INTERPHARM HOLDINGS INC
<DOCUMENT>
<TYPE>EX-10.10
<SEQUENCE>11
<FILENAME>v035894_ex10-10.txt
<TEXT>
                     DEMAND MORTGAGE AND SECURITY AGREEMENT

                                      from

                                INTERPHARM, INC.

                             a New York corporation

                              having an address at:

                                 75 Adams Avenue

                             Commack, New York 11725

                                  ("Mortgagor")

                                       to

                   WELLS FARGO BANK, NATIONAL ASSOCIATION, acting through its
      Wells Fargo Business Credit operating division

                              having an address at:

                              119 West 40th Street

                            New York, New York 10018

                                  ("Assignee")

                              LOCATION OF PREMISES:

                        Street Address:   50 Horseblock Road
                        Town of:          Yaphank
                        County of:        Suffolk
                        State of:         New York
                        District:         0200
                        Section:          813
                        Block:                  1
                        Lots:             5.005 & 5.006


                             DATED: February 9, 2006

                       AFTER RECORDING, PLEASE RETURN TO:

                         Ruskin Moscou Faltischek, P.C.

                               1425 Reckson Plaza

                             East Tower, 15th Floor

                         Uniondale, New York 11556-1425

                        Attn: Patricia M. Schaubeck, Esq.

<PAGE>

      THIS DEMAND MORTGAGE AND SECURITY AGREEMENT (the "Mortgage"), made the 9th
day of February, 2006 by INTERPHARM, INC., a New York corporation, having an
address at 75 Adams Avenue, Commack, New York 11725 ("Mortgagor") to WELLS FARGO
BANK, NATIONAL ASSOCIATION, acting through its Wells Fargo Business Credit
operating division, having an address at 119 West 40th Street, New York, New
York 10018 ("Mortgagee");

                                   WITNESSETH:

       To secure the prompt payment of all Indebtedness (as hereinafter defined)
up to a maximum principal amount of Five Million One Hundred Fifty Four Thousand
Nine Hundred Ninety Nine and 94/100 Dollars ($5,154,999.94), Mortgagor has
mortgaged, given, granted, bargained, sold, alienated, enfeoffed, conveyed,
confirmed, pledged, assigned and hypothecated and by these presents does
mortgage, give, grant, bargain, sell, alienate, enfeoff, convey, confirm,
pledge, assign and hypothecate unto Mortgagee the real property described in
Exhibit A attached hereto (the "Premises") and the buildings, structures,
fixtures, additions, enlargements, extensions, modifications, repairs,
replacements and improvements now or hereafter located thereon (herein
collectively referred to as the "Improvements");

       TOGETHER WITH: all right, title, interest and estate of Mortgagor now
owned, or hereafter acquired, in and to the following property, rights, interest
and estates (the Premises, the Improvements together with the following
property, rights, interests and estates being hereinafter collectively referred
to as the "Mortgaged Property"):

             (a) all easements, rights-of-way, 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, tenements,
       hereditaments and appurtenances of any nature whatsoever, in any way
       belonging, relating or pertaining to the Premises 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 Premises, 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 Mortgagor of, in and to the
       Premises and the Improvements and every part and parcel thereof, with the
       appurtenances thereto;

             (b) all machinery, equipment, fixtures (including but not limited
       to all heating, air conditioning, plumbing, lighting, communications and
       elevator fixtures) and other property of every kind and nature whatsoever
       owned by Mortgagor, or in which Mortgagor has or shall have an interest,
       now or hereafter located upon the Premises and the Improvements, or
       appurtenant thereto, or usable in connection with the present or future
       operation and occupancy of the Premises and the Improvements and all
       building equipment, materials and supplies of any nature whatsoever owned
       by Mortgagor, or in which Mortgagor has or shall have an interest, now or
       hereafter located upon the Premises and the, Improvements, or appurtenant
       thereto, or usable in connection with the present or future operation and
       occupancy of the Premises and the Improvements (herein collectively
       referred to as the "Equipment"), and the right, title and interest of
       Mortgagor in and to any of the Equipment 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 Mortgaged Property is
       located (the "Uniform Commercial Code"), superior in lien to the lien of
       this Mortgage;

<PAGE>

             (c) all awards or payments, including interest thereon, which may
       heretofore and hereafter be made with respect to the Mortgaged 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 said right), or for a change of grade, or for any other
       injury to or decrease in the value of the Mortgaged Property;

             (d) all leases and other agreements affecting the use, enjoyment or
       occupancy of the Premises and the Improvements heretofore or hereafter
       entered into (the "Leases") and all rents, issues and profits (including
       all oil and gas or other mineral royalties and bonuses) from the Premises
       and the Improvements (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;

             (e) all proceeds of and any unearned premiums on any insurance
       policies covering the Mortgaged 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 Mortgaged
       Property;

             (f) the right, in the name and on behalf of Mortgagor, to appear in
       and defend any action or proceeding brought with respect to the Mortgaged
       Property and to commence any action or proceeding to protect the interest
       of Mortgagee in the Mortgaged Property;

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

       DEFINED TERMS As used in this Mortgage, the following terms shall have
the following meanings, unless the context otherwise specifies or requires:

            "Credit Agreement" shall mean that certain Credit and Security
Agreement dated the date hereof between the Mortgagor and the Mortgagee, as the
same may be amended, extended, restated, replaced, supplemented or otherwise
modified from time to time.

            "Events of Default" shall mean the events and circumstances
described as such in Section 2.01 hereof.

            "Default Rate" shall mean an annual interest rate equal to three
(3%) percent over the applicable Interest Rate (as defined in the Credit
Agreement), but in no event to exceed the maximum rate allowed by law.


                                       2
<PAGE>

            "Indebtedness" shall mean the indebtedness, obligations and all
sums, which the Mortgagor may now or at any time hereafter owe to the Mortgagee
under the Real Estate Demand Note, or any other Loan Document (as hereinafter
defined), and any and all liability, whether liquidated or unliquidated,
defined, contingent, conditional or of any other nature whatsoever, and
performance of all other obligations, arising under any swap, derivative,
foreign exchange or hedge transaction or arrangement (or other similar
transaction or arrangement howsoever described or defined) at any time entered
into with Mortgagee.

            "Loan Documents" shall mean the Credit Agreement, Mortgage, ADA and
Environmental Indemnity Agreement and Assignment of Rents and Leases, all of
even date herewith, all Uniform Commercial Code Financing Statements executed
and delivered in connection herewith, together with all Uniform Commercial Code
continuation statements hereafter filed in respect of any such Financing
Statements, together with all other documents, guarantees, instruments,
certificates, title policies and the like securing and/or evidencing the
Indebtedness and/or executed and/or delivered by or on behalf of Mortgagor in
connection with the Real Estate Term Note (whether any of the foregoing were
executed in connection with the original closing of the loan evidenced by the
Real Estate Term Note, or at any time thereafter), as each may be amended,
restated, replaced, supplemented or otherwise modified from time to time.

            "Permitted Encumbrances" shall mean those matters set forth on
Schedule B of this Mortgage.

            "Power to Sell" shall mean the right, power and authority of
Mortgagee to sell the Mortgaged Property and/or a part or parts thereof after
any Event of Default and in accordance with and pursuant to Article 14 of the
Real Property Actions and Proceedings Law of the State of New York, as the same
may hereafter be modified or amended, or any successor statute or statutes,
and/or under and pursuant to any other laws or regulations now in effect and/or
hereafter enacted, which provides for and/or enables the property encumbered by
a mortgage to be sold by a mortgagee and/or its agents and/or representatives.

            "Note" or "Real Estate Demand Note" shall mean that certain Real
Estate Demand Note dated the date hereof, in the principal amount of Five
Million One Hundred Fifty Four Thousand Nine Hundred Ninety Nine and 94/100
Dollars ($5,154,999.94) made by Mortgagor to Mortgagee, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

            AND the Mortgagor covenants with the Mortgagee as follows:

                                   ARTICLE I

                        Particular Covenants of Mortgagor

            Mortgagor represents, warrants, covenants and agrees as follows:

            SECTION 1.01 Mortgagor represents and warrants that it has a good
and marketable title to an indefeasible fee estate in the Premises and the
Improvements; that it owns the Mortgaged Property subject to no lien, charge or
encumbrance, other than the Permitted Encumbrances; that this Mortgage is and
will remain a valid and enforceable first lien on the Mortgaged Property subject
only to the exceptions referred to above; that the execution and delivery of
this Mortgage and the other Loan Documents has been duly authorized by Mortgagor
and that there is no provision in any document relating to Mortgagor that
evidences or establishes the existence of Mortgagor requiring further consent


                                       3
<PAGE>

for such action by any other entity or person; that it is duly organized,
validly existing and is in good standing under the laws of the state of its
formation or incorporation, as the case may be; that it has (i) all necessary
licenses, authorizations, registrations, permits and/or approvals and (ii) full
power and authority to own its properties and carry on its business as presently
conducted and the execution and delivery by it of and performance of its
obligations under, this Mortgage and the other Loan Documents will not result in
Mortgagor being in default under any provisions of any document which evidences
or establishes the existence of Mortgagor or of any mortgage, credit or other
agreement to which Mortgagor is a party or by which it is bound or which affects
Mortgagor or the Premises or the Improvements, or any part thereof; that it will
preserve such title, and will forever warrant and defend the same unto
Mortgagee, and will forever warrant and defend the validity and priority of the
lien hereof against the claims of all persons and parties whomsoever, subject
only to the Permitted Encumbrances.

            SECTION 1.02 Mortgagor will, at the sole reasonable cost and expense
of Mortgagor, and without expense to Mortgagee, do, execute, acknowledge and
deliver all and every such further acts, deeds, conveyances, mortgages,
assignments, notices of assignment, transfers and assurances as Mortgagee shall
from time to time reasonably require, for the better assuring, conveying,
mortgaging, assigning, transferring and confirming unto Mortgagee the property
and rights hereby conveyed, mortgaged or assigned or intended now or hereafter
so to be, or which Mortgagor may be or may hereafter become bound to convey,
mortgage or assign to Mortgagee, or for carrying out the intention or
facilitating the performance of the terms of this Mortgage, or for filing,
registering or recording this Mortgage and, on demand, will execute and deliver
and hereby authorizes Mortgagee to execute and file in the name of Mortgagor to
the extent it may lawfully do so, one or more financing statements, chattel
mortgages or comparable security instruments to evidence more effectively the
lien hereof upon the Mortgaged Property or any part thereof.

