Document:

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,

PRINCIPAL
AMOUNT  

SECURED $145,000,000.00

 

 

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,

AND SECURITY AGREEMENT

 

THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, AND SECURITY AGREEMENT,
dated as of the 27th day of September, 2002 (the "Mortgage"), is
executed and delivered by BMC
INDUSTRIES, INC., a Minnesota corporation ("BMC"), and CORTLAND COUNTY INDUSTRIAL DEVELOPMENT
AGENCY, a public benefit corporation existing under the laws of the State
of New York (the "Agency"), (BMC and the Agency hereafter collectively
referred to as "Mortgagor"), to DEUTSCHE
BANK TRUST COMPANY AMERICAS (formerly known as Bankers Trust Company), not
individually, but solely in its capacity as Administrative Agent under the
Credit Agreement (as defined below) (the "Mortgagee").

Recitals

 WHEREAS, BMC is the holder of the fee simple
title to the Premises (defined below);

WHEREAS, the Agency is the holder of leasehold
estates in the Premises pursuant to that certain Lease to Agency dated as of
February 1, 1999, together with all options to renew, extend or purchase
(including rights of first refusal) now or hereafter contained therein (the
"Underlying Lease") by and between BMC, as landlord, and the Agency, as tenant,
which Underlying Lease has been memorialized of record by that certain
Memorandum of Underlying Lease by and between BMC and the Agency dated as of
February 1, 1999 and recorded on February 25, 1999 as Instrument No. 1999-1008,
and that certain Lease to Agency dated as of July 1, 1996, together with all
options to renew, extend or purchase (including rights of first refusal) now or
hereafter contained therein (the "1996 Lease") by and between BMC, as landlord,
and the Agency, as tenant, which 1996 Lease, as further evidenced by that
certain Memorandum of Underlying Lease by and between BMC and the Agency dated
as of July 1, 1996 (unrecorded);

WHEREAS, BMC, Mortgagee, NBD Bank,
as Documentation Agent, and certain other lenders have entered into that
certain Credit Agreement dated as of May 15, 1998 (the "Original Credit
Agreement"), as the same was amended and restated as of June 25, 1998, and
as the same was previously amended prior to that date hereof (the "First
Amended and Restated Credit Agreement");

WHEREAS, BMC, Mortgagee,
Documentation Agent and the financial institutions parties thereto have entered
into that certain Second Amendment and Restatement Agreement dated as of
October 12, 2001 (the "Second Amendment and Restatement Agreement"),
amending and restating the First Amended and Restated Credit Agreement;

WHEREAS, pursuant to that certain
Third Amended and Restated Credit Agreement, dated as of the date hereof, the
First Amended and Restated Credit Agreement (as previously amended by the
Second Amendment and Restatement Agreement) was further amended (as used
herein, the term "Credit Agreement" means the First Amended and
Restated Credit Agreement, as in effect on the date hereof and as amended by
that certain Second Amendment and Restatement Agreement described above and as
amended by that certain Third Amended and Restated Credit Agreement described
above, as the same may be amended, modified, extended, renewed, replaced,
restated or supplemented from time to time, and including any agreement
extending the maturity of or restructing of all or any portion of the
Indebtedness (as hereinafter defined) under such agreement or any successor
agreements), and the financial institutions party thereto have severally agreed
to make certain extensions of credit to or for the benefit of BMC upon the terms
and conditions set forth therein;

WHEREAS, pursuant to the terms of
the Credit Agreement, the obligations of BMC under the Credit Agreement and the
other Loan Documents (as hereinafter defined) shall be secured by, among other
things, a lien upon and perfected security interest in all estate, right, title
and interest of the Mortgagor in and to the Mortgaged Property (as hereinafter
defined) pursuant to the terms hereof;

WHEREAS, terms used but not defined
in this Mortgage have the meanings given to them in the Credit Agreement;

NOW, THEREFORE,
to secure (a) payment of the Notes, with interest thereon, (b) performance of
BMC's obligations under the Loan Documents insofar as they relate to the Notes
or guarantee repayment of the Notes, (c) payment by BMC to Mortgagee of all
sums expended or advanced by Mortgagee pursuant to any covenant, term, or
provision of this Mortgage, and (d) performance of each covenant, term and
provision by BMC to be performed pursuant to this Mortgage (clauses (a)-(d)
hereafter collectively referred to as the "Indebtedness"), and
provided that the maximum principal indebtedness secured hereby shall never
exceed $145,000,000, Mortgagor hereby mortgages, grants, conveys, warrants,
pledges, assigns, and hypothecates unto Mortgagee, its successors and assigns,
WITH THE POWER OF SALE, the real property described in Exhibit A
attached hereto including, but not limited to, Mortgagor's interests in the
Premises, (the "Premises"), and all of the buildings, structures,
fixtures, additions, enlargements, extensions, modifications, repairs,
replacements, and improvements now or hereafter located thereon (the "Improvements");

TOGETHER WITH
all right, title, interest, and estate of Mortgagor now owned, or hereafter
acquired, in and to the following property, rights, interests and estates (the
Premises, the Improvements, and such property, rights, interests, and estates
hereinafter described are collectively referred to as the "Mortgaged
Property"):

GRANTING CLAUSE ONE

All easements,
rights-of-way, strips and gores of land, streets, ways, alleys, passages, sewer
rights, water, water courses, water rights and powers, air rights and
development rights, all rights to oil, gas, minerals, coal and other substances
of any kind or character, and all estates, rights, titles, interests,
privileges, liberties, tenements, hereditaments and appurtenances of any nature
whatsoever, in any way belonging, relating or pertaining to the Premises and
the Improvements and the reversion and reversions, remainder and remainders,
and all land lying in the bed of any street, road, highway, alley or avenue,
opened, vacated or proposed, in front of or adjoining the Premises, to the
center line thereof and all the estates, rights, titles, interests, dower and
rights of dower, curtsey and rights of curtsey, property, possession, claim and
demand whatsoever, both at law and in equity, of Mortgagor of, in and to the
Premises and the Improvements and every part and parcel thereof, with the
appurtenances thereto;

GRANTING CLAUSE TWO

All machinery, furniture,
furnishings, equipment, computer software and hardware, fixtures (including,
without limitation, all heating, air conditioning, plumbing, lighting,
communications and elevator fixtures) and other property of every kind and nature,
whether tangible or intangible, whatsoever owned by Mortgagor, or in which
Mortgagor has or shall have an interest, now or hereafter located upon the
Premises and the Improvements, or appurtenant thereto, and usable in connection
with the present or future operation and occupancy of the Premises and the
Improvements and all building equipment, materials and supplies of any nature
whatsoever owned by Mortgagor, or in which Mortgagor has or shall have an
interest, now or hereafter located upon the Premises and the Improvements, or
appurtenant thereto, or usable in connection with the present or future
operation, enjoyment and occupancy of the Premises and the Improvements
(hereinafter collectively referred to as the "Equipment"), including
any leases of any of the foregoing, any deposits existing at any time in
connection with any of the foregoing, and the proceeds of any sale or transfer
of the foregoing, and the right, title and interest of Mortgagor in and to any
of the Equipment that may be subject to any "security interests" as
defined in New York's Uniform Commercial Code (the "Uniform Commercial
Code"), superior in lien to the lien of this Mortgage;

GRANTING CLAUSE THREE

Awards or
payments, including interest thereon, that may heretofore and hereafter be made
with respect to the Premises and the Improvements, whether from the exercise of
the right of eminent domain or condemnation (including, without limitation, any
transfer made in lieu of or in anticipation of the exercise of said rights), or
for a change of grade, or for any other injury to or decrease in the value of
the Premises and Improvements;

GRANTING CLAUSE FOUR

All leases and
other agreements or arrangements heretofore or hereafter entered into affecting
the use, enjoyment or occupancy of, or the conduct of any activity upon or in,
the Premises and the Improvements, including any extensions, renewals,
modifications or amendments thereof, but excluding the exercise by the Agency
of the Agency's Reserved Rights (as hereinafter defined), (the "Leases")
and all rents, rent equivalents, moneys payable as damages or in lieu of rent
or rent equivalents, royalties (including, without limitation, all oil and gas
or other mineral royalties and bonuses), income, receivables, receipts,
revenues, deposits (including, without limitation, security, utility and other
deposits), accounts, cash, issues, profits, charges for services rendered, and
other consideration of whatever form or nature received by or paid to or for
the account of or benefit of Mortgagor or its agents or employees from any and
all sources arising from or attributable to the Premises and the Improvements,
excluding, however, any moneys payable to the Agency pursuant to the Agency's
Reserved Rights (the "Rents"), together with all proceeds from the
sale or other disposition of the Leases and the right to receive and apply the
Rents to the payment of the Obligations;

GRANTING CLAUSE FIVE

All proceeds of and any
unearned premiums on any insurance policies covering the Mortgaged Property,
including, without limitation, the right to receive and apply the proceeds of
any insurance, judgments, or settlements made in lieu thereof, for damage to
the Mortgaged Property;

GRANTING CLAUSE SIX

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

GRANTING CLAUSE SEVEN

All proceeds,
products, offspring, rents and profits from any of the foregoing, including,
without limitation, those from sale, exchange, transfer, collection, loss,
damage, disposition, substitution or replacement of any of the foregoing.

TO HAVE AND TO
HOLD the above granted and described Mortgaged Property, WITH THE POWER OF
SALE, unto and to the use and benefit of Mortgagee, forever;

PROVIDED,
HOWEVER, these presents are upon the express condition that, if BMC shall well
and truly pay to Mortgagee the Indebtedness at the time and in the manner
provided in the Notes and this Mortgage and shall well and truly abide by and
comply with each and every covenant and condition set forth herein, in the
Notes and in the other Loan Documents in a timely manner, these presents and
the estate hereby granted shall cease, terminate and be void upon the full
payment of the Indebtedness.

This Mortgage secures the payment of the
Indebtedness in a principal amount not to exceed $145,000,000 (the "Secured
Principal Amount"), together with interest and amounts that Mortgagee
expends under this Mortgage in connection with (i) any taxes, charges or
assessments that may be imposed by law upon the Mortgaged Property, (ii)
premiums on insurance policies covering the Mortgaged Property, and (iii)
expenses incurred in upholding the lien of this Mortgage, including the
expenses of any litigation to prosecute or defend the rights and lien created
by this Mortgage, all of the foregoing Indebtedness and obligations,
collectively, the "Secured Indebtedness." Notwithstanding any
provision in this Mortgage to the contrary, (a) until the Indebtedness is paid
in full, this Mortgage secures the entire Indebtedness provided that the
maximum principal Indebtedness secured hereby shall never exceed the Secured
Principal Amount; (b) this Mortgage shall secure only the Indebtedness, taxes,
charges, assessments, premiums, and expenses included within the foregoing
definition of "Secured Indebtedness"; and (c) the Secured Principal
Amount shall be reduced only by the last and final sums that Mortgagor repays,
or is paid on its behalf, with respect to the principal of the Indebtedness and
shall not be reduced by any intervening principal payments of the Indebtedness;
such intervening principal payments shall instead be deemed to reduce only such
portions of the Indebtedness first, as are unsecured, second, as are secured by
other collateral other than real property located in New York State owned by
BMC, third, as are secured by a subordinated lien on real property located in
New York State owned by BMC, including the Mortgaged Property, which
subordinated lien is subordinated to a first lien held on such real property by
the Mortgagee.

