Document:

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                                                                    Exhibit 10.2

                        GUARANTY TO FORTRESS CREDIT CORP.

         THIS GUARANTY, made as of this 12th f November, 2004, by ACE GAMING,
LLC, a New Jersey limited liability company (the "Guarantor"), with a principal
address of c/o The Sands Hotel & Casino, Indiana Avenue & Brighton Park,
Atlantic City, NJ 08401, to and for the benefit of FORTRESS CREDIT CORP., a
Delaware corporation (hereinafter, the "Lender").

                                   BACKGROUND

A. Guarantor is a wholly owned subsidiary of and is related to Atlantic Coast
Entertainment Holdings, Inc., a Delaware corporation (the "Borrower"), and will
directly benefit from the Loan described below.

B. Borrower, Guarantor and Lender have entered into the Loan and Security
Agreement (the "Loan Agreement"), dated as of the date hereof, and other Loan
Documents to evidence and set forth the terms and conditions of the Loan, that
Lender is making available to Borrower, for up to the sum of TEN MILLION
($10,000,000.00) DOLLARS in accordance with a revolving credit facility which
shall be used by Guarantor as working capital in the operation of The Sands
Hotel and Casino ("The Sands"), located at South Indiana Avenue and Brighton
Park in Atlantic City New Jersey. Capitalized terms not otherwise defined herein
shall have the meaning set forth in the Loan Agreement.

C. Borrower wholly owns all legal and beneficial right, title, and interest in
the equity of Guarantor and Guarantor is the casino licensee, owner and operator
of The Sands.

D. Lender has agreed to grant the Loan to Borrower upon the condition that
Guarantor guaranty as surety the payment and performance by the Borrower of all
of the obligations under the Note and the Loan Documents executed and delivered
by Borrower in connection with the Loan, and the payment of all amounts due
thereunder.

E. Guarantor acknowledges (i) that the actions of Lender pursuant to the
foregoing are for Guarantor's benefit, and that Guarantor will share in the
benefits of the Loan realized by the Borrower; (ii) that the granting of the
Loan therefore constitutes a direct, material benefit to Guarantor; and (iii)
that this Guaranty constitutes a material inducement to Lender to grant the
Loan, without which the Loan would not have been made.

         NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt of which is hereby acknowledged, and to
induce Lender to grant the Loan, and with the foregoing Background incorporated
herein by this reference, Guarantor, intending to be legally bound hereby,
covenants and agrees as follows:

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                                      TERMS

         1. The Guarantor unconditionally, absolutely, jointly, severally, and
in the alternative with Borrower and with all other guarantors, guaranties the
punctual payment when due of any and all existing and future indebtedness and
liability created, arising under, or evidenced by the Note and the Loan
Documents given by the Borrower to Lender, including but not limited to all
renewals, extensions, and modifications thereof, and the due and punctual
payment of the principal of the Note, the interest thereon, and any other
monies, costs, fees and expenses due or which may become due under the Note and
the Loan Documents, and the due and punctual performance and observance by the
Borrower of all of the other terms, covenants, and conditions of the Note and
the Loan Documents, whether according to the present terms thereof, at any
earlier or accelerated date or dates as provided therein, or pursuant to any
extension of time or to any change or changes in the terms, covenants, and
conditions thereof now or at the time hereafter made or granted. This Guaranty
shall be deemed a continuing guaranty of the Loan from Lender pursuant to the
Note and the Loan Documents. For such purposes, the terms and provisions of the
Note and the Loan Documents are incorporated herein by this reference as if set
forth in full.

         2. Except as set forth in the Loan Agreement, Guarantor waives
diligence, presentment, protest, notice of dishonor, demand for payment,
extension of time for payment, notice of non-payment at maturity, and
indulgences and notices of every kind, and consents to any and all forbearances
and extensions of time of payment of the Note and other Loan Documents, and to
any and all changes in the terms, covenants, and conditions thereof, it being
the intention that the Guarantor shall remain liable as principal until the full
amount of all sums payable under the Note and other Loan Documents shall have
been fully paid and until the terms, covenants, and conditions thereof have been
performed and observed by the Borrower and notwithstanding any act, omission, or
thing which might otherwise operate as a legal or equitable discharge of the
Borrower.

         3. The obligations of the Guarantor shall not be impaired, modified,
changed, released, or limited in any manner whatsoever by any impairment,
modification, change, release, or limitation of the liability of the Borrower,
or any other guarantors, except as may be limited by applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, conservatorship,
rehabilitation, liquidation, receivership, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
principles of equity (regardless of whether such principles are considered in a
proceeding in equity or at law).

         4. Upon the mutual written agreement of Lender and Borrower, Lender
shall have full right, in its sole discretion and without any notice or consent
from any Guarantor, from time to time and at any time, and without affecting,
impairing, or discharging, in whole or in part, the liability of any Guarantor
hereunder: (a) to make any change, amendment, or modification whatsoever of any
of the terms and conditions of the Note, the Loan Documents; (b) to extend, in
whole or in part, by renewal or otherwise, and on one or any number of
occasions, the time for the payment of any principal or interest or any other
amount pursuant to the Note, Loan Documents or for the performance of any term
or condition thereof; (c) to settle, compromise, release, substitute, surrender,
modify, or impair, to enforce and exercise, or to fail or refuse to enforce or
exercise, any claims, rights, or remedies, of any kind or nature, which Lender
may at any time have against the Borrower whether under the Note, the Loan
Documents, or otherwise.

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         5. The obligations of Guarantor hereunder are those of a primary
obligor, as surety, and are independent of the obligations of the Borrower, any
other guarantors, or its or their successors and assigns, and are irrevocable. A
separate action or actions may be brought and prosecuted against the Guarantor
regardless of whether any action is brought against the Borrower or any other
guarantors, or whether the Borrower or any other guarantors are joined in any
such action or actions.

         6. In the event that the Lender has declared an Event of Default and
the Lender retains or engages an attorney or attorneys to enforce this Guaranty,
Guarantor will reimburse Lender for all expenses incurred, including reasonable
attorneys' fees and disbursements, and interest thereon at the Default Rate.

         7. Guarantor irrevocably submits to the jurisdiction of the Superior
Court of New Jersey, Atlantic County, over any action or proceeding arising out
of or relating to this Guaranty; all claims in respect of such action or
proceeding shall be heard and determined in such court, to the extent permitted
by law. Guarantor further irrevocably consents to the service of any and all
process in any such action or proceeding by the mailing of copies of such
process to the Guarantor at the address set forth in the introductory paragraph
of this Guaranty, to the attention of Patricia Wild, Esq. Nothing in this
paragraph shall affect Lender's right to serve legal process in any other manner
permitted by law.

         8. Guarantor shall have no right of subrogation whatsoever with respect
to any of the indebtedness guarantied hereby or to any of the collateral
securing any such indebtedness unless and until such indebtedness has been paid
in full.

         9. This Guaranty shall inure to the benefit of and may be enforced by
Lender and its successors and assigns, and any subsequent holder of the Note,
the Loan Documents, and shall be binding upon and enforceable against the
Guarantor and its assigns.

         10. This Guaranty shall be governed by, and construed under and in
accordance with, the substantive laws of the State of New Jersey, without giving
effect to choice of law rules thereof.

         11. THE GUARANTOR HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN
ANY LITIGATION WITH RESPECT TO ANY ASPECT OF THE LOAN DOCUMENTS OR THIS
GUARANTY. THE GUARANTOR ACKNOWLEDGES THAT IT HAS HAD THE OPPORTUNITY TO CONSULT
WITH INDEPENDENT COUNSEL WITH RESPECT TO THIS WAIVER.

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                           [Signature Page to follow]

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         IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the day
and year first above written.

