<PAGE>COVER

                                                                          UBS

                                   EXHIBIT D-1

                             FORM OF SECOND MORTGAGE


                                                    State _____ Site No. _______

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


Mortgagor:   PAYLESS CASHWAYS, INC.
             2300 Main Street
             Kansas City, Missouri  64108


Mortgagee:   CANADIAN IMPERIAL BANK OF COMMERCE,
             as Coordinating and
             Collateral Agent
             425 Lexington Avenue
             New York, New York  10017


Mortgage
  Amount:    $______________



Date:        December 2, 1997



Premises:




Record and   SHOOK, HARDY & BACON L.L.P.
Return to:   1200 Main St., Suite 3000
             Kansas City, MO 64105
             Attn.: Richard D. Woods, Esq.



<PAGE>1



     SECOND MORTGAGE,  LEASEHOLD  MORTGAGE,  SECURITY  AGREEMENT,  ASSIGNMENT OF
LEASES AND RENTS AND  FIXTURE  FILING,  dated as of  December  2,  1997,  by and
between PAYLESS CASHWAYS, INC., a Delaware corporation, having an office at 2300
Main Street,  Kansas City, Missouri 64108  ("Mortgagor"),  and CANADIAN IMPERIAL
BANK OF COMMERCE,  as Coordinating  and Collateral Agent under the Agreement (as
hereinafter  defined),  having an office at 425 Lexington Avenue,  New York, New
York 10017 ("Mortgagee").

                                   DEFINITIONS

     Mortgagor  and  Mortgagee  agree  that all  capitalized  terms used but not
defined  herein are defined in or by reference to the  Agreement  and shall have
the same meanings herein as therein. Mortgagor and Mortgagee further agree that,
unless the context  otherwise  specifies or requires,  the following terms shall
have the meanings herein specified, such definitions to be applicable equally to
the singular and the plural forms of such terms.

     "Agreement"  means that certain Amended and Restated Credit Agreement dated
on or about the date hereof by and among  Payless  Cashways,  Inc.,  the Lenders
signatory  thereto,  the  Underwriters,  U.S.  Bank National  Association,  as a
Fronting Bank, and Canadian Imperial Bank of Commerce, as a Fronting Bank and as
Coordinating  and  Collateral  Agent for the Lenders,  the Fronting  Banks,  the
Underwriters and the other Secured Parties, together with any future amendments,
amendments and restatements, extensions, modifications or supplements thereto or
thereof.

     "Bankruptcy Case" means In re Payless Cashways,  Inc., Case No. 97-50543 in
the Bankruptcy Court.

     "Bankruptcy Code" means 11 U.S.C. ss.101 et seq.

     "Bankruptcy Court" means the United States Bankruptcy Court for the Western
District of Missouri.

     "Bankruptcy  Reorganization  Plan" means Payless' plan of reorganization in
the Bankruptcy Case, as confirmed by the Bankruptcy Court.

     "Default" means Default, as that term is defined in the Agreement.

     "Default  Rate" means the rate of interest  specified in Section  2.8(a) of
the Agreement.



<PAGE>2



     "DIP Agent" means the DIP Agent, as that term is defined in the Agreement.

     "DIP Credit  Agreement" means the Revolving Credit  Agreement,  dated as of
July 21, 1997,  among  Payless,  as a  Debtor-in-Possession,  the  Lenders,  the
Underwriters and the Fronting Banks party thereto and Canadian  Imperial Bank of
Commerce,  as Coordinating and Collateral  Agent,  together with any amendments,
amendments and restatements, extensions, modifications or supplements thereto or
thereof prior to the date of the Agreement.

     "DIP Obligations" means the DIP Obligations, as that term is defined in the
Agreement.

     "Event of Default" means the events and circumstances  described as such in
Article II hereof.

     "Fixtures"  means  all of  Mortgagor's  right,  title and  interest  in all
furniture,  furnishings,  partitions,  screens, awnings, venetian blinds, window
shades, draperies,  carpeting, pipes, ducts, conduits, dynamos, motors, engines,
compressors,  generators,  boilers, stokers,  furnaces, pumps, tanks, elevators,
escalators,  vacuum  cleaning  systems,  call systems,  switchboards,  sprinkler
systems,  fire  prevention  and  extinguishing  apparatus,   refrigerating,  air
conditioning,   heating,   dishwashing,   plumbing,   ventilating,  gas,  steam,
electrical and lighting  fittings and fixtures,  licenses or permits of any kind
and all building  materials,  equipment and goods now or hereafter  delivered to
the Premises (hereinafter defined) and intended to be installed therein, and all
other machinery, fixtures, tools, implements,  apparatus, appliances, equipment,
goods,  facilities  and other  personal  property of similar  character in which
Mortgagor now has, or at any time hereafter acquires,  an interest and which are
now or  hereafter  affixed  or  attached  to,  or used in  connection  with  the
enjoyment,  occupancy  and/or  operation of, all or any portion of the Premises,
together with all renewals, replacements and substitutions thereof and additions
and accessions thereto and the proceeds of all of the foregoing items.

     "Fronting  Banks" means the Fronting  Banks, as that term is defined in the
Agreement.

     "Improvements"  means all  buildings,  structures  and  other  improvements
presently  existing or hereafter  constructed on the land described in Exhibit A
attached hereto.

     "Lease" has the meaning ascribed to such term in Section 3.01 hereof.

     "Leasehold"  has the meaning  ascribed to such term in paragraph "F" of the
Granting Clause, below.



<PAGE>3



     "Leasehold Interest" has the meaning ascribed to such term in paragraph "F"
of the Granting Clause, below.

     "Lenders" means the Lenders, as that term is defined in the Agreement.

     "Lessee" has the meaning ascribed to such term in Section 3.01 hereof.

     "Loan Documents"  means the Loan Documents,  as that term is defined in the
Agreement.

     "Loans" means the Loans, as that term is defined in the Agreement.

     "Mortgage"  means  this  Second  Mortgage,   Leasehold  Mortgage,  Security
Agreement,  Assignment of Leases and Rents and Fixture Filing  together with any
future  amendments,  amendments and restatements,  extensions,  modifications or
supplements hereto or hereof.

     "Mortgage Amount" means the principal sum of $__________________.

     "Mortgaged  Property" has the meaning ascribed to such term in the Granting
Clause, below.

     "Notes" means the Notes, as that term is defined in the Agreement.

     "Payless" means Payless Cashways, Inc., an Iowa corporation.

     "Post-Petition Mortgage Liens" has the meaning ascribed to such term in the
fourth WHEREAS clause, below.

     "Pre-Petition  Agent" means the Pre-Petition Agent, as that term is defined
in the Agreement.

     "Pre-Petition  Credit  Agreement"  means the  Amended and  Restated  Credit
Agreement  dated as of  October  3,  1996,  by and among  Payless,  the  lenders
signatory thereto,  Canadian Imperial Bank of Commerce, as letter of credit bank
and as  administrative  and  collateral  agent,  and The  Bank  of Nova  Scotia,
NationsBank of Texas,  N.A. and Bank of America  National Trust and Savings,  as
co-agents,   together  with  any   amendments,   amendments  and   restatements,
extensions, modifications or supplements thereto or thereof prior to the date of
the Agreement.



<PAGE>4


     "Pre-Petition Obligations" means the Pre-Petition Obligations, as that term
is defined in the Agreement.

     "Premises"  means the land described in Exhibit A annexed hereto,  together
with the Improvements  thereon or to be constructed thereon or therein,  and all
of the easements, rights, privileges and appurtenances thereunto belonging or in
anywise appertaining  thereto including,  but not limited to, all of the estate,
right, title,  interest,  claim or demand whatsoever of Mortgagor therein and in
and to the strips and gores,  streets and ways adjacent thereto,  whether in law
or in equity,  in possession or expectancy,  now or hereafter  acquired and also
any other realty,  Leaseholds  (hereinafter  defined) or Fixtures encompassed by
the term "Mortgaged Property", elsewhere herein defined.

     "Prior  Mortgage"  means that Mortgage and Security  Agreement  executed by
Mortgagor to The Prudential Insurance Company of America,  dated [June 15, 1989]
[_________,  19____] and recorded on [_________,  1989] [_________,  19____], at
Book  ____,  Page _____ of the real  property  records  of  ___________  County,
_____________,  as  assigned  to Prior  Mortgagee  and  amended by that  certain
Amendment to Mortgage and Security  Agreement  dated  December  ____,  1997,  as
amended, amended and restated,  supplemented or otherwise modified to the extent
permitted by the Agreement.

     "Prior Mortgagee" means UBS Mortgage Finance,  Inc., as mortgagee under the
Prior Mortgage.

     "Rents" has the meaning ascribed to such term in Section 3.01 hereof.

     "Secured  Obligations"  has  the  meaning  ascribed  to  such  term  in the
paragraph entitled "Secured Obligations" below.

     "Secured  Parties"  means Secured  Parties,  as that term is defined in the
Agreement.

     "UBS  Collateral"  means the real property listed on Schedule 1.1(c) to the
Agreement,  together  with  improvements,  fixtures and  appurtenances  relating
thereto, which is collateral pursuant to the relevant UBS Loan Documents.

     "UBS  Loan  Agreement"   means  that  certain  Amended  and  Restated  Loan
Agreement,  dated December __, 1997,  between Mortgagor and Prior Mortgagee,  as
the same  may be  hereafter  amended,  amended  and  restated,  supplemented  or
otherwise modified to the extent permitted by Section 5.04 hereof.

     "UBS Loan Documents"  means the UBS Loan  Agreement,  each of the mortgages
and deeds of trust  heretofore  delivered by Mortgagor to Prior  Mortgagee  with
respect to UBS


<PAGE>5


Collateral,  as amended as of  December  ____,  1997 and any and all  documents,
agreements and instruments related thereto, each as may be amended,  amended and
restated,  supplemented or otherwise modified to the extent permitted by Section
5.04 hereof.

     "Underwriters"  means  Underwriters,   as  that  term  is  defined  in  the
Agreement.

                              W I T N E S S E T H :

     WHEREAS, on July 21, 1997, Payless filed a voluntary petition of bankruptcy
under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court; and

     WHEREAS,  prior to the  commencement  of the Bankruptcy  Case,  Payless was
obligated  to the Lenders or their  predecessors-in-interest  pursuant to, among
other things, the Pre-Petition Credit Agreement; and

     WHEREAS, during the Bankruptcy Case, Payless became obligated to certain of
the Lenders pursuant to the DIP Credit Agreement; and

     WHEREAS, pursuant to the orders of the Bankruptcy Court entered on July 21,
1997  and  August  20,  1997  in the  Bankruptcy  Case,  the DIP  Agent  and the
Pre-Petition  Agent were granted liens (the  "Post-Petition  Mortgage Liens") on
the  Mortgaged  Property  to secure  the  Pre-Petition  Obligations  and the DIP
Obligations; and

     WHEREAS,  as  contemplated  by  Payless'  Bankruptcy  Reorganization  Plan,
Payless  has  merged  with and into  Mortgagor,  with  Mortgagor  being the sole
surviving entity; and

     WHEREAS,  pursuant to the terms of the Bankruptcy  Reorganization  Plan and
the  Agreement,  the parties have agreed among other  things,  (i) to permit the
merger of Payless into Mortgagor,  (ii) to secure various obligations of Payless
(as Mortgagor's  predecessor) in respect of the Pre-Petition Obligations and the
DIP  Obligations,  and (iii)  without  duplication,  to secure all  obligations,
whether now existing or hereafter  incurred or arising,  of Mortgagor  under the
Agreement,  the  Notes  and/or  the other  Loan  Documents,  including,  without
limitation, the Secured Obligations; in each case as more particularly set forth
in the Agreement and this Mortgage; and

     WHEREAS,  Mortgagor  is the  actual,  record  and  beneficial  owner of the
Premises or owns an actual beneficial interest therein; and

     WHEREAS,  Mortgagor has agreed pursuant to the terms of the Agreement,  the
Notes, and/or the other Loan Documents  evidencing the Secured Obligations to be
liable for the Secured Obligations; and


<PAGE>6


     WHEREAS,  the parties intend that the Secured  Obligations shall be secured
by this Mortgage.

