Exhibit 10-19



  THIS IS AN OPEN-END MORTGAGE, AS DEFINED BY ACT. NO. 126 OF 1990, P.L. 525,
            OCTOBER 12, 1990, 42 P.A.C.S.A. SECTION 8143, ET. SEQ.,
                         WHICH SECURES FUTURE ADVANCES

                    OPEN-END MORTGAGE AND SECURITY AGREEMENT

                                  $4,700,000.00


     THIS  OPEN-END  MORTGAGE  AND  SECURITY  AGREEMENT,  made  the  31st day of
December, 1997, by Erie Hotel LLC, a New York limited liability company, with an
office  for  the  transaction  of  business  located  at  100  Corporate  Woods,
Rochester,  New York 14623,  the MORTGAGOR to KEYBANK  NATIONAL  ASSOCIATION,  a
national  banking  association  with its principal office located at 50 Fountain
Plaza, Buffalo, New York 14202, the MORTGAGEE.

     WITNESSETH,  that to secure the payment of an  indebtedness  evidenced by a
certain  Promissory Note bearing even date herewith in the principal sum of Four
Million Seven Hundred Thousand and 00/100  ($4,700,000.00)  Dollars lawful money
of the United  States,  as the same may be  modified,  renewed or extended  (the
"Note") which sum, with interest thereon is to be paid by Mortgagor to Mortgagee
in accordance with the terms of said Note; to secure the payment by Mortgagor to
Mortgagee of all indebtedness, liabilities and obligations now existing or which
may  hereafter  arise by reason of the Note,  this  Mortgage  or any of the Loan
Documents (as that term is defined in the Note) or any  renewals,  extensions or
modifications  of the same; to secure the payment of any future advances made to
Mortgagor  pursuant to the Note,  this Mortgage or any of the Loan  Documents or
any  renewals,  extensions  or  modifications  of the same;  and to  secure  the
performance  of each  covenant,  term and provision by Mortgagor to be performed
pursuant to this Mortgage or any other Loan Document or any renewals, extensions
or  modifications  of the same,  Mortgagor  hereby  mortgages to Mortgagee,  its
successors  and  assigns,  the  following  described  property  (the  "Mortgaged
Property") whether now owned or held or hereafter acquired:

     ALL THAT TRACT OR PARCEL OF LAND situate in the Township of Summit,  County
of Erie, Commonwealth of Pennsylvania,  and being the same premises described in
Schedule "A" hereto annexed and made a part hereof (the "Premises").

     ALL RIGHT, TITLE AND INTEREST of Mortgagor in and to any and all buildings,
structures and improvements,  including without limitation,  the foundations and
footings thereof, now or at any time hereafter erected,  constructed or situated
upon the Premises or any part thereof (the "Improvements").

     TOGETHER with all fixtures,  chattels and articles of personal property now
or hereafter attached to or used in connection with the Premises,  together with
any and all replacements  thereof and additions thereto (the  "Chattels").  This
Mortgage shall be considered a financing statement



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pursuant to the provisions of the Uniform  Commercial  Code,  covering  fixtures
which are affixed to the Premises.  The types of collateral  covered  hereby are
described in this paragraph.  The debtor is Erie Hotel LLC. The secured party is
KEYBANK NATIONAL ASSOCIATION. Their addresses are set forth above.

     TOGETHER with all right,  title and  interest,  if any, of Mortgagor of, in
and to the bed of any street, road or avenue,  opened or proposed,  in front of,
adjoining or abutting upon the Premises to the center line thereof

     TOGETHER  with any and all  awards  heretofore  and  hereafter  made to the
present and all subsequent  owners of the Premises by any  governmental or other
lawful  authorities for the taking by eminent domain of the whole or any part of
the Premises,  or any easement therein,  including any awards for any changes of
grade of streets,  which said awards are hereby  assigned to  Mortgagee,  who is
hereby  authorized  to collect and receive the  proceeds of any such awards from
such authorities and to give proper receipts and acquittances  therefor,  and to
apply the same  toward  the  payment  of the  amount  owing on  account  of this
Mortgage and the Note,  notwithstanding  the fact that the amount owing  thereon
may not then be due and payable.

     TO HAVE  AND TO  HOLD  the  Mortgaged  Property  unto  the  Mortgagee,  its
successors and assigns,  PROVIDED ALWAYS that if Mortgagor shall pay or cause to
be paid to Mortgagee,  its successors  and assigns,  said principal sum of money
and other  charges  mentioned  and set forth in this  Mortgage  and in the Note,
together  with  interest  thereon,  then and from thence  forth,  the  Mortgaged
Property and the estate hereby granted shall cease, determine and be void.

     AND Mortgagor covenants with Mortgagee as follows:

     1 . REPRESENTATIONS.  Mortgagor hereby represents and warrants to Mortgagee
as follows:


         (a) That the Loan  Documents  (as that term is defined in the Note) are
     in all  respects  validand  legally  binding  obligations,  enforceable  in
     accordance with their respective terms.

         (b) That the execution and delivery of the Loan  Documents by Mortgagor
     and any guarantor do not, and the  performance  and observance by Mortgagor
     and any guarantor of their obligations  thereunder will not,  contravene or
     result in a breach of (i) if  Mortgagor or any  guarantor  purports to be a
     limited liability company or a corporation, any provision of Mortgagor's or
     any  guarantor's  articles  of  organization  or  operating  agreement,  or
     corporate charter or by-laws, or, if Mortgagor or any guarantor purports to
     be partnership, any provision of Mortgagor's or any guarantor's partnership
     agreement or certificate,  or (ii) any governmental requirements,  or (iii)
     any decree or judgment  binding on Mortgagor or any guarantor,  or (iv) any
     agreement or  instrument  binding on  Mortgagor or any  guarantor or any of
     their  respective  properties,  nor will the same result in the creation of
     any lien or security interest under any such agreement or instrument.



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         (c) That there are no actions,  suits,  investigations  or  proceedings
     pending, or, to the knowledge of Mortgagor, threatened against or affecting
     Mortgagor  (or any member of  Mortgagor),  any  guarantor or the  Mortgaged
     Property,  or involving the validity or  enforceability  of any of the Loan
     Documents  or the  priority  of the  lien  thereof,  or which  will  affect
     Mortgagor's  ability to repay the Note, at law or in equity or before or by
     any governmental authority.

         (d) That  Mortgagor  has no knowledge of any  violations  or notices of
     violations of any requirements.

         (e) If Mortgagor or any  guarantor  purports to be a limited  liability
     company or a corporation,  that (i) it is a limited  liability company or a
     corporation duly organized, validly existing and in good standing under the
     laws of the  state  in  which  it is  organized  or  incorporated,  (ii) if
     required by the laws of the state in which the  Premises is located,  it is
     duly qualified to do business and is in good standing therein, (iii) it has
     the power,  authority and legal right to own and operate its properties and
     assets,  carry on the  business  now being  conducted  and  proposed  to be
     conducted by it, and to engage in the transactions contemplated by the Loan
     Documents,  and (iv) the  execution  and delivery of the Loan  Documents to
     which it is a party and the  performance  and  observance of the provisions
     thereof have been duly authorized by all necessary actions.

         (f)  That  all  utility  services  necessary  and  sufficient  for  the
     construction,  development and operation of the Mortgaged  Property for its
     intended  purposes  are  presently   available  to  the  Premises  (or  the
     boundaries  thereof if this  Mortgage  is executed  in  conjunction  with a
     construction  loan)  through  dedicated  public  rights  of way or  through
     perpetual private easements,  approved by Mortgagee,  with respect to which
     the  Mortgage  creates  a  valid,   binding  and  enforceable  first  lien,
     including, but not limited to, water supply, storm and sanitary sewer, gas,
     electric and telephone facilities, and drainage.

         (g) That neither the Mortgaged  Property nor any portion thereof is now
     damaged  or injured as result of any fire,  explosion,  accident,  flood or
     other casualty or has been the subject of any taking,  and to the knowledge
     of Mortgagor, no taking is pending or contemplated.

