Document:

<PAGE>

                                                                   EXHIBIT 10.12

                                                                  Execution Copy

                                 LEASE AGREEMENT

                                 by and between

                            FOSS (NH) QRS 16-3, INC,
                             a Delaware corporation

                                   as LANDLORD

                                       and

                       FOSS MANUFACTURING COMPANY, INC.,
                          a New Hampshire corporation,

                                    as TENANT

                        Premises:  380 Lafayette Road, Hampton, New Hampshire
                                   390 Lafayette Road, Hampton, New Hampshire
                                   11 Merrill; Drive,Hampton, New Hampshire

                             Dated as of: July 1, 2004

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                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                           Page
                                                                                           ----
<S>  <C>                                                                                   <C>
1.   Demise of Premises................................................................      1
2.   Certain Definitions...............................................................      1
3.   Title and Condition; Single Lease Transaction.....................................      8
4.   Use of Leased Premises; Quiet Enjoyment...........................................     10
5.   Term..............................................................................     11
6.   Basic Rent........................................................................     12
7.   Additional Rent...................................................................     12
8.   Net Lease: Non-Terminability......................................................     13
9.   Payment of Impositions............................................................     14
10.  Compliance with Laws and Easement Agreements; Environmental Matters...............     15
11.  Liens; Recording..................................................................     16
12.  Maintenance and Repair............................................................     17
13.  Alterations and Improvements......................................................     17
14.  Permitted Contests................................................................     18
15.  Indemnification...................................................................     18
16.  Insurance.........................................................................     19
17.  Casually and Condemnation.........................................................     22
18.  Termination Events................................................................     23
19.  Restoration.......................................................................     25
20.  Procedures Upon Purchase..........................................................     26
21.  Assignment and Subletting: Prohibition against Leasehold Financing...............      27
22.  Events of Default.................................................................     30
23.  Remedies and Damages Upon Default.................................................     32
24.  Notices...........................................................................     35
25.  Estoppel Certificate..............................................................     35
26.  Surrender.........................................................................     35
27.  No Merger of Title................................................................     36
28.  Books and Records.................................................................     36
29.  Determination of Value............................................................     38
30.  Non-Recourse as to Landlord.......................................................     39
31.  Financing.........................................................................     40
32.  Subordination, Non-Disturbance and Attornment.....................................     40
33.  Operating Covenants...............................................................     40
34.  Tax Treatment; Reporting..........................................................     40
35.  Financing the Lafayette Factory Expansion.........................................     44
36.  Financing Additional Improvements by Landlord.....................................     44
37.  Tenant Construction on the Additional Land........................................     49
38.  Conditions to Construction of Additional Improvements and/or Lafayette Factory....     49
39.  Security Deposit..................................................................     44
40.  Miscellaneous.....................................................................     49
41.  Post-Closing Obligations..........................................................     49
</TABLE>

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EXHIBITS

<TABLE>
<S>                <C>
Exhibit "A"    -   Premises
Exhibit "B"    -   Machinery and Equipment
Exhibit "C"    -   Schedule of Permitted Encumbrances
Exhibit "D"    -   Rent Schedule
Exhibit "E"    -   Acquisition Costs and Allocated Loan Amount
Exhibit "F"    -   Premises Percentage Allocation of Basic Rent
Exhibit "G"    -   Operating Covenants
Exhibit "H"    -   Covenants Compliance Certificate
Exhibit "I"    -   Post-Closing Obligations
Exhibit "J"    -   Condominium Site Plan
Exhibit "K-1"  -   Condominium Declaration
Exhibit "K-2"  -   Condominium Bylaws
Exhibit "L"    -   Maximum Buildable Square Footage
Exhibit "M"    -   Additional Improvement Checklist
</TABLE>

                                      -ii-
<PAGE>

      LEASE AGREEMENT, made as of July 1, 2004, between FOSS (NH) QRS 16-3,
INC., a Delaware corporation("Landlord"), with an address c/o W. P. Carey &
Co. LLC, 50 Rockefeller Plaza, 2nd Floor, New York, New York 10020, and FOSS
MANUFACTURING COMPANY, INC., a New Hampshire corporation ("Tenant") with an
address at 380 Lafayette Road, Hampton, New Hampshire 03843.

      In consideration of the rents and provisions herein stipulated to be paid
and performed, Landlord and Tenant hereby covenant and agree as follows:

            1. Demise of Premises. Landlord hereby demises and lets to Tenant,
and Tenant hereby takes and leases from Landlord, for the term and upon the
provisions hereinafter specified, the following described property (hereinafter
referred to collectively as the "Leased Premises" and individually as the "38O
Lafayette Office Premises", "390 Lafayette Factory Premises", and "Merrill
Drive Premises", each of which premises (as hereinafter defined) shall include
the following item (a) and the following items (b) and (c)of this Paragraph 1
located thereon or therein and appertaining thereto: (a) the real property
described in Exhibit "A" hereto (including the real property described therein
as the "13 Acre Tract" and the "21 Acre Tract), together with the Appurtenances
(collectively, the "Land"); (b) the buildings containing approximately 528,010
square feet in the aggregate, structures and other improvements now or hereafter
constructed on the Land (collectively, the "Improvements"); and (c) the
fixtures, machinery, equipment and other property described in Exhibit "B"
hereto (collectively, the "Equipment").

            2. Certain Definitions.

                  "Acquisition Cost" of each of the Related Premises shall mean
the amount set forth opposite such premises on Exhibit "E" hereto.

                  "Additional Improvements" shall mean one or more buildings
which may be constructed on the Excess Land by Landlord or Tenant in accordance
with and subject to the terms of Paragraphs 36,37 and 38.

                  "Additional Rent" shall mean Additional Rent as defined in
Paragraph 7.

                  "Affected Premises" shall mean the Affected Premises as
defined in Paragraph 18.

                  "Affiliate" of any Person shall mean any Person which shall
(i) control, (ii) be under the control of, or (iii) he under common control with
such Person (the term "control" as used herein shall be deemed to mean ownership
of more than 50% of the outstanding voting stock of a corporation or other
majority equity and control interest if such Person is not a corporation) and
the power to direct or cause the direction of the management or policies of
such Person.

                  "Alterations" shall mean all changes, additions, improvements
or repairs to, all alteration, reconstructions, restorations, renewals,
replacements or removals of and all substitutions or replacements for any of the
Improvements or Equipment, both interior and

<PAGE>

exterior, structural and non-structural, and ordinary and extraordinary and
shall include the Lafayette Factory Expansion.

                  "Appurtenances" shall mean all tenements, hereditaments,
easements, rights-of-way, rights privileges in and to the Land, including (a)
easements over other lands granted by any Easement Agreement and (b) any
streets, ways, sidewalks driveways, curbs alleys, vaults, gores or strips of
land adjoining the Land.

                  "Asset Transfer" shall mean Asset Transfer as defined in
Paragraph 21(i).

                  "Assignment" shall mean any assignment of rents and leases
from Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified from time to time.

                  "Basic Rent" shall mean Basic Rent as defined in Paragraph 6.

                  "Basic Rent Payment Date" shall mean Basic Rent Payment Date
as defined in Paragraph 6.

                  "Casualty" shall mean any loss of or damage to or destruction
of or which affects the Leased Premises.

                  "Commencement Date" shall mean Commencement Date as defined in
Paragraph 5.

                  "Common Area" shall mean the Common Area as defined in the
Condominium Declaration and shown on the Condominium Site Plan.

                  "Condemnation" shall mean a Taking.

                  "Condemnation Notice" shall mean notice or knowledge of the
institution of or intention to institute any proceeding for Condemnation.

                  "Condominium" shall mean the commercial condominium regime
created pursuant to the Condominium Declaration.

                  "Condominium Association" shall mean the condominium Unit
owner's association formed pursuant to the Condominium Declaration.

                  "Condominium Bylaws" shall mean Bylaws to be recorded along
with the Condominium Declaration of Foss Condominium in substantially the form
attached hereto as Exhibit "K-2", as same may be amended, restated, modified or
supplemented from time to time with the consent of Landlord and Lender.

                  "Condominium Declaration" shall mean collectively, (i) the
Declaration of Foss Condominium, a condominium, in substantially the form
attached hereto as Exhibit "K-l", and all the terms and provisions thereof, and
(ii) the Condominium Bylaws, and any rules or regulations adopted thereunder, in
each case, as same may be amended, restated, modified or supplemented from time
to time with the consent of Landlord and Lender.

                                      -2-
<PAGE>

                  "Condominium Documents" shall mean the Condominium
Declaration, the Condominium Bylaws, the Condominium Site Plan. Any exhibit,
schedule, appendix, plan, or certification accompanying a Condominium Document
and recorded with it, or incorporated by reference in it, shall be deemed to be
incorporated into that Condominium Document.

                  "Condominium Expenses" shall mean the allocated share of all
expenses attributable to the management, operation, maintenance, repair and
security of the Condominium, including the parking and landscaped areas, which
are incurred by or payable by Landlord as owner of the Leased Premises
(including Landlord's undivided interest in the Common Area) pursuant to the
Declaration or in accordance therewith, without mark-up by Landlord.

                  "Condominium Site Plan" shall mean the Site Plan as defined in
the Condominium Declaration substantially in the form of those plans attached as
Exhibit "J" as same may be amended, restated, modified or supplemented from time
to time with the consent of Landlord and Lender. The parties acknowledge the
that Exhibit J is not complete and that any changes required for the completion
thereof shall be subject to the reasonable approval of Landlord and Lender. See
Sections 36(a) of this Lease.

                  "Costs" of a Person or associated with a specified transaction
shall mean all reasonable costs and expenses incurred by such Person or
associated with such transaction, including without limitation, attorneys' fees
and expenses, court costs, brokerage fees, escrow fees, title insurance
premiums, recording fees and transfer taxes, as the circumstances require.

                  "CPI" shall mean CPI as defined in Exhibit "D" hereto.

                  "Default Rate" shall mean the Default Rate as defined in
Paragraph 7(a)(iv).

                  "Default Termination Amount" shall mean the Default
Termination Amount as defined in Paragraph 23(a)(iii).

                  "Easement Agreement" shall mean any conditions, covenants,
restrictions, easements, declarations, licenses and other agreements listed as
Permitted Encumbrances or as may hereafter affect any Related Premises.

                  "Environmental Law" shall mean (a) whenever enacted or
promulgated, any applicable federal, state, foreign and local law, statute,
ordinance, rule, regulation, license, permit, authorization, approval, consent,
court order, judgment, decree, injunction, code, requirement or agreement with
any governmental entity, (i) relating to pollution (or the cleanup thereof), or
the protection of air, water vapor, surface water groundwater, drinking water
supply, land(including land surface or subsurface), plant, aquatic and animal
life from injury caused by a Hazardous Substance or (ii) concerning exposure
to, or the use, containment, storage, recycling, reclamation, reuse, treatment,
generation, discharge, transportation, processing, handling, labeling,
production, disposal or remediation of any Hazardous Substance, Hazardous
Condition or Hazardous Activity, in each case as amended and as now or hereafter
in effect, and (b) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence, nuisance,
trespass  and strict liability) that may impose liability

                                      -3-
<PAGE>

or obligations for injuries or damages due to or threatened as a result of the
presence of, exposure to, or ingestion of, any Hazardous Substance. The term
Environmental Law includes, without limitation, the federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the federal Water Pollution Control Act, the
federal Clean Air Act, the federal Clean Water Act, the federal Resources
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments to RCRA), the federal Solid Waste Disposal Act, the federal Toxic
Substance Control Act, the federal Insecticide, Fungicide and Rodenticide Act,
the federal Occupational Safety and Health Act of 1970, the federal National
Environmental Policy Act and the federal Hazardous Materials Transportation Act,
each as amended and as now or hereafter in effect and any similar state or local
Law.

                  "Environmental Violation" shall mean (a) any direct or
indirect discharge, disposal, spillage, emission, escape, pumping, pouring,
injection, leaching, release, seepage, filtration or transporting of any
Hazardous Substance at, upon, under, onto or within the Leased Premises,or from
the Leased Premises to the environment, in violation of any Environmental Law or
in excess of any reportable quantity established under any Environmental Law or
which could result in any liability to Landlord, Tenant or Lender any Federal,
state or local government or any other Person for the costs of any removal or
remedial action or natural resources damage or for bodily injury or property
damage, (b) any deposit, storage, dumping, placement or use of any Hazardous
Substance at, upon, under or within the Leased Premises in violation of any
Environmental Law or in excess of any reportable quantity established under any
Environmental Law or which could result in any liability to any Federal, state
or local government or to any other Person for the costs of any removal or
remedial action or natural resources damage or for bodily injury or property
damage, (c) the abandonment or discarding of any barrels, containers or other
receptacles containing any Hazardous Substances in violation of any
Environmental Laws, (d) any activity, occurrence or condition which could result
in any liability, cost or expense to Landlord or Lender or any other owner or
occupier or the Leased Premises, or which could result in a creation of a lien
on any Related Premises under any Environmental Law or (e) any violation of or
noncompliance with any Environmental Law.

                  "Equipment" shall mean the Equipment as defined in Paragraph
1.

                  "Event of Default" shall mean an Event of Default as defined
in Paragraph 22(a).

                  "Excess Land" shall mean, collectively, the Unit 4 Convertible
Land and the Unit 5 Convertible Land.

                  "Expansion Conditions" shall mean the Expansion Conditions as
defined in Paragraph 36.

                  "Expansion Costs and Expenses" shall mean the Expansion Costs
and Expenses as defined in Paragraph 36.

                  "Expansion Landlord" shall mean the Expansion Landlord as
defined in Paragraph 36.

                                      -4-
<PAGE>

                  "Expansion Lease Costs" shall mean the Expansion Lease Costs
as defined in Paragraph 36.

                  "Expansion Unit" shall mean the Expansion Unit as defined in
Paragraph 36.

                  "Fair Market Value" of either the Leased Premises or any
Related Premises, as the case may be, and the context may require, shall mean
the higher of (a) the fair market value of the Leased Premises or any Related
Premises, as the case may be, as of the Relevant Date as if unaffected and
unencumbered by this Lease or (b) the fair market value of the Leased Premises
or Related Premises, as the case may be, as of the Relevant Date as affected and
encumbered by this Lease and assuming that the Term has been extended for all
extension periods provided for herein. For all purposes of this Lease, Fair
Market Value shall be determined in accordance with the procedure specified in
Paragraph 29.

                  "Fair Market Value Date" shall mean the date when the Fair
Market Value is determined in accordance with Paragraph 29.

                  "Federal Funds" shall mean federal or other immediately
available funds which at the time of payment are legal tender for the payment of
public and private debts in the United States of America.

                  "Hazardous Activity" means any activity, process, procedure or
undertaking which directly or indirectly (a) procures, generates or creates any
Hazardous Substance; (b) causes or results in (or threatens to cause or result
in) the release, seepage, spill, leak, flow, discharge or emission of any
Hazardous Substance into the environment (including the air, ground water,
watercourses or water systems), (c) involves the containment or storage of any
Hazardous Substance, or (d) would cause any of the Leased Premises or any
portion thereof to become a hazardous waste treatment, recycling, reclamation,
processing, storage or disposal facility within the meaning of any Environmental
Law.

                  "Hazardous Condition" means any condition which would support
any claim or liability under any Environmental Law, including the presence of
underground storage tanks.

                  "Hazardous Substance" means (i) any substance, material,
product, petroleum, petroleum product, derivative, compound or mixture, mineral
(including asbestos), chemical, gas, medical waste, or other pollutant, in each
case whether naturally occurring, manmade or the by-product of any process, that
is toxic, harmful or hazardous or acutely hazardous to the environment or public
health or safety or (ii) any substance supporting a claim under any
Environmental Law, whether or not defined as hazardous as such under any
Environmental Law. Hazardous Substances include, without limitation, any toxic
or hazardous waste, pollutant, contaminant, industrial waste, petroleum or
petroleum-derived substances or waste, radon, radioactive materials, asbestos,
asbestos containing materials, microbial matter (including but not limited to
mold, mildew and other fungi or bacterial matter which reproduces through the
release of spores or the splitting of cells), urea formaldehyde foam insulation,
lead and polychlorinated biphenyls.

                                      -5-
<PAGE>

                  "Impositions" shall mean the Impositions as defined in
Paragraph 9(a).

                  "Improvements" shall mean the Improvements us defined in
Paragraph 1.

                  "Indemnitee" shall mean an Indemnitee as defined in Paragraph
15.

                  "Insurance Requirements" shall mean the requirements of all
insurance policies maintained in accordance with this Lease and the Condominium
Documents.

                  "Lafayette Factory Expansion" shall mean the Lafayette Factory
Expansion as defined in Paragraph 35.

                  "Land" shall mean the Land as defined in Paragraph 1.

                  "Law" shall mean any constitution, statute, rule of law,
code, ordinance, order judgment, decree, injunction, rule, regulation, policy,
requirement or administrative or judicial determination, even if unforseen or
extraordinary , of every duly constituted governmental authority, court or
agency, now or hereafter enacted or in effect.

                  "Lease" shall mean this Lease Agreement.

                  "Lease Year" shall mean, with respect to the first Lease Year,
the period commencing on the Commencement Date and ending at midnight on the
last day of the twelfth (12th ) full consecutive calender month following the
month in which the Commencement Date occurred, and each succeeding twelve (12)
month period during the Term.

                  "Leased Premises" shall mean the Leased Premises as defined in
Paragraph 1.

                  "Legal Requirements" shall mean the requirements of all
present and future Laws (including but not limited to Environmental Laws and
Laws relating to accessibility to, usability by, and discrimination against,
disabled individuals) and all covenants, restrictions and conditions now or
hereafter of record which may be applicable to Tenant or to any of the Leased
Premises or any Related Premises, or to the use, manner of use, occupancy,
possession, operation, maintenance, alteration, repair or restoration of any of
the Leased Premises or any Related Premises, even if compliance therewith
necessitates structural changes or improvements or results in interference with
the use or enjoyment of any of the Leased Premises or any Related Premises or
requires Tenant to carry insurance other than as required by this Lease.

                  "Lender" shall mean (i) CIBC Inc. and it successors and
assigns, as the initial Lender and (ii) thereafter, any Person (and its
respective successors and assigns) which may, on or after the date hereof, make
a Loan to Landlord or be the holder of a Note.

                  "Letter of Credit" shall mean Letter of Credit as defined in
Paragraph 39.

                  "Limited Common Area" shall mean the Limited Common Area as
defined in the Condominium Declaration and shown on the Condominium Site Plan.

                                      -6-
<PAGE>

                  "Loan" shall mean any loan made by one or more Lenders to
Landlord, which loan is secured by a Mortgage and an Assignment and evidenced
by a Note.

                  "Monetary Obligations" shall mean Kent and all other sums
payable by Tenant under this Lease to Landlord, to any third party on behalf of
Landlord or to any Indemnitee.

                  "Moody's" shall mean Moody's Investor Services, Inc.

                  "Mortgage" shall mean any mortgage or deed of trust from
Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified.

                  "Net Award" shall mean (a) the entire award payable to
Landlord or Lender by reason of a Condemnation whether pursuant to a judgment or
by agreement or otherwise, or (b) the entire proceeds of any insurance required
under clause (i), (ii) (to the extent payable to Landlord or Lender), (iv), (v)
or (vi) of Paragraph 16(a), as the case may be, less any expenses incurred by
Landlord and Lender in collecting such award proceeds.

                  "Note" shall mean any promissory note evidencing Landlord's
obligation to repay a Loan, as the same may be amended, supplemented or
modified.

                  "Operating Covenants" shall mean the covenants and agreements
described on Exhibit "G" hereto.

                  "Partial Casualty" shall mean any Casualty which does not
constitute a Termination Event.

                  "Partial Condemnation" shall mean any Condemnation which does
not constitute a Termination Event.

                  "Permitted Encumbrances" shall mean those covenants,
restrictions, reservations, liens, conditions and easements and other
encumbrances, other than any Mortgage or Assignment, listed, on Exhibit "C"
hereto (but such listing shall not be deemed to revive any such encumbrances
that have expired or terminated or are otherwise invalid or unenforceable).

                  "Person" shall mean an individual, partnership, association,
corporation or other entity.

                  "Post Closing Obligations" shall mean those obligations, if
any, of Tenant specified in Exhibit "I" hereto.

                  "Premises Percentage Allocation" shall mean the percentage
allocated to each Related Premises in Exhibit "F" to this Lease as the same may
be adjusted in accordance with the formula specified in Exhibit "F".

                  "Prepayment Premium" shall mean any payment required to be
made by Landlord to a Lender under a Note or other document evidencing or
securing a Loan (other than

                                      -7-

<PAGE>

payments of principal and/or interest which Landlord is required to make under a
Note or a Mortgage) solely by reason of any prepayment or defeasance by Landlord
of any principal due, under a Note or Mortgage, and which may, without
limitation, take the form of (a) a "make whole" or yield maintenance clause
requiring a prepayment premium or (b) a defeasance payment (such defeasance
payment to be an amount equal to the positive difference between (i) the total
amount required to defease a Loan and (ii) the outstanding principal balance of
the Loan as of the date of such defeasance plus reasonable Costs of Landlord and
Lender).

                  "Present Value" of any amount shall mean such amount
discounted by a rate per annum which is the lower of (a) the Prime Rate at the
time such present value is determined or (b) six percent (6%) per annum.

                  "Prime Rate" shall mean the interest rate per annum as
published, from time to time, in The Wall Street Journal as the "Prime Rate" in
its column entitled "Money Rate". The Prime Rate may not be the lowest rate of
interest charged by any "large U.S. money center commercial banks" and Landlord
makes no representations or warranties to that effect. In the event The Wall
Street Journal ceases publication or ceases to publish the "Prime Rate" as
described above, the Prime Rate shall be the average per annum discount rate
(the "Discount Rate") on ninety-one (91) day bills ("Treasury Bills") issued
from time to time by the United States Treasury at its most recent auction, plus
three hundred (300) basis points. If no such 91-day Treasury Bills are then
being issued, the Discount Rate shall be the discount rate on Treasury Bills
then being issued for the period of time closest to ninety-one (91) days.

                  "Related Premises" shall mean any one of the 380 Lafayette
Office Premises, 390 Lafayette Factory Premises, and Merrill Drive Premises.

                  "Release Conditions" shall mean the Release Conditions as
defined in Paragraph 37.

                  "Release Costs and Expenses" shall mean the Release Costs and
Expenses as defined in Paragraph 37.

                  "Release Notice" shall mean the Release Notice as defined in
Paragraph 37.

                  "Released Unit" shall mean the Released Unit as defined in
Paragraph 37.

                  "Released Unit Purchase Price" shall mean the Released Unit
Purchase Price as defined in Paragraph 37.

                  "Relevant Amount" shall mean the Termination Amount or the
Default Termination Amount as the case may be.

                  "Relevant Date" shall mean (a) the date immediately prior to
the date on which the applicable Condemnation Notice is received, in the event
of a Termination Notice under Paragraph 18 which is occasioned by a Taking, (b)
the date immediately prior to the date on which the applicable Casualty occurs,
in the event of a Termination Notice under Paragraph 18 which is occasioned by a
Casualty, (c) the date when Fair Market Value is

                                      -8-
<PAGE>

redetermined, in the event of a redetermination of Fair Market Value pursuant to
Paragraph 20(c), (d) the date immediately prior to the Event of Default giving
rise to the need to determine Fair Market Value in the event Landlord provides
Tenant with notice of its intention to require Tenant to make a termination
offer under Paragraph 23(a)(iii), as applicable.

                  "Remaining Premises" shall mean the Related Premises which are
not Affected Premises under Paragraph 18.

                  "Remaining Sum" shall mean Remaining Sum as defined in
Paragraph 19(c).

                  "Renewal Term" shall mean Renewal Term as defined in Paragraph
5.

                  "Rent" shall mean, collectively, Basic Rent and Additional
Rent.

                  "S&P" shall mean Standard and Poor's Corporation.

                  "Security Deposit" shall mean Security Deposit as defined in
Paragraph 39.

                  "Site Assessment" shall mean a Site Assessment as defined in
Paragraph 10(c).

                  "State" shall mean the State of New Hampshire.

                  "Surviving Obligations" shall mean any obligations of Tenant
under this Lease, actual or contingent, which arise on or prior to the
expiration or prior termination of this Lease or which survive such expiration
or termination by their own terms.

                  "Taking" shall mean (a) any taking or damaging of all or a
portion of any of the Leased Premises (i) in or by condemnation or other eminent
domain proceedings pursuant to any Law, general or special, or (ii) by reason,
of any agreement with any condemnor in settlement of or under threat of any such
condemnation or other eminent domain proceeding, or (iii) by any other means, or
(b) any de facto condemnation. The Taking shall be considered to have taken
place as of the later of the date actual physical possession is taken by the
condemnor, or the date on which the right to compensation and damages accrues
under the law applicable to the Related Premises.

                  "Tenant's Expansion Request" shall mean Tenant's Expansion
Request as defined in Paragraph 36.

                  "Term" shall mean the Term as defined in Paragraph 5.

                  "Termination Amount" shall mean (1), with respect to any
Relevant Date occurring during the first seven (7) Lease Years, the greater of
(a) the sum of the Fair Market Value of the applicable Related Premises and the
applicable Prepayment Premium which Landlord will be required to pay in
prepaying or defeasing, as applicable, any Loan with proceeds of the Termination
Amount or (b) the sun of the Acquisition Cost for the applicable

                                      -9-

<PAGE>

Related Premises and the applicable Prepayment Premium which Landlord will be
required to pay in prepaying or defeating in whole or in part, as applicable,
any Loan with proceeds of the Termination Amount, and (2) with respect to any
Relevant Date occurring after the seventh (7th) Lease Year, the sum of the Fair
Market Value of the applicable Related Premises and the applicable Prepayment
Premium which Landlord will be required to pay in prepaying or defeasing, as
applicable any Loan with proceeds of the Termination Amount; provided that in no
event shall the Termination Amount at any time be less that the sum of (i) the
portion of the initial Loan proceeds allocated to such Related Premises as
established under the terms of the initial Mortgage from Landlord to the initial
Lender (and its successors and assigns), and (ii) the applicable Prepayment
Premium which Landlord will be required to pay in prepaying or defeasing, as
applicable, any Loan with proceeds of the Termination Amount.

                  "Termination Date" shall mean the Termination Date as defined
in Paragraph 18.

                  "Termination Event" shall mean a Termination Event as defined
in Paragraph 18.

                  "Termination Notice" shall mean Termination Notice as defined
in Paragraph 18(a).

                  "Third Party Purchaser" shall mean the Third Party Purchaser
as defined in Paragraph 21 (h).

                  "Unit 2 Convertible Land" shall mean that portion of the Land
described in Appendix B of the Condominium Declaration as the Convertible Land
Unit 2.

                  "Unit 4 Convertible Land" shall mean that portion of the Land
as defined in the Condominium Declaration as the Convertible Land Unit #4 and as
described in Appendix B of the Condominium Declaration as Parcel I -
Convertible Land - Unit 4.

                  "Unit 5 Convertible Land" shall mean those portions of the
Land defined in the Condominium Declaration as the Convertible Land Unit #5 and
as described in Appendix B of the Condominium Declaration as (i) Parcel II -
Convertible Land - Unit 5 -Tract I, and (ii) Parcel II - Convertible Land - Unit
5 -Tract II.

                  "Warranties" shall mean Warranties as defined in Paragraph
               3(c).

                  "Work" shall mean Work as defined in Paragraph 13(b).

            3. Title and Condition; Single Lease Transaction.

                  (a) The Leased Premises are demised and let subject to (i) the
Mortgage and Assignment in effect as of the Commencement Date, (ii) the rights
of any Persons in possession of the Leased Premises, (iii) the existing state of
title of any of the Leased Premises, including any Permitted Encumbrances, (iv)
any state of facts which an accurate survey or physical inspection of the Leased
Premises might show, (v) all Legal Requirements, including any existing
violation of any thereof, and (vi) the condition of the Leased Premises as of
the commencement of the Term, without representation or warranty by Landlord.

                                      -10-
<PAGE>

                  (b) Tenant acknowledges that the Leased Premises are in good
condition and repair at the inception of this Lease. LANDLORD LEASES AND WILL
LEASE AND TENANT TAKES AND WILL TAKE THE LEASED PREMISES AS IS WHERE IS AND WITH
ALL FAULTS. TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD
HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR SHALL
LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, INCLUDING ANY WARRANTY OR
REPRESENTATION AS TO(i) ITS FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE
OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii)THE
EXISTENCE OF ANY DEFECT, LATENT OR PATENT, (iv) LANDLORD'S TITLE THERETO, (v)
VALUE, (vi) COMPLIANCE WITH SPECIFICATlONS,(vii) LOCATION, (viii) USE, (ix)
CONDITION, (x) MERCHANTABILITY, (xi) QUALITY, (xii) DESCRIPTION, (xii)
DURABILITY (xiv) OPERATION, (xv) THE EXISTENCE OF ANY HAZARDOUS SUBSTANCE, OR
(xvi) COMPLIANCE OF THE LEADED PREMISES WITH ANY LAW OR LEGAL REQUIREMENT; AND
ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT
THE LEASED PREMISES ARE OF ITS SELECTION AND TO ITS SPECIFICATIONS AND THAT THE
LEASED PREMISES HAVE BEEN INSPECTED BY TENANT AND ARE SATISFACTORY TO IT. IN THE
EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE LEASED PREMISES OF ANY NATURE,
WHETHER LATENT OR PATENT, LANDLORD SHALL NOT HAVE ANY RESPONSIBILITY OR
LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES
(INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF THIS PARAGRAPH 3(b) HAVE
BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY
WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED
PREMISES, ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW
OR HEREAFTER IN EFFECT OR ARISING OTHERWISE.

                  (c) Tenant represents to Landlord that Tenant has examined the
title to the Leased Premises prior to the execution and delivery of this Lease
and has found the same to be satisfactory for the purposes contemplated hereby.
Tenant acknowledges that (i) fee simple title (both legal and equitable) to the
Leased Premises is in Landlord and that Tenant has only the leasehold right of
possession and use of the Leased Premises, as provided herein, (ii) the
Improvements conform to all material Legal Requirements and all Insurance
Requirements, (iii) all easements necessary or appropriate for the use or
operation of the Leased Premises have been obtained, (iv) all contractors and
subcontractors who have performed work on or supplied materials to the Leased
Premises have been fully paid, and all materials and supplies have been fully
paid for, (v) the Improvements have been fully completed in all material
respects in a workmanlike manner of first class quality, and(vi) all Equipment
necessary or appropriate for the use or operation of the Leased Premises has
been installed and is presently fully operative in all material respects.

                  (d) Landlord hereby assigns to Tenant, without recourse or
warranty whatsoever, in conjunction with Landlord, the right to enforce all
assignable warranties, guaranties, indemnities, causes of action and similar
rights (collectively "Warranties") which Landlord may have against any
manufacturer, seller, engineer, contractor or builder in respect of any of the
Leased Premises. Such assignment shall remain in effect until the expiration or
earlier termination of this Lease (unless Tenant or its affiliate or designee
acquires any of the Leased Premises, in which instance such assignment shall
become permanent and irrevocable with respect to such Leased Premises),
whereupon such assignment shall cease and all of the Warranties shall
automatically revert to Landlord. In confirmation of such reversion Tenant

                                      -11-

<PAGE>

shall execute and deliver promptly any certificate or other document reasonably
required by Landlord. Landlord shall also retain the right to enforce any
Warranties upon the occurrence of an Event of Default. Tenant shall use
commercially reasonable efforts to enforce the Warranties in accordance with
their respective terms.

                  (e) LANDLORD AND TENANT AGREE THAT IT IS THEIR MUTUAL INTENT
TO CREATE, AND THAT THIS LEASE CONSTITUTES, A SINGLE LEASE WITH RESPECT TO EACH
AND EVERY PARCEL OP LAND, IMPROVEMENTS INCLUDED IN ANY AND ALL OF THE LEASED
PREMISES (WHEREVER LOCATED), THAT THIS LEASE IS NOT INTENDED AND SHALL NOT BE
CONSTRUED TO BE SEPARATE LEASES AND THAT ALL THE TERMS AND CONDITIONS HEREOF
SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF LANDLORD AND TENANT WITH RESPECT
THERETO.

                  (f) TENANT, ON BEHALF OF ITSELF AND ANY TRUSTEE OR LEGAL
REPRESENTATIVE (UNDER THE FEDERAL BANKRUPTCY CODE OR ANY SIMILAR STATE
INSOLVENCY PROCEEDING) EXPRESSLY ACKNOWLEDGES AND AGREES THAT, NOTWITHSTANDING
THE PROVISIONS OF PARAGRAPH 18 HEREOF OR ANY OTHER PROVISION IN THIS LEASE TO
THE CONTRARY, IT IS THE EXPRESS INTENT OF LANDLORD AND TENANT TO CREATE, AND
THAT THIS LEASE CONSTITUTES, A SINGLE LEASE WITH RESPECT TO EACH AND EVERY
PARCEL OF LAND, IMPROVEMENTS AND EQUIPMENT INCLUDED IN EACH AND ALL OF THE
RELATED PREMISES (WHEREVER LOCATED) AND SHALL NOT BE (OR BE DEEMED TO BE)
DIVISIBLE OR SEVERABLE INTO SEPARATE LEASES FOR ANY PURPOSE WHATSOEVER, AND
TENANT, ON BEHALF OF ITSELF AND ANY SUCH TRUSTEE OR LEGAL REPRESENTATIVE, HEREBY
WAIVES ANY RIGHT TO CLAIM OR ASSERT A CONTRARY POSITION IN ANY ACTION OR
PROCEEDING; IT BEING FURTHER UNDERSTOOD AND AGREED BY TENANT THAT THE
ALLOCATIONS OF ACQUISITION COST AND PERCENTAGE ALLOCATION OF BASIC RENT AS SET
FORTH ON EXHIBIT "E" AND EXHIBIT "F" HEREOF ARE INCLUDED TO PROVIDE A FORMULA
FOR RENT ADJUSTMENT AND LEASE TERMINATION UNDER CERTAIN CIRCUMSTANCES AND AS AN
ACCOMMODATION TO TENANT. ANY EVENT OF DEFAULT HEREUNDER IN CONNECTION WITH ANY
RELATED PREMISES SHALL BE DEEMED TO BE AN EVENT OF DEFAULT WITH RESPECT TO THE
ENTIRE LEASED PREMISES (WHEREVER LOCATED). THE FOREGOING AGREEMENTS AND WAIVERS
BY TENANT IN THIS PARAGRAPH 3(f) ARE MADE AS A MATERIAL INDUCEMENT TO LANDLORD
TO ENTER INTO THE TRANSACTION CONTEMPLATED BY THIS LEASE AND THAT, BUT FOR THE
FOREGOING AGREEMENTS AND WAIVERS BY TENANT, LANDLORD WOULD NOT CONSUMMATE THIS
LEASE TRANSACTION.

            4. USE OF LEASED PREMISES: QUIET ENJOYMENT.

                  (a) Tenant may occupy and use the Leased Premises for
manufacturing, warehouse, office, and research and development, and for no other
purpose, except that Tenant may use a portion of the 390 Lafayette Factory
Premises for electrical generation for use by Tenant or for sale to third
parties to the extent permitted by applicable Law; provided that, in no event
shall Tenant enter into any agreement with respect to the furnishing of electric
capacity to any third party that (x) is in the nature of a "guaranteed" or
"exclusive" contract (e.g, guaranteeing a minimum supply of electric capacity or
any so-called "output" or "requirements" contract), or (y) that is not
terminable on notice by Landlord upon the termination, expiration or
cancellation of this Lease, in any case, without the prior written consent of
Landlord and Lender, which consent may be granted or withheld in their sole and

                                      -12-
<PAGE>

absolute discretion. Tenant shall not use or occupy or permit any of the Leased
Premises to be used or occupied, nor do or permit anything to be done in or on
any of the Leased Premises, in a manner which would or might (i) violate any
Law, Legal Requirement or Permitted Encumbrance, or any Condominium Declaration
then in effect as to the Leased Premises, (ii) make void or voidable or cause
any insurer to cancel any insurance required by this Lease, or make it difficult
or impossible to obtain any such insurance at commercially reasonable rates,
(iii) make void or voidable, cancel or cause to be cancelled or release any of
the Warranties, (iv) cause structural injury to any of the Improvements or (v)
constitute a public, or private nuisance or waste. Notwithstanding the
foregoing, in the event the Leased Premises are converted to a condominium form
of ownership, any use of the Leased Premises or any part thereof shall also be
subject to the terms, conditions and restrictions set forth in the Condominium
Declaration (and any approvals required thereunder).

                  (b) Subject to the provisions hereof, so long as no Event of
Default has occurred and is continuing, Tenant shall quietly hold, occupy and
enjoy the Leased Premises throughout the Term, without any hindrance, ejection
or molestation by Landlord or anyone claiming by, through or under Landlord with
respect to matters that arise after the date hereof, provided that Landlord or
its agents may enter upon and examine any of the Leased Premises at such
reasonable times as Landlord may select and upon reasonable notice to Tenant
(except in the case of any emergency, in which event no notice shall be
required) for the purpose of inspecting the Leased Premises, verifying
compliance or non-compliance by Tenant with its obligations hereunder and the
existence or non-existence of an Event of Default or event which with the
passage of time and/or notice would constitute an Event of Default, showing the
Leased Premises to prospective Lenders and purchasers, making any repairs and
taking such other action with respect to the Leased Premises as is permitted by
any provision hereof.

                  (c) In no event shall any portion of the Leased Premises be
used or occupied or permitted to be used or occupied for any of the following
purposes: (i) any nightclub, bar or discotheque; (ii) any adult bookstore or
video shop, nude or semi-nude or "adult' entertainment establishment or any
lewd, obscene or pornographic purpose; (iii) any store in which a material
portion of the inventory is not available for sale or rental to children under
18 years of age because such inventory explicitly deals with, relates to, or
depicts human sexuality, or in which any of the inventory constitutes drug
paraphernalia of the kind associated with or sold by so-called "head shops";
(iv) any dumping, disposing, incineration or reduction of garbage (exclusive of
appropriately screened dumpsters and/or recycling bins located in the rear of
any building and garbage disposal in ordinary course of business); (v) any
mortuary; (vi) any fire sale, bankruptcy sale (unless pursuant to a court order)
or auction house operation; (vii) any gas station: (viii) any central laundry or
dry cleaning plant or laundromat; (ix) any automobile, truck, trailer or RV
sales, leasing, display or repair; (x) any "flea market", secondhand, surplus or
other "off-price" or deep discount store; (xi) any gambling or off-track betting
operation, or (xii) any massage parlor or carnival.

            5. Term.

                  (a) Subject to the provisions hereof, Tenant shall have and
hold the Leased Premises far an initial term (such term, as extended or renewed
in accordance with the provisions hereof, being called the "Term") commencing on
the date hereof (the "Commencement Date") and ending at 11:59 p.m. on August 31,
2024 (the "Expiration Date").

                  (b) Provided that if, on or prior to the Expiration Date or
any other Renewal Date (as hereinafter defined) this Lease shall not have been
terminated pursuant to any provision hereof, then on the Expiration Date and on
the tenth (10th) anniversary of the Expiration Date (the Expiration Date and
each such anniversary being referred to herein as a

                                      -13
<PAGE>

"Renewal Date"), the Term shall be deemed to have been automatically extended
for an additional period of ten (10) years (each such extension, a "Renewal
Term"), unless Tenant shall notify Landlord in writing in recordable form at
least eighteen (18) months prior to the next Renewal Date that Tenant is
terminating this Lease as of the next Renewal Date. Any such extension of the
Term shall be subject to all of the provisions of this Lease, as the same may be
amended, supplemented or modified (except that Tenant shall not have the right
to any additional Renewal Terms). If Tenant exercises its option pursuant to
Paragraph 5(b) not to have the Term automatically extended, or if on Event of
Default occurs, then Landlord shall have the right during the remainder of the
Term then in effect and, in any event, Landlord shall have the right during the
last year of the Term, to (i) advertise the availability of any of the Leased
Premises for sale or reletting and to erect upon any of the Leased Premises
signs indicating such availability and (ii) show any of the Leased Premises to
prospective purchasers or tenants or their agents at such reasonable times as
Landlord may select, upon reasonable prior notice to Tenant.

            6. Basic Rent. Tenant shall pay to Landlord, as annual rent for the
Leased Premises during the Term, the amounts determined in accordance with
Exhibit "D" hereto ("Basic Rent"), payable quarterly in advance for the next
three (3) calendar months, commencing on the twenty-fifth day of July, 2004, and
thereafter on the same day of each October, January, April and July during, the
Term which shall be payable as set forth in said Exhibit "D". The date that
each payment of Basic Rent is due is hereinafter referred to as a "Basic Rent
Payment Date". Each such payment of Basic Rent shall be made in Federal Funds on
each Basic Rent Payment Date to Landlord and/or to such one or more other
Persons, pursuant to wire transfer instructions delivered to Tenant from time to
time at such addresses and in such proportions as Landlord may direct by
fifteen (15) days' prior written notice to Tenant (in which event Tenant shall
give Landlord notice of each such payment concurrent with the making thereof).

            7. Additional Rent.

                  (a) Tenant shall pay and discharge, as additional rent
(collectively, "Additional Rent").

                        (i) except as otherwise specifically provided herein,all
costs and expenses of Tenant, Landlord and any other Persons specifically
referenced herein which arc incurred in connection or associated with (A) the
ownership, use, non-use, occupancy, possession, operation, condition, design,
construction, maintenance, alteration, repair or restoration of any of the
Leased Premises, (B) the performance of any of 'Tenant's obligations under this
Lease, (C) any sale or other transfer of any of the Leased Premises to Tenant
(or any assignee or designee of Tenant) under this Lease, including costs and
expenses incurred in connection with the payment of a Prepayment Premium. (D)
any Condemnation proceedings, (E) the adjustment, settlement or compromise of
any insurance claims involving or arising from any of the Leased Premises, (F)
the prosecution, defense or settlement of any litigation involving or arising
from the sale of the Leased Premises to Landlord or arising from any of the
Leased Premises (other than any litigation between Landlord and Tenant unless
pursuant to clause (G) hereof), (G) the exercise or enforcement by Landlord, its
successors and assigns, of any of its rights under this Lease, (H) any amendment
to or modification or termination of this Lease made at the request of Tenant,
(I) Costs of Landlord and its counsel incurred in connection with any act
undertaken or performed by Landlord (or its counsel) at the request of or on
behalf of Tenant or the review and monitoring of compliance by Tenant with the
terms of this Lease, including compliance with any Post Closing Obligations and
all applicable Laws, (J) Costs of Landlord incurred in connection with any act
undertaken by Landlord following Tenant's failure to act promptly in an
emergency situation, (K) any Condominium Expenses and (L) any other items
specifically required to be paid by Tenant under this Lease;

                                      -14-
<PAGE>

                        (ii) after the date all or any portion of any
installment of Basic Rent is due and not paid by the applicable Basic Rent
Payment Date, an amount (the "Late Charge") equal to five percent (5%) of the
amount of such unpaid installment or portion thereof to reimburse Landlord for
its cost and inconvenience incurred as a result of Tenant's delinquency;
provided, however, that with respect to the first late payment of all or any
portion of any installment of Basic Rent in any Lease Year, the Late Charge
shall not be due and payable unless the Basic Rent has not been paid within five
(5) days' following the due date thereof;

                        (iii) a sum equal to any additional sums other than
scheduled payments of principal and interest under any Loan (but including any
late charge in excess of the amount payable under clause (ii) above for that
portion of the Basic Rent paid to the Lender as scheduled installments of
principal and interest, default penalties, interest in excess of amounts payable
under clause (iv) below for that portion of the Basic Rent paid to the Lender as
scheduled installments of principal and interest, and fees of Lender's counsel)
which are payable by Landlord to any Lender under any Note by reason of Tenant's
late payment or non-payment of Basic Rent or by reason of an Event of Default;
and

                          (iv) interest at the rate (the "Default Rate") of five
percent (5%) over the Prime Rate per annum on the following sums. until paid in
full: (A) all overdue installments of Basic Rent from the respective due dates
thereof, (B) all overdue amounts of Additional Rent relating to obligations
which Landlord shall have paid on behalf of Tenant, from the date of payment
thereof by Landlord, and (C) all other overdue amounts of Additional Rent,
from the date when any such amount becomes overdue.

                  (b) Tenant shall pay and discharge (i) any Additional Rent
referred to in Paragraph 7(a)(i) when the same shall become due, provided that
amounts which are billed to Landlord or any third party, but not to Tenant,
shall be paid within five (5) days after Landlord's demand for payment thereof,
and (ii) any other Additional Rent, within five (5) days after Landlord's demand
for payment thereof.

                  (c) In no event shall amounts payable under Paragraph 7(a)
(ii), (iii) and (iv) or elsewhere in this Lease exceed the maximum amount
permitted by applicable Law.

            8. Net Lease: Non-Terminability.

                  (a) This is a net lease and all Monetary Obligations shall be
paid without notice or demand and without set-off, counterclaim, recoupment,
abatement, suspension, deferment, diminution, deduction,reduction or defense
(collectively, a "Set-Off").

                  (b) This Lease and the rights of Landlord and the obligations
of Tenant hereunder shall not be affected by any event or for any reason or
cause whatsoever foreseen or unforeseen.

                  (c) The obligations of Tenant hereunder shall be separate and
independent covenants and agreements, all Monetary Obligations shall continue to
be payable in all events (or, in lieu thereof, Tenant shall pay amounts equal
thereto), and the obligations of Tenant hereunder shall continue unaffected
unless the requirement to pay or perform the same shall have been terminated
pursuant to an express provision of this Lease. The obligation to pay Rent or
amounts equal thereto shall not be affected by any collection of any sums or
charges by any governmental body pursuant to a tax lien or otherwise, regardless
of how same are characterized. All Rent payable by Tenant hereunder shall
constitute "rent" for all purposes (including Section 502(b)(6) of the Federal
Bankruptcy Code).

                                      -15-
<PAGE>

                  (d) Except as otherwise expressly provided herein, Tenant
shall have no right and hereby waives all rights which it may have under any Law
(i) to quit, terminate or surrender this Lease or any of the Leased Premises, or
(ii) to any Set-Off any Monetary Obligations.

            9. Payment of Impositions.

                  (a) Tenant shall, before interest or penalties are due
thereon, pay and discharge all taxes (including real and personal property,
franchise, sales, use, gross receipts and rent taxes), all charges for any
casement or agreement maintained for the benefit of any of the Leased Premises,
all assessments and levies, all permit, inspection and license fees all rents
and charges for water, sewer, utility and communication services relating to any
of the Leased Premises, all ground rents and all other public charges whether of
a like or different nature, even if unforeseen or extraordinary, imposed upon or
assessed against (i) Tenant, (ii) Tenant's possessory interest in the Leased
Premises, (iii) any of the Leased Premises, (iv) Landlord as a result of or
arising in respect of the acquisition, ownership, occupancy, leasing, use,
possession or sale of any of the Leased Premises, any activity conducted on any
of the Leased Premises, or the Rent or (v) any Lender by reason of any Note,
Mortgage, Assignment or other document evidencing or securing a Loan and which
(as to this clause (v) Landlord has agreed to pay (collectively, the
"Impositions"); provided, that nothing herein shall obligate Tenant to pay (A)
income, excess profits or other taxes of Landlord (or Lender) which are
determined on the basis of Landlord's (or Lender's) net income or net worth
(unless such taxes are in lieu of or a substitute for any other tax, assessment
or other charge upon or with respect to the Leased Premises which, if it were in
effect, would be payable by Tenant under the provisions hereof or by the terms
of such tax, assessment or other charge), (B) any estate, inheritance,
succession, gift or similar tax imposed on Landlord, (C) any capital gains,
sales or similar tax imposed on Landlord in connection with the sale of the
Leased Premises to any Person, or (D) any transfer taxes payable by reason of a
sale or transfer of the Leased Premises to a party other than Tenant or an
Affiliate of Tenant. Landlord shall have the right to require Tenant to pay,
together with scheduled installments of Basic Rent, the amount of the gross
receipts or rent tax, if any, payable with respect to the amount of such
installment of Basic Rent. II any Imposition may be paid in installments without
interest or penalty, Tenant shall have the option to pay such Imposition in
installments; in such event, Tenant shall be liable only for those installments
which. accrue or become due and payable during the Term. Tenant shall prepare
and file all tax reports required by governmental authorities which relate to
the Impositions. Tenant shall deliver to Landlord (1) copies of all settlements
and notices pertaining to the Impositions which may be issued by any
governmental authority within ten (10) days after Tenant's receipt thereof, (2)
receipts for payment of all taxes required to be paid by Tenant hereunder within
thirty (30) days after the due date thereof and (3) receipts for payment of all
other Impositions within ten (10) days after Landlord's request therefor.

                   (b) Following the occurrence of an Event of Default, or if
Landlord is required by a Lender, Tenant shall pay to Landlord such amounts
(each an "Escrow Payment") monthly or as required by such Lender (but not more
often than monthly) so that there shall be in an escrow account an amount
sufficient to pay the Escrow Charges (as hereinafter defined) as they become
due. As used herein, "Escrow Charges" shall mean real estate taxes and
assessments on or with respect to the Leased Premises or payments in lieu
thereof and premiums on any insurance required by this Lease and any reserves
for capital improvements, deferred maintenance, repair and/or tenant
improvements and leasing commissions required by any Lender. Landlord shall
determine the amount of the Escrow Charges (it being agreed that if required by
a Lender, such amount shall equal any corresponding escrow installments required
to be paid by Landlord) and the amount of each Escrow Payment. The Escrow
Payments may be conmingled with other funds of Landlord or other Persons and no
interest thereon shall be due

                                      -16-

<PAGE>

or payable to Tenant except to the extent interest thereon is actually paid to
Landlord (in which event Landlord shall pay over such interest to Tenant).
Landlord shall apply the Escrow Payments to the payment of the Escrow Charges in
such order or priority as Landlord shall determine or as required by Law. If at
any time the Escrow Payments theretofore paid to Landlord shall be insufficient
for the payment of the Escrow Charges, Tenant within ten (10) days after
Landlord's demand therefor, shall pay the amount of the deficiency to Landlord.

            10. Compliance with Laws and Easement Agreements; Environmental
Matters.

                  (a) Tenant shall, at its expense, comply with and conform to,
and cause the Leased Premises and any other Person occupying any part of the
Leased Premises to comply with and conform to, all Insurance Requirements and
Legal Requirements (including all applicable Environmental Laws) and the
Condominium Declaration if then in effect. Tenant shall not at any time (i)
cause, permit or suffer to occur any Environmental Violation or (ii) permit any
sublessee, assignee or other Person occupying the Leased Premises under or
through Tenant to cause, permit or suffer to occur any Environmental Violation
and, at the request of Landlord or Lender, Tenant shall promptly remediate or
undertake any other appropriate response action to correct any existing
Environmental Violation however immaterial, and (iii) without the prior written
consent of Landlord and Lender, permit any drilling or exploration for or
extraction, removal, or production of any minerals from the surface or the
subsurface of the Land, regardless of the depth thereof or the method of mining
or extraction thereof. Any and all reports prepared for or by Landlord with
respect to the Leased Premises shall be for the sole benefit of Landlord and
Lender and no other Person shall have the right to rely on any such reports.

                  (b) Tenant, at its sole cost and expense, will at all times
promptly and faithfully abide by, discharge and perform all of the covenants,
conditions and agreements contained in any Easement Agreement on the part of
Landlord or the occupier to be kept and performed thereunder. Tenant will not
alter, modify, amend or terminate any Easement Agreement, give any consent or
approval thereunder, or enter into any new Easement Agreement without, in each
case, prior written consent of Landlord. Landlord will not consent to or vote in
favor of any modification or amendment to any of the Condominium Documents, (or
any regulations or rules promulgated thereunder) which materially affects the
use or occupancy of the Leased Premises (or the cost of operations thereat) or
any parking areas or allocation thereof, or any Impositions on the Leased
Premises without the prior written consent of Tenant, which consent shall not be
unreasonably withheld or delayed.

                  (c) Upon prior written notice from Landlord Tenant shall
permit such persons as Landlord may designate ("Site Reviewers") to visit the
Leased Premises during normal business hours and In a manner which does not
unreasonably interfere with Tenant's operations and perform, as agents of
Tenant, and to conduct environmental site investigations and assessment ("Site
Assessments") on the Leased Premises in any of the following circumstances: (i)
in connection with any sale, financing or refinancing of the Leased Premises,
(ii) within the six month period prior to the expiration of the Term, (iii) if
required by Lender or the terms of any credit facility to which Landlord is
bound, (iv) if an Event of Default exists, or (v) at any other time that, in the
opinion of Landlord or Lender, a reasonable basis exists to believe that an
Environmental Violation or any condition that could reasonably be expected to
result in any Environmental Violation exists. Such Site Assessments may include
both above and below the ground testing for Environmental Violations and such
other tests as may be necessary, in the opinion of the Site Reviewers, to
conduct the Site Assessments. Tenant shall supply to the Site Reviewers such
historical and operational information regarding the Leased Premises as may be
reasonably requested by the Site Reviewers to facilitate the Site

                                      -17-
<PAGE>

Assessment, and shall make available for meetings with the Site Reviewers
appropriate personnel having knowledge of such matters. The cost of performing
and reporting Site Assessments (A) under clause (i), if the sale is to Tenant or
an affiliate or designee of Tenant, (B) under clause (ii), but only one time,
and (C) under clauses (iv) and (v), but only if Landlord or Lender have a
reasonable basis to suspect that an Environmental Violation has occurred, shall
be paid by Tenant; and in all other instances shall be paid by Landlord.

                  (d) If an Environmental Violation occurs or is found to exist
and, in Landlord's reasonable judgment, the cost of remediation of, or other
response action with respect to, the same is likely to exceed $250,000, Tenant
shall provide to Landlord, within ten (10) days after Landlord's request
therefor, adequate financial assurances that Tenant will effect such remediation
in accordance with applicable Environmental Laws. Such financial assurances
shall be a bond or letter of credit satisfactory to Landlord in form and
substance and in an amount equal to or greater than Landlord's reasonable
estimate, based upon a Site Assessment performed pursuant to Paragraph 10(c), of
the anticipated cost of such remedial action.

                  (e) Notwithstanding any other provision of this Lease, if an
Environmental Violation occurs or is found to exist and the Term would otherwise
terminate or expire, then, at the option of Landlord, the Term shall be
automatically extended beyond the date of termination or expiration and this
Lease shall remain in full force and effect beyond such date until the earlier
to occur of (i) the completion of all remedial action in accordance with
applicable Environmental Laws or(ii) the date specified in a written notice from
Landlord to Tenant terminating this Lease.

                  (f) If Tenant fails to comply with any requirement of any
Environmental Law in connection with any Environmental Violation which occurs or
is found to exist, Landlord shall have the right (but no obligation) to take any
and all actions as Landlord shall deem necessary advisable in order to cure such
Environmental Violation.

                  (g) Tenant shall notify Landlord immediately after becoming
aware of any Environmental Violation (or alleged Environmental Violation) or
noncompliance with any of the covenants contained in this Paragraph 10 and shall
forward to Landlord immediately upon receipt thereof copies of all orders,
reports, notices, permits, applications or other communications relating to any
such violation or noncompliance.

                  (h) All future leases, subleases or concession agreements
relating to the Leased Premises entered into by Tenant shall contain covenants
of the other party thereto which are identical to the covenants contained in
Paragraph 10(a).

                  (i) Landlord acknowledges that in the event the Leased
Premises are converted to a condominium form of ownership, (i) to the extent
permitted by applicable Laws, Landlord shall, for so long as it is the owner of
the Leased Premises or any part thereof, at all times hold a majority of seals
on the Board of Directors of the Condominium Association pursuant to the terms
of the Condominium Declaration; provided that so long as no Event of Default,
and no condition, event, act or omission exists which, with the giving of notice
or passage of time or both, would constitute an Event of Default, has occurred
and is then continuing, Landlord agrees that it shall give due consideration,
without obligation, to the appointment of one officer of Tenant first-named
herein as one representative on such board; provided further that, in all
events, any officer or director of Landlord or its parent company or an
affiliate of either entity may be designated as a representative of Landlord on
such board, (ii) all rights of the Landlord and Tenant shall be subject to the
terms of the Condominium Documents and NH RSA 356-B, the Condominium Act, and
the terms of this Lease Agreement shall he read as requiring such compliance,
whether or not expressly so stated; and (iii) unless expressly otherwise
stated, where a term of this Lease allows Tenant to take or perform an action

                                      -18-
<PAGE>
that would otherwise be required of or limited to Landlord as Delarant, subject
to the provisions of this Lease, the parties shall execute such delegations of
authority or assignments of rights as shall be necessary to allow Tenant to act
for and on behalf of or as assignee of the Landlord as Declarant.

      11. Liens; Recording.

            (a) Tenant shall not, directly or indirectly, create or permit to be
created or to remain and shall promptly discharge or remove any lien, levy or
encumbrance on any of the Leased Premises or on any Rent or any other sums
payable by Tenant under this Lease,other than any Mortgage or Assignment, the
Permitted Encumbrances and any mortgage, lien, encumbrance or other charge
created by or resulting solely from any act or omission of Landlord. NOTICE IS
HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR
MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE HOLDING OR
OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR UNDER TENANT, AND THAT NO
MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH
TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED PREMISES.
LANDLORD MAY AT ANY TIME POST ANY NOTICES ON THE LEASED PREMISES
REGARDING SUCH NON-LIABILITY OF LANDLORD.

            (b) Tenant shall execute, deliver and record, file or register
(collectively, "record") all such instruments as may be required or permitted by
any present or future Law in order to evidence the respective interests of
Landlord and Tenant in any of the Leased Premises, and shall cause a memorandum
of this Lease (or, if such a memorandum cannot be recorded, this Lease), and any
supplement hereto or thereto, to be recorded in such manner and in such places
as may be required or permitted by any present or future Law in order to protect
the validity and priority of this Lease.

      12. Maintenance and Repair.

            (a) Tenant shall at all times maintain each Related Premises
(including the Common Area and Limited Common Area in the event that the
Condominium Documents are recorded) in as good repair and appearance as each is
in on the date hereof and fit to be used for their intended use in accordance
with the better of (i) the practices historically observed by Tenant with
respect to the Leased Premises or (ii)the practices then currently observed by
Tenant with respect to the other real properties owned or operated by it, and,
in the case of the Equipment, in as good mechanical condition as it was on the
later of the later of the date hereof or the date of its installation, except
for ordinary wear and fear. Tenant shall take every other action necessary or
appropriate for the preservation and safety of each Related Premises. Tenant
shall promptly make all Alterations of every kind and nature, whether foreseen
or unforeseen, which may be required to comply with the foregoing requirements
of this Paragraph 12(a). Landlord shall not be required to make any Alteration,
whether foreseen or unforeseen, or to maintain any of the Related Premises in
any way, and Tenant hereby expressly waives any right which may be provided for
in any Law now or hereafter in effect to make Alterations at the expense of
Landlord or to require Landlord to make Alterations. Any Alteration made by
Tenant pursuant to this Paragraph 12 shall be made in conformity with the
provisions of Paragraph 13.