Mortgagor
represents and warrants to and covenants and agrees with Mortgagee as follows:

PART I

GENERAL PROVISIONS

1.         Payment of Indebtedness and
Incorporation of Covenants, Conditions and Agreements.  BMC shall pay the Indebtedness at the time
and in the manner provided in the Notes and in the other Loan Documents.  All the covenants, conditions and agreements
contained in the Notes and any of the Loan Documents are hereby made a part of
this Mortgage to the same extent and with the same force as if fully set forth
herein.

2.         Warranty of Title.  BMC warrants that Mortgagor has good,
marketable and insurable title to the Mortgaged Property and has the full
power, authority and right to execute, deliver and perform its obligations
under this Mortgage and to deed, encumber, mortgage, give, grant, bargain,
sell, alienate, convey, confirm, pledge, assign and hypothecate the same and
that Mortgagor possesses an unencumbered fee estate in the Premises and the
Improvements and that it owns the Mortgaged Property free and clear of all
liens, encumbrances and charges whatsoever except for certain utility easements
which do not affect in any way Mortgagor's use of the Mortgaged Property and
except as listed in Schedule B of the Cortland Mortgage Policy (the "Permitted
Exceptions") and that this Mortgage is and will remain a valid and
enforceable first lien on and security interest in the Mortgaged Property,
subject only to said Permitted Exceptions. 
BMC shall forever warrant, defend and preserve such title and the
validity and priority of the lien of this Mortgage and shall forever warrant
and defend the same to Mortgagee against the claims of all persons whomsoever.

3.         Insurance; Casualty.

BMC, at its sole cost and expense,
will maintain insurance coverage with respect to the Mortgaged Property of the
types and in the amounts required by the Credit Agreement.  If the Mortgaged Property shall be damaged
or destroyed in whole or in part by casualty, BMC shall give prompt written
notice to Mortgagee generally describing the nature and extent of such
casualty, and all insurance proceeds to which Mortgagor may be entitled as a
result of such casualty shall be distributed and applied in accordance with the
Credit Agreement.

4.         Representations.  BMC hereby represents and warrants to
Mortgagee as follows:

(a)       This Mortgage is in all respects a
valid and legally binding obligation of BMC, enforceable in accordance with its
terms.

(b)       The execution and delivery of this
Mortgage and the performance and observance by BMC of its obligations hereunder
will not contravene or result in a breach of (i) BMC's certificate of incorporation
or by-laws, (ii) any governmental requirements, (iii) any decree or judgement
binding on Mortgagor, or (iv) any agreement or instrument binding on Mortgagor
or any of its properties, nor will the same result in the creation of any lien
or security interest under any such agreement or instrument.

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

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

(e)       All federal, state and other tax
returns of BMC with respect to the Mortgaged Property required by law to be
filed have been filed; all federal, state and other taxes, assessments and
other governmental charges upon BMC with respect to the Mortgaged Property
which are due and payable have been paid; and BMC has set aside on its books
provisions reasonably adequate for the payment of all such taxes for periods
subsequent to the periods for which such returns have been filed.

(f)       BMC has made no contract or
arrangement of any kind or type whatsoever (whether oral or written, formal or
informal), the performance of which by the other party thereto could give rise
to a lien or encumbrance on the Mortgaged Property, except for contracts (all
of which have been disclosed in writing to Mortgagee) made by Mortgagor with
parties who have executed and delivered lien waivers to BMC, and which, in the
opinion of Mortgagee's counsel, will not create rights in existing or future
lien claimants which may be superior to the lien of the Mortgage.

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

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

(i)       The Permitted Exceptions do not and
will not materially and adversely affect (1) the ability of BMC to pay in full
the principal and interest on the Notes in a timely manner or (2) the use of
the Mortgaged Property for the use currently being made thereof, the operation
of the Mortgaged Property as currently being operated or the value of the
Mortgaged Property.

(j)       Upon the execution by Mortgagor and
the recording of this Mortgage, and upon the execution and filing of UCC-1 financing
statements or amendments thereto, Mortgagee will have a valid first lien on the
Mortgaged Property and a valid security interest in the Equipment subject to no
liens, charges or encumbrances other than the Permitted Exceptions.

(k)       BMC (1) has not executed the Notes,
this Mortgage, or any other Loan Document with the actual intent to hinder,
delay, or defraud any creditor and (2) has received reasonably equivalent value
in exchange for its obligations under the Notes, this Mortgage, and the other Loan
Documents.  The fair saleable value of
Mortgagor's assets exceed and will, immediately following the execution and
delivery of this Mortgage, exceed Mortgagor's total liabilities, including,
without limitation, subordinated, unliquidated, disputed or contingent
liabilities.  The fair saleable value of
Mortgagor's assets is and will, immediately following the execution and
delivery of this Mortgage, be greater than Mortgagor's probable liabilities,
including the maximum amount of its contingent liabilities or its debts as such
debts become absolute and matured. 
Mortgagor's assets do not and, immediately following the execution and
delivery of this Mortgage will not, constitute unreasonably small capital to
carry out its business as conducted or as proposed to be conducted.  Mortgagor shall not incur debts and
liabilities (including, without limitation, contingent liabilities and other
commitments) beyond its ability to pay such debts as they mature (taking into
account the timing and amounts to be payable on or in respect of obligations of
Mortgagor).

(l)         Mortgagor has full power, authority
and right to execute, deliver and perform its obligations pursuant to this
Mortgage, and to deed, mortgage, give, grant, bargain, sell, alien, convey,
confirm, warrant, pledge, hypothecate and assign the Mortgaged Property
pursuant to the terms hereof and to keep and observe all of the terms of this
Mortgage on Mortgagor's part to be performed.

(m)      BMC is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986,
as amended and the related Treasury Department regulations, including temporary
regulations.

5.         Appointment of Receiver. In
any action to foreclose this Mortgage, Mortgagee shall be entitled, without
notice and as a matter of right and without regard to the adequacy of any
security of the indebtedness or the solvency of Mortgagor, upon application to
any court having jurisdiction, to the appointment of a receiver of the rents,
income and profits of the Mortgaged Property. 
If an Event of Default occurs under this Mortgage, BMC, upon demand of
Mortgagee, shall surrender the possession of, and it shall be lawful for
Mortgagee, by such officer or agent as it may appoint, to take possession of,
all or any part of the Mortgaged Property together with the books, papers, and
accounts of BMC pertaining thereto, and to hold, operate and manage the same,
and from time to time to make all needed repairs and improvements as Mortgagee
shall deem wise; and, if Mortgagee deems it necessary or desirable, to complete
construction and equipping of any Improvements and in the course of such
construction or equipping to make such changes to the same as it may deem
desirable; and Mortgagee may sell the Mortgaged Property or any part thereof, or
institute proceedings for the complete or partial foreclosure of the lien of
this Mortgage on the Mortgaged Property, or lease the Premises or any part
thereof in the name and for the account of Mortgagor or Mortgagee and collect,
receive and sequester the rents, revenues, earnings, income, products and
profits therefrom, and out of the same and any other monies received hereunder
pay or provide for the payment of, all proper costs and expenses of taking,
holding, leasing, selling and managing the same, including reasonable
compensation to Mortgagee, its agents and counsel, and any charges of Mortgagee
hereunder, and any taxes and other charges prior to the lien of this Mortgage
which Mortgagee may deem it wise to pay. 
The Receiver shall also be authorized to collect from BMC, and BMC
agrees to pay, the fair rental value of BMC's use and occupancy of the
Mortgaged Property.

6.         Payment of Real Estate Taxes.  BMC shall pay all taxes, assessments, sewer
rents or water rates or sums due under any payment in lieu of tax agreement ("Pilot
Agreement") and in default thereof, Mortgagee may pay the same.  In the event that Mortgagee shall pay any
such tax, assessment, sewer rent, water rate or sums due under any Pilot
Agreement, Mortgagee shall have the right, among other rights, to declare the
amount so paid with interest thereon immediately due and payable, and upon
default of BMC in paying any such amount with interest thereon, Mortgagee shall
have the right, subject to the limitations contained in the definition of
Secured Indebtedness hereinabove set forth, to foreclose for such amount as
well as any amounts due under the Notes. 

In the event
that BMC should fail to pay any sum BMC has agreed to pay pursuant to this
covenant for a period in excess of forty-five (45) days after the same is due
and payable, in addition to any other remedies available to Mortgagee
hereunder, Mortgagee may, at its option, require that BMC deposit with
Mortgagee, monthly, one-twelfth (1/12th) of the annual charges for taxes and any
other sums BMC is obligated to pay pursuant to this covenant and BMC shall make
such deposits with Mortgagee.  BMC shall
simultaneously therewith deposit with Mortgagee a sum of money which together
with the monthly installments aforementioned will be sufficient to make payment
of all sums required to be paid hereunder at least thirty (30) days prior to
the due date of such payments, it being understood that Mortgagee shall
calculate the amount of such deposits and notify BMC of the sum due.  Should an Event of Default (hereinbelow
defined) occur, the funds deposited with Mortgagee pursuant to this provision
may be applied in payment of the charges for which said funds shall have been
deposited or to the payment of any other sums secured by this Mortgage as Mortgagee
sees fit.

7.         Payment of Mortgage Taxes.  BMC shall pay immediately all taxes, if any,
imposed pursuant to Article 11 of the New York Tax Law or any other statute,
order or regulation, whether said tax is imposed at the time of recording or
subsequent thereto.  This obligation
shall survive the satisfaction or other termination of this Mortgage.

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

 9.         Condemnation.   If any proceeding in eminent domain is
commenced with respect to the Mortgage property, or any portion thereof, BMC
shall give prompt written notice thereof 
to Mortgagee and all condemnation awards to which Mortgagor may be
entitled as a result of such condemnation or eminent domain proceeding shall be
distributed and applied in accordance with the Credit Agreement.

10.         Maintenance and Use of Mortgaged
Property.  BMC shall cause the
Mortgaged Property to be maintained in a good and safe condition and
repair.  The Improvements and the
Equipment shall not be removed, demolished or materially altered (except for
normal replacement of the Equipment in the ordinary course of business) without
the consent of Mortgagee.  BMC shall
promptly comply with all laws, orders and ordinances affecting the Mortgaged
Property, or its use of the Mortgaged Property.  BMC shall not initiate, join in, acquiesce in, or consent to any
change in any private restrictive covenant, zoning law or other public or
private restriction, limiting or defining the uses which may be made of the
Mortgaged Property or any part thereof. 
If under applicable zoning provisions the use of all or any portion of
the Mortgaged Property is or shall become a nonconforming use, BMC will not
cause or permit such nonconforming use to be discontinued or abandoned without
the express written consent of 
Mortgagee.  BMC shall not (i)
change the use of the Mortgaged Property, (ii) permit or suffer to occur any
waste on or to the Mortgaged Property or to any portion thereof or (iii) take
any steps whatsoever to convert the Mortgaged Property, or any portion thereof,
to a condominium or cooperative form of management.  BMC will not install or permit to be installed on the Premises
any underground storage tank.

