NEOSE TECHNOLOGIES INC
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<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>d14589_ex10-4.htm
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<P ALIGN=RIGHT><FONT SIZE=2 FACE="TIMES NEW ROMAN"><B>Exhibit 10.4</B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN"><B><U>OPEN-END MORTGAGE AND SECURITY AGREEMENT</U></B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN"><B>This
Mortgage Secures Future Advances</B></FONT></P>

<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS
MORTGAGE is dated as of the 23<SUP>rd</SUP> day of February, 2004 (the <B>&#147;Mortgage&#148;)</B> by and between NEOSE
TECHNOLOGIES, INC., a Delaware corporation, with an address of 102 Witmer Road,
Horsham, Pennsylvania 19044 (the <B>&#147;Mortgagor&#148;</B>)
and BROWN BROTHERS HARRIMAN &amp; CO., a private bank organized as a
partnership, with its place of business at 1531 Walnut Street, Philadelphia,
Pennsylvania 19102 (the <B>&#147;Mortgagee&#148;</B>).</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN"><U>W I T N E S S E T H</U>:</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
at the request of Mortgagor, the Montgomery County Industrial Development
Authority (the &#147;<B>Authority</B>&#148;) has
issued a Variable Rate Revenue Bond (&#147;<B>Neose
Technologies, Inc. Project</B>&#148;) Series 2004, in the principal amount of
One Million and 00/100 Dollars ($1,000,000.00) (the &#147;<B>Bond</B>&#148;); and</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
the obligations of the Mortgagor to repay the loan represented by the Bond (the
&#147;<B>Loan</B>&#148;) and certain other
covenants and representations of Mortgagor, are set forth in that certain
Financing Agreement by and among Mortgagor, Authority and Mortgagee, dated the
date hereof (the &#147;<B>Financing Agreement</B>&#148;),
the terms and conditions of which are incorporated herein by reference; and</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
the obligations of the Mortgagor to Mortgagee under the Bond and the Financing
agreement are further secured by that certain Security Agreement from Mortgagor
to Mortgagee dated of even date herewith (the <B>&#147;Security
Agreement&#148;</B>)(the Financing Agreement, the Bond, the Security
Agreement and all other documents, instruments or agreements evidencing and/or
securing the Loan, as the same may be amended, modified, or supplemented from
time to time, are sometimes collectively referred to below as the &#147;<B>Financing Documents</B>&#148;); and </FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
as security for the payment of the Bond and the obligations of Mortgagor under
the Financing Agreement, Mortgagee has required Mortgagor to execute and
deliver this Mortgage; and</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
the maximum amount of indebtedness intended to be secured hereby is One Million
and 00/100 Dollars ($1,000,000.00).</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capitalized
terms used herein and not otherwise defined shall have the meanings given to
them in the Financing Agreement.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW,
THEREFORE, in order to secure the obligations of Mortgagor as set forth in the
Bond and the Financing Agreement (the <B>&#147;Obligations&#148;</B>),
and in consideration of the premises and the further sum of Ten Dollars
($10.00) to Mortgagor in hand well and truly paid by Mortgagee at or before the
ensealing and delivery hereof, the receipt whereof is hereby acknowledged,
Mortgagor has granted, bargained and sold, aliened, enfeoffed, released,
remised, </FONT></P>

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<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">conveyed, confirmed and mortgaged, and by these presents does grant,
bargain and sell, alien, enfeoff, release, remise, convey, confirm, and
mortgage unto Mortgagee and its successors and assigns, that certain premises
located at 102 Witmer Road, Horsham Township, Montgomery County, Pennsylvania,
as more particularly described in Exhibit &#147;A&#148; attached hereto and made a part
hereof (the <B>&#147;Real Estate&#148;</B>);</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOGETHER
with the appurtenances and all the estates and rights of Mortgagor in and to
the Real Estate, including without limitation the fixtures, equipment,
reversions, remainders, easements, issues and profits arising or issuing from
the Real Estate and the improvements thereon including, but not limited to the
rents, issues and profits arising or issuing from the Real Estate and the
improvements thereon, including but not limited to the rents, fixtures,
equipment, issues and profits arising or issuing from all insurance policies,
sale agreements, licenses, options, leases and subleases now or hereafter
entered into covering any part of said Real Estate or the buildings, structures
and improvements thereon, all of which insurance policies, sale agreements,
licenses, options, leases, subleases, rents, issues and profits are hereby
assigned and shall be caused to be assigned to Mortgagee by Mortgagor.&#160; Mortgagor will execute and deliver to
Mortgagee on demand such assignments as Mortgagee may require to implement this
assignment;</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOGETHER
with all the right, title and interest of Mortgagor in and to all streets, roads
and public places, opened or proposed, adjoining the Real Estate, and all
easements and rights of way, public or private, now or hereafter created or
used in connection therewith;</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOGETHER
with all the right, title and interest of Mortgagor, now owned or hereafter
acquired, in and to any and all sidewalks and alleys adjacent to the Real
Estate;</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOGETHER
with all buildings and improvements of every kind and description now or
hereafter erected or placed on the Real Estate;</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOGETHER
with all of Mortgagor&#146;s right, title and interest now owned or hereafter
acquired in and to all heating, plumbing, sprinkler, water, gas, electric
power, lighting and air conditioning equipment, elevators, machinery, fixtures,
equipment, furniture, building materials of any kind or nature, together with
all replacements thereof and additions thereto, now, or at any time hereafter,
affixed or attached to said Real Estate, buildings, structures and improvements
(hereinafter collectively called <B>&#147;Personal
Property&#148;</B>), all of which Mortgagor represents and warrants are and
will be owned by Mortgagor free from any prior conditional sales, chattel
mortgages, security interests, liens, pledges, hypothecations, charges or
encumbrances other than the Prior Mortgages (as hereinafter defined) and those
liens, encumbrances and other matters affecting title to the Mortgaged Property
(as hereinafter&#160; defined) set forth in Exhibit &#147;B&#148; attached hereto and
incorporated herein by this reference (the &#147;<B>Permitted Encumbrances</B>&#148;), and
is intended to be subject to the lien of this Mortgage as if part of the
realty.&#160; This provision shall be
self-operative and this Mortgage, to the extent that any such Personal Property
or other property subject to this Mortgage shall not be deemed to be part of
the realty, shall constitute a security agreement under the Pennsylvania
Uniform Commercial Code, and Mortgagor shall execute and deliver to Mortgagee
on demand, and hereby irrevocably appoints Mortgagee, or any person designated
by Mortgagee, the attorney-in-fact of Mortgagor to execute, deliver and file
such financing statements and other instruments as Mortgagee may reasonably
require in order to perfect and maintain such security interest under the
Pennsylvania </FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">2</FONT></P>

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<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">Uniform Commercial Code;</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOGETHER
with all accounts, contract rights, accounts receivable, agreements of sale,
and claims of any sort relating to or arising out of the Real Estate whether
now owned or hereafter acquired;</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOGETHER
with all awards, damages, payments and other compensation, and claims thereof
and rights thereto, which may result from a taking or injury by virtue of the
exercise of the power of eminent domain of or to, or from any damage, injury or
destruction by casualty or otherwise caused to, the Real Estate and said
improvements and personalty, or any part thereof, including insurance proceeds,
or from any change of grade or vacation of any street abutting thereon, all of
which are hereby assigned to Mortgagee to the fullest extent permitted by law,
Mortgagee being hereby irrevocably appointed attorney-in-fact for Mortgagor to
collect and receive any such awards, damages, payments and compensation from
the authorities or insurers making the same, and to give receipts and
acquittances therefor, and to institute, appear in and prosecute any proceeding
therefor, it being agreed that all sums collected by or paid to Mortgagee
pursuant to this assignment, net of any cost incurred by Mortgagee in collecting
the same (including attorneys&#146; fees), shall be applied to the payment of the
Obligations whether or not then due and payable, or to the restoration of the
Mortgaged Property (hereinafter defined) as Mortgagee shall elect, unless
otherwise set forth herein;</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOGETHER
with any and all proceeds (including insurance and condemnation proceeds and
proceeds of other proceeds) of any of the foregoing;</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
of the property and rights hereinabove described or mentioned being hereinafter
collectively called the <B>&#147;Mortgaged Property&#148;</B>.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TO
HAVE AND TO HOLD the Mortgaged Property unto Mortgagee, its successors and
assigns, forever;</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;AND,
at all times until the Obligations is paid in full with interest and faithfully
and strictly performed, Mortgagor does hereby covenant, promise and agree with
Mortgagee as follows:</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">ARTICLE I</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN"><U>Covenants As To Taxes and Assessments</U></FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgagor
will pay and discharge (i) all the taxes, general and special, levies and
assessments heretofore or hereafter charged, assessed or levied against the
Mortgaged Property or any part thereof by any lawful authority, or which
otherwise may become a lien thereon (collectively, the <B>&#147;Taxes&#148;</B>); and (ii) all water and sewer
rents which may be assessed or become liens on the Mortgaged Property before
the date on which any interest or penalties shall commence to accrue thereon,
and produce to Mortgagee evidence of such payment not less than ten days
thereafter.&#160;&#160; In default of any of the
above-described payments, Mortgagee may, but shall not be obligated to, pay the
same, and such payment by Mortgagee shall be repaid by Mortgagor to Mortgagee
on demand, shall be secured hereby, and shall bear interest at the Default Rate
as defined in the Financing Agreement (the &#147;<B>Default
Rate</B>&#148;) from the date </FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">3</FONT></P>