            SECTION 1.03 (a) Mortgagor forthwith upon the execution and delivery
of this Mortgage, and thereafter from time to time, will cause this Mortgage,
the Uniform Commercial Code Financing Statements and any security instrument
creating a lien or evidencing the lien hereof upon the Mortgaged Property and
each instrument of further assurance to be filed, registered and/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 the lien hereof upon, and the
interest of Mortgagee in, the Mortgaged Property.

            (b) Mortgagor will pay all filing, registration or recording fees,
taxes and other charges, and all costs and expenses incident to the execution,
acknowledgment, delivery and recording and/or filing of this Mortgage, the
Uniform Commercial Code Financing Statements, the other Loan Documents, any
mortgage supplemental hereto, any security instrument with respect to the
Mortgaged Property, and any instrument of further assurance, and all federal,
state, county and municipal stamp taxes and other taxes, duties, impositions,
assessments and charges arising out of or in connection with the execution and
delivery of this Mortgage or any mortgage supplemental hereto, any security
instrument with respect to the Mortgaged Property, any other Loan Document or
any instrument of further assurance.


                                       4
<PAGE>

            SECTION 1.04 Mortgagor will punctually pay the principal and
interest and all other sums to become due in respect of the Note at the time and
place and in the manner specified in the Note, according to the true intent and
meaning thereof, all in any coin or currency of the United States of America
which at the time of such payment shall be legal tender for the payment of
public and private debts and all such principal and interest due in respect of
the Note is hereby deemed an obligation under this Mortgage.

            SECTION 1.05 (a) Mortgagor will, so long as it is owner of the
Mortgaged Property or any part thereof, do all things necessary to preserve and
keep in full force and effect its existence, franchises, rights and privileges
as a corporation under the laws of the state of its incorporation or as a
limited liability company under the state of its formation, or as a limited or
general partnership, trust or other entity under the state of its formation, and
will comply with all regulations, rules, ordinances, statutes, orders and
decrees of any governmental authority or court applicable to Mortgagor or to the
Mortgaged Property or any part thereof.

            (b) Nothing in this Section 1.05 shall require the payment or
discharge of any obligation imposed upon Mortgagor by this Section so long as
Mortgagor shall in good faith and at its own expense contest the same or the
validity thereof by appropriate legal proceedings which shall operate to prevent
the collection thereof or other realization thereon and the sale or forfeiture
of the Premises or the Improvements or any part thereof to satisfy the same;
provided that during such contest Mortgagor shall, at the option of Mortgagee,
provide security satisfactory to Mortgagee, assuring the discharge of
Mortgagor's obligation hereunder and of any additional charge, penalty or
expense arising from or incurred as a result of such contest; and provided
further that if, at any time, payment of any obligation imposed upon Mortgagor
by subsection (a) of this Section shall become necessary to prevent the delivery
of a tax deed, or its equivalent, conveying the Mortgaged Property, or any part
thereof, because of nonpayment, then Mortgagor shall pay the same in sufficient
time to prevent the delivery of such tax deed or its equivalent.

            SECTION 1.06 All right, title and interest of Mortgagor in and to
all extensions, improvements, betterments, renewals, substitutes and
replacements of, and all additions and appurtenances to, the Mortgaged Property
hereafter acquired by, or released to, Mortgagor, or constructed, assembled or
placed by Mortgagor on the Premises or the Improvements or any part thereof, and
all conversions of the security constituted thereby, immediately upon such
acquisition, release, construction, assembling, placement or conversion, as the
case may be, and in each such case, without any further mortgage, conveyance,
assignment or other act by Mortgagor, shall become subject to the lien of this
Mortgage as fully and completely, and with the same effect, as though now owned
by Mortgagor and specifically described in the granting clause hereof, but at
any and all times Mortgagor will execute and deliver to Mortgagee any and all
such further assurances, mortgages, conveyances or assignments thereof as the
Mortgagee may require for the purpose of expressly and specifically subjecting
the same to the lien of this Mortgage.

            SECTION 1.07 (a) Mortgagor, from time to time when the same shall
become due and payable, will pay and discharge all taxes of every kind and
nature, all general and special assessments, levies, permits, inspection and
license fees, all water and sewer rents and charges, and all other public
charges whether of a like or different nature, imposed upon or assessed against
the Mortgaged Property, or any part thereof, or upon the revenues, rents,
issues, income and profits of the Mortgaged Property, or any part thereof, or
arising in respect of the occupancy, use or possession thereof. Mortgagor will,
upon the request of Mortgagee, deliver to Mortgagee receipts evidencing the
payment of all such taxes, assessments, levies, fees, rents and other public
charges imposed upon or assessed against the Mortgaged Property, or any part
thereof, or the revenues, rents, issues, income or profits thereof.


                                       5
<PAGE>

            (b) Mortgagor will pay, from time to time when the same shall become
due, all lawful claims and demands of mechanics, materialmen, laborers and
others, which claims and demands, if unpaid, might result in, or permit the
creation of, a lien on the Mortgaged Property or any part thereof, or on the
revenues, rents, issues, income and profits arising therefrom and in general
will do or cause to be done everything necessary so that the lien of this
Mortgage shall be fully preserved, at the sole cost and expense of Mortgagor,
without expense to Mortgagee.

            (c) Nothing in this Section 1.07 shall require the payment or
discharge of any obligation imposed upon Mortgagor by this Section so long as
Mortgagor shall in good faith and at its own cost and expense contest the same
or the validity thereof by appropriate legal proceedings which shall operate to
prevent the collection thereof or other realization thereon and the sale or
forfeiture of the Premises or the Improvements or any part thereof to satisfy
the same; provided that during such contest Mortgagor shall, at the option of
Mortgagee, provide security satisfactory to Mortgagee, assuring the discharge of
Mortgagor's obligation hereunder and of any additional charge, penalty or
expense arising from or incurred as a result of such contest; and provided
further that if, at any time, payment of any obligation imposed upon Mortgagor
by subsection (a) of this Section shall become necessary to prevent the delivery
of a tax deed, or its equivalent, conveying the Premises or the Improvements or
any other part of the Mortgaged Property, or any part thereof, because of
non-payment, then Mortgagor shall pay the same in sufficient time to prevent the
delivery of such tax deed or its equivalent.

            SECTION 1.08 Mortgagor will pay any and all taxes, charges, fees
and/or levies by reason of Mortgagee's ownership of this Mortgage or the other
Loan Documents and/or resulting from the exercise by Mortgagee of any of its
rights and/or remedies provided for under this Mortgage, except for income
taxes. In the event Mortgagee is advised by counsel chosen by it that the
payment of any such tax, charge, fee and/or levy by Mortgagor would be unlawful
or taxable to Mortgagee or unenforceable or provide the basis for a defense of
usury, then, in any such event, Mortgagee shall have the option, by written
notice to Mortgagor of not less than ninety (90) days, to declare the
Indebtedness immediately due and payable. The obligations assumed by Mortgagor
pursuant to this Section 1.08 shall survive the exercise by Mortgagee of any of
its rights and/or remedies under this Mortgage.

            SECTION 1.09 (a) Mortgagor shall maintain comprehensive general
public liability insurance for the Premises, Improvements and Equipment and keep
the Improvements and Equipment insured against damage by fire and other hazards
covered by the standard extended coverage insurance policy, and each policy
shall be endorsed to name Mortgagee as an insured thereunder, as its interest
may appear, with loss payable to Mortgagee, without contribution or assessment,
pursuant to a standard first mortgage endorsement substantially equivalent to
the New York standard mortgagee endorsement. All insurance policies and
endorsements required pursuant to this Section shall be fully paid for,
nonassessable and contain such provisions and expiration dates and be in such
form and amounts and issued by such insurance companies satisfactory to
Mortgagee. Without limiting the foregoing, each policy shall specifically
provide that (i) such policy may not be cancelled except upon thirty (30) days'


                                       6
<PAGE>

prior written notice to Mortgagee and that no act or thing done by Mortgagor
shall invalidate the policy as against Mortgagee and (ii) any and all insurance
proceeds will be paid to Mortgagee so long as Mortgagee certifies to the insurer
that the unpaid Indebtedness exceeds the proceeds of insurance. In addition,
Mortgagee may require Mortgagor to carry such other insurance on the
Improvements and Equipment in such amounts as may from time to time be required
by institutional lenders, against insurable casualties (including risks of war,
terrorism and nuclear explosion) which at the time are commonly insured against
in the case of real property similarly situated to the Premises. Mortgagor will
assign and deliver the policy or policies of all such insurance to Mortgagee,
which policy or policies shall have endorsed thereon an endorsement
substantially equivalent to the New York standard mortgagee endorsement in the
name of Mortgagee, so and in such manner and form that Mortgagee and its
successors and assigns shall at all times have and hold said policy or policies
as collateral and further security for the payment of the Indebtedness until the
full payment of the Indebtedness. In addition, from time to time, upon
occurrence of any change in the use, operation or value of the Premises or the
Improvements, or in the availability of insurance in the area in which the
Premises are located, Mortgagor shall, within ten (10) days after demand by
Mortgagee, take out such additional amounts and/or such other kinds of insurance
as Mortgagee may require.

            (b) Mortgagor shall not take out separate insurance concurrent in
form or contributing in the event of loss with that required to be maintained
under this Section 1.09, unless Mortgagee is included thereon as a named insured
with loss payable to Mortgagee under the standard mortgage endorsement of the
character above described. Mortgagor shall immediately notify Mortgagee whenever
any such separate insurance is taken out and shall promptly deliver to Mortgagee
the policy or policies of such insurance.

            (c) If the Premises, or any part thereof, are located in an area
which has been identified by the Secretary of Housing and Urban Development as a
flood hazard area, Mortgagor will keep, for as long as any Indebtedness remains
unpaid, the Improvements covered by flood insurance in an amount at least equal
to the full amount of the Note or the maximum limit of coverage available for
the Premises under the National Flood Insurance Act of 1968 and the Flood
Disaster Protection Act of 1973, as the same may have been or may hereafter be
amended or modified (and any successor act thereto), whichever is less.

            (d) Mortgagor shall give Mortgagee prompt notice of any loss covered
by insurance and Mortgagee shall have the right to join Mortgagor in adjusting
any loss in excess of $25,000. Notwithstanding anything to the contrary
contained herein or in Section 254 of the Real Property Law of the State of New
York or any other provision of applicable law, the proceeds of insurance
policies coming into the possession of Mortgagee shall not be deemed trust funds
and Mortgagee shall have the option in its sole discretion to apply any
insurance proceeds it may receive pursuant hereto, or otherwise, to the payment
of the Indebtedness or to allow all or a portion of such proceeds to be used for
the restoration of the Mortgaged Property. In the event any such insurance
proceeds shall be used to reduce the Indebtedness, the same shall be applied by
Mortgagee, after the deduction therefrom and repayment to Mortgagee of any and
all costs incurred by Mortgagee in the recovery thereof (including reasonable
attorneys' fees and disbursements), in any manner it shall designate including
but not limited to, the application of such proceeds to the then unpaid
installments of the principal balance due under the Note in the inverse order of
their maturity, such that the regular payments, if any, under the Note shall not
be reduced or altered in any manner. Any prepayment of the Note from the
proceeds of insurance shall be without prepayment premium.


