Exhibit 10.4

After recording please return:

Sullivan &  Worcester LLP
One Post Office Square
Boston, MA 02109
Attention: Duncan T. O'Brien, Esq.

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                          MORTGAGE, SECURITY AGREEMENT,
                         ASSIGNMENT OF LEASES AND RENTS,
                               AND FIXTURE FILING

                                     made by

                      MONTICELLO RACEWAY MANAGEMENT, INC.,

                                   Mortgagor,

                                       to

                         THE BANK OF SCOTLAND, as Agent

                                    Mortgagee

THIS INSTRUMENT  AFFECTS REAL AND PERSONAL PROPERTY SITUATED IN THE STATE OF NEW
YORK,  COUNTY OF SULLIVAN,  KNOW BY THE STREET ADDRESS OF ST. REGIS TRUST PARCEL
(232 ACRES MORE OR LESS)  MONTICELLO,  NEW YORK.

THIS MORTGAGE  CONSTITUTES A FINANCING  STATEMENT FILED AS A FIXTURE FILING, AND
IS TO BE FILED AND INDEXED IN THE REAL ESTATE  RECORDS AND ALSO TO BE INDEXED IN
THE  INDEX  OF  FINANCING  STATEMENTS  (FIXTURE  FILINGS)  UNDER  THE  NAMES  OF
MORTGAGOR,  AS "DEBTOR," AND MORTGAGEE, AS "SECURED PARTY." SEE GRANTING CLAUSES
AND SECTION 18 OF THIS INSTRUMENT FOR DESCRIPTION OF FIXTURES AND OTHER DETAILS.
THIS  MORTGAGE  DOES NOT  COVER  REAL  PROPERTY  PRINCIPALLY  IMPROVED  OR TO BE
IMPROVED BY ONE OR MORE STRUCTURES CONTAINING IN THE AGGREGATE NOT MORE THAN SIX
RESIDENTIAL  DWELLING UNITS EACH HAVING THEIR OWN SEPARATE  COOKING  FACILITIES.

THE "MAXIMUM  PRINCIPAL  AMOUNT"  SECURED BY THIS MORTGAGE IS  $10,000,000  (SEE
SECTION 33 FOR THE MAXIMUM TOTAL AMOUNT THAT THIS MORTGAGE SECURES).

                          Dated as of January 11, 2005

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                                TABLE OF CONTENTS
                                                                            Page
                                                                            ----

Granting Clauses...............................................................1
Terms and Conditions...........................................................4
    1.   Warranty of Title.....................................................4
    2.   Payment of Obligations................................................4
    3.   Requirements..........................................................4
    4.   Payment of Taxes and Other Impositions................................5
    5.   Insurance.............................................................6
    6.   Restrictions on Liens and Encumbrances................................6
    7.   Due on Sale and Other Transfer Restrictions...........................6
    8.   Casualty Condemnation/Eminent Domain..................................6
    9.   Leases................................................................6
    10.  Further Assurances....................................................7
    11.  Mortgagee's Right to Perform..........................................7
    12.  Events of Default.....................................................7
    13.  Remedies..............................................................7
    14.  Right of Mortgagee to Credit Sale.....................................8
    15.  Appointment of Receiver...............................................8
    16.  Extension, Release, etc...............................................9
    17.  Security Agreement under Uniform Commercial Code.....................10
    18.  Future Advances......................................................10
    19.  Assignment of Rents..................................................11
    20.  Additional Rights....................................................11
    21.  Mortgagor's Indemnities..............................................12
    22.  No Liability of Mortgagee............................................12
    23.  Notices..............................................................12
    24.  No Oral Modification.................................................12
    25.  Partial Invalidity...................................................13
    26.  Mortgagor's Waiver of Rights.........................................13
    27.  Remedies Not Exclusive...............................................14
    28.  Multiple Security....................................................14
    29.  Successors and Assigns...............................................15
    30.  No Waivers, etc......................................................15
    31.  Governing Law, etc...................................................16
    32.  Certain Definitions..................................................16
    33.  Maximum Amount of Indebtedness.......................................16
    34.  Last Dollars Secured Priority........................................16
    35.  Release..............................................................16
    36.  Inconsistency with Loan Agreement....................................17
    37.  Loan Agreement.......................................................17
    38.  No Merger of Estates.................................................17
    39.  No Partnership.......................................................17
    40.  Limitation of Amount.................................................17
    41.  Future Assignments...................................................17

                                       i

                                TABLE OF CONTENTS
                                  (continued)
                                                                            Page
                                                                            ----

    42.  Lien Law.............................................................17
    43.  Statutory Interpretation.............................................18
    44.  Power of Sale........................................................18
    45.  Multiple Parcels.....................................................18
    46.  Headings.............................................................18
    47.  Defense of Claims....................................................18
    48.  Exculpation Provisions...............................................19
    49.  Intentionally Deleted................................................19
    50.  Incorporation by Reference...........................................19

                          MORTGAGE, SECURITY AGREEMENT,
               ASSIGNMENT OF LEASES AND RENTS, AND FIXTURE FILING

     THIS  MORTGAGE,  SECURITY  AGREEMENT,  ASSIGNMENT OF LEASES AND RENTS,  AND
FIXTURE  FILING,  dated as of January  11,  2005 is made by  MONTICELLO  RACEWAY
MANAGEMENT,  INC., a New York corporation (the "MORTGAGOR"),  with an address at
c/o Monticello Raceway,  Route 17B;  Monticello,  New York 12701, to THE BANK OF
SCOTLAND, as Agent (in such capacity,  the "MORTGAGEE"),  with an address at 565
Fifth Avenue, New York, New York 10017, Attn.: Catherine Oniffrey. References to
this  "Mortgage"   shall  mean  this  instrument  .and  any  and  all  renewals,
modifications,     amendments,    supplements,    extensions,    consolidations,
substitutions, spreaders and replacements of this instrument.

                                   BACKGROUND

     A. Empire Resorts, Inc. ("EMPIRE") is a party to the Loan Agreement,  dated
as of January 11, 2005 (as amended, supplemented or otherwise modified from time
to time,  the "LOAN  AGREEMENT"),  among  Empire,  the  Mortgagor  and the other
Guarantors  named therein  (each,  a  "SUBSIDIARY  GUARANTOR"  and  collectively
together with Empire, the "LOAN PARTIES"), certain lenders (the "BANKS") and THE
BANK OF SCOTLAND, as agent (in such capacity, the "AGENT") for the Banks.

     B.  Pursuant to the terms of the Loan  Agreement,  the Banks have agreed to
make available to Empire a $10,000,000 revolving credit facility,  which will be
guaranteed on a senior basis, in part, by each of the Loan Parties. The terms of
the Loan  Agreement  are  incorporated  by reference in this  Mortgage as if the
terms  thereof  were fully set forth  herein.  Capitalized  terms not  otherwise
defined  herein shall have the meanings  ascribed  thereto in the Loan Agreement
and the other Loan Documents.  References in this Mortgage to the "OVERDUE RATE"
shall mean a rate per annum equal to 2% in excess of the Base Rate.

     C. The  Mortgagor  is the owner of the fee simple  estate in the parcels of
real  property  described  on EXHIBIT A attached  hereto (the "OWNED  LAND") and
owns,  leases  or  otherwise  has  the  right  to  use  all  of  the  buildings,
improvements,  structures, and fixtures now or subsequently located on the Owned
Land (the "IMPROVEMENTS"; the Owned Land and the Improvements being collectively
referred to as the "REAL ESTATE").

     D. As an  inducement  to the  Agent  and the  Banks to enter  into the Loan
Agreement and the Banks to make Loans, the Mortgagor is executing and delivering
this Mortgage to the Mortgagee. References herein to the "SECURED PARTIES" shall
mean the  collective  reference to the Mortgagee,  the Agent,  each Bank and any
other holder of the Obligations (as hereinafter  defined),  and their respective
successors, endorsees, transferees and assigns.

