Document:

Exhibit 10.236

                       N.J. METROMALL URBAN RENEWAL, INC.,
                     a New Jersey corporation, as mortgagor
                                             (Fee Borrower)

                                       and

                               JG ELIZABETH, LLC,
               a Delaware limited liability company, as mortgagor
                                             (Leasehold Borrower)

                                       to

                      MORGAN STANLEY MORTGAGE CAPITAL INC.,
                      a New York corporation, as mortgagee
                                                   (Lender)

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

                FEE AND LEASEHOLD MORTGAGE, ASSIGNMENT OF LEASES
                        AND RENTS AND SECURITY AGREEMENT

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

                        Dated:      As of June 9, 2004
                        Location:   Jersey Gardens
                                    Elizabeth, New Jersey

                        County:     Union County, New Jersey

                        PREPARED BY AND UPON
                        RECORDATION RETURN TO:

                        Cadwalader, Wickersham & Taft LLP
                        100 Maiden Lane
                        New York, New York 10038
                        Attention: John M. Zizzo, Esq.

================================================================================

<PAGE>

                FEE AND LEASEHOLD MORTGAGE, ASSIGNMENT OF LEASES
                        AND RENTS AND SECURITY AGREEMENT

      THIS FEE AND  LEASEHOLD  MORTGAGE,  ASSIGNMENT  OF  LEASES  AND  RENTS AND
SECURITY  AGREEMENT (this  "Security  Instrument") is made as of this 9th day of
June,  2004, by N.J.  METROMALL URBAN RENEWAL,  INC., a New Jersey  corporation,
having an address at 150 East Gay Street,  Columbus,  Ohio 43215,  as  mortgagor
("Fee Borrower") and JG ELIZABETH,  LLC, a Delaware limited  liability  company,
having an address at 150 East Gay Street,  Columbus,  Ohio 43215,  as  mortgagor
("Leasehold  Borrower"  and,  together  with  Fee  Borrower,   individually  and
collectively,  "Borrower")  for the benefit of MORGAN STANLEY  MORTGAGE  CAPITAL
INC.,  having an address at 1221 Avenue of the Americas,  27th Floor,  New York,
New York 10020, as mortgagee ("Lender").

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

      WHEREAS,  this Security  Instrument is given to secure a loan (the "Loan")
in the  principal  sum of ONE  HUNDRED  SIXTY-FIVE  MILLION  AND NO/100  DOLLARS
($165,000,000.00) or so much thereof as may be advanced pursuant to that certain
Loan  Agreement  dated as of the date  hereof  between Fee  Borrower,  Leasehold
Borrower  and  Lender  (as  the  same  may  be  amended,   restated,   replaced,
supplemented or otherwise  modified from time to time, the "Loan Agreement") and
evidenced by those  certain  Promissory  Notes dated the date hereof made by Fee
Borrower  and  Leasehold  Borrower  to Lender  (such  Notes,  together  with all
extensions, renewals, replacements,  restatements or modifications thereof being
hereinafter collectively referred to as the "Note");

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

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

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

<PAGE>

                         Article 1 - GRANTS OF SECURITY

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

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

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

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

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

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

      (f)  Fixtures.  All  Equipment  now owned,  or the  ownership  of which is
hereafter acquired, by Borrower which is so related to the Land and Improvements
forming part of the Property that it is deemed  fixtures or real property  under
the law of the  particular  state in which the Equipment is located,  including,
without  limitation,   all  building  or  construction  materials  intended  for
construction,  reconstruction,  alteration or repair of or  installation  on the
Property,

                                      -2-
<PAGE>

construction  equipment,  appliances,   machinery,  plant  equipment,  fittings,
apparatuses, fixtures and other items now or hereafter attached to, installed in
or used in connection with  (temporarily or permanently) any of the Improvements
or the Land, including,  but not limited to, engines,  devices for the operation
of  pumps,  pipes,  plumbing,   cleaning,   call  and  sprinkler  systems,  fire
extinguishing  apparatuses  and  equipment,  heating,   ventilating,   plumbing,
laundry,  incinerating,  electrical,  air conditioning and air cooling equipment
and systems, gas and electric machinery,  appurtenances and equipment, pollution
control equipment, security systems, disposals,  dishwashers,  refrigerators and
ranges,  recreational  equipment and  facilities of all kinds,  and water,  gas,
electrical,  storm and sanitary  sewer  facilities,  utility lines and equipment
(whether owned  individually or jointly with others,  and, if owned jointly,  to
the extent of Borrower's  interest  therein) and all other utilities  whether or
not situated in easements,  all water tanks,  water  supply,  water power sites,
fuel stations, fuel tanks, fuel supply, and all other structures,  together with
all  accessions,   appurtenances,   additions,  replacements,   betterments  and
substitutions  for any of the foregoing and the proceeds thereof  (collectively,
the "Fixtures"). Notwithstanding the foregoing, "Fixtures" shall not include any
property  which tenants are entitled to remove  pursuant to leases except to the
extent that Borrower shall have any right or interest therein;

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

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

      (i)  Condemnation  Awards.  All  awards or  payments,  including  interest
thereon,  which  may  heretofore  and  hereafter  be made  with  respect  to the
Property,  whether from the exercise of the right of eminent  domain  (including
but not limited to any transfer made in lieu of

                                      -3-
<PAGE>

or in anticipation  of the exercise of the right),  or for a change of grade, or
for any other injury to or decrease in the value of the Property;

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

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

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

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

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

      (o) Ground Lease.  All of Borrower's  right,  title and interest in and to
that certain Amended and Restated Master Lease dated as of June 4, 1998, between
the Fee Borrower, as landlord, and Leasehold Borrower's  predecessor-in-interest
and Elizabeth  Metromall LLC,  together as lessee,  recorded on June 12, 1998 as
Instrument No. 53426 in the Union County Clerk's Office;  as partially  assigned
by that certain  Partial  Assignment of Amended and Restated  Master Lease dated
June 4, 1998 by Elizabeth Metromall LLC to Power Center Ground Lessee,  recorded
on June 12, 1998 as Instrument  No. 53427 and on June 25, 1998 as Instrument No.
53870 in the Union  County  Clerk's  Office;  as amended by that  certain  First
Amendment to the Amended and Restated  Master Lease dated as of December 8, 2000
between N.J.  Metromall  Urban  Renewal,  Inc. and  Elizabeth  Metromall LLC and
consented  to by Power  Center  Ground  Lessee,  recorded on January 17, 2001 as
Instrument No. 90263 in the Union County Clerk's Office;  as further assigned by
that certain  Assignment of Amended and Restated Master Lease dated May 29, 2002
by N.J.  Metromall  Urban Renewal,  Inc. to Glimcher JG Urban Renewal,  Inc. and
recorded on June 28, 2002 as Instrument  No. 109479 in the Union County  Clerk's
Office;  as further assigned by that certain  Assignment of Amended and Restated
Master Lease dated May 29, 2002 by Elizabeth  Metromall,  LLC to Glimcher Jersey
Gardens,  LLC recorded on June 28, 2002 as  Instrument  No.  109480 in the Union
County Clerk's Office and by that certain  Corrective  Assignment of Amended and
Restated Master Lease to Glimcher Jersey Gardens,

                                      -4-
<PAGE>

LLC dated  December 18, 2002 and recorded on January 27, 2003 as Instrument  No.
117877;  as further  partially  assigned by  Assignment  of Amended and Restated
Master  Lease dated of even date hereof from  Glimcher  Jersey  Gardens,  LLC to
Leasehold Borrower to be recorded in the Union County Clerk's Office; as further
amended by that certain  Second  Amendment  to the Amended and  Restated  Master
Lease dated of even date hereof by Fee Borrower, Leasehold Borrower and Glimcher
JG Urban  Renewal,  Inc. to be recorded in the Union County  Clerk's Office (the
"Ground  Lease") and the leasehold  estate  created  thereby,  together with all
modifications,  extensions  and  renewals of the Ground  Lease and all  credits,
deposits  (including,  without limitation,  any deposit of cash or securities or
any other  property  which may be held to secure  Borrower's  performance of its
obligations under the Ground Lease), options, privileges and rights of Leasehold
Borrower as tenant under the Ground  Lease,  including,  but not limited to, (i)
the right to cause fee title to the  premises  demised by the Ground Lease to be
conveyed to Borrower  as provided in Section 2 of the Ground  Lease,  as amended
and (ii) all the estate,  right,  title, claim or demand whatsoever of Leasehold
Borrower either in law or in equity, in possession or expectancy,  of, in and to
the  Property  or any part  thereof,  including  the fee  title to the  property
conveyed or to be conveyed pursuant to the right described in clause (i) of this
Section 1.1(o); and

      (p) Proceeds.  All proceeds of any of the  foregoing,  including,  without
limitation,  proceeds  of  insurance  and  condemnation  awards,  whether  cash,
liquidation or other claims or otherwise;

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

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

      Section  1.2  ASSIGNMENT  OF  RENTS.   Borrower   hereby   absolutely  and
unconditionally assigns to Lender all of Borrower's right, title and interest in
and to all current and future  Leases and Rents;  it being  intended by Borrower
that this  assignment  constitutes  a present,  absolute  assignment  and not an
assignment for additional security only.  Nevertheless,  subject to the terms of
the Assignment of Leases and Section 7.1(h) of this Security Instrument,  Lender
grants to Borrower a revocable  license to collect,  receive,  use and enjoy the
Rents.  Borrower  shall  hold the  Rents,  or a portion  thereof  sufficient  to
discharge all current sums due on the Debt, for use in the payment of such sums.
This  Section 1.2 is intended to provide  Lender with all rights and remedies of
mortgagees pursuant to Section 697.07 of the Florida Statutes, as may be amended
from time to time. However,  in no event shall this reference  diminish,  alter,
impair or affect any other rights or remedies of Lender.

                                      -5-
<PAGE>

      Section 1.3 SECURITY  AGREEMENT.  This Security  Instrument is both a real
property  mortgage and a "security  agreement" within the meaning of the Uniform
Commercial Code. The Property  includes both real and personal  property and all
other  rights and  interests,  whether  tangible  or  intangible  in nature,  of
Borrower in the Property.  By executing and delivering this Security Instrument,
Borrower hereby grants to Lender,  as security for the Obligations  (hereinafter
defined),  a security  interest in the  Fixtures,  the  Equipment,  the Personal
Property and other  property  constituting  the Property to the full extent that
the Fixtures,  the Equipment,  the Personal Property and such other property may
be subject to the  Uniform  Commercial  Code (said  portion of the  Property  so
subject to the Uniform  Commercial  Code being called the  "Collateral").  If an
Event of Default shall occur and be continuing, Lender, in addition to any other
rights and remedies which it may have,  shall have and may exercise  immediately
and without demand,  any and all rights and remedies  granted to a secured party
upon default under the Uniform Commercial Code, including,  without limiting the
generality of the foregoing,  the right to take  possession of the Collateral or
any part thereof,  and to take such other  measures as Lender may deem necessary
for the care,  protection and  preservation of the  Collateral.  Upon request or
demand of Lender after the occurrence and during the  continuance of an Event of
Default,  Borrower  shall,  at its expense,  assemble the Collateral and make it
available  to Lender at a  convenient  place (at the Land if tangible  property)
reasonably acceptable to Lender.  Borrower shall pay to Lender on demand any and
all expenses,  including reasonable legal expenses and attorneys' fees, incurred
or paid by Lender in protecting  its interest in the Collateral and in enforcing
its rights  hereunder  with respect to the  Collateral  after the occurrence and
during the continuance of an Event of Default.  Any notice of sale,  disposition
or other  intended  action by Lender  with  respect  to the  Collateral  sent to
Borrower in  accordance  with the  provisions  hereof at least ten (10) business
days prior to such action,  shall,  except as otherwise  provided by  applicable
law, constitute  reasonable notice to Borrower.  The proceeds of any disposition
of the Collateral,  or any part thereof,  may,  except as otherwise  required by
applicable law, be applied by Lender to the payment of the Debt in such priority
and  proportions  as Lender in its discretion  shall deem proper.  The principal
place of business  of  Borrower  (Debtor) is as set forth on page one hereof and
the address of Lender (Secured Party) is as set forth on page one hereof.

