
itself  insecure,  notify the post office  authorities to change the address for
delivery of Company's  mail to an address  designated by Lender,  to receive and
open all mail  addressed  to  Company,  and to retain all mail  relating  to the
Collateral and forward all other mail to Company,  (f) at any time that an Event
of Default has occurred and is continuing or Lender deems itself insecure, make,
settle, and adjust all claims under Company's policies of insurance and make all
determinations and decisions with respect to such policies of insurance, and (g)
at any time that an Event of Default has  occurred and is  continuing  or Lender
deems itself  insecure,  settle and adjust  disputes and claims  respecting  the
Accounts  directly with Account Debtors,  for amounts and upon terms that Lender
determines to be  reasonable,  and Lender may cause to be executed and delivered
any  documents  and  releases  that  Lender  determines  to  be  necessary.  The
appointment of Lender as Company's attorney,  and each and every one of Lender's
rights and powers,  being coupled with an interest,  is irrevocable until all of
the  Obligations  have been fully and finally  repaid and performed and Lender's
obligation to extend credit hereunder is terminated.

     F.   Right to Inspect.

     Lender (through any of its officers,  employees,  or agents) shall have the
right,  from time to time  hereafter  to inspect  Company's  Books and to check,
test,  and  appraise  the  Collateral  in order to  verify  Company's  financial
condition  or the amount,  quality,  value,  condition  of, or any other  matter
relating to, the Collateral.

     In order to induce Lender to enter into this  Agreement,  Company makes the
following  representations  and warranties which shall be true, correct and such
representations  and warranties shall survive the execution and delivery of this
Agreement:

III. REPRESENTATIONS AND WARRANTIES.

     A.   No Encumbrances.

     Company has good and indefeasible  title to the Collateral,  free and clear
of Liens except for Permitted Liens.

                                       -4-

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     B.   Location of Inventory and Equipment.

     The Inventory and Equipment are not stored with a bailee, warehouseman,  or
similar party (without  Lender's prior written  consent) and are located only at
the locations identified on Schedule 3.2 or otherwise permitted by Section 4.3.

     C.   Location of Chief Executive Office.

     The chief executive  office of Company is located at the address  indicated
in the preamble to this Agreement.

IV.  AFFIRMATIVE COVENANTS.

     Company covenants and agrees that, so long as any credit hereunder shall be
available and until full and final payment of the Obligations, and unless Lender
shall otherwise consent in writing, Company shall do all of the following:

     A.   Taxes.

     Cause all assessments and taxes, whether real, personal, or otherwise,  due
or payable by, or imposed,  levied,  or assessed  against  Company or any of its
property to be paid in full, before  delinquency or before the expiration of any
extension  period.  Company shall make due and timely  payment or deposit of all
such federal, state, and local taxes, assessments,  or contributions required of
it by law,  and will  execute  and  deliver  to Lender,  on demand,  appropriate
certificates  attesting to the payment thereof or deposit with respect  thereto.
Company will make timely payment or deposit of all tax payments and  withholding
taxes  required  of it by  applicable  laws,  including  those  laws  concerning
F.I.C.A.,  F.U.T.A.,  state  disability,  and local,  state,  and federal income
taxes, and will, upon request,  furnish Lender with proof satisfactory to Lender
indicating that Company has made such payments or deposits.

     B.   Insurance.

          a.   At its  expense,  keep the  Collateral  insured  against  loss or
               damage  by fire,  theft,  explosion,  sprinklers,  and all  other
               hazards and risks, and in such amounts, as are ordinarily insured
               against by other owners in similar businesses. Company also shall
               maintain  business   interruption,   public  liability,   product
               liability,  and property damage  insurance  relating to Company's
               ownership and use of the Collateral, as well as insurance against
               larceny, embezzlement, and criminal misappropriation.

          b.   All such policies of insurance  shall be in such form,  with such
               companies,  and in such amounts as may be reasonably satisfactory
               to Lender.  All hazard  insurance  and such  other  insurance  as
               Lender shall specify,  shall contain a Form 438BFU (NS) mortgagee
               endorsement, or an equivalent endorsement satisfactory to Lender,
               showing  Lender as sole loss payee  thereof,  and shall contain a
               waiver of  warranties.  Every policy of insurance  referred to in
               this  Section 4.2 shall  contain an agreement by the insurer that
               it will not cancel such policy except after 30 days prior written
               notice to Lender and that any loss  payable  thereunder  shall be
               payable  notwithstanding  any act or  negligence  of  Company  or
               Lender which might, absent such agreement, result in a forfeiture
               of all or a part of such insurance payment. Company shall deliver
               to Lender  certified  copies of such  policies of  insurance  and
               evidence of the payment of all premiums therefor.

          c.   Original policies or certificates  thereof satisfactory to Lender
               evidencing  such insurance  shall be delivered to Lender at least
               30 days prior to the  expiration  of the  existing  or  preceding
               policies.  Company  shall give Lender  prompt  notice of any loss
               covered by such  insurance,  and  Lender  shall have the right to
               adjust any loss.  Lender shall have the exclusive right to adjust
               all losses payable under any such insurance  policies without any
               liability to Company  whatsoever in respect of such  adjustments.
               Any monies  received as payment for any loss under any  insurance
               policy including the insurance policies mentioned above, shall be
               paid over to Lender to be applied at the option of Lender  either
               to the prepayment of the  Obligations  without  premium,  in such
               order or manner as Lender may  elect,  or shall be  disbursed  to
               Company  under stage  payment  terms  satisfactory  to Lender for
               application   to  the   cost   of   repairs,   replacements,   or
               restorations. All repairs, replacements, or restorations shall be
               effected with  reasonable  promptness  and shall be of a value at
               least equal to the value of the items or property destroyed prior
               to such damage or destruction. Upon the occurrence of an Event of
               Default,  Lender  shall  have  the  right to  apply  all  prepaid
               premiums to the payment of the  Obligations in such order or form
               as Lender shall determine.

                                       -5-

<PAGE>

          d.   Company shall not take out separate insurance  concurrent in form
               or  contributing  in the event of loss with that  required  to be
               maintained  under this  Section  4.2,  unless  Lender is included
               thereon as named  insured with the loss payable to Lender under a
               standard  438BFU  (NS)  Mortgagee   endorsement,   or  its  local
               equivalent. Company immediately shall notify Lender whenever such
               separate   insurance  is  taken  out,   specifying   the  insurer
               thereunder and full particulars as to the policies evidencing the
               same,  and  originals  of  such  policies  immediately  shall  be
               provided to Lender.

     C.   Location of Inventory and Equipment.

     Keep the  Inventory  and  Equipment  only at the  locations  identified  on
Schedule 3.2;  provided,  however,  that Company may amend Schedule 3.2 to add a
new location so long as such  amendment  occurs by written  notice to Lender not
less than 30 days prior to the date on which the Inventory or Equipment is moved
to such new  location,  so long as such new  location is within the  continental
United States, and so long as, at the time of such written notification, Company
provides any financing  statements or fixture  filings  necessary to perfect and
continue perfected Lender's security interests in such assets.

V.   NEGATIVE COVENANTS.

     Company covenants and agrees that, so long as any credit hereunder shall be
available and until full and final payment of the Obligations,  Company will not
do any of the following without Lender's prior written consent:

     A.   Liens.

     Create, incur, assume, or permit to exist, directly or indirectly, any Lien
on or with  respect to any of its property or assets,  of any kind,  whether now
owned or  hereafter  acquired,  or any income or profits  therefrom,  except for
Permitted Liens.

     B.   Restrictions on Fundamental Changes.

     Enter into any merger, consolidation,  reorganization, or recapitalization,
or reclassify its capital stock,  or liquidate,  wind up, or dissolve itself (or
suffer  any  liquidation  or  dissolution),  or  convey,  sell,  assign,  lease,
transfer,   or  otherwise  dispose  of,  in  one  transaction  or  a  series  of
transactions, all or any substantial part of its property or assets.

     C.   Disposal of Assets.

     Sell,  lease,  assign,  transfer,  or otherwise dispose of any of Company's
properties  or assets  other than sales of  Inventory  to buyers in the ordinary
course of Company's  business as currently  conducted  (including  so long as no
Event of  Default  exists  or would be  caused  thereby,  obsolete  or  unuseful
Equipment in the aggregate amount not to exceed $50,000 in any fiscal year).

     D.   Change Name.

     Change Company's name,  FEIN,  corporate  structure  (within the meaning of
Section 9402(7) of the Code), or identity, or add any new fictitious name.

     E.   Change in Location of Chief Executive Office;  Inventory and Equipment
          with Bailees.

     Relocate its chief executive office to a new location without  providing 30
days prior written notification thereof to Lender and so long as, at the time of
such written notification,  Company provides any financing statements or fixture
filings necessary to perfect and continue perfected Lender's security interests.
The  Inventory  and  Equipment  shall not at any time now or hereafter be stored
with a bailee,  warehouseman,  or similar party without  Lender's  prior written
consent.