11.         Transfer or
Encumbrance of the Mortgaged Property.

(a)         Mortgagor shall not, without the
prior written consent of Mortgagee, sell, convey, alienate, mortgage, encumber,
pledge or otherwise transfer the Mortgaged Property or any part thereof, or
permit the Mortgaged Property or any part thereof to be sold, conveyed,
alienated, mortgaged, encumbered, pledged or otherwise transferred, provided,
however, that the Agency may convey the Mortgaged Property to BMC, subject to
this Mortgage and, upon providing Mortgagee with the prior written notice of
same, in accordance with the Lease Agreement dated as of July 1, 1996 between
BMC and the Agency (the "Agency Lease Agreement") without the
Mortgagee's prior written consent.

(b)       A sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer within the meaning of this Paragraph
11 shall be deemed to include, without limitation,(i) an installment sales
agreement wherein Mortgagor agrees to sell the Mortgaged Property or any part
thereof for a price to be paid in installments; (ii) an agreement by
Mortgagor leasing all or a substantial part of the Mortgaged Property; and
(iii) a sale, assignment or other transfer of, or the grant of a security
interest in, Mortgagor's right, title and interest in and to any leases or any
rents. 

(c)         Mortgagee shall not be required to
demonstrate any actual impairment of its security or any increased risk of
default hereunder in order to declare the Indebtedness immediately due and
payable upon Mortgagor's sale, conveyance, alienation, mortgage, encumbrance,
pledge or transfer of the Mortgaged Property without Mortgagee's consent.  This provision shall apply to every sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property regardless of whether voluntary or not, or whether or not
Mortgagee has consented to any previous sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property.

(d)         Mortgagee's consent to one sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property shall not be deemed to be a waiver of Mortgagee's right to
require such consent to any future occurrence of same.  Any sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property made in contravention
of this paragraph shall be null and void and of no force and effect.

(e)         Mortgagee may withhold its consent
in its sole discretion.

12.       Books and Records.  BMC shall keep and maintain at all times at
BMC's address stated in this Mortgage, or such other place as Mortgagee may
approve in writing, complete and accurate books of accounts and records
adequate to reflect correctly the results of the operation of the Mortgaged
Property and copies of all written contracts, leases and other instruments
which affect the Mortgaged Property. 
Such books, records, contracts, leases and other instruments shall be
subject to examination and inspection at any reasonable time by Mortgagee, at
Mortgagee's expense upon five (5) days prior notice, at BMC's office.

13.         Estoppel Certificates and No
Default Affidavits.  After request
by Mortgagee, BMC shall within ten (10) days furnish Mortgagee with a
statement, duly acknowledged and certified, setting forth (i) the amount of the
original principal amount of the Notes, (ii) the unpaid principal amount of the
Notes, (iii) the rate of interest of the Notes, (iv) the date installments of
interest and/or principal were last paid, (v) any offsets or defenses to the
payment of the Indebtedness, if any, (vi) that the Notes, this Mortgage and the
other Loan Documents are valid, legal and binding obligations and have not been
modified or if modified, giving particulars of such modification; and (vii)
reaffirming all representations and warranties of Mortgagor set forth herein
and in the other Loan Documents as of the date requested by Mortgagee or, to
the extent of any changes to any such representations and warranties, so
stating such changes.

14.       Usury.  It is expressly stipulated and agreed to be the intent of BMC and
Mortgagee at all times to comply with applicable state usury law or applicable
United States federal usury law (to the extent that it permits Mortgagee to
contract for, charge, take, reserve, or receive a greater amount of interest
than under state law).  If the
applicable law (state or federal) is ever judicially interpreted so as to
render usurious any amount called for under the Notes or under any of the other
Loan Documents, or contracted for, charged, taken, reserved, or received with
respect to the Indebtedness, or if Mortgagee's exercise of the option to accelerate
the maturity of the Notes, or if any prepayment by BMC results in BMC having
paid any interest in excess of that permitted by applicable law, then it is BMC's
and Mortgagee's express intent that all excess amounts theretofore collected
shall be credited on the principal balance of the Notes and all other
Indebtedness (or, if the Notes and all other Indebtedness have been or would
thereby be paid in full, refunded to BMC), and the provisions of the Notes and
the other Loan Documents immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without the necessity
of the execution of any new documents, so as to comply with the applicable law,
but so as to permit the recovery of the fullest amount otherwise called for
hereunder or thereunder.  

15.         Performance of Other Agreements.  BMC shall observe and perform each and every
term to be observed or performed by Mortgagor pursuant to the terms of any
agreement or recorded instrument affecting or pertaining to the Mortgaged
Property.

16.       Further Acts, Etc.  Mortgagor will, at the cost of BMC, and
without expense to Mortgagee, do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, mortgages, assignments, notices of
assignment, Uniform Commercial Code financing statements or continuation
statements, transfers and assurances as Mortgagee shall, from time to time,
require, for the better assuring, conveying, assigning, transferring, and
confirming unto Mortgagee the property and rights hereby deeded, mortgaged,
given, granted, bargained, sold, alienated, conveyed, confirmed, pledged,
assigned and hypothecated or intended now or hereafter so to be, or which
Mortgagor may be or may hereafter become bound to convey or assign to Mortgagee,
or for carrying out the intention or facilitating the performance of the terms
of this Mortgage or for filing, registering or recording this Mortgage.  Mortgagor, on demand, will execute and
deliver and hereby authorizes Mortgagee to execute in the name of Mortgagor or
without the signature of Mortgagor to the extent Mortgagee may lawfully do so,
one or more financing statements, chattel mortgages or other instruments, to
evidence more effectively the security interest of Mortgagee in the Mortgaged
Property.  Upon foreclosure, the
appointment of a receiver or any other relevant action, Mortgagor will, at the
cost of BMC and without expense to Mortgagee, cooperate fully and completely to
effect the assignment or transfer of any license, permit, agreement or any
other right necessary or useful to the operation of or the Mortgaged
Property.  Mortgagor grants to Mortgagee
an irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to
Mortgagee at law and in equity, including, without limitation, such rights and
remedies available to Mortgagee pursuant to this paragraph.

17.         Recording of Mortgage, Etc.  BMC forthwith upon the execution and
delivery of this Mortgage and thereafter, from time to time, will cause this
Mortgage, and any security instrument creating a lien or security interest or
evidencing the lien hereof upon the Mortgaged Property and each instrument of
further assurance to be filed, registered or recorded in such manner and in
such places as may be required by any present or future law in order to publish
notice of and fully to protect the lien or security interest hereof upon, and
the interest of Mortgagee in, the Mortgaged Property.  BMC will pay all filing, registration or recording fees, and all
expenses incident to the preparation, execution and acknowledgment of this
Mortgage, any mortgage supplemental hereto, any security instrument with
respect to the Mortgaged Property and any instrument of further assurance, and
all federal, state, county and municipal, taxes, duties, imposts, assessments
and charges arising out of or in connection with the execution and delivery of
this Mortgage, any mortgage supplemental hereto, any security instrument with
respect to the Mortgaged Property or any instrument of further assurance,
except where prohibited by law so to do. 
BMC shall hold harmless and indemnify Mortgagee, its successors and
assigns, against any liability incurred by reason of the imposition of any tax
on the making and recording of this Mortgage.

18.         Reporting Requirements.  BMC agrees to give prompt notice to
Mortgagee of the insolvency or bankruptcy filing of BMC or the insolvency or
bankruptcy filing of any guarantor of the Indebtedness.

19.       Events of Default.  The Indebtedness under the Notes shall
become immediately due and payable at the option of Mortgagee upon the
happening of any one or more of the following events of default (each an "Event
of Default"):

(a)       an Event of Default shall have occurred
under any of the Notes or under any Loan Document, including, if applicable the
expiration of any grace period provided thereon;

(b)       failure of Mortgagor to perform or
observe any covenant, agreement, representation, warranty or other provision
contained in this Mortgage; 

(c)       if any representation or warranty of
BMC made herein or in any certificate, report, or other instrument or document
furnished to BMC hereunder shall have been false or misleading in any material
respect when made;

(d)       if BMC shall be in default under any
other mortgage or security agreement covering any part of the Mortgaged
Property whether it be superior or junior in lien to this Mortgage;

(e)       if the Mortgaged Property becomes
subject to any mechanic's, materialman's or other lien and such lien is not
removed of record within thirty (30) days of the filing or recording of such
lien (except a lien for local real estate taxes and assessments not then due
and payable); or

(f)       if BMC ceases to continuously use the
Mortgaged Property or any material portion thereof for any reason whatsoever
(other than temporary cessation in connection with any repair or renovation
thereof undertaken with the consent of Mortgagee).

20.       Right To Cure Defaults.  Upon the occurrence of any Event of Default
or if BMC fails to make any payment (including, without limitation, any
required payments for taxes, insurance or to discharge any liens with respect
to the Property) or to do any act as herein provided, Mortgagee may, but
without any obligation to do so and without notice to or demand on BMC and
without releasing BMC from any obligation hereunder, make or do the same in
such manner and to such extent as Mortgagee may deem necessary to protect the
security hereof.  Mortgagee is
authorized to enter upon the Mortgaged Property for such purposes or appear in,
defend, or bring any action or proceeding to protect its interest in the
Mortgaged Property or to foreclose this Mortgage, and the cost and expense
thereof (including reasonable attorneys' fees and disbursements to the extent
permitted by law), with interest at the highest rate provided in the Notes for
the period after notice from Mortgagee that such cost or expense was incurred
to the date of payment, shall constitute a portion of the Indebtedness, subject
to the limitations contained in the definition of Secured Indebtedness
hereinabove set forth, shall be secured by this Mortgage and shall be due and
payable upon demand.  

