<PAGE>   1
                                                                   EXHIBIT 10.75

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

================================================================================


                         in maximum principal amount of


                                  $2,225,000.00

                                     made by


                              DECORA, INCORPORATED


                                   Mortgagor,



                                   IN FAVOR OF


                             ABLECO FINANCE LLC, AS
                              COLLATERAL AGENT FOR
                                  THE LENDERS,


                                    Mortgagee

                               DATED: May 2, 2000

                        THIS INSTRUMENT AFFECTS REAL AND
                       PERSONAL PROPERTY SITUATED IN THE
                    STATE OF NEW YORK, SECTION 163.17, BLOCK
                       4, LOT 22 IN FORT EDWARD, NEW YORK

--------------------------------------------------------------------------------

                                 RECORD AND RETURN TO:

                                 Schulte Roth & Zabel LLP
                                 900 Third Avenue
                                 New York, New York  10022
                                 Attention:  Frederic L. Ragucci, Esq.


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

            THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS
AND FIXTURE FILING dated May 2, 2000 (this "Mortgage"), made by DECORA,
INCORPORATED, a Delaware corporation, having its principal place of business at
1 Mill Street, Fort Edward, New York 12828 (the "Mortgagor"), in favor of ABLECO
FINANCE LLC, a Delaware limited liability company, as collateral agent for the
Lenders (as hereinafter defined), having its principal place of business at 450
Park Avenue, New York, New York 10022 (the "Mortgagee").

                                   WITNESSETH:

            WHEREAS, Mortgagor and Mortgagee are parties to a certain Financing
Agreement, of even date herewith (as amended, restated, supplemented or
otherwise modified from time to time, the "Financing Agreement"), by and among
Mortgagor, Decora Industries, Inc., a Delaware corporation (the "Parent"; the
Mortgagor and the Parent are each sometimes hereinafter referred to individually
as a "Borrower" and collectively as the "Borrowers"), the financial institutions
from time to time party to the Financing Agreement (such financial institutions,
together with their respective successors and assigns, are referred to
hereinafter each individually as a "Lender" and collectively as the "Lenders"),
Mortgagee, as collateral agent for the Lenders and The CIT Group/Business
Credit, Inc., as administrative agent for the Lenders;

            WHEREAS, pursuant to Article II of the Financing Agreement, the
Lenders have agreed to make to the Borrowers a term loan in the aggregate
principal amount of up to $2,225,000 (the "Loan"), for purposes set forth in the
Financing Agreement;

            WHEREAS, it is a condition precedent to the making by the Lenders of
the Loan to Mortgagor pursuant to the Financing Agreement that the Mortgagor
shall have executed and delivered to the Mortgagee this Mortgage, as security
for the indebtedness of the Borrowers with respect to the Obligations (as
defined in Section 3 hereof), providing for, among other things, the grant to
Mortgagee of a lien on certain real property, fixtures and other property of the
Mortgagor, as more particularly described herein;

            WHEREAS, the maximum principal amount secured by this Mortgage shall
not exceed the total sum of $2,225,000.00, together with interest thereon,
attorneys' fees and costs;

            WHEREAS, the Mortgagor is the owner of that certain real property
located in Fort Edward, County of Washington and State of New York and more
particularly described herein;

            NOW, THEREFORE, in consideration of the premises and the agreements
herein and in order to induce the Lenders to make and maintain the Loan pursuant
to the Financing Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Mortgagor hereby
agrees with the Mortgagee as follows:


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            SECTION 1. Definitions.

            (a) Reference is hereby made to the Financing Agreement for a
statement of the terms thereof. All terms used in this Mortgage which are
defined in the Financing Agreement or in Article 9 of the Uniform Commercial
Code (the "UCC") currently in effect in the State of New York and which are not
otherwise defined herein shall have the same meanings herein as set forth
therein.

            (b) As used in this Mortgage, the following terms shall have the
respective meanings indicated below, such meanings to be applicable equally to
both the singular and the plural forms of the terms defined:

            "Applicable Law" means all laws, rules, regulations, and orders of
any governmental authority which exercises jurisdiction over the Mortgaged
Property, including the Fair Labor Standards Act and the Americans With
Disabilities Act.

            "Business Day" shall have the meaning ascribed to it in the
Financing Agreement.

            "Building Equipment" has the meaning specified in Section 2(c)(ii)
hereof.

            "Event of Default" has the meaning specified in Section 7 hereof.

            "Financing Agreement" has the meaning specified in the recitals
hereto.

            "Governmental Approval" means the approval of any governmental
authority which exercises jurisdiction over the Mortgaged Property, including
but not limited to the United States of America, the State of New York, any
political subdivision of either, any agency, department, commission, board,
bureau or instrumentality of any of them, or any quasi-public agency established
by any of the foregoing including any insurance rating organization or board of
fire underwriters.

            "Hazardous Materials" means any chemical, material or substance
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "regulated substances," "extremely hazardous
waste," "restricted hazardous waste," or "toxic substances" or words of similar
import under any applicable local, state or federal law as now or at any time
hereafter in effect or under the regulations adopted or publications promulgated
pursuant thereto, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sec. 9601, et.
seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. Sec.
1801, et. seq.; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. Sec. 6901, et. seq.; the Federal Water Pollution Control Act, as amended,
33 U.S.C. Sec. 1251, et seq.; and all state and local statutes of like import as
now or at any time hereafter in effect. Without limiting the generality of the
foregoing, the term "Hazardous Materials" shall include, to the extent such
materials are regulated by any Hazardous Materials Law (a) any oil, flammable
substances, explosives, radioactive materials, hazardous wastes, chemicals, or
substances, or toxic wastes; (b) asbestos in any form; (c) urea formaldehyde
foam insulation; (d) transformers or other equipment which contain
polychlorinated biphenyls; and (e) radon gas.


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            "Improvements" has the meaning specified in Section 2 hereof.

            "Indebtedness" has the meaning specified in Section 3 hereof.

            "Loan Documents" has the meaning ascribed to it in the Financing
Agreement.

            "Mortgage" or "this Mortgage" means this Mortgage, Security
Agreement, Assignment of Leases and Rents and Fixture Filing, as modified from
time to time.

            "Mortgaged Property" has the meaning specified in Section 2 hereof.

            "Net Proceeds" has the meaning specified in Section 5(f)(iii)
hereof.

            "Obligations" has the meaning specified in Section 3 hereof.

            "Permitted Encumbrances" has the meaning specified in Section
4(d)(i) hereof.

            "Real Property" has the meaning specified in Section 2 hereof.

            SECTION 2. Grant of Lien. As collateral security for all of the
Obligations (as such term is defined in Section 3 hereof), the Mortgagor hereby
mortgages, grants, bargains, sells, warrants, conveys, aliens, remises,
releases, assigns, sets over and confirms to the Mortgagee, and the successors
and assigns of the Mortgagee, and grants to the Mortgagee, and the successors
and assigns of the Mortgagee, a continuing security interest in, the following,
to have and to hold until the Obligations are satisfied in full:

            (a) all of Mortgagor's right, title and interest in and to the real
property described in Exhibit A attached hereto (the "Real Property");

            (b) all of the buildings and improvements now or hereafter located
on the Real Property (the "Improvements");

            (c) all of the Mortgagor's right, title and interest in and to the
following, wherever located and whether now or hereafter existing and whether
now owned or hereafter acquired (together with the Real Property and the
Improvements, the "Mortgaged Property"):

                  (i) all of the streets and roads abutting the Real Property to
      the center lines thereof, and strips and gores within or adjoining the
      Real Property, the air space above the Real Property and the right to use
      such air space, all rights of ingress and egress by motor vehicles to
      parking facilities on or within the Real Property, all easements now or
      hereafter affecting the Real Property, all royalties and other rights
      appertaining to the use and enjoyment of the Real Property, including,
      without limitation, alley, drainage, crop, timber, agricultural,
      horticultural, mineral, water, oil and gas rights;

                  (ii) all fixtures, machinery, equipment and other tangible
      personal property and all parts thereof and all appurtenances, additions
      and accessions thereto and substitutions or replacements thereof; all
      building materials and supplies now or hereafter


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      attached to, contained in or used in connection with, the Real Property or
      the Improvements or placed on any part thereof and whether or not attached
      thereto, including, without limitation, all screens, awnings, shades,
      blinds, curtains, draperies, carpets, rugs, furniture and furnishings,
      heating, lighting, plumbing, ventilating, air conditioning, refrigerating,
      incinerator and compacting and elevator plants, stoves, ranges, security
      systems, vacuum cleaning systems, call systems, sprinkler systems and
      other fire prevention and extinguishing apparatus and materials, motors,
      pipes, appliances and fittings (any and all such fixtures and other
      personal property being hereinafter referred to as the "Building
      Equipment"), together with the benefits of all deposits and payments now
      or hereafter made with respect thereto by the Mortgagor;

                  (iii) all leases, lettings and licenses of the Real Property,
      the Improvements or the other property described in this Section 2,
      including, without limitation, cash and securities deposited thereunder,
      all rents, issues and profits payable thereunder or otherwise derived
      therefrom, together with the right to receive and collect such rents,
      issues and profits and the right to enforce, whether by action at law or
      in equity or otherwise, and all provisions and agreements in respect
      thereof, together with all rights now or hereafter existing in and to all
      agreements and other documents now or hereafter existing and evidencing or
      otherwise relating to any of the foregoing;