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

      Section 1.5 PLEDGES OF MONIES HELD.  Borrower hereby pledges to Lender any
and all  monies  now or  hereafter  held by  Lender  or on  behalf  of Lender in
connection with the Loan, including,  without limitation,  any sums deposited in
the Accounts (as defined in the Cash Management  Agreement) and Net Proceeds, as
additional security for the Obligations until expended or applied as provided in
this Security Instrument.

                                      -6-
<PAGE>

                               CONDITIONS TO GRANT

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

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

                    Article 2 - DEBT AND OBLIGATIONS SECURED

      Section 2.1 DEBT. This Security Instrument and the grants, assignments and
transfers made in Article 1 are given for the purpose of securing the Debt.

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

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

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

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

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

                         Article 3 - BORROWER COVENANTS

      Borrower covenants and agrees that:

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

      Section 3.2 INCORPORATION BY REFERENCE. All the covenants,  conditions and
agreements  contained  in (a) the Loan  Agreement , (b) the Note and (c) all and
any of the other

                                      -7-
<PAGE>

Loan Documents,  are hereby made a part of this Security  Instrument to the same
extent and with the same force as if fully set forth herein.

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

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

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

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

      (b) After prior written  notice to Lender,  Borrower,  at its own expense,
may contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due  diligence,  the amount or  validity or  application  in
whole or in part of any of the Labor and Material  Costs,  provided  that (i) no
Event of Default has occurred and is continuing  under the Loan  Agreement,  the
Note, this Security Instrument or any of the other Loan Documents, (ii) Borrower
is permitted to do so under the provisions of any other mortgage,  deed of trust
or deed to secure debt  affecting  the  Property,  (iii) such  proceeding  shall
suspend the  collection  of the Labor and Material  Costs from Borrower and from
the  Property or Borrower  shall have paid all of the Labor and  Material  Costs
under protest, (iv) such proceeding shall be permitted under and be conducted in
accordance  with the  provisions of any other  instrument  to which  Borrower is
subject and shall not constitute a default thereunder,  (v) neither the Property
nor any part thereof

                                      -8-
<PAGE>

or  interest  therein  will be in danger of being sold,  forfeited,  terminated,
canceled or lost,  and (vi) Borrower shall have furnished the security as may be
required  in the  proceeding,  or as may be  reasonably  requested  by Lender to
insure the payment of any contested Labor and Material Costs,  together with all
interest and penalties thereon.

      Section 3.7  PERFORMANCE OF OTHER  AGREEMENTS.  Borrower shall observe and
perform each and every term,  covenant and provision to be observed or performed
by Borrower  pursuant to the Loan  Agreement,  any other Loan  Document  and any
other agreement or recorded  instrument  affecting or pertaining to the Property
and any amendments, modifications or changes thereto.

      Section 3.8 CHANGE OF NAME,  IDENTITY  OR  STRUCTURE.  Borrower  shall not
change Borrower's name,  identity (including its trade name or names) or, if not
an individual,  Borrower's  corporate,  partnership or other  structure  without
first (a)  notifying  Lender of such change in writing at least thirty (30) days
prior to the effective  date of such change,  (b) taking all action  required by
Lender  for the  purpose  of  perfecting  or  protecting  the lien and  security
interest  of  Lender  and (c) in the case of a change in  Borrower's  structure,
without  first  obtaining the prior written  consent of Lender.  Borrower  shall
promptly  notify  Lender  in  writing  of  any  change  in  its   organizational
identification   number.  If  Borrower  does  not  now  have  an  organizational
identification  number and later obtains one,  Borrower  shall  promptly  notify
Lender in writing of such organizational  identification number.  Borrower shall
execute and deliver to Lender, prior to or contemporaneously  with the effective
date of any such change, any financing  statement or financing  statement change
required  by Lender to  establish  or  maintain  the  validity,  perfection  and
priority of the  security  interest  granted  herein.  At the request of Lender,
Borrower shall execute a certificate in form  satisfactory to Lender listing the
trade  names  under  which  Borrower  intends  to  operate  the  Property,   and
representing  and  warranting  that Borrower does business  under no other trade
name with respect to the Property.

      Section 3.9 Ground Lease.

      (a) Leasehold Borrower will: (i) pay the rent required by the Ground Lease
as the same becomes due and payable;  (ii)  promptly  perform and observe all of
the material  covenants,  agreements,  obligations and conditions required to be
performed and observed by Leasehold  Borrower under the Ground Lease, and do all
things  necessary to preserve and keep unimpaired its rights  thereunder;  (iii)
promptly notify Lender in writing of the  commencement of a proceeding under the
federal  bankruptcy  laws by or against  Leasehold  Borrower or, upon  Leasehold
Borrower's receipt of notification  thereof,  the lessor under the Ground Lease;
(iv) if any of the  indebtedness  secured hereby remains unpaid at the time when
notice may be given by the lessee  under the Ground Lease of the exercise of any
right to renew or extend the term of the Ground  Lease,  promptly give notice to
the lessor thereunder of the exercise of such right of extension or renewal; (v)
in case any  proceeds of  insurance  upon the  Property or any part  thereof are
deposited with any Person other than Lender,  promptly  notify Lender in writing
of the name and  address  of the  Person  with  whom  such  proceeds  have  been
deposited and the amount so deposited; (vi) promptly notify Lender in writing of
the receipt by Leasehold Borrower of any notice (other than notices  customarily
sent on a regular  periodic basis) from the lessor under the Ground Lease and of
any  notice  noting  or  claiming  any  default  by  Leasehold  Borrower  in the
performance or observance of any of the terms,  covenants,  or conditions on the
part of Leasehold

                                      -9-
<PAGE>

Borrower to be  performed or observed  under the Ground  Lease;  (vii)  promptly
notify Lender in writing of the receipt by Leasehold Borrower of any notice from
the lessor of any  termination  of the Ground Lease and promptly cause a copy of
each such notice to be delivered to Lender; and (viii) promptly notify Lender in
writing of any  request  made by either  party to the Ground  Lease to the other
party thereto for  arbitration or appraisal  proceedings  pursuant to the Ground
Lease,  and of the institution of any  arbitration or appraisal  proceedings and
promptly  deliver to Lender a copy of the  determination  of the  arbitrators or
appraisers in each such proceeding.

      (b)  Leasehold  Borrower  will not surrender the Ground Lease or Leasehold
Borrower's  leasehold estate and interest  therein,  nor terminate or cancel the
Ground Lease;  and except as set forth in the Loan Agreement,  will not, without
the prior written consent of Lender, modify, change, supplement,  alter or amend
the Ground Lease,  either orally or in writing,  and as further security for the
repayment of the  indebtedness  hereby  secured and for the  performance  of the
covenants, agreements, obligations and conditions herein and in the Ground Lease
contained,  Leasehold  Borrower  hereby  assigns  to Lender  all of its  rights,
privileges  and  prerogatives  as lessee  under the Ground  Lease to  terminate,
cancel, modify, change, supplement,  alter or amend the Ground Lease and, except
as  set  forth  in the  Loan  Agreement,  any  such  termination,  cancellation,
modification,  change, supplement,  alteration or amendment of the Ground Lease,
without the prior  written  consent  thereto by Lender,  shall be void and of no
force and effect.  Without  limiting the generality of the foregoing,  Leasehold
Borrower  will not reject the Ground  Lease  pursuant  to Section  365(a) of the
Bankruptcy  Code or any  successor  law, or allow the Ground  Lease to be deemed
rejected by inaction  and lapse of time,  and will not elect to treat the Ground
Lease as  terminated  by the related  lessor's  rejection  of such Ground  Lease
pursuant to Section  365(h)(1) of the Bankruptcy  Code or any successor law, and
as further security for the repayment of the indebtedness secured hereby and for
the performance of the covenants, agreements,  obligations and conditions herein
and in the Ground Lease contained,  Leasehold  Borrower hereby assigns to Lender
all of its  rights,  privileges  and  prerogatives  of  Leasehold  Borrower  and
Leasehold  Borrower's  bankruptcy  trustee to deal with the Ground Lease,  which
right  may  arise as a result  of the  commencement  of a  proceeding  under the
federal bankruptcy laws by or against Leasehold Borrower or any lessor under the
Ground Lease, including,  without limitation,  the right to assume or reject, or
to compel the  assumption  or rejection of the Ground Lease  pursuant to Section
365(a) of the Bankruptcy Code or any successor law, the right to seek and obtain
extensions  of time to assume or reject  the  Ground  Lease,  the right to elect
whether to treat the Ground Lease as  terminated  by the  lessor's  rejection of
such Ground Lease or to remain in possession of the Property and offset  damages
pursuant to Section  365(b)(1) of the Bankruptcy  Code or any successor law; and
any exercise of such rights, privileges or prerogatives by Leasehold Borrower or
Leasehold  Borrower's  bankruptcy  trustee  without  the prior  written  consent
thereto  by  Lender  shall be void and of no force and  effect.  No  release  or
forbearance  of any of  Leasehold  Borrower's  obligations  as lessee  under the
Ground Lease,  whether pursuant to the Ground Lease or otherwise,  shall release
Leasehold  Borrower from any of its obligations under this Security  Instrument,
including,  but not limited to, Leasehold Borrower's obligations with respect to
the payment of rent as provided for in the Ground Lease and the  observance  and
performance  of all of the  covenants,  agreements,  obligations  and conditions
contained  in the  Ground  Lease to be  observed  and  performed  by the  lessee
thereunder.  Unless Lender shall otherwise expressly consent in writing, the fee
title to the real property  demised by the Ground Lease and the leasehold estate
thereunder shall not merge, but

                                      -10-
<PAGE>

shall always  remain  separate and distinct,  notwithstanding  the union of such
estates  either  in  Leasehold  Borrower  or in a third  party  by  purchase  or
otherwise.

      (c) Upon the written demand of Lender,  Borrower will promptly  deliver to
Lender a certificate  stating that the Ground Lease is in full force and effect,
is  unmodified,  that no  notice  of  termination  thereon  has been  served  on
Borrower,  stating the date to which the net rent has been paid and stating,  to
the knowledge of Borrower,  whether or not there are any defaults thereunder and
specifying the nature of such defaults, if any. Borrower shall deliver to Lender
such certificate within twenty (20) days after Lender's demand therefor.

      (d)  Leasehold  Borrower  will furnish to Lender,  upon  demand,  proof of
payment  of all  items  which  are  required  to be paid by  Leasehold  Borrower
pursuant to the Ground Lease.

      Section 3.10 Right to Conveyance of Fee Title.  Leasehold  Borrower hereby
relinquishes  during any period  prior to the  repayment in full of the Debt its
right to cause fee  title to the  premises  demised  by the  Ground  Lease to be
conveyed to any party other than to Leasehold  Borrower pursuant to Section 2 of
the Ground Lease, as amended,  unless specifically and expressly consented to by
Lender.

