MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES

AND RENTS AND FINANCING STATEMENT

STOCKERYALE, INC.

to

LAURUS MASTER FUND, LTD.

(Hampshire Road and Garabedian Drive,

Salem, New Hampshire and Methuen, Massachusetts)

        THIS INSTRUMENT CONSTITUTES A FIXTURE FINANCING STATEMENT UNDER THE
UNIFORM COMMERCIAL CODE COVERING THE ITEMS AND TYPES OF COLLATERAL DESCRIBED
HEREIN. THE NAMES OF THE DEBTOR AND THE SECURED PARTY, THE MAILING ADDRESS OF
THE SECURED PARTY FROM WHICH INFORMATION CONCERNING THE SECURITY INTEREST MAY BE
OBTAINED, THE MAILING ADDRESS OF THE DEBTOR AND A STATEMENT INDICATING THE
TYPES, OR DESCRIBING THE ITEMS, OF COLLATERAL ARE AS DESCRIBED BELOW, IN
COMPLIANCE WITH THE REQUIREMENTS OF ARTICLE 9 OF THE UNIFORM COMMERCIAL CODE.

        UNDER THE TERMS AND PROVISIONS OF THE NOTE WHICH THIS INSTRUMENT SECURES
AND UNDER THE TERMS AND PROVISIONS OF ANY FUTURE OR FURTHER ADVANCES SECURED
HEREBY, THE INTEREST RATE PAYABLE THEREUNDER MAY BE VARIABLE. THE PURPOSE OF
THIS PARAGRAPH IS TO PROVIDE RECORD NOTICE OF THE RIGHT OF MORTGAGEE, ITS
SUCCESSORS AND ASSIGNS, TO INCREASE OR DECREASE THE INTEREST RATE ON ANY
INDEBTEDNESS SECURED HEREBY WHERE THE TERMS AND PROVISIONS OF SUCH INDEBTEDNESS
PROVIDE FOR A VARIABLE INTEREST RATE.

THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FINANCING
STATEMENT (hereinafter referred to as this “Mortgage”) is made and entered into
by StockerYale, Inc., a Massachusetts corporation, with an address of 32
Hampshire Road, Salem, New Hampshire 03079, as debtor and mortgagor (hereinafter
referred to as “Mortgagor”) to Laurus Master Fund, Ltd., a Cayman Islands
company with an address c/o M&C Corporate Services, Limited, P.O. Box 309, G.T.,
Ugland House, South Church Street, Georgetown Grand Cayman, Cayman Islands, as
secured party and mortgagee (hereinafter, referred to as “Mortgagee”).

WITNESSETH:

        That for and in consideration of One and no/100 dollars ($1.00) and
other good and valuable consideration, the receipt and sufficiency whereof are
hereby acknowledged by Mortgagor, and in order to secure the Secured Obligations
(as hereinafter defined), Mortgagor does hereby give, grant, bargain, sell,
transfer, assign, mortgage and convey unto Mortgagee, and its successors and
assigns, with MORTGAGE COVENANTS and upon the STATUTORY CONDITIONS AND WITH THE
STATUTORY POWER OF SALE (as such terms are defined under the laws of the
jurisdictions where the Mortgaged Property is located), all of the following
described property (hereinafter collectively referred to as the “Mortgaged
Property”):

(a)         Those certain tracts and parcels of land located at Hampshire Road
and Garabedian Drive, Salem, New Hampshire and Methuen, Massachusetts, as more
particularly described in Exhibit A attached hereto and by this reference made a
part hereof, together with all right, title and interest of Mortgagor, including
any after-acquired title or reversion, in and to the common areas,
rights-of-ways, streets and alleys adjacent thereto, and all easements,
rights-of-way, licenses, operating agreements, strips and gores of land, vaults,
roads, streets, ways, alleys, passages, sewers, sewer rights, waters, water
courses, water rights and powers, oil, gas and other minerals, flowers, shrubs,
crops, trees, timber and other emblements now or hereafter located on, servicing
or benefiting the land or under or above same, and all estates, rights, titles,
interests, privileges, liberties, tenements, hereditaments, easements and
appurtenances whatsoever, in any way belonging, relating to or appertaining to
said tract or parcel of land or any part thereof, or which hereafter shall in
any way belong, relate or be appurtenant thereto, whether now owned or hereafter
acquired by Mortgagor and the reversion and reversions, remainder and
remainders, and all the estate, right, title, interest, property, possession,
claim and demand whatsoever at law, as well as in equity, of Mortgagor of, in
and to the same (hereinafter referred to as the “Real Estate”); and

(b)         All buildings, structures, parking areas, landscaping, and other
improvements of every nature now or hereafter situated, erected or placed on the
Real Estate (hereinafter referred to as the “Improvements”), and all materials
intended for construction, reconstruction, alteration and repairs of the
Improvements now or hereafter erected, all of which materials shall be deemed to
be included within the Improvements immediately upon the delivery thereof to the
Real Estate; and

(c)         All fixtures, goods to become fixtures, machinery, equipment,
furniture, inventory, building supplies, appliances and other articles of
personal property (hereinafter collectively referred to as the “Personal
Property”), including, but not limited to, all gas and electric fixtures,
radiators, heaters, furnaces, engines and machinery, boilers, ranges, ovens,
elevators and motors, bathtubs, sinks, commodes, basins, pipes, faucets and
other plumbing, heating and air conditioning equipment, mirrors, refrigerating
plant, refrigerators, iceboxes, dishwashers, carpeting, floor coverings,
furniture, light fixtures, signs, lawn equipment, water heaters, and cooking
apparatus and appurtenances, and all other fixtures and equipment now or
hereafter owned by Mortgagor and located in, on or about, or used or intended to
be used with or in connection with the use, operation, or enjoyment of the Real
Estate or the Improvements, whether installed in such a way as to become a part
thereof or not, including all extensions, additions, improvements, betterments,
renewals and replacements of any of the foregoing and all the right, title and
interest of Mortgagor in and to any of the foregoing now owned or hereafter
acquired by Mortgagor, all of which are hereby declared and shall be deemed to
be fixtures and accessions to the freehold and a part of the Improvements as
between the parties hereto and all persons claiming by, through or under them;
and

(d)         All right, title and interest of Mortgagor in and to all policies of
insurance, licenses, franchises, permits and all applications filed in
connection therewith, service contracts, maintenance contracts, property
management agreements, equipment leases, tradenames, trademarks, service marks,
logos, goodwill, accounts, chattel paper and general intangibles as defined in
the Uniform Commercial Code, which in any way now or hereafter belong, relate or
appertain to the Real Estate, the Improvements or the Personal Property or any
part thereof now owned or hereafter acquired by Mortgagor, including, without
limitation, all condemnation payments, insurance proceeds and escrow funds and
all other property of Mortgagor deposited with Mortgagee or held by Mortgagee
(hereinafter referred to as the “Intangible Property”), and

(e)         All leases, subleases, licenses, franchises, concessions or grants
of other possessory interests, tenancies, and any other agreements affecting the
use, possession or occupancy of the Real Estate, Improvements or Personal
Property or any part thereof (including, without limitation, guest rooms,
restaurants, bars, conference and meeting rooms, and banquet halls and other
public facilities), whether now or hereafter existing or entered into
(including, without limitation, any use or occupancy arrangements created
pursuant to Section 365(d) of the Bankruptcy Code or otherwise in connection
with the commencement or continuance of any bankruptcy, reorganization,
arrangement, insolvency, dissolution, receivership or similar proceedings, or
any assignment for the benefit of creditors, in respect of any tenant or
occupant of any portion of the Real Estate) and all amendments, modifications,
supplements, extensions or renewals thereof, whether now or hereafter existing
and all amendments, modifications, supplements, extensions or renewals thereof,
together with the right to enforce, whether at law or in equity or by any other
means, all terms, covenants and provisions of the foregoing (collectively the
“Leases”).

(f)         All rents, issues, profits, royalties (including all oil and gas or
other hydrocarbon substances), earnings, receipts, revenues, accounts, account
receivable, security deposits and other deposits (subject to the prior right of
the tenants making such deposits) and income, including, without limitation,
fixed, additional and percentage rents, and all operating expense
reimbursements, reimbursements for increases in taxes, sums paid by tenants to
Mortgagor to reimburse Mortgagor for amounts originally paid or to be paid by
Mortgagor or Mortgagor’s agents or affiliates for which such tenants were
liable, as, for example, tenant improvements costs in excess of any work letter,
lease takeover costs, moving expenses and tax and operating expense
pass-throughs for which a tenant is solely liable, parking, maintenance, common
area, tax, insurance, utility and service charges and contributions, proceeds of
sale of electricity, gas, heating, air-conditioning and other utilities and
services, deficiency rents and liquidated damages, and other benefits now or
hereafter derived from any portion of the Real Estate or otherwise due and
payable or to become due and payable as a result of any ownership, use,
possession, occupancy or operation thereof and/or services rendered, goods
provided and business conducted in connection therewith (including any payments
received pursuant to Section 502(b) of the Bankruptcy Code or otherwise in
arrangement, insolvency, dissolution, receivership or similar proceedings, or
any assignment for the benefit of creditors, in respect of any tenant or other
occupants of any portion of the Real Estate and all claims as a creditor in
connection with any of the foregoing), all claims under any and all lease
guaranties, letters of credit and any other credit support given by any
guarantor in connection with any of the Leases or leasing commissions payable to
Mortgagor and all cash or security deposits, advance rentals, and all deposits
or payments of a similar nature relating thereto, now or hereafter, including
during any period of redemption, derived from the Real Estate or any portion
thereof and all proceeds from the cancellation, surrender, sale or other
disposition of the Leases (collectively the “Rents”).

(g)         All the right, title, interest of Mortgagor in and to all plans and
specifications relating to the Improvements on the Real Estate (hereinafter
collectively referred to as the “Plans”); and

(h)         All judgments, awards of damages and settlements hereafter made as a
result or in lieu of any taking of the Real Estate Improvements or any interest
therein or part thereof under the power of eminent domain, or for any damage
(whether caused by such taking or otherwise) to the Real Estate, or the
improvements thereon or any part thereof, including any award for change of
grade of streets; and

(i)         All the right, title, interest of Mortgagor in and to the
environmental indemnification provisions inuring to the benefit of Mortgagor
(and its lenders) under that certain Purchase and Sale Agreement dated August
28, 1995 by and between John Hancock Mutual Life Insurance Company as seller and
Mortgagor as buyer pertaining to the acquisition by Mortgagor of the Real Estate
and Improvements as the same may have been amended; and

(j)         All proceeds, products, substitutions and accessions of the
foregoing of every type.

        TO HAVE AND TO HOLD the Mortgaged Property and all parts, rights,
members and appurtenances thereof, to the use, benefit and behoove of Mortgagee
and the successors and assigns of Mortgagee, in fee simple forever; and
Mortgagor covenants that Mortgagor is lawfully seized and possessed of the
Mortgaged Property and holds marketable fee simple absolute title to the same
and has good right to convey the Mortgaged Property and that the conveyances in
this Mortgage are subject to only those matters (hereinafter referred to as the
“Permitted Encumbrances”) expressly set forth in Exhibit B attached hereto and
by this reference made a part hereof. Except for the Permitted Encumbrances,
Mortgagor does warrant and will forever defend the title to the Mortgaged
Property against the claims of all persons whomsoever.

        This Mortgage is intended to constitute: (i) a mortgage deed and (ii) a
security agreement and FINANCING STATEMENT under the Uniform Commercial Code.
This Mortgage is also intended to operate and be construed as an absolute
present assignment of the Leases and Rents, Mortgagor hereby agreeing that
Mortgagee is entitled to receive the Rents, issues and profits of the Mortgaged
Property prior to an Event of Default and without entering upon or taking
possession of the Real Estate.

        PROVIDED NEVERTHELESS, that if Mortgagor, its successors or assigns pays
and performs or causes to be paid and performed the following described
indebtedness and obligations (hereinafter all collectively referred to as the
“Secured Obligations”), then this Mortgage shall be void, otherwise this
Mortgage shall remain in full force:

    (a)        The debt and other obligations of Mortgagor to Mortgagee under
that certain Secured Convertible Note of even date herewith in the amount of
Five Hundred Thousand Dollars ($500,000.00) (as the same may be amended,
extended, restated or substituted from time to time, the “Note”);

    (b)        The full and prompt payment and performance by Mortgagor of all
of the provisions, agreements, covenants and obligations of the Mortgagor
contained in this Mortgage, in the Securities Purchase Agreement by and between
Mortgagor and Mortgagee of even date herewith (as the same may be amended,
extended, restated or substituted from time to time, “Purchase Agreement”), in
any promissory note issued pursuant to the Purchase Agreement, in the Common
Stock Purchase Warrant from Mortgagor to Mortgagee of even date herewith, in the
Registration Rights Agreement between Mortgagor and Mortgagee of even date
herewith, and in all other agreements, documents or instruments now or hereafter
evidencing, securing or otherwise relating to the obligations evidenced by the
Note and Purchase Agreement (the Note, this Mortgage, the Purchase Agreement and
such other promissory notes, agreements, documents and instruments, together
with any and all renewals, amendments, extensions and modifications thereof, are
hereinafter collectively referred to as the “Transaction Documents”),

    (c)        The accuracy of all of the representations and warranties of
Mortgagor contained herein, in the Purchase Agreement and in the other
Transaction Documents;

    (d)        Any and all additional advances made by Mortgagee to preserve and
protect the Improvements or to protect or preserve the Mortgaged Property or the
security interest created hereby on the Mortgaged Property, or for taxes,
assessments or insurance premiums as hereinafter provided or for performance of
any of Mortgagor’s obligations hereunder or under the other Transaction
Documents or for any other purpose provided herein or in the other Transaction
Documents (whether or not the original Mortgagor remains the owner of the
Mortgaged Property at the time of such advances); and

    (e)        Any and all other indebtedness, however incurred, which may now
or hereafter be due and owing from Mortgagor to Mortgagee, as maker, guarantor
or surety, now existing or hereafter coming into existence, however and whenever
incurred or evidenced, whether expressed or implied, direct or indirect absolute
or contingent, or due or to become due, and all renewals, modifications,
consolidations and extensions thereof.