                                       7
<PAGE>

            (e) Notwithstanding the foregoing, Mortgagee shall allow the use of
such proceeds for the restoration of the Improvements and Equipment, provided
Mortgagee acting reasonably determines that the restoration of the Improvements
can be completed prior to the full payment of the Indebtedness in accordance
with the terms of the Note, and that the amount of such insurance proceeds shall
be sufficient to complete the restoration, or if the amount of such insurance
proceeds shall be insufficient for completion of such restoration, Mortgagor
deposits with Mortgagee an amount equal to the difference between Mortgagee's
estimated cost of restoration and the insurance proceeds.

            (f) Upon the request of Mortgagee, Mortgagor shall establish and
maintain at all times while this Mortgage continues in effect an impound account
(the "Impound Account") with Mortgagee for payment of real estate taxes,
assessments, water and sewer charges and insurance on the Mortgaged Property and
as additional security for the Indebtedness. Upon the request of Mortgagee,
Mortgagor shall deposit in the Impound Account an amount determined by Mortgagee
to be necessary to ensure that there will be on deposit with Mortgagee an amount
which, when added to the monthly payments subsequently required to be deposited
with Mortgagee hereunder on account of real estate taxes, assessments, water and
sewer charges and insurance premiums, will result in there being on deposit with
Mortgagee in the Impound Account an amount sufficient to pay the next due annual
installment of real estate taxes, assessments and water and sewer charges on the
Mortgaged Property at least one (1) month prior to the delinquency date thereof
(if paid in one installment) and the next due annual insurance premiums with
respect to the Mortgaged Property at least one (1) month prior to the
delinquency date thereof (if paid in one installment). Upon notice from
Mortgagee and commencing on the next monthly payment date under the Note and
continuing thereafter on each monthly payment date under the Note, Mortgagor
shall pay to Mortgagee, concurrently with and in addition to the monthly payment
due under the Note and until the Indebtedness is fully paid and performed,
deposits in an amount equal to one-twelfth (1/12) of the amount of the annual
real estate taxes, assessments and water and sewer charges that will next become
due and payable on the Mortgaged Property, plus one-twelfth (1/12) of the amount
of the annual premiums that will next become due and payable on insurance
policies which Mortgagor is required to maintain hereunder, each as estimated
and determined by Mortgagee. So long as no default hereunder has occurred and is
continuing, all sums in the Impound Account shall be held by Mortgagee in the
Impound Account to pay said taxes, assessments, water and sewer charges and
insurance premiums in one installment before the same become delinquent.
Mortgagor shall be responsible for ensuring the receipt by Mortgagee, at least
thirty (30) days prior to the respective due date for payment thereof, of all
bills, invoices and statements for all taxes, assessments, water and sewer
charges and insurance premiums to be paid from the Impound Account, and so long
as no default hereunder has occurred and is continuing, Mortgagee shall pay the
governmental authority or other party entitled thereto directly to the extent
funds are available for such purpose in the Impound Account. In making any
payment from the Impound Account, Mortgagee shall be entitled to rely on any
bill, statement or estimate procured from the appropriate public office or
insurance company or agent without any inquiry into the accuracy of such bill,
statement or estimate and without any inquiry into the accuracy, validity,
enforceability or contestability of any tax, assessment, valuation, sale,
forfeiture, tax lien or title or claim thereof. The Impound Account shall not,
unless otherwise explicitly required by applicable law, be or be deemed to be
escrow or trust funds, but, at Mortgagee's option and in Mortgagee's discretion,
may either be held in a separate account or be commingled by Mortgagee with the
general funds of Mortgagee. No interest on funds contained in the Impound
Account, if any, shall be paid by Mortgagee to Mortgagor. The Impound Account is
solely for the protection of Mortgagee and entails no responsibility on
Mortgagee's part beyond the payment of taxes, assessments, water and sewer
charges and insurance premiums following receipt of bills, invoices or
statements therefor in accordance with the terms hereof and beyond the allowing
of due credit for the sums actually received. Upon assignment of this Mortgage
by Mortgagee, any funds in the Impound Account shall be turned over to assignee
and any responsibility of Mortgagee, as assignor, with respect thereto shall
terminate. If the total funds in the Impound Account shall exceed the amount of
payments actually applied by Mortgagee for the purposes of the Impound Account,
such excess may be credited by Mortgagee on subsequent payments to be made


                                       8
<PAGE>

hereunder or, at the option of Mortgagee, refunded to Mortgagor. If, however,
the Impound Account shall not contain sufficient funds to pay the sums required
when the same shall become due and payable, Mortgagor shall, within (10) days
after receipt of written notice therefor, deposit with Mortgagee the full amount
of any such deficiency. If Mortgagor shall fail to deposit with Mortgagee the
full amount of such deficiency as provided above, Mortgagee shall have the
option, but not the obligation, to make such deposit, and all amounts so
deposited by Mortgagee, together with interest thereon at the applicable Default
Rate from the date so deposited by Mortgagee, until actually paid by Mortgagor,
shall be immediately paid by Mortgagor on demand and shall be secured by this
Mortgage. If there is a default under this Mortgage which is not cured within
any applicable grace or cure period, Mortgagee may, but shall not be obligated
to, apply at any time the balance then remaining in the Impound Account against
the Indebtedness in whatever order Mortgagee shall subjectively determine. No
such application of the Impound Account shall be deemed to cure any default
hereunder. Upon full payment of the Indebtedness in accordance with its terms or
at such earlier time as Mortgagee may elect, the balance of the Impound Account
then in Mortgagee's possession shall be paid over to Mortgagor and no other
party shall have any right or claim thereto.

            (g) Mortgagor shall give Mortgagee prompt written notice of damage
to or destruction of the Improvements and Equipment or any part thereof and,
unless the Indebtedness is paid in full to Mortgagee within thirty (30) days of
the date of said damage or destruction, and provided that any proceeds of
casualty insurance are made available to Mortgagor, Mortgagor shall promptly
commence and diligently continue to perform the repairs, restoration and
rebuilding of the portion of the Improvements and Equipment so damaged or
destroyed (hereinafter the "Work") so as to restore the Improvements and
Equipment in full compliance with all legal requirements and so that the
Mortgaged Property shall be at least equal in value and general utility as they
were prior to such damage or destruction, and if such damage or destruction, in
the reasonable judgment of Mortgagee, shall exceed Twenty Five Thousand
($25,000) Dollars (hereinafter, collectively "Major Work"), Mortgagor shall,
prior to the commencement of the work, furnish to Mortgagee for its approval:
(1) complete plans and specifications for the Work, with satisfactory evidence
of the approval thereof (i) by all governmental authorities whose approval is
required and (ii) by Mortgagee's inspector or an architect satisfactory to
Mortgagee (hereinafter, the "Architect") and which shall be accompanied by the
Architect's signed estimate, bearing the Architect's seal, of the entire cost of
completing the Work; (2) certified or photostatic copies of all permits and
approvals required by law in connection with the commencement and conduct of the
Work; and (3) a surety bond or guaranty of the payment for and completion of the
Work, which bond or guaranty shall be in form satisfactory to Mortgagee and
shall be signed by surety or sureties, or guarantor or guarantors, as the case
may be, who are acceptable to Mortgagee, and in an amount not less than the
Architect's estimate of the entire cost of completing the Work, less the amount


                                       9
<PAGE>

of insurance proceeds and Mortgagor deposits, if any, then held by Mortgagee for
application toward the cost of the Work. Mortgagor shall not commence any of the
Work until Mortgagor shall have complied with applicable requirements referred
to in this subsection (g), and after commencing the Work Mortgagor shall perform
the Work diligently and in good faith in accordance with the plans and
specifications referred to in this subsection (g) of Section 1.09, if
applicable.

            (h) If the insurance proceeds, less the cost, if any, to Mortgagee
of such recovery and of paying out such proceeds (including reasonable
attorneys' fees and costs allocable to inspecting the Work and the plans and
specifications therefor) should be paid towards restoration of the Improvements
and Equipment or if such insurance proceeds are applied toward such restoration,
then such insurance proceeds shall be applied by Mortgagee to the payment of the
cost of the Work and shall be paid out from time to time to Mortgagor and/or, at
Mortgagee's option exercised from time to time, directly to the contractor,
subcontractors, materialmen, laborers, engineers, architects and other persons
rendering services or materials for the Work, as said Work progresses except as
otherwise hereinafter provided, but subject to the following conditions, any of
which Mortgagee may freely waive, at Mortgagee's sole discretion:

                  (A) If the Work to be done is Major Work, as determined by
Mortgagee, the Architect shall be in charge of the Work;

                  (B) Each request for payment shall be made on five (5) days
prior notice to Mortgagee and shall be accompanied by a certificate of the
Mortgagees inspector or the Architect if one is required under subsection (g)
above, otherwise by a certificate of an officer of Mortgagor, stating (i) that
all of the Work completed has been done in compliance with the approved plans
and specifications, if any be required under said subsection (f), and in
accordance with all provisions of law; (ii) the sum requested is justly required
to reimburse Mortgagor for payments by Mortgagor to, or is justly due to, the
contractor, subcontractor, materialmen, laborers, engineers, architects or other
persons rendering services or materials for the Work (giving a brief description
of such services and materials), and that when added to all sums, if any,
previously paid out by Mortgagee does not exceed the value of the Work done to
date of such certificate, and (iii) that the amount of such proceeds and other
deposits remaining in the hands of Mortgagee will be sufficient on completion of
the Work to pay for the same in full (giving in such reasonable detail as
Mortgagee may require an estimate of the cost of such completion);

                  (C) Each request shall be accompanied by waivers of liens
satisfactory to Mortgagee covering that part of the Work previously paid for, if
any, and by a search prepared by the title company which insured the lien of the
Mortgage or by other evidence satisfactory to Mortgagee, that there has not been
filed with respect to the Premises or Improvements or any part thereof any
mechanic's lien or other lien or instrument for the retention of title in
respect of any part of the Work not discharged of record and that there exist no
encumbrances on or affecting the Premises or Improvements or any part thereof or
any part of the other Mortgaged Property, other than the Permitted Encumbrances,
if any;

                  (D) The request for any payment after the Work has been
completed shall be accompanied by a copy of all certificates, permits, licenses,
waivers and/or other documents required by law to render occupancy of the
Premises and/or Improvements legal; and

                  (E) Upon completion of the Work and payment in full therefor,
or upon failure on the part of Mortgagor to commence, as provided in subsection
(g) of this Section 1.09, or diligently to continue the Work, or at any time
upon request by Mortgagor, Mortgagee may apply the amount of any such proceeds


                                       10
<PAGE>

then or thereafter in the hands of Mortgagee to the payment of the Indebtedness,
provided, however, that nothing herein contained shall prevent Mortgagee from
applying at any time the whole or any part of such proceeds to the curing of any
default after expiration of applicable notice and cure periods under this
Mortgage.

