Document:

<PAGE>

                                           Record and Return to:

                                           Christopher W. Rosenbleeth, Esquire
Prepared by: Christopher W. Rosenbleeth    Stradley, Ronon, Stevens & Young, LLP
Stradley, Ronon, Stevens & Young, LLP      Woodland Falls Corporate Park
                                           210 Lake Drive East, Suite 102
                                           Cherry Hill, NJ  08002

                         MORTGAGE AND SECURITY AGREEMENT
                         -------------------------------

                      THIS MORTGAGE SECURES FUTURE ADVANCES

     THIS MORTGAGE AND SECURITY AGREEMENT (the "MORTGAGE") is entered into on
October 8, 2003 by Merrimac Industries, Inc., a Delaware corporation
("MORTGAGOR"), having an address at 41 Fairfield Place, West Caldwell, NJ 07066,
in favor of THE CIT GROUP/BUSINESS CREDIT, INC. (the "MORTGAGEE"), having
offices at 1211 Avenue of the Americas, New York, New York 10036.

                              W I T N E S S E T H:
                               -------------------

     Mortgagor has executed and delivered to Mortgagee a certain Financing
Agreement dated the date hereof (the "FINANCING AGREEMENT") by and among
Mortgagor and Mortgagee, a certain term promissory note in the original
principal amount of $1,500,000.00 made by Mortgagor in favor of Mortgagee (the
"TERM NOTE A"), and a certain term promissory note in the original principal
amount of $2,750,000.00 made by Mortgagor in favor of Mortgagee (the "TERM NOTE
B," and together with Term Note A, the "PROMISSORY NOTES"), which Financing
Agreement and Promissory Notes, together with any and all related agreements,
documents and instruments collateral thereto or contemplated thereby, now or
hereafter executed and/or delivered in connection therewith or otherwise related
thereto, as the same may now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated, or replaced, are sometimes
hereinafter collectively referred to as the ("Documents"). Pursuant to the
Financing Agreement, Mortgagor is indebted to Mortgagee up to a total principal
amount of $9,250,000.00, together with interest accrued and accruing thereon at
the rate set forth in the Financing Agreement and other sums and charges
provided for herein, in the Promissory Notes and in the other Documents (all of
the foregoing are hereinafter collectively referred to as the "SECURED
OBLIGATIONS").

     NOW, THEREFORE, in order to secure the full and prompt payment and
performance by Mortgagor of all of the Secured Obligations due or to become due
under the Documents, or otherwise due or to become due under this Mortgage, or
any extensions or modifications thereof or hereof, including all future
advances, as well as to secure the performance of all of Mortgagor's covenants
and agreements contained in this Mortgage, the Documents, or any amendments
thereof, including without limitation, any advances made, with respect to the
Mortgaged Property described below, for the payment of taxes, assessments,
maintenance charges, insurance premiums or costs incurred for the protection of
the Mortgaged Property or the lien of this Mortgage, expenses incurred by
Mortgagee by reason of the default of the Mortgagor, or payment of all other
sums advanced in accordance with this Mortgage to protect Mortgagee's security,
with interest on those sums, and all other obligations, liabilities and
indebtedness of every kind, nature or description owing by Mortgagor to
Mortgagee and/or its affiliates, including principal, interest, charges, fees
and expenses, however evidenced, whether as principal, surety, endorser,
guarantor or otherwise, whether arising under any of the Documents, or
otherwise, whether now existing or hereafter arising, whether arising before,
during or after the initial or any renewal term of the Documents or after the
commencement of any case with respect to Mortgagor under the United States
Bankruptcy Code or any similar statute, whether direct or indirect, absolute or
contingent, joint or several, due or not due, primary or secondary, liquidated
or unliquidated, secured or unsecured, original, renewed or extended, and
whether arising directly or howsoever acquired by Mortgagee including from any
other entity outright, conditionally or as collateral security, by assignment,
merger with any other entity, participations or interests of Mortgagee in the
obligations of Mortgagor to others, assumption, operation of law, subrogation or
otherwise (the Secured Obligations

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and all of the foregoing are hereinafter collectively referred to as the
"OBLIGATIONS"), up to a maximum principal amount hereunder equal to the sum of
Nine Million Two Hundred Fifty Thousand Dollars ($9,250,0000.00) plus interest
thereon at the Default Rate (defined below) from the date of demand for payment
hereunder plus any and all costs of collection hereunder (including without
limitation attorney's fees and other expenses), and in consideration of the
further sum of One Dollar ($1.00) to the Mortgagor in hand well and truly paid
by Mortgagee at or before the ensealing and delivery hereof, the receipt whereof
is hereby acknowledged, the Mortgagor has granted, bargained and sold, aliened,
enfeoffed, released, remised, conveyed, confirmed and mortgaged, and by these
presents does grant, bargain, and sell, alien, enfeoff, release, remise, convey,
confirm, and mortgage unto Mortgagee and its successors and assigns, all that
certain property located in the Township of West Caldwell, Essex County, State
of New Jersey, all as more particularly described in EXHIBIT A attached hereto
and incorporated herein by this reference and being known as 41 Fairfield Place,
West Caldwell, NJ 07006 (the "REAL ESTATE");

     TOGETHER with the appurtenances and all the estates and rights of Mortgagor
in and to the Real Estate, including without limitation the rents, reversions,
remainders, easements, issues and profits arising or issuing from the Real
Estate and the improvements thereon including, but not limited to the rents,
issues and profits arising or issuing from all insurance policies, sale
agreements, licenses, options, leases and subleases now or hereafter entered
into covering any part of the Real Estate or the buildings, structures and
improvements thereon, all of which insurance policies, sale agreements,
licenses, options, leases, subleases, rents, issues and profits are hereby
assigned and shall be caused to be assigned to Mortgagee by Mortgagor. Mortgagor
will execute and deliver to Mortgagee on demand such assignments as Mortgagee
may require to implement this assignment;

     TOGETHER with all the right, title and interest of Mortgagor in and to all
streets, roads and public places, opened or proposed, adjoining the Real Estate,
and all easements and rights of way, public or private, now or hereafter created
or used in connection therewith;

     TOGETHER with all the right, title and interest of Mortgagor, now owned or
hereafter acquired, in and to any and all sidewalks and alleys adjacent to the
Real Estate;

     TOGETHER with all buildings and improvements of every kind and description
now or hereafter erected or placed on the Real Estate;

     TOGETHER with all of Mortgagor's right, title and interest now owned or
hereafter acquired in and to all heating, plumbing, sprinkler, water, gas,
electric power, lighting and air conditioning equipment, elevators, machinery,
fixtures, equipment, furniture, building materials of any kind or nature now
affixed or attached to the Real Estate together with all replacements thereof
and additions thereto at any time hereafter affixed or attached to the Real
Estate, buildings, structures and improvements (hereinafter collectively called
"PERSONAL PROPERTY"), all of which Mortgagor represents and warrants is and will
be owned by Mortgagor free from any prior conditional sales, chattel mortgages,
security interests, liens, pledges, hypothecations, charges or encumbrances
except for any Purchase Money Liens (as defined in the Financing Agreement) and
those liens, encumbrances and other matters affecting title to the Mortgaged
Property (as hereinafter defined) set forth on EXHIBIT B attached hereto and
incorporated herein by this reference (the "PERMITTED ENCUMBRANCES"), and is
intended to be subject to the lien of this Mortgage as if part of the Real
Estate. This provision shall be self-operative and this Mortgage, to the extent
that any such Personal Property or other property subject to this Mortgage shall
not be deemed to be part of the Real Estate, shall constitute a security
agreement under the applicable uniform commercial code, and Mortgagor shall
execute and deliver to Mortgagee on demand, and hereby irrevocably appoints
Mortgagee, or any person designated by Mortgagee, the attorney-in-fact of
Mortgagor to execute, deliver and file such financing statements and other
instruments as Mortgagee may reasonably require in order to perfect and maintain
such security interest under the applicable uniform commercial code);

     TOGETHER with all general intangibles, accounts, contract rights, accounts
receivable, agreements of sale, and claims of any sort relating to or arising
out of the Real Estate whether now owned or hereafter acquired;

     TOGETHER with (this grant constituting the grant of a security interest)
any and all awards, damages, payments and other compensation, and claims
therefor and rights thereto, which may result from a taking

                                       2
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or injury by virtue of the exercise of the power of eminent domain of or to, or
from any damage, injury or destruction by casualty or otherwise caused to, the
Real Estate, any buildings or improvements thereon, any appurtenances or
improvements thereto, and any Personal Property, or any part thereof, including
insurance proceeds, or from any change of grade or vacation of any street
abutting thereon, all of which are hereby assigned to Mortgagee to the fullest
extent permitted by law, Mortgagee being hereby irrevocably appointed
attorney-in-fact for the Mortgagor to collect and receive any such awards,
damages, payments and compensation from the authorities or insurers making the
same, and to give receipts and acquittances therefor, and to institute, appear
in and prosecute any proceeding therefor, it being agreed that all sums
collected by or paid to Mortgagee pursuant to this assignment, net of any cost
incurred by Mortgagee in collecting the same (including attorneys' fees), shall
be applied to the payment of the Obligations whether or not then due and
payable, or to the restoration, if applicable, of the Mortgaged Property (as
hereinafter defined), as Mortgagee shall elect, unless otherwise set forth
herein;

     TOGETHER with any and all proceeds (including insurance and condemnation
proceeds and proceeds of other proceeds) of any of the foregoing;

     All of the property and rights hereinabove described or mentioned being
hereinafter collectively called the "MORTGAGED PROPERTY".

     TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee, its successors
and assigns, to its own use forever.

     PROVIDED HOWEVER, that if (a) the Obligations shall have been indefeasibly
paid in full and discharged; and (b) the Mortgagor shall have kept and performed
each of the other covenants, conditions, and agreements herein and in the
Documents; and (c) if all commitments of Mortgagee to provide credit or make
loans under the Documents, if any, shall have expired and/or been terminated,
then this Mortgage and the estate hereby granted and conveyed shall cease and
become null and void.

     It is understood and agreed that this Mortgage secures present and future
advances, if any, made by Mortgagee and that the lien of future advances shall
relate back to the date of this Mortgage, even if such advances are made under a
renewal, extension, modification or refinancing of the Obligations, and even if
the Obligations are assumed by a third party. Mortgagor agrees that full
repayment of the Obligations secured hereby at any time shall not extinguish the
security of this Mortgage for obligations which Mortgagor may subsequently incur
to Mortgagee.

     Mortgagee may (but is not obligated to) make an advance or advances to pay
interest, penalties, fees, charges or other obligations which Mortgagor may owe
Mortgagee, and all such advances shall be secured by this Mortgage with lien
priority from the time this Mortgage was left for record. If Mortgagee makes
such an advance after having notified Mortgagor of a default under this Mortgage
or the Obligations, any such advances shall be treated as expenses incurred by
Mortgagee by reason of Mortgagor's default under this Mortgage.

     AND, at all times until the Obligations are paid in full with interest, and
faithfully and strictly performed, the Mortgagor does hereby covenant, promise
and agree with Mortgagee as follows:

                                    ARTICLE I

                      Covenants As To Taxes and Assessments
                      -------------------------------------

     1.1 The Mortgagor will pay and discharge (i) all of the general and special
taxes, levies and assessments heretofore or hereafter charged, assessed or
levied against the Mortgaged Property or any part thereof by any lawful
authority, or which otherwise may become a lien thereon (all of which are herein
collectively called the "TAXES"); and (ii) all water and sewer rents and all
charges for utilities, whether public or private, which may be assessed or
become liens on the Mortgaged Property (collectively, the "RENTS"), not less
than ten (10) days before the date on which any interest or penalties shall
commence to accrue thereon, and produce to Mortgagee evidence of each such
payment not less than ten (10) days after such payment is made. Upon default of
any of the above-described payments, Mortgagee may, but shall not be obligated
to, pay the same, and such payment by

                                       3
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Mortgagee shall be repaid by the Mortgagor to Mortgagee on demand, shall be
secured hereby, and shall bear interest at the lesser of the following rates:
(a) the Default Rate of Interest (as defined in the Financing Agreement) or (b)
the maximum amount permitted by applicable law to be contracted for, charged or
received (herein the "DEFAULT RATE") from the date Mortgagee makes such payment
until such sums are repaid in full. The Mortgagor shall promptly cause to be
paid and discharged, any lien or charge whatsoever which by any present or
future law may be or become superior to, or on parity with, either in lien or in
right of distribution out of the proceeds of any judicial sale of the Mortgaged
Property, the liens created hereby. The Mortgagor will cause to be paid, when
due, all charges for utilities whether public or private.

     1.2 Upon the request of Mortgagee following the occurrence of a Default or
an Event of Default and until such time as it is waived in writing by Mortgagee,
but subject to the rights of any senior mortgagee, Mortgagor will pay to
Mortgagee, on the first day of each month, a sum equal to one-twelfth (1/12) of
the Taxes, Rents, payments in lieu thereof, all applicable insurance payments
and premiums, and any other lien, claim, or encumbrance which may at any time be
or become a lien on the Mortgaged Property prior to, or on parity with, the lien
of this Mortgage so as to enable Mortgagee to pay the same at least thirty (30)
days before they become due. No amounts so paid shall be deemed to be trust
funds but may be commingled with general funds of Mortgagee and no interest
shall be payable thereon. If at any time the whole amount of the then remaining
indebtedness under the Obligations shall become due and payable, Mortgagee shall
have the right, at its election, to apply any amounts so held against all or any
of the Obligations and any interest thereon in payment of the premiums or
payments for which the amounts were deposited. The Mortgagor will furnish to
Mortgagee bills for Taxes and Rents in sufficient time to enable Mortgagee to
pay such Taxes, Rents and levies, charges, and fees related thereto, before any
interest or penalty accrues thereon.

     1.3 The Mortgagor covenants and agrees to pay to Mortgagee the principal
and interest hereby secured without deduction or credit for any amount for Taxes
assessed or to be assessed against the Mortgaged Property.

                                   ARTICLE II

               General Representations and Covenants of Mortgagor
               --------------------------------------------------

     2.1 Mortgagor will observe and perform all of the terms, covenants and
conditions on the part of Mortgagor to be observed and performed under this
Mortgage and shall pay and faithfully and strictly perform all of the
Obligations.

     2.2 Mortgagor represents, warrants and covenants that it has good and
marketable fee simple title to the Mortgaged Property, subject to no liens,
claims, security interests, pledges, hypothecations or other encumbrances or
charges senior to, or on parity with, in priority, the lien created hereby,
other than the Permitted Encumbrances. Mortgagor represents and warrants that it
has full power and lawful authority to execute and deliver this Mortgage and to
mortgage to Mortgagee all of the property and rights purported to be mortgaged
by it hereunder. Mortgagor will forever warrant and defend the title to the
Mortgaged Property unto Mortgagee against the claims and demands of all persons
whomsoever.

     2.3 Mortgagor will not, without the prior written consent of Mortgagee,
which consent may be withheld without reason stated, cause or permit any
building or improvement comprising part of the Mortgaged Property to be removed,
demolished, or structurally altered in whole or in part, or any material fixture
therein to be removed or destroyed. Mortgagor will not abandon the Mortgaged
Property or cause or permit any waste thereto and will at all times maintain the
Mortgaged Property in substantially its current condition, normal wear and tear
excepted.

     2.4 Throughout the term of this Mortgage, Mortgagor, at its sole cost and
expense, will take good care of the Mortgaged Property and the sidewalks and
curbs, if any, adjoining the Mortgaged Property and will keep the same in good
order and condition, and make all necessary repairs thereto, interior and
exterior (including parking areas), structural and non-structural, ordinary and
extraordinary, and unforeseen and foreseen. All repairs made by the Mortgagor
shall be at least equal in quality and class to the original work. The necessity
for and

                                       4
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adequacy of repairs and construction to and of the buildings and improvements
pursuant to this Mortgage shall be measured by the standard which is appropriate
for structures of similar construction and class, provided that Mortgagor shall
in any event make all repairs necessary to avoid any structural damage or injury
to the buildings and improvements to keep the buildings and improvements in a
proper condition.

     2.5 Mortgagor will permit Mortgagee and Mortgagee's representatives to
enter the Mortgaged Property at any time or from time to time to inspect the
same. In case of any Event of Default (as hereinafter defined) Mortgagee may, at
its option, enter the Mortgaged Property to protect, restore or repair any part
thereof, but Mortgagee shall be under no obligation to do so. Mortgagor will
repay to Mortgagee on demand any sums paid by Mortgagee to protect, restore or
repair any part of the Mortgaged Property, with interest thereon at the Default
Rate, and, until so paid, the same shall be secured by this Mortgage and by all
liens granted under any of the other Documents.

     2.6 Throughout the term of this Mortgage, Mortgagor, at its sole cost and
expense, shall promptly comply with all present and future laws, ordinances,
orders, rules, regulations and requirements of all federal, state and municipal
governments, courts, departments, commissions, boards and officers, any national
or local Board of Fire Underwriters, or any other body exercising functions
similar to those of any of the foregoing, which may be applicable to the
Mortgaged Property, the maintenance and use thereof and the sidewalks and curbs
adjoining the Mortgaged Property whether or not such law, ordinance, order,
rule, regulation or requirement shall necessitate structural changes or
improvements, or the removal of any encroachments or projections, ornamental,
structural or otherwise, onto or over property contiguous or adjacent thereto,
any such structural changes or improvements or removal of encroachments to be
performed with the consent of Mortgagee, which consent will not be unreasonably
withheld. Mortgagor will comply with all orders and notices of violation thereof
issued by any governmental authority. Mortgagor will pay all license fees and
similar municipal charges for the use of the Mortgaged Property and the other
areas now or hereafter comprising part thereof or used in connection therewith
and will not, unless so required by any governmental agency having jurisdiction,
discontinue use of the Mortgaged Property without prior written consent of
Mortgagee. If Mortgagor shall fail to perform any covenant herein, Mortgagee may
(but shall be under no obligation to) perform such covenant for the account of
Mortgagor and any sums paid by Mortgagee in such event shall be repaid by
Mortgagor to Mortgagee with interest thereon at the Default Rate and, until so
paid, the same shall be secured by this Mortgage.