                                                 ACE GAMING, LLC., a New Jersey
                                                 limited liability company

                                                 By:/s/ George Toth
                                                 Name: George Toth
                                                 Title: President

                                       5<PAGE>

                                                                    Exhibit 10.3

                      FIRST MORTGAGE AND SECURITY AGREEMENT

November 12, 2004

MORTGAGEE:             FORTRESS CREDIT CORP.
                       1251 Avenue of the Americas, 16th Floor
                       New York, NY 10021

MORTGAGOR:             ACE GAMING, LLC, a New Jersey limited liability company
                       c/o The Sands Hotel & Casino
                       Indiana Avenue & Brighton Park
                       Atlantic City, NJ 08401

MORTGAGED PREMISES:

                       Municipality: Atlantic City
                       County: Atlantic, State of New Jersey
                       Tax Map: Lots 10, 19, and 20 in Block 49; Lot 10 in
                       Block 48; Lots 1, 2, 3, 4, 5, 6, 7, 9, 10, 11, 12,
                       and 19 in Block 47; Lot 5 in Block 46; Lot 8 in Block
                       48; and Lots 29 and 31 in Block 156

BEING MORE PARTICULARLY DESCRIBED IN SECTION 2 BELOW.

1. DEBT:

On even date herewith, the Mortgagor executed and delivered a guaranty (the
"Guaranty") in favor of Mortgagee, guarantying as surety the payment and
performance by Atlantic Coast Entertainment Holdings, Inc., a Delaware
corporation (the "Borrower"), of or under (i) a note (the "Note") in the
original principal amount of up to TEN MILLION ($10,000,000.00) DOLLARS (the
"Loan"), together with interest as provided in the Note, and (ii) the Loan
Documents, as such term is defined therein. The terms and provisions of the Loan
are described more fully in a certain Loan and Security Agreement, dated of even
date with the Note, between Borrower and Mortgagee (the "LSA").

2. PROPERTY MORTGAGED:

To secure to the Mortgagee (i) the repayment of all sums due under this
Mortgage, the LSA, the Guaranty, the Note (and all extensions, renewals,
replacements and modifications thereof) and the other Loan Documents; (ii) the
performance of all of the Mortgagor's obligations under the terms of this
Mortgage, the Guaranty, the Note, the LSA, and the other Loan Documents; and
(iii) ALL OBLIGATIONS OF THE MORTGAGOR AND BORROWER TO THE MORTGAGEE, WHETHER
DIRECT OR INDIRECT, ABSOLUTE OR CONTINGENT, JOINT OR SEVERAL OR NOW OR HEREAFTER
EXISTING, including without limitation the Guaranty (subsections 2 (i), (ii) and
(iii) are collectively referred to as the "Liabilities"), the Mortgagor hereby
mortgages, grants and conveys to the Mortgagee all of the rights and interests
which the Mortgagor now has or will acquire with regard to the property
described in Sections 2.1 through 2.8 below (collectively, the "Mortgaged
Premises").

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         2.1  All of the land located in the State of New Jersey and more
              particularly described in accordance with a legal description
              attached hereto as Schedule "A".

              This is a FIRST LIEN fee mortgage on the Mortgaged Premises.

         2.2  All tenements, buildings, improvements, hereditaments, estates,
              rights, titles, interests, privileges, liberties, easements and
              appurtenances of any nature whatsoever belonging, benefiting or in
              any way appertaining to the Mortgaged Premises, and all land lying
              in the bed of any street, road, or avenue, open or proposed, in
              front of or adjoining the Mortgaged Premises to the center line
              thereof.

         2.3  All furniture, fixtures, equipment and other articles of personal
              property owned by the Mortgagor and now or hereafter attached to
              or used in connection with, or with the operation of, any
              improvements located on the Mortgaged Premises, as to which this
              Mortgage constitutes a security agreement under the New Jersey
              Uniform Commercial Code (the "Code") in addition to and not in
              lieu of any other security agreement between the parties,
              including, without limitation, all building supplies and
              materials, furniture, fixtures and equipment, machinery,
              generators, partitions, elevators, steam and hot water boilers,
              heating, air conditioning equipment, lighting and power plants,
              fuel oil burning apparatus, pipes, plumbing, radiators, sinks,
              bath tubs, water closets, refrigerators, gas and electrical
              fixtures, sprinkler systems or other fire prevention or
              extinguishing apparatus and materials, including all accessories,
              additions, substitutions and replacements thereof, all of which
              shall be deemed to be and remain and form a part of the Mortgaged
              Premises and are covered by the lien of this Mortgage. If the lien
              of this Mortgage shall be subject to a conditional bill of sale,
              chattel Mortgage, or other security interest covering any such
              property, then all the right, title, and interest of the Mortgagor
              in and to such property, together with the benefits of any
              deposits or payments now or hereafter made thereon, are and shall
              be covered by the lien of this Mortgage.

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

         2.5  All the rents, incomes, profits, revenues, royalties, bonuses,
              rights, accounts, contract rights, general intangibles and
              benefits under any and all leases or tenancies now existing or
              hereafter created of the Mortgaged Premises or any part thereof
              with the right to receive and apply the same to the Liabilities,
              and Mortgagee may demand, sue for and recover such payment but
              shall not be required to do so.

<PAGE>

         2.6  The right, in the name and on behalf of Mortgagor, to appear in
              any and defend any action or proceeding brought with respect to
              the Mortgaged Premises and to commence any action or proceeding to
              protect the interest of Mortgagee in the Mortgaged Premises.

         2.7  All proceeds of the conversion, voluntary or involuntary, of any
              of the foregoing into cash or liquidated claims.

         2.8  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 Premises, hereafter acquired by, or released to,
              Mortgagor or constructed, assembled or placed by Mortgagor on the
              Mortgaged 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 hereof as fully and completely, and with the
              same effect, as though now owned by Mortgagor and specifically
              described herein, 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 expressly and specifically
              subjecting the same to the lien of t his Mortgage.

         TO HAVE AND TO HOLD the above granted and described Mortgaged Premises
         unto and to the proper use and benefit of the Mortgagee, its successors
         and assigns, Forever.

3. INCORPORATION BY REFERENCE:

The Note, the Guaranty, the assignment of leases of even date herewith from the
Mortgagor to the Mortgagee (the "Assignment of Leases"), and all Loan Documents
executed in connection therewith are hereby made a part of this Mortgage, to the
extent and with the same effect as if fully set forth herein.

4. TERM:

This Mortgage shall terminate upon the payment in full of the Liabilities and
the fulfillment or performance of all the conditions of this Mortgage and the
Liabilities. Thereupon, the Mortgagee shall release the Mortgaged Premises and
shall execute at the request of the Mortgagor a release of this Mortgage and any
other instrument to that effect deemed necessary or desirable.

<PAGE>

5. COVENANTS:

         5.1  Payment and Performance Mortgagor covenants to (i) pay to
              Mortgagee all sums required to be paid by the Mortgagor under the
              Note and Loan Documents, in accordance with their stated terms and
              conditions; (ii) perform and comply with all terms, conditions and
              covenants set forth in the Loan Documents by which the Mortgagor
              is bound; and (iii) perform and comply with all of Mortgagor's
              obligations and duties as landlord under any leases of the
              Mortgaged Premises.

         5.2  Seisin and Warranty The Mortgagor is seized of an indefeasible
              estate in fee simple in the Mortgaged Premises, and the Mortgagor
              warrants the title to the Mortgaged Premises in accordance with a
              title commitment acceptable by the Mortgagee. The Mortgagor hereby
              covenants that the Mortgagor shall (i) preserve such title and the
              validity and priority of the lien of this Mortgage and shall
              forever warrant and defend the same to the Mortgagee against all
              lawful claims whatsoever; and (ii) execute, acknowledge and
              deliver all such further documents or assurances, and cause to be
              done all such further acts as may at any time hereafter be
              required by the Mortgagee to protect fully the lien of this
              Mortgage.

