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                                    MORTGAGE


                                       by

                            SUPREMA SPECIALTIES, INC.

                                  as Mortgagor

                                       to

                                NATWEST BANK N.A.

                                  as Mortgagee


                              Dated: March 29, 1996

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Mortgaged Premises:               508-522 East 35th Street
                                  Block L1516, Lot 5
                                  Paterson, New Jersey

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

Prepared by:
                                  ------------------------------
                                  Howard P. Lakind, Esq.

<PAGE>

                                    MORTGAGE

     THIS MORTGAGE  (hereinafter  referred to as the  "Mortgage"),  is made this
29th day of March, 1996,

                                       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  (hereinafter
referred to as the "Mortgagor"),

                                       TO

NatWest 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 10 Exchange Place,  Jersey City, New Jersey 07302 (hereinafter
referred to as the "Mortgagee").

                              W I T N E S S E T H:

     WHEREAS,  pursuant to a certain Mortgage Note dated the date hereof, in the
original  principal  amount of ONE MILLION  FIFTY  THOUSAND  AND 00/100  DOLLARS
($1,050,000.00)  lawful money of the United  States of America,  executed by the
Mortgagor,  as maker,  and  delivered to the  Mortgagee,  as payee  (hereinafter
referred  to as the  "Note"),  the  Mortgagee  has  agreed to make a loan to the
Mortgagor (hereinafter referred to as the "Loan");

     WHEREAS,  this Mortgage is given and made by the Mortgagor to the Mortgagee
as security for (i) the  repayment of the  indebtedness  of the Mortgagor to the
Mortgagee  evidenced  by the  Note,  and  (ii)  the  performance  of the  terms,
conditions  and covenants of the Mortgagor set forth in the Note,  this Mortgage
and the other loan  documents  executed  in  connection  therewith  (hereinafter
collectively referred to as the "Loan Documents");

     NOW,  THEREFORE,  in order to induce the  Mortgagee to make the Loan to the
Mortgagor and to secure the payment of the  indebtedness of the Mortgagor to the
Mortgagee  evidenced  by the  Note  made by the  Mortgagor  to the  order of the
Mortgagee  and to secure the  performance  by the  Mortgagor of all of its other
obligations and covenants pursuant to the Note 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  Note,  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 (hereinafter referred to as the "Premises"); and

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

     TOGETHER with all and singular the tenements, hereditaments, rights-of-way,
privileges,

<PAGE>

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 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 Note
secured  hereby at the time and in the manner  provided  in the Note 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 Note 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

<PAGE>

necessary  or  desirable,  upon  payment  and  performance  being  made  on  the
indebtedness and covenants secured hereby.

     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  Note.  Any  reference  to a  provision  of the  Note  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 Note
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 Note and secured by this Mortgage at the time and in the manner  provided
for the payment of the same in the Note.

     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 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

<PAGE>

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  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
Note, or the maximum limit of coverage available, whichever amount is less;

     (e) Title  insurance  coverage  in the form of an ALTA  standard  mortgagee
title  insurance  policy  insuring  this  Mortgage  as a valid first lien on the
Mortgaged  Premises in the principal  amount of the Note;  subject only to those
matters  approved  by  Mortgagee  and set  forth  on the  Commitment  for  Title
Insurance issued to the Mortgagee by a title insurer (hereinafter referred to as
the "Title Company") in connection with this Mortgage; and

     (f) 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.

<PAGE>

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

<PAGE>

     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.

<PAGE>

     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 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 Note,  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 Loan 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  Loan or  indebtedness  secured  hereby
unlawful or usurious, in which event the Mortgagor shall 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 Note, 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

<PAGE>

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 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.

<PAGE>

     (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, 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 Note 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 Note 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.

<PAGE>

     (x) Any and all awards (hereinafter referred to as 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 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.

     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.

<PAGE>

     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 (hereinafter referred to
as 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 Note.

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

<PAGE>

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  and/or the Note, 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 Note (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 Note.  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 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 Note,  and with  interest  thereon at the  Default  Rate set forth in the
Note.  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

<PAGE>

encumbrancer  which 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, 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.