            (i) In addition, as to any Work to be performed on the Improvements
or the Equipment and as to any construction projects that will be undertaken by
Mortgagor, Mortgagor shall maintain and provide Mortgagee with proof of:

                  (A) a prepaid builder's risk completed value fire and extended
coverage insurance policy insuring the buildings, improvements, furnishings,
fixtures, machinery and equipment constituting part of the property against
physical damage by fire and other risks generally covered under the broadest
available form of extended coverage in an amount satisfactory to Mortgagee
naming the Mortgagee as first mortgagee/mortgagee loss payee requiring a thirty
(30) day notice of cancellation or amendment, and

                  (B) comprehensive general public liability insurance
protecting Mortgagor. In addition, evidence of public liability insurance
coverage on any general contractor shall be provided to Mortgagee. All insurance
shall be satisfactory to Mortgagee as to amount, form, issuer and notice.
Mortgagee shall have the right to require additional types and amounts of
coverage against such risks as is usually carried by companies engaged in
similar businesses and owning similar properties in the same general area in
which the Mortgagor operates and in amounts sufficient to insure the
Indebtedness of Mortgagor to Mortgagee.

            SECTION 1.10 If Mortgagor shall fail to perform any of the covenants
contained in Sections 1.01, 1.03, 1.05, 1.07, 1.08, 1.09, 1.12 or 1.21 hereof,
Mortgagee may make advances to perform the same on its behalf and all sums so
advanced shall be a lien upon the Mortgaged Property and shall be secured
hereby. Mortgagor will repay on demand all sums so advanced on its behalf with
interest at the Default Rate. The provisions of this Section shall not prevent
any default in the observance of any covenant contained in said Sections 1.01,
1.03, 1.05, 1.07, 1.08, 1.09, 1.12 or 1.21 from constituting an Event of
Default.

            SECTION 1.11 (a) Mortgagor will keep adequate records and books of
account in accordance with generally accepted accounting principles and will
permit Mortgagee, in its sole discretion, by its agents, accountants and
attorneys, to visit and inspect the Premises and examine its records and books
of account and to discuss its affairs, finances and accounts with the officers
of Mortgagor. Provided no Event of Default has occurred, Mortgagee will provide
reasonable notice to Mortgagor of such visits, inspections and examinations and
conduct same at such reasonable times as may be requested by Mortgagee.

            (b) INTENTIONALLY OMITTED.

            (c) Mortgagor shall, within ten (10) days after request, furnish a
written statement duly acknowledged of the amount due whether for principal or
interest on the Note and whether any offsets, counterclaims or defenses exist
against Mortgagee, or the Indebtedness, or any part thereof.

            SECTION 1.12 Mortgagor will not commit any waste on the Mortgaged
Property, or any part thereof, or make any change in the use of the Mortgaged
Property, or any part thereof, which will in any way increase the risk of fire
or other hazard or casualty arising out of construction or operation. Mortgagor


                                       11
<PAGE>

will, at all times, maintain the Improvements in good operating order and
condition and will promptly make, from time to time, all repairs, renewals,
replacements, additions and improvements in connection therewith which are
necessary or desirable to such end. The Improvements shall not be demolished or
substantially altered, nor shall any Equipment be removed without the prior
written consent of Mortgagee, except where appropriate replacements free of
superior title, liens and claims are immediately made having value at least
equal to the value of the removed Equipment.

            SECTION 1.13 Mortgagor, immediately upon obtaining knowledge of the
institution of any proceedings for the condemnation of the Premises or
Improvements or any part thereof, will notify Mortgagee of the pendency of such
proceedings. Mortgagee may participate in any such proceedings and Mortgagor
from time to time will deliver to Mortgagee all instruments requested by it to
permit such participation. In the event of such condemnation proceedings, the
award or compensation payable is hereby assigned to and shall be paid to
Mortgagee. Mortgagee shall be under no obligation to question or challenge the
amount of any such award or compensation and may accept the same in the amount
in which the same shall be paid. In any such condemnation proceedings, Mortgagee
may be represented by counsel selected by Mortgagee. The proceeds of any award
or compensation so received shall at the option of Mortgagee, either be applied
toward the payment of the Indebtedness notwithstanding the fact that the
Indebtedness may not then be due and payable, and/or to the restoration of the
Improvements (in the case of a partial condemnation that affects the
Improvements in such a way that restoration is required to such Improvements).
In the event that any portion of the condemnation awards or compensation shall
be used to reduce the Indebtedness, same shall be applied by Mortgagee in any
manner it shall designate, including, but not limited to, the application of
such award or compensation to the then unpaid installments of the principal
balance due under the Note in the inverse order of their maturity such that the
regular payments under the Note shall not be reduced or altered in any manner.
Mortgagor, upon request by Mortgagee, shall make, execute and deliver any and
all instruments requested for the purpose of confirming the assignment of the
aforesaid awards and compensation to Mortgagee free and clear of any liens,
charges or encumbrances of any kind or nature whatsoever. Mortgagee shall not be
limited to the interest paid on the proceeds of any award or compensation, but
shall be entitled to the payment by Mortgagor of interest at the applicable rate
provided for in the Note.

            SECTION 1.14 (a) Mortgagor will not (i) execute an assignment of the
rents or leases, or any part thereof, in respect of the Premises or
Improvements, except for any assignment of leases and rents executed in
connection with the Note and constituting a Loan Document hereunder, or (ii)
except where the lessee is in default thereunder, terminate or consent to the
cancellation or surrender of any lease of the Premises or Improvements, or any
part thereof, now existing or hereafter to be made, having an unexpired term of
one (1) year or more, except that any lease may be cancelled provided that
promptly after the cancellation or surrender thereof a new lease is entered into
with a new lessee having a credit standing, in the reasonable judgment of
Mortgagee, at least equivalent to that of the lessee whose lease was cancelled,
on substantially the same or better terms as the terminated or cancelled lease,
or (iii) modify any such lease so as to shorten the unexpired term thereof or so
as to decrease the amount of the rents payable thereunder, or (iv) accept
prepayments of any installments of rents to become due under such leases, except
prepayments in the nature of security for the performance of the lessees
thereunder, or (v) in any other manner materially impair the value of the
Mortgaged Property or the security of this Mortgage in the reasonable judgment
of Mortgagee.


                                       12
<PAGE>

            (b) Mortgagor will not execute any lease of all or a substantial
portion of the Premises except for actual occupancy by the lessee thereunder,
and will at all times promptly and faithfully perform, or cause to be performed
promptly, all of the covenants, conditions and agreements contained in all
leases of the Premises or Improvements, or any part thereof, now or hereafter
existing, on the part of the lessor thereunder to be kept and performed and will
at all times do all things necessary to compel performance by the lessee under
each lease of all obligations, covenants and agreements by such lessee to be
performed thereunder. If any of such leases provide for the giving by the lessee
of an estoppel certificate with respect to the status of any such leases,
Mortgagor shall exercise its right to request such certificates within ten (10)
days of any demand therefor by Mortgagee.

            (c) Mortgagor shall furnish to Mortgagee, within ninety (90) days
after the end of each fiscal year, a written statement containing the names of
all lessees of the Premises and the Improvements, the terms of their respective
leases, the space occupied and the rentals payable thereunder.

            SECTION 1.15 Unless otherwise prohibited by applicable law, each
lease of the Premises or Improvements, or of any part thereof, shall provide
that, in the event of the enforcement by Mortgagee of the remedies provided for
by law or by this Mortgage, the lessee thereunder will, upon request of any
person succeeding to the interest of Mortgagor as a result of such enforcement,
automatically become the lessee of said successor in interest, without change in
the terms or other provisions of such lease; provided, however, that said
successor in interest shall not be bound by (i) any payment of rent or
additional rent for more than one month in advance, except prepayments in the
nature of security for the performance by said lessee of its obligations under
said lease, or (ii) any material amendment or modification of the lease made
without the consent of Mortgagee or such successor in interest. Reference is
hereby made to Section 291-f of the Real Property Law of the State of New York,
for purposes of obtaining for Mortgagee the benefit of Section 291-f in
connection with this Mortgage. Each such lease shall provide that upon request
by such successor in interest, such lessee shall execute and deliver an
instrument or instruments confirming such attornment.

            SECTION 1.16 Mortgagor hereby unconditionally and irrevocably gives,
grants, sets over and confirms, unto Mortgagee, the Power to Sell, which may be
unconditionally exercised at any time or times after an Event of Default and in
connection therewith, Mortgagor hereby (a) consents to any one or adjournments
of the sale date which Mortgagee may grant, consent to and/or effect, whether or
not Mortgagor is notified of such adjournment and (b) waives any and all
objections Mortgagor may have to the date of sale selected by Mortgagee, the
place of sale selected by Mortgagee, terms of sale selected by Mortgages and any
other matter.

            SECTION 1.17 In the event any payment provided for herein or in the
Note shall become overdue for a period in excess of fifteen (15) days, a late
charge of five cents (5(cent)) for each dollar so overdue shall become
immediately due to Mortgagee for the purpose of defraying the expenses incident
to handling such delinquent payment, and such charge shall be deemed to be part
of the Indebtedness and therefore secured by the lien of this Mortgage. Late
charges shall be payable with the next installment of principal and/or interest
due under the Note.

            SECTION 1.18 Mortgagor, in compliance with Section 13 of the Lien
Law of the State of New York, will receive the advances secured by this
Mortgage, and will hold the right to receive such advances, as a trust fund to
be applied first for the purpose of paying the cost of improvements to the
Premises or Improvements and will apply the same first to the payment of the
cost of any such improvements to the Premises or Improvements before using any
part of the total of the same for any other purpose.