         5.3  Insurance

              5.3.1  The Mortgagor hereby covenants to obtain and maintain at
                     all times, throughout the term of this Mortgage, the
                     following insurance covering the Mortgaged Premises:

                     5.3.1.1  Commercial general liability insurance insuring
                              against any and all liability of the Mortgagor or
                              claims of liability of Mortgagor arising out of,
                              occasioned by or resulting from any accident or
                              otherwise resulting in, on or about the Mortgaged
                              Premises and the adjoining streets, sidewalks and
                              passageways, in a minimum amount of $1,000,000.00
                              for death or bodily injury to any one Person in
                              connection with one accident or occurrence in or
                              about the Mortgaged Premises, $2,000,000.00 for
                              death or bodily injury to one or more Persons in
                              connection with one accident or occurrence in or
                              about the Mortgaged Premises, and $200,000,000.00
                              property damage in connection with one accident or
                              occurrence in or about the Mortgaged Premises
                              (including, without limitation, blanket
                              contractual liability insurance, garage liability,
                              innkeeper's liability, products liability and
                              elevator liability, if applicable);

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                     5.3.1.2  (1) With respect to the Mortgaged Premises during
                              any periods of construction, the Mortgagor shall
                              provide "Special Form" Builders Risk Insurance
                              (non-reporting form), including Flood, Earthquake,
                              and "The Replacement Cost" Endorsement, written on
                              a completed value basis in an amount not less than
                              the total value of the premises under construction
                              (less the total value of such improvements that
                              are uninsurable under the policy - i.e., site
                              preparation, grading, paving, parking lots, etc.,
                              excepting, however, excavation and foundation
                              costs and costs of underground tanks, conduits,
                              pilings and other similar underground items
                              subject to collapse or damage by insured perils)
                              without deduction for physical depreciation and
                              (2) with respect to the Mortgaged Premises at all
                              other times, the Mortgagor shall provide "Special
                              Form" Insurance (non-reporting form), including
                              Flood, Earthquake, and "The Replacement Cost"
                              Endorsement, written on a completed value basis in
                              an amount not less than the total value of the
                              Mortgaged Premises, without deduction for physical
                              depreciation;

                     5.3.1.3  If the Mortgaged Premises are required to be
                              insured pursuant to the Flood Disaster Protection
                              Act of 1973 or the National Flood Insurance Act of
                              1968, and the regulations promulgated thereunder,
                              flood insurance in an amount not less than the
                              outstanding principal of this Mortgage or the
                              maximum limit of coverage available, whichever
                              amount is less;

                     5.3.1.4  If required by Mortgagee, business interruption
                              and/or loss of rental insurance sufficient to pay,
                              during the period of interruption or loss, normal
                              operating expenses of the Mortgaged Premises;

                     5.3.1.5  If required by Mortgagee, boiler and machine
                              insurance covering pressure vessels, air tanks,
                              boilers, machinery, pressure piping, heating, air
                              conditioning and elevator equipment in such
                              amounts as the Mortgagee shall require from time
                              to time, provided that the Mortgaged Premises
                              contains equipment of such nature; and

                     5.3.1.6  Title insurance coverage in the form of a standard
                              ALTA Mortgage title insurance policy insuring the
                              Mortgage as a first lien, in the principal amount
                              of the Note; subject, however, to certain
                              "Permitted Exceptions" set forth on the Commitment
                              for Title Insurance issued to the Mortgagee by The
                              Title Company of Jersey, agent for Stewart Title
                              Guaranty Company, No. 102162062, dated September
                              23, 2004, and continued and revised through the
                              date hereof.

<PAGE>

                     5.3.1.7  Excess/Umbrella Liability Insurance on a "Follow
                              Form" basis with a minimum limit of liability of
                              $10,000,000.00 for the Mortgaged Premises.

              5.3.2  Each insurance policy required under this Section 5.3 shall
                     be written by insurance companies authorized or licensed to
                     do business in New Jersey having an Alfred M. Best Company
                     rating of "A" or higher and a financial size category of
                     VII or better, and shall be on such forms and written by
                     such companies as shall be reasonably approved by the
                     Mortgagee.

              5.3.3  Each insurance policy required under this Section 5.3
                     providing insurance against loss or damage to property
                     shall be written or endorsed so as to (i) contain a New
                     Jersey standard Mortgagee or secured party endorsement, as
                     the case may be, or its equivalent, and (ii) make all
                     losses payable directly to the Mortgagee, without
                     contribution.

              5.3.4  Each insurance policy required under this Section 5.3
                     providing public liability coverage shall be written and
                     endorsed so as to name the Mortgagee as an additional
                     insured, as its interest may appear.

              5.3.5  Each insurance policy required under this Section 5.3 shall
                     contain a provision to the effect that such policy shall
                     not be canceled or altered, or in any way limited in
                     coverage or reduced in amount, unless the Mortgagee is
                     notified in writing at least thirty (30) days prior to such
                     change. At least thirty (30) days prior to the expiration
                     of any such policy, the Mortgagor shall furnish evidence
                     satisfactory to the Mortgagee that such policy has been
                     renewed or replaced or is no longer required by this
                     Section 5.3.

              5.3.6  Each insurance policy required under this Section 5.3
                     (except flood insurance written under the federal flood
                     insurance program) shall contain an endorsement by the
                     insurer that any loss shall be payable to the Mortgagee, as
                     its interest may appear, in accordance with the terms of
                     such policy, notwithstanding any act or negligence of the
                     Mortgagor which might otherwise result in forfeiture of
                     said insurance and the further agreement of the insurer
                     waiving all rights of setoff, counterclaim, deduction or
                     subrogation against the Mortgagor (so as not to interfere
                     with the Mortgagee's rights).

<PAGE>

              5.3.7  In the event of loss or damage to the Mortgaged Premises,
                     Mortgagor will give immediate notice thereof to Mortgagee,
                     and Mortgagee may make proof of loss if not made promptly
                     by Mortgagor and may negotiate settlement of any claims on
                     behalf of Mortgagor. Each insurance company concerned is
                     hereby authorized and directed to make payment under such
                     insurance, including return of unearned premiums, directly
                     to Mortgagee instead of to Mortgagor and Mortgagee jointly,
                     and Mortgagor irrevocably appoints Mortgagee as Mortgagor's
                     attorney-in-fact to endorse any draft therefor and to sign
                     any and all proofs of claim, any release and all other
                     documents relating thereto. Mortgagee shall have the right
                     to retain and apply the proceeds of any such insurance at
                     its sole option, to reduction of the indebtedness secured
                     hereby or to restoration or repair of the damaged property.
                     In the event of a public liability claim, the proceeds of
                     any insurance provided hereunder shall be applied toward
                     extinguishing or satisfying the liability and expense
                     incurred in connection therewith.

              5.3.8  The Mortgagor shall not take out separate or additional
                     insurance with respect to the Mortgaged Premises which is
                     contributing in the event of loss unless it is properly
                     compatible with all of the requirements of this Section
                     5.3.

         5.4  No Encumbrances At no time throughout the term of this Mortgage
              shall the Mortgagor create or suffer to exist any new or
              refinanced mortgage, pledge, lien, security interest, encumbrance,
              attachment, levy, distraint or other judicial process and burdens
              of any kind on the Mortgaged Premises without the prior express
              written consent of the Mortgagee.

         5.5  Taxes and Other Charges The Mortgagor shall prepare and timely
              file all federal, state and local tax returns required to be filed
              by the Mortgagor and promptly pay and discharge all taxes,
              assessments, and other governmental charges imposed upon the
              Mortgagor, the Mortgaged Premises or on any of the Mortgagor's
              other property before the same shall become in default, or become
              a lien upon such property, except for those taxes, assessments and
              other governmental charges then being contested in good faith by
              the Mortgagor by appropriate proceedings and for which the
              Mortgagor has maintained adequate reserves in the sole judgment of
              the Mortgagee. The Mortgagor shall submit to the Mortgagee, upon
              request, an affidavit signed by the Mortgagor certifying that all
              federal, state and local information income tax returns have been
              filed to date and all real property taxes, assessments and other
              governmental charges with respect to the Mortgagor's properties
              have been paid to date.