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<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">Mortgagee makes such payment until such sums are repaid in full.&#160; Mortgagor shall promptly cause to be paid
and discharged, any lien or charge whatsoever which by any present or future
law may be or become superior, either in lien or in right of distribution out
of the proceeds of any judicial sale of the Mortgaged Property, to the liens
created hereby.&#160; Mortgagor will cause to
be paid, when due, all charges for utilities whether public or private.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
the request of Mortgagee, Mortgagor will pay on a monthly basis to Mortgagee, a
sum equal to one-twelfth (1/12th) of the real estate taxes, water rents, sewer
rents, payments in lieu thereof, special assessments and any other tax,
assessment, lien, claim or encumbrance which may at any time be or become a
lien on the Mortgaged Property prior to, or on a parity with, the lien of this
Mortgage so as to enable Mortgagee to pay the same at least thirty (30) days
before they become due.&#160; If special
assessments against the Mortgaged Property may be paid in installments and
Mortgagor elects to do so, the monthly payments to Mortgagee for such special
assessments shall be one-twelfth (1/12th) of the then current annual installment.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No amounts
so paid shall be deemed to be trust funds but may be co-mingled with general
funds of Mortgagee, and no interest shall be payable thereon.&#160; If, pursuant to any provision of this
Mortgage, the whole amount of said principal debt remaining or any installment
of interest, principal or principal and interest becomes due and payable,
Mortgagee shall have the right, at its election, to apply any amounts so held
against all or any of the Obligations, any interest thereon or in payment of
the premiums or payments for which the amounts were deposited.&#160; Mortgagor will furnish to Mortgagee tax
bills in sufficient time to enable Mortgagee to pay such taxes, assessments,
levies, charges and fees, before interest and penalties accrue thereon.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgagor
covenants and agrees to pay to Mortgagee the principal and interest hereby
secured pursuant to and in accordance with the terms of the Financing Agreement
without deduction or credit for any amount for Taxes assessed or to be assessed
against the Mortgaged Property.</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">ARTICLE II</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN"><U>General Representations and Covenants of
Mortgagor</U></FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgagor
will observe and perform all of the terms, covenants and conditions on the part
of Mortgagor to be observed and performed under this Mortgage and shall pay and
faithfully and strictly perform all of the Obligations.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgagor
warrants and covenants that it has good and marketable fee simple title to the
Mortgaged Property, subject to no liens, claims, security interests, pledges,
hypothecations or other encumbrances or charges, other than the Prior Mortgages
(as hereinafter defined) and Permitted Encumbrances.&#160; Mortgagor warrants that it has full power and lawful authority to
execute and deliver this Mortgage and to mortgage to Mortgagee all of the
property and rights purported to be mortgaged by it hereunder.&#160; Mortgagor will forever warrant and defend
the title to the Mortgaged Property unto Mortgagee against the claims and
demands of all persons whomsoever.</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">4</FONT></P>

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<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgagor
will not, without the prior written consent of Mortgagee, cause or permit any
building or improvement comprising part of the Mortgaged Property to be removed,
demolished or structurally altered, in whole or in part, or any material
fixture therein to be removed or destroyed.&#160;
Mortgagor will not abandon the Mortgaged Property or cause or permit any
waste thereto and will at all times maintain the Mortgaged Property in
substantially its current condition, normal wear and tear excepted.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Throughout
the term of this Mortgage, Mortgagor, at its sole cost and expense, will take
good care of the Mortgaged Property and will keep the same in good order and
condition, and make all necessary repairs thereto, interior and exterior
(including parking areas), structural and non-structural, ordinary and
extraordinary, and unforeseen and foreseen.&#160;
All repairs made by Mortgagor shall be equal in quality and class to the
original work.&#160; The necessity for and
adequacy of repairs to the buildings and improvements pursuant to this Mortgage
shall be measured by the standard which is appropriate for structures of
similar construction and class, provided that Mortgagor shall in any event make
all repairs necessary to avoid any structural damage or injury to the buildings
and improvements to keep the buildings and improvements in a proper condition.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgagor
will permit Mortgagee and Mortgagee&#146;s representatives to enter the Mortgaged
Property at reasonable times, upon five (5) days&#146; prior notice and during
regular business hours to inspect the same.&#160;
In the absence of an Event of Default, such inspections shall be limited
to four (4) times in any calendar year.&#160;
In case of any Event of Default, as defined hereinafter, Mortgagee may,
at its option, enter the Mortgaged Property to protect, restore or repair any
part thereof, but Mortgagee shall be under no obligation to do so.&#160; Mortgagor will repay to Mortgagee on demand
any sums paid by Mortgagee to protect, restore or repair any part of the
Mortgaged Property, with interest thereon at the Default Rate, and, until so
paid, the same shall be secured by this Mortgage.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Throughout
the term of this Mortgage, Mortgagor, at its sole cost and expense, shall
promptly comply with all present and future laws, ordinances, orders, rules,
regulations and requirements of all federal, state and municipal governments,
courts, departments, commissions, boards and officers, any national or local
Board of Fire Underwriters, or any other body exercising functions similar to
those of any of the foregoing, which may be applicable to the Mortgaged
Property, the maintenance and use thereof and the sidewalks and curbs adjoining
the Mortgaged Property whether or not such law, ordinance, order, rule,
regulation or requirement shall necessitate structural changes or improvements,
or the removal of any encroachments or projections, ornamental, structural or
otherwise, onto or over property contiguous or adjacent thereto, any such
structural changes or improvements or removal of encroachments to be performed
with the consent of Mortgagee, which consent will not be unreasonably
withheld.&#160; Mortgagor will comply with
all orders and notices of violation thereof issued by any governmental authority.&#160; Mortgagor will pay all license fees and
similar municipal charges for the use of the Mortgaged Property and the other
areas now or hereafter comprising part thereof or used in connection therewith
and will not, unless so required by any governmental agency having
jurisdiction, discontinue use of the Mortgaged Property without prior written
consent of Mortgagee.&#160; If Mortgagor
shall fail to perform any covenant herein, Mortgagee may (but shall be under no
obligation to) perform such covenant for the account of Mortgagor and any sums
paid by Mortgagee in such event shall be repaid by Mortgagor to Mortgagee with
interest thereon at the Default Rate and, until so paid, the same shall be
secured by this Mortgage.</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">5</FONT></P>