                                GRANTING CLAUSES

     For good and valuable  consideration,  the receipt and sufficiency of which
are hereby  acknowledged,  the  Mortgagor  agrees that to secure the payment and
performance of all  "Obligations"  (as defined in the Loan  Agreement) and other
liabilities  of the  Mortgagor  and the Loan Parties which may arise under or in
connection with the Notes,  the Loan Agreement and the other Loan Documents,  in

each case whether on account of principal, interest,  reimbursement obligations,
for  fees,  indemnities,   costs,  expenses  or  otherwise  (including,  without
limitation,  all fees and  disbursements  of counsel to the  Mortgagee or to any
Secured  Party that are  required  to be paid by the  Mortgagee  pursuant to the
terms  of  this  Mortgage  or  any  other  Loan  Documents  (collectively,   the
"OBLIGATIONS");

THE MORTGAGOR HEREBY GRANTS TO THE MORTGAGEE A LIEN UPON AND A SECURITY INTEREST
IN, AND HEREBY MORTGAGES AND WARRANTS,  GRANTS, ASSIGNS, TRANSFERS AND SETS OVER
UNTO THE MORTGAGEE FOR THE USE AND BENEFIT OF THE MORTGAGEE, AS AGENT:

               (a) the Owned Land;

               (b) all right,  title and interest the  Mortgagor  now has or may
          hereafter  acquire  in and to the  Improvements  or any  part  thereof
          (whether  owned in fee by the  Mortgagor or held pursuant to any Lease
          or  otherwise)  and all the  estate,  right,  title,  claim or  demand
          whatsoever of the Mortgagor,  in possession or  expectancy,  in and to
          the Real Estate or any part thereof;

               (c) all right,  title and  interest of the  Mortgagor  in, to and
          under all easements,  rights of way, licenses,  operating  agreements,
          abutting strips and gores of land,  streets,  ways, alleys,  passages,
          sewer  rights,  waters,  water  courses,  water  and  flowage  rights,
          development  rights,  air  rights,  mineral and soil  rights,  plants,
          standing  and  fallen  timber,  and  all  estates,   rights,   titles,
          interests,   privileges,   licenses,   tenements,   hereditaments  and
          appurtenances belonging,  relating or appertaining to the Real Estate,
          and any reversions,  remainders,  rents,  issues,  profits and revenue
          thereof and all land lying in the bed of any  street,  road or avenue,
          in front of or adjoining the Real Estate to the center line thereof;

               (d) all of the fixtures, chattels, business machines,  machinery,
          apparatus, equipment,  furnishings,  fittings, appliances and articles
          of  personal  property  of every kind and nature  whatsoever,  and all
          appurtenances  and additions thereto and substitutions or replacements
          thereof (together with, in each case, attachments,  components,  parts
          and  accessories)  currently  owned or  subsequently  acquired  by the
          Mortgagor and now or subsequently attached to, or contained in or used
          or usable in any way in  connection  with any  operation or letting of
          the Real Estate,  including but without limiting the generality of the
          foregoing, all screens, awnings, shades, blinds, curtains,  draperies,
          artwork,  carpets,  rugs,  storm  doors  and  windows,  furniture  and
          furnishings,  heating, electrical, and mechanical equipment, lighting,
          switchboards,  plumbing, ventilating, air conditioning and air-cooling
          apparatus,  refrigerating,  and  incinerating  equipment,  escalators,
          elevators,  loading  and  unloading  equipment  and  systems,  stoves,
          ranges, laundry equipment, cleaning systems (including window cleaning
          apparatus),  telephones,  communication  systems (including  satellite
          dishes and antennae),  televisions;  computers,  sprinkler systems and
          other fire  prevention  and  extinguishing  apparatus  and  materials,
          security systems,  motors,  engines,  machinery,  pipes, pumps, tanks,
          conduits,  appliances,   fittings  and  fixtures  of  every  kind  and
          description (all of the foregoing in this paragraph (d) being referred
          to as the "EQUIPMENT");

                                      -2-

               (e) all right,  title and interest of the Mortgagor in and to all
          substitutes and  replacements  of, and all additions and  improvements
          to, the Real  Estate and the  Equipment,  subsequently  acquired by or
          released to the Mortgagor or  constructed,  assembled or placed by the
          Mortgagor  on the Real  Estate;  immediately  upon  such  acquisition,
          release,  construction,  assembling or placement,  including,  without
          limitation,  any and all building materials whether stored at the Real
          Estate or offsite,  and, in each such case,  without any further deed,
          conveyance, assignment or other act by the Mortgagor;

               (f) all right,  title and  interest of the  Mortgagor  in, to and
          under all leases,  subleases,  underlettings,  concession  agreements,
          management  agreements,  licenses and other agreements relating to the
          use or  occupancy  of the Real  Estate  or the  Equipment  or any part
          thereof,  now existing or  subsequently  entered into by the Mortgagor
          and whether written or oral and all guarantees of any of the foregoing
          (collectively,  as any  of the  foregoing  may be  amended,  restated,
          extended,  renewed or modified from time to time, the  "LEASES");  and
          all  rights  of the  Mortgagor  in  respect  of  cash  and  securities
          deposited  thereunder  and  the  right  to  receive  and  collect  the
          revenues, income, rents, issues and profits thereof, together with all
          other rents,  royalties,  issues,  profits,  revenue, income and other
          benefits arising from the use and enjoyment of the Mortgaged  Property
          (as defined below) (collectively, the "RENTS");

               (g)  all  unearned  premiums  under  insurance  policies  now  or
          subsequently  obtained by the Mortgagor relating to the Real Estate or
          Equipment,  and the Mortgagor's interest in and to all proceeds of any
          such insurance policies (including title insurance policies) including
          the  right to  collect  and  receive  such  proceeds,  subject  to the
          provisions  relating to insurance  generally set forth below;  and all
          awards and other compensation,  including the interest payable thereon
          and the right to collect and receive the same;  made to the present or
          any subsequent owner of the Real Estate or Equipment for the taking by
          eminent domain,  condemnation or otherwise,  of all or any part of the
          Real Estate or any easement or other right therein; .

               (h) to the extent not expressly  prohibited  under the applicable
          contract,  consent,  license  or other  item  unless  the  appropriate
          consent  has been  obtained,  all  right,  title and  interest  of the
          Mortgagor in and to (i) all  contracts  from time to time  executed by
          the  Mortgagor  or any manager or agent on its behalf  relating to the
          ownership,  construction,  maintenance,  repair, operation, occupancy,
          sale or  financing of the Real Estate or Equipment or any part thereof
          and all  agreements  and options  relating to the purchase or lease of
          any portion of the Real  Estate,  together  with the right to exercise
          such options and all leases of Equipment, (ii) all consents, licenses,
          building  permits,  certificates  of occupancy and other  governmental
          approvals  relating to  construction,  completion,  occupancy,  use or
          operation  of the Real  Estate  or any part  thereof,  and  (iii)  all
          drawings, plans,  specifications and similar or related items relating
          to the Real Estate; and

               (i) all proceeds, both cash and noncash, of the foregoing;

                                      -3-

          (All of the  foregoing  property and rights and interests now owned or
held or  subsequently  acquired by the  Mortgagor and described in the foregoing
clauses (a)  through (c) are  collectively  referred to as the  "PREMISES",  and
those  described  in the  foregoing  clauses (a)  through  (i) are  collectively
referred to as the "MORTGAGED PROPERTY").

          TO  HAVE  AND TO HOLD  the  Mortgaged  Property  and  the  rights  and
privileges  hereby mortgaged unto the Mortgagee,  its successors and assigns for
the uses and purposes set forth,  until the Obligations are paid in full and the
Loan Commitments terminated under the Loan Agreement; PROVIDED HOWEVER, that the
condition of this Mortgage is such that if the  Obligations  are so  discharged,
then the estate hereby granted shall cease, terminate and become void, but shall
otherwise  remain in full  force and  effect.  Notwithstanding  anything  to the
contrary  contained  herein,  the Lien of this  Mortgage  shall be  released  in
compliance with the terms of the Loan Agreement.

          This  Mortgage  covers  advances,  in  the  aggregate  amount  of  the
obligations  secured hereby,  made by the Secured Parties for the benefit of the
Mortgagor.

                              TERMS AND CONDITIONS

          The Mortgagor further represents,  warrants, covenants and agrees with
the Mortgagee and the Secured Parties as follows:

     1.  WARRANTY  OF  TITLE.  The  Mortgagor  warrants  that  it has  good  and
marketable record title in fee simple to the Real Estate,  and good title to the
rest of the Mortgaged  Property,  subject only to the matters that are set forth
in  Schedule B of the title  insurance  policy or policies  being  issued to the
Mortgagee to insure the lien of this Mortgage and any other  Permitted Liens (as
defined in the Loan Agreement). The Mortgagor shall warrant, defend and preserve
such title and the lien of this  Mortgage  against all claims of all persons and
entities  (not  including  the holders of the  Permitted  Liens).  The Mortgagor
represents  and  warrants  that it has the power and lawful  authority to grant,
bargain,  sell,  assign,  transfer,  mortgage  and  convey a  mortgage  lien and
security  interest  in all of the  Mortgaged  Property to the  Mortgagee  in the
manner  and form  herein  provided  and  without  obtaining  the  authorization,
approval,  consent or waiver of any  grantor,  lessor,  sublessor,  governmental
authority or other Person whomsoever.

     2.  PAYMENT  OF  OBLIGATIONS.  The  Mortgagor  shall  pay and  perform  the
Obligations  at the times and  places and in the  manner  specified  in the Loan
Agreement and the other Loan Documents.