<PAGE>

     "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,

     (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,

<PAGE>

     (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 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 Note.

<PAGE>

     (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:

     (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  (hereinafter  referred  to  as  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 Note.

     (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

     (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

<PAGE>

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:

     (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.

     (ix) Mortgagor and Suprema Specialties West, Inc.  (hereinafter referred to
as  "Guarantor")  have,  simultaneously  with the  execution  of this  Mortgage,
executed and delivered to Mortgagee that certain Hazardous Material Guaranty and
Indemnification Agreement. The provisions of the Hazardous Material Guaranty and
Indemnification  Agreement  are  intended  to  supplement  and not  replace  the
provisions of this Section 20 of the Mortgage.  In the event there is a conflict
between  the  terms  of the  Hazardous  Material  Guaranty  and  Indemnification
Agreement and this Mortgage,  the terms of the Hazardous  Material  Guaranty and
Indemnification Agreement will govern, provided those provisions are broader.

     Section 21. Advice of Counsel.  Mortgagor  acknowledges  it has  thoroughly
read and reviewed the terms and  provisions  of this Mortgage and the other Loan
Documents and is familiar with the same, that the terms and provisions contained
herein are  clearly  understood  by it and have been  fully and  unconditionally
consented to by it, and that  Mortgagor has had full benefit and advice of legal
counsel of its own selection or the opportunity to obtain the benefit and advice
of counsel of its own selection,  in regard to understanding the terms,  meaning
and effect

<PAGE>

of this  Mortgage and the other Loan  Documents,  and that this Mortgage and the
other Loan  Documents have been entered into by Mortgagor  freely,  voluntarily,
with full knowledge, and without duress, and that in executing this Mortgage and
the other Loan  Documents,  Mortgagor is not relying on any  representations  or
statements  either  written or oral,  express or implied,  made to  Mortgagor by
Mortgagee or any other person, and that the consideration  received by Mortgagor
hereunder has been actual and adequate.

     Section 22. Financial  Information and Compliance  Certificates.  Mortgagor
hereby agrees that, so long as the Loan remains  outstanding and unpaid,  or any
other amount is owing to the Mortgagee  hereunder,  the Mortgagor will, and will
cause any Subsidiaries,  the Guarantor and any Subsidiary of the Guarantor (each
sometimes referred to herein as a "Specified Person") as applicable to:

     (i) as soon as  available,  but in any event within  ninety (90) days after
the last day of each of its fiscal year ends,  its 10-K report of the  Mortgagor
and its  subsidiaries  as at the last day of the fiscal year and  statements  of
income and retained  earnings and cash flows for such fiscal year each  prepared
in  accordance  with  generally  accepted  accounting  principles  ("GAAP")  and
certified by a firm of independent certified public accountants  satisfactory to
the Mortgagee,  together with management prepared consolidated and consolidating
balance  sheets.  Mortgagor  shall provide an itemized  statement of capitalized
expenses,  including,  but not  limited to,  slotting  fees,  marketing  service
agreements and the retail licensing agreement,  which shall be broken out on the
management  balance sheet, and any expenses related thereto shall be itemized on
the management  income  statement.  Mortgagor  shall also provide a breakdown of
selling, general and administrative expenses.

     (ii) as soon as  available,  but in any event  within sixty (60) days after
the close of each of the first three (3) quarters of each fiscal year,  its 10-Q
report and management  prepared  consolidated and consolidating  balance sheets,
statements  of income and retained  earnings and cash flows of the Mortgagor and
its  subsidiaries  as of the last day of and for such quarter and for the period
of the fiscal  year ended as of the close of the  particular  quarter,  all such
quarterly  statements  to be in  reasonable  detail,  and certified by the chief
financial or  accounting  officer of the  Mortgagor  as having been  prepared in
accordance with GAAP (subject to year-end adjustments).  Mortgagor shall provide
an itemized statement of capitalized  expenses,  including,  but not limited to,
slotting fees,  marketing service agreements and the retail licensing agreement,
which  shall be broken  out on the  prepared  balance  sheet,  and any  expenses
related  thereto shall be itemized on the prepared income  statement.  Mortgagor
shall also provide a breakdown of selling, general and administrative expenses.