     2.7 Without the prior written consent of Mortgagee, which Mortgagee may
withhold, condition and/or delay for any reason or for no reason, Mortgagor will
abstain from and will not cause or permit any sale, exchange, assignment,
transfer or conveyance (whether by deed, easement, lease, or other instrument)
or the mortgaging, pledging, hypothecating or other encumbering, directly or
indirectly (individually or collectively a "TRANSFER") of the Mortgaged
Property, or any part thereof, or any beneficial or legal interest therein,
voluntarily or by operation of law. For the purposes of this paragraph, the
liquidation and/or dissolution of Mortgagor, the merger or acquisition of
Mortgagor with or by another entity, or any reorganization, recapitalization or
restructuring of Mortgagor, shall constitute a Transfer of the Mortgaged
Property. If any Transfer occurs without the prior written consent of Mortgagee,
then the entire principal indebtedness of Mortgagor secured hereby shall, at the
option of Mortgagee, immediately become due and payable, without demand,
together with all other sums required to be paid by Mortgagor hereunder.
Mortgagor shall immediately give written notice to Mortgagee in the manner
provided herein for notices of any Transfer.

     2.8 Mortgagor shall promptly pay upon demand and presentation of invoices
or bills, with interest thereon at the Default Rate, all expenses and costs
incurred by Mortgagee, including reasonable attorney's fees in connection with
any action, proceeding, litigation or claim instituted or asserted by or against
Mortgagee or in which Mortgagee becomes engaged, wherein it becomes necessary in
the reasonable opinion of Mortgagee to defend or uphold the lien of this
Mortgage, or the validity or effectiveness of any assignment of any claim,
award, payment, property damage, insurance policy or any other right or property
conveyed, encumbered or assigned by Mortgagor to Mortgagee hereunder, or the
priority of any of the same, and all such expenses and costs, and interest
thereon, may be added to and become part of the principal indebtedness of
Mortgagor hereunder, bear interest at the Default Rate and be secured by this
Mortgage.

     2.9 To further secure payment of the Obligations, the Mortgagor hereby
pledges, assigns and grants to Mortgagee a continuing security interest in and
lien on all of the Personal Property and all proceeds

                                       5
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(including insurance proceeds and proceeds of proceeds) of all of the foregoing.
The parties hereto agree that the security interest created hereunder is valid
under the applicable uniform commercial code and is a presently existing
security interest and attaches to the Personal Property as of the date hereof.

     2.10 Mortgagor will not, without the prior written consent of Mortgagee,
which consent may be withheld without reason stated, create or suffer to be
created any security interest under the applicable Uniform Commercial Code, or
other encumbrance in favor of any party other than Mortgagee, or create or
suffer any reservation of title by any such other party, with respect to any of
the Personal Property nor shall any of the Personal Property be the subject
matter of any lease or other transaction whereby the ownership or any beneficial
interest in any of such Personal Property is held by any person or entity other
than Mortgagor (or Mortgagee as provided herein), except as otherwise permitted
in the Financing Agreement. Except as otherwise permitted in the Financing
Agreement, all such Personal Property shall be purchased for cash or in such
manner that no lien shall be created thereon except the lien of this Mortgage,
unless Mortgagee shall agree in writing to the contrary before a contract to
purchase any such Personal Property is executed. Mortgagor will deliver to
Mortgagee on demand, any contracts, bills of sale, statements, receipted
vouchers or agreements, under which the Mortgagor claims title to any Personal
Property incorporated in the improvements or subject to the lien of this
Mortgage.

     2.11 Mortgagor shall, at its expense, promptly upon request of Mortgagee
(i) do all acts and things, including but not limited to the execution of any
further assurances, deemed necessary by Mortgagee, to establish, confirm,
maintain and continue the lien created and intended to be created hereby, all
assignments made or intended to be made pursuant hereto, and all other rights
and benefits conferred or intended to be conferred on Mortgagee hereby, and
Mortgagor shall pay all costs incurred by Mortgagee in connection therewith,
including all filing and recording costs, cost of searches, and reasonable
counsel fees incurred by Mortgagee; and (ii) furnish Mortgagee with a written
certification signed by Mortgagor, as to all then existing leases for space
covering any part of the Mortgaged Property, the names of the tenants, the rents
payable thereunder and the dates to which such rents are paid, together with
executed copies of all such leases. The foregoing shall not operate as a consent
to leases or as a waiver of other provisions of this Mortgage or any related
agreement of Mortgagor.

     2.12 Mortgagor will promptly perform and observe, or cause to be performed
or observed, all of the terms, covenants and conditions of all instruments of
record affecting the Mortgaged Property, noncompliance with which may affect the
security of this Mortgage or which may impose any duty or obligation upon
Mortgagor or any lessee or other occupant of the Mortgaged Property or any part
thereof, noncompliance with which may affect the security of this Mortgage, and
the Mortgagor shall do or cause to be done all things necessary to preserve
intact and unimpaired any and all easements, appurtenances and other interests
and rights in favor of or constituting any portion of the Mortgaged Property.

     2.13 (a) To further secure payment of the Obligations, Mortgagor hereby
irrevocably assigns and sets over unto Mortgagee all right, title and interest
of Mortgagor in any and all leases, licenses or other grants of right to use the
Real Estate or any portion, thereof, now existing or hereafter entered into and
all rents, issues and profits of and from the Real Estate as additional security
for the indebtedness and other items hereby secured, for the purpose of keeping
said Real Estate, buildings and improvements and/or the contents thereof in
proper order and repair, and for the purpose of protecting the security of
Mortgagee, and Mortgagee is hereby granted a prior and continuing lien thereon
and security interest therein. Mortgagor does hereby irrevocably appoint
Mortgagee and/or its attorney or agent to do the following after the occurrence
of an Event of Default: collect said rents, with or without suit, and apply the
same, less all expenses of collection, to the said indebtedness, to management,
maintenance and repair of the Real Estate and the contents thereof, and to
protecting the security of Mortgagee in such manner as Mortgagee may elect;
provided, however, that until there occurs an Event of Default under the terms
of this Mortgage, Mortgagor may continue to collect and enjoy the current rents
without accountability to Mortgagee. During any period that Mortgagee collects
rents pursuant to this paragraph, Mortgagee shall be entitled to retain ten
percent (10%) of such rents in payment for the services of the Mortgagee in
relation to the Real Estate, which sum Mortgagor agrees is a fair and reasonable
charge. Except to the extent otherwise agreed in writing by Mortgagee, the
taking of possession and collection of rents by Mortgagee as aforesaid shall not
be construed to be an affirmation of or acceptance of any attornment with
respect to any lease of the Real Estate or any part thereof. Except to the
extent otherwise agreed in writing by Mortgagee, Mortgagee or any other
purchaser at any foreclosure sale may (if otherwise entitled to do so) exercise
the right to terminate any such lease as though such taking of possession and
collection of rents had not occurred. Mortgagee shall be liable to account only
for such

                                       6
<PAGE>

rents, issues, and profits as are actually received by Mortgagee. The foregoing
shall not operate as a consent to leases or as a waiver of other provisions of
this Mortgage or any related agreement of Mortgagor.

     (b) In connection with the foregoing, after the occurrence of an Event of
Default: (1) Mortgagor hereby irrevocably authorizes Mortgagee to endorse
Mortgagor's name on checks, bank drafts, and other instruments received in
payment of the rents; and (2) Mortgagee may take possession of and open any mail
addressed to Mortgagor received at the Real Estate, in order to effect
collection of rents and to remove, collect and apply all payments therein
contained, but Mortgagee agrees to make available to Mortgagor any mail which is
not related to tenant leases. This assignment of rents and these powers of
attorney are coupled with an interest; shall be in addition to all other
remedies herein and by law provided for upon an Event of Default; and may be put
into effect independently of or concurrently with any or all of said remedies.
No liability shall attach to Mortgagee for failure, refusal or inability to
collect any rents herein assigned, for the manner of collection thereof or for
the failure on the part of Mortgagee to perform any of Mortgagor's obligations
as landlord under any existing or future lease. This assignment, lien and power
of attorney shall apply to all rents heretofore or hereafter accruing from
present and future leases and renewals thereof of all or any part of the Real
Estate or the buildings and improvements thereon.

     2.14 Mortgagor will not assign the rents of the Mortgaged Property or any
part thereof other than to Mortgagee, nor consent (other than in the ordinary
course of business or in the event the lease is terminated pursuant to the terms
thereof) to the cancellation, modification or surrender of any lease now or
hereafter covering the Mortgaged Property, or any part thereof; nor accept any
prepayment of rents under any such lease more than one month in advance; and any
such purported assignment, cancellation, modification, surrender or prepayment
made without consent of Mortgagee shall be void as against Mortgagee.

     2.15 Mortgagor shall, within three (3) days following the written request
of Mortgagee, furnish a duly acknowledged written statement to Mortgagee, or any
proposed assignee of this Mortgage, setting forth the amount of the Obligations
and stating either that no off-sets or defenses exist against the Obligations,
or, if such off-sets or defenses are alleged to exist, the nature and amount
thereof.

     2.16 Mortgagor agrees not to do or suffer any act or thing which would
impair the security of the Obligations or of the lien of this Mortgage upon the
Mortgaged Property, or the rents, issues or profits thereof.