21.         Additional Remedies.

(a)       Upon the occurrence of any Event of
Default, Mortgagee may take such action, without notice or demand, as it deems
advisable to protect and enforce its rights against Mortgagor and in and to the
Mortgaged Property by Mortgagee itself or otherwise, and Mortgagee may take the
following additional actions, each of which may be pursued concurrently or
otherwise, at such time and in such order as they may determine, in their sole
discretion, without impairing or otherwise affecting their other rights and
remedies:

(i)       declare the entire Indebtedness to be
immediately due and payable;

(ii)       institute a proceeding or proceedings,
judicial or nonjudicial, by advertisement or otherwise, for the complete
foreclosure of this Mortgage in which case the Mortgaged Property or any
interest therein may be sold for cash or upon credit in one or more parcels or
in several interests or portions and in any order or manner, reserving
Mortgagee's right to seek a deficiency judgment against BMC;

(iii)       with or without entry, to the extent
permitted and pursuant to the procedures provided by applicable law, institute
proceedings for the partial foreclosure of this Mortgage for the portion of the
Indebtedness then due and payable, subject to the continuing lien of this
Mortgage for the balance of the Indebtedness not then due;

(iv)      sell for cash or upon credit the
Mortgaged Property or any part thereof and all estate, claim, demand, right,
title and interest of Mortgagor therein and rights of redemption thereof,
pursuant to the power of sale contained herein or otherwise, at one or more
sales, as an entirety or in parcels, at such time and place, upon such terms
and after such notice thereof as may be required or permitted by law;

(v)       institute an action, suit or proceeding
in equity for the specific performance of any covenant, condition or agreement
contained herein, or in any of the other Loan Documents;

(vi)      recover judgment on the Notes either
before, during or after any proceedings for the enforcement of this Mortgage;

(vii)      apply for the appointment of a trustee,
receiver, liquidator or conservator of the Mortgaged Property, without notice
and without regard for the adequacy of the security for the Obligations and
without regard for the solvency of BMC, any Guarantor or of any person, firm or
other entity liable for the payment of the Obligations;

(viii)     sell all or any portion of the Mortgaged
Property pursuant to Article 14 of New York's Real Property Actions and
Proceedings Law; and

(ix)      pursue such other rights and remedies as
may be available at law or in equity or under the Uniform Commercial Code
including without limitation the right to receive Rents and any other
receivables or rights to payments of BMC relating to the Mortgaged Property.

In the event of
a sale, by foreclosure or otherwise, of less than all of the Mortgaged
Property, this Mortgage shall continue as a lien on the remaining portion of
the Mortgaged Property.

(b)       The proceeds of any sale made under or
by virtue of this paragraph, together with any other sums which then may be
held by Mortgagee under this Mortgage, whether under the provisions of this
paragraph or otherwise, shall be applied by Mortgagee to the payment of the
Indebtedness in the manner set forth in 
the Credit Agreement.

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

(d)       Upon the completion of any sale or
sales pursuant hereto, Mortgagee, or an officer of any court empowered to do
so, shall execute and deliver to the accepted purchaser or purchasers a good
and sufficient instrument, or good and sufficient instruments, conveying,
assigning and transferring all estate, right, title and interest in and to the
property and rights sold.  Mortgagee is
hereby irrevocably appointed the true and lawful attorney of Mortgagor, in its
name and stead, to make all necessary conveyances, assignments, transfers and
deliveries of the Mortgaged Property and rights so sold and for that purpose
Mortgagee may execute all necessary instruments of conveyance, assignment and
transfer, and may substitute one or more persons with like power, Mortgagor
hereby ratifying and confirming all that its said attorney or such substitute
or substitutes shall lawfully do by virtue hereof.  Any sale or sales made under or by virtue of this paragraph,
whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and sale, shall
operate to divest all the estate, right, title, interest, claim and demand
whatsoever, whether at law or in equity, of Mortgagor in and to the properties
and rights so sold, and shall be a perpetual bar both at law and in equity
against Mortgagor and against any and all persons claiming or who may claim the
same, or any part thereof from, through or under Mortgagor.

(e)       Upon any sale made under or by virtue
of this paragraph, whether made under the power of sale herein granted or under
or by virtue of judicial proceedings or of a judgment or decree of foreclosure
and sale, Mortgagee may bid for and acquire the Mortgaged Property or any part
thereof and in lieu of paying cash therefor may make settlement for the
purchase price by crediting upon the Indebtedness the net sales price after
deducting therefrom the expenses of the sale and costs of the action and any
other sums which Mortgagee is authorized to deduct under this Mortgage.

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

(g)         Mortgagee may terminate or rescind
any proceeding or other action brought in connection with its exercise of the
remedies provided in this paragraph at any time before the conclusion thereof,
as determined in Mortgagee's sole discretion and without prejudice to
Mortgagee.

(h)         Mortgagee may resort to any remedies
and the security given by the Notes, this Mortgage or the other Loan Documents
in whole or in part, and in such portions and in such order as determined by
their sole discretion.  No such action
shall in any way be considered a waiver of any rights, benefits or remedies
evidenced or provided by the Notes, this Mortgage or any of the other Loan
Documents.  The failure to exercise any
right, remedy or option provided in the Notes, this Mortgage or any of the
other Loan Documents shall not be deemed a waiver of such right, remedy or
option or of any covenant or obligation secured by the Notes, this Mortgage or
the other Loan Documents.  No acceptance
by Lenders of any payment after the occurrence of any Event of Default and no
payment by Mortgagee of any obligation for which BMC is liable hereunder shall
be deemed to waive or cure any Event of Default with respect to BMC, or BMC's
liability to pay such obligation.  No
sale of all or any portion of the Mortgaged Property, no forbearance on the
part of Mortgagee, and no extension of time for the payment of the whole or any
portion of the Indebtedness or any other indulgence given by Mortgagee to BMC,
shall operate to release or in any manner affect the interest of Mortgagee in
the remaining Mortgaged Property or the liability of BMC to pay the
Indebtedness.  No waiver by Mortgagee
shall be effective unless it is in writing and then only to the extent
specifically stated.  All costs and
expenses of Mortgagee in exercising the rights and remedies under this
Paragraph 21 (including reasonable attorneys' fees and disbursements to the
extent permitted by law), shall be paid by BMC immediately upon notice from
Mortgagee, with interest at the highest rate provided in any of the Notes for
the period after notice from Mortgagee and, subject to the limitations
contained in the definition of Secured Indebtedness hereinabove set forth, such
costs and expenses shall constitute a portion of the Indebtedness and shall be
secured by this Mortgage.

(i)       The interests and rights of Mortgagee
under this Mortgage or in any of the other Loan Documents shall not be impaired
by any indulgence, including (i) any renewal, extension or modification which Mortgage
may grant with respect to any of the Indebtedness, (ii) any surrender,
compromise, release, renewal, extension, exchange or substitution which
Mortgagee may grant with respect to the Mortgaged Property or any portion
thereof; or (iii) any release or indulgence granted to any maker, endorser,
guarantor or surety of any of the Indebtedness.

(j)       The rights and remedies herein
afforded to Mortgagee and the Lenders shall be cumulative and supplementary to
and not exclusive of any other rights and remedies afforded the Mortgagee.

22.       Right of Entry.  In addition to any other rights or remedies
granted under this Mortgage, Mortgagee, and its agents, during the Term, shall
have the right to enter and inspect the Mortgaged Property during normal
business hours.  The cost of such
inspections or audits shall be borne by BMC, including the cost of all follow
up or additional investigations or inquiries deemed reasonably necessary by
Mortgagee.  The cost of such
inspections, if not paid for by BMC following demand, shall bear interest
thereafter until paid at the highest rate set forth in any of the Notes.

23.         Security Agreement.

(a)       This Mortgage is both a real property
mortgage and a "security agreement" within the meaning of the Uniform
Commercial Code.  The Mortgaged Property
includes both real and personal property and all other rights and interests,
whether tangible or intangible in nature, of Mortgagor in the Mortgaged
Property.  Mortgagor, by executing and
delivering this Mortgage, has granted and hereby grants to Mortgagee, as
security for the Indebtedness, a security interest in the Mortgaged Property to
the full extent that the Mortgaged Property may be subject to the Uniform
Commercial Code (said portion of the Mortgaged Property so subject to the Uniform
Commercial Code being called in this paragraph the "Collateral").
This Mortgage shall also constitute a "fixture filing" for the
purposes of the Uniform Commercial Code. 
As such, this Mortgage covers all items of the Collateral that are or
are to become fixtures.  Information
concerning the security interest herein granted may be obtained from the
parties at the addresses of the parties set forth in the first paragraph of
this Mortgage.

(b)       If an Event of Default shall occur,
Mortgagee, in addition to any other rights and remedies which it may have,
shall have and may exercise immediately and without demand, any and all rights
and remedies granted to a secured party upon default under the Uniform
Commercial Code, including, without limiting the generality of the foregoing,
the right to take possession of the Collateral or any part thereof, and to take
such other measures as Mortgagee may deem necessary for the care, protection
and preservation of the Collateral. 
Upon request or demand of Mortgagee, BMC shall at its expense assemble
the Collateral and make it available to Mortgagee at a convenient place
acceptable to Mortgagee.  BMC shall pay
to Mortgagee on demand any and all expenses, including attorneys' fees and
disbursements, incurred or paid by Mortgagee in protecting the interest in the
Collateral and in enforcing the rights hereunder with respect to the
Collateral.  Any notice of sale,
disposition or other intended action by Mortgagee with respect to the Collateral
sent to Mortgagor in accordance with the provisions hereof at least ten (10)
days prior to such action, shall constitute commercially reasonable notice to
BMC.  The proceeds of any disposition of
the Collateral, or any part thereof, shall be applied by Mortgagee to the
payment of the Indebtedness in such manner as may be provided in the Credit
Agreement.  In the event of any change
in name, identity or structure of any Mortgagor, such Mortgagor shall notify
Mortgagee thereof and promptly after request shall execute, file and record
such Uniform Commercial Code forms as are necessary to maintain the priority of
Mortgagee's lien upon and security interest in the Collateral, and BMC shall
pay all expenses and fees in connection with the filing and recording
thereof.  If Mortgagee shall require the
filing or recording of additional Uniform Commercial Code forms or continuation
statements, Mortgagor shall, at BMC's expense, promptly after request, execute,
file and record such Uniform Commercial Code forms or continuation statements
as Mortgagee shall deem necessary, and BMC shall pay all expenses and fees in
connection with the filing and recording thereof.  Mortgagor hereby irrevocably appoints Mortgagee as its
attorney-in-fact, coupled with an interest, to file with the appropriate public
office on its behalf any financing or other statements signed only by
Mortgagee, as secured party, in connection with the Collateral covered by this
Mortgage.

24.       Waiver of Setoff and Counterclaim.  All amounts due under this Mortgage, the
Notes and the other Loan Documents shall be payable without setoff,
counterclaim or any deduction whatsoever. 
Mortgagor hereby waives the right to assert a setoff, counterclaim
(other than a mandatory or compulsory counterclaim) or deduction in any action
or proceeding in which Mortgagee is a participant, or arising out of or in any
way connected with this Mortgage, the Notes, any of the other Loan Documents or
the Indebtedness.

25.         Recovery of Sums Required to be
Paid.  The Mortgagee shall have the
right from time to time to take action to recover any sum or sums which
constitute a part of the Indebtedness as the same become due, without regard to
whether or not the balance of the Indebtedness shall be due, and without
prejudice to the right of Mortgagee thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Mortgagor
existing at the time such earlier action was commenced.