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<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgagor
shall not, without the prior written consent of Mortgagee, by deed, mortgage,
pledge, lease, easement or other instrument grant, mortgage, pledge, convey,
assign, devise or otherwise transfer all or any part of the Mortgaged Property
or any interest therein, directly or indirectly, nor shall Mortgagor suffer or
permit such conveyance, assignment or transfer by execution sale or operation
of law or otherwise.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgagor
shall promptly pay upon demand, and presentation of invoices or bills, with
interest thereon at the Default Rate, all expenses and costs incurred by
Mortgagee, including reasonable attorney&#146;s fees in connection with any action,
proceeding, litigation or claim instituted or asserted by or against Mortgagee
or in which Mortgagee becomes engaged, wherein it becomes necessary in the
reasonable opinion of Mortgagee to defend or uphold the lien of this Mortgage,
or the validity or effectiveness of any assignment of any claim, award,
payment, property damage, insurance policy or any other right or property
conveyed, encumbered or assigned by Mortgagor to Mortgagee hereunder, or the
priority of any of the same, and all such expenses and costs, and interest
thereon, may be added to and become part of the principal indebtedness of
Mortgagor hereunder, bear interest at the Default Rate and be secured by this
Mortgage.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
further secure payment of the Obligations, Mortgagor hereby pledges, assigns
and grants to Mortgagee a continuing security interest in and lien on all of
Mortgagor&#146;s Personal Property (excluding Mortgagor&#146;s intellectual property and
Liquidity, except as otherwise provided in the Financing Agreement Agreement),
accounts, contract rights, accounts receivable now owned or existing or
hereafter acquired and all proceeds thereof, whether now owned or hereafter
acquired and all proceeds of all of the foregoing.&#160; The parties hereto agree that the security interest created
hereunder is valid under the Pennsylvania Uniform Commercial Code and is a
presently existing security interest and attaches to Mortgagor&#146;s
above-mentioned Personal Property as of the date hereof.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.10&nbsp;&nbsp;&nbsp;With
the exception of Permitted Liens (as defined below), Mortgagor will not,
without the prior written consent of Mortgagee, create or suffer to be created
any security interest under the Pennsylvania Uniform Commercial Code, or other
encumbrance in favor of any party other than Mortgagee, or create or suffer any
reservation of title by any such other party, with respect to any Personal
Property nor shall any such Personal Property be the subject matter of any
lease or other transaction whereby the ownership or any beneficial interest in
any of such Personal Property is held by any person or entity other than
Mortgagor (or Mortgagee as provided herein). &#160;All such Personal Property shall be purchased for cash or in such
manner that no lien shall be created thereon except the lien of this Mortgage,
the Prior Mortgages and liens as otherwise permitted in the Financing Agreement
and the Security Agreement (collectively <B>&#147;Permitted
Liens&#148;</B>), unless Mortgagee shall agree in writing to the contrary
before a contract to purchase any such Personal Property is executed.&#160; Mortgagor will deliver to Mortgagee on
demand, any contracts, bills of sale, statements, receipted vouchers or
agreements, under which Mortgagor claims title to any Personal Property
incorporated in the improvements or subject to the lien of this Mortgage.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.11&nbsp;&nbsp;&nbsp;Mortgagor
shall at its expense, promptly upon request of Mortgagee (i) do all acts and
things, including but not limited to the execution of any further assurances,
deemed necessary by Mortgagee, to establish, confirm, maintain and continue the
lien created and intended to be created hereby, all assignments made or
intended to be made pursuant hereto, and </FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">6</FONT></P>

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<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">all other rights and benefits conferred or intended to be conferred on
Mortgagee hereby, and Mortgagor shall pay all costs incurred by Mortgagee in
connection therewith, including all filing and recording costs, cost of
searches, and reasonable counsel fees incurred by Mortgagee; and (ii) furnish
Mortgagee with a written certification signed by Mortgagor, or an officer of
Mortgagor on Mortgagor&#146;s behalf, as to all then existing leases for space
covering any part of the Mortgaged Property, the names of the tenants, the
rents payable thereunder and the dates to which such rents are paid, together
with executed copies of all such leases.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.12&nbsp;&nbsp;&nbsp;Mortgagor
will promptly perform and observe, or cause to be performed or observed, all of
the terms, covenants and conditions of all instruments of record affecting the
Mortgaged Property, noncompliance with which may affect the security of this
Mortgage or which may impose any duty or obligation upon Mortgagor or any
lessee or other occupant of the Mortgaged Property or any part thereof, and
Mortgagor shall do or cause to be done all things necessary to preserve intact
and unimpaired any and all easements, appurtenances and other interests and
rights in favor of or constituting any portion of the Mortgaged Property.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.13&nbsp;&nbsp;&nbsp;To
further secure payment of the Obligations, Mortgagor hereby assigns and sets
over unto Mortgagee the interest of such Mortgagor as lessor in and to all
leases, written or oral, of the Mortgaged Property or any part thereof now or
hereafter made, executed or delivered.&#160;
Mortgagor hereby authorizes and empowers Mortgagee to collect the rents
under the aforesaid leases as they become due, and hereby directs each and all
of the tenants of the Mortgaged Property, upon demand made by Mortgagee, to pay
such rents as they become due to Mortgagee; provided, however, no such demand
shall be made unless and until there has occurred an Event of Default under the
terms of this Mortgage, and until such demand is made, Mortgagor is authorized
to collect the aforesaid rents; but such privilege of Mortgagor to collect
rents as aforesaid shall not operate to permit the collection by Mortgagor of
any installment of rent for more than one month in advance.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.14&nbsp;&nbsp;&nbsp;Mortgagor
will not, without the prior written consent of Mortgagee, assign the rents of
the Mortgaged Property or any part thereof, nor consent (other than in the
ordinary course of business) to the cancellation, modification or surrender of
any lease now or hereafter covering the Mortgaged Property, or any part
thereof; nor accept any prepayment of rents under any such lease more than one
month in advance; and any such purported assignment, cancellation,
modification, surrender or prepayment made without consent of Mortgagee shall
be void as against Mortgagee.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.15&nbsp;&nbsp;&nbsp;Mortgagor
shall, upon the request of Mortgagee, given 15 days in advance, furnish a duly
acknowledged written statement to Mortgagee, or any proposed assignee of this
Mortgage, setting forth the amount of the Obligations and stating either that
no off-sets or defenses exist against the Obligations, or, if such off-sets or
defenses are alleged to exist, the nature and amount thereof.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.16&nbsp;&nbsp;&nbsp;Mortgagor
agrees not to do or suffer any act or thing which would impair the security of
the Obligations or of the lien of this Mortgage upon the Mortgaged Property, or
the rents, issues or profits thereof.</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">7</FONT></P>

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<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">ARTICLE III</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN"><U>Compliance with Environmental Laws</U></FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgagor
shall comply with all Applicable Environmental Laws.&#160; As set forth herein, the term <B>&#147;Applicable
Environmental Laws&#148;</B> shall mean any and all existing or future
federal, state and local statutes, ordinances, regulations, rules, executive
orders, standards and requirements, including the requirements imposed by
common law, concerning or relating to industrial hygiene and the protection of
health and the environment including, without limitation:&#160; (i) the Comprehensive Environmental
Response, Compensation and Liability act of 1980, as amended, 42 U.S.C. &#167;9601 <U>et</U>
<U>seq</U>. (&#147;CERCLA&#148;); (ii) the Resource Conservation and Recovery Act of
1976, as amended, 42 U.S.C. &#167;6901 <U>et</U>. <U>seq</U>. (&#147;RCRA&#148;); (iii) the
Clean Air Act, as amended, 42 U.S.C. &#167;7901 <U>et</U> <U>seq</U>.; (iv) the
Clean Water Act, as amended, 33 U.S.C. &#167;1251 <U>et</U> <U>seq</U>.; (v) the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. &#167;1801 <U>et</U> <U>seq</U>.;
(vi) the Toxic Substances Control Act, 15 U.S.C. &#167;2601 <U>et</U> <U>seq.</U>,
as amended (&#147;TSCA&#148;), and the Pennsylvania Hazardous Sites Cleanup Act, 35 P.S.
&#167;6020.101 <U>et</U> <U>seq.</U> (&#147;HSCA&#148;).&#160;
Any terms mentioned herein which are defined in any Applicable
Environmental Laws shall have the meanings ascribed to such terms in such laws;
provided, however, that if any of such laws are amended so as to broaden any
term defined therein, such broader meaning shall apply subsequent to the
effective date of such amendment.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgagor
represents and warrants that Mortgagor has not and will not engage in
operations upon the Mortgaged Property, which involve the generation,
manufacture, refining, transportation, treatment, use, storage, handling or
disposal of any Hazardous Materials (as herein defined) other than in
compliance with all Applicable Environmental Laws.&#160; For the purposes of this Mortgage, the term &#147;Hazardous Materials&#148;
shall include, but shall not be limited to, petroleum fuel products, any
petroleum or petroleum byproducts, PCBs, asbestos, friable asbestos or
asbestos-containing material, transformers or other equipment which contain
dielectric fluid containing levels of polychlorinated biphenyls in excess of 50
parts per million, any flammable explosives, radioactive materials, any
&#147;Hazardous Substance&#148;, as such term is defined in 42 U.S.C. Section 9601(14) or
35 P.S. Section 6020.103 (herein, <B>&#147;Hazardous
Substance&#148;</B>), any &#147;Hazardous Waste&#148;, as such term is defined in 42
U.S.C. Section 6903 (5) or 35 P.S. Section 6020.103 (herein, <B>&#147;Hazardous Waste&#148;</B>), or any other material,
substance, pollutant or contaminant that is considered hazardous, radioactive
or toxic under any applicable federal, state or local statues, ordinances,
rules or regulations now or at any time hereafter in effect.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgagor
has not caused or permitted to exist and shall not cause or permit to exist, as
a result of any intentional or unintentional action or omission on its part, or
any tenant&#146;s part, any releasing, spilling, leaking, pumping, pouring,
emitting, emptying, or dumping from, on or about the Mortgaged Property of any
Hazardous Materials other than in compliance with all Applicable Environmental
Laws.&#160; Mortgagor will promptly cause the
removal and remediation of any Hazardous Materials which may hereafter be found
on the Mortgaged Property other than Hazardous Material that are being
maintained in compliance with all Applicable Environmental Laws.&#160; The Mortgaged Property does not contain any
underground storage tanks, except as may have been previously disclosed in
writing to Mortgagee.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
the best of Mortgagor&#146;s knowledge (and not imputed knowledge), and without a
duty to investigate on the part of Mortgagor, Mortgagor represents and warrants
that no </FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">8</FONT></P>