            (b) If any Improvement, now or hereafter constructed, shall (i)
encroach upon any setback or any property, street or right-of-way adjoining any
of the Leased Premises, (ii) violate the provisions of any restrictive covenant
affecting any of the Leased Premises, (iii) hinder or obstruct any easement or
right-of-way to which any of the Leased Premises is subject or (iv) impair the
rights of others in, to or under any of the foregoing, Tenant

                                      -19-
<PAGE>

shall, promptly after receiving notice or otherwise acquiring knowledge thereof,
either (A) obtain from all necessary parties waivers or settlements of all
claims, liabilities and damages resulting from each such encroachment,
violation, hindrance, obstruction or impairment, whether the same shall affect
Landlord, Tenant or both, or (B) take such action as shall be necessary to
remove all such encroachments, hindrances or obstructions and to end all such
violations or impairments, including, if necessary, making Alternations.

      13. Alterations and Improvements

            (a) Tenant shall have right, without having obtained the prior
written consent of Landlord or Lender and provided that no Event of Default then
exists, (i) to such Alterations or series of related Alterations performed
during any twelve (12) consecutive month period, do not cost in excess of
$250,000 with respect to any Related Premises and (ii) to install Equipment in
the Improvements or accessions to the Equipment that, as to such Equipment or
accessions, do not cost in excess of $250,000 during any twelve (12) consecutive
month period, so long as at the time of construction or installation of any such
Equipment or Alterations no Event of Default exists and the value and utility of
the Leased Premises is not diminished thereby. If the cost of any non-structural
Alterations, series of related non-structural Alterations performed within any
twelve (12) consecutive month period, or Equipment or accessions thereto
installed within a twelve (12) consecutive month period is in excess of
$250,000 or if Tenant desires to make structural Alterations to any
Related Premises, the prior written approval of Landlord and Lender shall be
required, which consent shall not be unreasonably withheld or delayed; provided
that Tenant shall not construct upon the Land any additional buildings without
having first obtained the prior written consent of Landlord and Lender which
consent may be granted or withheld in their sole discretion (subject to the
specific requirements set forth in Paragraph 35 through 38 with respect to the
Lafayette Factory Expansion and any Additional Improvements). Tenant shall not
be required to remove any Alterations at the end of the Term except that
Landlord shall have the right to require Tenant to remove any Alterations made
in violation of this Lease or of applicable Law or as to which Landlord's
consent was conditioned upon removal of same at the end of the Term.

            (b) If Tenant makes any Alterations pursuant to this Paragraph 13 or
Paragraphs 35 through 38 hereof or as required by Paragraph 12 or 17 (such
Alterations and actions being hereinafter collectively referred to as "Work"),
then (i) the market value of the Leased Premises shall not be lessened by any
such Work or its usefulness impaired, (ii) all such Work shall be performed by
Tenant in a good and workmanlike manner, (iii) all such Work shall be
expeditiously completed in compliance with all Legal Requirements, (iv) all such
Work shall comply with the requirements of all insurance policies required to be
maintained by Tenant hereunder, (v) if any such Work involves the replacement
off Equipment or parts thereto, all replacement Equipment or parts shall have a
value and useful life equal to the greater of (A) the value and useful life on
the date hereof of the Equipment being replaced or (B) the value and useful life
of the Equipment being replaced immediately prior to the occurrence of the event
which required its replacement (assuming such replaced Equipment was then in the
condition required by this Lease), (vi) Tenant shall promptly discharge or
remove all liens filed against any of the Leased Premises arising out of such
Work, (vii) Tenant shall procure and pay for all permits and licenses required
in connection with any such Work, (viii) all such Work shall be the property of
Landlord and shall be subject to this Lease, and Tenant shall execute and
deliver to Landlord any document requested by Landlord evidencing the assignment
to Landlord of all estate, right title and interest (other than the leasehold
estate created hereby) of Tenant or any other Person thereto or therein, and
(ix) Tenant shall comply, to the extent requested by Landlord or required by
this Lease, with the provisions of paragraphs 12(a) and 19(a), whether or not
such Work involves restoration of the Leased Premises.

                                      -20-
<PAGE>

            (c) Except for right (without obligation) of Landlord elsewhere in
this Lease to make any necessary repairs to the Leased Premises following
Tenant's failure to do so in accordance with this Lease or as required by the
Condominium Documents, Landlord shall not have the right to make any additions,
alterations, modifications or improvements to the Leased Premises or to
construct any additional buildings on the Land without obtaining the prior
written consent of Tenant. So long as this Lease is in effect and no Event of
Default beyond any applicable notice and cure period exists, Landlord shall not
request any modifications to the current zoning or use classification of the
Leased Premises or consent to any action by the Condominium with respect thereto
without obtaining the prior written consent of Tenant.

      14. Permitted Contests. Notwithstanding any other provision of this Lease,
Tenant shall not be required to (a) pay any Imposition, (b) discharge or remove
any lien referred to in Paragraph 11 or 13 (c) take any action with respect to
any encroachment, violation, hindrance, obstruction or impairment referred to in
Paragraph 12 (b) (such non - compliance with the terms hereof being hereinafter
referred to collectively as "Permitted Violations") and may dispute or contest
the same, so long as at the time of such non-compliance no Event of Default
exists and so long as Tenant shall contest, in good faith, the existence, amount
or validity thereof, the amount of the damages caused thereby, or the extent of
its or Landlord's liability therefor by appropriate proceedings which shall
operate during the pendency thereof to prevent or stay (i) the collection of, or
other realization upon, the Pennitted Violation so contested, (ii) the sale,
forfeiture or loss of any of the Leased Premises or any Rent to satisfy or to
pay any damages caused by any Permitted Violation,(iii) any interference with
the use or occupancy of any of the Leased Premises, (iv) any interference with
the payment of any Rent, (v) the cancellation or increase in the rate of any
insurance policy or a statement by the carrier that coverage will be denied or
(vi) the enforcement or execution of any injunction or order with respect to the
Permitted Violation. Tenant shall provide Landlord security which is
satisfactory, in Landlord's reasonable judgement, to assure that such Permitted
Violation is corrected, including all Costs, interest and penalties that may be
incurred or become due in connection therewith. While any Proceedings which
comply with the requirements of this Paragraph 14 are pending and the required
security is held by Landlord, Landlord shall not have the right to correct any
Permitted Violation thereby being contested unless Landlord is required by Law
to correct such Permitted Violation and Tenant's contest does not prevent or
stay such requirement as to Landlord. Each such contest shall be promptly and
diligently prosecuted by Tenant to a final conclusion, except that Tenant, so
long as the conditions of this Paragraph 14 are at all times complied with, has
the right to attempt to settle or compromise such contest through negotiations.
Tenant shall pay any and all losses, judgments, decrees and Costs in Connection
with any such contest and shall, promptly after the final determination of such
contest, fully pay and discharge the amounts which shall be levied, assessed,
charged or imposed or be determined to be payable therein or in connection
therewith, together with all penalties, fines, interest and Costs thereof or in
conncetion therewith, and perform all acts the performance of which shall be
ordered or decreed as a result thereof. No such contest shall subject landlord
to the risk of any civil or criminal liability.

      15. Indemnification

            (a) Tenant shall pay, protect, indemnify, defend, save and hold
harmless Landlord, Lender and all other Persons described in Paragraph 30 (each
an "Indemnitee") from and against any and all liabilities, losses, damages
including punitive damages), penalties, Costs (including attorneys' fees and
costs), causes of action, suits, claims, demands or judgments of any nature
whatsoever, howsoever caused, without regard to the form of action and whether
based on strict liability, gross negligence, negligence or any other theory of
recovery at law or in equity (any of the foregoing, a "Claim"), arising form
(i)any matter

                                      -21-
<PAGE>
pertaining to the acquisition (or the negotiations leading thereto and including
transfer tax allocation), ownership, leasing, use, non-use, occupancy,
operation, management, condition, design, construction, maintenance, repair or
restoration of any of the Leased Premises, (ii)any casualty in any manner
arising from any of the Leased Premises, whether or not Indemnitee has or should
have knowledge or notice of any defect or condition causing or contributing to
said casualty, (iii) any violation by Tenant of any provision of this Lease, any
Condominium Declaration then in effect, any contract or agreement to which
Tenant is a party, any Legal Requirement or any Permitted Encumbrance or any
encumbrance Tenant consented to or the Mortgage or Assignment or (iv) any
alleged, threatened or actual Environmental Violation, including (A) liability
for response costs and for costs of removal and remedial action incurred by the
United States Government, any state or local governmental unit or any other
Person, or damages from injury to or destruction or loss of natural resources,
including the reasonable costs of assessing such injury, destruction or loss,
incurred pursuant to Section 107 of CERCLA, or any successor section or act or
provision of any similar state or local Law, (B) liability for costs and
expenses of abatement, correction or clean-up, fines, damages, response costs or
penalties which arise from the provisions of any of the other Environmental Laws
and (C) liability for personal injury or property damage arising under any
statutory or common-law tort theory, including damages assessed for the
maintenance of a public or private nuisance or for carrying on of a dangerous
activity; provided that, the foregoing indemnity shall not apply to any Claim
arising solely from the gross negligence or willful misconduct of Landlord, or
it agents, employees or contractors.

            (b) In case any action or proceeding is brought against any
Indemnitee by reason of any such claim, (i) Tenant may, except in the event of a
conflict of interest or a dispute between Tenant and any such Indemnitee or
during the continuance of an Event of Default, retain its own counsel and defend
such action (it being understood that Landlord may employ counsel of its choice
to monitor the defense of any such action, the cost of which shall be paid by
Tenant) and (ii) such Indemnitee shall notify Tenant to resist or defend such
action or proceeding by retaining counsel reasonably satisfactory to such
Indemnitee, and such Indemnitee will cooperate and assist in the defense of such
action or proceeding if reasonably requested to do so by Tenant. In the event of
a conflict of interest or dispute or during the continuance of an Event of
Default, Landlord shall have the right to select counsel, and the cost of such
counsel shall be paid by Tenant.

            (c) The obligations of Tenant under this Paragraph 15 shall survive
any termination, expiration or rejection in bankruptcy of this Lease.

      16. Insurance.

            (a) Tenant shall obtain, pay for and maintain the following
insurance on or in connection with the Leased Premises;

                  (i) Insurance against all risk of physical loss or damage to
the Improvements and Equipment as provided under "Special Causes of Loss" form
coverage, and including customarily excluded perils of hail, windstorm, flood
coverage, earthquake and, to the extent required by Lender, terrorism and mold
insurance, in amounts not less than the actual replacement cost of the
Improvements and Equipment; provided that, if Tenant's insurance company is
unable or unwilling to include any of all of such excluded perils, Tenant shall
have the option of purchasing coverage against, such perils from another insurer
on a "Difference in Conditions" form or through a stand-alone policy. Such
policies shall contain Replacement Cost and Agreed Amount Endorsements and "Law
and Ordinance" coverage (at full replacement cost). Such policies and
endorsements shall contain deductibles not more than $ 100,000 per occurrence.

                                      -22-

<PAGE>

                  (ii) Commercial General Liability Insurance and Business
Automobile Liability Insurance (including Non-Owned and Hired Automobile
Liability) against claims for personal and bodily injury, death or property
damage occurring on, in or as a result of the use of the Leased Premises, in an
amount not less than $15,000,000 per occurrence/annual aggregate, on a claims
occurrence basis.

                  (iii) Workers' compensation insurance in the amount required
by applicable law and employers' liability insurance covering all persons
employed by tenant in connection with any work done on or about any of the
Leased premises.

                  (iv) Comprehensive Boiler and Machinery/Equipment Breakdown
Insurance on any of the Equipment or any other equipment on or in the Leased
Premises, in an amount not less than $5,000,000 per accident for damage to
property (and which may be carried as part of the coverage required under clause
(i) above or pursuant to a separate policy or endorsement). Either such Boiler
and Machinery policy or the Special Causes of Loss policy required in clause (i)
above shall include at least $3,000,000 per incidence for Off-Premises Service
Interruption, Expediting Expenses, Ammonia Contamination, and Hazardous
Materials Clean-Up Expense and may contain a deductible not to exceed $25,000.

                  (v) Business income/extra expense insurance at limits
sufficient to cover 100% of the period of indemnity not less than twelve (12)
months from time of loss, including extended period of indemnity which provides
that after the physical loss to the Improvements and Equipment has been
repaired, the continued loss of income will be insured until such income either
returns to the same level it was at prior to the loss, or the expiration of six
(6) months from the date that the applicable Related Premises is repaired or
replaced and operations are resumed, whichever first occurs.

                  (vi) During any period in which substantial Alterations at the
Leased Premises are being undertaken, builder's risk insurance covering the
total completed value, including all hard and soft costs (which shall include
business interruption coverage) with respect to the Improvements being
constructed, altered or repaired (on a completed value, non-reporting basis),
replacement cost of work performed and equipment, supplies and materials
furnished in collection with such construction, alteration or repair of
Improvements or Equipment, together with such other endorsements as Landlord may
reasonably require, and general liability, worker's compensation and automobile
liability insurance with respect to the Improvements being constructed, altered
or repaired.

                  (vii) Such other insurance (or other different terms with
respect to any insurance required pursuant to this Paragraph 16, including
without limitation amounts of coverage, deductibles, form of mortgagee clause,
insurer rating) on or in connection with any of the Leased Premises as Landlord
or Lender may reasonably require.

            (b) The insurance required by Paragraph 16(a) shall be written by
companies having a Best's rating of A:X or above and a claims paying ability
rating of AA (or better by Standard & Poor's Rating Services, a division of the
McGraw Hill Companies, Inc. or equivalent rating agency approved by Landlord and
Lender in their sole discretion) and are authorized to write insurance policies
by the State Insurance Department (or its equivalent) for the states in which
the Leased Premises are located (a "Qualified Insurer"). The insurance policies
(i) shall be for such terms as Landlord may reasonably approve and (ii) shall be
in amounts sufficient at all times to satisfy any coinsurance requirements
thereof. If said insurance or any part thereof shall expire, be withdrawn,
become void, voidable, unreliable or unsafe for any reason, including a breach
of any condition thereof by Tenant or the failure or impairment of the capital
of any insurer, or if for any other reason whatsoever said insurance shall
become reasonably unsatisfactory to Landlord, Tenant shall immediately obtain
new or additional

                                      -23-
<PAGE>
insurance reasonably satisfactory to Landlord. Landlord hereby approves Verlan
Fire Insurance Company as Tenant's insurer; provided and upon condition that
such insurer shall reinsure its coverage above the $350,000 limit with a
Qualified Insurer.

      (c)   Each insurance policy referred to in clauses (i), (iv), (v) and (vi)
of Paragraph 16(a) shall contain standard non-contributory mortgagee clauses in
favor of and acceptable to Lender. Each policy required by any provision of
Paragraph 16(a), except clause (iii) thereof, shall provide that it may not be
cancelled, substantially modified (including the conditions set forth in the
last sentence of Paragraph 16(b) above) or allowed to lapse on any renewal date
except after thirty (30) days' prior written notice to Landlord and Lender.

      (d)   Tenant shall pay as they become due all premiums for the insurance
required by Paragraph 16(a), shall renew or replace each policy and deliver to
Landlord evidence of the payment of the full premium therefor or installment
then due at least ten (10) days prior to the expiration date of such policy, and
shall promptly deliver to Landlord all original certificates of insurance
evidencing such coverages or, if required by Lender, original or certified
policies. All certificates of insurance (including liability coverage) provided
to Landlord and Lender shall be on ACORD Form 28 (or its equivalent).

      (e)   Anything in this Paragraph 16 to the contrary notwithstanding, any
insurance which Tenant is required to obtain pursuant to Paragraph 16(a) may be
carried under a "blanket" policy or policies covering other properties of Tenant
or under an "umbrella" policy or policies covering other liabilities of Tenant,
as applicable; provided that, such blanket or umbrella policy or policies
otherwise comply with the provisions of this Paragraph 16, and upon request,
Tenant shall provide to Landlord a Statement of Values which may be reviewed
annually and shall be amended to the extent determined necessary by Landlord
based on revised Replacement Cost Valuations. The original or a certified copy
of each such blanket or umbrella policy shall promptly be delivered to Landlord.

      (f)   Tenant shall not carry separate insurance concurrent in form or
contributing in the event of a Casualty with that required in this Paragraph 16
unless (i) Landlord and Lender are included therein as named insureds, with loss
payable as provided herein, and (ii) such separate insurance complies with the
other provisions of this Paragraph 16. Tenant shall immediately notify Landlord
of such separate insurance and shall deliver to Landlord the original policies
or certified copies thereof.

      (g)   Each policy (other than workers' compensation coverage) shall
contain an effective waiver by the carrier against all claims for payment of
insurance premiums against Landlord and shall contain a full waiver of
subrogation against the Landlord and, with respect to any policy carried by
Landlord, a full waiver of subrogation against Tenant, provided however, that
Tenant acknowledges and agrees that Landlord shall not, and shall have no
obligation to, carry any insurance hereunder or with respect to the Leased
Premises.

      (h)   The proceeds of any insurance required under Paragraph 16(a) shall
be payable as follows:

            (i)   proceeds payable under clauses (ii), (iii) and (iv) of
Paragraph 16(a) and proceeds attributable to the general liability coverage of
Builder's Risk insurance under clause (vi) of Paragraph 16(a) shall be payable
to the Person entitled to receive such proceeds; and

            (ii)  proceeds of insurance required under clause (i) of Paragraph
16(a) and proceeds attributable to Builder's Risk insurance (other than its
general liability coverage provisions) under clause (vi) of Paragraph 16(a)
shall be payable to Landlord

                                      -24-
<PAGE>

or Lender and applied as set forth in Paragraph 17 or, if applicable, Paragraph
18. Tenant shall apply the Net Award to restoration of the Leased Premises in
accordance with the applicable provisions of this Lease unless a Termination
Event shall have occurred and Tenant has given a Termination Notice.

      17.   Casualty and Condemnation.

            (a)   If any Casualty occurs to any Related Premises, Tenant shall
give Landlord and Lender immediate notice thereof. Landlord and Lender are
hereby authorized to adjust, collect and compromise, in their discretion and
upon notice to Tenant (except that no notice to Tenant shall be required if an
Event of Default has occurred and is continuing), all claims under any of the
insurance policies required by Paragraph (16)a (except public liability
insurance claims payable to a Person other than Tenant, Landlord of Lender) and
to execute and deliver on behalf of Tenant all necessary proofs of loss,
receipts, vouchers and releases required by the insurers. Provided that no Event
of Default has occurred and is continuing, Tenant shall be entitled to
participate with Landlord and Lender in any adjustment, collection and
compromise of the Net Award payable in connection with a Casualty. So long as no
Event of Default exists, any Net Award up to and including $250,000 for any
Related Premises shall be paid by Landlord to Tenant and Tenant shall restore
the applicable Related Premises in accordance with the requirements of paragraph
13(b) of this Lease. Any Net Award in excess of $250,000 for any Related
Premises (unless such Casualty resulting in the Net Award is a Termination
Event), shall, upon receipt, be made available by Landlord (or Lender if the
terms of the Mortgage so require) to Tenant for the restoration of any of the
applicable Related Premises pursuant to and in accordance with and subject to
the provisions of Paragraph 19 hereof. Tenant agrees to sign, upon the request
of Landlord or Lender, all such proofs of loss, receipts, vouchers and releases.
If Landlord or Lender so requests, Tenant shall adjust, collect and compromise
any and all such claims, and Landlord and Lender shall have the right to join
with Tenant therein. Any adjustment, settlement or compromise of any such claim
shall be subject to the prior written approval of Landlord and Lender (which
approval shall not be unreasonably withheld or delayed), and Landlord and Lender
shall have the right to prosecute or contest, or to require Tenant to prosecute
or contest, any such claim, adjustment, settlement or compromise. Each insurer
is hereby authorized and directed to make payment under said policies, including
return of unearned premiums, directly to Landlord or, if required by the
Mortgage, to Lender instead of to Landlord and Tenant jointly, and Tenant hereby
appoints each of Landlord and Lender as Tenant's attorneys-in-fact to endorse
any draft therefor. The rights of Landlord under this Paragraph 17(a) shall be
extended to Lender if and to the extent that any Mortgage so provides.

            (b)   Tenant, immediately upon receiving a Condemnation Notice,
shall notify Landlord and Lender thereof, Landlord and Lender are authorized to
collect, settle and compromise, in their discretion (and, if no Event of Default
exists, upon notice to Tenant), the amount of any Net Award. Provided that no
Event of Default has occurred and is continuing. Tenant shall be entitled to
participate with Landlord and Lender in any Condemnation proceeding or
negotiations under threat thereof and to contest the Condemnation or the amount
of the Net Award therefor. No agreement with any condemnor in settlement or
under threat of any Condemnation shall be made by Tenant without the written
consent of Landlord, whose consent shall not be unreasonably withheld or
delayed, and Lender. Subject to the provisions of this Paragraph 17(b), Tenant
hereby irrevocably assigns to Landlord any award or payment to which Tenant is
or may be entitled by reason of any Condemnation, whether the same shall be paid
or payable for Tenant's leasehold interest hereunder or otherwise; but nothing
in this Lease shall impair tenant's right to any award or payment on account of
Tenant's trade fixtures, equipment or other tangible property which is not part
of the Equipment, moving expenses or loss of business, if available, to the
extent that and so long as (i) Tenant shall have the right to make, and does
make, a separate claim therefor against the condemnor and (ii) such claim does

                                      -25-
<PAGE>
not in any way reduce either the amount of the award otherwise payable to
Landlord for the Condemnation of Landlord's fee interest in the applicable
Related Premises or the amount of the award (if any) otherwise payable for the
Condemnation of Tenant's leasehold interest hereunder. The rights of Landlord
under this Paragraph l7(b) shall also be extended to Lender if and to the extent
that any Mortgage so provides.

            (c)   If any Partial Casualty (whether or not insured against) or
Partial Condemnation shall occur to any Related Premises, this Lease shall
continue, notwithstanding such event, and there shall be no abatement or
reduction of any Monetary Obligations. Promptly after such Partial Casualty or
Partial Condemnation, Tenant, as required in Paragraphs 12(a) and 13(b), shall
commence and diligently continue to restore the Leased Premises as nearly as
possible to its value, condition and character immediately prior to such event
(assuming the Leased Premises to have been in the condition required by this
Lease). So long as no Event of Default exists, any Net Award up to and including
$250,000 shall be paid by Landlord to Tenant and Tenant shall restore the
applicable Related Premises in accordance with the requirements of Paragraph
13(b) of this Lease. Any Net Award in excess of $250,000 (unless such
Condemnation resulting in the Net Award is a Termination Event), shall, upon
receipt, be made available by Landlord (or Lender if the terms of the Mortgage
so require) to Tenant for the restoration of any of the applicable Related
Premises pursuant to and in accordance with and subject to the provisions of
Paragraph 19 hereof. If any Casualty or Condemnation which is not a Partial
Casualty or Partial Condemnation shall occur, Tenant shall comply with the terms
and conditions of Paragraph 18.

      18.   Termination Events.

            (a)   If either (i) all of any Related Premises shall be taken by a
Taking or (ii) any substantial portion of any Related Premises shall be taken by
a Taking or all or any substantial portion of any Related Premises shall be
totally damaged or destroyed by a Casualty and, in any such case. Tenant
certifies and convenants to Landlord that it will forever abandon operations at
the Related Premises, (any one or all of the Related Premises described in the
above clauses (i) and (ii) above being hereinafter referred to as the "Affected
Premises" and each of the events described in the above clauses (i)and (ii)
shall hereinafter be referred to as a "Termination Event"), then (x) in the case
of (ii) above, Tenant shall be obligated, within thirty (30) days after Tenant
receives a Condemnation Notice and (y) in the case of (ii) above, Tenant shall
have the option, within thirty (30) days after Tenant receives a Condemnation
Notice or thirty (30) days after the Casualty, as the case may be, to give to
Landlord written notice (a "Termination Notice") in the form described in
Paragraph 18(b) of the Tenant's election to terminate this Lease as to the
Affected Premises. If Tenant elects under clause (y) above not to give landlord
a Termination Notice, then Tenant shall rebuild or repair the Affected Premises
in accordance with Paragraphs 17 and 19. Notwithstanding any of the foregoing to
the contrary, in the event that (i) the Affected Premises is either the 390
Lafayette Factory Premises or the 11 Merrill Drive Premises, and (ii) the Leased
Premises shall not have been converted to a condominium form of ownership prior
to the occurrence of the Termination Event, then upon delivery of a Termination
Notice to Landlord, Tenant shall be deemed to have irrevocably waived its rights
hereunder to develop (or request Landlord to develop) the Excess Land and/or
convert the Leased Premises to a condominium form of ownership as contemplated
and provided for in Paragraphs 35 through 38 herein. In the event that (i)
Tenant shall deliver to Landlord a Termination Notice, (ii) the Affected
Premises is either the 390 Lafayette Factory Premises or the 11 Merrill Drive
Premises, and (iii) the Leased Premises has been converted to a condominium
prior to the occurrence of the Termination Event, then, at Landlord's option,
Landlord may either (i) accept such Termination Notice (subject to the
requirements provided herein), or (ii) require that Tenant rescind such
Termination Notice, in which event Tenant shall

                                      -26-
<PAGE>

be deemed to have elected under clause (y) above not to have given a Termination
Notice and Tenant shall rebuild or repair the Affected Premises in accordance
with Paragraphs 17 and 19.

            (b) A Termination Notice shall contain (i) notice of Tenant's
intention to terminate this Lease as to the Affected Premises on the first Basic
Rent Payment Date which occurs at least ninety (90) days after the Fair Market
Value Date (the "Termination Date"), (ii) a binding and irrevocable offer of
Tenant to pay the Termination Amount and (iii) if the Termination Event is an
event described in Paragraph 18(a)(ii), the certification and covenant described
therein and a certified resolution of the Board of Directors of Tenant
authorizing the same. Promptly upon the delivery to Landlord of a Termination
Notice, Landlord and Tenant shall commence to determine Fair Market Value. In
the event that (i) the Affected Premises is either the 390 Lafayelte Factory
Premises or the 11 Merrill Drive Premies, and (ii) the Leased Premises shall
not have been converted to a condominium form of ownership prior to the
occurrence of the Termination Event, in addition to the foregoing, the
Termination Notice shall contain an express irrevocable waiver by Tenant of its
rights hereunder to develop (or request landlord to develop) the Excess Land
and/or convert the Leased Premises to a condominium form of ownership as
contemplated and provided for in Paragraphs 35 through 38 herein.

            (c) If Landlord shall reject such offer by Tenant to pay to Landlord
the Termination Amount as to the Affected Premises pursuant to Paragraph 18(b)
above by written notice to Tenant (a "Rejection") which Rejection shall contain
the written consent of Lender to Landlord's rejection of Tenant's offer to pay
the Termination Amount, not later than thirty (30) days following the Fair
Market Value Date, then this Lease shall terminate as to the Affected Premises
on the Termination Date; provided that, if Tenant has not satisfied all Monetary
Obligations and all other obligations and liabilities under this Lease which
have arisen as to the Affected Premises (collectively, "Remaining Obligations")
on or prior to the Termination Date, then Landlord may, at its option, extend
the date on which this Lease may terminate as to the Affected Premises to a date
which is no later than the first Basic Rent Payment Date after the Termination
Date on which Tenant has satisfied all Remaining Obligations. Upon such
termination (i) all obligations of Tenant hereunder as to the Affected Premises
shall terminate except for any Surviving Obligations, (ii) Tenant shall
immediately vacate and shall have no further right, title or interest in or to
any of the Affected Premises and (iii) the Net Award shall be retained by
Landlord. Notwithstanding anything to the contrary hereinabove contained, if
Tenant shall have received a Rejection and, on the date when this Lease would
otherwise terminate with respect to the Affected Premises as provided above,
Landlord shall not have received the full amount of the Net Award payable by
reason of the applicable Termination Event, then the date on which this Lease is
to terminate with respect to the Affected Premises shall be automatically
extended to the first Basic Rent Payment Date after the receipt by Landlord of
the full amount of the Net Award provided that, if Tenant has not satisfied all
Remaining Obligations on such date, then Landlord may, at its option, extend the
date on which this Lease may terminate as to the Affected Premises to a date
which is no later than the first Basic Rent Payment Date after such date on
which Tenant has satisfied all such Remaining Obligations.

            (d) Unless Tenant shall have received a Rejection not later than the
thirtieth (30th) day following the Fair Market Value Date, Landlord shall be
conclusively presumed to have accepted such offer from Tenant to pay the
Termination Amount; provided that, both Tenant and Landlord expressly
acknowledge and agree that no acceptance or deemed acceptance by Landlord of an
irrevocable offer of Tenant to pay a Termination Amount shall be binding or
effective upon Landlord or Lender unless the prior written consent of Lender
shall have been obtained in the event (i) the Termination Amount is less than
the "allocated loan amount" for such Related Premises established by Lender in
connection with the Loan, or (ii) Lender's consent to Landlord's acceptance is
otherwise required under the Mortgage. If such offer from Tenant to pay the
Termination Amount is accepted by Landlord then, on the

                                      -27-

<PAGE>

Termination Date, Tenant shall pay to Landlord the Termination Amount and all
Remaining Obligations and, if requested by Tenant, Landlord shall convey to
Tenant or its designee the Affected Premises or the remaining portion thereof,
if any, all in accordance with Paragraph 20.

            (e) In the event of the termination of this Lease as to the Affected
Premises as hereinabove provided, this Lease shall remain in full force and
effect as to the Remaining Premises; provided, that the Basic Rent for the
Remaining Premises to be paid after such termination shall be the Basic Rent
otherwise payable hereunder with respect to the Leased Premises multiplied by a
percentage equal to the sum of the percentages set forth on Exhibit "F" for the
Remaining Premises.

      19.   Restoration.

            (a) If any Net Award is in excess of $250,000 for any Related
Premises, then Landlord (or Lender if required by any Mortgage) shall hold the
Net Award in a fund (the "Restoration Fund") and disburse amounts from the
Restoration Fund only in accordance with the following conditions:

                  (i) prior to commencement of restoration, (A) the architects,
contracts, contractors, plans and specifications and a budget for the
restoration shall have been approved by Landlord, (B) Landlord and Lender shall
be provided with mechanics' lien insurance (if available) and acceptable
performance and payment bonds which insure satisfactory completion of and
payment for the restoration, are in an amount and form and have a surety
acceptable to Landlord, and name Landlord and Lender as additional dual
obligees, and (C) appropriate waivers of mechanics' and materialmen's liens
shall have been obtained and/or filed;

                  (ii) at the time of any disbursement, no Event of Default
shall exist and no mechanics' or materialmen's liens shall have been filed
against any of the Leased Premises and remain undischarged;

                  (iii) disbursements shall be made from time to time in an
amount not exceeding the cost of the Work completed since the last disbursement,
upon receipt of (A) satisfactory evidence, including architects' certificates,
of the stage of completion, the estimated total cost of completion and
performance of the Work to date in a good and workmanlike manner in accordance
with the contracts, plans and specifications, (B) waivers of liens, (C)
contractors' and subcontractors' sworn statements as to completed Work and the
cost thereof for which payment is requested, (D) a satisfactory bringdown of
title insurance and (E) other evidence of cost and payment so that Landlord and
Lender can verify that the amounts disbursed from time to time are represented
by Work that is completed, in place and free and clear of mechanics' and
materialmen's lien claims;

                  (iv) each request for disbursement shall be accompanied by a
certificate of Tenant, signed by the president or a vice president of Tenant,
describing the Work for which payment is requested, stating the cost incurred in
connection therewith, stating that Tenant has not previously received payment
for such Work and, upon completion of the Work, also stating that the Work has
been fully completed and complies with the applicable requirements of this
Lease;

                  (v) Landlord may retain ten percent (10%) of the Restoration
Fund until the Work is fully completed;

                                      -28-

<PAGE>

                  (vi) If the Restoration Fund is held by Landlord, the
Restoration Fund shall not be commingled with Landlord's other funds and shall
bear interest at a rate agreed to by Landlord and Tenant; and

                  (vii) such other reasonable conditions as Landlord or Lender
may impose.

            (b) Prior to commencement of restoration and at any time during
restoration, if the estimated cost of completing the restoration work free and
clear of all liens, as determined by Landlord, exceeds the amount of the Net
Award available for such restoration, the amount of such excess shall, upon
demand by Landlord, be paid by Tenant to Landlord to be added to the Restoration
fund. Any sum so added by Tenant which remains in the Restoration Fund upon
completion of restoration shall be refunded to Tenant. For purposes of
determining the source of funds with respect to the disposition of funds
remaining after the completion of restoration, the Net Award shall be deemed to
be disbursed prior to any amount added by Tenant.

            (c) If any sum remains in the Restoration Fund after completion of
the restoration and any refund to Tenant pursuant to Paragraph 19(b), such sum
(the "Remaining Sum") shall, provided no Event of Default shall exist, be paid
to Tenant.

      20.   Procedures Upon Purchase.

            (a) If the Leased Premises or any of the Related Premises are
purchased by Tenant pursuant to any provision of this Lease, Landlord need not
convey any better title thereto than that which was conveyed to Landlord, and
Tenant or its designee shall accept such title, subject, however, to the
Permitted Encumbrances and to all other liens, exceptions and restrictions on,
against or relating to any of the Leased Premises or the applicable Related
Premises and to all applicable Laws, but free of the lien of and security
interest created by any Mortgage or Assignment and liens, exceptions and
restrictions on, against or relating to the Leased Premises or the applicable
Related Premises which have been created by or resulted solely from acts of
Landlord after the date of this Lease, unless the same are Permitted
Encumbrances or customary utility easements benefiting the Leased Premises or
were created with the concurrence of Tenant or as a result of a default by
Tenant under this Lease.

            (b) Upon the date fixed for any such purchase of the Leased Premises
or any of the Related Premises pursuant to any provision of this Lease (any such
date the "Purchase Date"), Tenant shall pay to Landlord, or to any Person to
whom Landlord directs payment, the Relevant Amount therefor specified herein, in
Federal Funds, less any credit of the Net Award received and retained by
Landlord or a Lender allowed against the Relevant Amount, and Landlord shall
deliver to Tenant (i) a special warranty deed which describes the premises being
conveyed and conveys the title thereto as provided in Paragraph 20(a), (ii) such
other instruments as shall be necessary to transfer to Tenant or its designee
any other property (or rights to any Net Award not yet received by Landlord or a
Lender) then required to be sold by Landlord to Tenant pursuant to this Lease
and (iii) any Net Award received by Landlord, not credited to Tenant against the
Relevant Amount and required to be delivered by Landlord to Tenant pursuant to
this Lease; provided, that if any Monetary Obligations remain outstanding on
such date, then Landlord may deduct from the Net Award the amount of such
Monetary obligations; and further provided, that if any event has occurred
which, in Landlord's reasonable judgment, is likely to subject any Indemnitee to
any liability which Tenant is required to indemnify against pursuant to
Paragraph 15, then an amount shall be deducted from the Net Award which, in
Landlord's reasonable judgment, is sufficient to satisfy such liability, which
amount shall be deposited in an escrow account with a financial institution
reasonably satisfactory to Landlord and Tenant pending resolution of such
matter. If on the Purchase Date

                                      -29-

<PAGE>

any Monetary Obligations remain outstanding and no Net Award is payable to
Tenant by Landlord or the amount of such Net Award is less than the amount of
the Monetary Obligations, then Tenant shall pay to Landlord on the Purchase Date
the amount of such Monetary Obligations. Upon the completion of such purchase,
this Lease and all obligations and liabilities of Tenant hereunder with respect
to the applicable Related Premises (but not with respect to the Remaining
Premises) shall terminate, except any Surviving Obligations.

            (c) If the completion of such purchase shall be delayed after (i)
the Termination Date, in the event of a purchase pursuant to Paragraph 18 or,
(ii) the date scheduled for such purchase, in the event of a purchase under any
other provision of this Lease then (x) Rent shall continue to be due and payable
until completion of such purchase and (y) at Landlord's sole option, Fair Market
Value shall be redetermined and the Relevant Amount payable by Tenant pursuant
to the applicable provision of this Lease shall be adjusted to reflect such
redetermination.

            (d) Any prepaid Monetary Obligations paid to Landlord shall be
prorated as of the Purchase Date, and the prorated unapplied balance shall be
deducted from the Relevant Amount due to Landlord; provided, that no
apportionment of any Impositions shall be made upon any such purchase.

      21.   Assignment and Subletting: Prohibition against Leasehold Financing.

            (a) Except as otherwise expressly provided to the contrary in this
Paragraph 21, Tenant may not assign this Lease, voluntarily or involuntarily,
whether by operation of law or otherwise (including through merger or
consolidation) to any Person without the prior written consent of Landlord and
Lender, which consent may be granted or withheld by Landlord and Lender in
accordance with the provisions of Paragraphs 21(b) below, as applicable, and
subject in each case, to the provisions of Paragraphs 21(i) and 21(j) below.
Notwithstanding the foregoing, Tenant may, without Landlord or Lender's consent
assign this Lease to any Person that is and remains a wholly owned subsidiary of
Tenant or is a Credit Entity (each, a "Preapproved Assignment"). Any purported
sublease or assignment in violation of this Paragraph 21 shall be null and void.
In addition, notwithstanding anything to the contrary contained in this
Paragraph 21, Tenant shall not have the right to assign this Lease (voluntarily
or involuntarily, whether by operation of law or otherwise), or sublet any of
the Leased Premises to any Person at any time that an Event of Default shall
exist. As used herein, a "Credit Entity" shall mean any Person that immediately
following such assignment or subletting and having given effect thereto will
have a publicly traded unsecured senior debt rating of "Baal" or better from
Moody's or a rating of "BBB+" or better from S&P (or, if such Person does not
then have rated debt, a determination that by either of such rating agencies its
unsecured senior debt would be so rated by such agency and will not be on
"Negative Credit Watch", and in the event both such rating agencies cease to
furnish such ratings, then a comparable rating by any rating agency acceptable
to Landlord and Lender.

            (b) If Tenant desires to assign this Lease, whether by operation of
law or otherwise, to a Person ("Non-Preapproved Assignee") that is not a
wholly-owned subsidiary of Tenant or a Credit Entity (each a "Non-Preapproved
Assignment") then Tenant shall, not less than ninety (90) days prior to the date
on which it desires to make a Non-Preapproved Assignment, submit to Landlord and
Lender information regarding the following with respect to the Non-Preapproved
Assignee (collectively, the "Review Criteria"): (A) credit, (B) capital
structure, (C) management, (D) operating history, (E) proposed use of the Leased
Premises and (F) risk factors associated with the proposed use of the Leased
Premises by the Non-Preapproved Assignee, taking into account factors such as
environmental concerns, product liability and the like. Landlord and Lender
shall review such information and shall approve or disapprove the

                                      -30-

<PAGE>

Non-Preapproved Assignee no later than the thirtieth 30th day following
receipt of all such information, and Landlord and Lender shall be deemed to have
acted reasonably in granting or withholding consent if such grant or disapproval
is based on their review of the Review Criteria applying prudent business
judgment. If a response is not received by Tenant by the expiration of such
thirty (30) day period, such non-Preapproved Assignee shall be deemed
disapproved.

            (c) Tenant shall have the right, upon thirty (30) days prior written
notice to Landlord and Lender, to enter into (x) one or more subleases with any
Credit Entity and (y) one or more subleases with any third parties that demise,
in the aggregate, up to, but not to exceed thirty percent (30%) of the gross
leasable area of the Improvements located on the Leased Premises with no consent
or approval of Landlord being required or necessary (each, a ("Preapproved
Sublet"). Other than pursuant to Preapproved Sublets, at no time during the Term
shall subleases exist for more than thirty percent (30%) of the gross leasable
area of the Improvements at the Leased Premises without the prior written
consent of Landlord and Lender, which consent shall be granted or withheld based
on a review of the Review Criteria as they relate to the proposed sublessee and
the terms of the proposed sublease. Landlord and Lender shall be deemed to have
acted reasonably in granting or withholding consent if such grant or disapproval
is based on their review of the Review Criteria applying prudent business
judgment.

            (d) If Tenant assigns all its rights and interest under this Lease,
the assignee under such assignment Shall expressly assume all the obligations of
Tenant hereunder, actual or contingent, including obligations of Tenant which
may have arisen on or prior to the date of such assignment, by a written
instrument delivered to Landlord at the time of such assignment and shall also
provide any certification reasonably required by Landlord related to the USA
Patriot Act. Each sublease of any of the Leased Premises (A) shall be expressly
subject and subordinate to this Lease, any Condominium Declaration then in
effect, and any Mortgage encumbering the Leased Premises; (B) not extend beyond
the then current Term minus one day; (C) terminate upon any termination of this
lease, unless Landlord elects in writing, to cause the sublessee to attorn to
and recognize Landlord as the lessor under such sublease, whereupon such
sublease shall continue as a direct lease between the sublessee and Landlord
upon all the terms and conditions of such sublease; and (D) bind the sublessee
to all covenants contained in Paragraph 4(a), 10 and 12 with respect to
subleased premises to the same extent as if the sublessee were the Tenant. No
assignment (including to any purchaser in an Asset Transfer as defined in
Paragraph 21(i) or sublease shall affect or reduce any of the obligations of
Tenant hereunder, and all such obligations of Tenant shall continue in full
force and effect as obligations of a principal and not as obligations of a
guarantor, as if no assignment or sublease had been made. No assignment or
sublease shall impose any additional obligations on Landlord under this Lease.

            (e) Tenant shall, within ten (10) days after the execution and
delivery of any (i) assignment of this lease, or (ii) sublease for premises
containing a gross leasable area of 15,000 or more square feet at any of the
Related Premises, deliver a duplicate original copy thereof to Landlord and
Lender which, in the event of an assignment, shall be in recordable form, With
respect to any assignment to a wholly-owned subsidiary of Tenant or Credit
Entity (a "Pre Approved Assignee") or any Preapproved Sublet, at least thirty
(30) days prior to the effective date of such assignment or sublease, Tenant
shall provide to Landlord and Lender information reasonably required by Landlord
and Lender to establish that the Person involved in any such proposed assignment
or sublet satisfies the criteria set forth in this Lease for a Preapproved
Assignment or Preapproved Sublet. Tenant shall deliver to Landlord within thirty
(30) days after the end of each calendar year, a rent roll for each of the
Related Premises, including the name of each subtenant at each Related Premises,
the size of the applicable subleased space, the commencement date and expiration
date of each such sublease, the fixed rent payable under such sublease, any
utility charges or contributions thereto paid by such subtenant, and whether any
defaults exist thereunder that remain uncured as of the date of such rent roll.

                                      -31-

<PAGE>

            (f) As security for performance of its obligations under this Lease,
Tenant hereby grants, conveys and assigns to Landlord all right, title and
interest of Tenant in and to all subleases now in existence or hereafter entered
into for any or all of the Leased premises, any and all extensions,
modifications and renewals thereof and all rents, issues and profits therefrom.
Landlord hereby grants to Tenant a license to collect and enjoy all rents and
other sums of money payable under any sublease of any of the Leased Premises;
provided, however, that Landlord shall have the absolute right at any time upon
notice to Tenant and any subtenants to revoke said license and to collect such
rents and sums of money and to retain the same. Any amounts collected shall be
applied to Rent payments next due and owing, Tenant shall not consent to, cause
or allow any modification or alteration of any of the terms, conditions or
covenants of any of the subleases or the termination thereof, without the prior
written approval of Landlord which consent shall not be unreasonably withheld
nor shall Tenant accept any rents more than thirty (30) days in advance of the
accrual thereof, nor do nor permit anything to be done, the doing of which, nor
omit or refrain from doing anything, the omission of which, will or could be a
breach of or default in the terms of any of the subleases.

            (g) Tenant shall not have the power to mortgage, pledge or otherwise
encumber its interest under this Lease or any sublease of the Leased Premises,
and any such mortgage, pledge or encumbrance made in violation of this Paragraph
21 shall be void and of no force and effect.

            (h) Landlord may sell or transfer the Leased Premises at any time
without Tenant's consent to any third party (each a "Third Party Purchaser"). In
the event of any such transfer, Tenant shall attorn to any Third Party Purchaser
as Landlord so long as such Third Party Purchaser and Landlord notify Tenant in
writing of such transfer. At the request of Landlord, Tenant will execute such
documents confirming the agreement referred to above and such other agreements
as Landlord may reasonably request, provided that such agreements do not
increase the liabilities and obligations of Tenant hereunder

            (i) Tenant shall not, in a single transaction or series of
transactions (including any interim merger or consolidation), sell or convey,
transfer or lease all or substantially all of its assets (an "Asset Transfer")
to any Person, and any such Asset Transfer shall be deemed an assignment in
violation of this Lease except that Tenant shall have the right to conduct an
Asset Transfer pursuant to a single transaction only (but not through a series
of related or unrelated transactions, including any interim merger or
consolidation) to a Person without Landlord's consent if the following
conditions are met: (i) the Asset Transfer is to a Person that (A) immediately
following such transaction shall have a net worth (calculated in accordance with
generally accepted accounting principles) equal to or greater than $15,100,000,
or (B) is a wholly owned United States subsidiary of Tenant: and (ii) such
Person shall assume all the obligations of Tenant hereunder, actual or
contingent, including obligations of Tenant which may have arisen on or prior to
the date of such assignment, by a written instrument delivered to Landlord at
the time of such assignment and shall also provide any certification reasonably
required by Landlord related to the USA Patriot Act. With respect to any
permitted Asset Transfer hereunder, Tenant shall give notice to Landlord at
least thirty (30) days prior to the effective date thereof. In the event of an
Asset Transfer to a subsidiary of Tenant, any subsequent sale of the assets of
the original Tenant named herein by such subsidiary of Tenant shall be governed
by the requirements of this subparagraph (i) irrespective of whether or not such
sale would be considered a sale of all or substantially all of the assets of the
subsidiary of Tenant. Notwithstanding the foregoing, Tenant shall be entitled to
grant an exclusive license in the use and exploitation of the "Foss Shield" and
related proprietary assets to or into a joint venture or other business entity
or organization [a "JV"), but only so long as Tenant or a wholly-owned
subsidiary of Tenant shall retain, own and control at least 51% of the economic
and beneficial ownership interests in such JV and shall have the ability to
direct the day-to-day management and operations of such JV; and provided further
that, the terms of such license

                                      -32-

<PAGE>

shall provide that such, license (or the exclusivity thereof, at Tenant's
option) is terminable by Tenant upon notice in the event of the bankruptcy,
insolvency, dissolution or other cessation of operations of such JV. Nothing
herein is intended or shall be deemed to prohibit Landlord from approving any
other proposed transfer of assets by Tenant, in Landlord's sole and absolute
discretion.

            (j) Tenant shall be entitled, pursuant to a single transaction or
series of related transactions to sell or convey for value all or any portion of
the voting stock, partnership interests, membership interests or other equitable
and/or beneficial interests of Tenant, including pursuant to sale of any such
stock by persons or parties through the "over-the-counter market" or through any
recognized stock exchange, provided that for purposes of Paragraph 21(a), any
transaction or series of related transactions in which any Person or "group"
(within the meaning of Section 13(d) or Section 14(d) of the Securities Exchange
Act of 1934, as amended) shall (i) acquire, directly or indirectly, more than
50% of the voting stock, partnership interests, membership interests or other
equitable and/or beneficial interests of Tenant ("Control"), or (ii) obtain,
directly or indirectly, the power (whether or not exercised) to elect a majority
of the directors of Tenant or voting control of any partnership or limited
liability company or other entity acting as its general partner or managing
member (including through a merger or consolidation or Tenant with or into any
other Person) shall be deemed an assignment at this Lease for purposes of
Paragraphs 21(d) and (e) hereof.

      22.    Events of Default.

            (a) The occurrence of any one or more of the following (after
expiration of any applicable cure period as provided in Paragraph 22(b)) shall,
at the sole option of Landlord, constitute an "Event of Default" under this
Lease:

                  (i) a failure by Tenant to make any payment of any Monetary
Obligation on or prior to its due date, regardless of the reason for such
failure;

                  (ii) a failure by Tenant duly to perform and observe, or a
violation or breach of, any other provision hereof not otherwise specifically
mentioned in this Paragraph 22(a);

                  (iii) any representation or warranty made by Tenant herein or
in any certificate, demand or request made pursuant hereto proves to be
incorrect, now or hereafter, in any material respect;

                  (iv) a default beyond any applicable cure period or at
maturity by Tenant in any payment of principal or interest on any obligations
for borrowed money having an original principal balance of $5,000,000 or more in
the aggregate, or in the performance of any other provision contained in any
instrument under which any such obligation is created or secured (including the
breach of any covenant thereunder), (x) if such payment is a payment at maturity
or a final payment, or (y) if an effect of such default is to cause, or permit
any Person to cause, such obligation to become due prior to its stated maturity;

                  (v) A default by Tenant beyond any applicable cure period in
the payment of rent under, or in the performance of any other material provision
of, any other lease or leases that have, in the aggregate, rental obligations
over the terms thereof of $5,000,000 or more if the Landlord under any such
lease or leases commences to exercise its remedies thereunder;

                                      -33-

<PAGE>

                  (vi) a final, non-appealable judgment or judgments for the
payment of money in excess of $5,000,000 in the aggregate shall be rendered
against Tenant and the same shall remain undischarged for a period of sixty (60)
consecutive days;

                  (vii) Tenant shall (A) voluntarily be adjudicated a bankrupt
or insolvent, (B) seek or consent to the appointment of a receiver or trustee
for itself or for any of the Related Premises, (C) file a petition seeking
relief under the bankruptcy or other similar laws of the United States, any
state or any jurisdiction, (D) make a general assignment for the benefit of
creditors, or (E) be unable to pay its debts as they mature;

                  (viii) a court shall enter an order, judgment or decree,
appointing, without the consent of Tenant a receiver or trustee for it or for
any of the Related Premises or approving a petition filed against Tenant which
seeks relief under the bankruptcy or other similar laws of the United States,
any state or any jurisdiction, and such order, judgment or decree shall remain
undischarged or unstayed sixty (60) days after it is entered;

                  (ix) any Related Premises shall have been (A) abandoned or (B)
vacated for a period in excess of thirty (30) consecutive days or more than
sixty (60) days during any Lease Year, except (1) during any reasonable period
of repair or restoration of the Leased Premises following a Casualty or Taking,
or (2) during the course of performing Alterations to prepare the applicable
Related Premises for occupancy by a sublessee or assignee pursuant to an
executed sublease or assignment agreement.

                  (x) Tenant shall be liquidated or dissolved or shall begin
proceedings towards its liquidation or dissolution;

                  (xi) the estate or interest of Tenant in any of the Related
Premises shall be levied upon or attached in any proceeding and such estate or
interest is about to be sold or transferred or such process shall not be vacated
or discharged within sixty (60) days after it is made;

                  (xii) a failure by Tenant to perform or observe, or a
violation or breach of, or a misrepresentation by Tenant under, any provision of
any Assignment or any other document between Tenant and Lender or from Tenant to
Lender, if such failure, violation, breach or misrepresentation gives rise to a
default beyond any applicable cure period with respect to any Loan;

                  (xiii) a failure by Tenant to maintain in effect any license
or permit necessary for the continued use or occupancy by Tenant of any Related
Premises or for the operation of any material portion of Tenant's then current
business thereat;

                  (xiv) Tenant shall enter into an Asset Transfer or permit a
change of control in violation of Paragraphs 21(i) and 21(j) respectively;

                  (xv) The breach of any Operating Covenant shall occur;

                  (xvi) Tenant shall fail to deliver its estoppel certificate as
described in Paragraph 25 within the time period specified therein;

                  (xvii) Tenant shall fail to provide maintain and replenish, if
necessary, the Security Deposit in accordance with the requirements of Paragraph
39;

                                      -34-

<PAGE>

                  (xviii) Tenant's failure to timely comply with any of Tenant's
Post Closing Obligations, if any, and such failure continues for twenty-one (21)
days after written notice from Landlord; and

                  (xix) There shall occur a breach or default by Tenant under
the terms and provisions of the Condominium Declaration, if then in effect,
beyond any applicable notice and cure period.

            (b) No notice or cure period shall be required in any one or more of
the following events; (A) the occurrence of an Event of Default under clause (i)
(except as otherwise set forth below), (iii), (iv), (v), (vi) (vii), (viii),
(ix), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii), (xviii) or (xix) of
Paragraph 22(a); (B) the default consists of a failure to pay Basic Rent, a
failure to provide any insurance required by Paragraph 16 or an assignment or
sublease entered into in violation of Paragraph 21; or (C) the default is such
that any delay in the exercise of a remedy by Landlord could reasonably be
expected to cause irreparable harm to Landlord. If the default consists of the
failure to pay any Monetary Obligation under clause (i) of Paragraph 22(a), the
applicable cure period shall be three (3) days from the date on which notice is
given, but Landlord shall not be obligated to give notice of, or allow any cure
period for, any such default more than one (1) time within any Lease Year. If
the default consists of a default under clause (xvi) or (xvii) of Paragraph
22(a), the applicable cure period shall be five (5) days from the date the
notice is given. If the default consists of a default under clause (ii) or
clause (xiii) of Paragraph 22(a), other than the events specified in clauses (B)
and (C) of the first sentence of this Paragraph 22(b), the applicable cure
period shall be twenty (20) days from the date on which notice is given or, if
the default cannot be cured within such twenty (20) day period and delay in the
exercise of a remedy would not (in Landlord's reasonable judgment) cause any
material adverse harm to Landlord or any of the Leased Premises, the cure period
shall be extended for the period required to cure the default (but such cure
period, including any extension, shall not in the aggregate exceed sixty (60)
days), provided that Tenant shall commence to cure the default within the said
twenty-day period and shall actively, diligently and in good faith proceed with
and continue the curing of the default until it shall be fully cured.

      23.   Remedies and Damages Upon Default.

            (a) If an Event of Default shall have occurred and is continuing,
Landlord shall have the right, at its sole option, then or at any time
thereafter, to exercise its remedies and to collect damages from Tenant in
accordance with this Paragraph 23, subject in all events to applicable Law, and
without additional demand upon or notice to Tenant, except as otherwise required
by the applicable Law of the State and as provided in Paragraph 22(b) and this
Paragraph 23.

                  (i) Landlord may give Tenant notice of Landlord's intention to
terminate this Lease on a date specified in such notice. Upon such date, this
Lease, the estate hereby granted and all rights of Tenant hereunder shall expire
and terminate. Upon such termination, Tenant shall immediately surrender and
deliver possession of the Leased Premises to Landlord in accordance with
Paragraph 26. If Tenant does not so surrender and deliver Possession of all of
the Leased Premises, Landlord may re-enter and repossess any of the Leased
Premises not surrendered, by any available legal process. Upon or at any time
after taking possession of any of the Leased Premises, Landlord may, by Legal
process, remove any Persons or property therefrom. Landlord shall be under no
liability for or by reason of any such entry, repossession or removal.
Notwithstanding such termination of the Lease, Landlord may collect the damages
set forth in Paragraph 23(b)(i)or 23(b)(ii).

                                      -35-

<PAGE>

                  (ii) Landlord may terminate Tenant's right of possession (but
not this Lease) and may repossess the Leased Premises by any available legal
process without thereby releasing Tenant from any liability hereunder and
without demand or notice of any kind to Tenant and without terminating this
Lease, except, in any case, as otherwise required under the applicable Laws of
the State. After repossession of any of the Leased Premises pursuant hereto,
Landlord shall have the right to relet any of the Leased Premises to such tenant
or tenants, for such term or terms, for such rent, on such conditions and for
such uses as Landlord in its sole discretion may determine and collect and
receive any rents payable by reason of such reletting. Landlord may make such
Alterations in connection with such reletting as it may deem advisable in its
sole discretion, Notwithstanding any such termination of Tenant's right of
possession of the Leased Premises Landlord may (A) exercise the remedy set forth
in and collect the damages permitted by Paragraph 23(a)(iii) or (B) collect the
damages set forth in Paragraph 23(b)(ii) or, at any time thereafter, elect to
terminate this Lease and in such event Landlord shall have the right and
remedies specified in the last sentence of Paragraph 23(a)(i).

                  (iii) Landlord may declare by notice to Tenant the entire
Basic Rent (in the amount of Basic Rent then in effect) for the remainder of the
then current Term to be immediately due and payable. Tenant shall immediately
pay to Landlord all such Basic Rent discounted to its Present Value, all accrued
Rent then due and unpaid, all other Monetary Obligations which are then due and
unpaid and all Monetary Obligations which arise or become due by reason of such
Event of Default (including any Costs of Landlord). Upon receipt by Landlord of
all such accelerated Basic Rent and Monetary Obligations, this Lease shall
remain in full force and effect and Tenant shall have the right to possession of
the Leased Premises from the date of such receipt by Landlord to the end of the
Term, and subject to all the provisions of this Lease, including the obligation
to pay all increases in Basic Rent and all Monetary Obligations that
subsequently become due, except that (A) no Basic Rent which has been prepaid
hereunder shall be due thereafter during the said Term, (B) Tenant shall have no
option to extend or renew the Term.

            (b) The following constitute damages to which Landlord shall be
entitled if Landlord exercises its remedies under Paragraph 23(a)(i) or
23(a)(ii):

                  (i) If Landlord exercises its remedy under Paragraph 23(a)(i)
but not its remedy under Paragraph 23(a)(ii) (or attempts to exercise such
remedy and is unsuccessful in reletting the Leased Premises) then, upon written
demand from Landlord, Tenant shall pay to Landlord, as liquidated and agreed
final damages for Tenant's default and in lieu of all current damages beyond the
date of such demand (it being agreed that it would be impracticable or extremely
difficult to fix the actual damages), an amount equal to the Present Value of
the excess, if any, of (A) all Basic Rent from the date of such demand to the
date on which the Term is scheduled to expire hereunder in the absence of any
earlier termination, re-entry or repossession over (B) the then fair market
rental value of the Leased Premises for the same period. Tenant shall also pay
to Landlord all accrued Rent then due and unpaid, all other Monetary Obligations
which are then due and unpaid, all Monetary Obligations which arise or become
due by reason of such Event of Default, including any Costs of Landlord in
connection with the repossession of the Leased Premises and any attempted
reletting thereof, including all brokerage commissions, legal expenses,
reasonable attorneys' fees, employees' expenses, costs of Alterations and
expenses and preparation for reletting.

                  (ii) If Landlord exercises its remedy under Paragraph 23(a)(i)
or its remedies under Paragraph 23(a)(i) and 23(a)(ii), then Tenant shall, until
the end of what would have been the Term in the absence of the termination of
the Lease, and whether or not any of the Leased Premises shall have been relet,
be liable to Landlord for, and shall pay to Landlord, as liquidated and agreed
current damages all Monetary Obligations which would be payable under this Lease
by Tenant in the absence of such termination less the net proceeds, if any, of

                                      -36-
<PAGE>

any reletting pursuant to Paragraph 23(a)(ii), after deducting from such
proceeds all accrued Rent then due and unpaid, all other Monetary Obligations
which are then due and unpaid, all Monetary Obligations which arise or become
due by reason of such Event of Default, including any Costs of Landlord incurred
in connection with such repossessing and reletting, including all brokerage
commissions, legal expenses, reasonable attorneys' fees, employees' expenses,
costs of Alterations and expenses and preparation for reletting; provided, that
if Landlord has not relet the Leased premises, such Costs of Landlord shall be
considered to be Monetary Obligations payable by Tenant.

            (iii) Tenant shall be and remain liable for all sums aforesaid, and
Landlord may recover such damages from Tenant and institute and maintain
successive actions or legal proceedings against Tenant for the recovery of such
damages. Nothing herein contained shall be deemed to require Landlord to wait to
begin such action or other legal proceedings until the date when the Term would
have expired by its own terms had there been no such Event of Default.