         5.6  Tax Escrows Upon request by Mortgagee following the declaration of
              an Event of Default, the Mortgagor shall pay to the Mortgagee at
              the time of each installment of principal and interest due under
              the Note, one twelfth (1/12) of the actual (if known) or estimated
              (if unknown) annual taxes and assessments levied and assessed
              against the Mortgaged Premises. In such event, Mortgagor shall pay
              concurrently with each installment of principal and interest
              payable on the Note, a deposit in an amount as in the Mortgagee's
              discretion will enable the Mortgagee to pay (out of the monies so
              paid to the Mortgagee) at least thirty (30) days before due, all
              taxes, assessments, and similar charges affecting the Mortgaged
              Premises. At closing, a deposit will be made in an amount
              sufficient to cover the necessary accrued tax expense. No interest
              or other compensation shall be paid by Mortgagee to Mortgagor on
              the funds so held and accumulated. Such payment shall be held by
              the Mortgagee to be used by the Mortgagee in payment of such taxes
              and assessments. If such escrow funds are not sufficient to pay
              such taxes and assessments, as the same become payable, the
              Mortgagor shall pay to the Mortgagee, upon request, such
              additional amounts as the Mortgagee shall estimate to be
              sufficient to make up any deficiency. No amount paid to the
              Mortgagee hereunder shall be deemed to be trust funds but may be
              commingled with general funds of the Mortgagee and no interest
              shall be payable thereon. Upon the occurrence of an Event of
              Default (as hereinafter defined), the Mortgagee shall have the
              right, at its sole discretion, to apply any amounts so held
              against the Liabilities. If the Mortgagor is not required to pay
              such tax escrows pursuant to this Section 5.6, the Mortgagor shall
              provide to Mortgagee on an annual basis, within five (5) business
              days after each payment, copies of receipted tax bills, canceled
              checks or other evidence satisfactory to the Mortgagee evidencing
              that such taxes and assessments have been paid in a timely manner.
              Notwithstanding anything herein to the contrary, during the term
              of this Mortgage, Mortgagee, in its sole discretion, may require
              the establishment or re-establishment, as the case may be, of the
              tax escrow described above. Thereupon, Mortgagor immediately shall
              produce such escrow in such amount and on such forms as Mortgagee
              shall specify. No delay or omission by Mortgagee in exercising its
              right to require the establishment of a tax escrow or its prior
              exercise of such right, shall exhaust or impair, in any way, its
              right to assert or re-assert its right to such escrow.

<PAGE>

         5.7  Advances with Respect to Mortgaged Premises The Mortgagor agrees
              that if, at any time during the term of this mortgage, the
              Mortgagor fails to perform or observe any covenant or obligation
              under this Mortgage, including, without limitation, payment of any
              tax assessment or other government charges, insurance premiums,
              appraisal charges as set forth in Section 5.17 hereof,
              environmental inspection, audit, testing or compliance costs as
              set forth in Section 10.3 hereof, or costs to keep the Mortgaged
              Premises in satisfactory repair and condition, the Mortgagee may
              (but shall not be obligated to) take such steps as are reasonably
              necessary to remedy any such non-performance or non-observance and
              provide payment thereof. All amounts advanced by the Bank shall be
              added to the amount secured by this Mortgage, and shall be due and
              payable, on demand, together with interest at the Default Rate of
              Interest specified in the LSA, such interest to be calculated from
              the date of such advance to the date of repayment thereof.

<PAGE>

         5.8  Transfer of Title Without the prior express written consent of the
              Mortgagee, the Mortgagor shall not voluntarily or involuntarily
              sell, transfer, convey or in any other manner change (i) the
              ownership of the Mortgaged Premises, or any interest therein, or
              (ii) the ownership of the Mortgagor, or any interest therein,
              without satisfying the Liabilities in full.

         5.9  Mergers, Etc. The Mortgagor shall not merge with or into or
              consolidate with or into, or with respect to the Mortgaged
              Premises, sell, assign, lease or otherwise dispose of (whether in
              one transaction or a series of transactions) all or substantially
              all of its assets (now owned or hereafter acquired) to any person,
              except as may be permitted in the LSA. If the Mortgagor is a
              corporation, it shall not sell, issue, or agree to sell or issue,
              any shares (voting, non-voting, preferred or common of any class)
              of Mortgagor, or purchase such shares except under such
              circumstances as will in the opinion of the Mortgagee not result
              in a material adverse change in the financial or business
              condition of the Mortgagor or the value of any security held by
              the Mortgagee. If the Mortgagor is a partnership, no partnership
              interest may be sold, transferred, assigned, or hypothecated. No
              new partners may be admitted without the Mortgagee's prior written
              consent, which consent shall not unreasonably be withheld.

         5.10 No Additional Liens on Fixtures Except as may be permitted in the
              LSA, the Mortgagor shall not remove or suffer to be removed from
              the Mortgaged Premises any fixtures (the term "fixtures" is
              defined by the law in New Jersey) presently or in the future owned
              by the Mortgagor (unless such fixtures have been replaced with
              similar fixtures of equal or greater utility and value); nor will
              the Mortgagor execute any security interest upon any such
              fixtures, without the prior express written consent of the
              Mortgagee.

         5.11 Preservation, Maintenance and Repair

              5.11.1 All buildings and other improvements presently or in the
                     future erected upon the Mortgaged Premises shall, at the
                     Mortgagor's own cost and expense, be kept in good and
                     substantial repair, working order and condition, and the
                     Mortgagor shall from time to time make, or cause to be
                     made, all necessary and proper repairs and replacements.
                     The Mortgagor shall not remove, demolish, materially alter,
                     discontinue the use of, sell, transfer, assign, hypothecate
                     or otherwise dispose of all or any part of the Mortgaged
                     Premises without the prior express written consent of the
                     Mortgagee. All alterations, replacements, renewals or
                     additions made pursuant to this Section 5.11, shall
                     automatically become a part of the Mortgaged Premises and
                     shall be covered by the lien of this Mortgage.

<PAGE>

              5.11.2 The Mortgagee shall have the right, but not the obligation,
                     to enter upon the Mortgaged Premises at any reasonable hour
                     to inspect. In the event any such inspection reveals, in
                     the sole discretion of the Mortgagee, the necessity for any
                     repair, replacement, clean-up or maintenance, Mortgagor
                     shall, at the discretion of the Mortgagee either (i) cause
                     such work to be effected immediately, or (ii) establish an
                     interest bearing reserve fund with the Mortgagee in an
                     amount determined by the Mortgagee for the purpose of
                     effecting such work.

         5.12 Compliance with Laws The Mortgagor hereby agrees to comply with
              all laws, rules, regulations and ordinances made or promulgated by
              lawful authority which are now or may hereafter by applicable to
              the Mortgaged Premises within such time as may be required by law.
              As of the date hereof, neither the Mortgagor nor any tenant in the
              Mortgaged Premises has received any notice from any such lawful
              authority that the Mortgaged Premises is in violation of any such
              law, rule, regulation or ordinance. The Mortgagor hereby covenants
              and agrees that, if such a notice is received by the Mortgagor or
              any tenant in the Mortgaged Premises at any time during the
              existence of this Mortgage, the Mortgagor shall immediately, but
              in any event within three (3) days of receipt of such notice,
              notify the Mortgagee in writing as to the nature and the extent of
              such claimed violation and shall further provide the Mortgagee a
              copy of such notice.

         5.13 Damage, Destruction and Condemnation

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

              5.13.2 If all or any part of the Mortgaged Premises is partially
                     or totally damaged or destroyed, the Mortgagor shall give
                     prompt notice thereof to the Mortgagee. The Mortgagor
                     hereby authorizes and directs any affected insurance
                     company to make payment of such proceeds directly to the
                     Mortgagee. The Mortgagee is hereby authorized and empowered
                     by the Mortgagor to settle, adjust or compromise, in
                     consultation with the Mortgagor, any claims for loss,
                     damage or destruction to the Mortgaged Premises. The
                     Mortgagor shall pay all costs of collection of insurance
                     proceeds payable on account of such damage or destruction.
                     The Mortgagor shall have no claim against the insurance
                     proceeds, or be entitled to any portion thereof, and all
                     rights to the insurance proceeds are hereby assigned to the
                     Mortgagee to the extent of the Liabilities as remain
                     unpaid. The Mortgagee shall have the option in its sole
                     discretion, of paying or applying all or any part of the
                     insurance proceeds to (i) reduction of the Liabilities;
                     (ii) restoration, replacement and rebuilding of the
                     Mortgaged Premises in accordance with the Mortgagee's
                     standard construction loan disbursement conditions and
                     requirements; or (iii) the Mortgagor.

<PAGE>

              5.13.3 Nothing in this Section 5.13 shall relieve the Mortgagor of
                     its duty to repair, restore, rebuild or replace the
                     Mortgaged Premises following damage or destruction, or
                     partial condemnation in the event that no or inadequate
                     proceeds of insurance or condemnation awards are available
                     to defray the cost of such repairing, restoring, rebuilding
                     or replacement.

         5.14 Required Notices In addition to any notices required, including
              without limitation any notices of environmental matters, the
              Mortgagor shall notify the Mortgagee within three (3) days of (i)
              the receipt of notice from any governmental authority relating to
              the structure, use or occupancy of all or any part of the
              Mortgaged Premises, (ii) a substantial change in the occupancy or
              use of all or any part of the Mortgaged Premises, (iii) the
              receipt of any notice from the holder of any lien or security
              interest in all or any part of the Mortgaged Premises; or (iv) the
              commencement of any litigation affecting the financial ability of
              the Mortgagor or the value of the Mortgaged Premises.