     3.  REQUIREMENTS.  The  Mortgagor  shall  promptly  comply  with all  laws,
ordinances,  judgments,  decrees,  injunctions,  writs and  orders of any court,
arbitrator  or  governmental  agency or authority,  and all rules,  regulations,
orders,  interpretations,  directives,  licenses and permits,  applicable to the
Mortgaged Property, and all covenants,  restrictions and conditions now or later
of record which may be applicable to any of the  Mortgaged  Property,  or to the
use, manner of use, occupancy, possession, operation,  maintenance,  alteration,
repair or reconstruction of any of the Mortgaged  Property.  The Mortgagor shall
not commit,  nor permit or suffer to occur,  any material  waste with respect to
the Mortgaged Property.

                                      -4-

     4. PAYMENT OF TAXES AND OTHER  IMPOSITIONS.  (a) Promptly when due or prior
to the date on which any fine, penalty, interest or cost may be added thereto of
imposed,   the  Mortgagor  shall  pay  and  discharge  all  taxes,  charges  and
assessments of every kind and nature,  all charges for any easement or agreement
maintained  for the benefit of any of the Real  Estate,  all general and special
assessments,  levies, permits,  inspection and license fees, all water and sewer
rents and charges,  vault taxes and all other public  charges even if unforeseen
or extraordinary, imposed upon or assessed against or which may become a lien on
any of the  Real  Estate,  or  arising  in  respect  of  the  occupancy,  use or
possession  thereof,  together  with any  penalties  or  interest  on any of the
foregoing  (all of the  foregoing  are  collectively  referred  to herein as the
"IMPOSITIONS"),  except  where  (i) the  validity  or  amount  thereof  is being
contested  in  good  faith  by  appropriate  proceedings,  which  the  Mortgagee
determines  suspends the obligation to pay the  Imposition and that  non-payment
thereof will not result in forfeiture,  sale, loss or diminution of any interest
of the Mortgagee in the Mortgaged  Property and (ii) the Mortgagor has set aside
on its books  adequate  reserves with respect  thereto in accordance  with GAAP,
which  reserves  shall  include  reasonable  additional  sums to cover  possible
interest,  costs,  and penalties;  PROVIDED,  HOWEVER,  that the Mortgagor shall
promptly  cause  to  be  paid  any  amount  adjudged  by a  court  of  competent
jurisdiction to be due, with all interest, costs and penalties thereon, promptly
after such judgment  becomes final (and,  subject to the Mortgagee's  rights and
remedies  during an Event of Default and subject to any  provisions set forth in
the Loan Agreement and the other Loan  Documents to the contrary,  the Mortgagee
shall make any sum deposited in such reserve  available for such  payment);  and
provided,  further,  that,  in  all  events,  Impositions,  interest  costs  and
penalties  shall be paid  prior to the  date any writ or order is  issued  under
which the Mortgaged Property may be sold, lost or forfeited. Upon request by the
Mortgagee,  the Mortgagor  shall deliver to the  Mortgagee  evidence  reasonably
acceptable to the Mortgagee  showing the payment of any such  Imposition.  If by
law any Imposition, at the Mortgagor's option, may without penalty or premium be
paid in installments (whether or not interest shall accrue on the unpaid balance
of such  Imposition),  the  Mortgagor  may elect to pay such  Imposition in such
installments and shall be responsible for the payment of such  installments with
interest, if any.

          (b) Nothing  herein shall affect any right or remedy of the  Mortgagee
under this Mortgage or otherwise,  without notice or demand to the Mortgagor, to
pay any Imposition after the date such Imposition shall have become due, and add
to the Obligations  the amount so paid,  together with interest from the time of
payment at the Overdue Rate.  Any sums paid by the Mortgagee in discharge of any
Impositions  shall be (i) a lien on the  Premises  secured  hereby  prior to any
right or title to,  interest in, or claim upon the Premises  subordinate  to the
lien of this  Mortgage,  and (ii)  payable  on  demand by the  Mortgagor  to the
Mortgagee together with interest at the Overdue Rate as set forth above.

          (c) As of the date hereof, the Mortgagor  represents and warrants that
the Mortgagor (i) has filed all federal, state, commonwealth,  county, municipal
and city income and other material tax returns required to have been filed by it
and has paid all taxes and other  impositions  which have become due or pursuant
to any  assessments  or charges  received by it, (ii) does not know of any basis
for any  additional  assessment  or charge in respect of any such taxes or other
Impositions,  and (iii) has paid in full all sums  owing or  claimed  for labor,
material,  supplies,  personal  property  (whether or not forming an Improvement
hereunder) and services of every kind and character used, furnished or installed
in or on the Mortgaged Property that are now due and owing and no claim for same

                                      -5-

exists or will be  permitted  to be created,  except such claims as may arise in
the ordinary course of business and that are not yet past due.

     5. INSURANCE.  (a) The Mortgagor  promptly shall comply with and conform in
all material  respects to (i) all provisions of each insurance policy maintained
with  respect  to the  Mortgaged  Property,  and  (ii) all  requirements  of the
insurers  applicable to the Mortgagor or to any of the Mortgaged  Property or to
the  use,  manner  of  use,  occupancy,  possession,   operation,   maintenance,
alteration or repair of any of the Mortgaged  Property.  The Mortgagor shall not
use or permit the use of the Mortgaged Property in any manner which would permit
any  insurer to cancel any  insurance  policy or void  coverage  required  to be
maintained by this Mortgage.

          (b) In the event of  foreclosure of this Mortgage or other transfer of
title to the Mortgaged Property,  all right, title and interest of the Mortgagor
in and to any  insurance  policies  then in force shall pass to the purchaser or
grantee.

     6. RESTRICTIONS ON LIENS AND ENCUMBRANCES.  Except for the Permitted Liens,
the Mortgagor shall not further mortgage,  nor otherwise  encumber the Mortgaged
Property nor create or suffer to exist any lien,  charge or  encumbrance  on the
Mortgaged Property, or any part thereof,  whether superior or subordinate to the
lien of this Mortgage and whether recourse or non-recourse.

     7.  DUE ON SALE  AND  OTHER  TRANSFER  RESTRICTIONS.  Except  as  expressly
permitted in the Loan  Agreement  and the other Loan  Documents,  the  Mortgagor
shall  not  sell,  transfer,  convey or  assign  all or any  portion  of, or any
interest in, the Mortgaged Property.

     8.  CASUALTY   CONDEMNATION/EMINENT   DOMAIN.  Immediately  upon  obtaining
knowledge  of  any  casualty  or the  institution  of any  proceedings  for  the
condemnation of the Mortgaged  Property,  or any material portion  thereof,  the
Mortgagor will notify the Mortgagee of the pendency of such proceedings.  In all
events,  the Mortgagor hereby  covenants and agrees to promptly  commence and to
diligently  prosecute  the  restoration  of  the  Mortgaged  Property  upon  the
occurrence of any casualty loss affecting the Mortgaged Property, without regard
to the  availability  of any  proceeds or award.  Notwithstanding  any damage to
destruction  or loss of or other  casualty  with respect to any of the Mortgaged
Property, the Mortgagor shall continue to pay the Obligations at the time and in
the manner  provided  for in the Loan  Agreement  and the other Loan  Documents,
until the Obligations have been paid in full. If the Mortgaged Property is sold,
through foreclosure or otherwise,  prior to the receipt by the Mortgagee of such
insurance  proceeds,  the  Mortgagee  shall  have the  right,  whether  or not a
deficiency  judgment on any Loan Document  shall have been sought,  recovered or
denied, to receive such insurance  proceeds,  or a portion thereof sufficient to
pay the then unpaid Obligations, whichever is less.

     9. LEASES.  Except as expressly  permitted  under the Loan  Agreement,  the
Mortgagor shall not (a) execute an assignment or pledge of any Lease relating to
all of any  portion  of the  Mortgaged  Property  other  than  in  favor  of the
Mortgagee,  (b)  execute  or permit  to exist any Lease of any of the  Mortgaged
Property,  or (c) mortgage,  pledge,  assign,  hypothecate,  amend,  modify,  or
otherwise encumber or transfer any Lease or any interest in any Lease.

                                      -6-

     10. FURTHER ASSURANCES. To further assure the Mortgagee's rights under this
Mortgage,  the Mortgagor  agrees promptly upon demand of the Mortgagee to do any
act or  execute  and  deliver,  record  and/or  file  any  additional  documents
(including,  but not limited to, security  agreements on any personalty included
or to be included in the  Mortgaged  Property and a separate  assignment of each
Lease in  recordable  form) as may be  reasonably  required by the  Mortgagee to
confirm the lien of this Mortgage and all other rights or benefits  conferred on
the Mortgagee by this Mortgage.