                      Article 4 - OBLIGATIONS AND RELIANCES

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

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

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

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

                                      -11-
<PAGE>

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

                         Article 5 - FURTHER ASSURANCES

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

      Section 5.2 FURTHER ACTS, ETC. Borrower will, at the cost of Borrower, and
without expense to Lender,  do,  execute,  acknowledge and deliver all and every
such further acts, deeds, conveyances,  deeds of trust, mortgages,  assignments,
notices of assignments,  transfers and assurances as Lender shall,  from time to
time,  reasonably  require,  for  the  better  assuring,  conveying,  assigning,
transferring,  and  confirming  unto  Lender  the  property  and  rights  hereby
mortgaged,  deeded,  granted,  bargained,  sold, conveyed,  confirmed,  pledged,
assigned,  warranted and  transferred  or intended now or hereafter so to be, or
which  Borrower  may be or may  hereafter  become  bound to  convey or assign to
Lender, or for carrying out the intention or facilitating the performance of the
terms of this Security  Instrument or for filing,  registering or recording this
Security Instrument, or for complying with all Legal Requirements.  Borrower, on
demand,  will execute and deliver,  and in the event it shall fail to so execute
and  deliver,  hereby  authorizes  Lender to execute in the name of  Borrower or
without the  signature of Borrower to the extent  Lender may lawfully do so, one
or more financing statements (including,  without limitation,  initial financing
statements and amendments  thereto and continuation  statements) with or without
the  signature of Borrower as  authorized  by  applicable  law, to evidence more
effectively  the  security  interest of Lender in the  Property.  Borrower  also
ratifies its authorization

                                      -12-
<PAGE>

for  Lender to have  filed any like  initial  financing  statements,  amendments
thereto and continuation statements, if filed prior to the date of this Security
Instrument.  Borrower grants to Lender an irrevocable  power of attorney coupled
with an interest for the purpose of exercising and perfecting any and all rights
and  remedies  available  to  Lender  at law and in  equity,  including  without
limitation such rights and remedies available to Lender pursuant to this Section
5.2. To the extent not prohibited by applicable  law,  Borrower  hereby ratifies
all acts Lender has lawfully  done in the past or shall  lawfully do or cause to
be done in the future by virtue of such power of attorney.  Nothing contained in
this Section 5.2 shall be deemed to create an obligation on the part of Borrower
to pay any  costs  and  expenses  incurred  by  Lender  in  connection  with the
Securitization or other sale or Transfer of the Loan.

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

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

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

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

      Section 5.5  REPLACEMENT  DOCUMENTS.  Upon  receipt of an  affidavit of an
officer of Lender as to the loss,  theft,  destruction or mutilation of the Note
or any other Loan Document  which is not of public  record,  and, in the case of
any such mutilation, upon surrender and

                                      -13-
<PAGE>

cancellation  of such Note or other Loan Document,  Borrower will issue, in lieu
thereof, a replacement Note or other Loan Document, dated the date of such lost,
stolen, destroyed or mutilated Note or other Loan Document in the same principal
amount thereof and otherwise of like tenor.

                       Article 6 - DUE ON SALE/ENCUMBRANCE

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

      Section 6.2 NO TRANSFER . Borrower shall not permit or suffer any Transfer
to occur,  unless  specifically  permitted by Article 8 of the Loan Agreement or
unless Lender shall consent thereto in writing.

      Section 6.3 TRANSFER  DEFINED.  As used in this Article 6 "Transfer" shall
mean any voluntary or involuntary sale,  conveyance,  mortgage,  grant, bargain,
encumbrance,  pledge,  assignment,  or  transfer  of: (a) all or any part of the
Property or any estate or interest therein including, but not be limited to, (i)
an installment  sales agreement  wherein Borrower agrees to sell the Property or
any part  thereof for a price to be paid in  installments,  (ii) an agreement by
Borrower leasing all or a substantial part of the Property for other than actual
occupancy  by a space  tenant  thereunder  and its  affiliates  or (iii) a sale,
assignment  or other  transfer  of,  or the  grant of a  security  interest  in,
Borrower's  right,  title and interest in and to any Leases or any Rents; or (b)
any  ownership  interest in (i) Borrower or (ii) any  indemnitor or guarantor of
any  Obligations  or  (iii)  any  corporation,  partnership,  limited  liability
company, trust or other entity owning,  directly or indirectly,  any interest in
Borrower or any indemnitor or guarantor of any Obligations.

      Section  6.4  LENDER'S  RIGHTS.  Without  obligating  Lender  to grant any
consent  under Section 6.2 hereof which Lender may grant or withhold in its sole
discretion,  Lender  reserves  the  right  to  condition  the  consent  required
hereunder upon (a) a modification of the terms hereof and of the Loan Agreement,
the Note or the other Loan  Documents;  (b) an assumption of the Loan Agreement,
the Note,  this Security  Instrument and the other Loan Documents as so modified
by the proposed  transferee,  subject to the  provisions of Section 11.22 of the
Loan Agreement;  (c) payment of all of Lender's  reasonable expenses incurred in
connection with such transfer; (d) the confirmation in writing by the applicable
Rating Agencies that the proposed transfer will not, in and of itself, result in
a downgrade,  qualification  or withdrawal of the initial,  or, if higher,  then
current ratings assigned in connection with any Securitization; (e) the delivery
of a nonconsolidation  opinion reflecting the proposed transfer  satisfactory in
form and substance to Lender; (f) the proposed transferee's continued compliance
with the representations and covenants set forth in Section 3.1.24 and 4.2.11 of
the Loan Agreement; (g) the delivery of

                                      -14-
<PAGE>

evidence  satisfactory  to Lender that the single  purpose nature and bankruptcy
remoteness of Borrower,  its shareholders,  partners or members, as the case may
be,  following such transfers are in accordance with the standards of the Rating
Agencies; (h) the proposed transferee's ability to satisfy Lender's then-current
underwriting  standards;  or (i) such other conditions as Lender shall determine
in its reasonable discretion to be in the interest of Lender, including, without
limitation,   the   creditworthiness,   reputation  and  qualifications  of  the
transferee  with  respect  to the Loan and the  Property.  Lender  shall  not be
required to demonstrate  any actual  impairment of its security or any increased
risk of default  hereunder  in order to  declare  the Debt  immediately  due and
payable upon a Transfer without Lender's consent.  This provision shall apply to
every  Transfer,  other  than  any  Transfer  permitted  pursuant  to  the  Loan
Agreement,  regardless of whether voluntary or not, or whether or not Lender has
consented to any previous Transfer.

                  Article 7 - RIGHTS AND REMEDIES UPON DEFAULT

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

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

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

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

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

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

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

                                      -15-
<PAGE>

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

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

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

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

                                      -16-
<PAGE>

            (i) Taxes and Other Charges;

            (ii) Insurance Premiums;

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

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

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

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

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

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

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

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

      Section 7.4 ACTIONS AND PROCEEDINGS. Lender has the right to appear in and
defend any action or  proceeding  brought  with  respect to the  Property and to
bring any action or

                                      -17-
<PAGE>

proceeding,  in the  name  and on  behalf  of  Borrower,  which  Lender,  in its
discretion, decides should be brought to protect its interest in the Property.

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

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

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

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

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

                                      -18-
<PAGE>

exclusively  to the rights and remedies  herein  stated but shall be entitled to
every right and remedy now or hereafter afforded at law or in equity.

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

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

      Section 7.10  RECOURSE AND CHOICE OF REMEDIES.  Notwithstanding  any other
provision of this Security Instrument or the Loan Agreement,  including, without
limitation,  Section 11.22 of the Loan Agreement,  Lender and other  Indemnified
Parties (as  hereinafter  defined)  are entitled to enforce the  obligations  of
Borrower,  any guarantor and indemnitor contained in Sections 9.2 and 9.3 herein
and Section 9.2 of the Loan Agreement  without first  resorting to or exhausting
any security or collateral and without first having  recourse to the Note or any
of the  Property,  through  foreclosure  or  acceptance  of a deed  in  lieu  of
foreclosure or otherwise, and in the event Lender commences a foreclosure action
against the  Property,  Lender is entitled to pursue a deficiency  judgment with
respect to such  obligations  against  Borrower and any  guarantor or indemnitor
with  respect to the Loan.  The  provisions  of Sections  9.2 and 9.3 herein and
Section  9.2 of the  Loan  Agreement  are  exceptions  to  any  non-recourse  or
exculpation provisions in the Loan Agreement, the Note, this Security Instrument
or the other Loan  Documents,  and Borrower and any guarantor or indemnitor with
respect to the Loan are fully and personally liable for the obligations pursuant
to  Sections  9.2 and 9.3  herein and  Section  9.2 of the Loan  Agreement.  The
liability of Borrower and any guarantor or  indemnitor  with respect to the Loan
pursuant to Sections 9.2 and 9.3 herein and Section 9.2 of the Loan Agreement is
not limited to the original  principal amount of the Note.  Notwithstanding  the
foregoing,  nothing herein shall inhibit or prevent  Lender from  foreclosing or
exercising  any other rights and remedies  pursuant to the Loan  Agreement,  the
Note,  this  Security   Instrument  and  the  other  Loan   Documents,   whether
simultaneously with foreclosure proceedings or in any other sequence. A separate
action or actions may be brought and  prosecuted  against  Borrower  pursuant to
Sections  9.2 and 9.3 herein and Section 9.2 of the Loan  Agreement,  whether or
not  action is  brought  against  any other  Person or  whether or not any other
Person is joined in the action or actions.  In  addition,  Lender shall have the
right but not the  obligation  to join and  participate  in, as a party if it so
elects,  any  administrative  or judicial  proceedings  or actions  initiated in
connection with any matter addressed in the Environmental Indemnity.

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

                                      -19-
<PAGE>

                        Article 8 - INTENTIONALLY OMITTED

                           Article 9 - INDEMNIFICATION

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

                                      -20-
<PAGE>

"Indemnified  Parties"  means  Lender  and any  Person  who is or will have been
involved  in the  origination  of the Loan,  any Person who is or will have been
involved in the servicing of the Loan secured  hereby,  any Person in whose name
the  encumbrance  created  by this  Security  Instrument  is or will  have  been
recorded,  persons and entities who may hold or acquire or will have held a full
or partial interest in the Loan secured hereby  (including,  but not limited to,
investors or  prospective  investors in the  Securities,  as well as custodians,
trustees and other  fiduciaries who hold or have held a full or partial interest
in the Loan  secured  hereby for the  benefit of third  parties)  as well as the
respective  directors,  officers,  shareholders,  partners,  employees,  agents,
servants,    representatives,     contractors,    subcontractors,    affiliates,
subsidiaries,  participants,  successors  and  assigns  of  any  and  all of the
foregoing  (including  but not limited to any other Person who holds or acquires
or will have held a participation or other full or partial interest in the Loan,
whether  during the term of the Loan or as a part of or following a  foreclosure
of the Loan and  including,  but not  limited  to,  any  successors  by  merger,
consolidation or acquisition of all or a substantial  portion of Lender's assets
and business).

      Section 9.2 MORTGAGE AND/OR  INTANGIBLE  TAX.  Borrower shall, at its sole
cost and expense,  protect,  defend,  indemnify,  release and hold  harmless the
Indemnified Parties from and against any and all Losses imposed upon or incurred
by or  asserted  against any  Indemnified  Parties  and  directly or  indirectly
arising out of or in any way relating to any tax on the making and/or  recording
of this Security  Instrument,  the Note or any of the other Loan Documents,  but
excluding any income, franchise or other similar taxes.