                                       13
<PAGE>

            SECTION 1.19 Mortgagor agrees that it shall indemnify and hold
Mortgagee harmless against any loss or liability, cost or expense, including
without limitation, any judgments, reasonable attorneys' fees, costs of appeal
bonds and printing costs, arising out of or relating to any proceedings
instituted by any claimant alleging priority over the lien of this Mortgage by
reason of an alleged violation by Mortgagor or Mortgagee of any section of
Article 3-A of the Lien Law of the State of New York.

            SECTION 1.20 Mortgagor shall execute and deliver to the appropriate
governmental authority any affidavit, instrument, document and/or filing
required pursuant to any applicable statute, ordinance, rule and/or regulation
in connection with the Premises or Improvements, the Note and other Loan
Documents and/or the business and affairs of Mortgagor.

            SECTION 1.21 Mortgagor expressly covenants and agrees to pay in full
the reasonable fees and expenses of Mortgagee's counsel, promptly upon the
receipt of a statement therefor, which are incurred prior to and after the date
hereof and which fees and expenses arise in connection with any matter
incidental to the loan which is evidenced by the Note and secured by this
Mortgage and those fees and expenses which are incurred after the date hereof
which fees and expenses arise in connection with the enforcement of any document
executed in connection with the loan.

            SECTION 1.22 (a) Mortgagor represents and warrants that the Premises
and Improvements are not now and have not ever been used to generate,
manufacture, refine, transport, treat, store, handle, dispose, transfer,
produce, process or in any manner deal with, except in accordance with
applicable laws, Hazardous Materials (as hereinafter defined), and that no
Hazardous Materials have ever been installed, placed, or in any manner dealt
with on the Premises and the Improvements, and that no owner of the Premises or
the Improvements or any tenant, subtenant, occupant, prior tenant, prior
subtenant or prior occupant has received any notice or advice from any
governmental agency or any tenant, subtenant or occupant with regard to
Hazardous Materials on, from or affecting the Premises and the Improvements.
Mortgagor covenants that the Premises and the Improvements shall be kept free of
Hazardous Materials, and shall not be used to generate, manufacture, refine,
transport, treat, store, handle, dispose, transfer, produce, process or in any
manner deal with, Hazardous Materials, and Mortgagor shall not cause or permit,
as a result of any intentional or unintentional act or omission on the part of
Mortgagor or any tenant or subtenant or occupant, the installation of Hazardous
Materials at the Premises or the Improvements or onto any other property or
suffer the presence of Hazardous Materials on the Premises and the Improvements.
Mortgagor agrees to comply with and ensure compliance by all tenants, subtenants
and occupants with all applicable federal, state and local laws, ordinances,
rules and regulations, with respect to Hazardous Materials, and agrees to keep
the Premises and the Improvements and the other Mortgaged Property free and
clear of any liens imposed pursuant to such laws, ordinances, rules and
regulations. In the event that Mortgagor received or receives any notice or
advice from any governmental agency, any tenant, subtenant or occupant with
regard to Hazardous Materials on, from or affecting the Premises or the
Improvements or other Mortgaged Property, Mortgagor shall immediately notify
Mortgagee. Mortgagor shall conduct and complete all investigations, studies,
sampling, and testing, and all remedial, removal, and other actions necessary to
clean up and remove all Hazardous Materials, on, from or affecting the Mortgaged
Property or any part thereof in accordance with all applicable federal, state,
and local laws, ordinances, rules, regulations, and policies and to the
satisfaction of Mortgagee. For these purposes, "Hazardous Materials" shall


                                       14
<PAGE>

include, without limitation, any flammable explosives, radioactive materials,
petroleum, hazardous wastes, hazardous or toxic substances, or related or
similar materials, asbestos or any material containing asbestos, or any other
substance or material as defined by any federal, state or local environmental
law, ordinance, rule, or regulation including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Section 1801, et seq.), the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, et seq.),
and in the regulations adopted and publications promulgated pursuant thereto,
but excluding substances of kinds and in amounts ordinarily and customarily used
or stored in similar properties as those of the Premises for the purposes of
cleaning or other maintenance or operations and otherwise in compliance with all
environmental laws. These obligations and liabilities of Mortgagor shall survive
any foreclosure involving the Mortgaged Property or the delivery of a deed in
lieu of foreclosure.

            (b) Mortgagor shall protect, indemnify and save harmless Mortgagee
from and against all liabilities, obligations, claims, damages, penalties,
causes of action, costs and expenses (including without limitation reasonable
attorneys' fees and expenses), imposed upon or incurred by or asserted against
Mortgagee by reason of (A) the presence, disposal, escape, seepage, leakage,
spillage, discharge, emission, release, or threatened release of any Hazardous
Materials on, from or affecting the Premises, the Improvements or any other
property; (B) any personal injury (including wrongful death) or property damage
(real or personal) arising out of or related to such Hazardous Materials; (C)
any lawsuit brought or threatened, settlement reached, or government order
relating to such Hazardous Materials; or (D) any violation of laws, orders,
regulations, requirements, or demands of government authorities, or any policies
or requirements of Mortgagee which are based upon or in any related to such
Hazardous Materials including, without limitation, attorney or consultant fees,
investigation and laboratory fees, court costs, and litigation expenses.

            SECTION 1.23 [Intentionally Omitted]

            SECTION 1.24 Mortgagor agrees as follows:

            (a) Mortgagor agrees that the Premises and the Improvements shall at
all times comply to the extent applicable with the requirements of the Americans
with Disabilities Act of 1990, as amended from time to time, the Fair Housing
Amendments Act of 1988, as amended from time to time, all state and local laws
and ordinances related to handicapped access and all rules, regulations, and
orders issues pursuant thereto including, without limitation, the American with
Disabilities Act Accessibility Guidelines for Buildings and Facilities, as
amended from time to time (collectively, "Access Laws").

            (b) Notwithstanding any provisions set forth herein or in any other
documents regarding Mortgagee's approval or alterations of the Premises or the
Improvements, Mortgagor shall not alter the Premises or the Improvements in any
manner which would increase Mortgagor's responsibilities for compliance with the
applicable Access Laws without the prior written approval of Mortgagee. The
foregoing shall apply to tenant improvements constructed by Mortgagor or by any
of its tenants. Mortgagee may condition any such approval upon receipt of a
certificate of Access Law compliance from an architect, engineer, or other
person reasonably acceptable to Mortgagee.


                                       15
<PAGE>

            (c) Mortgagor agrees to give prompt notice to Mortgagee of the
receipt by Mortgagor of any complaints related to violations of any Access Laws
and of commencement of any proceedings or investigations which relate to
compliance with applicable Access Laws.

            SECTION 1.25 (a) In the event that the Premises or the Improvements
or any part thereof or any interest therein, or if any part or interest in
Mortgagor, shall be sold, conveyed, disposed of, alienated, hypothecated, leased
(except to tenants of space in the Improvements in accordance with the
provisions of Section 1.14 hereof and the provisions of any assignment of leases
and rents executed and delivered by Mortgagor), assigned, pledged, mortgaged,
further encumbered or otherwise transferred or Mortgagor shall be divested of
its title to the Premises or the Improvements or any interest therein, in any
manner or way, whether voluntarily or involuntarily, without the prior written
consent of Mortgagee being first obtained, which consent may be withheld in
Mortgagee's sole and absolute discretion, then the same shall constitute a
default hereunder and Mortgagee shall have the right, at its option, to declare
any or all of the Indebtedness secured hereby, irrespective of the maturity date
specified in the Note, immediately due and payable and to otherwise exercise any
of its other rights and remedies contained in Article II hereof. If such
acceleration is during any period when a prepayment fee is payable pursuant to
the provisions set forth in the Note, then, in addition to all of the foregoing,
such prepayment fee shall then be immediately due and payable to the same end as
though Mortgagor were prepaying the entire indebtedness secured hereby on the
date of such acceleration.

            (b) In the event that Mortgagee shall consent, without in any way
implying any obligation on the part of Mortgagee to so consent, to a further
encumbrance of the Premises or the Improvements, the documents evidencing or
creating such encumbrance shall be subject to the prior approval of Mortgagee
and shall expressly provide, in addition to any other items required by
Mortgagee, that: (i) they are subordinate, secondary, junior and inferior in all
respects to the lien of this Mortgage and to any and all rights of Mortgagee set
forth herein including, without limitation, Mortgagee's right to payment under
the Note and the rights of Mortgagee set forth herein with respect to any
insurance proceeds and condemnation awards in respect of the Premises and the
Improvements, and (ii) they shall remain subordinate, secondary, junior and
inferior in all respects to any amendments, modifications, extensions or changes
in this Mortgage thereafter entered into by Mortgagee and Mortgagor or any
indemnitor or guarantor under any indemnity or guaranty executed in connection
with the loan secured hereby; and (iii) they are subordinate, secondary, junior
and inferior in all respects to all existing and future leases of space in the
Improvements, and the holder thereof shall, upon request of Mortgagee,
specifically subordinate the lien of such encumbrance to all leases of space in
the Improvements executed after the date of such encumbrance; and (iv) the
holder of such subordinate mortgage acknowledges and agrees that a conveyance of
all or any portion of the Premises and/or Improvements to such holder by
foreclosure, deed in lieu of foreclosure or otherwise shall constitute a default
under this Mortgage.

            SECTION 1.26 Mortgagor shall maintain its operating accounts
relating to the operation of the Mortgaged Property with Mortgagee.


                                       16
<PAGE>

            SECTION 1.27 This Mortgage and the Note are subject to the express
condition that at no time shall Mortgagor be obligated or required to pay
interest on the Indebtedness at a rate which could subject the holder of the
Note to either civil or criminal liability as a result of being in excess of the
maximum interest rate which Mortgagor is permitted by applicable law to contract
or agree to pay. If by the terms of this Mortgage or the Note, Mortgagor is at
any time required or obligated to pay interest on the Indebtedness at a rate in
excess of such maximum rate, the rate of interest under the same shall be deemed
to be immediately reduced to such maximum rate and the interest payable shall be
computed at such maximum rate and all prior interest payments in excess of such
maximum rate shall be applied and shall be deemed to have been payments in
reduction of the principal balance of the Note.

            SECTION 1.28 Mortgagor, at its option, may announce and publicize
the source of the Loan by means and media Mortgagee shall select.