     11.  MORTGAGEE'S RIGHT TO PERFORM.  If an Event of Default has occurred and
is continuing,  the Mortgagee,  without  waiving or releasing the Mortgagor from
any obligation or default under this Mortgage, may, pay or perform the same, and
the amount or cost thereof, with interest at the Overdue Rate, shall immediately
upon  written  demand be due from the  Mortgagor to the  Mortgagee  and the same
shall be secured by this Mortgage and shall be a lien on the Mortgaged  Property
prior to, any right, title to, interest in, or claim upon the Mortgaged Property
attaching  subsequent  to the lien of this  Mortgage.  No  payment or advance of
money by the  Mortgagee  under this Section shall be deemed or construed to cure
the Mortgagor's default or waive any right or remedy of the Mortgagee.

     12. EVENTS OF DEFAULT. The occurrence of an Event of Default under the Loan
Agreement shall constitute an Event of Default  hereunder.  Notwithstanding  the
foregoing, the breach by the Mortgagor of any term or provision of this Mortgage
other than those terms  requiring the making of any payment shall not constitute
an Event of Default  hereunder  unless such breach,  if susceptible of cure, has
not been cured  within  thirty  (30) days after the earlier of the date on which
the Mortgagee  gives the Mortgagor  notice of such breach or the date an officer
of any Loan Party becomes aware thereof.

     13.  REMEDIES.  (a) Upon the occurrence  and during the  continuance of any
Event of Default, the Mortgagee may immediately take such action, without notice
or demand,  under the Loan  Agreement and the other Loan Documents and otherwise
as it deems  advisable to protect and enforce its rights  against the  Mortgagor
and in and to the  Mortgaged  Property,  including,  but  not  limited  to,  the
following actions,  each of which may be pursued  concurrently or otherwise,  at
such  time  and in such  manner  as the  Mortgagee  may  determine,  in its sole
discretion,  without  impairing  or  otherwise  affecting  the other  rights and
remedies of the Mortgagee:

               (i) The Mortgagee may, to the extent permitted by applicable law,
          (A) institute and maintain an action of mortgage  foreclosure  against
          all or any part of the Mortgaged Property,  (B) institute and maintain
          an action on the Loan  Agreement  or any other Loan  Document,  or (C)
          take such other action at law or in equity for the enforcement of this
          Mortgage or any of the Loan  Agreement and the other Loan Documents as
          the law may allow.  The  Mortgagee  may  proceed in any such action to
          final  judgment  and  execution  thereon  for all sums due  hereunder,
          together  with  interest  thereon at the Overdue Rate and all costs of
          suit,  including,  without limitation,  reasonable attorneys' fees and
          disbursements.  Interest  at  the  Overdue  Rate  shall  be due on any
          judgment  obtained by the  Mortgagee  from the date of judgment  until
          actual payment is made of the full amount of the judgment; and

                                      -7-

               (ii) The Mortgagee may  personally,  or by its agents,  attorneys
          and employees and without  regard to the adequacy or inadequacy of the
          Mortgaged  Property  or any  other  collateral  as  security  for  the
          Obligations  enter into and upon the  Mortgaged  Property and each and
          every  part  thereof  and  exclude  the  Mortgagor  and its agents and
          employees   therefrom  without  liability  for  trespass,   damage  or
          otherwise (the Mortgagor  hereby  agreeing to surrender  possession of
          the Mortgaged  Property to the Mortgagee upon demand at any such time)
          and use, operate,  manage, maintain and control the Mortgaged Property
          and every part thereof. Following such entry and taking of possession,
          the Mortgagee shall be entitled,  without limitation, (A) to lease all
          or any part or parts of the  Mortgaged  Property  for such  periods of
          time and upon such conditions as the Mortgagee may, in its discretion,
          deem,  proper,  (B) to  enforce,  cancel or  modify  any Lease and (C)
          generally to execute,  do and perform any other act,  deed;  matter or
          thing  concerning the Mortgaged  Property as the Mortgagee  shall deem
          appropriate as fully as the Mortgagor might do.

          (b) In case of a foreclosure sale, the Real Estate may be sold, at the
Mortgagee's election, in one parcel or in more than one parcel and the Mortgagee
is specifically  empowered (without being required to do so, and in its sole and
absolute  discretion)  to cause  successive  sales of portions of the  Mortgaged
Property to be held.

          (c) In the event of any  breach of any of the  covenants,  agreements,
terms or conditions contained in this Mortgage,  the Mortgagee shall be entitled
to  enjoin  such  breach  and  obtain  specific  performance  of  any  covenant,
agreement,  term or condition and the  Mortgagee  shall have the right to invoke
any equitable  right or remedy as though other remedies were not provided for in
this Mortgage.

          (d) It is  agreed  that if an  Event of  Default  shall  occur  and be
continuing,  any and all  proceeds  of the  Mortgaged  Property  received by the
Mortgagee  shall be held by the Mortgagee for the benefit of the Secured Parties
as collateral security for the Obligations  (whether matured or unmatured),  and
shall be applied in  payment of the  Obligations  in the manner set forth in the
Loan Agreement.

     14. RIGHT OF MORTGAGEE TO CREDIT SALE. Upon the occurrence of any sale made
under this  Mortgage,  by virtue of  judicial  proceedings  or of a judgment  or
decree of  foreclosure  and sale,  the  Mortgagee  may bid for and  acquire  the
Mortgaged  Property or any part thereof.  In lieu of paying cash  therefor,  the
Mortgagee  may make  settlement  for the purchase  price by  crediting  upon the
Obligations  or other sums secured by this  Mortgage,  the net sales price after
deducting  therefrom  the  expenses  of sale and the cost of the  action and any
other sums which the Mortgagee is authorized to deduct under this  Mortgage.  In
such event,  this  Mortgage,  the Loan  Agreement  and the other Loan  Documents
evidencing expenditures secured hereby may be presented to the person or persons
conducting  the sale in order that the amount so used or applied may be credited
upon the Obligations as having been paid.

     15. APPOINTMENT OF RECEIVER. If an Event of Default shall have occurred and
be  continuing,  the  Mortgagee  as a matter of right and without  notice to the
Mortgagor,  unless  otherwise  required by applicable law, and without regard to

                                      -8-

the adequacy or inadequacy of the Mortgaged  Property or any other collateral or
the interest of the  Mortgagor  therein as security for the  Obligations,  shall
have the right to apply to any court having  jurisdiction  to appoint a receiver
or receivers or other manager of the Mortgaged  Property,  without requiring the
posting of a surety bond, and without reference to the adequacy or inadequacy of
the  value of the  Mortgaged  Property  or the  solvency  or  insolvency  of the
Mortgagor  or any other  party  obligated  for payment of all or any part of the
Obligations, and whether or not waste has occurred with respect to the Mortgaged
Property,  and the Mortgagor hereby irrevocably consents to such appointment and
waives notice of any  application  therefor  (except as may be required by law).
Any such  receiver or receivers  or manager  stall have all the usual powers and
duties of  receivers  in like or similar  cases and all the powers and duties of
the Mortgagee in case of entry as provided in this Mortgage,  including, without
limitation and to the extent permitted by law, the right to enter into leases of
all or any  part of the  Mortgaged  Property,  and  shall  continue  as such and
exercise all such powers until the date of confirmation of sale of the Mortgaged
Property unless such receivership is sooner terminated.

     16.  EXTENSION,  RELEASE,  ETC. (a) Without affecting the lien or charge of
this Mortgage upon any portion of the Mortgaged Property not then or theretofore
released as security for the full amount of the Obligations,  the Mortgagee may,
from time to time and without notice, agree to (i) release any person liable for
the  indebtedness  borrowed or guaranteed under the Loan Agreement and the other
Loan  Documents,  (ii)  extend  the  maturity  or alter  any of the terms of the
indebtedness  borrowed or guaranteed under the Loan Agreement and the other Loan
Documents or any other guaranty  thereof,  (iii) grant other  indulgences,  (iv)
release or reconvey,  or cause to be released or  reconveyed  at any time at the
Mortgagee's  option any parcel,  portion or all of the Mortgaged  Property,  (v)
take or release  any other or  additional  security  for any  obligation  herein
mentioned,  or (vi) make  compositions  or other  arrangements  with  debtors in
relation thereto.

          (b) No recovery of any  judgment  by the  Mortgagee  and no levy of an
execution  under any  judgment  upon the  Mortgaged  Property  or upon any other
property of the  Mortgagor  shall affect the lien of this Mortgage or any liens,
rights,  powers or remedies of the Mortgagee hereunder,  and such liens, rights,
powers and remedies shall continue unimpaired.

          (c) If the Mortgagee  shall have the right to foreclose  this Mortgage
or to direct a power of sale,  the  Mortgagor  authorizes  the  Mortgagee at its
option  to  foreclose  the  lien of this  Mortgage  (or  direct  the sale of the
Mortgaged Property,  as the case may be) subject to the rights of any tenants of
the Mortgaged  Property.  The failure to make any such tenants parties defendant
to any such foreclosure  proceeding and to foreclose their rights, or to provide
notice to such tenants as required in any statutory  procedure  governing a sale
of the Mortgaged  Property,  or to terminate  such tenant's  rights in such sale
will not be asserted by the Mortgagor as a defense to any proceeding  instituted
by the  Mortgagee to collect the  Obligations  or to foreclose  the lien of this
Mortgage.