                                 GRANTING CLAUSE

     NOW, THEREFORE,  Mortgagor,  in consideration of the premises, and in order
to secure the payment in full of the Mortgage Amount,  the Secured  Obligations,
all interest due thereon and all other costs and expenses and other  amounts due
hereunder and in respect of the Secured  Obligations,  and the  performance  and
discharge of all the provisions hereof, of the Secured Obligations and all other
Loan  Documents,  hereby  confirms the Post Petition  Mortgage  Liens and gives,
grants,  bargains,   mortgages,  pledges  and  grants  a  security  interest  to
Mortgagee, all of Mortgagor's estate, right, title and interest in, to and under
any and all of the following  described  property whether now owned or hereafter
acquired (all such properties being  collectively  referred to as the "Mortgaged
Property"), subject, however, to the Prior Mortgage:

     A. All Mortgagor's right, title and interest in and to the Premises and all
right,  title  and  interest  of  Mortgagor  in and to the  Improvements  on the
Premises or to be constructed thereon and all Fixtures now or hereafter situated
in, on or about,  or affixed or attached to the  Improvements or the Premises or
any  building,  structure  or  other  improvement  now  or  hereafter  standing,
constructed  or placed upon or within the  Premises,  and all and  singular  the
tenements,  hereditaments,  easements,  rights-of-way or use, rights, privileges
and  appurtenances  to the  Premises,  now or hereafter  belonging or in anywise
appertaining  thereto,  including,  without  limitation,  any such right, title,
interest, claim and demand in, to and under any agreement granting, conveying or
creating, for the benefit of the Premises, any easement, right or license in any
way affecting  other  property and in, to and under any streets,  ways,  alleys,
vaults,  gores or strips of land adjoining the Premises,  or any parcel thereof,
and  all  claims  or  demands  either  in law or in  equity,  in  possession  or
expectancy, of, in and to the Premises.

     B.  All  right,  title  and  interest  of  Mortgagor  in and to all  awards
heretofore  made or hereafter to be made for the taking by eminent domain of the
whole or any part of the above  described  premises,  or any estate or  easement
therein,  including  any  awards for  change of grade of  streets,  all of which
awards are hereby assigned to Mortgagee, which Mortgagee is hereby authorized to
collect (unless provided  otherwise in the Agreement),  and receive the proceeds
of such  awards  and to give  proper  receipts  and  acquittances  therefor  and
Mortgagee  shall  have the right and  option to apply such  excess  towards  the
payment of any sum owing on account of this Mortgage and the Secured Obligations
secured thereby,  notwithstanding the fact that such sum may not then be due and
payable.

     C. The Fixtures and the products and proceeds thereof.


<PAGE>7


     D. All present and future leases, subleases and licenses and any guarantees
thereof,  rents,  issues and  profits  and  additional  rents now or at any time
hereafter covering or affecting all or any portion of the Mortgaged Property and
all proceeds of, and all  privileges and  appurtenances  belonging or in any way
appertaining  to, the Mortgaged  Property,  or any part  thereof,  and all other
property  subjected  or required  to be  subjected  to the lien and/or  security
interest of this Mortgage,  including,  without  limitation,  all of the income,
revenues,   earnings,   rents,  maintenance  payments,   tolls,  issues,  awards
(including,  without limitation,  condemnation  awards and insurance  proceeds),
products  and  profits  thereof,  which  income,  revenues,   earnings,   rents,
maintenance  payments,  tolls, issues,  awards,  products and profits are hereby
expressly  assigned  with the right to take and  collect the same upon the terms
hereinafter  set forth;  and all the estate,  right,  title,  interest and claim
whatsoever,  at law and in  equity,  which  Mortgagor  now has or may  hereafter
acquire in and to the aforementioned property and every part thereof;  provided,
that so long as no Event of Default (as hereinafter defined) shall have occurred
and be  continuing,  all such income,  revenues,  earnings,  rents,  maintenance
payments,  tolls,  issues,  awards,  products and profits  shall remain with and
under the control of Mortgagor except as otherwise  expressly provided herein or
in any other written agreement between Mortgagor and Mortgagee.

     E. All right, title and interest of Mortgagor in and to all agreements,  or
contracts,  now or  hereafter  entered  into for the sale,  leasing,  brokerage,
development,  construction, renovation, management, maintenance and/or operation
of the Premises (or any part  thereof),  including  all moneys due and to become
due thereunder,  and all permits, licenses, bonds, insurance policies, plans and
specifications relative to the construction and/or operation of the Improvements
upon the Mortgaged Property.

     F. All  right,  title and  interest  (including,  without  limitation,  all
present  and future  rights to  possession  and use,  and all present and future
options and other rights to renew and to purchase)  of  Mortgagor,  as lessee or
sublessee,  under any  leases,  subleases,  licenses,  occupancy  agreements  or
concessions  now in effect or to be entered into  hereafter  (collectively,  the
"Leasehold  Instruments") whereby Mortgagor has any right to the use, possession
or  occupancy  of  the   Premises  or  any  part  thereof   (collectively,   the
"Leaseholds").

     G. All of Mortgagor's  claims and rights to the payment of damages  arising
from any rejection of a Leasehold or a Lease under or pursuant to the Bankruptcy
Code.

     H.  All  Mortgagor's  rights  and  remedies  at any time  arising  under or
pursuant to  Subsection  365(h) of the  Bankruptcy  Code,  11 U.S.C.  ss.365(h),
including, without limitation, all of Mortgagor's rights to remain in possession
of the Premises.

     I. Any other  property  and rights  which  are,  by the  provisions  of the
Agreement or any other Loan Document, required to be subject to the lien hereof,
and any  additional


<PAGE>8


property and rights that may from time to time hereafter by  installation  in or
on the Mortgaged Property, or by writing of any kind, or otherwise, be subjected
to the lien hereof by Mortgagor or by anyone on its behalf.

     J. All proceeds of the conversion,  voluntary or involuntary, of any of the
foregoing  into  cash  or  liquidated  claims,  including,  without  limitation,
proceeds of insurance and condemnation awards, and all right, title and interest
of  Mortgagor in and to all unearned  premiums  accrued,  accruing and to accrue
under any or all insurance policies obtained by Mortgagor.

     TO HAVE AND TO HOLD the Mortgaged Property,  subject to the Prior Mortgage,
unto Mortgagee and its successors  and assigns,  upon the terms,  provisions and
conditions herein set forth,  forever, and Mortgagor does hereby bind itself and
its successors, legal representatives, and assigns to warrant and forever defend
all and singular the Mortgaged  Property unto  Mortgagee and its  successors and
assigns,  against every person whomsoever lawfully claiming or to claim the same
or any part thereof, subject to the rights of the Prior Mortgagee.

                               SECURED OBLIGATIONS

     This  Mortgage,  and  all  rights,  titles,   interests,   liens,  security
interests,  powers,  privileges and remedies created hereby or arising hereunder
or by virtue  hereof,  are given to secure the  payment and  performance  of all
indebtedness,   obligations  and  liabilities   arising  under  the  Notes,  the
Agreement,  this  Mortgage  and any  other  Loan  Document,  and  any  renewals,
extensions,   amendments,   amendments   and   restatements,    supplements   or
modifications  thereof or  thereto,  howsoever  created,  arising or  evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing or
due or to  become  due,  and any and all fees,  costs or  expenses  incurred  by
Mortgagee or the other Secured Parties,  including, but not limited to, interest
accruing  at the then  applicable  rate  provided  in the  Agreement  after  the
maturity of the Loans and interest accruing at the then applicable rate provided
in the Agreement or other applicable  agreement after the filing of any petition
in bankruptcy,  or the  commencement of any insolvency,  reorganization  or like
proceeding,  relating to the Mortgagor on the Loans and on all other obligations
of  the  Mortgagor  to  the  Secured  Parties,  taxes,  recording  expenses  and
attorneys'  fees in  connection  with the  execution  and delivery of any of the
aforesaid,  and the consummation of the transactions  contemplated  thereby, the
administration  thereof,  and, after default,  the administration and collection
thereof,  all costs incurred of whatever  nature by Mortgagee in the exercise of
any rights hereunder or under any Loan Document and all other amounts payable by
Mortgagor  under this Mortgage (all of the foregoing  indebtedness,  obligations
and liabilities being referred to herein as the "Secured Obligations").



<PAGE>9


                                    ARTICLE I

                     PARTICULAR WARRANTIES, REPRESENTATIONS
                           AND COVENANTS OF MORTGAGOR

     Section 1.01 Warranties and Representations.  Mortgagor hereby warrants and
represents as follows:

          (a)  Mortgagor  is the  actual,  record  and  beneficial  owner of the
Premises and holder of a good and marketable title to an indefeasible  leasehold
estate in the Leaseholds or owns an actual  beneficial  interest therein and fee
estate in the rest of the Mortgaged Property, subject only to such exceptions to
title as are listed in the title policy  insuring the lien of this  Mortgage and
approved by Mortgagee and the Prior Mortgagee as permitted exceptions. Mortgagor
is the owner of all of the remaining Mortgaged Property;  Mortgagor will own the
Fixtures free and clear of liens and claims except the Prior  Mortgage and liens
and claims in favor of  Mortgagee;  and this Mortgage is and will remain a valid
and  enforceable  lien on the Mortgaged  Property  subject only to the permitted
exceptions referred to above.

          (b)  Mortgagor has full power and lawful  authority,  and has obtained
the written consent of the Prior Mortgagee,  to mortgage the Mortgaged  Property
in the manner and form herein done or intended  hereafter to be done.  Mortgagor
will preserve such title,  and will forever  warrant and defend the validity and
priority  of the lien  hereof,  against  the claims of all  persons  and parties
whomsoever.

          (c) Except as otherwise specified in the Title Policy (as
defined in the  Agreement) or in the Survey (as defined in the  Agreement),  the
Premises is not located in an area  identified  by the  Secretary of Housing and
Urban  Development  as an  area  having  special  flood  hazards  or if it is so
located, flood insurance acceptable to Mortgagee has been obtained.

     Section 1.02 Further Assurances.  Mortgagor will, at its sole expense,  do,
execute, acknowledge and deliver every further act, deed, conveyance,  mortgage,
assignment, notice of assignment,  transfer or assurance as Mortgagee shall from
time to time reasonably require, for the better assuring, conveying,  assigning,
transferring  and  confirming  unto  Mortgagee  the property  and rights  hereby
conveyed,  mortgaged or assigned or intended now or hereafter so to be, or which
Mortgagor may be or may hereafter become bound to convey,  mortgage or assign to
Mortgagee or for carrying out the intention or  facilitating  the performance of
the terms of this  Mortgage,  and for  filing,  registering  or  recording  this
Mortgage  and,  on demand,  will  execute  and  deliver,  and hereby  authorizes
Mortgagee  to execute in the name of  Mortgagor to the extent it may lawfully do
so, one or more financing  statements,  chattel



<PAGE>10


mortgages or comparable security instruments,  and renewals thereof, to evidence
more effectively the lien hereof upon the Fixtures.

     Section 1.03 Filings, Recordings and Payments. (a) Mortgagor forthwith
upon the execution of this Mortgage,  and thereafter from time to time, will, at
its expense,  cause this Mortgage and any security instrument creating a lien or
evidencing  the lien hereof upon the  Fixtures  and each  instrument  of further
assurance to be filed,  registered or recorded in such manner and in such places
as may be required  by any  present or future law in order to publish  notice of
and fully to protect the lien hereof upon, and the interest of Mortgagee in, the
Mortgaged Property.

          (b) Mortgagor will pay all taxes,  filing,  registration and recording
fees,  and all expenses  incident to the  execution and  acknowledgment  of this
Mortgage,  any supplemental  mortgage, any other Loan Document, and any security
instrument  with  respect  to  the  Fixtures,  and  any  instrument  of  further
assurance,  and all federal,  state,  county and municipal stamp taxes and other
taxes, duties, imposts,  assessments and charges arising out of or in connection
with  the  execution  and  delivery  of  the  Agreement,   this  Mortgage,   any
supplemental  mortgage,  any other Loan Document,  any security  instrument with
respect to the  Fixtures  or any  instrument  or further  assurance,  other than
income,  franchise  or other  similar  taxes  imposed on Mortgagee in respect of
income derived by Mortgagee under the Secured Obligations.

     Section  1.04  Payment  of Sums  Due.  Mortgagor  will  punctually  pay the
principal  and  interest  and all other  sums to become  due in  respect  of the
Agreement  and any other Loan  Document  at the time and place and in the manner
specified in the  Agreement and any other Loan  Document,  according to the true
intent and meaning thereof and without offset, counterclaim, defense or cause of
action of any kind  whatsoever , and without  deduction or credit for any amount
payable for taxes, all in immediately available funds in Dollars.

     Section 1.05  After  Acquired  Property.  All right,  title and interest of
Mortgagor  in  and  to  all  extensions,  improvements,  betterments,  renewals,
substitutes and  replacements  of, and all additions and  appurtenances  to, the
Mortgaged   Property,   hereafter  acquired  by  or  released  to  Mortgagor  or
constructed,  assembled  or  placed  by  Mortgagor  on  the  Premises,  and  all
conversions  of  the  security  constituted   thereby,   immediately  upon  such
acquisition, release, construction,  assembling, placement or conversion, as the
case may be, and in each such case,  without any further  mortgage,  conveyance,
assignment or other act by Mortgagor,  shall become  subject to the lien of this
Mortgage as fully and completely,  and with the same effect, as though now owned
by Mortgagor and specifically  described in the granting clauses hereof (subject
to the rights of the Prior  Mortgagee),  but at any and all times Mortgagor will
execute and deliver to Mortgagee any and all such further assurances, mortgages,


<PAGE>11


conveyances or assignments  thereof as Mortgagee may reasonably  require for the
purpose of expressing and  specifically  subjecting the same to the lien of this
Mortgage.