                                   ARTICLE III

                        Insurance, Damage or Destruction
                        --------------------------------

     3.1 The Mortgagor will insure itself, Mortgagee, and the Mortgaged Property
against such perils and to such limits as Mortgagee shall reasonably require.
All such insurance shall be in such forms and with such companies, and written
in such amounts and with such deductibles and endorsements, as may be reasonably
satisfactory to Mortgagee from time to time, and losses thereunder shall be
payable to Mortgagee under a standard form of mortgagee endorsement and shall
require that the insurer provide Mortgagee with thirty (30) days notice in the
event of cancellation or change to the scope or limits of the insurance
coverage. Mortgagor shall deliver to Mortgagee at least annually, but in any
event at least fifteen (15) days prior to the expiration of each period of
coverage for each insurance policy, current certificates of coverage addressed
to Mortgagee, showing that the coverage required hereunder has been established
for at least twelve (12) additional months, and confirming that Mortgagee is the
mortgagee and loss payee under such policy.

     3.2 Mortgagor will promptly notify Mortgagee of any loss thereunder, and
Mortgagee may, after notice of its intention to do so to Mortgagor, make proof
of loss thereof if not made within a reasonable time by Mortgagor. Mortgagee
may, after notice of its intention to do so to Mortgagor, on behalf of Mortgagor
adjust and compromise any claims under such insurance and collect and receive
the proceeds thereof and endorse drafts and Mortgagee is hereby irrevocably
appointed attorney-in-fact of Mortgagor for such purposes. Mortgagee may deduct
from such proceeds any expenses properly incurred by Mortgagee in collecting
same, including reasonable counsel fees. Mortgagee shall hold such proceeds for
the purposes set forth in Article V of this Mortgage.

                                       7
<PAGE>

     3.3 Mortgagor will not maintain any other insurance on the Mortgaged
Property competing or contributing, in right of payment or otherwise, with any
of the insurance required to be afforded to Mortgagee hereunder unless Mortgagee
is made the loss payee under such other insurance. Mortgagor hereby assigns to
Mortgagee all returned or unearned premiums which may be due upon the
cancellation of any such policies for any reason whatsoever and hereby directs
the insurer thereunder to pay to Mortgagee any amount so due, provided that so
long as there does not exist any Event of Default, or any event which with the
giving of notice or the lapse of time, or both, would constitute an Event of
Default, Mortgagee agrees immediately to refund to the Mortgagor any such
returned or unearned premium actually received by Mortgagee. Mortgagor hereby
irrevocably appoints Mortgagee as the Mortgagor's attorney-in-fact to endorse
any draft or check which may be payable to such Mortgagor in order to collect
any such returned or unearned premium or the proceeds of any such insurance. The
balance of any insurance proceeds remaining after payment in full of the
Obligations shall be refunded to the Mortgagor.

     3.4 If Mortgagor shall fail to procure, pay for and deliver to Mortgagee
any policy or policies of insurance or renewals thereof, Mortgagee may at its
option, but shall be under no obligation to do so, effect such insurance and pay
the premiums therefor, and Mortgagor will repay to Mortgagee on demand any
premiums so paid, with interest, at the Default Rate, and until so paid, the
same shall be secured by this Mortgage.

     3.5 Upon the written request of Mortgagee following the occurrence of a
Default or an Event of Default and until such time as it is waived in writing by
Mortgagee, but subject to the rights of any senior mortgagee, the Mortgagor will
pay to Mortgagee monthly, a sum equal to one-twelfth (1/12) of the annual
premiums for the insurance required to be maintained under this Mortgage. The
terms and conditions of Section 1.2 hereof relating to payments of Taxes, Rents
and other similar charges shall also apply to insurance premium payments made
pursuant to this section.

                                   ARTICLE IV

                                  Condemnation
                                  ------------

     4.1 The Mortgagor immediately upon obtaining knowledge of the institution
of any proceedings for the condemnation of the Mortgaged Property or any part
thereof shall notify Mortgagee of the pendency of such proceedings. Unless and
until Mortgagee shall notify the Mortgagor of Mortgagee's intent to appear and
prosecute such proceedings, pursuant to the appointment and assignment given
herein by the Mortgagor to Mortgagee, the Mortgagor may appear in and prosecute
such proceedings in any lawful manner; provided, however, that Mortgagor shall
have no right or authority to execute any instrument of conveyance or
confirmation in favor of the condemnor except subject hereto, nor to accept any
payment or settle or compromise any claim of the Mortgagor arising out of such
condemnation proceedings without the consent of Mortgagee. Mortgagee's election
not to appear in or prosecute such proceedings shall not diminish any right
Mortgagee may have to receive any amount paid in connection with such
condemnation and to apply such funds as herein provided.

                                       8
<PAGE>

                                    ARTICLE V

              Distribution Upon Damage, Destruction or Condemnation
              -----------------------------------------------------

     5.1 In the event the whole or materially all of the Mortgaged Property
shall be destroyed or damaged, Mortgagee shall have the right to collect the
proceeds of any insurance and to retain and apply such proceeds, at its
election, to the reduction of the Obligations or to restoration, repair,
replacement, rebuilding or alteration (herein sometimes collectively called the
"RESTORATION") of the Mortgaged Property. In the event the whole or materially
all of the Mortgaged Property shall be taken in condemnation proceedings or by
agreement between Mortgagor and Mortgagee and the condemning authority,
Mortgagee shall apply such award or proceeds thereof first to payment of the
Obligations, and any balance then remaining shall be paid to the Mortgagor. For
the purposes of this Article V, "materially all of the Mortgaged Property" shall
be deemed to have been damaged, destroyed or taken if the portion of the
Mortgaged Property not so damaged, destroyed or taken cannot be repaired or
reconstructed so as to constitute a complete structure and facility usable in
substantially the manner as prior to the damage, destruction or taking.

     5.2 So long as no Event of Default has occurred, in the event of partial
destruction or partial condemnation, all of the proceeds or awards shall be
collected and held by Mortgagee, and shall be applied by Mortgagee to the
payment of the Restoration, from time to time as the Restoration progresses,
upon the written request of Mortgagor, so long as:

     (a) such proceeds are, in Mortgagee's reasonable judgment, sufficient to
cover the cost of such Restoration or, if insufficient, the Mortgagor deposits
with Mortgagee the amount of any such deficiency;

     (b) the Mortgagor shall deliver to Mortgagee contracts, plans and
specifications for the Restoration which are satisfactory to Mortgagee;

     (c) the work for which payment is requested has been done in a good and
workmanlike manner and Mortgagor presents evidence satisfactory to Mortgagee of
amounts owed or paid by Mortgagor for completed Restoration work;

     (d) the Mortgaged Property, after such Restoration is or will be, in the
reasonable judgment of Mortgagee, of an economic utility not less than that of
the Mortgaged Property prior to the casualty or condemnation; and

     (e) the Mortgagor shall comply with such further conditions in connection
with the use of such proceeds or award as Mortgagee may reasonably request.

     Any balance remaining in the hands of Mortgagee after payment of such
Restoration shall be retained by Mortgagee and applied to the payment of the
Obligations.

     5.3 Notwithstanding the foregoing provisions of this Article V regarding
insurance or condemnation proceeds, if no Event of Default has occurred, and if
such proceeds do not exceed $25,000.00, and if the undamaged or uncondemned
portion of the Mortgaged Property can be continuously used during the
Restoration period as a complete structure and operating facility in
substantially the same manner as prior to the damage, Mortgagee will endorse and
deliver to Mortgagor any check evidencing the collection of insurance or
condemnation proceeds and Mortgagor will apply all of such funds to the
Restoration and promptly provide Mortgagee with copies of all receipts, canceled
checks and other written evidence of compliance herewith.

     5.4 No damage, destruction or condemnation of the Mortgaged Property nor
any application of insurance or condemnation proceeds to the payment of the
Obligations shall postpone or reduce the amount of any of the current
installments of principal or interest becoming due under the Obligations which
shall continue to be made in accordance with the terms of the Obligations until
the Obligations and all interest due thereunder are paid in full.

                                       9
<PAGE>

                                   ARTICLE VI

                         Events of Default and Remedies
                         ------------------------------

     6.1 Each of the following shall constitute an "EVENT OF DEFAULT" under this
Mortgage:

     (a) failure of Mortgagor to make any payment required to be made by it
hereunder or under any of the Documents when due, or failure to pay any other
Obligations when due, subject to any applicable grace period related thereto in
the Financing Agreement; or

     (b) failure of Mortgagor to observe or perform any covenant, agreement,
undertaking or obligation of any provision hereof or in any of the Documents,
subject to any applicable grace period related thereto in the Financing
Agreement; or

     (c) failure of Mortgagor to provide the insurance required in Article III
hereof; or

     (d) the occurrence of a default under any one or more of the Documents,
subject to any applicable grace period related thereto in the Financing
Agreement; or

     (e) any assignment for the benefit of creditors made by Mortgagor; or

     (f) any material breach of any representation or warranty made by Mortgagor
herein, in the Documents, in the Obligations, or in any other agreement,
document or instrument which relates or pertains to this Mortgage or the
Obligations, subject to any applicable grace period related thereto in the
Financing Agreement; or

     (g) appointment of a custodian, receiver, liquidator or trustee of
Mortgagor or of any of the property of Mortgagor; insolvency of Mortgagor; any
petition is filed for the bankruptcy of Mortgagor or adjustment of Mortgagor's
debts pursuant to the Federal Bankruptcy Code or any similar federal or state
statute by or against Mortgagor; or

     (h) the occurrence of a default under any other mortgage on the Mortgaged
Property or the commencement of foreclosure or execution proceedings by the
holder of any other mortgage or lien on the Mortgaged Property; or

     (i) the occurrence of an "Event of Default" under the Financing Agreement.