                                       -6-

<PAGE>

VI.  EVENTS OF DEFAULT.

     Any one or more of the  following  events  shall  constitute  an  event  of
default (each, an "Event of Default") under this Agreement:

          A. If Company  fails to pay when due and payable or when  declared due
     and payable, any portion of the Obligations (whether of principal, interest
     (including  any interest  which,  but for the  provisions of the Bankruptcy
     Code,  would have accrued on such amounts),  fees and charges due Lender or
     other amounts constituting Obligations;

          B. If Company fails to perform,  keep, or observe any term, provision,
     condition,  covenant,  or agreement contained in this Agreement,  in any of
     the other  Loan  Documents,  or in any other  present  or future  agreement
     between Company and Lender;

          C. If an Insolvency Proceeding is commenced by Company;

          D. If an Insolvency Proceeding is commenced against Company and any of
     the following  events occur: (a) Company consents to the institution of the
     Insolvency   Proceeding  against  it;  (b)  the  petition   commencing  the
     Insolvency  Proceeding  is  not  timely  controverted;   (c)  the  petition
     commencing  the Insolvency  Proceeding is not dismissed  within 45 calendar
     days of the date of the filing thereof; (d) an interim trustee is appointed
     to take  possession  of all or a substantial  portion of the  properties or
     assets of, or to operate all or any substantial portion of the business of,
     Company;  or (e) an order for  relief  shall  have been  issued or  entered
     therein;

VII. LENDER'S RIGHTS AND REMEDIES.

     A.   Rights and Remedies.

     Upon the occurrence,  and during the  continuation,  of an Event of Default
Lender may, at its election,  without notice of its election and without demand,
do any one or more of the following, all of which are authorized by Company:

          a. Declare all Obligations,  whether  evidenced by this Agreement,  by
     any of the other Loan Documents, or otherwise, immediately due and payable;

          b. Cease advancing money or extending  credit to or for the benefit of
     Company,  under any of the Loan  Documents,  or under  any other  agreement
     between Company and Lender;

          c. Terminate any of the Loan  Documents as to any future  liability or
     obligation of Lender,  but without  affecting  Lender's rights and security
     interests in the Collateral and without affecting the Obligations;

          d. Settle or adjust  disputes and claims directly with Account Debtors
     for amounts and upon terms which Lender considers advisable;

          e. Cause  Company to hold all returned  Inventory in trust for Lender,
     segregate all returned  Inventory  from all other property of Company or in
     Company's possession and conspicuously label said returned Inventory as the
     property of Lender;

          f.  Without  notice to or demand upon Company or any  guarantor,  make
     such payments and do such acts as Lender considers  necessary or reasonable
     to protect its security  interests  in the  Collateral.  Company  agrees to
     assemble the  Collateral if Lender so requires,  and to make the Collateral
     available to Lender as Lender may designate.  Company  authorizes Lender to
     enter the premises  where the  Collateral is located,  to take and maintain
     possession  of the  Collateral,  or any part of it,  and to pay,  purchase,
     contest,  or compromise any encumbrance,  charge,  or Lien that in Lender's
     determination  appears to conflict  with its security  interests and to pay
     all  expenses  incurred in  connection  therewith.  With  respect to any of
     Company's owned or leased premises,  Company hereby grants Lender a license
     to enter into  possession of such premises and to occupy the same,  without
     charge,  in order to exercise any of Lender's  rights or remedies  provided
     herein, at law, in equity, or otherwise;

                                      -7-

<PAGE>

          g. Without notice to Company (such notice being expressly waived), and
     without  constituting a retention of any collateral in  satisfaction  of an
     obligation  (within the meaning of Section  9505 of the Code),  set off and
     apply to the  Obligations  any and all (i) balances and deposits of Company
     held by Lender, or (ii) indebtedness at any time owing to or for the credit
     or the account of Company held by Lender;

          h. Hold,  as cash  collateral,  any and all  balances  and deposits of
     Company held by Lender to secure the full and final repayment of all of the
     Obligations;

          i. Ship, reclaim,  recover, store, finish,  maintain,  repair, prepare
     for sale,  advertise for sale, and sell (in the manner provided for herein)
     the  Collateral.  Lender is hereby granted a license or other right to use,
     without charge, Company's labels, patents, copyrights, rights of use of any
     name,  trade  secrets,   trade  names,   trademarks,   service  marks,  and
     advertising  matter, or any property of a similar nature, as it pertains to
     the  Collateral,  in completing  production of,  advertising  for sale, and
     selling any  Collateral  and  Company's  rights  under all licenses and all
     franchise agreements shall inure to Lender's benefit;

          j. Sell the Collateral at either a public or private sale, or both, by
     way of one or more contracts or transactions, for cash or on terms, in such
     manner  and  at  such  places  (including  Company's  premises)  as  Lender
     determines  is  commercially  reasonable.  It is  not  necessary  that  the
     Collateral be present at any such sale;

          k. Lender shall give notice of the  disposition  of the  Collateral as
     follows:

               (1)  Lender  shall  give  Company  and each  holder of a security
          interest in the Collateral who has filed with Lender a written request
          for notice,  a notice in writing of the time and place of public sale,
          or, if the sale is a private sale or some other disposition other than
          a  public  sale is to be made of the  Collateral,  then the time on or
          after which the private sale or other disposition is to be made;

               (2) The notice shall be personally  delivered or mailed,  postage
          prepaid,  to Company as provided in Section 10, at least 5 days before
          the date fixed for the sale,  or at least 5 days before the date on or
          after which the private sale or other  disposition  is to be made;  no
          notice  needs to be given prior to the  disposition  of any portion of
          the Collateral that is perishable or threatens to decline  speedily in
          value or that is of a type  customarily  sold on a recognized  market.
          Notice to Persons  other than  Company  claiming  an  interest  in the
          Collateral  shall be sent to such  addresses as they have furnished to
          Lender;

               (3) If the sale is to be a public  sale,  Lender  also shall give
          notice of the time and place by  publishing a notice one time at least
          5 days  before  the  date  of  the  sale  in a  newspaper  of  general
          circulation in the county in which the sale is to be held;

          l. Lender may credit bid and purchase at any public sale; and

          m. Any deficiency  that exists after  disposition of the Collateral as
     provided  above will be paid  immediately  by  Company.  Any excess will be
     returned,  without interest and subject to the rights of third Persons,  by
     Lender to Company.

     B.   Remedies Cumulative.

     Lender's rights and remedies under this Agreement,  the Loan Documents, and
all other agreements shall be cumulative. Lender shall have all other rights and
remedies not  inconsistent  herewith as provided  under the Code,  by law, or in
equity.  No  exercise  by  Lender  of one  right or  remedy  shall be  deemed an
election,  and no waiver by  Lender  of any Event of  Default  shall be deemed a
continuing  waiver. No delay by Lender shall constitute a waiver,  election,  or
acquiescence by it.

                                       -8-

<PAGE>

VIII. TAXES AND EXPENSES.

     If Company fails to pay any monies (whether taxes,  assessments,  insurance
premiums, or, in the case of leased properties or assets, rents or other amounts
payable under such leases) due to third  Persons,  or fails to make any deposits
or furnish any required  proof of payment or deposit,  all as required under the
terms of this Agreement,  then,  Lender may do any or all of the following:  (a)
make  payment  of the same or any  part  thereof;  or (b)  obtain  and  maintain
insurance  policies of the type  described  in Section  4.2, and take any action
with respect to such policies as Lender deems prudent.  Company shall  reimburse
Lender for any such amounts  paid by Lender.  Any such  payments  made by Lender
shall not  constitute  an agreement  by Lender to make  similar  payments in the
future  or a waiver by Lender of any  Event of  Default  under  this  Agreement.
Lender  need not inquire as to, or contest the  validity  of, any such  expense,
tax,  or Lien and the  receipt  of the usual  official  notice  for the  payment
thereof shall be conclusive evidence that the same was validly due and owing.

IX.  WAIVERS; INDEMNIFICATION.

     A.   Demand; Protest; etc.

     Company waives  demand,  protest,  notice of protest,  notice of default or
dishonor,  notice of payment and  nonpayment,  nonpayment at maturity,  release,
compromise,   settlement,   extension,   or  renewal  of  accounts,   documents,
instruments,  chattel paper,  and guarantees at any time held by Lender on which
Company may in any way be liable.

     B.   Lender's Liability for Collateral.

     So long as Lender complies with its obligations, if any, under Section 9207
of the Code, Lender shall not in any way or manner be liable or responsible for:
(a) the safekeeping of the Collateral;  (b) any loss or damage thereto occurring
or arising in any manner or fashion from any cause;  (c) any  diminution  in the
value thereof; or (d) any act or default of any carrier,  warehouseman,  bailee,
forwarding  agency, or other Person. All risk of loss, damage, or destruction of
the Collateral shall be borne by Company.

     C.   Indemnification.

     Company shall pay,  indemnify,  defend,  and hold Lender, and each of their
respective    officers,    directors,    employees,    counsel,    agents,   and
attorneys-in-fact  (each,  an  "Indemnified  Person")  harmless  (to the fullest
extent  permitted by law) from and against any and all claims,  demands,  suits,
actions, investigations,  proceedings, and damages, and all reasonable attorneys
fees and  disbursements  and  other  costs and  expenses  actually  incurred  in
connection  therewith (as and when they are incurred and irrespective of whether
suit is brought), at any time asserted against, imposed upon, or incurred by any
of them in  connection  with or as a  result  of or  related  to the  execution,
delivery, enforcement, performance, and administration of this Agreement and any
other Loan Documents or the transactions  contemplated  herein, and with respect
to any investigation,  litigation,  or proceeding related to this Agreement, any
other Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission,  event  or  circumstance  in  any  manner  related  thereto  (all  the
foregoing,  collectively, the "Indemnified Liabilities").  Company shall have no
obligation to any Indemnified  Person under this Section 9.3 with respect to any
Indemnified Liability that a court of competent  jurisdiction finally determines
to have  resulted  from the  gross  negligence  or  willful  misconduct  of such
Indemnified  Person.  This  provision  shall  survive  the  termination  of this
Agreement and the repayment of the Obligations.