            (c) Notwithstanding anything to the contrary herein contained, in
lieu of or in addition to any of the foregoing remedies and damages, Landlord
may exercise any remedies and collect any damages available to it at law or in
equity. If Landlord is unable to obtain full satisfaction pursuant to the
exercise of any remedy, it may pursue any other remedy which it has hereunder or
at law or in equity.

            (d) Landlord shall be required to mitigate its damages hereunder if
and only to the extent then required by the applicable Laws of the State at the
time in question. If any Law shall validly limit the amount of any damages
provided for herein to an amount which is less than the amount agreed to herein,
Landlord shall be entitled to the maximum amount available under such Law.

            (e) No termination of this Lease, repossession or reletting of any
of the Leased Premises, exercise of any remedy or collection of any damages
pursuant to this Paragraph 23 shall relieve Tenant of any Surviving Obligations.

            (f) TO THE FULLEST EXTENT PERMITTED BY THE APPLICABLE LAWS OF THE
STATE IN EACH CASE, WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD OR
TENANT HEREUNDER, EACH OF LANDLORD AND TENANT HEREBY WAIVES THE SERVICE OF
NOTICE WHICH MAY BE REQUIRED BY ANY APPLICABLE LAW AND ANY RIGHT TO A TRIAL BY
JURY.

            (g) Upon the occurrence of any Event of Default, Landlord shall have
the right (but no obligation) to perform any act required of Tenant hereunder
and, if performance of such act requires that Landlord enter the Leased
Premises, Landlord may enter the Leased Premises for such purpose.

            (h) No failure of Landlord (i) to insist at any time upon the strict
performance of any provision of this Lease or (ii) to exercise any option,
right, power or remedy contained in this Lease shall be construed as a waiver,
modification or relinquishment thereof. A receipt by Landlord of any sum in
satisfaction of any Monetary Obligation with knowledge of the breach of any
provision hereof shall not be deemed a waiver of such breach, and no waiver by
Landlord of any provision hereof shall be deemed to have been made unless
expressed in a writing signed by Landlord.

            (i) To the fullest extent permitted by the applicable Laws of the
State, in each instance, Tenant hereby waives and surrenders, for itself and all
those claiming under it, including creditors of all kinds, (i) any right and
privilege which it or any of them may have

                                      -37-

<PAGE>

under any present or future Law to redeem any of the Leased Premises or to have
a continuance of this Lease after termination of this Lease or of Tenant's right
of occupancy or possession pursuant to any court order or any provision hereof,
and (ii) the benefits of any present or future Law which exempts property from
liability for debt or for distress for rent.

            (j) Except as otherwise provided herein, all remedies are
cumulative and concurrent and no remedy is exclusive of any other remedy. Each
remedy may be exercised at any time an Event of Default has occurred and is
continuing and may be exercised from time to time. No remedy shall be exhausted
by any exercise thereof.

      24. Notices. All notices, demands, requests, consents, approvals, offers,
statements and other instruments or communications required or permitted to be
given pursuant to the provisions of this Lease shall be in writing and shall be
deemed to have been given and received for all purposes when delivered in person
or by Federal Express or other reliable 24-hour delivery service or five (5)
business days after being deposited in the United States mail, by registered or
certified mail, return receipt requested, postage prepaid, addressed to the
other party at its address stated on page one of this Lease or when delivery is
refused. Notices sent to Landlord shall be to the attention of Director, Asset
Management, and notices sent to Tenant shall be to the attention of Stephen W.
Foss, President. A copy of any notice given by Tenant to Landlord shall be
addressed to the attention of Director, Asset Management and shall
simultaneously be given by Tenant to Reed Smith LLP, One Liberty Place,
Philadelphia, PA 19103, Attention: Chairman, Real Estate Department and a copy
of any notice given by Landlord to Tenant shall simultaneously be given to
Casassa and Ryan, 459 Lafayette Road, Hampton, New Hampshire, 03842-2242,
Attention: John J. Ryan, Esq. For the purposes of this Paragraph, any party may
substitute another address stated above (or substituted by a previous notice)
for its address by giving fifteen (15) days' notice of the new address to the
other party, in the manner provided above.

      25. Estoppel Certificate. At any time upon not less than ten (10) days'
prior written request by either Landlord or Tenant (the "Requesting Party") to
the other party (the "Responding Party"), the Responding Party shall deliver to
the Requesting Party a statement in writing, executed by an authorized officer
of the Responding Party, certifying (a) that, except as otherwise specified,
this Lease is unmodified and in full force and effect, (b) the dates to which
Basic Rent, Additional Rent and all other Monetary Obligations have been paid,
(c) that, to the knowledge of the signer of such certificate and except as
otherwise specified, no default by either Landlord or Tenant exists hereunder,
(d) such other matters as the Requesting Party may reasonably request, and (e)
if Tenant is the Responding Party that, except as otherwise specified, there are
no proceedings pending or, to the knowledge of the signer, threatened, against
Tenant before or by a court or administrative agency which, if adversely
decided, would materially and adversely affect the financial condition and
operations of Tenant. Any such statements by the Responding Party may be relied
upon by the Requesting Party, any Person whom the Requesting party notifies the
Responding Party in its request for the Certificate is an intended recipient or
beneficiary of the Certificate, any Lender or their assignees and by any
prospective purchaser or mortgagee of any of the Leased Premises. Any
certificate required under this Paragraph 25 and delivered by Tenant shall state
that, in the opinion of each person signing the same, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to the subject matter of such certificate, and shall briefly
state the nature of such examination or investigation.

      26. Surrender. Upon the expiration or earlier termination of this Lease,
Tenant shall peaceably leave and surrender the Leased Premises or Affected
Premises, as applicable, to Landlord in the same condition in which the Leased
Premises or Affected Premises, as applicable, were at the commencement of this
Lease, except as repaired, rebuilt, restored, altered, replaced or added to as
permitted or required by any provision of this Lease.

                                      -38-

<PAGE>

ordinary wear and tear excepted. Upon such surrender, Tenant shall (a) remove
from the Leased Premises or Affected Premises, as applicable, all property which
is owned by Tenant or third parties other than Landlord and Alterations
required to be removed pursuant to Paragraph 13 hereof and (b) repair any damage
caused by such removal. Property not so removed shall become the property of
Landlord, and Landlord may thereafter cause such property to be removed from
the Leased Premises or Affected Premises, as applicable. The cost of removing
and disposing of such property and repairing any damage to any of the Leased
Premises or Affected Premises, if applicable, caused by such removal shall be
paid by Tenant to Landlord upon demand. Landlord shall not in any manner or to
any extent be obligated to reimburse Tenant for any such property which becomes
the property of Landlord pursuant to this Paragraph 26.

      27. No Merger of Title. There shall be no merger of the leasehold estate
created by this Lease with the fee estate in any of the Leased Premises by
reason of the fact that the same Person may acquire or hold or own, directly or
indirectly, (a) the leasehold estate created hereby or any part thereof or
interest therein and (b) the fee estate in any of the Leased Premises or any
part thereof or interest therein, unless and until all Persons having any
interest in the interests described in (a) and (b) above which are sought to be
merged shall join in a written instrument effecting such merger and shall duly
record the same.

      28. Books and Records.

            (a) Tenant shall keep adequate records and books of account with
respect to the finances and business of Tenant generally and with respect to the
Leased Premises, in accordance with generally accepted accounting principles
("GAAP") consistently applied, and shall permit Landlord and Lender by their
respective agents, accountants and attorneys, upon reasonable notice to Tenant,
to visit and inspect the Leased Premises and examine (and make copies of) the
records and books of account and to discuss the finances and business with the
officers of Tenant, at such reasonable times as may be requested by Landlord.
Upon the request of Lender or Landlord (either telephonically or in writing),
Tenant shall provide the requesting party with copies of any information to
which such party would be entitled in the course of a personal visit. Landlord
hereby approves Bernard, Johnson & Company, P.C. as Tenant's accountants for
purposes of this Paragraph 28.

            (b) If, at any time during the Term, Tenant's securities are not
listed and traded on a national securities exchange located in the United
States, Tenant shall deliver to Landlord and to Lender within ninety (90) days
of the close of each fiscal year, annual audited financial statements of the
Tenant Group certified by a nationally recognized independent certified public
accountants. Tenant shall also furnish to Landlord within forty-five (45) days
after the end of each of the three remaining quarters unaudited financial
statements and all other quarterly reports of the Tenant Group, certified by
Tenant's chief financial officer, and all filings, if any, of Form 10-K, Form
10-Q and other required filings with the Securities and Exchange Commission
pursuant to the provisions of the Securities Exchange Act of 1934, as amended,
or any other Law. All financial statements of Tenant shall be prepared in
accordance with GAAP consistently applied. All annual financial statements shall
be. accompanied (i) by an opinion of said accounting firm stating that (A) there
are no qualifications as to the scope of the audit and (B) the audit was
performed in accordance with GAAP and (ii) by the affidavit of the president or
a vice president of Tenant, dated within five (5) days of the delivery of such
statement, stating that (C) the affiant knows of no Event of Default, or event
which, upon notice or the passage of time or both, would become an Event of
Default which has occurred and is continuing hereunder or, if any such event has
occurred and is continuing, specifying the nature and period of existence
thereof and what action Tenant has taken or proposes to take with respect
thereto and (D) except as otherwise specified in such affidavit, that Tenant has
fulfilled all of its

                                      -39-

<PAGE>

obligations under this Lease which are required to be fulfilled on or prior to
the date of such affidavit.

            (c) All quarterly and annual financial statements shall be
accompanied by a certification ("Covenant Certification") of the chief financial
officer of Tenant in the form attached hereto as Exhibit "H" stating that Tenant
is in compliance with the Covenants (except as otherwise specified in the
Covenant Certification).

            (d) Landlord, Lender and their respective agents, accountants and
attorneys, shall consider and treat on a strictly confidential basis (i) any
information contained in the books and records of Tenant, (ii) any copies of any
books and records of Tenant, and any financial statements of Tenant pursuant to
Paragraph 28(b) which are delivered to or received by them and which are
conspicuously stamped "CONFIDENTIAL".

   The restrictions contained in this Paragraph 28(d) shall not prevent
disclosure by Landlord or Lender of any information in any of the following
circumstances:

                  (i) Upon the order of any court or administrative agency to
the extent required by such order and not effectively stayed or by appeal or
otherwise;

                  (ii) Upon the request, demand or requirement of any regulatory
agency or authority having jurisdiction over such party, including the
Securities and Exchange Commission (whether or not such request or demand has
the force of law);

                  (iii) That has been publicly disclosed other than by breach of
this Paragraph 28(d) by Lender or Landlord or by any other Person who has agreed
with Landlord or Lender to abide by the provisions of this Paragraph 28(d);

                  (iv) To counsel, accountants or consultants for such other
Person who has agreed to abide by the provisions of this Paragraph 28(d) or
counsel, accountants or consultants for Lender or Landlord;

                  (v) While an Event of Default exists, in connection with the
exercise of any right or remedy under this Lease or any other related document;

                  (vi) Independently developed by Landlord or Lender to the
extent that confidential information provided by Tenant is not used to develop
such information;

                  (vii) To any third party who enters into a confidentiality
agreement with Landlord for the benefit of Tenant;

                  (viii) With respect to financial information and information
that Landlord or its attorneys deem to be material in any reporting to the
shareholders of Landlord or the shareholders or prospective shareholders
(whether through a registered public offering or otherwise) of Landlord's parent
company;

                  (ix) In connection with any sale or financing of the Leased
Premises, provided that any recipient of such information who is a prospective
purchaser of the Leased Premises (except for a purchaser that purchases all or
substantially all of the assets of Landlord's parent company) shall agree to be
bound by the terms of Paragraph 28(d);

                  (x) In connection with the securitization and/or sale of a
Loan or interests therein by a Lender; or

                                      -40-
<PAGE>

                        (xi) As otherwise required by Law.

            29. Determination of Value.

                  (a) Whenever a determination of Fair Market Value is required
pursuant to any provision of this Lease, such Fair Market Value shall be
determined in accordance with the following procedure:

                        (i) Landlord and Tenant shall endeavor to agree upon
such Fair Market Value within thirty (30) days after the date (the "Applicable
Initial Date") on which (A) Tenant provides Landlord with notice of its
intention to terminate this Lease and purchase the Affected Premises pursuant to
Paragraph 18, (B) Landlord provides Tenant with notice of its intention to
redetermine Fair Market Value pursuant to Paragraph 20(c), or (C) Landlord
provides Tenant with notice of Landlord's intention to require Tenant to make an
offer to purchase the Leased Premises pursuant to Paragraph 23(a)(iii) Upon
reaching such agreement, the parties shall execute an agreement setting forth
the amount of such Fair Market Value.

                        (ii) If the parties shall not have signed such agreement
within thirty (30) days after the Applicable Initial Date, Tenant shall within
fifty (50) days after the Applicable Initial Date select an appraiser and notify
Landlord in writing of the name, address and qualifications of such appraiser.
Within twenty (20) days following Landlord's receipt of Tenant's notice of the
appraiser selected by Tenant, Landlord shall select an appraiser and notify
Tenant of the name, address and qualification of such appraiser. Such two
appraiser shall endeavor to agree upon Fair Market Value based on a written
appraisal made by each of them as of the Relevant Date (and given to Landlord by
Tenant). If such two appraisers shall agree upon a Fair Market Value, the amount
of such Fair Market Value as so agreed shall be binding and conclusive upon
Landlord and Tenant.

                        (iii) If such two appraisers shall be unable to agree
upon a Fair Market Value within twenty (20) days after the selection of an
appraiser by Landlord, then such appraisers shall advise Landlord and Tenant of
their respective determination of Fair Market Value and shall select a third
appraiser to make the determination of Fair Market Value. The selection of the
third appraiser shall be binding and conclusive upon Landlord and Tenant.

                        (iv) If such two appraisers shall be unable to agree
upon the designation of a third appraiser within ten (10) days after the
expiration of the twenty (20) day period referred to in clause (iii) above, or
if such third appraiser does not make a determination of Fair Market Value
within twenty (20) days after his selection, then such third appraiser or a
substituted third appraiser, an applicable, shall, at the request of either
party hereto (with respect to the other party), be appointed by the President or
Chairman of the American Arbitration Association in New York, New York. The
determination of Fair Market Value made by the third appraiser appointed
pursuant hereto shall be made within twenty (20) days after such appointment.

                        (v) If a third appraiser is selected, Fair Market Value
shall be the average of the determination of Fair Market Value made by the
third appraiser and the determination of Fair Market Value made by the
appraiser (selected pursuant to Paragraph 29 (a)(ii) hereof) whose determination
of Fair Market Value is nearest to that of the third appraiser. Such average
shall be binding and conclusive upon Landlord and Tenant.

                        (vi) All appraisers selected or appointed pursuant to
this Paragraph 29(a) shall (A) be independent qualified MAI appraisers (B) have
no right, power or

                                      -41-
<PAGE>

authority to alter or modify the provisions of this Lease, (C) utilize the
definition of Fair Market Value hereinabove set forth above, and (D) be
registered in the State where the applicable Related Premises is located if
such State provides for or requires such registration.

                        (vii) The cost of the procedure described in this
Paragraph 29(a) above shall be paid as follows: Each party shall pay the cost of
its own appraiser and the cost of the third, appraiser, if required, shall be
split equally between Landlord and Tenant.

                  (b) If, by virtue of any delay, Fair Market Value is not
determined by the expiration or termination of the then current Term, then the
date on which the Term would otherwise expire or terminate shall be extended
with respect to the Leased Premises or the Affected Premises, as applicable, to
the date specified for termination in the particular provision of this Lease
pursuant to which the determination of Fair Market Value is being made.

                  (c) In determining Fair Market Value as defined in clause (b)
of the definition of Fair Market Value, the appraisers shall add (i) the present
value of the Rent for the remaining Term, assuming the Term has been extended
for all extension periods provided herein (with assumed increases in the CPI to
be determined by the appraisers) using a discount rate (which may be determined
by an investment banker retained by each appraiser) based on the
creditworthiness of Tenant and (ii) the present value of the Leased Premises or
applicable Related Premises as of the end such Term (having assumed the Term has
been extended for all extension periods provided herein). The appraisers shall
further assume that no default then exists under the Lease, that Tenant has
complied (and will comply) with all provisions of the Lease.

            30. Non-Recourse as to Landlord. Anything contained herein to the
contrary notwithstanding, any claim based on or in respect of any liability of
Landlord under this Lease shall be limited to actual damages and shall be
enforced only against the Leased Premises and not against any other assets,
properties or funds of(a) Landlord, (b) any director, member, officer, general
partner, limited partner, employee or agent of Landlord, or any general partners
or shareholders of Landlord (or any legal representative, heir, estate,
successor or assign of any thereof) (c) any predecessor or successor partnership
or corporation (or other entity) of Landlord, or any of its general partners,
either directly or through Landlord or its general partners or any predecessor
or successor partnership or corporation or their shareholders, officers,
directors, employees or agents (or other entity), or (d) any other Person
(including Carey Asset Management Corp., Carey Property Advisors, Carey
Fiduciary Advisors, Inc., W. P. Carey & Co. LLC, Carey Management LLC, and any
Person affiliated with any of the foregoing, or any director, officer, employee
or agent of any thereof). Notwithstanding the foregoing, Tenant shall not be
precluded from instituting legal proceedings for the purpose of making a claim
against Landlord on account of an alleged violation of Landlord's obligations
under this Lease, subject, however, to the preceding sentences of this Paragraph
30.

            31. Financing.

                  (a) Tenant agrees to pay (i) upon demand, all reasonable costs
and expenses incurred by Landlord in connection with the purchase and leasing of
the Leased Premises including, without limitation, the cost of appraisals,
condition reports, environmental assessments, zoning reports, UCC and related
searches, title insurance premiums and charges, survey costs, and the legal fees
and expenses of Landlord's counsel and (ii) within three (3) Business Days
following written request from Landlord, (A) all reasonable costs and expenses
incurred by Landlord in connection with the financing of the initial Loan,
including, without limitation, the cost of appraisals, condition reports,
environmental assessments, zoning reports, UCC and related searches, survey
costs (or the costs of updates to any of the foregoing in

                                      -42-
<PAGE>

connection with the initial Loan, as applicable), title insurance premiums and
charges, and (B) the legal fees and expenses of Landlord's and Lender's counsel,
and "points" or commitment fees of Lender; it being currently estimated
(without representation, and without limiting Tenant's liability) that the cost
to obtain third party condition reports, appraisals and environmental
assessments tor the Leased Premises will not exceed $25,000, and that the fees
and expenses of Landlord's and Lender's counsel will not exceed, in the
aggregate, $150,000. Without in any way limiting the foregoing, if there exists
at any Related Premises a material Environmental Violation or a Hazardous
Condition such that a Phase II Site Assessment must be performed or additional
expenditures are incurred (including additional or extraordinary due diligence
and the reasonable legal fees and expenses of Landlord's and Lender's
consultant and/or counsel in connection therewith), then Tenant hereby
authorizes Landlord to cause same to be performed and the cost of such Phase II
Site Assessment and such additional due diligence and/or reasonable attorneys'
fees and expenses shall be paid by Tenant. In addition to the foregoing, Tenant
agrees to pay all costs and expenses (including Landlord's and Lender's
attorneys fees and expenses) in connection with the creation of the Condominium.

              (b) Tenant agrees to pay, within three (3) business days of
written demand thereof, any cost, charge or expense (other than the principal of
the Note and interest thereon at the contract rate of interest specified
therein) imposed upon Landlord by Lender pursuant to the Note, the Mortgage or
the Assignment which is not caused solely by the gross negligence or willful
misconduct of Landlord and which is not otherwise reimbursed by Tenant to
Landlord pursuant to any other provision of this Lease.

               (c) If Landlord desires to obtain or refinance any Loan, Tenant
shall negotiate in good faith with Landlord concerning any request made by any
Lender or proposed Lender for changes or modifications in this Lease. In
particular, Tenant shall agree, upon request of Landlord, to supply any such
Lender with such notices and information as Tenant is required to give to
Landlord hereunder and to extend the rights of Landlord hereunder to any such
Lender and to consent to such financing if such consent is requested by such
Lender. Tenant shall provide any other consent or statement and shall execute
any and all other documents that such Lender requires in connection with such
financing, including any environmental indemnity agreement and subordination,
non-disturbance and attornment agreement, so long as the same do not materially
adversely affect any right, benefit or privilege of Tenant under this Lease or
materially increase Tenant's obligations under this Lease. Such subordination,
nondisturbance and attornment agreement may require Tenant to confirm that (i)
Lender and its assigns will not be liable for any misrepresentation, act or
omission of Landlord and (ii) Lender and its assigns will not be subject to any
counterclaim, demand or offsets which Tenant may have Against Landlord.

      32. Subordination, Non-Disturbance and Attornment. This Lease and Tenant's
interest hereunder shall be subordinate to any Mortgage or other security
instrument hereafter placed upon the Leased Premises by Landlord, and to any and
all advances made or to be made thereunder, to the interest thereon, and all
renewals, replacements and extensions thereof, provided that any such Mortgage
or other security instrument (or a separate instrument in recordable form duly
executed by the holder of any such Mortgage or other security instrument and
delivered to Tenant) shall provide for the recognition of this Lease and all
Tenant's rights hereunder unless and until an Event of Default exists or
Landlord shall have the right to terminate this Lease pursuant to any applicable
provision hereof.

      33. Operating Covenants. Tenants hereby covenants and agrees to comply
with all the covenants and agreements described in Exhibit "G" hereto.

      34. Tax Treatment; Reporting. Landlord and Tenant each acknowledge that
each shall treat this transaction as a true lease for state law purpose and
shall report this

                                      -43-

<PAGE>

transaction as a lease for Federal income tax purposes. For Federal income tax
purposes each shall report this Lease as a true lease with Landlord as the owner
of the Leased Premises and Equipment and Tenant as the lessee of such Leased
Premises and Equipment including; (i) treating Landlord as the owner of the
property eligible to claim depreciation deductions under Section 167 or 168 of
the Internal Revenue Code of 1986 (the" Code") with respect to the Leased
Premises and Equipment, (ii) Tenant reporting its Rent payment as rent expense
under Section 162 of the Code, and (iii) Landlord reporting the Rent payments as
rental income. For the avoidance of doubt, nothing in this Lease shall be deemed
to constitute a guaranty, warranty or representation by either Landlord or
Tenant as to the actual treatment of this transaction for state law purposes and
for federal law purposes.

      35. Financing the Lafayette Factory Expansion.

            (a) Should Tenant, during the Term of this Lease, desire to
construct the approximately 119,000 square foot expansion to the 390 Lafayette
Factory Premises as shown on Exhibit "J" attached, hereto (the "Lafayette
Factory Expansion"), Tenant shall, prior to the commencement of construction of
the Lafayette Factory Expansion, offer by written notice to Landlord (a "Payment
Request") to accept reimbursement from Landlord for the costs (the "Lafayette
Factory Expansion Cost") thereof, to wit: cost of labor and materials, legal
fees, survey, title insurance and other normal and customary loan or
construction costs.

            (b) Should Landlord accept Tenant's Payment Request, which
acceptance or rejection shall be made in writing within sixty (60) days after
receipt by Landlord of such request, Landlord and Tenant shall enter into good
faith negotiations regarding the execution and delivery of an amendment of this
Lease and a construction agency agreement (a "Construction Agency Agreement")
pursuant to which Tenant, as agent for Landlord, will cause the construction of
the Lafayette Factory Expansion, which agreements shall provide for the
following:

                  (i) payment by Landlord to Tenant of the Lafayette Factory
Expansion Costs to be made through monthly progress payments in accordance with
the standard practices of Landlord's affiliates as more specifically set forth
in the Construction Agency Agreement;

                  (ii) an increase in the annual Basic Rent payable during the
Amortization Period (as hereinafter defined) to an amount equal to (A) the
then current annual Basic Rent plus (B) an amount sufficient to amortize the
Lafayette Expansion Cost ("Total Financing") over a period (the "Amortization
Period") which shall be the remainder of the then current Term and, if Tenant so
elects, any additional extension periods provided for herein (so long as Tenant
shall confirm any such extension periods included in the Amortization Period by
a written waiver of its right to give notice of its intention not to renew this
Lease prior to the expiration of such extension periods), at such rate of
interest and upon such other terms as shall be agreed upon between Landlord and
Tenant, but which shall be no less favorable than the prevailing interest rate
and terms for unsecured loans in a principal amount equal to the Total Financing
for borrowers having a credit rating, if applicable, and a financial standing,
equivalent to that of Tenant at that time;

                  (iii) a rate of return to Landlord on Landlord's equity
investment in the Leased Premises at least equal to that enjoyed by Landlord
hereunder immediately prior to such proposed increase in Basic Rent; and

                                      -44-

<PAGE>

                  (iv) such other changes and amendments to this Lease as may be
necessary and appropriate in view of such payment of the Lafayette Factory
Expansion Cost by Landlord to Tenant, as reasonably approved by Lender.

            (c) Tenant shall pay all Costs incurred by Landlord in connection
with any such modification to this Lease and such financing, including closing
costs, brokerage fees, taxes, recording charges and legal fees and expenses.

            (d) Prior to commencement of construction of the Lafayette Factory
Expansion, Tenant shall have delivered to Landlord and Lender all of the
documents and items specified in Exhibit "M" attached hereto all of which shall
be satisfactory to Landlord and Lender in all respects and shall have otherwise
complied with all the requirements of Lender as set forth in the Mortgage with
respect to the construction of the Lafayette Factory Expansion which are
required to be satisfied prior to the commencement of construction.

            (e) Landlord may accept or reject Tenant's Payment Request in its
sole discretion. Should Tenant's offer to accept payment for the Lafayette
Factory Expansion not be accepted by Landlord within said sixty (60) day period,
or should Landlord and Tenant be unable in good faith to agree upon the terms of
the modification of this Lease or the terms of the Construction Agency
Agreement, Tenant shall have the right to construct the Lafayette Factory
Expansion at Tenant's sole cost and expense (i.e. from cash flow or with equity
financing, but not with any indebtedness secured by any interest in the Leased
Premises), in which event (i) the construction of the Lafayette Factory
Expansion shall be performed in accordance with the provisions of Paragraphs 13
and 38 hereof and any such other reasonable construction procedures as may be
requested by Landlord and Lender, including evidence reasonably satisfactory to
Landlord and Lender that Tenant has the financial wherewithal to cause the lien-
free completion of the Lafayette Factory Expansion in accordance with the plans
and specifications therefor (which may be in the form of (A) a cash deposit, or
(B) a letter of credit in an amount and in a form acceptable to Landlord and
Lender), and Tenant shall comply with all requirements of Lender as set forth in
the Mortgage with respect to the construction of the Lafayette Factory
Expansion. In all events, the Lafayette Factory Expansion shall be and become
the property of Landlord and constitute a part of the Leased Premises subject to
this Lease.

            (f) Nothing contained in this Paragraph 35 shall be construed to
modify Paragraph 13 hereof, and the provisions of Paragraphs 12, 13 and 38 shall
apply to the construction of the Lafayette Factory Expansion. This Paragraph 35
shall be applicable whether or not the Leased Premises shall be converted to a
condominium form of ownership, provided that in the event that the Condominium
Documents have been recorded, the Lafayette Factory Expansion shall be
constructed as an addition to Unit 2 (as defined in the Condominium
Declaration). In such event, Tenant shall be deemed to be constructing the
Lafayette Factory Expansion as agent for, and on behalf of, Landlord as
Declarant of the Condominium Declaration. Upon completion of construction, the
Unit 2 Convertible Land shall be added to the Condominium and the Lafayette
Factory Expansion shall be merged into Unit 2 (as defined in the Condominium
Declaration) by an appropriate amendment to the Condominium Documents, each of
which shall be prepared by Tenant (as its sole cost and expense) and approved by
Landlord and Lender, which approval shall not be unreasonably withheld or
delayed.

            (g) The Lafayette Factory Expansion shall be constructed exclusively
within the footprint shown on Exhibit "J" as the "Proposed Building Expansion of
119,000 SQ.FT." at #390 Lafayette Road, and under no circumstances shall the
Lafayette Factory Expansion be connected in any way or share any common walls
with any other building constituting a part of the Leased Premises except for
the building currently situate on the 390 Lafayette Factory

                                      -45-

<PAGE>

Premises which, if the Condominium Documents have been recorded, will be
designated as Unit 2 in the Condominium.

      36. Financing Additional Improvements by Landlord.

             (a) Landlord and Tenant confirm that, because of the inability to
subdivide the Excess Land from the remainder of the Leased Premises, the Leased
Premises must be converted to a condominium form of ownership before the Excess
Land can be developed. Therefore, Landlord and Tenant agree that it is their
intent (that prior to construction of any Additional Improvements on the Excess
Land (whether pursuant this Paragraph 36 or Paragraph 37) that all of the
following must be satisfied: (i) the Leased Premises be converted to a
condominium form of ownership by the recording of the Condominium Documents in
the Rockingham County Registry of Deeds, and (ii) Tenant shall comply with all
other legal requirements necessary to create a condominium form of ownership.
Landlord and Tenant acknowledge that the Condominium Site Plans were not
complete as of the date of execution of this Lease. Tenant shall prepare and
provide Landlord and Lender with copies or the Foss Condominium Exterior Unit
Plans (as defined in the Condominium Declaration), which plans shall be
reasonably satisfactory to Landlord and Lender, prior to the recording of the
Condominium Documents.

            (b) So long as no Event of Default has occurred and is continuing at
the time of the receipt of Tenant's Expansion Request (as defined below), Tenant
shall have the option exercisable at any time during the Term to give to
Landlord written notice ("Tenant's Expansion Request") that, subject to the
requirements of this Paragraph 36, that it is requesting that Landlord fund the
construction one or more Additional Improvements on the Excess Land.

            (c) Landlord may accept or reject Tenant's Expansion Request in its
sole discretion. Should Landlord accept Tenant's Expansion Request, which
acceptance shall be made in writing within sixty (60) days after receipt by
Landlord thereof, the obligation of Landlord to fund the construction of the
Additional Improvements shall be contingent upon Tenant's satisfaction of each
of the following conditions (the "Expansion Conditions") no later than ninety
(90) days following Landlord's written acceptance of Tenant's Expansion Request:

                  (i) Tenant shall have delivered or caused to be delivered to
Landlord and Lender all of the documents and items specified in Exhibit "M"
attached hereto all of which shall be satisfactory to Landlord and Lender in all
respects, and shall have otherwise complied with all the requirements of Lender
as set forth in the Mortgage with respect to the construction of the Additional
Improvements which are required to be satisfied prior to the commencement of
construction.

                  (ii) Tenant and Landlord shall have entered into a
Construction Agency Agreement pursuant to which (i) Tenant, as agent for
Landlord will cause the construction of the Additional Improvements on the
Excess Land, and (ii) payment shall be made by Landlord to Tenant for the costs
of the construction of the Additional Improvements (to wit. cost of labor and
materials, legal fees, survey title insurance and other normal and customary
loan or construction costs, the "Expansion Lease Costs") through monthly
progress payments in accordance with the standard practices of Landlord's
affiliates;

                  (iii) Tenant shall have deposited with Landlord the sum of
$100,000 (the "Expansion Costs and Expense Deposit") which shall be applied
towards the payment of any and all costs and expenses incurred by Landlord and
Lender in connection with their consent to and monitoring of the construction of
the Additional Improvements. Any amounts remaining in the Expansion Costs and
Expense Deposit shall be returned to Tenant upon the conveyance of the Expansion
Unit (as defined below);

                                      -46-
<PAGE>

                  (iv) Tenant shall have complied with the requirements of
Paragraph 38;

                  (v) Landlord, an Affiliate of Landlord (the "Expansion
Landlord") and Tenant shall have entered into an agreement (the "Tri-Party
Agreement") providing that upon completion of the Additional Improvements: (A)
Landlord shall convey the Additional Improvements, the rights to any related
Limited Common Area appurtenant to such Additional improvements and the
applicable percentage undivided interest in the Common Area appurtenant to such
Additional Improvements (collectively, the "Expansion Unit") to the Expansion
Landlord upon terms and conditions acceptable to Landlord and the Expansion
Landlord in their sole discretion and (B) the Expansion Landlord and Tenant
shall execute a lease agreement (the "Expansion Lease") substantially identical
to this Lease except that the Expansion Lease shall provide that Tenant shall
lease the Expansion Unit from the Expansion Landlord and provide a rate of
return to the Expansion Landlord on Expansion Landlord's equity investment in
the Expansion Unit at least equal to that enjoyed by Landlord hereunder.

            (d) Contemporaneously with the execution of the Expansion Lease,
Landlord agrees to cause the Expansion Unit to be released from this Lease and
conveyed to the Expansion Landlord provided that the following conditions are
satisfied:

                  (i) the Condominium Documents creating the new Unit 4 or Unit
5 (as defined In the Condominium Documents), as applicable, shall have been
recorded in the Rockingham County Registry of Deeds in compliance with all
applicable Laws and Legal Requirements;

                  (ii) all requirements of Lender set forth in the Mortgage with
respect to the construction of the Additional Improvements, the release of the
Expansion Unit and any Condominium related requirements shall have been
satisfied, and

                  (iii) all costs and expenses incurred by Landlord, the
Expansion Landlord and Lender in connection with any Additional Improvements,
any Expansion Lease and any Expansion Unit shall have been paid by Tenant,
except that the Expansion Lease Costs shall be payable as provided for in the
Construction Agency Agreement.

            (e) Tenant shall be solely responsible for the satisfaction of the
Expansion Conditions and all other conditions contained in this Paragraph 36,
including the recording of the Condominium Documents, provided that Landlord, as
record title holder to the Excess Land, shall cooperate in executing and
recording the Condomimium Documents, at no cost to Landlord or Lender.

            (f) Contemporaneously with conveyance of the Expansion Unit to the
Expansion Landlord, Landlord and Tenant shall execute an amendment to this Lease
and the recorded memorandum of this Lease which (i) terminates this Lease with
respect to the Expansion Unit, and (ii) reduces the Basic Rent payable hereunder
by an amount per annum equal to the product of (X) 10.45% multiplied by (Y) the
product of (A) the maximum buildable square footage as set forth on Exhibit "L"
attached hereto (the "Maximum Buildable Square Footage") of the portion of the
Excess Land upon which the applicable Additional Improvements are to be
constructed (i.e., either the Unit 4 Excess Land or the Unit 5 Excess Land)
multiplied by (B) 57.13. Upon execution of such lease amendment, this Lease
shall terminate with respect to the Expansion Unit, but shall remain in full
force and effect with respect to the retained portion of the Leased Premises,
provided, however, that in no event will the conveyance of the Expansion Unit
amend, reduce or modify any of the obligations and liabilities of Tenant under
this Lease, including the obligation to pay Basic Rent hereunder, except to the
extent that Basic Rent may be reduced pursuant to this Paragraph 36(f).

                                      -47-
<PAGE>

            (g) Notwithstanding anything in this Lease to the contrary, except
as may he provided in the Tri-Party Agreement, in no event will the Expansion
Landlord have any liability or obligation in connection with the construction of
any Additional Improvements and/or the funding of the cost of such construction.

            (h) Upon the recording of the Condominium Documents, this Lease and
Tenant's rights hereunder shall be subject to the Condominium Documents,
provided that as between Tenant and Landlord in the event of any conflict
between the Condominium Documents and their respective obligations under this
Lease, this Lease shall control.

      37. Tenant Construction on the Excess Land.

            (a) In the event that Landlord shall reject Tenant's Expansion
Request and provided that no Event of Default shall then exist and be
continuing, Tenant shall have the right (subject to the requirements of this
Paragraph 37) upon written notice to Landlord (a "Release Notice") to construct
Additional Improvements on the Excess Land at no cost or expense to Landlord or
Lender. Tenant shall construct such Additional Improvements at it's sole cost
and expense (i.e. from cash flow or with equity financing, but not with any
indebtedness secured by any interest in the Leased Premises).

            (b) Tenant's right to construct the Additional Improvements on the
Excess Land shall be contingent upon the satisfaction by Tenant of each of the
following conditions (the "Release Conditions") no later than ninety (90) days
after Landlord's receipt of a Release Notice:

                  (i) Tenant shall have delivered or caused to be delivered to
Landlord and Lender all of the documents and items specified in Exhibit "M"
attached hereto all of which shall be satisfactory to Landlord and Lender in all
respects and shall have otherwise complied With all the requirements of Lender
as set forth in the Mortgage with respect to the construction of the Additional
Improvements which are required to be satisfied prior to the commencement of
construction.

                  (ii) Tenant shall have deposited with Landlord the sum of
$100,000 (the "Release Costs and Expense Deposit") which shall he applied
towards the payment of any and all costs and expenses incurred by Landlord and
Lender in connection with their consent to and monitoring of the construction of
the Additional Improvements. Any amounts remaining in the Release Costs and
Expense Deposit shall be returned to Tenant upon the conveyance of the Released
Unit;

                  (iii) Tenant shall have complied with all of the requirements
of Paragraph 38; and

                  (iv) Tenant shall have received the written consent from
Landlord to commence the construction of the Additional Improvements.

            (c) Tenant shall be solely responsible for the satisfaction of the
Release Conditions and all other conditions contained in this Paragraph 37,
including the recording of the Condominium Documents, provided that Landlord as
record title holder to the Excess Land, shall cooperate in executing and
recording the Condominium Documents, at no cost to Landlord or Lender.

            (d) The construction of any Additional Improvements by Tenant shall
be performed in accordance with the provisions of Paragraphs 13 and 38 hereof
and any such other reasonable construction procedures as may be requested by
Landlord and/or lender, including evidence satisfactory to Landlord and Lender
in their sole discretion that Tenant has the financial wherewithal to cause the
lien-free completion of such Additional Improvements in

                                      -48-
<PAGE>

accordance with the plans and specifications therefor (which may be in the form
of (A) a cash deposit, or (B) a letter of credit in an amount and in a form
acceptable to Landlord and Lender).

            (e) Subject to Tenant's compliance with the requirements of this
Paragraph 37, upon completion of the Additional Improvements, Landlord agrees to
convey the Additional Improvements, including rights to any related Limited
Common Area appurtenant to such Additional Improvements and the applicable
percentage undivided interest in the Common Area appurtenant to such Additional
Improvements (collectively, the "Released Unit") to Tenant for an amount equal
to the greater of (i) the product of (A) $7.13 multiplied by (B) the Maximum
Buildable Square Footage of the Unit 4 Convertible Land and/or the Unit 5
Convertible Land, as applicable, or (ii) the Fair Market Value of the Unit 4
Convertible Land and/or the Unit 5 Convertible Land, as applicable (the
"Released Unit Purchase Price"). Promptly upon completion of the Additional
Improvements, the parties shall commence to determine the Fair Market Value of
the Unit 4 Excess Land and/or the Unit 5 Excess Land, as applicable.

            (f) Contemporaneously with the receipt by Landlord of the Released
Unit Purchase Price, which shall be payable no later than thirty (30) days after
the determination of the Fair Market Value of the applicable portion of the
Excess Land, Landlord agrees to cause the Released Unit to be released from this
Lease provided that the following conditions are satisfied;

                  (i) the Condominium Documents creating the new Unit 4 or Unit
5, as applicable, shall have been recorded in the Rockingham County Registry of
Deeds in compliance with all applicable Laws and Legal Requirements;

                  (ii) all requirements of Lender set forth in the Mortgage with
respect to the construction of the Additional Improvements, the release of the
Released Unit and any Condominium related requirements shall have been
satisfied, and

                  (iii) all costs of Landlord, Lender and Tenant in connection
with the conveyance of the Released Unit and in complying with the above
conditions, including reasonable attorneys' fees, shall have been paid by
Tenant.

            (g) Contemporaneously with conveyance of the Released Unit to
Tenant, Landlord and Tenant shall execute an amendment to this Lease and the
recorded memorandum of this Lease which (i) terminates this Lease with respect
to the Released Unit, and (ii) reduces the Basic Rent payable hereunder by an
amount per annum equal to the product of (X) 10.45% multiplied by (Y) the
product of (A) Maximum Buildable Square Footage of the portion of the Excess
Land upon which the Released Unit has been constructed (i.e., either the Unit 4
Excess Land or the Unit 5 Excess Land) multiplied by (B) $7.13. Upon execution
of such lease amendment, this Lease shall terminate with respect to the Released
Unit, but shall remain in full force and effect with respect to the retained
portion of the Leased Premises, provided, however, that in no event will the
conveyance of the Released Unit amend, reduce or modify any of the obligations
and liabilities of Tenant under this Lease, including the obligation to pay
Basic Rent hereunder, except to the extent that Basic Rent may be reduced
pursuant to this Paragraph 37(g).

            (h) Upon the recording of the Condominium Documents, this Lease and
Tenant's rights hereunder shall be subject to the Condominium Documents,
provided that as between Tenant and Landlord, in the event of any conflict
between the Condominium Document and their respective obligations under this
Lease, this Lease shall control.

            (i) Under no circumstances will Landlord have any obligations or
liabilities with respect to the construction of any Additional Improvements by
Tenant as permitted by this Paragraph 37 and Tenant shall have no claims against
Landlord or right to

                                      -49-
<PAGE>

claim a default under this Lease or to offset rent under this Lease arising out
of (i) the construction of or failure to construct any Additional Improvements
and/or (ii) the conveyance of the Released Unit.

      38. Conditions to Construction of Additional Improvements and/or Lafayette
Factory Expansion.

      (A) If Tenant desires to construct or request Landlord to construct the
Lafayette Factory Expansion pursuant to Paragraph 35 or any Additional
Improvements pursuant to Paragraphs 36 or 37, then, as a condition to Landlord's
consent to such construction, Landlord and Lender shall receive the following,
all of which shall be in form and substance reasonably satisfactory to Landlord
and Lender.

                  (i) Plans and specifications for the Additional Improvements
or the Lafayette Factory Expansion, as applicable;

                  (ii) A report from a consultant selected by Landlord and
approved by Lender concluding, among other things, that, with respect to the
Lafayette Factory Expansion, the attachment of the Lafayette Factory Expansion
to the portion of the Improvements which comprise the 390 Lafayette Factory
Premises will not have any adverse impact on the structural integrity or
operational viability of the 390 Lafayette Factory Premises;

                  (iii) Evidence that the Lafayette Factory Expansion and/or the
Additional Improvements, as applicable, have been approved by all applicable
governmental authorities;

                  (iv) Such other conditions as Landlord shall reasonably
require, including, but not limited to, the condition that the Lafayette Factory
Expansion and/or any Additional Improvements be architecturally harmonious in
both material and design with the 390 Lafayette Factory Premises and/or the
other existing buildings comprising the Leased Premises, as applicable; and

                  (v) Evidence that all requirements of Lender as set forth in
the Mortgage with respect to the construction of the Lafayette Factory
Expansion, the construction of the Additional Improvements, the conveyance of
the Expansion Unit or Released Unit, and/or any Condominium related
requirements, as applicable, have been satisfied.

            (b) It is the intention of Landlord and Tenant and both parties
hereby agree that neither the Condominium Documents nor any other documents
intended to create a condominium form of ownership of the Leased Premises or any
portion therefore shall be recorded except in connection with the construction
of any Additional Improvements as provided for in Paragraphs 36 and 37 herein.

            (c) Notwithstanding anything to the contrary contained herein, at
all times during the existence of the Condominium, (i) the maximum number of
Units (as defined in the Condominium Documents) that may be created within the
Excess Land shall be two (2) Units, (ii) the maximum aggregate footprint square
footage of all of the Units on the Excess Land shall not exceed 397,254 square
feet, and (iii) Unit 2 and Unit 3, in the aggregate shall have not less than
fifty-one (51%) of the undivided interest in the Common Area.

      39. Security Deposit.

            (a) Concurrently with the execution of this Lease Tenant shall
deliver to Landlord a security deposit (the "Security Deposit") in the amount of
ONE MILLION FIVE HUNDRED NINE SEVEN THOUSAND TWO HUNDRED EIGHTY THREE AND
NO/100_ ($1,597,283.00) DOLLARS. The Security Deposit shall be in the form of an
irrevocable letter of credit (the "Letter of Credit") and shall be issued by a
bank acceptable to Landlord and having a

                                      -50-
<PAGE>

long-term unsecured debt rating of not less than "A" from Standard A Poor's
Corporation and in form and substance satisfactory to Landlord. The Security
Deposit shall remain in full force and effect during the Term as security for
the payment by Tenant of the Rent and all other charges or payments to be paid
hereunder and the performance of the covenants and obligations contained
herein, and the Letter of Credit shall be renewed at least thirty (30) days
prior to any expiration thereof. If Tenant fails to renew the Letter of Credit
by such date, time being of the essence, Landlord shall have the right at any
time after the thirtieth (30th) day before such expiration date to draw on the
Letter of Credit and to deposit the proceeds of the Letter of Credit as a cash
security deposit (the "Cash Security Deposit") in any account for the benefit of
Landlord or to declare an Event of Default. The Cash Security Deposit shall not
be commingled with other funds of Landlord or other Persons and no interest
thereon shall be due and payable to Tenant.

            (b) If at any time an Event of Default shall have occurred and be
continuing, Landlord shall be entitled, at its sole discretion, to draw on the
Letter of Credit or to withdraw the Cash Security Deposit from the
above-described account and to apply the proceeds in payment of (i) any Rent or
other charges for the payment of which Tenant shall be in default, (ii) prepaid
Basic Rent, (iii) any expense incurred by Landlord in curing any default of
Tenant, and/or (iv) any other sums due to Landlord in connection with any
default or the curing thereof, including, without limitation, any damages
incurred by Landlord by reason of such default, including any rights of Landlord
under Paragraph 23 or to do any combination of the foregoing, all in such order
or priority as Landlord shall so determine in its sole discretion and Tenant
acknowledges and agrees that such proceeds shall not constitute assets or funds
of Tenant or its estate, or be deemed to be held in trust for Tenant, but shall
be, for all purposes, the property of Landlord (or Lender, to the extent
assigned). Tenant further acknowledges and agrees that (1) Landlord's
application of the proceeds of the Letter of Credit or Cash Security Deposit
towards the payment of Basic Rent, Additional Rent or the reduction of any
damages due Landlord in accordance with Paragraph 23 of this Lease, constitutes
a fair and reasonable use of such proceeds, and (2) the application of such
proceeds by Landlord towards the payment of Basic Rent, Additional Rent or any
other sums due under this Lease shall not constitute a cure by Tenant of the
applicable default provided that an Event of Default shall not exist if Tenant
restores the Security Deposit to its full amount within five (5) days and in
accordance with the requirements of this Paragraph 39, so that the original
amount of the Security Deposit shall be again on deposit with Landlord.

            (c) Notwithstanding anything to the contrary contained in this
Paragraph 39; provided that no monetary Event of Default shall have occurred at
any time during the Term, then, if on any anniversary date subsequent to the
second (2nd) anniversary of the Basic Rent Payment Date on which the first full
quarterly installment of Basic Rent was due under this Lease, if Tenant shall
have maintained for the four (4) calendar quarters immediately preceding such
anniversary date (i) a Consolidated Tangible Net Worth (as defined below) of not
less than $35,000,000, (ii) a Debt Ratio (as defined below) of not greater than
3.75:1, and (iii) a Fixed Charge Coverage Ratio (as defined below) of not less
than 2.15:1 ((i) through(iii) are hereinafter referred to as the "L/C Reduction
Criteria"), then the Security Deposit as required under this Paragraph 39 shall
be reduced to $798,641.50, and upon Tenant's delivery of a written request for
such reduction based upon compliance with the foregoing requirements and
delivery of a replacement Letter of Credit in the required amount (and otherwise
meeting the requirements of this Paragraph 39), the existing Letter of Credit
shall be released to Tenant (or at Tenant's direction, to the issuer thereof);
provided, further, that if for any two (2) consecutive calendar quarters
following the L/C Reduction Date Tenant shall fail to maintain the L/C Reduction
Criteria, then the obligation of Tenant to maintain the Security Deposit as
required under this Paragraph 39 shall be automatically reinstated and Tenant
shall redeliver the Security Deposit initially required hereunder to Landlord
with in ten (10) Business Days of Landlord's request therefor.

                                      -51-
<PAGE>

            (d) Subject to the provisions of Paragraph 39(c) above, at the
expiration of the Term and so long as no Event of Default exists the Letter of
Credit or the Cash Security Deposit, as the case may be, shall be returned to
Tenant.

            (e) Landlord shall have the right to designate Lender or any other
holder of a Mortgage as the beneficiary of the Letter of Credit or the holder of
the Cash Security Deposit during the term of the applicable Loan, and such
Lender or other holder of a Mortgage shall have all of the rights of Landlord
under this Paragraph 39. Tenant covenants and agrees to execute such agreements,
consents and acknowledgments as may be requested by Landlord from time to time
to change the holder of the Security Deposit as hereinabove provided.

            (f) For purposes of Paragraph 39(c) above, the following terms shall
have the respective meanings set forth below:

            "Applicable Period" shall mean with respect to any calculation
utilized for the purpose of Paragraph 39(c), the twelve consecutive months
immediately preceding the date of such calculation.

            "Bonds" means any surety or performance bond issued by a bond issuer
with respect to the performance of the obligations of a Person under any
contract, pursuant to which such bond issuer guaranties such Person's
performance.

            "Consolidated Net Income" shall mean, for any period, the aggregate
Net Income (or Loss) of such Person and its Subsidiaries for such period on a
consolidated basis, determined in accordance with GAAP.

            "Consolidated Tangible Net Worth" shall mean, at any date, the
tangible net worth of Tenant and its Subsidiaries on a consolidated basis,
determined in accordance with GAAP.

            "Debt Ratio" shall mean the ratio of Indebtedness to EBITDA.

            "EBITDA" means, for any Applicable Period, Net Income plus interest
expense, taxes, management fees, depreciation and amortization.

            "EBITDAR" means, for any Applicable Period, Net Income, plus Fixed
Charges, taxes, management fees, depreciation and amortization.

            "Fixed Charges" means, for any period, (a) cash interest expense,
plus (b) rental payments with respect to this Lease.

            "Fixed Charge Coverage Ratio" shall mean the ratio of EBITDAR to
Fixed Charges.

            "Indebtedness" means, tor any Person, (i) all outstanding
obligations for borrowed money or for the deferred purchase price of property or
services or in respect of reimbursement obligations under letters of credit,
(ii) all obligations represented by debentures, notes, or similar instruments,
or accepted drafts that represent extensions of credit, (iii) all obligations
(including, during the non-cancellable term of any lease in the nature of a
title retention agreement, all future payment obligations under such lease
discounted to their present value in accordance with GAAP, but excluding
obligations under leases which, in accordance with GAAP, are true operating
leases and are not in the nature of a title retention agreement) secured by any
lien to which any property or asset owned or held by such Person is subject,
whether or not the obligation secured thereby shall have been assumed by such
Person

                                      -52-
<PAGE>

(excluding any contingent obligations with respect to any Bonds), (iv) all
obligations for which such Person is obligated pursuant to a guaranty,
including, but not limited to, all obligations of such Person consisting of
recourse liability with respect to accounts receivable sold or otherwise
disposed of by such Person, excluding, however, contingent obligations of such
Person or any of its Subsidiaries with respect to any Bond, (v) all outstanding
obligations under the capitalized portion of any lease obligations under
capitalized leases, excluding, however, contingent obligation of such Person or
any of its Subsidiaries with respect to any Bonds, and (vi) the loans with
respect to such Person and its Subsidiaries (without duplication); provided,
that preferred stock of such Person and any debt held by Stephen Foss or any
members of his immediate family shall not constitute "Indebtedness" under this
Lease.

            "Net Income" or "Net Loss" means, as applied to any Person, the net
income (or net loss) of such Person for the period an question after giving
effect to deduction of or provision for all operating expenses, all taxes and
reserves (including reserves for deferred taxes and all other proper
deductions), all determined in accordance with GAAP, provided that there shall
be excluded: (a) the net income (or net loss) of any other Person accrued prior
to the date it becomes a Subsidiary of, or is merged into or consolidated with,
the Person whose Net Income is being, determined or a Subsidiary of such Person,
(b) the net income (or net loss) of any other Person in which the Person whose
Net Income is being determined or any Subsidiary of such Person has an ownership
interest that is less than a 100% ownership interest, except, in the case of net
income, to the extent that any such income has actually been received by such
Person or such Subsidiary in the form of cash dividends or similar
distributions, (c) any restoration of any contingency reserve not in the
ordinary course of business, except to the extent that provision for such
reserve was made out of income during such period, (d) any write-up of any
asset, except any write-up of any asset in the ordinary course of such Person's
business in accordance with the percentage of completion rules under GAAP, and
(f) any other extraordinary item.

            "Subsidiary or "Subsidiaries"" of any Person means any corporation a
majority of the Voting Stock of which is at the time owned, or the management of
which is otherwise controlled, directly or indirectly, through one or
intermediaries, or both, by such Person.

            "Voting Stock" means shares of stock of a corporation having
ordinary voting power to elect the board of directors or other managers of such
corporation.

      40. Miscellaneous.

            (a) The Paragraph headings in this Lease are used only for
convenience in finding the subject matters and are not part of this Lease or to
be used in determining the intent of the parties or otherwise interpreting this
Lease.

            (b) As used in this Lease, the singular shall include the plural and
any gender shall include all genders as the context requires and the following
words and phrases shall have the following meanings: (i) "including" shall mean
"including without limitation"; (ii) "provisions" shall mean "provisions, terms,
agreements, covenants and/or conditions"; (iii) "lien" shall mean "Lien, charge,
encumbrance, title retention agreement, pledge, security interest, mortgage
and/or deed of trust"; (iv) "obligation" shall mean "obligation, duty,
agreement, liability, covenant and/or condition"; (v) "any of the Leased
Premises" shall mean "the Leased Premises or any part thereof or interest
therein"; (vi) "any of the Land" shall mean "the Land or any part thereof or
interest therein"; (vii) "any of the Improvements" shall mean "the Improvement
or any part thereof or interest therein"; and (viii) "any of the Equipment"
shall mean "the Equipment or any part thereof or interest therein".

                                      -53-
<PAGE>

            (c) Any act which Landlord is permitted to perform under this Lease
may be performed at any time and from time to time by Landlord or any person or
entity designated by Landlord. Each appointment of Landlord as attorney-in-fact
for Tenant hereunder is irrevocable and coupled with an interest. Landlord shall
not unreasonably withhold or delay its consent whenever such consent is required
under this Lease, except as otherwise provided herein and except that with
respect to any assignment or this Lease or subletting of any Related Premises
not expressly permitted by the terms of this Lease, Landlord may withhold, its
consent for any reason or no reason. In any instance in which Landlord agrees
not to act unreasonably, Tenant hereby waives any claim for damages against or
liability of Landlord which is based upon a claim that Landlord has unreasonably
withheld or unreasonably delayed any consent or approval requested by Tenant,
and Tenant agrees that its sole remedy shall be an action for declaratory
judgment. If with respect to any required consent or approval Landlord is
required by the express provisions of this Lease not to unreasonably withheld or
delay its consent or approval and if it is determined in any such proceeding
referred to in the preceding sentence that Landlord acted unreasonably, the
requested consent or approval shall be deemed to have been granted; however,
Landlord shall have no liability whatsoever to Tenant for its refusal or failure
to give such consent or approval. Tenant's sole remedy for Landlord's
unreasonably withholding or delaying, consent or approval shall be as provided
in this Paragraph. Time is of the essence with respect to the performance by
Tenant of its obligation under this Lease.

            (d) Landlord shall in no event be construed for any purpose to be a
partner, joint venturer or associate of Tenant or of any subtenant, operator,
concessionaire or licensee of Tenant with respect to any of the Leased Premises
or otherwise in the conduct of their respective businesses.

            (c) This Lease and any documents which may be executed by Tenant on
or about the effective date hereof at Landlord's request constitute the entire
agreement between the parties and supersede all prior understandings and
agreements, whether written or oral, between the parties hereto relating to the
Leased Premises and the transactions provided for herein. Landlord and Tenant
are business entities having substantial experience with the subject matter of
this Lease and have each fully participated in the negotiation and drafting of
this Lease. Accordingly, this Lease shall be construed without regard to the
rule that ambiguities in a document are to be construed against the drafter.

            (f) This Lease may be modified, amended, discharged or waived only
by an agreement in writing signed by the party against whom enforcement of any
such modification, amendment, discharge or waiver is sought.

            (g) The covenants of this Lease shall run with the land and bind
Tenant, its successors and assigns and all present and subsequent encumbrancers
and subtenants of any of the Leased Premises, and shall inure to the benefit of
Landlord, its successors and assigns. If there is more than one Tenant, the
obligations of each shall be joint and several.

            (h) Notwithstanding any provision in this Lease to the contrary, all
Surviving Obligations of Tenant shall survive the expiration or termination of
this Lease with respect to any Related Premises.

            (i) If any one or more of the provisions contained in this Lease
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Lease, but this Lease shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.

                                      -54-
<PAGE>

            (j) All exhibits attached hereto are incorporated herein as if fully
set forth.

            (k) Each of Landlord and Tenant hereby agree that the State of New
Hampshire has a substantial relationship to the parties and to the underlying
transaction embodied hereby, and in all respects (including, without limiting
the generality of the foregoing, matters of construction, validity and
performance) this Lease and the obligations arising hereunder shall be governed
by, and construed in accordance with, the laws of the State of New Hampshire
applicable to contracts made and performed therein and all applicable law of the
United State of America, and Tenant waives any objection which it may now or
hereafter have to the laying of venue of any such suit, action or proceeding in
such State, and Tenant hereby expressly and irrevocably submits to the
jurisdiction of any such court in any suit, action or proceeding.
Notwithstanding the foregoing nothing herein shall prevent or prohibit Landlord
from instituting any suit, action or proceeding in any other proper venue or
jurisdiction in which Tenant is located or where service of process can be
effectuated.

      41. Post-Closing Obligations. Pursuant to that certain Report of Property
Condition Assessment prepared by Professional Service Industries, Inc. (PSI
Project No. 888-4E039) and dated _______________, 2004, and that certain Phase
I Environmental; Site Assessment of the Leased Premises prepared by Professional
Services Industries, Inc. and dated June 14, 2004, Tenant shall complete or
caused to be completed the Post Closing Obligations within the time periods
specified in Exhibit "I".

            (b) On the date hereof, Tenant has deposited with Landlord the
amount of $48,912.50 (the "Post-Closing Escrow") which shall be allocated to
each of the Post-Closing Obligations in the amounts shown on Exhibit "T", shall
secure the obligation of Tenant to complete the Post-Closing Obligations, and
shall be held and disbursed as set forth in this Paragraph 41. The Post-Closing
Escrow shall be released to Tenant within thirty (30) days following the date on
which Landlord receives written and photographic evidence satisfactory to
Landlord and Lender that all Post-Closing Obligations have been completed (which
shall include written and photographic evidence and evidence of payment in
full).