     Section 1.06  Taxes, Fees and Other Charges.  (a)  Mortgagor,  from time to
time when the same shall  become  due,  and prior to the date of  imposition  of
interest or penalty (except as otherwise  permitted in the Agreement),  will pay
and discharge,  or cause to be paid and discharged,  all taxes of every kind and
nature  (including  real and  personal  property  taxes and  income,  franchise,
withholding,  transfer or recordation  taxes,  profits and gross receipt taxes),
all general and special  assessments,  levies,  permits,  inspection and license
fees,  all water and sewer  rents and  charges,  and all other  public  charges,
whether of a like or different  nature,  imposed upon or assessed  against it or
the Mortgaged Property or any part thereof or upon the revenues,  rents, issues,
income and profits of the Premises or arising in respect of the  occupancy,  use
or possession  thereof.  Mortgagor  will, at any time upon request by Mortgagee,
promptly deliver to Mortgagee receipts evidencing the payment of same.

     Subject to the Prior  Mortgage,  upon the occurrence of an Event of Default
under the  Agreement,  Mortgagee  may, at any time and from time to time, at its
option,  to be exercised by written notice to Mortgagor,  require the deposit by
Mortgagor at the time of each payment of an installment of interest or principal
under  the  Agreement  of an  additional  amount  sufficient  to  discharge  the
obligations under this subsection (a) when they become due. The determination of
the amount so payable and of the  fractional  part thereof to be deposited  with
Mortgagee,  so that the aggregate of such deposit  shall be sufficient  for this
purpose,  shall be made by Mortgagee in its sole discretion.  Such amounts shall
be held by Mortgagee without interest in an account  acceptable to Mortgagee and
applied to the payment of the  obligations in respect to which such amounts were
deposited or, at the option of Mortgagee  and subject to applicable  law, to the
payment of the Secured  Obligations in such order or priority as Mortgagee shall
determine  consistent with the Agreement,  on or before the respective  dates on
which the same or any of them would become delinquent. If one month prior to the
due date of any of the obligations under this subsection (a) the amounts then on
deposit  therefor shall be insufficient  for the payment of such  obligations in
full,  subject  to the Prior  Mortgage,  Mortgagor  within  ten (10) days  after
demand,  shall  deposit the amount of the  deficiency  with  Mortgagee.  Nothing
herein  contained  shall be deemed to  affect  any right or remedy of  Mortgagee
under the  provisions  of this  Mortgage or of any statute or rule of law to pay
any such  amount and to add the amount so paid  together  with  interest  at the
Default Rate to the indebtedness hereby secured.

          (b) Except as otherwise  permitted in the  Agreement,  Mortgagor  will
pay,  from time to time when the same shall  become due,  all lawful  claims and
demands of mechanics, materialmen,  laborers, and others which, if unpaid, might
result in, or permit the  creation of, a lien on the  Mortgaged  Property or any
part thereof,  or on the revenues,  rents,  issues,  income and profits  arising
therefrom  and in general  will do or cause to be done


<PAGE>12


everything  necessary so that the lien hereof shall be fully  preserved,  at the
cost of Mortgagor, without expense to Mortgagee.

     Section 1.07  Intentionally Deleted.

     Section  1.08  Insurance.  (a)  Mortgagor  agrees to at all times  provide,
maintain and keep in force the policies of insurance  required to the maintained
pursuant to the terms of the Agreement.

          (b) In the event Mortgagor fails to provide,  maintain,  keep in force
or deliver and furnish to Mortgagee  the  policies of insurance  required by the
Agreement  or  this   Mortgage,   Mortgagee   may  procure  such   insurance  or
single-interest  insurance for such risks  covering  Mortgagee's  interest,  and
Mortgagor will pay all premiums thereon  promptly upon demand by Mortgagee,  and
until  such  payment  is made by  Mortgagor  the  amount  of all such  premiums,
together  with  interest  thereon at the  Default  Rate shall be secured by this
Mortgage.

          (c) After the happening of any casualty to the  Mortgaged  Property or
any part  thereof,  Mortgagor  shall  give  prompt  written  notice  thereof  to
Mortgagee,  and  Mortgagee  may  make  proof  of loss if not  made  promptly  by
Mortgagor.  In the event of such loss or damage, all proceeds of insurance shall
be payable in the manner  provided  for in the  Agreement  (subject to the Prior
Mortgage). Unless otherwise provided in the Agreement,  nothing herein contained
shall be deemed to excuse  Mortgagor from repairing or maintaining  the Premises
as provided in Section 1.12 hereof or restoring all damage or destruction to the
Mortgaged  Property,  regardless of whether or not there are insurance  proceeds
available  or whether  any such  proceeds  are  sufficient  in  amount,  and the
application or release by Mortgagee of any insurance  proceeds shall not cure or
waive any Default or notice of Default under this Mortgage or invalidate any act
done pursuant to such notice.  Any monies received as payment for loss under any
insurance  shall be applied  pursuant to the terms of the Agreement  (subject to
the Prior Mortgage).

          (d) In the event of  foreclosure of this Mortgage or other transfer of
title or assignment of the Premises in  extinguishment,  in whole or in part, of
the debt secured  hereby,  all right,  title and interest of Mortgagor in and to
all  policies  of  insurance  required by this  Section  1.08 shall inure to the
benefit of and pass to the  successor in interest to Mortgagor or the  purchaser
or grantee of the Premises.

          (e) Mortgagor shall not take out separate insurance concurrent in form
or contributing  in the event of loss with that required to be maintained  under
this Section 1.08,  unless Mortgagee has approved the insurance  company and the
form and content of the insurance policy,  including,  without  limitation,  the
naming thereon of Mortgagee as a named


<PAGE>13


insured  with loss,  subject to the  rights of the Prior  Mortgagee,  payable to
Mortgagee  under  a  standard  mortgagee  endorsement  of  the  character  above
described and the inclusion of a provision  therein  obligating  said  insurance
company to provide Mortgagee with notice thirty (30) days prior to cancellation,
lapse or amendment of any policy.  Mortgagor shall immediately  notify Mortgagee
whenever any such separate  insurance is taken out and shall promptly deliver to
Mortgagee the policy or policies of such insurance.

          (f) Subject to the Prior Mortgage, Mortgagee may at any time following
the occurrence of an Event of Default under the Agreement,  at its option, to be
exercised by written notice to Mortgagor,  require the deposit by Mortgagor,  at
the time of each payment of an  installment  of interest or principal  under the
Agreement, of an additional amount sufficient to discharge the obligations under
this  Section  1.08 when they become  due.  The  determination  of the amount so
payable and of the  fractional  part thereof to be deposited with Mortgagee with
each installment,  so that the aggregate of such deposit shall be sufficient for
this purpose,  shall be made by Mortgagee in its sole  discretion.  Such amounts
shall  be held  by  Mortgagee  without  interest  in an  account  acceptable  to
Mortgagee and applied to the payment of the obligations in respect of which such
amounts were  deposited on or before the  respective  dates on which the same or
any of them  would  become  delinquent  or, at the option of  Mortgagee,  to the
payment of the Secured  Obligations in such order or priority as Mortgagee shall
determine  consistent with the Agreement.  If one month prior to the due date of
any of the aforementioned obligations the amounts then on deposit therefor shall
be insufficient  for the payment of such  obligations in full,  Mortgagor within
five (5) days after  demand  shall  deposit  the amount of the  deficiency  with
Mortgagee.  Nothing  herein  contained  shall be deemed  to affect  any right or
remedy of Mortgagee  under the  provisions of this Mortgage or of any statute or
rule of law to pay any such amount and to add the amount so paid  together  with
interest at the Default Rate to the indebtedness hereby secured.

     Section 1.09   Condemnation. (a) In the event the Mortgaged Property or any
part thereof or interest  therein,  shall be taken or damaged by eminent domain,
alteration of the grade of any street,  or there shall occur any other injury to
or decrease in the value of the Mortgaged  Property,  by reason of any public or
quasi-public  improvement or  condemnation  proceeding,  or in any other similar
manner  ("Condemnation"),  or  should  Mortgagor  receive  any  notice  or other
information  regarding such Condemnation or a proposed  Condemnation,  Mortgagor
shall give prompt written notice thereof to Mortgagee.

          (b) Subject to the Prior Mortgage, all compensation,  awards and other
payments  or  relief  payable  as a result  of any such  Condemnation,  shall be
payable  in the  manner  provided  for in the  Agreement.  Subject  to the Prior
Mortgage, all such compensation,  awards, damages, rights of action and proceeds
awarded to Mortgagor  (the  "Proceeds")  are hereby  assigned to  Mortgagee  and
Mortgagor  agrees  to  execute  such  further  assignments  of the  Proceeds  as
Mortgagee  may require.  Mortgagee  shall be under no obligation to question


<PAGE>14


the  amount of any such  award or  compensation  and may  accept the same in the
amount paid.  Subject to the Prior Mortgage,  all Proceeds may be applied either
against the Secured  Obligations  (in such order and priority as Mortgagee shall
determine  consistent  with the  Agreement) or to restore the  Premises,  at the
discretion of Mortgagee, except as may be otherwise provided in the Agreement.

          (c)  Unless  otherwise  provided  in  the  Agreement,  nothing  herein
contained shall be deemed to excuse  Mortgagor from repairing or maintaining the
Premises  as  provided  in  Section  1.12  hereof  or  restoring  all  damage or
destruction  to the Mortgaged  Property,  regardless of whether or not there are
proceeds  available or whether any such Proceeds are  sufficient in amount,  and
the  application or release by Mortgagee of any Proceeds shall not cure or waive
any default or notice of default under this Mortgage or invalidate  any act done
pursuant to such notice.

          (d) Receipt by Mortgagee and  application in reduction of indebtedness
of any  Proceeds  less  than the full  amount  of the then  outstanding  Secured
Obligations shall not defer, alter or modify Mortgagor's  obligation to continue
to pay the  regular  installments  of  principal,  interest  on the  outstanding
principal balance and other charges owned in respect of the Secured  Obligations
and herein.

          (e)  Subject  to the Prior  Mortgage,  if prior to the  receipt of the
Proceeds by Mortgagee the condemned Premises shall have been sold on foreclosure
of this Mortgage,  Mortgagee shall, nevertheless,  have the right to receive the
Proceeds and to retain, for its own account,  (i) an amount equal to the counsel
fees,  costs  and  disbursements   incurred  by  Mortgagee  in  connection  with
collection  of the Proceeds and not repaid by Mortgagor and (ii) the full amount
of  all  such  Proceeds,  if  Mortgagee  is  the  successful  purchaser  at  the
foreclosure  sale,  to the  extent of amounts  owed in  respect  of the  Secured
Obligations.

     Section  1.10  Mortgagee's  Performance  of  Mortgagor's  Obligations.   If
Mortgagor  shall fail to perform any of the  covenants  contained  herein or any
covenant  contained in the Agreement or any other Loan Document,  Mortgagee may,
but shall not be obligated to, make advances and/or disbursements to perform the
same.  Mortgagor will repay on demand all sums so advanced and/or disbursed with
interest  at the  Default  Rate  from the date of  making  such  advance  and/or
disbursement  until such sums have been repaid and all sums so  advanced  and/or
disbursed,  together with interest  thereon at the Default Rate, shall be a lien
upon the Mortgaged  Property and shall be secured hereby. The provisions of this
Section  1.10 shall not prevent any default in the  observance  of any  covenant
contained herein or with respect to the Secured Obligations or in any other Loan
Document from constituting an Event of Default.



<PAGE>15


     Section  1.11  Financial  Records.  Mortgagor  will  provide the  financial
statements to Mortgagee required pursuant to the terms of the Agreement.

     Section 1.12 Waste and  Maintenance.  Mortgagor will not threaten,  commit,
permit or suffer any waste to occur on or to the Mortgaged  Property or any part
thereof or alter or demolish the  Mortgaged  Property or any part thereof in any
manner or make any change in its use (except as provided  in the  Agreement,  or
the Prior  Mortgage)  or any change  which will in any way  increase any fire or
other  hazards  arising  out of  construction  or  operation  of  the  Mortgaged
Property.  Mortgagor  will,  at all times,  maintain the  Mortgaged  Property as
required pursuant to the terms of the Agreement and the Prior Mortgage.

