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                         MORTGAGE AND SECURITY AGREEMENT

                                       by

                            SUPREMA SPECIALTIES, INC.

                                  as Mortgagor

                                       to

                                FLEET BANK, N.A.,

                                    as agent


                            Dated: December 16, 1998

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Record and Return to:     Windels, Marx, Davies & Ives
                          120 Albany Street Plaza
                          New Brunswick, NJ  08901
                          Attn: Howard P. Lakind, Esq.

<PAGE>

                                    MORTGAGE

     THIS MORTGAGE AND SECURITY  AGREEMENT (the  "Mortgage"),  is made this 16th
day of December, 1998,

                                       BY

SUPREMA SPECIALTIES, INC., a corporation duly organized, validly existing and in
good  standing  under the laws of the State of New York,  having  its  principal
office  at  510  East  35th  Street,   Paterson,   New  Jersey  07543-0280  (the
"Mortgagor"),

                                       TO

FLEET BANK,  N.A., a national  banking  association  duly  organized and validly
existing  under the laws of the United  States of America,  having its principal
office located at 208 Harrison Road, Glen Rock, New Jersey 07452, as agent under
that certain Loan Agreement hereinafter referred to (the "Mortgagee").

                              W I T N E S S E T H:

     WHEREAS,  pursuant to a certain Second Amended and Restated Revolving Loan,
Guaranty and Security Agreement dated as of the date hereof among the Mortgagor,
Suprema  Specialties West, Inc., Suprema  Specialties  Northeast,  Inc. (Suprema
Specialties West, Inc. and Suprema Specialties Northeast,  Inc. are collectively
referred to herein as the  "Guarantors"),  the Mortgagee and the banks signatory
thereto (the "Banks") (the Second Amended and Restated Revolving Loan,  Guaranty
and Security Agreement as same may hereafter, be modified,  amended or restated,
is hereinafter  referred to as the "Loan  Agreement"),  the Banks have severally
agreed to make loans to the Mortgagor in the aggregate principal amount of up to
$35,000,000 (the "Loans"), as evidenced by certain Secured Revolving Notes dated
the date hereof made by the Mortgagor in favor of the Banks (the "Notes"); and

     WHEREAS,  this Mortgage is given and made by the Mortgagor to the Mortgagee
as security for (i) the Loans  evidenced by the Notes,  (ii) the  performance of
the terms, conditions and covenants of the Mortgagor set forth in the Notes, the
Loan  Agreement,  this  Mortgage  and  the  other  loan  documents  executed  in
connection  therewith  (hereinafter   collectively  referred  to  as  the  "Loan
Documents"),  and  (iii)  the  payment  of  all  other  indebtedness,   monetary
obligations,  liabilities  and  duties of any kind of the  Mortgagor,  direct or
indirect,  absolute or contingent,  joint or several, due or not due, liquidated
or not liquidated,  arising under the Notes, the Loan Agreement,  this Mortgage,
and the other Loan Documents.

     NOW,  THEREFORE,  in order to induce the Mortgagee to make the Loans to the
Mortgagor and to secure the payment of the

<PAGE>

indebtedness  of the Mortgagor to the  Mortgagee  evidenced by the Notes made by
the  Mortgagor  to the order of the Banks and to secure the  performance  by the
Mortgagor of all of its other  obligations and covenants  pursuant to the Notes,
the Loan  Agreement and the other Loan  Documents,  and to assure payment of all
other indebtedness, monetary obligations,  liabilities and duties of any kind of
the Mortgagor, direct or indirect, absolute or contingent, joint or several, due
or not due,  liquidated or not  liquidated,  arising  under the Notes,  the Loan
Agreement,  this  Mortgage,  and the other Loan  Documents,  the  Mortgagor  has
mortgaged, given, granted, released, assigned, transferred and set over unto the
Mortgagee,  and by these presents does hereby mortgage,  give,  grant,  release,
assign,  transfer and set over unto the  Mortgagee,  its  successors and assigns
forever, the following described property and rights:

     ALL those  certain  lots,  pieces or parcels of land and premises  situate,
lying and being in the City of  Paterson,  County of  Passaic,  and State of New
Jersey, as more particularly  described on SCHEDULE "A" attached hereto and made
a part hereof (the "Premises"); and

     TOGETHER with all buildings,  structures,  and improvements of every nature
whatsoever now or hereafter situated on the Premises (the "Improvements"); and

     TOGETHER with all and singular the tenements, hereditaments, rights-of-way,
privileges,  liberties, easements, riparian rights, woods, waters, watercourses,
mineral, oil and lights and appurtenances  thereunto  belonging,  or in any wise
appertaining,  and the reversion and reversions and remainders,  rents,  income,
issues and profits thereof; and

     TOGETHER with all right, title and interest of the Mortgagor,  now owned or
hereafter  acquired,  in and to any  streets,  the land  lying in the bed of any
streets,  roads or  avenues,  opened  or  proposed,  in front of,  adjoining  or
abutting  the  Premises  to the center  line  thereof,  and all strips and gores
within  or  adjoining  the  Premises,  easements  and  rights-of-way,  public or
private,  all sidewalks and alleys, now or hereafter used in connection with the
Premises or abutting the Premises; and

     TOGETHER with all  furniture,  fixtures,  equipment  and other  articles of
personal  property  owned by the Mortgagor  and now or hereafter  attached to or
used in connection with, or with the operation of, any  improvements  located on
the Premises,  as to which this Mortgage  constitutes a security agreement under
the New Jersey  Uniform  Commercial  Code (in addition to and not in lieu of any
other security agreement between the parties),  including,  without  limitation,
all building  supplies and materials,  furniture,  fixtures and  equipment;  all
furnaces,  motors, dynamos,  incinerators,  machinery,  generators,  partitions,
elevators, steam


                                       2
<PAGE>

and hot water  boilers,  heating,  air  conditioning  equipment,  wall cabinets,
lighting and power  plants,  coal and oil burning  apparatus,  pipes,  plumbing,
radiators,  sinks, bath tubs, water closets,  refrigerators,  gas and electrical
fixtures,  stoves, ranges, shades,  screens,  blinds, washing machines,  clothes
dryers,  dishwashers,  freezers,  awnings,  vacuum cleaning  systems,  sprinkler
systems or other fire  prevention  or  extinguishing  apparatus  and  materials,
including all accessories,  additions,  substitutions and replacements  thereof,
and all cash and non-cash proceeds  thereof,  all of which shall be deemed to be
and remain and form a part of the  Premises  and are covered by the lien of this
Mortgage. If the lien of this Mortgage shall be subject to a conditional bill of
sale,  chattel mortgage,  or other security interest covering any such property,
then all the right, title and interest of the Mortgagor in and to such property,
together  with the benefits of any  deposits or payments  now or hereafter  made
thereon, are and shall be covered by the lien of this Mortgage; and

     TOGETHER with any and all awards, damages, payments and other compensation,
and any and all claims therefor and rights thereto, which may result from taking
or injury  by virtue of the  exercise  of the power of  eminent  domain,  or any
damage, improvements, injury or destruction in any manner caused to the Premises
or thereon, or any part thereof; and

     TOGETHER with all the estate, right, title, interest, property, possession,
claim and demand whatsoever of the Mortgagor,  as well in law as in equity,  of,
in and to the same and every  part and  parcel  thereof  with the  appurtenances
(hereinafter  the  Premises  and all the  Improvements,  rights,  interests  and
benefits that go with it as described above shall be collectively referred to as
the "Mortgaged Premises").

     TO  HAVE  AND  TO  HOLD  the  above-granted  Mortgaged  Premises  unto  the
Mortgagee,  its successors and assigns, to its and their own proper use, benefit
and behoof forever.

     PROVIDED  THAT if the  Mortgagor  shall well and truly pay,  or there shall
otherwise  be paid to the  Mortgagee,  the  indebtedness  evidenced by the Notes
secured  hereby at the time and in the manner  provided in the Notes and/or this
Mortgage,  and the Mortgagor  shall well and truly abide by and comply with each
and every covenant and condition set forth in this  Mortgage,  the Notes and the
other Loan  Documents,  then these  presents  and the lien and  interest  hereby
transferred and assigned shall cease, terminate and be void. The Mortgagee shall
release the  Mortgaged  Premises and  renounce  any other  rights  granted to it
herein,  and shall  execute at the  request of the  Mortgagor  a release of this
Mortgage and any other  instrument to that effect deemed necessary or desirable,
upon  payment  and  performance  being made on the  indebtedness  and  covenants
secured hereby.


                                       3
<PAGE>

     This is a Second Mortgage  subject and subordinate to that certain Mortgage
dated March 29, 1996 which was recorded in the Office of the Register of Passaic
County on April 17,  1996,  in Volume  159,  Page 053,  et seq.,  as amended and
modified.

     ARTICLE I. THE MORTGAGOR  REPRESENTS,  WARRANTS,  COVENANTS AND AGREES WITH
THE MORTGAGEE AS FOLLOWS:

     Section 1. Definitions.  In this Mortgage,  all words and terms not defined
herein shall have the respective meanings and be construed herein as provided in
the  Notes.  Any  reference  to a  provision  of the  Notes  shall be  deemed to
incorporate that provision as a part hereof in the same manner and with the same
effect as if the same were fully set forth herein.

     Section 2. Interpretation and Construction. The provisions of the Notes and
the Loan  Agreement  shall be applied  to this  Mortgage  in the same  manner as
applied therein.

     Section 3.  Beneficiaries.  Nothing herein expressed or implied is intended
or shall be construed  to confer upon,  or to give to, any person other than the
Mortgagor  and the  Mortgagee  any  right,  remedy  or claim  under or by reason
hereof.  All covenants,  stipulations and agreements  herein contained by and on
behalf  of the  Mortgagor  shall be for the sole and  exclusive  benefit  of the
Mortgagee.

     Section 4. Indebtedness. The Mortgagor shall pay the indebtedness evidenced
by the Notes and the Loan Agreement and secured by this Mortgage at the time and
in the  manner  provided  for the  payment of the same in the Notes and the Loan
Agreement.

     Section 5. No Credit for Taxes Paid. The Mortgagor shall not be entitled to
any credit against payments due hereunder by reason of the payment of any taxes,
assessments,  water or sewer rent or other governmental  charges levied inst the
Mortgaged Premises.