            (c) If, at any time prior to the release of the Post-Closing Escrow,
an Event of Default shall have occurred and be continuing Landlord shall use the
proceeds of the Post-Closing Escrow to The extent required to satisfy the
Post-Closing Obligations, and be entitled at its sole discretion, to apply any
remaining balance in payment of any Rent or Other charges which have not been
made pursuant to this Lease and any other sums due to Landlord in connection
with any default or the curing thereof, including without limitation, any
damages incurred by Landlord by reason of such default. Tenant acknowledges and
agrees that such proceeds shall not constitute assets or funds of Tenant or its
estate, or be deemed to be held in trust for Tenant, but shall be, for all
purposes, the property of Landlord (or Lender, to the extent assigned). Tenant
further acknowledges and agrees that Landlord's application of the proceeds of
the Post-Closing Escrow towards the payment of Basic Rent, Additional Rent or
the reduction of any damages due Landlord in accordance with Paragraph 23 of
this Lease, constitute a fair and reasonable use of such proceeds, and the
application of such proceeds by Landlord towards the payment of Basic Rent,
Additional Rent or any other sums due under this Lease shall not constitute a
cure by Tenant of the applicable default, provided that an Event of Default
shall not exist if Tenant restores the Post-Closing Escrow to its full amount
within three (3) days and in accordance with the requirements of this Paragraph
41, so that the applicable amount of the Post-Closing Escrow shall be again on
deposit with Landlord.

            (d) Landlord shall have the right to designate Lender or any other
holder of a Mortgage as the holder of the Post-Closing Escrow during the term of
the applicable

                                      -55-
<PAGE>

Loan who shall have all of the rights of Landlord under this Paragraph 41,
provided that Lender shall not be obligated to release the Post-Closing Escrow
unless and until any release conditions contained in the Mortgage have been
satisfied. Tenant covenants and agrees to execute such agreements, consents and
acknowledgements as may be requested by Landlord from time to time to change the
holder of the Post-Closing Escrow as hereinabove provided.

      Tenant shall provide all communications regarding the Post Closing
Obligations specified in Section II of this Exhibit "I", including Tenant's
proof of satisfactory completion of these obligations to Landlord, addressed to;

                           Louis A. Naugle, Esquire
                           Reed Smith L.L.P
                           435 Sixth Avenue
                           Pittsburgh, PA  15219
                           Telephone: 412-288-8586
                           Fax: 412-288-3063
                           E-mail: Inangle@reedsmith.com

                                      -56-
<PAGE>

      IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be duly
executed under seal as of the day and year first above written.

                                          LANDLORD:
                                          FOSS (NH) QRS 16-3, INC.,

                                          By: /s/  Anne R. Coolidge
                                              -----------------------
                                          Name: Anne R. Coolidge
                                          Title: Managing Director

ATTEST:                                   TENANT:
                                          FOSS MANUFACTURING  COMPANY, INC.

By /s/ John J. Ryan                       By: /s/ Stephen W. Foss
   -----------------                          --------------------------
Name: John J. Ryan                        Name: Stephen W. Foss
Title: Secretary                          Title: President

[Corporate Seal]
<PAGE>

                                                                       EXHIBIT A
                                    PREMISES

                    TRACT I - 390 LAFAYETTE FACTORY PREMISES

         A certain lot of land with the buildings thereon situated on the
southerly sideline of Exeter Road, in the Town of Hampton, County of Rockingham,
State of New Hampshire being bounded and described as follows:

         Beginning at a 3/4" iron pin found (flush) along the southerly sideline
of Exeter Road at the northeast corner of Land now or formerly of Gertrude
Lougee; said pin being located S 60 degrees 41' 43" E, 63.12 feel from a 2 foot
high vertical rail found with scribed "X"; thence along said road S 33 degrees
13' 28" E, 45.76 feet to a 3/4" iron pin found 0.1 feet underground at land now
or formerly of Boston & Maine Railroad Corporation; thence along said railroad
land S 29 degrees 33' 53" W, 49.60 feet; thence by said land S 60 58' 12" E,
17.02 feet to a 3/4" iron pin found 0.3 feet underground; thence along said
railroad land the following courses; S 29 degrees 43' 00" W, 456.00 feet to an
iron pin; thence N 66 degrees 29' 11" W , 25.10 feet to an iron pin; thence S 29
degrees 43' 00" W, 511.41 feet to an iron pin; thence N 63 degrees 40' 38" W,
10.02 feet to an iron pin; thence S 29 degrees 43' 00" W, 567.00 feet to a point
at land now or formerly of Foss Realty, Inc., said point being located S 65
degrees 17' 04" W, 1.38 feet from a 5" square granite bound found 1 foot high;
thence along said Foss Realty land the following courses; N 85 degrees 20' 52"
W, 178.57 feet; thence N 84 degrees 51' 21" W, 193.48 feet; thence N 86 degrees
13' 31" W, 64.37 feet; thence N 84 degrees 11' 51" W, 445.12 feet; thence 85
degrees 47' 11" W, 265.51 feet to an iron pin; thence N 86 degrees 50' 11" W,
196.56 feet; thence N 85 degrees l4' 01" W, 194.42 feet to a point on the
easterly right of way sideline to New Hampshire Route 51; said point being
located N 24 degrees 43' 43" W, 210.03 feet from a New Hampshire Highway bound
found; thence, along said sideline northwesterly along a curve concave to the
east having a radius of 5,025.00 feel and a length of 473.52 feet with a Delta
of 5 degrees 23' 57" and Chord/Bearing of 473.35 feet/ N 20 degrees 49' 53" W to
a New Hampshire Highway bound found; thence, by said sideline N 71 degrees 54'
13" E, 25.08 feet to a new Hampshire Highway Bound found: thence along said
sideline northwesterly along a curve concave to the East having a radius of
5,000,00 feet and length of 414.17 feet with a delta of 4 degrees 44' 46" and a
chord/bearing of 414.05 feet, N 15 degrees 45' 32" W to land now or formerly of
the Timberland Company; thence along said land the following courses; S 68
degrees 07' 38" E, 392.53 feet to an iron pin; thence N 25 degrees 12' 59" E,
71.04 feet to an iron pin; thence S 78 degrees 21' 41" E, 320.08 feet to a 30
inch red oak with wire; thence S 77 degrees 17' 21" E, 112.59 feet; thence S 77
degrees 42' 11" E, 356.23 feel; thence S 78 degrees 17' 21" E, 105.46 feet;
thence S 78 degrees 56' 11" E, 238.90 feet to an iron pin; thence S 8 degrees
36' 31" E, 12.19 feet to an iron pin; thence S 79 degrees 51' 51" E, 216.42
feet; thence S 77 degrees 26' 11" E, 132.37 feet to a road nail in pavement at
the southeast corner of said land of Timberland Company; thence N 24 degrees 09'
08" E, 37.23 feet; thence N 21 degrees 42' 08" E, 298.32 feet to a 12 inch spike
set in northeast base of 24 inch while pine with wire at corner of fence; thence
N 68 degrees 25' 32" W, 1,106.86 feet to a 2 inch iron pipe found 1 foot high;
thence N 22 degrees 38' 03" E, 241.73 feet to land now or formerly of Gertrude
Lougee; thence along land of said Lougee the following courses: S 64 degrees 03'
04" E, 114.66 feet to a 3/4 inch iron pin set 0.5 feet high with cap at base of
fence post; thence S 64 degrees 03' 04" E, 286,13 feet to a nail set in 30 inch
red oak with barbed wire; thence S 61 degrees 57' 55" E, 190.59 feet to a nail
set in 30 inch beech with barbed wire; thence S 65 degrees 21' 26" E, 426.20
feet to a nail set in 24 inch yellow birch with barbed wire; thence S 66 degrees
14' 16" E, 269.9l feet to a 3/4 inch iron pin with Hislop cap set at base of
fence post; thence S 75 degrees 05' 15" E, 106.48 feet to an iron pin at the
southeast corner of said land now or formerly of Gertrude Lougee; thence N 29
degrees 42' 36" E, 290.07 feet to a t-bar found flush; thence N 29 degrees 42'
37" E, 242.43 feet to the point of beginning.

         The above described parcel containing 37.62 acres is more particularly
shown on plan entitled "As Built Land Title Survey" of land owned by Foss
Manufacturing Company, Inc.,

<PAGE>
by Knight Hill Land Surveying Services, Inc., dated July, 1998, and recorded at
the Rockingham County Registry of Deeds as Plan #D-26503.

         Meaning and intending to convey and describe the premises acquired by
the Grantor herein by deed recorded in the Rockingham County Registry of Deeds
at Book 3631, Page 2762.

         The above described property includes the rights granted under a
certain easement granted by the Boston and Maine Corporation described in an
easement deed recorded at the Rockingham County Registry of Deeds at Book 2261,
Page 1262 which easement allows for passage under the railroad trestle to gain
access from Lafayette Road to the above described premises as shown on Plan
#D-26503.

         The above described property also includes the rights granted to Foss
Manufacturing Company, LLC under a certain "Declaration of Reciprocal Easements"
recorded in the Rockingham County Registry of Deeds at Book 3631, Page 2715.

                    TRACT II - 380 LAFAYETTE OFFICE PREMISES

         A certain lot of land with the buildings thereon situated on the
westerly sideline of Lafayette Road, in the Town of Hampton, County of
Rockingham and State of New Hampshire being bounded and described as follows:

         Beginning at a point on the easterly right of way sideline of Boston &
Maine Railroad Corp. at the northwest corner of land now or formerly of Joseph F
Lorusso, II; said point being located N 72 degrees 11' 47" W, 4.98 feet from a 3
inch iron pipe found 3 feet high; thence N 29 degrees 43' 00" E, 220.77 feet to
a point along an access right of way at land now or formerly of Foss Realty,
Inc.; said point being located S 63 degrees 25' 02" E, 23.46 feet from a 2 inch
iron pipe found 0.2 feet high; thence, along said Foss Realty Land along said
right of way the Following courses: S 79 degrees 09' 50" E, 105.43 feet; thence
S 74 degrees 14' 47" E, 92.50 feet; thence S 63 degrees 13' 39" E, 63.55 feet to
a railroad spike in pavement at the westerly right of way sideline of lafayette
Road; thence along said road sideline the following courses: S 24 degrees 37'
14" W, 44.52 feet; thence S 22 degrees 48' 44" W, 96.21 feet; along a curve
concave to the southeast having a radius of 730 feet; and length of 40.00 feet
with a delta of 3 degrees 08' 22" and chord/bearing of 39.99 feet; S 21 degrees
14' 33" W, S 19 degrees 40' 14" W, 35.88 feet to an iron pin at land now or
formerly of Joseph J. Lorusso II; thence, along said land S 73 degrees 27' 47"
E, 288.26 feet to the point of beginning.

         The above described parcel containing 1.39 acres is more particularly
shown on a plan entitled "As Built Land Title Survey" of land owned by Foss
Manufacturing Company, Inc., by Knight Hill Land Surveying Services, Inc. dated
July 1998 and recorded in the Rockingham County Registry of Deeds as Plan
#D-26503.

         The above premises include the rights granted under a Declaration of
Reciprocal Easements recorded in the Rockingham County Registry of Deeds at Book
3631, Page 2715.

                       TRACT III - MERRILL DRIVE PREMISES

         A certain lot or land with the buildings thereon situated along the
southerly terminus of Merrill Industrial Drive in the Town of Hampton, County of
Rockingham and State of New Hampshire, being bounded and described as follows:

<PAGE>

         Beginning at a 1 1/2 inch iron pipe at the southwest corner of land now
or formerly of Foss Manufacturing Company, Inc.; thence along land of said Foss
N 22 degrees 38' 03" E, 241.73 feet to a brook at the northern most corner of
the herein described lot at land now or formerly of Snap On Tools Corporation;
thence westerly along land of Snap On Tools, the terminus of Merrill Industrial
Drive and land now or formerly of Continental Microwave and Tool Company all
along said brook 715 feet +/- to Drakes River at land now or formerly of Towle
Farm Road Riverwalk Condominiums; thence southwesterly along land of said
condominiums and land now or formerly of Elanor Woodman all at Long Drakes Drive
925 feet +/- to Route 51 right of way boundary thence along said Route 51
boundary southeasterly along a curve concave to the East having a radius of
5,000 feet and a length of 71.78 feet +/- with a delta of 00 degrees 49' 21" and
chord bearing of 71.78 feet S 12 degrees 58' 29" E to a point at land now or
formerly of Foss Manufacturing Company, Inc., said point being located S 62
degrees 08' 47" W, 1172.75 feet from the said northernmost lot corner at brook;
thence along said land the following courses: S 68 degrees 07' 38" E, 392.53
feet to an iron pin; thence N 25 degrees 12' 59" E, 71.04 feet to an iron pin;
thence S 78 degrees 21' 41" E, 320.08 feet to a 40" red oak with wire; thence S
77 degrees 17' 21" E, 112.59 feet; thence S 77 degrees 42' 11" E, 356.23 feet;
thence S 78 degrees 17' 21" E, 105.46 feet; thence S 78 degrees 56' 11" E,
238.90 feet to an iron pin; thence S 08 degrees 36' 31" E, 12.19 feet to an iron
pin; thence S 79 degrees 51' 51" E, 216.42 feet; thence S 77 degrees 26' 11" E,
132.27 feet to a road nail; thence N 24 degrees 09' 08" E, 37.23 feet; thence N
21 degrees 42' 08" E, 298.32 feet to a spike in pine at fence corner at land now
or formerly of Foss Realty, Inc.; thence along said land of Foss Realty, Inc. N
68 degrees 25' 32" W, 1,106.86 feet to the point of beginning.

      The above described parcel containing 23.6 acres is more particularly
shown on a plan entitled "As Built Land Title Survey of Land Owned by Foss
Manufacturing Company, Inc;" by Knight Hill Land Surveying Services, Inc., dated
July 1998 and recorded at the Rockingham County Registry of Deeds as Plan
#D-26503.

         Also included hereunder is the right of the Grantor, its successors,
assigns, licensees, invitees, in common with other # s to pass and repass over
Industrial Drive as shown on a plan entitled "Consolidation and Subdivision Plan
of Land, Towle Farm Road Realty Trust" dated May 26, 1982 which plan is recorded
in the Rockingham County Registry of Deeds as Plan # D-11609.

         The above described premises include the rights granted under the
Declaration of Reciprocal Easements recorded at the Rockingham County Registry
of Deeds at Book 3631, Page 2715.

                           TRACT IV - 13 ACRE PARCEL

      A certain parcel of land situate on the southwesterly side of Exeter
Road, so-called, in the Town of Hampton, County Rockingham and State of New
Hampshire containing 13.1 acres, and being bounded and described as follows:

         Beginning at point on the westerly side of the B & M Railroad tracks,
thence N 75 degrees 05' 15" W for a distance of 106.48 feet to a point; thence N
66 degrees 14' 16" W for a distance of 269.91 feet to a point; thence N 65
degrees 21' 26" W for a distance of 426,20 feet to a point; thence N 61 degrees
57' 55" W for a distance of 190.59 feet to a point; thence N 64 degrees 03' 04"
W for a distance of 286.13 feet to a point; thence N 64 degrees 03' 04" W for a
distance of 114.66 feet to a point; thence along a brook along a survey tie line
N 67 degrees 14' 07" E for a distance of 545.48 feet to a point; thence N
25 degrees 01' 43" W for a distance of 177.73 feet to; a point; thence N 86
degrees 11' 52" E for a distance of 114.96 feet to a point; thence N 84 degrees
06' 16" E for a distance of 151.51 feet to a point; thence N 85 degrees 42' 04"
E for a distance of 394.59 feet to a point; thence N 85 degrees 42' 04" E for a

<PAGE>

distance of 31.13 feet to a point; thence S 29 degrees 46' 48" E for a distance
of 19.18 feet to a point; thence S 29 degrees 46' 48" E for a distance of 185.55
feet to a point; thence S 83 degrees 58' 50" W for a distance of 398.84 feet to
a point; thence S 16 degrees 14' 16" E for a distance of 119.07 feet to a point;
thence S 87 degrees 20' 16" W for a distance of 300 feet to a point; thence S 22
degrees 33' 22" E for a distance of 163.10 feet to a point; thence S 64 degrees
39' 37" E for a distance of 6.35 feet; thence S 84 degrees 34' 59" E for a
distance of 159.77 feet to a point; thence S 80 degrees 08' 44" E for a distance
of 448.88 feet to a point; thence S 53 degrees 51' 12" E for a distance of
168.60 feet to a point; thence N 32 degrees 03' 03" E for a distance of 212.15
feet to a point; thence N 32 degrees 03' 03" E for a distance of 33.74 feet to a
point; thence S 28 degrees 30' 03" E along Exter Road for a distance of 23.93
feet to a point; thence S 33 degrees 48' 23" E still along said Exeter Road for
a distance of 46.27 feet to a point; thence S 29 degrees 42' 37" W for a
distance of 242.43 feet to a point thence S 29 degrees 42' 36" W for a distance
of 290.07 feet to the point of beginning.

         Meaning and intending to describe a 13.1 +/- acre tract shown on a plan
entitled "Standard Boundary Survey Plan of Land Owned by Foss Manufacturing
Company, Inc." known as Town of Hampton Tax Map 143, Lot 19.

         This conveyance includes the rights granted under a Declaration of
Reciprocal Easements recorded at the Rockingham County Registry of Deeds at Book
3631, Page 2715.

                             TRACT V - 21 ACRE TRACT

      A certain tract or parcel of land situated in the Town of Hampton, County
of Rockingham and State of New Hampshire and bounded and described as follows:

         Beginning a point at an iron pipe on the westerly side of the B & M
Railroad tract property, thence N 88 degrees 00' 42" W for a distance of 231.38
feet to a point; thence N 88 degrees 22' 36" W for a distance of 20.64 feet to a
point; thence N 87 degrees 37' 17" W for a distance of 140.46 feet to a point;
thence N 88 degrees 08' 05" W for a distance of 226.66 feet to a point; thence N
26 degrees 00' 00" W for a distance of 178.61 feet to a point; thence N 26
degrees 00' 00" W for a distance of 643.37 feet to a point; thence along a curve
with a radius of 5025 feet and a length of 210.05 feet with a delta of 02
degrees 23' 42" and chord bearing of 210.03 feet N 24 degrees 43' 42" W to a
point; thence S 85 degrees 14' 01" E for a distance of 194.42 feet to a point;
thence S 86 degrees 50' 11" E for a distance of 196.56 feet to a point; thence S
85 degrees 47' 11" E for a distance of 265.51 feet to a point; thence S 84
degrees 11' 51" E for a distance of 445.12 feet to a point; thence S 86 degrees
13' 31" E for a distance of 64.37 feet to a point; thence S 84 degrees 51' 21" E
for a distance of 193.48 feet to a point; thence S 85 degrees 20' 52" E for a
distance of 178.57 feet to a point; thence S 85 degrees 20' 52" E for a distance
of 5.51 feet to a point; thence S 29 degrees 43' 00" W for a distance of 584.12
feet to a point; thence along a curve with a radius of 10777 feet and a length
of 123.93 feet with a delta of 00 degrees 39' 33" and a chord bearing of 123.98
feet S 30 degrees 02' 46" W to a point; thence S 22 degrees 44' 07" W for a
distance of 40.36 feet to a point; thence along a curve with a radius of
10782.68 feet and a length of 200.52 feet with a delta of 01 degrees 03' 56" and
a chord bearing of 200.52 feet S 31 degrees 12' 04" W to the point of begining.

         Meaning and intending to describe a certain "21 acre tract" shown as
Tax Map 175, Lot 7 on a plan for Foss Manufacturing Company Inc. recorded at the
Rockingham County Registry of Deeds as Plan #D26503, sheet 2 of 3.

         Subject to and with the benefit of a Declaration of Reciprocal
Easements recorded at the Rockingham County Registry of Deeds at Book 3631, Page
2715.

<PAGE>

                                                                       EXHIBIT B

                             MACHINERY AND EQUIPMENT

      All machinery, equipment fixtures and related apparatus of every kind and
nature whatsoever now or hereafter affixed or attached to or installed in any of
the Leased Premises and useful or necessary for the operation of the buildings
including fire prevention and protection, fine alarms, sprinklers, fire pumps,
building HVAC systems and related ductwork and equipment, heating burner and
boiler, steam piping and fuel storage tanks necessary for heating, lighting
(including hanging fluorescent lighting not utilized exclusively in conjunction
with the manufacturing process), plumbing for building facilities, doors,
windows, loading platforms, lavatory facilities, stairwells, fencing, passenger
& freight elevators, overhead cranes, and building electrical distribution
equipment attached or installed in any of the leased premises, together with all
additions thereto, substitutions therefor and replacements thereof required or
permitted by this Lease; but excluding all personal property and all trade
fixtures, machinery, office, manufacturing and warehouse equipment which are
utilized by Tenant in connection with its manufacturing, warehousing, and office
operations (and all uses permitted under Paragraph 4(a) of the Lease), including
any co-generation equipment now or hereafter located at any of the Related
Premises (and specifically including all items listed in the appraisal report
prepared by Republic Associates, dated as of December 30, 2003 (a true, correct,
and complete copy thereof having been provided to Landlord by Tenant), plus any
replacements thereof or additions thereto during the Term of the Lease.

<PAGE>

                                                                       EXHIBIT C

                             PERMITTED ENCUMBRANCES

                    TRACT I - 390 LAFAYETTE FACTORY PREMISES

      1 . The provisions of and covenants recited in a deed of the Town of
Hampton recorded in the Rockingham County Registry of Deeds at Book 2994, Page
0221 as follows:

      1) subject to the covenant and agreement to maintain a fence if required,
      2) subject to the rights of ingress and egress, 3) together with rights of
      ingress and egress, 4) excepting herefrom pipes, poles, wires, signal P
      466 and underground facilities, 5) the right to enter upon the premise to
      maintain repair, replace, renew, relay and remove the same, 6) subject to
      the restrictions of non-liability for damages caused by fire, 7) subject
      to the right of the Boston and Maine Railroad to enter upon the premises
      to inspect, repair, maintain and/or reconstruct the overhead highway
      bridge at Exeter Road, 8) subject to an easement granted 11/1/50 between
      the Boston and Maine Railroad and the Town of Hampton, 9) and subject also
      to any rights of way as June now exist on and over said parcel, all as
      contained in deed of Boston and Maine Railroad to Hampton Plaza
      Corporation dated 5/3/62 and recorded in Rockingham County Registry of
      Deeds' at Book 1637, page 486, and is subject to such other restrictions,
      covenants and agreements contained in said Railroad deed.

         2. Subject to the restriction contained in a deed of the Town of
Hampton that said premises shall never be used for access to Exeter Road.(The
Company affirmatively insures access onto Lafayette Road in Hampton, NH).

         3. The rights, easements and obligations of a certain easement granted
by the Boston and Maine Corporation described in an easement deed recorded at
the Rockingham County Registry of Deeds at Book 2261, Page 1262 which easement
allows for passage under the railroad trestle to gain access from Lafayette Road
to the above described premises, as shown on Plan #D-26503. The Company
affirmatively insures that this easement is in full force and effect and insures
against any loss or damage to the insured by reason of any default or non-
performance by the Mortgagor under the above easement. The Company affirmatively
insures that the above described easement benefits the "Factory Parcel" premises
provided that any construction within the easement area must be approved by the
B & M Railroad.

         4. A pole line easement in favor of New England Telephone and Telegraph
Co. recorded in the Rockingham County Registry of Deeds at Book 745, Page 5.
This exception is limited to the easement as shown on Plan #D-26503. There
exists a building encroachment within the easement area. The Company
affirmatively insures against (i) forced removal of or damage to any
improvements on the insured premises and (ii) interference with the present and
proposed use of the property by reason of the above encroachment.

         5. A sewer line easement in favor of the Town of Hampton recorded at
the Rockingham County Registry of Deeds at Book 2232, Page 1208; Book 2232, Page
1747 and Book 2232, Page 1209. This exception is limited to the easement as
shown on Plan #D-26503. There is propane tank area encroachment into the
easement area in violation of the terms of the easement prohibiting flammable
materials within 3 feet of the easement. The Company affirmatively insures
against (i) forced removal of or damage to any improvements on the insured
premises and (ii) interference with the present and proposed use of the property
by reason of the above encroachment.

<PAGE>

         6. A gas line easement in favor of Northern Utilities recorded at the
Rockingham County Registry of Deeds at Book 2398, Page 1756 and Book 2398, Page
1758. This exception is limited to the easement as shown on Plan #D-26503.

         7. A 6 foot wide underground telephone cable easement in favor of New
England Telephone and Telegraph Co. recorded in the Rockingham County Registry
of Deeds at Book 1442, Page 10. This exception is limited to the easement as
shown on Plan #D-26503. The Company affirmatively insures against (i) forced
removal of or damage to any improvements on the insured premises and (ii)
interference with the present and proposed use of the property by reason of the
above encroachment.

         8. A 20 foot wide pole line easement in favor of the Exeter and Hampton
Electric Co., recorded in the Rockingham County Registry of Deeds at Book 2247,
Page 838. This exception is limited to the easement as shown on Plan #D-26503.

         9. A 17 foot pole line easement in favor of Exeter and Hampton Electric
Company as shown on a plan recorded at the Rockingham County Registry of Deeds
as Plan #D-6167. This exception is limited to the easement as shown on
Plan #D-26503.

         10. An underground 27 inch reinforced concrete pipe drain as described
in Note 15 on Plan #D-26503. Upon information received from the Town of Hampton
Public Works Department the 27 inch concrete pipe runs from land of Joseph
Lorusso into and under the Foss property and factory building and encapsulates
the route of a small brook and connects with drains on Lafayette Road.

         11. A 10 inch wide easement in favor of New England Telephone and
Telegraph Co. recorded in the Rockingham County Registry of Deeds at Book 2891,
Page 2445. This exception is limited to the easement as shown on Plan #D-26503.

         12. Declaration of Reciprocal Easements recorded in the Rockingham
County Registry of Deeds at Book 3631, Page 2715. The Company affirmatively
insures the rights as granted under the above Declaration of Reciprocal
Easements granted to the insured as successor in interest to Foss Manufacturing
Company, LLC.

         13. The "As Built" survey referenced in Exhibit A, recorded as Plan
#D-26503 discloses certain encroachments, as follows:

      -  Southeast corner of factory building encroaches across pole line
         easement and 600 square foot concrete block building encroaches.

      -  Edge of paved area adjacent to northeast corner of factory building
         encroaches onto land of Timberland.

      -  Pavement on south side or factory lot encroaches onto land of Foss
         Realty, Inc.

      -  Northwest corner of paved parking for Lot 32 encroaches onto
         railroad right-of-way.

      -  4 propane tanks encroaches onto sewer easement.

      -  380 square Foot metal building encroaches onto sewer easement.

      -  Propane storage tank encroaches over underground easement.

         14. Subject to a Conservation Easement Deed to the Town of Hampton
dated July __, 2004 to be recorded in the Rockingham County Registry of Deeds.

                                       C-2

<PAGE>

         15. Taxes and assessments for the year 2004 and subsequent years.

         16. Rights or claims of parties in possession not shown by the public
records.

         17. Easements, or claims of easements, roads, ways or streams not
shown by the public records.

         18. Any encroachments, overlaps, boundary line disputes, variations in
area or content, party walls and/or any other matters which would be disclosed
by an accurate survey or Prispection of the premises.

         19. Any facts, rights, interests, or claims which are not shown by the
public records but which could be ascertained by an inspection of said land or
by making inquiry of persons in possession thereof.

         20. Any lien, or right to a lien, for services, labor or material
heretofore or hereafter furnished, imposed by law and not shown by the public
records.

         21. Planning zoning and subdivision regulations and restrictions.

                    TRACT II - 380 LAFAYETTE OFFICE PREMISES

         1. Reciprocal Easement Declaration recorded at the Rockingham County
Registry of Deeds at Book 3631, Page 2715. The Company affirmatively insures the
rights granted under the Declaration of Reciprocal Easements.

         2. The "As Built" survey referenced in Exhibit A, recorded as Plan
#D-26503 discloses certain encroachments, as follows:

      -  Southeast corner of factory building encroaches across pole line
         easement and 600 square foot concrete block building encroaches.

      -  Edge of paved area adjacent to northeast corner of factory building
         encroaches onto land of Timberland.

      -  Pavement on south side of factory lot encroaches onto land of Foss
         Realty, Inc.

      -  Northwest corner of paved parking for Lot 32 encroaches onto
         railroad right-of-way.

      -  4 propane tanks encroaches onto sewer easement.

      -  380 square foot metal building encroaches onto sewer easement.

      -  Propane storage tank encroaches over underground easement.

         3. Subject to a Conservation Easement Deed to the Town of Hampton dated
July ___, 2004 to be recorded in the Rockingham County Registry of Deeds.

         4. Taxes and assessments for the year 2004 and subsequent years.

         5. Rights or claims of parties in possession not shown by the public
records.

                                       C-3

<PAGE>

         6. Easements, or claims of easements, roads, ways or streams not shown
by the public records.

         7. Any encroachments, overlaps, boundary line disputes, variations in
area or content, party walls and/or any other matters which would be disclosed
by an accurate survey or inspection of the premises.

         8. Any facts, rights, interests, or claims which are not shown by the
public records but which could be ascertained by an inspection of said land or
by making inquiry of persons in possession thereof.

         9. Any lien, or right to a lien, for services, labor or material
heretofore or hereafter furnished, imposed by law and not shown by the public
records.

         10. Planning, zoning and subdivision regulations and restrictions.

                       TRACT III - MERRILL DRIVE PREMISES

         1. Declaration of Reciprocal Easements recorded at the Rockingham
County Registry of Deeds at Book 3631, Page 2715. The Company affirmatively
insures the rights granted under the Declaration of Reciprocal Easements.

         2. Utility Easement to New England Telephone and Telegraph recorded at
the Rockingham County Registry of Deeds at Book 2531, Page 1946 and Book 2555
Page 2888. This exception is limited to the easement shown on Plan #D-26503.

         3. The "As Built" survey referenced in Exhibit A, recorded as Plan
#D-26503 discloses certain encroachments, as follows:

      -  Southeast corner of factory building encroaches across pole line
         easement and 600 square foot concrete block building encroaches.

      -  Edge of paved area adjacent to northeast corner of factory building
         encroaches onto land of Timberland.

      -  Pavement on south side of factory lot encroaches onto land of Foss
         Realty, Inc.

      -  Northwest corner of paved parking for Lot 32 encroaches onto
         railroad right-of-way.

      -  4 propane tanks encroaches onto sewer easement.

      -  380 square foot metal building encroaches onto sewer easement.

      -  Propane storage tank encroaches over underground easement.

         4. Subject to a Conservation Easement Deed to the Town of Hampton
dated July __, 2004 to be recorded in the Rockingham County registry of Deeds.

         5. Taxes and assessments for the year 2004 and subsequent years.

         6. Rights or claims of parties in possession not shown by the public
records.

         7. Easements, or claims of easements, roads, ways or streams not shown
by the public records.

                                       C-4

<PAGE>
         8. Any encroachments, overlaps, boundary line disputes, variations in
area or content, party walls and/or any other matters which would be disclosed
by an accurate survey or inspection of the premises.

         9. Any facts, rights, interests, or claims which are not shown by the
public records but which could be ascertained by an inspection of said land or
by making inquiry of persons in possession thereof.

         10. Any lien, or right to a lien, for services, labor or material
heretofore or hereafter furnished, imposed by law and not shown by the public
records.

         11. Planning, zoning and subdivision regulations and restrictions.

                            TRACT IV - 13 ACRE PARCEL

         1. Declaration of Reciprocal Easements recorded at the Rockingham
County Registry of Deeds at Book 3631, Page 2715. The Company affirmatively
insures the rights granted under the Declaration of Reciprocal Easements.

         2. Sewer Easement to the Town of Hampton recorded at the Rockingham
County Registry of Deeds at Book 2366, Page 935. This exception is limited to
the easement as shown on Plan #D-26503 or the survey plan referenced in the
description of the 13 acre tract in Schedule A.

         3. Water Easement to Hampton Water Works recorded at the Rockingham
County Registry of Deeds at Book 2418, Page 1099.

         4. The "As Built" survey referenced in Exhibit A, recorded as Plan #
D-26503 discloses certain encroachments, as follows:

      -  Southeast corner of factory building encroaches across pole line
         easement and 600 square foot concrete block building encroaches.

      -  Edge of paved area adjacent to northeast corner of factory building
         encroaches onto land of Timberland.

      -  Pavement on south side of factory lot encroaches onto land of Foss
         Realty, Inc.

      -  Northwest corner of paved parking for Lot 32 encroaches onto railroad
         right-of-way.

      -  4 propane tanks encroaches onto sewer easement.

      -  380 square foot metal building encroaches onto sewer easement.

      -  Propane storage tank encroaches over underground easement.

         5. Subject to a Conservation Easement Deed to the Town of Hampton dated
July ____, 2004 to be recorded in the Rockingham County Registry of Deeds.

         6. Taxes and assessments for the year 2004 and subsequent years.

         7. Rights or claims of parties in possession not shown by the public
records.

         8. Easements, or claims of easements, roads, ways or streams not shown
by the public records.

                                       C-5

<PAGE>
         9. Any encroachments, overlaps, boundary line disputes, variations in
area or content, party walls and/or any other matters which would be disclosed
by an accurate survey or inspection of the premises.

         10. Any facts, rights, interests, or claims which are not shown by the
public records but which could be ascertained by an inspection of said land or
by making inquiry of persons in possession thereof.

         11. Any lien, or right to a lien, for services, labor or material
heretofore or hereafter furnished, imposed by law and not shown by the public
records.

         12. Planning, zoning and subdivision regulations and restrictions.

                            TRACT V - 21 ACRE PARCEL

         1. Declaration of Reciprocal Easements recorded at the Rockingham
County Registry of Deeds at Book 3631. Page 2715. The Company affirmatively
insures the rights granted under the Declaration of Reciprocal Easements.

         2. The "As Built" survey referenced in Exhibit A, recorded as Plan
#D-26503 discloses certain encroachments, as follows:

      -  Southeast corner of factory building encroaches across pole line
         easement and 600 square foot concrete block building encroaches.

      -  Edge of paved area adjacent to northeast corner of factory building
         encroaches onto land of Timberland.

      -  Pavement on south side of factory lot encroaches onto land of Foss
         Realty, Inc.

      -  Northwest corner of paved parking for Lot 32 encroaches onto
         railroad right-of-way.

      -  4 propane tanks encroaches onto sewer easement.

      -  38O square foot metal building encroaches onto sewer easement.

      -  Propane storage tank encroaches over underground easement.

         3. Subject to a Conservation Easement Deed to the Town of Hampton dated
July ____, 2004 to be recorded in the Rockingham County Registry of Deeds.

         4. Taxes and assessments for the year 2004 and subsequent years.

         5. Rights or claims of parties in possession not shown by the public
records.

         6. Easements, or claims of easements, roads, ways or streams not shown
by the public records.

         7. Any encroachments, overlaps, boundary line disputes, variations in
area or content, party walls and/or any other matters which would be disclosed
by an accurate survey or inspection of the premises.

                                      C-6
<PAGE>

         8. Any facts, rights, interests, or claims which are not shown by the
public records but which could be ascertained by an inspection of said land or
by making inquiry of persons in possession thereof.

         9. Any lien, or right to a lien, for services, labor or material
heretofore or hereafter furnished, imposed by law and not shown by the public
records.

         10. Planning, zoning and subdivision regulations and restrictions.

                                       C-7
<PAGE>

                                                                       EXHIBIT D

                               BASIC RENT PAYMENTS

         1. BASIC RENT.

            (a) Initial Term. Subject to the adjustments provided for in
Paragraphs 2, 3 and 4 below, Basic Rent payable in respect of the Term shall be
$3,194,565 per annum, payable quarterly in advance on such Basic Rent Payment
Date, in equal installments of $798,641.25 each. Pro rata Basic Rent for the
period from the date hereof through the last day of July, 2004 shall be paid on
the date hereof.

            2. CPI Adjustments to Basic Rent. The Basic Rent shall be subject to
adjustment, in the manner hereinafter set forth, for increases in the index
known as United States Department of Labor, Bureau of Labor Statistics, Consumer
Price Index, All Urban Consumers, United States City Average, All Items,
(1982-84= 100) ("CPI") or the successor index that most closely approximates the
CPI. If the CPI shall be discontinued with no successor or comparable successor
index, Landlord and Tenant shall attempt to agree upon a substitute index or
formula, but if they are unable to so agree, then the matter shall be determined
by arbitration in accordance with the rules of the American Arbitration
Association then prevailing in New York City. Any decision or award resulting
from such arbitration shall be final and binding upon Landlord and Tenant and
judgment thereon may be entered in any court of competent jurisdiction. In no
event will the annual Basic Rent as adjusted by the CPI adjustment be less than
the Basic Rent in effect for the three (3) year period immediately preceding
such adjustment.

            3. Effective Dates of CPI Adjustments. Basic Rent shall not be
adjusted to reflect changes in the CPI until the third (3rd) anniversary of the
Basic Rent Payment Date on which the first full quarterly installment of Basic
Rent shall be due and payable (the "First Full Basic Rent Payment Date"). As of
the third anniversary of the First Full Basic Rent Payment Date and thereafter
on the sixth, ninth, twelfth, fifteenth, eighteenth and, if the initial Term is
extended, on the twenty first, twenty forth, twenty-seventh, thirtieth,
thirty-third, thirty sixth and thirty-ninth anniversaries of the first Full
Basic Rent Payment Date, Basic Rent shall be adjusted to reflect increases in
the CPI during the most recent three (3) year period immediately preceding each
of the foregoing dates (each such date being hereinafter referred to as the
"Basic Rent Adjustment Date").

         4. Method of Adjustment for CPI Adjustment.

            (a) As of each Basic Rent Adjustment Date when the average CPI
determined in clause (i) below exceeds the Beginning CPI (as defined in this
Paragraph 4(a)), the Basic Rent in effect immediately prior to the applicable
Basic Rent Adjustment Date shall be multiplied by a fraction, the numerator of
which shall be the difference between (i)the average CPI for the three (3) most
recent calendar months (the "Prior Months") ending prior to such Basic Rent
Adjustment Date for which the CPI has been published on or before the
forty-fifth (45th) day preceding such Basic Rent Adjustment Date and (ii) the
Beginning CPI, and the denominator of which shall be the Beginning CPI. The
product of such multiplication shall be added to the Basic Rent in effect
immediately prior to such Basic Rent Adjustment Date. As used herein, "Beginning
CPI" shall mean the average CPI for the three (3) calendar months corresponding
to the Prior Months, but occurring three (3) years earlier. If the average CPI
determined in clause (i) is the same or less than the Beginning CPI, the Basic
Rent will remain the same for the ensuring three (3) year period.

<PAGE>

            (b) Effective as of a given Basic Rent Adjustment Date, Basic Rent
payable under this Lease until the rest succeeding Basic Rent Adjustment Date
shall be the Basic Rent in effect after the adjustment provided for as of such
Basic Rent Adjustment Date.

            (c) Notice of the new annual Basic Rent shall be delivered to Tenant
on or before the tenth (10th) day preceding each Basic Rent Adjustment Date, but
any failure to do so by Landlord shall not be or be deemed to be a waiver by
Landlord of Landlord's rights to collect such sums. Tenant Shall pay to
Landlord, within ten (10) days after a notice of the new annual Basic Rent is
delivered to Tenant, all amounts due from Tenant, but unpaid, because the stated
amount as set forth above was not delivered to Tenant at least ten (10) days
preceding the Basic Rent Adjustment Date in question.

<PAGE>

                                                                       EXHIBIT E

                                ACQUISITION COST

380 Lafayette Office Premises                   $1,159,418

390 Lafayette Factory Premises                 $18,813,033

Merrill Drive Premises                          $8,853,736

Unit 4 Convertible Land                        $1,430, 109

Unit 5 Convertible Land                         $1,754,176

<PAGE>

                                                                       EXHIBIT F

                  PREMISES PERCENTAGE ALLOCATION OF BASIC RENT

380 Lafayette Office Premises                             4%

390 Lafayette Factory Premises                           59%

Merrill Drive Premises                                   28%

Unit 4 Convertible Land                                   4%

Unit 5 Convertible Land                                   5%

If any of the Related Premises ceases to be the subject to this Lease, the
percentage shown on this Exhibit F for each of the Related Premises which
remains subject to this Lease shall be adjusted proportionately so that the
total of such percentages shall be 100%.

<PAGE>

                                                                       EXHIBIT G

                               OPERATING COVENANTS

      1. Restricted Payments. Tenant will not, directly or indirectly make, or
cause or permit any subsidiary of the Tenant to make, any Restricted Payment (i)
at any time prior to October 1, 2004, (ii) at any time during any fiscal year of
Tenant if, as of the close of Tenant's immediately preceding fiscal year,
Tenant's Consolidated Net Income was less than One Dollar ($1.00), nor (iii) at
any time after October 1, 2004 unless at the time thereof and after giving
effect thereto:

      (a) no Event or Default under the Lease shall have occurred and then be
continuing;

      (b) Foss Family LLC and/or its principals shall have caused the repayment
to Tenant of that certain promissory note, dated as of August 16, 2002, in the
original principal amount of $3,200,000 plus all accrued interest thereon (an
aggregate amount of not less than $4,l00,000) to have been made to the operating
account of Tenant; and

      (c) such Restricted Payment, together with all other Restricted Payments
made during the fiscal year in which such Restricted Payment is made does not
exceed the sum of 50% of Tenant's combined Consolidated Net Income for the
immediately preceding fiscal year; provided that, subject to the provisions of
clause (ii) above, nothing herein shall require Tenant to make any distribution
during any fiscal year of Tenant, and Tenant may accrue and carry-over the right
to make the Restricted Payments permitted hereunder in any future fiscal year.

      2. Definitions. For the purpose hereof, the following terms shall have the
following meanings:

      "Consolidated Net Income" shall mean, for any period, the net income of
Tenant and its subsidiaries for such period, determined in accordance with
GAAP, but excluding from revenues:

            (a) proceeds of life insurance policies;

            (b) (i) amounts which would be shown, in accordance with GAAP,
      opposite the caption "gains from the sale or other disposition of capital
      assets" or any similar caption, (ii) gains arising from any write-up of
      assets and (iii) gains arising from the acquisition of debt securities for
      a cost less than principal and accrued interest;

            (c) amounts which would be shown, in accordance with GAAP, opposite
      the caption "extraordinary items" or similar caption;

            (d) any portion of the net earnings (which would otherwise be
      included in the determination of such consolidated net earnings or such
      consolidated net loss) of any subsidiary which for any reason shall be
      legally or contractually unavailable for payment of dividends to the
      Tenant;

            (e) any earnings, prior to the date of acquisition, of any other
      Person acquired in any manner;

            (f) in the case of successor to the Tenant or any subsidiary by
      consolidation or merger or a transferee of its assets, any earnings of
      such successor or transferee corporation prior to such consolidation,
      merger or transfer of assets;

<PAGE>

            (g) any deferred credit (or amortization of a deferred credit)
      arising from the acquisition in any manner of any other person;

            (h) any gains, income or profit from the sale-leaseback transaction
      of which this Lease is a part; and

            (i) an amount equal to the amount of the Preferred Dividends
      actually distributed in any fiscal year of Tenant.

         "GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States of America, applied an a consistent
basis.

         "Indebtedness" of any Person shall mean, as of any date, all
obligations which would in accordance with GAAP be classified as debt, and shall
include (a) all obligations of such Person for borrowed money, (b) all
obligations of such person in respect or letters of credit, surety bonds or
similar obligations issued for the account of such Person, (c) all obligations
of such Person as lessee, user or obligor under any lease of real or personal
property which, in accordance with GAAP, are or should be capitalized on the
books of the lessee, user or obligor (including, in the case of Tenant, this
Lease), (d) all obligations of such Person in respect of the deferred purchase
price for goods, property or services acquired by such Person, (e) all
obligations of such Person to purchase goods, property or services where payment
therefore is required regardless of whether delivery of such goods or property
or the performance of such services is ever made or tendered, (f) all
obligations of such Person in respect of any interest rate or currency swap,
rate cap or other similar transaction (valued in an amount equal to the highest
termination payment, if any, that would be payable by such Person upon
termination for any reason on the date of determination), and (g) all
obligations of others similar in character to those described in clauses (a)
through (f) of this definition to the extent such Person is liable, continently
or otherwise, as obligor, guarantor or in any other capacity, or in respect of
which obligations such Person assures a creditor against loss or agrees to take
any action to prevent any such loss (other than endorsements of negotiable
instruments for collection in the ordinary course of business), including,
without limitation, all obligations of such Person to advance funds to, or to
purchase property or services from, any other Person in order to maintain the
financial condition of such other Person and, in the case of Tenant, all
Indebtedness which is nonrecourse to the credit of Tenant but which is secured
by the assets or property of Tenant (but excluding any such non-recourse
Indebtedness of subsidiaries of Tenant in which Tenant has no liability). Any
Indebtedness which is extended or renewed (other than by an option created with
the original creation of such Indebtedness) will be deemed to have been created
when extended or renewed. Notwithstanding foregoing, for purposes of
calculating Indebtedness hereunder, any obligations of Tenant for borrowed money
payable to Stephen W. Foss or members of his immediate family ("Foss Family
Members") shall not be included in the definition of Indebtedness (it being
acknowledged and agreed, however, that payment of such obligations to Foss
Family Member shall, in all instances, be subordinate to the payment and
performance of the obligations of Tenant under the Lease).

         "Person" shall mean an individual, partnership, limited liability
company, association, corporation or other entity.

         "Preferred Dividends" shall mean certain dividends, not to exceed
$211,000 in the per annum, paid by Tenant to Foss Family Members that are
holders of preferred shares in Tenant.

         "Restricted Payment" shall mean and include; (a) any direct or indirect
purchase, redemption or other acquisition or retirement for value of any equity
security of Tenant or any option, warrant or right to acquire any such equity
security, or any security convertible into or

<PAGE>

exchangeable for any such equity security, (b) any dividend, distribution,
loan, advance, guarantee, extension of credit or other payment or transfer,
whether in cash or property and whether direct or indirect, to or for the
benefit of any Person holding an equity interest in the Tenant, whether or not
such interest is evidenced by a security, or any Affiliate of any such Person,
and (c) any direct or indirect purchase, redemption, prepayment or other
acquisition or retirement for value, prior to its stated maturity, scheduled
repayment or scheduled sinking fund payment, of any Indebtedness of the Tenant
or any subsidiary held by any Person described in clause (b) above; provided,
however, that "Restricted Payment" shall not mean or include: (i) any payment
made to pay any capital gains or similar taxes on income imposed on Tenant by
the IRS or any State or municipal taxing authorities in connection with its
realization of income from the sale-leaseback transaction of which this Lease is
a part, (ii) any payment made to repay Indebtedness of Tenant in existence as of
the date of this Lease, and (iii) provided that Tenant is not then in monetary
default under the Lease beyond any applicable notice and cure period, the
payment of the Preferred Dividends (it being acknowledged and agreed that
payment of the Preferred Dividends shall, in all instances, be subordinate to
the payment and performance of the obligations of Tenant under the Lease.

      "Subsidiary" of any Person means a corporation or other entity a majority
of the Voting Interest of which is at the time owned, or the management of which
is otherwise controlled, directly or indirectly, through one or intermediaries,
or both, by such Person.

<PAGE>

                                                                      EXHIBIT H

                         COVENANT COMPLIANCE CERTIFICATE

I, Name of Officer performing financial review, Title, of Tenant Name hereby
certify the following:

1.    This certificate is being delivered pursuant to Paragraph 28(c) to the
      lease Agreement dated as of _________ , 2004-between FOSS (NH) QRS 16-3,
      INC.; as Landlord, and Foss Manufacturing Company, Inc., as Tenant.

2.    I have reviewed the applicable provisions of the Lease agreement, and have
      included in the attached Covenant Analysis the information and/or
      computations required in order to establish whether tenant was in
      compliance with the requirements of Paragraph 28(c) of The Lease Agreement
      as of Ending Date of Most Recent Quarter.

3.    As of the date of the financial statements for the fiscal quarter ending
      on Ending Date of Most Recent Quarter, and to the best of my knowledge as
      of the date of this certificate or at any time during the period covered
      by such financial statements [no default exists.] OR [the following
      default(s) exist(s);]
      _____________________                          __________________________
              DATE                               By:  Chief Financial Officer
<PAGE>

                                                                       EXHIBIT I

                            POST-CLOSING OBLIGATIONS

<TABLE>
<CAPTION>
 Item                                                                                                                Escrow
Number             Property                                    Work                               Due Date           Amount
------      ---------------------            ---------------------------------------------     --------------       ---------
<S>         <C>                              <C>                                               <C>                  <C>
I(A)            Merrill Drive                Stripe and install signage for three (3)          July 25, 2004        $2,812.50
                   Premises                  handicapped accessible parking spaces,
                                             including one van accessible parking space.

(B)          380 Lafayette Office            Stripe and install signage for six (6)            July 25, 2004
                   Premises                  handicapped accessible parking spaces,
                                             including one van accessible parking space.

(C)         390 Lafayette Factory            Enlist an engineer/company to bring                September 24,       $12,500.00
                   Premises                  sprinkler systems to code and copy Hampton             2004
                                             Fire/Rescue Department ("HFD") on plans.
                                             Correct deficiency in fire sprinkler coverage
                                             under the mezzanines in the generator room,
                                             in the Baler City mezzanine levels, on the
                                             Spin City 1 and 2 mezzanine levels and in the
                                             Coating Line tank area.

(D)             Merrill Drive                Activate in-rack sprinklers in phase 6             July 25, 2004
                  Premises

(E)         390 Lafayette Factory            Copy of a report or letter from sprinkler          September 24,
                  Premises                   engineer, certifying that the change from               2004
                                             hoses to stand pipes with caps still meets
                                             code. If not, make corrections.

(F)             Merrill Drive                Copy of the phase 6 fire pump test for prior       July 25, 2004
                  Premises                   year.

(G)         390 Lafayette Factory            New fire alarm system test report.                 July 25, 2004
                  Premises

                Merrill Drive
                  Premises

            380 Lafayette Office
                  Premises
</TABLE>

<PAGE>

<TABLE>
<S>         <C>                              <C>                                               <C>
(H)         390 Lafayette Factory            Maintain fire extinguisher coverage and           July 25, 2004
                   Premises                  upkeep. Correct any signs, hangers, etc.

                Merrill Drive

                   Premises

            380 Lafayette Office

                  Premises

(I)         390 Lafayette Factory            Remove or secure stray propane and other          July 25, 2004
                   Premises                  tanks on platform near fuel
                                             cage.

(J)         390 Lafayette Factory            Decrease number of pallets out back, to           July 25, 2004
                   Premises                  avoid narrowing of road and presenting high
                                             fire hazard.

(K)         390 Lafayette Factory            Provide protection for tanks, and                 July 25, 2004
                   Premises                  restrictions on where used (Not
                                             comfortable with in-plant use of
                Merrill Drive                propane tanks/guns).
                   Premises

(L)         390 Lafayette Factory            Correct sprinkler connection blocked near         July 25, 2004
                   Premises                  vehicle shop.

(M)         390 Lafayette Factory            Provide HFD with an updated copy of Emergency     July 25, 2004
                   Premises                  Response Plan

                Merrill Drive
                   Premises

            380 Lafeyette Office
                   Premises

(N)         390 Lafayette Factory            Send a written report of fires that do not        July 25, 2004
                   Premises                  involve a response from HFD.

                Merrill Drive
                   Premises

            380 Lafayette Office
                  Premises
</TABLE>

<PAGE>

<TABLE>
<S>         <C>                              <C>                                               <C>                  <C>
(O)         390 Lafayette Factory            Make sure they all Exit Doors swing open          July 25, 2004
                  Premises                   with one motion to a full 90 degrees
                                             without obstruction, and with minimal
                Merrill Drive                effort (15 ft. lbs or less).
                  Premises

            380 Lafayette Office
                  Premises

(P)             Merrill Drive                Correct malfunction in fire alarm panel in        July 25, 2004
                  Premises                   phase 6. (There were some malfunctions noted
                                             on day of inspection. "Trouble" was
                                             indicated in some office devices. No trouble
                                             was indicated for tamper switch on a riser
                                             with a closed valve).

II          390 Lafayette Factory            Perform and complete the on-going                                      $33,600.00
                  Premises                   groundwater remediation at the Property
                                             and obtain a "No Further Action" letter
               Merrill Drive                 from the New Hampshire Department of
                 Premises                    Environmental Services ("NHDES")
                                             with respect thereto.
            380 Lafayette Office
                 Premises
</TABLE>

<PAGE>

                                                                       EXHIBIT J

                             CONDOMINIUM SITE PLAN

<PAGE>

                                                                     EXHIBIT K-1

                        DECLARATION OF FOSS CONDOMINIUM

<PAGE>

                                   DECLARATION
                                       OF
                                FOSS CONDOMINIUM

      WHEREAS, FOSS (NH) QRS, 16-3, INC. with an address of c/o W.P. Carey & Co.
LLC, 50 Rockefeller Plaza, 2nd Floor, New York, NY 10020 desires to establish a
condominium, pursuant to RSA 356-B, to be known as "FOSS CONDOMINIUM" (or such
other name as the Declarant may choose prior to recording of the Declaration).

      NOW THEREFORE, the following is hereby declared.

      1. This Declaration shall become effective as of the date it is recorded
in the Rockingham County Registry of Deeds.

      2. Foss (NH) QRS 16-3, Inc. is the owner of record of the land submitted
including the convertible lands, by virtue of a deed recorded in the Rockingham
County Registry of Deeds at Book _____, Page _____

      3. The Declarant hereby submits the Submitted Lands, including the
Convertible Lands and the existing Units and potential future Units constructed
or to be constructed, to the condominium form of ownership, in the manner
provided by RSA 356-B.

                                    ARTICLE I

                                   DEFINITIONS

      A. Board of Directors, Board and Directors means the Board of Directors of
the Units Owners Association,

      B. Building means any permanently enclosed structure placed, constructed
or located on or within the premises, or containing all or part of a Unit,

                                       1
<PAGE>

including any appurtenant canopies, supports, loading docket, truck ramps, and
other outwards extensions.

      C. "Bylaws" means the bylaws of the Unit Owners Association attached as
Appendix D.

      D. Common Areas means all of the condominium land and facilities submitted
under this Declaration excepting the declared Units hereunder, including without
limitation, the common Access Drives from Lafayette Road and Merrill Industrial
Drive, the utility lines and facilities common to and used by more than one of
the Units.

      E. Common Expenses means all expenditures lawfully made or incurred by or
on behalf of the Unit Owners Association, together with all funds lawfully
assessed for the creation and/or maintenance of reserves pursuant to the
provisions of the Condominium Instruments.

      F. Common Utility Lines means those Utility Lines which are installed to
provide the applicable utility service to the Premises as a whole or to more
than one Unit.

      G. Condominium means the real property and interests that have been
submitted to the Condominium Act by the recording of the Condominium
Instruments. The term includes the Units and the Common Area.

      H. Condominium Act or Act means the provisions of New Hampshire Revised
Statutes Annotated, Chapter 356-B.

      I. Condominium Instruments means this Declaration, the Bylaws, the
Condominium Rules, and the Site Plans. Any exhibit, schedule, appendix, plan, or
certification accompanying a Condominium Instrument and recorded with it, or

                                       2
<PAGE>

incorporated by reference in it, shall be deemed to be incorporated into that
Condominium Instrument.

      J. Condominium Rules means the Rules for the use of the Premises that are
adopted from time to time by the Board of Directors.

      K. Convertible Land has the meaning given to it in the Condominium Act and
shall include 1) the 6.54 acre parcel shown on the Site Plan as Convertible Land
- Unit #2. This Convertible Land shall be used solely for the purposes of
creating an addition to Unit #2; 2) Convertible Land, Unit #4 shall include the
7.16 acre parcel shown on the Site Plan as "Convertible Land Unit #4; 3)
Convertible Land Unit #5 shall Include the 10.73 acre parcel and the 6.60 acre
parcel shown on the Site Plan as Convertible Land Unit #5. The Convertible Lands
are described in the attached Appendix B.

      L. First Mortgage means any mortgage or deed of trust from a Unit Owner to
a Mortgagee which (a) encumbers such Unit Owner's fee interest in its Unit, (b)
secures such Unit Owner's obligation to repay a loan, as the same may be
amended, supplemented or modified, (c) has priority over any other mortgage
encumbering such Unit.

      M. First Mortgagee means any person (and its respective successors and
assigns) which may, on or after the date hereof, make a loan to any Unit Owner
which loan shall be secured by a First Mortgage.

      N. Governmental Approvals means all existing or future permits and
approvals issued or required by the Town of Hampton, the State of New Hampshire,
the

                                       3
<PAGE>

United States of America, or any of their subdivisions as a precondition of the
development of all or any portion of the Premises.

      O. Hazardous Materials means petroleum products, asbestos, polychlorinated
biphenyls, radioactive materials and all other dangerous, toxic or hazardous
pollutants, contaminants, chemicals, materials or substances listed or
identified in, or regulated by, any federal, state, county, municipal, local and
other statutes, laws, ordinances and regulations which relate to or deal with
human health or the environment.

      P. Limited Common Areas which are used exclusively by one or more Units
but not all of the Units, and include the following.

         (1) UNIT #1 - Office Building

             The Limited Common Areas assigned to Unit #1 shall be the parking
lot and remaining land labeled LCA Unit #1 on the Site Plan.

         (2) Unit #2 - Factory Building

             The Limited Common Areas assigned to Unit #2 shall be those areas
depicted on the Site Plan entitled "Foss Condominium Site Plan - Units #2 and #3
and Limited Common Area".

         (3) Unit #3 -Timberland Building

             The Limited Common Areas assigned to Unit #3 are those areas
depicted on the Site Plan entitled "Foss Condominium Site Plan - Units #2 and #3
and Limited Common Area".

         (4) Units #2 and #3 - Connector

                                       4
<PAGE>

                  The connector building which connects Units #2 and #3 shall be
Limited Common Area for the use of Units #2 and #3.

                  The Declarant expressly reserves the right in connection with
the development of the Convertible Land, to eliminate, reconfigure, or
re-allocate the above described Limited Common Areas, and the improvements shown
in such Limited Common Areas, and to assign to Units #2 and #3 and to future
Units #4 and #5, such altered or new Limited Common Areas as the Declarant shall
deem necessary to the use of Units #2, #3, #4 and #5. The Declarant shall
exercise this right by the preparation and recordation of an amendment, as
required by Section 19.III of the Condominium Act, which amendment shall be
executed by either an Officer of the Unit Owners Association, or an officer or
representative of the Declarant, and by the Unit Owner of each Unit to which the
Limited Common Area shall be assigned or from which Limited Common Area will be
removed or altered by virtue of the amendment. The Declarant or Unit Owners
Association may assess the costs of the preparation and recordation of such
amendment against the affected Unit Owners. No Unit Owner, other than the
Declarant, may reassign Limited Common Area that is appurtenant to its Unit or
terminate the assignment of Limited Common Area to its Unit, without the
Declarant's or Unit Owners Association's prior consent. Each Owner of the other
Units hereby agrees that the Declarant or the Unit Owners Association may
execute and record amendments to the Condominium Instruments to reflect such
elimination, reconfiguration, or reallocation, agrees that such elimination,
reconfiguration, or reallocation shall not materially impair the rights of, or
impose materially greater obligations on, their respective Unit and to the
extent required by this Declaration or by

                                       5
<PAGE>

law, hereby consents to such elimination, reconfiguration, or reallocation, and
waives any right to object to such elimination, reconfiguration, or
reallocation.

      Q. Manager means the management company or property manager that may be
hired or retained by the Unit Owners Association, acting through the Board, from
time to time to manage or to assist with the management of the Common Area. The
Manager may be an affiliate of the Declarant; provided, however, that any
contract, agreement or other arrangement of any kind between the Unit Owners
Association and the Manager shall be commercially reasonable and reflect
competitive terms not less favorable to the Unit Owners Association, or any Unit
Owner, than those terms typically included in similar agreements entered into at
arms'-length between non-related owners and managers of comparable properties in
the market area of the Condominium.