        This Mortgage is, in addition, upon the STATUTORY CONDITIONS OF THE LAWS
OF NEW HAMPSHIRE AND MASSACHUSETTS, upon the breach of which Mortgagee shall
have the STATUTORY POWERS OF SALE UNDER THE LAWS OF NEW HAMPSHIRE AND
MASSACHUSETTS, which are hereby incorporated herein by reference.

        Mortgagor hereby further covenants and agrees with Mortgagee as follows:

    1.        Payment and Performance of Secured Obligations. Mortgagor shall
promptly pay the Secured Obligations when due, and fully and promptly perform
all of the provisions, agreements, covenants and obligations of the Secured
Obligations.

    2.        Funds for Impositions. At Mortgagee’s request, Mortgagor shall pay
into an account established with Mortgagee, on the days that monthly
installments of interest are payable under the Note, until the Note is paid in
full, a sum (hereinafter referred to as the “Funds”) equal to one-twelfth (1/12)
of the following items (hereinafter collectively referred to as the
“Impositions”): (a) real estate taxes, ad valorem taxes, personal property
taxes, assessments, betterments, and all governmental charges of every name and
restriction which may be levied on the Mortgaged Property, and (b) the yearly
premium installments for the insurance covering the Mortgaged Property and
required by Mortgagee pursuant to Paragraph 4 hereof. The Impositions shall be
estimated initially and from time to time by Mortgagee on the basis of
assessments and bills and estimates thereof. The Funds shall be held by
Mortgagee, free of interest and free of any liens or claims on the part of
creditors of Mortgagor and as part of the security for the Secured Obligations.
The Funds shall not be, nor be deemed to be, trust funds but may be commingled
with the general funds of Mortgagee. The Funds are pledged as additional
security for the Secured Obligations, and may be applied, at Mortgagee’s option
and without notice to Mortgagor, to the payment of the Secured Obligations upon
any Event of Default hereunder. If at any time the amount of the Funds held by
Mortgagee shall be less than the amount deemed necessary by Mortgagee to pay
Impositions as such become due, Mortgagor shall pay to Mortgagee any amount
necessary to make up the deficiency within five (5) days after notice from
Mortgagee to Mortgagor requesting payment thereof. Upon payment in full of the
Secured Obligations, Mortgagee shall promptly refund to Mortgagor any Funds held
by Mortgagee.

    3.        Impositions, Liens and Charges. Mortgagor shall pay all
Impositions and other charges, if any, attributable to the Mortgaged Property,
as and when due, unless, pursuant to Paragraph 2 above, Mortgagee has requested
that they be paid monthly, in which case, they shall be paid in accordance with
Paragraph 2. Mortgagor shall furnish to Mortgagee all bills and notices of
amounts due under this Paragraph 3 as soon as received. Mortgagor shall promptly
discharge (by bonding, payment or otherwise) any lien filed against the
Mortgaged Property and will keep and maintain the Mortgaged Property free from
the claims of all persons supplying labor or materials to the Mortgaged
Property.

    4.        Insurance.

    (a)        Mortgagor, at its expense, shall procure and maintain for the
benefit of Mortgagor and Mortgagee, insurance policies issued by such insurance
companies, in such amounts, in such form and substance, and with such coverages,
endorsements, deductibles, and expiration dates as are acceptable to Mortgagee,
providing the following types of insurance covering the Mortgaged Property:

    (i)        “Direct Loss” Property insurance (including broad form flood,
broad form earthquake and comprehensive boiler and machinery coverages) on the
Improvements and Personal Property in an amount not less than one hundred
percent (100%) of the full replacement cost of the Improvements and the Personal
Property determined annually by an insurer or qualified appraiser selected and
paid for by Mortgagor and acceptable to Mortgagee, with deductibles not to
exceed $25,000 for any one occurrence, with a replacement cost coverage
endorsement, an agreed amount endorsement, and, if requested by Mortgagee, a
contingent liability from operation of building laws endorsement, a demolition
cost endorsement and an increased cost of construction endorsement in such
amounts as Mortgagee may require. Full replacement cost as used herein means the
cost of replacing the Improvements (exclusive of the cost of the land,
excavations, foundations and footings below the lowest basement floor) and the
Personal Property without deduction for physical depreciation thereof;

    (ii)        During the course of any construction, the insurance required by
clause (i) above shall be written on a builders risk, completed value,
non-reporting form, meeting all of the terms required by clause (i) above,
covering the total value of work performed, materials, equipment, machinery and
supplies furnished, existing structures, and temporary structures being erected
on or near the Real Estate, including coverage against collapse and damage
during transit or while being stored off-site, and containing a soft costs
(including loss of rents) coverage endorsement and a permission to occupy
endorsement;

    (iii)        Flood insurance if at any time the Improvements are located in
any federally designated “special hazard area” (including any area having
special flood, mud slide and/or flood-related erosion hazards, and shown on a
Flood Hazard Boundary Map or a Flood Insurance Rate Map), in an amount equal to
the full replacement cost or the maximum amount then available under the New
Hampshire and Massachusetts Flood Insurance Programs;

    (iv)        To the extent applicable, rent loss insurance in an amount
sufficient to recover at least (1) the total estimated gross receipts from all
sources of income for the Real Estate, including, without limitation, rental
income, for a twelve month period, plus (2) Impositions for a twelve month
period to the extent not included in (1) above;

    (v)        Commercial general liability insurance against claims for
personal injury (to include, without limitation, bodily injury and personal and
advertising injury) and property damage liability, all on an occurrence basis,
if available, with such coverages as Mortgagee may request (including, without
limitation, contractual liability coverage, completed operations coverage for a
period of two (2) years following completion of construction of any Improvements
on the Real Estate, and coverages equivalent to an ISO broad form endorsement),
with a general aggregate limit of not less than $ 1,000,000, a completed
operations aggregate limit of not less than $1,000,000, and a combined single
“per occurrence” limit of not less than $1,000,000 for bodily injury, Real
Estate damage and medical payments;

    (vi)        During the course of construction or repair of any Improvements
on the Real Estate, owner’s contingent or protective liability insurance
covering claims not covered by or under the terms or provisions of the insurance
required by clause (v) above;

    (vii)        Employers liability insurance;

    (viii)        Umbrella liability insurance with limits of not less than ONE
MILLION DOLLARS ($1,000,000) to be in excess of the limits of the insurance
required by clauses (v), (vi) and (vii) above, with coverage at least as broad
as the primary coverages of the insurance required by clauses (v), (vi) and
(vii) above, with any excess liability insurance to be at least as broad as the
coverages of the lead umbrella policy. All such policies shall be endorsed to
provide defense coverage obligations;

    (ix)        Workmen’s compensation insurance for all employees of Mortgagor
engaged on or with respect to the Real Estate or Improvements; and

    (x)        Such other insurance in such form and in such amounts as may from
time to time be required by Mortgagee against other insurable hazards and
casualties which at the time are commonly insured against in the case of
properties of similar character and location to the Real Estate and the
Improvements.

        Mortgagor shall pay all premiums on insurance policies in the manner
provided under Paragraph 3 hereof. The insurance policies provided for in
clauses (v), (vi) and above shall name Mortgagee as an additional insured and
shall contain a cross liability/severability endorsement. The insurance policies
provided for in clauses (i), (ii), (iii) and (iv) above shall name Mortgagee as
mortgagee and loss payee, shall be first payable in case of loss to Mortgagee,
and shall contain mortgage clauses and lender’s loss payable endorsements in
form and substance acceptable to Mortgagee. Mortgagor shall deliver duplicate
originals or certified copies of all such policies to Mortgagee, and Mortgagor
shall promptly furnish to Mortgagee all renewal notices and all receipts of paid
premiums. At least thirty (30) days prior to the expiration date of the
policies, Mortgagor shall deliver to Mortgagee duplicate originals or certified
copies of renewal policies in form satisfactory to Mortgagee.

    (b)        All policies of insurance required by this Mortgage shall contain
clauses or endorsements to the effect that (i) no act or omission of either
Mortgagor or anyone acting for Mortgagor (including, without limitation, any
representations made by Mortgagor in the procurement of such insurance), which
might otherwise result in a forfeiture of such insurance or any part thereof, no
occupancy or use of the Mortgaged Property for purposes more hazardous than
permitted by the terms of the policy, and no foreclosure or any other change in
title to the Mortgaged Property or any part thereof, shall affect the validity
or enforceability of such insurance insofar as Mortgagee is concerned, (ii) the
insurer waives any right of setoff, counterclaim, subrogation, or any deduction
in respect of any liability of Mortgagor and Mortgagee, (iii) such insurance is
primary and without right of contribution from any other insurance which may be
available, (iv) such policies shall not be modified, canceled or terminated
without the insurer thereunder giving at least thirty (30) days prior written
notice to Mortgagee by certified or registered mail, and (v) that Mortgagee
shall not be liable for any premiums thereon or subject to any assessments
thereunder, and shall in all events be in amounts sufficient to avoid any
coinsurance liability.

    (c)        With the prior consent of Mortgagee not to be unreasonably
withheld, the insurance required by this Mortgage may be effected through a
blanket policy or policies covering additional locations and property of
Mortgagor not included in the Mortgaged Property, provided that such blanket
policy or policies comply with all of the terms and provisions of this Paragraph
and contain endorsements or clauses assuring that any claim recovery will not be
less than that which a separate policy would provide, including, without
limitation, a priority claim endorsement in the case of Real Estate insurance
and an aggregate limits of insurance per location endorsement in the case of
liability insurance.

    (d)        All policies of insurance required by this Mortgage shall be
issued by companies licensed to do business in the state where the policy is
issued and also in the states where the Real Estate is located and having a
rating in Best’s Key Rating Guide of at least “A” and a financial size category
of at least “VIII”.

    (e)        Mortgagor shall not carry separate insurance, concurrent in kind
or form or contributing in the event of loss, with any insurance required under
this Mortgage unless such insurance complies with the terms and provisions of
this Paragraph.

    (f)        In the event of any loss or damage to the Mortgaged Property,
Mortgagor shall give immediate written notice to the insurance carrier and
Mortgagee. Mortgagor hereby irrevocably authorizes and empowers Mortgagee, at
Mortgagee’s option and in Mortgagee’s sole discretion, as attorney in fact for
Mortgagor, to make proof of such loss, to adjust and compromise any claim under
insurance policies, to appear in and prosecute any action arising from such
insurance policies, to collect and receive insurance proceeds, and to deduct
therefrom Mortgagee’s expenses incurred in the collection of such proceeds. If
Mortgagor is not then in default under this Mortgage, Mortgagee will agree to
the use of insurance proceeds for reconstruction or repair of the Mortgaged
Property, under Mortgagee’s usual construction loan procedures, with Mortgagor
providing any necessary equity injection required in the judgment of Mortgagee
to assure proper completion of such repair or restoration. Otherwise, Mortgagee
is authorized to apply the balance of such proceeds to the payment of the
Secured Obligations whether or not then due, in which case any prepayment
premiums or fees in the nature thereof, (including by way of example, the result
of applying Applicable Percentage to the amount being repaid as set forth in the
Note) will be due as provided for under the Note. If Mortgagee shall require, or
if Mortgagor desires to proceed with (and is not otherwise in default), the
reconstruction or repair of the Mortgaged Property, Mortgagee shall, as they
become due during the course of reconstruction or repair of the Mortgaged
Property, reimburse Mortgagor, in accordance with such terms and conditions as
Mortgagee may prescribe, for the costs of reconstruction or repair of the
Mortgaged Property, and upon completion of such reconstruction or repair, shall
apply any excess to the payment of the Secured Obligations. If under Paragraph
21 hereof the Mortgaged Property is sold or the Mortgaged Property is acquired
by Mortgagee, all right, title and interest of Mortgagor in and to any insurance
policies and unearned premiums thereon and in and to the proceeds thereof
resulting from loss or damage to the Mortgaged Property prior to the sale or
acquisition shall pass to Mortgagee or any other successor in interest to
Mortgagor or purchaser or grantor of the Mortgaged Property but receipt of any
insurance proceeds and any disposition of the same by Mortgagee shall not
constitute a waiver of any rights of Mortgagee, statutory or otherwise, and
specifically shall not constitute a waiver of the right of foreclosure by
Mortgagee in the Event of Default or failure of performance by Mortgagor of any
of the Secured Obligations.