         (h)  That  any  brokerage   commissions  due  in  connection  with  the
     transactions  contemplated  hereby have been paid in full and that any such
     commissions  coming due in the future will be promptly  paid by  Mortgagor.
     Mortgagor  agrees  to and shall  indemnify  Mortgagee  from any  liability,
     claims or losses arising by reason of any such brokerage commissions.  This
     provision  shall  survive the  repayment of the Note and shall  continue in
     full force and effect so long as the possibility of such liability,  claims
     or losses exists.

         (i)  That the  financial  statements  of  Mortgagor  and any  guarantor
     previously  delivered  to Mortgagee  are true and correct in all  respects,
     have  been  prepared  in  accordance  with  generally  accepted  accounting
     principles   consistently   applied,  and  fairly  present  the  respective
     financial  conditions of Mortgagor  and any guarantor as of the  respective
     dates thereof and the results of their  operations for the periods  covered
     thereby; that no adverse change has occurred in the assets, liabilities, or
     financial  conditions reflected therein since the respective dates thereof,
     and that no



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     additional  borrowings  have been made by Mortgagor or any guarantor  since
     the date thereof other than the borrowing contemplated hereby.

         (j) That all federal,  state and other tax returns of Mortgagor and any
     guarantor  required by law to be filed have been filed,  that all  federal,
     state and other  taxes,  assessments  and other  governmental  charges upon
     Mortgagor and any guarantor or their  respective  properties  which are due
     and payable have been paid,  and that  Mortgagor and any guarantor have set
     aside on their books provisions  reasonably adequate for the payment of all
     taxes for periods  subsequent  to the periods for which such  returns  have
     been filed.

         (k) That  Mortgagor has made no contract or  arrangement of any kind or
     type  whatsoever  (whether  oral  or  written,  formal  or  informal),  the
     performance  of which by the other party  thereto could give rise to a lien
     or  encumbrance  on the Mortgaged  Property,  except for contracts  (all of
     which have been disclosed in writing to Mortgagee).

         (1)  That  the  rights  of way for all  roads  necessary  for the  full
     utilization of the  Improvements  for their  intended  purposes have either
     been acquired by the Mortgagor,  the appropriate  governmental authority or
     have  been  dedicated  to  public  use and  accepted  by such  governmental
     authority,  and all such roads shall have been completed,  or all necessary
     steps shall have been taken by Mortgagor and such governmental authority to
     assure the complete construction and installation thereof prior to the date
     upon  which  access  to the  Mortgaged  Property  via  such  roads  will be
     necessary. Allcurb cuts, driveway permits and traffic signals necessary for
     access to the Mortgaged  Property are existing or have been fully  approved
     by the appropriate governmental authority.

         (m) That no Event of Default (hereinbelow  defined) exists and no event
     which but for the  passage  of time,  the  giving  of notice or both  would
     constitute an Event of Default has occurred.

     2. THE INDEBTEDNESS. Mortgagor will pay the indebtedness as provided in the
Note or in any modification, renewal or extension of the Note.

     3 . INSURANCE. At all times that the Note is outstanding, including without
limitation during any construction period (a "Construction  Period"),  Mortgagor
shall maintain,  or shall cause to be maintained,  insurance with respect to the
Premises  the  Improvements  and the  Chattels  against  such risks and for such
amounts as are  customarily  insured against by businesses of like size and type
paying,  as the same become due and payable,  all  premiums in respect  thereto,
including but not limited to:

         (a) Prior to completion of construction of the Improvements,  builder's
     risk all risk (or  equivalent  coverage)  insurance  upon any work  done or
     material  furnished in connection with  construction  of the  Improvements,
     issued to Mortgagor and Mortgagee  and written in  non-reporting  completed
     form  in  the  principal  amount  of  the  Note  and  with  respect  to the
     Improvements  and at such time that builder's  risk insurance  shall not be
     available due to completion of the construction



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     of the Improvements, or if all Improvements have been completed,  insurance
     protecting the interests of the Mortgagor and Mortgagee as their  interests
     may appear against loss or damage to the  Improvements by fire,  lightning,
     flood  and  other  casualties  normally  insured  against,  with a  uniform
     standard extended coverage  endorsement,  such insurance at all times to be
     in an  amount  of the  Note or the  total  cash  replacement  value  of the
     Improvements  not covered by builder's  risk  insurance,  as  determined at
     least once every three years by a recognized  appraiser or insurer selected
     by the Mortgagor and approved by the Mortgagee.

         (b) Boiler and  machinery  insurance  covering  physical  damage to the
     Improvements  and to the  major  components  of any  central  heating,  air
     conditioning  or ventilation  systems and such other equipment as Mortgagee
     shall designate.

         (c) Business interruption  insurance in an amount sufficient to prevent
     Mortgagor  from  becoming a co-insurer  within the terms of the  applicable
     policies and  sufficient to cover the continued loss of income for a period
     of one (1) year from the Mortgaged Property and, in all events,  based upon
     the projected  expenses and net operating income of the Mortgage  Property,
     in an amount not less than $1,000,000.00.

         (d) Workers' compensation insurance, disability benefits insurance, and
     such other form of  insurance  which the  Mortgagor  is  required by law to
     provide, covering loss resulting from injury, sickness, disability or death
     of employees of Mortgagor who are located at or assigned to the Premises or
     who are responsible for the construction of the Improvements.

         (e) Insurance protecting Mortgagor and Mortgagee against loss or losses
     from  liabilities  imposed by law or assumed in any  written  contract  and
     arising from personal  injury and death or damage to the property of others
     caused by accident or occurrence, in such amounts as may be designated from
     time to time by Mortgagee,  excluding  liability imposed upon the Mortgagor
     by any applicable  workers'  compensation law, or such other amounts as may
     be required in writing by the  Mortgagee;  and a blanket  excess  liability
     policy in an amount  reasonably  satisfactory  to the Mortgagee  protecting
     Mortgagor  and  Mortgagee  against  any loss or  liability  or  damage  for
     personal injury or property damage.

     4. OTHER INSURANCE  PROVISIONS,  All insurance required under this Mortgage
shall be procured and maintained in financially  sound and generally  recognized
responsible  insurance  companies  selected by the Mortgagor  and  authorized to
write such insurance in the  Commonwealth of Pennsylvania  and acceptable to the
Mortgagee.  Such insurance may be written with deductible  amounts comparable to
those on similar  policies  carried  by other  entities  engaged  in  businesses
similar in size, character and other respects to those in which the Mortgagor is
engaged. All policies evidencing such insurance shall provide for (i) payment of
the losses to Mortgagor and Mortgagee as their respective  interests may appear,
and (ii) at least thirty (30) days written  notice to  Mortgagor  and  Mortgagee
prior to cancellation, reduction in policy limits or material change in coverage
thereof.  The insurance  required by Section 3(a) shall  contain a  Pennsylvania
mortgagee  endorsement in favor of Mortgagee.  All insurance  required hereunder
shall be in form,  content  and  coverage  satisfactory  to the  Mortgagee.  The
original policy, or a certified



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duplicate copy thereof,  for all insurance required hereby shall be delivered to
Mortgagee. So long as no Event of Default shall have occurred and is continuing,
the Mortgagor may adjust  losses and receive  insurance  proceeds in amounts not
greater than $250,000.00 without the prior written consent of the Mortgagee.  If
an Event of Default has occurred and is continuing, or if the insurance proceeds
to be paid with respect to a casualty are equal to or greater than  $250,000.00,
then the  Mortgagor  may not adjust a casualty  loss or  receive  such  proceeds
without  the  prior  written  consent  of the  Mortgagee.  The  proceeds  of any
insurance  equal to or greater than  $250,000.00  shall be paid to the Mortgagee
and may be applied by the Mortgagee  toward the payment of any monies secured by
this Mortgage, or, may be paid over, wholly or in part, to the Mortgagor for the
repair of the  Improvements  or for any other purpose or object  satisfactory to
the  Mortgagee.  The  Mortgagor  shall be  obligated  to repair and  restore the
Mortgaged  Property  following the occurrence of a casualty only if the proceeds
of insurance are made  available to the  Mortgagor.  Mortgagor  shall deliver to
Mortgagee  at  least  thirty  (3 0) days  prior  to the  expiration  date of any
insurance coverages required hereunder,  a certificate reciting that there is in
full force and effect,  with a term covering at least the next succeeding  year,
insurance in the amounts and of the types required hereunder.