     Section 6. Seisin and Warranty.  The Mortgagor is seized of an indefeasible
estate in fee simple in the Mortgaged Premises, and Mortgagor warrants the title
to the Mortgaged Premises,  subject to those title exceptions set forth in title
commitment no. 96-LT-0016 issued by Stewart Title Guaranty Company, as continued
through the date hereof. The Mortgagor hereby covenants that the Mortgagor shall
(i)  preserve  such  title and the  validity  and  priority  of the lien of this
Mortgage and shall forever warrant and defend the same to the Mortgagee  against
all  lawful  claims  whatsoever  and  the  claims  of all  persons  or  entities
(hereinafter  collectively  referred  to as  "Persons")  whomsoever  claiming or
threatening  to claim  the same or any part  thereof,  and (ii)  make,  execute,
acknowledge and deliver all such further or


                                       4
<PAGE>

other deeds, documents, instruments or assurances, and cause to be done all such
further acts and things as may at any time  hereafter be reasonably  required by
the Mortgagee to fully protect the lien of this Mortgage.

     Section  7.  Insurance.  (i) The  Mortgagor  shall  obtain,  or cause to be
obtained, and shall maintain or cause to be maintained,  at all times throughout
the term of this  Mortgage,  insurance on the Mortgaged  Premises in such manner
and  against  such loss,  damage and  liability,  including  liability  to third
parties,  as is  customary  with  Persons  operating  properties  similar to the
Mortgaged  Premises and in the same or similar  business and located in the same
or  similar  areas.  Such  insurance  shall  include,  without  limitation,  the
following:

     (a) Commercial  general  liability  insurance  (including garage liability,
innkeeper's liability, products liability and elevator liability, if applicable)
insuring  against any and all  liability of the Mortgagor or claims of liability
of Mortgagor  arising out of,  occasioned  by or resulting  from any accident or
otherwise  resulting  in or  about  the  Mortgaged  Premises  and the  adjoining
streets, sidewalks and passageways, including XCU, blanket contractual liability
and completed  operations  coverage,  in such amounts as are usually  carried by
Persons operating properties similar to the Mortgaged Premises, but in any event
with a combined single limit of not less than  $1,000,000.00 for personal injury
and property  damage with respect to any one  occurrence,  which amount shall be
increased  from  time  to time  to  reflect  what a  reasonably  prudent  Person
operating property similar to the Mortgaged Premises would carry,  together with
excess/umbrella liability insurance on a "follow form" basis with minimum limits
of $10,000,000.00;

     (b) Loss or damage by perils customarily included under standard "all risk"
policies,  including  business  interruption and rental insurance if applicable,
covering  all perils and  contingencies  as may be  required  by the  Mortgagee,
including a so-called "agreed amount" replacement cost endorsement  insuring one
hundred percent (100%) of the replacement cost of the Improvements;

     (c) For any period  during  which  construction  is being  performed on the
Mortgaged  Premises,  "Builder's  All-Risk"  coverage  policy of fire and hazard
insurance  (completed  value  form)  with  respect  to the  Mortgaged  Premises,
including vandalism and malicious mischief, which insurance policy shall contain
a replacement cost endorsement;

     (d) If the  Mortgaged  Premises are required to be insured  pursuant to the
Flood Disaster  Protection  Act of 1973 or the National  Flood  Insurance Act of
1968, and the regulations


                                       5
<PAGE>

promulgated  thereunder,  because  it is  located  in an  area  which  has  been
identified by the Secretary of Housing and Urban  Development  as a Flood Hazard
Area, then a flood insurance policy covering the Mortgaged Premises in an amount
not less than the  outstanding  principal  balance of the Notes,  or the maximum
limit of coverage available, whichever amount is less;

     (e) Boiler and machinery  insurance  covering pressure vessels,  air tanks,
boilers,  machinery,  pressure  piping,  heating,  air conditioning and elevator
equipment,  provided  that the  Mortgaged  Premises  contains  equipment of such
nature.

     (ii) Each insurance  policy  required under this Section 7 shall be written
by insurance companies authorized or licensed to do business in the State of New
Jersey  having  an  Alfred M. Best  Company,  Inc.  rating of A or higher  and a
financial  size  category  of not less than XII,  and shall be on such forms and
written by such companies as shall be reasonably approved by the Mortgagee. Such
insurance  coverage may be effected  under  overall  blanket or excess  coverage
policies of the Mortgagor,  except as to public liability insurance which may be
effected under combined single limit.

     (iii)  Each  insurance  policy  required  under  this  Section 7  providing
insurance  against loss or damage to property shall be written or endorsed so as
to (a) contain a standard  mortgagee or secured party  endorsement,  as the case
may  be,  or its  equivalent,  (b)  make  all  losses  payable  directly  to the
Mortgagee,  without  contribution,  and (c) provide for  deductibles  reasonably
satisfactory to the Mortgagee.

     (iv) Each  insurance  policy  required  under this Section 7 and  providing
public  liability  coverage  shall be  written  and  endorsed  so as to name the
Mortgagee as an additional insured, as its interest may appear.

     (v) Each  insurance  policy  required  under this Section 7 shall contain a
provision  to the  effect  that such  policy  shall not lapse or be  terminated,
cancelled, altered or in any way limited in coverage or reduced in amount unless
the  Mortgagee  is notified  in writing at least  thirty (30) days prior to such
lapse, termination,  cancellation, alteration, limitation or reduction. At least
thirty (30) days prior to the expiration of any such policy, the Mortgagor shall
furnish evidence satisfactory to the Mortgagee that such policy has been renewed
or replaced or is no longer required by this Section 7.

     (vi) Each  insurance  policy  required  under this Section 7 (except  flood
insurance  written under the federal flood  insurance  program) shall contain an
endorsement  or  agreement  by the insurer that any loss shall be payable to the
Mortgagee, as its interest


                                       6
<PAGE>

may appear, in accordance with the terms of such policy  notwithstanding any act
or  negligence of the Mortgagor  which might  otherwise  result in forfeiture of
said  insurance and the further  agreement of the insurer  waiving all rights of
set-off, counterclaim, deduction or subrogation against the Mortgagor (so as not
to interfere with the Mortgagee's rights).

     (vii) In the event of loss or damage to the collateral, the proceeds of any
insurance provided hereunder shall be applied as set forth in Section 14 of this
Article  I; in the  event of a  public  liability  claim,  the  proceeds  of any
insurance provided hereunder shall be applied toward extinguishing or satisfying
the liability and expenses incurred in connection therewith.

     (viii)  The  Mortgagor  shall  not  take  out any  separate  or  additional
insurance with respect to the Mortgaged  Premises which is  contributing  in the
event of loss unless it is properly  compatible with all of the  requirements of
this Section 7.

     Section 8. Preservation, Maintenance and Repair. All Improvements which are
presently  erected  and in the  future  are to be  erected  upon  the  Mortgaged
Premises,  shall, at the  Mortgagor's own cost and expense,  be kept in good and
substantial  repair,  working order and condition,  and the Mortgagor shall from
time to time  make,  or cause to be made,  all  necessary  and  proper  repairs,
replacements,  improvements  and  betterments  thereto.  The Mortgagor shall not
remove,  demolish,  materially alter or discontinue the use of any material part
of the  Mortgaged  Premises  without the prior  express  written  consent of the
Mortgagee,  except  that  the  Mortgagor  shall  from  time  to time  make  such
substitutions, additions, modifications and improvements as may be necessary and
as shall not impair the structural integrity,  operating efficiency and economic
value of the Mortgaged  Premises.  All  alterations,  replacements,  renewals or
additions  made  pursuant  to this  Section  8 shall  automatically  become  and
constitute a part of the Mortgaged  Premises and shall be covered by the lien of
this Mortgage.  The Mortgagor shall not do, and shall not permit to be done, any
act which may in any way impair or weaken the security under this Mortgage.

     Section  9.  Declaration  of No Offset.  The  Mortgagor  represents  to the
Mortgagee that the Mortgagor has no knowledge of any offsets,  counterclaims  or
defenses to the principal  indebtedness  secured hereby, or to any part thereof,
or the interest thereon, either at law or in equity. The Mortgagor shall, within
fifteen (15)  business  days upon request by mail,  furnish a duly  acknowledged
written  statement in form  reasonably  satisfactory  to the  Mortgagee  stating
either that the Mortgagor knows of no offsets or defenses  existing against such
indebtedness, or if such offsets or defenses are alleged to exist,


                                       7
<PAGE>

the nature and extent  thereof,  and in either case,  such  statement  shall set
forth the amount due hereunder.

     Section  10. No  Removal of  Fixtures.  The  Mortgagor  shall not remove or
suffer to be removed  from the  Mortgaged  Premises  any  fixtures  owned by the
Mortgagor as the term  "fixtures"  (other than trade fixtures) is defined by the
law in New Jersey presently, or in the future to be incorporated into, installed
in, annexed or affixed to the Mortgaged Premises (unless such fixtures have been
replaced  with similar  fixtures of equal or greater  utility and value or which
have become obsolete).

     Section  11.  Security  Agreement.  This  Mortgage  constitutes  a security
agreement under the New Jersey Uniform Commercial Code, and the Mortgagor hereby
grants  to  the  Mortgagee  a  security  interest  in all  furniture,  fixtures,
equipment   and  personal   property  and  all  other   machinery,   appliances,
furnishings, tools and building materials now owned or hereafter acquired by the
Mortgagor,  and installed or to be installed in or on the Mortgaged Premises and
used or to be used in the management or operation of the Mortgaged Premises, and
all substitutions, replacements, additions and accessions thereto, together with
all cash and non-cash  proceeds thereof.  The Mortgagor shall execute,  deliver,
file and refile any  financing  statements,  continuation  statements,  or other
security  agreements that the Mortgagee may require from time to time to confirm
the lien of this Mortgage with respect to such  property.  Without  limiting the
foregoing,  the  Mortgagor  hereby  irrevocably  constitutes  and  appoints  the
Mortgagee   with  full   power  of   substitution,   as  its  true  and   lawful
attorney-in-fact  with full  irrevocable  power and  authority  (coupled with an
interest)  in the  place  and  stead of such  Mortgagor  and in the name of such
Mortgagor or in the Mortgagee's own name, for the Mortgagee to execute,  deliver
and file such  instruments  for and on behalf of the Mortgagor.  Notwithstanding
any release of any or all of that property  included in the  Mortgaged  Premises
which is deemed "real  property",  and proceedings to foreclose this Mortgage or
its  satisfaction  of  record,  the terms  hereof  shall  survive  as a security
agreement with respect to the security  interest  created hereby and referred to
above until the  repayment or  satisfaction  in full of the  obligations  of the
Mortgagor as are now or hereafter secured hereby.