     Section 1.13 Enforcement Expenses.  Except where inconsistent with the laws
of the state in which the Mortgaged  Property is located,  Mortgagor agrees that
if any action or proceeding be commenced,  including an action to foreclose this
Mortgage or to collect  the  indebtedness  hereby  secured,  to which  action or
proceeding Mortgagee is made a party by reason of the execution of this Mortgage
or the other Loan Documents which it secures,  or in which it becomes  necessary
to defend or uphold the lien of this  Mortgage,  all sums paid by Mortgagee  for
the expense of any  litigation  to  prosecute  or defend or  participate  in the
transaction  and the  rights  and liens  created  hereby  (including  reasonable
attorneys' fees) shall be paid by Mortgagor  together with interest thereon from
date of payment by  Mortgagee  at the Default  Rate.  All such sums paid and the
interest thereon shall be immediately due and payable,  shall be a lien upon the
Mortgaged  Property,  and  shall be  secured  hereby  as shall be all such  sums
incurred in connection with  enforcement by Mortgagee of its rights hereunder or
under any other Loan Document.

     Section 1.14 Defense of Mortgagee's Interests. If the interest of Mortgagee
in the Mortgaged  Property or any part thereof or the lien or security  interest
of this Mortgage thereon shall be attacked,  directly or indirectly, or if legal
proceedings  shall be  instituted  against  Mortgagor or Mortgagee  with respect
thereto  or  against  Mortgagor,  Mortgagor,  upon its  learning  thereof,  will
promptly  give  written  notice  thereof to Mortgagee  and  Mortgagor  will,  at
Mortgagor's cost and expense,  exert itself diligently to cure, or will cause to
be cured,  any defect that may have  developed or be claimed to exist,  and will
take all necessary and proper steps for the protection  and defense  thereof and
will  take,  or will cause to be taken,  such  action as is  appropriate  to the
defense  of any such  legal  proceedings,  including,  but not  limited  to, the
employment of counsel and the prosecution and defense of litigation.

     Section 1.15 No Impairment of Security.  In no event shall  Mortgagor do or
permit to be done,  or omit to do or permit the  omission  of, any act or thing,
the doing, or omission,  of which would  materially  impair the security of this
Mortgage or materially  impair the value of the  Mortgaged  Property or any part
thereof.



<PAGE>16


     Section 1.16  Restrictions  on Transfers and  Mortgages.  Unless  otherwise
permitted pursuant to the terms of the Agreement, Mortgagor will not directly or
indirectly,  by  transfer,  mortgage,  conveyance,  or  sale of an  interest  in
Mortgagor permit, do or suffer the assignment, lease, transfer, sale, conveyance
or  encumbrance of the Mortgaged  Property,  or any part thereof or any interest
therein, without the express prior written consent of Mortgagee unless otherwise
permitted  pursuant to the terms of the Agreement and the Prior Mortgage.  While
the Secured Obligations are outstanding, neither the structure nor the ownership
of  Mortgagor  may be changed  without  the  express  prior  written  consent of
Mortgagee unless otherwise permitted pursuant to the terms of the Agreement and,
while the Prior Mortgage is in effect, the Prior Mortgage.

     Section 1.17  Mortgagee's  Defense.  Mortgagee may appear in and defend any
action or proceeding  at law or in equity or in bankruptcy  purporting to affect
the Premises or the security  hereof or the rights and powers of Mortgagee,  and
any  appellate  proceedings,  and in  such  event  Mortgagor  shall  pay  all of
Mortgagee's costs, charges and expenses, including cost of evidence of title and
attorneys'  fees incurred in such action or proceeding.  All costs,  charges and
expenses so incurred,  together with  interest  thereon at the Default Rate from
the date of payment of same by Mortgagee as  aforesaid,  shall be secured by the
lien of this Mortgage and shall be due and payable upon demand.

     Section 1.18  Environmental  Compliance.  Mortgagor will perform and comply
promptly  with,  and cause the Premises to be  maintained,  used and operated in
accordance with, all applicable federal,  state and local laws pertaining to air
and water quality,  hazardous  waste,  waste  disposal,  air emissions and other
environmental matters as set forth in the Agreement.

     Section 1.19 Zoning Changes. Mortgagor will not consent to, join in, permit
or allow any change in the zoning laws or  ordinances  relating to or  affecting
the Premises which could  reasonably be expected to materially  adversely affect
the Premises  and will  promptly  notify  Mortgagee of any changes to the zoning
laws.

     Section 1.20 Grant of Security Interest. Mortgagor, as further security for
the payment of said  indebtedness and in addition to all the rights and remedies
otherwise  available  to  Mortgagee  under  this  Mortgage  and the  other  Loan
Documents, grants to Mortgagee a security interest, under the Uniform Commercial
Code as now in effect in the state where all or any of the Fixtures are located,
in and to the  Fixtures,  and all  proceeds  thereof.  Upon an Event of Default,
Mortgagee  shall have, in addition to all the other rights and remedies  allowed
by law, the rights and remedies of a secured party under the Uniform  Commercial
Code as in effect at that  time.  Mortgagor  further  agrees  that the  security
interest  created  hereby also  secures all  expenses  of  Mortgagee  (including
reasonable expenses for legal services of every kind, and cost of any insurance,
and  payment  of taxes or other


<PAGE>17


charges) incurred in or incidental to, the custody, care, sale or collection of,
or realization  upon, any of the property  secured hereby or in any way relating
to the enforcement or protection of the rights of Mortgagee hereunder,  together
with interest thereon at the Default Rate until paid.

     Section 1.21 Compliance with Laws and ADA Compliance.

          (a) Mortgagor  warrants and  covenants  that the Premises are and will
continue to be  substantially in compliance with all applicable  local,  county,
state and federal laws and regulations and all building, housing and fire codes,
rules and regulations.

          (b) Without  limiting the provisions of subsection (a) of this Section
1.21:  (i)  Mortgagor  represents  and warrants to Mortgagee  that  Mortgagor is
substantially in compliance with the Americans with Disabilities Act of 1990 (42
U.S.C.A. sec. 12101 et. seq.), as the same may be amended from time to time (the
"ADA")  and  all  other  federal,   state  and  local  laws  pertaining  to  the
accessibility  of the  Premises by persons with  disabilities  (the ADA and such
other  laws  are,  collectively,   the  "Accessibility  Laws");  (ii)  Mortgagor
covenants to ensure that the  Premises  will at all times  substantially  comply
with all  applicable  Accessibility  Laws and,  upon the  request of  Mortgagee,
Mortgagor  will conduct such surveys of the Premises as Mortgagee  shall require
to ascertain such compliance;  (iii) Mortgagor will maintain accurate records of
all  expenditures  made in connection  with any  alterations to the Premises and
will deliver  copies  thereof to Mortgagee upon  Mortgagee's  request;  and (iv)
Mortgagor shall defend,  indemnify and hold harmless  Mortgagee,  its employees,
agents,  officers  and  directors,  attorneys  and any  parent or  affiliate  of
Mortgagee, from and against any claims, demands,  penalties, fines, liabilities,
settlements,  damages,  cost or expenses of  whatever  kind or nature,  known or
unknown,  contingent  or  otherwise,  arising  out or in any way  related to any
violations of the Accessibility Laws (including,  without limitation,  any costs
incurred by Mortgagee in complying with any Accessibility Laws). Neither payment
of the indebtedness  secured hereby nor foreclosure shall operate as a discharge
of Mortgagor's  obligations  under this  subsection  (b). In the event Mortgagor
tenders a deed in lieu of  foreclosure,  Mortgagor shall deliver the Premises to
Mortgagee  (or  its  designee)  substantially  free  of  any  violations  of the
Accessibility  Laws. In the event  Mortgagor  does not timely perform any of the
above obligations,  Mortgagee after 30 days notice to Mortgagor may perform said
obligations at the expense of Mortgagor and Mortgagor shall, upon written demand
from Mortgagee, reimburse Mortgagee for all costs, including attorney's fees and
out-of-pocket  expenses,  and all liabilities incurred by Mortgagee by reason of
the foregoing,  with interest  thereon at the Default Rate from the date of such
payment  by  Mortgagee  to the date of  repayment.  Until  paid,  said costs and
expenses shall be secured by this Mortgage.



<PAGE>18


     Section 1.22 Other Multistate  Mortgages.  The indebtedness secured in part
by this Mortgage is secured by mortgages  and/or deeds of trust  encumbering and
conveying lands and other property and/or leasehold  interests  therein in other
states as more particularly  described in the Agreement,  all of which mortgages
and/or deeds of trust, including this instrument, being hereafter referred to as
"the mortgage instruments."

     It is  understood  and  agreed  that  all of the  properties  of all  kinds
conveyed or encumbered by the mortgage  instruments are security for the Secured
Obligations  without  allocation  of any one or more of the  parcels or portions
thereof to any portion of the  Secured  Obligations  less than the whole  amount
thereof unless so stated in said mortgage instruments.

     Subject to the Prior  Mortgage,  it is  specifically  covenanted and agreed
that Mortgagee may proceed, at the same or at different times, to foreclose said
mortgage  instruments,  or any of them, by any  proceedings  appropriate  in the
state where any of the land lies, and that no event of enforcement  taking place
in any state including,  without  limiting the generality of the foregoing,  any
pending  foreclosure,  judgment or decree of the foreclosure,  foreclosure sale,
rents received,  possession  taken,  deficiency  judgment or decree, or judgment
taken  on the  Secured  Obligations,  shall  in any way  stay,  preclude  or bar
enforcement of the mortgage  instruments or any of them in any other state,  and
that,  Mortgagee  may  pursue  any or all its  remedies  to the  maximum  extent
permitted  by state law until all of the Secured  Obligations  now or  hereafter
secured by any or all of the mortgage  instruments  has been paid and discharged
in full.

     Neither Mortgagor,  nor any person claiming under Mortgagor,  shall have or
enjoy any right to marshaling of assets,  all such right being hereby  expressly
waived as to  Mortgagor  and all persons  claiming  under it,  including  junior
lienors.  No release of personal liability of any person whatever and no release
of any portion of the property  now or  hereafter  subject to the lien of any of
the mortgage  instruments shall have any effect whatever by way of impairment or
disturbance  of the lien or priority of any of said  mortgage  instruments.  Any
foreclosure or other  appropriate  remedy brought in any of the states aforesaid
may be brought and prosecuted as to any part of the mortgaged security, wherever
located,  without  regard  to the fact  that  foreclosure  proceedings  or other
appropriate  remedies  have or have not been  instituted  elsewhere on any other
land subject to the lien of said mortgage instruments or any of them.

     Section 1.23 Leasehold and Leasehold Instruments.

          (a)  Mortgagor  covenants  and agrees to  faithfully  comply  with and
perform all of its obligations under the Leasehold Instruments,  and to promptly
cure any default by it under the Leasehold Instruments.


<PAGE>19


          (b) Mortgagor may modify,  amend or terminate any Leasehold Instrument
without the prior written  consent  provided such action is consistent  with the
terms of the Agreement and the Prior Mortgage.

          (c)  Mortgagor  will  promptly  give  Mortgagee  a copy of any default
notice given to Mortgagor with respect to any Leasehold Instrument.

                                   ARTICLE II

                         EVENTS OF DEFAULT AND REMEDIES

     Section 2.01 Events of Default.  The following  shall  constitute  defaults
hereunder  and,  after the giving of notice and the passage of time,  if any, as
provided herein, shall constitute "Events of Default" hereunder:

          (a) If  Mortgagor  shall fail to pay when due any  Secured  Obligation
after the passage of any applicable notice or grace period, if any; or

          (b) If an Event of Default,  as defined in the Agreement,  shall occur
under the Agreement.