         5.15 No Credits on Accounts of the Liabilities The Mortgagor shall not
              claim or demand or be entitled to any credit on account of the
              Liabilities for any part of the taxes paid with respect to the
              Mortgaged Premises or any part thereof and no deduction shall
              otherwise be made or claimed from the taxable value of the
              Mortgaged Premises, or any part thereof, by reason of this
              Mortgage.

         5.16 Books and Records The Mortgagor shall keep and maintain complete
              and accurate books and records in accordance with the requirements
              of the LSA, reflecting all of the financial affairs of the
              Mortgagor and all items or income and expense in connection with
              the operations of the Mortgaged Premises. The Mortgagor shall
              permit representatives of the Mortgagee to examine and audit the
              Mortgagor's books and records and to inspect the Mortgagor's
              facilities and properties as is provided in the LSA.

         5.17 Intentionally Omitted

<PAGE>

    5.18 Financial Statements The Mortgagor shall provide to the Mortgagee the
         financial statements as is required by and in the manner set forth in
         the LSA within ninety (90) days of the close of each calendar year. All
         such statements shall set forth in reasonable detail the results of
         operations and conditions of the Mortgagor and shall be in a form
         satisfactory to Mortgagee.

6. DECLARATION OF NO OFFSET:

The Mortgagor represents to the Mortgagee that the Mortgagor has no knowledge of
any offsets, counterclaims or defenses to the Liabilities either at law or in
equity. The Mortgagor shall, within three (3) days upon request in person or
within ten (10) days upon request by mail, furnish a written statement in form
satisfactory to the Mortgagee stating the amount due under the Liabilities and
either that the Mortgagor knows of no such offsets or defenses or if such
offsets or defenses are alleged to exist, the nature and extent thereof.

7. SECURITY AGREEMENT:

This Mortgage constitutes a security agreement under the Code and shall be
deemed to constitute a fixture financing statement. Mortgagor hereby grants to
Mortgagee, pursuant to the terms of the Loan Documents, a security interest in
the personal and other property owned by Mortgagor and included in the Mortgaged
Premises, in all replacements, substitutions and future additions thereto and in
all rents, income, profits, revenues, accounts, contract rights and intangibles
as more fully described in Section 2 hereof. Mortgagor shall at Mortgagor's own
expense, execute and file such financing statements, continuation statements or
other security agreements as Mortgagee shall require from time to time to
perfect the lien of this Mortgage with respect to such property. Without
limiting the foregoing, Mortgagor hereby authorizes Mortgagee to file such
financing statements without the signature of Mortgagor. Mortgagor shall not
change its principal place of business without giving Mortgagee at least thirty
(30) days prior written notice, which notice shall be accompanied by new
financing statements executed by Mortgagor in the same form as the financing
statements delivered to Mortgagee on the date hereof except for the change of
address. Upon any Event of Default (as herein set forth), Mortgagee shall have,
in addition to any other rights and remedies hereunder or under the Loan
Documents, all of the rights and remedies granted to a secured party under the
Code. Notwithstanding any release of any of the real property included in the
Mortgaged Premises, any proceedings to foreclose this Mortgage or its
satisfaction of record, the terms of this Section 7 shall survive as a security
agreement until the satisfaction in full of the Liabilities.

8.  ABSOLUTE ASSIGNMENT OF RENTS AND LEASES:

    8.1  The Mortgagor hereby absolutely assigns and sets over to the Mortgagee
         the rents, income and profits arising out of or from the Mortgaged
         Premises for the purpose of making the payment of the indebtedness
         secured by this Mortgage and, so long as there shall exist no Event of
         Default under the Note, this Mortgage or any of the other Loan
         Documents, there is reserved to the Mortgagor a license to collect as
         they become due, but not prior to accrual, all rents, income and
         profits from the Mortgaged Premises and the proceeds of rent insurance
         and to retain, use and enjoy the same and to apply such rents, issues,
         income and profits, all as more specifically provided for and required
         under the Note and this Mortgage to the payment of (i) the cost of all
         such alterations, renovations, repairs, replacements and maintenance
         and expenses incident to taking and retaining possession of the
         Mortgaged Premises and the management and operation thereof and keeping
         the same insured, (ii) all taxes, charges, claims, assessments, water
         rents, sewer rents and any and all other liens on the Mortgaged
         Premises and premiums for said insurance, with interest on all such
         items and (iii) the repayment of indebtedness herein described then due
         and payable, together with all costs and reasonable attorneys' fees,
         before using any part of the same for any other purpose. Upon the
         occurrence of an Event of Default under the Note, this Mortgage or any
         of the other Loan Documents, such license granted to the Mortgagor
         shall be immediately revoked without further demand or notice from the
         Mortgagee, and the Mortgagee is hereby empowered to enter upon and take
         possession of the Mortgaged Premises for the purpose of collecting the
         same and to let the Mortgaged Premises or any part thereof, and to
         apply the rents, issues and profits, after payment of all necessary
         charges and expenses, on account of said indebtedness. This assignment
         and grant shall continue in effect until this Mortgage is paid in full
         and discharged of record. The Mortgagor shall not, without the prior
         express written consent of the Mortgagee, receive or collect rent from
         any tenant of the Mortgaged Premises or any part thereof for a period
         of more than one (1) month in advance and upon the occurrence of an
         Event of Default under the Note, this Mortgage or any of the other Loan
         Documents, the Mortgagor shall pay monthly in advance to the Mortgagee
         or to any receiver appointed to collect such rents, issues and profits,
         the fair and reasonable rental value for the use and occupation of the
         Mortgaged Premises or of such part thereof as may be in the possession
         of the Mortgagor and, upon default in any such payment, the Mortgagor
         shall vacate and surrender the possession of the Mortgaged Premises to
         the Mortgagee or to such receiver. If the Mortgagor does not so vacate
         and surrender the Mortgaged Premises, then the Mortgagor may be evicted
         by summary proceedings.

<PAGE>

9.  CHANGE IN LAWS:

During the term of the Mortgage, in the event of the passage after the date of
this Mortgage of any law of the State of New Jersey, or any other governmental
entity, changing the taxation of mortgages, or debts secured thereby, for state
or local purposes, or the manner of the operation of any such taxes, so as to
affect the interest of the Mortgagee, then the Mortgagor shall pay the full
amount of such taxes; provided that if payment by the Mortgagor of any such new
taxes would be unlawful or usurious, the Mortgagee may, at the Mortgagee's
option, (i) declare the Liabilities to be immediately due and payable; or (ii)
pay that portion of such taxes as renders the Liabilities unlawful or usurious,
in which event the Mortgagor shall concurrently therewith pay the remaining
lawful and non-usurious portion of said taxes.

<PAGE>

10. ENVIRONMENTAL COVENANTS:

Mortgagor represents and warrants, to the best of its knowledge after due
inquiry and investigation, as follows:

    10.1 Mortgagor's Representations & Warranties

         10.1.1  None of the real property owned and/or occupied by Mortgagor
                 and located in the State of New Jersey, including, but not
                 limited to the Mortgaged Premises, has ever been used by
                 previous owners and/or operators to refine, produce, store,
                 handle, transfer, process or transport "Hazardous Substances",
                 as such term is defined in N.J.A.C. 7:1E-1.6, as same may be
                 amended from time to time, and Mortgagor has not in the past,
                 nor does Mortgagor intend in the future, to use said real
                 property, including but not limited to the Mortgaged Premises,
                 for the purpose of refining, producing, storing, handling,
                 transferring, processing or transporting said "Hazardous
                 Substances".

         10.1.2  None of the real property owned and/or occupied by Mortgagor
                 and located in the State of New Jersey, including but not
                 limited to the Mortgaged Premises, has been or is now being
                 used as a "Major Facility", as such term is defined in N.J.A.C.
                 7:1E-1.6, as same may be amended from time to time, and said
                 real property, including but not limited to the Mortgaged
                 Premises, will not be used as a "Major Facility" after
                 completion of the construction, renovation, restoration and
                 other developmental work there on.