     Section 12. Taxes. The Mortgagor shall prepare and timely file all federal,
state and local tax returns  required to be filed by the  Mortgagor and promptly
pay and  discharge  or  cause to be  promptly  paid and  discharged  all  taxes,
assessments,  municipal or governmental rates, charges,  impositions,  liens and
water and sewer rents or any part thereof,  heretofore or hereafter imposed upon
the Mortgagor or in respect of any of the Mortgagor's property and assets before
the same shall become in default, as


                                       8
<PAGE>

well as all lawful  claims  which,  if unpaid might become a lien or charge upon
such  property  and  assets  or  any  part  thereof,  except  for  those  taxes,
assessments and other governmental charges then being contested in good faith by
the Mortgagor by appropriate  proceedings  (provided that such contest shall not
result in a new lien being placed on any of the Mortgagor's properties or assets
or result in any of the  Mortgagor's  properties or assets being subject to loss
or forfeiture as a result of the nonpayment of such items during the continuance
of said contest) and for which the Mortgagor has maintained adequate reserves or
accrued the estimated  liability on the  Mortgagor's  balance sheets for payment
thereof. The Mortgagor shall submit to the Mortgagee, upon request, an affidavit
signed  by the  Mortgagor  certifying  that,  to  the  best  of the  Mortgagor's
knowledge,  all current  federal and state  information  income tax returns have
been  filed to date  and all  real  property  taxes,  assessments,  governmental
charges or levies  and other  lawful  claims  with  respect  to the  Mortgagor's
properties and assets have been paid to date. Upon the occurrence of an Event of
Default,  the Mortgagor  shall, at the request of the Mortgagee,  in addition to
the regular payment on the Notes,  pay into a non-interest  bearing account held
by the  Mortgagee,  at the times when the monthly  installment  of principal and
interest  is  payable,  an amount  equal to  one-twelfth  (1/12th) of the annual
estimated  real estate taxes levied with  respect to the  Mortgaged  Premises so
that funds are available to pay said real estate taxes and assessments when due,
and such sum shall be held by the  Mortgagee for the payment of such real estate
taxes and assessments as they become due. If the amount so estimated shall prove
insufficient, then the Mortgagor shall pay the required deficiency upon demand.

     Section 13. Change in Laws. During the term of this Mortgage,  in the event
of the  passage  after the date of this  Mortgage of any law of the State of New
Jersey, or any other  governmental  entity,  changing in any way the laws now in
force for the taxation of  mortgages,  or debts  secured  thereby,  for state or
local  purposes,  or the manner of the  operation  of any such  taxes,  so as to
affect the  interest of the  Mortgagee,  then and in such event,  the  Mortgagor
shall  bear and pay the full  amount  of such  taxes,  provided  that if for any
reason  payment by the  Mortgagor of any such new or  additional  taxes would be
unlawful or if the payment thereof would constitute usury or render the Loans or
indebtedness  secured hereby wholly or partially usurious under any of the terms
or  provisions  of the  obligation  secured  hereunder,  or  this  Mortgage,  or
otherwise,  the Mortgagee may, at the Mortgagee's option,  declare the whole sum
secured by this  Mortgage,  with interest  thereon,  to be  immediately  due and
payable,  or the Mortgagee may, at the  Mortgagee's  option,  pay that amount or
portion  of such  taxes as  renders  the Loans or  indebtedness  secured  hereby
unlawful or usurious, in which event the Mortgagor shall


                                       9
<PAGE>

concurrently  therewith  pay the  remaining  lawful and  nonusurious  portion or
balance of said taxes.

     Section 14. Damage, Destruction and Condemnation.

     (i) If all or any  part of the  Mortgaged  Premises  shall  be  damaged  or
destroyed,  or if title to or the  temporary use of the whole or any part of any
of the Mortgaged  Premises shall be taken or condemned by a competent  authority
for any public use or purpose,  there shall be no  abatement or reduction in the
amounts payable by the Mortgagor hereunder or under the Notes, and the Mortgagor
shall continue to be obligated to make such payments.

     (ii) If the Mortgaged  Premises or any part thereof is partially or totally
damaged or destroyed by fire or any other cause, the Mortgagor shall give prompt
written notice  thereof to the Mortgagee.  Upon the occurrence of such damage or
destruction  to the  Mortgaged  Premises,  where  the  damage  to the  Mortgaged
Premises  exceeds  $25,000.00,  the  Mortgagor  shall have no claim  against the
insurance proceeds, or be entitled to any portion thereof, and all rights to the
insurance proceeds are hereby assigned to the Mortgagee to be applied on account
of the  indebtedness  secured hereby that remains unpaid.  If the damage exceeds
$25,000.00, the Mortgagee shall have the option, in its sole discretion,  either
(a) to settle and adjust any claim  under any  insurance  policies  without  the
consent of Mortgagor  or (b) to allow  Mortgagor to settle and adjust such claim
without the consent of Mortgagee;  provided that in either case Mortgagee shall,
and is hereby  authorized to,  collect and receive any such insurance  proceeds;
and the expenses  incurred by  Mortgagee in the  adjustment  and  collection  of
insurance  proceeds  shall be added to the  indebtedness  hereby,  and  shall be
reimbursed  to  Mortgagee  upon  demand  or,  in the  event  and  to the  extent
sufficient  proceeds are available,  shall be deducted and retained by Mortgagee
from said  insurance  proceeds  prior to any  other  application  thereof.  Each
insurance  company which has issued an insurance policy is hereby authorized and
directed  to make  payment  for all  losses  covered by an  insurance  policy to
Mortgagee alone, and not to Mortgagee and Mortgagor jointly.

     (iii)  Mortgagee  shall,  in its sole  discretion,  elect to apply  the net
proceeds of  insurance  policies  consequent  upon any casualty to either (a) to
reduce the  indebtedness  secured  hereby or (b) to reimburse  Mortgagor for the
cost of restoring,  repairing, replacing or rebuilding (hereinafter collectively
referred to as "Restoring") the loss or damage to the Mortgaged Premises. In the
event Mortgagee  elects to use such net proceeds to reimburse  Mortgagor for the
costs of Restoring,  then such reimbursement  shall be subject to the conditions
and in accordance with the provisions of Section 14(viii)  hereof.  If Mortgagee
elects to apply the net proceeds of insurance to the indebtedness


                                       10
<PAGE>

secured hereby and such proceeds do not discharge the  indebtedness in full, the
entire  indebtedness  shall become  immediately  due and payable  with  interest
thereon at the Default Rate.

     (iv) In the event net  insurance  proceeds are made  available to Mortgagor
for the purpose of Restoring the Mortgaged Premises,  Mortgagor hereby covenants
to restore, repair, replace or rebuild the Mortgaged Premises, to be of at least
equal value,  and of  substantially  the same character as prior to such loss or
damage,  all  to be  effected  in  accordance  with  plans,  specifications  and
procedures  to be first  submitted  to  Mortgagee  and  subject  to  Mortgagee's
approval.  In the event  the  insurance  proceeds  are  insufficient  to pay the
aforementioned  restoration costs in full, then Mortgagor shall pay all costs of
such Restoring which are in excess of such net insurance proceeds.

     (v) Any portion of the insurance  proceeds  remaining after payment in full
of the obligations  secured hereby shall be paid to Mortgagor or as ordered by a
court of competent jurisdiction.

     (vi) At the written request of Mortgagor, the insurance proceeds held by or
for the benefit of Mortgagee shall be held in an interest bearing account.

     (vii) In the event of  foreclosure  of the  Mortgage  or other  transfer of
title to the Mortgaged  Premises in  extinguishment  of the obligations  secured
hereby,  all right,  title and  interest of  Mortgagor  in and to any  insurance
policies then in force shall pass to the purchaser of the Mortgaged  Premises in
foreclosure,  or the  grantee of a deed in lieu of  foreclosure,  and  Mortgagor
hereby appoints Mortgagee its attorney-in-fact  with full irrevocable  authority
(coupled with an interest), in Mortgagor's name, to assign and transfer all such
policies and proceeds to such purchaser or grantee.

     (viii) If Mortgagee elects to apply the net proceeds of insurance  policies
to reimburse  the costs of Restoring  to  Mortgagor in  accordance  with Section
14(iii)(b) and provided no Event of Default has occurred and is then continuing,
the net  insurance  proceeds  held by Mortgagee  for  Restoring of the Mortgaged
Premises  shall be disbursed from time to time upon  Mortgagee  being  furnished
with  (a)  evidence  reasonably  satisfactory  to it of the  estimated  cost  of
completion of the Restoring,  (b) funds (or assurance  satisfactory to Mortgagee
that such funds are  available)  sufficient  in addition to the net  proceeds of
insurance, to complete and fully pay for the completion of the Restoring and (c)
such  architect's  certificates,   contractors',  mechanics'  and  materialmen's
waivers of lien,  contractor's sworn statements,  title insurance  endorsements,
plats of survey and such other  evidence  of cost,  payment and  performance  as
Mortgagee may require and approve; and Mortgagee, in any event,


                                       11
<PAGE>

may require that all plans and specifications for such Restoring be submitted to
and approved by Mortgagee prior to commencement of any work, which consent shall
not be  unreasonably  withheld  or delayed.  No payment  made prior to the final
completion of the Restoring shall, when added to all previous  payments,  exceed
ninety  percent (90%) of the value of the work  performed  from time to time, as
such value shall be determined by Mortgagee in its sole and exclusive  judgment;
funds  received  by  Mortgagee  pursuant  to  subparagraph  (b)  above  shall be
disbursed  prior  to  disbursement  of net  insurance  proceeds,  except  as may
otherwise be provided herein;  and at all times the undisbursed  balance of such
proceeds  remaining in the hands of Mortgagee,  together with funds deposited or
irrevocably  committed to the satisfaction of completion of the Restoring,  free
and clear of all liens on proceeds held by Mortgagee after payment of such costs
of Restoring,  shall be paid to Mortgagor. If there is an Event of Default while
Mortgagee is holding  funds for  Restoring,  Mortgagee  may, at its sole option,
apply such  funds  against  the  indebtedness  secured  hereby,  in such  order,
proportion  and  priority  as  Mortgagee  may  elect in its  sole  and  absolute
discretion.