26.         Marshalling and Other Matters.  Mortgagor hereby waives, to the extent
permitted by law, the benefit of all appraisement, valuation, stay, extension,
reinstatement and redemption laws now or hereafter in force and all rights of
marshalling in the event of any sale hereunder of the Mortgaged Property or any
part thereof or any interest therein. 
Further, Mortgagor hereby expressly waives any and all rights of
redemption from sale under any order or decree of foreclosure of this Mortgage
on behalf of Mortgagor, and on behalf of each and every person acquiring any
interest in or title to the Mortgaged Property subsequent to the date of this
Mortgage and on behalf of all persons to the extent permitted by applicable
law.

27.         Hazardous Substances.  The Mortgagor shall not use, or permit the
use of, the Mortgaged Property for the handling, storage, transportation, manufacture,
release or disposal of any Hazardous Substances.  In addition, the Mortgagor shall not install or maintain, or
permit the installation or maintenance of, any above-ground or underground
storage tanks for the storage of petroleum, petroleum by-products or other
Hazardous Substances in, about or under the Mortgaged Property unless (a) the
Mortgagor has obtained the prior written consent of the Mortgagee for such
installation and maintenance and (b) the Mortgagor installs and maintains such
above-ground or underground storage tanks in compliance with all applicable
Environmental Laws.  Notwithstanding the
foregoing, the Mortgagor or any tenant of the Mortgagor may use or store
immaterial amounts of commonly known and used materials which may be deemed
Hazardous Substances hereunder, provided that any such use or storage (i) does
not constitute a remunerative activity of the Mortgagor or any tenant, (ii) is
incidental to the Mortgagor's or such tenant's primary use of the Mortgaged
Property and does not constitute a primary use thereof, and (iii) complies at
all times with all applicable Environmental Laws.  "Hazardous Substances" means any Contaminant (as
defined in the Credit Agreement), asbestos, ureaformaldehyde, polychlorinated
biphenyls, nuclear fuel or material, chemical waste, radioactive material,
explosives, known carcinogens, petroleum products and by-products and other
dangerous, toxic or hazardous pollutants, contaminants, chemicals, materials or
substances listed or identified in, or regulated by, any Environmental
Laws.  Each of the agreements set forth
in Section 7.9 of the Credit Agreement are hereby incorporated by reference
herein with the same effect as if such agreements had been set forth herein.

28.         Conflicts with Credit Agreement.  Notwithstanding anything in this Mortgage to
the contrary, in the event of a conflict or patent inconsistency between the
terms of this Mortgage and the Credit Agreement, the terms of the Credit
Agreement shall govern and apply.

29.         Notices.  Any notice, report, demand or other
instrument authorized or required to be given or furnished ("Notices")
shall be in writing and shall be given as follows:  (a) by hand delivery; (b) by deposit in the United States mail as
first class certified mail, return receipt requested, postage paid; (c) by
overnight nationwide commercial courier service; or (d) by telecopy
transmission (other than for notices of default) with a confirmation copy to be
delivered by duplicate notice in accordance with any of clauses (a)- (c) above,
in each case, addressed to the party intended to receive the same at the
following address(es):

Mortgagee:                   Deutsche Bank Trust Company Americas

233 South Wacker Drive, 84th Floor

Chicago, Illinois  60606

Attn:  John Anos

Telecopy No.:  (312) 993-8162

With
a copy to:             Winston & Strawn

35 West Wacker Drive

Chicago, Illinois  60601

Attn.:  Charles B. Boehrer, Esq.

Telecopy No.:  (312) 558-5700

Agency:                        Cortland
County Industrial Development Agency

34 Tompkins Street

Cortland,  New York 13045

Attn: Executive Director

Telecopy No.: (607) 756-7901

With
a copy to:             Riehlman, Shafer
& Shafer

397 Route 281

P.O. Box 430

Tully, New York 13159

Attn:  John P. Sidd, Esq.

Telecopy No.: (315) 696-6019

 

BMC:                          BMC Industries, Inc.

P.O. Box 189

Kellogg Road

Cortland, New York 13045

Attn: Treasurer

with a copy to:              Jon
Dobson, Esq.

Vice President, General Counsel

BMC Industries, Inc.

One Meridan Crossings

Suite 850

Minneapolis, MN 55423

Telecopy No.:  (952) 851-6050 

Any party may
change the address to which any such Notice is to be delivered, by furnishing
ten (10) days written notice of such change to the other parties in accordance
with the provisions of this Paragraph 29. 
Notices shall be deemed to have been given on the date they are actually
received; provided, that the inability to deliver Notices because of a changed
address of which no Notice was given, or rejection or refusal to accept any
Notice offered for delivery shall be deemed to be receipt of the Notice as of
the date of such inability to deliver or rejection or refusal to accept
delivery.  Notice for either party may
be given by its respective counsel.

30.       Waiver of Notice.  Mortgagor shall not be entitled to any
notices of any nature whatsoever from Mortgagee except with respect to matters
for which this Mortgage specifically and expressly provides for the giving of
notice by Mortgagee to Mortgagor and except with respect to matters for which
Mortgagee is required by applicable law to give notice, and Mortgagor hereby
expressly waives the right to receive any notice from Mortgagee with respect to
any matter for which this Mortgage does not specifically and expressly provide
for the giving of notice by Mortgagee to Mortgagor.

31.       Sole Discretion of Mortgagee.  Wherever pursuant to this Mortgage, Mortgagee
exercises any right given to it to consent or not consent or approve or
disapprove, or any arrangement or term is to be satisfactory to Mortgagee, the
decision of Mortgagee to consent or not consent, to approve or disapprove or to
decide that arrangements or terms are satisfactory or not satisfactory shall be
in the sole discretion of Mortgagee and shall be final and conclusive, except
as may be otherwise expressly and specifically provided herein.

32.       Non-Waiver.  The failure of Mortgagee to insist upon
strict performance of any term hereof shall not be deemed to be a waiver of any
term of this Mortgage.  Mortgagor shall
not be relieved of Mortgagor's obligations hereunder by reason of (a) the
failure of Mortgagee or Lenders to comply with any request of Mortgagor to take
any action to foreclose this Mortgage or otherwise enforce any of the
provisions hereof or of the Notes, or the other Loan Documents, (b) the
release, regardless of consideration, of the whole or any part of the Mortgaged
Property, or of any person liable for the Indebtedness or any portion thereof,
or (c) any agreement or stipulation by Mortgagee or Lenders extending the
time of payment or otherwise modifying or supplementing the terms of the Notes,
this Mortgage or any of the other Loan Documents.  Mortgagee and the Lenders may resort for the payment of the
Indebtedness to any other security held by them in such order and manner as
they, in their sole discretion, may elect. 
Mortgagee and the Lenders may take action to recover the Indebtedness,
or any portion thereof, or to enforce any covenant hereof without prejudice to
the right of Mortgagee thereafter to foreclosure this Mortgage.  The rights and remedies of Mortgagee under
this Mortgage shall be separate, distinct and cumulative and none shall be
given effect to the exclusion of the others. 
No act of Mortgagee or the Lenders shall be construed as an election to
proceed under any one provision herein to the exclusion of any other provision.  Mortgagee and the Lenders shall not be limited
exclusively to the rights and remedies herein stated but shall be entitled to
every right and remedy now or hereafter afforded at law or in equity.

33.       No Oral Change.  This Mortgage, and any provisions hereof,
may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Mortgagor or
Mortgagee, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change,
discharge or termination is sought.

34.         Liability.  Subject to the provisions contained in
Paragraph 55 of this Mortgage, if Mortgagor consists of more than one person,
the obligations and liabilities of each such person hereunder shall be joint and
several.  Subject to the provisions
hereof requiring Mortgagee's consent to any transfer of the Mortgaged Property,
this Mortgage shall be binding upon and inure to the benefit of Mortgagor and
Mortgagee and their respective successors and assigns forever.

35.         Inapplicable Provisions.  If any term, covenant or condition of this
Mortgage is held to be invalid, illegal or unenforceable in any respect, this
Mortgage shall be construed without such provision.

36.         Headings, Etc.  The headings and captions of various
paragraphs of this Mortgage are for convenience of reference only and are not
to be construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.

37.         Definitions.  Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Mortgage may be used interchangeably in singular or plural form and the
word "Mortgagor" shall mean "each Mortgagor and any subsequent
owner or owners of the Mortgaged Property or any part thereof or any interest
therein," the word "Mortgagee" shall mean "Mortgagee and
any subsequent Administrative Agent under the Credit Agreement," the word "Notes"
shall mean "any of the Notes and any other evidence of indebtedness
secured by this Mortgage," the word "person" shall include an
individual, corporation, partnership, trust, unincorporated association,
government, governmental authority, and any other entity, and the words "Mortgaged
Property" shall include any portion of the Mortgaged Property and any
interest therein and the words "attorneys' fees" shall include any
and all attorneys' fees, paralegal and law clerk fees, including, without
limitation, fees at the pre-trial, trial and appellate levels incurred or paid
by Mortgagee in protecting its interest in the Mortgaged Property and
Collateral and enforcing its rights hereunder. 
Whenever the context may require, any pronouns used herein shall include
the corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa.

38.       Actions and Proceedings.  If any action or proceeding be commenced to
which action or proceeding Mortgagee is made a party and in which it becomes
necessary in the opinion of Mortgagee to defend or uphold the lien of this
Mortgage, all sums paid by Mortgagee for the expense of any litigation to
prosecute and defend the rights and lien created by this Mortgage, including
reasonable counsel fees, costs and allowances, shall, together with interest
thereon be a lien on the Mortgaged Property and, subject to the limitations
contained in the definition of Secured Indebtedness hereinabove set forth,
secured by this Mortgage and shall be collectible in like manner as said
indebtedness and shall be paid by BMC upon receipt of an invoice from
Mortgagee.

39.       Leases of the Mortgaged Property.  Mortgagor will not enter into any lease(s)
for all or any portion of the Mortgaged Property other than the Agency Lease
Agreement without the prior written consent of Mortgagee.

40.       Real Property Law.  All covenants hereof, which are in addition
to those set forth in Sections 254 and 291-f of the New York Real Property
Law, shall be construed as affording to Mortgagee rights additional to, and not
exclusive of, the rights conferred under the provisions of said Sections 254
and 291-f.

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

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

43.         Mortgagee Not Obligated.  Nothing herein contained shall be construed
as making the payment of any insurance premiums, taxes or assessments
obligatory upon Mortgagee, although Mortgagee may pay same, or as making Mortgagee
liable in any way for loss, damage or injury, resulting from the non-payment of
any such insurance premiums, taxes or assessments.

44.       Lien Law.  BMC will, in compliance with Section 13 of
the New York Lien Law, receive the advances secured by this Mortgage and
will hold the right to receive such advances as a trust fund to be applied
first for the purpose of paying the cost of the improvement and will apply the
same first to the payment of the cost of the improvement before using any part
of the total of the same for any other purpose.