X.   NOTICES.

     Unless otherwise provided in this Agreement,  all notices or demands by any
party  relating to this Agreement or any other Loan Document shall be in writing
and (except for financial statements and other informational documents which may
be sent by first-class mail,  postage prepaid) shall be personally  delivered or
sent  by  registered  or  certified  mail  (postage   prepaid,   return  receipt
requested),  overnight courier, or telefacsimile to Company or to Lender, as the
case may be, at its address set forth below:

                                      -9-

<PAGE>

If to Company:                2703 College Avenue
                              Goshen, Indiana  46526
                              Attn:  ...........................................
                              Fax No............................................
If to Lender:                 2703 College Avenue
                              Goshen, Indiana  46526
                              Attn:  ...........................................
                              Fax No............................................

     The  parties  hereto may  change  the  address at which they are to receive
notices  hereunder,  by notice in writing in the  foregoing  manner given to the
other.  All notices or demands  sent in  accordance  with this Section 10, other
than notices by Lender in  connection  with  Sections  9504 or 9505 of the Code,
shall be deemed  received on the earlier of the date of actual receipt or 3 days
after the  deposit  thereof in the mail.  Company  acknowledges  and agrees that
notices  sent by Lender in  connection  with  Sections  9504 or 9505 of the Code
shall be deemed sent when  deposited in the mail or  personally  delivered,  or,
where permitted by law,  transmitted  telefacsimile  or other similar method set
forth above.

XI.  CHOICE OF LAW AND VENUE;  JURY TRIAL  WAIVER.

     THE  VALIDITY  OF THIS  AGREEMENT  AND THE  OTHER  LOAN  DOCUMENTS  (UNLESS
EXPRESSLY   PROVIDED  TO  THE  CONTRARY  IN  AN  ANOTHER  LOAN  DOCUMENT),   THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING  HEREUNDER
OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED  UNDER,  GOVERNED
BY, AND  CONSTRUED  IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF  INDIANA.  THE
PARTIES AGREE THAT ALL ACTIONS OR  PROCEEDINGS  ARISING IN CONNECTION  WITH THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS  SHALL BE TRIED AND LITIGATED ONLY IN THE
STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF ELKHART,  STATE OF INDIANA OR,
AT THE SOLE OPTION OF Lender,  IN ANY OTHER COURT IN WHICH Lender SHALL INITIATE
LEGAL OR EQUITABLE  PROCEEDINGS AND WHICH HAS SUBJECT MATTER  JURISDICTION  OVER
THE MATTER IN  CONTROVERSY.  EACH OF BORROWER AND Lender  WAIVES,  TO THE EXTENT
PERMITTED  UNDER  APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
OF FORUM NON  CONVENIENS  OR TO OBJECT TO VENUE TO THE EXTENT ANY  PROCEEDING IS
BROUGHT IN  ACCORDANCE  WITH THIS SECTION 11.  BORROWER AND Lender  HEREBY WAIVE
THEIR  RESPECTIVE  RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION  BASED
UPON OR  ARISING  OUT OF ANY OF THE LOAN  DOCUMENTS  OR ANY OF THE  TRANSACTIONS
CONTEMPLATED  THEREIN,  INCLUDING CONTRACT CLAIMS,  TORT CLAIMS,  BREACH OF DUTY
CLAIMS,  AND ALL OTHER  COMMON LAW OR  STATUTORY  CLAIMS.  EACH OF BORROWER  AND
Lender  REPRESENTS  THAT IT HAS  REVIEWED  THIS  WAIVER AND EACH  KNOWINGLY  AND
VOLUNTARILY  WAIVES  ITS JURY TRIAL  RIGHTS  FOLLOWING  CONSULTATION  WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION,  A COPY OF THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.

XII. DESTRUCTION OF BORROWER'S DOCUMENTS.

     All documents,  schedules,  invoices,  agings, or other papers delivered to
Lender may be destroyed  or otherwise  disposed of by Lender 4 months after they
are delivered to or received by Lender, unless Company requests, in writing, the
return of said documents,  schedules, or other papers and makes arrangements, at
Company's expense, for their return.

XIII. GENERAL PROVISIONS.

     A.   Effectiveness.

     This  Agreement  shall be binding  and deemed  effective  when  executed by
Company and Lender.

                                      -10-

<PAGE>

     B.   Successors and Assigns.

     This  Agreement  shall  bind and  inure to the  benefit  of the  respective
successors and assigns of each of the parties;  provided,  however, that Company
may not assign this Agreement or any rights or duties hereunder without Lender's
prior written consent and any prohibited assignment shall be absolutely void. No
consent to an assignment by Lender shall release  Company from its  Obligations.
Lender may assign  this  Agreement  and its rights and duties  hereunder  and no
consent  or  approval  by  Company  is  required  in  connection  with  any such
assignment.  Lender reserves the right to sell, assign, transfer,  negotiate, or
grant  participations  in all or any part of, or any interest in Lender's rights
and benefits hereunder. In connection with any such assignment or participation,
Lender may disclose all documents and information  which Lender now or hereafter
may have  relating to Company or Company's  business.  To the extent that Lender
assigns  its  rights  and  obligations  hereunder  to  a  third  Person,  Lender
thereafter shall be released from such assigned obligations to Company.  Without
limiting  the  foregoing,  Company  acknowledges  that  Lender has  collaterally
assigned Lender's rights under the Loan Documents to Lender Capital Corporation.

     C.   Section Headings.

     Headings  and  numbers  have been set forth  herein for  convenience  only.
Unless the contrary is compelled  by the context,  everything  contained in each
section applies equally to this entire Agreement.

     D.   Interpretation.

     Neither this  Agreement nor any  uncertainty  or ambiguity  herein shall be
construed  or  resolved  against  Lender or Company,  whether  under any rule of
construction or otherwise.  On the contrary, this Agreement has been reviewed by
all parties and shall be  construed  and  interpreted  according to the ordinary
meaning of the words used so as to fairly accomplish the purposes and intentions
of all parties hereto.

     E.   Severability of Provisions.

     Each  provision  of this  Agreement  shall be  severable  from every  other
provision  of  this  Agreement  for  the  purpose  of   determining   the  legal
enforceability of any specific provision.

     F.   Amendments in Writing.

     This  Agreement can only be amended by a writing  signed by both Lender and
Company.

     G.   Counterparts; Telefacsimile Execution.

     This  Agreement  may be  executed  in any  number  of  counterparts  and by
different  parties on separate  counterparts,  each of which,  when executed and
delivered,  shall be deemed to be an  original,  and all of  which,  when  taken
together,  shall  constitute  but one and the  same  Agreement.  Delivery  of an
executed  counterpart  of this  Agreement by  telefacsimile  shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile also
shall deliver an original executed counterpart of this Agreement but the failure
to deliver  an  original  executed  counterpart  shall not affect the  validity,
enforceability, and binding effect of this Agreement.

     H.   Revival and Reinstatement of Obligations.

     If the incurrence or payment of the Obligations by Company or any guarantor
of the  Obligations  or the transfer by either or both of such parties to Lender
of any  property  of  either  or both  of such  parties  should  for any  reason
subsequently  be declared to be void or voidable  under any state or federal law
relating to  creditors'  rights,  including  provisions of the  Bankruptcy  Code
relating  to  fraudulent  conveyances,   preferences,   and  other  voidable  or
recoverable  payments  of  money  or  transfers  of  property  (collectively,  a
"Voidable Transfer"), and if Lender is required to repay or restore, in whole or
in part,  any such  Voidable  Transfer,  or elects to do so upon the  reasonable
advice of its counsel,  then,  as to any such Voidable  Transfer,  or the amount
thereof  that Lender is  required  or elects to repay or restore,  and as to all
reasonable costs,  expenses,  and attorneys fees of Lender related thereto,  the
liability  of  Company  or  such  guarantor   automatically  shall  be  revived,
reinstated,  and restored and shall exist as though such  Voidable  Transfer had
never been made.

                                      -11-

<PAGE>

     I.   Integration.

     This Agreement, together with the other Loan Documents, reflects the entire
understanding  of the  parties  with  respect to the  transactions  contemplated
hereby and shall not be contradicted or qualified by any other  agreement,  oral
or written, before the date hereof.

     J.   Subordination Agreement.

     Notwithstanding  anything contained in this Agreement to the contrary,  the
rights and  remedies of Lender are subject to the terms and  conditions  of that
certain  Subordination  Agreement  of even  date  herewith  (the  "Subordination
Agreement") between the Lender and Foothill Capital Corporation. In the event of
a  conflict  between  this  Agreement  on the one  hand,  and the  Subordination
Agreement  on the other hand,  the terms of the  Subordination  Agreement  shall
govern.

                                      -12-

<PAGE>

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed in Goshen,  Indiana,  effective the date first above mentioned, on this
12 day of December, 2000.

                                        COMPANY:

                                        STARCRAFT AUTOMOTIVE GROUP, INC.

                                        An Indiana corporation

                                        By: /s/ Michael H. Schoeffler
                                           -----------------------------------
                                        Title:  President
                                              --------------------------------

                                        STARCRAFT CORPORATION,
                                        an Indiana corporation

                                        By: /s/ Michael H. Schoeffler
                                           -----------------------------------
                                        Title:  President
                                              --------------------------------

                                        LENDER:

                                          /s/ Kelly L. Rose
                                        --------------------------------------
                                        Kelly L. Rose

                                          /s/ G. Ray Stults
                                        --------------------------------------
                                        G. Ray Stults

                                      -13-

<PAGE>

SCHEDULES

Schedule P-1               Permitted Liens
Schedule 3.2               Location of Inventory and Equipment

                                      -14-REAL PROPERTY MORTGAGE

                           (LaGrange County, Indiana)

                            (Elkhart County, Indiana)

         THIS REAL PROPERTY  MORTGAGE   ("Mortgage"),  made  as of December  12,
2000,  is made and executed by  STARCRAFT  CORPORATION,  an Indiana  corporation
("Mortgagor"),  f/k/a Rokane  Investment  Group,  Inc., with its chief executive
office and principal place of business at 2703 College Avenue,  Goshen,  Indiana
46528,  in  favor of Kelly L.  Rose and G. Ray  Stults  (collectively  "Lender")
having an address at 2703 College Avenue, Goshen, Indiana 46528.