      Section 9.3 ERISA  INDEMNIFICATION.  Borrower  shall, at its sole cost and
expense, protect, defend,  indemnify,  release and hold harmless the Indemnified
Parties  from and against  any and all Losses  (including,  without  limitation,
reasonable attorneys' fees and costs incurred in the investigation, defense, and
settlement of Losses incurred in correcting any prohibited transaction or in the
sale  of  a  prohibited  loan,  and  in  obtaining  any  individual   prohibited
transaction  exemption  under  ERISA  that may be  required,  in  Lender's  sole
discretion)  that  Lender may incur,  directly or  indirectly,  as a result of a
default under Sections 3.1.8 or 4.2.11 of the Loan Agreement.

      Section 9.4 INTENTIONALLY OMITTED.

      Section 9.5 DUTY TO DEFEND;  ATTORNEYS'  FEES AND OTHER FEES AND EXPENSES.
Upon  written  request by any  Indemnified  Party,  Borrower  shall  defend such
Indemnified  Party (if requested by any  Indemnified  Party,  in the name of the
Indemnified  Party)  by  attorneys  and  other  professionals  approved  by  the
Indemnified  Parties.  Notwithstanding  the foregoing,  if the defendants in any
such claim or  proceeding  include both Borrower and any  Indemnified  Party and
Borrower and such Indemnified  Party shall have reasonably  concluded that there
are any legal defenses available to it and/or other Indemnified Parties that are
different from or additional to those  available to Borrower,  such  Indemnified
Party  shall  have the right to select  separate  counsel  to assert  such legal
defenses and to otherwise participate in the defense of such action on behalf of
such  Indemnified  Party,  provided that no  compromise  or settlement  shall be
entered  without  Borrower's  consent,  which consent shall not be  unreasonably
withheld.  Upon  demand,  Borrower  shall  pay  or,  in the  sole  and  absolute
discretion of the Indemnified  Parties,  reimburse,  the Indemnified Parties for
the payment of reasonable fees and disbursements of attorneys,

                                      -21-
<PAGE>

engineers,  environmental  consultants,  laboratories and other professionals in
connection therewith.

                              Article 10 - WAIVERS

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

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

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

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

      Section 10.5 SURVIVAL.  The indemnifications  made pursuant to Section 9.3
herein and the representations and warranties,  covenants, and other obligations
arising under the Environmental  Indemnity,  shall continue indefinitely in full
force and  effect  and shall  survive  and shall in no way be  impaired  by: any
satisfaction or other termination of this Security Instrument, any assignment or
other  transfer of all or any portion of this  Security  Instrument  or Lender's
interest in the Property  (but,  in such case,  shall  benefit both  Indemnified
Parties and any assignee or  transferee),  any  exercise of Lender's  rights and
remedies  pursuant hereto including but not limited to foreclosure or acceptance
of a deed in lieu of  foreclosure,  any  exercise  of any  rights  and  remedies
pursuant to the Loan Agreement, the Note or any of the other Loan Documents, any
transfer of all or any portion of the Property (whether by Borrower or by Lender
following  foreclosure  or acceptance of a deed in lieu of foreclosure or at any
other time), any amendment to this Security Instrument,  the Loan Agreement, the
Note or the other Loan

                                      -22-
<PAGE>

Documents,  and any act or  omission  that might  otherwise  be  construed  as a
release or discharge of Borrower from the obligations pursuant hereto.

                            Article 11 - EXCULPATION

      The  provisions  of  Section  11.22  of  the  Loan  Agreement  are  hereby
incorporated  by reference into this Security  Instrument to the same extent and
with the same force as if fully set forth herein.

                              Article 12 - NOTICES

      All notices or other written  communications  hereunder shall be delivered
in accordance with Section 11.6 of the Loan Agreement.

                           Article 13 - APPLICABLE LAW

      Section 13.1 GOVERNING LAW. (A) THIS SECURITY INSTRUMENT WAS NEGOTIATED IN
THE STATE OF NEW YORK,  AND MADE BY BORROWER AND ACCEPTED BY LENDER IN THE STATE
OF NEW YORK, AND THE PROCEEDS OF THE NOTE SECURED HEREBY WERE DISBURSED FROM THE
STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL  RELATIONSHIP
TO THE PARTIES AND TO THE UNDERLYING  TRANSACTION  EMBODIED  HEREBY,  AND IN ALL
RESPECTS,  INCLUDING,  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS
OF  CONSTRUCTION,  VALIDITY AND  PERFORMANCE,  THIS SECURITY  INSTRUMENT AND THE
OBLIGATIONS  ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH,  THE LAWS OF THE  STATE  OF NEW  YORK  APPLICABLE  TO  CONTRACTS  MADE AND
PERFORMED IN SUCH STATE  (WITHOUT  REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND
ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES (I)
THE PROVISIONS  FOR THE CREATION,  PERFECTION,  PRIORITY AND  ENFORCEMENT OF THE
LIENS AND SECURITY  INTERESTS  CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER
LOAN  DOCUMENTS  WITH  RESPECT TO THE  PROPERTY  (OTHER THAN THAT  DESCRIBED  IN
SUBPARAGRAPH  II BELOW) SHALL BE GOVERNED BY AND CONSTRUED  ACCORDING TO THE LAW
OF THE  STATE IN WHICH THE  PROPERTY  AND  FIXTURES  ARE  LOCATED  AND (II) WITH
RESPECT TO THE  PERFECTION,  PRIORITY AND  ENFORCEMENT OF THE LIENS AND SECURITY
INTERESTS  CREATED BY THIS SECURITY  INSTRUMENT  AND THE OTHER LOAN DOCUMENTS IN
PROPERTY  WHOSE  PERFECTION  AND  PRIORITY  IS  COVERED  BY ARTICLE 9 OF THE UCC
(INCLUDING,  WITHOUT  LIMITATION,  THE  ACCOUNTS),  THE LAW OF THE  JURISDICTION
APPLICABLE  IN  ACCORDANCE  WITH  SECTIONS  9-301 THROUGH 9-307 OF THE UCC AS IN
EFFECT IN THE STATE OF NEW YORK SHALL GOVERN. TO THE FULLEST EXTENT PERMITTED BY
LAW, BORROWER HEREBY  UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT
THAT THE LAW OF ANY

                                      -23-
<PAGE>

OTHER  JURISDICTION  GOVERNS THIS  SECURITY  INSTRUMENT  AND THE NOTE,  AND THIS
SECURITY  INSTRUMENT  AND  THE  NOTE  SHALL  BE  GOVERNED  BY AND  CONSTRUED  IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW EXCEPT AS SPECIFICALLY SET FORTH ABOVE.

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

                  CORPORATION SERVICE COMPANY
                  1177 AVENUE OF THE AMERICAS
                  17TH FLOOR
                  NEW YORK, NEW YORK  10036

AS ITS AUTHORIZED  AGENT TO ACCEPT AND  ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS  WHICH MAY BE SERVED IN ANY SUCH SUIT,  ACTION OR  PROCEEDING IN
ANY FEDERAL OR STATE  COURT IN NEW YORK,  NEW YORK,  AND AGREES THAT  SERVICE OF
PROCESS  UPON SAID AGENT AT SAID  ADDRESS  AND  WRITTEN  NOTICE OF SAID  SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY  RESPECT  EFFECTIVE  SERVICE OF PROCESS  UPON  BORROWER  IN ANY SUCH SUIT,
ACTION OR  PROCEEDING  IN THE STATE OF NEW YORK.  BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER,  (II)
MAY AT ANY TIME AND FROM TIME TO TIME  DESIGNATE A SUBSTITUTE  AUTHORIZED  AGENT
WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED  AS THE PERSON AND ADDRESS FOR SERVICE OF  PROCESS),  AND (III) SHALL
PROMPTLY  DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED  AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

      Section 13.2 USURY LAWS. Notwithstanding anything to the contrary, (a) all
agreements and  communications  between Borrower and Lender are hereby and shall
automatically  be limited so that,  after taking into account all amounts deemed
interest, the interest contracted for, charged or received by Lender shall never
exceed  the  maximum  lawful  rate or amount,  (b) in  calculating  whether  any
interest  exceeds the lawful  maximum,  all such  interest  shall be  amortized,
prorated, allocated and spread over the full amount and term of all

                                      -24-
<PAGE>

principal indebtedness of Borrower to Lender, and (c) if through any contingency
or event,  Lender  receives  or is deemed to receive  interest  in excess of the
lawful  maximum,  any such excess  shall be deemed to have been  applied  toward
payment  of the  principal  of any  and all  then  outstanding  indebtedness  of
Borrower to Lender,  or if there is no such  indebtedness,  shall immediately be
returned to Borrower.

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

                            Article 14 - DEFINITIONS

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

                      Article 15 - MISCELLANEOUS PROVISIONS

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

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

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

                                      -25-
<PAGE>

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

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

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

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

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

      Section  15.9  WAIVER OF TRIAL BY JURY.  BORROWER  HEREBY  WAIVES,  TO THE
FULLEST  EXTENT  PERMITTED  BY LAW,  THE  RIGHT TO TRIAL BY JURY IN ANY  ACTION,
PROCEEDING OR  COUNTERCLAIM,  WHETHER IN CONTRACT,  TORT OR OTHERWISE,  RELATING
DIRECTLY OR INDIRECTLY TO THE LOAN  EVIDENCED BY THE NOTE, THE  APPLICATION  FOR
THE LOAN  EVIDENCED  BY THE NOTE,  THIS  SECURITY  INSTRUMENT  OR THE OTHER LOAN
DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS
OR AGENTS IN CONNECTION THEREWITH.

                                      -26-
<PAGE>

      Section 15.10 -

                     Article 16 - STATE-SPECIFIC PROVISIONS

      Section   16.1   PRINCIPLES   OF   CONSTRUCTION.   In  the  event  of  any
inconsistencies  between  the terms and  conditions  of this  Article 16 and the
other terms and conditions of this Security Instrument, the terms and conditions
of this Article 16 shall control and be binding.

      Section 16.2  CONTINUING  ENFORCEMENT  OF SECURITY  INSTRUMENT.  If, after
receipt of any payment of all or any part of the Debt,  Lender is  compelled  or
agrees,  for  settlement  purposes,  to surrender  such payment to any person or
entity for any reason (including,  without limitation, a determination that such
payment  is void or  voidable  as a  preference  or  fraudulent  conveyance,  an
impermissible  setoff,  or a  diversion  of trust  funds),  then  this  Security
Instrument and the other Loan Documents shall continue in full force and effect,
and Borrower shall be liable for, and shall indemnify,  defend and hold harmless
Lender with respect to the full amount so  surrendered.  The  provisions of this
Section  16.2 shall  survive the  cancellation  or  discharge  of this  Security
Instrument and shall remain effective  notwithstanding  the payment of the Debt,
the  cancellation  of the Note,  the release of any security  interest,  lien or
encumbrance securing the Debt or any other action which Lender may have taken in
reliance upon its receipt of such payment.  Any  cancellation,  release or other
such action by Lender shall be deemed to have been  conditioned upon any payment
of the Debt having become final and irrevocable.

      Section 16.3 HAZARDOUS SUBSTANCES.