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<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">adjacent property has been used in such a manner that Hazardous
Materials may be in the subsurface water supply.&#160; </FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgagor
will permit Mortgagee and Mortgagee&#146;s representatives to enter the Mortgaged
Property at reasonable times to inspect the same, for purposes of making site
and building investigations and performing soil, groundwater, structural and
other tests, upon three days prior notice to Mortgagor.&#160; In the absence of an Event of Default, such
inspections and investigations shall be limited to four (4) times in any
calendar year.&#160; Mortgagor shall provide
Mortgagee, its agents, employees, and representatives from time to time upon
request with access to and copies of any and all data and documents relating to
or dealing with any potentially Hazardous Materials used, generated,
manufactured, found, stored or disposed of, on, under, or about the Mortgaged
Property or transported to or from the Mortgaged Property within thirty (30)
days of a request therefore.&#160; Mortgagor
shall bear the cost of such copies and reimburse Mortgagee for all reasonable
attorneys&#146; fees, copy costs, and other related costs incurred to procure such
information as Mortgagee, in its sole discretion deems necessary.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgagor
shall furnish to Mortgagee, immediately upon receipt or dispatch, a copy of any
notice, summons, citation, directive, letter or other written communication from
or to any federal, state or local environmental agency or department, which may
evidence or result in a liability under any Environmental Law such that the
costs of correcting, or of paying penalties assessed in connection with, such
liability would have a material adverse effect upon the business of Mortgagor
as now conducted or upon Mortgagor&#146;s business, operations, properties or
condition, financial or otherwise.&#160; In
such event, Mortgagor shall use diligent efforts to complete all remediation
which may be required by such communication from any federal, state, county,
municipal or other administrative, investigative, prosecutorial or enforcement
agency or environmental or occupational safety regulatory agency <B>(&#147;Environmental Regulator&#148;</B>) and to obtain
from all such Environmental Regulators having jurisdiction thereof, and deliver
to Mortgagee as received, such approvals and certifications as can be obtained
from such agencies from time to time to confirm Mortgagor&#146;s completion of all
remediation and Mortgagor&#146;s compliance with all governmental requirements
applicable thereto.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event of failure of Mortgagor to comply with any provision of this Mortgage
or any other Loan Document relating to Hazardous Substances, Environmental Laws
or Environmental Regulators, or if Mortgagee shall have reason to believe that
any Hazardous Substance has been or is likely to be released on, in or under
the Mortgaged Property (except in compliance with all Environmental Laws),
Mortgagee may do any or all of the following: (i) Mortgagee shall have the
right to investigate, or to demand that Mortgagor investigate and report to
Mortgagee on (in which case Mortgagor shall investigate and report to Mortgagee
on) the result of the investigation of such location, and if Mortgagee
requests, provide this investigation through an independent reputable
environmental consulting or engineering firm acceptable to Mortgagee; (ii)
without obligation to do so, to cure such default or to comply or cause
compliance, or to demand that Mortgagor cure such default or comply or cause
compliance, with any or all Environmental Laws.&#160; All of the foregoing shall be at the expense of Mortgagor, and
any expense incurred by Mortgagee in connection with any of the foregoing
(including without limitation its expenses relating to attorneys fees and any
environmental consultants or engineers) shall be additional obligation of
Mortgagor hereunder which shall be payable to Mortgagee upon demand, with
interest computed at the Default Rate from the date(s) upon which said costs
and expenses were incurred by Mortgagee.</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">9</FONT></P>

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<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">ARTICLE IV</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN"><U>Insurance, Damage or Destruction</U></FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgagor
will insure itself and the Mortgaged Property against such perils and to such
limits as Mortgagee shall reasonably require for the full replacement value of
the Mortgaged Property.&#160; All such
insurance shall be in such forms and with such companies, and written in such
amounts and with such deductibles and endorsements, as may be reasonably
satisfactory to Mortgagee from time to time, and losses thereunder shall be
payable to Mortgagee under standard forms of lender loss payable and mortgagee
endorsements and shall require that the insurer provide Mortgagee with thirty
(30) days notice in the event of cancellation.&#160;
In any case, Mortgagor&#146;s obligation to carry such insurance may only be
brought within the coverage of a so-called blanket or umbrella policy or
policies of insurance carried and maintained by Mortgagor if and only if the
coverage afforded Mortgagee will not be limited, reduced or diminished by
reason of the use of a blanket or umbrella policy of insurance.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event of any material loss or damage to the Mortgaged Property, Mortgagor
will promptly (and, in any event, within five (5) days of such occurrence)
notify Mortgagee in writing of any loss thereunder, and Mortgagee may, after
notice of its intention to do so to Mortgagor, make proof of loss thereof if
not made within a reasonable time by Mortgagor.&#160; After default Mortgagee may, after notice of its intention to do
so to Mortgagor, on behalf of Mortgagor, adjust and compromise any claims under
such insurance and collect and receive the proceeds thereof and endorse drafts
and Mortgagee is hereby irrevocably appointed attorney-in-fact of Mortgagor for
such purposes.&#160; Mortgagee may deduct
from such proceeds any expenses properly incurred by Mortgagee in collecting
same, including reasonable counsel fees.&#160;
Mortgagee shall hold such proceeds for the purposes set forth in Article
VI of this Mortgage.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgagor
will not maintain any other insurance on the Mortgaged Property competing or
contributing, in right of payment or otherwise, with any of the insurance required
to be afforded to Mortgagee hereunder unless Mortgagee is made the loss payee
under such other insurance.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
Mortgagor shall fail to procure, pay for and deliver to Mortgagee any policy or
policies of insurance or renewals thereof, Mortgagee may at its option, but shall
be under no obligation to do so, effect such insurance and pay the premiums
thereof, and Mortgagor will repay to Mortgagee on demand any premiums so paid,
with interest, at the Default Rate, and until so paid, the same shall be
secured by this Mortgage.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intentionally
omitted.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgagor,
at its sole cost and expense, shall obtain a mortgagee&#146;s title insurance
policy, insuring the Mortgaged Property, in form and content and issued by a title
insurance company satisfactory to Mortgagee, which will insure Mortgagee as the
holder of a valid first mortgage lien for the full amount of the Mortgage on
the Mortgaged Property, subject only to the Prior Mortgages (as hereinafter
defined), the Permitted Encumbrances, and such exceptions as Mortgagee may
approve including, but not limited to, the satisfaction or release of all
mortgages encumbering the Mortgaged Property other than the first mortgage held
by Mortgagee.</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">10</FONT></P>

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<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">ARTICLE V</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN"><U>Condemnation</U></FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgagor
immediately upon obtaining knowledge of the institution of any proceedings for
the condemnation of the Mortgaged Property or any part thereof shall notify
Mortgagee of the pendency of such proceedings.&#160;
Unless and until Mortgagee shall notify Mortgagor of Mortgagee&#146;s intent
to appear and prosecute such proceedings, pursuant to the appointment and
assignment given herein by Mortgagor to Mortgagee, Mortgagor may appear in and
prosecute such proceedings in any lawful manner; provided, however, that
Mortgagor shall have no right or authority to execute any instrument of
conveyance or confirmation in favor of the condemnor except subject hereto, nor
to accept any payment or settle or compromise any claim of Mortgagor arising
out of such condemnation proceedings without the consent of Mortgagee.&#160; Mortgagee&#146;s election not to appear in or
prosecute such proceedings shall not diminish any right Mortgagee may have to
receive any amount paid in connection with such condemnation and to apply such
funds as herein provided.</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">ARTICLE VI</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN"><U>Distribution Upon Damage, Destruction or
Condemnation</U></FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event the whole or materially all of the Mortgaged Property shall be
destroyed or damaged, Mortgagee shall have the right to collect the proceeds of
any insurance and to retain and apply such proceeds, at its election, to the
reduction of the Obligations or to restoration, repair, replacement, rebuilding
or alteration (herein sometimes collectively called the <B>&#147;Restoration&#148;</B>) of the Mortgaged
Property.&#160; In the event the whole or
materially all of the Mortgaged Property shall be taken in condemnation
proceedings or by agreement between Mortgagor and Mortgagee and the condemning
authority, Mortgagee shall apply such award or proceeds thereof first to
payment of the Obligations, and any balance then remaining shall be paid to
Mortgagor.&#160; For the purposes of this
Article VI, &#147;materially all of the Mortgaged Property&#148; shall be deemed to have
been damaged, destroyed or taken if the portion of the Mortgaged Property not
so damaged, destroyed or taken cannot be repaired or reconstructed so as to
constitute a complete structure and facility usable in substantially the manner
as prior to the damage, destruction or taking.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;So
long as no Event of Default has occurred, in the event of partial destruction
or partial condemnation, all of the proceeds or awards shall be collected and
held by Mortgagee, and shall be applied by Mortgagee, in its sole discretion,
to the repayment of the Obligations in the inverse order of maturity and any
other amounts due and owing under the Financing Documents, with any proceeds
then remaining being paid to Mortgagor, or to the payment of the
Restoration.&#160; Upon the written request
of Mortgagor, Mortgagee shall apply such proceeds or awards to the payment of
the Restoration as the Restoration progresses, so long as:</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Such
proceeds are, in Mortgagee&#146;s reasonable judgment, sufficient to cover the cost
of such Restoration or, if insufficient, Mortgagor deposits with Mortgagee the
amount of any such deficiency,</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">11</FONT></P>