     5. ALTERATIONS.  No Improvements shall be structurally altered,  removed or
demolished without the prior written consent of Mortgagee.

     6.  APPOINTMENT  OF RECEIVER.  Mortgagee  in any action to  foreclose  this
Mortgage shall be entitled,  without notice and as a matter of right and without
regard to the  adequacy of any security of the  indebtedness  or the solvency of
Mortgagor, upon application to any court having jurisdiction, to the appointment
of a receiver of the rents, income and profits of the Mortgaged Property.

     If an Event of Default (hereinbelow defined) occurs under this Mortgage, as
a matter of right and without  regard to the  adequacy of any  security  for the
Note,  the  Mortgagor,  upon  demand  of  the  Mortgagee,  shall  surrender  the
possession of, and it shall be lawful for Mortgagee, by such officer or agent as
it may appoint, to take possession, of all or any part of the Mortgaged Property
together  with the books,  papers,  and  accounts  of the  Mortgagor  pertaining
thereto, and to hold, operate and manage the same, and from time to time to make
all needed  repairs  and  improvements  as  Mortgagee  shall deem wise;  and, if
Mortgagee  deems  it  necessary  or  desirable,  to  complete  construction  and
equipping  of any  Improvements  and in  the  course  of  such  construction  or
equipping  to make  such  changes  to the  same as it may  deem  desirable;  and
Mortgagee  may sell the  Mortgaged  Property or any part  thereof,  or institute
proceedings for the complete or partial foreclosure of the lien of this Mortgage
on the Mortgaged Property, or lease the Premises or any part thereof in the name
and for the account of the  Mortgagor  or  Mortgagee  and  collect,  receive and
sequester the rents, revenues, earnings, income, products and profits therefrom,
and out of the same and any other monies  received  hereunder pay or provide for
the  payment of, all proper  costs and  expenses  of taking,  holding,  leasing,
selling and managing the same, including  reasonable  compensation to Mortgagee,
its agents and counsel,  and any charges of Mortgagee  hereunder,  and any taxes
and other charges prior to the lien of this Mortgage which Mortgagee may deem it
wise to pay.


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     7. PAYMENT OF TAXES. Mortgagor will pay all taxes, assessments, sewer rents
or water  rates or sums due under any payment in lieu of tax  agreement  ("Pilot
Agreement")  and in default  thereof,  Mortgagee  may pay the same. In the event
that  Mortgagee  shall pay any such tax,  assessment,  sewer rent or water rate,
Mortgagee  shall have the right,  among other  rights,  to declare the amount so
paid with  interest  thereon  immediately  due and payable,  and upon default of
Mortgagor in paying any such amount with interest thereon,  Mortgagee shall have
the right to foreclose for such amount  subject to the  continuing  lien of this
Mortgage for the balance of the mortgage indebtedness not then due.

     In the event that the  Mortgagor  should fail to pay any sum the  Mortgagor
has agreed to pay pursuant to this covenant for a period in excess of sixty (60)
days  after the same is due and  payable,  in  addition  to any  other  remedies
available to the Mortgagee hereunder,  the Mortgagee may, at its option, require
that the Mortgagor deposit with the Mortgagee,  monthly, one-twelfth (1/12th) of
the annual  charges for taxes and any other sums the  Mortgagor  is obligated to
pay pursuant to this  covenant and the  Mortgagor  shall make such deposits with
the Mortgagee.  The Mortgagor shall  simultaneously  therewith  deposit with the
Mortgagee  a  sum  of  money  which  together  with  the  monthly   installments
aforementioned  will be  sufficient  to make payment of all sums  required to be
paid hereunder at least thirty (30) days prior to the due date of such payments,
it being  understood  that the  Mortgagee  shall  calculate  the  amount of such
deposits  and notify the  Mortgagor  of the sum due.  Should an Event of Default
(hereinbelow  defined) occur, the funds deposited with the Mortgagee pursuant to
this  provision  may be applied in payment of the  charges  for which said funds
shall have been  deposited  or to the payment of any other sums  secured by this
Mortgage as the Mortgagee sees fit.

     8. PAYMENT OF MORTGAGE TAXES.  Mortgagor shall pay all taxes imposed by any
statute,  order  or  regulation,  whether  said  tax is  imposed  at the time of
recording or subsequent thereto.  This obligation shall survive the satisfaction
or other termination of this Mortgage.

     9. STATEMENT OF AMOUNT DUE. Mortgagor, within five (5) days upon request in
person or within fifteen (15) days upon request by mail,  will furnish a written
statement duly  acknowledged  of the amount due on this Mortgage and whether any
offsets or defenses exist against the said indebtedness.

     10. NOTICES.  Any notices required or permitted to be given hereunder shall
be: (i)  personally  delivered or (ii) given by  registered  or certified  mail,
postage  prepaid,  return  receipt  requested,  or (iii)  forwarded by overnight
courier  service,  in each instance  addressed to the addresses set forth at the
head of this Mortgage, or such other addresses as the parties may for themselves
designate  in writing as provided  herein for the purpose of  receiving  notices
hereunder.  All notices  shall be in writing and shall be deemed  given,  in the
case of notice by personal  delivery,  upon actual delivery,  and in the case of
appropriate mail or courier  service,  upon deposit with the U.S. Postal Service
or delivery to the courier service.

     11.  WARRANTY  OF TITLE.  Mortgagor  warrants  the  title to the  Premises,
Improvements and Chattels.



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     12. SALE IN ONE PARCEL.  In case of a sale, the Premises may be sold in one
parcel together with the Improvements and Chattels.  Should the Premises consist
of more than one parcel,  in the event of a foreclosure  of this Mortgage or any
mortgage at any time  consolidated  with this  Mortgage,  Mortgagor  agrees that
Mortgagee shall be entitled to a judgment directing the referee appointed in the
foreclosure  proceeding to sell all of the parcels  constituting the Premises at
one  foreclosure  sale,  either as a group or separately  and that the Mortgagor
expressly  waives  any right  that it may now have or  hereafter  acquire to (i)
request or require  that the  parcels be sold  separately  or (ii)  request,  if
Mortgagee has elected to sell parcels separately,  that there be a determination
of any  deficiency  amount after any such separate  sale or otherwise  require a
calculation of whether said parcel or parcels  separately sold were conveyed for
their "fair market value".

     13. ASSIGNMENT OF RENTS AND LEASES.  The rents,  income,  security deposits
and  profits  of the  Premises  and all leases at any time  existing  are hereby
assigned to Mortgagee as further security for the payment of said  indebtedness,
and  Mortgagor  shall,  on demand,  surrender  possession  of the  Premises  and
Improvements  and Chattels to Mortgagee,  and hereby  consents that, at any time
after such demand,  Mortgagee may enter upon and take possession of the Premises
and Improvements and Chattels and let the same and collect all rents, income and
profits  therefrom  which  are due or to become  due and  apply the same,  after
payment  of  all  charges  and  expenses,   on  account  of  any  part  of  said
indebtedness,  whether matured or not, but Mortgagee  hereby waives the right to
enter upon and take possession of the Premises and Improvements and Chattels for
the purpose of collecting said rents, income and profits, and Mortgagor shall be
entitled to collect and receive said rents,  income and profits (except as might
be  otherwise  provided  in any  assignment  of rents  and  leases  executed  in
connection with this Mortgage),  until the occurrence of an Event of Default. If
an Event of Default occurs, Mortgagee, by virtue of such right to possession, or
as the agent of Mortgagor may dispossess, by the usual summary proceedings,  any
tenant then or thereafter  in default in the payment of any rent,  and Mortgagor
hereby  irrevocably  appoints Mortgagee the agent of Mortgagor for such purpose.
In the event that Mortgagor is an occupant of the Premises or the  Improvements,
Mortgagor  agrees to surrender  possession  of the Premises or  Improvements  so
occupied as Mortgagee may demand and in default of so doing,  Mortgagor may also
be  dispossessed  by  the  usual  summary  proceedings.  Mortgagor  makes  these
covenants for the benefit of Mortgagee and any subsequent owner of the Mortgaged
Property  and these  covenants  shall  become  effective  immediately  after the
happening  of any Event of Default  solely on the  determination  of  Mortgagee,
provided Mortgagee shall give notice of such determination to Mortgagor. In case
of foreclosure and the appointment of a receiver of rents,  the covenants herein
contained shall inure to the benefit of such receiver.