     Section 2.02 Mortgagee's Remedies.  (a) During the continuance of any Event
of Default, Mortgagee,  without notice or presentment,  each of which are hereby
waived by Mortgagor,  may,  subject to the provisions of the Agreement,  declare
the entire principal of the Secured Obligations then outstanding and all accrued
and unpaid  interest  thereon and all other amounts owing in respect thereof (if
not then due and payable,  whether by acceleration or otherwise),  to be due and
payable immediately,  and upon any such declaration the principal of the Secured
Obligations and said accrued and unpaid interest shall become and be immediately
due and payable,  anything in the instruments evidencing the Secured Obligations
or in this Mortgage to the contrary notwithstanding;

          (b) During the  continuance  of any Event of Default,  Mortgagee  may,
subject  to the  Prior  Mortgage,  enter  into  and  upon all or any part of the
Premises, and, having and holding the same, may use, operate, manage and control
the  Mortgaged  Property or any part thereof and conduct the  business  thereof,
either  personally  or  by  its  superintendents,  managers,  agents,  servants,
attorneys  or  receivers;  and  likewise,  from time to time,  at the expense of
Mortgagor,  Mortgagee  may make all  necessary or proper  repairs,  renewals and
replacements   and  such  useful   alterations,   additions,   betterments   and
improvements  thereto  and  thereon  as to it may  deem  advisable  in its  sole
judgment;  and in every such case  Mortgagee  shall have the right to manage and
operate the Mortgaged Property and to carry on the business thereof and exercise
all rights and powers of Mortgagor  with respect  thereto


<PAGE>20


either in the name of Mortgagor or otherwise as Mortgagee  shall deem best;  and
Mortgagee  shall be  entitled,  subject to the Prior  Mortgage,  with or without
entering into or upon the Premises,  to collect and receive all gross  receipts,
earnings,  revenues, rents, maintenance payments,  issues, profits and income of
the  Mortgaged  Property  and every  part  thereof,  all of which  shall for all
purposes constitute property of Mortgagee;  and, after deducting the expenses of
conducting  the  business  thereof and of all  maintenance,  repairs,  renewals,
replacement,  alterations,  additions,  betterments and improvements and amounts
necessary to pay taxes, assessments, insurance and prior or other proper charges
upon the Mortgaged Property or any part thereof,  as well as just and reasonable
compensation  for the  services of  Mortgagee  and for all  attorneys,  counsel,
agents,  clerks,  servants  and  other  employees  by it  properly  engaged  and
employed, Mortgagee may apply the moneys arising as aforesaid in such manner and
at such times as Mortgagee shall determine in its discretion consistent with the
Agreement to the payment of the Secured  Obligations  and the interest  thereon,
when and as the same shall  become  payable  and/or to the  payment of any other
sums required to be paid by Mortgagor under this Mortgage;

          (c) During the  continuance  of any such Event of  Default,  Mortgagor
covenants and agrees as follows  (subject,  in each case, to the Prior  Mortgage
and Sections 5.05 and 5.06 of this Mortgage):

          (1) Mortgagee may, with or without entry,  personally or by its agents
     or attorneys,  insofar as  applicable,  sell the Mortgaged  Property or any
     part  thereof and  pursuant  to the  procedures  provided  by law,  and all
     estate,  right,  title,  interest,  claim and demand therein,  and right of
     redemption thereof, at one or more sales as an entity or in parcels, and at
     such time and place upon such terms and after such notice thereof as may be
     required or permitted by law; or

          (2)  Mortgagee  may  institute  an action of mortgage  foreclosure  or
     institute other  proceedings  according to law for the foreclosure  hereof,
     and may  prosecute  the  same  to  judgment,  execution  and  sale  for the
     collection of the Secured Obligations secured hereby, and all interest with
     respect thereto, together with all taxes and insurance premiums advanced by
     Mortgagee  and other sums  payable by  Mortgagor  hereunder,  and all fees,
     costs and  expenses  of such  proceedings,  including  attorneys'  fees and
     expenses; or

          (3)  Mortgagee  may,  if default be made in the payment of any part of
     the Secured  Obligations,  proceed with  foreclosure of the liens evidenced
     hereby  in  satisfaction  of such  item  either  through  the  courts or by
     conducting the sale as herein provided, and proceed with foreclosure of the
     security  interest created hereby,  all without  declaring the whole of the
     Secured


<PAGE>21


     Obligations  due, and provided that if sale of the Mortgaged  Property,  or
     any portion thereof, is made because of default in payment of a part of the
     Secured Obligations, such sale may be made subject to the unmatured part of
     the  Secured  Obligations,  but as to such  unmatured  part of the  Secured
     Obligations  (and it is agreed that such sale, if so made, shall not in any
     manner affect the unmatured part of the Secured  Obligations) this Mortgage
     shall  remain in full force and effect just as though no sale had been made
     under the  provisions  of this  paragraph.  And it is further  agreed  that
     several sales may be made  hereunder  without  exhausting the right of sale
     for any unmatured part of the Secured Obligations,  it being the purpose to
     provide for a foreclosure and sale of the Mortgaged  Property,  or any part
     thereof,  for  any  matured  portion  of the  Secured  Obligations  without
     exhausting  the power to foreclose and to sell the Mortgaged  Property,  or
     any part  thereof,  for any other part of the Secured  Obligations  whether
     matured at the time or subsequently maturing; or

          (4)  Mortgagee  may take such steps to protect  and enforce its rights
     whether by action,  suit or proceeding in equity or at law for the specific
     performance  of any covenant,  condition or agreement in the Loan Documents
     or in  aid  of the  execution  of any  power  herein  granted,  or for  any
     foreclosure  hereunder,  or for the  enforcement  of any other  appropriate
     legal or equitable remedy or otherwise as Mortgagee shall elect; or

          (5)  Mortgagee  may  exercise  in  respect of the  Mortgaged  Property
     consisting  of  Fixtures,  all of the rights and  remedies  available  to a
     secured party upon default under the  applicable  provisions of the Uniform
     Commercial Code as then in effect in the state where the Mortgaged Property
     is located; or

          (6)  Mortgagee  may  apply  any  proceeds  or  amounts  held in escrow
     pursuant  to the  terms  of this  Mortgage  to  payment  of any part of the
     Secured  Obligations  in such order of priority as Mortgagee  may determine
     consistent with the Agreement; or

          (7) Any sale as aforesaid may be subject to such existing tenancies as
     Mortgagee, in its sole discretion, may elect.

     Section 2.03 Sale, Foreclosure, etc. (a) Mortgagee may adjourn from time to
time  any  sale  by it to be  made  under  or by  virtue  of  this  Mortgage  by
announcement at the time and place appointed for such sale or for such adjourned
sale or sales; and, except as otherwise provided by any applicable  provision of
law, Mortgagee, without further notice or publication, may make such sale at the
time and place to which the same shall be so adjourned.



<PAGE>22


          (b) Upon the  completion of any sale or sales made by Mortgagee  under
or by  virtue  of this  Article  II,  Mortgagee,  or any  officer  of any  court
empowered  to do so,  shall  execute and deliver to the  accepted  purchaser  or
purchasers a good and sufficient instrument, or good and sufficient instruments,
conveying,  assigning and transferring all estate,  right, title and interest in
and to the properties, interests and rights sold. Subject to the Prior Mortgage,
Mortgagee  is hereby  irrevocably  appointed  the true and  lawful  attorney  of
Mortgagor,  in its  name  and  stead,  to make  all the  necessary  conveyances,
assignments,  transfers and deliveries of any part of the Mortgaged Property and
rights  so sold,  and for that  purpose  Mortgagee  may  execute  all  necessary
instruments  of  conveyance,  assignment  and transfer and may substitute one or
more persons with like power, Mortgagor hereby ratifying and confirming all that
its said attorney or such substitute or substitutes  shall lawfully do by virtue
hereof. Nevertheless,  Mortgagor, if so requested by Mortgagee, shall ratify and
confirm any such sale or sales by executing  and  delivering  to Mortgagee or to
such  purchaser or purchasers all such  instruments as may be advisable,  in the
reasonable  judgment of  Mortgagee,  for the purpose and as may be designated in
such request.

          (c) Upon any sale,  whether under the power of sale hereby given or by
virtue of judicial proceedings,  it shall not be necessary for Mortgagee, or any
public  officer  acting under  execution  or order of court,  to have present or
constructive possession of any of the Mortgaged Property.

          (d) The recitals  contained in any conveyance made by Mortgagee to any
purchaser at any sale made pursuant hereto or under applicable law shall be full
evidence of the matters therein stated, and all prerequisites to such sale shall
be presumed to have been satisfied and performed.

          (e) Any such sale or sales made  under or by virtue of this  Mortgage,
whether  under the power of sale hereby  granted and  conferred,  or under or by
virtue of any judicial  proceedings,  shall operate to divest all right,  title,
interest, claim and demand whatsoever,  either by law or in equity, of Mortgagor
in and to the premises and property  sold, and shall be a perpetual bar, both at
law and in equity,  against Mortgagor,  its successors and assigns, and (subject
to the Prior  Mortgage)  against any and all persons or  entities  claiming  the
premises and property sold, or any part thereof, from through or under Mortgagor
and its successors or assigns.

          (f) The receipt given by Mortgagee for the purchase  money paid at any
such sale,  or the receipt  given by any other person  authorized to receive the
same, shall be sufficient  discharge  therefor to any purchaser of the property,
or  any  part  thereof,  sold  as  aforesaid,  and  no  such  purchaser,  or his
representatives,  grantees or assigns,  after  paying  such  purchase  money and
receiving  such receipt,  shall be bound (i) to see to the  application  of such
purchase  money or any part  thereof  upon or for any trust or  purpose  of this
Mortgage,  (ii) by the  misapplication


<PAGE>23


or nonapplication  of any such purchase money, or any part thereof,  or (iii) to
inquire as to the authorization, necessity, expediency or regularity of any such
sale.

          (g) In case  the  liens or  security  interests  hereunder,  or by the
exercise of any other right or power, shall be foreclosed by Mortgagee's sale or
by other judicial or non-judicial  action,  the purchaser at any such sale shall
receive, as an incident to its ownership,  immediate  possession of the property
purchased,  and if Mortgagor or Mortgagor's  successors shall hold possession of
said  property,  or any part thereof,  subsequent to  foreclosure,  Mortgagor or
Mortgagor's  successors  shall be  considered  as tenants at  sufferance  of the
purchaser at foreclosure  sale,  and anyone  occupying the property after demand
made for  possession  thereof shall be guilty of forcible  detainer and shall be
subject to eviction and removal,  forcible or otherwise, with or without process
of law, and all damages by reason thereof are hereby expressly waived.

          (h) In the  event  a  foreclosure  hereunder  shall  be  commenced  by
Mortgagee,  Mortgagee may at any time before the sale abandon the suit,  and may
then institute suit for the  collection of the Secured  Obligations  and for the
foreclosure  of the liens and security  interest  hereof.  If  Mortgagee  should
institute  a suit  for  the  collection  of the  Secured  Obligations  and for a
foreclosure of the liens and security interest hereof, it may at any time before
the entry of a final  judgment in said suit dismiss the same and proceed to sell
the Mortgaged  Property,  or any part thereof,  in accordance with provisions of
this Mortgage.

          (i) Any  reasonable  expenses  incurred by Mortgagee  in  prosecuting,
resetting or settling the claim of Mortgagee shall become an additional  Secured
Obligation of Mortgagor hereunder.

          (j) In the event of any sale made  under or by virtue of this  Article
II (whether made under the power of sale herein granted or under or by virtue of
judicial  proceedings or of a judgment or decree of foreclosure  and sale),  the
entire principal of, and interest on, the Secured Obligations, if not previously
due and payable, and all other sums required to be paid by Mortgagor pursuant to
this Mortgage,  immediately thereupon shall, anything in the Secured Obligations
or in this Mortgage to the contrary notwithstanding, become due and payable.

          (k) The purchase money proceeds or avails of any sale made under or by
virtue of this Article II,  together  with any other sums which then may be held
by Mortgagee  under this Mortgage,  whether under the provisions of this Article
II or otherwise, shall be applied in accordance with the laws of the state where
the Mortgaged Property is located, and to the extent not inconsistent,  first to
the  payment  of the costs  and  expenses  of such  sale,  including  reasonable
compensation  to Mortgagee and its agents and counsel,  second to the payment of
the amounts due and owing  under or in respect of the  Secured  Obligations  for
principal and interest and any other amounts including (without  limitation) any
other sums  required to be paid


<PAGE>24


by  Mortgagor  pursuant  to any  provision  of this  Mortgage  or any other Loan
Document,  with interest at the Default Rate from and after the happening of any
Event of  Default in the order set forth in Section  7.2 of the  Agreement,  all
with  interest at the Default  Rate from the date such sums were or are required
to be paid under this Mortgage, and third to the payment of the surplus, if any,
to whomsoever may be lawfully entitled to receive the same.

          (l) Upon any sale made under or by virtue of this Article II,  whether
made under the power of sale  herein  granted or under or by virtue of  judicial
proceedings  or of a judgment or decree of foreclosure  and sale,  Mortgagee and
any other Secured  Party may bid for and acquire the  Mortgaged  Property or any
part thereof and  Mortgagee  and any other  Secured Party in lieu of paying cash
therefor may make  settlement for the purchase price by crediting some or all of
the  indebtedness  of Mortgagor  secured by this Mortgage  owing to such Secured
Party (or, in the case of Mortgagee, owing to all Secured Parties) the net sales
price after  deducting  therefrom  the expenses of the sale and the costs of the
action and any other sums which  Mortgagee  is  authorized  to deduct under this
Mortgage.