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<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgagor
shall deliver to Mortgagee contracts, plans and specifications for the
Restoration which are satisfactory to Mortgagee,</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;the
work for which payment is requested has been done in a good and workmanlike
manner and Mortgagor presents evidence satisfactory to Mortgagee of amounts
owed or paid by Mortgagor for completed Restoration work,</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Mortgaged Property, after such Restoration is or will be, in the reasonable
judgment of Mortgagee, of an economic utility not less than that of the
Mortgaged Property prior to the casualty or condemnation, and</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgagor
shall comply with such further conditions in connection with the use of such
proceeds or award as Mortgagee may reasonably request.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
balance remaining in the hands of Mortgagee after payment of such Restoration
shall be retained by Mortgagee and applied to the payment of the Obligations.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding
the foregoing provisions of this Article VI regarding insurance or condemnation
proceeds, if no Event of Default has occurred, and if such proceeds do not
exceed $1,000,000.00, and if the undamaged or uncondemned portion of the
Mortgaged Property can be continuously used during the Restoration period as a
complete structure and operating facility in substantially the same manner as
prior to the damage, Mortgagor shall have the right to collect the insurance or
condemnation proceeds and apply them to the Restoration.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
damage, destruction or condemnation of the Mortgaged Property nor any
application of insurance or condemnation proceeds to the payment of the
Obligations shall postpone or reduce the amount of any of the current
installments of principal or interest becoming due under the Obligations which
shall continue to be made in accordance with the terms of the Obligations until
the Obligations and all interest due thereunder are paid in full.</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">ARTICLE VII</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN"><U>Events of Default and Remedies</U></FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
of the following shall constitute an &#147;Event of Default&#148; under this Mortgage:</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Failure
of Mortgagor to make any payment of principal or of interest as required by the
Bond;</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Failure
of Mortgagor to pay any other fee, expense or other payment due under the
Financing Agreement or other Financing Document within five (5) days after
demand is made; or&#160; </FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Failure
of Mortgagor to observe or perform any other covenant, agreement, undertaking,
performance or obligation of any provision hereof where such failure continues
for ten (10) business days after receipt by Mortgagor of written notice from
Mortgagee specifying such failure; </FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">12</FONT></P>

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<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Failure
of Mortgagor to observe or perform any covenant, agreement, undertaking,
performance or obligation under any of the other Financing Documents, or an
event of default under the Financing Agreement, subject to any applicable
notice and cure periods therein; or</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Failure
of Mortgagor to provide the insurance required in Article IV hereof; </FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
any representation or warranty made by Mortgagor herein, in the Financing Documents or in any other instrument
which pertains to this Mortgage proves to be incorrect, now or hereafter, in
any material respect, when made; or</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
default by Mortgagor under (i) that certain Open-End Mortgage and Security Agreement
dated January 30, 2004, from Mortgagor to Mortgagee in the amount of
$8,000,000, recorded in the Office of the Recorder of Deeds, in and for
Montgomery County; (ii) that certain Mortgage, Assignment of Leases and
Security Agreement dated March 20, 1997, from Mortgagor to Jefferson Bank in
the amount of One Million and 00/100 Dollars ($1,000,000.00), recorded in the
Office of the Recorder of Deeds in and for Montgomery County, Pennsylvania, on
March 25, 1997, at MB 7911, Pages 416, et seq., and (iii) that certain
Mortgage, Assignment of Leases and Security Agreement dated March 20, 1997,
from Mortgagor to Jefferson Bank in the amount of Eight Million Four Hundred
Thousand and 00/100 Dollars ($8,400,000.00), recorded in the Office of the
Recorder of Deeds in and for Montgomery County, Pennsylvania, on March 25,
1997, at MB 7911, Pages 388, et seq., (the &#147;<B>Prior
Mortgages</B>&#148;).</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
the occurrence of an Event of Default which shall be continuing, Mortgagee
shall have the right and is hereby authorized, but without any obligation to do
so, to perform the defaulted obligation and to discharge Mortgagor&#146;s
obligations on behalf of Mortgagor, and to pay any sums necessary for that
purpose, and the sums so expended by Mortgagee shall be an obligation of
Mortgagor, shall bear interest at the Default Rate, be payable on demand, and
be added to the Obligations.&#160; Mortgagee
shall be subrogated to all the rights, equities and liens discharged by any
such expenditure.&#160; Such performance by
Mortgagee on behalf of Mortgagor shall not constitute a waiver by Mortgagee of
such default and shall not limit Mortgagee&#146;s rights, remedies and recourses
hereunder, or the Obligations, or as otherwise provided at law or in
equity.&#160; Notwithstanding that the
Obligations shall not have been declared due and payable upon any such default,
the Obligations shall bear interest at the Default Rate from the date of notice
and demand therefor by Mortgagee until such default shall have been completely
cured and removed to the satisfaction of Mortgagee.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
the occurrence of an Event of Default, the entire unpaid balance of the
principal, accrued interest and all other sums secured by this Mortgage, shall,
at the option of Mortgagee, become immediately due and payable without notice
or demand and Mortgagee shall have and may exercise all the rights and remedies
permitted by law, including without limitation the right to foreclose this
Mortgage, and proceed thereon to final judgment and execution thereon for the entire
unpaid balance of said Obligations, with interest, at the default rate and
pursuant to the methods of calculation specified in the Bond, together with all
other sums secured by this Mortgage, all costs of suits, interest at the
Default Rate on any judgment obtained by Mortgagee from and after the date of
any Sheriff&#146;s Sale of the Mortgaged Property until actual payment is </FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">13</FONT></P>

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<PAGE>

<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">made by the Sheriff of the full amount due Mortgagee, and reasonable
attorney&#146;s fees, without further stay, any law, usage, or custom to the
contrary notwithstanding.&#160; In any such
foreclosure proceedings, the Mortgaged Property shall be sold, at the sole
option of Mortgagee, either (a) in one lot or unit and, as an entirety; or (b)
in such lots or units and in such order and manner as may be required by law;
or (c) in the absence of any such requirement, in such lots or units and in
such order and manner as Mortgagee may determine in its sole discretion.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
the occurrence of an Event of Default which shall be continuing, Mortgagee
shall have the right, without further notice or demand and without the
appointment of a receiver, to enter immediately upon and take possession of the
Mortgaged Property, without further consent or assignment of Mortgagor or any
subsequent owner of the Mortgaged Property, with the right to let the Mortgaged
Property, or any part thereof, and to collect and receive all of the rents,
issues, profits and other amounts due or to become due to Mortgagor or any such
subsequent owner and to apply the same in such order of priority as Mortgagee
shall determine at its sole option, after payment of all necessary charges and
expenses in connection with the operation of the Mortgaged Property (including
any managing agent&#146;s commission), on account of interest, principal, taxes,
water charges and assessments, insurance premiums and any advances for
improvements, alterations or repairs or otherwise pursuant to the terms hereof
for the account of Mortgagor, or on account of the Obligations.&#160; Mortgagee may institute legal proceedings
against any tenant of the Mortgaged Property who fails to comply with the
provisions of his lease.&#160; If Mortgagor
or any such subsequent owner is occupying the Mortgaged Property or any part
thereof, such Mortgagor or subsequent owner will either immediately vacate and
surrender possession thereof to Mortgagee or pay to Mortgagee a reasonable
rental for the use thereof, monthly in advance, and, in default of so doing,
such Mortgagor or subsequent owner may be dispossessed by legal proceedings or
otherwise.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;AFTER
AN EVENT OF DEFAULT WHENEVER AND AS OFTEN AS MORTGAGEE HAS THE RIGHT TO TAKE
POSSESSION OF THE MORTGAGED PROPERTY, MORTGAGOR IRREVOCABLY AUTHORIZES AND EMPOWERS
THE CLERK OF COURT OR ANY ATTORNEY OF ANY COURT OF COMMON PLEAS OR ANY OTHER
COURT OF COMPETENT JURISDICTION, AS ATTORNEY FOR MORTGAGOR AND MORTGAGOR&#146;S
SUCCESSORS AND ASSIGNS OR ANY OTHER PERSONS CLAIMING ANY INTEREST UNDER OR
THROUGH MORTGAGOR, AS WELL AS FOR ALL PERSONS CLAIMING UNDER, BY OR THROUGH
MORTGAGOR, TO APPEAR FOR MORTGAGOR IN AN ACTION OR ACTIONS IN EJECTMENT OR
OTHER APPROPRIATE ACTION FOR POSSESSION OF THE MORTGAGED PROPERTY FILED BY
MORTGAGEE OR ANY HOLDER OF THIS MORTGAGE (WITHOUT THE NECESSITY OF FILING ANY
BOND AND WITHOUT ANY STAY OF EXECUTION OR APPEAL) AND IN SUCH ACTION OR ACTIONS
TO ADMIT MORTGAGEE&#146;S SUPERIOR TITLE AND/OR CONFESS JUDGMENT FOR THE RECOVERY BY
MORTGAGEE OF POSSESSION OF THE MORTGAGED PROPERTY, FOR WHICH THIS INSTRUMENT
(OR A COPY HEREOF VERIFIED BY AFFIDAVIT OF MORTGAGEE OR ANYONE AUTHORIZED TO
MAKE SUCH AFFIDAVIT ON BEHALF OF MORTGAGEE) SHALL BE A SUFFICIENT WARRANT;
WHEREUPON A WRIT OF POSSESSION OR OTHER APPROPRIATE PROCESS TO OBTAIN
POSSESSION OF THE MORTGAGED PROPERTY MAY BE ISSUED FORTHWITH, WITHOUT ANY PRIOR
WRIT OR PROCEEDING WHATSOEVER, MORTGAGOR HEREBY RELEASING AND AGREEING TO
RELEASE MORTGAGEE AND SAID ATTORNEYS FROM ALL ERRORS AND DEFECTS </FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">14</FONT></P>