      (a)  Except  as  otherwise   disclosed   by  (x)  that  certain   Phase  I
environmental report (or Phase II environmental  report, if required) in respect
of the  Property  delivered  to  Lender,  a copy of which has been  provided  to
Lender,  and (y)  that  certain  Consent  Decree  by and  among  the New  Jersey
Department of Environmental Protection, OENJ Corporation and N.J. Metromall, LLC
and approved by the United States  District Court for the District of New Jersey
on October 29, 1996,  Borrower hereby represents and warrants to Lender that, to
the best of  Borrower's  knowledge:  (i) the Property is not in violation of any
local, state, federal or other governmental authority, statute, ordinance, code,
order,  decree,  law, rule or regulation  pertaining to or imposing liability or
standards  of conduct  concerning  environmental  regulation,  contamination  or
clean-up  including,   without  limitation,   the  Comprehensive   Environmental
Response,  Compensation and Liability Act, as amended  ("CERCLA"),  the Resource
Conservation and Recovery Act, as amended ("RCRA"),  the Emergency  Planning and
Community  Right-to-Know  Act of  1986,  as  amended,  the  Hazardous  Materials
Transportation  Act, as amended,  the Solid Waste Disposal Act, as amended,  the
Clean Water Act, as amended,  the Clean Air Act, as amended, the Toxic Substance
Control  Act,  as  amended,  the  Safe  Drinking  Water  Act,  as  amended,  the
Occupational  Safety and Health Act, as amended,  the New Jersey Industrial Site
Recovery Act, as amended ("ISRA"), the New Jersey Spill Compensation and Control
Act, as amended, the New Jersey Underground Storage of Hazardous Substances Act,
as amended,  the New Jersey Water Pollution  Control Act, as amended,  any state
super-lien and environmental  clean-up  statutes and all regulations  adopted in
respect to the foregoing laws  (collectively,  "Environmental  Laws");  (ii) the
Property  is not  subject to any  private or  governmental  lien or  judicial or
administrative  notice or action or inquiry,  investigation or claim relating to
hazardous  and/or  toxic,  dangerous  and/or  regulated,   substances,   wastes,
materials, raw materials which

                                      -27-
<PAGE>

include  hazardous  constituents,  pollutants or contaminants  including without
limitation,  petroleum, tremolite,  anthlophylie,  actinolite or polychlorinated
biphenyls,  radon, formaldehyde insulation and any other substances or materials
which are  included  under or  regulated by  Environmental  Laws  (collectively,
"Hazardous  Substances"),  but specifically  excluding  deminimis  quantities of
"Hazardous Substances"  associated with the customary  maintenance,  cleaning or
operation  of the  Property;  (iii) no  Hazardous  Substances  are or have  been
(including  the  period  prior  to  Borrower's  acquisition  of  the  Property),
discharged,  generated,  treated,  disposed of or stored on, incorporated in, or
removed or transported from the Property other than in material  compliance with
all Environmental  Laws; (iv) no underground storage tanks and no asbestos exist
on any of the Property; and (v) the Property is not located within a "freshwater
wetlands" or a "transition  area," each as defined by N.J.S.A.  13:9B-3,  and is
not subject to the terms of the New Jersey Freshwater  Wetlands  Protection Act,
as amended,  N.J.S.A. 13:9B-1 et. seq., or the rules and regulations promulgated
thereunder.  So long as  Borrower  owns or is in  possession  and control of the
Property,  Borrower  (A) shall keep or cause the Property to be kept in material
compliance  with all applicable  Environmental  Laws, (B) shall promptly  notify
Lender if Borrower shall become aware of any release of Hazardous  Substances on
or near the Property  and/or if Borrower shall become aware that the Property is
in material  violation of any Environmental Laws and/or if Borrower shall become
aware of any condition on the Property  which shall pose a threat to the health,
safety or welfare of humans,  and (C) shall  remove  such  release of  Hazardous
Substances  and/or  cure  such  violations   and/or  remove  such  threats,   as
applicable,  as required by applicable Environmental Law promptly after Borrower
becomes aware of same, at Borrower's sole expense.  Nothing herein shall prevent
Borrower from  recovering  such expenses from any other party that may be liable
for such removal or cure. The obligations and liabilities of Borrower under this
Section 16.3 shall survive any termination,  satisfaction, or assignment of this
Security  Instrument and the exercise by Lender of any of its rights or remedies
hereunder,  including,  without  limitation,  the acquisition of the Property by
foreclosure or a conveyance in lieu of foreclosure.

      (b)  Borrower  shall not conduct or cause or permit to be conducted on the
Property any activity  which  constitutes an Industrial  Establishment  (as such
term is defined in ISRA)  without the prior  written  consent of Lender.  In the
event that the provisions of ISRA become  applicable to the Property  subsequent
to the date hereof,  Borrower shall give prompt written notice thereof to Lender
and shall  take  immediate  requisite  action to insure  compliance  with  ISRA.
Borrower  shall  deliver to Lender  copies of all  correspondence,  notices  and
submissions  that it sends to or  receives  from the New  Jersey  Department  of
Environmental  Protection in connection  with such ISRA  compliance.  Borrower's
obligation to comply with ISRA shall, notwithstanding its general applicability,
also specifically apply to sale, transfer,  closure or termination of operations
associated  with any  foreclosure  action  respecting  the Property,  including,
without  limitation,  a foreclosure action brought with respect to this Security
Instrument.

      Section 16.3 (c) To the best of Borrower's knowledge, the Property has not
been  and is  not  now  being  used  as a  Major  Facility  (as  defined  in the
Environmental  Laws),  and Borrower  shall not use any such  property as a Major
Facility in the future without the prior written consent of Lender.  If Borrower
ever becomes an owner or operator of a Major  Facility,  Borrower  shall pay all
taxes levied against such Major Facility, in accordance with N.J.S.A.  58:10-23.
11h.

                         [NO FURTHER TEXT ON THIS PAGE]

                                      -28-
<PAGE>

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

                                   FEE BORROWER:

WITNESS:
                                   N.J. METROMALL URBAN RENEWAL, INC., a New
                                   Jersey corporation

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

                                   LEASEHOLD BORROWER:

WITNESS:                           JG ELIZABETH, LLC, a Delaware limited
                                   liability company

                                   By: GLIMCHER JERSEY GARDENS, LLC, a
----------------------------           Delaware limited liability company, its
Name:                                  sole member

                                       By: JG MEZZANINE, LLC, a Delaware
                                           limited liability company, its sole
                                           member

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

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

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

<PAGE>

                                 ACKNOWLEDGMENT

STATE OF                )
                        )  SS.
COUNTY OF               )

      On this, the 4th day of June, 2004, before me, the undersigned  Officer, a
Notary  Public in and for the State and County  aforesaid,  personally  appeared
George A. Schmidt,  who acknowledged  himself to be the Executive Vice President
of N.J. Metromall Urban Renewal, Inc., a New Jersey corporation (the "Company"),
the within named Fee Borrower,  and that he, as such Executive  Vice  President,
executed the foregoing  Security  Instrument for the purposes therein contained,
by signing on behalf of the Company as such Executive Vice President.

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

                                       /s/ Barbara B. Howison
                                       --------------------------------
                                       Notary Public

My commission expires:

July 2, 2005
----------------------

<PAGE>

                                 ACKNOWLEDGMENT

STATE OF                )
                        )  SS.
COUNTY OF               )

      On this, the 4th day of June, 2004, before me, the undersigned  Officer, a
Notary  Public in and for the State and County  aforesaid,  personally  appeared
George A. Schmidt,  who acknowledged  himself to be the Executive Vice President
of Glimcher Properties  Corporation,  a Delaware  corporation,  the sole general
partner  of  Glimcher  Properties  Limited   Partnership,   a  Delaware  limited
partnership,  the sole member of JG Mezzanine, LLC, a Delaware limited liability
company,  the sole member of Glimcher  Jersey Gardens,  LLC, a Delaware  limited
liability  company,  the sole member of JG  Elizabeth,  LLC, a Delaware  limited
liability company (the "Company"), the within named Leasehold Borrower, and that
he, as such Executive Vice President, executed the foregoing Security Instrument
for the purposes therein contained,  by signing on behalf of the Company as such
Executive Vice President.

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

                                       /s/ Barbara B. Howison
                                       --------------------------------
                                       Notary Public

My commission expires:

July 2, 2005
----------------------

<PAGE>

                                    EXHIBIT A
                                    ---------

                                LEGAL DESCRIPTION

                                    Exhibit AExhibit 10.237

                                    GUARANTY

      This GUARANTY (this "Guaranty") is executed as of June 9, 2004 by GLIMCHER
PROPERTIES LIMITED  PARTNERSHIP,  a Delaware limited partnership (whether one or
more collectively referred to as "Guarantor"), for the benefit of MORGAN STANLEY
MORTGAGE CAPITAL INC., a New York corporation ("Lender").

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

      WHEREAS,  pursuant to those certain  Promissory Notes,  dated of even date
herewith,  executed  by  N.J.  METROMALL  URBAN  RENEWAL,  INC.,  a  New  Jersey
corporation ("Fee Borrower") and JG ELIZABETH, LLC, a Delaware limited liability
company ("Leasehold Borrower" and, together with Fee Borrower,  individually and
collectively,  "Borrower")  and payable to the order of Lender in the  aggregate
principal  amount  of  One  Hundred   Sixty-Five   Million  and  No/100  Dollars
($165,000,000)  (together  with  all  renewals,  modifications,   increases  and
extensions thereof, the "Note"), Borrower has become indebted, and may from time
to time be further indebted, to Lender with respect to a loan (the "Loan") which
is made pursuant to that certain Loan  Agreement,  dated of even date  herewith,
between Fee Borrower, Leasehold Borrower and Lender (the "Loan Agreement");

      WHEREAS,  Lender is not  willing  to make the Loan,  or  otherwise  extend
credit,  to Borrower unless  Guarantor  unconditionally  guarantees  payment and
performance to Lender of the Guaranteed Obligations (as herein defined); and

      WHEREAS,  Guarantor  is the  owner of a direct  or  indirect  interest  in
Borrower,  and Guarantor will directly  benefit from Lender's making the Loan to
Borrower.

      NOW,  THEREFORE,  as an  inducement to Lender to make the Loan to Borrower
and to extend  such  additional  credit as Lender may from time to time agree to
extend under the Loan Documents,  and for other good and valuable consideration,
the receipt and legal sufficiency of which are hereby acknowledged,  the parties
do hereby agree as follows:

                                    ARTICLE I

                          NATURE AND SCOPE OF GUARANTY

      1.1   Guaranty   of   Obligation.   Guarantor   hereby   irrevocably   and
unconditionally  guarantees to Lender and its successors and assigns the payment
and performance of the Guaranteed  Obligations as and when the same shall be due
and payable, whether by lapse of time, by acceleration of maturity or otherwise.
Guarantor hereby irrevocably and unconditionally covenants and agrees that it is
liable for the Guaranteed Obligations as a primary obligor.

<PAGE>

      1.2  Definition  of  Guaranteed  Obligations.  As used  herein,  the  term
"Guaranteed  Obligations"  means the  obligations  or liabilities of Borrower to
Lender for any loss, damage, cost, expense, liability, claim or other obligation
incurred by Lender  (including  attorneys' fees and costs  reasonably  incurred)
arising out of or in connection with the following:

            (a) fraud or intentional  misrepresentation by Borrower or Guarantor
      in connection with the Loan;

            (b) the willful  misconduct  by Borrower or Guarantor in  connection
      with the Loan;

            (c)  the  breach  of  any  representation,   warranty,  covenant  or
      indemnification  provision  in  the  Environmental  Indemnity  or  in  the
      Mortgage concerning  environmental laws, hazardous substances and asbestos
      and any indemnification of Lender with respect thereto in either document;

            (d)  the  misapplication  or  conversion  by  Borrower  of  (i)  any
      insurance  proceeds paid by reason of any loss,  damage or  destruction to
      the Property, (ii) any awards or other amounts received in connection with
      the  Condemnation  of all or a portion of the Property and (iii) any Rents
      following an Event of Default;

            (e) any  security  deposits,  advance  deposits  or  other  deposits
      collected  with respect to the Property  which are not delivered to Lender
      upon a foreclosure  of the Property or action in lieu  thereof,  except to
      the extent any such security  deposits were applied in accordance with the
      terms and conditions of any of the Leases;

            (f) the breach by Borrower of Borrower's indemnification obligations
      set forth in Section 9.2 of the Loan Agreement; or

            (g) failure of Borrower to maintain  its status as a single  purpose
      entity as required by, and in accordance with the terms and provisions of,
      the Loan Agreement.