         10.1.3  No lien has been attached to any revenues or any real or
                 personal property owned by Mortgagor and located in the State
                 of New Jersey, including, but not limited to the Mortgaged
                 Premises, as a result of the chief executive of the New Jersey
                 Spill Compensation Fund expending monies from said fund to pay
                 for "Damages', as such term is defined in N.J.S.A. 58:20-23.11g
                 and/or "Cleanup and Removal Costs", as such term is defined in
                 N.J.A.C. 7:1E-1.6, arising from an intentional or unintentional
                 action or omission of Mortgagor or any previous owner and/or
                 operator of said real property, including, but not limited to
                 the Mortgaged Premises, resulting in the releasing, spilling,
                 pumping, pouring, emitting, emptying or dumping of "Hazardous
                 Substances", as such term is defined in N.J.A.C. 7:1E-1.6, as
                 same may be amended from time to time, into the waters of the
                 State of New Jersey or onto land from which it might flow or
                 drain into said waters or into waters outside the jurisdiction
                 of the State of New Jersey where damage may have resulted to
                 the lands, waters, fish, shellfish, wildlife, biota, air and
                 other resources owned, managed, held in trust or otherwise
                 controlled by the State of New Jersey.

<PAGE>

         10.1.4  Mortgagor has complied fully with the requirements of the New
                 Jersey Spill Compensation and Control Act (N.J.S.A. 58:10-23-11
                 et seq.) and the regulations promulgated thereunder (N.J.A.C.
                 7:1E-1.6 et seq.) as same may be amended from time to time,
                 with respect to the Mortgaged Premises and any other real
                 property owned and/or operated by Mortgagor and located in New
                 Jersey.

         10.1.5  Mortgagor has not received a summons, citation, directive,
                 letter or other communication, written or oral, from the New
                 Jersey Department of Environmental Protection ("NJDEP")
                 concerning any intentional or unintentional action or omission
                 on Mortgagor's part resulting in the releasing, spilling,
                 leaking, pumping, pouring, emitting, emptying or dumping of
                 "Hazardous Substances", as such term is defined in N.J.A.C.
                 7:1E-1.6, into the waters or onto the lands of the State of New
                 Jersey, or into the water outside the jurisdiction of the State
                 of New Jersey, resulting in damage to the land, waters, fish,
                 shellfish, wildlife, biota, air and other resources owned,
                 managed, held in trust or otherwise controlled by the State of
                 New Jersey.

         10.1.6  None of the real property owned and/or occupied by Mortgagor
                 and located in the State of New Jersey, including, but not
                 limited to the Mortgaged Premises, has ever been used by
                 previous owners and/or operators to generate, manufacture,
                 refine, transport, treat, store, handle or dispose of
                 "Hazardous Substances" or Hazardous Wastes", as such terms are
                 defined in N.J.A.C. 7:1-1.6 and N.J.A.C. 7:26-1.4, as same may
                 be amended from time to time, respectively, and the Mortgagor
                 does not intend to use any of its real property, including but
                 not limited to, the Mortgaged Premises, for such purposes.

         10.1.7  There is no presence of "Hazardous Substances" or "Hazardous
                 Wastes", as such terms are defined in N.J.A.C. 7:1E-1.6 and
                 N.J.A.C. 7:26-1.4, respectively, and the Mortgagor has found no
                 evidence of the presence of said "Hazardous Substances" or
                 "Hazardous Wastes" on or in the Mortgaged Premises.

         10.1.8  In connection with any purchase of the Mortgaged Premises or
                 any business or assets located thereon or any "closing,
                 terminating or transferring operations" of any "industrial
                 establishment" occurring on or after December 31, 1983,
                 Mortgagor required that the Seller of said real property,
                 including the Mortgaged Premises, or business or assets located
                 thereon, comply with the provisions of the New Jersey
                 Environmental Cleanup Responsibility Act, N.J.S.A. 13:1K-6 et
                 seq. ("ECRA"), the New Jersey Industrial Site Recovery Act,
                 ("ISRA") as same may be amended from time to time, or obtain a
                 Letter of Non-Applicability ("LNA") from the NJDEP that
                 ECRA/ISRA was not applicable to the captioned purchase, and the
                 Seller did comply therewith.

<PAGE>

         10.1.9  Mortgagor represents that there are no underground storage
                 tanks located at or on the Mortgaged Premises that are not
                 regulated in accordance with law. Underground storage tanks
                 shall have the definition as set forth in N.J.SA. 58:10A.22(p).

         10.1.10 Mortgagor represents that the real property is in full
                 compliance with all other statutes, including without
                 limitation federal statutes, affecting same.

    10.2 Mortgagor's Covenants

         10.2.1  If Mortgagor ever becomes such an owner or operator, then
                 Mortgagor shall furnish the NJDEP with all the information
                 required by N.J.A.C. 7:1E-1.1 et seq. as same may be amended
                 from time to time.

         10.2.2  Mortgagor shall not cause or permit to exist, as a result of an
                 intentional or unintentional action or omission on its part, a
                 releasing, spilling, leaking, pumping, emitting, pouring,
                 emptying or dumping of a "Hazardous Substance", as such term is
                 defined in N.J.A.C. 7:1E-1.6, as same may be amended from time
                 to time, into waters of the State of New Jersey or onto the
                 lands from which it might flow or drain into said waters, or
                 into waters outside the jurisdiction of the State of New
                 Jersey, where damage may result to the lands, waters, fish,
                 shellfish, wildlife, biota, air and other resources owned,
                 managed, held in trust or otherwise controlled by the State of
                 New Jersey, unless said release, spill, leak, pumping,
                 emitting, pouring, emptying or dumping is pursuant to and in
                 compliance with the conditions of a permit issued by the
                 appropriate federal or state governmental authorities.

         10.2.3  So long as Mortgagor shall own or operate any real property
                 located in the State of New Jersey, which is used as a "Major
                 Facility", as such term is defined in N.J.A.C. 7:1E-1.6, as
                 same may be amended from time to time, Mortgagor shall duly
                 file or cause to be duly filed with the Director of the
                 Division of Taxation in the New Jersey Department of the
                 Treasury, a tax report or return and shall pay or make
                 provisions in accordance with and pursuant to N.J.S.A.
                 58:10-23.11H.

<PAGE>

         10.2.4  In the event that there shall be filed a lien against the
                 Mortgaged Premises by the NJDEP, pursuant to and in accordance
                 with the provisions of N.J.S.A. 58:10-23.11(f), as same may be
                 amended from time to time, as a result of the chief executive
                 of the New Jersey Spill Compensation Fund having expended
                 monies from said fund to pay for "Damages", as such term is
                 defined in N.J.S.A. 58:10-23.11(g), as same may be amended from
                 time to time, and/or "Cleanup and Removal Costs", as such term
                 is defined in N.J.A.C. 7:1E-1.6, as same may be amended from
                 time to time, arising from an intentional or unintentional
                 action or omission of Mortgagor, resulting in the releasing,
                 spilling, pumping, pouring, emitting, emptying or dumping of
                 "Hazardous Substances", as such term is defined in N.J.A.C.
                 7:1E-1.6, as same may be amended from time to time, into the
                 waters of the State of New Jersey or onto lands from which it
                 might flow or drain into said waters, the Mortgagor shall,
                 within thirty (30) days from the date that Mortgagor is given
                 notice that the lien has been placed against the Mortgaged
                 Premises or within such shorter period of time in the event
                 that the State of New Jersey has commenced steps to cause the
                 Mortgaged Premises to be sold pursuant to the lien, either (i)
                 pay the claim and remove the lien from the Mortgaged Premises,
                 or (ii) furnish (a) a bond satisfactory the Title Insurance
                 Company and Mortgagee in the amount of the claim out of which
                 the lien arises, (b) a cash deposit in the amount of the claim
                 out of which the lien arises, or (c) other security reasonably
                 satisfactory to Mortgagee in an amount sufficient to discharge
                 the claim out of which the lien arises.