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<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">WHATSOEVER OF A PROCEDURAL NATURE IN ENTERING ANY SUCH ACTION OR
JUDGMENT OR IN CAUSING ANY SUCH WRIT OR PROCESS TO BE ISSUED OR IN ANY
PROCEEDING THEREON OR CONCERNING THE SAME, PROVIDED THAT MORTGAGEE SHALL HAVE
FILED IN SUCH ACTION AN AFFIDAVIT MADE BY A PERSON ON MORTGAGEE&#146;S BEHALF
SETTING FORTH THE FACTS NECESSARY TO AUTHORIZE THE ENTRY OF SUCH JUDGMENT ACCORDING
TO THE TERMS OF THIS INSTRUMENT, OF WHICH FACTS SUCH AFFIDAVIT SHALL BE A PRIMA
FACIE EVIDENCE; AND IT IS HEREBY EXPRESSLY AGREED THAT IF FOR ANY REASON AFTER
ANY SUCH ACTION HAS BEEN COMMENCED THE SAME SHALL BE DISCONTINUED, MARKED
SATISFIED OF RECORD OR TERMINATED, OR POSSESSION OF THE MORTGAGED PROPERTY
SHALL REMAIN IN OR BE RESTORED TO EITHER MORTGAGOR OR ANYONE CLAIMING UNDER, BY
OR THROUGH MORTGAGOR, MORTGAGEE MAY, WHENEVER AND AS OFTEN AS MORTGAGEE SHALL
HAVE THE RIGHT TO TAKE POSSESSION AGAIN OF THE MORTGAGED PROPERTY, BRING ONE OR
MORE FURTHER ACTIONS IN THE MANNER HEREINABOVE SET FORTH TO RECOVER POSSESSION
OF THE MORTGAGED PROPERTY AND TO CONFESS JUDGMENT THEREIN AS HEREINABOVE
PROVIDED, AND THE AUTHORITY AND POWER GIVEN ABOVE TO ANY SUCH ATTORNEY SHALL
EXTEND TO ALL SUCH FURTHER ACTIONS.&#160;
MORTGAGEE SHALL HAVE THE RIGHT TO BRING SUCH AN ACTION IN EJECTMENT AND
TO CONFESS JUDGMENT THEREIN AS HEREINABOVE PROVIDED BEFORE OR AFTER COMMENCING
AN ACTION OF MORTGAGE FORECLOSURE AND BEFORE OR AFTER JUDGMENT THEREON OR
THEREIN HAS BEEN RECOVERED OR A JUDICIAL SALE OF ALL OR ANY PART OF THE
MORTGAGED PROPERTY HAS TAKEN PLACE. </FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding
anything in this Paragraph 7.5 to the contrary, this Paragraph 7.5 and the
authority granted by Mortgagor therein is not and shall not be construed to
constitute a &#147;power of attorney&#148; and is not governed by the provisions of 20
Pa.C.S. Chapter 56.&#160; Furthermore, an
attorney or other person or entity acting under this Paragraph 7.5 shall not
have any fiduciary obligations to Mortgagor and, without limiting the foregoing
shall have NO duty to:&#160; (1) Exercise the
powers for the benefit of Mortgagor, (2) Keep separate any assets of Mortgagor
from those of such attorney, other person or entity or Mortgagee, (3) Exercise
reasonable caution and prudence on behalf of Mortgagor, or (4) Keep a full and
accurate record of all actions, receipts and disbursements on behalf of
Mortgagor.</B></FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MORTGAGOR
AND MORTGAGEE HEREBY CONSENT TO THE JURISDICTION OF THE COURT OF COMMON PLEAS
OF MONTGOMERY COUNTY OR THE FEDERAL DISTRICT COURT FOR THE EASTERN DISTRICT OF
PENNSYLVANIA FOR ANY PROCEEDING IN CONNECTION HEREWITH, AND HEREBY WAIVE
OBJECTIONS AS TO VENUE AND CONVENIENCE OF FORUM IF VENUE IS IN MONTGOMERY
COUNTY, PENNSYLVANIA OR IN THE FEDERAL DISTRICT COURT FOR THE EASTERN DISTRICT
OF PENNSYLVANIA.&#160; IN ANY ACTION OR SUIT
UNDER THIS MORTGAGE, SERVICE OF PROCESS MAY BE MADE UPON MORTGAGEE OR MORTGAGOR
BY MAILING A COPY OF THE PROCESS BY FIRST CLASS MAIL TO THE RECIPIENT.&#160; MORTGAGEE AND MORTGAGOR HEREBY WAIVE ANY AND
ALL OBJECTIONS TO SUFFICIENCY OF SERVICE OF PROCESS IF DULY SERVED IN THIS </FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">15</FONT></P>

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<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">MANNER.&#160; MORTGAGOR AND
MORTGAGEE, AS AN INDEPENDENT COVENANT, HEREBY MUTUALLY WAIVE AND AGREE TO WAIVE
THE RIGHT, IF ANY, TO A JURY TRIAL IN CONNECTION WITH ANY ACTION, SUIT OR OTHER
PROCEEDING WITH RESPECT HERETO OR WITH RESPECT TO ANY TRANSACTION RELATED
HERETO.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
monies received by Mortgagee by virtue of the assignments made herein to
Mortgagee, after payment therefrom of the costs and expenses incident to the
enforcement or collection of the assigned rights or claims, shall be applied to
the payment of the Obligations.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
the occurrence of an Event of Default, Mortgagee may proceed to protect and
enforce its rights under this Mortgage by suit for specific performance of any
covenant herein contained, or in aid of the execution of any power herein
granted, or for the foreclosure of this Mortgage and the sale of the Mortgaged
Property under the judgment or decree of a court of competent jurisdiction, or
for the enforcement of any other right as Mortgagee shall deem most effectual
for such purpose.&#160; The foregoing rights
shall be in addition to, and not in lieu of, the rights of Mortgagee as a secured
creditor under the Uniform Commercial Code of Pennsylvania with respect to any
portion of the Mortgaged Property which is subject to such Code.&#160; Mortgagee may also proceed in any other
manner permitted by law to enforce its rights hereunder and under the Financing
Agreement and/or the Security Agreement.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
failure or delay on the part of Mortgagee in exercising any right, power or
privilege under this Mortgage, and no course of dealings between Mortgagor and
Mortgagee, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.&#160; No notice to or demand on
Mortgagor shall entitle Mortgagor to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the right of Mortgagee
to any other or further action in the same or other circumstances without
notice or demand.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
any action to foreclose this Mortgage, Mortgagee, to the fullest extent
permitted by law, shall be entitled as a matter of right to the appointment of
a receiver of the Mortgaged Property and of the rents, revenues, issues, income
and profits thereof, without notice or demand, and without regard to the
adequacy of the security for the Obligations or the solvency of Mortgagor.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.10&nbsp;&nbsp;&nbsp;Upon
the occurrence of any Event of Default, Mortgagor shall pay monthly in advance
to Mortgagee, or to any receiver appointed at the request of Mortgagee to
collect the rents, revenues, issues and profits of the Mortgaged Property, the
fair and reasonable rental value for the use and occupancy of the Mortgaged
Property or of such part thereof as may be possessed by Mortgagor. &#160;Upon default in payment thereof, Mortgagor
shall vacate and surrender possession of the Mortgaged Property to Mortgagee or
such receiver, and upon a failure so to do may be evicted by summary
proceedings, in the manner hereinabove provided or otherwise.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.11&nbsp;&nbsp;&nbsp;The
rights and remedies of Mortgagee expressed or contained in this Mortgage are
cumulative and no one of them shall be deemed to be exclusive of the others or
of any right or remedy Mortgagee may now or hereafter have at law or in equity.
&#160;The covenants of this Mortgage shall
run with the land and bind Mortgagor and, unless the context clearly indicates
a </FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">16</FONT></P>