                  (iv) all unearned premiums accruing under insurance policies
      and all proceeds of the voluntary or involuntary conversion of any of the
      Real Property, the Improvements or the other property described in this
      Section 2 into cash or liquidated claims, including, without limitation,
      proceeds of hazard and title insurance and all awards and compensation
      made with respect to any of the Real Property, the Improvements or the
      other property described in this Section 2, by any governmental authority
      or other regulatory body for the taking by eminent domain, condemnation or
      otherwise, including, without limitation, awards for any change of grade
      of streets;

                  (v) any right to appear in and defend, in the name and on
      behalf of the Mortgagor, any action or proceeding brought with respect to
      the Real Property, the Improvements or the other property described in
      this Section 2 or to commence any action or proceeding to protect the
      interest of the Mortgagee in any of such property; and

                  (vi) all extensions, improvements, betterments, renewals,
      substitutions and replacements of and all additions and appurtenances to
      any of the Real Property, the Improvements or the other property described
      in this Section 2 hereafter acquired by or released to the Mortgagor or
      constructed, assembled or placed by the Mortgagor on any of the Real
      Property, the Improvements or the other property described in this Section
      2, and all conversions of the security constituted thereby which,
      immediately upon such acquisition, release, construction, assembling,
      placement or conversion (and in each such case without any further
      mortgage, conveyance, assignment or other act by the Mortgagor), shall
      become subject to the Lien of this Mortgage as fully and completely, and
      with the same effect, as though now owned by the Mortgagor and
      specifically described herein.


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            SECTION 3. Security for Obligations. The mortgage Lien created
hereby in the Mortgaged Property constitutes continuing collateral security for
all of the following obligations, whether now existing or hereafter incurred
(the "Obligations"):

            (a) the prompt payment by the Borrowers, as when due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), of all amounts now or hereafter owing in respect of the Loan,
whether for principal, interest, fees, expenses or otherwise, (b) the payment of
any expenses (including reasonable counsel fees and expenses) incurred by the
Mortgagee in enforcing its rights under the Financing Agreement and the other
Loan Documents with respect to the Loan, and (c) the performance by the
Borrowers of all of their obligations under the Financing Agreement and other
Loan Documents with respect to the Loan.

            (b) the prompt payment by the Mortgagor, as and when due and
payable, of all amounts from time to time owing by it in respect of this
Mortgage and the prompt payment by the Borrowers, as and when due and payable,
of all amounts from time to time owing by them in respect to the Obligations
pursuant to the Financing Agreement and the other Loan Documents (collectively,
the "Indebtedness").

            (c) Any and all renewals, modifications, consolidations,
replacements and extensions of any of the foregoing, provided, however, that the
maximum principal amount of all indebtedness secured hereby at any one time
shall not exceed the total sum of $2,225,000, together with interest thereon,
attorneys' fees and costs; and

            (d) the due performance and observance by the Mortgagor and the
other Borrowers of all of their other obligations from time to time existing in
respect of this Mortgage and the Obligations pursuant to the Financing Agreement
and the other Loan Documents, including any Obligations existing subsequent to
an Event of Default.

            SECTION 4. Representations and Warranties. The Mortgagor represents
and warrants as follows:

            (a) The Mortgagor (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware as set
forth on the first page hereof, (ii) has all requisite power and authority, and
has taken all necessary corporate action, to authorize, execute, deliver and
perform this Mortgage and to encumber the Mortgaged Property pursuant hereto,
and (iii) is duly qualified to do business and is in good standing under the
laws of the state in which the Mortgaged Property is located.

            (b) The execution, delivery and performance by the Mortgagor of this
Mortgage in accordance with its terms do not and will not (i) require any
Governmental Approval or any consent or approval of the stockholders of the
Mortgagor or any other Person that has not been obtained, (ii) violate or
conflict with, result in a breach of, or constitute a default under, (A) any
contract binding on or affecting the Mortgagor or any of its properties or (B)
any Applicable Law, or (iii) result in or require the creation of any security
interest or other Lien upon or with respect to any of its properties.


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            (c) This Mortgage is a legal, valid and binding obligation of the
Mortgagor, enforceable against the Mortgagor in accordance with its terms.

            (d) (i) The Mortgagor has good, marketable and insurable fee simple
title to the Mortgaged Property, subject only to those items affecting title to
the Mortgaged Property as are set forth in the Mortgagee's title insurance
policy or the marked title insurance commitment delivered to the Mortgagee as of
the date hereof and insuring the Lien of this Mortgage (the "Permitted
Encumbrances"), (ii) except as may be permitted by the Financing Agreement, the
Mortgagor is and will be at all times the owner of the Building Equipment, free
and clear of any security interest or other Lien, except for the Permitted
Encumbrances, (iii) this Mortgage is and will remain a valid and enforceable
first Lien on the Mortgaged Property, and (iv) the Mortgagor will preserve such
title, and will warrant and defend the validity and priority of the Lien created
hereby against the claims of all Persons.

            (e) The Mortgaged Property is not located in an area identified as
an area having special flood hazards pursuant to the terms of the National Flood
Insurance Act of 1968, as amended, or the Flood Disaster Protection Act of 1973,
as amended.

            (f) (i) The Mortgagor has all Governmental Approvals necessary for
the lawful ownership and operation by the Mortgagor of the Mortgaged Property as
an industrial facility (including, without limitation, where applicable, a
Permanent Certificate of Occupancy and Board of Fire Underwriters Certificate
(or local equivalent) for those portions of the Improvements which have been
completed, and building permits and all required environmental permits for those
portions of the Improvements to be constructed or under construction), and the
Mortgaged Property as so owned and operated by the Mortgagor is in compliance
with Applicable Law, including, without limitation, all applicable zoning and
building codes, ordinances and regulations. No condition exists or event has
occurred which, in itself or with the giving of notice or the lapse of time or
both, would result in the suspension, revocation, impairment, forfeiture or
nonrenewal of any such Governmental Approval, and there is no claim that any
thereof is not in full force and effect; (ii) the present or contemplated use or
occupancy of the Mortgaged Property does not conflict with or violate any such
Governmental Approval; (iii) any Improvements hereafter constructed on the Real
Property shall be in compliance with all Applicable Law, including, without
limitation, all applicable zoning and building codes, ordinances and
regulations, and shall lie wholly within the boundaries of the Real Property;
(iv) any Improvements located on the Real Property which are buildings shall at
all time be independent and self-contained operating units; and (v) the Real
Property shall at all times be a separate tax lot.

            (g) The exercise by the Mortgagee of any of its rights and remedies
hereunder will not violate or conflict with, or result in a breach of, or
constitute a default under, any contract binding on or affecting the Mortgagor
or any of its properties or any Applicable Law, and will not result in or
require the creation of any security interest or other Lien upon or with respect
to any of its properties.

            (h) No Governmental Approval is required for (i) the due execution,
delivery and performance by the Mortgagor of this Mortgage, (ii) the grant by
the Mortgagor, or the


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perfection, of the Lien purported to be created hereby in the Mortgaged
Property, or (iii) the exercise by the Mortgagee of any of its rights and
remedies hereunder, except for the recording of this Mortgage in the Office of
the County Clerk of Washington County and the filing under the UCC of financing
statements in the Office of the Secretary of State of the State of New York.

            SECTION 5. Covenants of the Mortgagor. So long as any of the
Obligations shall remain outstanding, unless the Mortgagee shall otherwise
consent in writing:

            (a) Payment of Indebtedness. The Mortgagor and the other Borrowers
shall punctually pay the Indebtedness in the manner specified in the Financing
Agreement, without offset, counterclaim or defense of any nature whatsoever, and
shall perform all other obligations specified in the Financing Agreement and the
other Loan Documents.

            (b) Further Assurances. The Mortgagor will at its expense, at any
time and from time to time, promptly execute, acknowledge and deliver all such
further deeds, conveyances, mortgages, assignments, estoppel certificates,
notices of assignment, transfers, assurances, instruments and documents and take
all such further action as may be necessary or desirable or that the Mortgagee
may request in order to (i) perfect and protect the rights intended to be
granted to the Mortgagee hereby; (ii) enable the Mortgagee to exercise and
enforce its rights and remedies hereunder in respect of the Mortgaged Property;
or (iii) otherwise effect the purposes of this Mortgage, including, without
limitation, furnishing to the Mortgagee from time to time statements and
schedules further identifying and describing the Mortgaged Property and such
other information in connection with the Mortgaged Property as the Mortgagee may
request, all in reasonable detail.

            (c) Maintenance of the Mortgaged Property. The Mortgagor will
maintain the Mortgaged Property in good repair, comply with the requirements of
any governmental authority or regulatory body claiming jurisdiction over the
Mortgaged Property within the lesser of 30 days after an order containing such
requirement has been issued by any such authority or body or the time required
pursuant to the terms of such order and will permit the Mortgagee, at any
reasonable time and from time to time, to enter upon and inspect the Mortgaged
Property without prior notice. The Mortgagor will not, without the prior written
consent of the Mortgagee, threaten, commit, permit or suffer to occur any waste,
material alteration, demolition or removal of any of the Mortgaged Property;
provided, however, that fixtures and articles of personal property may be
removed to the extent and in the manner provided in the Financing Agreement. The
Mortgagor will promptly notify the Mortgagee of any loss or damage to the
Mortgaged Property in excess of $10,000.00.