                                    RECITALS

         I. Pursuant to the terms of a certain  Reimbursement  Agreement of even
date  herewith  (said  Reimbursement  Agreement  together  with all  amendments,
supplements,  modifications and replacements thereof, being hereinafter referred
to as the "Loan  Agreement") by and between  Imperial  Automotive  Group,  Inc.,
Starcraft  Corporation,  Starcraft  Automotive Group, Inc. and National Mobility
Corporation, as borrowers ("Borrowers"), and Lender, Lender has agreed to extend
financial  accommodations  to Borrowers as  described  therein,  in an aggregate
principal amount of $2,500,000 (collectively, the "Loans"). The Loans consist of
certain letter of credit financial  accommodations and guaranty obligations.  To
induce Lender to make the Loans,  Mortgagor has executed and delivered to Lender
the Loan  Agreement.  The terms and  provisions of the Loan Agreement are hereby
incorporated by reference in this Mortgage.

         II.  Among  other  things,  this  Mortgage  is given to secure not only
present indebtedness but also future advances,  whether such future advances are
obligatory or are to be made at the option of Lender,  or otherwise.  The amount
of  indebtedness  secured  hereby may  increase or  decrease  from time to time,
however the principal amount of such  indebtedness  shall not at any time exceed
the amount of $3,000,000,  plus interest thereon,  and other costs,  amounts and
disbursements as provided herein and in the Agreement.

                                GRANTING CLAUSES

         To  secure  the  payment  of the  indebtedness  evidenced  by the  Loan
Agreement  the  payment  and  performance  of the  obligations  under  the  Loan
Agreement  and the  Guaranty,  and the  payment of all amounts due under and the
performance  and  observance of all covenants and  conditions  contained in this
Mortgage,  the Loan Agreement any and all other mortgages,  security agreements,
assignments  of  leases  and  rents,  guaranties,  reimbursement  agreements  in
connection  with any letters of credit and any other  documents and  instruments
now  or  hereafter  executed  by  Mortgagor  or any  party  related  thereto  or
affiliated therewith to evidence,  secure or guarantee the payment of all or any
portion of the  Indebtedness  under the Loan Agreement and any and all renewals,
extensions, amendments and replacements of this Mortgage, the Loan Agreement and
any such other  documents and instruments  (the Loan  Agreement,  this Mortgage,
such other  mortgages,  security  agreements,  assignments  of leases and rents,
guaranties,  reimbursement  agreements in connection with any letters of credit,
and any other documents and instruments now or hereafter  executed and delivered
in connection with the Loans, and any and all amendments,  renewals,  extensions
and replacements hereof and thereof, being sometimes referred to collectively as
the  "Loan   Instruments"  and  individually  as  a  "Loan   Instrument")   (all
indebtedness and liabilities secured hereby being hereinafter sometimes referred
to as "Borrowers' Liabilities"), Mortgagor does hereby convey, mortgage, warrant
assign,  transfer,  pledge and  deliver to Lender and grant to Lender a security
interest in the following described property subject to the terms and conditions
herein:

         (A) The lands located in LaGrange County and Elkhart  County,  Indiana,
legally described in attached Exhibit A ("Land");

         (B) All the buildings,  structures,  improvements and fixtures of every
kind or  nature  now or  hereafter  situated  on the  Land  and  all  machinery,
appliances,  equipment,  furniture and all other personal property of every kind
or nature which constitute  fixtures with respect to the Land, together with all
extensions,  additions,  improvements,  substitutions  and  replacements  of the
foregoing ("Improvements");

         (C) All easements,  tenements,  rights-of-way,  vaults,  gores of land,
streets, ways, alleys,  passages,  sewer rights, water courses, water rights and
powers and  appurtenances in any way belonging,  relating or appertaining to any
of the Land or Improvements,  or which hereafter shall in any way belong, relate
or  be   appurtenant   thereto,   whether  now  owned  or   hereafter   acquired
("Appurtenances");

         (D) (i) All  judgments,  insurance  proceeds,  awards  of  damages  and
settlements  which may result from any damage to all or any portion of the Land,
Improvements or Appurtenances  or any part thereof or to any rights  appurtenant
thereto;

             (ii) All compensation,  awards,  damages,  claims, rights of action
and proceeds of or on account of (a) any damage or taking, pursuant to the power
of  eminent  domain,  of the Land,  Improvements  or  Appurtenances  or any part
thereof,  (b)  damage  to all or  any  portion  of  the  Land,  Improvements  or
Appurtenances by reason of the taking,  pursuant to the power of eminent domain,
of all or any  portion  of the  Land,  Improvements,  Appurtenances  or of other
property,  or (c) the  alteration  of the grade of any  street or  highway on or
about the Land, Improvements,  Appurtenances or any part thereof, and, except as
otherwise  provided herein,  Lender is hereby  authorized to collect and receive
said awards and proceeds and to give proper receipts and  acquittances  therefor
and, except as otherwise  provided herein,  to apply the same toward the payment
of the indebtedness and other sums secured hereby; and

             (iii)   All   proceeds,    products,    replacements,    additions,
substitutions,  renewals  and  accessions  of and to the Land,  Improvements  or
Appurtenances;

         (E) All  rents,  issues,  profits,  income  and other  benefits  now or
hereafter arising from or in respect of the Land,  Improvements or Appurtenances
(the  Rents");  it be intended  that this  Granting  Clause shall  constitute an
absolute  and  present  assignment  of  the  Rents,  subject,  however,  to  the
conditional  permission  given to  Mortgagor  to  collect  and use the  Rents as
provided in this Mortgage;

         (F) Any and all leases,  licenses and other occupancy agreements now or
hereafter affecting the Land,  Improvements or Appurtenances,  together with all
security therefor and guaranties thereof and all monies payable thereunder,  and
all books and records owned by Mortgagor which contain evidence of payments made
under the leases and all security given therefor  (collectively,  the "Leases"),
subject  however,  to the  conditional  permission  given  in this  Mortgage  to
Mortgagor  to collect  the Rents  arising  under the Leases as  provided in this
Mortgage;

         (G) Any and all after-acquired right, title or interest of Mortgagor in
and to any of the property described in the preceding Granting Clauses; and

         (H) The proceeds from the sale,  transfer,  pledge or other disposition
of any or all of the property described in the preceding Granting Clauses;

         All of the  mortgaged  property  described  in  the  Granting  Clauses,
together with all real and personal,  tangible and intangible  property  pledged
in,  or to which a  security  interest  attaches  pursuant  to,  any of the Loan
Instruments is sometimes  referred to collectively as the "Mortgaged  Property."
The Rents and Leases are pledged on a parity with the Land and  Improvements and
not secondarily.

                                   ARTICLE ONE
                             COVENANTS OF MORTGAGOR

         Mortgagor covenants and agrees with Lender as follows:

         1.1  Performance  under Loan  Agreement,  the  Mortgage  and Other Loan
Instruments.  Mortgagor  shall  perform,  observe and comply with or cause to be
performed,  observed  and  complied  with in a complete  and  timely  manner all
provisions hereof, of the Loan Agreement,  every other Loan Instrument and every
instrument evidencing or securing Borrowers' Liabilities.

         1.2  General  Covenants  and   Representations.   Mortgagor  covenants,
represents  and warrants that as of the date hereof and at all times  thereafter
during the term hereof (a) Mortgagor is seized of an indefeasible  estate in fee
simple in that portion of the Mortgaged Property which is real property, and has
good and absolute title to it and the balance of the Mortgaged Property free and
clear of all liens,  security  interests,  charges and  encumbrances  whatsoever
except  those  currently  of record,  if any (such  liens,  security  interests,
charges  and  encumbrances  being  hereinafter  referred  to as  the  "Permitted
Encumbrances"); (b) Mortgagor has good right, full power and lawful authority to
mortgage  and pledge the  Mortgaged  Property as provided  herein;  (c) upon the
occurrence of an Event of Default (hereinafter defined), Lender may at all times
peaceably and quietly enter upon, hold, occupy and enjoy the Mortgaged  Property
in  accordance  with the terms  hereof,  and (d)  Mortgagor  will  maintain  and
preserve  the  lien  of  this  Mortgage  as a first  and  paramount  lien on the
Mortgaged  Property subject only to the Permitted  Encumbrances until Borrowers'
Liabilities  have  been  paid in full and  Lender's  obligations  under the Loan
Agreement have been terminated.

         1.3 Compliance with Laws and Other  Restrictions.  Mortgagor  covenants
and represents that the Land and the Improvements and the use thereof  presently
comply  with,  and will  continue to comply  with,  all  applicable  restrictive
covenants,  zoning and  subdivision  ordinances  and building  codes,  licenses,
health and  environmental  laws and regulations and all other  applicable  laws,
ordinances, rules and regulations.

         1.4      Taxes and Other Charges.

                  1.4.1 Taxes and Assessments. Mortgagor shall pay promptly when
due  all  taxes,  assessments,   rates,  dues,  charges,  fees,  levies,  fines,
impositions,  liabilities, obligations, liens and encumbrances of every kind and
nature whatsoever now or hereafter  imposed,  levied or assessed upon or against
the Mortgaged Property or any part thereof,  or upon or against this Mortgage or
Borrowers'  Liabilities;  provided,  however,  that  Mortgagor may in good faith
contest the validity,  applicability  or amount of any tax,  assessment or other
charge,   Mortgagor  shall  obtain  an   endorsement,   in  form  and  substance
satisfactory to Lender,  to the loan policy of title insurance  issued to Lender
insuring the lien of this Mortgage,  insuring over such tax, assessment or other
charge and if Mortgagor  otherwise complies with any provisions which may be set
forth in the Loan Agreement regarding the contest of taxes.