     (iii) as soon as available,  but in any event within thirty (30) days after
the end of each month,  internally  prepared profit and loss statements for each
such  month in  reasonable  detail  and  certified  by the  chief  financial  or
accounting  officer of the Mortgagor as having been prepared in accordance  with
GAAP  (subject  to  year-end  adjustments).  For the  fiscal  year-end  and each
quarter-end of the Mortgagor,  such internally prepared statements the shall not
be required.

     (iv) at the same time as it delivers the financial statements called for by
subparagraphs  (i) and (ii),  the Mortgagor  shall deliver a certificate  of the
chief financial or accounting officer of the Mortgagor  evidencing a computation
of compliance with the financial covenants referred to in Section 23;

     (v) from time to time as requested by the Mortgagee, but no more often than
twice a year, provide the Mortgagee with a written  acknowledgment,  in form and
substance satisfactory

<PAGE>

to  the  Mortgagee,   from  the  Mortgagor's  and  the  Guarantor's   accountant
acknowledging  that the  Mortgagee is relying on the  accountant's  professional
accounting  services to the Mortgagor and  Guarantor,  and the  Mortgagor's  and
Guarantor's knowledge of the Mortgagee's reliance;

     (vi)  within  ninety  (90) days of the  fiscal  year end of the  Mortgagor,
furnish  annual  projections  for  the  next  succeeding  Fiscal  Year in a form
reasonably acceptable to the Mortgagee;

     (vii)  furnish such other  reports and  information  as the  Mortgagee  may
reasonably require; and

     (viii)  Prior to the  acquisition  of the whey  facility,  the  Mortgagor's
quarterly financial statements for the period ending March 31, 1996, prepared on
a review basis by BDO Seidman, showing substantial compliance with projections.

     Section 23. Financial Covenants.  The Mortgagor hereby agrees that, so long
as the Note remains  outstanding and unpaid, or any other amount is owing to the
Mortgagee hereunder, the Mortgagor shall comply with all financial covenants set
forth in Section  10.14 of that certain  Revolving  Loan,  Guaranty and Security
Agreement dated February 15, 1994 by and among Mortgagor,  as Borrower,  Suprema
Specialties West, Inc., as Guarantor and Mortgagee,  as amended, as if same were
fully set forth herein.

     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 Note or this
Mortgage within five (5) days after same is due and payable.

     Section 2. Breach of Covenants.  The Mortgagor shall have failed to perform
any of the  terms,  covenants,  conditions  or  undertakings  contained  in this
Mortgage or the Note, 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 in this Mortgage or the Note 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 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 assets; or shall generally not be paying the
Mortgagor's  debts as they  become  due;  or shall have  admitted in writing the
inability  to pay the  Mortgagor'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 by any Court of competent
jurisdiction  appointing a receiver,  custodian,  trustee or  liquidator  of the
Mortgagor,  or a substantial  part of the Mortgagor's  assets;  or a petition in
bankruptcy shall have been filed by or

<PAGE>

against Mortgagor;  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 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.

     Section 7. Other Debt. In the event of an Event of Default by the Mortgagor
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  Revolving  Loan,  Guaranty  and  Security
Agreement dated February 15, 1994 by and among Mortgagor,  as Borrower,  Suprema
Specialties  West,  Inc., as Guarantor and  Mortgagee,  as amended,  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.

     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 Note 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 and/or the Note.

     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 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

<PAGE>

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  Note  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 Note (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.

     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 Note  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 Note,  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 Note or other obligation  accompanying this Mortgage, nor under any covenant
or stipulation  therein contained,  nor under any agreement assuming the payment
of said Note or obligation.

<PAGE>

     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

            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:

                  NatWest Bank N.A.
                  Legal Center
                  1 Riverfront Plaza, 3rd Floor
                  Newark, New Jersey 07102
                  Attn: Edward J. Waterfield, Vice President

            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.