            (d) Maintenance of Existence. The Mortgagor will preserve and
maintain its existence and all of its franchises, licenses, rights and
privileges and will become or remain duly qualified and in good standing in each
jurisdiction in which the character of the properties owned or leased by it or
in the nature of its businesses requires such qualification, and will comply
with all Applicable Laws.


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            (e) Insurance.

                  (i) The Mortgagor will keep the Improvements and the Building
Equipment, insured, for the full replacement cost thereof, against any loss by
fire, lightning, windstorm, hail, explosion, aircraft, smoke damage, vehicle
damage, earthquakes, elevator collision, and other risks from time to time
included under "extended coverage" policies, in such amounts as Mortgagee may
require, but in any event in amounts sufficient to prevent Mortgagee from
becoming a co-insurer under such policies. In addition, Mortgagor will maintain
(ii) combined single limit bodily injury and property damages insurance against
any loss, liability, or damages on, about, or relating to the Mortgaged
Property, in an amount of not less than $3,000,000.00; (iii) business rental
insurance covering annual receipts for a 12 month period for the Mortgaged
Property; and (iv) insurance for such other risks as Mortgagee may require.
Replacement costs, at Mortgagee's option, may be redetermined by an insurance
appraiser, satisfactory to Mortgagee, not more frequently than once every 12
months at Mortgagor's cost.

                  (ii) All such policies of insurance shall be in such form,
with such companies, and in such amounts as may be reasonably satisfactory to
Mortgagee. All insurance required herein shall be written by companies which
have a Best's rating of A for capital and X for financial stability. All hazard
insurance and such other insurance as Mortgagee shall specify, shall contain a
Form 438BFU (NS) mortgagee endorsement, or an equivalent endorsement
satisfactory to Mortgagee, showing Mortgagee as sole loss payee thereof, and
shall contain a waiver of warranties. Every policy of insurance referred to in
this Section 5 shall contain an agreement by the insurer that it will not cancel
such policy except after 30 days prior written notice to Mortgagee and that any
loss payable thereunder shall be payable notwithstanding any act or negligence
of Mortgagor or the Mortgagee, which might, absent such agreement, result in a
forfeiture of all or a part of such insurance payment and notwithstanding (i)
occupancy or use of the Mortgaged Property for purposes more hazardous than
permitted by the terms of such policy, (ii) any foreclosure or other action or
proceeding taken by Mortgagee pursuant to this Mortgage upon the happening of an
Event of Default, or (iii) any change in title or ownership of the Mortgaged
Property. Mortgagor shall deliver to Mortgagee certified copies of such policies
of insurance and evidence of the payment of all premiums therefor.

                  (iii) Original policies or certificates thereof satisfactory
to Mortgagee evidencing such insurance shall be delivered to Mortgagee at least
30 days prior to the expiration of the existing or preceding policies. Mortgagor
shall give Mortgagee prompt notice of any loss covered by such insurance, and
Mortgagee shall have the right to adjust any loss. Mortgagee shall have the
exclusive right to adjust all losses payable under any such insurance policies
without any liability to Mortgagor whatsoever in respect of such adjustments.
Any monies received as payment for any loss under any insurance policy including
the insurance policies mentioned above, shall be paid over to Mortgagee to be
applied or disbursed as provided in the Financing Agreement

                  (iv) Mortgagee shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained under this Section 5, unless Mortgagee is included thereon as named
insured with the loss payable to Mortgagee under a standard 438BFU (NS)
Mortgagee endorsement, or its local equivalent. Mortgagor immediately


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<PAGE>   10

shall notify Mortgagee whenever such separate insurance is taken out, specifying
the insurer thereunder and full particulars as to the policies evidencing the
same, and originals of such policies immediately shall be provided to Mortgagee.

                  (v) The Mortgagor will keep the Improvements and Building
Equipment located on any of the Mortgaged Property insured against loss by flood
if such Mortgaged Property is located in an area identified as an area having
special flood hazards and in which flood insurance has been made available under
the National Flood Insurance Act of 1968, as amended, or the Flood Disaster
Protection Act of 1973, as amended (or any successor acts thereto), in an amount
at least equal to the Indebtedness or the maximum limit of coverage available
with respect to the Improvements and Building Equipment under such Act,
whichever is less, and with a company or companies approved by the Mortgagee.

                  (vi) Without limiting the generality of Section 6(b) hereof,
the Mortgagor shall not adjust or compromise any claims under any insurance
referred to in this Section 5(e) without the prior written consent of Mortgagee
in each instance, and Mortgagor shall execute any proofs of loss, receipts,
vouchers and releases in connection with such claims from time to time as shall
be requested by Mortgagee.

            (f) Insurance Proceeds; Restoration of Mortgaged Property.

                  (i) The proceeds of insurance paid in respect of any of the
      Mortgaged Property will be paid over to the Mortgagee to be applied as
      hereinafter provided, and any proceeds of insurance policies coming into
      the possession of the Mortgagee shall not be deemed trust funds and the
      Mortgagee shall be entitled to dispose of such proceeds as hereinafter
      provided. Without limiting the generality of Sections 8(a) and 8(b)
      hereof, the Mortgagee may deduct from such insurance proceeds any
      expenses, including, without limitation, attorneys' fees and disbursements
      (to the extent permitted by law), incurred by it in connection with
      obtaining such proceeds. The Mortgagee shall have the option, in its sole
      discretion, to apply any insurance proceeds as specified in Section 7(d)
      hereof or to allow all or a portion of such proceeds to be used for the
      restoration of the Mortgaged Property.

                  (ii) If any of the Mortgaged Property shall be damaged or
      destroyed by fire or other casualty, the Mortgagor will give prompt notice
      thereof to the Mortgagee, and will promptly commence and diligently
      continue to perform the repair and restoration of such Mortgaged Property
      (hereinafter called the "Work") so as to restore such Mortgaged Property
      in full compliance with all legal requirements and so that such Mortgaged
      Property shall be at least equal in value and general utility to its value
      and general utility prior to such damage or destruction, and if the Work
      to be done is structural or if the cost of the Work, as estimated by the
      Mortgagee, shall exceed $100,000 (the "Major Work"), the Mortgagor will,
      prior to the commencement of the Major Work, furnish to the Mortgagee for
      its approval: (A) complete plans and specifications for the Major Work,
      with satisfactory evidence of the approval thereof (1) by all governmental
      authorities or other regulatory bodies whose approval is required and (2)
      by an architect satisfactory to the Mortgagee (the "Architect"),
      accompanied by the


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      Architect's signed estimate, bearing the Architect's seal, of the cost of
      completing the Major Work; (B) certified or photostatic copies of all
      permits and authorizations required in connection with the Major Work; and
      (C) a guaranty of the payment for and completion of the Major Work, which
      guaranty shall be in form and substance and made by a guarantor
      satisfactory to the Mortgagee, and in an amount not less than the
      Architect's estimate of the cost of completing the Major Work, less the
      amount of any insurance proceeds then held by the Mortgagee for
      application to the cost of the Major Work. Upon receipt of the Mortgagee's
      approval, the Mortgagor will perform the Major Work diligently and in good
      faith in accordance with the plans and specifications approved by the
      Mortgagee.

                  (iii) If the Mortgagee shall determine to apply any insurance
      proceeds to the Work, the net insurance proceeds available after deduction
      of the Mortgagee's cost of recovering and paying out such proceeds,
      including, without limitation, attorneys' fees and costs allocable to
      inspecting the Work and the plans and specifications therefor (the "Net
      Proceeds") shall be applied by the Mortgagee (x) in the case of Work
      determined by the Mortgagee not to be Major Work, to the Mortgagor upon
      completion of the Work and (y) in the case of Major Work, at the
      Mortgagee's option from time to time, to the Mortgagor and/or directly to
      the contractor, subcontractors, materialmen, laborers, engineers,
      architects and other Persons rendering services or materials as said Major
      Work progresses. All such payments shall be subject to the following
      conditions:

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

                        (B) Each request for payment shall be made on not less
than seven days' prior notice to the Mortgagee and shall be accompanied by a
certificate of the Architect (if an architect is required to be retained
pursuant to subsection (ii) of this Section 5(f)), otherwise by a certificate of
an authorized officer of the Mortgagor, stating that (1) all completed Work has
been done in compliance with the approved plans and specifications, if any, and
in accordance with Applicable Law, (2) the sum requested is justly required to
reimburse the Mortgagor for payments by the Mortgagor to, or is justly due to,
the contractor, subcontractors, materialmen, laborers, engineers, architects or
other Persons rendering services or materials for the Work (giving a brief
description of such services and materials), and, when added to any sums
previously paid out for Work by the Mortgagee, does not exceed the value of the
Work performed to the date of such certificate, and (3) the amount of such
insurance proceeds remaining in the hands of the Mortgagee will be sufficient to
pay for completion of the Work (including, in such reasonable detail as the
Mortgagee may require, an estimate of the cost of such completion);

                        (C) Each request for payment shall be accompanied by (1)
Lien waivers satisfactory to the Mortgagee covering any part of the Work
previously paid for and (2) a search prepared by a title company or licensed
abstractor, or other evidence satisfactory to the Mortgagee, that there has not
been filed with respect to the Mortgaged Property any mechanic's or other Lien
or any instrument for the retention of title in respect of any part of the Work
which is not discharged of record and that there are no encumbrances affecting
any of the Mortgaged


