MORTGAGE AND SECURITY AGREEMENT

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                        MORTGAGE AND SECURITY AGREEMENT

                 THIS SECURITY INSTRUMENT AND SECURITY AGREEMENT (this "Security
Instrument") is made as of this P. day of December, 2005, by RD ELMWOOD
ASSOCIATES, L.P., a Delaware limited partnership, having its principal place of
business at c/o Acadia Realty Trust, 1311 Mamaroneck Avenue - Suite 260, White
Plains, New York 10605, as mortgagor ("Borrower") for the benefit of MORTGAGE
ELECTRONIC REGISTRATION SYSTEMS, INC., A DELAWARE CORPORATION, HAVING AN ADDRESS
AT 1595 SPRING HILL ROAD, SUITE 310 VIENNA, VIRGINIA 22182 ("MERS"), AS NOMINEE
OF BEAR STEARNS COMMERCIAL MORTGAGE, INC., a New York corporation, having an
address at 383 Madison Avenue, New York, New York 10179, as mortgagee
("Lender").
                                   WITNESSETH:

                  WHEREAS, this Security Instrument is given to secure a loan
(the "Loan") in the principal sum of Thirty-Four Million Six Hundred Thousand
and No/100 Dollars ($34,600,000.00) advanced pursuant to that certain Loan
Agreement, dated as of the date hereof, between Borrower and Lender (as the same
may hereafter be amended, restated, replaced, supplemented, renewed, extended or
otherwise modified from time to time, the "Loan Agreement") and evidenced by
that certain Promissory Note, dated the date hereof, made by Borrower in favor
of Lender (as the same may hereafter be amended, restated, replaced,
supplemented, renewed, extended or otherwise modified from time to time, 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 (as herein
defined); 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, the Note, and that
certain Assignment of Leases and Rents of even date herewith made by Borrower in
favor of MFRS, as nominee of Lender delivered in connection with this Security
Agreement (as the same may be amended, restated, replaced, supplemented,
renewed, extended or otherwise modified from time to time, the "Assignment of
Leases"), 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, the Assignment of Leases and Rents and all other
documents evidencing or securing the Debt (including all additional mortgages,
deeds to secure debt and assignments of leases and rents) or executed or
delivered in connection therewith, 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:

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                         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
MERS, as nominee of 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, nights-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 reversions 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,
rights of dower, 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 Unifouuu 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;

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                  (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 founing 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, 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, call and sprinkler
systems, fire extinguishing apparatuses and equipment, heating, ventilating,
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, betteitnents 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, whether tangible or intangible, 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, subleases or subsubleases,
lettings, licenses, concessions or other agreements (whether written or oral)
pursuant to which any Person is granted a possessory interest in, or right to
use or occupy all or any portion of the Land and the Improvements, and every
modification, amendment or other agreement relating to such leases, subleases,
subsubleases, or other agreements entered into in connection with such leases,
subleases, subsubleases, or other agreements and every guarantee of the
performance and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto, heretofore or hereafter
entered into (collectively, the "Leases"), whether before or after the filing by
or against Borrower of any petition for relief under the Bankruptcy Code 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;

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                  (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 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;

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

                  (m) 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;

                  (n) 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 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;

                  (o) 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;

                  (p) Accounts. All reserves, escrows and deposit accounts
maintained by Borrower with respect to the Property, including, without
limitation (i) all accounts established pursuant to the Cash Management
Agreement, including, without limitation, that and (ii) all accounts t,
including, without limitation, that certain Account Number [__________________
at-{;______ together with all deposits or wire transfers made to the Lockbox
Account or Cash Management Account and all cash, checks, drafts, certificates,
securities, investment property, financial assets, instruments and other
property held therein from time to time and all proceeds, products,
distributions or dividends or substitutions thereon and thereof; and



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                  (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 MERS, as nominee of 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 MERS, as nominee of 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, the Cash Management Agreement
and Section 7.1(h) of this Security Instrument, Lender grants to Borrower a
revocable license to collect, receive, use and enjoy the Rents and Borrower
shall hold the Rents, or a portion thereof sufficient to discharge all current
sums due on the Debt, for use in the payment of such sums.