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<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">contrary intent or unless otherwise specifically provided herein, its
successors and assigns and all subsequent owners, encumbrancers, tenants and
subtenants of the Mortgaged Property and shall inure to the benefit of
Mortgagee and its successors and assigns and all subsequent holders of this
Mortgage and the Obligations.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.12&nbsp;&nbsp;&nbsp;Mortgagee
may in its discretion from time to time grant to Mortgagor indulgences,
forbearances and extensions of the Obligations, may release, with or without
consideration, any portion of the Mortgaged Property from the lien hereof, and
may accept other and further collateral security for the payment of and strict
and faithful performance of the Obligations, all without otherwise affecting
the lien or priority of this Mortgage, and the release of any portion of the
Mortgaged Property from the lien hereof shall not affect the lien of this
Mortgage with respect to the remainder of the Mortgaged Property.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.13&nbsp;&nbsp;&nbsp;Mortgagor
hereby waives and relinquishes the benefits of all present and future laws (i)
exempting the Mortgaged Property or any other property or any part of the
proceeds of sale thereof from attachment, levy or sale on execution, and (ii)
staying execution or other process.&#160; </FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.14&nbsp;&nbsp;&nbsp;Mortgagor
acknowledges and agrees that the occurrence of an Event of Default under the
terms of this Mortgage shall constitute a default under each of the other
Financing Documents, and a default under the other Financing Documents shall
constitute an Event of Default under this Mortgage.&#160; The security interests, liens and other rights and interests in
and relative to any of the collateral now or hereafter granted to Mortgagee by
Mortgagor by or in any instrument or agreement, including but not limited to
this Mortgage and the other Financing Documents, shall serve as security for
any and all liabilities of Mortgagor to Mortgagee, including but not limited to
the liabilities described in this Mortgage and the other Financing Documents,
and, for the repayment thereof, Mortgagee may resort to any security held by it
in such order and manner as it may elect.</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">ARTICLE VIII</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN"><U>Indemnity</U></FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
the maximum extent permitted by applicable law, Mortgagor, for itself and its
successors (herein, <B>&#147;Indemnifying Parties&#148;</B>),
shall jointly and severally indemnify, hold harmless, and upon request defend
Mortgagee and its partners, employees and agents, officers, directors and
attorneys, and their respective successors and assigns (collectively, the &#147;<B>Indemnified Parties&#148;</B>) from and against any
and all claims and liabilities which any Indemnified Party may suffer, incur or
be exposed to by reason of or in connection with or arising out of the
transport, release, treatment, processing, manufacture, deposit, storage,
disposal, burial, dumping, injecting, spilling, leaking or placement at any
time heretofore or hereafter, by any person or entity, of any Hazardous Material,
including but not limited to (1) costs of or liability for investigation,
monitoring, boring, testing and evaluation; (2) costs or liabilities for
abatement, correction, response, cleanup, removal or remediation; (3) fines,
damages, penalties and other liabilities; and (4) liability for personal injury
or property damage.</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">17</FONT></P>

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<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">ARTICLE IX</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN"><U>Miscellaneous Provisions</U></FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
notices, demands, requests and consents required under this Mortgage shall be
in writing.&#160; All such notices, demands, requests
and consents shall be deemed to have been properly given if sent by United
States registered or certified mail, return receipt requested, postage prepaid,
if addressed to Mortgagee at 1531 Walnut Street, Philadelphia, Pennsylvania&#160; 19102, Attention:&#160; J. Clark O&#146;Donoghue, with a copy in all instances to Dean M.
Schwartz, Esquire, Stradley, Ronon, Stevens &amp; Young, LLP, 2600 One Commerce
Square, Philadelphia, Pennsylvania 19103, and if addressed to Mortgagor at 102
Witmer Road, Horsham, Pennsylvania, 19044, Attention:&#160; General Counsel, with a copy in all instances to Barry M.
Abelson, Esquire, Pepper Hamilton LLP, 3000 Two Logan Square, 18<SUP>th</SUP>
&amp; Arch Streets, Philadelphia, Pennsylvania 19103 or at such other address
or addresses as either party may hereafter designate in writing to the
other.&#160; Notices, demands and requests
which shall be served by registered or certified mail, return receipt
requested, upon Mortgagor or Mortgagee, in the manner aforesaid, shall be deemed
sufficiently served or given for all purposes hereunder two (2) days after the
time such notice, demand or request shall be mailed by United States registered
or certified mail, return receipt requested, postage prepaid, in any Post
Office or Branch Post Office regularly maintained by the United States
Government.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
Mortgagor complies with the provisions of this Mortgage and pays to Mortgagee
all sums secured hereby in accordance with the terms of and at the times
provided in the Bond and the Financing Agreement, without deduction, fraud or
delay, then this Mortgage and the estate and security interest hereby granted
and created shall then cease, terminate and become void, and Mortgagee shall
execute and deliver such mortgage satisfactions and other documents as
Mortgagor may reasonably request to evidence the same.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgagor
shall promptly cause this Mortgage to be duly recorded in the Office for the
Recording of Deeds and Mortgages in and for Montgomery County, Pennsylvania and
shall pay all recording fees and other costs incurred in connection therewith.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
amendments and modifications of this Mortgage must be in writing.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
any term or provision of this Mortgage or the application thereof to any person
or circumstances shall, to any extent, be invalid or unenforceable, the
remainder of this Mortgage, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Mortgage shall be valid and be enforced to the fullest extent permitted by
law.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Mortgage is intended to be eligible for all of the benefits of the provisions
of Act 126 of 1990, 42 Pa. C.S. Sections 8143 and 8144, but to the extent that
any rule or law would grant greater protection to Mortgagee or greater priority
for the lien of this Mortgage as it secures any advance, such rule or law shall
prevail.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Mortgage is not a residential mortgage as that term is defined in 41 P.S. &#167;101 <U>et</U>
<U>seq</U>. or Act 91 of 1983.</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">18</FONT></P>

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<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Mortgage and all terms, covenants and conditions hereof shall inure to the
benefit of and bind the parties hereto, their successors and assigns, to the
extent assignments are permitted herein.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
interest rate on the Bond secured by this Open-End Mortgage and Security
Agreement is an adjustable rate based on the London Interbank Offering Rate or
rates otherwise established by Mortgagee from time to time, each as more
particularly set forth in the Bond.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.10&nbsp;&nbsp;&nbsp;MORTGAGOR
CERTIFIES THAT IT HAS RECEIVED A FULLY EXECUTED COPY OF THIS MORTGAGE WITHOUT
CHARGE.</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN"><B><I>Signatures follow on
next page.</I></B></FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">19</FONT></P>