                                       10
<PAGE>   12
Property other than the Permitted Encumbrances and such other encumbrances as
the Mortgagee shall have approved in writing, together with updates of, and
endorsements to, any title insurance policies required by the Mortgagee
increasing coverage by the amount advanced and without title exceptions not
previously approved by the Mortgagee;

                        (D) No lease affecting the Mortgaged Property
immediately prior to the applicable damage or destruction shall have been
cancelled, and no such lease shall contain any still exercisable right to
cancel, due to such damage or destruction;

                        (E) No Default or Event of Default shall have occurred
and be continuing;

                        (F) Any request for payment after completion of the Work
shall be accompanied by a copy of all Governmental Approvals required for the
lawful occupancy of the Mortgaged Property;

                        (G) The Work and the Improvements can be completed on or
before such date as the Mortgagee shall determine; and

                        (H) The Mortgagor, prior to the commencement of the
Work, shall have deposited with the Mortgagee the amount, if any, by which the
sum of (i) the cost of the Work and (ii) the other costs which will be incurred
during the period of restoration, including, without limitation, interest on the
Indebtedness (in the case of both (i) and (ii) above, as determined by the
Mortgagee in its sole discretion) exceeds the Net Proceeds, and shall continue
to maintain such deposit (as recomputed by the Mortgagee from time to time as
the Work progresses).

                  (iv) Upon completion of the Work and payment in full therefor,
      or upon failure on the part of the Mortgagor promptly to commence or
      diligently to continue the Work, or at any time upon request by the
      Mortgagor, the Mortgagee may apply the amount of any insurance proceeds
      then or thereafter in the hands of the Mortgagee as specified in Section
      7(d) hereof; provided, however, that nothing herein shall prevent the
      Mortgagee from applying at any time any of such insurance proceeds to cure
      any Event of Default.

                  (v) If (A) in the case of Major Work, (1) within 120 days
      after the occurrence of the damage or destruction to the Mortgaged
      Property requiring such Major Work, the Mortgagor shall not have submitted
      to the Mortgagee and received the Mortgagee's approval of plans and
      specifications for such Major Work (approved by the Architect and by all
      governmental authorities or other regulatory bodies whose approval is
      required), or (2) after such plans and specifications are approved by the
      Mortgagee, the Architect and all such governmental authorities or other
      regulatory bodies, the Mortgagor shall fail promptly to
      commence such Major Work, or thereafter shall fail diligently to continue
      such Major Work or shall be delinquent in the payment to mechanics,
      materialmen or others in connection with such Major Work, or (B) in the
      case of Work determined by the Mortgagee not to be Major Work, the
      Mortgagor shall fail promptly to


                                       11
<PAGE>   13
      perform such Work, then, in addition to all other rights set forth herein,
      and after giving the Mortgagor 10 days' notice of the nonfulfillment of
      any of the foregoing conditions, the Mortgagee may perform or cause to be
      performed such repair and restoration, and upon 24 hours' notice to the
      Mortgagor, the Mortgagee may enter upon the Mortgaged Property to the
      extent necessary for any of the foregoing purposes, and the Mortgagor
      hereby waives any claim arising out of anything done pursuant hereto, and
      the Mortgagee may, at its option, apply insurance proceeds (without the
      need by the Mortgagee to fulfill any other requirements of this Mortgage)
      to cover all amounts expended in connection with the performance of such
      Work, and any excess costs shall be paid by the Mortgagor to the Mortgagee
      upon demand.

            (g) Taxes and Other Charges; Tax Credits Waived. The Mortgagor will
pay and discharge when due all Taxes of every kind and nature, water rates,
sewer rents and assessments, levies, permit, inspection and license fees and all
other charges imposed upon or assessed against any of the Mortgaged Property or
arising in respect of the occupancy, use or possession thereof and all lawful
claims and demands of mechanics, materialmen, laborers and other Persons which,
if unpaid, might result in, or permit the creation of, a Lien on any of the
Mortgaged Property, except to the extent (i)(A) the validity of any of the
foregoing is being contested in good faith by proper proceedings which stay (1)
the imposition of any penalty, fine or Lien resulting from the nonpayment of any
thereof, the collection thereof or other realization thereon, and (2) the sale
of the Lien thereof and the sale or forfeiture of any of the Mortgaged Property,
and (B) adequate reserves with respect thereto in an amount determined by the
Mortgagee have been set aside with the Mortgagee for the payment thereof or (ii)
the Mortgagor, shall, in the case of any such claims or demands of mechanics,
materialmen, laborers and others, bond or discharge any Lien on the Mortgaged
Property arising from any such obligation; provided, however, that if at any
time payment of any obligation imposed upon the Mortgagor by this subsection (f)
shall become necessary to prevent the delivery of a tax deed conveying any of
the Mortgaged Property or the sale of the tax Lien therefor because of
nonpayment, or to prevent the sale or forfeiture of any of the Mortgaged
Property because of nonpayment or to protect the Lien of this Mortgage, then the
Mortgagor shall pay the same in sufficient time to prevent the delivery of such
tax deed or the sale of such Lien or the sale or forfeiture of the Mortgaged
Property or to protect the Lien of this Mortgage, as the case may be. Unless the
Mortgagor is making monthly deposits with the Mortgagee in accordance with
Section 5(k), the Mortgagor will exhibit to the Mortgagee within 10 days after
the same shall have become due, validated receipts showing the payment of all
such Taxes, water rates, sewer rents, assessments, levies, fees and other
charges which may be or become a Lien on any of the Mortgaged Property.

            (h) Payment of Other Expenses. The Mortgagor will pay when due all
(i) premiums for insurance required to be maintained by the Mortgagor on the
Mortgaged Property pursuant to the terms hereof, (ii) title insurance premiums
relating to the insurance to be maintained on the Mortgaged Property in
connection with this Mortgage, (iii) other costs and expenses required to be
paid for the maintenance or protection of, or on account of, the Lien of this
Mortgage or any other collateral assigned, pledged, mortgaged or otherwise
hypothecated to the Mortgagee by the Mortgagor as security for the Obligations,
or in connection with the execution and delivery of this Mortgage, and (iv)
payments and charges on all Liens and all ground and other leases which may
affect or attach to any of the Mortgaged Property. Without


                                       12
<PAGE>   14
limiting the generality of Section 5(b) hereof, upon default of the Mortgagor in
the performance of any of its obligations under the preceding sentence, the
Mortgagee shall have the right, but not the obligation, to cure such default in
the name and on behalf of the Mortgagor.

            (i) Condemnation Awards. The Mortgagor, immediately upon obtaining
knowledge, by receipt of service of process or otherwise, of the institution of
any proceedings for the condemnation of any of the Mortgaged Property, will
notify the Mortgagee of the pendency of such proceedings. The Mortgagor will
file and prosecute its claim(s) for any award or payment in good faith and with
diligence. The Mortgagee may participate in any such proceedings and the
Mortgagor from time to time will deliver to the Mortgagee all instruments
requested by it to permit such participation. The Mortgagor shall not settle any
action or proceeding or agree to accept any award or payment without the prior
written consent of the Mortgagee. The Mortgagor will cause all awards and
compensation payable to the Mortgagor as a result of any such condemnation or
other taking (or purchase in lieu thereof) to be paid over promptly to the
Mortgagee. Without limiting the generality of Section 5(b) hereof, the
Mortgagor, upon request by the Mortgagee, shall make, execute and deliver any
and all instruments requested for the purpose of confirming the assignment of
the aforesaid awards and compensation to the Mortgagee free and clear of any
Liens other than the Permitted Encumbrances. The Mortgagee shall not be limited
to the interest paid on the proceeds of any award or compensation, but shall be
entitled to the payment by the Mortgagor of interest at the highest rate
specified in the Financing Agreement for interest on the principal of the Loan
or such other rate as shall be fixed by Applicable Law. The Mortgagee shall
apply all such proceeds, in its discretion, as specified in Section 7(d) hereof
or to the restoration of the Mortgaged Property. In no event shall the Mortgagee
be required to satisfy or discharge this Mortgage until the Obligations are
fully paid, and the Mortgagee shall not be required to release from the Lien of
this Mortgage any portion of the Real Property so taken until the Mortgagee
receives the award or payment for the portion so taken. The application of such
award or payment toward payment of the Obligations shall not be deemed a waiver
by the Mortgagee of its right to receive payment of the balance of the
Obligations in accordance with the provisions of the Loan Documents. The
Mortgagee shall have the right, but not the obligation, to question the amount
of the award or payment, and the Mortgagee may accept the same without prejudice
to any rights that the Mortgagee may have to question such amount.
Notwithstanding any taking by condemnation or eminent domain, closing of, or
alteration of the grade of, any street or other injury to or decrease in value
of the Real Property by any public or quasi-public authority or corporation, the
unpaid principal portion of the Obligations shall continue to bear interest at
the rate payable pursuant to the applicable Loan Documents until the applicable
award or payment shall have been actually received by the Mortgagee, and any
reduction in the Obligations resulting from the application by the Mortgagee of
any such award or payment shall be deemed to take effect only on the date of
such receipt.