     Section 2.04 Payments, Judgment, etc. (a) In case an Event of Default under
the Agreement and the  acceleration  of the  obligations  thereunder  shall have
occurred, then, Mortgagor will in accordance with the Agreement pay to Mortgagee
the whole  amount  which then shall have  become due and  payable on the Secured
Obligations,  whether for principal  and interest or both or  otherwise,  as the
case may be,  which  interest  shall then accrue at the Default Rate on the then
unpaid principal of or other amounts constituting the Secured  Obligations,  and
the sums  required to be paid by  Mortgagor  pursuant to any  provision  of this
Mortgage,  and in addition thereto such further amount as shall be sufficient to
cover the costs and expenses of collection,  including compensation to Mortgagee
its agents and counsel and any expenses incurred by Mortgagee hereunder.  In the
event Mortgagor shall fail forthwith to pay such amounts upon demand,  Mortgagee
shall be entitled and empowered to institute  such action or  proceedings at law
or in equity as may be advised by its counsel for the  collection of the sums so
due and unpaid,  and may prosecute any such action or proceedings to judgment or
final decree.

          (b)  Mortgagee  shall be  entitled to recover  judgment  as  aforesaid
either  before  or after or  during  the  pendency  of any  proceedings  for the
enforcement  of the  provisions  of this  Mortgage and the right of Mortgagee to
recover such judgment shall not be affected by any entry or sale  hereunder,  or
by the exercise of any other right,  power or remedy for the  enforcement of the
provisions of this Mortgage or the  foreclosure  of the lien hereof;  and in the
event  of a sale  of the  Mortgaged  Property  or any  part  thereof  and of the
application  of the  proceeds  of sale,  as provided  in this  Mortgage,  to the
payment of the  indebtedness  hereby  secured,  Mortgagee  shall be  entitled to
enforce  payment of, and to receive all amounts  then  remaining  due and unpaid
upon,  the Secured  Obligations,  and to enforce  payment of all other  charges,
payments  and costs due under this  Mortgage  and shall be  entitled  to recover
judgment


<PAGE>25


for any  portion of the debt  remaining  unpaid,  with  interest  thereon at the
Default  Rate.  In  case of  proceedings  against  Mortgagor  in  insolvency  or
bankruptcy  or  any  proceedings  for  its   reorganization   or  involving  the
liquidation of its assets,  then Mortgagee  shall be entitled to prove the whole
amount of principal  and interest due upon the Secured  Obligations  to the full
amount  thereof,  and all other  payments,  charges  and  costs  due under  this
Mortgage without deducting  therefrom any proceeds obtained from the sale of the
whole or any part of the Mortgaged Property.

          (c) No  recovery  of any  judgment  by  Mortgagee  and no  levy  of an
execution  under any  judgment  upon the  Mortgaged  Property  or upon any other
property of Mortgagor shall affect, in any manner or to any extent,  the lien of
this  Mortgage upon the  Mortgaged  Property or any part thereof,  or any liens,
rights,  powers or  remedies of  Mortgagee  hereunder,  but such liens,  rights,
powers and remedies of Mortgagee shall continue unimpaired as before.

          (d) Any moneys thus  collected  by  Mortgagee  under this Section 2.04
shall be applied by Mortgagee in accordance with the provisions of paragraph (k)
of Section 2.03.

     Section 2.05 Receiver,  Waiver. After the happening of any Event of Default
and  immediately  upon the  commencement  of any  action,  suit or  other  legal
proceedings  by Mortgagee to obtain  judgment for the  principal of, or interest
on,  and any other  amounts  constituting  the  Secured  Obligations,  including
(without  limitation) all sums required to be paid by Mortgagor  pursuant to any
provision  of this  Mortgage or of any nature in aid of the  enforcement  of the
Secured  Obligations or of this Mortgage,  Mortgagor will (a) waive the issuance
and service of process and submit to a voluntary appearance in such action, suit
or proceeding and (b) subject to the Prior  Mortgage,  if required by Mortgagee,
consent to the appointment of a receiver or receivers of the Mortgaged  Property
or any  part  thereof  and of all the  earnings,  revenues,  rents,  maintenance
payments,  issues,  profits and income  thereof in accordance  with Section 2.11
hereof.  After the happening of any Event of Default and during its continuance,
or upon the  commencement  of any  proceedings  to foreclose this Mortgage or to
enforce  the  specific  performance  hereof  or  in  aid  thereof  or  upon  the
commencement of any other judicial proceeding to enforce any right of Mortgagee,
subject  to the Prior  Mortgage,  Mortgagee  shall be  entitled,  as a matter of
right, if it shall so elect, without the giving of notice to any other party and
without  regard to the adequacy or  inadequacy  of any security for the Mortgage
indebtedness, forthwith either before or after declaring the unpaid principal of
the Secured  Obligations  to be due and payable,  to the  appointment  of such a
receiver or receivers.

     Section 2.06 Mortgagee's Possession. Notwithstanding the appointment of any
receiver,  liquidator or trustee of Mortgagor or of any of its  property,  or of
the Mortgaged  Property or any part  thereof,  Mortgagee  shall,  subject to the
Prior  Mortgage,  be entitled to retain  possession and control of the Mortgaged
Property.



<PAGE>26


     Section  2.07  Remedies  Cumulative.  No remedy  herein  conferred  upon or
reserved  to  Mortgagee  is  intended  to be  exclusive  of any other  remedy or
remedies which Mortgagee may be entitled to exercise against  Mortgagor and each
and every such  remedy  shall be  cumulative,  and shall be in addition to every
other remedy given  hereunder or in the  Agreement or in any other Loan Document
now or  hereafter  existing  at law or in equity or by  statute.  No delay by or
omission of  Mortgagee to exercise any right or power shall be construed to be a
waiver of any Event of Default or any acquiescence  therein; and every power and
remedy given in this  Mortgage or in the Agreement or in any other Loan Document
to  Mortgagee  may be  exercised  from  time to time as often  as may be  deemed
expedient by Mortgagee.  The resort to any remedy  provided  hereunder or in the
Agreement  or in any other Loan  Document or provided by law or at equity  shall
not prevent the  concurrent  or subsequent  employment of any other  appropriate
remedy or remedies against Mortgagor.  By the acceptance of payment of principal
of or  interest  on or any other  amount due in  respect  of any of the  Secured
Obligations  after its due date,  Mortgagee  does not waive the right  either to
require prompt payment when due of all other amounts secured hereby or to regard
as an Event of Default  the  failure to pay any other such  amounts.  Nothing in
this Mortgage or in the Agreement or in any  instrument  evidencing  the Secured
Obligations  shall affect the  obligation  of Mortgagor to pay (i) the principal
of, and interest on, the Secured  Obligations  in the manner and at the time and
place  therein  or  in  the  Agreement  expressed  or  (ii)  the  other  Secured
Obligations in the manner and at the time herein expressed.

     Section 2.08 Agreement by Mortgagor.  Mortgagor will not at any time insist
upon, or plead, or in any manner whatever claim or take any benefit or advantage
of any stay or extension or moratorium law, any exemption from execution or sale
of the Mortgaged Property or any part thereof,  wherever enacted,  now or at any
time hereafter in force, which may affect the covenants and terms of performance
of this Mortgage or any other Loan Document,  or claim,  take or insist upon any
benefit or  advantage of any law now or  hereafter  in force  providing  for the
valuation or appraisal of the Mortgaged Property, or any part thereof,  prior to
any sale or sales thereof which may be made pursuant to any provision herein, or
pursuant  to  the  decree,   judgment  or  order  of  any  court  of   competent
jurisdiction,  or,  after any such sale or sales,  claim or  exercise  any right
under any statute heretofore or hereafter enacted to redeem the property so sold
or any part  thereof;  and  Mortgagor  hereby  expressly  waives all  benefit or
advantage of any such law or laws and covenants  not to hinder,  delay or impede
the  execution of any power herein  granted or  delegated to  Mortgagee,  but to
suffer and permit the execution of every power as though no such law or laws had
been made or enacted. Mortgagor, waives, to the extent that it lawfully may, all
right to have the  Mortgaged  Property or any part  thereof  marshaled  upon any
foreclosure hereof.

     Section 2.09 Use and  Occupancy  Payments.  During the  continuance  of any
Event of Default and pending the  exercise by  Mortgagee of its right to exclude
Mortgagor  from all or any part of the  Premises,  unless  Mortgagor  is legally
entitled to continue  possession  of the


<PAGE>27


Premises,  Mortgagor  agrees to pay to Mortgagee the fair and reasonable  rental
value,  which  amount shall be  determined  by the  Mortgagee in its  reasonable
judgment, for the use and occupancy of the Premises or any portion thereof which
are in its  possession  for such period and,  upon default of any such  payment,
will,  subject to the Prior  Mortgage,  vacate and  surrender  possession of the
Premises to  Mortgagee or to a receiver,  if any, and in default  thereof may be
evicted by any summary  action or  proceeding  for the recovery of possession of
the Premises for non-payment of rent, however designated.  Any payments received
under this Section 2.09 by Mortgagee shall be applied in accordance with Section
2.03(k) of this Mortgage.

     Section 2.10 Mortgagee's Right to Purchase. In case of any sale under
the  foregoing  provisions  of this Article II,  whether made under the power of
sale hereby given or pursuant to judicial proceedings, Mortgagee may bid for and
purchase any property, and may make payment therefor as hereinafter set forth or
as set forth in Section 2.03 (l) above,  and, upon  compliance with the terms of
said  sale,  may hold,  retain  and  dispose of such  property  without  further
accountability therefor. For the purpose of making settlement or payment for the
property or properties  purchased,  Mortgagee shall be entitled to use and apply
such  of the  Secured  Obligations  held  by it or the  other  Secured  Parties,
including  (without  limitation) any accrued and unpaid interest thereon,  as it
may elect, or as may be otherwise provided for in Section 2.03(l) above.

     Section 2.11 Appointment of Receiver.  Upon application of Mortgagee to any
court of competent jurisdiction, if any Event of Default shall have occurred and
so long as it shall be continuing,  to the extent  permitted by law, and subject
to the Prior Mortgage,  a receiver may be appointed to take possession of and to
operate,  maintain,  develop  and  manage  the  Mortgaged  Property  or any part
thereof. In every case when a receiver of the whole or any part of the Mortgaged
Property shall be appointed under this Section 2.11 or otherwise, the net income
and profits of the Mortgaged  Property shall,  subject to the order of any court
of competent  jurisdiction,  and subject to the Prior Mortgage, be paid over to,
and shall be received by, Mortgagee to be applied as provided in Section 2.03(k)
hereof.

     Section 2.12 No Waiver.  Mortgagee may resort to any security given by this
Mortgage or to any other security now existing or hereafter  given to secure the
payment of any of the Secured  Obligations  secured hereby, in whole or in part,
and in such  portions  and in such  order as may seem best to  Mortgagee  in its
reasonable discretion, and any such action shall not in any way be considered as
a waiver of any of the rights,  benefits,  liens or security interest created by
this Mortgage.



<PAGE>28


                                   ARTICLE III

                         ASSIGNMENT OF LEASES AND RENTS

     Section  3.01 Lease  Related  Definitions.  As used in this  Mortgage:  (a)
"Lease" means any lease, sublease, or other similar agreement,  now or hereafter
existing,  under the terms of which  any  person  other  than  Mortgagor  has or
acquires any right to occupancy or use of the  Mortgaged  Property,  or any part
thereof,  or  interest  therein;  (b)  "Lessee"  means  the  lessee,  sublessee,
licensee,  tenant or other  person  having the right to occupy or use all or any
part of the Mortgaged  Property  under a Lease;  and (c) "Rent" means the rents,
additional  rents and other  consideration  payable to  Mortgagor  by the Lessee
under the terms of a Lease.  Whenever  reference  is made in this  Mortgage to a
lease,  license,  lessee,  licensee,  tenancy or tenant, such reference shall be
deemed to  include a  sublease,  sublessee,  license,  licensee,  subtenancy  or
subtenant, as the case may be.

     Section 3.02  Assignment of Leases and Rents.  Mortgagor  hereby assigns to
Mortgagee all Leases,  together with all Rents payable under the Leases,  now or
at any time  hereafter  existing,  such  assignment  being  subject to the Prior
Mortgage and upon the  following  terms:  (a) until  receipt  from  Mortgagee of
notice  of the  occurrence  of an Event of  Default,  each  Lessee  may pay rent
directly to Mortgagor,  (b) upon receipt from  Mortgagee of notice that an Event
of Default exists,  each Lessee shall, and is hereby authorized and directed to,
pay directly to Mortgagee all Rent thereafter accruing,  and the receipt of such
Rent by Mortgagee shall be a release of such Lessee to the extent of all amounts
so paid, (c) Rent so received by Mortgagee  shall be applied by Mortgagee  first
to the expenses,  if any, of collection  and then in accordance  with Article II
hereof,  (d)  without  impairing  its rights  hereunder,  Mortgagee  may, at its
option, at any time and from time to time, release to Mortgagor Rent so received
by  Mortgagee,  or any part thereof,  (e) Mortgagee  shall not be liable for its
failure to collect,  or its failure to exercise  diligence in the collection of,
Rent, but shall be accountable only for Rent that it shall actually receive.  As
among  Mortgagee,  Mortgagor and any person claiming through or under Mortgagor,
the  assignment  contained  in this  Section  3.02 is intended  to be  absolute,
unconditional and presently effective,  and the provisions of subsection 3.02(a)
are intended for the benefit of each Lessee and shall never inure to the benefit
of Mortgagor or any person claiming through or under  Mortgagor.  It shall never
be necessary for Mortgagee to institute legal proceedings of any kind whatsoever
to enforce the provisions of this Section 3.02.  Notwithstanding anything herein
to the contrary,  Mortgagor may collect such Rent until such time as an Event of
Default shall occur hereunder.