      R. Occupant means any Unit Owner, as well as any Person, from time to time
entitled to the use and occupancy of any portion of a Unit under an ownership
right, lease, sublease, license, concession, or other similar agreement, and all
of their officers, directors, employees, agents, contractors, customers,
vendors, suppliers, concessionaires, visitors, invitees, and licensees.

      S. Person means any natural person, corporation, limited or general
partnership, association, trust, limited liability company, limited liability
partnership, or other entity capable of holding title to real property.

      T. Premises mean the Submitted Land, together with and subject to any
existing or future Buildings and all improvements constructed on it, and all
easements, rights, and appurtenances to it, whether set forth in this
Declaration or

                                       6
<PAGE>

subsequently created and placed on record at the Rockingham County Registry of
Deeds, are together referred to as the ("Premises").

      U. Site Plan shall mean the Site Plan entitled Foss Condominium Site Plan
or any amended Site Plan or future Site Plan pertaining to the Condominium. The
term Site Plan shall also include the Foss Condominium Exterior Unit Plans
(defined below within the definition of "Unit") depicting the exterior of Units
#1, #2 and #3 and any such future plans depicting Units #4 and #5 and the
addition to Unit #2.

      V. Submitted Land shall be the properties which include the 1.39 acre
parcel (office building); the 37.62 acre parcel known as the "factory parcel";
the 23.6 acre parcel known as the "Timberland parcel", the 13 acre parcel, and
the 21 acre parcel. The Submitted land is described in Appendix A.

      W. Unit means those portions of the Condominium that are designed and
intended for individual use and ownership and include Units #1, #2 and #3 as
shown on the Site Plan and as also shown on certain plans depicting the
elevations and exterior dimensions, and architectural features of the Units.
These plans shall be labeled "Foss Condominium Exterior Unit Plans" and shall be
recorded prior to the conveyance of any Unit.

      X. Unit Owner means the Person who owns a Unit. The term "Unit Owner" also
includes the Declarant to the extent the Declarant holds an ownership interest
in any Unit(s).

      Y. Unit Owners Association, means the Association of the Unit Owners
within the Condominium.

                                       7
<PAGE>

                                   ARTICLE II

                                DEVELOPMENT PLAN

            A. The Declarant hereby submits the Submitted Land described above
to this Condominium and establishes Units #1, #2 and #3 as the Units initially
declared hereunder. The Declarant also reserves the right, pursuant to the
provisions of RSA 356-B, to declare additional Units within the Convertible
Lands. The maximum number of Units that may be created within the Convertible
Lands shall be 2 Units and an addition to existing Unit #2, the maximum
aggregate square footage (as defined in Article IV) of both new Units shall not
exceed 397.254 square feet, and Unit #2 and Unit #3, in the aggregate, shall
have not less than fifty-one (51%) of the undivided interest in the Common Area.
Unit #2 and the addition to Unit #2 which may be constructed shall be merged and
the boundaries of Unit #2 adjusted to include that addition by the Declarant
without the need of the consent of other Unit Owners.

            B. All structures erected on the Convertible Lands shall be
comparable in terms of quality of construction, the principal materials used but
not necessarily in architectural style, nor shall the Units be required to be
substantially identical in size, configuration or style. As of or prior to the
completion of any new Units within the Condominium, the Declarant shall record
an Amendment to this Declaration and the Site Plan describing the differences in
design, layout, size, quality or other significant characteristics of the Units
and Limited Common Area created within the Convertible Lands.

            C. Pursuant to its rights under Article I(P), the Declarant shall
have the right to construct, and install parking areas, utility lines, driveways
and other

                                       8
<PAGE>

improvements within the Convertible Lands as shall be deemed necessary or
desirable to the improvement of those lands.

      D.  Any Units created within the Convertible Land, or in the case of any
addition to Unit #2, shall be allocated an undivided interest in the Common
Areas as provided in ARTICLE IV of this Declaration, and such allocation shall
be described in any Amendment(s) to this Declaration.

      E.  The Units may be used for business offices, manufacturing, research
and development and warehousing uses, and for no other purposes.

      F.  There are no structural or other warranties made with respect to any
existing Unit or any Unit which may be created within the Convertible Land. To
the maximum extent allowed by law, the warranty contained in NH RSA 356-B:41 II
shall be inapplicable to any Building.

                                  ARTICLE III

                            BOUNDARIES OF THE UNITS

      The boundaries of the Units declared hereunder shall be the exterior
boundaries of the Building and the Unit shall be deemed to consist of the entire
Building, including any appurtenances, extensions, attachments or accessory
equipment or apparatus. The boundaries of Unit #2 shall be deemed to include any
addition to that Building which may be constructed within the Convertible Land,
Unit #2, as and when constructed. The Declarant and Unit Owners reserve the
right to merge or subdivide any of the Units or portions of the Units by
amendment to this Declaration and the recording of Site or Floor Plans related
thereto, provided however, that no subdivision or

                                       9
<PAGE>
merger of such Units shall be permitted without the consent of each First
Mortgage holding a First Mortgage on the affected Units.

                                   ARTICLE IV

              PERCENTAGE OF UNDIVIDED INTEREST IN THE COMMON AREAS
                            PERTAINING TO EACH UNIT

     Each of the Units declared hereunder or which may be declared hereunder
shall have an undivided interest in the Common Areas based upon the following
formula or fraction:

                       Number of Square Feet of the Unit

                Total Number of Square Feet of all declared Units

     The term "Square Feet" shall mean the ground "footprint" area occupied by a
unit calculated by the length and the width of the exterior of the Building, and
shall not include interior stories or levels.

                                   ARTICLE V
                                   EASEMENTS

            A. This Condominium shall be subject to and with the benefit of all
utility, sewer and water easements of record, as described and contained in the
Appendices to this Declaration. In addition, the Condominium and the Units
declared or which may be declared shall have the benefit of the easements
contained in the Declaration of Reciprocal Easements recorded in the Rockingham
County Registry of Deeds at Book 3631, Page 2715.

            B. Easement for Pipes, Wires, Flues, Ducts, Cable, Conduits, Public
Utility Lines and Other Common Elements Located Inside of Units.

                                       10
<PAGE>

            Each Unit shall have an easement in common with all other Units to
use all pipes, wires, ducts, flues, cables, conduits, public utility lines
located within all Common Areas and Limited Common Areas within the Condominium.
Each Unit shall be subject to an easement in favor of all other Units to use
pipes, wires, ducts, flues, cables, conduits, public utility lines located
within all Common Areas and Limited Common Areas within the Condominium. The
Board of Directors shall have a right of access to each Unit to inspect the
same, to remove violations therefrom and to maintain repair or replace the
Common Areas and Limited Common Areas contained therein or elsewhere in the
Condominium.

            C. OTHER EASEMENTS

            The Declarant and persons that it may select shall have the right of
ingress and egress over, upon and across the Common Areas and the Limited Common
Areas and the right to temporarily store materials thereon and to make such
other use thereof as may be reasonably necessary and incident to the
construction and completion of any new Units or any addition to Unit #2, but the
Declarant and persons to whom it has granted this permission shall not unduly
interfere with the Unit Owners and their rights to use the Common Areas and the
Limited Common Areas.

            Unit Owners shall have an easement to tie into such utility services
as may be located within the Common Areas and Limited Common Areas such as
electricity, water and sewer or other infrastructure.

                                   ARTICLE VI

            A. The Association shall be responsible for the maintenance and
repair of the Common Areas as defined in this Declaration.

                                       11
<PAGE>

            B. Each Unit Owner shall be responsible for the maintenance, repair
and replacement of its Unit and all utilities, parking lot(s), roadway or other
improvements located within the Limited Common areas assigned to such Unit under
this Declaration. In the event that the Board of Directors of the Association
shall determine that any portion of the improvements to be maintained by the
Unit Owners shall be in need of maintenance, repair or replacement, the Board of
Directors shall so notify the Unit Owners responsible hereunder. If such
maintenance, repair or replacement shall not have been performed or completed
within a reasonable period of time, the Board of Directors shall have the right
to undertake such maintenance, repair or replacement and shall have the right to
assess the Unit Owner so responsible for all costs incurred by the Board of
Directors including a reasonable fee to compensate the Board of Directors for
its time and effort with respect to such work.

            C. Each Unit Owner covenants and agrees to maintain and keep the
Buildings located in its Unit, Limited Common Area, and any adjacent footings
and support structures in sightly, safe and good condition and state of repair,
in compliance with all governmental laws, rules, regulations, orders, and
ordinances, and in compliance with the provisions of the Condominium Instruments
and the Governmental Approvals. Each Unit Owner shall store all trash and
garbage in adequate containers, and shall locate or screen such containers so as
not to be easily visible from the parking area or abutting streets, and to
arrange for regular removal of such trash or garbage directly with a removal
service.

                                       12
<PAGE>
          D.   No merchandise, equipment or services shall be displayed,
offered for sale or lease, or stored within the Common Areas, except as
otherwise provided by the Condominium Instruments.

          E.   No party shall use or permit the use of Hazardous Materials on,
about, under or in its Unit, or the Common Area, except in the ordinary course
of its usual business operations and in compliance with all environmental laws
or laws relating to Hazardous Materials.

          F.   Each Unit Owner covenants and agrees that the Common Area may be
illuminated as required by Governmental Approvals, unless the Declarant or the
Units Association agrees upon a different schedule or unless otherwise required
by applicable. Each Unit Owner further agrees to keep its exterior Unit #2
lighting illuminated during the same periods of time as the Common Area is
illuminated and to keep any exterior security lights on from dusk until dawn.

                                  ARTICLE VII
                             DAMAGE OR DESTRUCTION

     A.   CASUALTY DAMAGE. In the event any Unit or Limited Common Area is
damaged by fire or other casualty (whether insured or not), the Unit Owner of
the Unit or of the Unit to which the Limited Common Area is appurtenant shall,
subject to governmental regulations and/or insurance adjustment delays, promptly
remove the debris resulting from such event and provide a sightly barrier.
Within a reasonable time after the fire or casualty, the Unit Owner shall, in
its discretion, either (i) repair or restore the Unit and/or Limited Common
Area so damaged in accordance with all

                                       13
<PAGE>

provisions of this Declaration, or (ii) demolish the damaged portion and/or the
balance of such Unit and/or Limited Common Area and restore the cleared area to
a landscaped condition until and unless a replacement Unit and/or Limited Common
Area is erected. During any period that a Unit and/or Limited Common Area is
damaged, destroyed or demolished, the Unit Owner shall remain liable for its
share of Common Expenses as fully as If such casualty had not taken place. All
such repairs, reconstruction, demolition, or restoration shall be commenced and
completed expeditiously.

      B. DAMAGE TO OR DESTRUCTION OF COMMON AREA. If any of the Common Area,
other than Limited Common Area, is damaged or destroyed, the Unit Owners
Association, upon receipt of the necessary permits and approvals, shall promptly
cause the repair, restoration or rebuilding of the improvements so damaged or
destroyed so that the restored portions of the Common Area shall comply with the
applicable requirements of the Condominium Instruments and the Governmental
Approvals. The Unit Owners Association shall have the option to secure the
damaged or destroyed area in a safe manner and to delay the repair, restoration,
or rebuilding of the Common Area until such time as it has received the
insurance proceeds for such loss if such loss shall be a covered loss. In the
event that the damage was caused by the negligence or willful misconduct of an
Occupant, the costs of such repair or restoration shall be paid for by the
Occupant and the Unit Owner whose Occupant caused the damage.

                                  ARTICLE VIII

                                    INSURANCE

                                       14

<PAGE>

      A.    Unit OWNERS INSURANCE. Except as may be otherwise authorized in
writing by the Declarant or the Unit Owners Association, each Unit Owner shall
maintain in full force and effect the minimum insurance coverages set forth
below:

            (i) Commercial General Liability Insurance with a combined single
limit of liability of at least Five Million Dollars ($5,000,000) for bodily
injury, personal injury and property damage, arising out of any one occurrence.
During the period of construction on any Unit, this Insurance requirement may be
satisfied by contractor insurance described below, provided such contractor
insurance names all Unit Owners, the Declarant, and the Unit Owners Association,
as additional insureds.

            (ii) Workers' compensation and employer's liability insurance:

                  a. Worker's compensation insurance as required by any
            applicable law or regulation.

                  b. Employer's liability insurance in the amount of at least
            $1,000,000 for each accident for bodily injury, at least $1,000,000
            for bodily injury by disease and at least $1,000,000 for each
            employee for bodily injury by disease.

            (iii) Automobile Liability Insurance: Automobile liability insurance
including coverage for owned, hired, and non-owned automobiles. The limits of
liability shall not be less than $1,000,000 combined single limit each accident
for bodily injury and property damage combined.

            (iv) Such other insurance in such amounts and with such coverages as
the Board of Directors shall determine from time to time.

                                       15
<PAGE>

            (v) The Declarant, the Unit Owners Association, and the Manager
shall be "named insureds" or "additional insureds" under each such policy as
their interests may appear.

      B. CONTRACTOR INSURANCE. Prior to commencing any construction activities
within a Unit or Limited Common Area, each Unit Owner shall obtain or require
its contractor (the "CONTRACTOR") to obtain and maintain so long as such
construction activity is occurring, the minimum insurance coverages set forth
below:

            (i) Worker's compensation and employer's liability insurance:

                  a. Worker's compensation insurance as required by any
            applicable law or regulation.

                  b. Employer's liability insurance in the amount of at least
            $1,000,000 each accident for bodily injury, at least $1,000,000
            policy limit for bodily injury by disease and at least $1,000,000
            each employee for bodily injury by disease.

            (ii) General liability insurance: Commercial General Liability
insurance covering all operations by or on behalf of the Contractor, which shall
include the following minimum limits of liability and coverages:

                  a. Required coverages:

                        (1) Premises and Operations;

                        (2) Products and Completed Operations;

                        (3) Contractual Liability, insuring the indemnity
                        Obligations assumed by Contractor under the Contract
                        Documents;

                                       16
<PAGE>

                        (4) Broad Form Property Damage (including Completed
                        Operations);

                        (5) Explosion, Collapse and Underground Hazards; and

                        (6) Personal Injury Liability.

                  b. Minimum limits of liability:

                        (1) $1,000,000 each occurrence (for bodily injury and
                        property damage);

                        (2) $1,000,000 for Personal Injury Liability:

                        (3) $2,000,000 aggregate for Products and Completed
                        Operations (which shall be maintained for a three (3)
                        year period following final completion of the Work), and

                        (4) $2,000,000 general aggregate applying separately to
                        the Premises.

            (iii) Automobile Liability Insurance: Automobile liability insurance
including coverage for owned, hired, and non-owned automobiles. The limits of
liability shall not be less than $1,000,000 combined single limit each accident
for bodily injury and property damage combined. The Contractor shall require
each of his subcontractors to include in their liability insurance policies
coverage for Automobile Contractual Liability.

            (iv) Umbrella/Excess Liability Insurance: The Contractor shall also
carry umbrella/excess liability insurance in the amount of $5,000,000.

                                       17
<PAGE>

The Declarant, all Unit Owners, the Unit Owners Association, and the Manager
shall be named as named or additional insureds on all above-referenced policies
as their interests may appear. If such insurance is canceled or expires then the
constructing Unit Owner shall immediately stop all work on or use of the Unit
until either the required insurance is reinstated or replacement insurance
obtained.

      C. CASUALTY INSURANCE. Effective upon the commencement of construction of
any Building and so long as such Building exists, a Declarant shall carry, or
cause to be carried, property insurance with "all-risk" coverage, in the amount
of 100% of full replacement cost. During the period of construction or addition
to a Unit, this subsection may be satisfied by builders risk insurance carried
by the Declarant's contractor and naming all such parties as an additional
insureds or loss payees. Upon the completion of a Building or addition to a Unit
and conversion of such Building or addition to a Unit, the Unit Owner shall
carry, or cause to be carried, property insurance with "all risk" coverage in
the amount of 100% of the full replacement costs of the Building and all
appurtenant Limited Common Area.

      D. GENERAL INSURANCE PROVISIONS. All insurance required by this Article
shall be written on an occurrence basis and procured from companies authorized
to do business in New Hampshire. All insurance may be provided under (i) an
individual policy covering this location, (ii) a "blanket" policy or policies
covering other properties of the party, its subsidiaries, and its controlling or
affiliated corporations (provided that the required coverage amounts apply to
this location regardless of occurrences at any other insured locations), (iii) a
plan of self-insurance as provided below, (iv) a combination of any of the
foregoing insurance programs, or (v) any other reasonable plan of insurance

                                       18
<PAGE>

selected by the Board of Directors from time to time. To the extent any
deductible is permitted or allowed as a part of any insurance policy carried by
a Unit Owner in compliance with this Section, such Unit Owner shall be deemed to
be covering the amount of the deductible under a plan of self-insurance;
provided, however, that in no event shall any deductible exceed $50,000.00
unless such Unit Owner complies with the requirements regarding self-insurance
pursuant to subsection. (iii) above. Each Unit Owner who is obligated to procure
and maintain insurance coverage pursuant to this Section shall furnish to any
party who is or is required to be an "additional" insured under such policy, a
certificate of insurance coverages, or statement of self-insurance, as the case
may be, evidencing that the insurance required to be carried by such party is in
full force and effect.

      E. Any Unit Owner or party responsible to maintain the insurance required
by this Section of this Declaration may "self-insure," Of provide for a
deductible from said coverage related to its Unit, to the extent of one percent
(1%) of the net worth of such Unit Owner or party in its last calendar or fiscal
year as certified by an independent certified public accountant and computed in
accordance with generally accepted accounting principles consistently applied.
The right of any party to "self-insure" shall be subject to the further
requirements that (i) such party's net worth during any period of self-insurance
shall not be less than Three Hundred Million Dollars ($300,000,000,00), and (ii)
self-insurance coverages shall be established in not less than the same amounts,
and proceeds of such self-insurance shall be made available in the same manner,
at the same times and for the same purposes, as otherwise required by the
foregoing provisions of this Section.

                                       19
<PAGE>
     F. CANCELLATION. The policies of insurance required pursuant to this
Section shall include the following provisions:

          (i) that the policies shall not be canceled, or reduced in amount or
coverage below the requirements of this Declaration, nor shall it be allowed to
expire, without at least thirty (30) days prior written notice by the insurer
to each insured and to each additional and named insured;

          (ii) shall provide for severability of interests; and

          (iii) shall provide that an act or omission of one of the insureds or
additional insureds which would void or otherwise reduce coverage, shall not
reduce or void the coverage as to the other insureds.

     G. ALLOCATION OF INSURANCE EXPENSES. Insurance expenses with respect to
Common Areas shall be allocated between the Limited Common Areas (if the Unit
Owners Association insures any Limited Common Area) and the remaining Common
Areas based upon gross square footage, regardless of use. The portion of the
insurance expenses allocated to Limited Common Areas shall be further allocated
and assessed against the respective individual Unit Owners, as provided in
ARTICLE IX, and regardless of use, by using the following formula: multiply the
total insurance expense allocated to all Limited Common Areas by a fraction
(the "SPECIAL ALLOCATION FRACTION") the numerator of which is the gross square
footage of Limited Common Area appurtenant to the Unit Owner's Unit and the
denominator of which is the gross square footage of all Limited Common Areas to
which insurance expense has been allocated. The portion of the insurance
expenses allocated to the Common Areas, other than

                                       20
<PAGE>

Limited Common Areas, shall be assessed against all Unit Owners based upon their
interest in the Common Areas.

      H. TAXES AND ASSESSMENTS AND OTHER EXPENSES. Each Unit Owner shall pay,
prior to delinquency, all taxes and assessments with respect to its Unit. If the
taxes or assessments may be paid in installments, the Unit Owner may, but shall
not be required to, pay each such installment as and when the same becomes due
and payable. Nothing contained in this Section shall prevent any Unit Owner from
contesting at its cost and expense any such taxes and assessments with respect
to its Unit in any manner such Unit Owner elects, so long as such contest is
maintained with reasonable diligence and in good faith. At such time as the
contest is concluded (allowing for appeal to the highest appellate court), the
contesting Unit Owner shall promptly pay all such taxes and assessments
determined to be owing, together with all interest, penalties and costs. Until
such time as the Units shall be separately assessed, each Unit Owner shall pay
to the Declarant or the Unit Owners Association, not later than the later to
occur of (i) twenty (20) days before the date such taxes and assessments are
due, or (ii) ten (10) days following receipt of an invoice for its share of the
taxes and assessments along with a copy of the bill for same from the taxing
authority, its share of all taxes and assessments attributable to the Premises,
allocated with respect to the Unit based on the expected assessed value of each
Unit and with respect to the Common Area (including the Limited Common Area) in
a manner that is Consistent with the provisions of the Condominium Instruments.

      In the event that taxes with respect to Common Areas are assessed against
the Unit Owners Association, such taxes (if not separately itemized) shall be
allocated

                                       21
<PAGE>

between any Limited Common Areas that are included in the assessment and the
remaining Common Areas based upon gross square footage, regardless of the use.
The portion of the taxes allocated to Limited Common Areas shall be further
allocated and assessed against the respective individual Unit Owners, based on
the respective interests in the Common Areas, and regardless of use, by using
the Special Allocation Fraction. The portion of the taxes allocated to the
Common Areas, other than Limited Common Areas, shall be assessed against all
Unit Owners equally, as provided in this Section.

      Notwithstanding any provisions of this Declaration of the contrary, each
Unit Owner shall pay the costs and expenses associated with (i) the maintenance
of the storm drainage system servicing the Premises, including the costs of any
inspection and reporting requirements relating thereto, (ii) the maintenance of
the flood storage system and detention ponds servicing the Premises, and (iii)
the maintenance of on-going security therefor as required by the Governmental
Approvals, each in accordance with the Special Allocation Fraction.

                           ARTICLE IX COMMON EXPENSES

      1. BUDGET. The Unit Owners Association shall submit to the Unit Owners no
later than sixty (60) days after the beginning of each calendar year an
estimated budget (the "BUDGET") for the Common Expenses for the calendar year.
The Budget shall be in a form approved by the Board of Directors and shall
include estimates for all applicable income and expenses, including the
following (but subject to any exclusions or limitations set forth herein
including, without limitation, those set forth in this Section.

            (a) Common Area administration and maintenance expenses;

                                       22
<PAGE>

            (b) insurance expenses;

            (c) real estate taxes assessed to the Unit Owners Association for
            Common Area, if any, and any current use tax assessed under
            applicable law;

            (d) the management fee payable to a Manager pursuant to any contract
            for management services from time to time approved by the Board of
            Directors;

            (e) rental or purchase of equipment and supplies;

            (f) depreciation or trade-in allowance applicable to items purchased
            for Common Area purposes;

            (g) any reserve fund or funds for repair or replacement of Common
            Area from time to time adopted by the Board of Directors;

            (h) any so called "capital expenses" as determined in accordance
            with generally accepted accounting principles consistently applied,
            but only to the extent of the amortized portion of such expense for
            the relevant year (with capital expenses amortized over the lesser
            of (i) seven (7) years, or (ii) the useful life thereof);

            (i) expenses associated with shared access and easement rights
            affecting the Common Area or appurtenant to the Premises;

            (j) Common Area lighting, utility and landscaping expense, and
            annual betterment assessments from utility providers;

                                       23
<PAGE>

            (k) The cost of maintaining the common access ways from Lafayette
            Road and Merrill Industrial Drive;

            (l) costs and expenses associated with (i) the maintenance of the
            storm drainage system servicing the Premises, including the costs of
            any inspection and reporting requirements relating thereto, (ii) the
            maintenance of the flood storage system and detention ponds
            servicing the Premises, and (iii) the maintenance of on-going
            security therefor as required by the Governmental Approvals;

            (m) the cost of complying with any other ongoing obligations under
            the Governmental Approvals (to the extent not addressed in
            subsection (1) above; and

            (n) all other permitted expenses.

      2. APPROVAL OF BUDGET. The Unit Owners shall have fifteen (15] days
following receipt of the proposed Budget to object to any estimated expense or
to propose any additional expense deemed necessary or appropriate for operation
of the Premises. The Board of Directors shall consider all written objections or
suggestions submitted by Unit Owners and adopt and submit to the Unit Owners a
final budget for the calendar year on or before fifteen (15) days after the
expiration of the Unit Owners' objection and comment period. The final Budget,
duly adopted by the Board of Directors, shall be binding on all Unit Owners. If
for any reason a final Budget is not adopted on or before December 31 In any
year, the Unit Owners shall continue to pay the monthly expense allocation in
effect for the preceding year until adoption of a final Budget for the current
year. Any shortfall between the Common Expenses paid by a

                                       24
<PAGE>

Unit Owner prior to the adoption of the Budget and those required under the
Budget shall be paid with the first monthly payment made after the adoption of
the Budget.

      3. ALLOCATION OF COMMON EXPENSES. The Common Expenses included in each
Budget approved by the Board of Directors shall be allocated among each of the
Unit Owners in accordance with their respective interest in the Common Areas.
However,

      (a) expenses benefiting less than all of the Units in the judgment of the
Declarant or the Unit Owners Association shall be specially assessed against the
benefited Units in proportion to the respective Unit Owners' and Occupants'
receipt of the benefits of such expense; provided, however, that the Unit Owner
of such benefited Unit shall have thirty (30) days from the dale of receipt of a
written statement from the Unit Owners Association allocating the Common
Expenses to object to the same. In the event of the failure of the Unit Owner
and the Unit Owners Association to reach agreement with respect to the disputed
special assessment within thirty (30) days of the Unit Owner's notice of
objection, the parties agree that the dispute shall, to the fullest extent
permitted by law, be settled by arbitration in any forum and form agreed upon by
the parties or, In the absence of such agreement, under the auspices of the
American Arbitration Association, in Hampton, New Hampshire. The Unit Owner
shall pay the amount of the disputed assessment to the Unit Owners Association
to be held in escrow pending the outcome of the arbitration. In the case of
public assessments, including, without limitation, taxes. The Unit Owners
Association may pay the disputed amount under protest to the applicable
authority in accordance with applicable laws. Should the arbitration award be
less than the amount of the escrowed funds, the excess shall be

                                       25
<PAGE>

refunded to the Unit Owner. The Unit Owner shall bear the cost of all
administrative fees and arbitrator's fees and expenses associated with the
arbitration, however, each party shall pay the cost of its own legal fees and
expenses.

      (c) expenses caused by the conduct of less than all of the Unit Owners or
Occupants in the judgment of the Declarant or the Unit Owners Association shall
be specially assessed against the Unit Owners who, alone or with their
Occupants, have caused such expenses to be incurred in proportion to their
responsibility for such expense and their enjoyment of the benefits of the
expenditure; provided, however, that the Unit Owner of such benefited Unit shall
have thirty (30) days from the date of receipt of a written statement from the
Unit Owners Association allocating the Common Expenses to object to the same. In
the event of any such objection, the dispute will be resolved in accordance with
the arbitration provisions contained in subsection (b) above.

      (d) those expenses that have been expressly allocated herein in accordance
with the Special Allocation Fraction may be so allocated.

      The per Unit expense allocation shall be provided in writing to each Unit
Owner at the time each final Budget is distributed.

      4. COMMENCEMENT OF LIABILITY. The responsibility for payment by each Unit
Owner of an allocated share of Common Expenses shall commence upon the creation
of the Unit. Any Unit that becomes obligated to pay an allocated share of Common
Expenses other than at the beginning of a calendar year shall be assessed a
proportional amount such allocation of Common Expenses.

                                       26
<PAGE>

      5. ADDITIONAL ASSESSMENTS. Notwithstanding any provisions of this Section
to the contrary, if in the course of any calendar year the Board of Directors
determines that there are additional expenses not included in the Budget which
should be paid in that calendar year in order to maintain the Premises at the
standard set by the Board, the Board of Directors may amend the Budget and
allocate such expenses to the Unit Owners. Such amendment shall be effective
upon delivery of notice to the Unit Owners of the amended Budget and an
allocation of each Unit Owner's share of such increase. In the alternative, the
Board of Directors may make a special assessment against the Unit Owners which
shall be due and payable thirty (30) days after notice of the purpose of the
assessment, the amount of the assessment, and each Unit Owner's allocable share
of the assessment has been sent to the affected Unit Owners. All such
assessments shall be based upon the respective Unit Owners interest in the
Common Areas.

      6. PAYMENT OF ASSESSMENTS. Each Unit Owner shall pay to the Unit Owners
Association monthly, on or before the fifteenth day of each month with respect
to such month, one-twelfth of the Unit Owner's allocated share of Common
Expenses (other than special assessments). If a Unit Owner disputes its
obligation to pay all or any portion of its Common Expenses, it still must
continue to pay the amount stated in the notice provided by the Board of
Directors pending the resolution of the dispute. If the Unit Owner is successful
in its challenge, the Unit Owners Association shall promptly refund any
overpayment to the Unit Owner or give the Unit Owner a credit against future
Common Expense payments in the amount of the overpayment.

                                       27
<PAGE>

      7. LIEN FOR COMMON EXPENSE ASSESSMENTS. The Unit Owners Association shall
have and may enforce all rights provided for under Section 15 of the Condominium
Act and may obtain a lien on any Unit and enforce all such other rights provided
for under Section 46 of the Condominium Act in order to secure payment of and
collect any Unit Owner's allocated share of Common Expenses.

      8. ANNUAL REPORT OF OPERATIONS. Annually, within one hundred twenty (120)
days after the end of each calendar year, the Unit Owners Association shall
submit to the Unit Owners a detailed report showing the results of operations
for the preceding calendar year (the "ANNUAL REPORT"). The Annual Report shall
set out all expenses paid compared to the Budget as the same may have been
amended, report the balances of any reserve funds, and reflect the amount of any
shortfall or excess of revenues over Common Expenses. The Board of Directors may
at its option:

      (a) as to any shortfall of revenues, either make an additional assessment
or include the amount of such shortfall in the then current year's Budget; and

      (b) as to any excess of revenues, either, at the Board's option, (i)
refund such excess to the Unit Owners proportionally to their Ownership
Interests, (ii) apply the excess to the then current year's Budget and reduce
each Unit Owner's allocated share of Common Expenses and the monthly payment
thereof proportionally, or (iii) apply such funds to the creation and/or
maintenance of reserves pursuant to the provisions of the Condominium
Instruments. Excess Revenues that were specially assessed shall be credited to
the Unit Owner(s) who paid such amounts.

      Any Unit Owner and/or its First Mortgagee, may on written notice to the
Unit Owners Association, examine the books and records for the operation of the
Premises

                                       28
<PAGE>

for the two (2) calendar years preceding such request. Such examination shall be
scheduled so as not to unduly interfere with the day-to-day operations of the
Unit Owners Association. Copies of records may be made by the examining Unit
Owner, and the Unit Owners Association may charge such Unit Owner a reasonable
fee for such copies.

      9. LIENS FOR IMPROVEMENTS TO COMMON AREA. Subject to any restrictions
contained in any First Mortgage, the Declarant or Unit Owners Association may
secure loans obtained to improve or construct the Common Area by granting liens
upon the monthly Common Area Expense payments to be paid by the Unit Owners to
the Unit Owners Association; provided, however, that any such lien shall be
subordinate to the rights provided to the Unit Owners herein and to the lien of
any First Mortgage.

                                    ARTICLE X

                            AMENDMENT OF DECLARATION

      1. GENERAL. This Declaration may be amended by the vote of Unit Owners
holding a majority of the interests in the Condominium. However:

            (a) no such amendment shall impose any materially greater obligation
            on, or materially impair any right of, a Unit Owner or its Unit
            without the prior consent of such Unit Owner,

            (b) no such amendment shall impose any new obligations on or alter
            the rights and privileges of the Declarant without the Declarant's
            prior consent, and

                                       29
<PAGE>

            (c) no such amendment shall be effective until evidence of it has
            been duly recorded in the Rockingham County Registry of Deeds
            pursuant to Sections 11 and 34 of the Condominium Act.

            (d) no such amendment shall be effective unless consented to by the
            First Mortgagees of the Unit Owners approving such amendment.

      2. AMENDMENT FOR UNIT OWNER. Notwithstanding any provision in this
Declaration to the contrary, a Unit Owner shall have the right to request the
Unit Owners Association to amend this Declaration at the Unit Owner's cost to
subdivide, merge, or expand Units as permitted in this Declaration.

      3. CONSENT OF MORTGAGEES. In accordance with Section 34 of the Condominium
Act, except as set forth herein or in the Bylaws, the consent of those parties
who hold mortgages on any Unit is expressly not required for the consent or
approval of the respective Unit Owner to be effective under any section or
provision of the Condominium Instruments.

                                   ARTICLE XI

                           TERMINATION OF CONDOMINIUM

      This Condominium may be terminated in the manner provided for in Section
34 of the Condominium Act, provided however, the Condominium shall not be
terminated without the consent of the First Mortgagees of the Unit Owners
holding a majority of the interests in the Condominium.

                                       30
<PAGE>

                                   ARTICLE XII

                                     DEFAULT

      1. DEFAULT.

            (a) The occurrence of any one or more of the following events shall
            constitute a default of this Declaration by the non-performing party
            (the "DEFAULTING PARTY"):

                  (i) the failure to make any payment required to be made under
                  any Condominium Instruments within ten (10) days after receipt
                  of the written notice from the Declarant or Unit Owners
                  Association; or

                  (ii) the failure to observe or perform any other of the
                  covenants, conditions or obligations of the Condominium
                  Instruments within thirty (30) days after receipt of written
                  notice from the Declarant or the Unit Owners Association (the
                  "NON-DEFAULTING PARTY") specifying the nature of the default
                  claimed. However, the Defaulting Party receiving notice shall
                  not be deemed to be in default under this section so long as
                  the Defaulting Party starts to cure the claimed default within
                  thirty (30) days after receipt of such notice and diligently
                  pursues such cure.

            (b) Each Non-Defaulting Party shall have the right to bring any
            proceedings at law or in equity against any Defaulting Party, or any
            other Parson violating or attempting to violate any of the
            provisions

                                       31
<PAGE>

            contained in any Condominium Instrument or the Condominium Act, and
            to recover damages for any such violation or default, Such
            proceeding shall include the right to restrain by injunction any
            violation or threatened violation of any of the terms, covenants, or
            conditions of this Declaration, or to obtain a decree to compel
            performance of any such terms, covenants, or conditions, it being
            agreed that the remedy at law for a breach of any such term,
            covenant, or condition (except those, if any, requiring the payment
            of a liquidated sum) is not adequate. The Non-Defaulting Party shall
            have all of the remedies permitted or available under this
            Declaration, under the Condominium Act, or at law or in equity, all
            of which shall be cumulative and not alternative. The invocation of
            any specific right or remedy shall not constitute a wavier or
            election of remedies with respect to any other permitted or
            available right or remedy. The prevailing party in such an
            enforcement action shall be entitled to recover costs of collection
            or defense, including reasonable attorneys' fees.

            (c) In addition, with respect to any default under ARTICLE XIII
            above, any Non-Defaulting Party shall have the right, but not the
            obligation, following the expiration of any applicable cure period,
            to cure such default by the payment of money or the performance of
            some other action for the account of and at the expense of the
            Defaulting Party. However, in the event the default shall constitute

                                       32
<PAGE>

            an emergency condition, the Non-Defaulting Party, acting in good
            faith, shall have the right to cure such default upon such advance
            notice as is reasonably possible under the circumstances or, if
            necessary, without advance notice, so long as notice is given as
            soon as possible afterwards. To effectuate any such cure, the
            Non-Defaulting Party shall have the right to enter upon the Unit of
            the Defaulting Party to perform any necessary work or furnish any
            necessary materials or services to cure the default of the
            Defaulting Party. In the event any Non-Defaulting Party shall cure a
            default, the Defaulting Party shall reimburse the Non-Defaulting
            Party for all costs and expenses incurred in connection with such
            curative action, plus interest as provided below, within ten (10)
            days of receipt of demand for reimbursement, which demand shall
            include reasonable documentation supporting the expenditures made.

            (d) Each Unit Owner shall be responsible for any default of or
            caused by an act or omission of the Occupants of its Unit. However,
            no Unit Owner shall be deemed to be in default so long as it is
            diligently pursuing default remedies against its Occupant.

      2. INTEREST. Any time a party shall fail to pay any sum due under this
Declaration to the Declarant or the Unit Owners Association within any
applicable notice and cure period, such unpaid sum shall accrue interest from
the due date to and including the date such payment is received by the Person
entitled to payment, at the lesser of:

                                       33
<PAGE>

            (a) the highest rate permitted by law to be paid on such type of
            obligation by the Person obligated to make such payment; or

            (b) three percent (3%) per annum in excess of the prime rate from
            time to time published by the Wall Street Journal or its successor;

determined as of the due date for such payment.

      3. MITIGATION OF DAMAGES. In all situations arising out of this
Declaration, all parties shall attempt to avoid and mitigate the damages
resulting from the conduct of any other party. Each Unit Owner shall take all
reasonable measures to effectuate the provisions of this Declaration.

      4. DECLARATION SHALL CONTINUE NOTWITHSTANDING BREACH. It is expressly
agreed that no breach of this Declaration shall (a) entitle any Unit Owner to
cancel, rescind, or otherwise terminate this Declaration, or (b) defeat or
render invalid the lien of any mortgage or deed of trust made in good faith and
for value as to any part of the Premises. However, such limitation shall not
affect in any manner any other rights or remedies which a Unit Owner may have
by reason of any such breach.

      5. INDEMNIFICATION. Each Unit Owner shall indemnify and hold the
Declarant, the Unit Owners Association, every other Unit Owner, tenant, and
occupant of the Condominium harmless (except for loss or damage resulting from
the tortious acts or omissions of such other parties) from and against any
actual damages, liabilities, actions, claims, and expenses (including attorneys'
fees in a reasonable amount) in connection with the loss of life, personal
injury and/or damage to property arising from

                                       34
<PAGE>

or out of any occurrence in or upon such Unit Owner's Unit, the Limited Common
Area attributable to such Unit, or occasioned wholly or in part by any actual or
alleged act or omission of said Unit Owner or its tenants, agents, contractors,
employees or licensees. Claims for consequential or punitive damages are
expressly excluded from this indemnification.

      6. LIMITED RECOURSE. The Declarant's and each Unit Owner's liability under
the terms of the Condominium Instruments shall be limited to its ownership
interest in the Premises, or in any Units. No director, officer, shareholder,
general or limited partner, member, or representative of the Declarant or any
Unit Owner (or any legal representative, heir, estate, successor or assign of
any thereof shall be personally liable for any obligation or liability of the
Declarant or any Unit Owner under the Condominium Instruments.

      7. NO WAIVAR. The failure of any Unit Owner or the Declarant to insist
upon strict performance of any of the terms, covenants or conditions of this
Declaration shall not be deemed a waiver of any rights or remedies which that
Unit Owner or the Declarant or the Unit Owners Association may have under this
Declaration, at law or in equity, and shall not be deemed a waiver of any
subsequent breach or default in any of such terms, covenants or conditions. No
waiver by the Declarant or the Unit Owners Association or a Unit Owner of any
default under this Declaration shall be effective or binding on such party
unless made in writing by such party and no such waiver shall be implied from
any omission by such party to take action with respect to such default. No
express written waiver of any default shall affect any other default or cover
any other period of time other than any default and/or period of time specified
in such express

                                       35
<PAGE>

waiver. One or more written waivers or any default under any provision of this
Declaration shall not be deemed to be a waiver of any subsequent default in the
performance of the same provision or any other terms or provisions contained in
this Declaration.

                                  ARTICLE XIII

                               GENERAL PROVISIONS

      1. ESTOPPEL CERTIFICATE. Each Unit Owner and the Unit Owners Association
shall, upon written request of any other Unit Owner, issue to such Unit Owner,
or its prospective mortgagee, tenant or successor, an estoppel certificate
stating to the best of the issuer's knowledge as of such date:

            (a)   whether there exists any default under this Declaration by the
                  requesting Unit Owner or any other Unit Owner (including the
                  issuing Unit Owner), and specifying the nature of the default;

            (b)   whether this Declaration is in full force and effect; and

            (c)   with respect to the Unit Owners Association, whether or not
                  all general and special assessments have been paid to date
                  and, if not, the amount owing and by which Unit Owner(s).

Such estoppel certificate shall be issued within seven (7) days of receipt of
the request, and shall act to estop the issuer from asserting a claim or defense
against a bona fide lien holder or purchaser for value to the extent that such
claim or defense is based upon facts known to the issuer as of the date of the
estoppel certificate which are contrary to the facts contained in the
certificate, and such bona fide purchaser or lien holder has

                                       36
<PAGE>

acted in reasonable reliance upon the estoppel certificate without knowledge of
facts to the contrary. The issuance of an estoppel certificate shall in no event
subject the issuer to any liability for the negligent or inadvertent failure of
the issuer to disclose correct and/or relevant information, nor shall such
issuance be construed to waive any rights of the issuer against any other
parties.

      2. REIMBURSEMENT OF EXPENSES. Whenever this Declaration provides that the
Declarant's or Unit Owners Association's consent or approval is required before
a Unit Owner may act, the Unit Owner shall reimburse the Declarant or Unit
Owners Association for all costs and expenses, Including reasonable attorneys'
fees, incurred by them in connection with the review of and response to such
request.

      3. NOTICES. All notices required or provided for under this Declaration
shall be deemed to have been given and received for all purposes when (a)
delivered in person, (b) the date delivered or refused if mailed, postage
prepaid, Certified or Registered United States Mail, return receipt requested,
(c) the date delivered or refused if sent by receipted or otherwise traceable
overnight delivery service.

         Upon the purchase of a Unit, the Person purchasing the Unit shall
deliver its address for notice to the Unit Owners Association, and such address
shall be the address for notices for such Unit Owner until written notice of a
change of address is given to the Unit Owners Association. The current notice
address for the Declarant and the Unit Owners Association is:

         c/o Stephen W. Foss, President
         Foss Manufacturing Company, Inc.
         390 Lafayette Road
         P.O. Box 5000
         Hampton, NH 03843-5000

                                       37
<PAGE>
         WITH A COPY TO:
         WP Carey & Co. LLC
         50 Rockefeller Plaza, 2nd Floor
         New York, NY 10020
         ATTN: Director, Asset Management

            If a Unit is owned by more than one Person, those Persons shall
designate in writing to the Declarant and the Unit Owners Association the name
and address of one of their number to whom notices shall be sent. A notice to
the Person so designated shall be full and effective notice under this
Declaration. The Unit Owners Association shall advise the Unit Owners in writing
of any change of address of the when operational. The Unit Owners Association
shall give prior written notice to the Unit Owners of the notice address of any
manager with whom it has contracted. Any notice sent to any Unit Owner shall be
simultaneously sent to any First Mortgagee of such Unit Owner who has given the
Association its notice address and requested that it receive copies of all
notices sent to its Unit Owner mortgagor.

      4. TRANSFER OF UNIT. A party transferring all or any portion of its
interest in its Unit shall give notice to the Declarant and the Unit Owners
Association of such transfer with at least the following information:

            (a) the name and address of the new Unit Owner; and

            (b) the description of the Unit and/or interest transferred.

      5. CONDEMNATION. In the event any portion of the Premises shall be
condemned, or conveyed under threat of condemnation, the award shall be paid to
the Declarant, the Unit Owners, and Unit Owners Association in proportion to the
values of the Unit(s) and Common Area and improvements taken, and the other Unit
Owners waive and release any right to recover any value attributable to the
property interest so

                                       38
<PAGE>

taken. If a separate claim can be filed for the taking of any other property
interest existing pursuant to this Declaration which does not reduce or diminish
the amount paid to a Unit Owner, the Declarant or the Unit Owners Association,
then the owner of such other property interest shall have the right to seek an
award for the taking of such interest.

      6. BINDING EFFECT. The terms of this Declaration and all easements granted
under it shall constitute covenants running with the land and shall bind the
Premises and inure to the benefit of and be binding upon the Unit Owners and
their respective successors and assigns. This Declaration is not intended to
supersede, modify, amend, or otherwise change the provisions of any prior
instrument affecting the Premises.

      7. NOT A PUBLIC DEDICATION. Nothing contained in this Declaration shall be
deemed to be a gift or dedication of any portion of the Premises or of any Unit
to the general public, or for any public use or purpose whatsoever. Except as
specifically provided in this Declaration, no right, privileges or immunities of
the Declarant or any Unit Owner under this Declaration shall inure to the
benefit of any third-party person, nor shall any third-party person be deemed to
be a beneficiary of any of the provisions contained in this Declaration.

      8. TIME. Time is of the essence in this Declaration.

      9. CHOICE OF LAW. This Declaration shall be governed under the laws of the
State of New Hampshire.

      10. CONDOMINIUM ACT. As to any matters with respect to which the
Condominium Instruments are silent, the Condominium Act shall control. In the
event of

                                       39
<PAGE>

a conflict between the terms of the Condominium Act and the Condominium
Instruments, the Condominium Instruments shall control.

      11. WAIVER. The Unit Owners each acknowledge that this is a commercial
condominium that involves no residential Units. To the maximum extent allowed by
law, in any instance in which the provisions of the Condominium Instruments may
not strictly comply with the provisions of the Condominium Act, the Unit Owners
each waive the technical compliance of the Condominium Instruments with the
Condominium Act.

      12. ASSOCIATION. The operation of the Condominium shall be by an
unincorporated association, or by an incorporated association, and the
association shall, at any annual meeting, vote as to which type of organization
it prefers.

                                   ARTICLE XIV

                          UNITS SUBJECT TO DECLARATION

      1. A. UNITS SUBJECT TO DECLARATION, BYLAWS AND RULES AND REGULATIONS. All
present or future Unit Owners and Occupants are subject to the provisions of the
Condominium Instruments. The acceptance of any fee, leasehold or similar
interest in any Unit shall constitute an agreement that the provisions of the
Condominium Instruments, as they may be lawfully amended from time to time, are
accepted and ratified by such Unit Owner or Occupant. The Condominium
Instruments shall be deemed to be enforceable servitudes and covenants running
with the land and shall bind any Person who holds any interest in any Unit,
whether or not such provisions are recited and stipulated in full in each and
every instrument of conveyance, lease, or other agreement. Each Unit Owner and
Occupant shall comply with all Condominium Instruments, and failure to comply
shall be grounds for an action by the Declarant or the

                                       40
<PAGE>

Unit Owners Association to recover damages or obtain injunctive relief against
the Occupant and, if the Occupant is not a Unit Owner, the applicable Unit
Owner. In the event of litigation to enforce the Condominium Instruments, the
Declarant or the Unit Owners Association shall be entitled to recover all
reasonable costs and expenses of such actions from the violating party and the
Unit Owner, including attorneys' fees.

      2. B. CONDOMINIUM RULES. The Declarant or the Board of Directors may adopt
Condominium Rules governing activities at the Premises. The Condominium Rules
shall not abrogate any rights of Unit Owners established in this Declaration.

                                   ARTICLE XV

                                 EFFECTIVE DATE

      This Declaration shall take effect upon the recording of this Declaration.

      IN WITNESS WHEREOF, the Declarant has set its hand on this ______ day of
________, 20____.

                                             FOSS (NH) QRS 16-3, INC., DECLARANT

_________________________________            By:________________________________
Witness                                      Duly Authorized

STATE OF _________________________           Dated: _________________, 20_______
COUNTY OF ________________________

      Personally appeared the above named ________________ known to me or
satisfactorily proven to be the ___________________ of FOSS (NH) QRS 16-3, INC.,
the Declarant and being so authorized to do so, executed the within for the
purposes contained herein and acknowledged same to be her free act and deed.

      Before me,

                                              __________________________________
                                              Notary Public/Justice of the Peace
                                              Name:
                                              My Commission Expires:

                                       41
<PAGE>

                                     JOINDER

      The undersigned, Foss Manufacturing Company, Inc., the Tenant under a
Lease with the Declarant, hereby joins in this Condominium Declaration and
agrees that its interests as Tenant shall be subject to the provisions of this
Declaration.

      IN WITNESS WHEREOF, the Tenant has set its hand on this ________ day of
__________, 20____.

                                                FOSS MANUFACTURING COMPANY, INC.

_____________________________                   By:_____________________________
Witness                                              Stephen W. Foss, President

                                     JOINDER

      The undersigned, CIBC Inc. the holder of a first Mortgage on the premises
described in the Declaration, hereby joins in this Declaration and agrees that
its interests as Mortgagee shall be subject to the provisions of this
Declaration.

      IN WITNESS WHEREOF, the Mortgagee has set its hand on this ______ day of
_______, 20____.

                                                 CIBC, INC.

______________________________                   By:____________________________
Witness                                          Duly Authorized

                                       42
<PAGE>

                                   APPENDIX A
                           SUBMITTED LAND DESCRIPTION

      A CERTAIN TRACT OF LAND SITUATED IN THE TOWN OF HAMPTON, COUNTY OF
ROCKINGHAM, STATE OF NEW HAMPSHIRE, DESCRIBED AS FOLLOWS:

      BEGINNING AT A RAILROAD SPIKE IN PAVEMENT AT THE NORTHEAST CORNER OF LAND
OWNED BY FOSS MANUFACTURING CO., LLC (RCRD BK 3631 PG 2760) AND THE SOUTHEAST
CORNER OF A 20 FT ACCESS RIGHT OF WAY AND UTILITY EASEMENT ALONG THE WESTERLY
RIGHT OF WAY SIDELINE OF LAFAYETTE ROAD;

      THENCE ALONG SAID LAFAYETTE ROAD SIDELINE THE FOLLOWING COURSES AND
DISTANCES:

      S24 degrees 37'14"W, 44.52 FT;

      S22 degrees 48'44"W, 96.21 FT;

      ALONG A CURVE CONCAVE TO THE EAST HAVING A RADIUS OF 730 FT AND LENGTH OF
40.00 FT AND CHORD/BEARING OF 39.99 FT/S21 degrees 14'33" W;

      S19 degrees 40'14"W, 35.88 FT TO AN IRON PIN AT THE NORTHEAST LOT CORNER
OF LAND NOW OR FORMERLY OF JOSEPH J. LORUSSO, II;

      THENCE ALONG SAID LORUSSO N73 degrees 27'46"W, 288.26 FT TO LAND NOW OR
FORMERLY OF BOSTON & MAINE CORP.;

      THENCE ALONG SAID LAND N29 degrees 43'00"E, 220.77 FT TO LAND NOW OR
FORMERLY OF FOSS MANUFACTURING CO., LLC (RCRD BK 3631 PG 2766);

      THENCE ALONG SAID FOSS LAND AND LAND OF BOSTON & MAINE CORP
N63 degrees 40'37"W, 23.04 FT;

      THENCE N29 degrees 43'00"E, 5.58 FT TO THE SOUTHERLY SIDE OF AN ACCESS
RIGHT OF WAY AND UTILITY EASEMENT;

      THENCE ALONG SAID EASEMENT N63 degrees 34'54"W, 1.15 FT TO A STONE BRIDGE
ABUTTMENT

      THENCE ACROSS LAND NOW OR FORMERLY OF BOSTON & MAINE CORP ALONG THE FACE
OF STONE BRIDGE ABUTTMENT AND SOUTHERLY SIDE OF

                                       43
<PAGE>

SAID RIGHT OF WAY AND UTILITY EASEMENT THE FOLLOWING COURSES AND DISTANCES:

      N53 degrees 04'46"W, 20.73 FT;

      N60 degrees 25'07"W, 23.29 FT;

      N68 degrees 10'41"W, 21.20 FT TO THE SOUTHWEST CORNER OF THE RIGHT OF WAY
AND UTILITY EASEMENT AT LAND NOW OR FORMERLY OF FOSS MANUFACTURING CO. LLC (RCRD
BK 3631 PG 2762);

      THENCE ALONG LAND NOW OR FORMERLY OF BOSTON & MAINE CORP AND SAID FOSS MFG
THE FOLLOWING COURSES:

      S29 degrees 43'00"W, 9.06 FT;

      N63 degrees 40'37"W, 10.02 FT;

      S29 degrees 43'00"W, 567.00 FT TO A BOUND AT LAND NOW OR FORMERLY OF FOSS
FAMILY LLC II (RCRD BK 3631 PG 2859);

      THENCE ALONG LAND NOW OR FORMERLY OF BOSTON & MAINE CORP AND SAID FOSS
FAMILY THE FOLLOWING COURSES AND DISTANCES:

      S85 degrees 20'52"E, 5.51 FT TO A BOUND;

      S29 degrees 43'00"W, 584.12 FT;

      ALONG A CURVE CONCAVE TO THE WEST HAVING A RADIUS OF 10,777.00 FT AND
LENGTH OF 123.98 FT AND CHORD/BEARING OF 123.98 FT S30 degrees 02'46"W;

      S22 degrees 44'07"W, 40.36 FT;

      ALONG A CURVE CONCAVE TO THE WEST HAVING A RADIUS OF 10,782.68 FT AND
LENGTH OF 200.52 FT AND CHORD/BEARING OF 200.52 FT/S31 degrees 12'04"W TO AN
IRON PIPE AT LAND NOW OR FORMERLY OF THOMAS COOK;

      THENCE ALONG LAND OF THOMAS COOK N88 degrees 00'42"W, 231.38 FT;

      THENCE ALONG SAID COOK N88 degrees 22'36"W, 20,64 FT TO AN IRON PIPE AT
LAND NOW OR FORMERLY OF PAUL BEAUDRY;

      THENCE ALONG SAID LAND OF BEAUDRY N87 degrees 37'17"W, 140.46 FT;

                                       44
<PAGE>

      THENCE ALONG SAID LAND N88 degrees 08'05"W. 226 66 FT TO THE NORTHEAST
SIDELINE OF ROUTE 51 RIGHT OF WAY;

      THENCE ALONG SAID RIGHT OF WAY THE FOLLOWING COURSES:

      N26 degrees 00'00"W,178.61 FT TO A HIGHWAY BOUND;

      N26 degrees 00'00"W, 643.37 FT TO A HIGHWAY BOUND;

      ALONG A CURVE CONCAVE TO THE NORTHEAST HAVING A RADIUS OF 5,025.00 FT AND
LENGTH OF 210.05 FT WITH A CHORD/BEARING OF 210.03 FT/N24 degrees 43'42"W TO THE
SOUTHWEST CORNER OF LAND NOW OR FORMERLY OF FOSS MFC CO., LLC (RCRD BK 3631 PG
2762);

      THENCE CONTINUING ALONG SAID ROUTE 51 RIGHT OF WAY AND FOSS LAND THE
FOLLOWING COURSES:

      ALONG A CURVE CONCAVE TO THE NORTHEAST HAVING A RADIUS OF 5,025.00 FT AND
LENGTH OF 473.52 FT WITH A CHORD/BEARING OF 473.35 FT/N20 degrees 49'53"W TO A
HIGHWAY BOUND;

      N71 degrees 54'14"E, 25.00 FT TO A HIGHWAY BOUND;

      ALONG A CURVE CONCAVE TO THE NORTHEAST HAVING A RADIUS OF 5,000.00 FT AND
LENGTH OF 414.17 FT WITH A CHORD/BEARING OF 414.05 FT/N15 degrees 45'32"W TO THE
SOUTHWEST CORNER OF LAND NOW OR FORMERLY OF FOSS FAMILY LLC I (RCRD BK 3631 PG
2768). SAID SOUTHWEST CORNER BEING LOCATED S62 degrees 08'47"W, 1,172.75 FT FROM
A POINT IN A BROOK AT LAND OF NASH PROPERTIES, INC;

      THENCE ALONG SAID LAND AND RIGHT OF WAY ALONG A CURVE CONCAVE TO THE
NORTHEAST HAVING A RADIUS OF 5,000.00 FT AND LENGTH OF 71.78 +/- FT WITH A
CORD/BEARING OF 71.78 FT FT/S 12 degrees 58'29"E TO DRAKE'S RIVER;

      THENCE NORTHERLY ALONG DRAKE'S RIVER 925 +/- FT TOGETHER WITH THAT PORTION
OF SAID RIVER WHICH WOULD PASS WITH A CONVEYANCE OF THE HEREIN DESCRIBED PARCEL
TO THE INTERSECTION WITH A BROOK;

      THENCE NORTHEASTERLY ALONG SAID BROOK 715+/- FT TO A POINT AT LAND OF NASH
PROPERTIES, INC. AT THE SOUTHWEST LOT CORNER OF FOSS FAMILY LLC II (RCRD BK 3631
PG 2861), SAID POINT BEING LOCATED

N62 degrees 08'47"E. 1,172.75 FT FROM A POINT (DESCRIBED ABOVE) ALONG THE
NORTHEAST ROUTE 51 RIGHT OF WAY;

                                       45
<PAGE>

      THENCE NORTHEASTERLY ALONG THE BROOK 700+/- FT TO A POINT AT THE SOUTHEAST
LOT CORNER OF LAND NOW OR FORMERLY OF NASH PROPERTIES, INC. SAID POINT BEING
LOCATED N67 degrees 14'07"E, 545.48 FT FROM THE SOUTHWEST LOT CORNER OF FOSS
FAMILY LLC II;

      THENCE ALONG LAND OF SAID NASH N25 degrees 01'43"W, 177.73 +/- FT TO AN
IRON PIN AT LAND NOW OR FORMERLY OF CHARLES CHASE;

      THENCE ALONG LAND OF SAID CHASE THE FOLLOWING COURSES:

      N86 degrees 11'52"E, 114.96 FT TO A NAIL IN 30" OAK W/WIRE;

      N84 degrees 06'16"E, 151.51 FT TO A NAIL IN 12" ASH W/WIRE;

      N85 degrees 42'04"E, 394.59 FT TO A NAIL IN 30" MAPLE W/WIRE;

      N85 degrees 42'04"E, 31.13 FT TO LAND NOW OR FORMERLY OF ROBERT G. LAW;
      THENCE S29 degrees 46'48"E, 19.18 FT TO A PIPE;

      THENCE S29 degrees 46'48"E, 185.55 FT TO AN IRON PIN AT LAND NOW OR
FORMERLY OF CECELIA H. NOEL, TRUST;

      THENCE ALONG LAND OF SAID NOEL THE FOLLOWING COURSES AND DISTANCES:

      S83 degrees 58'50"W, 398.84 FT TO AN IRON PIN;

      S16 degrees 14'18"E, 119.07 FT TO AN IRON PIN;

      S87 degrees 20'16"W, 300.00 FT TO AN IRON PIN;

      S22 degrees 33'22"E, 163.10 FT;

      S64 degrees 39'37"E, 6.35 FT TO AN IRON PIN;

      S84 degrees 34'59"E, 159.77 FT TO A NAIL IN 30" OAK W/WIRE;

      S80 degrees 08'44"E, 448.88 FT TO AN IRON PIN;

      S53 degrees 51'12"E, 168.60 FT TO A CHISELED X IN 1FT HIGH VERTICAL IRON
RR RAIL:

      N32 degrees 03'03"E, 212.15 FT TO A CHISELED X ON 2 FT HIGH VERTICAL IRON
RR RAIL;

      N32 degrees 03'03"E, 33.74 FT TO AN IRON PIN ALONG THE SOUTH SIDE OF
EXETER ROAD ROW;

                                       46
<PAGE>

      THENCE ALONG SAID ROAD S28 degrees 30'03"E, 23.93 FT;

      THENCE S33 degrees 48'23"E, 46.27 FT TO AN IRON PIN AT THE NORTHWEST
CORNER OF LAND NOW OR FORMERLY OF FOSS MFC CO LLC;

      THENCE ALONG SAID ROAD AND LAND OF FOSS S33 degrees 13'27'E, 45.76 FT TO
AN IRON PIN AT LAND NOW OR FORMERLY OF BOSTON & MAINE CORP.;

      THENCE ALONG LAND OF SAID BOSTON & MAINE THE FOLLOWING COURSES AND
DISTANCES:

      S29 degrees 33'53"W, 49.60 FT;

      S60 degrees 58'12"E, 17.02 FT TO AN IRON PIN;

      S29 degrees 43'00"W, 511.41 FT TO AN IRON PIN;

      N66 degrees 29'11"W, 25.10 FT TO AN IRON PIN;

      S29 degrees 43'00"W, 482.17 FT TO THE NORTHWEST CORNER OF AN ACCESS RIGHT
OF WAY UTILITY EASEMENT AT THE FACE OF STONE BRIDGE ABUTTMENT;

      THENCE ACROSS LAND NOW OR FORMERLY OF BOSTON & MAINE CORP. ALONG SAID
ABUTMENT AND ACCESS ROW AND UTILITY EASEMENT THE FOLLOWING COURSES AND
DISTANCES:

      S51 degrees 51'26"E, 21.57 FT;

      S60 degrees 58'36"E, 24.63 FT;

      S65 degrees 59'12"E, 19.71 FT TO CORNER OF STOKE BRIDGE ABUTTMENT;

      N24 degrees 00'48"E, 1.16 FT TO THE NORTH SIDE OF A 20' ACCESS ROW AND
UTILITY EASEMENT;

      S63 degrees 34'54"E, 0.54 FT TO LAND NOW OR FORMERLY OF FOSS MFG CO, LLC;

      THENCE FOLLOWING THE NORTHERLY BORDER OF SAID ROW AND EASEMENT ACROSS LAND
NOW OR FORMERLY OF FOSS MFG CO LLC (RCRD BK 3631 PG 2766) THE FOLLOWING COURSES
AND DISTANCES:

      S63 degrees 34'54"E, 38.67 FT;

      S79 degrees 09'49"E, 82.96 FT;

                                       47
<PAGE>

      S74 degrees 14'46"E, 95.29 FT;

      S63 degrees 13'39"E, 64.73 FT TO THE WESTERLY SIDELINE OF LAFAYETTE RD
ROW;

      THENCE ALONG SAID ROW S24 degrees 37'43"W, 20.01 FT TO THE POINT OF
BEGINNING.