          (d) Unless expressly provided  otherwise,  in the event that ownership
of this Mortgage and title to the Mortgaged Property or any estate therein shall
become  vested in the same person or entity;  this  Mortgage  shall not merge in
such title but shall continue as a valid lien on the Mortgaged  Property for the
amount secured hereby.

                                      -9-

     17.  SECURITY  AGREEMENT  UNDER  UNIFORM  COMMERCIAL  CODE.  (a)  It is the
intention of the parties hereto that this Mortgage  shall  constitute a Security
Agreement  within the meaning of the UCC (as  defined in the Uniform  Commercial
Code of the State of New York (the  "UCC").  If an Event of Default  shall occur
and be  continuing  under this  Mortgage,  then in  addition to having any other
right or remedy  available  at law or in equity,  the  Mortgagee  shall have the
option of either (i) proceeding  under the Code and  exercising  such rights and
remedies as may be provided to a secured  party by the Code with  respect to all
or any portion of the Mortgaged Property which is personal property  (including,
without  limitation,  taking  possession  of and selling such  property) or (ii)
treating such property as real property and proceeding  with respect to both the
real and personal  property  constituting  the Mortgaged  Property in accordance
with the  Mortgagee's  rights,  powers  and  remedies  with  respect to the real
property (in which event the default provisions of the Code shall not apply). If
the Mortgagee  shall elect to proceed  under the Code,  then ten days' notice of
sale  of the  personal  property  shall  be  deemed  reasonable  notice  and the
reasonable  expenses of retaking,  holding,  preparing for sale, selling and the
like incurred by the Mortgagee shall include, but not be limited, to, reasonable
attorneys' fees and legal expenses.  At the Mortgagee's  request,  the Mortgagor
shall assemble the personal property and make it available to the Mortgagee at a
place  designated  by the  Mortgagee  which  is  reasonably  convenient  to both
parties.

          (b) The Mortgagor and the Mortgagee  agree, to the extent permitted by
law,  that:  (i) all of the goods  described  within the  definition of the word
"Equipment" are or are to become fixtures on the Real Estate; (ii) this Mortgage
upon recording or  registration  in the real estate records of the proper office
shall  constitute a financing  statement filed as a "fixture  filing" within the
meaning of Sections  9a-334 and 9a-502 of the Code;  (iii) the  Mortgagor is the
record owner of the Owned Land;  and (iv) the addresses of the Mortgagor and the
Mortgagee are as set forth on the first page of this Mortgage.

          (c) The  information  provided in this paragraph is provided in, order
that this Mortgage  shall comply with the  requirements  of applicable law for a
mortgage instrument to be filed as a financing  statement.  The Mortgagor is the
"Debtor"  and its  name and  mailing  address  are set  forth  hereinabove.  The
"Secured  Party" is the  Mortgagee  and its name and mailing  address from which
information  concerning the security interest granted herein may be obtained are
as set forth  hereinabove.  A statement  describing the portion of the Mortgaged
Property  comprising  of  goods or other  personal  property  that may now be or
hereafter  become fixtures hereby secured is set forth in the description of the
Mortgaged  Property  contained herein.  The Mortgagor is the record owner of the
Mortgaged Property.

          (d)  After  written  request,   Mortgagor  shall  file  all  financing
statements  necessary to perfect the  Mortgagee's  lien  thereon.  Additionally,
Mortgagor  authorizes  Mortgagee to file  financing  statements  describing  the
Mortgaged Property on the Mortgagors  behalf;  provided that the Mortgagee shall
not be responsible for the filing of any financing or continuation statement.

     18. FUTURE  ADVANCES.  The lien of this Mortgage with respect to any future
advances  and/or  obligations  up to a maximum  of  $10,000,000,  modifications,
extensions,  and  renewals  referred  to herein and made from time to time shall
have the same priority to which this Mortgage  otherwise would be entitled as of

                                      -10-

the date this Mortgage is executed and recorded  without regard to the fact that
any such future advance,  obligation,  modification,  extension,  or renewal may
occur after this Mortgage is executed.

     19.  ASSIGNMENT OF RENTS. (a) The Mortgagor hereby assigns to the Mortgagee
the  Rents  as  further  security  for the  payment  of and  performance  of the
Obligations,  and the  Mortgagor  grants to the Mortgagee the right to enter the
Mortgaged  Property  for the  purpose  of  collecting  the  same  and to let the
Mortgaged Property or any part thereof, and to apply the Rents on account of the
Obligations.  The foregoing  assignment  and grant is present,  irrevocable  and
absolute and shall continue in effect until the  Obligations  are fully paid and
performed,  but the Mortgagee hereby grants the Mortgagor a revocable license to
collect,  receive,  use and retain the Rents until the occurrence of an Event of
Default;  such  license to collect,  receive,  use and retain the Rents shall be
immediately and automatically  revoked by the Mortgagee without the necessity of
any action of the Mortgagee upon the  occurrence  and during the  continuance of
any Event of Default; in the event such license is revoked,  the Mortgagor shall
pay over to the  Mortgagee,  or to any receiver  appointed to collect the Rents,
any lease security deposits,  and shall pay monthly in advance to the Mortgagee,
or to any such receiver,  the fair and reasonable  rental value as determined by
the Mortgagee  for the use and occupancy of such part of the Mortgaged  Property
as may be in the  possession of the Mortgagor or any affiliate of the Mortgagor,
and upon default in any such payment the Mortgagor and any such  affiliate  will
vacate and surrender the  possession of the Mortgaged  Property to the Mortgagee
or to  such  receiver,  and  in  default  thereof  may  be  evicted  by  summary
proceedings  or  otherwise.  The  Mortgagor  shall  not  accept  prepayments  of
installments  of Rent to  become  due for a period  of more  than  one  month in
advance (except for security deposits and estimated payments of percentage rent,
if any).

          (b) The  Mortgagor  has not  affirmatively  done any act  which  would
prevent the  Mortgagee  from, or limit the Mortgagee in, acting under any of the
provisions of the foregoing assignment.

          (c) Except  for any matter  disclosed  in the Loan  Agreement  and the
other Loan  Documents,  no action has been brought or, so far as is known to the
Mortgagor, is threatened, which would interfere in any way with the right of the
Mortgagor to execute the foregoing assignment and perform all of the Mortgagor's
obligations contained in this Section and in the Leases.

     20.  ADDITIONAL  RIGHTS.  The holder of any subordinate lien or subordinate
mortgage on the  Mortgaged  Property  shall have no right to terminate any Lease
whether  or not  such  Lease is  subordinate  to this  Mortgage  nor  shall  the
Mortgagor consent to any holder of any subordinate lien or subordinate  mortgage
joining  any  tenant  under any Lease in any  action  to  foreclose  the lien or
modify,  interfere with, disturb or terminate the rights of any tenant under any
Lease.  By  recordation  of this Mortgage all  subordinate  lienholders  and the
mortgagees  and  beneficiaries  under  subordinate  mortgages are subject to and
notified  of this  provision,  and any  action  taken by any such  penholder  or
beneficiary  contrary  to this  provision  shall  be null  and  void.  Upon  the
occurrence  and during the  continuance  of any Event of Default,  the Mortgagee
may, in its sole  discretion  and without regard to the adequacy of its security
under this  Mortgage,  apply all or any part of any amounts on deposit  with the
Mortgagee under this Mortgage  against all or any part of the  Obligations.  Any
such application shall not be construed to cure or waive any Default or Event of

                                      -11-

Default or invalidate  any act taken by the Mortgagee on account of such Default
or Event of Default.

     21. MORTGAGOR'S INDEMNITIES. The Mortgagor agrees to protect, indemnify and
hold  harmless  the  Mortgagee  and  each  Secured  Party   (collectively,   the
"INDEMNITEES")  from and against any and all losses  which the  Mortgagee or any
such  Indemnitee  may incur under or by reason of the  assignment  of Leases and
Rents,  or for any  action  taken by the  Mortgagee  or any  Bank or  Indemnitee
hereunder,  or by  reason  or in  defense  of any and  all  claims  and  demands
whatsoever  which may be asserted  against the Mortgagee or any such  Indemnitee
arising out of the Leases, including, without limitation, any claim by any third
Person for credit on account of Rents paid to and received by the Mortgagor, but
not delivered to the Mortgagee or its agents,  representatives or employees, for
any  period  under any Lease  more than one (1) month in advance of the due date
thereof.  In the event that the Mortgagee or any of the Secured  Parties  incurs
any  losses  covered  by the  indemnity  set forth in this  Section,  the amount
thereof,  including  reasonable  attorneys'  fees, with interest  thereon at the
Overdue Rate, shall be payable by the Mortgagor to the Mortgagee within ten (10)
days  after  demand  therefor,  and  shall be  secured  hereby  and by all other
security for the payment and performance of the Obligations,  including, without
limitation,  the lien and security interest of this Mortgage. The liabilities of
the Mortgagor as set forth in this Section shall survive the termination of this
Mortgage and the repayment of the Obligations.