     6.2 Upon the occurrence of an Event of Default, Mortgagee shall have the
right and is hereby authorized, but without any obligation to do so, to perform
the defaulted obligation and to discharge Mortgagor's obligations on behalf of
the Mortgagor and to pay any sums necessary for that purpose, and the sums so
expended by Mortgagee shall be an obligation of the Mortgagor, shall bear
interest at the Default Rate, be payable on demand, and be added to the
Obligations. Mortgagee shall be subrogated to all the rights, equities and liens
discharged by any such expenditure. Such performance by Mortgagee on behalf of
the Mortgagor shall not constitute a waiver by Mortgagee of such default and
shall not limit Mortgagee's rights, remedies and recourse hereunder, or the
Obligations, or as otherwise provided at law or in equity. Notwithstanding that
the Obligations shall not have been declared due and payable upon any such
default, the Obligations shall bear interest at the Default Rate from the date
of notice and demand therefor by Mortgagee until such default shall have been
completely cured and removed to the satisfaction of Mortgagee.

     6.3 Upon the occurrence of an Event of Default, the entire unpaid balance
of the principal, accrued interest and all other sums secured by this Mortgage
shall, at the option of Mortgagee, become immediately due and payable without
further notice or demand and Mortgagee shall have and may exercise all the
rights and remedies permitted by law, including without limitation the right to
foreclose this Mortgage, and proceed thereon to final judgment and execution
thereon for the entire unpaid balance of the Obligations, with interest, at the
Default Rate, together with all other sums secured by this Mortgage, all costs
of suits, interest at the Default Rate on any judgment obtained by Mortgagee
from and after the date of any Sheriff's Sale of the Mortgaged Property until
actual

                                       10
<PAGE>

payment is made by the Sheriff of the full amount due Mortgagee, and reasonable
attorney's fees, without further stay, any law, usage, or custom to the contrary
notwithstanding. In any such foreclosure proceedings, the Mortgaged Property
shall be sold, at the sole option of Mortgagee, either (a) in one lot or unit
and as an entirety; or (b) in such lots or units and in such order and manner as
may be required by law; or (c) in the absence of any such requirement, in such
lots or units and in such order and manner as Mortgagee may determine in its
sole discretion.

     6.4 Upon the occurrence of an Event of Default, Mortgagee shall have the
right, without further notice or demand and without the appointment of a
receiver, to enter immediately upon and take possession of the Mortgaged
Property, without further consent or assignment of the Mortgagor or any
subsequent owner of the Mortgaged Property, with the right to let the Mortgaged
Property, or any part thereof, and to collect and receive all of the rents,
issues, profits and other amounts due or to become due to Mortgagor or any such
subsequent owner and to apply the same in such order of priority as Mortgagee
shall determine at its sole option, after payment of all necessary charges and
expenses in connection with the operation of the Mortgaged Property (including
any managing agent's commission), on account of Taxes, Rents, interest,
principal, and insurance premiums and any advances for improvements, alterations
or repairs or otherwise pursuant to the terms hereof for the account of the
Mortgagor, or on account of the Obligations. Mortgagee may institute legal
proceedings against any tenant of the Mortgaged Property who commits an event of
default under his/her/its lease. If Mortgagor or any such subsequent owner is
occupying the Mortgaged Property or any part thereof, such Mortgagor or
subsequent owner will, at the election of Mortgagee, either immediately vacate
and surrender possession thereof to Mortgagee or pay to Mortgagee a fair and
reasonable rental for the use thereof, monthly in advance, and, in default of so
doing, such Mortgagor or subsequent owner may be dispossessed by legal
proceedings or otherwise.

     6.5 All money received by the Mortgagee by virtue of the assignments made
herein to Mortgagee, after payment therefrom of the costs and expenses incident
to the enforcement or collection of the assigned rights or claims, shall be
applied to the payment of the Obligations.

     6.6 Upon the occurrence of an Event of Default, Mortgagee may proceed to
protect and enforce its rights under this Mortgage by suit for specific
performance of any covenant herein contained, or in aid of the execution of any
power herein granted, or for the foreclosure of this Mortgage and the sale of
the Mortgaged Property under the judgment or decree of a court of competent
jurisdiction, or for the enforcement of any other right as Mortgagee shall deem
most effectual for such purpose. The foregoing rights shall be in addition to,
and not in lieu of, the rights of Mortgagee as a secured creditor under the
Uniform Commercial Code of New Jersey with respect to any portion of the
Mortgaged Property which is subject to such Code. Mortgagee may also proceed in
any other manner permitted by law to enforce its rights hereunder and under the
Documents.

     6.7 No failure or delay on the part of Mortgagee in exercising any right,
power or privilege under this Mortgage, and no course of dealings between the
Mortgagor and Mortgagee, shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. No notice to or demand on Mortgagor shall entitle Mortgagor to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the right of Mortgagee to any other or further action in
the same or other circumstances without notice or demand.

     6.8 In any action to foreclose this Mortgage, Mortgagee, to the fullest
extent permitted by law, shall be entitled as a matter of right to the
appointment of a receiver of the Mortgaged Property and of the rents, revenues,
issues, income and profits thereof, without notice or demand, and without regard
to the adequacy of the security for the Obligations or the solvency of
Mortgagor.

     6.9 The rights and remedies of Mortgagee expressed or contained in this
Mortgage are cumulative and no one of them shall be deemed to be exclusive of
the others or of any right or remedy Mortgagee may now or hereafter have at law
or in equity. The covenants of this Mortgage shall run with the Real Estate and
bind the Mortgagor and, unless the context clearly indicates a contrary intent
or unless otherwise specifically provided herein, its successors and assigns and
all subsequent owners, encumbrancers, tenants and subtenants of the Mortgaged
Property and shall inure to the benefit of Mortgagee and its successors and
assigns and all subsequent holders of this Mortgage and the Obligations.

                                       11
<PAGE>

     6.10 Mortgagee may in its discretion from time to time grant to Mortgagor
indulgences, forbearances and extensions of the Obligations, may release, with
or without consideration, any portion of the Mortgaged Property from the lien
hereof, and may accept other and further collateral security for the payment of
and strict and faithful performance of the Obligations, all without otherwise
affecting the liability of any person or impairing or affecting the lien or
priority of this Mortgage, and the release of any portion of the Mortgaged
Property from the lien hereof shall not affect the lien of this Mortgage with
respect to the remainder of the Mortgaged Property.

     6.11 The Mortgagor hereby waives and relinquishes the benefits of all
present and future laws (i) exempting the Mortgaged Property or any other
property or any part of the proceeds of sale thereof from attachment, levy or
sale on execution; (ii) staying execution or other process; and (iii) requiring
valuation or appraisement of the Mortgaged Property or any other property levied
or sold upon execution under any judgment recovered for the Obligations.

     6.12 Upon the occurrence of any Event of Default, Mortgagor shall pay
monthly in advance to the Mortgagee, or to any receiver appointed at the request
of the Mortgagee to collect the rents, revenues, issues and profits of the
Mortgaged Property, the fair and reasonable rental value for the use and
occupancy of the Mortgaged Property or of such part thereof as may be possessed
by the Mortgagor. Upon default in payment thereof, the Mortgagor shall vacate
and surrender possession of the Mortgaged Property to the Mortgagee or such
receiver, and upon a failure so to do may be evicted by summary proceedings, in
the manner hereinabove provided or otherwise.

                                   ARTICLE VII

                       Compliance with Environmental Laws
                       ----------------------------------

     7.1 Mortgagor represents, warrants and covenants as follows: (a) that the
Mortgaged Property does not now contain nor shall there be installed or used
upon the Mortgaged Property friable asbestos or asbestos contaminated material,
urea formaldehyde foam insulation or any other chemical, material or substance
exposure to which is prohibited, limited or regulated by any federal, state,
county, local or regional law or authority, except for any chemical, material,
substance or waste used, produced, generated, handled, transferred, processed,
stored, collected, treated or disposed of in the ordinary course of Mortgagor's
business in accordance with all applicable Environmental Requirements and
consistent with past practices (the "PERMITTED ACTIVITY"); (b) the Mortgaged
Property is, not now being used, nor has it been used in the past, nor shall it
be used in the future for any activities involving, directly or indirectly the
use, refining, production, handling, transfer, processing, generation,
treatment, storage or disposal of any hazardous or toxic chemical, material,
substance, or waste, including, without limitation any Hazardous Substance (as
defined herein), except for the Permitted Activity; (c) Mortgagor will not use,
generate, store, collect, treat, dispose of, or otherwise introduce any
Hazardous Substance into or on the Mortgaged Property, nor cause, suffer or
allow anyone else to do so, except for the Permitted Activity; (d) 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, pouring, emitting, emptying or dumping of Hazardous Substances, into
waters of the State of New Jersey or onto 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 or 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, unless said release
spill, leak, and so forth, is pursuant to and in compliance with the conditions
of a permit issued by all appropriate federal or state governmental authorities;
(e) Mortgagor agrees to comply promptly with all Environmental Requirements (as
defined below), and to immediately notify Mortgagee, in writing, of the
discovery, discharge or release of any Hazardous Substance (except for the
Permitted Activity); (f) dispose of any residual waste or solid waste (as
defined in any applicable Environmental Requirements) on the Mortgaged Property;
(g) Mortgagor shall promptly supply Mortgagee, at Mortgagor's sole expense,
copies of all correspondence and submissions between Mortgagor and the New
Jersey Department of Environmental Protection, the United States Environmental
Protection Agency, the United States Occupational Safety and Health
Administration, or any other local, state or federal authority which requires
submissions of any information concerning environmental matters or Hazardous
Substances with regard to the Mortgaged Property; (h) if prescribed by
applicable law, Mortgagor will promptly clean up any Hazardous Substances found
on the Mortgaged Property; (i) Mortgagor has not been identified in any
litigation, administrative proceeding, or investigation as a responsible party
or potentially

                                       12
<PAGE>

responsible party under any Environmental Requirements, except to the extent set
forth on Exhibit C attached hereto; and (j) the Mortgaged Property is not now
nor has it ever been used as a landfill.