      EXCEPTING AND RESERVING LAND OWNED BY THE BOSTON & MAINE CORPORATION
PROPERTY DESCRIBED AS FOLLOWS:

      BEGINNING AT A POINT AT THE SOUTHWEST CORNER OF A RIGHT OF WAY UTILITY
EASEMENT ALONG LAND NOW OR FORMERLY OF FOSS MANUFACTURING COMPANY, LLC. SAID
POINT BEING LOCATED N29 degrees 43'00"E, 9.06 FT FROM AN IRON PIN;

      THENCE ALONG LAND NOW OR FORMERLY OF BOSTON & MAINE CORPORATION AND SAID
FOSS N29 degrees 43'00"E. 20.18 FT;

      THENCE ACROSS LAND OF BOSTON & MAINE CORPORATION ALONG A STONE FACE OF
BRIDGE ABUTMENT THE FOLLOWING COURSES AND DISTANCES:

      S51 degrees 51'26"E, 21.57 FT;

      S60 degrees 58'36"E. 24.63 FT;

      S65 degrees 59'12"E, 19.71 FT;

      N24 degrees 20'48"E, 1.16 FT;

      S63 degrees 34'54"E, 0.54 FT TO LAND NOW OR FORMERLY OF FOSS MANUFACTURING
COMPANY, LLC;

      THENCE ALONG LAND OF SAID FOSS S29 degrees 43'00"W, 20.03 FT;

      THENCE ACROSS LAND OF BOSTON & MAINE RAILROAD AND ALONG STONE FACE OF
BRIDGE ABUTMENT THE FOLLOWING COURSES AND DISTANCES:

      N63 degrees 34'54"W, 1.15 FT;

      N53 degrees 04'46"W, 20.73 FT;

      N60 degrees 25'07"W 23.29 FT;

                                       48
<PAGE>

      N68 degrees 10'41" W, 21.20 FT TO THE POINT OF BEGINNING.

      THE ABOVE DESCRIBED PARCEL CONTAINING 1,054 SQ FT IS MORE PARTICULARLY
DESCRIBED/SHOWN ON PLAN ENTITLED "FOSS CONDOMINIUM SITE PLAN", SHEET 3 OF 7 BY
KNIGHT HILL LAND SURVEYING SERVICES, INC., PROJ. #1163COND DATED JUNE 2004, AND
THE ABOVE DESCRIBED EXCEPTED PREMISES ARE SUBJECT TO THE RIGHTS, EASEMENTS AND
OBLIGATIONS OF A CERTAIN EASEMENT GRANTED BY THE B & M CORP. DESCRIBED IN AN
EASEMENT DEED RECORDED AT THE ROCKINGHAM COUNTY REGISTRY OF DEEDS AT BOOK 2261,
PAGE 1262 WHICH EASEMENT ALLOWS FOR PASSAGE UNDER THE RAILROAD TRESTLE TO GAIN
ACCESS FROM LAFAYETTE ROAD TO THE ABOVE DESCRIBED PREMISES AS SHOWN ON PLAN
#D-26503.

      THE ABOVE DESCRIBED SUBMITTED LAND IS SHOWN ON A SITE PLAN ENTITLED "FOSS
CONDOMINIUM SITE PLAN" RECORDED AT THE ROCKINGHAM COUNTY REGISTRY OF DEEDS, AND
INCLUDES THE SO-CALLED OFFICE PARCEL, THE FACTORY PARCEL, THE TIMBERLAND PARCEL
THE 13 ACRE PARCEL AND THE 21 ACRE PARCEL AND CONSISTING OF 97.39 ACRES.

      THE ABOVE DESCRIBED PREMISES ARE SUBJECT TO AND WITH THE BENEFIT OF THE
FOLLOWING:

      1. The provisions of and covenants recited in a deed of the Town of
Hampton recorded in the Rockingham County Registry of Deeds at Book 2994, Page
0221 as follows:

            "Said premises are conveyed 1) subject to the covenant and agreement
            to maintain a fence if required, 2) subject to the rights of ingress
            and egress, 3) together with rights of ingress and egress, 4)
            excepting herefrom pipes, poles, wires, signal P 466 and
            underground facilities, 5) the right to enter upon the premises to
            maintain, repair, replace, renew, relay and remove the same, 6)
            subject to the restrictions of nonliability for damages caused by
            fire, 7) subject to the right of the Boston and Maine Railroad to
            enter upon the premises to inspect, repair, maintain and/or
            reconstruct the overhead highway bridge at Exeter Road, 8) subject
            to an easement granted 11/1/50 between the Boston and Maine Railroad
            and the Town of Hampton, 9) and subject also to any rights of way as
            may now exist on and over said parcel, all as contained in deed of
            Boston and Maine Railroad to Hampton Plaza Corporation dated 5/3/62
            and recorded in Rockingham County Registry of Deeds' at Book 1637,
            page 486, and is subject to such other restrictions, covenants and
            agreements contained in said Railroad deed.

                                       49
<PAGE>

            Said premises are conveyed subject to the restriction on the
            Grantee, its successors and assigns, that said premises shall never
            be used for access to said Exeter Road".

      2. The rights, easements and obligations of a certain easement granted by
the Boston and Maine Corporation described in an easement deed recorded at the
Rockingham County Registry of Deeds at Book 2261, Page 1262 which easement
allows for passage under the railroad trestle to gain access from Lafayette Road
to the above described premises, as shown on Plan #D-26503.

      3. A pole line easement in favor of New England Telephone and Telegraph
Co. recorded in the Rockingham County Registry of Deeds at Book 745, page 5.

      4. A sewer line easement in favor of the Town of Hampton recorded at the
Rockingham County Registry of Deeds at Book 2232, Page-1208; Book 2232, Page
1747 and Book 2232, Page 1209.

      5. A gas line easement in favor of Northern Utilities recorded at the
Rockingham County Registry of Deeds at Book 2398, Page 1756 and Book 2398, Page
1758.

      6. A 6 foot wide underground telephone cable easement in favor of New
England Telephone and Telegraph Co. recorded in the Rockingham County Registry
of Deeds at Book 1442, Page 10.

      7. A 20 foot wide pole line easement in favor of the Exeter and Hampton
Electric Co., recorded in the Rockingham County Registry of Deeds at Book 2247,
Page 838.

      8. A 17 foot pole line easement in favor of Exeter and Hampton Electric
Company as shown on a plan recorded at the Rockingham County Registry of Deeds
as Plan #D-6167.

      9. An underground 27 inch reinforced concrete pipe drain as described in
Note 15 on Plan #D-26503.

      10. A 10 inch wide easement in favor of New England Telephone and
Telegraph Co. recorded in the Rockingham County Registry of Deeds at Book 2891.
Page 2445.

      11. Subject to and with the benefit of the Declaration of Reciprocal
Easements recorded in the Rockingham County Registry of Deeds at Book 3631, Page
2715.

      12. Also included hereunder is the right of the Grantor, its successors,
assigns, licensees, invitees, in common with others to pass and repass over
Industrial Drive as shown on a plan entitled "Consolidation and Subdivision Plan
of Land, Towle

                                       50
<PAGE>

Farm Road Realty Trust", dated May 26, 1982 which plan is recorded in the
Rockingham County Registry of Deeds as Plan #D-11609.

      13. Subject to a utility Easement to New England Telephone and Telegraph
recorded in the Rockingham County Registry of Deeds at Book 2531, Page 1946 and
Book 1555, Page 2888.

      14. Subject to a Sewer Easement to the Town of Hampton dated November 7,
1950 and recorded at said Registry at Book 1191, Page 126.

      15. Subject to a Sewer Easement to the Town of Hampton dated June 19, 1980
and recorded at said Registry at Book 2366, Page 935.

      16. Subject to a Water Easement to Hampton Water Works Company dated
August 1, 1982 and recorded at said Registry at Book 2418, Page 1099.

                                       51
<PAGE>

                                   APPENDIX B

                      LEGAL DESCRIPTION OF THE CONVERTIBLE
                           LANDS REGARDING UNITS 4 & 5

                      PARCEL I - CONVERTIBLE LAND - UNIT 4

      A CERTAIN TRACT OF LAND SITUATED IN THE TOWN OF HAMPTON, COUNTY OF
ROCKINGHAM, STATE OF NEW HAMPSHIRE, AND DESCRIBED AS FOLLOWS:

      BEGINNING AT A POINT AT THE NORTHEAST CORNER OF THE WITHIN DESCRIBED
TRACT; THENCE S 73 degrees 27' 01" E FOR A DISTANCE OF 484.43 FEET TO A POINT;
THENCE N 16 degrees 32' 59 E FOR A DISTANCE OF 505.63 FEET TO A POINT; THENCE
ALONG A CURVE WITH A RADIUS OF 5025 FEET AND A LENGTH OF 126.45 FEET WITH A
CORD/BEARING OF 126.44" FT/N 22 degrees 48'35" TO A POINT; THENCE N 54 degrees
50' 59" W FOR A DISTANCE OF 72.98 FEET TO A POINT; THENCE N 73 degrees 27' 01 W
FOR A DISTANCE OF 341.25 FEET TO A POINT; THENCE S 64 degrees 16' 14" W FOR A
DISTANCE OF 35.65 FEET TO A POINT; THENCE N 16 degrees 70' 09" E FOR A DISTANCE
OF 308.64 FEET TO A POINT; THENCE S 10 degrees 29' 33" W FOR A DISTANCE OF
295.71 FEET TO THE POINT OF BEGINNING.

      MEANING AND INTENDING TO DESCRIBED A 7.16 ACRE PARCEL LABELED CONVERTIBLE
LAND AND UNIT #4, ON A PLAN ENTITLED FOSS CONDOMINIUM SITE PLAN CONVERTIBLE LAND
DETAIL SITE PLAN FOR UNITS 2, 4, & 5 RECORDED AT THE ROCKINGHAM COUNTY REGISTRY
OF DEEDS.

      THE ABOVE PREMISES ARE SUBJECT TO AND WITH THE BENEFIT OF THE EASEMENTS
AND OTHER DOCUMENTS LISTED IN APPENDIX A, ITEMS 1-16, TO THE EXTENT THAT ANY OF
THOSE ITEMS SHALL BE APPLICABLE TO THE ABOVE DESCRIBED PREMISES.

                                    PARCEL II

                      CONVERTIBLE LAND - UNIT #5 - TRACT I

      A CERTAIN TRACT OF LAND SITUATED IN THE TOWN OF HAMPTON, COUNTY OF
ROCKINGHAM, STATE OF NEW HAMPSHIRE, AND DESCRIBED AS FOLLOWS:

      BEGINNING AT A POINT AT THE SOUTHWEST CORNER OF THE WITHIN DESCRIBED
PREMISES THENCE N 29 degrees 28' 22" E FOR A DISTANCE OF 1018.14 FEET TO A
POINT; THENCE N 79 degrees 37' 25" W FOR A DISTANCE OF 127.44 FEET TO A POINT;
THENCE N 79 degrees 40' 21" W FOR A DISTANCE OF 596.17 FEET TO A POINT; THENCE
N 12 degrees 16' 41" E FOR A DISTANCE OF 339.82 FEET TO A POINT; THENCE N
03 degrees 42' 00" W FOR A DISTANCE OF 73.63 FEET TO A POINT; THENCE N
75 degrees 10'

                                       52
<PAGE>

48" W FOR A DISTANCE OF 135.61 FEET TO A POINT; THENCE N 13 degrees 40' 52" E
FOR A DISTANCE OF 88.24 FEET TO A POINT; THENCE N 75 degrees 28' 06" W FOR A
DISTANCE OF 237.59 FEET TO A POINT; THENCE S 13 degrees 17' 42" W FOR A
DISTANCE OF 55.56 FEET TO A POINT; THENCE N 76 degrees 54' 53" W FOR A DISTANCE
OF 74.62 FEET TO A POINT; THENCE N 00 degrees 12' 02" W FOR A DISTANCE OF 98.09
FEET TO A POINT; THENCE N 43 degrees 17' 47" E FOR A DISTANCE OF 53.51 FEET TO A
POINT; THENCE S 76 degrees O8' 47" E FOR A DISTANCE OF 220.60 FEET TO A POINT;
THENCE S 45 degrees 08' 42" E FOR A DISTANCE OF 170.95 FEET TO A POINT; THENCE
S 79 degrees 42' 29" E FOR A DISTANCE OF 506.05 FEET TO A POINT; THENCE S
34 degrees 15' 25" E FOR A DISTANCE OF 321.91 FEET TO A POINT; THENCE S
10 degrees 51' 11" W FOR A DISTANCE OF 181.40 FEET TO A POINT; THENCE S
46 degrees 27' 58" E FOR A DISTANCE OF 218.35 FEET TO A POINT; THENCE S
29 degrees 43' 00" W FOR A DISTANCE OF 566.70 FEET TO A POINT; THENCE S
85 degrees 20' 52" E FOR A DISTANCE OF 5.51 FEET TO A POINT; THENCE S
29 degrees 43' 00" W FOR A DISTANCE OF 467.52 FEET TO A POINT; THENCE N
60 degrees 17' 00" W FOR A DISTANCE OF 110.43 FEET TO THE POINT OF BEGINNING.

      MEANING AND INTENDING TO DESCRIBE CONVERTIBLE LAND UNIT #5 CONSISTING OF
10.73 ACRES AS SHOWN ON A PLAN ENTITLED FOSS CONDOMINIUM SITE PLAN, CONVERTIBLE
LAND DETAIL SITE PLAN FOR UNITS 2, 4 AND 5.

                      CONVERTIBLE LAND - UNIT #5 - TRACT II

      A CERTAIN TRACT OF LAND SITUATED IN THE TOWN OF HAMPTON, COUNTY OF
ROCKINGHAM, STATE OF NEW HAMPSHIRE, AND DESCRIBED AS FOLLOWS:

      BEGINNING AT A POINT AT THE SOUTHWEST CORNER OF THE WITHIN DESCRIBED
PREMISES; THENCE N 25 degrees 23' 52" W FOR A DISTANCE OF 285.06 FEET TO A
POINT; THENCE N 77 degrees 37' 32" W FOR A DISTANCE OF 440.21 FEET TO A POINT:
THENCE N 12 degrees 22' 28" E FOR A DISTANCE OF 506.85 FEET TO A POINT; THENCE
N 51 degrees 43' 04" E FOR A DISTANCE OF 145.50 FEET TO A POINT; THENCE S
68 degrees 16' 16" E FOR A DISTANCE OF 478.93 FEET TO A POINT; THENCE S
43 degrees 17' 47" W FOR A DISTANCE OF 328.06 FEET TO A POINT; THENCE S
12 degrees 02' 28" W FOR A DISTANCE OF 162.58 FEET TO A POINT; THENCE S
52 degrees 19' 43" E FOR A DISTANCE OF 233.67 FEET TO A POINT; THENCE S
10 degrees 29' 33" W FOR A DISTANCE OF 223.12 FEET TO THE POINT OF BEGINNING.

      MEANING AND INTENDING TO DESCRIBE CONVERTIBLE LAND TRACT 5 CONSISTING OF
6.60 ACRES AND SHOWN ON A PLAN ENTITLED FOSS CONDOMINIUM SITE PLAN, CONVERTIBLE
LAND DETAIL SITE PLAN FOR UNITS 2, 4, AND 5 RECORDED AT THE ROCKINGHAM COUNTY
REGISTRY OF DEEDS.

                                       53
<PAGE>

      THE ABOVE TRACTS I AMD II OF CONVERTIBLE LAND AREA UNIT #5 ARE SUBJECT TO
AND WITH THE BENEFIT OF THE EASEMENTS AND OTHER DOCUMENTS LISTED UNDER APPENDIX
A ITEMS 1-16, TO THE EXTENT THAT SUCH ITEMS ARE APPLICABLE TO THE ABOVE
DESCRIBED PREMISES.

      NOT MORE THAN ONE UNIT MAY BE CREATED WITHIN CONVERTIBLE LAND -UNIT
#5-TRACTS I AND II.

                                       54
<PAGE>

                LEGAL DESCRIPTION OF THE CONVERTIBLE LAND-UNIT #2

      A CERTAIN TRACT OF LAND SITUATED IN THE TOWN OF HAMPTON, COUNTY OF
ROCKINGHAM, STATE OF NEW HAMPSHIRE, AND DESCRIBED AS FOLLOWS:

      BEGINNING AT A POINT AT THE NORTHEASTERLY CORNER OF THE WITHIN DESCRIBED
PREMISES, THENCE S 77 degrees 42' 42" E FOR A DISTANCE OF 400.84 FEET TO A
POINT; THENCE N 10 degrees 29' 33" E FOR A DISTANCE OF 559.57 FEET TO A POINT;
THENCE S 10 degrees 29' 33" W FOR A DISTANCE OF 295.71 FEET TO A POINT; THENCE
N 16 degrees 10' 09" E FOR A DISTANCE OF 308.64 FEET TO A POINT; THENCE S
76 degrees 01' 19" W FOR A DISTANCE OF 297.91 FEET TO A POINT, THENCE S
11 degrees 45' 09" W FOR A DISTANCE OF 40.01 FEET TO A POINT; THENCE S
78 degrees 14' 51" E FOR A DISTANCE OF 30.14 FEET TO A POINT; THENCE S
11 degrees 45' 09" W TO A POINT; THENCE S 70 degrees 34' 35" W FOR A DISTANCE
OF 114.29 FEET TO A POINT; THENCE N 79 degrees 38' 46" W FOR A DISTANCE OF
170.97 FEET TO A POINT; THENCE S 10 degrees 23' 49" W FOR A DISTANCE OF 118.20
FEET TO A POINT; THENCE S 79 degrees 24' 18" E FOR A DISTANCE OF 99.28 FEET TO
A POINT; THENCE S 10 degrees 22' 54" W FOR A DISTANCE OF 319.27 FEET TO A
POINT; THENCE (AROUND A SQUARE SMALL EXTENSION OF UNIT #2 ALONG THE FOLLOWING
COURSES AND DISTANCES (TO BE FILLED IN LATER) TO A POINT: THENCE N 79 degrees
37' 08" W FOR A DISTANCE OF 17.20 FEET TO A POINT; THENCE S 10 degrees 30' 51"
W FOR A DISTANCE OF 98.61 FEET TO THE POINT OF BEGINING.

      MEANING AND INTENDING TO DESCRIBE A 6.54 ACRE PARCEL LABELED CONVERTIBLE
LAND/CONVERTIBLE SPACE UNIT #2 AS SHOWN ON A PLAN ENTITLED FOSS CONDOMINIUM SITE
PLAN CONVERTIBLE LAND DETAIL SITE PLAN FOR UNITS 2, 4, AND 5 TO BE RECORDED AT
THE ROCKINGHAM COUNTY REGISTRY OF DEEDS.

      THE ABOVE DESCRIBED PREMISES ARE SUBJECT TO AND WITH THE BENEFIT OF THE
EASEMENTS AND OTHER DOCUMENTS LISTED IN THE APPENDIX A ITEMS 1-16, TO THE EXTENT
THAT ANY OF THOSE LISTED ITEMS SHALL APPLY TO THE ABOVE DESCRIBED PREMISES.

                                       55
<PAGE>

APPENDIX C

                       ALLOCATION OF OWNERSHIP INTERESTS,
                         VOTES IN UNIT OWNERS ASSOCIATION

<TABLE>
<CAPTION>
                 UNIT     NUMBER OF      PERCENTAGE OWNERSHIP  INTEREST IN
                NUMBER      VOTES                  COMMON AREA
                ------    ---------      ---------------------------------
<S>             <C>       <C>            <C>
                  1           1                        1%

                  2          69                       69%

                  3          30                       30%

TOTALS            3         100                      100%
</TABLE>

                                       56
<PAGE>

                                   APPENDIX D
                                     BYLAWS

                                       57
<PAGE>

                                                                     EXHIBIT K-2

                               CONDOMINIUM BYLAWS

<PAGE>

                                     BY-LAWS

                                FOSS CONDOMINIUM

                             HAMPTON, NEW HAMPSHIRE

                                       1
<PAGE>

                                 BY-LAWS FOR THE
                                FOSS CONDOMINIUM

      Condominium By-Laws dated this ______________________ day
of _________________,20______for the FOSS CONDOMINIUM. These By-Laws are adopted
pursuant to the New Hampshire Condominium Act. New Hampshire Revised Statutes
Annotated Chapter 356-B, and these By-Laws shall apply to the FOSS CONDOMINIUM
("CONDOMINIUM") as described and created by the Declaration and to all present
and future owners, tenants and Occupants of any Unit in the Condominium, and to
all other persons who shall at any time use the Condominium or any portion
thereof. The mere acquisition or rental of any Unit or the mere act of occupancy
of any Unit will signify that these By-Laws are accepted, ratified and will be
compiled with. These By-Laws shall run with the land and each Unit comprising
the Condominium and shall he binding thereon.

                                    ARTICLE I

                             INTRODUCTORY PROVISIONS

      1. Definitions. The terms used herein shall have the same meaning as given
to them in the New Hampshire Condominium Act, New Hampshire Revised Statutes
Annotated Chapter 356-B, or in the Declaration of the Condominium, except as
expressly otherwise provided herein, or the application of such meaning would be
contrary to the clear intent of the statement. The term "Common Areas" means
those areas designated in the Declaration as Areas and Limited Common Areas. The
term "Condominium" shall include all Units and Common Areas, including all
improvements within the Common Areas and all easements, rights and appurtenances
belonging thereto and all other property intended for use in connection
therewith. The term "rules and regulations" refers to the rules and regulations
for the conduct of the Occupants of the Condominium, adopted by the Board of
Directors as hereafter provided. The term "Owner" or "Unit Owner" means a person
or entity owning severally or as a co-tenant a Unit and the common interest
appurtenant thereto. The term "Association" means the Association of Unit Owners
as described in these By-Laws and in the New Hampshire Condominium Act.

      2. Conflicts. These By-Laws are intended to comply with the requirements
of New Hampshire Revised Statutes Annotated Chapter 356-B. In the event these
By-Laws conflict with the provisions of said Chapter 356-B, as amended from time
to time, or any successor statute, or with the terms of the Declaration, said
law, or the Declaration, as the case may be, shall control.

                                   ARTICLE II

                           ASSOCIATION OF UNIT OWNERS

                                       2
<PAGE>

      1. Membership. The government of the Condominium shall be vested in the
Association. All Owners of Units in the condominium shall constitute the
Association. The Owner of any Unit upon acquiring title thereto shall
automatically become a member of the Association and shall remain a member
thereof until such time as his or her ownership of the Unit ceases for any
reason. Each Board of Directors will keep an accurate and current list of
members and their current addresses, and said list will be maintained at a place
designated by the Board of Directors.

      2. Voting. Each Unit shall be entitled to a vote equal to that Unit's
percentage interest in the undivided interests in the Common Areas. Votes may be
cast in person or by the proxy by the respective Unit Owners. If any vote is to
be cast by an executor, administrator, guardian or trustee for a Unit Owner,
there shall be filed with the Chairman of the meeting prior to the taking of
said vote satisfactory evidence that the person seeking to cast the vote is the
record owner of the Unit or is otherwise duly authorised. If a Unit Owner is
more than one person, the vote may be cast by any one of them present or
represented by proxy at the meeting. [I would rather require them to agree among
themselves and cast a uniform vote for the Unit. If they disagree, no vote
cast.] Such vote shall constitute a representation that the person casting the
vote has the requisite authority to act for all of the Owners of the Unit and if
there shall appear any evidence of any disagreement between or among such
Owners, no such vote shall be cast or counted. If a Unit Owner is a corporation
or other entity other than a natural person, the vote for that Unit may be cast
by any natural person having authority to execute deeds on behalf of the Unit
Owner, and in the absence of protest by any other person, said authority may be
presumed by the secretary or chairman of the meeting at which the vote will be
cast.

      3. Proxies. A proxy in each case will be subject to the following
requirements:

      (a) It must be dated.

      (b) The signature of the person granting the proxy must be acknowledged
before a Notary Public or Justice of the Peace.

      (c) It will terminate automatically upon the adjournment of the first
meeting held on or after the date of the proxy.

      (d) It will not be revocable except by actual notice of the revocation to
the person presiding over the meeting.

      4. Quorum. The presence in person or by proxy (at the commencement of any
meeting of the Association) of Unit Owners having a majority of the total
authorized vote of all Unit Owners shall constitute a quorum.

      5. Majority Vote. The vote of a majority of the undivided interests of the
Units represented at a meeting at which a quorum shall be present shall be
binding upon all

                                       3
<PAGE>

Unit Owners for all purposes except where a higher percentage vote is required
in the Declaration, these By-Laws or by law.

      6. Place of Meetings. The first annual meeting of the Association will be
held as called by the Declarant, within ninety (90) days following the
expiration of the Declarant's control under Article V herein. Thereafter, the
annual meetings of the Association will be held on the second Tuesday of October
of each year, or on such other date as may be set by the Board of Directors. At
each annual meeting, the Board of Directors will be elected.

      7. Regular Meetings. In addition to the annual meeting, the Board of
Directors may by resolution establish regular meetings of the Association at
regular intervals more frequently than annually.

      8. Special Meetings. Special meetings of the Association may be held at
any time upon the call of the President or of any two Directors, or upon written
request of the Owners of not less than 20% of the Units (excluding Units owned
by the Association) presented to the Secretary.

      9. Notice of Meetings and Other Notices. The President or Secretary of the
Association will give written notice of all meetings of the Association by
United States Mail (return receipt requested, if required by law) to all Unit
Owners of record who are members of the Association at the address of their
respective Units or to such other addresses as any of them may have designated
in writing to the President or Secretary. In the case of each annual meeting or
other regularly scheduled meeting, said notice shall be mailed at least 21 days
prior to the meeting. In the case of any special meeting, said notice shall be
mailed not less than seven days prior to the meeting. Each notice will set forth
the time, place and purpose of the meeting. Upon notice being given in
accordance with the provisions hereof, the failure of any Owner of a Unit to
receive actual notice of any meeting shall not in any way invalidate the meeting
or proceedings thereat. Any Unit Owner may waive any notice as to him or her.
Any notice sent to any Unit Owner shall be simultaneously sent to any first
mortgagee of such Unit Owner who has given the Association its notice address
and requested that it receive copies of all notices sent to its Unit Owner
mortgagor.

      10. Adjournment of Meetings. If any meeting of the Association cannot be
held because a quorum has not attended, a majority of the votes of the Unit
Owners who are present at such meeting, either in person or by proxy, may
adjourn the meeting to a time not less than 48 hours from the time the original
meeting was called. Notice of such adjourned meeting shall be sent to all Unit
owners.

      11. Action Without a Meeting. The Unit Owners may act without a meeting in
any case by unanimous written consent.

                                       4
<PAGE>

                                   ARTICLE III

                               BOARD OF DIRECTORS

      1. Number and Qualifications. The affairs of the Condominium will be
governed by a Board of Directors. The Board of Directors will Consist of three
(3) Directors chosen by the Owners controlling a majority of the undivided
interests in the Common Areas. Until the end of the period of control described
in NH RSA 356-B:36, the Declarant shall have the right to appoint all of the
Officers and Directors of the Association.

      2. Compensation. The Board of Directors shall serve without compensation,
except that (a) a Director may be entitled to reimbursement for reasonable
personal expenses incurred in pursuance of the Association's business, subject
to any budget requirements or other conditions or limitations imposed by the
Board of Directors or the Association; (b) reasonable remuneration to the
Directors for their services as Directors may be paid as a common expense if
approved by a vote of the Association; and (c) a Director may receive
remuneration for extraordinary or unusual services, legal or otherwise, rendered
by him or her in connection with Condominium affairs, as shall be approved by a
majority of the Board of Directors.

      3. Powers and Duties. The Board of Directors of the Association shall have
all of the powers and responsibilities assigned by the New Hampshire Condominium
Act. R.S.A 356-B, as amended from time to time or any successor statute. Without
limiting the generality of the preceding sentence, the Board will have all of
the powers and duties necessary for the administration of the affairs of the
Condominium and the Association and may do all such acts and things except as by
law or by the terms of the Declaration may not be delegated to the Board of
Directors: subject to any limitations imposed by the Association itself. Said
powers and duties shall include, but not be limited to, the following:

            (a) Operation, care, upkeep and maintenance of the Common Areas and
other areas or facilities to be maintained by the Board of Directors under the
Declaration.

            (b) The employment, dismissal and replacement of agents and
employees to facilitate the operation, care, upkeep and maintenance of the
Common Areas;

            (c) To make or cause to be made additional improvements on and as
part of the Common Areas (subject to Article VI, Section 2 below);

            (d) To acquire, hold, manage, convey and encumber title to real
property (including but not limited to Units conveyed to or acquired by the
Association) in the name of and on behalf of the Association;

                                       5
<PAGE>

            (e) To grant easements through the Common Areas and to accept
easements benefiting the Condominium or any portion thereof;

            (f) The budgeting, assessment and collection of the common expenses
from the Unit Owners, and the enforcement of liens to secure unpaid assessments,
pursuant to R.S.A Section 356-B:46, as amended from time to time, or any
successor statute. Also the adoption in the Board's discretion of a schedule of
fines which may be levied with respect to late payments of common expenses or
violations of the rules and regulations of the Condominium, which fines may be
enforceable by liens on Units in the same manner as common expenses;

            (g) The adoption and amendment of rules and regulations covering the
details of the operation and use of the Condominium, the Common Areas, or any
portion thereof;

            (h) The general regulations of use and operation of the Common
Areas;

            (i) Opening of bank accounts on behalf of the Association and
designate the signatories required therefor;

            (j) Obtaining and administering insurance for the Condominium as set
forth in the Declaration;

            (k) Repairing, restoring or replacing Common Areas Common Areas
after damage or destruction by fire or other casualty, or as a result of eminent
domain proceedings, as provided in the By-Laws;

            (l) Procuring legal and accounting services necessary or proper in
the operation of the Condominium or the enforcement of these By-Laws;

            (m) The assessment of costs or damages against any Unit Owner whose
actions have proximately caused damages to the Common Areas;

            (n) Payment of any amount necessary to discharge any lien or
encumbrance levied against the entire Condominium or any part thereof which may
in the opinion of the Board constitute a lien against the Condominium or against
the Common Areas, rather than merely against the interests of particular Unit
Owners (Where one or more Owners are responsible for the existence of such lien,
they shall be jointly and severally liable for the cost of discharging it and
the costs incurred by the Board by reason of said lien or liens);

            (o) The management of all personal property of the Association and
provisions for the plowing and maintenance of the common access driveways from
Lafayette Road and Merrill Industrial Drive; and

                                       6
<PAGE>

            (p) All other powers granted by the Declaration or these By-Laws,
permitted by law or enjoyed by Boards of Directors of associations of this kind.

      4. Managing Agent. The Board of Directors may, in its discretion, employ,
as a common expense of the Condominium, a managing agent to assist it in
managing the affairs of the Condominium. The Board may delegate to said agent
the authority to perform any of the functions or exercise any of the powers set
forth in subparagraphs (a) through (p) in the preceding paragraph 3. The
Association or the Board, in its discretion, may limit any of the powers
granted to the managing agent or grant additional powers to the managing agent
to the extent permitted by law.

      5. Election and Term of Office. Except as to Directors who are appointed
by the Declarant pursuant to Article III 1, each of the Directors will be
elected for a 3-year term which will end on the third annual meeting following
the annual meeting of the Association at which said Director was elected (and
thereafter until his or her successor shall have been elected by the Association
in case of delay in the election of a successor).

      6. Removal. At any regular or special meeting of the Association, any one
or more of the members of the Board of Directors may be removed with or without
cause by vote of the members of the Association and a successor may then and
there or thereafter be elected for the remainder of the term to fill the vacancy
thus created. Any member of the Board whose removal has been proposed by the
Unit Owners shall be given an opportunity to be heard at the meeting.

      7. Vacancies. Vacancies on the Board of Directors caused by any reason
other than the removal of a member by vote of the Unit Owners shall be filled by
a vote of a majority of the remaining members of the Board and each person so
elected shall be a member of the Board of Directors for the remainder of the
term of the member whose vacancy has been filled. Death, incapacity or
resignation by any Director or his ceasing to be an Owner or co-owner of a Unit
shall cause his office to become vacant.

      8. Organization Meetings. The first meeting of the members of the Board of
Directors following the annual meeting of the Association shall be held within
10 days thereafter, at a convenient time and place, and no notice shall be
necessary to the newly elected members of the Board in order to legally
constitute such meeting, providing that a majority of the whole Board shall be
present thereat.

      9. Regular Meetings. Regular meetings of the Board may be held at any such
time and place as shall be determined from time to time by a majority of the
members of the Board, but at least one such meeting shall be held during each
calendar year. Notice of regular meetings of the Board of Directors shall be
given to each member of the Board of Directors personally or by mail, telephone
or telegraph, at least 21 days prior to the date named for such meeting.

                                       7
<PAGE>

      10. Special Meetings. Special meetings of the Board of Directors may be
called by the President on 10 days written notice by mail or 7 days notice given
personally or by telephone to each member, which notice shall state the time,
place and purpose of the meeting. Special meetings of the Board will be called
in like manner and on like notice on written request of at least two members of
the Board of Directors.

      11. Action Without a Meeting. The Board of Directors may act without a
meeting in any case by unanimous written consent, and by a majority written
consent in those cases requiring, in the sole judgment of a majority of the
Directors, in a response to an emergency situation.

      12. Waiver of Notice. Any member of the Board of Directors may at any time
waive notice of any meetings of the Board. Attendance by a member of the Board
at any Board meeting shall constitute a waiver of notice by him of the time and
place thereof. If all the members of the Board are present at any meeting of the
Board, no notice shall be required and any business may be transacted at such
meeting.

      13. Quorum or the Board. At all meetings of the Board, a majority of the
Board will constitute a quorum for the transaction of business, and the votes of
a majority of the members of the Board present at a meeting at which a quorum is
present shall constitute the decision of the Board. If at any meeting of the
Board of Directors there shall be less than a quorum present, a majority of
those present may adjourn the meeting from time to time. At any such adjournment
meeting at which a quorum is present, any business which might have been
transacted at the meeting originally called may be transacted without further
notice.

      14. Fidelity Bonds. The Board of Directors will in its discretion obtain
adequate fidelity bonds for all officers and employees of the Association
handling or responsible for Association funds. The premiums upon such bonds will
be a common expense.

      15. Liability and Indemnity of Board of Directors and Officers. The
members of the Board of Directors and Officers shall not be liable to the Unit
Owners for any mistake of judgment or otherwise except for their own individual
gross negligence or willful misconduct. The Association will indemnify each
Director and Officer of the Association against all costs, expenses and
liabilities, including the amount of judgments, amounts paid in compromise
settlements which may be incurred by or imposed upon him in connection with any
claim, action, suit, proceeding, investigation or inquiry hereafter made,
instituted or threatened in which he may be involved as a party or otherwise by
reason of his being or having been such Director or Officer, or by any reason of
past or future action taken or authorized or approved by him of any omission to
act as such Director or Officer, whether or not be continues to be such Director
or officer at the time of the incurring or imposition of such costs, expenses or
liabilities, except such costs, expenses or liabilities as shall relate to
matters as to which he is liable by reason of his gross negligence or willful
misconduct toward the Association in the performance of his duties as such
Director or Officer. As to whether or not a Director or Officer was liable by
reason of gross negligence or willful

                                       8
<PAGE>

misconduct toward the Association in the performance of his duties as such
Director of Officer, in the absence of a final adjudication of the existence of
such liability, the Board of Directors and each Director or Officer may
conclusively rely upon an opinion of legal counsel selected by the Board of
Directors. The foregoing right of indemnification shall not be exclusive of
other rights to which any such Director or Officer may be entitled as a matter
of law or otherwise, and shall inure to the benefit of the heirs, executors,
administrators and assigns of each Director and Officer.

      The Board of Directors, acting by a majority, may purchase, as a common
expense of the Condominium, such insurance against such liability as the Board
of Directors shall determine is reasonable and necessary. Each Unit Owner shall
be personally liable for all sums lawfully assessed for his or her share of the
common expense of the Condominium and for his or her proportionate share of any
claims involving the Condominium in excess thereof, all as provided in New
Hampshire Revised Statutes Annotated, Chapter 356-B.

                                   ARTICLE IV

                                    OFFICERS

      1. Designation. The principal Officers of each Association will be the
President, Vice President, Secretary and Treasurer; all of whom shall be
appointed by the Board of Directors of the Association. The Board may appoint
any other Officer or Officers which the Board in its judgment shall deem
necessary or desirable. The President shall be a member of the Board of
Directors. Other Officers may be, but are not required to be, members of the
Board.

      2. Election and Removal. Except with respect to Officers who are appointed
by Declarant pursuant to Article III 1, each Officer will be appointed by the
Board to serve at the pleasure of the Board, and may be removed at any time by
the Board, with or without cause.

      3. Powers. The President shall serve as the chief executive Officer of the
Association and shall preside at all meetings of the Association and of the
Board of Directors. The Treasurer shall maintain and keep the financial books
and records of accounts of the Association, prepare regular reports thereof and
be responsible for the deposit and custody of the Association's funds and
securities. The Secretary shall keep the minutes of the Association and of the
Board of Directors and will give all notices of all meetings as provided by
these By-Laws. Notwithstanding the foregoing, the Board of Directors may in its
discretion delegate powers to or limit the powers of any of the Officers.

      4. Execution of Instruments. All checks, drafts, notes, deeds,
acceptances, conveyances, contracts or other instruments shall be signed on
behalf of the Association by such person or persons as shall be provided by
general or special resolution of the Board of Directors or, in the absence of
any such resolution applicable

                                       9
<PAGE>

to such instrument, by the President or Vice President and by the Treasurer or
Secretary.

                                    ARTICLE V

                         INTERIM MANAGEMENT BY DEVELOPER

      From and after the date of the recording of these By-Laws, the Declarant
will exercise all powers and responsibilities assigned by these By-Laws, the
Declaration and by the New Hampshire Condominium Act to the Association, its
Board of Directors and the Officers until such time as the Declarant turns over
said powers and responsibilities to the Unit Owners, and said Association shall
have elected a Board of Directors pursuant to NH RSA 356-B:36.

                                   ARTICLE VI

                               GENERAL PROVISIONS

      1. Abatement of Violations. The violations of any rule or regulation
adopted by any Board of Directors, the breach of any By-Law contained herein, or
the breach of any provision in the Declaration shall give the Board of Directors
the right, in addition to any other rights set forth in these By-Laws or in the
Declaration:

            (a) To enter the Unit in which, or as to which, the violation or
breach exists and to summarily abate and remove, at the expense of the
defaulting Unit Owner any structure, thing or condition that may exist therein
contrary to the intent and meaning of the provisions hereof and the Board of
Directors and its agents (including but not limited to the Officers of the
Association and the managing agent, if any) shall not thereby be deemed guilty
in any manner of trespass; or

            (b) To enjoin, abate or remedy by appropriate legal proceedings,
either at law or in equity, the continuance of any such breach and all costs
thereof, including attorney's fees, shall be borne by the defaulting Unit Owner.

      2. Waiver. The failure of any Board of Directors to insist in any one or
more instances upon strict performance of or compliance with any of the
covenants of the owner hereunder, or to exercise any right or option herein
contained, or to serve any notice, or institute any action of summary
proceeding, shall not be construed as a waiver or a relinquishment for the
future of such covenant or option or right, but such covenant or option or
right shall continue and remain in full force and effect.

      3. Notices. All notices sent to Unit Owners shall be deemed given when
delivered by hand or if sent by postage prepaid Registered or Certified Mail,
return receipt requested, to the Owner, addressed to the Owner's address
appearing on the records of the applicable Board of Directors, when delivered or
refused. Any notice given or mailed to one co-owner shall be presumed to have
been properly given to any

                                       10
<PAGE>

other co-owner, regardless of whether a separate notice was given or sent to
said other co-owner. Any notice sent to any Unit Owner shall be simultaneously
sent to any first mortgagee of such Unit Owner who has given the Association its
notice address and requested that it receive copies of all notices sent to its
Unit Owner mortgagor.

      4. Amendment. These By-Laws may be amended by majority vote of the Owners
at any time upon compliance with the requirements of the Declaration, and any
other or further restrictions imposed by the New Hampshire Condominium Act, as
amended from time to time, or any successor statute.

      5. Notices to Prospective Purchasers of Units. In the event of any resale
of a Unit or any interest therein by any person (other than the developer of the
project or the developer's successors in interest), the prospective Unit owner
shall have the right to obtain from the Association, prior to the contract date
of the disposition, the following:

            (a) Appropriate statements pursuant to New Hampshire R.S.A. Section
356-B:46 VIII, or any successor statute;

            (b) A statement of any capital expenditure and major maintenance
expenditures anticipated by the Association within the current or succeeding two
fiscal years;

            (c) A statement for the status and amount of any reserve for the
major maintenance or replacement fund, and any portion of such fund earmarked
for any specified project by the Board of Directors;

            (d) A copy of the income statement and balance sheet of the
Association for the last fiscal year for which such statement is available;

            (e) A statement of the status of any pending suits or judgments in
which the Association is a defendant;

            (f) A statement setting forth what insurance coverage is provided
for all Unit Owners by the Association and what additional insurance coverage
would normally be secured by each individual Unit Owner; and

            (g) A statement that any improvements or alterations made to the
Unit or the Limited Common Areas assigned thereto by the prior Unit Owner are
not known to be in violation of the Condominium instruments.

      The President of the Association or any other Officer or Director of the
Association shall furnish such statements upon written request of any
prospective Unit Owner within ten (10) business days of the receipt of such
request.

                                       11
<PAGE>

      IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
the date first above written:

                                          FOSS (NH) QRS 16-3, INC., DECLARANT

_______________________________           By: _______________________________
Witness                                   Duly Authorized

STATE OF _______________________
COUNTY OF ______________________           Dated: ___________________, 20_

      Personally appeared the above named ________________________ known to me
or satisfactorily proven to be the __________________________ of FOSS (NH) QRS
16-3, INC., the Declarant and being so authorized to do so executed the within
for the purposes contained herein and acknowledged same to be his/her/their free
act and deed.

      Before me,

                                             ___________________________________
                                             Notary Public/Justice of the Peace
                                             Name:
                                             My Commission Expires:

                                       12
<PAGE>

                                                                       EXHIBIT L

                        MAXIMUM BUILDABLE SQUARE FOOTAGE

<TABLE>
<S>                                 <C>
Unit 4 Convertible Land             190,200
Unit 5 Convertible Land             233,300
</TABLE>

<PAGE>
                                                                       EXHIBIT M

1.   PARTIES AND COUNSEL                                             DESIGNATION
     -------------------                                             -----------

     1.   Lessee              Foss Manufacturing Company, Inc.       Lessee
          ------

          Lessee's            Casassa & Ryan                         Lessee's
          Counsel:                                                   Counsel

     2.   Lessor              FOSS (NH) QRS 16-3, INC.               Lessor
          ------

          General Counsel:    Reed Smith LLP                         RS

          New Hampshire       SULLOWAY & HOLLIS, PLLC                Lessor's
          Counsel:                                                   Local

                                                                     Counsel

     3.   Title Company:      Commonwealth Title                     TC
          -------------

                  DOCUMENT/TASK                         RESPONSIBILITY
                  -------------                         --------------
A.   ACQUISITION DOCUMENTS
     ---------------------

1.   MAI Appraisal                                          Lessee
     -------------

2.   Insurance Policies (ACORD Form 28 Certificate)         Lessee
     -----------------------------------------------

     a)   Public Liability
     b)   Business Interruption/rent insurance
     c)   Builder's Risk
     d)   Other

13.  Zoning Report, including municipality letter           RS/Lessee
     --------------------------------------------

14.  Boundary Survey with Surveyor Certification            Lessee
     -------------------------------------------

15.  Title Report                                           RS/TC
     ------------

          Endorsements (If available):

          Extended Coverage
          Address
          Same as survey
          Tax lot
          Contiguity
          Zoning (3.1 if available)
          Access
          Owner's Comprehensive
<PAGE>
                    DOCUMENT/TASK                           RESPONSIBILITY

16.  Insured Closing Letter                            RS/TC
     ----------------------
17.  Estoppel re: Lease                                Lessee
     ------------------
18.  Settlement Statement and Disbursement Schedule    Lessor/Lessee
     ----------------------------------------------
19.  Wiring Instructions                               Lessee/Lessor/RS/TC
     -------------------
     (a) Lessee
     (b) Title Company
     (c) RS
     (d) W.P. Carey
     (e) Lessor Local Counsel

B.   LEASE DOCUMENTS
     ---------------
20.  Amendment to Lease                                RS/Lessor/Lessee
     ------------------
C.   CONSTRUCTION DOCUMENTS
     ----------------------
21.  Construction Agency Agreement                     RS/Lessee
     -----------------------------
22.  Site Plan Approval or Evidence not Required       Lessee
     -------------------------------------------
     (i) copy of approved site plan
     (ii) copy of site plan approval resolution

23.  Rezoning Approval, if necessary                   Lessee
     -------------------------------
24.  Plans and Specifications                          Lessee
     ------------------------
25.  Permits                                           Lessee
     -------
      (i) Grading
      (ii) Foundation
      (iii) Building
      (iv) Site Work
      (v) Other

26.  Soils Report                                      Lessee
     ------------
27.  General Construction Contract                     Lessee
     -----------------------------
28.  Copies of all Major Subcontracts (as defined      Lessee
     --------------------------------------------
     in the Construction Agency Agreement)
     -------------------------------------
29.  Construction Budget                               Lessee
     -------------------
30.  Construction Schedule                             Lessee
     ---------------------
<PAGE>
                    DOCUMENT/TASK                           RESPONSIBILITY

31.  Letters from Contractor re: change orders         RS
     -----------------------------------------

32.  Letters from Architect re: change orders          RS
     ----------------------------------------

33.  Evidence of Availability of Utilities             Lessee
     -------------------------------------
     "Will serve" Letters
     --------------------
     a. electric
     b. gas
     c. water
     d. sewer
     e. phone

34.  Payment and Performance Bonds                     Lessee
     -----------------------------

35.  Review Letter from Lessor's Consultant            Lessor
     --------------------------------------

D.   CORPORATE DOCUMENTS
     -------------------

36.  Federal Tax ID Numbers                            RS/Lessee
     ----------------------
     (a) Lessor
     (b) Lessee

37.  Certificate of Secretary of Lessee                Lessee
     ----------------------------------
     a. Certificate of Incorporation
     b. Bylaws
     c. Resolutions
     d. Incumbency of Officers

38.  Good Standing Certificates of Lessee issued by    Lessee
     ----------------------------------------------
     the State of New Hampshire
     --------------------------

E.   OPINION LETTERS
     ---------------
39.  Corporate Opinion of Lessee's Counsel Regarding   Lessee's Counsel
     -----------------------------------------------
     due execution and delivery of the Lease
     ---------------------------------------
     documents addressed to Landlord and Lender
     ------------------------------------------

40.  Enforceability Opinion of Lessee's Counsel        Lessee's Counsel
     ------------------------------------------
     re: New Hampshire law addressed to Landlord
     -------------------------------------------
     and Lender
     ----------<PAGE>

                                                                   EXHIBIT 10.13

            THIS MORTGAGE AND SECURITY AGREEMENT (this "MORTGAGE") is made as
of the 1 day of July, 2004, by FOSS (NH) QRS 16-3, INC., A Delaware
corporation, whose address is c/o W.P. Carey & Co, LLC, 50 Rockefeller Plaza
2(nd) Floor, New York, New York 10020 ("Mortgagor"), in favor of CIBC INC., a
Delaware corporation ("Mortgagee"), whose address is 622 Third Avenue, 8th
Floor, Attn: Real Estate Finance Group, New York, New York, 10017.

                                   WITNESSETH:

            THAT FOR AND IN CONSIDERATION OF THE SUM OF TEN AND NO/100 DOLLARS
($10.00), AND OTHER VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH
IS HEREBY ACKNOWLEDGED, MORTGAGOR HEREBY IRREVOCABLY MORTGAGES, GRANTS,
BARGAINS, SELLS, CONVEYS, TRANSFERS, PLEDGES, SETS OVER AND ASSIGNS, AND GRANTS
A SECURITY INTEREST TO MORTGAGEE, ITS SUCCESSORS AND ASSIGNS, in all of
Mortgagor's estate, right, title and interest in to and under any and all of
the following described property, whether now owned or hereafter acquired
(collectively, the "Property"):

            A. All that certain real property situated at 380 Lafayette Road,
Hampton, New Hampshire (as more particularly described as Tract II on Exhibit A
attached hereto), 390 Lafayette Road, Hampton, New Hampshire (as more
particularly described as Tract I on Exhibit A attached hereto) and 11 Merrill
Industrial Drive, Hampton, New Hampshire (as more particularly described as
Tract III on Exhibit A attached hereto) and that certain 13.1 acre tract of real
property located in Hampton, New Hampshire (as more particularly described as
Tract IV on Exhibit A attached hereto) and that certain 21 acre tract of real
property located in Hampton, New Hampshire (as more particularly described as
Tract V on Exhibit A attached hereto) (collectively, as described on Exhibit A
attached hereto and incorporated herein by this reference, the "Land"). together
with all of the casements, rights, privileges, franchises, tenements,
hereditaments and appurtenances now or hereafter thereunto belonging or in any
way appertaining and all of the estate, right, title, interest, claim and demand
whatsoever of Mortgagor therein or thereto, either at law or in equity, in
possession or in expectancy, now or hereafter acquired;

            B. All structures, buildings and improvements of every kind and
description now or at any time hereafter located or placed on the Land (the
"Improvements");

            C. All furniture, furnishings, fixtures, goods, equipment, inventory
or personal property owned by Mortgagor and now or hereafter located on,
attached to or used in and about the Improvements, including, but not limited
to, all machines, engines, boilers, dynamos, elevators, stokers, tanks,
cabinets, awnings, screens, shades, blinds, carpets, draperies, lawn mowers,
and all appliances, plumbing, heating, air conditioning, lighting, ventilating,
refrigerating, disposal and incinerating equipment, and all fixtures and
appurtenances thereto, and such other goods and chattels and personal property
owned by Mortgagor as are now or hereafter used or furnished in operating the
Improvements, or the activities conducted therein, and all building materials
and equipment hereafter situated on or about the Land or

<PAGE>

Improvements, and all warranties and guaranties relating thereto, and all
additions thereto and substitutions and replacements therefor (exclusive of any
of the foregoing owned or leased by tenants of space in the Improvements):

            D. All easements, rights-of-way, strips and gores of land, vaults,
streets, ways, alleys, passages, sewer rights, air rights and other development
rights now or hereafter located on the Land or under or above the same or any
part or parcel thereof, and all estates, rights, titles, interests, tenements,
hereditaments and appurtenances, reversions and remainders whatsoever, in any
way belonging, relating or appertaining to the Land and/or Improvements or any
part thereof, or which hereafter shall in any way belong, relate or be
appurtenant thereto, whether now owned or hereafter acquired by Mortgagor,

            E. All water, ditches, wells, reservoirs and drains and all water,
ditch, well, reservoir and drainage rights which are appurtenant to, located on,
under or above or used in connection with the Land or the Improvements, or any
part thereof, whether now existing or hereafter created or acquired;

            F. All minerals, crops, timber, trees, shrubs, flowers and
landscaping features now or hereafter located on, under or above the Land;

            G. All cash funds, deposit accounts and other rights and evidence of
rights to cash, now or hereafter created or held by Mortgagee pursuant to this
Mortgage or any other of the Loan Documents. (as hereinafter defined),
including, without limitation, all funds now or hereafter on deposit in the
Payment Reserve, the Impound Account, the Leasing Reserve, the Repair and
Remediation Reserve, the Environmental Reserve, the LC Assignment Reserve and
the Replacement Reserve, each as hereafter defined (collectively, the
"Reserves");

            H. All leases (including. without limitation, (a) that certain lease
dated as of July _, 2004 between Mortgagor, as lessor, and FOSS MANUFACTURING
COMPANY, INC., as lessee (the "Primary Tenant") (as the same may be modified and
in effect from time to time, the "Primary Lease") and (b) oil, gas and mineral
leases), licenses, concessions and occupancy agreements of all or any part of
the Land or the Improvements now or hereafter entered into (each, a "Lease" and
collectively, the "Leases") and all rents, royalties, issues, profits, revenue,
income and other benefits (collectively, the "Rents and Profits") of the Land
or the Improvements, now or hereafter arising from the use or enjoyment of all
or any portion thereof or from any present or future Lease or other agreement
pertaining thereto or arising from any of the Contracts (as hereinafter defined)
or any of the General Intangibles (as hereinafter defined) and all cash or
securities (including, without limitation, the "Security Deposit", "Cash
Security Deposit" and the "Letter of Credit" as such terms are defined in
Paragraph 39 of the Primary Lease), deposited to secure performance by the
tenants, Lessees or licensees, as applicable (each a "Tenant" and collectively,
the "Tenants"), of their obligations under any such Leases, whether said cash or
securities are to be held until the expiration of the terms of said Leases or
applied to one or more of the installments of rent coming due prior to the
expiration of said terms, subject, however, to the provisions contained in
Section 1.11 hereinbelow;

                                       2
<PAGE>
            I. All contracts and agreements now or hereafter entered into
covering any part of the Land or the Improvements (collectively, the
"Contracts") and all revenue, income and Other benefits thereof, including,
without limitation, management agreements, service contracts, maintenance
contracts, equipment leases, personal property leases and any contracts or
document's relating to construction on any part of the Land or the Improvements
(including plans, drawings, surveys, tests, reports, bonds and governmental
approvals) or to the management or operation of any part of the Land or the
Improvements;

            J. All present and future monetary deposits given to any public or
private utility with respect to utility services furnished to any part of the
Land or the Improvements;

            K. All present and future funds, accounts, Instruments, accounts
receivable, documents, causes of action, claims, general intangibles (including
without limitation, trademarks, trade names, servicemarks and symbols now or
hereafter used in connection with any part of the Land or the Improvements, all
names by which the Land or the Improvements may be operated or known, all rights
to carry on business under such names, and all rights, interest and privileges
which Mortgagor has or may have as developer or declarant under any covenants,
restrictions or declarations now or hereafter relating to the Land or the
Improvements) and all notes or chattel paper now or hereafter arising from or by
virtue of any transactions related to the Land or the Improvements
(collectively, the "General Intangibles");

            L. All water taps, sewer taps, certificates of occupancy, permits,
licenses, franchises, certificates, consents, approvals, and other rights and
privileges now or hereafter obtained in connection with the Land or the
Improvements and all present and future warranties and guaranties relating to
the Improvements or to any equipment, fixtures, furniture, furnishing, personal
property or components of any of the foregoing now or hereafter located or
installed on the Land or the Improvements;

            M. All building materials, supplies and equipment now or hereafter
placed on the Land, or in the Improvements and all architectural renderings,
models, drawings, plans, specifications, studies and data now or hereafter
relating to the Land or the Improvements;

            N. All right, title and interest of Mortgager in any insurance
policies or binders now or hereafter relating to the Property including any
unearned premiums thereon;

            O. All proceeds, products, substitutions and accessions (including
claims and demands therefor) of the conversion, voluntary or involuntary, of any
of the foregoing into cash or liquidated claims, including, without limitation,
proceeds of insurance and condemnation awards and proceeds of refunds of any
taxes or assessments levied against the Property with respect to any period in
which this Mortgage encumbers the Property; and

            P. All other or greater rights and interests of every nature in the
Land or the Improvements and in the possession or use thereof and income
therefrom, whether now owned or hereafter acquired by Mortgagor.

            FOR THE PURPOSE OF SECURING:

                                       3
<PAGE>

            (1) The debt evidenced by that certain promissory note (such
promissory note, together with any and all renewals, modifications,
consolidations and extensions thereof, is hereinafter referred to as the
"Note") of even date with this Mortgage, made by Mortgagor to the order of
Mortgagee in the original principal amount of SEVENTEEN MILLION AND 00/100
DOLLARS ($17,000,000), together with interest as therein provided;

            (2) The full and prompt payment and performance of all of the
provisions, agreements, covenants and obligations herein contained and contained
in any other agreements, documents or instruments now or hereafter evidencing,
guarantying, securing or otherwise relating to the indebtedness evidenced by the
Note, excluding only the Indemnity and Guaranty Agreement dated of even date
with this Mortgage executed by Corporate Property Associates 16-Global
Incorporated, a Maryland corporation ("Guarantor") in favor of Mortgagee (the
"Guaranty") and that certain separate Hazardous Substances Indemnity Agreement
(as hereinafter defined), which are unsecured obligations of Mortgagor and
Guarantor (the Note, this Mortgage and such other agreements, documents and
instruments, including the Guaranty and the Hazardous Substances Indemnity
Agreement, together with any and all renewals, amendments, extensions and
modifications thereof, are hereinafter collectively referred to as the "Loan
Documents") and the payment of all other sums therein covenanted to be paid;

            (3) Any and all additional advances made by Mortgagee to protect or
preserve the Property or the lien or security interest created hereby on the
Property, or for taxes, assessments or insurance premiums as hereinafter
provided or for performance of any of Mortgagor's obligations hereunder or under
the other Loan Documents or for any other purpose provided herein or in the
other Loan Documents (whether or not the original Mortgagor remains the owner of
the Property at the time of such advances); and

            (4) Any and all other indebtedness now owing or which may hereafter
be owing by Mortgagor to Mortgagee, including, without limitation, all
prepayment fees, however and whenever incurred or evidenced, whether express or
implied, direct or indirect, absolute or contingent, or due or to become due,
and all renewals, modifications, consolidations, replacements and extensions
thereof, it being contemplated by Mortgagor and Mortgagee that Mortgagor may
hereafter become so indebted to Mortgagee.