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<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS
WHEREOF, Mortgagor has executed and delivered this Mortgage on the day and year
above written.</FONT></P>
<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR>
  <TD WIDTH="58%" COLSPAN="3" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="41%" COLSPAN="4" VALIGN=BOTTOM>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">NEOSE TECHNOLOGIES, INC., a<BR>
  Delaware corporation</FONT></P></TD>
 </TR>
 <TR>
  <TD WIDTH="58%" COLSPAN="3" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="41%" COLSPAN="4" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
 </TR>
 <TR>
  <TD WIDTH="58%" COLSPAN="3" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="41%" COLSPAN="4" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
 </TR>
 <TR>
  <TD WIDTH="5%" VALIGN=BOTTOM>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">Attest:</FONT></P></TD>
  <TD WIDTH="32%" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="20%" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="3%" VALIGN=BOTTOM>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">By:</FONT></P></TD>
  <TD WIDTH="14%" COLSPAN="2" VALIGN=BOTTOM>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">/s/ C. Boyd Clarke</FONT></P></TD>
  <TD WIDTH="23%" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
 </TR>
 <TR>
  <TD WIDTH="5%" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="32%" VALIGN=BOTTOM>
  <HR SIZE=1 WIDTH="100%" NOSHADE COLOR=BLACK ALIGN=CENTER>
  </TD>
  <TD WIDTH="20%" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="3%" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="14%" COLSPAN="2" VALIGN=BOTTOM>
  <HR SIZE=1 WIDTH="100%" NOSHADE COLOR=BLACK ALIGN=CENTER>
  </TD>
  <TD WIDTH="23%" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
 </TR>
 <TR>
  <TD WIDTH="58%" COLSPAN="3" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="6%" COLSPAN="2" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="35%" COLSPAN="2" VALIGN=BOTTOM>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">Name: C. Boyd Clarke</FONT></P></TD>
 </TR>
 <TR>
  <TD WIDTH="58%" COLSPAN="3" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="6%" COLSPAN="2" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="35%" COLSPAN="2" VALIGN=BOTTOM>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">Title:&nbsp;&nbsp;&nbsp;President and CEO</FONT></P></TD>
 </TR>
 <TR>

  <TD WIDTH=38></TD>
  <TD WIDTH=231></TD>
  <TD WIDTH=149></TD>
  <TD WIDTH=26></TD>
  <TD WIDTH=18></TD>
  <TD WIDTH=89></TD>
  <TD WIDTH=170></TD>
 </TR>
</TABLE>

<P><FONT SIZE=2 FACE="TIMES NEW ROMAN"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS
MORTGAGE CONTAINS A CONFESSION OF JUDGMENT IN EJECTMENT.&#160; A JUDGMENT FOR POSSESSION COULD BE ENTERED
AGAINST YOU WITHOUT A PRIOR HEARING OR NOTICE.&#160;
MORTGAGOR HEREBY CERTIFIES THAT THEY HAVE CONSULTED AN ATTORNEY
REGARDING THE IMPLICATIONS OF A CONFESSION OF JUDGMENT AND KNOWINGLY,
VOLUNTARILY AND INTELLIGENTLY WAIVE ANY RIGHTS TO PRIOR NOTICE AND OPPORTUNITY
TO BE HEARD IN CONNECTION THEREWITH.</B></FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR>
  <TD WIDTH="58%" COLSPAN="3" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="41%" COLSPAN="4" VALIGN=BOTTOM>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">NEOSE TECHNOLOGIES, INC., a<BR>
  Delaware corporation</FONT></P></TD>
 </TR>
 <TR>
  <TD WIDTH="58%" COLSPAN="3" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="41%" COLSPAN="4" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
 </TR>
 <TR>
  <TD WIDTH="58%" COLSPAN="3" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="41%" COLSPAN="4" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
 </TR>
 <TR>
  <TD WIDTH="5%" VALIGN=BOTTOM>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">Attest:</FONT></P></TD>
  <TD WIDTH="32%" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="20%" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="3%" VALIGN=BOTTOM>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">By:</FONT></P></TD>
  <TD WIDTH="14%" COLSPAN="2" VALIGN=BOTTOM>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">/s/ C. Boyd Clarke</FONT></P></TD>
  <TD WIDTH="23%" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
 </TR>
 <TR>
  <TD WIDTH="5%" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="32%" VALIGN=BOTTOM>
  <HR SIZE=1 WIDTH="100%" NOSHADE COLOR=BLACK ALIGN=CENTER>
  </TD>
  <TD WIDTH="20%" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="3%" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="14%" COLSPAN="2" VALIGN=BOTTOM>
  <HR SIZE=1 WIDTH="100%" NOSHADE COLOR=BLACK ALIGN=CENTER>
  </TD>
  <TD WIDTH="23%" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
 </TR>
 <TR>
  <TD WIDTH="58%" COLSPAN="3" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="6%" COLSPAN="2" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="35%" COLSPAN="2" VALIGN=BOTTOM>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">Name: C. Boyd Clarke</FONT></P></TD>
 </TR>
 <TR>
  <TD WIDTH="58%" COLSPAN="3" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="6%" COLSPAN="2" VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="35%" COLSPAN="2" VALIGN=BOTTOM>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">Title:&nbsp;&nbsp;&nbsp;President and CEO</FONT></P></TD>
 </TR>
 <TR>

  <TD WIDTH=38></TD>
  <TD WIDTH=231></TD>
  <TD WIDTH=149></TD>
  <TD WIDTH=26></TD>
  <TD WIDTH=18></TD>
  <TD WIDTH=89></TD>
  <TD WIDTH=170></TD>
 </TR>
</TABLE>

<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">The address of
Mortgagee is:</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">1531 Walnut Street<BR>
Philadelphia, PA&#160; 19102</FONT></P>
<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR>
  <TD WIDTH="21%" VALIGN=TOP>
  <HR SIZE=1 WIDTH="100%" NOSHADE COLOR=BLACK ALIGN=CENTER>
  </TD>
  <TD WIDTH="78%" VALIGN=TOP>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
 </TR>
 <TR>
  <TD WIDTH="21%" VALIGN=TOP>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">On behalf&nbsp;of&nbsp;Mortgagee</FONT></P></TD>
  <TD WIDTH="78%" VALIGN=TOP>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">20</FONT></P>

<HR STYLE="MARGIN-TOP: -2PX" NOSHADE SIZE=1>
<HR STYLE="MARGIN-TOP: -10PX" NOSHADE SIZE=4>
<PAGE>

<BR>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR>
  <TD WIDTH="34%" VALIGN=TOP>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">STATE OF
  PENNSYLVANIA</FONT></P></TD>
  <TD WIDTH="6%" VALIGN=TOP>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">:</FONT></P></TD>
  <TD WIDTH="59%" VALIGN=TOP>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
 </TR>
 <TR>
  <TD WIDTH="34%" VALIGN=TOP>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="6%" VALIGN=TOP>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">:</FONT></P></TD>
  <TD WIDTH="59%" VALIGN=TOP>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">SS</FONT></P></TD>
 </TR>
 <TR>
  <TD WIDTH="34%" VALIGN=TOP>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">COUNTY OF
  PHILADELPHIA</FONT></P></TD>
  <TD WIDTH="6%" VALIGN=TOP>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">:</FONT></P></TD>
  <TD WIDTH="59%" VALIGN=TOP>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
 </TR>
</TABLE>

<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
this _______ day of February, 2004, before me, a Notary Public, personally
appeared C. Boyd Clarke who acknowledged that he is President and CEO of NEOSE
TECHNOLOGIES, INC., a Delaware corporation, and that he being authorized to do
so as such officer, executed the foregoing instrument for the purposes therein
contained.</FONT></P>
<P><FONT SIZE=2 FACE="TIMES NEW ROMAN">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS
WHEREOF, I have hereunto set my hand and official seal.</FONT></P>

<TABLE ALIGN=CENTER  BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR>
  <TD WIDTH="42%" VALIGN=TOP>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="31%" VALIGN=TOP>
  <HR SIZE=1 WIDTH="100%" NOSHADE COLOR=BLACK ALIGN=CENTER>
  </TD>
  <TD WIDTH="25%" VALIGN=TOP>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
 </TR>
 <TR>
  <TD WIDTH="42%" VALIGN=TOP>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="57%" COLSPAN="2" VALIGN=TOP>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">Notary Public</FONT></P></TD>
 </TR>
 <TR>
  <TD WIDTH="42%" VALIGN=TOP>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="57%" COLSPAN="2" VALIGN=TOP>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
 </TR>
 <TR>
  <TD WIDTH="42%" VALIGN=TOP>
  <P><FONT SIZE=1>&nbsp;</FONT></P></TD>
  <TD WIDTH="57%" COLSPAN="2" VALIGN=TOP>
  <P><FONT SIZE=2 FACE="TIMES NEW ROMAN">My Commission Expires:</FONT></P></TD>
 </TR>
</TABLE>

<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">21</FONT></P>

<HR STYLE="MARGIN-TOP: -2PX" NOSHADE SIZE=1>
<HR STYLE="MARGIN-TOP: -10PX" NOSHADE SIZE=4>
<PAGE>

<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">EXHIBIT &#147;A&#148;</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">Description of Real Estate</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">22</FONT></P>

<HR STYLE="MARGIN-TOP: -2PX" NOSHADE SIZE=1>
<HR STYLE="MARGIN-TOP: -10PX" NOSHADE SIZE=4>
<PAGE>

<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">EXHIBIT &#147;B&#148;</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">Permitted Encumbrances</FONT></P>
<P ALIGN=CENTER><FONT SIZE=2 FACE="TIMES NEW ROMAN">23</FONT></P>

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</TEXT>
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