                               (End of Article I)

                                   ARTICLE II

                         Events of Default and Remedies

            SECTION 2.01 If one or more of the following Events of Default shall
occur, that is to say:

            (a) if (i) default shall be made in the payment of any interest due
under the Note, or in the payment of any installment of principal due under the
Note, in either such case, when and as the same shall become due and payable or
(ii) default shall be made in any other payment of the principal of the Note,
when and as the same shall become due and payable, whether at maturity or by
acceleration or as part of any prepayment or otherwise, in each case, as in the
Note and this Mortgage provided or default in the payment of any other
Indebtedness due to Mortgagee under this Mortgage or the other Loan Documents or
(iii) default shall be made in the payment of any tax required by Section 1.07
to be paid; or

            (b) if default shall be made in the due observance or performance of
any covenant, term or agreement on the part of Mortgagor contained in Section
1.08 or 1.09 and such default shall have continued for a period of thirty (30)
days after written notice specifying such default shall have been given to
Mortgagor by Mortgagee, unless such term, covenant or agreement cannot be
complied with or such default cannot be cured in such period, and provided
further that Mortgagor shall commence compliance with such term, covenant or
agreement or curing such default and shall continue to diligently prosecute such
compliance or curing such default; or

            (c) if any representation made in Section 1.01 shall have been false
when made or shall become false at any time; or

            (d) if default shall be made in the due observance or performance of
any other covenant or condition on the part of Mortgagor in the Note, or in this
Mortgage contained, and such default shall have continued for a period of ten
(10) days after written notice specifying such default and demanding that the
same be remedied shall have been given to Mortgagor by Mortgagee, provided,
however, that with respect to all defaults arising under this Section 2.01(d)
which, within the reasonable judgment of Mortgagee, are capable of being cured
within a reasonable period of time without material injury to the benefits
afforded or intended to be afforded to Mortgagee under this Mortgage and which
are not capable of being cured solely by the payment of money, Mortgagor shall
have such additional time to cure such default as may be necessary, provided
that Mortgagor shall have commenced the cure thereof promptly after receipt of
notice of such default and shall diligently prosecute such cure to completion
and provided further that such time to cure does not require an extension or the
maturity date of the Note; or


                                       17
<PAGE>

            (e) if by the order of a court of competent jurisdiction, a trustee,
receiver or liquidator of the Mortgaged Property, or any part thereof, or of
Mortgagor shall be appointed and such order shall not be discharged or dismissed
within thirty (30) days after such appointment; or

            (f) if Mortgagor shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in an involuntary
case under any such law or to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of Mortgagor or of any substantial part of its property, or if
Mortgagor shall make any general assignment for the benefit of creditors, or if
Mortgagor shall fail generally to pay its debts as such debts become due, or if
Mortgagor shall take any action in furtherance of any of the foregoing; or

            (g) if any of the creditors of Mortgagor shall commence against
Mortgagor an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect and if such case shall not be
discharged or dismissed within thirty (30) days after the date on which such
case was commenced, or

            (h) if final judgment for the payment of money in excess of
Twenty-five Thousand and No/100 Dollars ($25,000.00) shall be rendered against
Mortgagor and Mortgagor shall not discharge the same or cause it to be
discharged within thirty (30) days from the entry thereof, or shall not appeal
therefrom or from the order, decree or process upon which or pursuant to which
said judgment was granted, based or entered, and secure a stay of execution
pending such appeal; or

            (i) any breach, default or event of default by Mortgagor under any
agreement between Mortgagor and Mortgagee; or

            (j) if Mortgagor sells, transfers, assigns, conveys or encumbers the
Premises or Improvements or any part thereof or any interest therein without the
prior written consent of Mortgagee or as permitted pursuant to Section 1.25
hereof, or if any direct or indirect equity interests in Mortgagor are
transferred, assigned, conveyed or encumbered in violation of the provision of
Section 1.25 hereof; or

            (k) if a default occurs under any mortgage, that is prior or
subordinate to the lien of this Mortgage, or the mortgagee under any prior or
subordinate mortgage commences a foreclosure action in connection with said
mortgage, it being further agreed by Mortgagor that an Event of Default
hereunder shall constitute an Event of Default under any such other mortgage or
deed of trust held by Mortgagee;

            (l) any breach, default or event of default by Mortgagor under the
Credit Agreement or under any other agreement between Mortgagor and Mortgagee;


                                       18
<PAGE>

            (m) if Mortgagor defaults under any Loan Document or any other
agreement with Mortgagee; or

            (n) if it shall be illegal for Mortgagor to pay any tax referred to
in Section 1.08 hereof or if the payment of such tax by Mortgagor would result
in the violation of the usury laws of the State of New York; or

            (o) if any person or entity having or claiming an interest in
Mortgagor or the Mortgaged Property, or any part thereof, commences an action or
proceeding against Mortgagor, the Mortgaged Property, or any part thereof, or
any person or entity having or claiming an interest in Mortgagor or the
Mortgaged Property, or any part thereof; or

            (p) the existence or occurrence at any time of one or more
conditions or events, which, in the sole opinion of Mortgagee, has resulted, or
is reasonably likely to result in a material adverse change in the business
properties or financial condition of Mortgagor.

                  I. During the continuance of any such Event of Default,
Mortgagee, by written notice given to Mortgagor, may declare the entire
principal of the Note then outstanding (if not then due and payable), and all
accrued and unpaid interest thereon, together with all other Indebtedness, to be
due and payable immediately, and upon any such declaration the principal of the
Note, said accrued and unpaid interest thereon, and all other Indebtedness shall
become and be immediately due and payable, anything in the Note or in this
Mortgage to the contrary notwithstanding;

                  II. During the continuance of any such Event of Default,
Mortgagee personally, or by its agents or attorneys, may enter into and upon all
or any part of the Premises and the Improvements, and each and every part
thereof, and may exclude Mortgagor, its agents and servants wholly therefrom;
and having and holding the same, may use, operate, manage and control the
Premises and the Improvements and conduct the business thereof, either
personally or by its superintendents, managers, agents, servants, attorneys or
receivers; and upon every such entry, Mortgagee, at the expense of the Mortgaged
Property, from time to time, either by purchase, repairs or construction, may
maintain and restore the Mortgaged Property, whereof it shall become possessed
as aforesaid, may complete the construction of any of the Improvements and in
the course of such completion may make such changes in the contemplated
Improvements as it may deem desirable and may insure the same; and likewise,
from time to time, at the expense of the Mortgaged Property, Mortgagee may make
all necessary or proper repairs, renewals and replacements and such useful
alterations, additions, betterments and improvements thereto and thereon as to
it may seem advisable; and in every such case Mortgagee shall have the right to
manage and operate the Mortgaged Property and to carry on the business thereof
and exercise all rights and powers of Mortgagor with respect thereto either in
the name of Mortgagor or otherwise as it shall deem best; and Mortgagee shall be
entitled to collect and receive all earnings, revenues, rents, issues profits
and income of the Mortgaged Property and every part thereof, all of which shall
for all purposes constitute property of Mortgagor; and in furtherance of such
right Mortgagee may collect the rents payable under all leases of the Premises
and Improvements directly from the lessees thereunder upon notice to each such
lessee that an Event of Default exists hereunder accompanied by a demand on such
lessee for the payment to Mortgagee of all rents due and to become due under its
lease, and Mortgagor for the benefit of Mortgagee and each such lessee hereby
covenants and agrees that the lessee shall be under no duty to question the


                                       19
<PAGE>

accuracy of Mortgagee's statement of default and shall unequivocally be
authorized to pay said rents to Mortgagee without regard to the truth of
Mortgagee's statement of default and notwithstanding notices from Mortgagor
disputing the existence of an Event of Default such that the payment of rent by
the lessee to Mortgagee pursuant to such a demand shall constitute performance
in full of the lessee's obligation under the lease for the payment of rents by
the lessee to Mortgagor; and after deducting the expenses of conducting the
business thereof and of all maintenance, repairs, renewals, replacements,
alterations, additions, betterments and improvements and amounts necessary to
pay for taxes, assessments, insurance and prior or other proper charges upon the
Mortgaged Property, or any part thereof, as well as just and reasonable
compensation for the services of Mortgagee and for all attorneys, counsel,
agents, clerks, servants and other employees by it properly engaged and
employed, Mortgagee shall apply the moneys arising as aforesaid, first to the
payment of the principal of the Note and the interest thereon, when and as the
same shall become payable, and second to the payment of any other Indebtedness
and sums required to be paid by Mortgagor under this Mortgage.

                  III. Mortgagee, with or without entry, personally or by its
agents or attorneys, insofar as applicable, may:

                        (1) sell the Mortgaged Property, or any part

thereof, to the extent permitted and pursuant to the procedures provided by law,
and all estate, right, title and interest, claim and demand therein, and right
of redemption thereof, at one or more sales as an entirety or in parcels, and at
such time and place upon such terms and after such notice thereof as may be
required or permitted by law; or

                        (2) institute proceedings for the complete or

partial foreclosure of this Mortgage; or

                        (3) take such steps to protect and enforce its

rights whether by action, suit or proceeding in equity or at law for the
specific performance of any covenant, condition or agreement in the Note, or in
this Mortgage, or in aid of the execution of any power herein granted, or for
any foreclosure hereunder, or for the enforcement of any other appropriate legal
or equitable remedy or otherwise as Mortgagee shall elect.

                  IV. Mortgagor hereby unconditionally and irrevocably gives,
grants, sets over and confirms unto the Mortgagee the Power to Sell, which may
be unconditionally exercised at any time or times after an Event of Default and
in connection therewith, Mortgagor hereby (a) consents to any one or more
adjournments of the sale date which Mortgagee may grant, consent to and/or
effect, whether or not Mortgagor is notified of such adjournment and (b) waives
any and all objections Mortgagor may have to date of sale selected by Mortgagee,
the place of sale selected by Mortgagee, terms of sale selected by the
Mortgagee, and any other matter.

                  V. Mortgagee also shall have such other rights and/or remedies
provided to a mortgagee and/or a secured party by the Uniform Commercial Code as
that model statute is enacted and in effect in the jurisdiction wherein the
Premises are situated.

            SECTION 2.02 (a) Mortgagee may adjourn from time to time any sale by
it to be made under or by virtue of this Mortgage by announcement at the time
and place appointed for such sale or for such adjourned sale or sales; and,
except as otherwise provided by any applicable provision of law, Mortgagee,
without further notice or publication, may make such sale at the time and place
to which the same shall be so adjourned.