     14. NEGATIVE COVENANTS. Mortgagor will not (i) execute an assignment of the
rents, income or profits, or any part thereof from the Mortgaged Property except
to  Mortgagee,  or (ii)  except  where  the  tenant  is in  default  thereunder,
terminate  or  consent  to the  cancellation  or  surrender  of any lease of the
Premises or Improvements or of any part thereof, now existing or hereafter to be
made,  having an unexpired term of two (2) years or more,  except that any lease
may be canceled  provided  that  promptly  after the  cancellation  or surrender
thereof a new lease is entered into with a new tenant having a credit  standing,
in the  judgment of the  Mortgagee,  at least  equivalent  to that of the tenant
whose lease was canceled, on substantially the same terms as the terminated or



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canceled  lease,  or modify any such lease so as to shorten the  unexpired  term
thereof or so as to  decrease  the amount of the rents  payable  thereunder,  or
(iii) accept  prepayments  of any sums to become due under such  leases,  except
prepayments of rent for more than one (1) month in advance or prepayments in the
nature of security for the  performance of the tenants  thereunder,  (iv) in any
other manner impair the value of the Mortgaged  Property or the security of this
Mortgage  or (v)  further  encumber,  alienate,  hypothecate,  grant a  security
interest in or grant any other interest whatsoever in the Mortgaged Property. No
rent reserved under any lease of the Premises or Improvements  has been assigned
or  anticipated,  and no rent for any period  subsequent  to the date hereof has
been collected in advance of the due date thereof Mortgagor will not execute any
lease of all or a substantial portion of the Premises or Improvements except for
actual  occupancy by the tenant  thereunder,  and will at all times promptly and
faithfully perform, or cause to be performed,  all of the covenants,  conditions
and agreements  contained in all leases of the Premises or  Improvements  now or
hereafter  existing,  on the  part of the  landlord  thereunder  to be kept  and
performed and will at all times do all things necessary to compel performance by
the tenant under each lease of all obligations, covenants and agreements by such
tenant to be performed thereunder.  If any of such leases provide for the giving
by the  tenant of  certificates  with  respect  to the  status  of such  leases,
Mortgagor shall exercise its right to request such certificates  within five (5)
days of any demand therefor by Mortgagee.  Mortgagor shall furnish to Mortgagee,
upon request of Mortgagee to do so, a written statement  containing the names of
all  tenants of the  Premises  or  Improvements,  the terms of their  respective
leases, the space occupied and the rentals payable thereunder.

     15. APPRAISAL:  LOAN TO VALUE RATIO. For the purposes of this Section,  the
following terms shall be defined as follows:

         (a) "Appraisal" shall mean an appraisal of the fair market
value ("as stabilized") of the Mortgaged Property prepared by an Appraiser.

         (b)  "Appraiser"  shall mean an  appraiser  selected by  Mortgagor  and
     approved by Mortgagee.

         (c)  "Loan To  Value  Ratio"  shall  mean the  percentage  obtained  by
     dividing the then outstanding  principal balance under the Note by the fair
     market value of the Premises set forth in the Appraisal.

         (d) "Target  Loan To Value  Ratio"  shall mean sixty  (60%)  percent or
     less.

     Within ninety (90) days from the date Mortgagee has mailed a written notice
to  Mortgagor  requesting  the  same,  Mortgagor  shall  provide  Mortgagee,  at
Mortgagor's expense,  with an Appraisal of the Mortgaged Property.  An Appraisal
may be required not more  frequently  than once every twelve (12) months  except
that it may also be required prior to any extension or renewal of the Note.

     When Mortgagee receives the Appraisal,  it will determine the Loan To Value
Ratio and if the Loan To Value  Ratio is greater  than the Target  Loan To Value
Ratio,  the  Mortgagor  must,  within  thirty  (30) days  after  receipt  of the
Appraisal, do one of the following:



                                      - 9 -



<PAGE>



         (e) Provide  Mortgagee  with  collateral  in addition to the  Mortgaged
     Property (and any other  collateral  for the Note) which is in all respects
     acceptable  to the  Mortgagee  which will reduce the Loan To Value Ratio to
     the Target Loan To Value Ratio; or

         (f) Make such principal  payments  (which will be accepted by Mortgagee
     without the payment of any prepayment penalty chargeable under the Note) as
     will  reduce  the  principal  balance  of the Note to an amount  which will
     reduce the Loan To Value Ratio to the Target Loan To Value Ratio; or

         (g) Pay all  sums  due  Mortgagee  under  the  Note or any  other  Loan
     Document (as that term is defined in the Note).

     16. BOOKS AND RECORDS.

         (a) In addition to any  requirements  elsewhere in the Loan  Documents,
     Mortgagor  shall keep and  maintain at all times at  Mortgagors'  addresses
     stated in this  Mortgage,  or such other place as Mortgagee  may approve in
     writing,  complete and accurate  books of accounts and records  adequate to
     reflect  correctly the results of the  operation of the Mortgaged  Property
     and copies of all written  contracts,  leases and other  instruments  which
     affect the Mortgaged Property. Such books, records,  contracts,  leases and
     other  instruments  shall be subject to  examination  and inspection at any
     reasonable time by Mortgagee, upon reasonable notice.

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

     17.  FUTURE  LAWS.  In the  event  of the  passage  after  the date of this
Mortgage of any federal state or municipal law, deducting from the value of land
for the purposes of taxation any lien thereon,  or changing in any way, the laws
for the taxation of mortgages or debts  secured by  mortgages,  or the manner of
collection of any such taxes, so as to affect Mortgagee,  this Mortgage, or said
indebtedness,  Mortgagee  shall have the right to give thirty (30) days' written
notice to Mortgagor  requiring the payment of said indebtedness.  If such notice
be given,  said  indebtedness  shall become due,  payable and collectible at the
expiration of said thirty (30) days.

     18. [INTENTIONALLY OMITTED]

     19. PROVISIONS REGARDING USE OF MORTGAGED PROPERTY.  Mortgagor warrants and
represents that:



                                     - 10 -





<PAGE>



         (a) Mortgagor is not responsible  for any action or omission,  and does
     not know of any action or omission by any prior owner, that would cause the
     Mortgaged Property to be subject to forfeiture pursuant to any law, rule or
     regulation (a "Forfeiture").

         (b) The Mortgaged Property has not been acquired with any proceeds from
     a transaction or an activity that would cause the Mortgaged  Property to be
     subject to Forfeiture.

         Mortgagor  covenants  that  Mortgagor will not use, and will not permit
     any third party to use, the  Mortgaged  Property or any portion  thereof or
     interest  therein for any purpose or activity that would cause a Forfeiture
     thereof

     20.  ACTIONS AND  PROCEEDINGS.  If any action or proceeding be commenced to
which  action or  proceeding  Mortgagee  is made a party and in which it becomes
necessary  in the  opinion  of  Mortgagee  to defend or uphold  the lien of this
Mortgage,  all sums paid by  Mortgagee  for the  expense  of any  litigation  to
prosecute  and defend the rights and lien  created by this  Mortgage,  including
reasonable  counsel fees,  costs and allowances,  shall,  together with interest
thereon be a lien on the  Mortgaged  Property  and secured by this  Mortgage and
shall be  collectible in like manner as said  indebtedness  and shall be paid by
Mortgagor on demand.