    5.        Preservation and Maintenance. Mortgagor (a) shall not permit or
commit waste, impairment, or deterioration of the Mortgaged Property or abandon
the Mortgaged Property, (b) shall restore or repair promptly and in a good and
workmanlike manner all or any part of the Mortgaged Property in the event of any
damage, injury or loss thereto, to the equivalent of its condition prior to such
damage, injury or loss, or such other condition as Mortgagee may approve in
writing, (c) shall keep the Mortgaged Property, including the Improvements and
the Personal Property, in good order, repair and tenantable condition and shall
replace fixtures, equipment, machinery and appliances on the Mortgaged Property
when necessary to keep such items in good order, repair, and tenantable
condition, and (d) shall comply with all laws, ordinances, regulations and
requirements of any governmental body applicable to the Mortgaged Property.
Mortgagor covenants and agrees to give Mortgagee prompt notice of any
non-compliance with such laws, ordinances, regulations or requirements and of
any notice of non-compliance therewith which it receives or any threatened or
pending proceedings in respect thereto or with respect to the Mortgaged
Property. Neither Mortgagor nor any tenant or other person shall remove,
demolish or alter any Improvements now existing or hereafter erected on the
Mortgaged Property or any Personal Property in or on the Mortgaged Property
except when incident to the replacement of Personal Property with items of like
kind. Mortgagor further covenants and agrees that, without the prior written
consent of Mortgagee, herein, no part of the Mortgaged Property shall be
declared, or become the subject of, a condominium under the New Hampshire or
Massachusetts Condominium Acts, as they may be amended or supplemented, or
become the subject of any covenants or restrictions, or any planned unit
development, or any other type of development that would control or restrict the
uses to which the Real Estate and Improvements may be put or the scheme or
arrangement or its development or the design, location or character of its
buildings or improvements, or which would impose Obligations or assessments of
any type upon any owners or tenants of the Mortgaged Property, or upon any other
parties who may use or enjoy the Mortgaged Property.

    6.        Transfers. Mortgagor will not, directly or indirectly, voluntarily
or involuntarily, without the prior written consent of Mortgagee in each
instance: (a) sell, convey, assign, transfer, lease, option, mortgage, pledge,
hypothecate or dispose of the Mortgaged Property, or any part thereof or
interest therein, except as expressly permitted by the terms of this Mortgage;
or (b) create or suffer to be created or to exist any lien, encumbrance,
security interest, mortgage, pledge, restriction, attachment or other charge of
any kind upon the Mortgaged Property, or any part thereof or interest therein,
except for Permitted Encumbrances.

    7.        Hazardous Materials Warranties and Indemnification.

    (a)        Definitions. The following definitions shall apply for purposes
of this Paragraph 7:

    (i)        “Environmental Law” shall mean any federal, state or local
statute, regulation or ordinance or any judicial or administrative decree or
decision, whether now existing or hereinafter enacted, promulgated or issued,
with respect to any drinking water, groundwater, wetlands, landfills, open
dumps, storage tanks, solid waste, waste water, storm water run-off, waste
emissions, wells, toxic pollutants or hazardous wastes or materials, including,
but not limited to, petroleum and petroleum products, asbestos and asbestos
containing materials, polychlorinated biphenyls, lead, radon, radioactive
materials, flammables and explosives. Without limiting the generality of the
foregoing, the term “Environmental Law” shall encompass each of the following
statutes, and regulations promulgated thereunder, and amendments and successors
to such statutes and regulations, as may be enacted and promulgated from time to
time: (i) the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (codified in scattered sections of 26 U.S.C.; 33 U.S.C.; 42 U.S.C.
and 42 U.S.C. s. 9601 et seq.); (ii) the Resource Conservation and Recovery Act
of 1976 (42 U.S.C. s. 6901 et seq.); (iii) the Hazardous Substances
Transportation Act (49 U.S.C. s. 1801 et seq.); (iv) the Toxic Substances
Control Act (15 U.S.C. s. 2061 et seq.); (v) the Clean Water Act (33 U.S.C. s.
1251 et seq.); (vi) the Clean Air Act 42 U.S.C. s. 7401 et seq.); (vii) the Safe
Drinking Water Act (21 U.S.C. s. 349; 42 U.S.C. s. 201 and s. 300f et seq.);
(viii) The National Environmental Policy Act of 1969 (42 U.S.C. s. 4321); (ix)
the Superfund Amendment and Reauthorization Act of 1986 (codified in scattered
sections of 10 U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C.); (x) Title III of the
Superfund Amendment and Reauthorization Act (40 U.S.C. s. 1101 et seq.).

    (ii)        “Hazardous Substances” shall mean each and every element,
compound, chemical mixture, contaminant, pollutant, material, waste or other
substance which is defined, determined or identified as hazardous or toxic or is
otherwise regulated under any Environmental Law and includes but is not limited
to any and all substances (whether solid, liquid or gas) defined, listed, or
otherwise classified as pollutants, hazardous wastes, hazardous substances,
hazardous materials, extremely hazardous wastes, or words of similar meaning or
regulatory effect under any present or future Environmental Law or that may have
a negative impact on human health or the environment, including but not limited
to petroleum and petroleum products, asbestos and asbestos-containing materials,
polychlorinated biphenyls, lead, radon, radioactive materials, flammables and
explosives.

    (iii)        “Remediation” includes but is not limited to any response,
remediation, removal, or corrective action; any activity to clean up, detoxify,
decontaminate, contain or otherwise remediate any Hazardous Substance; any
actions to prevent, cure or mitigate any Release of any Hazardous Substance; any
action to comply with any Environmental Law or with any permits issued pursuant
thereto; any inspection, investigation, study, monitoring, assessment, audit,
sampling and testing, laboratory or other analysis, or evaluation relating to
any Hazardous Substances or to any thing referred to herein.

    (iv)        “Release” shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, storing, escaping, leaching,
dumping, or discarding, burying, abandoning, or disposing into the environment.

    (v)        “Threat of Release” shall mean a substantial likelihood of a
Release which requires action to prevent or mitigate damage to the environment
which may result from such Release.

    (b)        Environmental Representations and Warranties. Mortgagor hereby
represents and warrants to Mortgagee that, to the best of Mortgagor’s knowledge,
after due inquiry and investigation: (a) the Mortgaged Property is not now in
direct or indirect violation of any Environmental Law; (b) the Mortgaged
Property is not subject to any private or governmental lien or active judicial
or administrative notice of action relating to any Hazardous Substance other
than the notice recorded at Book 3396, Page 741, which Mortgagor does not
believe will have a material adverse effect on the Mortgaged Property; (c) no
property adjoining the Mortgaged Property is being used for the disposal,
storage, treatment, processing or other handling of Hazardous Substances and
there is no threat of any Hazardous Substances migrating to the Mortgaged
Property except as those disclosed in writing to Mortgagee and which comply with
applicable Environmental Laws; and (vi) Mortgagor has truthfully and fully
provided to Mortgagee, in writing, any and all information relating to
conditions in, on, under or from the Mortgaged Property that is known to
Mortgagor and that is contained in files and records of Mortgagor, including but
not limited to any reports relating to Hazardous Substances in on, under or from
the Mortgaged Property and/or to the environmental condition of the Mortgaged
Property.

    (c)        Environmental Covenants. Mortgagor covenants and agrees that: (a)
all uses and operations on or of the Mortgaged Property, whether by Mortgagor or
any other person over which Mortgagor has control, shall be in compliance with
all Environmental Laws and permits that may have been issued pursuant thereto;
(b) Mortgagor shall not permit the Release of Hazardous Substances by Mortgagor
or any other person over which Mortgagor has control in, on, under or from the
Mortgaged Property; (c) Mortgagor shall not permit any Hazardous Substances in,
on, or under the Mortgaged Property, except those that are both (i) in
compliance with all Environmental Laws and with permits that may have been
issued pursuant thereto and (ii) fully disclosed to Mortgagee in writing; (d)
Mortgagor shall keep the Mortgaged Property free and clear of all liens and
other encumbrances imposed pursuant to any Environmental Law, whether due to any
act or omission of Mortgagor or any other person or entity (the “Environmental
Liens”); (e) Mortgagor shall, at its sole cost and expense, perform any
environmental site assessment or other investigation of environmental conditions
in connection with the Mortgaged Property, pursuant to any reasonable written
request of Mortgagee made in the event that Mortgagee has a good faith reason to
believe that an environmental hazard exists on the Mortgaged Property (including
but not limited to sampling, testing and analysis of soil, water, air, building
materials and other materials and substances whether solid, liquid or gas), and
share with Mortgagee the reports and other results thereof, and the Mortgagee
shall be entitled to rely on such reports and other results thereof; (g)
Mortgagor shall, at its sole cost and expense, comply with all reasonable
written requests of Mortgagee made in the event that Mortgagee has a good faith
reason to believe that an environmental hazard exists on the Mortgaged Property
in order to (i) reasonably effectuate Remediation of any Release of any
Hazardous Substances in, on, under or from the Mortgaged Property; (ii) comply
with any Environmental Law; (iii) comply with any directive from any
governmental authority; and (iv) take any other reasonable action necessary or
appropriate for protection of human health or the environment; (h) Mortgagor
shall not do or allow any tenant or other user of the Mortgaged Property to do
any act that materially increases the dangers to human health or the
environment, poses an unreasonable risk of harm to any person or entity (whether
on or off the Mortgaged Property), impairs or may impair the value of the
Mortgaged Property, is contrary to any requirement of any insurer, constitutes a
public or private nuisance, constitutes waste, or violates any covenant,
condition, agreement or easement applicable to the Mortgaged Property; and (i)
Mortgagor shall immediately notify Mortgagee in writing of (A) any presence of
Releases or Threat of Release of Hazardous Substances in, on, under, from or
migrating towards the Mortgaged Property; (B) any non-compliance with any
Environmental Laws related in any way to the Mortgaged Property; (C) any actual
or potential Environmental Lien; (D) any required or proposed Remediation of
environmental conditions relating the Mortgaged Property; and (E) any written or
oral notice or other communication of which Mortgagor becomes aware from any
source whatsoever (including but not limited to a governmental entity) relating
in any way to the Mortgaged Property and Hazardous Substances or Remediation
thereof, possible liability of any Person pursuant to any Environmental Law
relating to the Mortgaged Property, other environmental conditions in connection
with the Mortgaged Property, or any actual or potential administrative or
judicial proceedings in connection with anything referred to in this Agreement.

    (d)        Indemnification. Irrespective of any knowledge Mortgagee has with
respect to the compliance of the Mortgaged Property with Environmental Laws or
the existence of any Hazardous Wastes on the Mortgaged Property and irrespective
of the cause of the existence of any Hazardous Waste on the Mortgaged Property
or violation of Environmental Laws thereof (unless the sole cause is the actions
of Mortgagee in possession of the Mortgaged Property), Mortgagor covenants and
agrees, at its sole cost and expense to protect, defend, indemnify, release and
hold Mortgagee harmless from and against any and all losses imposed upon or
incurred by or asserted against any Mortgagee and directly or indirectly arising
out of or in any way relating to any one or more of the following: (a) any
presence of any Hazardous Substances in, on, above, or under the Mortgaged
Property whether the same occurred after or before the date hereof and including
any Hazardous Substances know to be present on the date of execution hereof by
Mortgagee; (b) any activity by Mortgagor, any prior owner or operator of the
Mortgaged Property, any person or entity affiliated with Mortgagor or such prior
owner or operator, and any tenant or other user of the Mortgaged Property in
connection with any actual, proposed or threatened use, treatment, storage,
holding, existence, disposal or other Release, generation, production,
manufacturing. processing, refining, control, management, abatement, removal,
handling, transfer or transportation to or from the Mortgaged Property of any
Hazardous Substances at any time located in, under, on or above the Mortgaged
Property; (c) any activity by Mortgagor or any prior owner or operator of the
Mortgaged Property, any person or entity affiliated with Mortgagor or such prior
owner or operator, and any tenant or other user of the Mortgaged Property in
connection with any actual or proposed Remediation of any Hazardous Substances
at any time located in, under, on or above the Mortgaged Property, whether or
not such Remediation is voluntary or pursuant to court or administrative order,
including (but not limited to) any removal, remedial or corrective action; (d)
any actual or threatened noncompliance or violations of any Environmental Laws
(or permits issued pursuant to any Environmental Law) in connection with the
Mortgaged Property or operations thereon, including but not limited to any
failure by Mortgagor or any prior owner or operator, any person or entity
affiliated with Mortgagor or such prior owner or operator, and any tenant or
other user of the Mortgaged Property to comply with any order of any
governmental authority in connection with any Environmental Laws; (e) the
imposition, recording or filing or the threatened imposition, recording or
filing of any Environmental Lien encumbering the Mortgaged Property; (f) any
administrative processes or proceedings or judicial proceedings in any way
connected with any matter addressed in this Agreement; (g) any actual or
threatened injury to, destruction of or loss of natural resources in any way
connected with the Mortgaged Property, including (but not limited to) costs to
investigate and assess such injury, destruction or loss; (h) any acts of
Mortgagor or any prior owner or operator, any person or entity affiliated with
Mortgagor or such prior owner or operator, and any tenant or other user of the
Mortgaged Property in arranging for disposal or treatment, or arranging with a
transporter for transport for disposal or treatment, of Hazardous Substances at
any facility or incineration vessel containing such or similar hazardous
substances; (i) any acts of Mortgagor or any prior owner or operator, any person
or entity affiliated with any Mortgagor or such prior owner or operator, and any
tenant or other user of the Mortgaged Property in accepting any Hazardous
Substances for transport to disposal or treatment facilities, incineration
vessels or sites from which there is a Release, or a Threat of Release of any
Hazardous Substance which causes the incurrence of costs for Remediation; and
(j) any personal injury, wrongful death, or property or other damage arising
under any statutory or common law or tort law theory, including (but not limited
to) damages assessed for private or public nuisance or for the conducting of an
abnormally dangerous activity on or near the Mortgaged Property.