            (j) Mortgage Taxes. The Mortgagor will pay all Taxes and
registration and recording fees imposed upon the Mortgagee (other than income,
franchise and doing business Taxes) by reason of its ownership of this Mortgage
or any mortgage supplemental hereto or any other Loan Document, or any security
instrument with respect to any fixture or personal property of the Mortgagor,
and shall pay all stamp and other Taxes required to be paid on any promissory
note executed by the Mortgagor.


                                       13
<PAGE>   15
            (k) Tax and Insurance Deposits. The Mortgagee, at its option, to be
exercised by 10 days' written notice to the Mortgagor, may require that the
Mortgagor deposit with the Mortgagee, (i) monthly, one-twelfth of the annual
charges for any ground or other rent, insurance premiums, real estate
assessments or other Taxes or water, sewer and other charges which might become
a Lien on any of the Mortgaged Property, and (ii) such additional sums which,
together with the aforementioned monthly installments, will be sufficient to
make each of the aforementioned payments at least 30 days prior to the date such
payments are due, and the Mortgagor, if so required, will make such deposits.
Should such charges not be ascertainable at the time any deposit is required to
be made with the Mortgagee, the deposit shall be made on the basis of an
estimate made by the Mortgagee in its sole discretion, and when the charges are
fixed for the then current year, the Mortgagor will deposit any deficiency with
the Mortgagee. All funds so deposited with the Mortgagee shall be held by it,
but not in escrow, and, except to the extent required by Applicable Law, without
interest, and, provided that no Event of Default or an event which, with the
giving of notice or the lapse of time or both, would constitute an Event of
Default shall have occurred, shall be applied by the Mortgagee in payment of the
charges aforementioned when and as payable, to the extent the Mortgagee shall
have such funds on hand. Should an Event of Default or such other event occur,
the funds deposited with the Mortgagee as aforementioned, shall be applied, in
the sole discretion of the Mortgagee, to pay the charges for which such funds
have been deposited or as specified in Section 7(d) hereof, but no such
application shall be deemed to have been made by operation of law or otherwise
until actually made by the Mortgagee as herein provided, nor shall any
application be deemed to affect any right or remedy of the Mortgagee hereunder
or under Applicable Law. If deposits are being made with the Mortgagee, the
Mortgagor will furnish the Mortgagee with bills for the charges for which such
deposits are made and such other documents necessary for the payment of such
charges at least 15 days prior to the date on which such charges first become
payable. Upon any assignment of this Mortgage, the Mortgagee will have the right
to pay over the balance of such deposits in its possession to the assignee, and
upon the making of such payment the Mortgagee will be completely released from
all liability with respect to such deposits and the Mortgagor will look solely
to the assignee with respect thereto.

            (l) Restrictive Covenants. Without the prior written consent of the
Mortgagee, the Mortgagor will not, except as otherwise provided in the Financing
Agreement, (i) execute any conditional bill of sale, chattel mortgage or other
security instruments covering any Building Equipment or purchase any Building
Equipment so that the ownership of the same will not vest unconditionally in the
Mortgagor free from any Liens upon delivery to the Mortgaged Property, (ii)
sell, transfer, grant, convey or assign any interest in any of the Mortgaged
Property, or (iii) further mortgage, encumber, alienate, hypothecate, or
otherwise grant a security interest in or other Lien on or any other interest on
any of the Mortgaged Property.

            (m) Estoppel Certificates. The Mortgagor will, not later than five
days after request therefor by the Mortgagee, furnish to the Mortgagee a written
statement, duly acknowledged, setting forth the amount due on this Mortgage, the
terms of payment and maturity date of the Indebtedness, the date to which
interest has been paid on the Indebtedness, whether any offsets or defenses
exist against the Indebtedness or any Guaranty thereof and (if any are alleged
to exist) a detailed description thereof.


                                       14
<PAGE>   16
            (n) Rents and Leases.

                  (i) The Mortgagor will not: (A) execute or permit to exist any
      lease of any of the Mortgaged Property except for occupancy by the lessee
      pursuant to a written lease in form and substance, and with a lessee,
      satisfactory to the Mortgagee, (B) modify or amend any lease or sublease
      affecting the Mortgaged Property, (C) discount any rents or collect the
      same for a period of more than one month in advance, (D) cancel or
      terminate any lease affecting the Mortgaged Property or accept surrender
      of the property demised under any such lease except upon the default of
      the tenant thereunder, or (E) further assign the leases and rents
      affecting the Mortgaged Property.

                  (ii) The Mortgagor will, upon demand, deliver to the Mortgagee
      an executed counterpart of each lease or other document relating to any of
      the Mortgaged Property. The Mortgagor will fully and promptly perform all
      of its obligations under any and all of such leases, and will enforce the
      performance and observance of each and every obligation to be performed or
      observed by the lessee under each such lease. The Mortgagee will not be
      bound to perform any of the covenants, conditions or provisions contained
      in any such lease or other document or otherwise have any obligation
      (including, without limitation, any liability under the covenant or
      requirement of quiet enjoyment contained in any lease or Applicable Law,
      in the event that any tenant shall have been joined as a party defendant
      in any action to foreclose this Mortgage and shall have been barred and
      foreclosed thereby of all right, title and interest and equity of
      redemption in the Mortgaged Property). At the option of the Mortgagee,
      each lease, and all rights of the tenant thereunder, shall be subject and
      subordinate to this Mortgage, and to each and every advance made or
      hereafter made hereunder, and to all renewals, additions, supplements,
      modifications, consolidations, spreaders, replacements and extensions of
      this Mortgage. The Mortgagor will give prompt notice to the Mortgagee of
      (a) any notice received by the Mortgagor of any default by the lessor
      under any lease, (b) the commencement of any action or proceeding by any
      tenant, the purpose of which shall be the cancellation of any lease or a
      reduction or abatement of the rent payable thereunder, (c) any notice of
      default given by the Mortgagor to the tenant under any lease, or (d) the
      interposition by any tenant of any defense or counterclaim in any action
      or proceeding brought by the Mortgagor against any tenant.

                  (iii) The Mortgagor hereby grants to the Mortgagee the right
      (A) to enter upon and take possession of the Mortgaged Property for the
      purpose of collecting the rents, issues and profits assigned to the
      Mortgagee hereunder (the execution of this Mortgage constituting and
      evidencing the irrevocable consent of the Mortgagor to such entry and
      possession, whether or not foreclosure has been instituted and without
      applying for a receiver), (B) to dispossess by the usual summary
      proceedings any tenant defaulting in the payment thereof to the Mortgagee,
      (C) to let any of the Mortgaged Property, and (D) to apply such rents,
      issues and profits as specified in Section 7(d) hereof. Until an Event of
      Default or an event which, with the giving of notice or the lapse of time
      or both, would constitute an Event of Default shall have occurred and be
      continuing, the Mortgagor shall be entitled to receive said rents, issues
      and profits; provided, however, that the Mortgagor will hold said rents,
      issues and profits in trust for the benefit of the


                                       15
<PAGE>   17
      Mortgagee hereunder; and provided, further, that the Mortgagee shall have
      the right, at any time upon the occurrence of an Event of Default or such
      other event, and upon notice to the Mortgagor of its intention to do so
      served personally upon or sent by registered or certified mail to the
      record owner of the Mortgaged Property, to notify any tenant or other
      obligors of such rents, issues and profits and to direct such tenants or
      obligors to make payment of all such amounts due or to become due to the
      Mortgagor directly to the Mortgagee and, upon such notification and at the
      expense of the Mortgagor and to the extent permitted by law, to enforce
      collection of any of such rents, issues and profits and to adjust, settle
      or compromise the amount or payment thereof, in the same manner and to the
      same extent as the Mortgagor might have done. After receipt by the
      Mortgagor of the notice from the Mortgagee referred to in the second
      proviso to the immediately preceding sentence, all amounts and proceeds
      (including instruments) received by the Mortgagor in respect of such
      rents, issues and profits shall be received in trust for the benefit of
      the Mortgagee hereunder, shall be segregated from other funds of the
      Mortgagor and shall be forthwith paid over to the Mortgagee in the same
      form as so received (with any necessary endorsement) to be held as cash
      collateral and either (1) released to the Mortgagor so long as no Event of
      Default shall have occurred and be continuing or (2) if any Event of
      Default shall have occurred and be continuing, applied as specified in
      Section 7(d) hereof.

                  (iv) All lease securities of tenants of the Mortgaged Property
       shall be treated as trust funds and shall not be commingled with any
       other funds of the Mortgagor and said lease securities shall be deposited
       in a segregated tenants' security account to be maintained by the
       Mortgagor. Within 10 days after request by the Mortgagee, the Mortgagor
       shall furnish to the Mortgagee satisfactory evidence of compliance with
       this clause (iv), together with a statement of all lease securities
       deposited by the tenants and copies of all leases not theretofore
       delivered to the Mortgagee, certified by the Mortgagor.

                  (v) Reference is made to Section 291-f of the Real Property
       Law of the State of New York to establish for the Mortgagee the rights
       and benefits provided therein.

            (o) Compliance With Permitted Encumbrances. The Mortgagor will
comply with the covenants made by it or any predecessor in title in any
instrument or document constituting a Permitted Encumbrance and will not suffer
or permit to exist any default to occur thereunder. The Mortgagor will, at its
expense, promptly deliver to the Mortgagee a copy of each notice or other
communication received by it by which any holder of any Permitted Encumbrance
purports to exercise any of its rights or affect any of its obligations with
respect thereto, together with a copy of any reply by the Mortgagor thereto.