45.       Costs, Expenses and Attorney's Fees.  Should one or more Events of Default occur
hereunder, and should an action be commenced for the foreclosure of this
Mortgage, Mortgagee shall be entitled to recover all sums due hereunder,
statutory costs, and any additional allowances made pursuant to Section 8303(a)
of the Civil Practice Law and Rules of the State of New York, and in addition
thereto, reasonable attorneys' fees in such proceeding and in all proceedings
related thereto necessary to and related to the foreclosing proceeding, and
such amount shall be paid by BMC on demand and shall be a lien on the Mortgaged
Property prior to any right or title to, interest in or claim upon the
Mortgaged Property attaching and accruing subsequent to the lien of this
Mortgage, and shall be deemed to be secured by this Mortgage and the
indebtedness which it secures.

46.       Entire Agreement. This Mortgage
constitutes the entire understanding between Mortgagor and Mortgagee relative
to the granting of a mortgage lien on the Mortgaged Property and supersedes any
prior writings or oral statements or conversations at any time made or had with
respect thereto.

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

48.       Time of the Essence. Time is of
the essence with respect to each and every covenant, agreement and obligation
of Mortgagor under this Mortgage.

49.         WAIVER OF JURY TRIAL.  MORTGAGOR AND MORTGAGEE HEREBY WAIVE TRIAL
BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR
ARISING OUT OF THIS MORTGAGE OR THE VALIDITY, PROTECTION, INTERPRETATION,
COLLECTION OR ENFORCEMENT HEREOF, OR THE RELATIONSHIP BETWEEN MORTGAGOR AND
MORTGAGEE OR ANY OTHER CLAIM OR DISPUTE HOWSOEVER ARISING BETWEEN MORTGAGOR AND
MORTGAGEE ARISING UNDER THIS MORTGAGE.

50.       Tax Law Section 253 Statement.
This Mortgage does not cover real property principally improved or to be
improved by one or more structures containing in the aggregate not more than
six residential dwelling units, each having their own separate cooking
facilities.

51.         Execution
of Counterparts.  This Agreement may
be executed in one or more counterparts, any one or all of which shall
constitute but one agreement.

52.         No
Recourse; Special Obligation.

(a)         The
obligations and agreements of the Agency contained herein and any other
instrument or document executed in connection therewith or herewith, and any
other instrument or document supplemental thereto or hereto, shall be deemed
the obligations and agreements of the Agency, and not of any member, officer,
director, agent (other than BMC) or employee of the Agency in his individual
capacity, and the members, officers, directors, agents (other than BMC) and
employees of the Agency shall not be liable personally hereon or thereon or be
subject to any personal liability or accountability based upon or in respect
hereof or thereof or of any transaction contemplated hereby or thereby.

(b)         The
obligations and agreements of the Agency contained herein and therein shall not
constitute or give rise to an obligation of the State of New York or Cortland
County, New York, and neither the State of New York nor Cortland County, New
York shall be liable hereon or thereon, and, further, such obligations and
agreements shall not constitute or give rise to a general obligation of the
Agency, and Mortgagee shall have no recourse to the Agency other than the Agency's
interests in the Mortgaged Property, including, but not limited to, the
revenues derived and to be derived from the sale or other disposition of the
Real Property.  This Mortgage is
specifically subordinate to the exercise by the Agency of the following rights
(the "Agency's Reserved Rights") under the Agency Lease
Agreement:  The right to (a) receive in
its own behalf all opinions of counsel, reports, statements, certificates,
insurance policies or binders or certificates, or other communications required
to be delivered by BMC to the Agency; (b) grant or withhold any consents or
approvals required of the Agency; (c) to enforce or otherwise exercise in its
own behalf all agreements of BMC with respect to ensuring that the Mortgaged
Property shall always constitute a qualified "project" as defined in
and as contemplated by the Act (as that term is defined in the Agency Lease
Agreement); (d) to amend with BMC the provisions of the Payment in Lieu of Tax
Agreement (as that term is defined in the Agency Lease Agreement); (e) to
enforce in its own behalf (or on behalf of the appropriate taxing authorities)
the provisions of, and receive amounts payable under the Payment in Lieu of Tax
Agreement and Sections 5.3, 8.9, 10.2 and 10.4 of the Agency Lease Agreement;
(f) to be indemnified pursuant to Section 8.2 of the Agency Lease Agreement;
(g) to terminate the Agency Lease Agreement in accordance with its terms; and
(h) to reconvey the Mortgaged Property to Borrower in accordance with the terms
of the Agency Lease Agreement.  The
Agency's Reserved Rights are not pledged to the Mortgagee hereunder and are
reserved to the Agency and the contractual obligations of BMC with respect to
the Agency's Reserved Rights shall survive a foreclosure of this Mortgage.

(c)         No
order or decree of specific performance with respect to any of the obligations
of the Agency hereunder shall be sought or enforced against the Agency unless
(1) the party seeking such order or decree shall first have requested the
Agency in writing to take the action sought in such order or decree of specific
performance, and thirty (30) days shall have elapsed from the date of receipt
of such request, and the Agency shall have refused to comply with such request
(or, if compliance therewith would reasonably be expected to take longer than
thirty (30) days, shall have failed to institute and diligently pursue action
to cause compliance with such request within such ten day period) or failed to
respond within such notice period, (2) if the Agency refuses to comply with
such request and the Agency's refusal to comply is based on its reasonable
expectation that it will incur fees and expenses, the party seeking such order
or decree shall have placed in an account with the Agency an amount or
undertaking sufficient to cover such reasonable fees and expenses, and (3) if
the Agency refuses to comply with such request and the Agency's refusal to
comply is based on its reasonable expectation that it or any of its members,
officers, agents (other than BMC) or employees shall be subject to potential
liability, the party seeking such order or decree shall (a) agree to indemnify,
defend and hold harmless the Agency and its members, officers, directors,
agents (other than BMC) and employees against any liability incurred as a
result of its compliance with such demand, and (b) if requested by the Agency,
furnish to the Agency satisfactory security to protect the Agency and its
members, officers, directors, agents (other than BMC) and employees against all
liability expected to be incurred as a result of compliance with such
request.  Any failure to provide the
indemnity and/or security required in this Section 52(c) shall not affect the
full force and effect of an Event of Default hereunder.

53.         New York State Specific
Provisions.

(a)         Inconsistencies.  In the event of any inconsistencies between
the terms and conditions of this Section 53 and the other provisions of this
Mortgage, the terms and conditions of this Section 53 shall control and be
binding.

(b)         Insurance.  The provisions of subsection 4 of Section
254 of the New York Real Property Law covering the insurance of buildings
against loss by fire shall not apply to this Mortgage.  In the event of any conflict, inconsistency
or ambiguity between the provisions of this Mortgage and the provisions of
subsection 4 of Section 254 of the New York Real Property Law covering the
insurance of buildings against loss by fire, the provisions of the Mortgage
shall control.

(c)      Leases.  Mortgagee shall have all of the rights
against lessees of the Mortgaged Property set forth in Section 291-f of the
Real Property Law of New York.

(d)         Statutory
Construction.  The clauses and
covenants contained in this Mortgage that are construed by Section 254 of the
New York Real Property Law shall be construed as provided in those sections
(except as provided in Section 53(b)). 
The additional clauses and covenants contained in this Mortgage shall
afford rights supplemental to and not exclusive of the rights conferred by the
clauses and covenants construed by Section 254 and shall not impair, modify,
alter, or defeat such rights (except as provided in Section 53(b)),
notwithstanding that such additional clauses and covenants may relate to the
same subject matter or provide for different or additional rights in the same
or similar contingencies as the clauses and covenants construed by Section
254.  The rights of Mortgagee arising
under the clauses and covenants contained in this Mortgage shall be separate,
distinct, and cumulative and none of them shall be in exclusion of the
others.  No act of Mortgagee or any of
the Lenders shall be construed as an election to proceed under any one
provision herein to the exclusion of any other provision, anything herein or
otherwise to the contrary notwithstanding. 
In the event of any inconsistencies between the provisions of Section
254 and the provisions of this Mortgage, the provisions of this Mortgage shall
prevail.

(e)      Power
of Sale.  Upon the occurrence of an
Event of Default, Mortgagee shall have the right to sell the Mortgaged
Property, including, without limitation, by exercise of any and all rights and
remedies available under Article 14 of the New York Real Property Actions and
Proceedings Law (the "RPAPL"). 
Any deed or deeds executed and delivered in connection with the sale or
sales of the Mortgaged Property pursuant to Article 14 of the RPAPL shall be in
the form provided in Article 14 of the RPAPL.

[Remainder of page intentionally left blank]

IN WITNESS
WHEREOF, this Mortgage has been duly executed as of the 27th day of September,
2002.

BMC INDUSTRIES,
INC.

By:  /s/Bradley D. Carlson               

                              
Bradley D. Carlson 

 

CORTLAND COUNTY INDUSTRIAL
DEVELOPMENT AGENCY

By:  /s/Paul F. Slowey

                               Paul F. Slowey

	

STATE OF MINNESOTA

    	

)

    
	

 

    	

)

    	

SS.:

    
	

COUNTY OF HENNEPIN

    	

)

    

On the 25th
day of September in the year 2002, before me, the undersigned, personally
appeared  Bradley D. Carlson, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged
to me that he executed the same in his capacity, and that by his signature on
the instrument, the individual or the person upon behalf of which the
individual acted, executed the instrument, and that such individual made such
appearance before the undersigned in the City of Minneapolis.  

/s/Julie K. Uhrich                      

                        Notary Public

 

	

STATE OF NEW YORK

    	

)

    
	

 

    	

)

    	

SS.:

    
	

COUNTY OF CORTLAND

    	

)

    

On the 23rd
day of September in the year 2002, before me, the undersigned, personally
appeared PAUL F. SLOWEY, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual or the
person upon behalf of which the individual acted, executed the instrument.

/s/Edwin J. Kelley Jr.               

                        Notary Public

 

EXHIBIT "A"

 

PARCEL 1

ALL THAT TRACT
OR PARCEL OF LAND, situate in the Town of Cortlandville, City of Cortland,
County of Cortland and State of New York, being part of Lot No. 76 in said
Town, bounded and described as follows:

BEGINNING at a
point in the centerline of Kellogg Road at its intersection with the south line
of lands of the Erie-Lackawanna Railway Company (Cincinnatus Branch), reputed
owner; thence running North 73° 47' 50" West along said south line of the
Railway Company, a distance of 78.72 feet to a point; thence continuing westerly
along said south line along the arc of a circle to the right having a radius of
1781.78 feet and a central angle of 17° 58' 20", a distance of 558.90 feet
to a point; thence continuing along said south line North 55° 49' 20"
West, a distance of 1135.06 feet to a point in the northeast corner of lands of
The Grand Union Company, reputed owner; thence running South 8° 07' 15"
West along the easterly line of The Grand Union Company, reputed owner, a
distance of 1153.23 feet to a point in the north line of lands of The
Erie-Lackawanna Railway Company (formerly known as The Syracuse, Binghamton and
New York Railroad Company), reputed owner; thence running along said north line
of the Railway Company South 44° 11' 30" East, a distance of 1637.37 feet
to a point; thence continuing along said north line of the Railway Company
South 46° 02' 40" East, a distance of 210.40 feet to a point; thence
running North 60° 24' 10" East, a distance of 1129.21 feet to a point in
the centerline of Kellogg Road, said point also being the northwesterly corner
of lands of Richard Reeves and Elizabeth Reeves, reputed owners; thence running
North 30° 29' 40" West along said centerline of Kellogg Road, a distance
of 1169.32 feet to the place of beginning.