     21.  SECURITY  INTEREST UNDER THE UNIFORM  COMMERCIAL  CODE.  Mortgagee is
authorized to sign as the agent of Mortgagor  such agreement in addition to this
Mortgage as  Mortgagee  at any time may deem  necessary  or proper or require to
grant to  Mortgagee a perfected  security  interest in the  Chattels.  Mortgagor
hereby  authorizes  Mortgagee  to file  financing  statements  (as such  term is
defined in said Uniform  Commercial  Code) with respect to the Chattels,  at any
time, without the signature of Mortgagor.  Mortgagor will,  however, at any time
upon request of Mortgagee,  sign such financing  statements.  Mortgagor will pay
all filing fees for the filing of such financing statements and for the refiling
thereof at the times  required,  in the opinion of  Mortgagee,  by said  Uniform
Commercial  Code.  If the  lien of this  Mortgage  be  subject  to any  security
agreement  covering the  Chattels,  then in the event of any default  under this
Mortgage,  all the right,  title and interest of Mortgagor in and to any and all
of the Chattels is hereby  assigned to  Mortgagee,  together with the benefit of
any  deposits or payments  now or  hereafter  made  thereof by  Mortgagor or the
predecessors or successors in title of Mortgagor in the Mortgaged Property.

     22.  CONDEMNATION.  Any and all awards  heretofore  and  hereafter  made to
Mortgagor  and  all  subsequent   owners  of  the  Mortgaged   Property  by  any
governmental or other lawful authorities for the taking by eminent domain of the
whole or any part of the Mortgaged  Property or any easement therein,  including
any  awards  for any  changes  of grade  of  streets,  are  hereby  assigned  to
Mortgagee.  So long as no Event of Default has occurred and is  continuing,  the
Mortgagor  may settle  and adjust  claims  and  receive  condemnation  awards in
amounts  less  than  $250,000.00  without  the  prior  written  consent  of  the
Mortgagee. In the event that an Event of Default has occurred and is continuing,
or if any such claim is equal to or greater than $250,000.00, then the Mortgagee
is hereby authorized to collect and receive the proceeds of any such awards from
such authorities, to give proper receipts and acquittances therefor and to apply
the same toward the


                                     - 11 -





<PAGE>



payment of the amount owing on account of this  Mortgage and said  indebtedness,
notwithstanding  the fact that the amount owing  thereon may not then be due and
payable;  and  Mortgagor  hereby  covenants and agrees,  upon request,  to make,
execute and deliver any and all assignments and other instruments sufficient for
the purpose of  assigning  the  aforesaid  awards to Mortgagee  free,  clear and
discharged  of any and  all  encumbrances  of any  kind  or  nature  whatsoever.
Mortgagor  shall  continue to make all  payments  required by the Note until any
such award shall have been  actually  received by Mortgagee and any reduction in
said  indebtedness  resulting  from the  application  by Mortgagee of such award
shall be deemed to take effect only on the date of such receipt.

     Notwithstanding  the  foregoing,  if any one or more of the portions of the
Mortgaged Property described in subparagraphs (a) and (b) below shall be damaged
or taken through  condemnation,  either  temporarily  or  permanently,  then the
entire  balance due under the Note and any other Loan  Documents  shall,  at the
option of Mortgagee, become immediately due and payable:

         (a) Any  portion or  portions  of the  Improvements  or the  support or
     foundation of any portion or portions of the Improvements; or

         (b) Any portion or portions of the Premises  which,  when so damaged or
     taken,  would  result  either  in  (i)  an  impairment  of  access  to  the
     Improvements  from the publicly  dedicated  rights of way now adjoining the
     Premises,  or (ii) the  failure  of the  Improvements  to  comply  with any
     building code, zoning or other  governmental laws or regulations,  lease or
     other agreement to which the Mortgaged Property is subject.

     Mortgagor  authorizes  Mortgagee,  at  Mortgagee's  option,  following  the
occurrence  and during the  continuance  of an Event of Default,  as attorney in
fact for  Mortgagor,  to commence,  appear in and  prosecute in  Mortgagor's  or
Mortgagee's name, any action or proceeding relating to any condemnation or other
taking  of the  Mortgaged  Property  and to settle  or  compromise  any claim in
connection with such condemnation or other taking.

     23.  TITLE  TO  MORTGAGED  PROPERTY.  Mortgagor  is now  the  owner  of the
Mortgaged Property upon which this Mortgage is a valid first lien for the amount
above  specified,  with  interest  thereon at the rate set forth in the Note and
there are no defenses or offsets to this Mortgage or to the said indebtedness.

     24. LEASES OF THE MORTGAGED  PROPERTY.  Mortgagor will not lease all or any
portion of the Mortgaged Property or amend, modify or terminate any now existing
or future lease of the Mortgaged  Property  without the prior written consent of
Mortgagee.  Notwithstanding the foregoing, all leases covering more than fifteen
percent (I 5%) of the gross  leasable  area of the  Mortgaged  Property  (if the
Mortgaged  Property  is  improved  rental  property)  must  require  the  tenant
thereunder to provide  Mortgagee with annual financial  statements of the tenant
certified  to by an  independent  certified  public  accountant.  Mortgagor,  at
Mortgagee's request,  shall furnish Mortgagee with executed copies of all leases
hereafter made of all or any part of the Mortgaged Property,  and all leases now
or hereafter  entered into will be in form and substance subject to the approval
of


                                     - 12 -





<PAGE>



Mortgagee.  Upon  Mortgagee's  request,  Mortgagor  shall  make a  separate  and
distinct  assignment  to  Mortgagee,  as  additional  security,  of  all  leases
hereafter made a part of the Mortgaged Property.

     25. TRANSFER OF MORTGAGED PROPERTY. In the event of the sale, conveyance or
transfer, by deed, any other voluntary or involuntary act or by operation of law
or otherwise  (including  the entry into any land sale contract or other similar
agreement)  of-any interest in any of the stock of Mortgagor,  if Mortgagor be a
corporation,  or partnership interest, if Mortgagor be a partnership,  or of the
Mortgaged  Property or a part thereof,  while this Mortgage  shall remain a lien
thereon,  the full  balance of the  indebtedness  then  remaining  unpaid,  with
interest,  shall, at the option of the Mortgagee, or its assigns, be immediately
due and payable without notice or demand unless the prior written consent of the
Mortgagee to such sale,  conveyance,  or transfer  shall have been  obtained.  A
mortgage of the  Mortgaged  Property to any  mortgagee  other than the Mortgagee
shall be deemed a conveyance for the purpose of this Section.

     26. ACCESS.  Mortgagee, by its employees or agents, shall at all times have
the right to enter upon the Mortgaged Property during reasonable  business hours
for the purpose of examining and inspecting the same.

     27. [INTENTIONALLY OMITTED].

     28. PERFORMANCE OF MORTGAGOR'S COVENANTS BY MORTGAGEE.  In the event of any
default in the  performance  of any of the  covenants,  terms,  or provisions of
Mortgagor  under this  Mortgage,  Mortgagee  may,  at the  option of  Mortgagee,
perform the same and the cost thereof,  with interest,  shall immediately be due
from Mortgagor to Mortgagee and secured by this Mortgage.

     29.  REMIEDIES NOT EXCLUSIVE.  Mortgagee  shall have the right from time to
time, to take action to recover any amounts of past due  principal  indebtedness
and interest  thereon,  or any installment of either, or any other sums required
to be paid under the  covenants,  terms and  provisions  of this Mortgage or the
Note, as the same become due, whether or not the principal indebtedness secured,
or any other sums secured by the Note or this Mortgage shall be due, and without
prejudice  to  the  right  of  Mortgagee   thereafter  to  bring  an  action  of
foreclosure,  or any other action, for default or defaults by Mortgagor existing
at the time such earlier action was commenced.

     30.  ADDITIONAL  ACTS AND DOCUMENTS.  Mortgagor  covenants that it will do,
execute, acknowledge, deliver, file and/or record, or cause to be recorded every
and all such further acts, deeds, conveyances,  advances,  mortgages,  transfers
and  assurances,  in law as  Mortgagee  shall  require for the better  assuring,
conveying, transferring, mortgaging, assigning and confirming unto Mortgagee all
and singular the Mortgaged Property.

     31.  REMEDIES  CUMULATIVE.  The  rights and  remedies  herein  afforded  to
Mortgagee  shall be  cumulative  and  supplementary  to and not exclusive of any
other rights and remedies afforded the holder of this Mortgage and the Note.