            (p) New York Lien Law Requirements. The Mortgagor will receive any
advances secured hereby, and will hold the right to receive such advances, as a
trust fund to be applied first for the purpose of paying the cost of the
improvement and will apply the same first to payment of the cost of the
improvement before using any part of the total of such advances for any other
purpose. The covenants of this subsection (p) are made subject to and in
compliance with the trust fund provisions of Section 13 of the Lien Law of the
State of New York.


                                       16
<PAGE>   18
            (r) Management. The Mortgagor shall cause the Real Property and the
Improvements to be managed at all times by a manager satisfactory to the
Mortgagee and pursuant to a management agreement in form and substance
satisfactory to the Mortgagee.

            (s) Environmental Provisions.

                  (A) The Mortgagor represents, warrants and covenants to the
      Mortgagee as follows: (i) the Mortgaged Property will not and, to the best
      of the Mortgagor's knowledge, do not, contain any Hazardous Materials
      except in compliance with all applicable Hazardous Materials Law; and (ii)
      (I) the Mortgaged Property and any buildings now or hereafter located
      thereon are not now being used, nor have ever been used, and will not,
      while the Mortgagor or any affiliate thereof is the owner or lessee of the
      Mortgaged Property or any portion thereof, be used, for any activities
      involving, directly or indirectly, the use, handling, generation,
      treatment, storage, transportation, removal, remediation, release or
      disposal of any Hazardous Materials, and (II) to the best knowledge of the
      Mortgagor after due inquiry, there has never been any discharge of any
      Hazardous Materials (1) upon or at the Mortgaged Property, without regard
      to the source or origin of such discharge, or (2) from the Mortgaged
      Property into or onto any lands, surface waters or ground waters or air
      space adjacent to or in the vicinity of the Mortgaged Property; and (iii)
      neither the Mortgaged Property nor the Mortgagor are subject to any
      existing or pending proceeding, investigation or inquiry by any
      Governmental Authority or any sanction or remedial obligation imposed
      under any applicable Hazardous Materials Law, and no such proceeding,
      investigation, inquiry, sanction or remedial obligation has been
      threatened by any such Governmental Authority.

                  (B) The Mortgagor shall comply with any and all Hazardous
      Materials Law, shall pay immediately when due the costs of removal of any
      such Hazardous Material if required by any Hazardous Materials Law and
      shall keep the Mortgaged Property free of any lien imposed pursuant to
      such Hazardous Materials Law. The Mortgagor covenants that the Mortgaged
      Property and any buildings now or hereafter located thereon, will not,
      while the Mortgagor is the owner or operator of all or a portion thereof,
      be used in violation of any Hazardous Materials Law. In the event the
      Mortgagor fails to comply with this section, after notice to the Mortgagor
      and the expiration of the earlier of (i) applicable cure period hereunder,
      or (ii) the cure period permitted under the applicable Hazardous Materials
      Law, the Mortgagee may declare this Mortgage to be in default and/or
      remove, or cause the removal of, the Hazardous Materials and the cost of
      such removal shall be paid by the Mortgagor as additional interest
      hereunder and secured hereby.

            SECTION 6. Additional Provisions Concerning the Mortgaged Property.

            (a) To the extent permitted by Applicable Law, this Mortgage shall
be deemed to be a security agreement and a fixture filing, as such terms are
defined under the UCC, and the Mortgagor hereby authorizes the Mortgagee to
file, without the signature of the Mortgagor


                                       17
<PAGE>   19
where permitted by law, one or more financing or continuation statements, and
amendments thereto, relating to the Mortgaged Property.

            (b) The Mortgagor hereby irrevocably appoints the Mortgagee the
Mortgagor's attorney-in-fact and proxy, with full authority in the place and
stead of the Mortgagor and in the name of the Mortgagor or otherwise, from time
to time in the Mortgagee's discretion, to take any action and to execute,
acknowledge and deliver any document or instrument which the Mortgagee may deem
necessary or advisable to accomplish the purposes of this Mortgage, including,
without limitation, (i) to obtain, adjust and compromise claims for any
insurance required to be paid to the Mortgagee pursuant to Section 5(f) hereof,
(ii) to collect any awards or other compensation required to be paid to the
Mortgagee pursuant to Section 5(i) hereof as a result of any condemnation or
other taking (or purchase in lieu thereof), and to give proper receipts and
acquittances therefor, (iii) to ask, demand, collect, sue for, recover,
compound, receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Mortgaged Property, including, without
limitation, all rents, issues and profits, (iv) to receive, indorse, and collect
any drafts or other instruments, documents and chattel paper in connection with
clauses (i), (ii) or (iii) above, (v) to convey, assign, transfer and deliver
the Mortgaged Property pursuant to the terms hereof, and (vi) to file any claims
or take any action or institute any proceedings which the Mortgagee may deem
necessary or desirable for the collection of any of the Mortgaged Property or
otherwise to enforce the rights of the Mortgagee with respect to any of the
Mortgaged Property, and this power, being coupled with an interest, shall be
irrevocable so long as this Mortgage remains in effect.

            (c) If the Mortgagor fails to perform any agreement contained
herein, the Mortgagee may itself perform, or cause performance of, such
agreement or obligation, and the expenses of the Mortgagee incurred in
connection therewith, together with interest thereon, shall be payable by the
Mortgagor pursuant to Section 8 hereof.

            (d) The powers conferred on the Mortgagee hereunder are solely to
protect its interest in the Mortgaged Property and shall not impose any duty
upon it to exercise any such powers. Except for the safe custody of any of the
Mortgaged Property in its possession and the accounting for moneys actually
received by it hereunder, the Mortgagee shall have no duty as to the Mortgaged
Property or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to the Mortgaged Property.

            (e) THE MORTGAGOR HEREBY WAIVES TRIAL BY JURY AND ALL RIGHT TO HAVE
THE MORTGAGED PROPERTY MARSHALLED UPON ANY FORECLOSURE HEREOF. The Mortgagor
further agrees that it will not at any time (i) claim or demand or be entitled
to any credit against the Obligations for so much of the Taxes assessed against
any of the Mortgaged Property as is equal to the tax rate applied to the amount
due on this Mortgage or any part thereof, and no deductions shall otherwise be
made or claimed from the taxable value of any of the Mortgaged Property by
reason of this Mortgage or the Obligations secured hereby; (ii) insist upon, or
plead, or in any manner whatever claim or take any benefit or advantage of any
stay or extension or moratorium law, or any exemption from execution or sale of
any of the Mortgaged Property, which may affect the covenants and terms of
performance of this Mortgage; (iii) claim, take or insist upon any benefit or
advantage of any law providing for


                                       18
<PAGE>   20
the valuation or appraisal of any of the Mortgaged Property prior to any sale(s)
thereof made pursuant to the terms hereof, or pursuant to the decree, judgment
or order of any court of competent jurisdiction, or hinder, delay or impede the
execution of any power herein granted or delegated to the Mortgagee, but will
permit the execution of every power as though no such law had been enacted; or
(iv) after any such sale(s), claim or exercise any statutory right to redeem any
of the property so sold, and the Mortgagor hereby waives any such statutory
right. Upon the occurrence and during the continuance of any Event of Default or
immediately upon the commencement of any action, suit or other legal proceedings
by the Mortgagee to obtain judgment for any of the Obligations, or of any other
nature in aid of the enforcement of this Mortgage or any other Loan Document,
the Mortgagor will (A) waive the issuance and service of process and enter its
voluntary appearance in such action, suit or proceeding, and (B) if required by
the Mortgagee, consent to the appointment of a custodian, receiver, liquidator
or trustee of the Mortgagor or of any of its property (it being agreed by the
Mortgagor that Mortgagee shall have the right to such appointment whether or not
the Mortgagor shall consent thereto), and notwithstanding the appointment of any
such custodian, receiver, liquidator or trustee, the Mortgagee shall have the
right, but not the obligation, to retain possession and control of all of the
Mortgaged Property.

            (f) No recovery of any judgment by the Mortgagee and no levy of an
execution under any judgment upon any of the Mortgaged Property or any other
property of the Mortgagor shall in any way affect the Lien of this Mortgage or
any rights or remedies of the Mortgagee hereunder.

            (g) In the event that the Mortgaged Property is sold and the
Mortgagee enters into an agreement with the then owner of the Mortgaged Property
extending the time of payment of any of the Obligations, or otherwise modifying
the terms hereof, the Mortgagor shall continue to be liable for the Obligations
according to the tenor of any such agreement unless expressly released and
discharged in writing by the Mortgagee.

            (h) The Mortgagee shall have the right to appear in and defend any
action or proceeding, in the name and on behalf of the Mortgagor which the
Mortgagee, in its discretion, feels may adversely affect the Mortgaged Property
or this Mortgage. The Mortgagee shall also have the right to institute any
action or proceeding which the Mortgagee, in its discretion, feels should be
brought to protect its interest in the Mortgaged Property or its rights
hereunder.

            (i) Notwithstanding anything to the contrary contained in this
Mortgage, the assignment, pledge and mortgaging of all insurance policies,
unearned premiums thereon, eminent domain awards and all proceeds of any thereof
and the right to apply any thereof in accordance with the terms of this Mortgage
shall survive any foreclosure of this Mortgage or any sale of any of the
Mortgaged Property pursuant to the power of sale.