     Section 3.03 Mortgagee's Consent. Nothing in this Article III shall ever be
construed as (a) allowing any Lease without  Mortgagee's  prior written  consent
unless  otherwise  permitted  under the  Agreement,  or (b)  subordinating  this
Mortgage to any Lease.



<PAGE>29


     Section 3.04 Lease  Related  Covenants.  Mortgagor  covenants  to: (a) upon
demand by Mortgagee, and subject to the Prior Mortgage,  assign to Mortgagee, by
separate instrument in form and substance satisfactory to Mortgagee, any and all
Leases, and/or all Rents payable thereunder,  including, but not limited to, any
Lease which is now in existence or which may be executed  after the date hereof;
(b) not accept from any Lessee, nor permit any Lessee to pay, Rent for more than
one  month  in  advance  except  for  payment  in the  nature  of  security  for
performance of Lessee's  obligations unless otherwise provided for in the Lease;
(c)  comply  with the terms and  provisions  of each  Lease  including,  without
limitation,  the payment of all sums  required to be paid by  Mortgagor or which
any  Lessor  has an  option  to pay  under  any  Lease in order to  prevent  any
reduction in or offset  against any Rent payable  under any Lease or any default
thereunder;  (d) not amend,  extend,  cancel,  abridge,  or otherwise modify, or
accept  surrender  of, or renew,  any  Lease  without  the  written  consent  of
Mortgagee  other  than in the  ordinary  course  of  business,  (e) not  assign,
transfer or mortgage any Lease without the written consent of Mortgagee; (f) not
assign, transfer, pledge or mortgage any Rent; (g) not waive, excuse, release or
condone any nonperformance of any covenant of any Lease by any Lessee other than
in the ordinary course of business;  (h) give to Mortgagee  duplicate  notice of
each material default by each Lessee;  (i) on all Leases executed after the date
hereof,  cause each Lessee to agree (and each Lessee  under each Lease  executed
after the date hereof does so agree) to give to Mortgagee written notice of each
and every  material  default by  Mortgagor  under its Lease and not exercise any
remedies under such Lease unless  Mortgagee fails to cure such material  default
within a reasonable  period after Mortgagee has received such notice;  provided,
that Mortgagee shall never have any obligation or duty to cure any such material
default; (j) enforce its rights with regard to all Leases in the ordinary course
of business;  and (k) not enter into any Lease, affecting the Mortgaged Property
or any part thereof unless otherwise permitted under the Agreement and the Prior
Mortgage, without the prior approval of Mortgagee.

     Section  3.05  Mortgagee  Not Liable.  Mortgagee  shall not be obligated to
perform or discharge,  nor does it hereby undertake to perform or discharge, any
obligation,  duty or  liability  under any Lease,  or under or by reason of this
assignment,  and Mortgagor  shall and does hereby agree to indemnify and to hold
Mortgagee harmless from and against any and all liability,  loss or damage which
Mortgagee  may or might  incur  under  any  Lease or under or by  reason of this
assignment and from and against any and all claims and demands  whatsoever which
may be  asserted  against  Mortgagee  by reason of any  alleged  obligations  or
undertakings on its part to perform or discharge any of the terms,  covenants or
agreements  contained in any Lease.  Should  Mortgagee incur any such liability,
loss or damage under any Lease or under or by reason of this  assignment,  or in
the defense of any such claims or demands,  the amount  thereof,  including  all
costs, expenses and attorneys' fees, shall be secured hereby and constitute part
of the Secured  Obligations,  and Mortgagor shall reimburse  Mortgagee therefore
immediately  upon demand,  and upon the failure of Mortgagor to do so, Mortgagee
may declare all sums secured by this Mortgage immediately due and payable.



<PAGE>30


         Section 3.06 Estoppel  Certificates.  On all Leases  executed after the
date  hereof,  all  Leases  shall  provide  for  the  giving  by the  Lessee  of
certificates  with respect to the status of such  Leases,  and  Mortgagor  shall
exercise  its right to  request  such  certificates  within ten (10) days of any
demand therefor by Mortgagee.  Mortgagor shall furnish to Mortgagee,  within ten
(10) days after a request by Mortgagee to do so, an executed  counterpart of all
Leases.

     Section 3.07 Lease Approval Requirements.  On all Leases executed after the
date hereof, all Leases and Lessees of the Premises,  or any part thereof,  must
be acceptable to and approved by Mortgagee unless  otherwise  provided under the
Agreement;   and  all  Lessees  shall   execute  such   estoppel   certificates,
subordinations, attornments and other agreements as Mortgagee may require. Under
no circumstances shall Mortgagee be liable for any obligation to pay any leasing
commission,  brokerage fee or similar fee or charge in connection with any Lease
nor shall Mortgagee be obligated to complete any Improvements for the benefit of
any Lessee.

                                   ARTICLE IV

                                  MISCELLANEOUS

     Section 4.01 Benefit of  Mortgagee.  All of the grants,  covenants,  terms,
provisions  and  conditions of this  Mortgage  shall run with the land and shall
apply to,  bind and inure to the  benefit of the  successors  and assigns of the
respective  parties  hereto;   provided,  that  Mortgagor  may  not  assign  its
obligations hereunder without the prior written consent of Mortgagee.

     Section 4.02 Savings Clause. In the event any one or more of the provisions
contained in this Mortgage  shall for any reason be held to be invalid,  illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall,  at the  option of  Mortgagee,  not affect  any other  provision  of this
Mortgage but this  Mortgage  shall be construed as if such  invalid,  illegal or
unenforceable provision had never been contained herein or therein.

     Section 4.03 Notices.  All notices hereunder shall be given pursuant to the
terms of Section 9.1 of the Agreement.

     Section 4.04 Governing Law. This Mortgage shall, without regard to place of
contract or payment,  be  construed  and  enforced  according to the laws of the
state where the Mortgaged Property is located,  all without regard to principles
of conflict of laws.

     Section 4.05 No Change.  Neither this Mortgage nor any provision hereof may
be  changed,  waived,  discharged  or  terminated,  except by an  instrument  in
writing, signed by Mortgagee and Mortgagor.



<PAGE>31


     Section 4.06 Security Agreement and Fixture Filing.  This Mortgage shall be
deemed to be a security  agreement  and fixture  filing  pursuant to the Uniform
Commercial Code of the state where the Mortgaged Property is located.

     Section 4.07 No Usury. In the event that Mortgagee, in enforcing its rights
hereunder,  determines  that charges and fees  incurred in  connection  with the
Secured  Obligations  may, under the applicable  usury laws,  cause the interest
rate herein to exceed the maximum  allowed by law, then such  interest  shall be
recalculated  and any excess over the maximum  interest  permitted  by said laws
shall be  credited  to the then  principal  outstanding  balance to reduce  said
balance by that amount.  It is the intent of the parties  hereto that  Mortgagor
under no circumstances shall be required to pay, nor shall Mortgagee be entitled
to collect,  any interest which is in excess of the maximum legal rate permitted
under the applicable usury laws.

     Section  4.08  Effect of  Partial  Release.  No  release of any part of the
Mortgaged  Property  or of any other  property  conveyed  to secure the  Secured
Obligations shall in any way alter,  vary or diminish the force,  effect or lien
or security  interest  of this  Mortgage  on the  Mortgaged  Property or portion
thereof remaining subject to the lien and security interest created hereby.

     Section 4.09  Mortgagee's  Dealing with Successors and Lessees.  Subject to
the Prior  Mortgage,  in the event  Mortgagor or any of  Mortgagor's  successors
conveys or leases without the prior  approval of Mortgagee  (except as otherwise
permitted  herein or in the Agreement or the Prior Mortgage) any interest in the
Mortgaged Property, or any part thereof, to any other party,  Mortgagee may deal
with any owner or lessee of any part of the Mortgaged Property with reference to
this Mortgage and to the Secured Obligations,  either by forbearance on the part
of Mortgagee or release of all or any part of the  Mortgaged  Property or of any
other property securing payment of any Secured  Obligations,  without in any way
modifying or affecting Mortgagee's rights, remedies, liens or security interests
hereunder  (including  the  right to  exercise  any one or more of the  remedies
described  or  referred to in Article I,  Article II,  Article III or Article IV
hereof in the event such conveyance is made in  contravention  of the provisions
of this  Mortgage)  or the  liability of Mortgagor or any other party liable for
the payment of the Secured  Obligations,  in whole or in part. This shall not be
construed  to allow any such  conveyance  or  leasing  by  Mortgagor,  except as
permitted herein or in the Agreement.

     Section  4.10 No Waiver by  Mortgagee.  All  options and rights of election
herein provided for the benefit of Mortgagee are continuing,  and the failure to
exercise  any such  option or right or  election  upon a  particular  default or
breach or upon any  subsequent  default  or breach  shall  not be  construed  as
waiving the right to exercise  such option or election at any later date. By the
acceptance  of payment of  principal or interest  after its due date,  Mortgagee
does not waive the right either to require  prompt payment when due of all other
amounts  secured  hereby or to regard as an Event of Default  the failure to pay
any other such amounts.  No exercise of


<PAGE>32


the rights and powers herein granted and no delay or omission in the exercise of
such rights and powers  shall be held to exhaust the same or be  construed  as a
waiver thereof,  and every such right and power may be exercised at any time and
from time to time. All grants, covenants, terms and conditions hereof shall bind
Mortgagor and all successive owners of the Premises.

     Section 4.11 Headings Descriptive. The headings of the several sections and
subsections of this Mortgage are inserted for convenience  only and shall not in
any way affect the meaning or construction of any provision of this Mortgage.

     SECTION 4.12 WAIVER OF TRIAL BY JURY. THE MORTGAGOR AND THE MORTGAGEE WAIVE
THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING  BASED UPON,  ARISING OUT
OF OR IN ANY WAY CONNECTED TO THIS MORTGAGE.

     Section 4.13  Indemnification.  The  Mortgagor  agrees to pay, and to save,
indemnify  and  keep  the  Mortgagee  and its  respective  directors,  officers,
employees,   attorneys,   experts,   and  agents  harmless  from,  any  and  all
liabilities,  costs and expenses (including,  without limitation, legal fees and
expenses),  losses or damages (i) with respect to, or resulting  from, any delay
in paying,  any and all  excise,  sales or other  taxes  which may be payable or
determined  to be payable with respect to any of the  Mortgaged  Property,  (ii)
with respect to, or resulting  from, any delay in complying with any requirement
of law applicable to any of the Mortgaged  Property or (iii) in connection  with
any of the  transactions  contemplated by this Mortgage,  including the fees and
disbursements  of  counsel  and of any other  experts,  which  Mortgagee  or its
respective  directors,  officers,  employees,  attorneys,  experts or agents may
incur in connection with (w) the administration or enforcement of this Mortgage,
including  such  expenses as are incurred to preserve the value of the Mortgaged
Property  and the  validity,  perfection,  rank and value of any  liens  granted
hereunder, (x) the collection, sale or other disposition of any of the Mortgaged
Property,  (y) the exercise by the Mortgagee of any of the rights conferred upon
it  hereunder  or (z) any Default or Event of Default,  but  excluding  any such
liabilities,  costs and expenses, losses or damages incurred solely by reason of
the  gross  negligence  or  willful  misconduct  of  the  party  seeking  to  be
indemnified  as  determined by a final order or judgment of a court of competent
jurisdiction.

     Any amount due hereunder which is not paid on demand shall bear interest at
a rate equal to the Default Rate and shall be a lien upon the Mortgaged Property
and shall be secured hereby.

     The  agreements  of the  Mortgagor  contained  in this  Section  4.13 shall
survive  the  payment  and  performance  of  the  Secured  Obligations  and  the
termination  of the liens and  security  interests  granted  hereby.  All of the
Mortgagor's  obligations  to indemnify  Mortgagee and its  directors,  officers,
employees,  attorneys,  experts and agents hereunder shall (without


<PAGE>33


duplication)  be in addition to, and shall not limit in any way, the Mortgagor's
indemnification  obligations  contained  in the  Agreement  or in any other Loan
Document.