    (e)        Notice to Mortgagee. If Mortgagor receives any notice or obtains
knowledge of (i) any potential or known Release or Threat of Release of any
Hazardous Materials at or from the Real Estate, notification of which must be
given to any governmental agency under any Environmental Law, or notification of
which has, in fact, been given to any governmental agency, or (ii) any
complaint, order, citation or notice with regard to air emissions, water
discharges, or any other environmental health or safety matter affecting
Mortgagor or the Real Estate (an “Environmental Complaint”) from any person or
entity (including, without limitation, the Environmental Protection Agency),
then Mortgagor shall immediately notify Mortgagee orally and in writing of said
Release or Threat of Release or Environmental Complaint. Upon such notification,
Mortgagee may, at its election without regard to whether an Event of Default has
occurred, obtain one or more environmental assessments of the Real Estate
prepared by a geohydrologist, an independent engineer or other qualified
consultant or expert approved by the Mortgagee which evaluates or confirms (i)
whether any Hazardous Materials are present in the soil or water at or adjacent
to the Real Estate, and (ii) whether the use and operation of the Real Estate
comply with all Environmental Laws. Environmental assessments may include
detailed visual inspections of the Real Estate, including, without limitation,
any and all storage areas, storage tanks, drains, dry wells and leaching areas,
and the taking of soil samples, surface water samples and ground water samples,
as well as such other investigations or analyses as are necessary or appropriate
for a complete determination of the compliance of the Real Estate and the use
and operation thereof with all applicable Environmental Laws. All such
environmental assessments shall be at the cost and expense of the Mortgagor.

    (f)        Survival, Assignability, and Transferability

    (i)        The warranties, representations and indemnity set forth in
subparagraphs (b), (c), (d) and (e) of this Paragraph shall survive the payment
and performance of the Secured Obligations and any exercise by Mortgagee of any
remedies under this Mortgage, including without limitation, the power of sale,
or any other remedy in the nature of foreclosure, and shall not merge with any
deed given by Mortgagor to Mortgagee in lieu of foreclosure or any deed under a
power of sale.

    (ii)        It is agreed and intended by Mortgagor and Mortgagee that the
warranties, representations, and indemnity set forth above in subparagraphs (b),
(c) (d) and (e) of this Paragraph 7 may be assigned or otherwise transferred by
Mortgagee to its successors and assigns and to any subsequent purchasers of all
or any portion of the Real Estate by, through or under Mortgagee, without notice
to Mortgagor and without any further consent of Mortgagor. To the extent consent
or any such assignment or transfer is required by law, advance consent to any
such assignment or transfer is hereby given by Mortgagor in order to maximize
the extent and effect of the warranties, representations, and indemnity given
hereby.

    8.        Use of Mortgaged Property. Unless required by applicable law or
unless Mortgagee has otherwise agreed in writing, Mortgagor shall not allow
changes in the nature of the occupancy or use for which the Mortgaged Property
was intended at the time this Mortgage was executed. Mortgagor shall not
initiate or acquiesce in a change in the zoning classification of the Mortgaged
Property or subject the Mortgaged Property to restrictive or negative covenants
without Mortgagee’s written consent. Mortgagor shall comply with, observe and
perform all zoning and other laws affecting the Mortgaged Property, all
restrictive covenants affecting the Mortgaged Property, and all licenses and
permits affecting the Mortgaged Property.

    9.        Protection of Mortgagee’s Security. If Mortgagor fails to perform
the covenants and agreements contained in this Mortgage, or if any action or
proceeding is commenced which affects the Mortgaged Property or title thereto or
the interest of Mortgagee therein, including, but not limited to, eminent
domain, insolvency, code enforcement or arrangements or proceedings involving a
bankrupt or decedent, then Mortgagee at Mortgagee’s option may make such
appearances, disburse such sums and take such action as Mortgagee deems
necessary to protect Mortgagee’s interest, including, but not limited to,
disbursement of attorneys’ fees, payment, contest or compromise of any lien or
security interest which is prior to the lien or security interest of this
Mortgage, and entry upon the Mortgaged Property to make repairs. At its option,
and without limitation, Mortgagee may pay any Impositions, or provide for the
maintenance and preservation of the Mortgaged Property. Any amounts disbursed by
Mortgagee pursuant to this Paragraph 9, with interest thereon, shall become a
portion of the Secured Obligations. Unless Mortgagor and Mortgagee agree to
other terms of payment, such amounts shall be payable upon demand from Mortgagee
to Mortgagor requesting payment thereof and shall bear interest from the date of
disbursement at the default interest rate stated in the Note unless collection
from Mortgagor of interest at such rate would be contrary to applicable law, in
which event such amounts shall bear interest at the highest rate which may be
collected from Mortgagor under applicable law. Mortgagor shall have the right to
prepay such amounts in whole or in part at any time without penalty or premium.
Nothing contained in this Paragraph 9 shall require Mortgagee to incur any
expense or do any act.

    10.        Inspection. Mortgagee may, at Mortgagor’s expense, make or cause
to be made reasonable entries upon and inspections of the Mortgaged Property
during normal business hours, or at any other time when necessary to protect or
preserve the Mortgaged Property.

    11.        Books and Records.

    (a)        Mortgagor shall keep and maintain at all times at Mortgagor’s
address stated in this Mortgage, or such other place as Mortgagee may approve in
writing, complete, proper and accurate records and books of account in which
full, true and correct entries shall be made in accordance with generally
accepted accounting principles reflecting the results of the operation of the
Mortgaged Property, and copies of all written contracts, leases and other
instruments which affect the Mortgaged Property. Such records, books of account,
contracts, leases and other instruments shall be subject to examination,
inspection and copying by Mortgagee at any reasonable time by Mortgagee and at
Mortgagor’s expense.

    (b)        Upon request of Mortgagee in writing, Mortgagor shall promptly
provide Mortgagee with all documents reasonably requested by Mortgagee prepared
in the form and the manner called for in such request and as may reasonably
relate to the Mortgaged Property or the use, maintenance, operation or condition
thereof, or the financial condition of Mortgagor or any party obligated on the
Note or under any guaranty, including, without limitation, all leases or
leasehold interests granted to or by Mortgagor, rent rolls and tenant lists,
rent and damage deposit ledgers, operating statements, profit and loss
statements and balance sheets, personal financial statements of Mortgagor or
income tax returns (including quarterly returns), any or all of which documents
shall be audited or certified as true and accurate by a certified public
accountant, if requested by Mortgagee, and shall cover such period or periods as
may be specified by Mortgagee.

    12.        Condemnation. If all or substantially all of the Mortgaged
Property shall be damaged or taken through condemnation (which term, when used
in this Mortgage, shall include any damage or taking by any governmental
authority, quasi-governmental authority, any party having the power of
condemnation, or any transfer by private sale in lieu thereof), either
temporarily or permanently, then the entire Secured Obligations shall, at the
option of Mortgagee, become immediately due and payable. Mortgagor authorizes
Mortgagee, at Mortgagee’s option, as attorney in fact for Mortgagor, to
commence, appear in and prosecute, in Mortgagee’s or Mortgagor’s name, any
action or proceeding relating to any condemnation or other taking of the
Mortgaged Property and to settle or compromise any claim in connection with such
condemnation or other taking. The proceeds of any award or claim for damages,
direct or consequential, in connection with any condemnation, or other taking of
the Mortgaged Property, or part thereof, or for conveyances in lieu of
condemnation, are hereby assigned and shall be paid to Mortgagee. Mortgagor
authorizes Mortgagee to apply such awards, proceeds or damages, after the
deduction of Mortgagee’s expenses incurred in the collection of such amounts,
and at Mortgagee’s option, to restoration or repair of the Mortgaged Property or
to payment of the Secured Obligations, whether or not then due, with the
balance, if any, to Mortgagor. Mortgagor agrees to execute such further
assignment of any awards, proceeds, damages or claims arising in connection with
such condemnation or injury that Mortgagee may require. For the purposes of this
Paragraph, “substantially all of the Mortgaged Property” shall mean a taking of
or damage to less than the entire Mortgaged Property through condemnation, which
in the good faith judgment of Mortgagee, renders the Mortgaged Property
remaining after such taking or damage unsuitable for restoration for the use
intended to be made of the Mortgaged Property or substantially the same value,
condition, character or general utility as the then use which existed on the
Mortgaged Property before such condemnation. Any taking or damage of less than
substantially all of the Mortgaged Property is a “partial taking”.

        If Mortgagor is not then otherwise in default of the Secured
Obligations, then Mortgagee agrees to release the proceeds of a partial taking,
under its usual construction loan disbursement procedures, with Mortgagor
providing any necessary equity injection required in the judgment of Mortgagee
to assure proper completion of such repair or restoration.

        Mortgagor shall promptly provide Mortgagee copies of all notices
received by Mortgagor with respect to any condemnation.

    13.        Mortgagor and Lien Not Released. From time to time, without
affecting the obligation of Mortgagor or Mortgagor’s successors or assigns to
pay the Secured Obligations and to observe the covenants of Mortgagor contained
in this Mortgage and the other Transaction Documents, and without affecting the
guaranty of any person, corporation, partnership or other entity for payment or
performance of the Secured Obligations, and without affecting the lien or
priority of lien of this Mortgage on the Mortgaged Property, Mortgagee may, at
Mortgagee’s option, without giving notice to or obtaining the consent of
Mortgagor, Mortgagor’s successors or assigns or of any guarantor, and without
liability on Mortgagee’s part, grant extensions or postponements of the time for
payment of the Secured Obligations or any part thereof, release anyone liable on
any of the Secured Obligations, accept a renewal note or notes therefor, release
from this Mortgage any part of the Mortgaged Property, take or release other or
additional security, reconvey any part of the Mortgaged Property, consent to any
map or plat or subdivision of the Mortgaged Property, consent to the granting of
any easement, join in any extension or subordination agreement and agree in
writing with Mortgagor to modify the rate of interest or terms and time of
payment or period of amortization of the Note or change the amount of the
monthly installments payable thereunder. Mortgagor shall pay Mortgagee a
reasonable service charge, together with such title insurance premiums and
attorneys’ fees as may be incurred, at Mortgagee’s option, for any such action
if taken at Mortgagor’s request.

    14.        Forbearance Not Waiver. Any forbearance by Mortgagee in
exercising any right or remedy hereunder, or otherwise afforded by applicable
law, shall not be a waiver of or preclude the exercise of any right or remedy
hereunder. The procurement of insurance or the payment of taxes or other liens
or charges by Mortgagee shall not be a waiver of Mortgagee’s right to accelerate
the maturity of the Secured Obligations. Mortgagee’s receipt of any awards,
proceeds or damages under Paragraphs 4 and 12 hereof shall not operate to cure
or waive Mortgagor’s default in payment of the Secured Obligations.

    15.        Estoppel Certificate. Mortgagor shall, within ten (10) days of a
written request from Mortgagee, furnish Mortgagee with a written statement, duly
acknowledged, setting forth the amount of the Secured Obligations and any right
of set-off, counterclaim or other defense which may exist or be claimed by
Mortgagor against the Secured Obligations and the obligations of Mortgagor under
this Mortgage.

    16.        Security Agreement. Insofar as any item of property included in
the Mortgaged Property which is or might be deemed to be “personal property” is
concerned, this Mortgage is hereby made and declared to be a security agreement
and fixture financing statement, granting a security interest in and to each and
every item of such property included in the Mortgaged Property (hereinafter
collectively referred to as the “Collateral”), in compliance with the provisions
of the Uniform Commercial Code. The remedies for any violation of the covenants,
terms and conditions of the security agreement herein contained shall be (i) as
prescribed herein, or (ii) as prescribed by general law, or (iii) as prescribed
by the specific statutory consequences now or hereafter enacted and specified in
the Uniform Commercial Code, all at Mortgagee’s sole election. Mortgagor and
Mortgagee agree that the filing of such financing statement(s) in the records
normally having to do with personal property shall never be construed as in any
wise derogating from or impairing this declaration and hereby stated intention
of Mortgagor and Mortgagee that everything used in connection with the
production of income from the Mortgaged Property and/or adapted for use therein
and/or which is described or reflected in this Mortgage, is, and at all times
and for all purposes and in all proceedings both legal or equitable shall be,
regarded as part of the Real Estate irrespective of whether (i) any such item is
physically attached to the Real Estate or the Improvements, (ii) serial numbers
are used for the better identification of certain items capable of being thus
identified in a recital contained herein, or (iii) any such item is referred to
or reflected in any such financing statement(s) so filed at any time. Similarly,
the mention in any such financing statement(s) of the rights in and to the
proceeds of any hazard insurance policy, or any award in eminent domain
proceedings for a taking or for loss of value, or Mortgagor’s interest as lessor
in any present or future lease or rights to income growing out of the use and/or
occupancy of the Mortgaged Property, whether pursuant to lease or otherwise,
shall never be construed as in any wise altering any of the rights of Mortgagee
as determined by this instrument or impugning the priority of Mortgagee’s lien
granted hereby or by any other recorded document, but such mention in such
financing statement(s) is declared to be for the protection of Mortgagee in the
event any court shall at any time hold, with respect to any such matter, that
notice of Mortgagee’s priority of interest, to be effective against a particular
class of persons, must be filed in the records of the Uniform Commercial Code
kept with the Secretary of State of the Debtor’s location. Mortgagor warrants
that (i) Mortgagor’s (that is, “Debtor’s”) name, identity or organizational
structure and residence or place of creation are as set forth in the first
paragraph of this Agreement; and (iii) the location of all collateral
constituting fixtures is upon the Real Estate. Mortgagor covenants and agrees
that Mortgagor will not change its name, identity or organizational structure.
The information contained in this Paragraph 16 is provided in order that this
Mortgage shall comply with the requirements of the Uniform Commercial Code, for
instruments to be filed as financing statements. The names of the “Debtor” and
the “Secured Party”, the identity or organizational structure and residence or
place of creation of “Debtor”, and the mailing address of the “Secured Party”
from which information concerning the security interest may be obtained, and the
mailing address of “Debtor”, are as set forth in the first paragraph of this
Mortgage, and a statement indicating the types, or describing the items, of
collateral is set forth in this Mortgage.