         SECTION 1.3 SECURITY AGREEMENT. This Security Instrument is both a real
property mortgage and a "security agreement" within the meaning of the Uniform
Commercial Code. The Property includes both real and personal property and all
other rights and interests, whether tangible or intangible in nature, of
Borrower in the Property. By executing and delivering this Security Instrument,
Borrower hereby grants to MERS, as nominee of Lender, as security for the
Obligations (hereinafter defined), a security interest in the Fixtures, the
Equipment and the Personal Property to the full extent that the Fixtures, the
Equipment and the Personal 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. Borrower's (debtor's) principal place of
business is as set forth on page one hereof and the address of Lender (secured
party) is as set forth on page one hereof.

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         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,
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,
including, without limitation, any sums deposited in the Lockbox Account or Cash
Management Account, the Reserve Funds and Net Proceeds, as additional security
for the Obligations until expended or applied as provided in this Security
Instrument.

         SECTION 1.6 Grants to MERS. This Security Instrument and the grants,
assignments and transfers made to MFRS in this Article 1 shall inure to MERS
solely in its capacity as Lender's nominee.


                               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 I 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 I are also given for the
purpose of securing the following (the "Other Obligations"):



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                  (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 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 noinal 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.

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                  (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 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
notifying Lender of such change in writing at least thirty (30) days prior to
the effective date of such change and, in the case of a change in Borrower's
structure, without first obtaining the prior written consent of Lender. 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.

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         SECTION 3.9 TITLE. Borrower has good, marketable and insurable fee
simple title to the real property comprising part of the Property and good title
to the balance of such Property, free and clear all Liens (as defined in the
Loan Agreement) whatsoever except the Permitted Encumbrances (as defined in the
Loan Agreement), such other Liens as are permitted pursuant to the Loan
Documents and the Liens created by the Loan Documents. The Permitted
Encumbrances in the aggregate do not materially and adversely affect the value,
operation or use of the Property or Borrower's ability to repay the Loan. This
Security Instrument, when property recorded in the appropriate records, together
with any Uniform Commercial Code financing statements required to be filed in
connection therewith, will create (a) a valid, perfected first priority lien on
the Property, subject only to Permitted Encumbrances and the Liens created by
the Loan Documents and (b) perfected security interests in and to, and perfected
collateral assignments of, all personalty (including the Leases), all in
accordance with the terms thereof, in each case subject only to any applicable
Permitted Encumbrances, such other Liens as are permitted pursuant to the Loan
Documents and the Liens created by the Loan Documents. There are no claims for
payment for work, labor or materials affecting the Property which are past due
and are or may become a lien prior to, or of equal priority with, the Liens
created by the Loan Documents unless such claims for payments are being
contested in accordance with the terms and conditions of this Security
Instrument.
                       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
(n) 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.


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<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 Section 4.1 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 Section 4.1
of the Loan Agreement.

                         ARTICLE 5 - FURTHER ASSURANCES

         SECTION 5.1 RECORDING OF MORTGAGE, 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 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 to evidence more effectively the security interest
of Lender in the Property. Borrower grants to Lender an irrevocable power of
attorney coupled with an interest for the purpose of exercising and perfecting
any and all rights and remedies available to Lender at law and in equity,
including without limitation, such rights and remedies available to Lender
pursuant to this Section 5.2.


                                      -10-
<PAGE>

         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 SEVERING 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 severed into two or more notes and two or more
security instruments in such denominations as Lender shall determine in its sole
discretion, each of which shall cover all or a portion of the Property to be
more particularly described therein. To that end, Borrower, upon written request
of Lender, shall execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered by the then owner of the Property, to Lender and/or
its designee or designees substitute notes and security instruments in such
principal amounts, aggregating not more than the then unpaid principal amount of
this Security Instrument, and containing teiiiis, 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 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.


                                      -11-
<PAGE>

                        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 perfoiiuuance 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 SALE/ENCUMBRANCE. Neither Borrower nor any Restricted
Party shall Transfer the Property or any part thereof or any interest therein or
permit or suffer the Property or any part thereof or any interest therein to be
Transferred other than as expressly peiuiitted pursuant to the terms of the Loan
Agreement.

                  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 perfoiinrance 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;


                                      -12-
<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, Indemnifying Person 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 r