     7.2 Mortgagor represents and warrants that to the best of Mortgagor's
knowledge, after due inquiry and investigation, 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 Property,
pursuant to expenditures from the New Jersey Spill Compensation Fund to pay for
"Clean Up and Removal Costs", as such term is defined in N.J.S.A.
(Section)58:10-23.11b(d).

     7.3 Mortgagor represents and warrants that Mortgagor has not received any
communication, written or oral, from the New Jersey Department of Environmental
Protection ("NJDEP") or any federal, state or local agency concerning any
intentional or unintentional action or omission on Mortgagor's part in
connection with the releasing, spilling, leaking, pumping, pouring, emitting,
emptying or dumping of Hazardous Substances, except to the extent set forth on
Exhibit C attached hereto.

     7.4 In the event that there shall be filed a lien against the Mortgaged
Property by the NJDEP, then Mortgagor shall, within thirty (30) days from the
date that Mortgagor is given notice that the lien has been placed against the
Mortgaged Property or within such shorter period of time if the State of New
Jersey has commenced steps to cause the Mortgaged Property to be sold pursuant
to the lien, either (1) pay the claim and cause the removal of the lien from the
Mortgaged Property; or (2) furnish (i) a bond satisfactory to the Mortgagee's
title insurance company and Mortgagee in the amount of the claim out of which
the lien arises, or (ii) a cash deposit in the amount of the claim out of which
the lien arises, or (iii) other security reasonably satisfactory to Mortgagee in
an amount sufficient to discharge the claim out of which the lien arises.

     7.5 The Mortgagor shall use best efforts to cause all tenants to comply
with the New Jersey Industrial Site Recovery Act, N.J.S.A(Section)13:1K-6, et
seq. ("ISRA"). Mortgagor shall notify the Mortgagee in writing prior to any
termination of any lease or the closing or termination of any facility or
operation on the Mortgaged Property. Mortgagor shall provide evidence of the
status of compliance by tenants with the provisions of ISRA.

     7.6 At any time Mortgagee shall request after the occurrence of an Event of
Default, or after commencement of foreclosure proceedings, or before or after
any foreclosure, judicial or other sale, or if otherwise required by applicable
law, Mortgagor shall take all steps necessary, and shall use best efforts, to
obtain a determination by the NJDEP of nonapplicability of ISRA to the Mortgaged
Property, or NJDEP's approval of a negative declaration by Mortgagor as to
contamination, or NJDEP's approval of a clean-up plan for the Mortgaged
Property. If ISRA is determined to be applicable to the Mortgaged Property,
Mortgagor shall, if Mortgagee requests, take all steps necessary, and shall use
best efforts (including the posting of any necessary bond or other financial
security) to obtain, as quickly as possible, an Administrative Consent Order
from NJDEP sufficient to permit any transfer of, closing down of, or termination
of operations of any "industrial establishment" on the Mortgaged Property.
Mortgagor agrees that Mortgagee may have no adequate remedy at law for
Mortgagor's failure to comply with the provisions of this paragraph and that
Mortgagee may enforce Mortgagor's obligations hereunder by injunction, specific
performance, the appointment of a receiver, or appropriate equitable
proceedings.

     7.7 There shall be no lien or superlien filed against any real or personal
property of the Mortgagor pursuant to Section 7f of the New Jersey Spill
Compensation and Control Act (the "SPILL ACT"), N.J.S.A. Section 58:10-23.11f.f,
and neither Mortgagor (nor any tenant or other occupant of the Mortgaged
Property, but only as to the Mortgaged Property) shall have been or be
identified in any litigation, administrative proceedings or investigation as a
responsible party or a potentially responsible party for any liability under the
Spill Act.

     7.8 For all Hazardous Substances at any time located on any of the
Mortgagor's Real Property, Mortgagor shall take or cause to be taken, at
Mortgagor's sole expense, all such actions as may be necessary to comply with
all Environmental Requirements. If Mortgagor shall fail to take all such
actions, Mortgagee may make advances or payments towards performance or
satisfaction of the same (but shall be under no obligation so to do) and all
sums so advanced or paid, including all sums advanced or paid by Mortgagee in
connection with any judicial or administrative investigation or proceedings
relating thereto (including, but without limitation, reasonable attorneys' fees,
fines or other penalty payments), shall be immediately repayable by Mortgagor
and all sums so advanced or paid shall become a part of the obligations secured
by this Mortgage.

                                       13
<PAGE>

     7.9 To the maximum extent permitted by applicable law, Mortgagor agrees at
all times hereafter, absolutely and unconditionally, to indemnify, defend and
hold Mortgagee and Mortgagee's parents, subsidiaries, successors, endorsees, and
assignees, and any officer, director, shareholder, employee or agent of any of
the foregoing (collectively the "INDEMNIFIED PARTIES"), harmless from and
against any and all Damages (as defined below) which any of such Indemnified
Parties may sustain by reason of Mortgagor's breach of any of the foregoing
representations, warranties or covenants or by reason of Mortgagor's failure, or
the failure of any of Mortgagor's predecessor(s) in title to the Mortgaged
Property, or the failure of any of Mortgagor's tenants, to perform any of its,
or their, obligations pursuant to the Environmental Requirements. The provisions
of this paragraph shall survive the repayment of the Secured Obligations and any
transfer of the Mortgaged Property, including a transfer after a foreclosure of
this Mortgage and the delivery of the Deed effecting such transfer.

     7.10 Mortgagee reserves the right to disclose any and all information,
including information relating to Hazardous Substances, of which it becomes
apprised, to the appropriate municipal, state or federal agencies when Mortgagee
in its sole discretion deems such disclosure appropriate.

     7.11 For purposes of this Article VII:

         (1) "DAMAGES" means all liabilities, obligations, claims, demands,
suits, controversies, actions, causes of action, orders, writs, and judgments
including, but without limitation, costs, expenses, attorneys' fees,
consultants' fees, environmental clean-up costs, natural resources damage,
fines, penalties, consequential damages, injury, death or other damages to
person(s), personal or real property, and business enterprises, now or in the
future arising out of or relating to any environmental condition related to the
Mortgaged Property including, but not limited to:

         (a)   any actual or threatened release of any Hazardous Substance (as
               defined herein);

         (b)   any violation of any federal, state or local environmental law
               that is caused, suffered, allowed or permitted by Mortgagor; or

         (c)   any other environmental condition that may cause Mortgagee to
               sustain any damages regardless of whether such environmental
               condition resulted from any act or omission of Mortgagor, one or
               more third parties or some combination thereof, whether
               heretofore, now or hereafter existing or occurring.

         (2) "ENVIRONMENTAL REQUIREMENTS" means any and all applicable federal,
state or local environmental laws, statutes, ordinances, regulations or
standards, or administrative or court orders or decrees, or settlement
agreements, now or hereafter in effect.

         (3) "HAZARDOUS SUBSTANCE(S)" shall mean and include any material or
substance that contains:

         (a)   any "hazardous substance", "pollutant" or "contaminant" or
               "hazardous waste" as defined in any applicable federal statute,
               law, rule or regulation now or hereafter in effect including but
               without limitation, Sections 101(14) and (33) of the
               Comprehensive Environmental Response, Compensation and Liability
               Act (42 U.S.C. Section 9601(14) and (33)) or 42 U.S.C. 6903(5) or
               40 C.F.R. Part 302 or any amendment thereto or any replacement
               thereof or in any statute or regulation relating in any way to
               the environment, whether similar or dissimilar, now or hereafter
               in effect;

         (b)   any hazardous substance or hazardous waste as those terms are now
               or hereafter defined in any applicable state or local law, rule
               or regulation or in any statute or regulation relating in any way
               to the environment, whether similar or dissimilar, now or
               hereafter in effect, including

                                       14
<PAGE>

               without limitation, Section 7f of the New Jersey Spill
               Compensation and Control Act, N.J.S.A. Section 58:10-23.11f.f or
               any amendment thereto or any replacement thereof;

         (c)   any hazardous waste, residual waste or solid waste;

         (d)   any substance subject to the Emergency Planning and Community
               Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq. or
               equivalent or similar state laws, or the regulations promulgated
               thereunder or in any amendment thereto or in any replacement
               thereof or in any similar statute or regulation now or hereafter
               in effect;

         (e)   any substance containing petroleum, as that term is defined in
               Section 9001(8) of the Resource Conservation and Recovery Act, as
               amended (42 U.S.C. Section 6991(8)) or 40 C.F.R. Section 280.1 or
               in any amendment thereto or any replacement thereof or in any
               similar statute or regulation now or hereafter in effect; or

         (f)   any other substance containing friable asbestos or asbestos
               contaminated material, urea formaldehyde foam insulation or any
               other chemical, material or substance, exposure to which is
               prohibited, limited or regulated by any federal, state, county,
               local or regional law or authority; or

         (g)   any other substance for which any federal, state or local
               governmental entity now or hereafter requires special handling in
               its use, transportation, accumulation, collection, storage,
               treatment or disposal.