      Notwithstanding anything to the contrary in any of the Loan Documents, (i)
Lender  shall not be deemed to have waived any right which Lender may have under
Section 506(a),  506(b),  1111(b) or any other provisions of the U.S. Bankruptcy
Code to file a claim  for the full  amount  of the Debt or to  require  that all
collateral  shall  continue  to  secure  all of the  Debt  owing  to  Lender  in
accordance  with the Loan Documents and (ii)  Guarantor  shall be liable for the
full amount of the Debt in the event that (A) Borrower fails to obtain  Lender's
prior written consent to any subordinate  mortgage  financing or other voluntary
lien  encumbering  the Property in  connection  with such  subordinate  mortgage
financing;  (B) Borrower fails to obtain  Lender's prior written  consent to any
assignment,  transfer,  or conveyance of the Property or any interest therein as
required by the Loan  Agreement or the Mortgage;  (C) Borrower files a voluntary
petition under the Bankruptcy  code or any other Federal or state  bankruptcy or
insolvency law; (D) an Affiliate,  officer,  director,  or representative  which
controls, directly or indirectly,  Borrower files, or joins in the filing of, an
involuntary  petition  against  Borrower under the Bankruptcy  Code or any other
Federal or state  bankruptcy  or  insolvency  law,  or  solicits or causes to be
solicited  petitioning  creditors for any involuntary  petition against Borrower
from any Person;  (E) Borrower  files an answer  consenting to or joining in any
involuntary  petition filed against it, by any other Person under the Bankruptcy
Code or any other Federal or state

                                      -2-
<PAGE>

bankruptcy or insolvency law, or solicits or causes to be solicited  petitioning
creditors  for any  involuntary  petition  from any Person;  (F) any  Affiliate,
officer,  director,  or  representative  which controls  Borrower consents to or
joins in an application for the appointment of a custodian,  receiver,  trustee,
or examiner for Borrower or any portion of the Property;  or (G) Borrower  makes
an  assignment  for the benefit of  creditors,  or admits,  in writing or in any
legal  proceeding,  its  insolvency or inability to pay its debts as they become
due.

      1.3  Nature  of  Guaranty.  This  Guaranty  is an  irrevocable,  absolute,
continuing guaranty of payment and performance and not a guaranty of collection.
This Guaranty may not be revoked by Guarantor and shall continue to be effective
with  respect  to any  Guaranteed  Obligations  arising  or  created  after  any
attempted  revocation by Guarantor and after (if Guarantor is a natural  person)
Guarantor's   death  (in  which  event  this  Guaranty  shall  be  binding  upon
Guarantor's  estate and Guarantor's legal  representatives  and heirs). The fact
that at any  time  or  from  time to  time  the  Guaranteed  Obligations  may be
increased or reduced shall not release or discharge the  obligation of Guarantor
to Lender with  respect to the  Guaranteed  Obligations.  This  Guaranty  may be
enforced  by  Lender  and any  subsequent  holder  of the Note and  shall not be
discharged by the assignment or negotiation of all or part of the Note.

      1.4  Guaranteed   Obligations  Not  Reduced  by  Offset.   The  Guaranteed
Obligations and the liabilities and obligations of Guarantor to Lender hereunder
shall  not be  reduced,  discharged  or  released  because  or by  reason of any
existing  or future  offset,  claim or defense of  Borrower  or any other  party
against Lender or against  payment of the Guaranteed  Obligations,  whether such
offset,  claim or defense arises in connection  with the Guaranteed  Obligations
(or the transactions creating the Guaranteed Obligations) or otherwise.

      1.5 Payment By Guarantor. If all or any part of the Guaranteed Obligations
shall not be punctually paid when due, whether at demand, maturity, acceleration
or otherwise,  Guarantor  shall,  immediately  upon demand by Lender and without
presentment,  protest,  notice  of  protest,  notice of  non-payment,  notice of
intention to accelerate the maturity,  notice of acceleration of the maturity or
any  other  notice  whatsoever,  pay in  lawful  money of the  United  States of
America,  the amount due on the  Guaranteed  Obligations  to Lender at  Lender's
address as set forth herein.  Such demand(s) may be made at any time  coincident
with or after the time for payment of all or part of the Guaranteed  Obligations
and may be made from time to time with respect to the same or different items of
Guaranteed Obligations.  Such demand shall be deemed made, given and received in
accordance with the notice provisions hereof.

      1.6 No Duty To Pursue  Others.  It shall not be necessary  for Lender (and
Guarantor  hereby waives any rights which Guarantor may have to require Lender),
in order  to  enforce  the  obligations  of  Guarantor  hereunder,  first to (i)
institute suit or exhaust its remedies  against Borrower or others liable on the
Loan or the Guaranteed  Obligations or any other person,  (ii) enforce  Lender's
rights  against  any  collateral  which shall ever have been given to secure the
Loan,  (iii)  enforce  Lender's  rights  against  any  other  guarantors  of the
Guaranteed  Obligations,  (iv)  join  Borrower  or  any  others  liable  on  the
Guaranteed  Obligations  in any action  seeking to enforce  this  Guaranty,  (v)
exhaust any remedies available to Lender against any collateral which shall ever
have  been  given to  secure  the Loan,  or (vi)  resort  to any other  means of
obtaining payment of the Guaranteed Obligations. Lender shall not be required to
mitigate  damages  or take any other  action to reduce,  collect or enforce  the
Guaranteed Obligations.

                                      -3-
<PAGE>

      1.7 Waivers.  Guarantor agrees to the provisions of the Loan Documents and
hereby  waives  notice of (i) any loans or advances  made by Lender to Borrower,
(ii) acceptance of this Guaranty,  (iii) any amendment or extension of the Note,
the  Mortgage,  the Loan  Agreement  or of any other  Loan  Documents,  (iv) the
execution  and  delivery  by  Borrower  and  Lender of any other  loan or credit
agreement or of  Borrower's  execution and delivery of any  promissory  notes or
other  documents  arising  under the Loan  Documents or in  connection  with the
Property,  (v) the  occurrence of any breach by Borrower or an Event of Default,
(vi) Lender's transfer or disposition of the Guaranteed Obligations, or any part
thereof,  (vii)  sale or  foreclosure  (or  posting or  advertising  for sale or
foreclosure) of any collateral for the Guaranteed  Obligations,  (viii) protest,
proof of  non-payment  or default by  Borrower,  or (ix) any other action at any
time taken or omitted by Lender and, generally, all demands and notices of every
kind in connection  with this  Guaranty,  the Loan  Documents,  any documents or
agreements evidencing, securing or relating to any of the Guaranteed Obligations
and the obligations hereby guaranteed.

      1.8 Payment of Expenses. In the event that Guarantor should breach or fail
to timely perform any provisions of this Guaranty,  Guarantor shall, immediately
upon demand by Lender, pay Lender all costs and expenses  (including court costs
and  attorneys'  fees)  incurred  by  Lender  in the  enforcement  hereof or the
preservation  of Lender's  rights  hereunder.  The  covenant  contained  in this
Section shall survive the payment and performance of the Guaranteed Obligations.

      1.9 Effect of  Bankruptcy.  In the event that pursuant to any  insolvency,
bankruptcy,  reorganization,  receivership  or other  debtor  relief  law or any
judgment,  order or  decision  thereunder,  Lender  must  rescind or restore any
payment or any part thereof received by Lender in satisfaction of the Guaranteed
Obligations,  as set forth herein, any prior release or discharge from the terms
of this Guaranty  given to Guarantor by Lender shall be without  effect and this
Guaranty shall remain in full force and effect.  It is the intention of Borrower
and Guarantor that  Guarantor's  obligations  hereunder  shall not be discharged
except  by  Guarantor's  performance  of such  obligations  and then only to the
extent of such performance.

      1.10   Waiver   of   Subrogation,    Reimbursement    and    Contribution.
Notwithstanding  anything to the contrary contained in this Guaranty,  Guarantor
hereby  unconditionally and irrevocably  waives,  releases and abrogates any and
all rights it may now or hereafter have under any agreement, at law or in equity
(including,  without limitation, any law subrogating the Guarantor to the rights
of Lender), to assert any claim against or seek contribution, indemnification or
any other form of  reimbursement  from  Borrower or any other  party  liable for
payment of any or all of the  Guaranteed  Obligations  for any  payment  made by
Guarantor under or in connection with this Guaranty or otherwise.

      1.11 Borrower. The term "Borrower" as used herein shall include any new or
successor corporation,  association,  partnership (general or limited),  limited
liability  company joint  venture,  trust or other  individual  or  organization
formed as a result of any merger,  reorganization,  sale, transfer, devise, gift
or bequest of Borrower or any interest in Borrower.

                                      -4-
<PAGE>

                                   ARTICLE II

                      EVENTS AND CIRCUMSTANCES NOT REDUCING
                     OR DISCHARGING GUARANTOR'S OBLIGATIONS

      Guarantor  hereby  consents and agrees to each of the following and agrees
that  Guarantor's  obligations  under  this  Guaranty  shall  not  be  released,
diminished,  impaired, reduced or adversely affected by any of the following and
waives any common law,  equitable,  statutory or other rights (including without
limitation rights to notice) which Guarantor might otherwise have as a result of
or in connection with any of the following:

      2.1  Modifications.   Any  renewal,  extension,  increase,   modification,
alteration or  rearrangement  of all or any part of the Guaranteed  Obligations,
the Note,  the Mortgage,  the Loan  Agreement,  the other Loan  Documents or any
other  document,  instrument,  contract or  understanding  between  Borrower and
Lender or any other parties  pertaining  to the  Guaranteed  Obligations  or any
failure of Lender to notify Guarantor of any such action.

      2.2 Adjustment. Any adjustment, indulgence, forbearance or compromise that
might be granted or given by Lender to Borrower or any Guarantor.

      2.3  Condition  of  Borrower or  Guarantor.  The  insolvency,  bankruptcy,
arrangement,  adjustment, composition,  liquidation,  disability, dissolution or
lack of power of  Borrower,  Guarantor or any other party at any time liable for
the payment of all or part of the Guaranteed Obligations;  or any dissolution of
Borrower or Guarantor or any sale, lease or transfer of any or all of the assets
of Borrower or Guarantor or any changes in the shareholders, partners or members
of Borrower or Guarantor; or any reorganization of Borrower or Guarantor.