     (ix)  Notwithstanding  anything to the contrary contained in this Mortgage,
if the  Improvements  shall be damaged or destroyed (in whole or in part) by any
one fire or other casualty,  Mortgagee  shall, in accordance with the provisions
of  Section  14(viii)  above,  make the net  amount  of all  insurance  proceeds
received by Mortgagee as a result of such damage or destruction  after deduction
of the  reasonable  costs and  expense,  if any,  in  collecting  the  insurance
proceeds, available for Restoring,  provided that: (a) no Event of Default shall
have occurred and shall be continuing  under the Mortgage,  the Loan  Agreement,
the  Notes or the  other  Loan  Documents;  (b)  Mortgagee  shall be  reasonably
satisfied  that the Restoring  can be completed on or before one hundred  eighty
(180) days after the  occurrence  of such damage or  casualty;  (c) the maturity
date of the  Notes is not less than 18  months  from the date of such  damage or
casualty;  and (d) Mortgagor shall execute and deliver to Mortgagee a completion
guaranty  in form  and  substance  satisfactory  to  Mortgagee  pursuant  to the
provisions of which Mortgagor  shall guaranty to Mortgagee the lien-free  (other
than the lien  presently  held by  Mortgagee)  completion  by  Mortgagor  of the
Restoring in accordance with the provisions of this Mortgage.

     (x) Any and all awards (the "Awards") heretofore or hereafter made or to be
made to the present, or any subsequent,  owner of the Mortgaged Premises, by any
governmental or other lawful authority for the taking by condemnation or eminent
domain, of all or any part of the Mortgaged  Premises  (including any award from
the  United  States  government  at any  time  after  the  allowance  of a claim
therefor, the ascertainment of the amount thereto, and the issuance of a warrant
for payment thereof), or the proceeds


                                       12
<PAGE>

from a sale in lieu of such  condemnation  or eminent domain are hereby assigned
by  Mortgagor to  Mortgagee,  which Awards  Mortgagee  is hereby  authorized  to
collect and receive from the condemnation  authorities,  and Mortgagee is hereby
authorized to give  appropriate  receipts and  acquittance  therefor.  Mortgagor
shall give Mortgagee  immediate notice of the actual or threatened  commencement
of any condemnation or eminent domain  proceedings  affecting all or any part of
the  Mortgaged  Premises and shall  deliver to  Mortgagee  copies of any and all
papers served in connection with any such proceedings.  Mortgagor further agrees
to make, execute and deliver to Mortgagee, at any time upon request, free, clear
and discharged of any encumbrance of any kind  whatsoever  (except the rights of
holders  of any  junior  mortgage  loans  expressly  consented  to in writing by
Mortgagee,  provided  such  rights are  expressly  subordinate  to the rights of
Mortgagee),  any  and all  further  assignments  and  other  instruments  deemed
reasonably  necessary by Mortgagee  for the purpose of validly and  sufficiently
assigning  to  Mortgagee  all  Awards  and  other  compensation  heretofore  and
hereafter made to Mortgagor for any taking, either permanent or temporary, under
any such proceeding.  If any portion of or interest in the Mortgaged Premises is
taken by condemnation or eminent domain, either temporarily or permanently,  and
the  remaining  portion of the  Mortgaged  Premises is not,  in the  judgment of
Mortgagee,  an architectural  and economic unit of the same character and is not
materially  less  valuable  than the same was prior to the taking,  then, at the
option of Mortgagee,  the entire  indebtedness  shall immediately become due and
payable.  After  deducting  from the Award for such  taking all of its  expenses
incurred in the collection and administration of the Award, including reasonable
attorney's fees and disbursements,  Mortgagee shall be entitled to apply the net
proceeds  towards  repayment  of such  portion of the  indebtedness  as it deems
appropriate  without  affecting  the lien of the  Mortgage.  In the event of any
partial  taking of the  Mortgaged  Premises  or any  interest  in the  Mortgaged
Premises which in the judgment of Mortgagee leaves the Mortgaged  Premises as an
architectural  and economic unit of the same character and not  materially  less
valuable than the same was prior to the taking, and provided no Event of Default
has  occurred and is then  continuing,  the  Mortgagee  shall apply the Award to
reimburse  Mortgagor for the cost of  restoration  and  rebuilding the Mortgaged
Premises in accordance with plans,  specifications  and procedures which must be
submitted to and approved by Mortgagee, and such Award shall be disbursed in the
same manner as is provided in Section 14 (viii)  hereof for the  application  of
insurance proceeds,  provided that any surplus after payment of such costs shall
be applied on account of the  indebtedness.  If the Award is not applied for the
reimbursement of such restoration  costs, the Award shall be applied against the
indebtedness, in such order or manner as Mortgagee shall elect.


                                       13
<PAGE>

     Section 15.  Compliance with Laws. The Mortgagor  agrees to comply,  and to
cause all  tenants of all or any  portion of the  Mortgaged  Premises to comply,
with all laws,  rules,  regulations and ordinances made or promulgated by lawful
authority which are now or may hereafter be applicable to the Mortgaged Premises
within such time as may be required by law.

     Section 16. Indemnification. The Mortgagor hereby agrees to and does hereby
indemnify,  protect,  defend and save  harmless the  Mortgagee and its trustees,
officers,  employees,  agents,  attorneys  and  shareholders  (the  "Indemnified
Parties") from and against any and all losses, damages,  expenses or liabilities
of any  kind or  nature  and  from  any  suits,  claims  or  demands,  including
reasonable  counsel fees  incurred in  investigating  or  defending  such claim,
suffered by any of them and caused by,  relating to,  arising out of,  resulting
from,  or  in  any  way  connected  with  this  Mortgage  and  the  transactions
contemplated  herein (unless  caused by the negligence or willful  misconduct of
the Indemnified Parties),  including,  without limitation,  (i) disputes between
any architect, general contractor, subcontractor, materialman or supplier, or on
account of any act or omission to act by the  Indemnified  Parties in connection
with this Mortgage, or (ii) losses,  damages,  expenses or liabilities sustained
by the  Indemnified  Parties in connection  with any  environmental  sampling or
cleanup of the Mortgaged Premises required or mandated by any federal,  state or
local law, ordinance,  rule or regulation,  including,  without limitation,  the
Environmental Laws, as hereinafter  defined. In case any action shall be brought
against an Indemnified Party based upon any of the above and in respect to which
indemnity  may be sought  against the  Mortgagor,  the  Indemnified  Party shall
promptly  notify the Mortgagor in writing,  and the  Mortgagor  shall assume the
defense  thereof,  including the employment of counsel selected by the Mortgagor
and reasonably  satisfactory to the Indemnified  Party, the payment of all costs
and  expenses  and the  right to  negotiate  and  consent  to  settlement.  Upon
reasonable  determination  made by the Indemnified  Party, the Indemnified Party
shall  have the right to  employ  separate  counsel  in any such  action  and to
participate in the defense  thereof;  provided,  however,  that said Indemnified
Party  shall  pay the  costs  and  expenses  incurred  in  connection  with  the
employment  of  separate  counsel.  The  Mortgagor  shall not be liable  for any
settlement of any such action effected without the Mortgagor's  consent,  but if
settled with the  Mortgagor's  consent,  or if there be a final judgment for the
claimant in any such action, the Mortgagor agrees to indemnify and save harmless
the  Indemnified  Party from and against any loss or liability by reason of such
settlement  or judgment.  The  provisions  of this Section 16 shall  survive the
termination of this Mortgage and the repayment of the Notes.

     Section 17.  Assignment  of Rents.  The  Mortgagor  hereby  absolutely  and
unconditionally assigns to the Mortgagee the rents,


                                       14
<PAGE>

issues  and  profits  arising  out of or from the  Mortgaged  Premises,  and the
Mortgagor grants to the Mortgagee the right to enter upon and to take possession
of the Mortgaged  Premises for the purpose of collecting the same and to let the
Mortgaged  Premises  or any part  thereof,  and to apply the  rents,  issues and
profits,  after payment of all necessary charges and expenses, on account of the
indebtedness  secured hereby. This assignment and grant shall continue in effect
until this  Mortgage is paid in full and  discharged  of record.  The  Mortgagee
hereby  waives the right to enter upon and to take  possession  of the Mortgaged
Premises for the purpose of collecting said rents,  issues and profits,  and the
Mortgagor  shall be  entitled to  collect,  receive,  retain and use said rents,
issues  and  profits  until the  occurrence  of an Event of  Default  under this
Mortgage,  but such right of the Mortgagor may be revoked by the Mortgagee  upon
the  occurrence  of an Event of Default  on five (5) days  written  notice.  The
Mortgagor shall not,  without the written  consent of the Mortgagee,  receive or
collect rent from any tenant of the Mortgaged Premises or any part thereof for a
period of more than one (1) month in advance, and in the event of the occurrence
of an Event of Default under this Mortgage,  the Mortgagor  shall pay monthly in
advance to the  Mortgagee  or to any  receiver  appointed to collect said rents,
issues  and  profits,  the  fair and  reasonable  rental  value  for the use and
occupation  of the  Mortgaged  Premises or of such part thereof as may be in the
possession of the Mortgagor,  and upon default in any such payment the Mortgagor
shall vacate and  surrender  the  possession  of the  Mortgaged  Premises to the
Mortgagee or to such receiver. If the Mortgagor does not so vacate and surrender
the Mortgaged Premises then the Mortgagor may be evicted by summary proceedings.
Notwithstanding  anything  above to the contrary,  in the event of a conflict or
inconsistency  between this Section 17 and the Absolute Assignment of Leases and
Rents  granted  the date  hereof by  Mortgagor  to  Mortgagee,  the terms of the
Absolute Assignment of Leases and Rents shall govern.

     Section 18.  Advances.  Upon the  occurrence  of an Event of Default by the
Mortgagor  under  this  Mortgage,  the Loan  Agreement  and/or  the  Notes,  the
Mortgagee may at its option remedy such Event of Default,  and all payments made
by the  Mortgagee  to remedy an Event of  Default  by the  Mortgagor  (including
reasonable  attorney's  fees) and the total of any payment or payments  due from
the  Mortgagor to the  Mortgagee  which are in default,  together  with interest
thereon at the Default Rate set forth in the Notes and the Loan Agreement  (such
interest to be  calculated  from the date of such advance to the date of payment
thereof by the  Mortgagor),  shall be added to the debt secured by this Mortgage
until paid,  and the  Mortgagor  covenants to repay the same to the Mortgagee on
the next  interest  payment  date of the Notes.  Any such sums and the  interest
thereon  shall  be a lien on the  Mortgaged  Premises  prior to any  other  lien
attaching to or accruing  subsequent  to the lien of this  Mortgage.  All monies
paid, and all expenses paid or


                                       15
<PAGE>

incurred,  including attorneys' fees and disbursements and other monies advanced
by Mortgagee to protect the Mortgaged Premises and the lien of this Mortgage, or
to complete  construction,  furnishing  and  equipping  or to rent,  operate and
manage the Mortgaged  Premises or to pay any such  operating  costs and expenses
thereof or to keep the  Mortgaged  Premises  operational  and  useable for their
intended  purpose  shall be so much  additional  debt  secured by the  Mortgage,
whether or not the indebtedness,  as a result thereof, shall exceed the original
principal balance set forth herein, and shall become immediately due and payable
on the next interest payment date of the Notes, and with interest thereon at the
Default  Rate  set  forth  in the  Notes  and the Loan  Agreement.  Inaction  of
Mortgagee  shall never be considered as a waiver of any right  accruing to it on
account of any Event of Default nor shall the  provisions  of this Section 18 or
any  exercise by  Mortgagee  of its rights  hereunder  prevent any default  from
constituting an Event of Default. Nothing contained herein shall be construed to
require  Mortgagee to advance or expend monies for any purpose mentioned herein,
or for any  other  purpose,  and any  expenditure  of  monies  or  action  taken
hereunder shall be at the sole option and discretion of Mortgagee.