<PAGE>

     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 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. WAIVER OF AUTOMATIC  STAY.  THE  MORTGAGOR  AGREES THAT,  IN THE
EVENT  THAT  THE  MORTGAGOR  OR  ANY  OF  THE  PERSONS,   PARTIES,  OR  ENTITIES
CONSTITUTING THE MORTGAGOR SHALL (I) FILE WITH ANY BANKRUPTCY COURT OF COMPETENT
JURISDICTION  OR BE THE SUBJECT OF ANY PETITION UNDER THE BANKRUPTCY  CODE; (II)
BE THE SUBJECT OF ANY ORDER FOR RELIEF ISSUED UNDER THE BANKRUPTCY  CODE;  (III)
FILE OR BE THE SUBJECT OF ANY PETITION SEEKING ANY REORGANIZATION,  ARRANGEMENT,
COMPOSITION, READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER ANY
PRESENT  OR  FUTURE  FEDERAL  OR  STATE  ACT  OR  LAW  RELATING  TO  BANKRUPTCY,
INSOLVENCY,  OR OTHER  RELIEF FOR  DEBTORS;  (IV) HAVE SOUGHT OR CONSENTED TO OR
ACQUIESCED  IN  THE  APPOINTMENT  OF  ANY  TRUSTEE,  RECEIVER,  CONSERVATOR,  OR
LIQUIDATOR;  OR (V) BE THE SUBJECT OF ANY ORDER,  JUDGMENT, OR DECREE ENTERED BY
ANY COURT OF  COMPETENT  JURISDICTION  APPROVING A PETITION  FILED  AGAINST SUCH
PARTY   FOR  ANY   REORGANIZATION,   ARRANGEMENT,   COMPOSITION,   READJUSTMENT,
LIQUIDATION,  DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL
OR STATE ACT OR LAW RELATING TO BANKRUPTCY,  INSOLVENCY,  OR RELIEF FOR DEBTORS,
THE  MORTGAGEE  SHALL  THEREUPON  BE  ENTITLED,  AND THE  MORTGAGOR  IRREVOCABLY
CONSENTS TO, IMMEDIATE AND UNCONDITIONAL  RELIEF FROM ANY AUTOMATIC STAY IMPOSED
BY SECTION 362 OF THE BANKRUPTCY CODE, OR OTHERWISE,  ON OR AGAINST THE EXERCISE
OF THE RIGHTS AND REMEDIES OTHERWISE  AVAILABLE TO THE MORTGAGEE AS PROVIDED FOR
HEREIN,  IN THE  NOTE,  OR IN ANY  OTHER  OF THE  LOAN  DOCUMENTS  DELIVERED  IN
CONNECTION  HEREWITH AND AS OTHERWISE  PROVIDED BY LAW, AND THE MORTGAGOR HEREBY
IRREVOCABLY  WAIVES ANY RIGHT TO OBJECT TO SUCH  RELIEF AND WILL NOT CONTEST ANY
MOTION BY THE MORTGAGEE SEEKING RELIEF FROM THE AUTOMATIC STAY AND THE MORTGAGOR
WILL COOPERATE WITH THE MORTGAGEE,  IN ANY MANNER REQUESTED BY THE MORTGAGEE, IN
ITS EFFORTS TO OBTAIN RELIEF FROM ANY SUCH STAY OR OTHER PROHIBITION.

     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
NOTE AND THE OTHER LOAN  DOCUMENTS.  IT IS INTENDED THAT SAID WAIVER SHALL APPLY
TO ANY AND ALL DEFENSES, RIGHTS,

<PAGE>

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, 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 Loan,  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 Note or any other
Loan Document,  irrespective of whether or not the Mortgagee shall have made any
demand under this  Mortgage,  the Note 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 Note,  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.

<PAGE>

     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 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.



-------------------
Steven Venechanos,
Secretary                                   President

<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
                                 MARCH 29, 1996

                        DESCRIPTION OF MORTGAGED PREMISES

<PAGE>

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

     BE IT  REMEMBERED,  that on this 29th day of March,  1996,  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 I
having first known to him the contents  thereof,  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.

                                      Martin Luskin, Esq.,
                                      Attorney at law of the State of New Jersey