                                       20
<PAGE>

            (b) Upon the completion of any sale or sales made by Mortgagee under
or by virtue of this Article II, Mortgagee, or an officer of any court empowered
to do so, shall execute and deliver to the accepted purchaser or purchasers a
good and sufficient instrument, or good and sufficient instruments, conveying,
assigning and transferring all estate, right, title and interest in and to the
property and rights sold and shall execute and deliver to the appropriate
governmental authority any affidavit, instrument, document and/or filing
required pursuant to any applicable statute, ordinance, rule and/or regulation,
of the State of New York. As long as the loan secured by this Mortgage remains
unpaid, Mortgagee is hereby irrevocably appointed the true and lawful attorney
of Mortgagor, in its name and stead, to make all necessary conveyances,
assignments, transfers and deliveries of the Mortgaged Property and rights so
sold and for that purpose Mortgagee may execute all necessary instruments of
conveyance, assignment and transfer, including, without limitation, any
affidavit, instrument, document or filing required pursuant to any applicable
statute, rule or regulation of the State of New York as the same may be amended
from time to time, and may substitute one or more persons with like power,
Mortgagor hereby ratifying and confirming all that its said attorney or such
substitute or substitutes shall lawfully do by virtue hereof. Nevertheless
Mortgagor, if so requested by Mortgagee, shall ratify and confirm any such sale
or sales by executing and delivering to Mortgagee or to such purchaser or
purchasers all such instruments as may be advisable, in the reasonable judgment
of Mortgagee, for that purpose, and as may be designated in such request. Any
such sale or sales made under or by virtue of this Article II, whether made
under or by virtue of judicial proceedings or of a judgment or decree of
foreclosure and sale, shall operate to divest all the estate, right, title,
interest, claim and demand whatsoever, whether at law or in equity, of Mortgagor
in and to the properties and rights so sold, and shall be a perpetual bar both
at law and in equity against Mortgagor and against any and all persons claiming
or who may claim the same, or any part thereof, from, through or under
Mortgagor.

            (c) In the event of any sale made under or by virtue of this Article
II (whether made under or by virtue of judicial proceedings, a judgment or
decree of foreclosure or a Power to Sell), the entire principal of, and interest
on, the Note, if not previously due and payable, and all other sums required to
be paid by Mortgagor pursuant to this Mortgage, immediately thereupon, shall,
anything in the Note or in this Mortgage to the contrary notwithstanding, become
due and payable.

            (d) The purchase money proceeds or avails of any sale made under or
by virtue of this Article II, together with any other sums which then may be
held by Mortgagee under this Mortgage, whether under the provisions of this
Article II or otherwise, shall be applied as follows:

                  First: To the payment of the costs and expenses of such sale,
including, but not limited to, the reasonable compensation to Mortgagee, its
agents and counsel, and any sums that may be due under and/or pursuant to any
statute, rule, regulation and/or law which imposes any tax, charge, fee and/or
levy in connection with and/or arising from the exercise of any right and/or
remedy under this Mortgage or the requirement that any sum be paid in order to
record and/or file any deed, instrument of transfer or other such document in
connection with any such sale and of any judicial proceedings wherein the same
may be made, and of all expenses, liabilities and advances made or incurred by
Mortgagee under this Mortgage, together with interest at the Default Rate on all
advances made by Mortgagee and all taxes or assessments, except any taxes,
assessments or other charges subject to which the Mortgaged Property shall have
been sold;


                                       21
<PAGE>

                  Second: To the payment of the whole amount then due, owing or
unpaid upon the Note for principal, interest, other indebtedness, and any other
sums required to be paid thereunder with interest on the unpaid principal at the
Default Rate from and after the happening of any Event of Default described in
Section 2.01 from the due date of any such payment of principal until the same
is paid;

                  Third: To the payment of the whole amount then due, owing or
unpaid upon any other note held by Mortgagee for principal and interest, with
interest on the unpaid principal at the Default Rate from and after the
happening of any Event of Default described in Section 2.01 from the due date of
any such payment of principal until the same is paid;

                  Fourth:  To the  payment of any other  Indebtedness  and any
other sums required to be paid by Mortgagor  pursuant to any provision of this
Mortgage; or

                  Fifth:  To the payment of the surplus, if any, to Mortgagor.

            (e) Upon any sale made under or by virtue of this Article II,
whether made under or by virtue of judicial proceedings, a judgment or decree of
foreclosure and sale, or a Power to Sell, Mortgagee may bid for and acquire the
Mortgaged Property or any part thereof and in lieu of paying cash therefor may
make settlement for the purchase price by crediting upon the indebtedness of
Mortgagor secured by this Mortgage the net sales price after deducting therefrom
the expenses of the sale and the costs of the action and any other sums which
Mortgagee is authorized to deduct under this Mortgage.

            SECTION 2.03 (a) In case an Event of Default described in Section
2.01 shall have happened and be continuing, then, upon written demand of
Mortgagee, Mortgagor will pay to Mortgagee the whole amount which then shall
have become due and payable on the Note, for principal or interest or both, as
the case may be, and after the happening of said Event of Default will also pay
to Mortgagee interest at the Default Rate on the then unpaid principal of the
Note, and the sums required to be paid by Mortgagor pursuant to any provision of
this Mortgage, and in addition thereto such further amount as shall be
sufficient to cover the costs and expenses of collection, including reasonable
compensation to Mortgagee, its agents, and counsel and any expenses incurred by
Mortgagee hereunder. In the event Mortgagor shall fail forthwith to pay such
amounts upon such demand, Mortgagee shall be entitled and empowered to institute
such action or proceedings at law or in equity as may be advised by its counsel
for the collection of the sums so due and unpaid, and may prosecute any such
action or proceedings to judgment or final decree, and may enforce any such
judgment or final decree against Mortgagor and collect, out of the property of
Mortgagor wherever situated, as well as out of the Mortgaged Property, in any
manner provided by law, moneys adjudged or decreed to be payable.

            (b) Mortgagee shall be entitled to recover judgment as aforesaid
either before or after or during the pendency of any proceedings for the
enforcement of the provisions of this Mortgage; and the right of Mortgagee to
recover such judgment shall not be affected by any entry or sale hereunder, or
by the exercise of any other right, power or remedy for the enforcement of the
provisions of this Mortgage, or the foreclosure of the lien hereof; and in the
event of a sale of the Mortgaged Property, or any part thereof, and of the


                                       22
<PAGE>

application of the proceeds of sale, as in this Mortgage provided, to the
payment of the debt hereby secured, Mortgagee shall be entitled to enforce
payment of, and to receive all amounts then remaining due and unpaid upon the
Note, and to enforce payment of all other charges, payments and costs due under
this Mortgage, and shall be entitled to recover judgment for any portion of the
debt remaining unpaid, with interest at the Default Rate. In case of the
commencement of any case against Mortgagor under any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect or any proceedings
for its reorganization or involving the liquidation of its assets, then
Mortgagee shall be entitled to prove the whole amount of principal and interest
due upon the Note to the full amount thereof, and all other payments, charges
and costs due under this Mortgage, without deducting therefrom any proceeds
obtained from the sale of the whole or any part of the Mortgaged Property,
provided, however, that in no case shall Mortgagee receive a greater amount than
such principal and interest and such other payments, charges and costs from the
aggregate amount of the proceeds of the sale of the Mortgaged Property and the
distribution from the estate of Mortgagor.

            (c) No recovery of any judgment by Mortgagee and no levy of an
execution under any judgment upon the Mortgaged Property or upon any other
property of Mortgagor shall affect in any manner or to any extent, the lien of
this Mortgage upon the Mortgaged Property, or any part thereof, of any liens,
rights, powers or remedies of Mortgagee hereunder, but such liens, rights,
powers and remedies of Mortgagee shall continue unimpaired as before.

            (d) Any moneys thus collected by Mortgagee under this Section 2.03
shall be applied by Mortgagee in accordance with the provisions of subsection
(d) of Section 2.02.

            SECTION 2.04 After the happening of any Event of Default and
immediately upon the commencement of any action, suit or other legal proceedings
by Mortgagee to obtain judgment for the principal of, or interest on, the Note,
and/or all other Indebtedness and/or other sums required to be paid by Mortgagor
pursuant to any provision of this Mortgage, or of any other nature in aid of the
enforcement of the Note or of this Mortgage, Mortgagor will (a) consent to the
service of process as provided in Section 3.12 and enter its voluntary
appearance in such action, suit or proceeding, and (b) if required by Mortgagee,
consent to the appointment of a receiver or receivers of the Mortgaged Property,
or any part thereof, and of all the earnings, revenues, rents, issues, profits
and income thereof. After the happening of any Event of Default and during its
continuance, or upon the commencement of any proceedings to foreclose this
Mortgage or to enforce the specific performance hereof or in aid thereof or upon
the commencement of any other judicial proceeding to enforce any right of
Mortgagee, Mortgagee shall be entitled, as a matter of right, if it shall so
elect, without the giving of notice to any other party and without regard to the
adequacy or inadequacy of any security for the Indebtedness, forthwith either
before or after declaring the unpaid principal of the Note to be due and
payable, to the appointment of such a receiver or receivers.

            SECTION 2.05 Notwithstanding the appointment of any receiver,
liquidator or trustee of Mortgagor, or of any of its property, or of the
Mortgaged Property or any part thereof, Mortgagee shall be entitled to retain
possession and control of all property now or hereafter held under this
Mortgage.

            SECTION 2.06 No remedy herein conferred upon or reserved to
Mortgagee is intended to be exclusive of any other remedy or remedies, and each
and every such remedy shall be cumulative, and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or


                                       23
<PAGE>

by statute. No delay or omission of Mortgagee to exercise any right or power
accruing upon any Event of Default shall impair any such right or power, or
shall be construed to be a waiver of any such Event of Default or any
acquiescence therein; and every power and remedy given by this Mortgage to
Mortgagee may be exercised from time to time as often as may be deemed expedient
by Mortgagee.

            SECTION 2.07 Mortgagor will not at any time insist upon, or plead,
or in any manner whatever claim or take any benefit or advantage of any stay or
extension or moratorium law, any exemption from execution or sale of the
Mortgaged Property or any part thereof, wherever enacted, now or at any time
hereafter in force, which may affect the covenants and terms of performance of
this Mortgage, nor claim, take or insist upon any benefit or advantage of any
law now or hereafter in force providing for the valuation or appraisal of the
Mortgaged Property, or any part thereof, prior to any sale or sales thereof
which may be made pursuant to any provision herein, or pursuant to the decree,
judgment or order of any court of competent jurisdiction; nor, after any such
sale or sales, claim or exercise any right under any statute heretofore or
hereafter enacted to redeem the property so sold or any part thereof and
Mortgagor hereby expressly waives all benefit or advantage of any such law or
laws, and covenants not to hinder, delay or impede the execution of any power
herein granted or delegated to Mortgagee, but to suffer and permit the execution
of every power as though no such law or laws had been made or enacted.
Mortgagor, for itself and all who may claim under it, waives, to the extent that
it lawfully may, all right to have the Mortgaged Property, or any part thereof,
marshaled upon any foreclosure hereof.