            (j) The Mortgagor acknowledges that it has received a true copy of
this Mortgage and the other Loan Documents in existence as of the date hereof.

            (k) All of the agreements contained herein may be enforced by a
receiver of any of the Mortgaged Property.


                                       19
<PAGE>   21
            SECTION 7. Events of Default; Remedies. Without limiting the
generality of Section 1 hereof, any event or condition which constitutes an
Event of Default under the Financing Agreement or any other Loan Documents shall
constitute an "Event of Default" under this Mortgage. If any Event of Default
shall have occurred and be continuing:

            (a) The Mortgagee may exercise in respect of the Mortgaged Property,
in addition to other rights and remedies provided for herein or otherwise
available to it, all of the rights and remedies of a secured party on default
under the UCC (whether or not the UCC applies to the Mortgaged Property), and
also may without notice or demand, as it deems advisable to protect and enforce
its rights against the Mortgagor and in and to the Mortgaged Property, take the
following actions, each of which may be pursued concurrently or otherwise, at
such time and in such order as the Mortgagee, in its sole discretion, may
determine, without impairing or otherwise affecting the other rights and
remedies of the Mortgagee: (i) declare the entire unpaid Indebtedness to be
immediately due and payable, and exercise all other rights it may have under any
Loan Document; (ii) enter into or upon the Mortgaged Property, either personally
or by its agents or nominees and dispossess the Mortgagor and its agents and
servants therefrom and thereupon the Mortgagee may (A) use, operate, manage,
control, insure, maintain, repair, restore and otherwise deal with all of the
Mortgaged Property and conduct business thereat; (B) complete any construction
on the Mortgaged Property in such manner and form as the Mortgagee, in its sole
discretion, deems advisable; (C) make alterations, additions, renewals,
replacements and improvements to or on the Mortgaged Property; and (D) exercise
all rights and powers of the Mortgagor with respect to the Mortgaged Property,
whether in the name of the Mortgagor or otherwise, including, without
limitation, the right to make, cancel, enforce or modify leases, obtain and
evict tenants, and demand, sue for, collect and receive all earnings, revenues,
rents, issues, profits and other income of the Mortgaged Property; (iii)
institute proceedings for the complete foreclosure of this Mortgage, in which
case the Mortgaged Property may be sold for cash, on credit or for future
delivery, in one or more parcels; (iv) with or without entry and, to the extent
permitted and pursuant to the procedures provided by applicable law, institute
proceedings for the partial foreclosure of this Mortgage for the Obligations
then due and payable, subject to the Lien of this Mortgage continuing unimpaired
and without loss of priority so as to secure the balance of the Obligations; (v)
sell any of the Mortgaged Property and all estate, claim, demand, right, title
and interest of the Mortgagor therein and rights and equities of redemption and
statutory rights of redemption thereof, pursuant to the power of sale or
otherwise, at one or more sales, in one or more parcels, at such times and
places, upon such terms and after such notice thereof as may be required or
permitted by law, and in the event of a sale, by foreclosure or otherwise, of
less than all of the Mortgaged Property, this Mortgage shall continue as a Lien
on the remaining portion of the Mortgaged Property; (vi) institute an action,
suit or proceeding in equity for the specific performance of any agreement
contained herein or in any other Loan Document to which the Mortgagor is a
party; (vii) recover judgment on any such other Loan Document either before,
during or after or in lieu of any proceedings for the enforcement of this
Mortgage; and (viii) apply for and obtain the appointment of a custodian,
trustee, receiver, liquidator or conservator of the Mortgaged Property, without
regard for the adequacy of the security for the Obligations and without regard
for the solvency of the Mortgagor or any Guarantor of the Obligations or any
other Person.


                                       20
<PAGE>   22
            (b) The Mortgagee shall not be obligated to make any sale of any of
the Mortgaged Property regardless of notice of sale having been given. The
Mortgagee may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and, except as otherwise
provided by Applicable Law, such sale may without further notice be made at the
time and place to which it was so adjourned. In any sale made by virtue of this
Mortgage (whether made under the power of sale herein granted or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and sale), the
Mortgagee may bid for and acquire any of the Mortgaged Property and in lieu of
paying cash therefor may make settlement for the purchase price by crediting
upon the Indebtedness the net sale price after deducting therefrom the expenses
of the sale and any other sums payable pursuant to Section 8 hereof. The
Mortgagee shall not be required to take possession of any of the Mortgaged
Property prior to the sale thereof or to deliver possession of the Mortgaged
Property to the purchaser at such sale. Any such sale made by virtue of this
Mortgage shall operate to divest all of the estate, right, title, interest,
claim and demand whatsoever, whether at law or in equity, of the Mortgagor in
and to the properties and rights so sold, and shall be a perpetual bar both at
law and in equity against the Mortgagor and against any Persons claiming the
same, or any part thereof, either from, through or under the Mortgagor.

            (c) If the Mortgagor is the occupant of any of the Mortgaged
Property, it will immediately surrender possession of the space so occupied to
the Mortgagee, and if the Mortgagor is permitted to remain in possession, the
possession shall be as a month-to-month tenant of the Mortgagee and, on demand,
the Mortgagor will pay to the Mortgagee monthly, in advance, a reasonable rental
for the space so occupied and in default thereof the Mortgagor may be
dispossessed by the usual summary proceedings.

            (d) Any cash held by the Mortgagee as part of the Mortgaged Property
and all cash proceeds received by the Mortgagee in respect of any sale of,
collection from, or other realization upon, all or any part of the Mortgaged
Property may, in the discretion of the Mortgagee, be held by the Mortgagee as
collateral for, and/or then or at any time thereafter applied (after payment of
any amounts payable to the Mortgagee pursuant to Section 8 hereof) in whole or
in part by the Mortgagee against, all or any part of the Obligations in such
order as the Mortgagee shall elect. Any surplus of such cash or cash proceeds
held by the Mortgagee and remaining after payment in full of all of the
Obligations shall be paid over to the Mortgagor or to such Person as may be
lawfully entitled to receive such surplus.

            (e) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Mortgagee is
legally entitled, the Mortgagor shall be liable for the deficiency, together
with interest thereon at the highest rate specified in the Financing Agreement
for interest on overdue principal or such other rate as shall be fixed by
Applicable Law, together with the costs of collection and the reasonable fees of
any attorneys employed by the Mortgagee to collect such deficiency.

            (f) If, at any time prior to foreclosure sale, the Mortgagor or any
other Person tenders payment of the amount necessary to satisfy the Obligations,
the same shall be deemed to be a voluntary prepayment, in which case such
payment must include the premium required under any applicable prepayment
provisions contained in the Loan Documents, if any. This provision


                                       21
<PAGE>   23
shall be of no force or effect if at the time that such tender of payment is
made, the Mortgagor has the right under this Mortgage or any Loan Documents to
prepay the Indebtedness without penalty or premium.

            (g) Mortgagee shall have the right, without limiting any other
rights or remedies Mortgagee may have hereunder or at law, to sell the Mortgaged
Property pursuant to Article 14 of the New York Property Actions and Proceedings
Law, as the same may be amended from time to time.

            SECTION 8. Indemnity and Expenses.

            (a) The Mortgagor agrees to indemnify the Mortgagee from and against
any and all claims, losses and liabilities growing out of or resulting from this
Mortgage (including, without limitation, the defense or enforcement of the Lien
of this Mortgage) or otherwise relating to any proceeding alleging a violation
by the Mortgagor or the Mortgagee of any law, except claims, losses or
liabilities resulting solely and directly from the Mortgagee's gross negligence
or willful misconduct.

            (b) The Mortgagor will upon demand pay to the Mortgagee the amount
of any and all costs and expenses, including the fees and disbursements of the
Mortgagee's counsel and of any experts and agents, which the Mortgagee may incur
in connection with (i) the administration of this Mortgage, (ii) the custody,
preservation, use, operation or management of, or the sale of, collection from,
or other realization upon, any of the Mortgaged Property, (iii) the exercise or
enforcement of any of the rights of the Mortgagee hereunder, or (iv) the failure
by the Mortgagor to perform or observe any of the provisions hereof, together
with interest thereon, to the extent permitted by Applicable Law, at the default
rate specified in Section 2.04(c) of the Financing Agreement, from the time such
payments are made by the Mortgagee to the date of reimbursement by the
Mortgagor. All such costs and expenses, together with interest thereon, shall be
added to and included in the Obligations and shall be secured by this Mortgage.

            (c) Notwithstanding any notice or grace period contained herein or
in any other Loan Document and in addition to any other payments required
hereunder or in any other Loan Document, in the event any payment provided for
herein shall become overdue for a period in excess of 10 days, the Mortgagor
will pay on demand a late charge of four cents ($.04) for each dollar so overdue
for the purpose of defraying the expenses incident to handling such delinquent
payment.