    17.        Leases and Rents.

    (a)        As part of the consideration for the Secured Obligations,
Mortgagor hereby absolutely and unconditionally assigns and transfers to
Mortgagee all of Mortgagor’s right, title and interest in and to the Leases and
the Rents, including those now due, past due or to become due by virtue of any
Lease for the occupancy or use of all or any part of the Real Estate. Mortgagor
hereby authorizes Mortgagee or Mortgagee’s agents to collect the Rents and
hereby directs such tenants, lessees and licensees of the Real Estate to pay the
Rents to Mortgagee or Mortgagee’s agents; provided, however, that prior to
written notice given by Mortgagee to Mortgagor of any Event of Default by
Mortgagor, Mortgagor shall collect and receive the Rents as trustee for the
benefit of Mortgagee, to apply the Rents so collected to the Secured
Obligations, to the extent then due, with the balance, so long as no Event of
Default has occurred, to the account of Mortgagor. Mortgagor agrees that each
and every tenant, lessee and licensee of the Real Estate shall pay, and hereby
irrevocably authorizes and directs each and every tenant, lessee and licensee of
the Real Estate to pay, the Rents to Mortgagee or Mortgagee’s agents on
Mortgagee’s written demand therefor without any obligation on the part of said
tenant, lessee or licensee to inquire as to the existence of an Event of Default
and notwithstanding any notice or claim of Mortgagor to the contrary, and
Mortgagor agrees that Mortgagor shall have no right or claim against said
tenant, lessee or licensee for or by reason of any Rents paid to Mortgagee
following receipt of such written demand.

    (b)        Mortgagor hereby covenants that Mortgagor has not executed any
prior assignment of the Leases or the Rents, that Mortgagor has not performed,
and will not perform, any acts or has not executed, and will not execute, any
instruments which would prevent Mortgagee from exercising the rights as holder
of the Leases and Rents under this Mortgage, and that at the time of execution
of this Mortgage, there has been no anticipation or prepayment of any of the
Rents for more than one (1) month prior to the due dates of such Rents.
Mortgagor further covenants that Mortgagor will not hereafter collect or accept
payment of any Rents more than one (1) month prior to the due dates of such
Rents.

    (c)        Mortgagor agrees that neither the foregoing assignment of Leases
and Rents nor the exercise of any of Mortgagee’s rights and remedies under
Paragraph 21 hereof shall be deemed to make Mortgagee a mortgagee-in-possession
or otherwise responsible or liable in any manner with respect to the Leases, the
Real Estate or the use, occupancy, enjoyment or operation of all or any portion
thereof, unless and until Mortgagee, in person or by agent, assumes actual
possession thereof. Nor shall the appointment of any receiver for the Real
Estate by any court at the request of Mortgagee or by agreement with Mortgagor,
or the entering into possession of any part of the Real Estate by such receiver,
be deemed to make Mortgagee a mortgagee-in-possession or otherwise responsible
or liable in any manner with respect to the Leases, the Real Estate or the use,
occupancy, enjoyment or operation of all or any portion thereof.

    (d)        If Mortgagee or a court-appointed receiver enters upon, takes
possession of and maintains control of the Real Estate pursuant to this
Mortgage, all Rents thereafter collected shall be applied first to the costs of
taking control of and managing the Real Estate and collecting the Rents,
including, but not limited to, reasonable attorneys’ fees actually incurred,
receiver’s fees, premiums on receiver’s bonds, costs of repairs to the Real
Estate, premiums on insurance policies, Impositions and other charges on the
Real Estate, and the costs of discharging any obligation or liability of
Mortgagor as landlord, lessor or licensor of the Real Estate and then to the
Secured Obligations. Mortgagee or the receiver shall have access to the books
and records used in the operation and maintenance of the Real Estate and shall
be liable to account only for those Rents actually received. Mortgagee shall not
be liable to Mortgagor, anyone claiming under or through Mortgagor or anyone
having an interest in the Real Estate by reason of anything done or left undone
by Mortgagee. If the Rents are not sufficient to meet the costs of taking
control of and managing the Real Estate and collecting the Rents, any monies
expended by Mortgagee for such purposes shall become a portion of the Secured
Obligations. Unless Mortgagee and Mortgagor agree in writing to other terms of
payment, such amounts shall be payable upon notice from Mortgagee to Mortgagor
requesting payment thereof and shall bear interest from the date of disbursement
at the default rate stated in the Note unless payment of interest at such rate
would be contrary to applicable law, in which event such amounts shall bear
interest at the highest rate which may be collected from Mortgagor under
applicable law. The entering upon and taking possession of and maintaining of
control of the Real Estate by Mortgagee or the receiver and the application of
Rents as provided herein shall not cure or waive any Event of Default or
invalidate any other right or remedy of Mortgagee hereunder.

    (e)        Mortgagor will not enter into any Lease of all or any portion of
the Real Estate unless such Lease shall be upon a form of lease previously
approved by Mortgagee; provided however that after any Event of Default shall
have occurred hereunder and until such time as such Event of Default has either
been cured with a written consent of Mortgagee or the Event of Default has been
waived in writing by Mortgagee, Mortgagor will not enter into any Lease of all
or any portion of the Real Estate or amend, supplement or otherwise modify, or
terminate or cancel, or accept the surrender of, or consent to the assignment or
subletting of, or grant any concessions to or waive the performance of any
obligations of any tenant, lessee or licensee under, any now existing or future
Lease of the Real Estate, without the prior written consent of Mortgagee.
Mortgagor, at Mortgagee’s request, shall furnish Mortgagee with executed copies
of all Leases hereafter made of all or any part of the Real Estate, and all
Leases now or hereafter entered into will be in form and substance subject to
the approval of Mortgagee. Upon Mortgagee’s request, Mortgagor shall make a
separate and distinct assignment to Mortgagee, as additional security, of all
Leases hereafter made of all or any part of the Real Estate.

    (f)        Upon or at any time after the occurrence of an Event of Default,
Mortgagee shall have the right to proceed in its own name or in the name of
Mortgagor in respect of any claim, suit, action or proceeding relating to the
rejection of any Lease, including, without limitation, the right to file and
prosecute, to the exclusion of Mortgagor, any proofs of claim, complaints,
motions, applications, notices and other documents, in any case in respect of
the lessee under such Lease under the Bankruptcy Code.

    (g)        If there shall be filed by or against Mortgagor a petition under
the Bankruptcy Code, and Mortgagor, as lessor under any Lease, shall determine
to reject such Lease pursuant to Section 365(a) of the Bankruptcy Code, then
Mortgagor shall give Mortgagee not less than ten (10) days’ prior notice of the
date on which Mortgagor shall apply to the bankruptcy court for authority to
reject the Lease. Mortgagee shall have the right, but not the obligation, to
serve upon Mortgagor within such ten-day period a notice stating that (i)
Mortgagee demands that Mortgagor assume and assign the Lease to Mortgagee
pursuant to Section 365 of the Bankruptcy Code and (ii) Mortgagee covenants to
cure or provide adequate assurance of future performance under the Lease. If
Mortgagee serves upon Mortgagor the notice described in the preceding sentence,
Mortgagor shall not seek to reject the Lease and shall comply with the demand
provided for in clause (i) of the receding sentence within thirty (30) days
after the notice shall have been given, subject to the performance by Mortgagee
of the covenant provided for in clause (ii) of the preceding sentence.

    (h)        Nothing in this Mortgage shall be construed to impose upon
Mortgagee any obligation or responsibility of Mortgagor, to any Lessee under any
of the Leases or to any other third party, for the control, care, management or
repair of the Real Estate, the performance of any of the landlord’s obligations
under the Leases, or for any dangerous or defective condition on the Real
Estate.

    (i)        Mortgagor shall defend, indemnify and hold Mortgagee harmless
from and against all obligations, liabilities, losses, costs, expenses, civil
fines, penalties or damages (including attorneys fees) which Mortgagee may incur
by reason of this Mortgage or in connection with any of the Leases or with
regard to the Real Estate prior to such time as Mortgagee takes physical
possession of and manages and operates the Real Estate after an Event of
Default. Mortgagor shall defend Mortgagee against any such claim or litigation
involving Mortgagee for the same. Should Mortgagee incur such obligation,
liability, loss, cost, expense, civil fine, penalty or damage, Mortgagor shall
reimburse Mortgagee upon demand. Any amount owed Mortgagee under this provision
shall bear interest at the highest applicable interest rate payable under the
Note.

    (j)        It is understood and agreed that neither the assignment of the
Leases as to Mortgagee nor the exercise by Mortgagee of any of its rights or
remedies under this Mortgage shall be deemed to make Mortgagee a
“Mortgagee-in-Possession” or otherwise responsible or liable in any manner with
respect to the Real Estate or the use, occupancy, enjoyment or operation of all
or any portion thereof, unless and until Mortgagee, in person or agent, assumes
actual possession thereof, nor shall appointment of a receiver by any court at
the request of Mortgagee or by agreement with Mortgagor or the entering into
possession of the Real Estate or any part thereof by such receiver be deemed to
make Mortgagee a “Mortgagee-in-Possession” or otherwise responsible or liable in
any manner with respect to the Real Estate or the use, occupancy, enjoyment or
operation of all or any portion thereof.

    18.        Remedies Cumulative. All remedies provided in this Mortgage are
distinct and cumulative to any other right or remedy under this Mortgage or
under the other Transaction Documents or afforded by law or equity, and may be
exercised concurrently, independently or successively.

    19.        Taxation of Mortgages. In the event of the enactment of any law
deducting from the value of the Mortgaged Property any mortgage lien thereon, or
imposing upon Mortgagee the payment of all or part of the taxes, charges or
assessments previously paid by Mortgagor pursuant to this Mortgage, or changing
the law relating to the taxation of mortgages or debts secured by mortgages or
Mortgagee’s interest in the Mortgaged Property so as to impose new incidents of
tax on Mortgagee, then Mortgagor shall pay such taxes or assessments or shall
reimburse Mortgagee therefor; provided that, however, if in the opinion of
counsel to Mortgagee, such payment cannot lawfully be made by Mortgagor, and
such change in the law cannot be remedied and lawful payment made by Mortgagor
to the reasonable satisfaction of Mortgagee within thirty (30) days following
notice to Mortgagor by Mortgagee of the occurrence of such change, then
Mortgagee may, at Mortgagee’s option, declare the Secured Obligations to be
immediately due and payable and invoke any remedies permitted by Paragraph 21 of
this Mortgage.