            SECTION 2.08 During the continuance of any Event of Default, and
pending the exercise by Mortgagee of its right to exclude Mortgagor from all or
any part of the Premises and the Improvements, Mortgagor agrees to pay the fair
and reasonable rental value for the use and occupancy of the Mortgaged Property,
or any part thereof that is in its possession for such period, and upon default
of any such payment, will vacate and surrender possession of the Mortgaged
Property, or any part thereof, to Mortgagee or to a receiver, if any, and in
default thereof may be evicted by any summary action or proceeding for the
recovery of possession of the Premises and the Improvements for non-payment of
rent, however designated.

                               (End of Article II)

                                  ARTICLE III

                                  Miscellaneous

            SECTION 3.01 In the event any one or more of the provisions
contained in this Mortgage shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall, at the option of Mortgagee, not affect any other provision of this
Mortgage, but this Mortgage shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein or therein.

            SECTION 3.02 All notices hereunder shall be in writing and shall be
deemed to have been sufficiently given or served for all purposes three (3) days
after being sent by registered or certified mail, return receipt requested, or
one (1) business day after being sent by nationally recognized overnight
courier, in the case of Mortgagee, to 119 West 40th Street, New York, New York
10018, Attention: Richard Mahtani, and in the case of Mortgagor at its address
above stated, Attention: ____________________, or at such other address of which
any party shall have notified any other party giving such notice in writing as
aforesaid.


                                       24
<PAGE>

            SECTION 3.03 All covenants hereof shall be construed as affording to
Mortgagee rights additional to and not exclusive of the rights conferred under
the provisions of Sections 254 and 273 of the Real Property Law of the State of
New York, or any other applicable law.

            SECTION 3.04 All of the grants, terms, conditions, provisions and
covenants of this Mortgage shall run with the land, shall be binding upon
Mortgagor and shall inure to the benefit of Mortgagee, subsequent holders of
this Mortgage and their respective successors and assigns. For the purpose of
this Mortgage, the term "Mortgagor" shall include and refer to the mortgagor
named herein, any subsequent owner of the Mortgaged Property, or any part
thereof, and their respective heirs, executors, legal representatives,
successors and assigns. If there is more than one Mortgagor, all their
undertakings hereunder shall be deemed joint and several.

            SECTION 3.05 The enforcement of this Mortgage shall be governed,
construed and interpreted by the laws of the State where the Premises are
located. Nothing in this Mortgage or in any other agreement between Mortgagor
and Mortgagee shall require Mortgagor to pay, or Mortgagee to accept, interest
in an amount which would subject Mortgagee to any penalty or forfeiture under
applicable law. In the event that the payment of any charges, fees or other sums
due hereunder or under any such other agreement, which are or could be held to
be in the nature of interest and which would subject Mortgagee to any penalty or
forfeiture under applicable law, then, ipso facto, the obligations of Mortgagor
to make such payment shall be reduced to the highest rate authorized under
applicable law. Should Mortgagee receive any payment which is or would be in
excess of the highest rate authorized under law, such payment shall have been,
and shall be deemed to have been, made in error, and shall automatically be
applied to reduce the outstanding principal balance of the Indebtedness.

            SECTION 3.06 This Mortgage and all of the terms, covenants,
provisions, conditions and grants contained in this Mortgage cannot be altered,
amended, waived, modified or discharged orally, and no executory agreement shall
be effective to modify, waive or discharge, in whole or in part, anything
contained in this Mortgage unless it is in writing and signed by the party
against whom enforcement of the modification, alteration, amendment, waiver or
discharge is sought.

            SECTION 3.07 Mortgagor acknowledges that it has received a true copy
of this Mortgage.

            SECTION 3.08 This Mortgage may be executed in any number of
counterparts, and each of such counterparts shall for all purposes be deemed to
be an original; and all such counterparts shall together constitute but one and
the same mortgage.

            SECTION 3.09 Time is of the essence as to each of Mortgagor's
obligations under this Mortgage.

            SECTION 3.10 The information set forth on the cover hereof is hereby
incorporated herein.


                                       25
<PAGE>

            SECTION 3.11 Mortgagor expressly agrees, intending that Mortgagee
rely thereon, that this Mortgage also shall constitute a "security agreement,"
as such term is defined in the Uniform Commercial Code. The Mortgaged Property
includes, and shall be deemed to include, all of the Mortgaged Property,
regardless of whether they are held or hereafter acquired, of Mortgagor in, to
and under the Mortgaged Property. By executing and delivering this Mortgage,
Mortgagor has granted, in the same manner and with the same effect described in
the granting clause hereof, to Mortgagee, as additional security, a security
interest in the Mortgaged Property which are subject to the Uniform Commercial
Code. If any Event of Default shall occur, Mortgagee shall have, in addition to
any and all other rights and remedies set forth in this Mortgage, and may
exercise without demand, any and all rights and remedies granted to a secured
party under the Uniform Commercial Code, including, but not limited to, the
right to take possession of the Mortgaged Property, or any part thereof, and the
right to advertise and sell the Mortgaged Property, or any part thereof,
pursuant to and in accordance with the power of sale provided for in this
Mortgage. Mortgagor agrees that any notice of sale or other action intended by
Mortgagee with respect to the Mortgaged Property, or any part thereof, shall
constitute reasonable notice if it is sent to Mortgagor not less than ten (10)
days prior to any such sale or intended action. The proceeds of any such sale of
the Mortgaged Property, or any part thereof, shall be applied in the manner set
forth in clauses First through Fifth of Section 2.02 (d) of this Mortgage.

            SECTION 3.12 This Mortgage and the rights and obligations of the
parties hereunder shall in all respects by governed by, and construed and
enforced in accordance with, the laws of the State of New York (without giving
effect to New York's principles of conflicts of law). Mortgagor hereby
irrevocably submits to the nonexclusive jurisdiction of any New York State or
Federal court sitting in New York County over any suit, action or proceeding
arising out of or relating to this Mortgage, and Mortgagor hereby agrees and
consents that, in addition to any methods of service of process provided for
under applicable law, all service of process in any such suit, action or
proceeding in any New York State or Federal court sitting in the New York County
may be made by certified or registered mail, return receipt requested, directed
to Mortgagor at the following address and service so made shall be complete
seven (7) days after the same shall have been so mailed: 50 Horseblock Road,
Yaphank, New York 11980, or such other place as Mortgagor shall notify Mortgagee
is Mortgagor's principal office.

            SECTION 3.13 This Mortgage does not cover real property principally
improved by one or more structures containing in the aggregate six (6) or less
residential dwelling units having their own separate cooking facilities.

            SECTION 3.14 Mortgagor and Mortgagee shall upon a mutual agreement
to do so execute such documents as may be necessary in order to effectuate the
modification of this Mortgage, including the execution of substitute mortgages,
so as to create two or more coordinate liens on the Mortgaged Property or a
portion thereof in such amounts as may be mutually agreed upon. Mortgagor shall
pay all costs in connection with said modification, including, but not limited
to, title examination costs, title insurance premiums, charges, and any mortgage
recording taxes. Nothing contained herein shall require Mortgagee to execute
said documents if the property encumbered by said coordinate mortgages shall be
less then the property mortgaged hereby.


                                       26
<PAGE>

            SECTION 3.15 MORTGAGOR, AND BY ITS ACCEPTANCE HEREOF, MORTGAGEE,
EACH HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY
JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH
RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE MORTGAGE, 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 MORTGAGOR AND
MORTGAGEE, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH
ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. MORTGAGOR
AND MORTGAGEE ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.

            SECTION 3.16 MORTGAGOR HEREBY EXPRESSLY AND UNCONDITIONALLY WAIVES,
IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING BROUGHT BY OR ON BEHALF OF
MORTGAGEE ON THIS MORTGAGE, ANY AND EVERY RIGHT MORTGAGOR MAY HAVE TO (I)
INJUNCTIVE RELIEF, (II) INTERPOSE ANY COUNTERCLAIM THEREIN (OTHER THAN
COMPULSORY COUNTERCLAIMS), AND (III) HAVE THE SAME CONSOLIDATED WITH ANY OTHER
OR SEPARATE SUIT, ACTION OR PROCEEDING. NOTHING HEREIN CONTAINED SHALL PREVENT
OR PROHIBIT MORTGAGOR FROM INSTITUTING OR MAINTAINING A SEPARATE ACTION AGAINST
MORTGAGEE WITH RESPECT TO ANY ASSERTED CLAIM.

            SECTION 3.17 Multiple Security. If, in addition to this Mortgage,
Mortgagee shall now or hereafter hold one or more additional mortgages, liens or
other security for the Indebtedness upon other property in the State of New
York, to the fullest extent permitted by law, Mortgagee may, at its sole
election, commence or consolidate in a single foreclosure action all foreclosure
proceedings against all such collateral securing the Indebtedness, including,
without limitation, the Mortgaged Property, which action may be brought or
consolidated in the courts of any county within which such collateral is
located.

                              (End of Article III)

           [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]


                                       27
<PAGE>

            IN WITNESS WHEREOF, this Mortgage has been duly executed by
Mortgagor.

                                    ASSIGNOR:

                                    INTERPHARM, INC.

                                    By: /s/ George Aronson
                                       ---------------------------------------
                                       George Aronson, Chief Financial
                                       Officer

                                    With respect to Section 3.15:

                                    WELLS  FARGO BANK,  NATIONAL  ASSOCIATION,
                                    acting  through its Wells  Fargo  Business
                                    Credit operating division

                                    By: /s/ Richard Mahtani
                                       ---------------------------------------
                                      Richard Mahtani, Assistant Vice
                                      President


                                       28
<PAGE>

                                 ACKNOWLEDGMENTS

STATE OF NEW YORK )
                  ) ss.:
COUNTY OF NASSAU  )

      On the 9th day of February, in the year 2006, before me, the undersigned,
a Notary Public in and for said State, personally appeared George Aronson,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.


                                          -------------------------------------
                                          Notary Public

STATE OF NEW YORK   )
                    ) ss.:
COUNTY OF NASSAU    )

      On the 9th day of February, in the year 2006, before me, the undersigned,
a Notary Public in and for said State, personally appeared Richard Mahtani,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.

                                          -------------------------------------
                                          Notary Public


                                       29
<PAGE>

                                    EXHIBIT A

                                   (Premises)

<PAGE>

                                    EXHIBIT B

                            (Permitted Encumbrances)

                                      None.
</TEXT>
</DOCUMENT>