     22. NO LIABILITY OF MORTGAGEE.  Neither the  acceptance nor the exercise of
the rights and remedies  hereunder nor any other action on the part of Mortgagee
or any Person exercising Mortgagee's rights hereunder shall be construed to: (a)
be an assumption by Mortgagee or any such Person or to otherwise  make Mortgagee
or  such  Person  liable  or  responsible  for  the  performance  of  any of the
obligations  of  Mortgagor  under or with respect to the Leases or for any Rent,
security deposit or other amount delivered to Mortgagor, provided that Mortgagee
or any such Person  exercising the rights of Mortgagee  shall be accountable for
any Rents,  security deposits or other amounts actually received by Mortgagee or
such Person, as the case may be; or (b) obligate Mortgagee or any such Person to
take any  action  under or with  respect  to the  Leases or with  respect to the
Mortgaged  Property,  to incur any expense or perform or  discharge  any duty or
obligation  under or with respect to the Leases or with respect to the Mortgaged
Property, to appear in or defend any action or proceeding relating to the Leases
or the Mortgaged Property, to constitute Mortgagee as a  mortgagee-in-possession
(unless  Mortgagee  actually  enters  and  takes  possession  of  the  Mortgaged
Property),  or to be liable in any way for any  injury or damage to  Persons  or
property sustained by any Person in or about the Mortgaged Property,  other than
to the extent caused by the willful  misconduct or gross negligence of Mortgagee
or any Person exercising the rights of Mortgagee hereunder.

     23.  NOTICES.  All  notices,  requests,  demands  and other  communications
hereunder shall be given in accordance with the provisions of the Loan Agreement
and the other Loan  Documents to the Mortgagor and to the Mortgagee as specified
therein.

     24. NO ORAL MODIFICATION. This Mortgage may not be amended, supplemented or
otherwise  modified  except  in  accordance  with  the  provisions  of the  Loan
Agreement and the other Loan Documents.  Any agreement made by the Mortgagor and
the Mortgagee after the date of this Mortgage relating to this Mortgage shall be

                                      -12-

superior to the rights of the holder of any  intervening or subordinate  lien or
encumbrance.

     25.  PARTIAL  INVALIDITY.  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 not affect any other provision  hereof,  but each shall be construed as if
such  invalid,  illegal or  unenforceable  provision  had never  been  included.
Notwithstanding  to the contrary  anything  contained in this Mortgage or in any
provisions of any Loan  Document,  the  obligations  of the Mortgagor and of any
other obligor under any Loan  Agreement  and the other Loan  Documents  shall be
subject to the limitation that the Mortgagee shall not charge,  take or receive,
nor  shall  the  Mortgagor  or any  other  obligor  be  obligated  to pay to the
Mortgagee,  any amounts  constituting  interest  in excess of the  maximum  rate
permitted by law to be charged by the Mortgagee.

     26.  MORTGAGOR'S WAIVER OF RIGHTS. (a) The Mortgagor hereby voluntarily and
knowingly  releases  and waives any and all rights to retain  possession  of the
Mortgaged Property after the occurrence of an Event of Default hereunder and any
and all rights of redemption  from sale under any order or decree of foreclosure
(whether  full or partial),  pursuant to rights,  if any,  therein  granted,  as
allowed under any  applicable  law, on its own behalf,  on behalf of all persons
claiming or having an interest  (direct or indirectly) by, through or under each
constituent  of the Mortgagor  and on behalf of each and every person  acquiring
any interest in the Mortgaged  Property  subsequent to the date hereof, it being
the  intent  hereof  that  any  and  all  such  rights  or  redemption`  of each
constituent  of the Mortgagor and all such other persons are and shall be deemed
to be  hereby  waived to the  fullest  extent  permitted  by  applicable  law or
replacement  statute.  Each  constituent  of the  Mortgagor  shall not invoke or
utilize any such law or laws or otherwise hinder, delay, or impede the execution
of any right,  power, or remedy herein or otherwise  granted or delegated to the
Mortgagee, but shall permit the execution of every such right, power, and remedy
as though no such law or laws had been made or enacted.

          (b) To the fullest extent  permitted by law, the Mortgagor  waives the
benefit of all laws now existing or that may  subsequently be enacted  providing
for (i) any appraisement  before sale of any portion of the Mortgaged  Property,
(ii) any  extension of the time for the  enforcement  of the  collection  of the
Obligations or the creation or extension of a period of redemption from any sale
made in collecting such debt and (iii) exemption of the Mortgaged  Property from
attachment,  levy or sale under execution or exemption from civil process to the
full extent the  Mortgagor  may do so, the  Mortgagor  agrees that the Mortgagor
will not at any time insist upon, plead,  claim or take the benefit or advantage
of any law now or hereafter in force providing for any appraisement,  valuation,
stay,  exemption,  extension or  redemption,  or requiring  foreclosure  of this
Mortgage before exercising any other remedy granted hereunder and the Mortgagor,
for the Mortgagor and its  successors  and assigns,  and for any and all persons
ever claiming any interest in the Mortgaged Property, to the extent permitted by
law,   hereby  waives  and  releases  all  rights  of   redemption,   valuation,
appraisement,  stay of  execution,  notice  of  election  to mature  (except  as
expressly  provided  in the Loan  Agreement  and the other  Loan  Documents)  or
declare due the whole of the secured  indebtedness  and marshalling in the event
of exercise by the Mortgagee of the foreclosure rights,  power of sale, or other
rights hereby created.

                                      -13-

     27.  REMEDIES NOT  EXCLUSIVE.  The  Mortgagee  shall be entitled to enforce
payment and performance of the Obligations and to exercise all rights and powers
under this Mortgage or under any of the other Loan  Agreement and the other Loan
Documents   or  other   agreement  or  any  laws  now  or  hereafter  in  force,
notwithstanding some or all of the Obligations may now or hereafter be otherwise
secured, whether by deed of trust, mortgage,  security agreement,  pledge, lien,
assignment  or  otherwise.  Neither  the  acceptance  of this  Mortgage  nor its
enforcement,  shall prejudice or in any manner affect the Mortgagee's  rights to
realize  upon  or  enforce  any  other  security  now or  hereafter  held by the
Mortgagee,  it being agreed that the Mortgagee shall be entitled to enforce this
Mortgage and any other  security now or hereafter  held by the Mortgagee in such
order and manner as the Mortgagee may determine in its absolute  discretion.  No
remedy  herein  conferred  upon or reserved to the  Mortgagee  is intended to be
exclusive of any other remedy herein or by law provided or  permitted,  but each
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 by statute.  Every
power or remedy given by any of the Loan  Agreement and the other Loan Documents
to the Mortgagee or to which either may otherwise be entitled, may be exercised,
concurrently or  independently,  from time to time and as often as may be deemed
expedient by the Mortgagee, as the case may be. In no event shall the Mortgagee,
in the exercise of the remedies  provided in this Mortgage  (including,  without
limitation,  in connection with the assignment of Rents to the Mortgagee, or the
appointment  of a receiver and the entry of such  receiver on to all or any part
of the  Mortgaged  Property),  be deemed a "mortgagee  in  possession,"  and the
Mortgagee  shall not in any way be made liable for any act, either of commission
or omission, in connection with the exercise of such remedies.