    20.        Events of Default and Acceleration. The term “Event of Default”,
wherever used in this Mortgage, shall mean any one or more of the following
conditions or events:

    (a)        Failure by Mortgagor to pay as and when due and payable any
interest on or principal of or other sum payable under or failure to perform any
obligation of Mortgagor under the Note not cured in accordance with the terms
thereof or any other Event of Default as defined under the Note; or

    (b)        Failure by Mortgagor to pay as and when due and payable any sums
to be paid by Mortgagor under this Mortgage (including, but not limited to, any
payment of Funds) and continuance of such failure for a period of ten (10) days
after written notice thereof from Mortgagee; or

    (c)        Failure by Mortgagor to duly observe or perform any term,
covenant, condition or agreement contained in Paragraphs 6 or 7 of this
Mortgage. With respect to Mortgagor’s obligations to comply with all applicable
Environmental Laws, including either or both the clean-up and removal of
Hazardous Materials present on the Mortgaged Property, Mortgagor shall have at
thirty (30) days to achieve such full compliance after written notice from
Mortgagee requiring such compliance, and if Mortgagor shall commence and
diligently pursue to full compliance in accordance with the terms of Paragraph
7, Mortgagor shall have such additional time as Mortgagee, in its sole judgment,
shall allow Mortgagor for such compliance, provided however, Mortgagee may in
its sole judgment, declare an Event of Default to exist by written notice
thereof to Mortgagor at any time after the expiration of such thirty (30) day
period if such full compliance with all applicable Environmental Laws shall not
have been so achieved at the time of such notice, or

    (d)        Failure by Mortgagor to duly observe or perform any term,
covenant, condition or agreement contained in this Mortgage (other than the
obligations to make payments referred to in subparagraph (b) above and
continuance of such failure for a period of thirty (30) days after written
notice thereof from Mortgagee; or

    (e)        Failure by Mortgagor or any guarantor to duly observe or perform
any other material term, covenant, condition or agreement contained in the
Purchase Agreement or any of the other Transaction Documents not cured in
accordance with the terms thereof; or

    (f)        Without the prior written consent of Mortgagee, any merger,
dissolution or termination of existence of Mortgagor as a corporation; or

    (g)        Failure by Mortgagor or any guarantor or obligor to duly observe
and perform any term, covenant, condition or agreement contained in any document
evidencing any obligation of such person to Mortgagee, whether as maker or
guarantor or surety, now existing or hereafter arising, which is not cured in
accordance with the terms thereof, including, without limitation, the
obligations under the promissory note and other documents executed on or about
February ____, 2004;

    (h)        any Event of Default as defined under any Transaction Document;

    (i)        any breach of the Statutory Conditions of New Hampshire or
Massachusetts; or

    (j)        Any representation or warranty of Mortgagor or any guarantor
contained in this Mortgage or the other Transaction Documents shall prove to
have been false or incorrect in any material respect upon the date when made; or

    (k)        The filing by Mortgagor or any guarantor or obligor of the
Secured Obligations of a voluntary petition in bankruptcy under Title 11 of the
United States Code, or the issuing of an order for relief against Mortgagor,
Mortgagor or any guarantor or obligor in any involuntary petition in bankruptcy
under Title 11 of the United States Code, or the filing by Mortgagor or any
guarantor or obligor of any petition or answer seeking or acquiescing in any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief for itself under any present or future federal, state or other
law or regulation relating to bankruptcy, insolvency or, other relief for
debtors, Mortgagor’s or any guarantor’s or obligor seeking or consenting to or
acquiescing in the appointment of any custodian, trustee, receiver, conservator
or liquidator of Mortgagor or such guarantor or obligor, respectively, or of all
or any substantial part of its respective Real Estate, or the making by
Mortgagor or any guarantor or obligor of any assignment for the benefit of
creditors, or Mortgagor’s or any guarantor’s or obligor’s failure generally to
pay its debts, as such debts become due, or Mortgagor’s or any guarantor’s or
obligor’s giving of notice to any governmental authority or body of insolvency
or pending insolvency or suspension of operations; or

    (l)        The entry by a court of competent jurisdiction of any order,
judgment or decree approving a petition filed against Mortgagor or any guarantor
or obligor of the Secured Obligations seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future federal, state or other law or regulation relating to
bankruptcy, insolvency or other relief for debtors, or appointing any custodian,
trustee, receiver, conservator or liquidator of all or any substantial part of
Mortgagor’s or any guarantor’s or obligor’s Real Estate; or

    (m)        Such a change in the condition or affairs (financial or
otherwise) of the Mortgagor or of any obligor, endorser, guarantor or surety
under or for any of the Secured Obligations, or decline in the value of the
Mortgaged Property as, in the opinion of the Mortgagee, materially impairs the
Mortgagee’s security or increases its risk or if the Mortgagee in good faith
deems itself insecure; or

    (n)        Default after the expiration of any applicable cure period in the
prompt payment, performance or observance of any material term, provision,
condition, covenant, warranty or representation set forth in any mortgage,
liens, lease or encumbrance affecting the Mortgaged Property, whether or not
such mortgage, lien, lease or encumbrance is senior or junior to this Mortgage,
and whether or not such mortgage, lien, lease or encumbrance has been consented
to by Mortgagee, provided, however, that nothing herein shall be deemed to be a
consent by Mortgagee, including, without limitation, the mortgage in the amount
of Five Hundred Thousand Dollars ($500,000.00) from Mortgagor to Smithfield
Fiduciary LLC of near or even date herewith and subordinate hereto, implied or
otherwise, to the granting of any mortgage, lien or encumbrance on the Premises;
or

        If an Event of Default shall have occurred, Mortgagee may, at
Mortgagee’s option, by notice to Mortgagor declare the entire Secured
Obligations to be immediately due and payable, whereupon the same shall become
immediately due and payable, and without presentment, protest, demand or other
notice of any kind, all of which are hereby expressly waived by Mortgagor. No
omission on the part of Mortgagee to exercise such option when entitled to do so
shall be construed as a waiver of such right.

      21. Rights and Remedies.

    (a)        Power of sale and other Remedies. Upon the occurrence of any
Event of Default, and whether or not Mortgagee shall have accelerated the
maturity of the Secured Obligations pursuant to Paragraph 20 hereof, Mortgagee,
at its option, may take the following actions or any one or more of them from
time to time:

    (i)        Declare any one or more of the Secured Obligations immediately
due and payable;

    (ii)        Cease advancing money or extending credit to or for the benefit
of the Mortgagor under any agreement, whether or not secured hereby;

    (iii)        Foreclose this Mortgage under any legal method of foreclosure
in existence at the time or now existing, or under any other applicable law,
including, without limitation, the Statutory Powers of Sale of the States in
which the Real Estate is located, which are incorporated herein by reference,
and if the Mortgaged Property consists of multiple parcels or units, to
foreclose against the entire Mortgaged Property or such portions thereof in such
order and at such times as Mortgagee may determine all in its discretion, and
the deferral or delay in foreclosure against any portion of the Mortgaged
Property shall not impair the right of Mortgagee to subsequently foreclose;

    (iv)        either with or without entering upon or taking possession of the
Mortgaged Property, demand, collect and receive any or all Rents;

    (v)        take possession of all or any part of the Collateral, and for
such purpose Mortgagee may, so far as Mortgagor can give authority, enter upon
any premises on which the Collateral or any part thereof may be situated and
remove the same;

    (vi)        either with or without taking possession of the Collateral,
sell, lease or otherwise dispose of the Collateral in its then condition or
following such preparation as Mortgagee deems advisable;

    (vii)        either with or without entering upon or taking possession of
the Mortgaged Property, and without assuming any obligations of Mortgagor
thereunder, exercise the rights of Mortgagor under, use or benefit from, any of
the Plans, Leases or Intangible Real Estate;

    (viii)        in person, by agent or by court-appointed receiver, enter
upon, take possession of, and maintain full control of the Mortgaged Property in
order to perform all acts necessary or appropriate to complete the Improvements
and to maintain and operate the Mortgaged Property, including, but not limited
to, the execution, cancellation or modification of Leases, the making of repairs
to the Mortgaged Property and the execution or termination of contracts
providing for the improvement, management or maintenance of the Mortgaged
Property, all on such terms as Mortgagee, in its sole discretion, deems proper
or appropriate;

    (ix)        proceed by a suit or suits in law or in equity or by other
appropriate proceeding against Mortgagor or any other party liable to enforce
payment of the Secured Obligations or the performance of any term, covenant,
condition or agreement of this Mortgage or any of the other Transaction
Documents, or any other right, and to pursue any other remedy available to it,
all as Mortgagee shall determine most effectual for such purposes;

    (x)        institute and maintain such suits and proceedings as Mortgagee
may deem expedient to prevent any impairment of the Mortgaged Property by any
acts which may be unlawful or in violation of this Mortgage, to preserve or
protects its interest in the Mortgaged Property and the Rents, and to restrain
the enforcement of or compliance with any legislation or other governmental
enactment, rule or order that would impair the security hereunder or be
prejudicial to the interest of Mortgagee. Mortgagor recognizes that in the Event
of Default, no remedy of law will provide adequate relief to Mortgagee, and
therefore Mortgagor agrees that Mortgagee shall be entitled to temporary and
permanent injunctive relief to cure any such Default without the necessity of
proving actual damages;

    (xi)        apply all or any portion of the Mortgaged Property, or the
proceeds thereof, towards (but not necessarily in complete satisfaction of) the
Secured Obligations in any order chosen by Mortgagee, without being deemed to
have waived any Event of Default;

    (xii)        foreclose any and all rights of Mortgagor in and to the
Mortgaged Property, whether by sale, entry or in any other manner provided for
hereunder or under the laws of the State where the Real Estate is located
whether now existing or as hereafter arising and apply the proceeds thereof to
the Secured Obligations in any order chosen by Mortgagee;

    (xiii)        in the case of any receivership, insolvency, bankruptcy,
reorganization, arrangement, adjustment, composition or other proceedings
affecting Mortgagor or the creditors or Real Estate of Mortgagor, Mortgagee, to
the extent permitted by law, shall be entitled to file such proofs of claim and
other documents as may be necessary or advisable in order to have the claims of
Mortgagee allowed in such proceedings for the entire amount of the Secured
Obligations at the date of the institution of such proceedings and for any
additional portion of the Secured Obligations accruing after such date;

    (xiv)        exercise any other right or remedy of a mortgagee or secured
party under the laws of the States where the Mortgaged Property or Mortgagor is
located; and

    (xv)        set-off against any and all deposits, accounts, certificate of
deposit balances, claims, or other sums at any time credited by or due from
Mortgagee to Mortgagor and against all other Real Estate of Mortgagor in the
possession of Mortgagee or under its control.

    (xvi)        in the event that the Mortgagee seeks to enforce its rights and
remedies hereunder, the Mortgagor shall fully cooperate with the Mortgagee in
any foreclosure of the Mortgaged Property scheduled by the Mortgagee, including
without limitation; (i) providing the Mortgagee with any information concerning
the Mortgaged Property reasonably requested by the Mortgagee, such as rental
income information, taxes, water assessment charges and any maintenance costs
associated with the Mortgaged Property; (ii) arranging with the Mortgagee two
(2) preview dates, each three hours in length, prior to the dates of any
foreclosure sale; and (iii) granting the Mortgagee unlimited access to the
Mortgaged Property on the date of the foreclosure sale for one hour before and
one hour after the foreclosure sale. In addition, the Mortgagee shall, without
waiving its right to enjoin a foreclosure under applicable law, under no
circumstances and in no event in any way interfere with, any foreclosure sale of
the Mortgaged Property scheduled by the Mortgagee.

    (b)        Receiver. If an Event of Default shall have occurred, Mortgagee,
upon application to a court of competent jurisdiction, shall be entitled as a
matter of strict right, without notice and without regard to the occupancy or
value of any security for the Secured Obligations or the solvency of any party
bound for its payment, to the appointment of a receiver to take possession of
and to operate the Mortgaged Property and to collect and apply the Rents. The
receiver shall have all of the rights and powers permitted under the laws of the
State where the Real Estate is located or otherwise existing. Mortgagor will pay
to Mortgagee upon demand, all expenses, including receiver’s fees, attorneys’
fees, costs and agent’s compensation, incurred pursuant to such appointment and
all such expenses shall be a portion of the Secured Obligations.

    (c)        Sale or Other Disposition of Mortgaged Property. Any sale or
other disposition of Collateral may be at public or private sale, to the extent
such private sale is authorized under the provisions of the Uniform Commercial
Code, upon such terms and in such manner as Mortgagee deems advisable. Mortgagee
may conduct any such sale or other disposition of the Mortgaged Property upon
the Real Estate, in which event Mortgagee shall not be liable for any rent or
charge for such use of the Real Estate. Mortgagee may purchase the Mortgaged
Property, or any portion of it, at any sale held under this Paragraph. With
respect to any Collateral to be sold pursuant to the Uniform Commercial Code,
Mortgagee shall give Mortgagor at least seven (7) days written notice of the
date, time, and place of any proposed public sale, or such additional notice as
may be required under the laws of the State where the Mortgaged Property is
located, and of the date after which any private sale or other disposition may
be made. Mortgagee may sell any of the Collateral as part of the Real Estate
comprising the Mortgaged Property, or any portion or unit thereof, at the
foreclosure sale or sales conducted pursuant hereto. If the provisions of the
Uniform Commercial Code are applicable to any part of the Collateral which is to
be sold in combination with or as part of the Real Estate comprising the
Mortgaged Property, or any part thereof, at one or more foreclosure sales, any
notice required under such provisions shall be fully satisfied by the notice
given in execution of any method of foreclosure, including without limitation,
the STATUTORY POWER OF SALE with respect to the Real Estate or any part thereof.
Mortgagor waives any right to require the marshaling of any of its assets in
connection with any disposition conducted pursuant hereto. In the event all or
part of the Mortgaged Property is included at any foreclosure sale conducted
pursuant hereto, a single total price for the Mortgaged Property, or such part
thereof as is sold, may be accepted by Mortgagee with no obligation to
distinguish between the application of such proceeds amongst the Real Estate
comprising the Mortgaged Property. The obligations of Mortgagor to pay such
amounts shall be included in the Secured Obligations of Mortgagor to Mortgagee
and shall accrue interest at the default rate of interest set forth in the Note.
Mortgagor agrees that all rights and remedies of Mortgagee as to the Personal
Real Estate and as to the Mortgaged Property, and all rights and interests
appurtenant thereto, shall be cumulative and may be exercised together or
separately without waiver by Mortgagee of any other of its rights or remedies.
Mortgagor further agrees that any sale or other disposition by Mortgagee of any
of the Personal Property and any rights and interests therein or appurtenant
thereto, or any part thereof, may be conducted either separately from or
together with any foreclosure, sale or other disposition of the Mortgaged
Property, or any rights or interests therein or appurtenant thereto, or any part
thereof, all as the Mortgagee may in its sole discretion elect.