     7.12 Mortgagee may from time to time, but not more frequently than
semi-annually, enter upon the Mortgaged Property to perform or cause to be
performed any environmental tests including soil borings and ground water wells,
as Mortgagee deems necessary. All such tests will be performed at Mortgagor's
expense.

     7.13 The representations, covenants, and indemnification contained in this
Article III shall survive the occurrence of any event whatsoever including, but
not limited to, the payment of the obligations secured by this Mortgage.

                                  ARTICLE VIII

                            Miscellaneous Provisions
                            ------------------------

     8.1 All notices, demands, requests and consents required under this
Mortgage shall be in writing. All such notices, demands, requests and consents
shall be deemed to have been properly given if hand delivered or sent by United
States registered or certified mail, return receipt requested, postage prepaid,
if addressed to Mortgagee at 1211 Avenue of the Americas, New York, New York
10036, Attention: Legal Department, with a copy in all instances to Michael P.
Bonner, Esquire, Stradley, Ronon, Stevens & Young, LLP, 2600 One Commerce
Square, Philadelphia, PA 19103 and if addressed to Mortgagor at the address of
Mortgagor set forth on the first page of this Mortgage, or at such other address
or addresses as either party may hereafter designate in writing to the other.
Notices, demands and requests which shall be served by registered or certified
mail, return receipt requested, upon Mortgagor or Mortgagee, in the manner
aforesaid, shall be deemed sufficiently served or given for all purposes
hereunder three (3) days after the time such notice, demand or request shall be
mailed by United States registered or certified mail, return receipt requested,
postage prepaid, in any Post Office or Branch Post Office regularly maintained
by the United States Government.

                                       15
<PAGE>

     8.2 This Mortgage will be duly recorded in the Office for the Recording of
Deeds and Mortgages in and for the County in which the Real Estate is located,
and Mortgagor shall pay all recording fees and other costs incurred in
connection therewith.

     8.3 All amendments and modifications of this Mortgage must be in writing.

     8.4 If any term or provision of this Mortgage or the application thereof to
any person or circumstances shall, to any extent, be invalid or unenforceable,
the remainder of this Mortgage, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Mortgage shall be valid and be enforced to the fullest extent permitted by
law.

     8.5 This Mortgage secures, among other things, the full and timely payment
and performance of the Secured Obligations. It is further understood and agreed
that this Mortgage secures present and future advances, in the aggregate amount
secured hereby, made by Mortgagee to or for the benefit of Mortgagor and that
the lien of such future advances shall relate back to the date of this Mortgage.
This Mortgage is intended to secure such future advances and to be eligible for
all of the benefits of the provisions of any rule or law that would grant
greater protection to Mortgagee or greater priority for the lien of this
Mortgage as it secures any advance.

     8.6 WAIVER OF JURY TRIAL. MORTGAGOR AND MORTGAGEE IRREVOCABLY, AS AN
INDEPENDENT COVENANT, WAIVE JURY TRIAL AND THE RIGHT THERETO IN ANY ACTION OR
PROCEEDING BETWEEN MORTGAGOR AND MORTGAGEE, WHETHER HEREUNDER OR OTHERWISE.

     8.7 This Mortgage and all terms, covenants and conditions hereof shall
inure to the benefit of and bind the parties hereto, their successors and
assigns, to the extent assignments are permitted herein.

     8.8 This Mortgage secures Obligations which have an adjustable or floating
rate feature. This Mortgage is granted in connection with a commercial loan
transaction and is not a residential mortgage.

     8.9 MORTGAGOR HAS RECEIVED A FULLY EXECUTED COPY OF THIS MORTGAGE WITHOUT
CHARGE.

     IN WITNESS WHEREOF, Mortgagor, intending to be legally bound hereby, has
executed and delivered this Mortgage as of the day and year first above written.

                                        MERRIMAC INDUSTRIES, INC.

                                        By: /s/ Robert V. Condon
                                           -----------------------------------
                                           Robert V. Condon,
                                           Chief Financial Officer and
                                           Vice President, Finance

                                       16
<PAGE>

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

     Before me, a notary public, in and for the State and County aforesaid, on
8th day of October, 2003, personally appeared Robert V. Condon, who acknowledged
him/herself to be the Chief Financial Officer and Vice President-Finance of
Merrimac Industries, Inc., who having first executed the foregoing instrument in
my presence and having been by me first duly sworn, did acknowledge the
foregoing instrument as his/her free deed and act, signed, sealed and delivered
by her on the purposes herein stated and intending to be legally bound thereby.

     IN WITNESS WHEREOF, I have hereunto set my hand and official seal.

                                             /s/ Ellen Warren
                                             --------------------------
                                             Notary Public

     Receipt of a fully executed copy of the within Mortgage and Security
Agreement is hereby acknowledged:

                                             MERRIMAC INDUSTRIES, INC.

                                             By: /s/ Robert V. Condon
                                                 -------------------------------
                                                 Robert V. Condon
                                                 Chief Financial Officer and
                                                 Vice President, Finance

The address of Mortgagee is: 1211 Avenue of the Americas, New York, New York
10036.

                                             THE CIT GROUP/BUSINESS CREDIT, INC.

                                             By: /s/ Robert E. Chimenti
                                                 -------------------------------
                                                 Name: Robert E. Chimenti
                                                 Title: AVP

                                       17<PAGE>

                            MERRIMAC INDUSTRIES, INC.

                                 SEVERANCE PLAN
                                 --------------

                          As Adopted September 17, 2003

1.       Purpose.
         -------

         This Plan is intended to induce those key executive management
         personnel who are designated as Participants to remain in the employ of
         the Company, since, as is the case with many publicly-held
         corporations, the possibility of a Change in Control of the Company
         exists from time to time and such possibility, and the uncertainty,
         instability and questions which it may raise for and among key
         executive management personnel, may result in the premature departure
         or significant distraction of such personnel to the material detriment
         of the Company and its shareholders. The Board has determined that
         appropriate steps should be taken to reinforce, focus and encourage the
         continued attention and dedication of key members of the executive
         management of the Company and its subsidiaries to their assigned duties
         without distraction in the face of potentially disturbing or unsettling
         circumstances arising from the possibility of a Change in Control of
         the Company.

2.       Definitions.
         -----------

         Annual Base Salary shall mean the Participant's rate of regular basic
         annual compensation prior to any reduction under a salary reduction
         agreement pursuant to section 401(k) or section 125 of the Code, and
         shall not include (without limitation) cost of living allowances, fees,
         retainers, reimbursements, bonuses, incentive awards, prizes or similar
         payments.

         Board shall mean the Board of Directors of the Company.

         Cause for termination by the Company of a Participant's employment,
         after any Change in Control, shall mean (i) willful failure to perform
         normal and customary duties for an extended period of time for any
         reason other than death or disability; or (ii) gross negligence or
         willful misconduct, including but not limited to fraud, embezzlement or
         intentional misrepresentation; or (iii) commission of, or indictment or
         conviction for, a felony; or (iv) misappropriation of a material
         opportunity of the Company; or (v) willfully engaging in competitive
         activities against the Company or purposely aiding a competitor of the
         Company; or (vi) violation of any material term of this Plan and, if
         the violation may be cured by the Participant, the failure to cure the
         violation within ten days after receipt of written notice of such
         violation.

         Change in Control shall mean and be deemed to have occurred if: (i) any
         Person becomes the beneficial owner (as that term is used in Section
         13(d) of the Exchange Act) of stock of the Company entitled to cast
         more than 25% of the votes at the time entitled to be cast generally
         for the election of directors; or (ii) more than 50% of the members of
         the Board shall not be Continuing Directors; or (iii) the Company is
         merged or consolidated with, or in any transaction or series of
         transactions, all or substantially all of the business or assets of the
         Company shall be sold or otherwise acquired by, another corporation or
         entity and, as a result thereof, the stockholders of the Company
         immediately prior thereto shall not have at least 50% or more of the
         combined voting power of the surviving, resulting or transferee
         corporation or entity.

<PAGE>

         Code shall mean the Internal Revenue Code of 1986, as amended from time
         to time.

         Company shall mean Merrimac Industries, Inc., a Delaware corporation,
         and any successor to its business and/or assets which assumes (either
         expressly, by operation of law or otherwise) and/or agrees to perform
         this Plan by operation of law or otherwise (except in determining
         whether or not any Change in Control of the Company has occurred in
         connection with such succession).

         Continuing Directors shall mean the directors of the Company (A) who
         were members of the Board on September 17, 2003 or (B) who subsequently
         became directors of the Company and who were elected or designated to
         be candidates for election as nominees of the Board, or whose election
         or nomination for election by the Company's stockholders was otherwise
         approved, by a vote of a majority of the Continuing Directors then on
         the Board.