                                     - 13 -





<PAGE>



     32.  SUCCESSORS.  All of the provisions of this Mortgage shall inure to the
benefit of Mortgagee and of any subsequent  holder of this Mortgage and shall be
binding upon Mortgagor and each subsequent owner of the Mortgaged Property.

     33. EFFECT OF RELEASES.  Mortgagee, without notice, may release any part of
the  security  described  herein,  or  any  person  or  entity  liable  for  any
indebtedness  secured  hereby  without in any way affecting the lien hereof upon
any part of the security not  expressly  released,  and may agree with any party
obligated on said indebtedness or having any interest in the security  described
herein to extend  the time for  payment  of any part or all of the  indebtedness
secured  hereby.  Such agreement shall not in any way release or impair the lien
hereof,  but shall  extend the lien  hereof as against  the title of all parties
having any interest in said  security,  which  interest is subject to said lien,
and no such release or agreement shall release any person or entity obligated to
pay any indebtedness secured hereby.

     34. WAIVERS. Any failure by Mortgagee to insist upon the strict performance
by Mortgagor Of any of the  covenants,  terms and  provisions  of this  Mortgage
shall not be deemed to be a waiver of any of the covenants, terms and provisions
of this Mortgage,  and Mortgagee,  notwithstanding any such failure,  shall have
the right  thereafter to insist upon the strict  performance by Mortgagor of any
and all of the covenants,  terms and provisions of this Mortgage to be performed
by Mortgagor.  Neither Mortgagor nor any other person or entity now or hereafter
obligated for the payment of the whole or any part of said indebtedness shall be
relieved of such  obligation by reason of (i) the failure of Mortgagee to comply
with any request of  Mortgagor,  or of any other person or entity so  obligated,
(ii) the failure of  Mortgagee  to take  action to  foreclose  this  Mortgage or
otherwise enforce any of the covenants, terms and provisions of this Mortgage or
the Note, (iii) the release,  regardless of  consideration,  of the whole or any
part of the security held for payment of said indebtedness or (iv) any agreement
or stipulation  between any subsequent owner or owners of the Mortgaged Property
and Mortgagee modifying the covenants,  terms and provisions of this Mortgage or
the Note without  first  having  obtained the consent of Mortgagor or such other
person or entity.  In the last  mentioned  event,  Mortgagor  and all such other
persons or entities shall continue liable to make such payments according to the
terms and provisions of any such agreement or extension or  modification  unless
expressly  released  and  discharged  in writing  by  Mortgagee.  Mortgagee  may
release, regardless of consideration,  any part of the security held for payment
of said indebtedness  without,  as to the remainder of the security,  in any way
impairing  or affecting  the lien of this  Mortgage or the priority of such lien
over  any  subordinate  lien.  Mortgagee  may  resort  for the  payment  of said
indebtedness to any other security  therefor held by Mortgagee in such order and
manner as Mortgagee may elect.

     35. INTEREST ON ADVANCES.  Wherever,  under the provisions of this Mortgage
or by law,  Mortgagee  is entitled  to  interest  on  advances  made or expenses
incurred, such interest shall be computed at a rate per annum which shall be the
interest rate payable under the Note.

     36. MORTGAGEE NOT OBLIGATED. Nothing herein contained shall be construed as
making the payment of any insurance  premiums,  taxes or assessments  obligatory
upon Mortgagee,  although  Mortgagee may pay same, or as making Mortgagee liable
in any way for loss,



                                     - 14 -



<PAGE>



damage or injury, resulting from the non-payment of any such insurance premiums,
taxes or assessments.

     37. ADVANCES.  Mortgagor will receive the advances secured by this Mortgage
and will hold the right to receive  such  advances as a trust fund to be applied
first for the purpose of paying the cost of the  improvement  and will apply the
same first to the payment of the cost of the  improvement  before using any part
of the total of the same for any other purpose.

     38. ENVIRONMENTAL WARRANTEES AND COVENANTS.

         (a)  Warranties.  Mortgagor  makes the  following  representations  and
     warranties,  to the best of its  knowledge,  except as  described in either
     environmental  assessment  report  furnished  by  Mortgagor to Mortgagee in
     connection with the Mortgaged Property, (i) Mortgagor (or the present owner
     of the Mortgaged  Property,  if different) is in compliance in all respects
     with  all  applicable  federal,  state  and  local  laws  and  regulations,
     including,  without  limitation,  those  relating  to toxic  and  hazardous
     substances and other environmental matters (the "Laws"), (ii) no portion of
     the Mortgaged Property is being used or has been used at any previous time,
     -for the disposal, storage, treatment,  processing or other handling of any
     hazardous or toxic substances, in a manner not in compliance with the Laws,
     (iii) the soil and any surface  water and ground  water which are a part of
     the Mortgaged  Property are free from any solid wastes,  toxic or hazardous
     substance or contaminant and any discharge of sewage or effluent;  and (iv)
     neither  the  federal  government  nor  the  Commonwealth  of  Pennsylvania
     Department of Environmental  Protection or any other  governmental or quasi
     governmental  entity has filed a lien on the  Mortgaged  Property,  nor are
     there any governmental  judicial or administrative  actions with respect to
     environmental matters pending, or to the best of the Mortgagor's knowledge,
     threatened, which involve the Mortgaged Property.

         (b)  Inspection.   If  Mortgagee  has  a  reasonable  basis  therefore,
     Mortgagor  agrees that Mortgagee or its agents or  representatives  may, at
     any reasonable  time,  upon  reasonable  notice and at Mortgagor's  expense
     inspect  Mortgagor's books and records and inspect and conduct any tests on
     the Mortgaged  Property including taking soil samples in order to determine
     whether Mortgagor is in continuing compliance with the Laws, so long as the
     Mortgaged  Property is restored to its condition prior to the  commencement
     of such tests.

         (c) Agreement to Comply. If any environmental contamination is found on
     the Mortgaged Property for which any removal or remedial action is required
     pursuant to Law, ordinance, order, rule, regulation or governmental action,
     Mortgagor  agrees  that it will at its sole  cost and  expense,  take  such
     removal or remedial action promptly and to Mortgagee's satisfaction.

         (d)  Indemnification.  Mortgagor  agrees to defend,  indemnify and hold
     harmless Mortgagee, its employees,  agents, officers and directors from and
     against  any  claims,  actions,  demands,  penalties,  fines,  liabilities,
     settlements,  damages,  costs or expenses  (including,  without limitation,
     reasonable  attorney and  consultant  fees,  investigations  and laboratory
     fees, court costs and litigation  expenses of whatever kind or nature known
     or unknown,  contingent or otherwise)  arising out of or in any way related
     to: (i) the past or present disposal, release or threatened release




                                     - 15 -



<PAGE>



     of any hazardous or toxic  substances on the Mortgaged  Property;  (ii) any
     personal  injury  (including  wrongful  death or property  damage,  real or
     personal)  arising out of or related to such hazardous or toxic substances;
     (iii) any lawsuit brought or threatened,  settlement  reached or government
     order given relating to such hazardous or toxic substances; and/or (iv) any
     violation  of any law,  order,  regulation,  requirement,  or demand of any
     government authority,  or any policies or requirements of Mortgagee,  which
     are based upon or in any way related to such hazardous or toxic substances.

         (e) Other Sites.  Mortgagor  knows of no on-site or off-site  locations
     where  hazardous or toxic  substances from the operation of any Improvement
     have been stored, treated, recycled or disposed of

         (f) Leases. Mortgagor agrees not to lease or permit the sublease of the
     Mortgaged  Property to a tenant or subtenant whose operations may result in
     contamination of the Mortgaged Property with hazardous or toxic substances.

         (g) Non-Operation by Mortgagee.  Mortgagor acknowledges that any action
     Mortgagee  takes under this Mortgage shall be taken to protect  Mortgagee's
     security interest only;  Mortgagee does not hereby intend to be involved in
     the operations of the Mortgagor.