            SECTION 9. Notices, Etc. Except as otherwise set forth herein, all
notices and other communications under this Mortgage shall (a) be in writing
(which shall include communications by telecopy) and (b) be (i) sent by
registered or certified mail, postage prepaid, return receipt requested, or by
telecopier, or (ii) delivered by hand, (c) be given, at the following respective
addresses and telecopier or telephone numbers and to the attention of the
following Persons:

            (i) if the Mortgagor, to it at:


                                       22
<PAGE>   24
            Decora, Incorporated
            c/o Decora Industries, Inc.
            1 Mill Street
            Fort Edward, New York  12828-1727
            Attention:  Chief Financial Officer

            Telephone:  (518) 747-6255
            Telecopier:  (518) 747-5089

            with a copy to:

            Miller & Holguin
            1801 Century Park East
            Suite 700
            Los Angeles, California 90067
            Attention:  Howard J. Unterberger, Esq.
            Telephone:  310-556-1990
            Telecopier:  310-557-2205

            (ii)   if to the Mortgagee, to it at:

            Ableco Finance LLC
            450 Park Avenue
            28th Floor
            New York, New York  10022
            Attention:   Kevin P. Genda
            Telephone:  (212) 891-2100
            Telecopier:  (212) 759-5305

            with a copy to

            c/o Schulte Roth & Zabel LLP
            900 Third Avenue
            New York, New York  10022
            Attention:  Frederic L. Ragucci, Esq.
            Telephone:  (212) 756-2000
            Telecopier:  (212) 593-5595

or as to any such Person at such other address as such Person may hereafter
specify in a written notice to each such other Person complying as to delivery
with the terms of this Section 9 and specifically captioned "Notice of Change of
Address", and (d) be effective or deemed delivered or furnished (i) if given by
mail, three (3) days after such communication is deposited in the mail,
addressed as above provided, (ii) if given by telecopier, when such
communication is transmitted to the appropriate number determined as above
provided in this Section 9 and the appropriate answer-back is received or
receipt is otherwise acknowledged, and (iii) if given by hand delivery,


                                       23
<PAGE>   25
when left at the address of the addressee addressed as above provided, except
that materials furnished to the Mortgagee shall not be deemed furnished until
received.

            SECTION 10. Miscellaneous.

            (a) Any term, covenant, agreement or condition of this Mortgage may
be amended or waived, and any departure therefrom may be consented to, if, but
only if, such amendment, waiver or consent is in writing and signed by the
Mortgagee and, in the case of any amendment, the Mortgagor. Unless otherwise
specified in such waiver or consent, a waiver or consent given hereunder shall
be effective only in the specific instance and for the specific purpose for
which given.

            (b) The rights and remedies of the Mortgagee, hereunder or under any
other Loan Document shall be cumulative and not exclusive of any rights or
remedies which the Mortgagee would otherwise have, whether in law or equity, and
no failure or delay by the Mortgagee in exercising any right shall operate as a
waiver thereof, nor shall any single or partial exercise of any power or right
preclude its other or further exercise or the exercise of any other power or
right. The rights and remedies of the Mortgagee provided herein or in any other
Loan Document against any Person are not conditional or contingent upon any
attempt by the Mortgagee to exercise any of its rights and remedies under any
other Loan Document against such party or against any other Person.

            (c) Any provision of this Mortgage which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or thereof or affecting the validity or
enforceability of such provision in any other jurisdiction. To the extent
permitted by Applicable Law, the Mortgagor hereby waives any provision or law
which renders any provision hereof prohibited or unenforceable in any respect.

            (d) This Mortgage shall create a continuing Lien in the Mortgaged
Property and shall (i) remain in full force and effect until the payment in full
or release of the Obligations, and (ii) be binding on the Mortgagor and its
successors and assigns and shall inure, together with all rights and remedies of
the Mortgagee hereunder, to the benefit of the Mortgagee and its successors,
transferees and assigns. Without limiting the generality of clause (ii) of the
immediately preceding sentence, the Mortgagee may from time to time assign to
one or more other Persons all or any part of or otherwise grant participations
to one or more other Persons in all or any part of the Loans and the Notes, and
the Mortgagee may assign or otherwise transfer any of its rights hereunder or
under any other Loan Document to any other such Person, and the holder of any
such assignment or participation, if the assignment or participation agreement
so provides, shall, with respect to its assignment or participation, be entitled
to all of the rights and benefits of the Mortgagee hereunder or under the other
Loan Documents. The Mortgagee may, in connection with any such assignment or
participation or proposed assignment or participation, disclose any non-public
information relating to the Mortgagor furnished by or on behalf of the Mortgagor
or any of its Affiliates to the Mortgagee. None of the rights or obligations of
the Mortgagor hereunder or any interest of the Mortgagor herein may be assigned
or otherwise transferred without the prior written consent of the Mortgagee, and
no such attempted assignment


                                       24
<PAGE>   26
or transfer of any such obligation shall relieve the Persons therefrom unless
the Mortgagee shall have consented to such release in writing specifically
referring to the obligations from which the Mortgagor is to be released.

            (e) For the purpose of this Mortgage, the term "Mortgagor" shall be
deemed to refer to any subsequent owner of any of the Mortgaged Property and any
successor, executor, legal representative or assign thereof. If there is more
than one Mortgagor hereunder, all of their undertakings hereunder shall be
deemed joint and several.

            (f) Upon the satisfaction in full of the Obligations, (i) this
Agreement and the Lien created hereby shall terminate and all rights to the
Collateral Check defined term. shall revert to the Mortgagor, and (ii) the
Mortgagee will, upon the Mortgagor's request and at the Mortgagor's expense, (A)
return to the Mortgagor such of the Collateral as shall not have been sold or
otherwise disposed of or applied pursuant to the terms hereof, and (B) execute
and deliver to the Mortgagor such documents as the Mortgagor shall reasonably
request to evidence such termination.

            (g) In the event of the passage after the date of this Mortgage of
any law of any governmental authority having jurisdiction hereof or of the
Mortgaged Property, deducting from the value of land for the purpose of
taxation, affecting any Lien thereon or changing in any way the laws for the
taxation of deeds of trust or mortgages or debts secured by deeds of trust or
mortgages for Federal, state or local purposes, or the manner of the collection
of any such Taxes, so as to affect this Mortgage, the Mortgagor shall promptly
pay to the Mortgagee, on demand, all Taxes, costs and charges for which the
Mortgagee is or may be liable as a result thereof; provided, however, that if
said payment shall be prohibited by law, render any of the Obligations usurious
or subject the Mortgagee to any penalty or forfeiture, then and in such event
the Indebtedness shall, at the option of the Mortgagee, be immediately due and
payable.

            (h) This Mortgage and the other Loan Documents to which the
Mortgagor is a party embody the entire agreement between the Mortgagor and the
Mortgagee relating to the subject matter hereof and supersede all prior
agreements, representations and understandings, if any, relating to the subject
matter hereof.

            (i) Section headings are included for convenience of reference only
and shall not constitute a part of this Mortgage for any other purpose.

            (j) The information set forth on the cover hereof is incorporated
herein.

            (k) This Mortgagee shall be governed by and construed in accordance
with the law of the State of New York.

            (l) Mortgagor represents that this Mortgage does not encumber
property principally improved or to be improved by one or more structures
containing in the aggregate not more than six (6) residential dwelling units.

            (m) Pursuant to Section 13 of the lien law of the State of New York,
Mortgagor shall receive the advances secured hereby and shall hold the right to
receive such


                                       25
<PAGE>   27
advances as a trust fund to be applied first for the purpose of paying the cost
of any improvement on the Mortgaged Property and shall apply such advances first
to the payment of the cost of any such improvements on the Mortgaged Property
before using any part of the total of the same for any other purpose. Mortgagor
will indemnify and hold harmless Mortgagee from and against any loss, cost,
expense or liability, including, without limitation, any judgments, attorneys'
fees and expenses, costs of appeal bonds and printing costs, arising out of or
relating to any proceeding instituted by any claimant alleging a violation by
Mortgagor or Mortgagee of any applicable lien law, including, without
limitation, the Lien Law of the State of New York.

            (n) Except as otherwise expressly provided herein, Mortgagee shall
have all of the rights against lessees of the Secured Property as set forth in
Section 291(f) of the Real Property Law of the State of New York.

            (o) In the event of any conflict between this Mortgage and the
Financing Agreement, the Financing Agreement shall control, except where and to
the extent this Mortgage expressly provides that this Mortgage controls.

            (p) The covenants and conditions contained herein, other than those
included in the New York Statutory Short Form of Mortgage, shall be construed as
affording to Mortgagee rights additional to, and not exclusive of, the rights
conferred under the provisions of Section 254 of the Real Property Law of the
State of New York.

            (q) The monies paid to amortize the Loans (as defined in the Loan
Agreement) shall be applied first to repay that portion of the Indebtedness not
secured by the Mortgaged Property.

            (r) This Mortgage and that certain Mortgage, Security Agreement and
Assignment of Leases and Rents, of even date herewith, between Mortgagor and
Mortgagee, securing the original principal amount of $2,000,000, are intended to
be recorded simultaneously and each is intended to, and shall, have equal
priority of lien with the other.


                                       26
<PAGE>   28

            IN WITNESS WHEREOF, the Mortgagor has caused this Mortgage to be
executed and delivered by its officer thereunto duly authorized, as of the date
of the acknowledgment herein below taken, to be effective as of the date first
written above.

                                            DECORA, INCORPORATED


                                            By:
                                               ---------------------------------
                                               Name:
                                               Title:














                                       27
<PAGE>   29

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

On the 2nd day of May, 2000 before me, the undersigned, personally appeared
Robert L. MacDonald personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual, or the
person upon behalf of which the individual acted, executed the instrument.



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


<PAGE>   30


                                    Exhibit A


                                Legal Description