    (d)        Collection of Rents. In connection with the exercise by Mortgagee
of the rights and remedies provided for in subparagraph (a)(ii) of this
Paragraph-

    (i)        Mortgagee may notify any purchaser, tenant, lessee or licensee of
the Mortgaged Property, either in the name of Mortgagee or Mortgagor, to make
payment of Rents directly to Mortgagee or Mortgagee’s agents, may advise any
person of Mortgagee’s interest in and to the Rents, and may collect directly
from such purchaser, tenants, lessees and licensees all amounts due on account
of the Rents;

    (ii)        At Mortgagee’s request, Mortgagor will provide written
notification to any or all purchaser, tenants, lessees and licensees of the
Mortgaged Property concerning Mortgagee’s interest in the Rents and will request
that such purchaser, tenants, lessees and licensees forward payment thereof
directly to Mortgagee;

    (iii)        Mortgagor shall hold any proceeds and collections of any of the
Rents in trust for Mortgagee and shall not commingle such proceeds or
collections with any other funds of Mortgagor; and

    (iv)        Mortgagor shall deliver all such proceeds to Mortgagee
immediately upon the receipt thereof by Mortgagor in the identical form
received, but duly endorsed or assigned on behalf of Mortgagor to Mortgagee.

    (e)        Use and Occupation of Mortgaged Property. In connection with the
exercise of Mortgagee’s rights under Subparagraph (a)(vi) of this Paragraph,
Mortgagee may enter upon, occupy, and use all or any part of the Mortgaged
Property and may exclude Mortgagor from the Real Estate and the Improvements or
portion thereof as may have been so entered upon, occupied, or used. Mortgagee
shall not be required to remove any Personal Property from the Real Estate and
the improvements upon Mortgagee’s taking possession thereof, and may render any
Personal Property unusable to Mortgagor. In the event Mortgagee manages the Real
Estate and the Improvements, Mortgagor shall pay to Mortgagee on demand a
reasonable fee for the management thereof in addition to the Secured
Obligations. Further, Mortgagee may make such alterations, renovations, repairs,
and replacements to the Improvements, as Mortgagee, in its sole discretion,
deems proper or appropriate. The obligation of Mortgagor to pay such amounts and
all expenses incurred by Mortgagee in the exercise of its rights hereunder shall
be included in the Secured Obligations and shall accrue interest at the default
rate of interest stated in the Note.

    (f)        Partial Sales. Mortgagor agrees that in case Mortgagee, in the
exercise of the power of sale contained herein or in the exercise of any other
rights hereunder given, elects to sell in parts or parcels, said sales may be
held from time to time and that the power shall not be exhausted until all of
the Mortgaged Property not previously sold shall have been sold, notwithstanding
that the proceeds of such sales exceed, or may exceed, the Secured Obligations.

    (g)        Assembly of Collateral. Upon the occurrence of any Event of
Default, Mortgagee may require Mortgagor to assemble the Collateral and make it
available to Mortgagee, at Mortgagor’s sole risk and expense, at a place or
places to be designated by Mortgagee which are reasonably convenient to both
Mortgagee and Mortgagor.

    (h)        Actions by Mortgagee. Upon the occurrence of any Event of Default
that continues beyond any applicable grace or cure period, Mortgagor hereby
irrevocably constitutes and appoints Mortgagee or any receiver appointed in
accordance with this Mortgage to be Mortgagor’s true and lawful attorney in fact
to take any action with respect to the Mortgaged Property to preserve, protect,
or realize upon Mortgagee’s interest therein, each at the sole risk, cost and
expense of Mortgagor, but for the sole benefit of Mortgagee. The rights and
powers granted by the within appointment include, but are not limited to, the
right and power to (i) prosecute, defend, compromise, settle, or release any
action relating to the Mortgaged Property; (ii) endorse the name of Mortgagor
upon any and all checks or other items constituting Rents; (iii) sign and
endorse the name of Mortgagor on, and to receive as secured party, any of the
Collateral; (iv) file or record on behalf of Mortgagor any financing or other
statement in order to perfect or protect Mortgagee’s security interest; (v)
enter into leases or subleases, purchase and sale agreements, deeds and other
instruments of conveyance relative to all or a portion of the Real Estate or the
Improvements, (vi) enter into any contracts or agreements relative to, and to
take all action deemed necessary in connection with, any Improvements on the
Real Estate; (vii) manage, operate, maintain, or repair the Real Estate with,
any Improvements on the Real Estate, and the Improvements and (viii) exercise
the rights of Mortgagor under any Plans, Leases, or Intangible Personal Real
Estate. Such receiver or Mortgagee shall not be obligated to perform any of such
acts or to exercise any of such powers, but if it so elects so to perform or
exercise, it shall not be accountable for more than it actually receives as a
result of such exercise of power, and shall not be responsible to Mortgagor
except for willful misconduct or gross negligence. All powers conferred by this
Mortgage, being coupled with an interest, shall be irrevocable until terminated
by a written instrument executed by a duly authorized officer of Mortgagee or
until payment of this Mortgage as shall entitle the Mortgagor to a discharge of
record of the lien hereof, whichever shall first occur.

    22.        Notices. Except as otherwise specified in this Mortgage, any and
all notices, demands, elections or requests provided for or permitted to be
given pursuant to this Mortgage (hereinafter in this Paragraph 22 referred to as
“Notice”) shall be in writing and shall be deemed to have been properly given or
served by personal delivery or by sending same by overnight courier or by
depositing same in the United States Mail, postpaid and registered or certified,
return receipt requested, and addressed to the addresses set forth on page one
hereof. Each Notice shall be effective upon being personally delivered or upon
being sent by overnight courier or upon being deposited in the United States
Mail as aforesaid. However, the time period in which a response to such Notice
must be given or any action taken with respect thereto, if any, shall commence
to run from the date of receipt if personally delivered or sent by overnight
courier, or, if so deposited in the United States Mail, the earlier of three (3)
business days following such deposit and the date of receipt as disclosed on the
return receipt. Rejection or other refusal to accept or the inability to deliver
because of changed address for which no Notice was given shall be deemed to be
receipt of the Notice sent. By giving at least thirty (30) days prior Notice
thereof, Mortgagor or Mortgagee shall have the right from time to time and at
any time during the term of this Mortgage to change their respective addresses
and each shall have the right to specify as its address any other address within
the United States of America.

    23.        Successors and Assigns Bound; Captions. The covenants and
agreements herein contained shall bind, and the rights hereunder shall inure to,
the respective successors and assigns of Mortgagee and Mortgagor, subject to the
provisions of Paragraph 6 hereof. The captions and headings of the paragraphs of
this Mortgage are for convenience only and are not to be used to interpret or
define the provisions hereof.

    24.        Governing Law; Severability. The Mortgaged Property is located
both within New Hampshire and Massachusetts. This Mortgage is to be governed by
the laws of New Hampshire except that, the laws of Massachusetts shall govern
Mortgagee’s remedies for the portion of the Mortgaged Property located in
Massachusetts. In the event that any provision or clause of this Mortgage
conflicts with applicable law, such conflict shall not affect other provisions
of this Mortgage which can be given effect without the conflicting provision,
and to this end, the provisions of this Mortgage are declared to be severable.
In the event that any applicable law limiting the amount of interest or other
charges permitted to be collected from Mortgagor is interpreted so that any
charge for which provision is made in this Mortgage, whether considered
separately or together with other charges permitted to be collected from
Mortgagor, is interpreted so that any such charge, whether considered separately
or together with other charges that are considered a part of the transaction
represented by this Mortgage, violates such law, and Mortgagor is entitled to
the benefit of such law, such charge is hereby reduced to the extent necessary
to eliminate such violation. The amounts, if any, previously paid to Mortgagee
in excess of the amounts payable to Mortgagee pursuant to such charges as
reduced shall be applied by Mortgagee to reduce the principal of the
indebtedness evidenced by the Note.

    25.        Discharge. Upon payment and performance of the Secured
Obligations, Mortgagee shall discharge this Mortgage. Mortgagor shall pay
Mortgagee’s reasonable costs incurred in discharging this Mortgage.

    26.        Waivers. Mortgagor agrees to the full extent permitted by law,
that in case of an Event of Default hereunder, neither Mortgagor nor anyone
claiming through or under Mortgagor shall or will set up, claim or seek to take
advantage of any appraisal, valuation, stay, extension, homestead, exemption or
redemption laws now or hereafter in force, in order to prevent or hinder the
enforcement or foreclosure of this Mortgage, or the absolute sale of the
Mortgaged Property, or the final and absolute putting into possession thereof,
immediately after such sale, of the purchasers thereat, and Mortgagor, for
Mortgagor and all who may at any time claim through or under Mortgagor, hereby
waives to the fullest extent that Mortgagor may lawfully so do, the benefit of
all such laws, and any and all right to have the assets comprised in the
security intended to be created hereby marshaled upon any foreclosure of the
lien hereof. No delay or omission of Mortgagee or of any holder of the Note to
exercise any right, power or remedy accruing upon any Event of Default shall
exhaust or impair any such right, power or remedy or shall be construed to be a
waiver of any such default, or acquiescence therein; and every right, power and
remedy given by this Mortgage to Mortgagee may be exercised from time to time
and as often as may be deemed expedient by Mortgagee. No consent or waiver,
expressed or implied, by Mortgagee to or of any Event of Default shall be deemed
or construed to be a consent or waiver to or of any other Event of Default.
Failure on the part of Mortgagee to complain of any act or failure to act which
constitutes an Event of Default, irrespective of how long such failure
continues, shall not constitute a waiver by Mortgagee of Mortgagee’s rights
hereunder or impair any rights, powers or remedies consequent on any Event of
Default. No act or omission of Mortgagee as described in Paragraph 13 above
shall preclude Mortgagee from exercising any right, power or privilege herein
granted or intended to be granted in the event of any Event of Default then made
or of any subsequent Event of Default; nor, except as otherwise expressly
provided in an instrument or instruments executed by Mortgagee, shall the lien
of this Mortgage be altered thereby. No acceptance of partial payment or
performance shall waive, affect or diminish any right of Mortgagee or
Mortgagor’s duty of compliance and performance therewith. Any Obligation which
this Mortgage secures is a separate instrument and may be negotiated, extended
or renewed by Mortgagee without releasing Mortgagor or any guarantor or
co-maker. In the event of the sale or transfer by operation of law or otherwise
of all or any part of the Mortgaged Property, Mortgagee, without notice, is
hereby authorized and empowered to deal with any such vendee or transferee with
reference to the Mortgaged Property or the Secured Obligations or with reference
to any of the terms, covenants, conditions or agreements hereof, as fully and to
the same extent as it might deal with the original parties hereto and without in
any way releasing or discharging any liabilities, obligations or undertakings
(including, without limitation, the restrictions upon transfer contained in
Paragraph 6).

    27.        Further Assurances. At any time and from time to time, upon
request by Mortgagee, Mortgagor will make, execute and deliver, or cause to be
made, executed and delivered, to Mortgagee and, where appropriate, cause to be
recorded and/or filed and from time to time thereafter to be re-recorded and/or
refiled at such time and in such offices and places as shall be deemed desirable
by Mortgagee, any and all such other and further assignments, mortgages,
security agreements, financing statements, continuation statements, instruments
of further assurance, certificates and other documents as may, in the opinion of
Mortgagee, be necessary or desirable in order to effectuate, complete, or
perfect, or to continue and preserve (a) the obligations of Mortgagor under this
Mortgage, and (b) the lien and security interest created by this Mortgage upon
the Mortgaged Property. Upon any failure by Mortgagor so to do, Mortgagee may
make, execute, record, file, re-record and/or refile any and all such
assignments, mortgages, security agreements, financing statements, continuation
statements, instruments, certificates, and documents for and in the name of
Mortgagor, and Mortgagor hereby irrevocably appoints Mortgagee the agent and
attorney in fact of Mortgagor so to do.

    28.        Subrogation. Mortgagee shall be subrogated to all right, title,
lien or equity of all persons to whom Mortgagee may have paid any monies in
settlement of liens, charges or assessments, or in acquisition of title or for
its benefit hereunder, or for the benefit or account of Mortgagor upon execution
of the Note or subsequently paid under any provisions hereof.

    29.        Time of the Essence. Time is of the essence with respect to each
and every covenant, agreement and obligation of Mortgagor under this Mortgage,
the Note, Purchase Agreement, and any and all other Transaction Documents.

    30.        Indemnification; Subrogation; Waiver of Offset.

    (a)        Mortgagor shall indemnify, defend and hold Mortgagee harmless
against: (i) any and all claims for brokerage, leasing, finders or similar fees
which may be made relating to the Mortgaged Property or the Secured Obligations,
and (ii) any and all liability, obligations, losses, damages, penalties, claims,
actions, suits, costs and expenses (including Mortgagee’s reasonable attorneys’
fees, together with reasonable appellate counsel fees, if any) of whatever kind
or nature which may be asserted against, imposed on or incurred by Mortgagee in
connection with the Secured Obligations, this Mortgage, the Mortgaged Property,
or any part thereof, or the exercise by Mortgagee of any rights or remedies
granted to it under this Mortgage; provided, however, that nothing herein shall
be construed to obligate Mortgagor to indemnity, defend and hold harmless
Mortgagee from and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, suits, costs and expenses enacted against,
imposed on or incurred by Mortgagee by reason of Mortgagee’s willful misconduct
or gross negligence.