            (All of the sums referred to in Paragraphs (1) through (4) above are
herein sometimes referred to as the "secured indebtedness" or the "indebtedness
secured hereby").

            TO HAVE AND TO HOLD the Property unto Mortgagee, its successors and
assigns forever, for the purposes and uses herein set forth.

            PROVIDED, HOWEVER, that if the principal and interest and all other
sums due or to become due under the Note and the other Loan Documents,
including, without limitation, any prepayment fees required pursuant to the
terms of the Note, shall have been paid at the time and in the manner stipulated
therein and all other sums payable hereunder and all other indebtedness secured
hereby shall have been paid and all other covenants contained in the Loan
Documents shall have been performed, then, in such case, this Mortgage shall be
satisfied and the estate, right, title and interest of Mortgagee in the Property
shall cease, and upon payment to

                                       4
<PAGE>

Mortgagee of all costs and expenses incurred for the preparation of the release
hereinafter referenced and all recording costs if allowed by law, Mortgagee
shall release this Mortgage and the lien hereof by proper instrument.

                                    ARTICLE I

                             COVENANTS OF MORTGAGOR

            For the purpose of further securing the indebtedness secured hereby
and for the protection of the security of this Mortgage, for so long as the
indebtedness secured hereby or any part thereof remains unpaid, Mortgagor
covenants and agrees as follows:

            Section 1.1 Warranties of Mortgagor. Mortgagor, for itself and its
successors and assigns, does hereby represent, warrant and covenant to and with
Mortgagee, its successors and assigns, that:

            (a) Organization and Existence. Mortgagor is duly organized and
validly existing as a corporation in good standing under the laws of Delaware,
is duly qualified as a foreign corporation in the state in which the Property is
located and in all other jurisdictions in which Mortgagor is transacting
business.

            (b) Authorization. Mortgagor has the power and authority to execute,
deliver and perform the obligations imposed on it under the Loan Documents and
to consummate the transactions contemplated by the Loan Documents and has taken
all necessary actions in furtherance thereof including, without limitation, that
those partners or members of Mortgagor whose approval is required by the terms
of Mortgagor's organizational documents have duly approved the transactions
contemplated by the Loan Documents and have authorized execution and delivery
thereof by the respective signatories. To the best of Mortgagor's knowledge, no
other consent by any local, state or federal agency is required in connection
with the execution and delivery of the Loan Documents.

            (c) Valid Execution and Delivery. All of the Loan Documents
requiring execution by Mortgagor have been duly and validly executed and
delivered by Mortgagor.

            (d) Enforceability. All of the Loan Documents constitute valid,
legal and binding obligations of Mortgagor and are fully enforceable against
Mortgagor in accordance with their terms, subject only to bankruptcy laws and
general principles of equity.

            (e) No Defenses. The Note, this Mortgage and the other Loan
Documents are not subject to any right of rescission, set-off, counterclaim or
defense, nor would the operation of any of the terms of the Note, this Mortgage
or any of the other Loan Documents, or the exercise of any right thereunder,
render this Mortgage unenforceable, in whole or in part, or subject to any right
of rescission, set-off, counterclaim or defense, including the defense of usury.

                                       5
<PAGE>

            (f) Defense of Usuary. Mortgagor knows of no facts that would
support a claim of usury to defeat or avoid its obligation to repay the
principal of, interest on, and other sums or amounts due and payable under, the
Loan Documents.

            (g) No Conflict/Violation of Law. The execution, delivery and
performance of the Loan Documents by the Mortgagor will not cause or constitute
a default under or conflict with the organizational documents of Mortgagor, any
indemnitor or any general partner or managing member or shareholder of Mortgagor
or, to Mortgagor's knowledge, any shareholder of indemnitor. The execution,
delivery and performance of the obligations imposed on Mortgagor under the Loan
Documents will not cause Mortgagor to be in default, including after due notice
or lapse of time or both, under the provisions of any agreement, judgment or
order to which Mortgagor is a party or by which Mortgagor is bound.

            (h) Compliance with Applicable Laws and Regulations. To Mortgagor's
knowledge, (i) all of the Improvements and the use of the Property by the
Mortgagor comply with all applicable statutes, rules, regulations and private
covenants now or hereafter relating to the ownership, construction, use or
operation of the Property, including all applicable statutes, rules and
regulations pertaining to requirements for equal opportunity,
anti-discrimination, fair housing, environmental protection, zoning and land
use; (ii) the Improvements comply with applicable health, fire and building
codes; (iii) in all material respects there is no evidence of any illegal
activities relating to controlled substances on the Property; (iv) all
certifications, permits, licenses and approvals, including, without limitation,
certificates of completion and occupancy permits required for the legal use,
occupancy and operation of the Property for the use currently being made thereof
have been obtained and are in full force and effect; and (v) all of the
Improvements comply with all material requirements of any applicable zoning and
subdivision laws and ordinances.

            (i) Consents Obtained. All consents, approvals, authorizations,
orders or filings with any court or governmental agency or body, if any,
required for the execution, delivery and performance of the Loan Documents by
Mortgagor have been obtained or made.

            (j) No Litigation. There are no pending or, to the best of
Mortgagor's knowledge, threatened actions, suits or proceedings, arbitrations or
governmental investigations against the Property, Mortgagor or any guarantor of
Mortgagor, an adverse outcome of which would materially affect the Mortgagor's
performance under the Note, the Mortgage or the other Loan Documents.

            (k) Title. The Mortgagor has good and indefeasible fee simple title
to the Property, subject only to those matters expressly listed as exceptions to
title or subordinate matters in the title insurance policy accepted by Mortgagee
in connection with this Mortgage, excepting therefrom all preprinted and/or
standard exceptions (the "Permitted Exceptions"). Further, Mortgagor has full
power and lawful authority to grant, bargain, sell, convey, assign, transfer and
mortgage its interest in the Property in the manner and form hereby done or
intended. Mortgagor will preserve its interest in and title to the Property and
will forever warrant and defend the same to Mortgagee against any and all claims
whatsoever and will forever warrant and defend the validity and priority of the
lien and security interest created herein

                                       6
<PAGE>

against the claims of all persons and parties whomsoever, subject to the
Permitted Exceptions. The foregoing warranty of title shall survive the
foreclosure of this Mortgage and shall inure to the benefit of and be
enforceable by Mortgagee in the event Mortgagee acquires title to the Property
pursuant to any foreclosure.

            (l) Permitted Exceptions. The Permitted Exceptions do not and will
not materially and adversely affect (1) the ability of the Mortgagor to pay in
full the principal and interest on the Note in a timely manner or (2) the use of
the Property for the use currently being made thereof, the operation of the
Property as currently being operated or, to the best of Mortgagor's knowledge,
the value of the Property.

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

            (n) ERISA. The Mortgagor has made and shall continue to make all
required contributions to all employee benefit plans, if any, and the Mortgagor
has no knowledge of any material liability which has been incurred by the
Mortgagor which remains unsatisfied for any taxes or penalties with respect to
any employee benefit plan or any multi-employer plan, and each such plan has
been administered in compliance with its terms and the applicable provisions of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") and
any other federal or state law.

            (o) Contingent Liabilities. The Mortgagor has no known material
contingent liabilities.

            (p) No Other Obligations. The Mortgagor has no material financial
obligation under any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Mortgagor is a party or by which the
Mortgagor or the Property is otherwise bound, other than obligations incurred in
the ordinary course of the operation of the Property and other than obligations
under this Mortgage, the Note and the other Loan Documents.

            (q) Fraudulent Conveyance. The Mortgagor (1) has not entered into
the loan evidenced by the Note (the "Loan") or any Loan Document with the actual
intent to hinder, delay, or defraud any creditor and (2) received reasonably
equivalent value in exchange for its obligations under the Loan Documents.
Giving effect to the Loan contemplated by the Loan Documents, the fair saleable
value of the Mortgagor's assets exceed and will, immediately following the
execution and delivery of the Loan Documents, exceed the Mortgagor's total
liabilities, including, without limitation, subordinated, unliquidated, disputed
or contingent liabilities. The fair saleable value of the Mortgagor's assets is
and will, immediately following the execution and delivery of the Loan
Documents, be greater than the Mortgagor's probable liabilities, including the
maximum amount of its contingent liabilities or its debts as such debts become
absolute and matured. The Mortgagor's assets do not and, immediately following
the execution and delivery of the Loan Documents will not, constitute
unreasonably small capital to

                                       7
<PAGE>

carry out its business as conducted or as proposed to be conducted. The
Mortgagor does not intend to, and does not believe that it will, 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
the Mortgagor).

            (r) Investment Company Act. The Mortgagor is not (1) an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended; (2) a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate" of
either a "holding company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended; or (3) subject to any
other federal or state law or regulation which purports to restrict or regulate
its ability to borrow money.

            (s) Access/Utilities. The Property has rights of access to public
ways and is served by water, sewer, sanitary sewer and storm drain facilities.
All public utilities necessary to the continued use and enjoyment of the
Property as presently used and enjoyed are located in the public right-of-way
abutting the Property or irrevocable easements serving the Property, and all
such utilities are connected so as to serve the Property without passing over
other property (other than an irrevocable easement serving the Property). All
roads, and access to such roads, necessary for the full utilization of the
Property for its current purpose have been completed and dedicated to public use
and accepted by all governmental authorities or are the subject of access
easements for the benefit of the Property without any further condition or cost
to Mortgagor or Tenants.

            (t) Taxes Paid. Mortgagor has filed all federal, state, county and
municipal tax returns required to have been filed by Mortgagor, and has paid all
taxes which have become due pursuant to such returns or to any notice of
assessment received by Mortgagor, and Mortgagor has no knowledge of any basis
for additional assessment with respect to such taxes. Further, the Property is
free from delinquent water charges, sewer rents, taxes and assessments.

            (u) Single Tax Lot. Based solely on the title insurance policy
accepted by Mortgagee in connection with this Mortgage, the Property consists of
a single lot or multiple tax lots; no portion of said tax lot(s) covers property
other than the Property or a portion of the Property and no portion of the
Property lies in any other tax lot.

            (v) Special Assessments. Except as disclosed in the title insurance
policy, there are no pending or, to the knowledge of the Mortgagor, proposed
special or other assessments for public improvements or otherwise affecting the
Property, nor, to the knowledge of the Mortgagor, are there any contemplated
improvements to the Property that may result in such special or other
assessments.

            (w) Flood Zone. The Property is not located in a flood hazard area
as defined by the Federal Insurance Administration.

            (x) Intentionally Omitted.

                                       8
<PAGE>

            (y) Misstatements of Fact. No statement of fact made in the Loan
Documents contains any untrue statement of a material fact or omits to state any
material fact necessary to make statements contained herein or therein not
misleading. There is no fact presently known to the Mortgagor which has not been
disclosed which materially adversely affects, nor as far as the Mortgagor can
foresee, might materially adversely affect the business, operations or condition
(financial or otherwise) of the representing party. Further, and in
clarification of the foregoing, all reports, certificates, affidavits,
statements and other data furnished by or on behalf of Mortgagor to Mortgagee,
or their respective agents, in connection with the Loan are true and correct in
all material respects and do not omit to state any fact or circumstance
necessary to make the statements contained therein misleading.

            (z) Condition of Improvements. To Mortgagor's knowledge, the
Property has not been damaged by fire, water, wind or other cause of loss or any
previous damage to the Property has been fully restored. To Mortgagor's
knowledge, the Improvements are structurally sound, in good repair and free of
defects in materials and workmanship and have been constructed and installed in
substantial compliance with the plans and specifications relating thereto. All
major building systems located within the Improvements, including, without
limitation, the heating and air conditioning systems and the electrical and
plumbing systems, are in working order and condition.

            (aa) No Insolvency or Judgment. Neither Mortgagor, nor any general
partner, member or shareholder of Mortgagor, nor any guarantor of the Loan is
currently (a) the subject of or a party to any completed or pending bankruptcy,
reorganization or insolvency proceeding; or (b) the subject of any judgment
unsatisfied of record or docketed in any court of the state in which the
Property is located or in any other court located in the United States. The
proposed Loan will not render the Mortgagor nor any general partner, member or
shareholder of Mortgagor insolvent. As used in this Certificate, the term
"insolvent" means that the sum total of all of an entity's liabilities (whether
secured or unsecured, contingent or fixed, or liquidated or unliquidated) is in
excess of the value of all such entity's non-exempt assets, i.e., all of the
assets of the entity that are available to satisfy claims of creditors.

            (bb) No Condemnation. To Mortgagor's knowledge, no part of any
property subject to the Mortgage has been taken in condemnation or other like
proceeding to an extent which would impair the value of the Property, the
Mortgage or the Loan or the usefulness of such property for the purposes
contemplated by the loan application relating to the Loan (the "Loan
Application"), nor, except as disclosed to Mortgagee, is any proceeding pending,
threatened or known to be contemplated for the partial or total condemnation or
taking of the Property.

            (cc) No Labor or Materialmen Claims. To Mortgagor's knowledge, all
parties furnishing labor and materials have been paid in full and, except for
such liens or claims insured against by the policy of title insurance to be
issued in connection with the Loan, there are no mechanics', laborers' or
materialmen's liens or claims outstanding for work, labor or materials affecting
the Property, whether prior to, equal with or subordinate to the lien of the
Mortgage.

                                       9
<PAGE>

            (dd) No Purchase Options. No tenant, person, party, firm,
corporation or other entity has an option, right of first offer, or right of
first refusal, to purchase the Property, any portion thereof or any interest
therein (except for Primary Tenant's right to purchase all or a portion of the
"Excess Land", as defined in the Primary Lease, pursuant to and in accordance
with the terms of Section 37 of the Primary Lease).

            (ee) Leases. The Property is not subject to any leases, subleases,
licenses, concessions or other agreements related to the leasing or renting of
the Property or any portion thereof, except the Primary Lease. No person has any
possessory interest in the Property or right to occupy the same, except pursuant
to the Leases. As of the date hereof, (i) the Mortgagor is the owner and holder
of the landlord's interest under the Leases; (ii) there are no prior assignments
of all or any portion of the Leases or any portion of the Rents and Profits
which are presently outstanding and have priority over the assignment of leases
and rents contained herein in Section 1.11 given by Mortgagor to Mortgagee; and
(iii) there are no offsets or defenses to the payment of any portion of the
Rents. The representations set forth in this paragraph (ee) are in addition to
those set forth in Section 1.12 of this Mortgage.

            (ff) Forfeiture. There has not been committed by Mortgagor and shall
never be committed by Mortgagor any act or omission affording the federal
government or any state or local government the right of forfeiture as against
the Property or any part thereof or any monies paid in performance of
Mortgagor's obligations under any of the Loan Documents.

            (gg) Use of Rents and Profits. All Rents and Profits generated by or
derived from the Property shall first be utilized solely for current expenses
directly attributable to the ownership and operation of the Property and payable
by Mortgagor under the Primary Lease, including, without limitation, current
expenses relating to Mortgagor's liabilities and obligations with respect to
this Mortgage and the other Loan Documents, and none of the Rents and Profits
generated by or derived from the Property shall be diverted by Mortgagor and
utilized for any other purposes unless all such current expenses attributable to
the ownership and operation of the Property and payable by Mortgagor under the
Primary Lease have been fully paid and satisfied.

            (hh) No Broker. No financial advisors, brokers, underwriters,
placement agents, agents or finders have been dealt with by the Mortgagor in
connection with the Loan, except for any broker whose full commission was paid
out of the proceeds of the Loan and is set forth in the written instructions
from Mortgagor to Mortgagee regarding disbursement of the proceeds of the Loan.

            (ii) Work. All work to be performed by Mortgagor under any Lease has
been substantially performed, all contributions to be made by Mortgagor to the
Tenant have been made and all other conditions precedent to the Tenant's
obligations thereunder have been satisfied.

            (jj) Security Agreements. There are no security agreements or
financing statements affecting any of the Property made by Mortgagor other than
(i) as disclosed in writing by Mortgagor to Mortgagee prior to the date hereof
and (ii) the security agreements and financing statements created in favor of
Mortgagee.

                                       10
<PAGE>

            (kk) Homestead. The Property forms no part of any property owned,
used or claimed by Mortgagor as a residence or business homestead and is not
exempt from forced sale under the laws of the State in which the Property is
located. Mortgagor hereby disclaims and renounces each and every claim to all or
any portion of the Property as a homestead.

            (ll) Contracts. Mortgagor will comply with all of its obligations
under all Contracts which are material to the operation of the Property in
accordance with Mortgagor's current practice, and with all material obligations
under all other Contracts.

            Section 1.2 Defense of Title. If, while this Mortgage is in force,
the title to the Property or the interest of Mortgagee therein shall be the
subject, directly or indirectly, of any action at law or in equity, or be
attacked directly or indirectly, or endangered, clouded or adversely affected in
any manner, Mortgagor, at Mortgagor's expense, shall take all necessary and
proper steps for the defense of said title or interest, including the employment
of counsel approved by Mortgagee, the prosecution or defense of litigation, and
the compromise or discharge of claims made against said title or interest.
Notwithstanding the foregoing, in the event that Mortgagee determines that
Mortgagor is not adequately performing its obligations under this Section,
Mortgagee may, without limiting or waiving any other rights or remedies of
Mortgagee hereunder, take such steps with respect thereto as Mortgagee shall
deem necessary or proper; any and all reasonable costs and expenses incurred by
Mortgagee in connection therewith, together with interest thereon at the Default
Interest Rate (as defined in the Note) from the date incurred by Mortgagee until
actually paid by Mortgagor, shall be immediately paid by Mortgagor on demand and
shall be secured by this Mortgage and by all of the other Loan Documents
securing all or any part of the indebtedness evidenced by the Note.

            Section 1.3 Performance of Obligations. Mortgagor shall pay when due
the principal of and the interest on the indebtedness evidenced by the Note.
Mortgagor shall also pay all charges, fees and other sums required to be paid by
Mortgagor as provided in the Loan Documents, and shall observe, perform and
discharge all obligations, covenants and agreements to be observed, performed or
discharged by Mortgagor set forth in the Loan Documents in accordance with their
terms. Further, Mortgagor shall promptly and strictly perform and comply with or
cause to be performed and complied with all covenants, conditions, obligations
and prohibitions required of Mortgagor in connection with any other document or
instrument affecting title to the Property, or any part thereof, regardless of
whether such document or instrument is superior or subordinate to this Mortgage.

            Section 1.4 Insurance. The provisions of Section 1.4(A) hereof shall
only be applicable from and after the Primary Lease Termination Date (as defined
in Section 1.4(B)). Prior to the Primary Lease Termination Date, the provisions
of Section 1.4(B) shall be applicable and to the extent any conflict exists
between the provisions of Section 1.4(A) and Section 1.4(B), the provisions of
Section 1.4(B) shall control during such period.

            (A) Insurance Coverage Requirements After Primary Lease Termination
Date. Mortgagor shall, at Mortgagor's expense, maintain in force and effect on
the Property at all times while this Mortgage continues in effect the following
insurance:

                                       11
<PAGE>

                  (a) Insurance against loss or damage to the Property by fire,
windstorm, tornado and hail and against loss or damage by such other, further
and additional risks as may be now or hereafter embraced by an "all-risk" form
of insurance policy. The amount of such insurance shall be not less than one
hundred percent (100%) of the full replacement (insurable) cost of the
Improvements, furniture, furnishings, fixtures, equipment and other items
(whether personalty or fixtures) included in the Property and owned by Mortgagor
from time to time, without reduction for depreciation. The determination of the
replacement cost amount shall be adjusted annually to comply with the
requirements of the insurer issuing such coverage or, at Mortgagee's election,
by reference to such indices, appraisals or information as Mortgagee determines
in its reasonable discretion. Full replacement cost, as used herein, means, with
respect to the Improvements, the cost of replacing the Improvements without
regard to deduction for depreciation, exclusive of the cost of excavations,
foundations and footings below the lowest basement floor, and means, with
respect to such furniture, furnishings, fixtures, equipment and other items, the
cost of replacing the same, in each case, with inflation guard coverage to
reflect the effect of inflation, or annual valuation. Each policy or policies
shall contain a replacement cost endorsement and either an agreed amount
endorsement (to avoid the operation of any co-insurance provisions) or a waiver
of any co-insurance provisions, all subject to Mortgagee's approval.

                  (b) Comprehensive Commercial General Liability Insurance for
personal injury, bodily injury, death and property damage liability in amounts
not less than $1,000,000 per occurrence, $2,000,000 in the aggregate and
$10,000,000 umbrella coverage. During any construction on the Property,
Mortgagor's general contractor for such construction shall also provide the
insurance required in this subsection (b). Mortgagee hereby retains the right to
periodically review the amount of said liability insurance being maintained by
Mortgagor and to require an increase in the amount of said liability insurance
should Mortgagee deem an increase to be reasonably prudent under then existing
circumstances.

                  (c) General boiler and machinery insurance coverage is
required if steam boilers or other pressure-fired vessels are in operation at
the Property. Minimum liability amount per accident must equal the greater of
the replacement (insurable) value of the Improvements housing such boiler or
pressure-fired machinery or $2,000,000.

                  (d) If the Property or any part thereof is identified by the
Director of the Federal Emergency Management Agency as being situated in an area
now or subsequently designated as having special flood hazards (including,
without limitation, those areas designated as Zone A or Zone V), flood insurance
in an amount equal to the lesser of: (i) the minimum amount required, under the
terms of coverage, to compensate for any damage or loss on a replacement basis
(or the unpaid balance of the indebtedness secured hereby if replacement cost
coverage is not available for the type of building insured); or (ii) the maximum
insurance available under the appropriate National Flood Insurance
Administration program.

                  (e) During the period of any construction on the Property or
renovation or alteration of the Improvements, a so-called "Builder's All-Risk
Completed Value" or "Course of Construction" insurance policy in non-reporting
form for any Improvements under construction,

                                       12
<PAGE>

renovation or alteration in an amount approved by Mortgagee and Worker's
Compensation Insurance covering all persons engaged in such construction,
renovation or alteration.

                  (f) Loss of rents or loss of business income insurance in
amounts sufficient to compensate Mortgagor for all Rents and Profits during a
period of not less than eighteen (18) months in which the Property may be
damaged or destroyed. The amount of coverage shall be adjusted annually to
reflect the Rents and Profits or income payable during the succeeding eighteen
(18) month period.

                  (g) Any other insurance coverage required by Mortgagee in
connection with the making of the Loan and in effect as of the date hereof.

                  (h) Such other insurance on the Property or on any
replacements or substitutions thereof or additions thereto as may from time to
time be required by Mortgagee against other insurable hazards or casualties
which at the time are commonly insured against in the case of property similarly
situated including, without limitation, Sinkhole, Mine Subsidence, Earthquake,
Terrorism (to the extent available at commercially reasonable rates as
determined by Mortgagee in its reasonable discretion) and Environmental
insurance, due regard being given to the height and type of buildings, their
construction, location, use and occupancy.

            All such insurance shall (i) be with insurers authorized to do
business in the state within which the Property is located and who have and
maintain a rating of at least "AA" from Standard & Poor's and at least "A-X" per
Best's Key Rating Guide, (ii) contain the complete address of the Property (or a
complete legal description), (iii) be for terms of at least one year, (iv)
contain deductibles which do not exceed (y) $25,000.00 if the original principal
balance of the Loan is less than $9,000,000 and (z) $50,000.00 if the original
principal balance of the Loan is $9,000,000 or greater and (v) be subject to the
approval of Mortgagee as to insurance companies, amounts, content, forms of
policies, method by which premiums are paid and expiration dates which approval
shall not be unreasonably withheld or delayed.

            To the extent that at any time Mortgagee agrees to accept insurance
from an insurer that is rated less than the foregoing, Mortgagee may terminate
its waiver and reassert the aforesaid minimum rating requirements upon any
renewal of any insurance coverage, or at any time if the rating of any insurer
is reduced or Mortgagee reasonably determines that any other material adverse
event has occurred with respect to the financial condition of such insurer.

            Mortgagor shall as of the date hereof deliver to Mortgagee evidence
that said insurance policies have been paid current as of the date hereof and
certified copies of such insurance policies and original certificates of
insurance signed by an authorized agent of the applicable insurance companies
evidencing such insurance satisfactory to Mortgagee. Mortgagor shall renew all
such insurance and deliver to Mortgagee certificates evidencing such renewals at
least thirty (30) days before any such insurance shall expire. Without limiting
the required endorsements to the insurance policies, Mortgagor further agrees
that all such policies shall include a standard, non-contributory, mortgagee
clause naming:

                                    CIBC INC.

                                       13
<PAGE>

                           its successors and assigns
                          as their interests may appear
                        Attn: Real Estate Finance Group,
                          622 Third Avenue, 8th Floor,
                            New York, New York, 10017

(x) as an additional insured under all liability insurance policies, (y) as the
first mortgagee on all property insurance policies and (z) as the loss payee on
all loss of rents or loss of business income insurance policies. Mortgagor
further agrees that all such insurance policies: (1) shall provide for at least
thirty (30) days' prior written notice to Mortgagee prior to any cancellation or
termination thereof and prior to any modification thereof which affects the
interest of Mortgagee; (2) shall contain an endorsement or agreement by the
insurer that any loss shall be payable to Mortgagee in accordance with the terms
of such policy notwithstanding any act or negligence of Mortgagor which might
otherwise result in forfeiture of such insurance; (3) shall waive all rights of
subrogation against Mortgagee; (4) in the event that the Land or the
Improvements constitutes a legal non-conforming use under applicable building,
zoning or land use laws or ordinances, shall include an ordinance or law
coverage endorsement which will contain Coverage A: "Loss Due to Operation of
Law" (with a minimum liability limit equal to Replacement Cost With Agreed Value
Endorsement), Coverage B: "Demolition Cost" and Coverage C: "Increased Cost of
Construction" coverages; and (5) may be in the form of a blanket policy provided
that, in the event that any such coverage is provided in the form of a blanket
policy, Mortgagor hereby acknowledges and agrees that failure to pay any portion
of the premium therefor which is not allocable to the Property or by any other
action not relating to the Property which would otherwise permit the issuer
thereof to cancel the coverage thereof, would require the Property to be insured
by a separate, single-property policy. The blanket policy must properly identify
and fully protect the Property as if a separate policy were issued for 100% of
Replacement Cost at the time of loss and otherwise meet all of Mortgagee's
applicable insurance requirements set forth in this Section 1.4. The delivery to
Mortgagee of the insurance policies or the certificates of insurance as provided
above shall constitute an assignment of all proceeds payable under such
insurance policies relating to the Property by Mortgagor to Mortgagee as
further security for the indebtedness secured hereby. In the event of
foreclosure of this Mortgage, or other transfer of title to the Property in
extinguishment in whole or in part of the secured indebtedness, all right, title
and interest of Mortgagor in and to all proceeds payable under such policies
then in force concerning the Property shall thereupon vest in the purchaser at
such foreclosure, or in Mortgagee or other transferee in the event of such other
transfer of title. Approval of any insurance by Mortgagee shall not be a
representation of the solvency of any insurer or the sufficiency of any type or
amount of insurance. In the event Mortgagor fails to provide, maintain, keep in
force or deliver and furnish to Mortgagee the policies of insurance required by
this Mortgage or evidence of their renewal as required herein, Mortgagee may,
but shall not be obligated to, procure such insurance and Mortgagor shall pay
all amounts advanced by Mortgagee therefor, together with interest thereon at
the Default Interest Rate from and after the date advanced by Mortgagee until
actually repaid by Mortgagor, promptly upon demand by Mortgagee. Any amounts so
advanced by Mortgagee, together with interest thereon, shall be secured by this
Mortgage and by all of the other Loan Documents securing all or any part of the
indebtedness secured hereby. Mortgagee shall not be responsible for nor incur
any liability for

                                       14
<PAGE>

the insolvency of any insurer or other failure of any insurer to perform, even
though Mortgagee has caused the insurance to be placed with such insurer after
failure of Mortgagor to furnish such insurance. Mortgagor shall not obtain
insurance for the Property in addition to that required by Mortgagee without the
prior written consent of Mortgagee, which consent will not be unreasonably
withheld provided that (i) Mortgagee is a named insured and loss payee on such
insurance, (ii) Mortgagee receives complete copies of all policies evidencing
such insurance, and (iii) such insurance complies with all of the applicable
requirements set forth herein. Mortgagee acknowledges that all or a portion of
the insurance coverage may be provided by the Primary Tenant and Mortgagee
agrees to accept same so long as such coverage complies with the requirements
set forth above.

            (B) Insurance Coverage Requirements Prior to Primary Lease
Termination Date. Prior to the Primary Lease Termination Date (as defined
below), Mortgagor shall, at its sole cost and expense, (x) keep or cause to be
kept in full force and effect the insurance coverage required by Article 16 of
the Primary Lease (or, if applicable, the analogous section of the Replacement
Primary Lease [as defined below] governing insurance requirements) and
compliance therewith shall be deemed compliance with the provisions of this
Section 1.4 of this Mortgage and (y) provide or cause to be provided to
Mortgagee certificates evidencing renewal of all insurance required by Article
16 of the Primary Lease (or, if applicable, the analogous section of the
Replacement Primary Lease governing insurance requirements) not later than seven
(7) business days before any such insurance shall expire; provided, however,
that in all instances Mortgagor shall diligently enforce the terms and
provisions of the Primary Lease (or, if applicable, the Replacement Primary
Lease) with respect to such insurance coverage and shall take such actions as
shall be necessary to cause Primary Tenant (or, if applicable, the tenant under
the Replacement Primary Lease) to comply with the provisions thereof and,
provided, further, that to the extent that the Primary Tenant (or, if
applicable, the tenant under the Replacement Primary Lease) does not comply with
any or all of the terms and conditions of the Primary Lease, (or, if applicable,
the Replacement Primary Lease), such non-compliance shall in no way relieve
Mortgagor of its affirmative obligations under this Section 1.4(B) or the
requirements to procure and maintain the insurance required by Article 16 of the
Primary Lease (or, if applicable, the analogous section of the Replacement
Primary Lease governing insurance requirements).

            As used herein, "Primary Lease Termination Date" shall mean the
earlier to occur of (i) the date on which the Primary Lease expires pursuant to
its terms and (ii) the date on which the Primary Lease is sooner terminated;
provided, however, that if subsequent to the occurrence of the Primary Lease
Termination Date, Mortgagor enters into a Replacement Primary Lease, then from
and after the effective date of such Replacement Primary Lease, the Primary
Lease Termination Date shall be deemed to mean the earlier to occur of (i) the
date on which the Replacement Primary Lease expires pursuant to its terms and
(ii) the date on which the Replacement Primary Lease is sooner terminated.

            As used herein, "Replacement Primary Lease" shall mean a Lease other
than the Primary Lease which demises to the tenant thereunder (the 'Replacement
Primary Tenant") the entire premises demised to the Primary Tenant as of the
date hereof under the Primary Lease and

                                       15
<PAGE>

which satisfies the following conditions: (i) Mortgagee shall have approved in
writing, in its sole discretion, such Lease and the tenant thereunder and (ii)
the insurance requirements thereunder shall be no less favorable to Mortgagor
and Mortgagee (as determined by Mortgagee) as the insurance requirements under
the Primary Lease as of the date hereof.

            Section 1.5 Payment of Taxes. Mortgagor shall pay or cause to be
paid, except to the extent provision is actually made therefor pursuant to
Section 1.6 or Section 1.7 of this Mortgage, all taxes and assessments which are
or may become a lien on the Property or which are assessed against or imposed
upon the Property. Mortgagor shall furnish Mortgagee with receipts (or if
receipts are not immediately available, with copies of canceled checks
evidencing payment with receipts to follow promptly after they become available)
showing payment of such taxes and assessments not later than thirty (30) days
after the due date therefor. Notwithstanding the foregoing, Mortgagor may in
good faith, by appropriate proceedings and upon notice to Mortgagee, contest the
validity, applicability or amount of any asserted tax or assessment so long as
(a) such contest is diligently pursued, (b) Mortgagee determines, in its
reasonable opinion, that such contest suspends the obligation to pay the tax and
that nonpayment of such tax or assessment will not result in the sale, loss,
forfeiture or diminution of the Property or any part thereof or any interest of
Mortgagee therein, and (c) prior to the earlier of the commencement of such
contest or the delinquency date of the asserted tax or assessment, Mortgagor
deposits in the Impound Account an amount determined by Mortgagee to be adequate
to cover the payment of such tax or assessment and a reasonable additional sum
to cover possible interest, costs and penalties; provided, however, that
Mortgagor shall promptly cause to be paid any amount adjudged by a court of
competent jurisdiction to be due, with all interest, costs and penalties
thereon, promptly after such judgment becomes final; and provided, further, that
in any event each such contest shall be concluded, the taxes, assessments,
interest, costs and penalties shall be paid prior to the date any writ or order
is issued under which the Property may be sold, lost or forfeited. Mortgagor's
rights under this Section 1.5 to contest taxes or assessments with respect to
the Property may be exercised by Primary Tenant (or by a Replacement Primary
Tenant, if applicable), provided same shall not relieve Mortgagor of any of its
obligations under this Section 1.5.

            Section 1.6 Tax and Insurance Impound Account. Mortgagor shall
establish and maintain at all times while this Mortgage continues in effect an
impound account (the "Impound Account") with Mortgagee for payment of real
estate taxes and assessments and insurance on the Property and as additional
security for the indebtedness secured hereby, provided, however, that, prior to
a Sale (as defined in Section 1.13 hereof) of the Property to an entity which is
not directly or indirectly controlled by W.P. Carey & Co. LLC, so long as the
Primary Lease or Replacement Primary Lease, as applicable, shall remain in full
force and effect and no monetary Event of Default (as defined in the Primary
Lease or such comparable term in the Replacement Primary Lease, as applicable)
exists thereunder:

            (i) Mortgagor shall not be obligated to make deposits in the Impound
      Account on account of real estate taxes and assessments so long as
      Mortgagor (1) shall cause Primary Tenant (or, if applicable, the tenant
      under the Replacement Primary Lease) to pay or cause to be paid all taxes
      and assessments which are or may become a lien on

                                       16
<PAGE>

      the Property or which are assessed against or imposed upon the Property
      and (2) shall have furnished Mortgagee with receipts (or if receipts are
      not immediately available, with copies of canceled checks evidencing
      payment with receipts to follow promptly after they become available)
      showing payment of such taxes and assessments prior to the applicable
      delinquency date therefor and prior to any penalties being due thereon;
      and

            (ii) to the extent that Primary Tenant (or, if applicable, the
      tenant under the Replacement Primary Lease) provides an allocable portion,
      or all, of the insurance coverage set forth in Section 1.4 hereof,
      Mortgagor shall not be required to make deposits into the Impound Account
      for the amounts of the coverages provided by Primary Tenant (or, if
      applicable, the tenant under the Replacement Primary Lease), so long as
      Mortgagor shall cause Primary Tenant (or, if applicable, the tenant under
      the Replacement Primary Lease) to provide evidence of such coverage being
      in full force and effect;

it being expressly agreed that if either of the foregoing subclauses (i) or (ii)
shall cease to be satisfied, then Mortgagor shall be obligated, within five (5)
business days after written demand therefor, to deposit in the Impound Account
an amount determined by Mortgagee to be necessary to ensure that there will be
on deposit with Mortgagee an amount which, when added to the monthly payments
subsequently required to be (and actually) deposited with Mortgagee hereunder on
account of real estate taxes, assessments and insurance premiums, will result in
there being on deposit with Mortgagee in the Impound Account an amount
sufficient to pay the next due periodic installment of real estate taxes and
assessment on the Property at least one (1) month prior to the delinquency date
thereof and the next due periodic insurance premiums with respect to the
Property at least one (1) month prior to the due date thereof. Mortgagor
acknowledges that, if Mortgagor is providing insurance coverage by a blanket
policy, or by a combination of policies provided by Mortgagor and Primary
Tenant, any insurance which Mortgagee is permitted pursuant to the terms of this
Mortgage to purchase, if Mortgagor shall fail to provide the coverage required
under Section 1.4 hereof, may be substantially more costly than the insurance
coverage Mortgagor had provided and Mortgagor agrees that Mortgagee may require
the deposit into the Impound Account in respect of insurance to be increased to
cover such possible increased costs. Commencing on the first Payment Date under
the Note (subject to clauses (i) and (ii) of this Section 1.6) and continuing
thereafter on each monthly payment date under the Note, Mortgagor shall pay to
Mortgagee, concurrently with and in addition to the monthly payment due under
the Note and until the Note and all other indebtedness secured hereby is fully
paid and performed, deposits in an amount equal to one-twelfth (1/12) of the
amount of the annual real estate taxes and assessments that will next become due
and payable on the Property, plus one-twelfth (1/12) of the amount of the annual
premiums that will next become due and payable on insurance policies which
Mortgagor is required to maintain hereunder, each as estimated and determined by
Mortgagee. So long as no Event of Default (as defined in Section 2.1 hereunder)
has occurred and is continuing, all sums in the Impound Account shall be held by
Mortgagee in the Impound Account to pay said taxes, assessments and insurance
premiums in one installment before the same become delinquent. Mortgagor shall
be responsible for ensuring the receipt by Mortgagee, at least thirty (30) days
prior to the respective due date for payment thereof, of all bills, invoices and
statements for all taxes, assessments and insurance premiums to be paid from the
Impound Account, and so long as no Event of Default

                                       17
<PAGE>

has occurred and is continuing, Mortgagee shall pay the governmental authority
or other party entitled thereto directly to the extent funds are available for
such purpose in the Impound Account. In making any payment from the Impound
Account, Mortgagee shall be entitled to rely on any bill, statement or estimate
procured from the appropriate public office or insurance company or agent
without any inquiry into the accuracy of such bill, statement or estimate and
without any inquiry into the accuracy, validity, enforceability or
contestability of any tax, assessment, valuation, sale, forfeiture, tax lien or
title or claim thereof. The Impound Account shall not, unless otherwise
explicitly required by applicable law, be or be deemed to be escrow or trust
funds, but, at Mortgagee's option and in Mortgagee's discretion, may either be
held in a separate account or be commingled by Mortgagee with the general funds
of Mortgagee. No interest on the funds contained in the Impound Account shall be
paid by Mortgagee to Mortgagor. The Impound Account is solely for the protection
of Mortgagee and entails no responsibility on Mortgagee's part beyond the
payment of taxes, assessments and insurance premiums following receipt of bills,
invoices or statements therefor in accordance with the terms hereof and beyond
the allowing of due credit for the sums actually received. Upon assignment of
this Mortgage by Mortgagee, any funds in the Impound Account shall be turned
over to the assignee and any responsibility of Mortgagee, as assignor, with
respect thereto shall terminate. If the total funds in the Impound Account shall
exceed the amount of payments actually applied by Mortgagee for the purposes of
the Impound Account, such excess may be credited by Mortgagee on subsequent
payments to be made hereunder or, at the option of Mortgagee, refunded to
Mortgagor. If, however, the Impound Account shall not contain sufficient funds
to pay the sums required when the same shall become due and payable, Mortgagor
shall, within ten (10) days after receipt of written notice thereof, deposit
with Mortgagee the full amount of any such deficiency. If Mortgagor shall fail
to deposit with Mortgagee the full amount of such deficiency as provided above,
Mortgagee shall have the option, but not the obligation, to make such deposit
and all amounts so deposited by Mortgagee, together with interest thereon at the
Default Interest Rate from the date incurred by Mortgagee until actually paid by
Mortgagor, shall be immediately paid by Mortgagor on demand and shall be secured
by this Mortgage and by all of the other Loan Documents securing all or any part
of the indebtedness evidenced by the Note. Upon an Event of Default, Mortgagee
may, but shall not be obligated to, apply at any time the balance then remaining
in the Impound Account against the indebtedness secured hereby in whatever order
Mortgagee shall subjectively determine. No such application of the Impound
Account shall be deemed to cure any Event of Default hereunder, and any such
application shall not limit Mortgagor's obligation to deposit any deficiency of
which Mortgagee gives notice. Upon full payment of the indebtedness secured
hereby in accordance with its terms or at such earlier time as Mortgagee may
elect, the balance of the Impound Account then in Mortgagee's possession shall
be paid over to Mortgagor and no other party shall have any right or claim
thereto.

            Section 1.7 Payment Reserve. Contemporaneously with the execution
hereof, Mortgagor has established with Mortgagee a reserve in the amount equal
to one (1) regular monthly installment of principal and interest under the Note
(the "Payment Reserve"). Mortgagor understands and agrees that,
notwithstanding the establishment of the Payment Reserve as herein required, all
of the proceeds of the Note have been, and shall be considered, fully disbursed
and shall bear interest and be payable on the terms provided therein. No
interest

                                       18
<PAGE>

on funds contained in the Payment Reserve shall be paid by Mortgagee to
Mortgagor. For so long as no Default has occurred hereunder, Mortgagee shall on
the first Payment Date (as defined in the Note) under the Note, advance from the
Payment Reserve to itself the amount due and payable by Mortgagor under the Note
on such Payment Date. Nothing contained herein, including, without limitation,
the existence of the Payment Reserve, shall release Mortgagor of any obligation
to make payments under the Note, this Mortgage or the other Loan Documents
strictly in accordance with the terms hereof or thereof.

            Section 1.8 Replacement Reserve; Security Interest in Reserves.

                  (a) At Mortgagee's option, as additional security for the
indebtedness secured hereby, commencing with the first Payment Date (as defined
in the Note) following the earlier to occur of (i) the Primary Lease Termination
Date, (ii) Mortgagor entering into a Replacement Primary Lease pursuant to which
the tenant thereunder is not solely responsible for the performance of all
Repairs (as defined below), or (iii) for so long as the Primary Lease (or, if
applicable, the Replacement Primary Lease) shall remain in force, Mortgagor's
failure to perform, or to cause Primary Tenant (or, if applicable, the tenant
under the Replacement Primary Lease) to perform, all of the Repairs strictly
when required pursuant to any applicable provisions of the Loan Documents (the
"Replacement Reserve Commencement Date"), Mortgagor shall establish and
thereafter maintain at all times while this Mortgage continues in effect a
repair reserve (the "Replacement Reserve") with Mortgagee for payment of certain
non-recurring types of costs and expenses incurred by Mortgagor for interior and
exterior work to the Property, including without limitation, performance of work
to the roofs, chimneys, gutters, downspouts, paving, curbs, driveways, ramps,
balconies, porches, patios, exterior walls, exterior doors and doorways,
windows, elevators and mechanical and HVAC equipment (collectively, the
"Repairs") provided such costs and expenses are incurred for repairs (i) not
incurred for ordinary wear and tear at the Property and (ii) categorized under
generally accepted accounting principles as a capital expense and not as an
operating expense. Commencing on the first Payment Date following the
Replacement Reserve Commencement Date, and continuing on each Payment Date
thereafter, Mortgagor shall pay Mortgagee, concurrently with and in addition to
the monthly payment due under the Note and until the Note and all other
indebtedness secured hereby is fully paid and performed, a deposit to the
Replacement Reserve in an amount equal to one-twelfth (1/12th) of fifteen cents
($0.15) per rentable square foot of the Property, as such square footage shall
have been determined by Mortgagee in its reasonable discretion. So long as no
Event of Default has occurred and is continuing, all sums in the Replacement
Reserve shall be held by Mortgagee in the Replacement Reserve to pay the costs
and expenses of Repairs. So long as no Event of Default has occurred and is
continuing, Mortgagee shall, to the extent funds are available for such purpose
in the Replacement Reserve, disburse to Mortgagor the amount paid or incurred by
Mortgagor in performing such Repairs within ten (10) days following: (a) the
receipt by Mortgagee of a written request from Mortgagor for disbursement from
the Replacement Reserve and a certification by Mortgagor in the form attached
hereto as Exhibit B that the applicable item of Repair has been completed, (b)
the delivery to Mortgagee of invoices, receipts or other evidence satisfactory
to Mortgagee verifying the cost of performing the Repairs; (c) for disbursement
requests in excess of $10,000.00, the delivery to Mortgagee of affidavits, lien
waivers or other evidence reasonably satisfactory to Mortgagee showing that all

                                       19
<PAGE>

materialmen, laborers, subcontractors and any other parties who might or could
claim statutory or common law liens and are furnishing or have furnished
material or labor to the Property have been paid all amounts due for labor and
materials furnished to the Property; (d) for disbursement requests in excess of
$10,000.00, delivery to Mortgagee of a certification from an inspecting
architect or other third party acceptable to Mortgagee describing the completed
Repairs and verifying the completion of the Repairs and the value of the
completion of the Repairs and the value of the completed Repairs; (e) for
disbursement requests in excess of $lO,OOO,OO, delivery to Mortgagee of a new
certificate of occupancy for the portion of the Improvements covered by such
Repairs, if said new certificate of occupancy is required by law, or a
certification by Mortgagor that no new certificate of occupancy is required; and
(f) the receipt by Mortgagee of an administrative fee in the amount of $150.00.
Mortgagee shall not be required to make advances from the Replacement Reserve
more frequently than once in any sixty (60) day period. In making any payment
from the Replacement Reserve, Mortgagee shall be entitled to rely on such
request from Mortgagor without any inquiry into the accuracy, validity or
contestability of any such amount. Mortgagee may, at Mortgagor's expense, make
or cause to be made during the term of this Mortgage an annual inspection at the
Property to determine the need, as determined by Mortgagee in its reasonable
judgment, for further Repairs of the Property. In the event that such inspection
reveals that further Repairs of the Property are required, Mortgagee shall
provide Mortgagor with a written description of the required Repairs and
Mortgagor shall complete such Repairs to the reasonable satisfaction of
Mortgagee within ninety (90) days after the receipt of such description from
Mortgagee, or such later date as may be approved by Mortgagee in its sole
discretion. The Replacement Reserve shall not, unless otherwise explicitly
required by applicable law, be or be deemed to be escrow or trust funds, but, at
Mortgagee's option and in Mortgagee's discretion, may either be held in a
separate account or be commingled by Mortgagee with the general funds of
Mortgagee. Interest on the funds contained in the Replacement Reserve shall be
credited to Mortgagor as provided in Section 4.31 hereof. The Replacement
Reserve is solely for the protection of Mortgagee and entails no responsibility
on Mortgagee's part beyond the payment of the costs and expenses described in
this Section in accordance with the terms hereof and beyond the allowing of due
credit for the sums actually received. In the event that the amounts on deposit
or available in the Replacement Reserve are inadequate to pay the cost of the
Repairs, Mortgagor shall pay the amount of such deficiency. Upon assignment of
this Mortgage by Mortgagee, any funds in the Replacement Reserve shall be turned
over to the assignee and any responsibility of Mortgagee, as assignor, with
respect thereto shall terminate. Upon an Event of Default, Mortgagee may, but
shall not be obligated to, apply at any time the balance then remaining in the
Replacement Reserve against the indebtedness secured hereby in whatever order
Mortgagee shall subjectively determine. No such application of the Replacement
Reserve shall be deemed to cure any Event of Default hereunder. Upon full
payment of the indebtedness secured hereby in accordance with its terms or at
such earlier time as Mortgagee may elect, the balance of the Replacement Reserve
then in Mortgagee's possession shall be paid over to Mortgagor and no other
party shall have any right or claim thereto.

                  (b) As additional security for the payment and performance by
Mortgagor of all duties, responsibilities and obligations under the Note and the
other Loan Documents (excluding the Hazardous Substances Indemnity Agreement),
Mortgagor hereby unconditionally and irrevocably assigns, conveys, pledges,
mortgages, transfers, delivers, deposits, sets over and

                                       19
<PAGE>

confirms unto Mortgagee, and hereby grants to Mortgagee a security interest in,
(i) the Reserves (as defined in Paragraph G of the granting clause of this
Mortgage), (ii) the accounts into which the Reserves have been deposited, (iii)
all insurance of said accounts, (iv) all accounts, contract rights and general
intangibles or other rights and interests pertaining thereto, (v) all sums now
or hereafter therein or represented thereby, (vi) all replacements,
substitutions or proceeds thereof, (vii) all instruments and documents now or
hereafter evidencing the Reserves or such accounts, (viii) all powers, options,
rights, privileges and immunities pertaining to the Reserves (including the
right to make withdrawals therefrom), and (ix) all proceeds of the foregoing.
Mortgagor hereby authorizes and consents to the account into which the Reserves
have been deposited being held in Mortgagee's name or the name of any entity
servicing the Note for Mortgagee, and hereby acknowledges and agrees that
Mortgagee, or at Mortgagee's election, such servicing agent, shall have
exclusive control over said account. Notice of the assignment and security
interest granted to Mortgagee herein may be delivered by Mortgagee at any time
to the financial institution wherein the Reserves have been established, and
Mortgagee, or such servicing entity, shall have possession of all passbooks or
other evidences of such accounts. Mortgagor hereby assumes all risk of loss with
respect to amounts on deposit in the Reserves. Mortgagor hereby knowingly,
voluntarily and intentionally stipulates, acknowledges and agrees that the
advancement of the funds from the Reserves as set forth herein is at Mortgagor's
direction and is not the exercise by Mortgagee of any right of set-off or other
remedy upon an Event of Default. Mortgagor hereby waives all right to withdraw
funds from the Reserves, and all right to receive disbursements from the
Reserves except in compliance with the Loan Documents. Upon an Event of Default,
then Mortgagee may, without notice or demand on Mortgagor, & its option: (A)
withdraw any or all of the funds (including, without limitation, interest) then
remaining in the Reserves and apply the same, after deducting all costs and
expenses of safekeeping, collection and delivery (including, but not limited to,
reasonable attorneys' fees, costs and expenses) to the indebtedness evidenced by
the Note or any other obligations of Mortgagor under the other Loan Documents
(excluding the Hazardous Substances Indemnity Agreement) in such manner or as
Mortgagee shall deem appropriate in its sole discretion, and the excess, if any,
shall be paid to Mortgagor, (B) exercise any and all rights and remedies of a
secured party under any applicable Uniform Commercial Code, and/or (C) exercise
any other remedies available at law or in equity. No such use or application of
the funds contained in the Reserves shall be deemed to cure any Event of Default
hereunder or under the other Loan Documents.

            Section 1.9 Casualty and Condemnation. Mortgagor shall give
Mortgagee prompt written notice of the occurrence of any casualty affecting, or
the institution of any proceedings for eminent domain or for the condemnation
of, the Property or any portion thereof; provided that with respect to any
casualty affecting the Property, Mortgagor shall only be required to provide
Mortgagee with written notice thereof if the reasonably estimated insurance
proceeds for such casualty are equal to or exceed $250,000, or Mortgagor
otherwise receives or should reasonably have notice of such casualty. All
insurance proceeds on the Property, and all causes of action, claims,
compensation, awards and recoveries for any damage, condemnation or taking of
all or any part of the Property or for any damage or injury to it or any loss or
diminution in value of the Property, are hereby assigned to and shall be paid to
Mortgagee; provided that so long as (x) the Primary Lease is in full force and
effect and there are no defaults thereunder, (y) no Event of Default hereunder
shall have occurred and be continuing and (z) such

                                       21
<PAGE>

insurance proceeds or compensation for any such condemnation do not, in the
aggregate, exceed $250,000, then such insurance proceeds or compensation for any
such condemnation (but in no event, in the aggregate, more than $250,000) shall
not be assigned to Mortgagee so long as same are assigned to Primary Tenant and
used by Primary Tenant for the restoration or repair of the Property. Mortgagee
may participate in any suits or proceedings relating to any such proceeds,
causes of action, claims, compensation, awards or recoveries and Mortgagee is
hereby authorized, in its own name or in Mortgagor's name, to adjust any loss
covered by insurance or any condemnation claim or cause of action, and to settle
or compromise any claim or cause of action in connection therewith, and
Mortgagor shall from time to time deliver to Mortgagee any instruments required
to permit such participation; provided, however, that Mortgagee shall not have
the right to participate in the adjustment of any loss which is not in excess of
the lesser of (i) ten percent (10%) of the then outstanding principal balance of
the Note and (ii) $500,000.00. Mortgagee shall apply any sums received by it
under this Section first to the payment of all of its costs and expenses
(including, but not limited to, reasonable legal fees and disbursements)
incurred in obtaining those sums, and then, as follows:

                  (a) Except to the extent otherwise provided in Section 1.9(c)
hereof, in the event of a taking of not more than fifteen percent (15%) of the
Improvements or a casualty damaging not more than thirty percent (30%) of the
Improvements then if:

                        (1) no Event of Default is then continuing hereunder,
      and

                        (2) the Property can, in Mortgagee's judgment, with
      diligent restoration or repair, be returned to a condition at least equal
      to the condition thereof that existed prior to the casualty or partial
      taking causing the loss or damage within the earlier to occur of (i) six
      (6) months after the receipt of insurance proceeds or condemnation awards
      by either Mortgagor or Mortgagee and (ii) six (6) months prior to the
      Maturity Date (as defined in the Note), and

                        (3) all necessary governmental approvals can be obtained
      to allow the rebuilding and reoccupancy of the Property as described in
      Section 1.9(a)(2) above, and

                        (4) there are sufficient sums available (through
      insurance proceeds or condemnation awards and contributions by Mortgagor,
      the full amount of which shall at Mortgagee's option have been deposited
      with Mortgagee) for such restoration or repair (including, without
      limitation, for any costs and expenses of Mortgagee to be incurred in
      administering said restoration or repair) and for payment of principal and
      interest to become due and payable under the Note during such restoration
      or repair, and

                        (5) the economic feasibility of the Improvements after
      such restoration or repair (and including the impact of the termination or
      amendment of any Leases due to such casualty or condemnation) will be such
      that income from their operation is reasonably anticipated to be
      sufficient to pay operating expenses of the Property and debt service on
      the indebtedness secured hereby in full with the same

                                       22
<PAGE>

      coverage ratio considered by Mortgagee in its determination to make the
      loan secured hereby, and

                        (6) Mortgagor shall have delivered to Mortgagee, at
      Mortgagor's sole cost and expense, an appraisal report in form and
      substance reasonably satisfactory to Mortgagee appraising the value of the
      Property as proposed to be restored or repaired to be not less than the
      appraised value of the Property considered by Mortgagee in its
      determination to make the loan secured hereby,

                        (7) Mortgagor so elects by written notice delivered to
      Mortgagee within fifteen (15) days after settlement of the aforesaid
      insurance or condemnation claim,

                        (8) Mortgagee receives from each tenant then occupying
      10% or more of the Improvements an estoppel certificate and agreement in
      form, scope and substance acceptable to Mortgagee in its sole discretion
      confirming that such tenant shall reoccupy the portion of the Improvements
      demised to it, on all of the terms of its lease in effect immediately
      prior to such taking or destruction (including payment of rent) upon such
      restoration or repair, and

                        (9) Mortgagee receives confirmation or an estoppel
      certificate or other evidence acceptable to Mortgagee from the tenant
      under the Primary Lease that it shall reoccupy the Improvements pursuant
      to the terms of the Primary Lease as in effect on the date hereof or as
      otherwise approved by Mortgagee,

then, Mortgagee shall, solely for the purposes of such restoration or repair,
advance so much of the remainder of such sums as may be required for such
restoration or repair, and any funds deposited by Mortgagor therefor, to
Mortgagor in the manner and upon such terms and conditions as would be required
by a prudent interim construction lender, including, but not limited to, the
prior approval by Mortgagee of plans and specifications, contractors and form of
construction contracts and the furnishing to Mortgagee of permits, bonds, lien
waivers, invoices, receipts and affidavits from contractors and subcontractors
in form and substance reasonably satisfactory to Mortgagee in its discretion,
with any remainder being applied by Mortgagee for payment of the indebtedness
secured hereby in whatever order Mortgagee directs in its absolute discretion.

                  (b) Except to the extent otherwise provided in Section 1.9(c)
hereof, in the event that Mortgagor does not elect to restore or repair the
Property pursuant to clause (a) above, or if the taking or casualty is of a
greater portion of the Improvements than specified in clause (a) above, or
otherwise fails to meet the requirements of clause (a) above, then in any of
such events, Mortgagee shall elect, in Mortgagee's absolute discretion and
without regard to the adequacy of Mortgagee's security, to do either of the
following: (1) accelerate the maturity date of the Note and declare any and all
indebtedness secured hereby to be immediately due and payable (without
prepayment penalty so long as no Event of Default has occurred) and apply the
remainder of such sums received pursuant to this Section to the payment of the
indebtedness secured hereby in whatever order Mortgagee directs in its absolute
discretion, with any remainder being paid to

                                       23
<PAGE>

Mortgagor, or (2) notwithstanding that Mortgagor may have elected not to restore
or repair the Property pursuant to the provisions of Section 1.9(a)(7) above,
require Mortgagor to restore or repair the Property (a "Required Restoration")
in the manner and upon such terms and conditions as would be required by a
prudent interim construction lender, including, but not limited to the deposit
by Mortgagor with Mortgagee, within thirty (30) days after demand therefor, of
any deficiency necessary in order to assure the availability of sufficient funds
to pay for such restoration or repair, including Mortgagee's costs and expenses
to be incurred in connection therewith, the prior approval by Mortgagee of plans
and specifications, contractors and form of construction contracts and the
furnishing to Mortgagee of permits, bonds, lien waivers, invoices, receipts and
affidavits from contractors and subcontractors in form and substance
satisfactory to Mortgagee in its discretion, and apply the remainder of such
sums toward such restoration and repair, with any balance thereafter remaining
being applied by Mortgagee for payment of the indebtedness secured hereby in
whatever order Mortgagee directs in its absolute discretion.

The following terms, as used in this Deed of Trust, shall have the following
meanings:

            "380 Lafayette Property" shall mean the certain real property
situated at 380 Lafayette Road, Hampton, New Hampshire, as more particularly
described as Tract II on Exhibit A attached hereto, together with all buildings
and improvements now or hereafter located thereon.

            "390 Lafayette Property" shall mean the certain real property
situated at 390 Lafayette Road, Hampton, New Hampshire, as more particularly
described as Tract I on Exhibit A attached hereto, together with all buildings
and improvements now or hereafter located thereon.

            "11 Merrill Property" shall mean the certain real property situated
at 11 Merrill Industrial Drive, Hampton, New Hampshire, as more particularly
described as Tract III on Exhibit A attached hereto, together with all buildings
and improvements now or hereafter located thereon.

            "Individual Property" shall mean any of the 380 Lafayette Property,
the 390 Lafayette Property or the 11 Merrill Property.