     Section 19. Transfer or Encumbrance of Mortgaged Premises.

     (i) No part of the  Mortgaged  Premises  shall  in any  manner  be  further
encumbered,   sold,   transferred  or  conveyed,  or  permitted  to  be  further
encumbered,  sold,  transferred  or conveyed,  without the consent of Mortgagee,
which consent may be given or withheld in  Mortgagee's  sole  discretion for any
reason or for no reason.  The Mortgaged  Premises shall not be encumbered by any
secondary or subordinate  liens,  including  mechanics  liens. The provisions of
this  Section 19 shall apply to each and every such further  encumbrance,  sale,
transfer or conveyance, regardless of whether or not Mortgagee has consented to,
or waived by its action or inaction,  its rights  hereunder  with respect to any
such previous further encumbrance, sale, transfer or conveyance.

     Any consent by the Mortgagee,  or any waiver of any Event of Default, under
this  Section  19 shall not  constitute  a consent  to, or waiver of any  right,
remedy or power of the Mortgagee  upon a subsequent  Event of Default under this
Section 19.

     (ii)  Mortgagor  recognizes  that  Mortgagee  is  entitled to keep its loan
portfolio at current  interest rates by either making new loans at such rates or
collecting  assumption  fees and/or  increasing the interest rate on a loan, the
security  for which is  purchased  by a party  other than  Mortgagor.  Mortgagor
further  recognizes  that any  secondary  or junior  financing  placed  upon the
Mortgaged Premises (a) may divert funds which would otherwise be used to pay the
indebtedness   secured  hereby;   (b)  could  result  in  the  acceleration  and
foreclosure by such junior encumbrancer which


                                       16
<PAGE>

would  force  Mortgagee  to take  measures  and incur  expenses  to protect  its
security;  (c) would  detract from the value of the  Mortgaged  Premises  should
Mortgagee come into  possession  thereof with the intention of selling the same;
and (d) would impair  Mortgagee's right to accept a deed in lieu of foreclosure,
as a  foreclosure  by  Mortgagee  would be  necessary  to clear the title to the
Mortgaged Premises. In accordance with the foregoing and for the purposes of (w)
protecting Mortgagee's security, both of repayment and of value of the Mortgaged
Premises; (x) giving Mortgagee the full benefit of its bargain and contract with
Mortgagor;  (y) assumption fees; and (z) keeping the Mortgaged  Premises free of
subordinate financing liens,  Mortgagor agrees that if this Section 19 is deemed
a restraint on alienation, that it is a reasonable one.

     Section 20. Environmental  Matters. (i) For purposes of this Mortgage,  the
following terms shall have following meanings:

     "Hazardous  Materials"  shall  mean  existing  and  future  asbestos,  urea
formaldehyde  foam insulation,  polychlorinated  biphenyls or related or similar
materials, petroleum products,  explosives,  radioactive materials, or any other
hazardous  or toxic or harmful  materials,  wastes and  substances  or any other
chemical,   material,   substance  or  element  which  is  hereinafter  defined,
determined,  identified,  prohibited,  limited or regulated by the Environmental
Laws, or any other chemical, material, substance or element which is known to be
harmful to the health or safety of occupants of property or which is hereinafter
defined as a hazardous or toxic  substance by any Federal,  State, or local law,
ordinance,  rule  or  regulation,  including,  but not  limited  to,  the  Toxic
Substances  Control Act (15 U.S.C.  2601 et seq.),  the Federal Water  Pollution
Control  Act (33  U.S.C.  1251 et seq.),  the Clean Air Act (42  U.S.C.  7401 et
seq.), the Resource  Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. 1801
et seq.),  and/or the regulations  promulgated in relation  thereto,  all as the
same may be amended from time to time (hereinafter  collectively  referred to as
the "Federal  Statutes"),  the New Jersey Spill Compensation and Control Act, as
amended,  N.J.S.A.  58:10-23.11  et seq., the New Jersey  Environmental  Cleanup
Responsibility  Act, as amended by the Industrial  Site Recovery Act, and as may
be further amended, N.J.S.A. 13:1K-6 et seq., the New Jersey Leaking Underground
Storage  Tank  Act,  as  amended,   N.J.S.A.   58:1OA-21  et  seq.  (hereinafter
collectively  referred  to  as  the  "State  Statutes"),   and  the  regulations
promulgated  in relation  thereto,  all as the same may be amended  from time to
time.

     "Environmental  Laws"  shall mean any  applicable  federal,  state or local
laws, rules, regulations, resolutions, ordinances,


                                       17
<PAGE>

directives or orders (whether now existing or hereafter  enacted or promulgated)
or  any  judicial  or   administrative   interpretation  of  such  laws,  rules,
regulations,   resolutions,  ordinances,  directives  or  orders  or  any  other
applicable   determination   regarding  land,  water,  air,  health,  safety  or
environment including,  for example but not limited to, the Federal Statutes and
the State Statutes.

     "Governmental   Authority"  shall  mean  any  federal,   state,  and  local
government,  governing body, agency, court,  tribunal,  authority,  subdivision,
bureau or other  recognized  body  having  jurisdiction  to  enact,  promulgate,
interpret, enforce, review or repeal any Environmental Law.

     "Environmental  Complaint" shall mean any judgment, lien, order, complaint,
notice,  citation,  action,  proceeding  or  investigation  pending  before  any
Governmental  Authority,   including,   without  limitation,  any  environmental
regulatory  body,  with  respect  to or  threatened  against  or  affecting  the
Mortgagor or relating to its  business,  assets,  property or  facilities or the
Mortgaged  Premises,  in connection with any Hazardous Material or any Hazardous
Discharge or any Environmental Law.

     "Hazardous Discharge" shall mean any release of a Hazardous Material caused
by the seeping, spilling,  leaking, pumping, pouring, emitting, using, emptying,
discharging,   injecting,  escaping,  leaching,  dumping  or  disposing  of  any
Hazardous Material into the environment,  and any liability for the costs of any
cleanup or other remedial action.

     (ii) The  Mortgagor  covenants,  represents  and  warrants  that  except as
disclosed in the Phase I  Environmental  Site  Assessment  by  Melick-Tully  and
Associates, Inc. dated July 20, 1994:

     (a) to the  best  of the  Mortgagor's  knowledge,  after  due  inquiry  and
investigation,  none of the real property owned or occupied by the Mortgagor and
located in the state in which the Mortgaged Premises is situated, including, but
not limited to the Mortgaged  Premises,  has ever been used by previous  owners,
operators  or  occupants or the  Mortgagor  to  generate,  manufacture,  refine,
transport, treat, store, handle or dispose, transfer, produce, process or in any
manner deal with any Hazardous Material,

     (b) the Mortgagor has not received a summons, citation,  directive,  letter
or  other  communication,   written  or  oral,  from  any  Government  Authority
concerning  any  intentional  or   unintentional   action  or  omission  on  the
Mortgagor's part which had resulted in the violation of any Environmental  Laws,
as the same may relate to the Mortgaged Premises,


                                       18
<PAGE>

     (c) to the  best  of the  Mortgagor's  knowledge,  after  due  inquiry  and
investigation, no lien has been attached to any revenues or any real or personal
property  owned by the  Mortgagor  and located in the state where the  Mortgaged
Premises are located,  including, but not limited to the Mortgaged Premises, for
"Damages"  and/or  "Cleanup and Removal  Costs",  as such terms are  hereinafter
defined  in  any   Environmental   Law,  or  arising  from  an   intentional  or
unintentional  act or omission in violation  thereof by the  Mortgagor or by any
previous owner and/or operator of such real or personal property, including, but
not limited to the Mortgaged Premises,

     (d) the Mortgagor has duly complied, and shall continue to comply, with the
provisions  of the  Environmental  Laws  governing  it,  its  business,  assets,
property,  facilities and the Mortgaged  Premises,  and shall keep the Mortgaged
Premises free and clear of any liens imposed pursuant to such laws,

     (e) the  Mortgagor  shall not,  and shall not  permit any of its  officers,
partners,  employees,  agents,  contractors,  licensees,  tenants,  occupants or
others to  generate,  manufacture,  refine,  transport,  treat,  store,  handle,
dispose,  transfer,  produce,  process or in any manner deal with any  Hazardous
Material on the Mortgaged  Premises except in accordance with all  Environmental
Laws applicable thereto,

     (f) there is not now outstanding any Environmental  Complaint issued by any
Governmental Authority to the Mortgagor or relating to the Mortgagor's business,
assets,   property,   and  facilities  or  the  Mortgaged   Premises  under  any
Environmental  Law, and there is not now existing any condition  which, if known
by the proper authorities, could result in any Environmental Complaint, and that

     (g) the Mortgagor has, and will continue to have,  all necessary  licenses,
certificates and permits under the Environmental  Laws relating to the Mortgagor
and its facilities,  property,  assets, and business, and the Mortgaged Premises
and the foregoing are in compliance with all Environmental Laws.

     (h)  there  are no  underground  storage  tanks on or under  the  Mortgaged
Premises.