         10.2.5  Should Mortgagor cause or permit any intentional or
                 unintentional action or omission resulting in the releasing,
                 spilling, leaking, pumping, pouring, emitting, emptying or
                 dumping of "Hazardous Substances", as such term is defined in
                 N.J.A.C. 7:1E-1.6 as same may be amended from time to time,
                 into the waters or onto the lands of the State of New Jersey,
                 or into the waters outside the jurisdiction of the State of New
                 Jersey, resulting in damage to the lands, waters, fish,
                 shellfish, wildlife, biota, air and other resources owned,
                 managed, held in trust or otherwise controlled by the State of
                 New Jersey, without having obtained a permit issued by the
                 appropriate governmental authorities, Mortgagor shall promptly
                 clean up such spill, leak, etc. in accordance with the
                 provision of the New Jersey Spill Compensation and Control Act.

<PAGE>

         10.2.6  If Mortgagor shall own or operate any underground storage
                 tanks, as that term is defined at N.J.S.A. 58:10-A-22(p), at or
                 on the Mortgaged Premises, Mortgagor shall comply with all
                 requirements of N.J.S.A. 58:10A-21, et seq., including but not
                 limited to, registration of all underground storage tanks,
                 inventory control and record keeping, testing, or monitoring,
                 installation of leak detection systems or secondary containment
                 of underground tanks, or other activities as may be required by
                 regulations promulgated by the NJDEP.

         10.2.7  In the event that there shall be filed a lien against the
                 Mortgaged Premises by the NJDEP, or in the event that an
                 Administrative Order, directive, or other notice, whether oral
                 or written, is received pursuant to the terms of N.J.S.A.
                 58:10A-21 et seq. as same may be amended from time to time,
                 requiring remediation or payment for remediation performed by
                 the NJDEP or any consultant or contractor retained by the NJDEP
                 to remediate any release of hazardous substances from
                 underground storage tanks, then Mortgagor shall comply with the
                 terms of any such order or directive or Mortgagor shall, within
                 thirty (30) days from the date that Mortgagor is given notice
                 of action taken on the Mortgaged Premises by NJDEP or its
                 agents, pay the amount set forth in said directive, notice or
                 order so as to prevent the creation of a lien on the Mortgaged
                 Premises by virtue of such action.

    10.3 Right to Inspect and Cure The Mortgagee shall have the right to conduct
         or have conducted by its agent or contractors, such environmental
         inspections, audits and testing as the Mortgagee shall deem necessary
         or advisable from time to time at the sole cost and expense of the
         Mortgagor. The cost of such tests shall be added to the Liabilities and
         shall be secured by this Mortgage. Mortgagor shall, and shall cause
         each lessee of the Mortgaged Premises to, cooperate with such
         inspection efforts; such cooperation shall include, without limitation,
         supplying such information concerning the operations conducted and
         Hazardous Substances or Hazardous Wastes located at the Mortgaged
         Premises. In the event that the Mortgagor fails to comply with any
         applicable environmental law then the Mortgagee may, in addition to any
         of its other remedies under this Mortgage, cause the Mortgaged Premises
         to be in compliance with such laws and the cost of such compliance
         shall be added to the sums secured by this Mortgage and shall bear
         interest from the date of demand at the rate of interest then in effect
         under the Note plus five (5%) percent per annum.

11. INDEMNIFICATION:

    11.1 The Mortgagor hereby agrees to and does hereby indemnify, protect,
         defend and save harmless the Mortgagee, and any entity which "controls"
         the Mortgagee, within the meaning of the Securities Act of 1933, as
         amended, any member, officer, director, official, agent, employee and
         attorney of the Mortgagee, and their respective heirs, successors and
         assigns (collectively, the "Indemnified Parties"), from and against any
         and all losses, damages, expenses or Liabilities of any kind or nature
         and from any suits, claims or demands, including reasonable counsel
         fees incurred in investigating or defending such claim, suffered by any
         of them and caused by, relating to, arising out of, resulting from, or
         in any way connected with the Loan Documents and the transactions
         contemplated therein (unless caused by the gross negligence or willful
         misconduct of the Indemnified Parties) including, without limitation:
         (i) disputes between any architect, general contractor, subcontractor,
         materialman or supplier, or on account of any act or omission or act by
         the Mortgagee in connection with the Mortgaged Premises; (ii) losses,
         damages, expenses or liabilities sustained by the Mortgagee in
         connection with any environmental inspection, sampling or cleanup of
         the Mortgaged Premises required or mandated by any applicable
         environmental law; (iii) any untrue statement of material fact
         necessary to be stated therein in order to make such statement not
         misleading or incomplete; (iv) the failure of the Mortgagor to perform
         any obligations herein required to be performed by the Mortgagor; and
         (v) the ownership, construction, occupancy, operation, use and
         maintenance of the Mortgaged Premises.

<PAGE>

    11.2 In case any action shall be brought against the Mortgagee in respect to
         which indemnity may be sought against the Mortgagor, the Mortgagee
         shall promptly notify the Mortgagor and the Mortgagor shall assume the
         defense thereof, including the employment of counsel selected by the
         Mortgagor and satisfactory to the Mortgagee, the payment of all costs
         and expenses and the right to negotiate and consent to settlement. The
         Mortgagee shall have the right, at its sole option, to employ separate
         counsel in any such action and to participate in the defense thereof.
         The Mortgagor shall not be liable for any settlement of any such action
         effected without its consent, but if settled with the Mortgagor's
         consent, or if there be a final judgment of the claimant in any such
         action, the Mortgagor agrees to indemnify and save harmless the
         Mortgagee from and against any loss or liability by reason of such
         settlement or judgment.

    11.3 The provisions of this Section 11 shall survive the repayment of the
         Liabilities.

12. EVENTS OF DEFAULT:

    12.1 The Mortgagor shall be in default of this Mortgage upon the occurrence
         of any Event of Default that is described in the LSA, the Note, the
         Guaranty, or the other Loan Documents.

13. REMEDIES:

<PAGE>

IF ANY EVENT OF DEFAULT SHALL HAVE OCCURRED, THE MORTGAGEE MAY TAKE ANY OF THE
FOLLOWING ACTIONS (WITHOUT THE OBLIGATION TO MARSHAL), IN ADDITION TO ANY OTHER
REMEDIES AVAILABLE AT LAW, IN EQUITY, OR BOTH:

    13.1 Acceleration The Mortgagee may declare the entire amount of the
         Liabilities immediately due and payable without presentment, demand,
         notice of any kind, protest or notice of protest, all of which are
         expressly waived, notwithstanding anything to the contrary contained in
         the Loan Documents. The Mortgagee may collect interest from the date of
         default on the unpaid balance of the Liabilities, at the Default Rate
         of Interest set forth in the LSA.

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

    13.3 Foreclosure The Mortgagee may institute an action of mortgage
         foreclosure, or take other action as the law may allow, at law or in
         equity, or both, for the enforcement of this Mortgage. In case of any
         sale of the Mortgaged Premises by judicial proceedings, the Mortgaged
         Premises may be sold in one parcel or in such parcels, manner or order
         as the Mortgagee in its sole discretion may elect. The Mortgagee shall
         not be required to marshal any of the security under this Mortgage. The
         failure to make any tenant a defendant to a foreclosure proceeding
         shall not be asserted by the Mortgagor as defense in any proceeding
         instituted by the Mortgagee to collect the Liabilities or any
         deficiency remaining unpaid after the foreclosure sale of the Mortgaged
         Premises.

    13.4 Appointment of Receiver. The Mortgagee may have a receiver of the
         rents, income, issues and profits of the Mortgaged Premises appointed
         without the necessity of proving either the depreciation or the
         inadequacy of the value of the security or the insolvency of the
         Mortgagor or any person or party who may be legally or equitably liable
         to pay monies secured hereby, and the Mortgagor and each such person or
         party waive such proof and consent to the appointment of a receiver.

<PAGE>

    13.5 Fair Rental Payments. If the Mortgagor or any subsequent owner is
         occupying the Mortgaged Premises or any part thereof, it is hereby
         agreed that such occupants shall pay such reasonable rental monthly in
         advance as the Mortgagee shall demand for the Mortgaged Premises or the
         part so occupied, and for the use of personal property covered by this
         Mortgage or any chattel mortgage.