      2.4 Invalidity of Guaranteed  Obligations.  The invalidity,  illegality or
unenforceability  of all or  any  part  of  the  Guaranteed  Obligations  or any
document or agreement executed in connection with the Guaranteed Obligations for
any  reason  whatsoever,  including  without  limitation  the fact  that (i) the
Guaranteed  Obligations or any part thereof exceeds the amount permitted by law,
(ii) the act of creating the Guaranteed Obligations or any part thereof is ultra
vires, (iii) the officers or  representatives  executing the Note, the Mortgage,
the Loan  Agreement  or the other  Loan  Documents  or  otherwise  creating  the
Guaranteed  Obligations acted in excess of their authority,  (iv) the Guaranteed
Obligations  violate applicable usury laws, (v) the Borrower has valid defenses,
claims or offsets  (whether at law, in equity or by agreement)  which render the
Guaranteed Obligations wholly or partially uncollectible from Borrower, (vi) the
creation,  performance  or  repayment  of the  Guaranteed  Obligations  (or  the
execution,  delivery and performance of any document or instrument  representing
part of the Guaranteed Obligations or executed in connection with the Guaranteed
Obligations or given to secure the repayment of the Guaranteed  Obligations)  is
illegal,  uncollectible or unenforceable,  or (vii) the Note, the Mortgage,  the
Loan  Agreement or any of the other Loan Documents have been forged or otherwise
are irregular or not genuine or authentic,  it being agreed that Guarantor shall
remain liable hereon regardless of whether Borrower or any other person be found
not liable on the Guaranteed Obligations or any part thereof for any reason.

      2.5 Release of Obligors.  Any full or partial  release of the liability of
Borrower  on  the  Guaranteed  Obligations  or  any  part  thereof,  or  of  any
co-guarantors,  or any other Person now or hereafter liable, whether directly or
indirectly, jointly, severally, or jointly

                                      -5-
<PAGE>

and  severally,  to  pay,  perform,  guarantee  or  assure  the  payment  of the
Guaranteed Obligations,  or any part thereof, it being recognized,  acknowledged
and agreed by Guarantor  that  Guarantor  may be required to pay the  Guaranteed
Obligations  in full  without  assistance  or  support of any other  party,  and
Guarantor  has not been  induced to enter into this  Guaranty  on the basis of a
contemplation,  belief,  understanding  or agreement  that other parties will be
liable to pay or perform the Guaranteed Obligations, or that Lender will look to
other parties to pay or perform the Guaranteed Obligations.

      2.6 Other  Collateral.  The  taking or  accepting  of any other  security,
collateral or guaranty,  or other  assurance of payment,  for all or any part of
the Guaranteed Obligations.

      2.7   Release   of   Collateral.   Any   release,   surrender,   exchange,
subordination,  deterioration,  waste,  loss or  impairment  (including  without
limitation negligent,  willful, unreasonable or unjustifiable impairment) of any
collateral,  property or security at any time  existing in  connection  with, or
assuring or securing payment of, all or any part of the Guaranteed Obligations.

      2.8 Care and  Diligence.  The  failure  of Lender  or any  other  party to
exercise   diligence  or  reasonable  care  in  the  preservation,   protection,
enforcement,  sale or  other  handling  or  treatment  of all or any part of any
collateral,  property or  security,  including  but not limited to any  neglect,
delay,  omission,  failure or refusal  of Lender  (i) to take or  prosecute  any
action  for  the  collection  of any of the  Guaranteed  Obligations  or (ii) to
foreclose, or initiate any action to foreclose, or, once commenced, prosecute to
completion any action to foreclose upon any security therefor,  or (iii) to take
or  prosecute  any  action  in  connection  with  any  instrument  or  agreement
evidencing or securing all or any part of the Guaranteed Obligations.

      2.9  Unenforceability.  The fact that any collateral,  security,  security
interest or lien  contemplated  or  intended to be given,  created or granted as
security for the repayment of the Guaranteed  Obligations,  or any part thereof,
shall not be properly  perfected or created,  or shall prove to be unenforceable
or subordinate to any other security  interest or lien, it being  recognized and
agreed by  Guarantor  that  Guarantor  is not  entering  into this  Guaranty  in
reliance  on,  or  in   contemplation   of  the   benefits  of,  the   validity,
enforceability,  collectibility  or  value  of  any of the  collateral  for  the
Guaranteed Obligations.

      2.10 Offset. The Note, the Guaranteed  Obligations and the liabilities and
obligations  of  the  Guarantor  to  Lender  hereunder  shall  not  be  reduced,
discharged  or released  because of or by reason of any existing or future right
of offset,  claim or defense of Borrower against Lender,  or any other party, or
against  payment of the  Guaranteed  Obligations,  whether such right of offset,
claim or defense arises in connection  with the Guaranteed  Obligations  (or the
transactions creating the Guaranteed Obligations) or otherwise.

      2.11 Merger. The reorganization,  merger or consolidation of Borrower into
or with any other Person.

      2.12 Preference. Any payment by Borrower to Lender is held to constitute a
preference  under bankruptcy laws or for any reason Lender is required to refund
such payment or pay such amount to Borrower or someone else.

                                      -6-
<PAGE>

      2.13 Other Actions Taken or Omitted.  Any other action taken or omitted to
be taken with respect to the Loan Documents, the Guaranteed Obligations,  or the
security  and  collateral  therefor,  whether  or not such  action  or  omission
prejudices Guarantor or increases the likelihood that Guarantor will be required
to pay the  Guaranteed  Obligations  pursuant  to the  terms  hereof,  it is the
unambiguous  and  unequivocal  intention of Guarantor  that  Guarantor  shall be
obligated  to pay the  Guaranteed  Obligations  when  due,  notwithstanding  any
occurrence,   circumstance,  event,  action,  or  omission  whatsoever,  whether
contemplated  or  uncontemplated,  and whether or not otherwise or  particularly
described herein,  which obligation shall be deemed satisfied only upon the full
and final payment and satisfaction of the Guaranteed Obligations.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

      To induce  Lender to enter into the Loan  Documents  and extend  credit to
Borrower, Guarantor represents and warrants to Lender as follows:

      3.1 Benefit.  Guarantor  is an  Affiliate  of Borrower,  is the owner of a
direct or indirect  interest in Borrower,  and has  received,  or will  receive,
direct or indirect  benefit from the making of this Guaranty with respect to the
Guaranteed Obligations.

      3.2  Familiarity  and  Reliance.  Guarantor  is  familiar  with,  and  has
independently  reviewed books and records regarding,  the financial condition of
the Borrower and is familiar with the value of any and all  collateral  intended
to be created as security for the payment of the Note or Guaranteed Obligations;
however,  Guarantor is not relying on such financial condition or the collateral
as an inducement to enter into this Guaranty.

      3.3 No  Representation  By Lender.  Neither Lender nor any other party has
made any  representation,  warranty or statement to Guarantor in order to induce
the Guarantor to execute this Guaranty.

      3.4  Guarantor's  Financial  Condition.  As of the date hereof,  and after
giving effect to this Guaranty and the contingent  obligation  evidenced hereby,
Guarantor  is and will be solvent  and has and will have  assets  which,  fairly
valued, exceed its obligations,  liabilities (including contingent  liabilities)
and debts,  and has and will have property and assets  sufficient to satisfy and
repay its obligations and liabilities.

      3.5 Legality. The execution, delivery and performance by Guarantor of this
Guaranty and the consummation of the transactions  contemplated hereunder do not
and  will not  contravene  or  conflict  with any  law,  statute  or  regulation
whatsoever  to which  Guarantor is subject or  constitute a default (or an event
which with notice or lapse of time or both would constitute a default) under, or
result in the breach of, any indenture, mortgage, charge, lien, or any contract,
agreement  or other  instrument  to which  Guarantor  is a party or which may be
applicable  to  Guarantor.  This  Guaranty is a legal and binding  obligation of
Guarantor and is enforceable in accordance with its terms,  except as limited by
bankruptcy,  insolvency  or other laws of general  application  relating  to the
enforcement of creditors' rights.

                                      -7-
<PAGE>

      3.6 Survival.  All representations and warranties made by Guarantor herein
shall survive the execution hereof.

                                   ARTICLE IV

                      SUBORDINATION OF CERTAIN INDEBTEDNESS

      4.1  Subordination  of All  Guarantor  Claims.  As used  herein,  the term
"Guarantor  Claims"  shall  mean  all  debts  and  liabilities  of  Borrower  to
Guarantor,  whether  such  debts  and  liabilities  now  exist or are  hereafter
incurred or arise,  or whether the  obligations  of Borrower  thereon be direct,
contingent,  primary,  secondary,  several, joint and several, or otherwise, and
irrespective  of  whether  such  debts  or  liabilities  be  evidenced  by note,
contract, open account, or otherwise,  and irrespective of the person or persons
in whose favor such debts or liabilities may, at their inception,  have been, or
may hereafter be created, or the manner in which they have been or may hereafter
be acquired by Guarantor.  The Guarantor Claims shall include without limitation
all rights and claims of  Guarantor  against  Borrower  (arising  as a result of
subrogation or otherwise) as a result of Guarantor's payment of all or a portion
of the  Guaranteed  Obligations.  After the occurrence of an Event of Default or
the occurrence of an event which would, with the giving of notice or the passage
of time, or both, constitute an Event of Default, Guarantor shall not receive or
collect,  directly or  indirectly,  from  Borrower or any other party any amount
upon the Guarantor Claims.

      4.2  Claims  in  Bankruptcy.  In the  event of  receivership,  bankruptcy,
reorganization,  arrangement,  debtor's relief, or other insolvency  proceedings
involving Guarantor as debtor, Lender shall have the right to prove its claim in
any such proceeding so as to establish its rights hereunder and receive directly
from the receiver, trustee or other court custodian dividends and payments which
would otherwise be payable upon Guarantor Claims.  Guarantor hereby assigns such
dividends and payments to Lender. Should Lender receive, for application against
the Guaranteed  Obligations,  any dividend or payment which is otherwise payable
to Guarantor and which, as between  Borrower and Guarantor,  shall  constitute a
credit against the Guarantor Claims, then, upon payment to Lender in full of the
Guaranteed  Obligations,  Guarantor  shall  become  subrogated  to the rights of
Lender to the extent that such payments to Lender on the  Guarantor  Claims have
contributed  toward the  liquidation  of the  Guaranteed  Obligations,  and such
subrogation  shall  be  with  respect  to  that  proportion  of  the  Guaranteed
Obligations which would have been unpaid if Lender had not received dividends or
payments upon the Guarantor Claims.

      4.3 Payments Held in Trust. In the event that, notwithstanding anything to
the contrary in this  Guaranty,  Guarantor  should  receive any funds,  payment,
claim or distribution which is prohibited by this Guaranty,  Guarantor agrees to
hold in trust for Lender an amount  equal to the amount of all funds,  payments,
claims or distributions so received, and agrees that it shall have absolutely no
dominion over the amount of such funds,  payments,  claims or  distributions  so
received except to pay them promptly to Lender, and Guarantor covenants promptly
to pay the same to Lender.

      4.4  Liens  Subordinate.   Guarantor  agrees  that  any  liens,   security
interests,  judgment liens, charges or other encumbrances upon Borrower's assets
securing  payment  of the  Guarantor  Claims  shall be and remain  inferior  and
subordinate to any liens, security interests,

                                      -8-
<PAGE>

judgment liens,  charges or other  encumbrances  upon Borrower's assets securing
payment of the Guaranteed  Obligations,  regardless of whether such encumbrances
in favor of  Guarantor or Lender  presently  exist or are  hereafter  created or
attach.  Without the prior written  consent of Lender,  Guarantor  shall not (i)
exercise or enforce any creditor's right it may have against  Borrower,  or (ii)
foreclose,  repossess, sequester or otherwise take steps or institute any action
or  proceedings  (judicial  or  otherwise,   including  without  limitation  the
commencement  of, or joinder  in, any  liquidation,  bankruptcy,  rearrangement,
debtor's relief or insolvency proceeding) to enforce any liens, mortgage,  deeds
of trust, security interests, collateral rights, judgments or other encumbrances
on assets of Borrower held by Guarantor.