         (h)  Compliance   Determinations.   Mortgagor   acknowledges  that  any
     determinations Mortgagee makes under this Section regarding compliance with
     environmental  laws shall be made for Mortgagee's  benefit only and are not
     intended to be relied upon by any other party.

         (i) Survival of Conditions.  The provisions of ties Section shall be in
     addition to any other  obligations  and  liabilities  Mortgagor may have to
     Mortgagee at common law, and shall  survive the  transactions  contemplated
     herein,  subject to the limitations  described in Section 4 of that certain
     Hazardous  Substances  Indemnity Agreement by and between the Mortgagor and
     the Mortgagee of even date herewith.

         (j) Definitions.  The term "hazardous substance" shall include, without
     limit, any substance or material defined in 42 U.S.C.  Section 9601 (as the
     same  may  be  amended  from  time  to  time),   the  Hazardous   Materials
     Transportation   Act  (as  amended  from  to  time),   and  any   analogous
     Commonwealth of Pennsylvania  statute (as may be amended from time to time)
     and in any regulations adopted or publications  promulgated pursuant to any
     of the foregoing.

     39. EVENTS OF DEFAULT.  The whole of the principal sum of the  indebtedness
secured hereby and interest thereon and all other sums due and payable hereunder
shall become due, at the option of  Mortgagee,  if one or more of the  following
events (an "Event of Default") shall happen:

         (a) The occurrence of an "Event of Default" under the Note; or

         (b) If  Mortgagor  defaults  in the  payment of any tax,  water rate or
     sewer rent or  payment  under any Pilot  Agreement  against  the  Mortgaged
     Property for thirty (30) days after the


                                     - 16 -



<PAGE>



     same become due and payable or fails to exhibit to Mortgagee, within thirty
     (30) days after demand,  receipts showing payment of all taxes, water rates
     or sewer rents; or

         (c)  The  actual  or  threatened   removal   demolition  or  structural
     alteration,  in whole or in part,  of any  Improvement,  without  the prior
     written consent of Mortgagee; or the removal,  demolition or destruction in
     whole or in part, of any Chattels without replacing the, same with Chattels
     at least equal in quality and  condition to those  replaced,  free from any
     security  interest  or  other   encumbrance   thereon  and  free  from  any
     reservation of title thereto;  or the commission of any waste in respect to
     the Mortgaged Property; or

         (d) Failure of Mortgagor to pay within  fifteen (I 5) days after notice
     and demand any  installment of any assessment made against the Premises for
     local  improvements,  heretofore or hereafter made, which assessment is, or
     may  become,  a lien on the  Premises  prior to the lien of this  Mortgage,
     notwithstanding  the fact that such  installment  be not due and payable at
     the time of such notice and demand; or

         (e) Failure of Mortgagor to pay the said  indebtedness  secured by this
     Mortgage  within  (30) days after  notice and  demand,  in the event of the
     passage after the date of this Mortgage of any federal,  state or municipal
     law  deducting  from the value of land for the purpose of taxation  any Hen
     thereon,  or changing in any way the laws now in force for the  taxation of
     mortgages, or of debts secured by mortgages, or the manner of collection of
     any  such  taxes,  so  as  to  affect  Mortgagee,   this  Mortgage  or  the
     indebtedness which is secured,  notwithstanding  that Mortgagor,  before or
     after such  notice,  may have the option to pay or contest  the  payment of
     such tax; or

         (f) Failure of Mortgagor to maintain the  Improvements  on the Premises
     in a  rentable  or  tenantable  state  of  repair  to the  satisfaction  of
     Mortgagee,  for thirty (3 0) days  after  notice of such  failure  has been
     given to  Mortgagor,  or to  comply  with any order or  requirement  of any
     municipal,   state,   federal  or  other   governmental   authority  having
     jurisdiction  of the Premises  within  thirty (30) days after such order or
     requirement  shall have been  issued by any such  authority;  or failure of
     Mortgagor or of any tenant holding under Mortgagor,  to comply with any and
     all and  singular  the  statutes,  requirements,  orders or  decrees of any
     federal,  state or municipal authority relating to the use of the Mortgaged
     Property,  or of any part  thereof,  or failure of Mortgagor to observe and
     timely perform all of the covenants,  terms and provisions contained in any
     lease now or hereafter  affecting the Premises or the  Improvements  or any
     portion thereof,  on the part of the landlord to be observed and performed;
     or

         (g) Failure of Mortgagor, in the event of the entry of a final judgment
     for the payment of money against  Mortgagor,  to discharge such judgment or
     to have it stayed  pending  appeal  within  thirty (30) days from the entry
     thereof,  or if such judgment  shall be affirmed on appeal,  the failure to
     discharge  such  judgment  within  thirty  (30) days from the entry of such
     affirmance; or

         (h) Failure of Mortgagor to pay within  fifteen (I 5) days after notice
     and demand any filing or refiling fees required hereunder; or



                                     - 17 -




<PAGE>



         (i) Failure of Mortgagor or any occupant of the Mortgaged Property,  to
     allow or permit  Mortgagee,  or its duly authorized  agent, to inspect said
     Mortgaged  Property  at any time and from  time to time  during  reasonable
     business hours and following reasonable notice; or

         (j)  Default  for  thirty  (30) days  after  notice  and  demand in the
     observance or  performance  of any other  covenant or agreement  under this
     Mortgage.

     40. INTEREST TO ACCRUE.  If the whole of the principal sum evidenced by the
Note and  interest,  shall become due by exercise of the option of the Mortgagee
after default by the Mortgagor under any of the terms,  covenants and conditions
of this  Mortgage  and/or the Note,  or if the whole of said  principal  sum and
interest  shall mature and become due under the terms,  covenants and conditions
of this Mortgage and the Note regardless of default,  if any, on the part of the
Mortgagor,  then interest on said  principal sum shall continue to accrue at the
rate provided for in the Note, and in this Mortgage, until said principal sum is
fully paid.

     41.  FLOOD  INSURANCE.  In  addition  to the terms and  provisions  of this
Mortgage with regard to insurance,  in the event the Premises are  determined to
be in a special  flood hazard area as  determined  by any  governmental  agency,
Mortgagor  further  covenants  and  agrees  to fully  insure  the  Premises  and
Improvements  against  loss or damage  by flood,  with  coverage  as is  therein
provided for by fire and other specified perils to the same extent and effect as
if such flood insurance was therein specifically set forth.

     42.  COSTS,  EXPENSES  AND  ATTORNEY'S  FEES.  Should one or more Events of
Default occur  hereunder,  and should an action be commenced for the foreclosure
of this Mortgage, Mortgagee shall be entitled to recover all sums due hereunder,
statutory costs,  and in addition  thereto,  reasonable  attorneys' fees in such
proceeding and in all proceedings  related  thereto  necessary to and related to
the  foreclosing  proceeding,  and such amount  shall be added to the  principal
balance  and  interest  then due and shall be a lien on the  Mortgaged  Property
prior to any right or title to, interest in or claim upon the Mortgaged Property
attaching  and accruing  subsequent to the lien of this  Mortgage,  and shall be
deemed to be secured by this Mortgage and the indebtedness which it secures.

     43. [INTENTIONALLY OMITTED].

     44. TERMS.  It is  understood  and agreed that the words,  "Mortgagor"  and
"Mortgagee" herein shall include the respective heirs, successors and assigns of
Mortgagor and Mortgagee.

     45. ENTIRE AGREEMENT. This Mortgage and the other Loan Documents constitute
the entire understanding between Mortgagor, any guarantors, and Mortgagee and to
the extent that any  writings  not signed by  Mortgagee  or oral  statements  or
conversations at any time made or had shall be inconsistent  with the provisions
of this Mortgage and the other Loan Documents, the same shall be null and void.



                                     - 18 -





<PAGE>



     46. GOVERNING LAW; SEVERABILITY. This Mortgage shall be governed by the law
of the  jurisdiction  in which the Mortgaged  Property is located.  In the event
that any  provision  or  clause  of this  Mortgage  or the Note  conflicts  with
applicable law, such conflict shall not affect other provisions of this Mortgage
or the Note which can be given effect without the conflicting provision,  and to
this end,  the  provisions  of this  Mortgage  and the Note are  declared  to be
severable.