         Date of Termination shall mean, with respect to any purported
         termination of a Participant's employment with the Company within one
         year after a Change in Control, (i) if the Participant's employment is
         terminated for Disability, 10 days after Notice of Termination is given
         (provided that the Participant shall not have returned to the full-time
         performance of the Participant's duties during such period), and (ii)
         if the Participant's employment is terminated for any other reason, the
         date specified in the Notice of Termination which, in the case of a
         termination by the Company, shall not be less than ten business days
         except in the case of a termination for Cause and, in the case of a
         termination by the Participant, shall not be less than ten business
         days nor more than 20 business days, respectively, after the date such
         Notice of Termination is given.

         Disability shall mean if, as result of physical or mental illness or
         injury, a Participant is unable to perform the essential duties of his
         or her position for a period of 90 consecutive days or for a period of
         120 non-consecutive days in any twelve month period, or poses a direct
         threat to the safety and health of the Participant or others and there
         is no reasonable accommodation that can be provided by the Company that
         would allow the Participant to perform the essential functions of the
         Participant's position as determined by applicable law.

         Exchange Act shall mean the Securities Exchange Act of 1934, as amended
         from time to time.

         Good Reason for termination by a Participant of the Participant's
         employment in connection with or as a result of any Change in Control,
         shall mean the occurrence (without the Participant's prior express
         written consent) of any one of the following acts, or failures to act:
         (i) a material diminution of the duties and responsibilities of the
         Participant; or (ii) a reduction in compensation or benefits of the
         Participant; or (iii) any failure by the Company to comply with any of
         the provisions of this Plan, other than an isolated, insubstantial and
         inadvertent failure not occurring in bad faith and which is remedied by
         the Company promptly after receipt of notice thereof given by the
         Participant; or (iv) any purported termination of the Participant's
         employment which is not pursuant to a Notice of Termination; or (v) the
         relocation of the Company's principal executive offices where the
         Participant works to a location more than 25 miles from its location on
         the date of the adoption of this Plan or the Company's requiring the
         Participant to be based anywhere other than the Company's principal
         executive offices. Required travel on the Company's business to an
         extent substantially consistent with the Participant's business travel
         obligations as of the date of this Plan is not a relocation event under
         this Plan.

                                       2

<PAGE>

         Notice of Termination shall mean a notice which shall indicate the
         specific termination provision in this Plan relied upon, if any, and
         shall set forth in reasonable detail the facts and circumstances
         claimed to provide a basis for termination of the Participant's
         employment with the Company under the provision so indicated. For
         purposes of this Plan, any purported termination not effected in
         accordance with this definition shall not be effective.

         Participant shall mean each key executive management employee of the
         Company or any of its subsidiaries who shall be designated from time to
         time by the Compensation Committee of the Board. Any Participant who
         shall be a Participant at the time of a Change in Control shall remain
         a Participant until the earlier to occur of the expiration of one year
         following a Change in Control or the termination of such Participant's
         employment with the Company.

         Person shall have the meaning ascribed thereto in Section 13(d) and
         14(d) in the Exchange Act, provided, however, a Person shall not
         include (i) the Company or any of its subsidiaries, (ii) a trustee or
         other fiduciary holding securities under an employee benefit plan of
         the Company or any of its subsidiaries (in its capacity as such), or
         (iii) an underwriter temporarily holding securities pursuant to an
         offering of such securities, or (iv) a corporation owned, directly or
         indirectly, by the stockholders of the Company in substantially the
         same character and proportions as their ownership of stock of the
         Company.

         Plan shall mean the Merrimac Industries, Inc. Severance Plan.

         Severance Payments shall mean the payments described in Section 3(a)
         below.

3.       Severance Payments.

         (a)      Severance. The Company shall pay each Participant the
                  Severance Payments provided for in clauses (i) and (ii) below
                  upon the termination of the Participant's employment with the
                  Company within one year after a Change in Control, unless such
                  termination is (i) by the Company for Cause, or (ii) by the
                  Participant without Good Reason, or (iii) due to the
                  Participant's death or Disability. The Participant's right to
                  terminate his or her employment for Good Reason shall not be
                  affected by his or her incapacity due to physical or mental
                  illness. The Participant's continued employment shall not
                  constitute consent to, or a waiver of rights with respect to,
                  any act or failure to act constituting Good Reason.

                  (i)      The Company shall pay to the Participant for a period
                           of twelve months, in accordance with the Company's
                           regular salary payment procedures, an annualized
                           amount equal to an amount designated from time to
                           time by the Compensation Committee of the Board,
                           being either one times or two times the Annual Base
                           Salary of the Participant; provided that such amount
                           cannot be changed following a Change in Control.

                  (ii)     For a twenty-four month period after the Date of
                           Termination, the Company shall arrange to provide the
                           Participant with health insurance benefits
                           substantially similar to those which the Participant
                           is receiving immediately prior to any Change in
                           Control.

         (b)      Round Down. To the extent that any payments made under this
                  Plan may be subject to the excise tax imposed under section
                  4999 of the Code, the Company

                                       3

<PAGE>

                  shall reduce the amount of such payments by the minimum
                  amount necessary to avoid being subject to such excise tax.

4.       Notice of Termination. Within one year after a Change in Control any
         purported termination of the Participant's employment with the Company
         (other than by reason of death) shall be communicated by written Notice
         of Termination from the Company to the Participant or from the
         Participant to the Company.

5.       No Mitigation. The Company agrees that, if a Participant's employment
         is terminated, the Participant is not required to seek other employment
         or attempt in any way to reduce any amounts payable to the Participant
         by the Company pursuant to Section 3. Further, the amount of any
         payment or benefit provided for in Section 3 (other than pursuant to
         Section 3(a)(ii)) shall not be reduced by any compensation earned by
         the Participant as the result of employment by another employer, by
         retirement benefits, or offset against any amount claimed to be owed by
         the Participant to the Company or any of its subsidiaries or otherwise.

6.       Successors. In addition to any obligations imposed by law upon any
         successor to the Company, the Company will require any successor
         (whether direct or indirect, by purchase, merger, consolidation or
         otherwise) to all or substantially all of the business and/or assets
         of the Company to expressly assume and agree to perform this Plan in
         the same manner and to the same extent that the Company would be
         required to perform if such succession had not taken place. Failure of
         the Company to obtain such assumption and agreement prior to the
         effectiveness of any such succession shall be a breach of this Plan
         and shall entitle each Participant to compensation from the Company in
         the same amount and on the same terms as the Participant would be
         entitled to hereunder if the Participant were to terminate the
         Participant's employment for Good Reason after a Change in Control,
         except that, for purposes of implementing the foregoing, the date on
         which any such succession becomes effective shall be deemed the Date
         of Termination.

7.       Binding Plan. This Plan shall inure to the benefit of and be
         enforceable by each Participant's personal or legal representatives,
         executors, administrators, successors, heirs, distributees, devisees
         and legatees. If the Participant shall die while any amount would still
         be payable to the Participant hereunder (other than amounts which, by
         their terms, terminate upon the death of the Participant), all such
         amounts shall be paid to the executors, personal representative or
         administrators of the Participant's estate.

8.       Notices. Notices and all other communications provided for in this Plan
         shall be in writing and shall be deemed to have been duly given when
         delivered or mailed by United States certified mail, return receipt
         requested, postage prepaid, if for a Participant, at the Participant's
         address as it appears on the records of the Company, or at such other
         address as the Participant shall have specified by notice to the
         Company in the manner herein provided, and if for the Company, at
         Merrimac Industries, Inc., 41 Fairfield Place, West Caldwell, NJ 07006,
         attention of its chief executive officer, or at such other address as
         the Company shall have specified by notice to the Participants in the
         manner herein provided. Notwithstanding the foregoing, any notice of
         change of address shall be effective only upon actual receipt.

                                       4

<PAGE>

9.       Miscellaneous.

         The Board may amend or terminate this Plan in whole or in part at any
         time upon notice to all of the Participants; provided, however, that,
         subsequent to a Change in Control or during the period of 180 days
         prior to a Change in Control, no such amendment which could adversely
         affect the rights of any Participant nor any termination shall become
         effective until the expiration of one year following the Change in
         Control. No waiver by either the Company or any Participant at any time
         of any breach by either the Company or the Participant, or compliance
         with, any condition or provision of this Plan to be performed by either
         the Company or the Participant shall be deemed a waiver of similar or
         dissimilar provisions or conditions at the same or at any prior or
         subsequent time. The validity, interpretation, construction and
         performance of this Plan shall be governed by the laws of the State of
         New York without regard to the principles of conflict of laws thereof.
         All references to sections of the Exchange Act or the Code shall be
         deemed also to refer to and include any successor provisions to such
         sections. Any payments provided for hereunder shall be paid net of any
         applicable withholding required under federal, state, or local law and
         any additional withholding to which the Participant has agreed.

10.      Validity. The invalidity or unenforceability of any provision of this
         Plan shall not affect the validity or enforceability of any other
         provision of this Plan which shall remain in full force and effect.

11.      No Limitation. Nothing in this Plan shall prevent or limit any
         Participant's continuing or future participation in any plan, program,
         policy or practice provided by the Company or any of its affiliated
         companies and for which the Participant may qualify, nor shall anything
         herein limit or otherwise affect such rights as the Participant may
         have under any other contract or agreement with the Company or any of
         its affiliated companies. Amounts which are vested benefits or which
         the Participant is otherwise entitled to receive under any plan,
         policy, practice or program of or any contract or agreement with the
         Company or any of its affiliated companies at or subsequent to the Date
         of Termination shall be payable in accordance with such plan, policy,
         practice or program or contract or agreement except as explicitly
         modified by this Plan.

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