PARCEL II

ALL THAT TRACT
OR PARCEL OF LAND, situate in the City of Cortland, County of Cortland and
State of New York, being part of Lot No. 76 in said City, bounded and described
as follows:

BEGINNING at a
point in the south line of lands of The Erie-Lackawanna Railway Company (formerly
known as The Syracuse, Binghamton and New York Railroad Company), reputed
owner, said point being an angle point in said south line, said point being
located a distance of 356.01 feet southeasterly from a point opposite the
southwest corner of the parcel above described; thence running North 44° 11' 30"
West along said south line of the Railway Company, a distance of 629.13 feet to
a point, said point being designated as Station 13123+58.1, 1° Cv. R on a Map
entitled "Station Map - Lands of The Syracuse, Binghamton and New York
R.R. Co." dated April 2, 1915; thence running northwesterly along the arc
of a circle to the right having a radius of 5770.58 feet and a central angle of
5° 04' 55", a distance of 511.83 feet to a point, said point also being the
intersection of said south line of the Railway Company and the division line
between Great Lots No. 75 and 76; thence running South 8° 10' 40" West
along the west line of Lot No. 76, a distance of 959.61 feet to a point; thence
running South 81° 49' 20" East, a distance of 700.00 feet to a point;
thence running North 45° 48' 30" East, a distance of 309.90 feet to the
place of beginning.

 Said
premises being more particularly described as follows:

PARCEL I

ALL THAT TRACT
OR PARCEL OF LAND, situate in the Town of Cortlandville, City of Cortland,
County of Cortland and State of New York, being part of Lot No. 76 in said
Town, bounded and described as follows:

BEGINNING at a
point in the centerline of Kellogg Road, said point also being the southerly
line of lands formerly owned by the Lehigh Valley Railroad, now owned by the
City of Cortland; thence running North 72° 50' 40" West along said
southerly line of the former Railroad a distance of 78.82 feet to a point of
curvature; thence running northwesterly along the arc of a circle to the right,
having a radius of 1781.78 feet, a central angle of 17° 58' 20" and an arc
length of 558.90 feet to a point, said arc having a chord length of 556.61 feet
at North 63° 51' 30" West; thence running North 54° 52' 20" West
along said southerly line of the former Railroad, a distance of 1135.07 feet to
a point marked by an existing iron pipe; thence running South 09° 04' 25"
West a distance of 1153.23 feet to a point marked by an existing iron rod found
in the northerly line of lands of Conrail; thence running South 43° 14' 20"
East along said northerly line of the Railroad a distance of 1637.37 feet to an
angle point in said line; thence running South 45° 05' 30" East along said
northerly line of the Railroad a distance of 210.40 feet to a point; thence
running North 61° 21' 20" East along the westerly line of lands of
Westendorf, reputed owner per deed filed at Document #1999-4963, a distance of
1129.21 feet to a point in the centerline of the aforementioned Kellogg Road;
thence running North 29° 32' 40" West along said centerline of Kellogg
Road a distance of 1169.32 feet to the place of Beginning and containing 64.255
acres (2,798,937 square feet) more or less of land.

PARCEL II

ALL THAT TRACT
OR PARCEL OF LAND, situate in the City of Cortland, County of Cortland and
State of New York, being part of Lot No. 76 in said City, bounded and described
as follows:

BEGINNING at a
point in the southerly line of lands of Cortland County Industrial Development
Agency, reputed owner per deed filed at Liber 506, Page 235 (formerly Erie
Lackawanna Railroad), said point also being in the division line between
Military Lots 76 and 75; thence running southeasterly along said southerly line
of the Railroad, along the arc of a circle to the left, having a radius of
5770.58 feet, a central angle of 05° 04' 55" and an arc length of 511.82
feet to a point of tangency in said line, said arc having a chord length of
511.65 feet at South 40° 41' 54" East; thence running South 43° 14' 20"
East along said southerly line of the Railroad, a distance of 629.13 feet to a
point; thence running South 46° 45' 40" West a distance of 309.90 feet to
a point; thence running North 80° 52' 10" West a distance of 700.00 feet
to a point in the westerly line of Military Lot 76; thence running North 09° 07'
50" East along said division line between Military Lots 76 and 75, a
distance of 959.61 feet to the place of Beginning and containing 11.558 acres
(503,479 square feet) more or less of land.<PAGE>
                                                                     EXHIBIT 4.1

                              CV THERAPEUTICS, INC.

                        2000 NONSTATUTORY INCENTIVE PLAN
             ADOPTED BY THE BOARD OF DIRECTORS JULY 19, 2000 AMENDED
             AND RESTATED BY THE BOARD OF DIRECTORS FEBRUARY 9, 2001
          AMENDED AND RESTATED BY THE BOARD OF DIRECTORS JULY 20, 2001
         AMENDED AND RESTATED BY THE BOARD OF DIRECTORS DECEMBER 9, 2001
        AMENDED AND RESTATED BY THE BOARD OF DIRECTORS FEBRUARY 25, 2002
           AMENDED AND RESTATED BY THE BOARD OF DIRECTORS JUNE 7, 2002
         AMENDED AND RESTATED BY THE BOARD OF DIRECTORS AUGUST 29, 2002

1.  PURPOSES.

        (a) ELIGIBLE STOCK AWARD RECIPIENTS. Only Eligible Participants may
receive Stock Awards under this Plan.

        (b) AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a
means by which Eligible Participants may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of Nonstatutory
Stock Options.

        (c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards, to secure
and retain the services of new members of this group and to provide incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.

2.  DEFINITIONS.

        (a) "AFFILIATE" means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

        (b) "BOARD" means the Board of Directors of the Company.

        (c) "CODE" means the Internal Revenue Code of 1986, as amended.

        (d) "COMMITTEE" means a committee of one or more members of the Board
appointed by the Board in accordance with subsection 3(c).

        (e) "COMMON STOCK" means the common stock of the Company.

        (f) "COMPANY" means CV Therapeutics, Inc., a Delaware corporation.

        (g) "CONSULTANT" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (ii) who is a member of the Board of Directors
of an Affiliate. However, the term "Consultant" shall not include Directors.

<PAGE>

        (h) "CONTINUOUS SERVICE" means that the Holder's service with the
Company or an Affiliate, whether as an Employee or Consultant, is not
interrupted or terminated. The Holder's Continuous Service shall not be deemed
to have terminated merely because of a change in the capacity in which the
Holder renders service to the Company or an Affiliate as an Employee or
Consultant or a change in the entity for which the Holder renders such service,
provided that there is no interruption or termination of the Holder's service to
the Company or an Affiliate. For example, a change in status without
interruption from an Employee of the Company to a Consultant of an Affiliate
will not constitute an interruption of Continuous Service. The Board or the
chief executive officer of the Company, in that party's sole discretion, may
determine whether Continuous Service shall be considered interrupted in the case
of any leave of absence approved by that party, including sick leave, military
leave or any other personal leave.

        (i) "DIRECTOR" means a member of the Board of Directors of the Company.

        (j) "DISABILITY" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.

        (k) "ELIGIBLE PARTICIPANT" means any Employee or Consultant; provided,
however, that except as provided in the following sentence, no Employee or
Consultant who is a Director or an Officer may be granted Stock Awards under
this Plan. Notwithstanding the preceding sentence, an Officer may be an Eligible
Participant if he or she is granted a Stock Award in connection with his or her
initial commencement of employment with the Company and such grant is an
essential inducement to his or her entering into a contract of employment with
the Company.

        (l) "EMPLOYEE" means any person employed by the Company or an Affiliate.
Mere service as a Director or payment of a director's fee by the Company or an
Affiliate shall not be sufficient to constitute "employment" by the Company or
an Affiliate.

        (m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

        (n) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:

               (i) If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Common Stock) on the last market trading day prior to the day
of determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.

               (ii) In the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.

        (o) "HOLDER" means a person to whom a Stock Award is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Stock
Award.

                                       2
<PAGE>

        (p) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder. Incentive Stock Options may not be granted
under the Plan.

        (q) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.

        (r) "OFFICER" means a person who is either (i) an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder or (ii) an officer of the Company within the
meaning of Section 4310(c)(25)(G)(i) of the NASD Manual and Notices to Members
(the "NASD Manual"), or any successor provision thereto.

        (s) "OPTION" means a Nonstatutory Stock Option granted pursuant to the
Plan.

        (t) "OPTION AGREEMENT" means a written or electronic agreement between
the Company and an Optionholder evidencing certain terms and conditions of an
individual Option grant. Each Option Agreement shall be subject to the terms and
conditions of the Plan.

        (u) "OPTIONHOLDER" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.

        (v) "PLAN" means this CV Therapeutics, Inc. 2000 Nonstatutory Incentive
Plan.

        (w) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.

        (x) "SECURITIES ACT" means the Securities Act of 1933, as amended.

        (y) "STOCK AWARD" means any Option granted under the Plan.

        (z) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a Holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.

3.  ADMINISTRATION.

        (a) ADMINISTRATION BY BOARD. The Board shall administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c).

        (b) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:

               (i) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which a Stock Award shall be granted to each such
person.

                                       3
<PAGE>

               (ii) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

               (iii) To amend the Plan or a Stock Award as provided in
Section 11.

               (iv) To terminate or suspend the Plan as provided in Section 12.

               (v) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.

        (c) DELEGATION TO COMMITTEE. The Board may delegate administration of
the Plan to a Committee or Committees of one (1) or more members of the Board.
The term "Committee" shall apply to any person or persons to whom such authority
has been delegated. If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, including the power to delegate to a
subcommittee any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board shall thereafter be to the
Committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest in
the Board the administration of the Plan.

        (d) EFFECT OF BOARD'S DECISION. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.

4.  SHARES SUBJECT TO THE PLAN.

        (a) SHARE RESERVE. Subject to the provisions of Section 10 relating to
adjustments upon changes in Common Stock, the Common Stock that may be issued
pursuant to Stock Awards shall not exceed in the aggregate Two Million Six
Hundred and Ten Thousand Three Hundred and Twenty Five (2,610,325) shares of
Common Stock.

        (b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award shall
for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, the shares of Common Stock not acquired under
such Stock Award shall revert to and again become available for issuance under
the Plan.