     47. TIME OF THE  ESSENCE.  Time is of the essence  with respect to each and
every covenant,  agreement and obligation of Mortgagor under this Mortgage,  the
Note and any and all other Loan Documents.

     48. INDEMNIFICATION; SUBROGATION; WAIVER OF OFFSET.

         (a)  Mortgagor  shall  indemnify,  defend and hold  Mortgagee  harmless
     against: (i) any and all claims for brokerage,  leasing, finders or similar
     fees which may be made relating to the Mortgaged Property or the loan which
     is the  subject  of the  Note,  and  (ii)  against  any and all  liability,
     obligations, losses, damages, penalties, claims, actions, suits, costs, and
     expenses   (including  its  reasonable   attorneys'  fees,   together  with
     reasonable appellate counsel fees, if any) of whatever kind or nature which
     may be imposed on or incurred by Mortgagee at any time pursuant either to a
     judgment or decree or other order entered into by a court or administrative
     agency or to a settlement reasonably approved by Mortgagor, which judgment,
     decree,  order or  settlement  relates  in any way to or arises  out of the
     offer, sale or lease of the Mortgaged  Property and/or the ownership,  use,
     occupation  or operation of any portion of the Mortgaged  Property,  and is
     not caused by the gross negligence or willful  misconduct,  or other act or
     omission of the Mortgagee.

         (b) If Mortgagee is made a party defendant to any litigation brought by
     any person or entity other than the Mortgagor or a guarantor concerning the
     loan  which is the  subject  of the  Note,  this  Mortgage,  the  Mortgaged
     Property,  or any part thereof,  or any interest therein,  or the occupancy
     thereof, then Mortgagor shall indemnify, defend and hold Mortgagee harmless
     from all  liability  by reason  of said  litigation,  including  reasonable
     attorneys' fees (together with reasonable  appellate  counsel fees, if any)
     and expenses  incurred by Mortgagee in any such litigation,  whether or not
     any such  litigation is prosecuted to judgment.  If Mortgagee  commences an
     action against Mortgagor to enforce any of the terms hereof or to prosecute
     any breach by  Mortgagor  of any of the terms  hereof or to recover any sum
     secured hereby, Mortgagor shall pay to Mortgagee such reasonable attorneys'
     fees  (together  with  reasonable  appellate  counsel  fees,  if  any)  and
     expenses.  The  right to such  attorneys  fees  (together  with  reasonable
     appellate  counsel  fees,  if any) and  expenses  shall be  deemed  to have
     accrued  on the  commencement  of such  action,  and  shall be  enforceable
     whether or not such action is prosecuted to judgment. If Mortgagor breaches
     any term of this Mortgage, Mortgagee may employ an attorney or attorneys to
     protect its rights hereunder, and in the event of such employment following
     any  breach  by  Mortgagor,   Mortgagor  shall  pay  Mortgagee   reasonable
     attorneys' fees (together with reasonable  appellate  counsel fees, if any)
     and expenses  incurred by  Mortgagee,  whether or not an action is actually
     commenced against Mortgagor by reason of such breach.



                                     - 19 -



<PAGE>



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

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

     49. WAIVER OF JURY TRIAL.  The  Mortgagor  and the  Mortgagee  hereby waive
trial by jury in any  litigation  in any court with  respect  to, in  connection
with,  or  arising  out of this  Mortgage  or any other  Loan  Document,  or any
instrument  or  document  delivered  in  connection  with the loan  which is the
subject of the Note, or the validity, protection, interpretation,  collection or
enforcement  thereof or the  relationship  between  Mortgagor  and  Mortgagee as
borrower and lender, or any other claim or dispute howsoever arising between the
Mortgagor and Mortgagee.

     50. BUILDING LOAN AGREEMENT.  This Mortgage is executed in conjunction with
a Building Loan Agreement dated of even date herewith, and any breach, violation
or default in the performance of any covenant required to be performed under the
Building Loan Agreement shall be an Event of Default under this Mortgage.

     Where used herein,  the word,  "Mortgagor" may be read  "Mortgagors"  where
applicable.



                                     - 20 -



<PAGE>



     IN WITNESS  WHEREOF,  this Mortgage has been duly executed by Mortgagor and
Mortgagee.

                                     ERIE HOTEL LLC

                                     BY:  ESSEX HOTELS II LLC
                                          its Managing Member

                                     BY:  ESSEX HOSPITALITY ASSOCIATES IV L.P.,
                                          its Managing Member

                                     BY:  Essex Partners Inc.,
                                          its General Partner


                                     BY:  /s/ Barbara J. Purvis
                                          --------------------------
                                          Barbara J. Purvis
                                          Senior Vice President




                                     KEYBANK NATIONAL ASSOCIATION


                                     BY:  /s/ Karen M. Cummings
                                          --------------------------
                                          Karen M. Cummings
                                          Vice-President


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

     On this 31st day of December,  1997,  before me personally  came Barbara J.
Purvis,  to me personally known, who, being by me duly sworn, did depose and say
that  she is a  Senior  Vice  President  of  Essex  Partners  Inc.,  a New  York
corporation and the general partner of Essex  Hospitality  Associates IV L.P., a
New York limited  partnership  and the managing member of Essex Hotels 11 LLC, a
New York limited  liability  company and the managing  member of Erie Hotel LLC,
the limited  liability company described in and on whose behalf she executed the
within  Instrument;  and she duly  acknowledged  to me that she  signed her name
thereto as the act and deed of said limited liability company.

                                         /s/ Mark R. Foerster
                                         -------------------------------------
                                             Notary Public

MARK R. FOERSTER
Notary Public in the State of New York
MONROE COUNTY
Commission Expires May 31, 1999


                                     - 21 -






<PAGE>



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

     On the 31st day of  December,  1997,  before me  personally  came  Karen M.
Cummings,  to me known who, being by me duly sworn,  did depose and say that she
resides in the Town of Amherst; that she is a Vice-President of KeyBank National
Association,  the  corporation  described in and which  executed  the  foregoing
instrument;  and  that she  signed  her name  thereto  by order of the  Board of
Directors of said corporation.



                                           /s/ Louis C. Fessard
                                           ------------------------------
                                                     Notary Public


LOUIS C. FESSARD
Notary Public State of New York
Qualified in Erie County
My Commission Expires Aug. 31, 1999






                                     - 22 -





<PAGE>



                                   SCHEDULE A

                               (LEGAL DESCRIPTION)

     ALL THAT  CERTAIN  piece or  parcel  of land  situate  in Tract  373 in the
Township of Summit, County of Erie and Commonwealth of Pennsylvania, being Lot 1
as shown on a map entitled "Subdivision of Land of David A. Kellogg,  Richard E.
and Mary L. Hess and Pamela A. Giese", made by Henry T. Welks Associates,  dated
August 22, 1996,  revised  September  4, 1996 and May 19, 1997,  and recorded in
Erie County Map No. 1997-133,  and being more particularly bounded and described
as follows, to wit:

     BEGINNING at the most southerly corner of the piece herein described,  at a
point in the centerline of Old Oliver Road (50 foot right-of-way);  thence North
27(degree)  25' 40" West,  a distance  of 408.58 feet to a point;  thence  North
69(degree) 01' 12" East, a distance of 397.38 feet to an iroN survey pin; thence
North 72(degree) 03' 09" East, a distance of 37.77 feet to a point; thence South
54(degree)  1l' 20"  East,  a  distance  of  124.85  feet to A P.K.  nail in the
centerline of Old Oliver Road;  thence South  35(degree) 48' 40" West, along the
centerline  of Old  Oliver  Road,  a  distance  of  546.91  feet to the point of
beginning.  CONTAINING 2.819 acres of land to the centerline of Old Oliver Road;
CONTAINING 2.509 acres of land to the northerly  right-of-way line of Old Oliver
Road.

     EXCEPTING therefrom a 400 square foot parcel of land conveyed to the Summit
Township  Sewer  Authority in Erie County Record Book 70 page 635,  bearing Erie
County Index No. (40) 17-73-2.09.








                                     - 23 -