     28.  MULTIPLE  SECURITY.  If (a) the Premises  shall consist of one or more
parcels,  whether  or not  contiguous  and  whether  or not  located in the same
county,  or (b) in  addition  to  this  Mortgage,  the  Mortgagee  shall  now or
hereafter hold or be the beneficiary of one or more additional mortgages, liens,
deeds of trust or other security  (directly or indirectly)  for the  Obligations
upon other  property in the State in which the Premises are located  (whether or
not such  property  is  owned by the  Mortgagor  or by  others)  or (c) both the
circumstances  described  in  clauses  (a) and (b)  shall be  true,  then to the
fullest extent permitted by law, the Mortgagee may, at its election, commence or
consolidate in a single foreclosure action all foreclosure  proceedings  against
all such collateral securing the Obligations (including the Mortgaged Property),
which action may be brought or  consolidated  in the courts of or sale conducted
in,  any  county in which  any of such  collateral  is  located.  The  Mortgagor
acknowledges that the right to maintain a consolidated  foreclosure  action is a
specific  inducement  to the  Mortgagee  to  extend  the  indebtedness  borrowed
pursuant to or  guaranteed by the Loan  Agreement and the other Loan  Documents,
and the  Mortgagor  expressly  and  irrevocably  waives  any  objections  to the
commencement or consolidation of the foreclosure  proceedings in a single action
and any  objections  to the laying of venue or based on the grounds of forum non
conveniens which it may now or hereafter have. The Mortgagor further agrees that
if  the  Mortgagee  shall  be  prosecuting  one or  more  foreclosure  or  other
proceedings  against  a  portion  of  the  Mortgaged  Property  or  against  any
collateral  other than the  Mortgaged  Property,  which  collateral  directly or
indirectly  secures the  Obligations,  or if the Mortgagee shall have obtained a
judgment of foreclosure and sale or similar  judgment  against such  collateral,
then,  whether or not such  proceedings  are being  maintained or judgments were
obtained  in or  outside  the  State in which  the  Premises  are  located,  the
Mortgagee may commence or continue any foreclosure  proceedings and exercise its
other remedies granted in this Mortgage against all or any part of the Mortgaged
Property  and  the  Mortgagor  waives  any  objections  to the  commencement  or

                                      -14-

continuation of a foreclosure of this Mortgage or exercise of any other remedies
hereunder based on such other proceedings or judgments,  and waives any right to
seek to dismiss,  stay, remove,  transfer or consolidate either any action under
this Mortgage or such other proceedings on such basis.  Neither the commencement
nor continuation of proceedings to foreclose this Mortgage,  nor the exercise of
any other rights  hereunder nor the recovery of any judgment by the Mortgagee in
any such proceedings or the occurrence of any sale in any such proceedings shall
prejudice,  limit or preclude the Mortgagee's  right to commence or continue one
or more foreclosure or other  proceedings or obtain a judgment against any other
collateral  (either in or outside the State in which the  Premises  are located)
which  directly  or  indirectly  secures  the  Obligations,  and  the  Mortgagor
expressly  waives any objections to the  commencement  of,  continuation  of, or
entry of a judgment  in such  other  sales or  proceedings  or  exercise  of any
remedies  in such  sales or  proceedings  based  upon  any  action  or  judgment
connected to this  Mortgage,  and the Mortgagor also waives any right to seek to
dismiss,  stay,  remove,  transfer  or  consolidate  either  such other sales or
proceedings  or any sale or action  under this  Mortgage  on such  basis.  It is
expressly understood and agreed that to the fullest extent permitted by law, the
Mortgagee may, at its election,  cause the sale of all  collateral  which is the
subject of a single  foreclosure  action at either a single  sale or at multiple
sales conducted  simultaneously  and take such other measures as are appropriate
in order to effect the agreement of the parties to dispose of and administer all
collateral  securing  the  Obligations  (directly  or  indirectly)  in the  most
economical and least time-consuming manner.

     29.  SUCCESSORS  AND ASSIGNS.  All covenants of the Mortgagor  contained in
this  Mortgage  are  imposed  solely  and  exclusively  for the  benefit  of the
Mortgagee,  and its successors and assigns,  and no other person or entity shall
have standing to require compliance with such covenants or be deemed,  under any
circumstances, to be a beneficiary of such covenants, any or all of which may be
freely  waived in whole or in part by the  Mortgagee  at any time if in the sole
discretion of Mortgagee such a waiver is deemed advisable. All such covenants of
the Mortgagor shall run with the land and bind the Mortgagor, the successors and
assigns  of the  Mortgagor  (and  each  of  them)  and  all  subsequent  owners,
encumbrances  and  tenants of the  Mortgaged  Property,  and shall  inure to the
benefit of the Mortgagee and its  successors and assigns.  The word  "Mortgagor"
shall  be  construed  as if it read  "Mortgagors"  whenever  the  sense  of this
Mortgage  so  requires  and if there  shall  be more  than  one  Mortgagor,  the
obligations of the Mortgagors shall be joint and several.

     30. NO WAIVERS, ETC. Any failure by the Mortgagee to insist upon the strict
performance by the Mortgagor of any of the terms and provisions of this Mortgage
shall not be deemed to be a waiver of any of the terries and provisions  hereof,
and the  Mortgagee,  notwithstanding  any such  failure,  shall  have the  right
thereafter to insist upon the strict performance by the Mortgagor of any and all
of the terms and  provisions of this Mortgage to be performed by the  Mortgagor.
The Mortgagee may release, regardless of consideration and without the necessity
for any  notice  to or  consent  by the  holder of any  subordinate  lien on the
Mortgaged Property, any part of the security held for the obligations secured by
this Mortgage without, as to the remainder of the security, in any way impairing
or  affecting  the lien of this  Mortgage or the  priority of such lien over any
subordinate lien or deed of trust.

                                      -15-

     31.  GOVERNING  LAW, ETC. This Mortgage  shall be governed by and construed
and  interpreted  in  accordance  with  the  laws  of the  State  of  New  York.

     32. CERTAIN  DEFINITIONS.  Unless the context clearly  indicates a contrary
intent or unless  otherwise  specifically  provided  herein,  words used in this
Mortgage shall be used  interchangeably  in singular or plural form and the word
"Mortgagor"  shall mean "each Mortgagor or any subsequent owner or owners of the
Mortgaged   Property  or  any  part  thereof  or  interest  therein,"  the  word
"Mortgagee"  shall  mean  "Mortgagee  or any  successor  agent  for the  Secured
Parties,"  the  word  "person"  shall  include  any   individual,   corporation,
partnership,  limited  liability  company,  trust,  unincorporated  association,
government,  governmental  authority,  or other entity, and the words "Mortgaged
Property"  shall  include  any  portion of the  Mortgaged  Property  or interest
therein.  Whenever  the context may  require,  any  pronouns  used herein  shall
include the corresponding masculine,  feminine or neuter forms, and the singular
form of nouns and pronouns shall include the plural and vice versa. The captions
in this Mortgage are for  convenience  or reference  only and in no way limit or
amplify the provisions hereof.

     33.  MAXIMUM  AMOUNT  OF  INDEBTEDNESS.  Notwithstanding  anything  to  the
contrary  in  this  Mortgage,   the  maximum   aggregate   principal  amount  of
indebtedness that is, or under any contingency may be, secured by this Mortgage,
either  at  execution  or  any  time  thereafter  (the  "SECURED  AMOUNT"),   is
$10,000,000.00,  plus amounts that Mortgagee  expends under this Mortgage to the
extent that any such amounts shall constitute  payment of (i) taxes,  charges or
assessments  that  may be  imposed  by law  upon the  Mortgaged  Property,  (ii)
premiums on insurance policies covering the Mortgaged  Property;  (iii) expenses
incurred in upholding the lien of this  Mortgage,  including the expenses of any
litigation to prosecute or defend the rights and lien created by this  Mortgage;
or (iv) any amount, cost or charge to which Mortgagee becomes  subrogated,  upon
payment;  whether under recognized principles of law or equity, or under express
statutory  authority;  THEN,  and in each such  event,  such  amounts  or costs,
together  with  interest  thereon,  shall be added to the  indebtedness  secured
hereby and shall be secured by this Mortgage.

     34. LAST DOLLARS SECURED PRIORITY.  This Mortgage secures only a portion of
the indebtedness owing or which may become owing by the Mortgagor to the Secured
Parties.  The parties agree that any payments or repayments of such indebtedness
shall be and be deemed to be applied  first to the  portion of the  indebtedness
that is not secured hereby, it being the parties' intent that the portion of the
indebtedness  last remaining unpaid shall be secured hereby. If at any time this
Mortgage shall secure less than all of the principal  amount of the Obligations,
it is  expressly  agreed  that any  repayments  of the  principal  amount of the
Obligations  shall not reduce the amount of the lien of this Mortgage  until the
lien amount shall equal the principal amount of the Obligations outstanding.

     35. RELEASE. If any of the Mortgaged Property shall be sold, transferred or
otherwise  disposed of by any  Mortgagor in a  transaction  permitted by, and in
accordance  with,  the Loan  Agreement  and the other Loan  Documents,  then the
Mortgagee, at the request and sole expense of such Mortgagor,  shall execute and
deliver to such Mortgagor all releases or other documents  reasonably  necessary
or  desirable  for the  release of the Liens  created  hereby on such  Mortgaged
Property.  The  Mortgagor  shall  deliver  to the  Mortgagee,  at least ten (10)
Business Days prior to the date of the proposed  release,  a written request for

                                      -16-

release  identifying  the  sale  or  other  disposition  in  reasonable  detail,
including the price thereof and any expenses in connection  therewith,  together
with a  certification  by the  Mortgagor  stating  that such  transaction  is in
compliance  with,  and  permitted  by,  the Loan  Agreement  and the other  Loan
Documents.

     36. INCONSISTENCY WITH LOAN AGREEMENT. In the event of any conflict between
the terms of this Mortgage and the terms of the Loan Agreement  and/or the other
Loan Documents, the terms of the Loan Agreement shall govern and control.

