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                                              State _______    Site No. _______

                                   EXHIBIT G-1
                                   -----------

                                FORM OF MORTGAGE
                                ----------------


                          MORTGAGE, LEASEHOLD MORTGAGE,
                        SECURITY AGREEMENT AND ASSIGNMENT
                               OF LEASES AND RENTS


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



    Mortgagee:                CANADIAN IMPERIAL BANK OF COMMERCE,
                                NEW YORK AGENCY
                                as Administrative Agent and
                                Collateral Agent
                              425 Lexington Avenue
                              New York, New York  10017



    Mortgage
      Amount:



    Date:                     October 3, 1996



    Premises:







    Record and                EMMET, MARVIN & MARTIN, LLP
    Return to:                120 Broadway
                              New York, New York 10271
                              Attn:  John P. Uehlinger, Esq.



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             MORTGAGE,  LEASEHOLD MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF
    LEASES AND RENTS,  dated as of the 3rd day of October,  1996, by and between
    PAYLESS CASHWAYS,  INC., an Iowa corporation,  having an office at 2300 Main
    Street, Kansas City, Missouri 64108 ("Mortgagor") and CANADIAN IMPERIAL BANK
    OF COMMERCE,  NEW YORK AGENCY, as Administrative  Agent 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 signatory Lenders thereto,  Canadian Imperial Bank of Commerce, as
    Letter of Credit Bank, Canadian Imperial Bank of Commerce,  New York Agency,
    as  Administrative  Agent and Collateral  Agent and The Bank of Nova Scotia,
    Nationsbank of Texas,  N.A., and Bank of America  National Trust and Savings
    Association as Co-Agents,  together with any future  amendments,  amendments
    and  restatements,  extensions,  modifications  or  supplements  thereto  or
    thereof.

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

             "Default  Rate" means the rate of interest  specified in Subsection
    2.5(a) of the Agreement.

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

             "Fixtures" means all 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



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    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.

             "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.

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

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

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

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

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

             "Mortgage Amount" means the principal sum of $500,000,000.

             "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.

             "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



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    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.

             "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.


                              W I T N E S S E T H :

             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

             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 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"):

             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



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    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.

             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.





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             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, 11 U.S.C. ss.101 et seq. (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  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,  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




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    assigns,  against every person whomsoever  lawfully claiming or to claim the
    same or any part thereof.


                               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 the all  indebtednesses,  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,  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  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 any other 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").


                                    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 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  those in
    favor  of  Mortgagee;



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    and this Mortgage is and will remain a valid and  enforceable  first lien on
    the Mortgaged Property subject only to the permitted  exceptions referred to
    above.

                      (b)  Mortgagor  has full  power and  lawful  authority  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  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



<PAGE> 9

    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,  but at any and all times Mortgagor will execute and deliver
    to Mortgagee any and all such further assurances,  mortgages, 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



<PAGE> 10

    evidencing the payment of same.

             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,  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 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



<PAGE> 10

    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.
    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.

                      (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
    insured  with  loss  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) 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




<PAGE> 11

    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) 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.  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 the amount of any such award or compensation
    and may accept  the same in the amount  paid.  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




<PAGE> 12

    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 specified in
    the Secured Obligations and herein.

                      (e) 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 under the Secured Obligations or hereunder.

             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  in  the  Secured
    Obligations  or any  other  Loan  Document  from  constituting  an  Event of
    Default.

             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 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.





<PAGE> 13

             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 Secured  Obligations 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 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.

             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.  While the  Secured  Obligations  are  outstanding,  neither  the
    structure nor the ownership of Mortgagor may be changed  without the express
    prior




<PAGE> 14

    written  consent of Mortgagee  unless  otherwise  permitted  pursuant to the
    terms of the Agreement.

             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 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
    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



<PAGE> 15

    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  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,  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.

             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."





<PAGE> 16

             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.

             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  marshalling  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.

                      (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.

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




<PAGE> 17

                                   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  of (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  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,   ad-



<PAGE> 18

    ditions,  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  either in the name of  Mortgagor or otherwise as Mortgagee
    shall deem best; and Mortgagee shall be entitled,  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:

                      (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  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




<PAGE> 19

             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 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.

                      (b) Upon  the  completion  of any  sale or  sales  made by


<PAGE> 20

    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. 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 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)




<PAGE> 21

    by the  misapplication  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 ex-



<PAGE> 22

    tent 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 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  9.2(a) 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 (other than the  Merchandise  Letter of Credit  Bank,  as that term is
    defined  in the  Agreement)  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



<PAGE> 23

    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 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 all 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) 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



<PAGE> 24

    enforce any right of Mortgagee,  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  be  entitled  to  retain  possession  and  control  of the  Mortgaged
    Property.

             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  obligations  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





<PAGE> 25

    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
    covenant  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 Premises, Mortgagor agrees to
    pay the fair and  reasonable  rental value 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 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.
    Such rental  obligation by the  Mortgagor  shall be determined by the extent
    that the  Secured  Obligations  have been deemed to have been  reduced  (the
    "Reduction"). It is agreed that the fair and reasonable rental value for use
    and  occupancy of the Premises may be difficult or  impossible to ascertain;
    therefore, Mortgagor and Mortgagee hereby agree that the fair and reasonable
    rental  value  shall in no event be less  than an  amount  equal to the debt
    service on the  Reduction.  Any  payments  received  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



<PAGE> 26

    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, 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,  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.


                                   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 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


<PAGE> 27

    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.

             Section 3.04 Lease Related Covenants.  Mortgagor  covenants to: (a)
    upon demand by  Mortgagee,  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 



<PAGE> 28

    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 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.

             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.



<PAGE> 29

                                   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 11.1 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.

             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.





<PAGE> 30

             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
    obligations  secured  hereby  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.  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  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
    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




<PAGE> 31

    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
    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 at-




<PAGE> 33

    tached  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.

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

                                           MORTGAGOR

                                           PAYLESS CASHWAYS, INC.


                                           By:
                                               -------------------------------

                                               Name:
                                                      ------------------------

                                               Title:
                                                      ------------------------



<PAGE> 34







                                    EXHIBIT A

                               DESCRIPTION OF LAND



<PAGE> 35







                                    EXHIBIT B

                              LOCAL LAW PROVISIONS