    (b)        If Mortgagee is made a party defendant to any litigation or any
claim is threatened or brought against Mortgagee concerning the Secured
Obligations, this Mortgage, the Mortgaged Property, or any part thereof, or any
interest therein, or the maintenance, operation or occupancy or use thereof,
then Mortgagor shall indemnify, defend and hold Mortgagee harmless from and
against all liability by reason of said litigation or claims, including
reasonable attorneys’ fees (together with reasonable appellate counsel fees, if
any) and expenses incurred by Mortgagee in any such litigation or claim, whether
or not any such litigation or claim is prosecuted to judgment. If Mortgagee
commences an action against Mortgagor to enforce any of the terms hereof or to
prosecute any breach by Mortgagor of any of the terms hereof or to recover any
sum secured hereby, Mortgagor shall pay to Mortgagee its reasonable attorneys’
fees (together with reasonable appellate counsel, fees, if any) and expenses.
The right to such attorneys’ fees (together with reasonable appellate counsel
fees, if any) and expenses shall be deemed to have accrued on the commencement
of such action, and shall be enforceable whether or not such action is
prosecuted to judgment. If Mortgagor breaches any term of this Mortgage,
Mortgagee may engage the services of an attorney or attorneys to protect its
rights hereunder, and in the event of such engagement following any breach by
Mortgagor, Mortgagor shall pay Mortgagee reasonable attorneys’ fees (together
with reasonable appellate counsel fees, if any) and expenses incurred by
Mortgagee, whether or not an action is actually commenced against Mortgagor by
reason of such breach. All references to “attorneys” in this Subparagraph and
elsewhere in this Mortgage shall include without limitation any attorney or law
firm engaged by Mortgagee, and all references to “fees and expenses” in this
Subparagraph and elsewhere in this Mortgage shall include without limitation any
fees of such attorney or law firm and any allocation charges.

    (c)        A waiver of subrogation shall be obtained by Mortgagor from its
insurance carrier and, consequently, Mortgagor waives any and all right to claim
or recover against Mortgagee, its officers, employees, agents and
representatives, for loss of or damage to Mortgagor, the Mortgaged Property,
Mortgagor’s Real Estate or the Real Estate of others under Mortgagor’s control
from any cause insured against or required to be insured against by the
provisions of this Mortgage.

    (d)        All sums payable by Mortgagor hereunder shall be paid without
notice (except as may otherwise be provided herein), demand, counterclaim,
setoff, deduction or defense and without abatement, suspension, deferment,
diminution or reduction, and the obligations and liabilities of Mortgagor
hereunder shall in no way be released, discharged or otherwise affected by
reason of: (i) any damage to or destruction of or any condemnation or similar
taking of the Mortgaged Property or any part thereof; (ii) any restriction or
prevention of or interference with any use of the Mortgaged Property or any part
thereof; (iii) any title defect or encumbrance or any eviction from the Real
Estate or the Improvements on the Real Estate or any part thereof by title
paramount or otherwise; (iv) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation, or other like proceeding
relating to Mortgagee, or any action taken with respect to this Mortgage by any
trustee or receiver of Mortgagee, or by any court, in such proceeding; (v) any
claim which Mortgagor has, or might have, against Mortgagee; (vi) any default or
failure on the part of Mortgagee to perform or comply with any of the terms
hereof or of any other agreement with Mortgagor; or (vii) any other occurrence
whatsoever, whether similar or dissimilar to the foregoing, whether or not
Mortgagor shall have notice or knowledge of any of the foregoing. Mortgagor
waives all rights now or hereafter conferred by statute or otherwise to any
abatement, suspension, deferment, diminution, or reduction of any sum secured
hereby and payable by Mortgagor.

    31.        Declaration of Subordination. At the option of Mortgagee, which
may be exercised at any time or from time to time, by written notice to
Mortgagor and to any applicable tenant, this Mortgage shall become subject and
subordinate, in whole or in part (but not with respect to priority of
entitlement to insurance proceeds or condemnation awards), to any and all leases
of all or any part of the Real Estate upon the execution by Mortgagee and
recording and filing thereof at any time hereafter in the appropriate land
records of a unilateral declaration to that effect.

    32.        Statutory Conditions and Statutory Power of Sale. This Mortgage
is made upon the Statutory Conditions of the laws of the State of New Hampshire
and the Statutory Conditions of the laws of the Commonwealth of Massachusetts
and with the Statutory Powers of Sale of such States, and upon any breach of the
Statutory Conditions or upon any other Event of Default, Mortgagee shall have
the Statutory Power of Sale as provided under the laws of the State where the
Real Estate is located.

    33.        Future Advances by Mortgagee. Mortgagee may from time to time, at
its sole option, make further advances to Mortgagor, to be secured hereby.
Mortgagor shall execute and deliver to Mortgagee a Note or other agreement
evidencing each and every such further advance which Mortgagee may make, which
note or agreement shall contain such terms and conditions as Mortgagee may
require. Mortgagor shall pay when due all such further advances with interest
and other charges thereon, as applicable, and the same, and each note and
agreement evidencing the same, shall be fully secured hereby. All provisions of
this Mortgage shall apply to each such further advance as well as to any other
indebtedness secured hereby and all such future advances shall enjoy the same
priority as this Mortgage. Nothing herein contained, however, shall limit the
amount secured by this Mortgage if such amount is increased by advances made by
Mortgagee to protect or preserve the Real Estate as provided elsewhere herein.
Any future advances made hereunder may be made to Mortgagor or to any successor
to Mortgagor in ownership of the Real Estate.

    34.        Maximum Amount Secured. The maximum amount secured by this
Mortgage shall include, but not be limited to, the total of all of the following
items which may be outstanding at any time: the principal amount of the Note;
accrued interest, charges, and fees under the Note; legal fees and costs;
collection and foreclosure costs (including appraisals, environmental testing
(and remediation, if necessary), brokerage commissions, receiver’s fees,
eviction costs, management and marketing fees and expenses, registry recording
charges, deed transfer stamps and taxes, commercial advertising costs, and
auctioneer fees); all taxes, utility payments, insurance premiums, maintenance
costs, tenant improvements, rental incentives, or other amounts advanced by
Mortgagee; and all other damages, costs, and expenses to which the holder of a
mortgage is entitled under applicable law, and to the extent permitted by law,
future advances described in Paragraph 33 above. If the laws of the State in
which the Real Estate is located require a stated maximum amount for priority
purposes, the maximum amount secured by this Mortgage is Ten Million Dollars
($10,000,000.00).

    35.        Recording. This Mortgage may be executed in multiple original
counterparts. One original is to be filed with the land records of Essex County,
Massachusetts as a mortgage, assignment of leases and financing statement
pursuant to Section 9-402 of the Uniform Commercial Code of the Massachusetts
General Laws as amended, and a second in the Hillsborough County Registry of
Deeds, New Hampshire, as a mortgage, assignment of leases and financing
statement pursuant to Section 9-402 of the Uniform Commercial Code of New
Hampshire.

    36.        Single Economic Unit. Mortgagor acknowledges that the Mortgaged
Property constitutes a single economic entity that is located in both
Massachusetts and New Hampshire, and Mortgagor agrees that without limiting any
of the rights or remedies hereunder of the Mortgagee, the Mortgagee, in its sole
discretion, may sell the Mortgaged Property or some part thereof that
transverses state border lines as a single parcel or entity at a single sale or
at different sales, in Massachusetts or New Hampshire, contingent upon the same
purchaser purchasing the single parcel or entity. In addition, without limiting
any of the foregoing, Mortgagee may sell the Real Estate and the Improvements
and any other real property included in the Mortgaged Property either together
with or separate from the personal property that is subject to a security
interest under the Uniform Commercial Code in effect in New Hampshire and
Massachusetts. All covenants and conditions contained in this Mortgage shall be
construed as affording to the Mortgagee rights additional to, and separate from,
the rights conferred by the incorporation herein of the STATUTORY CONDITIONS AND
STATUTORY POWERS OF SALE under the laws of New Hampshire and Massachusetts.

    37.        Waiver of Rights. MORTGAGOR ACKNOWLEDGES THAT THE TRANSACTION OF
WHICH THIS MORTGAGE IS A PART IS A COMMERCIAL TRANSACTION, AND HEREBY
VOLUNTARILY AND KNOWINGLY WAIVES ITS RIGHTS TO NOTICE AND HEARING ALLOWED BY ANY
STATE OR FEDERAL LAW, WITH RESPECT TO ANY PREJUDGMENT REMEDY OR OTHER RIGHT THAT
MORTGAGEE MAY DESIRE TO EXERCISE OR EMPLOY. FURTHER, MORTGAGOR HEREBY WAIVES, TO
THE EXTENT PERMITTED BY LAW, THE BENEFITS OF ALL PRESENT AND FUTURE VALUATION,
APPRAISEMENT, HOMESTEAD, EXEMPTION, STAY, REDEMPTION AND MORATORIUM LAWS. The
Mortgaged Property is not subject to any homestead interest.

    38.        This Mortgage is subject to a prior mortgage in favor of
Mortgagee dated February 23, 2004 and recorded in the Rockingham County (New
Hampshire) Registry of Deeds and Essex County North (Massachusetts) Registry of
Deeds at Book 4239, Page 301 and Book 8583, Page 17, respectively (“First
Mortgage”). Mortgagee consents to this Mortgage and the subordinated mortgage in
favor of Smithfield Fiduciary LLC.

        IN WITNESS WHEREOF, Mortgagor has executed this Mortgage under seal, as
of _________________, 2004.

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STOCKERYALE, INC. ______________________________
By:______________________________________ Witness Name: Title

STATE OF ___________________COUNTY
OF _________________

        On this the _____ day of _____________, 2004, before me, the undersigned
officer, personally appeared __________________, the _________ of StockerYale,
Inc., a Massachusetts corporation, duly authorized, and who acknowledged that he
as such __________, being authorized to do so executed the foregoing instrument
for the purposes contained therein on behalf of the corporation.

_________________

Notary Public [print name] My Commission expires: Affix Notarial Seal

   Exhibit A — Real Estate DescriptionExhibit
B — Permitted Encumbrances

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EXHIBIT A

LEGAL DESCRIPTION

        A certain tract or parcel of land, with the buildings thereon, situated
in Salem, Rockingham County, State of New Hampshire and Methuen, Essex County,
Commonwealth of Massachusetts, as shown on a plan of land entitled “Property
Survey Plan of Land of Stocker & Yale, Inc.”; 32 Hampshire Road, Town of Salem,
Rockingham County, New Hampshire, Town of Methuen, Essex County, Massachusetts,
prepared by Sanford Surveying and Engineering, dated 12/29/00 and recorded at
the Rockingham County (NH) Registry of Deeds as Plan # D-30358 and the Essex
County (MA) Registry of Deeds as Plan # 14431, and more particularly described
as follows:

        Beginning at the southwesterly corner of the granted premises by the
intersection of Garabedian Drive, a public way, and Hampshire Road, a public
way, at an iron pipe set in the ground on the Northerly side of said Hampshire
Road as shown on said plan;

          Thence running N 64º 12’ 05” W, 58.24 feet, along the northerly side
of Hampshire Road to an iron pipe set in the ground on the northerly side of
Hampshire Road;

          Thence running N 53º 38’ 15” W, 265.76 feet, along the northerly side
of Hampshire Road to an iron pipe set in the ground on the northerly side of
Hampshire Road;

          Thence running on an arch with a radius of 830 feet, 219.70 feet along
the northerly side of Hampshire Road to an iron pipe set in the ground at the
intersection of the northerly side of Hampshire Road and the Massachusetts/New
Hampshire boundary line as shown on said plan;

          Thence running N 38º 28’ 17” W, 27.33 feet by the northerly side of
said Hampshire Road to the point where the northerly side of Hampshire Road
intersects with the center line of the ditch as shown on said plan;

          Thence turning and running S 31º 35’ 10” W, 82.10 feet along the
center of the ditch to a point shown on said plan;

          Thence running S 28º 30’ 05” E, 762.90 feet along the center of the
ditch to a point shown on the said plan at the northeasterly corner of the
premises;

 

          Thence turning and running S 61º 20’ 07” E, 503.90 feet, along land
now or formerly of Construction Industries, Inc. to an pipe set in the ground by
a fire hydrant on the easterly side of Garabedian Drive as shown on said plan;

          Thence running on an arch with the radius of 750 feet, 261.32 feet,
along the easterly side of the said Garabedian Drive, to an iron pipe set in the
ground on the easterly side of Garabedian Drive;

          Thence proceeding along the easterly side of Garabedian Drive, N 47º
31’ 15” E, 100.26 feet to a nail set in the ground on the easterly side of
Garabedian Drive;

          Thence proceeding on an arch with a radius of 700 feet, 269.46 feet
along the easterly side of Garabedian Drive to an iron pipe set in the ground on
the easterly side of Garabedian Drive;

          Thence running along the easterly side of Garabedian Drive, N 25º 47’
35” E, 80.09 feet to an iron pipe set in the ground on the easterly side of
Garabedian Drive;

          Thence running on an arch with the radius of 50 feet 78.54 feet to the
point of beginning.

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EXHIBIT B

[Permitted Encumbrances]

Those matters shown on the Old Republic Title Insurance Policy insuring this
Mortgage

        A subordinate (third) mortgage in favor of Smithfield Fiduciary, LLC in
the amount of Five Hundred Thousand Dollars ($500,000.00)