     (iii) If the Mortgagor receives any notice of (a) the presence of Hazardous
Materials on the Mortgaged Premises,  (b) any violation of or noncompliance with
any Environmental  Law, (c) the occurrence of a Hazardous  Discharge on or about
any asset,  business,  facility or property  of the  Mortgagor  or caused by the
Mortgagor,  or (d) any  Environmental  Complaint  affecting the Mortgagor or the
Mortgaged Premises or the Mortgagor's operations,  assets, business,  facilities
or properties, then the Mortgagor


                                       19
<PAGE>

will give written notice of the foregoing to the Mortgagee  within ten (10) days
of receipt thereof and shall (1) promptly comply with the Environmental Laws and
all other laws,  regulations,  resolutions  and ordinances to correct,  contain,
cleanup,  remove,  resolve or minimize the impact of such  Hazardous  Materials,
Environmental Discharge or Environmental Complaint and (2) shall (A) post a bond
from a surety or (B) cause a lending institution to issue a letter of credit for
the benefit of the Mortgagee,  and to any Governmental  Authority  requiring the
same; the surety or the lending institution, and the form, the substance and the
amount of the bond or letter of credit to be  satisfactory  to the Mortgagee and
satisfactory  to the  applicable  Governmental  Authority,  or shall give to the
Mortgagee  and  the  applicable   Governmental  Authority  such  other  security
satisfactory  in  form,  substance  and  amount  to both the  Mortgagee  and the
applicable  Governmental  Authority to assure that the  Mortgagor  does correct,
contain,  cleanup,  remove,  resolve or  minimize  the impact of such  Hazardous
Materials, Environmental Discharge or Environmental Complaint.

     (iv) Without  limitation of the  Mortgagee's  rights under this Mortgage or
applicable law, the Mortgagee shall have the right,  but not the obligation,  to
exercise any of its rights to cure as provided in this Mortgage or to enter onto
the Mortgaged  Premises or to take such other  actions as it deems  necessary or
advisable to correct,  contain,  cleanup, remove, resolve or minimize the impact
of, or otherwise deal with, any such Hazardous Material,  Hazardous Discharge or
Environmental Complaint upon its receipt of any notice from any person or entity
or Governmental  Authority,  informing the Mortgagee of such Hazardous Material,
Hazardous Discharge or Environmental  Complaint,  which if true, could adversely
affect the Mortgagor or any part of the Mortgaged Premises or which, in the sole
opinion of the Mortgagee,  could adversely affect its collateral  security under
this  Mortgage.  All  reasonable  costs and  expenses  incurred  and paid by the
Mortgagee in the  exercise of any such rights shall be paid by the  Mortgagor to
the Mortgagee upon demand, together with interest from the date that such sum is
advanced,  payment  made or  expense  incurred,  to and  including  the  date of
reimbursement,  computed at the Default Rate. Any such sum paid by the Mortgagee
and the interest thereon shall be a lien on the Mortgaged  Premises prior to any
claim,  lien,  right,  title or  interest  in, to or on the  Mortgaged  Premises
attaching  or accruing  subsequent  to the lien of this  Mortgage,  and shall be
deemed to be secured by this Mortgage and evidenced by the Notes.

     (v) Upon written request,  the Mortgagor shall provide to the Mortgagee the
following  information  pertaining  to  all  operations  conducted  in or on the
Mortgaged Premises:


                                       20
<PAGE>

     (a)  copies  of  all   licenses,   certificates   and  permits   under  the
Environmental Laws;

     (b) material  safety data sheets and maps,  diagrams and site plans showing
the location of all storage areas and storage tanks for all Hazardous  Materials
or other  chemicals in, used at,  manufactured  at,  brought to or stored at the
Mortgaged Premises;

     (c) copies of all materials filed with any Governmental Authority;

     (d) a description of the operations and processes of the Mortgagor; and

     (e) any other information which the Mortgagee may reasonably require.

     (vi) Upon reasonable notice to the Mortgagor,  the Mortgagee, its officers,
employees,  agents and contractors,  may enter the Mortgaged Premises to inspect
it and to conduct,  complete  and take such tests,  samples,  analyses and other
processes  (an  "Environmental  Survey")  as  the  Mortgagee  shall  require  to
determine the Mortgagor's  compliance with this Paragraph and the  Environmental
Laws  (but not more  than  once  during  the term  unless  Mortgagee  reasonably
believes  there  has been a  Hazardous  Discharge  or an Event  of  Default  has
occurred).  The  costs,  expenses  and  fees of the  Mortgagee  of  such  entry,
inspection,  tests, samples, analyses and processes shall be paid and reimbursed
by the  Mortgagor  upon  demand  by the  Mortgagee.  Any  such  sum  paid by the
Mortgagee,  with the  interest  thereon at the rate  provided  to be paid on the
indebtedness secured by this Mortgage, shall be a lien on the Mortgaged Premises
prior to any claim,  lien,  right,  title or interest in, to or on the Mortgaged
Premises  attaching or accruing  subsequent  to the lien of this  Mortgage,  and
shall be deemed to be secured by this Mortgage and evidenced by the Notes.

     (vii) In addition to those Events of Default  specified  in this  Mortgage,
the occurrence of any of the following  events shall  constitute a default under
this  Mortgage,  entitling  the  Mortgagee to all rights and  remedies  provided
therefor:

     (a) if any Governmental Authority asserts or creates a lien upon any or all
of the  Mortgaged  Premises by reason of the presence of Hazardous  Materials or
the occurrence of a Hazardous Discharge or Environmental Complaint or otherwise,
and the  Mortgagor  does not,  within  the  earlier of sixty (60) days after the
recording thereof or prior to the institution by such Governmental  Authority of
any steps to foreclose such lien, cause such lien to be discharged of record; or


                                       21
<PAGE>

     (b) if any  Governmental  Authority  asserts a claim against the Mortgagor,
the Mortgaged Premises or the Mortgagee for damages or cleanup or remedial costs
related  to  any  Hazardous   Materials  or  any  Hazardous   Discharge  or  any
Environmental  Complaint;  provided,  however, such claim shall not constitute a
default if,  within  fifteen (15) business  days of the  Mortgagor's  receipt of
notice of the foregoing:

     (1) the Mortgagor can prove to the Mortgagee's reasonable satisfaction that
the  Mortgagor has commenced  and is  diligently  pursuing  either:  (A) a cure,
remedy or correction of the event which constitutes the basis for the claim, and
is continuing  diligently to pursue such cure or  correction to  completion,  in
strict compliance with the  Environmental  Laws or Environmental  Complaint,  as
applicable,  or (B)  proceedings for  injunction,  a restraining  order or other
appropriate  emergency  relief  to  prevent  such  Governmental  Authority  from
asserting  such claim,  which relief is granted  within  thirty (30) days of the
occurrence  giving  rise to the claim  and the  injunction,  order or  emergency
relief is not thereafter dissolved or reversed on appeal; and

     (2) in either of the foregoing  events,  the Mortgagor  shall (A) give such
surety or other security,  which may be required by and satisfactory to both the
Governmental  Authority  asserting the claim and to the Title Company, to secure
the proper and complete cure or correction  of the event which  constitutes  the
basis  for the  claim  or,  (B) at the  Mortgagee's  request  if no such bond or
security  has been  given,  the  Mortgagor  shall post a bond from a surety or a
letter of credit issued by a lending institution, with the Mortgagee, the surety
or the lending  institution,  and the form,  substance and amount of the bond or
letter of credit to be reasonably satisfactory to the Mortgagee and to the Title
Company,  or shall  give to the  Mortgagee  and the  Title  Company  such  other
security  satisfactory in form, substance and amount to the Mortgagee and to the
Title  Company,  to secure the payment for all of the work,  labor and  services
required to effect a proper and complete  cure or  correction  of the  condition
which constitutes the basis for the claim.

     (viii) The Mortgagor covenants and agrees, at its sole cost and expense, to
indemnify, protect, and save the Mortgagee harmless against and from any and all
damages,  losses,  liabilities,   obligations,  penalties,  claims,  litigation,
demands,  defenses,  judgments,  suits,  proceedings,  costs,  disbursements  or
expenses of any kind or of any nature whatsoever (including, without limitation,
reasonable attorneys' and experts' fees and disbursements) which may at any time
be imposed  upon,  incurred by or asserted or awarded  against the Mortgagee and
arising from or out of:


                                       22
<PAGE>

     (a) the Mortgagor's failure to perform and comply with this Subsection, or

     (b) any Hazardous  Material,  any Hazardous  Discharge,  any  Environmental
Complaint, or any Environmental Law applicable to the Mortgagor, its operations,
business, assets, property or facilities, or the Mortgaged Premises, or

     (c) any action against the Mortgagor under this indemnity.

     Section 21. Mortgage  Secures a Line of Credit.  This Mortgage  secures the
Loans to the  extent  of the  stated  principal  amount  of this  Mortgage  plus
interest  and other  amounts  secured  hereby.  In addition to the other  rights
granted to the  Mortgagee  hereunder  and under  applicable  law and without any
limitation  on said  rights,  this  Mortgage  secures  the  indebtedness  of the
Mortgagor  under the Loan  Agreement,  which  reflects the fact that the parties
thereto reasonably contemplate entering into a series of advances,  payments and
re-advances,  and that the aggregate amount at any time outstanding by reason of
such series of advance,  or advances,  payments and re-advances shall not exceed
the  maximum  amount  available  pursuant  to the  Loan  Agreement,  the  stated
principal  amount of which plus interest and other amounts which may be advanced
to the Mortgagor  thereunder is secured by this  Mortgage.  This Mortgage  shall
secure not only the original  indebtedness but also the indebtedness that may be
created by future  advances to the  Mortgagor by the  Mortgagee  hereunder  made
hereafter,  whether such advances are obligatory or are to be made at the option
of the  Mortgagee or  otherwise,  to the same extent and with the same  priority
lien as if such  future  advances  had been  made at the time this  Mortgage  is
recorded,  although  there may be no advances  made at the time of the execution
and  acknowledgment of this Mortgage,  and although there may be no indebtedness
outstanding  at the time any  advance  is made.  The  total  amount of the Loans
secured  hereunder  may  increase  or decrease  from time to time in  accordance
advances,  repayments  and  re-advances  made,  if  any,  pursuant  to the  Loan
Agreement.

     ARTICLE II. THE  MORTGAGOR  SHALL BE IN DEFAULT OF THIS  MORTGAGE  UPON THE
OCCURRENCE OF ANY OF THE FOLLOWING EVENTS (ANY OF WHICH MAY BE REFERRED TO AS AN
"EVENT OF DEFAULT"):

     Section  1.  Nonpayment.  The  Mortgagor  shall  fail to make  when due any
payment of principal, interest or other monies as provided in the Loan Agreement
and/or  the Notes or this  Mortgage  within  five (5) days after same is due and
payable.

     Section 2. Breach of Covenants.  The Mortgagor or any Guarantor  shall have
failed to perform any of the terms,


                                       23
<PAGE>

covenants,  conditions  or  undertakings  contained in this  Mortgage,  the Loan
Agreement or the Notes,  other than the  nonpayment  of money,  and such default
shall have remained uncured for the applicable grace periods,  if any,  provided
for herein or therein.