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

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

14. MISCELLANEOUS:

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

         14.2    Application of Proceeds.

         (i) All payments and proceeds received under this Mortgage after the
         occurrence of an Event of Default shall be applied in the following
         order of priority:

             (a) First, to the payment of all fees, costs and expenses
             (including reasonable attorneys' fees and expenses, and expressly
             including any and all post-judgment collection costs and expenses)
             incurred by the Mortgagee and/or its agents or representatives in
             connection with the realization of such payments or proceeds;

<PAGE>

             (b)Next, to the payment in full of all unpaid principal, accrued
             interest and other sums, if any, due and owing under the Note; and

             (c) Next, the balance, if any, of such payments, proceeds, or
             amounts to the Mortgagor, or, if otherwise determined by a court of
             competent jurisdiction, to whomever may be entitled thereto.

         (ii) If the amount of the proceeds received from the sale or other
         disposition of the Mortgaged Premises shall be insufficient to satisfy
         in full the amounts referred to in subparagraphs (a) and (b) of this
         Section 14.2, then the Mortgagor shall remain and be liable for any
         such deficiency

    14.3 Waiver of Defaults The Mortgagee may, by written notice to the
         Mortgagor, waive any Event of Default hereunder and its consequences
         and rescind any acceleration or maturity of principal. In every case of
         any such waiver or rescission, in accordance with the preceding
         sentence, the Mortgagee shall be bound thereby.

    14.4 Agreement to Pay Attorneys' Fees and Expenses Upon the occurrence of an
         Event of Default, as a result of which the Mortgagee shall employ
         attorneys or incur other expenses for the collection of the Liabilities
         or performance of any agreement on the part of the Mortgagor contained
         herein, the Mortgagor shall, on demand, pay to the Mortgagee, the
         reasonable fee of such attorneys (or allocated costs of the Mortgagee's
         in-house legal counsel) and such other reasonable expenses so incurred
         by the Mortgagee.

    14.5 Moratorium Laws; Right of Redemption 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 Premises or any part
         thereof, wherever enacted, now or at any time hereafter in force
         providing for the valuation or appraisal of the Mortgaged Premises, or
         any part thereof, prior to any sale or sales thereof which may be made
         pursuant to any provision herein, or pursuant to any decree, judgment
         or order of any court of competent jurisdiction; nor, after any such
         sale or sales, claim or exercise any right under any statute heretofore
         or hereafter enacted to redeem the property so sold or any part thereof
         and Mortgagor hereby expressly waives all benefit or advantage of any
         such law or laws, and covenants not to hinder, delay or impede the
         execution of any power herein granted or delegated to Mortgagee, but to
         suffer and permit the execution of every power as though no such law or
         laws had been made or enacted. Mortgagor, for itself and all who may
         claim under it, waives, to the extent that it lawfully may, all right
         to have the Mortgaged Property marshaled upon any foreclosure hereof.

<PAGE>

    14.6 Mortgagee's Rights Concerning Application of Amounts Collected
         Notwithstanding anything to the contrary contained herein, upon the
         occurrence of an Event of Default, Mortgagee may apply, to the extent
         permitted by law, any amount collected hereunder to principal, interest
         or any other sum due under the Note or otherwise in respect of the Loan
         in such order and amounts, and to such obligations, as Mortgagee shall
         elect in its sole and absolute discretion.

    14.7 No Additional Waiver Implied By One Waiver The Mortgagee shall not be
         deemed to waive any of its rights or remedies hereunder unless such
         waiver is in writing and signed by the Mortgagee and then only to the
         extent specifically set forth therein. In the event any agreement
         contained in the Mortgage should be breached by the Mortgagor and
         thereafter waived by the Mortgagee, such waiver shall be limited to the
         actual breach so waived and shall not be deemed to waive any other
         breach hereunder.

    14.8 No Oral Modifications The terms of this Mortgage may not be changed
         orally but only by an agreement in writing signed by the party against
         whom enforcement of any waiver, change, modification or discharge is
         sought.

    14.9 Partial Invalidity The unenforceability or invalidity of any one or
         more provisions shall not render any of the provisions unenforceable or
         invalid.

    14.10 Binding Effect The covenants, conditions and agreements contained in
         this Mortgage shall bind, and the benefits thereof shall inure to, the
         respective parties hereto and their respective heirs, executors,
         administrators, successors and assigns and are intended and shall be
         held to be real covenants running with the land; provided however, that
         this Mortgage cannot be assigned by the Mortgagor without the prior
         express written consent of the Mortgagee.

    14.11 Captions The captions preceding the text of the sections of this
         Mortgage are used solely for the convenience of reference and shall not
         affect the meaning or construction of this Mortgage.

    14.12 Number and Gender In the event that the Mortgagor consists of more
         than one person or entity, the obligations and liabilities hereunder of
         each such person or entity shall be joint and several and the word
         "Mortgagor" shall mean all or some or any of them. For the purpose of
         this Mortgage, the singular shall be deemed to include the plural and
         the neuter shall be deemed to include the masculine and feminine, as
         the context may require.

    14.13 Commercial Loan The Mortgagor represents and warrants that the loan
         secured by this Mortgage was obtained solely for the purpose of
         providing working capital.

<PAGE>

    14.14 Modification of Mortgage This Mortgage is subject to "modification" as
          such term is defined in P.L. 1985 c.353 (N.J.S.A. 46:9-8.1 et seq.)
          and shall be subject to the priority provisions thereof.

    14.15 New Jersey Law Governs This Mortgage shall be governed and construed
          in accordance with the laws of the State of New Jersey, without giving
          effect to choice of law rules.

    14.16 Consent to Jurisdiction The Mortgagor hereby irrevocably consents to
          the jurisdiction of the State of New Jersey (venued in Atlantic
          County) and to the jurisdiction of the United States District Court
          for the District of New Jersey, for the purpose of any suit, action or
          other proceeding arising out of or relating to this Mortgage or any
          other Loan Document, or the subject matter hereof or thereof. The
          Mortgagor hereby waives, and agrees not to assert, any such suit,
          action or proceeding, any claim that it is not personally subject to
          such jurisdiction, or any right to remove an action brought in State
          or Federal Court, or any claim that such suit, action or proceeding is
          in an inconvenient forum or that the venue thereof is improper. The
          Mortgagor agrees that service in any such action, whether or not in
          either such jurisdiction, may be effected by means in accordance with
          the provisions hereinafter set forth or by any other means of service
          allowed by law.

    14.17 Notices Unless otherwise indicated differently, all notices which may
          be required hereunder shall be in writing and shall be personally
          delivered or sent by telex (answer back received), courier, or
          first-class certified or registered United States mail, postage
          prepaid, return receipt requested, and sent to the party at its
          address appearing above or such other address as any party shall
          hereafter inform the other party by notice given as aforesaid. All
          notices shall be deemed effective upon receipt or, if mailed, upon
          receipt or the expiration of the third day following the date of
          mailing, whichever occurs first except that any notice of change in
          address shall be effective only upon receipt by the party to whom said
          notice is addressed.

    14.18 Waiver of Jury Trial THE MORTGAGOR AND MORTGAGEE HEREBY WAIVE ANY
          RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO ANY
          ASPECT OF THIS MORTGAGE OR THE LOAN DOCUMENTS. THE MORTGAGOR
          ACKNOWLEDGES THAT IT HAS HAD THE OPPORTUNITY TO CONSULT WITH
          INDEPENDENT COUNSEL WITH RESPECT TO THIS WAIVER.

    14.19 Disassociation, Solvency, and Default of Borrower and Guarantors All
          sums payable under the Note, Mortgage and Loan Documents shall become
          due at the option of the Bank in the event of the filing by the
          Mortgagor of a petition in bankruptcy or insolvency, or in
          reorganization, or for the appointment of a receiver or a trustee, or
          the making of an assignment for the benefit of creditors or the filing
          of a petition for an arrangement by the Mortgagor which is not
          withdrawn or dismissed and/or terminated before the expiration of
          sixty (60) days from the date thereof, or in the event of the filing
          against the Mortgagor of the following, which said filings are not
          withdrawn or discharged within sixty (60) days therefrom: a petition
          in bankruptcy or insolvency, or in reorganization, or for the
          appointment of a receiver or a trustee, or the filing of a petition
          for an arrangement.

<PAGE>

         IN WITNESS WHEREOF, this mortgage has been duly executed and sealed by
the mortgagor on the day and year first written above.

RECEIPT, WITHOUT CHARGE, OF A TRUE COPY OF THIS MORTGAGE IS ACKNOWLEDGED.

                                                    ACE GAMING, LLC

                                                    By:/s/ George Toth
                                                    Name: George Toth
                                                    Title: President

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