     37.  LOAN  AGREEMENT.  Mortgagor  has  received a copy of and is fully Loan
Agreement and the other Loan Documents.  All representations and warranties made
by Mortgagor in the Loan Agreement and the other Loan Documents are incorporated
herein by  reference  and are  hereby  made by  Mortgagor  as to itself  and the
Mortgaged Property as though such  representations and warranties were set forth
at length herein as the representations and warranties of Mortgagor.

     38. NO MERGER OF  ESTATES.  So long as any part of the  Obligations  remain
unpaid, unperformed or undercharged,  the fee, easement and leasehold estates to
the  Mortgaged  Property  shall not merge but rather shall  remain  separate and
distinct, notwithstanding the union of such estates either in the Mortgagor, the
Mortgagee, any lessee, any third-party purchaser or otherwise.

     39. NO PARTNERSHIP.  Nothing  contained in this Mortgage is intended to, or
shall be construed  to,  create to any extent and in any manner  whatsoever  any
partnership,  joint  venture,  or  association  between  the  Mortgagor  and the
Mortgagee,  or in any way make the Mortgagee a  co-principal  with the Mortgagor
with reference to the Mortgaged Property, and any inferences to the contrary are
hereby expressly negated.

     40.  LIMITATION  OF AMOUNT.  Notwithstanding  the  foregoing,  the  maximum
principal  amount of  indebtedness  that may be secured by this  Mortgage is the
Maximum  Principal  Amount as set forth on the cover of this  Mortgage,  and the
maximum  total  amount  that may be secured by this  Mortgage  is limited as set
forth in SECTION 33.

     41. FUTURE ASSIGNMENTS.  If Mortgagor obtains mortgage financing secured by
the  Mortgaged  Property  and the proceeds of such new  mortgage  financing  are
applied  to repay  the  Obligations  in full,  then in  place  of  delivering  a
discharge,  satisfaction;  or release of this Mortgage,  the Mortgagee  shall at
Mortgagor's  request,  deliver to the new lender an assignment of this Mortgage,
all in form  reasonably  satisfactory to Mortgagee.  Effective upon  Mortgagee's
assignment of this Mortgage,  the Mortgagee shall be released from any remaining
obligations and liabilities under the Loan Agreement and other Loan Documents.

     42. LIEN LAW. This Mortgage is made subject to the trust fund provisions of
Section 13 of the New York Lien Law.  Mortgagor  covenants that it shall receive
all monies and  advances  secured by this  Mortgage  and shall hold the right to
receive  such  advances  as a trust fund to be applied  first for the purpose of
paying the cost of  improvement  before using any part of the same for any other
purpose.

                                      -17-

     43. STATUTORY INTERPRETATION. The covenants and conditions in this Mortgage
shall be  construed as affording  to  Mortgagee  rights  additional  to, and not
exclusive  of,  the  rights  conferred  under  the  provisions  of New York Real
Property Law Sections  254,271 and 272;  provided  Mortgagor shall have received
ten (10) business days' notice required under the Loan Agreement.  The following
provisions of New York Real Property Law Section 254 shall,  however,  not apply
to this Mortgage and the rights and obligations of the parties to this Mortgage:
(1)  subsection  "4,"  covering  the use and  application  of  casualty or flood
insurance proceeds; and (2) the portion of subsection "4-a" that begins with the
word  "however" and  continues to the end of the  paragraph.  Any  inconsistency
between  this  Mortgage  and Real  Property Law Section 254, 271 or 272 shall be
resolved in favor of this Mortgage.

     44. POWER OF SALE.  If an Event of Default has occurred and is  continuing,
then without limiting any other rights or remedies of Mortgagee,  Mortgagee may,
either with or without entry or taking  possession of the Mortgaged  Property as
provided  in  this  Mortgage  or  otherwise,  personally  or by  its  agents  or
attorneys, and without prejudice to the right to bring an action for foreclosure
of this Mortgage,  sell the Mortgaged Property or any part of it pursuant to any
procedures provided by applicable law, including the procedures set forth in New
York Real Property Actions and Proceedings Law Article 14 (and any amendments or
substitute statutes in regard thereto),  and all estate, right, title, 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 applicable law.

     45.  MULTIPLE  PARCELS.  If the  Mortgaged  Property  consists  of multiple
parcels,  then in any sale of the  Mortgaged  Property  pursuant to  Mortgagee's
exercise  of its  remedies  after an Event of Default  (including  any  judicial
foreclosure  sale under Real Property  Actions and  Proceedings Law Article 14),
the multiple  parcels shall be sold at one time and in a single sale,  except to
the extent that Mortgagee,  in its sole absolute discretion,  determines to sell
any one or more of the parcel(s) separately. Any such separate sales may be made
in whatever  order  Mortgagee  determines  in its sole and absolute  discretion.
Mortgagee may, in its sole and absolute discretion,,  cause the entire Mortgaged
Property to be offered for sale as a single  auction lot and may also cause bids
to be solicited for  individual  parcels of the  Mortgaged  Property as separate
auction lots in any order, but shall be under no obligation to proceed in either
manner or the other.  Mortgagor  acknowledges  that if Mortgagee  sells multiple
parcels  individually,  no fair value or  deficiency  hearing  shall be required
after each sale.

     46.  HEADINGS.  The Section headings herein are inserted for convenience of
reference  only and  shall in no way  alter,  modify  or  define,  or be used in
construing, the text of such Sections.

     47. DEFENSE OF CLAIMS. The Mortgagor shall promptly notify the Mortgagee in
writing of the commencement of any legal  proceedings  affecting the Mortgagor's
title to the Mortgaged  Property or the Mortgagee's Lien on or security interest
in the Mortgaged Property,  or any part thereof, and shall take all such action,
employing attorneys agreeable to the Mortgagee,  as may be necessary to preserve
the Mortgagor's and the Mortgagee's  rights affected  thereby.  If the Mortgagor
fails or  refuses to  adequately  or  vigorously,  in the sole  judgment  of the
Mortgagee,  defend the  Mortgagor's or the  Mortgagee's  rights to the Mortgaged
Property, the Mortgagee may take such action on behalf of and in the name of the
Mortgagor and at the  Mortgagor's  expense.  All costs,  expenses and reasonable

                                      -18-

attorneys'  fees  incurred by the  Mortgagee  (or its  agents)  pursuant to this
Section or in  connection  with the  defense  by the  Mortgagee  of any  claims,
demands or litigation  relating to the Mortgagor,  the Mortgaged Property or the
transactions  contemplated  in this Mortgage shall be paid by the Mortgagor upon
written  demand,  plus  interest  thereon  from the date of the  advance  by the
Mortgagee until reimbursement of the Mortgagee at the Overdue Rate.

     48. EXCULPATION PROVISIONS.  EACH OF THE PARTIES HERETO SPECIFICALLY AGREES
THAT IT HAS A DUTY TO READ THIS  MORTGAGE;  AND AGREES  THAT IT IS CHARGED  WITH
NOTICE AND  KNOWLEDGE  OF THE TERMS OF THIS  MORTGAGE;  THAT IT HAS IN FACT READ
THIS  MORTGAGE AND IS FULLY  INFORMED  AND HAS FULL NOTICE AND  KNOWLEDGE OF THE
TERMS,  CONDITIONS AND EFFECTS OF THIS MORTGAGE; THAT IT HAS BEEN REPRESENTED BY
INDEPENDENT  LEGAL COUNSEL OF ITS CHOICE  THROUGHOUT THE NEGOTIATIONS  PRECEDING
ITS  EXECUTION  OF THIS  MORTGAGE AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN
ENTERING INTO THIS MORTGAGE.

     49. INTENTIONALLY DELETED.

     50.  INCORPORATION  BY REFERENCE.  In connection  with its  appointment and
acting  hereunder,  Mortgagee is entitled to all rights,  privileges,  benefits,
protections, immunities and indemnities provided to it as "Agent" under the Loan
Agreement.

            [No Further Text, On This Page; Signature Page Follows.]

                                      -19-

     IN WITNESS  WHEREOF,  this Mortgage has been duly executed by Mortgagor and
its corporate seal has been duly affixed hereto.

                                            MONTICELLO RACEWAY
                                            MANAGEMENT, INC., a New York
                                            corporation

                                            By: /s/ Thomas W. Aro
                                                --------------------------------
                                                Name:  Thomas W. Aro
                                                Title: President

This Mortgage Was Prepared By
And When Recorded Return to:

Sullivan &  Worcester LLP
One Post Office Square
Boston, MA 02109
Attention: Duncan T. O'Brien, Esq.

                                      -20-

                                 ACKNOWLEDGMENTS

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

On the 1Oth day of  January,  in the year  2005,  before  me,  the  undersigned,
personally appeared Tom Aro, 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.

Witness My Hand and Official Seal.

/s/ Kim Willison
----------------------------------
Signature

My Commission expires on June 2, 2007

                                      -21-