     Section  3.   Representations  and  Warranties.   In  the  event  that  any
representation  or  warranty  made by the  Mortgagor  or any  Guarantor  in this
Mortgage,  the Loan  Agreement,  the Notes or in any other Loan Document used in
connection herewith shall prove to be false or misleading in any substantial and
material respect on the date as of which made.

     Section 4.  Bankruptcy.  The Mortgagor or any Guarantor  shall have applied
for or  consented  to the  appointment  of a  receiver,  custodian,  trustee  or
liquidator of all or a substantial  part of the  Mortgagor's or any  Guarantor's
assets;  or shall  generally not be paying the  Mortgagor's  or any  Guarantor's
debts as they become due; or shall have admitted in writing the inability to pay
the  Mortgagor's or any Guarantor's  debts as they mature;  or shall have made a
general assignment for the benefit of creditors;  or shall have filed a petition
or an  answer  seeking  an  arrangement  with  creditors;  or shall  have  taken
advantage of any insolvency law; or shall have submitted an answer admitting the
material  allegations of a petition in any bankruptcy or insolvency  proceeding;
or  an  order,  judgment  or  decree  shall  have  been  entered,   without  the
application,  the approval or consent of the  Mortgagor or any  Guarantor by any
Court of competent  jurisdiction  appointing a receiver,  custodian,  trustee or
liquidator  of the  Mortgagor or any  Guarantor,  or a  substantial  part of the
Mortgagor's or any Guarantor's  assets;  or a petition in bankruptcy  shall have
been filed by or against Mortgagor or any Guarantor;  or if any Order for Relief
shall have been entered under the Federal Bankruptcy Code.

     Section 5. Other  Foreclosures.  In the event that  proceedings  shall have
been instituted for foreclosure or collection of any mortgage, judgment, or lien
prior,  equal to or  subordinate  to the lien of this  Mortgage,  affecting  the
Mortgaged Premises, and same is not discharged within thirty (30) days thereof.

     Section 6. Judgments. In the event one or more final judgments, decrees, or
orders for the payment of money in excess of Fifty Thousand Dollars ($50,000.00)
in the  aggregate  shall be rendered  against the Mortgagor or any Guarantor and
such judgments, decrees or orders shall continue unsatisfied and in effect for a
period of thirty  (30)  consecutive  days  without  being  vacated,  discharged,
satisfied, or stayed or bonded pending appeal.


                                       24
<PAGE>

     Section 7. Other Debt. In the event of an Event of Default by the Mortgagor
or any  Guarantor in any of the terms or  conditions  of an Event of Default any
agreement  covering the payment of borrowed  money  (other than trade  payables)
from any Person including,  but not limited to, the Loan Agreement,  or any Loan
Documents executed in connection  therewith,  if such a default would permit the
holder  of  the  debt   instrument  to  accelerate  the  payment  of  the  debt,
irrespective of whether the default is waived or not waived by the holder of the
debt instrument.

     Section 8. Default Under Other Loan Documents. In the event of a default or
Event of Default under any other Loan Document.

     Section 9.  Effectiveness of Guaranties.  In the event the guaranties given
by the  Guarantors  shall  cease  to be in full  force  and  effect  or shall be
declared  null and void,  or the  validity or  enforceability  thereof  shall be
contested  by any  Guarantor,  or any  Guarantor  shall deny it has any  further
liability or  obligation  under or shall fail to perform its  obligations  under
such Guarantor's guaranty.

     ARTICLE III. IF ANY EVENT OF DEFAULT  SHALL HAVE OCCURRED AND IS CONTINUING
ON THE PART OF THE MORTGAGOR, THE MORTGAGEE MAY TAKE ANY OR ALL OF THE FOLLOWING
ACTIONS, AT THE SAME OR AT DIFFERENT TIMES:

     Section 1.  Acceleration.  The  Mortgagee  may declare the entire amount of
unpaid principal, together with all accrued and unpaid interest and other moneys
due under  this  Mortgage,  the Loan  Agreement,  the  Notes and the other  Loan
Documents  immediately  due and  payable,  and  accordingly  accelerate  payment
thereof  notwithstanding  contrary  terms of  payment  stated  therein,  without
presentment,  demand or notice of any kind,  all of which are expressly  waived,
notwithstanding  anything to the contrary  contained in the  Mortgage,  the Loan
Agreement and/or the Notes.

     Section 2. Possession.  The Mortgagee may enter upon and take possession of
the Mortgaged Premises;  lease and let the said Mortgaged Premises;  receive all
the rents,  income,  issues and profits  thereof  which are  overdue,  due or to
become  due;  and apply the same,  after  payment of all  necessary  charges and
expenses,  on account of the amounts hereby secured.  The Mortgagee is given and
granted full power and  authority to do any act or thing which the  Mortgagor or
the  successors  or  assigns  of the  Mortgagor  who may then own the  Mortgaged
Premises  might or could do in connection  with the  management and operation of
the Mortgaged  Premises.  This covenant becomes effective either with or without
any action brought to foreclose  this Mortgage and without  applying at any time
for a receiver of such rents.  Should said rents or any part thereof be assigned
without the consent of the holder of this


                                       25
<PAGE>

Mortgage, then this Mortgage shall at the option of the holder hereof become due
and  payable   immediately,   anything   herein   contained   to  the   contrary
notwithstanding.

     Section 3.  Foreclosure.  The Mortgagee may institute an action of mortgage
foreclosure or take other action as the law may allow, at law or in equity,  for
the  enforcement  of this  Mortgage,  and proceed  thereon to final judgment and
execution of the entire  unpaid  balance of the Notes  including  costs of suit,
interest and  reasonable  attorney's  fees. In case of any sale of the Mortgaged
Premises by virtue of judicial  proceedings,  the Mortgaged Premises may be sold
in one  parcel and as an  entirety  or in such  parcels,  manner or order as the
Mortgagee  in its sole  discretion  may elect.  The  failure to make any tenants
parties defendant to a foreclosure proceeding and to foreclose their rights will
not be asserted by the  Mortgagor as a defense in any  proceeding  instituted by
the  Mortgagee  to collect  the  obligations  secured  hereby or any  deficiency
remaining unpaid after the foreclosure sale of the Mortgaged Premises.

     Section 4.  Appointment  of Receiver.  The Mortgagee may have a receiver of
the rents,  income,  issues  and  profits of the  Mortgaged  Premises  appointed
without the necessity of proving  either the  depreciation  or the inadequacy of
the value of the Security or the  insolvency  of the Mortgagor or any Person who
may be  legally  or  equitably  liable to pay  moneys  secured  hereby,  and the
Mortgagor and each such Person waives such proof and consents to the appointment
of a receiver.

     Section 5. Fair Rental  Payments.  If the Mortgagor or any subsequent owner
is occupying  the Mortgaged  Premises or any part  thereof,  it is hereby agreed
that the said occupants shall pay such reasonable  rental monthly (to be applied
on account of the unpaid  indebtedness) in advance as the Mortgagee shall demand
for the Mortgaged Premises or the part so occupied,  and for the use of personal
property covered by this Mortgage or any chattel mortgage.

     Section 6. Excess Monies.  The Mortgagee may apply on account of the unpaid
indebtedness evidenced by the Notes (including any unpaid accrued interest) owed
to the Mortgagee after a foreclosure sale of the Mortgaged Premises,  whether or
not a deficiency action shall have been instituted,  any unexpended monies still
retained by the  Mortgagee  that were paid by Mortgagor to the Mortgagee (i) for
the payment of, or as security for the payment of taxes, assessments,  municipal
or governmental  rates,  charges,  impositions,  liens, water or sewer rents, or
insurance  premiums,  if any, or (ii) in order to secure the performance of some
act by the Mortgagor.


                                       26
<PAGE>

     Section 7.  Remedies at Law or Equity.  The  Mortgagee  may take any of the
remedies otherwise available to it as a matter of law or equity.

     ARTICLE IV. MISCELLANEOUS:

     Section 1. Cumulative  Rights.  The rights and remedies herein expressed to
be vested in or conferred upon the Mortgagee shall be cumulative and shall be in
addition  to and not in  substitution  for or in  derogation  of the  rights and
remedies conferred by any applicable law. The acceptance by the Mortgagee of any
payments  hereunder  after the occurrence of an Event of Default or the failure,
at any one or more times,  of the  Mortgagee  to assert the right to declare the
principal  indebtedness  due or the granting of any  extension or  extensions of
time of  payment  of the Notes  either to the maker or to any other  Person,  or
taking of other or additional security for the payment thereof, or releasing any
security, or changing any of the terms of this Mortgage, the Loan Agreement, the
Notes,  the other Loan  Documents,  or any other  obligation  accompanying  this
Mortgage,  or waiver of or failure to exercise  any right under any  covenant or
stipulation  herein  contained shall not in any way affect this Mortgage nor the
rights of the  Mortgagee  hereunder  nor operate as a release  from any personal
liability upon the Notes or other  obligation  accompanying  this Mortgage,  nor
under any covenant or  stipulation  therein  contained,  nor under any agreement
assuming the payment of said Notes or obligation.

     Section 2. Notices.  Unless otherwise indicated  differently,  all notices,
payments,  requests, reports,  information or demands which any party hereto may
desire or may be  required  to give to any other  party  hereunder,  shall be in
writing and shall be personally delivered or sent by facsimile,  Federal Express
or other nationally  recognized  overnight  delivery service providing a receipt
for delivery, or first-class certified or registered United States mail, postage
prepaid,  return  receipt  requested,  and  sent  to the  party  at its  address
appearing  below or such other address as any party shall  hereafter  inform the
other party hereto by written notice given as aforesaid:

          If to the Mortgagor:

               Suprema Specialties, Inc.
               510 East 35th Street
               P.O. Box 280 Park Station
               Paterson, New Jersey 07543-0280
               Attn: Mark Cocchiola, President


                                       27
<PAGE>

          With a copy to:

               Tenzer, Greenblatt & Zunz, P.A.
               c/o Tenzer Greenblatt LLP
               405 Lexington Avenue
               New York, New York 10174
               Attn: Martin Luskin, Esq.

          If to the Mortgagee:

               Fleet Bank, N.A.
               208 Harrison Road
               Glen Rock, New Jersey 07452
               Attn: Michael Vondras

          With a copy to:

               Windels, Marx, Davies & Ives
               120 Albany Street Plaza
               New Brunswick, New Jersey 08901
               Attn: Howard P. Lakind, Esq.