                  1.4.2  Taxes  Affecting  Lender's  Interest.   If  any  state,
federal,  municipal or other governmental law, order, rule or regulation,  which
becomes  effective  subsequent  to the date  hereof,  in any  manner  changes or
modifies  existing laws  governing the taxation of mortgages or debts secured by
mortgages, or the manner of collecting taxes, so as to impose on Lender a tax by
reason of its ownership of any or all of the Loan Instruments or measured by the
principal amount of Borrowers' Liabilities, requires or has the practical effect
of  requiring  Lender to pay any  portion  of the real  estate  taxes  levied in
respect of the  Mortgaged  Property or to pay any tax levied in whole or in part
in  substitution  for real estate  taxes or  otherwise  affects  materially  and
adversely  the  rights of Lender in  respect  of  Borrowers'  Liabilities,  this
Mortgage or the other Loan Instruments,  Borrowers' Liabilities and all interest
accrued  thereon  shall,  upon thirty (30) days' notice,  become due and payable
forthwith at the option of Lender,  whether or not there shall have  occurred an
Event of Default provided, however, that, if Mortgagor may, without violating or
causing a violation of such law,  order,  rule or regulation,  pay such taxes or
other sums as are necessary to eliminate  such adverse effect upon the rights of
Lender and does pay such  taxes or other sums when due,  Lender may not elect to
declare due  Borrowers'  Liabilities by reason of the provisions of this Section
1.4.2.

         1.5  Mechanic's and Other Liens.  Mortgagor  shall not permit or suffer
any mechanic's, laborer's, materialman's, statutory or other lien or encumbrance
(other than any lien for taxes and  assessments  not yet due) to be created upon
or against the Mortgaged Property; provided, however, that Mortgagor may in good
faith, by appropriate proceedings, contest the validity, applicability or amount
of any asserted lien, if Mortgagor shall first obtain an endorsement in form and
substance  satisfactory to Lender,  to the loan policy of title insurance issued
to Lender  insuring the lien of this Mortgage,  insuring over such asserted lien
and if Mortgagor  otherwise  complies with any provisions which may be set forth
in the Loan Agreement regarding the contest of liens.

         1.6      Insurance and Condemnation.

                  1.6.1  Insurance  Policies.   Mortgagor  shall,  at  its  sole
expense,  obtain for,  deliver  to,  assign to and  maintain  for the benefit of
Lender,  until  Borrowers'  Liabilities  are  paid in  full,  such  policies  of
insurance as are required by the Loan Agreement.

                  1.6.2 Adjustment of Loss.  Except as otherwise may be provided
by the Loan Agreement, Lender is hereby authorized and empowered, at its option,
to adjust or  compromise  any loss under any  insurance  policies  covering  the
Mortgaged  Property and to collect and receive the proceeds from any such policy
or   policies.   Mortgagor   hereby   irrevocably   appoints   Lender   as   its
attorney-in-fact for the purposes set forth in the preceding sentence.

                  1.6.3  Condemnation  Awards.  Lender  shall be entitled to all
compensation,  awards, damages,  claims, rights of action and proceeds of, or on
account of, (1) any damage or taking,  pursuant to the power of eminent  domain,
of the  Mortgaged  Property or any part  thereof,  (11) damage to the  Mortgaged
Property by reason of the taking,  pursuant to the power of eminent  domain,  of
other property, or (111) the alteration of the grade of any street or highway on
or about the Mortgaged Property.  Lender is hereby authorized, at its option, to
commence,  appear in and prosecute in its own or Mortgagor's  name any action or
proceeding relating to any such compensation, awards, damages, claims, rights of
action  and  proceeds  and to  settle  or  compromise  any  claim in  connection
therewith.  Mortgagor hereby irrevocably appoints Lender as its attorney-in-fact
for the purposes set forth in the preceding sentence.

                  1.6.4  Repair;  Proceeds  of  Casualty  Insurance  and Eminent
Domain.  If all or any  part of the  Mortgaged  Property  shall  be  damaged  or
destroyed  by fire or other  casualty  or shall be damaged or taken  through the
exercise  of the power of eminent  domain or other  cause  described  in Section
1.6.3,  Mortgagor  shall promptly and with all due diligence  restore and repair
the  Mortgaged  Property  to the  extent  that  the  proceeds,  award  or  other
compensation  or proceeds of the Loans are made  available to Mortgagor for such
restoration  or  repair.  Except  as  otherwise  may be  provided  by  the  Loan
Agreement,  the entire amount of such proceeds,  award or compensation  shall be
applied to Borrowers' Liabilities in such order and manner as Lender may elect.

         1.7 Lender May Pay. Upon Mortgagor's failure to pay any amount required
to be paid by Mortgagor  under  Sections  1.4,  1.5 and 1.6,  Lender may pay the
same.  Mortgagor  shall pay to Lender  on  demand  the  amount so paid by Lender
together  with  interest at the highest  rate payable  under the Loan  Agreement
after the  occurrence  of an "Event of  Default"  as such term is defined in the
Loan  Agreement (the "Default  Rate") and the amount so paid by Lender  together
with interest, shall be added to Borrowers' Liabilities.

         1.8  Care of the  Mortgaged  Property.  Mortgagor  shall  preserve  and
maintain the  Mortgaged  Property in good and first class  condition and repair.
Mortgagor shall not without the prior written  consent of Lender,  permit commit
or suffer any waste, impairment or deterioration of the Mortgaged Property or of
any part  thereof,  and will not take any action which will increase the risk of
fire or other hazard to the Mortgaged Property or to any part thereof. Except as
otherwise  provided in the Loan Agreement or this Mortgage,  no new improvements
shall be  constructed  on the  Mortgaged  Property and no part of the  Mortgaged
Property shall be removed,  demolished or altered in any material manner without
the prior written consent of Lender.

         1.9  Transfer  or  Encumbrance  of the  Mortgaged  Property.  Except as
permitted by the Loan  Agreement,  Mortgagor shall not permit or suffer to occur
any sale, assignment,  conveyance,  transfer, mortgage, lease (other than leases
made mi accordance  with the provisions of this Mortgage) or encumbrance  of, or
any  contract  for any of the  foregoing  on an  installment  basis or otherwise
pertaining to, the Mortgaged Property,  any part thereof,  any interest therein,
the beneficial interest in Mortgagor, any interest in the beneficial interest in
Mortgagor  or in any  trust  holding  title to the  Mortgaged  Property,  or any
interest in a corporation, partnership or other entity which owns all or part of
the Mortgaged Property or such beneficial interest,  whether by operation of law
or otherwise, without the prior written consent of Lender having been obtained.

         1.10  Further  Assurances.  At any  time and  from  time to time,  upon
Lender's  request,  Mortgagor  shall make,  execute and deliver,  or cause to be
made, executed and delivered, to Lender, and where appropriate shall cause to be
recorded,  registered  or  filed,  and  from  time  to  time  thereafter  to  be
re-recorded,  re-registered  and  refiled at such time and in such  offices  and
places  as  shall be  deemed  desirable  by  Lender,  any and all  such  further
mortgages,  security agreements,  financing  statements,  instruments of further
assurance,  certificates and other documents as Lender may consider necessary or
desirable  in order to  effectuate  or perfect,  or to continue and preserve the
obligations under, this Mortgage.

         1.11  Assignment of Rents.  The  assignment of rents,  income and other
benefits contained in Section (E) of the Granting Clauses of this Mortgage shall
be fully operative  without any further action on the part of either party, and,
specifically, Lender shall be entitled, at its option, upon the occurrence of an
Event of Default  hereunder,  to all rents,  income and other  benefits from the
Mortgaged  Property,  whether or not Lender takes  possession of such  property.
Such assignment and grant shall continue in effect until Borrowers'  Liabilities
are paid in full and the Loan Instruments have been terminated, the execution of
this Mortgage  constituting and evidencing the irrevocable  consent of Mortgagor
to the entry upon and taking  possession  of the  Mortgaged  Property  by Lender
pursuant  to such  grant,  whether  or not  foreclosure  proceedings  have  been
instituted.  Notwithstanding  the foregoing,  so long as no Event of Default has
occurred  or is  continuing,  Mortgagor  shall have the right and  authority  to
continue  to collect the rents,  income and other  benefits  from the  Mortgaged
Property as they become due and payable but not more than thirty (30) days prior
to the due date thereof

         1.12 After-Acquired  Property.  To the extent permitted by, and subject
to,  applicable  law,  the lien of this  Mortgage  shall  automatically  attach,
without further act to all property  hereafter  acquired by Mortgagor located in
or on, or attached  to, or used or intended to be used in  connection  with,  or
with the operation of, the Mortgaged Property or any part thereof

         1.13 Leases Affecting Mortgaged  Property.  Mortgagor shall comply with
and perform i a complete and timely  manner all of its  obligations  as landlord
under all leases  affecting  the  Mortgaged  Property  or any part  thereof  The
assignment  contained in Section (E) of the Granting Clauses shall not be deemed
to impose  upon  Lender  any of the  obligations  or duties of the  landlord  or
Mortgagor provided in any lease.

         1.14  Management  of  Mortgaged  Property.  Mortgagor  shall  cause the
Mortgaged  Property to be managed at all times in accordance with sound business
practice.