     Section 4.14 Advances under the Agreement. It is understood and agreed that
the funds to be advanced  under this Mortgage are to be advanced  subject to and
in accordance with the provisions of the Agreement and the other Loan Documents,
and that all sums  advanced  thereunder  or hereunder  are  included  within the
Secured Obligations secured hereby.

     Section 4.15 Particular State Provisions. There is attached hereto and made
a part hereof Exhibit B containing  additional  provisions that are necessary or
appropriate  under  the laws of the  state in which the  Mortgaged  Property  is
located or pursuant to the provisions of any permitted property liens.

                                    ARTICLE V

                CERTAIN PROVISIONS CONCERNING THE PRIOR MORTGAGE

     Section 5.01 Payment on Prior  Mortgage.  Mortgagor will promptly pay, when
due and payable, the interest, principal, and all other sums and charges secured
by and described in the Prior Mortgage and the other UBS Loan Documents.

     Section 5.02  Performance  of UBS Loan  Documents.  Mortgagor will promptly
perform and observe all of the terms,  covenants,  and conditions required to be
performed  and observed by Mortgagor  under the UBS Loan  Documents,  within the
periods  (inclusive of grace periods)  provided in the UBS Loan  Documents,  and
will do all things necessary to avoid the occurrence of any default with respect
to the UBS Loan Documents.

     Section 5.03 Default on UBS Loan Documents.  Any Event of Default under the
UBS  Loan  Documents  shall  be an Event of  Default  under  Article  II of this
Mortgage.

     Section 5.04 No  Modifications.  Mortgagor will not directly or indirectly,
amend,  modify,  supplement,  waive  compliance with, or assent to noncompliance
with,  any term,  provision or condition of the UBS Loan Agreement or any of the
other UBS Loan Documents as in effect on the Effective Date hereof (A) which the
Mortgagee or the Majority  Revolving Lenders deem material  (including,  without
limitation,  terms,  provisions  or  conditions  relating  to events of default,
acceleration rights or other remedies,  tenor,  interest rates,  substitution of
collateral,   the   non-recourse   nature  of  such  financing,   covenants  and
prohibitions  against  amending  any of the Loan  Documents)  or (B)  which  the
Mortgagee reasonably determines would place any further material restrictions on
the Mortgagor or its Subsidiaries or materially  increase the obligations of the
Mortgagor or any of its Subsidiaries thereunder or confer on the holders thereof
any material additional rights.


<PAGE>34


     Section 5.05 Consent of Prior  Mortgagee.  Notwithstanding  anything to the
contrary contained in this Mortgage,  the rights of Mortgagee  hereunder will be
limited in that,  unless and until all of the  obligations  secured by the Prior
Mortgage  have been  indefeasibly  paid in full,  Mortgagee  shall not,  without
obtaining the prior written consent of the Prior Mortgagee, which consent may be
withheld in Prior  Mortgagee's sole and absolute  discretion (a) modify,  amend,
supplement or extend the terms and provisions of Article V of this Mortgage,  or
(b) commence an enforcement action or other remedial proceeding, or (c) exercise
any remedies  provided for under this  Mortgage at law or in equity with respect
to the Mortgaged Property  (including,  without limitation,  the commencement of
foreclosure  proceedings  or the  appointment  of a  receiver),  or (d)  seek to
enforce  any  judgment  against  the  Mortgaged  Property  in a manner  which is
prohibited  under this Article V, or (e)  otherwise use its position as a junior
lienor  to take  any  actions  with  respect  to the  Mortgaged  Property  or to
interfere with or otherwise  impede any actions that Prior Mortgagee may wish to
take with respect to the Mortgaged Property;  provided, that notwithstanding the
provisions  set forth in (a) through (e) above,  Mortgagee  may make  protective
advances contemplated by this Mortgage,  including without limitation,  for past
due real estate taxes, insurance premiums,  repair costs and other amounts which
could result in a lien or encumbrance  upon the Mortgaged  property and may join
in any enforcement  action or other remedial  proceeding that has been commenced
by or on behalf of the Prior Mortgagee to assure that Mortgagee's junior lien is
not extinguished,  diminished or otherwise adversely affected;  provided further
that the Prior Mortgagee consents to Mortgagee acting in Mortgagor's stead under
this  Mortgage,  subject to all the conditions  and  requirements  hereunder and
under the UBS Loan  Documents,  if  Mortgagor  is in default with respect to its
obligations to Mortgagee (it being  understood  that Mortgagee shall not, by the
making of any protective advance,  acquire by subrogation or otherwise any lien,
estate or interest  in the  Mortgaged  Property  which may be prior to the lien,
estate or interest of the Prior  Mortgagee,  but the amount of any such advances
shall be secured by the lien of this Mortgage).

     Section 5.06 Subject to the UBS Loan Documents. Mortgagee acknowledges that
the terms,  conditions,  provisions and lien of this Mortgage, any Assignment of
Leases and Rents hereafter  delivered to Mortgagee with respect to the Mortgaged
Property and any  documents  hereafter  delivered  pursuant to Sections 1.02 and
1.03 of this  Mortgage and all of  Mortgagee's  rights  under this  Mortgage are
junior and subject to the terms,  conditions,  provisions  and lien of the Prior
Mortgage and the other UBS Loan  Documents and all of Prior  Mortgagee's  rights
thereunder.  Mortgagee further acknowledges that if Mortgagor's  compliance with
any of the terms,  covenants,  conditions  or other  provisions of this Mortgage
would be  inconsistent  with or cause a default  under  the UBS Loan  Documents,
Mortgagor shall not be obligated to comply with such term, covenant or condition
or other provision  contained in this Mortgage.  Notwithstanding  the foregoing,
nothing herein shall preclude the operation of any term, covenant, provision, or
condition  of,  or  right  of  Mortgagee  under,  this  Mortgage  which  is  not
inconsistent with the terms, covenants, provisions and conditions of,


<PAGE>35


and rights of Prior  Mortgagee  under the Prior  Mortgage and the other UBS Loan
Documents, and which would not cause a default under the UBS Loan Documents.

     Section 5.07 Third Party  Beneficiary.  It is expressly intended and agreed
by the parties to this  Mortgage  that (a) the Prior  Mortgagee is a third party
beneficiary  of this  Mortgage and is relying upon the terms and  provisions  of
this Article V, (b) the Prior  Mortgage shall be recorded  first,  (c) the Prior
Mortgagee  shall  have  the  right,  in  addition  to  all  other  remedies,  to
specifically  enforce the  provisions of this Article V and shall be entitled to
injunctive and other equitable relief in connection  therewith and (d) Mortgagor
and Mortgagee  expressly agree that the rights of the parties  hereunder are the
same as they would be if the  Mortgagee  and the Prior  Mortgagee had executed a
separate intercreditor agreement.

     Section 5.08 Consent to Non-Disturbance Agreement.  Mortgagee hereby agrees
to give a  non-disturbance  agreement  to any lessee or tenant  with  respect to
which  the  Prior  Mortgagee  shall  have  executed  a  similar  non-disturbance
agreement  and,  if  the  Mortgagee  fails  to  give  any  such  non-disturbance
agreement,  the Mortgagee  nevertheless  agrees not to disturb the possession or
occupancy  of any  lessee  or  tenant  of all or any  portion  of the  Mortgaged
Property  without  the prior  written  consent  of the Prior  Mortgagee  in each
instance.

     Section  5.09  Release  of  Mortgaged  Property.  Subject  to the terms and
provisions of Section 6.3(h) of the Agreement,  in the event the Prior Mortgagee
releases all or any portion of the Mortgaged Property from the lien of the Prior
Mortgage,  then Mortgagee hereby irrevocably appoints the Prior Mortgagee as its
attorney-in-fact (coupled with an interest) to execute and deliver, in the name,
and on behalf of  Mortgagee,  any and all  documents  necessary  to release  the
Mortgaged property ( or such portion thereof being released from the lien of the
Mortgage) from the lien of this Mortgage.  Mortgagee hereby acknowledges that it
shall not be entitled to receive any payment in  connection  with the release of
the Mortgaged  Property (or any portion thereof) from the lien of this Mortgage,
including,  without  limitation,  the proceeds of any sale  thereof,  unless and
until  the  Prior  Mortgagee  is fully  paid all  sums  due  under  the UBS Loan
Documents.  The Mortgagor  hereby agrees that it will provide the Mortgagee with
written notice as to the release of all or any portion of the Mortgaged Property
from the lien of the Prior Mortgage.

     Section  5.10  Bankruptcy,  Insolvency,  etc.  In  the  event  of  (a)  any
insolvency,  dissolution,  winding up, liquidation,  readjustment,  composition,
reorganization  or other  similar  proceedings  relating to  Mortgagor  (whether
voluntary  or  involuntary,  partial or  complete,  and  whether in  bankruptcy,
insolvency or receivership,  or upon an assignment for the benefit of creditors,
or any other marshaling of the assets and liabilities of Mortgagor,  or any sale
of all or substantially all of the Mortgaged Property, or otherwise ) or (b) any
receivership  or other  equivalent  proceeding  with  respect  to the  Mortgaged
Property, the UBS


<PAGE>36


Loan shall first be indefeasibly paid in full before Mortgagee shall be entitled
to retain any payment or  distribution  received  as  proceeds of the  Mortgaged
Property of any kind of  character,  whether in cash,  property  or  securities.
Mortgagee hereby irrevocably authorizes and agrees that the Prior Mortgagee may,
at its sole discretion, in the name of Mortgagee, or otherwise, demand, sue for,
collect,  receive and give receipt for any and all payments or  distributions of
any kind or  character,  whether  in cash,  property  or  securities,  which are
proceeds of the Mortgaged  Property to which  Mortgagee would be entitled if the
Mortgage  were not subject to the Prior  Mortgage  pursuant to the terms hereof.
Upon request,  Mortgagee  shall furnish to the Prior  Mortgagee,  as promptly as
practicable,  all  information  in its  possession  relating  to  the  Mortgaged
Property which the Prior Mortgagee considers  reasonably necessary in connection
with any action by the Prior Mortgagee permitted under the foregoing  provisions
of Section 5.10.  Mortgagee will not initiate any  proceedings to modify or lift
the stay provided for in SECTION 362(a) of Title 11 of the United States Code in
respect of the Mortgage or the Mortgaged Property.  Notwithstanding  anything to
the  contrary  contained  herein,  nothing  contained in this Section 5.10 shall
preclude  Mortgagee from asserting any claim in any such proceeding with respect
to all Secured Obligations  secured hereby as it pertains to any property,  cash
or securities of Borrower other than the Mortgaged Property.

     Section 5.11 Other Payments.  In the event that the Mortgagee  receives any
payment or other  distribution  of any kind or character  from the  Mortgagor or
from any other source whatsoever as proceeds of the Mortgaged Property, which it
is  not  entitled  to  retain  pursuant  to  this  Article  V,  Mortgagee  shall
immediately  deliver  the same to the  Prior  Mortgagee,  in the form  received,
together with any necessary endorsements,  in each case for application pursuant
to the UBS Loan  Documents,  but until so received by the Prior  Mortgagee,  the
same shall be held in trust by Mortgagee as the property of the Prior Mortgagee.



<PAGE>37


                                   ARTICLE VI

                   RESTATEMENT OF POST-PETITION MORTGAGE LIENS

     Section  6.01  Post-Petition  Mortgage  Liens.  This  Mortgage  amends  and
restates in their entirety the Post-Petition  Mortgage Liens;  provided that, to
the fullest  extent  permitted by law,  (a) the priority of all liens,  security
interests and other  encumbrances  evidenced  hereby or arising  hereunder shall
relate back to the date and time the Post-Petition  Mortgage Liens were granted;
(b) nothing herein shall impair the creation, attachment, perfection or priority
of the  Post-Petition  Mortgage Liens; and (c) nothing herein shall constitute a
novation or discharge of the obligations  secured by the Post-Petition  Mortgage
Liens.

     IN WITNESS  WHEREOF,  this Mortgage has been duly executed by Mortgagor and
Mortgagee as of the day and year first above written.

                                       MORTGAGOR:

                                       PAYLESS CASHWAYS, INC.


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


                                       MORTGAGEE:

                                       CANADIAN  IMPERIAL BANK OF COMMERCE,
                                         as Coordinating and Collateral Agent


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



CONSENTED AND AGREED TO:

[UBS MORTGAGE FINANCE, INC.]



<PAGE>38


[BA LEASING & CAPITAL CORPORATION]


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

                            [NOTARY BLOCK -- PAYLESS]


                             [NOTARY BLOCK -- CIBC]

                        [NOTARY BLOCK - PRIOR MORTGAGEE]



<PAGE>39



                                    EXHIBIT A

                              (DESCRIPTION OF LAND)



<PAGE>40



                                    EXHIBIT B

                             (LOCAL LAW PROVISIONS)