All notices, payments,  requests, reports, information or demands so given shall
be deemed  effective upon receipt or, if mailed,  upon receipt or the expiration
of the third day following the date of mailing,  which ever occurs first, except
that any notice of change in address shall be effective only upon receipt by the
party to whom said notice is addressed.  A failure to send the requisite  copies
does not  invalidate an otherwise  properly sent notice to the Mortgagor  and/or
the Mortgagee.

     Section 3. Successors and Assigns. All of the terms, covenants,  provisions
and conditions  herein contained shall be for the benefit of, apply to, and bind
the successors and assigns of the Mortgagor and the Mortgagee,  and are intended
and  shall be held to be real  covenants  running  with the  land,  and the term
"Mortgagor"  shall also include any and all subsequent  owners and successors in
title of the Mortgaged Premises.

     Section  4.  Gender.  When such  interpretation  is  appropriate,  any word
denoting  gender used herein shall include all persons,  natural or  artificial,
and words used in the singular shall include the plural.

     Section 5. Waiver of Right of Redemption. The Mortgagor waives the right of
redemption on any property levied upon under a judgment  obtained in proceedings
to collect the  indebtedness  hereby secured or in proceedings on this Mortgage,
and further  waives and  releases  any and all  benefits  that may accrue to the
Mortgagor  by virtue of any law relating to  appraisement,  stay of execution or
exemption of the Mortgaged Premises from levy or sale


                                       28
<PAGE>

under execution,  now or hereafter in force. A foreclosure sale shall constitute
a foreclosure sale of all interest  whatsoever of the Mortgagor in the Mortgaged
Premises and the Mortgagee  shall,  if it is the purchaser at the sale, hold the
Mortgaged  Premises  and any part  thereof  so  purchased  free of any equity of
redemption by reason of any  circumstances  whatsoever and not as collateral for
any obligation.

     Section 6. Severability.  The provisions of this Mortgage are severable. In
the event of the unenforceability or invalidity of any one or more of the terms,
covenants,  conditions,  or provisions of this Mortgage under federal, state, or
other applicable law, such  unenforceability  or invalidity shall not render any
other of the terms, covenants, conditions, or provisions hereof unenforceable or
invalid.  In the event any waiver by Mortgagor  hereunder is  prohibited by law,
including but not limited to the waiver of exemption from execution, such waiver
shall be and deemed to be deleted herefrom.

     Section 7. [intentionally omitted]

     Section 8. WAIVER OF JURY TRIAL.  THE  MORTGAGOR  HEREBY WAIVES ANY AND ALL
RIGHTS THAT IT MAY NOW OR  HEREAFTER  HAVE UNDER THE LAWS OF THE UNITED STATE OF
AMERICA  OR ANY STATE TO A TRIAL BY JURY OF ANY AND ALL  ISSUES  ARISING  EITHER
DIRECTLY OR INDIRECTLY IN ANY ACTION OR PROCEEDING  BETWEEN THE MORTGAGEE OR ITS
SUCCESSORS AND ASSIGNS,  OUT OF OR IN ANY WAY CONNECTED WITH THIS MORTGAGE,  THE
NOTES AND THE OTHER LOAN DOCUMENTS.  IT IS INTENDED THAT SAID WAIVER SHALL APPLY
TO  ANY  AND  ALL  DEFENSES,  RIGHTS,  AND/OR  COUNTERCLAIMS  IN ANY  ACTION  OR
PROCEEDING.

     Section 9. SERVICE OF PROCESS. THE MORTGAGOR AGREES THAT SERVICE OF PROCESS
IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER ARISING
OUT OF OR RELATED TO THIS MORTGAGE OR THE RELATIONSHIP ESTABLISHED HEREUNDER MAY
BE DULY EFFECTED UPON IT BY MAILING A COPY THEREOF,  BY REGISTERED MAIL, POSTAGE
PREPAID, TO THE MORTGAGOR AT THE ADDRESS SET FORTH HEREIN.

     Section  10.  Payment of  Attorneys'  Fees and  Costs.  If upon an Event of
Default:  (i) this  Mortgage  or any Loan  Document is placed in the hands of an
attorney for collection or  enforcement or is collected or enforced  through any
legal  proceeding;  (ii) an attorney is retained to  represent  Mortgagee in any
bankruptcy,   reorganization,   receivership,   or  other  proceeding  affecting
creditor's  rights and  involving a claim under this Mortgage or any of the Loan
Documents;  (iii) an  attorney is retained to protect or enforce the lien of the
Mortgage  or any of the Loan  Documents;  or (iv) an  attorney  is  retained  to
represent  Mortgagee in any other proceeding  whatsoever in connection with this
Mortgage,  any of the Loan  Documents  or any  property  subject  thereto,  then
Mortgagor shall pay to Mortgagee all reasonable attorneys' fees, costs,


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<PAGE>

expenses and disbursements incurred in connection therewith,  in addition to all
other amounts due hereunder.

     Section  11.  Right  of  Set-Off.   Upon  the  occurrence  and  during  the
continuance of any Event of Default,  the Mortgagee is hereby  authorized at any
time and from time to time,  without  notice to the  Mortgagor  (any such notice
being  expressly  waived by the  Mortgagor),  to  set-off  and apply any and all
deposits (general or special, time or demand,  provisional or final) at any time
held and other  indebtedness  at any time owing by the  Mortgagee  to or for the
credit or the account of the Mortgagor and relating to the Loans,  the Mortgaged
Premises or the Loan  Documents  against any and all of the  obligations  of the
Mortgagor now or hereafter existing under this Mortgage, the Loan Agreement, the
Notes or any other Loan Document,  irrespective  of whether or not the Mortgagee
shall have made any demand under this Mortgage, the Loan Agreement, the Notes or
such other Loan Document and although  such  obligations  may be unmatured.  The
Mortgagee  agrees  promptly to notify the  Mortgagor  after any such set-off and
application,  provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Mortgagee under this
Section 11 are in  addition to other  rights and  remedies  (including,  without
limitation, other rights of set-off) which the Mortgagee may have.

     Section 12.  Counterparts.  This  Mortgage may be executed in any number of
counterparts,  each of which shall be deemed an original  but such  counterparts
shall together constitute but one and the same instrument.

     Section 13. Performance. The Mortgagor shall perform and abide by the terms
and covenants  herein and the terms and covenants in the Loan  Agreement and the
Notes, all of which are made a part hereof as though set forth herein at length.

     Section  14.  Law  Governing.  All  the  terms,  conditions  and  covenants
contained in this Mortgage shall be governed by and construed and interpreted in
accordance with the laws of the State of New Jersey.

     Section  15. No  Assignment.  This  Mortgage  shall not be  assigned by the
Mortgagor without the prior express written consent of the Mortgagee.

     Section 16.  Modifications in Writing. No provision of this Mortgage may be
waived,  changed,  amended,  modified  or  discharged  orally  and no  executory
agreement  shall be  effective  to modify or  discharge  it in whole or in part,
unless it is in writing and signed by the party against whom  enforcement of the
waiver,  change,  amendment,  modification or discharge is sought. Any waiver by
the Mortgagee or modification of the terms hereof shall


                                       30
<PAGE>

be  effective  only in the specific  instance  and for the specific  purpose for
which given and,  notwithstanding  anything  to the  contrary  herein,  all such
waivers and  modifications  may be given or withheld in the sole judgment of the
Mortgagee.

     Section  17.  Consent by  Mortgagee.  If the  Mortgagor  shall  request the
Mortgagee's  consent  or  approval  pursuant  to any of the  provisions  of this
Mortgage or otherwise,  and the Mortgagee shall fail or refuse to give, or shall
delay in giving,  such  consent or  approval,  the  Mortgagor  shall in no event
(other than upon the willful  misconduct or bad faith of Mortgagee)  make, or be
entitled to make, any claim for damages (nor shall the Mortgagor  assert,  or be
entitled to assert, any such claim by way of defense,  set-off, or counterclaim)
based  upon  any  claim  or  assertion  by  the  Mortgagor  that  the  Mortgagee
unreasonably  withheld  or delayed its consent or  approval,  and the  Mortgagor
hereby waives any and all rights that it may have, from whatever source derived,
to make or assert  any such  claim.  The  Mortgagor's  sole  remedy for any such
failure,  refusal,  or delay  shall be an  action  for a  declaratory  judgment,
specific performance,  or injunction,  and such remedies shall be available only
in those  instances  where the Mortgagee has expressly  agreed in writing not to
unreasonably  withhold or delay its consent or approval or where, as a matter of
law, the Mortgagee may not unreasonably withhold or delay the same.

     Section 18. Joint and Several Liability.  If the Mortgagor consists of more
than one Person,  the obligations and liabilities of each such Person  hereunder
shall be joint and several.

     THE MORTGAGOR  HEREBY  DECLARES THAT THE MORTGAGOR HAS READ THIS  MORTGAGE,
HAS RECEIVED A COMPLETELY  FILLED IN COPY OF IT WITHOUT CHARGE  THEREFOR AND HAS
SIGNED THIS MORTGAGE AS OF THE DATE AT THE TOP OF THE FIRST PAGE.

     IN WITNESS  WHEREOF,  the  Mortgagor  has caused  this  Mortgage to be duly
executed and delivered by its appropriate  authorized corporate officers and its
corporate seal to be hereunto  affixed and attested,  pursuant to the resolution
of its Board of Directors, all on the day and year first above written.

ATTEST:                                       SUPREMA SPECIALTIES, INC.


                                           By:
------------------------                      --------------------------
Steven Venechanos,                            Mark Cocchiola,
Secretary                                     President


                                       31
<PAGE>

                                  SCHEDULE "A"

                       ATTACHED TO AND MADE A PART OF THAT
                         CERTAIN MORTGAGE BY AND BETWEEN
                            SUPREMA SPECIALTIES, INC.
                                AS MORTGAGOR, AND
                                NATWEST BANK N.A.
                               AS MORTGAGEE, DATED
                                DECEMBER 16, 1998

                        DESCRIPTION OF MORTGAGED PREMISES

<PAGE>

STATE OF NEW JERSEY     :
                        :ss:
COUNTY OF MIDDLESEX     :

     BE IT REMEMBERED,  that on this 16th day of December,  1998, before me, the
subscriber,  an officer  duly  authorized  pursuant to N.J.S.A.  46:14-6 to take
acknowledgements  for use in the State of New Jersey,  personally  appeared Mark
Cocchiola,  who I am satisfied is the person who executed the within Mortgage as
the President of Suprema  Specialties,  Inc., the corporation named therein, and
he did thereupon acknowledge that the said Mortgage made by the said corporation
and  delivered by him as such  officer,  is the  voluntary  act and deed of said
corporation,  made by virtue of authority  from its Board of Directors,  for the
uses and purposes therein expressed.



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