         1.15  Execution of Leases.  Except as may be otherwise  provided in the
Loan  Agreement,  Mortgagor  shall  not  permit  any  leases  to be  made of the
Mortgaged  Property or existing leases to be modified,  terminated,  extended or
renewed without the prior written consent of Lender.

         1.16  Expenses;  Indemnity.  Without  limitation  of any  obligation of
Mortgagor  set  forth in the Loan  Agreement,  Mortgagor  shall pay when due and
payable,  and otherwise on demand made by Lender, all loan fees, appraisal fees,
recording fees,  taxes,  brokerage fees and  commissions,  abstract fees,  title
insurance  fees,  escrow fees,  attorneys'  fees,  court costs,  documentary and
expert  evidence,  fees of inspecting  architects and  engineers,  and all other
costs and  expenses  of every  character  which have been  incurred or which may
hereafter  be incurred by Lender in  connection  with the Loans,  including  the
preparation,  execution, delivery and performance of this Mortgage. If Mortgagor
fails to pay said costs and  expenses  as above  provided,  Lender may elect but
shall not be obligated,  to pay the costs and expenses described in this Section
1. 16, and if Lender does so elect,  then Mortgagor will, upon demand by Lender,
reimburse  Lender  for all such  expenses  which  have  been or shall be paid or
incurred by it. The amounts  paid by Lender  shall bear  interest at the Default
Rate and such  amounts,  together  with  interest,  shall be added to Borrowers'
Liabilities,  shall be  immediately  due and payable and shall be secured by the
lien of this Mortgage and the other Loan Instruments. To the extent permitted by
law, in the event of foreclosure hereof,  Lender shall be entitled to add to the
indebtedness found to be due by the court a reasonable estimate of such expenses
to be incurred after entry of the decree of foreclosure. To the extent permitted
by law, Mortgagor agrees to hold harmless Lender against and from, and reimburse
it for, all claims, demands, liabilities, losses, damages, judgments, penalties,
costs and expenses,  including without limitation  attorneys' fees, which may be
imposed  upon,  asserted  against,  or incurred or paid by it by reason of or in
connection  with any bodily injury or death or property  damage  occurring in or
upon or in the vicinity of the Mortgaged  Property through any cause whatsoever,
or  asserted  against  it on  account  of any act  performed  or  omitted  to be
performed  hereunder,  or on account of any transaction arising out of or in any
way  connected  with the  Mortgaged  Property,  this  Mortgage,  the other  Loan
Instruments,  any of the  *indebtedness  evidenced  by the  Guaranty or the Loan
Agreement or any of Borrowers' Liabilities.

         1.17 Lender's  Performance  of  Mortgagor's  Obligations.  If Mortgagor
fails to pay any tax, assessment, encumbrance or other imposition, or to furnish
insurance hereunder, or to perform any other covenant, condition or term in this
Mortgage, the Guaranty, the Loan Agreement or any other Loan Instrument,  Lender
may,  but shall not be  obligated  to,  pay,  obtain or  perform  the same.  All
payments made,  whether such payments are regular or accelerated  payments,  and
costs and expenses  incurred or paid by Lender in connection  therewith shall be
due and payable  immediately.  The  amounts so incurred or paid by Lender  shall
bear  interest at the Default Rate and such  amounts,  together  with  interest,
shall  be  added  to  Borrowers'  Liabilities  and  secured  by the lien of this
Mortgage and the other Loan Instruments.

         1.18 Payment of Superior  Liens.  To the extent that Lender,  after the
date  hereof,  pays any sum due  under any  provision  of law or  instrument  or
document  creating any lien superior or equal in priority in whole or in part to
the lien of this Mortgage,  such sum advanced by Lender shall be immediately due
and payable,  with interest at the Default Rate and shall be deemed to be a part
of  Borrowers'  Liabilities,  and Lender shall have and be entitled to a lien on
the Mortgaged Property equal in parity with that discharged, and Lender shall be
subrogated  to and  receive  and enjoy all rights and liens  possessed,  held or
enjoyed by, the holder of such lien, which shall remain in existence and benefit
Lender to secure  the  Guaranty,  the Loan  Agreement  and all  obligations  and
liabilities secured hereby.

         1.19     Environmental Conditions.

                  (a) Mortgagor  covenants,  warrants and represents  that there
         are no, nor will there,  for so long as any of  Borrowers'  Liabilities
         remain  outstanding,   be,  any  Hazardous  Materials  (as  hereinafter
         defined)  generated,   released,  stored,  buried  or  deposited  over,
         beneath,  in or upon the Mortgaged  Property  except as such  Hazardous
         Materials  may  be  required  to be  used,  stored  or  transported  in
         connection  with the permitted uses of the Mortgaged  Property and then
         only to the  extent  permitted  by law after  obtaining  all  necessary
         permits  and  licenses   therefor.   For  purposes  of  this  Mortgage,
         "Hazardous   Materials"   shall  mean  and  include   any   pollutants,
         flammables,   explosives,  petroleum,  (including  crude  oil)  or  any
         fraction  thereof,  radioactive  materials,   hazardous  wastes,  toxic
         substances or related materials,  including,  without  limitation,  any
         substances  defined  as or  included  in the  definition  of  toxic  or
         hazardous substances,  wastes, or materials under any federal, state or
         local  laws,  ordinances,  regulations  or  guidances  which  regulate,
         govern,  prohibit  or  pertain  to the  generation,  manufacture,  use,
         transportation,  disposal,  release, storage, treatment of, or response
         or exposure  to, toxic or hazardous  substances,  wastes or  materials.
         Such laws,  ordinances and  regulations  are  hereinafter  collectively
         referred to as the "Hazardous Materials Laws."

                  (b) Mortgagor  shall, and Mortgagor shall cause all employees,
         agents,  contractors  and  subcontractors  of  Mortgagor  and any other
         persons  from  time to  time  present  on or  occupying  the  Mortgaged
         Property  to, keep and maintain the  Mortgaged  Property in  compliance
         with, and not cause or knowingly permit the Mortgaged Property to be in
         violation  of,  any  applicable   Hazardous   Materials  Laws.  Neither
         Mortgagor nor any employees,  agents,  contractors or subcontractors of
         Mortgagor or any other  persons  occupying or present on the  Mortgaged
         Property  shall  use,  generate,  manufacture,  store or dispose of on,
         under or about  the  Mortgaged  Property  or  transport  to or from the
         Mortgaged  Property any Hazardous  Materials,  except as such Hazardous
         Materials  may  be  required  to be  used,  stored  or  transported  in
         connection  with the permitted uses of the Mortgaged  Property and then
         only to the  extent  permitted  by law after  obtaining  all  necessary
         permits and licenses therefor.

                  (c) Mortgagor  shall  immediately  advise Lender in writing of
         (i) any notices  received by Mortgagor  (whether  such notices are from
         the Environmental  Protection  Agency,  or any other federal,  state or
         local governmental  agency or regional office thereof) of the violation
         or potential. violation occurring on or about the Mortgaged Property of
         any applicable  Hazardous Materials Laws; (ii) any and all enforcement,
         cleanup,   removal  or  other   governmental   or  regulatory   actions
         instituted,  completed or threatened  against Mortgagor pursuant to any
         Hazardous  Materials  Laws;  (iii) all claims made or threatened by any
         third party  against  Mortgagor or the Mortgaged  Property  relating to
         damage,  contribution,  cost  recovery  compensation,  loss  or  injury
         resulting  from any  Hazardous  Materials  (the  matters  set  forth in
         clauses  (i),  (ii) and (iii)  above  are  hereinafter  referred  to as
         "Hazardous  Materials Claims");  and (iv) Mortgagor's  discovery of any
         occurrence  or  condition  on any  real  property  adjoining  or in the
         vicinity  of the  Mortgaged  Property  that could  cause the  Mortgaged
         Property or any part thereof to be subject to any  Hazardous  Materials
         Claims.  Lender shall have the right but not the obligation to join and
         participate  in, as a party if it so elects,  any legal  proceedings or
         actions initiated in connection with any Hazardous Materials Claims and
         Mortgagor shall pay to Lender,  upon demand, all reasonable  attorneys'
         and consultants' fees incurred by Lender in connection therewith.

                  (d)  Mortgagor  shall be  solely  responsible  for,  and shall
         indemnify and hold harmless Lender, its directors, officers, employees,
         agents, successors and assigns from and against any loss, damage, cost,
         expense  or  liability   directly  or  indirectly  arising  out  of  or
         attributable  to the  use,  generation,  storage,  release,  threatened
         release,  discharge,  disposal or presence  (whether prior to or during
         the term of the Loans or otherwise  and  regardless  of by whom caused,
         whether by Mortgagor or any  predecessor  in title or any owner of land
         adjacent to the  Mortgaged  Property or any other third  party,  or any
         employee,  agent,  contractor  or  subcontractor  of  Mortgagor  or any
         predecessor  In title  or any such  adjacent  land  owner or any  third
         person)  of  Hazardous  Materials  on,  under  or about  the  Mortgaged
         Property;  including,  without limitation:  (i) claims of third parties
         (including  governmental  agencies)  for  damages,  penalties,  losses,
         costs,  fees,  expenses,  damages,  injunctive  or other  relief,  (ii)
         response  costs,  clean-up  costs,  costs and  expenses  of removal and
         restoration,  including  fees of attorneys  and  experts,  and costs of
         determining the existence of Hazardous  Materials and reporting same to
         any governmental agency; and (iii) any and all expenses or obligations,
         including  attorneys'  fees,  incurred at, before or after any trial or
         appeal therefrom  whether or not taxable as costs,  including,  without
         limitation,  attorneys' fees, witness fees,  deposition costs,  copying
         and telephone charges and other expenses.  The obligations of Mortgagor
         under this  subsection  shall  survive any of the  foreclosure  of this
         Mortgage,   the   repayment  of   Borrowers'   Liabilities,   or  other
         satisfaction of the indebtedness  secured by this Mortgage,  whether by
         deed in lieu of foreclosure or otherwise.