                                    ARTICLE V

                                  MISCELLANEOUS

      5.1 Waiver.  No failure to exercise,  and no delay in  exercising,  on the
part of Lender, any right hereunder shall operate as a waiver thereof, nor shall
any single or partial  exercise  thereof  preclude any other or further exercise
thereof or the exercise of any other right. The rights of Lender hereunder shall
be in addition to all other rights provided by law. No modification or waiver of
any provision of this  Guaranty,  nor consent to departure  therefrom,  shall be
effective  unless in writing and no such consent or waiver  shall extend  beyond
the particular case and purpose involved.  No notice or demand given in any case
shall constitute a waiver of the right to take other action in the same, similar
or other instances without such notice or demand.

      5.2 Notices.  All notices given hereunder shall be in writing and shall be
either hand  delivered  or mailed,  by  registered  U.S.  mail,  Return  Receipt
Requested,  first class  postage  prepaid,  to the  parties at their  respective
addresses  below  or at such  other  address  for any  party as such  party  may
designate by notice to the other parties hereto:

            If to Lender:     Morgan Stanley Mortgage Capital Inc.
                              1221 Avenue of the Americas, 27th Floor
                              New York, New York  10020
                              Attention: James Flaum & Kevin Swartz
                              Facsimile No.: (212) 762-9494

            with a copy to:   Cadwalader, Wickersham & Taft LLP
                              100 Maiden Lane
                              New York, New York 10038
                              Attention: John M. Zizzo, Esq.
                              Facsimile No. (212) 504-6666

            If to Guarantor:  Glimcher Properties Limited Partnership
                              150 East Gay Street
                              Columbus, Ohio 43215
                              Attention: George A. Schmidt, Senior
                              Vice President
                              Facsimile No. (614) 621-9311

                                      -9-
<PAGE>

            with a copy to:   Squire Sanders & Dempsey L.L.P.
                              1300 Huntington Center
                              41 South High Street
                              Columbus, Ohio 43215-6197
                              Attention: Kim A. Rieck, Esq.
                              Facsimile No. (614) 365-2499

      5.3 Governing  Law;  Submission to  Jurisdiction.  This Guaranty  shall be
governed by and construed in  accordance  with the laws of the State of New York
pursuant to Section  5-1401 of the New York  General  Obligations  Law  (without
regard to any other  principles of conflict of laws) and the applicable  laws of
the United  States of America.  Any legal  suit,  action or  proceeding  against
Lender or Guarantor  arising out of or relating to this Guaranty may at Lender's
option be  instituted  in any  Federal  or State  court in the City of New York,
County  of New  York,  pursuant  to  Section  5-1402  of the  New  York  General
Obligations  Law  and  Guarantor  waives  any  objections  which  it may  now or
hereafter  have based on venue  and/or  forum non  conveniens  of any such suit,
action  or  proceeding,   and  Guarantor  hereby  irrevocably   submits  to  the
jurisdiction of any such court in any suit, action or proceeding. Guarantor does
hereby designate and appoint:

                  Corporation Service Company
                  80 State Street
                  Albany, New York  12207-2543

as its authorized  agent to accept and  acknowledge on its behalf service of any
and all process  which may be served in any such suit,  action or  proceeding in
any Federal or State  court in New York,  New York,  and agrees that  service of
process  upon said agent at said  address  and  written  notice of said  service
mailed or delivered to Guarantor in the manner  provided  herein shall be deemed
in every respect  effective  service of process upon Guarantor in any such suit,
action or proceeding in the State of New York.

      5.4 Invalid  Provisions.  If any  provision of this Guaranty is held to be
illegal, invalid, or unenforceable under present or future laws effective during
the term of this  Guaranty,  such  provision  shall be fully  severable and this
Guaranty  shall  be  construed  and  enforced  as if such  illegal,  invalid  or
unenforceable  provision had never  comprised a part of this  Guaranty,  and the
remaining  provisions of this Guaranty shall remain in full force and effect and
shall not be affected by the illegal,  invalid or unenforceable  provision or by
its severance from this Guaranty,  unless such continued  effectiveness  of this
Guaranty,  as  modified,  would be  contrary  to the  basic  understandings  and
intentions of the parties as expressed herein.

      5.5  Amendments.  This  Guaranty may be amended only by an  instrument  in
writing  executed  by the  party or an  authorized  representative  of the party
against whom such amendment is sought to be enforced.

      5.6 Parties Bound;  Assignment;  Joint and Several. This Guaranty shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors, assigns and legal representatives; provided, however, that Guarantor
may not, without the prior written consent of Lender,  assign any of its rights,
powers, duties or obligations hereunder.  If Guarantor consists of more than one
person or party,  the  obligations  and liabilities of each such person or party
shall be joint and several.

                                      -10-
<PAGE>

      5.7 Headings.  Section  headings are for convenience of reference only and
shall in no way affect the interpretation of this Guaranty.

      5.8 Recitals.  The recital and introductory  paragraphs  hereof are a part
hereof,  form a basis for this  Guaranty  and shall be  considered  prima  facie
evidence of the facts and documents referred to therein.

      5.9 Counterparts.  To facilitate execution,  this Guaranty may be executed
in as many  counterparts  as may be  convenient  or  required.  It shall  not be
necessary  that the  signature  of, or on behalf  of,  each  party,  or that the
signature of all persons required to bind any party, appear on each counterpart.
All counterparts shall collectively constitute a single instrument. It shall not
be  necessary  in making  proof of this  Guaranty to produce or account for more
than a single counterpart  containing the respective signatures of, or on behalf
of, each of the parties  hereto.  Any signature page to any  counterpart  may be
detached  from  such  counterpart  without  impairing  the  legal  effect of the
signatures  thereon and  thereafter  attached to another  counterpart  identical
thereto except having attached to it additional signature pages.

      5.10 Rights and Remedies. If Guarantor becomes liable for any indebtedness
owing by Borrower to Lender, by endorsement or otherwise,  other than under this
Guaranty,  such liability shall not be in any manner impaired or affected hereby
and the  rights of Lender  hereunder  shall be  cumulative  of any and all other
rights that Lender may ever have  against  Guarantor.  The exercise by Lender of
any right or remedy  hereunder  or under any other  instrument,  or at law or in
equity,  shall not preclude the  concurrent or subsequent  exercise of any other
right or remedy.

      5.11 Other Defined Terms.  Any capitalized term utilized herein shall have
the meaning as  specified in the Loan  Agreement,  unless such term is otherwise
specifically defined herein.

      5.12  Entirety.  THIS  GUARANTY  EMBODIES THE FINAL,  ENTIRE  AGREEMENT OF
GUARANTOR  AND LENDER WITH  RESPECT TO  GUARANTOR'S  GUARANTY OF THE  GUARANTEED
OBLIGATIONS   AND  SUPERSEDES  ANY  AND  ALL  PRIOR   COMMITMENTS,   AGREEMENTS,
REPRESENTATIONS,  AND  UNDERSTANDINGS,  WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT  MATTER  HEREOF.  THIS GUARANTY IS INTENDED BY GUARANTOR AND LENDER AS A
FINAL AND COMPLETE  EXPRESSION  OF THE TERMS OF THE  GUARANTY,  AND NO COURSE OF
DEALING  BETWEEN  GUARANTOR  AND  LENDER,  NO  COURSE OF  PERFORMANCE,  NO TRADE
PRACTICES,  AND  NO  EVIDENCE  OF  PRIOR,  CONTEMPORANEOUS  OR  SUBSEQUENT  ORAL
AGREEMENTS OR  DISCUSSIONS  OR OTHER  EXTRINSIC  EVIDENCE OF ANY NATURE SHALL BE
USED TO  CONTRADICT,  VARY,  SUPPLEMENT  OR  MODIFY  ANY  TERM OF THIS  GUARANTY
AGREEMENT. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND LENDER.

      5.13  Waiver of Right To Trial By Jury.  GUARANTOR  HEREBY  AGREES  NOT TO
ELECT A TRIAL BY JURY OF ANY ISSUE  TRIABLE  OF RIGHT BY JURY,  AND  WAIVES  ANY
RIGHT TO TRIAL BY JURY  FULLY TO THE  EXTENT  THAT ANY SUCH  RIGHT  SHALL NOW OR
HEREAFTER EXIST WITH

                                      -11-
<PAGE>

REGARD TO THIS GUARANTY,  THE NOTE,  THE MORTGAGE,  THE LOAN  AGREEMENT,  OR THE
OTHER LOAN  DOCUMENTS,  OR ANY CLAIM,  COUNTERCLAIM  OR OTHER ACTION  ARISING IN
CONNECTION  THEREWITH.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND  VOLUNTARILY BY GUARANTOR,  AND IS INTENDED TO ENCOMPASS  INDIVIDUALLY  EACH
INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE
ACCRUE.  LENDER IS HEREBY  AUTHORIZED  TO FILE A COPY OF THIS  PARAGRAPH  IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY GUARANTOR.

      5.14  Cooperation.  Guarantor  acknowledges that Lender and its successors
and assigns may (i) sell this Guaranty, the Note and other Loan Documents to one
or more  investors as a whole loan,  (ii)  participate  the Loan secured by this
Guaranty to one or more  investors,  (iii) deposit this  Guaranty,  the Note and
other  Loan  Documents  with a  trust,  which  trust  may sell  certificates  to
investors  evidencing  an  ownership  interest  in the  trust  assets,  or  (iv)
otherwise  sell the Loan or  interest  therein to  investors  (the  transactions
referred to in clauses  (i) through  (iv) are  hereinafter  each  referred to as
"Secondary  Market  Transaction").  Guarantor  shall  cooperate  with  Lender in
effecting any such Secondary Market Transaction and shall cooperate to implement
all  requirements  imposed  by  any  Rating  involved  in any  Secondary  Market
Transaction.  Guarantor shall provide such information and documents relating to
Guarantor,  Borrower, the Property and any tenants of the Improvements as Lender
may reasonably request in connection with such Secondary Market Transaction.  In
addition,  Guarantor shall make available to Lender all  information  concerning
its business and operations that Lender may reasonably request.  Lender shall be
permitted  to share all such  information  with the  investment  banking  firms,
Rating  Agencies,  accounting  firms, law firms and other  third-party  advisory
firms involved with the Loan and the Loan Documents or the applicable  Secondary
Market Transaction.  It is understood that the information provided by Guarantor
to Lender may  ultimately be  incorporated  into the offering  documents for the
Secondary Market Transaction and thus various investors may also see some or all
of the  information.  Lender and all of the aforesaid  third-party  advisors and
professional firms shall be entitled to rely on the information  supplied by, or
on behalf  of,  Guarantor  in the form as  provided  by  Guarantor.  Lender  may
publicize  the  existence of the Loan in  connection  with its  marketing  for a
Secondary Market Transaction or otherwise as part of its business development.

      5.15 Reinstatement in Certain Circumstances. If at any time any payment of
the principal of or interest  under the Note or any other amount  payable by the
Borrower under the Loan Documents is rescinded or must be otherwise  restored or
returned upon the insolvency,  bankruptcy or  reorganization  of the Borrower or
otherwise,  the Guarantor's  obligations  hereunder with respect to such payment
shall be  reinstated  as though  such  payment has been due but not made at such
time.

                         [NO FURTHER TEXT ON THIS PAGE]

                                      -12-
<PAGE>

      EXECUTED as of the day and year first above written.

                              GUARANTOR:

                              GLIMCHER PROPERTIES LIMITED PARTNERSHIP, a
                              Delaware limited partnership

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

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

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