        (c) SOURCE OF SHARES. The shares of Common Stock subject to the Plan may
be unissued shares or reacquired shares, bought on the market or otherwise.

5.  ELIGIBILITY.

        (a) ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Stock Awards may be granted
only to Eligible Participants.

                                       4
<PAGE>

        (b) CONSULTANTS. A Consultant shall not be eligible for the grant of a
Stock Award if, at the time of grant, a Form S-8 Registration Statement under
the Securities Act ("Form S-8") is not available to register either the offer or
the sale of the Company's securities to such Consultant because of the nature of
the services that the Consultant is providing to the Company, or because the
Consultant is not a natural person, or as otherwise provided by the rules
governing the use of Form S-8, unless the Company determines both (i) that such
grant (A) shall be registered in another manner under the Securities Act (e.g.,
on a Form S-3 Registration Statement) or (B) does not require registration under
the Securities Act in order to comply with the requirements of the Securities
Act, if applicable, and (ii) that such grant complies with the securities laws
of all other relevant jurisdictions.

6.  OPTION PROVISIONS.

        (a) Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

        (b) OPTION EXERCISE PRICE. The exercise price of each Nonstatutory Stock
Option shall be not less than one hundred percent (100%) of the Fair Market
Value of the Common Stock subject to the Option on the date the Option is
granted. Notwithstanding the foregoing, a Nonstatutory Stock Option may be
granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.

        (c) CONSIDERATION. The purchase price of Common Stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the
Company of other Common Stock, (2) according to a deferred payment or other
similar arrangement with the Optionholder or (3) in any other form of legal
consideration that may be acceptable to the Board. Unless otherwise specifically
provided in the Option, the purchase price of Common Stock acquired pursuant to
an Option that is paid by delivery to the Company of other Common Stock
acquired, directly or indirectly from the Company, shall be paid only by shares
of the Common Stock of the Company that have been held for more than six (6)
months (or such longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes). At any time that the Company is
incorporated in Delaware, payment of the Common Stock's "par value," as defined
in the Delaware General Corporation Law, shall not be made by deferred payment.

        (d) In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.

        (e) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory Stock
Option shall be transferable to the extent provided in the Option Agreement. If
the Nonstatutory Stock Option does not provide for transferability, then the
Nonstatutory Stock Option shall not be

                                       5
<PAGE>

transferable except by will or by the laws of descent and distribution and shall
be exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionholder, shall thereafter be
entitled to exercise the Option.

        (f) VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(d) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may
be exercised.

        (g) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the date of
termination) but only within such period of time ending on the earlier of (i)
the date three (3) months following the termination of the Optionholder's
Continuous Service (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, after termination, the Optionholder does not exercise his
or her Option within the time specified in the Option Agreement, the Option
shall terminate.

        (h) EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement
may also provide that if the exercise of the Option following the termination of
the Optionholder's Continuous Service (other than upon the Optionholder's death
or Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in subsection 6(a) or (ii) the
expiration of a period of three (3) months after the termination of the
Optionholder's Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.

        (i) DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement) or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, after termination, the Optionholder does not
exercise his or her Option within the time specified herein, the Option shall
terminate.

        (j) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's Continuous
Service terminates as a result of the Optionholder's death or (ii) the
Optionholder dies within the period (if any) specified in the Option Agreement
after the termination of the Optionholder's Continuous Service for a reason
other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the

                                       6
<PAGE>

Optionholder's estate, by a person who acquired the right to exercise the Option
by bequest or inheritance or by a person designated to exercise the Option upon
the Optionholder's death pursuant to subsection 6(e) or 6(f), but only within
the period ending on the earlier of (1) the date eighteen (18) months following
the date of death (or such longer or shorter period specified in the Option
Agreement) or (2) the expiration of the term of such Option as set forth in the
Option Agreement. If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate.

        (k) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. Any unvested shares of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the Board
determines to be appropriate. The Company will not exercise its repurchase
option until at least six (6) months (or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting purposes) have
elapsed following exercise of the Option unless the Board otherwise specifically
provides in the Option.

7.  COVENANTS OF THE COMPANY.

        (a) AVAILABILITY OF SHARES. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.

        (b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Stock Awards and to issue and sell shares
of Common Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained.

8.  USE OF PROCEEDS FROM STOCK.

        (a) Proceeds from the sale of Common Stock pursuant to Stock Awards
shall constitute general funds of the Company.

9.  MISCELLANEOUS.

        (a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have the
power to accelerate the time at which a Stock Award may first be exercised or
the time during which a Stock Award or any part thereof will vest in accordance
with the Plan, notwithstanding the provisions in the Stock Award stating the
time at which it may first be exercised or the time during which it will vest.

                                       7
<PAGE>

        (b) STOCKHOLDER RIGHTS. No Holder shall be deemed to be the holder of,
or to have any of the rights of a holder with respect to, any shares of Common
Stock subject to such Stock Award unless and until such Holder has satisfied all
requirements for exercise of the Stock Award pursuant to its terms.

        (c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Holder any right to continue to serve the Company or an Affiliate in the
capacity in effect at the time the Stock Award was granted or shall affect the
right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause or (ii) the service of
a Consultant pursuant to the terms of such Consultant's agreement with the
Company or an Affiliate.

        (d) INVESTMENT ASSURANCES. The Company may require a Holder, as a
condition of exercising or acquiring Common Stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Holder's knowledge
and experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Stock Award; and (ii) to give written assurances
satisfactory to the Company stating that the Holder is acquiring Common Stock
subject to the Stock Award for the Holder's own account and not with any present
intention of selling or otherwise distributing the Common Stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (1) the issuance of the shares of Common Stock upon the exercise
or acquisition of Common Stock under the Stock Award has been registered under a
then currently effective registration statement under the Securities Act or (2)
as to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the Common Stock.

        (e) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of a
Stock Award Agreement, the Holder may satisfy any federal, state or local tax
withholding obligation relating to the exercise or acquisition of Common Stock
under a Stock Award by any of the following means (in addition to the Company's
right to withhold from any compensation paid to the Holder by the Company) or by
a combination of such means: (i) tendering a cash payment; (ii) authorizing the
Company to withhold shares of Common Stock from the shares of Common Stock
otherwise issuable to the Holder as a result of the exercise or acquisition of
Common Stock under the Stock Award, provided, however, that no shares of Common
Stock are withheld with a value exceeding the minimum amount of tax required to
be withheld by law; or (iii) delivering to the Company owned and unencumbered
shares of Common Stock.

10.  ADJUSTMENTS UPON CHANGES IN STOCK.

        (a) CAPITALIZATION ADJUSTMENTS. If any change is made in the Common
Stock subject to the Plan, or subject to any Stock Award, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock

                                       8
<PAGE>

dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the Plan will be appropriately adjusted in the class(es) and maximum
number of securities subject to the Plan pursuant to subsection 4(a) and the
maximum number of securities subject to award to any person pursuant to
subsection 5(c), and the outstanding Stock Awards will be appropriately adjusted
in the class(es) and number of securities and price per share of Common Stock
subject to such outstanding Stock Awards. The Board shall make such adjustments,
and its determination shall be final, binding and conclusive. The conversion of
any convertible securities of the Company shall not be treated as a transaction
"without receipt of consideration" by the Company.

        (b) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then all outstanding Stock Awards shall terminate
immediately prior to such event.

        (c) CHANGE OF CONTROL.

               (i) Subject to clause (ii) below, in the event of a Change of
Control, to the extent permitted by law, any surviving corporation or acquiring
corporation may assume any Stock Awards outstanding under the Plan or substitute
similar stock awards (including awards to acquire the same consideration paid to
the stockholders in the Change of Control) for those outstanding under the Plan.
In the event any surviving corporation or acquiring corporation does not assume
such Stock Awards or substitute similar stock awards for those outstanding under
the Plan, then with respect to Stock Awards held by Holders whose Continuous
Service has not terminated, the time during which such Stock Awards may be
exercised shall be accelerated in full, and the Stock Awards shall terminate if
not exercised at or prior to such event. With respect to any other Stock Awards
outstanding under the Plan, such Stock Awards shall terminate if not exercised
prior to such event.

               (ii) In the event of a Change of Control not approved by the
Board, each outstanding Stock Award under the Plan shall become fully vested,
and the Company's right of repurchase shall lapse with respect to shares
received upon exercise of a Stock Award prior to full vesting, notwithstanding
the terms of the Stock Award or any early exercise stock purchase agreement,
immediately prior to the consummation of such Change of Control.

               For purposes of this Plan, "Change of Control" means: (i) a sale
of substantially all of the assets of the Company; (ii) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation in which shareholders immediately before the merger or
consolidation have, immediately after the merger or consolidation, equal or
greater stock voting power); (iii) a reverse merger in which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise (other than a reverse
merger in which stockholders immediately before the merger have, immediately
after the merger, greater stock voting power); or (iv) any transaction or series
of related transactions in which in excess of 50% of the Company's voting power
is transferred.

11.  AMENDMENT OF THE PLAN AND STOCK AWARDS.

                                       9
<PAGE>

        (a) AMENDMENT OF PLAN. The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 10 relating to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3
or any Nasdaq or securities exchange listing requirements.

        (b) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the Board
may amend the Plan in any respect the Board deems necessary or advisable to
provide eligible Employees with the maximum benefits provided or to be provided
under the provisions of the Code.

        (c) NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Holder and (ii) the Holder consents
in writing.

        (d) AMENDMENT OF STOCK AWARDS. The Board at any time, and from time to
time, may amend the terms of any one or more Stock Awards; provided, however,
that the rights under any Stock Award shall not be impaired by any such
amendment unless (i) the Company requests the consent of the Holder and (ii) the
Holder consents in writing. Notwithstanding the foregoing, the Board shall not,
without the approval of the stockholders of the Company, authorize the amendment
of any outstanding Option to reduce its exercise price. Furthermore, no Option
shall be canceled and replaced with grants having a lower exercise price without
the further approval of stockholders of the Company.

12.  TERMINATION OR SUSPENSION OF THE PLAN.

        (a) PLAN TERM. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board. No Stock Awards
may be granted under the Plan while the Plan is suspended or after it is
terminated.

        (b) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan shall
not impair rights and obligations under any Stock Award granted while the Plan
is in effect except with the written consent of the Holder.

13.  EFFECTIVE DATE OF PLAN.

        (a) The Plan shall become effective upon its adoption by the Board.

14.  CHOICE OF LAW/INTERPRETATION.

        (a) The law of the State of Delaware shall govern all questions
concerning the construction, validity and interpretation of this Plan, without
regard to such state's conflict of laws rules. Notwithstanding the foregoing, it
is expressly intended that approval of the Company's stockholders not be
required as a condition of the effectiveness of the Plan, and the Plan's
provisions shall be interpreted in a manner consistent with such intent for all
purposes (including without limitation, for purposes of determining whether
stockholder approval of the Plan is necessary pursuant to the NASD Manual or any
successor provisions thereto).

                                       10

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