                  (e) Any loss,  damage,  cost, expense or liability incurred by
         Lender as a result of a breach or misrepresentation by Mortgagor or for
         which  Mortgagor is responsible or for which  Mortgagor has indemnified
         Lender  shall  be  paid  to  Lender  on  demand,  and,  failing  prompt
         reimbursement,  such amounts shall,  together with interest  thereon at
         the  Default  Rate  from the date  incurred  by  Lender  until  paid by
         Mortgagor, be added to Borrowers'  Liabilities,  be immediately due and
         payable and be secured by the lien of this  Mortgage and the other Loan
         Instruments.

                  (f) If Lender has reason to suspect that Hazardous  Materials,
         which are not permitted by Hazardous  Materials  Laws, are present upon
         the Mortgaged  Property,  Lender may, in Its sole  discretion,  require
         Mortgagor,  at its sole cost and expense,  from time to time to perform
         or cause to be performed,  such studies or assessments of the Mortgaged
         Property, as Lender may deem necessary or appropriate or desirable,  to
         determine  the  status  of  environmental  conditions  on and about the
         Mortgaged Property, which such studies and assessments shall be for the
         benefit  of, and be  prepared  in  accordance  with the  specifications
         established by, Lender.

                  (g) Mortgagor hereby grants to Lender,  its agents,  employees
         and contractors,  access to the Mortgaged  Property,  from time to time
         upon prior  written  notice,  for the purpose of either (i) taking such
         action as Lender  shall  determine  to be  appropriate  to respond to a
         release, threatened release, or the presence of Hazardous Materials, or
         any related  condition,  on or about the  Mortgaged  Property;  or (11)
         conducting  such studies or assessments of the Mortgaged  Property,  as
         Lender may deem necessary or appropriate or desirable.

                                   ARTICLE TWO
                                    DEFAULTS

         2.1 Event of Default.  The term "Event of  Default,"  wherever  used in
this Mortgage, shall mean any one or more of the following events:

                  (a) The failure by Mortgagor: (1) to keep, perform, or observe
         any  covenant,  condition  or agreement  contained  in Sections  1.4.1,
         1.6.1,  1.9 or 1. 19 hereof,  or (11) to keep,  perform or observe  any
         other covenant, condition or agreement on the part of Mortgagor in this
         Mortgage.

                  (b) The  occurrence  of an  "Event  of  Default"  under and as
         defined in the Loan Agreement or any of the other Loan Instruments.

                                  ARTICLE THREE
                                    REMEDIES

         3.1  Acceleration  of  Maturity.  If an Event  of  Default  shall  have
occurred,  Lender may declare the outstanding  principal amount of the Loans and
the  interest  accrued  thereon and any other of  Borrowers'  Liabilities  to be
immediately  due and  payable,  and upon such  declaration  such  principal  and
interest and other Borrowers'  Liabilities declared due shall immediately become
and be due and payable without further demand or notice. The foregoing shall not
be in  limitation  of any  provision  contained  in any other  Loan  Instrument,
including  without  limitation any such provision  pursuant to which  Borrowers'
Liabilities  become  immediately  due and payable  without action or election by
Lender.

         3.2 Lender's  Power of  Enforcement.  If an Event of Default shall have
occurred,  Lender may,  either  with or without  entry or taking  possession  as
provided in this  Mortgage or  otherwise,  and without  regard to whether or not
Borrowers' Liabilities shall have been accelerated, and without prejudice to the
right of Lender thereafter to bring an action of foreclosure or any other action
for any  default  existing  at the time such  earlier  action was  commenced  or
arising  thereafter,  proceed by any  appropriate  action or proceeding:  (a) to
enforce  payment of the Loans and/or any other of Borrowers'  Liabilities or the
performance  of any term  hereof or any of the other  Loan  Instruments;  (b) to
foreclose  this Mortgage and to have sold, as an entirety or in separate lots or
parcels, the Mortgaged Property; and (c) to pursue any other remedy available to
it. Lender may take action either by such  proceedings or by the exercise of its
powers  with  respect  to entry or taking  possession,  or both,  as Lender  may
determine.

         3.3  Lender's  Right to Enter and Take  Possession,  Operate  and Apply
Income.

                  (a) If an Event of Default shall have occurred, (i) Mortgagor,
         upon demand of Lender,  shall forthwith  surrender to Lender the actual
         possession of the Mortgaged  Property,  and to the extent  permitted by
         law, Lender itself, or by such officers or agents as it may appoint, is
         hereby expressly  authorized to enter and take possession of all or any
         portion of the  Mortgaged  Property and may exclude  Mortgagor  and its
         agents and employees  wholly therefrom and shall have joint access with
         Mortgagor  to the books,  papers and  accounts of  Mortgagor;  and (ii)
         notwithstanding  the provisions of any lease or other  agreement to the
         contrary, Mortgagor shall pay monthly in advance to Lender, on Lender's
         entry into  possession,  or to any  receiver  appointed  to collect the
         rents,  income and other benefits of the Mortgaged  Property,  the fair
         and reasonable  rental value for the use and occupation of such part of
         the Mortgaged  Property as may be in  possession  of Mortgagor,  or any
         entity affiliated with or controlled by Mortgagor,  and upon default in
         any such payment  Mortgagor  shall vacate and  surrender  possession of
         such part of the Mortgaged Property to Lender or to such receiver,  and
         in default thereof  Mortgagor may be evicted by summary  proceedings or
         otherwise.

                  (b) If  Mortgagor  shall for any reason fail to  surrender  or
         deliver the  Mortgaged  Property  or any part  thereof  after  Lender's
         demand, Lender may obtain a Judgment or decree conferring on Lender the
         right to  'immediate  possession  or  requiring  Mortgagor  to  deliver
         immediate  possession  of all or  part  of the  Mortgaged  Property  to
         Lender,  to the  entry of which  Judgment  or decree  Mortgagor  hereby
         specifically consents.  Mortgagor shall pay to Lender, upon demand, all
         costs and expenses of obtaining  such judgment or decree and reasonable
         compensation to Lender,  its attorneys and agents,  and all such costs,
         expenses and compensation  shall, until paid, be secured by the lien of
         this Mortgage.

                  (c) Upon every  such  entering  upon or taking of  possession,
         Lender,  to the extent permitted by law, may hold, store, use, operate,
         manage and  control the  Mortgaged  Property  and conduct the  business
         thereof.

         3.4 Leases. If Lender so elects, Lender is authorized to foreclose this
Mortgage subject to or prior to the rights, if any, of any or all tenants of the
Mortgaged  Property.   Lender  may  elect.  to  foreclose  the  rights  of  some
subordinate tenants while foreclosing subject to the rights of other subordinate
tenants.

         3.5 Purchase by Lender.  Upon any foreclosure  sale, Lender may bid for
and purchase all or any portion of the Mortgaged  Property and, upon  compliance
with the terms of the sale,  may hold,  retain and  possess  and dispose of such
property in its own absolute right without further accountability.

         3.6  Application  of  Foreclosure  Sale  Proceeds.  The proceeds of any
foreclosure  sale of the  Mortgaged  Property  or any part  thereof  received by
Lender  shall be applied by Lender to the  indebtedness  secured  hereby in such
order and manner as Lender may elect.

         3.7  Application  of  Indebtedness  Toward  Purchase  Price.  Upon  any
foreclosure sale, Lender may apply any or all of the indebtedness and other sums
due to Lender under the Guaranty, the Loan Agreement, this Mortgage or any other
Loan Instrument to the price paid by Lender at the foreclosure sale.

         3.8 Waiver of Appraisement,  Valuation,  Stay, Extension and Redemption
Laws. To the extent permitted by law, Mortgagor hereby waives any and all rights
of redemption.  Mortgagor  further agrees,  to the full extent permitted by law,
that in case of an Event of  Default,  neither  Mortgagor  nor  anyone  claiming
through  or  under  it will  set up,  claim  or  seek to take  advantage  of any
reinstatement,  appraisement, valuation, stay or extension laws now or hereafter
in force, or take any other action which would prevent or hinder the enforcement
or foreclosure  of this Mortgage or the absolute sale of the Mortgaged  Property
or the final and absolute  putting into possession  thereof,  immediately  after
such sale, of the purchaser  thereat.  Mortgagor,  for itself and all who may at
any time claim  through or under it, hereby  waives,  to the full extent that it
may lawfully so do, the benefit of all such laws,  and any and all right to have
the assets comprising the Mortgaged Property  marshalled upon any foreclosure of
the lien  hereof and agrees  that  Lender or any court  having  jurisdiction  to
foreclose such lien may sell the Mortgaged Property in part or as an entirety.

         3.9 Receiver - Lender in Possession.  If an Event of Default shall have
occurred, Lender, to the extent permitted by law and without regard to the value
of the Mortgaged  Property or the adequacy of the security for the  indebtedness
and  other  sums  secured  hereby,  shall be  entitled  as a matter of right and
without any additional  showing or proof,  at Lender's  election,  to either the
appointment by the court of a receiver  (without the necessity of Lender posting
a bond) to enter  upon and take  possession  of the  Mortgaged  Property  and to
collect all rents,  income and other benefits  thereof and apply the same as the
court may direct or to be placed by the court into  possession  of the Mortgaged
Property as mortgagee  in  possession  with the same power  herein  granted to a
receiver and with all other rights and  privileges  of a mortgagee in possession
under law. The right to enter and take  possession  of and to manage and operate
the  Mortgaged  Property,  and to collect all rents,  income and other  benefits
thereof,  whether by a receiver or  otherwise,  shall be cumulative to any other
right or remedy  hereunder or afforded by law and may be exercised  concurrently
therewith or  independently  thereof  Lender shall be liable to account only for
such rents,  income and other  benefits  actually  received  by Lender,  whether
received  pursuant  to this  Section  3.9 or Section  3.3.  Notwithstanding  the
appointment  of any  receiver or other  custodian,  Lender  shall be entitled as
pledgee to the  possession  and control of any cash,  deposits or instruments at
the time held by, or payable or deliverable  under the terms of this Mortgage to
Lender.

         3.10  Mortgagor  to Pay  Borrowers'  Liabilities  in Event of  Default;
Application of Monies by Lender.

                  (a) Upon  occurrence  of an Event of Default,  Lender shall be
         entitled  to sue for and to  recover  judgment  against  Mortgagor  for
         Borrowers' Liabilities due and unpaid together with costs and expenses,
         including,  without limitation,  the reasonable compensation,  expenses
         and   disbursements   of   Lender's   agents,   attorneys   and   other
         representatives,  either  before,  after or during the  pendency of any
         proceedings  for the  enforcement  of this  Mortgage;  and the right of
         Lender to recover such judgment  shall not be affected by any taking of
         possession or  foreclosure  sale  hereunder,  or by the exercise of any
         other right,  power or remedy for the  enforcement of the terms of this
         Mortgage, or the foreclosure of the lien hereof.

                  (b) In case of a  foreclosure  sale of all or any  part of the
         Mortgaged  Property and of the  application  of the proceeds of sale to
         the  payment- of  Borrowers'  Liabilities,  Lender shall be entitled to
         enforce all other rights and remedies under the Loan Instruments.

                  (c) Mortgagor  hereby agrees,  to the extent permitted by law,
         that no  recovery  of any  judgment  by  Lender  under  any of the Loan
         Instruments,  and no  attachment  or levy of execution  upon any of the
         Mortgaged Property or any other property of Mortgagor, shall (except as
         otherwise  provided by law) in any way affect the lien of this Mortgage
         upon the  Mortgaged  Property or any part thereof or any lien,  rights,
         powers or remedies of Lender hereunder,  but such lien, rights,  powers
         and remedies  shall  continue  unimpaired  as before  until  Borrowers'
         Liabilities are paid in full.

                  (d) Any monies  collected  or  received  by Lender  under this
         Section 3. 10 shall be applied to the payment of compensation, expenses
         and disbursements of the agents, attorneys and other representatives of
         Lender,  and the balance  remaining  shall be applied to the payment of
         Borrowers'  Liabilities,  in such order and manner as Lender may elect,
         and any surplus, after payment of all Borrowers' Liabilities,  shall be
         paid to Mortgagor.

         3.11 Remedies  Cumulative.  No right power or remedy  conferred upon or
reserved to Lender by the  Guaranty,  the Loan  Agreement,  this Mortgage or any
other Loan  Instrument  or any  instrument  evidencing  or  securing  Borrowers'
Liabilities is exclusive of any other right, power or remedy, but each and every
such right power and remedy shall be cumulative  and  concurrent and shall be in
addition  to any other  right  power and  remedy  given  hereunder  or under the
Guaranty,  the Loan  Agreement or any other Loan  Instrument  or any  instrument
evidencing or securing Borrowers'  Liabilities,  or now or hereafter existing at
law, in equity or by statute.

                                  ARTICLE FOUR
                            MISCELLANEOUS PROVISIONS

         4.1  Heirs,  Successors  and  Assigns  Included  in  Parties.  Whenever
Mortgagor  or Lender is named or referred to herein,  heirs and  successors  and
assigns  of such  person or entity  shall be  included,  and all  covenants  and
agreements  contained in this Mortgage  shall bind the successors and assigns of
Mortgagor,  including any  subsequent  owner of all or any part of the Mortgaged
Property and inure to the benefit of the successors and assigns of Lender.  This
Section  4.1  shall  not  be  construed  to  permit  an  assignment,   transfer,
conveyance,  encumbrance  or  other  disposition  otherwise  prohibited  by this
Mortgage.

         4.2  Notices.  All  notices,   requests,   reports,  demands  or  other
instruments  required  or  contemplated  to be given  or  furnished  under  this
Mortgage to Mortgagor or Lender shall be directed to Mortgagor or Lender, as the
case  may  be,  in the  manner  and at the  addresses  for  notice  in the  Loan
Agreement.

         4.3 Headings.  The headings of the articles,  sections,  paragraphs and
subdivisions of this Mortgage are for convenience only, are not to be considered
a part hereof, and shall not limit,  expand or otherwise affect any of the terms
hereof

         4.4  Invalid  Provisions.  In the  event  that  any  of the  covenants,
agreements,  terms or provisions  contained in this  Mortgage  shall be Invalid,
illegal  or  unenforceable  in  any  respect,  the  validity  of  the  remaining
covenants,  agreements, terms or provisions contained herein (or the application
of the covenant,  agreement,  term held to be invalid, illegal or unenforceable,
to persons or circumstances  other than those in respect of which it is invalid,
illegal or unenforceable)  shall be in no way affected,  prejudiced or disturbed
thereby.

         4.5 Changes. Neither this Mortgage nor any term hereof may be released,
changed, waived,  discharged or terminated orally, or by any action or inaction,
but  only  by an  instrument  in  writing  signed  by the  party  against  which
enforcement of the release, change, waiver, discharge or termination is sought.

         4.6 Governing  Law.  Except with respect to the  creation,  perfection,
priority and enforcement of the lien and security  interest  created  hereunder,
all of which shall be construed,  interpreted, enforced and governed by the laws
of the State of Indiana,  the validity and interpretation of this Mortgage shall
be governed by and in accordance with the laws of the State of Illinois.

         4.7  Limitation  of  Interest.  The  provisions  of the Loan  Agreement
regarding  the  payment of lawful  interest  are hereby  incorporated  herein by
reference.

         4.8 Future Advances. This Mortgage is given to secure not only existing
indebtedness,  but also future advances (whether such advances are obligatory or
are to be made at the option of Lender,  or otherwise)  made by Lender under the
Loan  Agreement,  to the same extent as if such future advances were made on the
date of the execution of this Mortgage.  The total amount of  indebtedness  that
may be so secured may decrease or increase from time to time,  but the principal
amount of all indebtedness secured hereby shall, in no event, exceed $3,000,000.
The lien of this  Mortgage  shall  remain  in effect  until  the last  dollar of
Borrowers' Liabilities is paid in full and all of Lender's obligations under the
Loan Agreement have been terminated.

         4.9  Release.   Upon  full  payment  and   satisfaction  of  Borrowers'
Liabilities  and the  termination  of all  Lender's  obligations  under the Loan
Agreement,  Lender  shall issue to  Mortgagor  an  appropriate  release  deed in
recordable form.

         4.10 Attorneys' Fees.  Whenever reference is made herein to the payment
or  reimbursement  of  attorneys'  fees,  such fees  shall be deemed to  include
compensation to staff counsel,  if any, of Lender in addition to the fees of any
other attorneys engaged by Lender.

         4.11 Loan Agreement. The Loans are governed by terms and provisions set
forth in the Loan  Agreement and in the event of any conflict  between the terms
of this  Mortgage  and the  terms of the Loan  Agreement,  the terms of the Loan
Agreement shall control;  provided,  however, in the event there is any apparent
conflict between any particular term or provision which appears in both the Loan
Agreement  and this  Mortgage  and it Is possible for the terms of both the Loan
Agreement   and  this  Mortgage  to  be  performed  or  compiled   with,   then,
notwithstanding  the  foregoing,  both the terms of the Loan  Agreement  and the
Mortgage shall be performed or compiled with.

<PAGE>

         IN WITNESS WHEREOF, Mortgagor has caused this instrument to be executed
by its duly  authorized  officers as of the day and year first above  written on
this 12 day of December, 2000.

                                            STARCRAFT CORPORATION,
                                            an Indiana corporation

                                            By: /s/ Richard J. Mullin
                                               -------------------------------
                                            Print Name: Richard J. Mullin
                                                       -----------------------
                                            Its: Sr. Vice President
                                                ------------------------------

                                 ACKNOWLEDGMENT

STATE OF INDIANA        )
                        ) SS

COUNTY OF ELKHART       )

     I, Janis M. Neal,  a Notary  Public in and for and  residing in said County
and State,  DO HEREBY  CERTIFY  THAT Richard J.  Mullin,  the Sr. Vice Pres.  of
Starcraft Corporation, an Indiana corporation,  personally known to me to be the
same persons whose names are  subscribed to the  foregoing  instrument  appeared
before me this day in person and  acknowledged  that they  signed and  delivered
said  instrument  as  their  own  free  and  voluntary  act and as the  free and
voluntary act of said corporation for the uses and purposes therein set forth.

         GIVEN under my hand and notarial seal this 12th day of December, 2000.

                                                /s/  Janis M. Neal
                                                -------------------------------
                                                Notary Public

                                                 Janis M. Neal
                                                -------------------------------
                                                Printed Name of Notary Public

                                                October 14, 2007
                                                -------------------------------
                                                My Commission Expires:

                                                Marshall
                                                -------------------------------
                                                My County of Residence

THIS INSTRUMENT PREPARED BY
AND AFTER RECORDING RETURN TO:
Rand W. Nilsson

BARNES & THORNBURG
121 W. Franklin Street, Suite 200
Elkhart, Indiana 46516
(219) 293-0681
<PAGE>
                                   Exhibit A

                               Legal Description

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