Notwithstanding anything in this Section 1.9(b) to the contrary:

                        (i) In the event that Mortgagee notifies Mortgagor that
it shall be required to perform a Required Restoration (a "Required Restoration
Notice"), Mortgagor shall not be required to perform such Required Restoration
if (x) a Termination Event (as defined in the Primary Lease or a comparable
provision in a Replacement Primary Lease) shall have occurred with respect to
either the 390 Lafayette Property or the 11 Merrill Property and the Primary
Tenant shall have delivered a Termination Notice (as defined in the Primary
Lease or a comparable provision in a Replacement Primary Lease) with respect to
the 390 Lafayette Property or the 11 Merrill Property and (y) Mortgagor pays to
Mortgagee the remaining unpaid

                                       24
<PAGE>

principal balance of the Note, together with all unpaid interest accrued thereon
(through and including the date of prepayment) and any other fees and expenses
then owing to Mortgagee by Mortgagor pursuant hereto, the Note and the other
Loan Documents without any penalty or any prepayment consideration otherwise set
forth in this Mortgage or in the Note; provided, however, that such prepayment
must occur, if at all, within ninety (90) days after the delivery by Mortgagee
to Mortgagor of the Required Restoration Notice. Upon receipt of such payment
Mortgagee will execute and deliver any agreements reasonably requested by
Mortgagor to release and terminate this Mortgage,

                        (ii) In the event that the casualty or condemnation for
which Mortgagee delivers a Required Restoration Notice is limited solely to the
380 Lafayette Property but not any other Individual Property (such Individual
Property which is the subject of such casualty or condemnation is hereinafter
referred to as a "Type 1 Affected Individual Parcel"), then Mortgagor shall not
be required to perform such Required Restoration with respect to the Type 1
Affected Individual Parcel if (x) a Termination Event (as defined in the Primary
Lease or a comparable provision in a Replacement Primary Lease) shall have
occurred with respect to the Type 1 Affected Individual Parcel and the Primary
Tenant shall have delivered a Termination Notice (as defined in the Primary
Lease or a comparable provision in a Replacement Primary Lease) with respect to
the Type 1 Affected Individual Parcel, (y) Mortgagor satisfies all of the
Individual Property Release Conditions (as defined in Exhibit F annexed hereto
and made a part hereof) with respect to the Type 1 Affected Individual Parcel
and (z) Mortgagor pays to Mortgagee the applicable Allocated Loan Amount as set
forth on Schedule I hereof with respect to the Type 1 Affected Individual
Parcel, together with all unpaid interest accrued under the Note (through and
including the date of prepayment) and any other fees and expenses then owing to
Mortgagee by Mortgagor pursuant hereto, the Note and the other Loan Documents
without any penalty or any prepayment consideration otherwise set forth in this
Mortgage or in the Note; provided, however, that such prepayment must occur, if
at all, within ninety (90) days after the delivery by Mortgagee to Mortgagor of
the Required Restoration Notice. Upon receipt of such payment Mortgagee will
execute and deliver any agreements reasonably requested by Mortgagor to release
the Type 1 Affected Individual Parcel from the lien of this Mortgage, and

                        (iii) In the event that the casualty or condemnation for
which Mortgagee delivers a Required Restoration Notice is limited solely to the
390 Lafayette Property or the 11 Merrill Property, but not any other Individual
Property (such Individual Property which is the subject of such casualty or
condemnation is hereinafter referred to as a "Type 2 Affected Individual
Parcel"), then Mortgagor shall not be required to perform such Required
Restoration with respect to the Type 2 Affected Individual Parcel if (w) the
Property shall not have been submitted to a condominium form of ownership prior
to the occurrence of the Termination Event and Primary Tenant irrevocably waives
any rights under the Primary Lease to construct (or cause to be constructed) the
Additional Improvements (as defined in Section 5.34 hereof) and/or to convert
the Property to a condominium form of ownership, (x) a Termination Event (as
defined in the Primary Lease or a comparable provision in a Replacement Primary
Lease) shall have occurred with respect to the Type 2 Affected Individual Parcel
and the Primary Tenant shall have delivered a Termination Notice (as defined in
the Primary Lease or a comparable provision in a Replacement Primary Lease) with
respect to the Type 2 Affected Individual Parcel, (y)

                                       25
<PAGE>

Mortgagor satisfies all of the Individual Property Release Conditions (as
defined in Exhibit F annexed hereto and made a part hereof) with respect to the
Type 2 Affected Individual Parcel and (z)Mortgagor pays to Mortgagee the
applicable Allocated Loan Amount as set forth on Schedule I hereof with respect
to the Type 2 Affected Individual Parcel, together with all unpaid interest
accrued under the Note (through and including the date of prepayment) and any
other fees and expenses then owing to Mortgagee by Mortgagor pursuant hereto,
the Note and the other Loan Documents without any penalty or any prepayment
consideration otherwise set forth in this Mortgage or in the Note; provided,
however, that such prepayment must occur, if at all, within ninety (90) days
after the delivery by Mortgagee to Mortgagor of the Required Restoration Notice.
Upon receipt of such payment Mortgagee will execute and deliver any agreements
reasonably requested by Mortgagor to release the Type 2 Affected Individual
Parcel from the lien of this Mortgage.

                  (c) Notwithstanding the foregoing provisions of Section 1.9(a)
and Section 1.9(b) hereof, for so long as the Primary Lease (or, if applicable,
the Replacement Primary Lease) shall be in full force and effect and Mortgagee
shall have received a current estoppel certificate from Primary Tenant
certifying that the Primary Lease (or, if applicable, the Replacement Primary
Lease) is in full force and effect, that, to Primary Tenant's (or, if
applicable, Replacement Primary Tenant's) best knowledge, there are no defaults
beyond any applicable notice and cure period, and that a Termination Event (as
defined in the Primary Lease) (or, if applicable, in the case of the Replacement
Primary Lease, any event which would allow a termination of the Replacement
Primary Lease) has not occurred, Mortgagee shall apply any sums received by it
under this Section 1.9 first to the payment of all of its costs and expenses
(including, but not limited to, legal fees and disbursements) incurred in
obtaining those sums, and shall apply the remainder of such sums toward the
restoration and repair of the Property in the manner set forth in the Primary
Lease (or, if applicable, the Replacement Primary Lease provided that such lease
contains substantially the same restoration requirements as the original Primary
Lease), and in such event Mortgagee shall require Mortgagor to restore or repair
(or cause Primary Tenant (or, if applicable, the Replacement Primary Tenant) to
restore or repair) the Property in the manner and upon such terms and conditions
as required by the Primary Lease (or, if applicable, the Replacement Primary
Lease) and (to the extent not in conflict with the Primary Lease (or, if
applicable, the Replacement Primary Lease provided that such lease contains
substantially the same restoration requirements as the original Primary Lease))
as would be required by a prudent interim construction lender, including, but
not limited to (i) the deposit by Mortgagor with Mortgagee, within thirty (30)
days after demand therefor, of any deficiency necessary in order to assure the
availability of sufficient funds to pay for such restoration or repair,
including Mortgagee's costs and expenses to be incurred in connection therewith,
(ii) the prior approval by Mortgagee of plans and specifications, contractors
and form of construction contracts, and (iii) the furnishing to Mortgagee of
permits, bonds, lien waivers, invoices, receipt and affidavits from contractors
and subcontractors in form and substance reasonably satisfactory to Mortgagee in
its discretion, with any balance thereafter remaining being disbursed as
follows: (i) if such casualty shall occur prior to the fifteenth anniversary of
the date hereof, any such remainder shall be disbursed to Mortgagor, so long as
no Event of Default exists, and (ii) if such casualty shall occur on or after
the fifteenth anniversary of the date hereof, any such remainder shall be
disbursed to Mortgagee for payment of the indebtedness secured hereby (without
any

                                       26
<PAGE>

prepayment penalty so long as no Event of Default has occurred) in whatever
order Mortgagee directs in its absolute discretion, and in the event the
reduction in principal is greater than thirty-five percent (35%) of the then
outstanding balance of the Note, the scheduled installments of principal and
interest shall be recalculated accordingly.

                  (d) In the event that a Termination Event has not occurred and
Mortgagor does not restore or repair the Property in accordance with the
foregoing provisions, the same shall, after expiration of the notice and cure
period set forth in Section 2.l(c) hereof, be an Event of Default hereunder and
Mortgagee may, in Mortgagee's absolute discretion and without regard to the
adequacy of Mortgagee's security, elect to accelerate the maturity date of the
Note and declare any and all indebtedness secured hereby to be immediately due
and payable and apply the remainder of such sums received pursuant to this
Section 1.9 to the payment of the indebtedness secured hereby in whatever order
Mortgagee directs in its absolute discretion.

                  (e) (i) With respect to any casualty or condemnation proceeds
received by Mortgagee in connection with a casualty or condemnation affecting
either the 390 Lafayette Property or the 11 Merrill Property, provided (1) no
Event of Default shall exist and be continuing at the time that Mortgagee has
the right to, and does, elect to apply any sums received by it pursuant to this
Section 1.9 to the payment of the indebtedness secured hereby (rather than
making such sums available for repair, restoration or rebuilding of the
Property), or at the time that Mortgagee actually applies such sums to the
payment of the indebtedness secured hereby and (2) a Termination Event (as
defined in the Primary Lease or a comparable provision in a Replacement Primary
Lease) shall have occurred with respect to the 390 Lafayette Property or the 11
Merrill Property and the Primary Tenant shall have delivered a Termination
Notice (as defined in the Primary Lease or a comparable provision in a
Replacement Primary Lease) with respect to the 390 Lafayette Property or the 11
Merrill Property, then, notwithstanding anything to the contrary contained
herein, in the Note, Mortgagor shall be permitted to prepay the remaining unpaid
principal balance of the Note, together with all unpaid interest accrued thereon
(through and including the date of prepayment) and any other fees and expenses
then owing to Mortgagee by Mortgagor pursuant hereto, the Note and the other
Loan Documents without any penalty or any prepayment consideration otherwise set
forth in this Mortgage or in the Note; provided, however, that such prepayment
must occur, if at all, within ninety (90) days after the delivery by Mortgagee
to Mortgagor of written notice of Mortgagee's application of such sums to the
indebtedness secured hereby in accordance with the terms hereof. Upon receipt of
such payment Mortgagee will execute and deliver any agreements reasonably
requested by Mortgagor to release and terminate this Mortgage.

                        (ii) With respect to any casualty or condemnation
proceeds received by Mortgagee in connection with a casualty or condemnation
affecting the 380 Lafayette Property, provided no Event of Default shall exist
and be continuing at the time that Mortgagee has the right to, and does, elect
to apply any sums received by it pursuant to this Section 1.9 to the payment of
the indebtedness secured hereby (rather than making such sums available for
repair, restoration or rebuilding of the Property), or at the time that
Mortgagee actually applies such sums to the payment of the indebtedness secured
hereby, then, notwithstanding anything to the contrary contained herein, in the
Note, or in the other Loan

                                       27
<PAGE>

Documents, (x) such application shall be deemed to reduce the Allocated Loan
Amount (as set forth in Schedule I hereof) with respect to the 380 Lafayette
Property and (y) so long as (1) a Termination Event (as defined in the Primary
Lease or a comparable provision in a Replacement Primary Lease) shall have
occurred with respect to the 380 Lafayette Property and the Primary Tenant shall
have delivered a Termination Notice (as defined in the Primary Lease or a
comparable provision in a Replacement Primary Lease) with respect to the 380
Lafayette Property and (2) Mortgagor satisfies all of the Individual Property
Release Conditions (as defined in Exhibit F annexed hereto and made a part
hereof) with respect to the 380 Lafayette Property, Mortgagor shall be permitted
to prepay the remaining unpaid principal balance of the Allocated Loan Amount
with respect to the 380 Lafayette Property, together with all unpaid interest
accrued thereon (through and including the date of prepayment) and any other
fees and expenses then owing to Mortgagee by Mortgagor pursuant hereto, the Note
and the other Loan Documents without any penalty or any prepayment consideration
otherwise set forth in this Mortgage or in the Note (and if a Termination Event
shall have occurred under the Primary Lease with respect to the 380 Lafayette
Property, then, so long as Mortgagor satisfies all of the Individual Property
Release Conditions (as defined in Exhibit F annexed hereto and made a part
hereof) with respect to the 380 Lafayette Property, Mortgagor shall have the
right to accept the rejectable offer from Primary Tenant to pay the Termination
Amount (as defined in the Primary Lease) with respect to the 380 Lafayette
Property so long as the Termination Amount is sufficient to pay the foregoing
amounts in full); provided, however, that such prepayment must occur, if at all,
within ninety (90) days after the delivery by Mortgagee to Mortgagor of written
notice of Mortgagee's application of such sums to the indebtedness secured
hereby in accordance with the terms hereof. Upon receipt of such payment
Mortgagee will execute and deliver any agreements reasonably requested by
Mortgagor to release and terminate this Mortgage solely with respect to the 380
Lafayette Property, and

                        (iii) With respect to any casualty or condemnation
proceeds received by Mortgagee in connection with a casualty or condemnation
affecting the 390 Lafayette Property or the 11 Merrill Property, provided no
Event of Default shall exist and be continuing at the time that Mortgagee has
the right to, and does, elect to apply any sums received by it pursuant to this
Section 1.9 to the payment of the indebtedness secured hereby (rather than
making such sums available for repair, restoration or rebuilding of the
Property), or at the time that Mortgagee actually applies such sums to the
payment of the indebtedness secured hereby, then, notwithstanding anything to
the contrary contained herein, in the Note, or in the other Loan Documents, (x)
such application shall be deemed to reduce the Allocated Loan Amount (as set
forth in Schedule I hereof) with respect to the applicable Type 2 Affected
Individual Parcel and (y) so long as (1) the Property shall not have been
submitted to a condominium form of ownership prior to the occurrence of the
Termination Event and Primary Tenant irrevocably waives any rights under the
Primary Lease to construct (or cause to be constructed) the Additional
Improvements (as defined in Section 5.34 hereof) and/or to convert the Property
to a condominium form of ownership, (2) a Termination Event (as defined in the
Primary Lease or a comparable provision in a Replacement Primary Lease) shall
have occurred with respect to the Type 2 Affected Individual Parcel and the
Primary Tenant shall have delivered a Termination Notice (as defined in the
Primary Lease or a comparable provision in a Replacement Primary Lease) with
respect to the Type 2 Affected Individual Parcel and (3) Mortgagor satisfies all
of

                                       28
<PAGE>

the Individual Property Release Conditions (as defined in Exhibit F annexed
hereto and made a part hereof) with respect to the Type 2 Affected Individual
Parcel, Mortgagor shall be permitted to prepay the remaining unpaid principal
balance of the Allocated Loan Amount with respect to such Type 2 Affected
Individual Parcel, together with all unpaid interest accrued thereon (through
and including the date of prepayment) and any other fees and expenses then owing
to Mortgagee by Mortgagor pursuant hereto, the Note and the other Loan Documents
without any penalty or any prepayment consideration otherwise set forth in this
Mortgage or in the Note (and if a Termination Event with respect to the Type 2
Affected Individual Parcel shall have occurred under the Primary Lease, then, so
long as (X) Mortgagor satisfies all of the Individual Property Release
Conditions (as defined in Exhibit F annexed hereto and made a part hereof) with
respect to the Type 2 Affected Individual Parcel and (Y) the Property shall not
have been submitted to a condominium form of ownership prior to the occurrence
of the Termination Event and Primary Tenant irrevocably waives any rights under
the Primary Lease to construct (or cause to be constructed) the Additional
Improvements (as defined in Section 5.34 hereof) and/or to convert the Property
to a condominium form of ownership, Mortgagor shall have the right to accept the
rejectable offer from Primary Tenant to pay the Termination Amount (as defined
in the Primary Lease) with respect to the Type 2 Affected Individual Parcel so
long as the Termination Amount is sufficient to pay the foregoing amounts in
full); provided, however, that such prepayment must occur, if at all, within
ninety (90) days after the delivery by Mortgagee to Mortgagor of written notice
of Mortgagee's application of such sums to the indebtedness secured hereby in
accordance with the terms hereof. Upon receipt of such payment Mortgagee will
execute and deliver any agreements reasonably requested by Mortgagor to release
and terminate this Mortgage solely with respect to the Type 2 Affected
Individual Parcel.

                  (f) Any reduction in the indebtedness secured hereby resulting
from Mortgagee's application of any sums received by it hereunder shall take
effect only when Mortgagee actually receives such sums and elects to apply such
sums to the indebtedness secured hereby and, in any event, the unpaid portion of
the indebtedness secured hereby shall remain in full force and effect and
Mortgagor shall not be excused in the payment thereof. Except as otherwise
provided herein, partial payments received by Mortgagee, as described in the
preceding sentence, shall be applied first to the final payment due under the
Note and thereafter to installments due under the Note in the inverse order of
their due date. If Mortgagor elects, or Mortgagee directs Mortgagor, to restore
or repair the Property after the occurrence of a casualty or partial taking of
the Property as provided above, Mortgagor shall promptly and diligently, at
Mortgagor's sole cost and expense and regardless of whether the insurance
proceeds or condemnation award, as appropriate, shall be sufficient for the
purpose, restore, repair, replace and rebuild the Property as nearly as possible
to its value, condition and character immediately prior to such casualty or
partial taking in accordance with the foregoing provisions and Mortgagor shall
pay to Mortgagee all costs and expenses of Mortgagee incurred in administering
said rebuilding, restoration or repair, provided that Mortgagee makes such
proceeds or award available for such purpose. Mortgagor agrees to execute and
deliver from time to time such further instruments as may be reasonably
requested by Mortgagee to confirm the foregoing assignment to Mortgagee of any
award, damage, insurance proceeds, payment or other compensation. Mortgagee is
hereby irrevocably constituted and appointed the attorney-in-fact of Mortgagor
(which power of attorney shall be irrevocable so long as any indebtedness
secured

                                       29
<PAGE>
hereby is outstanding, shall be deemed coupled with an interest, shall
survive the voluntary or involuntary dissolution of Mortgagor and shall not be
affected by any disability or incapacity suffered by Mortgagor subsequent to the
date hereof), with full power of substitution, subject to the terms of this
section, to settle for, collect and receive any such awards, damages, insurance
proceeds, payments or other compensation from the parties or authorities making
the same, to appear in and prosecute any proceedings therefor and to give
receipts and acquittances therefor.

                  (g) Without limiting any of the foregoing, Mortgagor agrees
that in no event shall Mortgagor, without Mortgagee's prior written consent,
accept any rejectable offer by Primary Tenant to pay the Termination Amount with
respect to any Individual Property if (i) the Individual Property Release
Conditions have not been satisfied with respect to such Individual Property or
(ii) (x) such Individual Property is either the 390 Lafayette Property or the 11
Merrill Property and (y) (1) the Property shall have been submitted to a
condominium form of ownership prior to the occurrence of the Termination Event
or (2) Primary Tenant shall not have irrevocably waived any rights under the
Primary Lease to construct (or cause to be constructed) the Additional
Improvements (as defined in Section 5.34 hereof) and/or to convert the Property
to a condominium form of ownership.

            Section 1.10 Mechanics' Liens. Mortgagor shall pay or cause to be
paid when due all claims and demands of mechanics, materialmen, laborers and
others for any work performed or materials delivered for the Land or
Improvements; provided, however, that Mortgagor shall have the right to contest
in good faith any such claim or demand, so long as it does so diligently, by
appropriate proceedings and without prejudice to Mortgagee, and provided that
neither the Property nor any interest therein would be in any danger of sale,
loss or forfeiture as a result of such proceeding or contest. In the event
Mortgagor shall contest any such claim or demand, Mortgagor shall promptly
notify Mortgagee of such contest and thereafter shall, upon Mortgagee's request,
promptly provide a bond, cash deposit or other security reasonably satisfactory
to Mortgagee to protect Mortgagee's interest and security should the contest be
unsuccessful. If Mortgagor shall fail to promptly discharge or provide security
against any such claim or demand as aforesaid, Mortgagee may do so and any and
all expenses incurred by Mortgagee, together with interest thereon at the
Default Interest Rate from the date incurred by Mortgagee until actually paid by
Mortgagor, shall be immediately paid by Mortgagor on demand and shall be secured
by this Mortgage and by all of the other Loan Documents securing all or any part
of the indebtedness evidenced by the Note.

            Section 1.11 Rents and Profits. As additional and collateral
security for the payment of the indebtedness secured hereby and cumulative of
any and all rights and remedies herein provided for, Mortgagor hereby absolutely
and presently assigns to Mortgagee all existing and future Leases, and all
existing and future Rents and Profits. Mortgagor hereby grants to Mortgagee the
sole, exclusive and immediate right, without taking possession of the Property,
to demand, collect (by suit or otherwise), receive and give valid and sufficient
receipts for any and all of said Rents and Profits, for which purpose Mortgagor
does hereby irrevocably make, constitute and appoint Mortgagee its
attorney-in-fact with full power to appoint substitutes or a trustee to
accomplish such purpose (which power of attorney shall be irrevocable so long as
any indebtedness secured hereby is outstanding, shall be deemed to be coupled
with an interest, shall

                                       30
<PAGE>
 survive the voluntary or involuntary dissolution of Mortgagor and shall not be
affected by any disability or incapacity suffered by Mortgagor subsequent to the
date hereof). Mortgagee shall be without liability for any loss which may arise
from a failure or inability to collect Rents and Profits, proceeds or other
payments. However, until the occurrence of an Event of Default under this
Mortgage, Mortgagor shall have a license to collect and receive the Rents and
Profits when due and prepayments thereof for not more than one month prior to
due date thereof (or, for not more than three months prior to the due date
thereof with respect to Rents paid quarterly in advance). Upon the occurrence of
an Event of Default, Mortgagor's license shall automatically terminate Without
notice to Mortgagor and Mortgagee may thereafter, without taking possession of
the Property, collect the Rents and Profits (including, without limitation, the
Cash Security Deposit and any Letter of Credit) itself or by an agent or
receiver. From and after the termination of such license, Mortgagor shall be the
agent of Mortgagee in collection of the Rents and Profits and all of the Rents
and Profits so collected by Mortgagor shall be held in trust by Mortgagor for
the sole and exclusive benefit of Mortgagee and Mortgagor shall, within one (1)
business day after receipt of any Rents and Profits, pay the same to Mortgagee
to be applied by Mortgagee as hereinafter set forth, Neither the demand for or
collection of Rents and Profits by Mortgagee, nor the exercise of Mortgagee's
rights as assignee of the Leases, shall constitute any assumption by Mortgagee
of any obligations under any Lease or other agreement relating thereto.
Mortgagee is obligated to account only for such Rents and Profits as are
actually collected or received by Mortgagee. Mortgagor irrevocably agrees and
consents that the respective payors of the Rents and Profits shall, upon demand
and notice from Mortgagee of an Event of Default hereunder, pay said Rents and
Profits to Mortgagee without liability to determine the actual existence of any
Event of Default claimed by Mortgagee. Mortgagor hereby waives any right, claim
or demand which Mortgagor may now or hereafter have against any such payor by
reason of such payment of Rents and Profits to Mortgagee, and any such payment
shall discharge such payor's obligation to make such payment to Mortgagor. All
Rents and Profits collected or received by Mortgagee may be applied against all
expenses of collection, including, without limitation, reasonable attorneys'
fees, against costs of operation and management of the Property and against the
indebtedness secured hereby, in whatever order or priority as to any of the
items so mentioned as Mortgagee directs in its sole subjective discretion and
without regard to the adequacy of its security. Neither the exercise by
Mortgagee of any rights under this Section nor the application of any Rents and
Profits to the secured indebtedness shall cure or be deemed a waiver of any
Event of Default hereunder. The assignment of Leases and of Rents and Profits
hereinabove granted shall continue in full force and effect during any period of
foreclosure or redemption with respect to the Property. As additional security
for the indebtedness secured hereby, Mortgagor has executed an Assignment of
Leases and Rents dated of even date herewith (as hereafter amended, consolidated
or modified from time to time, the "Assignment") in favor of Mortgagee covering
all of the right, title and interest of Mortgagor, as landlord, lessor or
licensor, in and to any Leases. All rights and remedies granted to Mortgagee
under the Assignment shall be in addition to and cumulative of all rights and
remedies granted to Mortgagee hereunder.

      Section 1.12 Leases.

                                       31
<PAGE>

            (a)   Lease Requirements. Prior to execution of any Leases after the
date hereof, Mortgagor shall submit to Mortgagee, for Mortgagee's prior
approval, which approval shall not be unreasonably withheld so long as no Event
of Default exists hereunder, a copy of the form lease Mortgagor plans to use in
leasing space in the Improvements. Each Lease executed after the date hereof
affecting any of the Land or the Improvements must provide, in a manner approved
by Mortgagee, that (i) such Lease is subject and subordinate to this Mortgage,
and (ii) the tenant, lessee or licensee, as appropriate, will attorn to, and
recognize as its landlord, lessor or licensor, any person succeeding to the
interest of Mortgagor in such Lease upon any foreclosure of this Mortgage or
deed in lieu of foreclosure. Each such Lease shall also provide that, upon
request of said successor-in-interest, the tenant, lessee or licensee shall
execute and deliver an instrument or instruments confirming its attornment as
provided for in this Section 1.12; provided, however, that neither Mortgagee nor
any successor-in-interest shall be bound by any payment of rental for more than
one (1) month in advance (or more than three (3) months in advance if rent is
paid on a quarterly basis), or any amendment or modification of said Lease made
without the express written consent of Mortgagee or said successor-in-interest.
No Lease shall contain any right of first refusal or any option to purchase all
or any portion of the Property. No Lease shall contain any right of first
refusal to lease all or any portion of the Property. No Lease shall contain any
right to terminate the term thereof (except in the event of the destruction or
taking of all or substantially all of the Property).

            (b)   Acts Requiring Consent of Mortgagee. Mortgagor shall not,
without the prior written consent of Mortgagee, (i) enter into any Lease of all
or any portion of the Property, except for renewals of the Primary Lease on the
terms set forth therein; (ii) cancel, terminate, abridge or otherwise modify the
terms of the Primary Lease, or accept a surrender thereof; (iii) consent to any
assignment of, or subletting of all or any portion of the premises demised
under, the Primary Lease unless required by the terms thereof (provided,
however, that in the event that Mortgagor is required pursuant to the provisions
of the Primary Lease to not unreasonably withhold or delay its consent to any
such requested assignment or subletting, then Mortgagee shall not unreasonably
withhold or delay its consent to Mortgagor's so consenting, so long as such
assignment or subletting does not (x) release Primary Tenant from any of its
obligations under the Primary Lease or (y) release any guarantor of the Primary
Lease from any of its obligations to guaranty the Primary Tenant's obligations
under the Primary Lease); or (iv) cancel, terminate, abridge, release or
otherwise modify any guaranty of the Primary Lease or the terms thereof. The
request for approval of each such proposed Lease shall be made to Mortgagee in
writing. As part of such request, Mortgagor shall furnish to Mortgagee (and any
loan servicer specified from time to time by Mortgagee): (1) such biographical
and financial information about the proposed tenant as Mortgagee may require in
conjunction with its review, (2) a copy of the proposed Lease, and (3) a summary
of the material terms of such proposed Lease (including, without limitation,
rental terms and the term of the proposed Lease and any options).Notwithstanding
anything to the contrary contained in this Mortgage, Mortgagor shall have the
right at any time or from time-to-time, in its sole and absolute discretion, to
waive, amend or modify the provisions of Paragraphs 22(a)(iv), (v), (vi) and
(xv) of the Primary Lease and Exhibit "G" of the Primary Lease.

                                       32
<PAGE>

            (c)   Affirmative Covenants Regarding Leases. Mortgagor shall at all
times promptly and faithfully perform, or cause to be performed, all of the
covenants, conditions and agreements contained in all Leases, now or hereafter
existing, on the part of the landlord, lessor or licensor thereunder to be kept
and performed. Mortgagor shall promptly send copies to Mortgagee of (y) all
notices of default which Mortgagor shall send or receive under any Lease and (z)
all financial statements required to be provided by the Primary Tenant pursuant
to the Primary Lease. Mortgagor, at no cost or expense to Mortgagee, shall
enforce, short of termination, the performance and observance of each and every
condition and covenant of each of the other parties under each Lease. Mortgagor
shall furnish to Mortgagee, within thirty (30) days after a request by Mortgagee
to do so, but not more than twice annually and in any event by January 1 of each
year in which any Lease other than the Primary Lease shall be in effect, a
current rent roll certified by Mortgagor as being true and correct containing
the names of all tenants, lessees and licensees with respect to the Property,
the terms of their respective Leases, the spaces occupied and the rentals or
fees payable thereunder and the amount of each tenant's security deposit. Upon
the request of Mortgagee, Mortgagor shall deliver to Mortgagee (i) a copy of
each Lease; and (ii) an estoppel certificate from the tenant under each Lease
(provided that Mortgagor shall not be required to deliver such certificates more
frequently than twice in any calendar year).

            (d)   Negative Covenants Regarding Leases. Mortgagor shall not enter
into any Lease (i) without the prior written consent of Mortgagee where such
consent is required pursuant to this Mortgage; (ii) except on terms consistent
with the terms for similar leases in the market area of the Land, including,
without limitation as to the rental rate, security deposit, tenant improvement
and work letter terms, and free rent periods; (iii) other than with a
third-party tenant unrelated to Mortgagor or any Affiliate (as defined herein)
of Mortgagor; or (iv) except for an actual occupancy by the tenant, lessee or
licensee thereunder. Mortgagor shall not do or suffer to be done any act that
might result in a default by the landlord, lessor or licensor under any Lease or
allow the tenant, lessee or licensee thereunder to withhold payment or rent and
shall not further assign any Lease or any Rents and Profits. Mortgagor shall
not, without the prior written consent of Mortgagee (1) modify any Lease; (2)
terminate or accept the surrender of any Lease (except in connection with the
payment of a "Termination Amount," as such term is defined in the Primary
Lease); or (3) waive or release any other party from the performance or
observance of any obligation or condition under any Lease. Mortgagor shall not
solicit or accept the prepayment of any rents under any Lease for more than one
(1) month prior to the due date thereof (or 3 months prior to the due date there
of if rent is collected on a quarterly basis). Mortgagor shall not execute any
other assignment of the lessor's interest in the Leases or the Rents and
Profits.

            (e)   Security Deposits. To the extent permitted hereunder to be
held by Mortgagor, all security deposits of tenants, whether held in cash
(including, without limitation, the Cash Security Deposit) or in any other form,
shall not be commingled with any other funds of Mortgagor or any other person
and, if cash, shall be deposited by Mortgagor at such commercial or savings bank
or banks, or otherwise held in compliance with applicable law, as may be
reasonably satisfactory to Mortgagee. To the extent permitted hereunder to be
held by Mortgagor, any letter of credit (including, without limitation, any
letter of credit), bond or other

                                       33
<PAGE>
instrument which Mortgagor is permitted to hold in lieu of cash security
deposits under any applicable legal requirement shall be maintained in full
force and effect in the full amount of such deposits unless replaced by cash
deposits as hereinabove described; shall be issued by an institution reasonably
satisfactory to Mortgagee; shall, if permitted pursuant to any applicable legal
requirements, name Mortgagee as payee or mortgagee thereunder or, at Mortgagee's
option, be assigned or fully assignable to Mortgagee; and shall, in all
respects, comply with any applicable legal requirements and otherwise be
reasonably satisfactory to Mortgagee. Mortgagor shall, upon request, provide
Mortgagee with evidence reasonably satisfactory to Mortgagee of Mortgagor's
compliance with the foregoing. Upon an Event of Default under this Mortgage,
Mortgagor shall, immediately upon Mortgagee's request (if permitted by
applicable law), deliver to Mortgagee the security deposits (and any interest
previously earned thereon and not disbursed to the person(s) lawfully entitled
to receive same) with respect to all or any portion of the Property, to be held
by Mortgagee subject to the terms of the Leases.

            (f)   Rights of Mortgagee Upon Default. Upon an Event of Default,
whether before or after the whole principal sum secured hereby becomes or is
declared to be immediately due or whether before or after the institution of
legal proceedings to foreclose this Mortgage, forthwith, upon demand of
Mortgagee, Mortgagor shall surrender to Mortgagee and, subject to the rights of
tenants under the Leases, Mortgagee shall be entitled to take actual
possession of the Property or any part thereof personally, or by its agent or
attorneys. In such event, Mortgagee shall have, and Mortgagor hereby gives and
grants to Mortgagee, the right, power and authority to make and enter into
Leases for such rents and for such periods of occupancy and upon conditions and
provisions as Mortgagee may deem desirable in its sole discretion, and
Mortgagor expressly acknowledges and agrees that the term of such Lease may
extend beyond the date of any foreclosure sale of the Property; it being the
intention of Mortgagor that in such event Mortgagee shall be deemed to be and
shall be the attorney-in-fact of Mortgagor for the purpose of making and
entering into Leases for the rents and upon the terms, conditions and provisions
deemed desirable to Mortgagee in its sole discretion and with like effect as if
such Leases had been made by Mortgagor as the owner in fee simple of the
Property free and clear of any conditions or limitations established by this
Mortgage. The power and authority hereby given and granted by Mortgagor to
Mortgagee shall be deemed to be coupled with an interest, shall not be revocable
by Mortgagor so long as any indebtedness secured hereby is outstanding, shall
survive the voluntary or involuntary dissolution of Mortgagor and shall not be
affected by any disability or incapacity suffered by Mortgagor subsequent to the
date hereof. In connection with any action taken by Mortgagee pursuant to this
Section, Mortgagee shall not be liable for any loss sustained by Mortgagor
resulting from any failure to let the Property, or any part thereof, or from any
other act or omission of Mortgagee in managing the Property except for
Mortgagee's gross negligence or willful misconduct, nor shall Mortgagee be
obligated to perform or discharge any obligation, duty or liability under any
Lease or under or by reason of this instrument or the exercise of rights or
remedies hereunder. Mortgagor shall, and does hereby, indemnify Mortgagee for,
and hold Mortgagee harmless from, any and all claims, actions, demands,
liabilities, loss or damage which may or might be incurred by Mortgagee under
any such Lease or under this Mortgage or by the exercise of rights or remedies
hereunder and from any and all claims and demands whatsoever which may be
asserted against Mortgagee by reason of any alleged obligations or undertakings
on its part to perform or

                                       34
<PAGE>
discharge any of the terms, covenants or agreements contained in any such Lease
other than those finally determined to have resulted solely from the gross
negligence or willful misconduct of Mortgagee. Should Mortgagee incur any such
liability, the amount thereof, including, without limitation, costs, expenses
and attorneys' fees, together with interest thereon at the Default Interest Rate
from the date incurred by Mortgagee until actually paid by Mortgagor, shall be
immediately due and payable to Mortgagee by Mortgagor on demand and shall be
secured hereby and by all of the other Loan Documents securing all or any part
of the indebtedness evidenced by the Note. Nothing in this Section shall impose
on Mortgagee any duty, obligation or responsibility for the control, care,
management or repair of the Property, or for the carrying out of any of the
terms and conditions of any such Lease, nor shall it operate to make Mortgagee
responsible or liable for any waste committed on the Property by the tenants or
by any Other parties or for any dangerous or defective condition of the
Property, or for any negligence in the management, upkeep, repair or control of
the Property. Mortgagor hereby assents to, ratifies and confirms any and all
actions of Mortgagee with respect to the Property taken under this Section. The
foregoing rights are in addition to all other rights and remedies granted to
Mortgagee pursuant to this Mortgage.

            (g)   Representations Regarding Leases. Mortgagor hereby represents
and warrants as follows:

                  (i)   Mortgagor has delivered a true, correct and complete
      copy of the Primary Lease (including all amendments thereto and
      modifications thereof) and there are no other Leases entered into by
      Mortgagor affecting the Property as of the date hereof;

                  (ii)  The Primary Lease constitutes the legal, valid and
      binding obligation of Mortgagor and, to the best of Mortgagor's knowledge
      and belief, is enforceable against the Tenant thereof. No default exists,
      or, to the best of Mortgagor's knowledge, with the passing of time or the
      giving of notice or both would exist, under the Primary Lease which would,
      in the aggregate, have a material adverse effect on Mortgagor or the
      Property;

                  (iii) The Primary Tenant has not, as of the date hereof, paid
      rent more than three (3) months in advance, and the rents under such
      Leases have not been waived, released, or otherwise discharged or
      compromised;

                  (iv)  All work to be performed by Mortgagor under the Primary
      Lease has been performed, all contributions to be made by Mortgagor to
      Primary Tenant have been made and all other conditions precedent to the
      Primary Tenant's obligations thereunder have been satisfied;

                  (v)   The Primary Tenant has entered into occupancy of the
      demised premises under the Primary Lease;

                                       35
<PAGE>

                  (vi)  To the best of Mortgagor's knowledge and belief, the
      Primary Tenant is free from bankruptcy, reorganization or arrangement
      proceedings or a general assignment for the benefit of creditors; and

                  (vii) The Primary Lease does not provide any party with the
      right to obtain a lien or encumbrance upon the Property superior to the
      lien of this Mortgage.

                  (Viii) None of the Leases shall contain (1) any option to
      purchase, (2) any right of first refusal to lease or purchase or (3) any
      right to terminate the lease term (other than the right to terminate the
      Lease in connection with a Termination Event [as defined in the Primary
      Lease]). For so long as the Property remains subject to this Mortgage
      (e.g., unless the Loan has been duly prepaid or defeased subject to and in
      accordance with the provisions of this Mortgage and the other Loan
      Documents), in the event that the Primary Tenant purports to exercise any
      right to purchase all or any part of the Property, (except in the event of
      the destruction or condemnation of all or substantially all of the
      Property), such event shall be an Event of Default hereunder unless done
      in accordance with the provisions of this Mortgage relating to transfers
      of interests in the Property, including, without limitation, the
      requirement that the mortgagor of the Property be a single purpose,
      bankruptcy remote entity otherwise complying with the provisions of
      Section 1.33 hereof).

            (h)   Contemporaneously with the execution hereof, Mortgagor has
delivered to Mortgagee the Security Deposit (as defined in the Primary Lease) in
the form of a letter of credit in the amount of $1,597,283 (as defined in the
Primary Lease, the "Letter of credit"), to be held and applied in accordance
with the following provisions of this subsection 1.12(h);

                  (i)   The Letter of Credit and/or Cash Security Deposit (as
      defined in the Primary Lease), shall be held in accordance with applicable
      Laws and as required by the Primary Lease. Mortgagor hereby pledges to
      Mortgagee any and all cash, bonds and other instruments (including,
      without limitation, the Cash Security Deposit and the Letter of Credit, if
      any) obtained as security in connection with the Primary Lease as
      additional security for the payment of the indebtedness secured hereby,
      subject in all events to the rights of Primary Tenant under the terms of
      the Primary Lease.

                  (ii)  if at any time Primary Tenant shall replace the Letter
      of Credit with any replacement Letter of Credit then (x) Mortgagor shall
      deliver the replacement Letter of Credit to Mortgagee, (y) the replacement
      Letter of Credit shall name Mortgagee as beneficiary, and (z) Mortgagor
      shall cause the replacement Letter of Credit to be maintained in full
      force and effect without modification or reduction throughout the Term
      (except as otherwise expressly provided in the Primary Lease as in effect
      on the date hereof). Mortgagor shall fully cooperate with Mortgagee so
      that Mortgagee obtains a first priority

                                       36
<PAGE>

      perfected security interest in the Letter of Credit or any other security
      for the Primary Lease, including, without limitation, the execution and
      delivery of all transfer documents, security agreements, blank draw
      requests, notices to issuers, all as Mortgagee may reasonably require in
      connection with such perfection, subject in all events to the rights of
      Primary Tenant under the terms of the Primary Lease.

                  (iii) If the Primary Tenant fails to renew or increase the
      Letter of Credit as required by the Primary Lease, Mortgagee may at any
      Time after the thirtieth day before the expiration date of Such Letter of
      Credit, draw upon and deposit the cash proceeds thereof as a cash security
      deposit (as defined in the Primary Lease, the "Cash Security Deposit") in
      an account in Mortgagee's name and in accordance with Section 5.31
      hereof.

                  (iv)  Promptly upon the occurrence of any event or
      circumstance in which the Mortgagor becomes entitled under the terms of
      the Primary Lease to draw on the Letter of Credit (or the Cash Security
      Deposit, as applicable), Mortgagor shall so notify Mortgagee. With or
      without notice from Mortgagor upon the occurrence of any such event or
      circumstance, Mortgagee may draw on the Letter of Credit (or the Cash
      Security Deposit, as applicable) in accordance with the terms and
      conditions of the Primary Lease; and apply the proceeds of such draw as
      provided in the Primary Lease; provided, however, that if there is no such
      requirement with respect to such application, or if the proceeds are to be
      applied to rent or other Primary Tenant payment obligations under the
      Primary Lease, then Mortgagee shall, at its option, be entitled to (i)
      apply such proceeds (A) to the Leasing Reserve, or (B) If any Event of
      Default shall then have occurred and be continuing (at Mortgagee's
      option), in reduction of the Mortgagor's obligations under the Note and
      other Loan documents in such order and amount as Mortgagee shall
      determine, or (ii) retain and hold same to be applied against rent or
      other payment obligations then next coming due from Primary Tenant (but
      only to the extent such rent or other payment obligation is not paid by
      the Primary Tenant when due). No such application of proceeds of the
      Letter of Credit (or the Cash Security Deposit, as applicable) shall be
      deemed to cure any Event of Default hereunder. Upon an assignment of the
      Loan, Mortgagee shall have the right to transfer the Letter of Credit (or
      the Cash Security Deposit, as applicable) to the assignee or transferee.
      Within ten (10) days after notice from Mortgagee of any such anticipated
      assignment, Mortgagor, at its sole cost, shall arrange for the transfer of
      the Letter of Credit (or the Cash Security Deposit, as applicable) to the
      assignee or transferee, as designated by Mortgagee in the foregoing
      notice, or to have the Letter of Credit reissued in the name of the
      assignee or transferee, and thereafter Mortgagor shall look solely to the
      assignee or transferee for the return of the Letter of Credit (or the Cash
      Security Deposit, as applicable). The provisions of this Section l.l2(h)
      shall apply to every assignment made of the Loan to an assignee or
      transferee. Mortgagor will not assign or encumber, or attempt to assign or
      encumber, the Letter of Credit (or the Cash

                                       37
<PAGE>

      Security Deposit, as applicable), and neither Mortgagee nor its successors
      or assigns shall be bound by any such actual or attempted assignment or
      encumbrance.

                  (v)   In the event that, pursuant to the provisions of the
      Primary Lease as in effect on the date hereof, Primary Tenant shall be
      entitled to a return of a portion of the Cash Security Deposit or to
      reduce the amount of the Letter of Credit, Mortgagee shall, upon delivery
      of evidence reasonably satisfactory to Mortgagee of Primary Tenant's
      satisfaction of all applicable conditions of such return or reduction,
      cooperate with Mortgagor in turning over to Mortgagor the same for
      application in accordance with the terms of the Primary Lease (it being
      acknowledged and agreed by Mortgagor that, other than pursuant to Section
      39(c) of the Primary Lease, the Primary Lease does not afford Primary
      Tenant the right to reduce any Letter of Credit which has been delivered
      to Mortgagee pursuant to this Section 1.12(h). Mortgagor acknowledges that
      in the event that (i) there is a reduction of the Letter of Credit or the
      Cash Security Deposit pursuant to Section 39(c) of the Primary Lease and
      (ii) subsequent to such reduction the obligation of the Primary Tenant to
      maintain the initial Security Deposit as required under Paragraph 39 of
      the Primary Lease is reinstated, then Mortgagor shall cause a new Letter
      of Credit or the Cash Security Deposit reflecting such increased amount to
      be delivered to Mortgagee and same shall be held and applied in accordance
      with the provisions of this subsection 1.12(h).

                  (vi)  Contemporaneously with the execution hereof, Mortgagor
      has established with Mortgagee a reserve in the amount of $________ (the
      "LC ASSIGNMENT RESERVE") by depositing such amount with Mortgagee. In
      connection with a Secondary Market Transaction (as hereinafter defined),
      Mortgagee may apply any funds then on deposit in the LC Assignment Reserve
      to the payment of any fees or expenses incurred by Mortgagee in connection
      with the assignment of the Letter of Credit to the transferee of the
      Mortgagee's interest under the Loan Documents (the "LC ASSIGNMENT FEES").
      Mortgagor shall be responsible for the payment of any and all LC
      Assignment Fees, regardless of whether there are sufficient funds in the
      LC Assignment Reserve for the payment of same.

            (i)   Approval Procedures. If Mortgagee's consent is required by the
terms of this Section 1.12, Mortgagee's consent shall be deemed withheld absent
notice from Mortgagee to the contrary unless Mortgagor complies with the
following procedures: Mortgagor shall request such consent by delivering notice
to Mortgagee in accordance with Section 5.5 of this Mortgage, with the following
legend on such request: THIS IS A REQUEST FOR CONSENT UNDER THE LOAN BY CIBC
INC. TO FOSS (NH) QRS 10-3, INC. FAILURE TO RESPOND TO THIS REQUEST WILL RESULT
IN THE REQUEST BEING DEEMED GRANTED. If, within ten (10) business days of
delivery of notice as aforesaid, Mortgagee has not responded (either
affirmatively or negatively) to Mortgagor with respect to such written request,
then such request shall be deemed granted.

                                       38
<PAGE>

      Section 1.13 Alienation and Further Encumbrances.

(a)   Mortgagor acknowledges that Mortgagee has relied upon the principals of
Mortgagor and their experience in owning and operating properties similar to the
Property in connection with the closing of the loan evidenced by the Note.
Accordingly, except as specifically allowed hereinbelow in this Section and
notwithstanding anything to the contrary contained in Section 5.6 hereof, in the
event that the Property or any part thereof or interest of Mortgagor therein
shall be sold, subject to and in accordance with the provisions hereof
(including, without limitation, the provisions of Section 1.13(b) hereof, it
being agreed that, without limiting the foregoing, the assumption fee identified
in Section 1.13(b)(3) hereof shall be payable in connection with any such sale),
conveyed, disposed of, alienated, hypothecated, leased (except to Tenants under
Leases which are approved, or deemed approved, in accordance with the provisions
of Section 1.12 hereof), assigned, pledged, mortgaged, further encumbered or
otherwise transferred or Mortgagor shall be divested of its title to the
Property or any interest therein, in any manner or way, whether voluntarily or
involuntarily, without the prior written consent of Mortgagee being first
obtained, which consent may be withheld in Mortgagee's sole discretion, then,
the same shall constitute an Event of Default hereunder and Mortgagee shall have
the right, at its option, to declare any or all of the indebtedness secured
hereby, irrespective of the maturity date specified in the Note, immediately due
and payable and to otherwise exercise any of its other rights and remedies
contained in Article III hereof. If such acceleration is during any period when
a prepayment fee is payable pursuant to the provisions set forth in the Note,
then, in addition to all of the foregoing, such prepayment fee shall also then
be immediately due and payable to the same end as though Mortgagor were
prepaying the entire indebtedness secured hereby on the date of such
acceleration. For the purposes of this Section 1.13 (a): (i) in the event either
Mortgagor or any of its general partners or managing members is a corporation or
trust, the sale, conveyance, transfer or disposition of more than 10% of the
issued and outstanding capital stock of Mortgagor or any of its general partners
or managing members or of the beneficial interest of such trust (or the issuance
of new shares of capital stock in Mortgagor or any of its general partners or
managing members so that immediately after such issuance the total capital stock
then issued and outstanding is more than 110% of the total immediately prior to
such issuance) shall be deemed to be a transfer of an interest in the Property,
and (ii) in the event Mortgagor or any general partner or managing member of
Mortgagor is a limited or general partnership, a joint venture or a limited
liability company, a change in the ownership interests in any general partner,
any joint venturer or any member, either voluntarily, involuntarily or
otherwise, or the sale, conveyance, transfer, disposition, alienation,
hypothecation or encumbering of all or any portion of the interest of any such
general partner, joint venturer or member in Mortgagor or such general partner
(whether in the form of a beneficial or partnership interest or in the form of a
power of direction, control or management, or otherwise), shall be deemed to be
a transfer of an interest in the Property. Notwithstanding the foregoing, (1)
limited partnership and/or non-managing member and/or non-controlling
shareholder interests in Mortgagor or in any general partner or managing member
of Mortgagor shall be freely transferable without the consent of Mortgagee to a
wholly-owned subsidiary of any Affiliate (as defined in Section 1.33) of
Mortgagor which has a net worth of at least $50,000,000 at the time of transfer,
$50,000,000 as determined by Mortgagee in its sole discretion, provided

                                       39
<PAGE>

that at least ten (10) days notice of such transfer is given to Mortgagee,
together with evidence reasonably satisfactory to Mortgagee of such net worth,
(2) any involuntary transfer caused by the death of Mortgagor or any general
partner, shareholder, joint venturer, or beneficial owner of a trust shall not
be a default under this Mortgage so long as Mortgagor is reconstituted, if
required, following such death and so long as those persons responsible for the
management of Mortgagor and the Property remain unchanged as a result of such
death or any replacement management is approved by Mortgagee, (3) gifts for
estate planning purposes of any individual's interests in Mortgagor or in any
of Mortgagor's general partners, managing members or joint venturers to the
spouse or any lineal descendant of such individual, or to a trust for the
benefit of any one or more of such individual, spouse or lineal descendant,
shall not be an Event of Default under this Mortgage so long as Mortgagor is
reconstituted, if required, following such gift and so long as those persons
responsible for the management of the Property and Mortgagor remain unchanged
following such gift or any replacement management is approved by Mortgagee and
(4) the sale or transfer of stock or interest in Corporate Property Associates
14 Incorporated, Corporate Property Associates 15 Incorporated, Corporate
Property Associates 12 Incorporated, Corporate Property Associates 16-Global
Incorporated, Carey Institutional Properties Incorporated or W.P. Carey & Co.
LLC shall not be an Event of Default under this Mortgage so long as the
applicable company whose stock or interest is being sold or transferred is
required to file, with respect to the equity interests of such company, periodic
reports with the Securities and Exchange Commission under Section 13 or Section
15(d) of the Securities Exchange Act of 1934, as amended.

            (b)   Notwithstanding the foregoing provisions of this Section
Mortgagee shall consent to a one time sale, conveyance or transfer of the
Property in its entirety (hereinafter, "Sale") to any person or entity, and to
one further Sale of by such person or entity, provided that in case of each such
Sale each of the following terms and conditions are satisfied:

                  (1)   No Event of Default is then continuing;

                  (2)   Mortgagor gives Mortgagee written notice of the terms
      of such prospective Sale not less than forty-five (45) days before the
      date on which such Sale is scheduled to close and, concurrently therewith,
      gives Mortgagee all such information concerning the proposed transferee of
      the Property (hereinafter, the "Buyer") as Mortgagee would require in
      evaluating an initial extension of credit to a borrower and pays to
      Mortgagee a non-refundable application fee in the amount of $5,000,00.
      Mortgagee shall have the right to approve or disapprove the proposed
      Buyer. In determining whether to give or withhold its approval of the
      proposed Buyer, Mortgagee shall consider the Buyer's experience and track
      record in owning and operating facilities similar to the Property, the
      Buyer's financial strength, the Buyer's general business standing and the
      Buyer's relationships and experience with contractors, vendors, tenants,
      lenders and other business entities; provided, however, that,
      notwithstanding Mortgagee's agreement to consider the foregoing factors in
      determining whether to give or withhold such approval, such approval shall
      be given or withheld based on what Mortgagee, in its sole discretion,
      determines to be commercially reasonable (it being acknowledged that
      Mortgagee shall not be obligated to approve any proposed Buyer unless
      Mortgagee

                                       40
<PAGE>

      receives confirmation in writing from each of the Rating Agencies (as
      defined herein) that such Sale will not result in a qualification,
      downgrade or withdrawal of any rating in effect immediately prior to such
      Sale for any securities issued in connection with a Secondary Market
      Transaction (as defined herein) and, if given, may be given subject to
      such conditions as Mortgagee may deem appropriate; provided further,
      however, that any entity that (x) satisfies all of the other requirements
      of this Section 1.13(b) and (y) is either (i) a wholly owned subsidiary of
      W.P. Carey & Co. LLC or (ii) a wholly owned subsidiary of an entity which
      is controlled by W.P. Carey & Co. LLC (including, without limitation, a
      wholly owned subsidiary of any Of the following entities so long as such
      entities are controlled by W.P. Carey & Co. LLC: Corporate Property
      Associates 14 Incorporated, Corporate Property Associates 15 Incorporated,
      Corporate Property Associates 12 Incorporated, Corporate Property
      Associates 16 - Global Incorporated or Carey Institutional Properties
      Incorporated), shall be deemed to be an acceptable Buyer for purposes of
      this Section 1.13(b)(2) (an entity that satisfied the requirements of
      clauses (x) and (y) above shall be referred to herein as a "Pre-approved
      Buyer");

                  (3)   Mortgagor pays Mortgagee, concurrently with the closing
      of such Sale, a nun-refundable assumption fee in an amount equal to (x)
      all out-of-pocket costs and expenses, including, without limitation,
      reasonable attorneys' fees, incurred by Mortgagee in connection with the
      Sale plus (y) so long as the Buyer is not a Pre-approved Buyer, an amount
      equal to one percent (1.0%) of the then outstanding principal balance of
      the Note;

                  (4)   The Buyer assumes and agrees to pay the indebtedness
      secured hereby subject to the provisions of Section 5.27 hereof and, prior
      to or concurrently with the closing of such Sale, the Buyer executes,
      without any cost or expense to Mortgagee such documents and agreements as
      Mortgagee shall reasonably require to evidence and effectuate said
      assumption and delivers such legal opinions as Mortgagee may reasonably
      require;

                  (5)   Mortgagor and the Buyer execute, without any cost or
      expense to Mortgagee, new financing statements or financing statement
      amendments and any additional documents reasonably requested by Mortgagee;

                  (6)   A party associated with the Buyer approved by Mortgagee
      in its sole discretion assumes the obligations of the current guarantor
      and indemnitor under its guaranty or indemnity agreements and such party
      associated with the Buyer executes, without any cost or expense to
      Mortgagee, a new guaranty or indemnity agreement in form and substance
      satisfactory to Mortgagee and delivers such legal opinions as Mortgagee
      may reasonably require;

                  (7)   Mortgagor delivers to Mortgagee, without any cost or
      expense to Mortgagee, such endorsement to Mortgagee's title insurance
      policy, hazard insurance endorsements or certificates and other similar
      materials as Mortgagee may deem necessary at the time of the Sale, all in
      form and substance reasonably satisfactory to Mortgagee, to the extent
      available, including, without limitation, an endorsement or

                                       41
<PAGE>

      endorsements to Mortgagee's title insurance policy insuring the lien of
      this Mortgage, extending the effective date of such policy to the date of
      execution and delivery (or, if later, of recording) of the assumption
      agreement referenced above in subparagraph (4) of this Section with no
      additional exceptions added to such policy and insuring that fee. simple
      title to the Property is vested in the Buyer;

                  (8)   Mortgagor executes and delivers to Mortgagee, without
      any cost or expense to Mortgagee, a release of Mortgagee, its officers,
      directors, employees and agents, from all claims, and liability relating
      to the transactions evidenced by the Loan Documents through and including
      the date of the closing of the Sale, which agreement shall be in form and
      substance reasonably satisfactory to Mortgagee and shall be binding upon
      the Buyer;

                  (9)   Subject to the provisions of Section 5.27 hereof, such
      Sale is not construed so as to relieve Mortgagor of any personal liability
      under the Note or any of the other Loan Documents for any acts or events
      occurring or obligations arising prior to or simultaneously with the
      closing of such Sale and Mortgagor executes, without any cost or expense
      to Mortgagee, such documents and agreements as Mortgagee shall reasonably
      require to evidence and effectuate the ratification of said personal
      liability. Mortgagor shall be released from and relieved of any personal
      liability under the Note or any of the other Loan Documents for any acts
      or events occurring or obligations arising after the closing of such Sale
      which are not caused by or arising out of any acts of events occurring or
      obligations arising prior to or simultaneously with the closing of such
      Sale;

                  (10)  Such Sale is not construed so as to relieve any current
      indemnitor of its obligations under any guaranty or indemnity agreement
      for any acts or events occurring or obligations arising prior to or
      simultaneously with the closing of such Sale and each such current
      guarantor and indemnitor executes, without any cost or expense to
      Mortgagee, such documents and agreements as Mortgagee shall reasonably
      require to evidence and effectuate the ratification of each such guaranty
      and indemnity agreement. Each such current indemnitor shall be released
      from and relieved of any of its obligations under any guaranty or
      indemnity agreement executed in connection with the loan secured hereby
      for any acts or events occurring or obligations arising after the closing
      of such Sale which are not caused by or arising out of any acts or events
      occurring or obligations arising prior to or simultaneously with the
      closing of such Sale; and

                  (11)  The Buyer shall furnish, if the Buyer is a corporation,
      limited liability company, partnership or other entity, all appropriate
      papers evidencing the Buyer's capacity and good standing, and the
      qualification of the signers to execute the assumption of the indebtedness
      secured hereby, which papers shall include certified copies of all
      documents relating to the organization and formation of the Buyer and of
      the entities, if any, which are partners of the Buyer. The Buyer and such
      constituent partners, members or shareholders of Buyer (as the case may
      be), as Mortgagee shall require, shall

                                       42
<PAGE>
      be single purpose, "bankruptcy remote" entities, whose formation documents
      shall be approved by counsel to Mortgagee.

                  (c)   Notwithstanding (and without limiting) the foregoing
provisions of this Section 1.13, no transfer of any direct or indirect ownership
interests in Mortgagor may be made such that the transferee owns, in the
aggregate with the ownership interests in Mortgagor of transferee's Affiliates,
more than a forty-nine percent (49%) interest in Mortgagor unless such transfer
is conditioned upon the delivery of a nonconsolidation opinion acceptable to the
Mortgagee and any applicable rating Agency.

      Section 1.14 Payment of Utilities, Assessments, Charges, Etc. Mortgagor
shall pay or cause to be paid when due all utility charges which are incurred by
Mortgagor or Primary Tenant or which may become a charge or lien against any
portion of the Property for gas, electricity, water and sewer services furnished
to the Land and/or the Improvements and all other assessments or charges of a
similar nature, or assessment payable pursuant to any restrictive covenants,
whether public or private, affecting the Land and/or the Improvements or any
portion thereof, whether or not such assessments or charges are or may become
liens thereon.

      Section 1.15 Access Privileges and Inspections. Mortgagee and the agents,
representative and employees of Mortgagee shall, subject to the rights of
tenants, have full and free access to the Land and the Improvements and any
other location where books and records concerning the Property are kept at all
reasonable times for the purposes of inspecting the Property and of examining,
copying and making extracts from the books and records of Mortgagor relating to
the Property. Mortgagor shall lend assistance to all such agents,
representatives and employees of Mortgagee.

      Section 1.16 Waste; Alteration of Improvements. Mortgagor shall not
commit, suffer or permit any waste on the Property nor take any actions that
might invalidate any insurance carried on the Property. Mortgagor shall maintain
or cause the Property to be maintained in good condition and repair. No part of
the Improvements may be removed, demolished or materially altered, without the
prior written consent of Mortgagee, which consent shall not be unreasonably
withheld; provided, however, that to the extent Primary Tenant is permitted to
make alterations in accordance with the terms of the Primary Lease (or the
tenant under a Replacement Primary Lease is so permitted) at no cost to
Mortgagor and without the consent or approval of Mortgagor thereunder,
Mortgagee's consent hereunder shall not be required, but Mortgagor shall
deliver to Mortgagee a copy of any written notice delivered by the Primary
Tenant in connection therewith. Without the prior written consent of Mortgagee
Mortgage shall not commence construction of any improvements on the Land other
than improvements required for the maintenance or repair of the Property.

      Section 1.17 Zoning. Without the prior written consent of Mortgagee,
Mortgagor shall not seek, make, suffer, consent to or acquiesce in any change in
the zoning or conditions of use of the Land or the Improvements. Mortgagor shall
comply with and make all payments required under the provisions of any
covenants, conditions or restrictions affecting Ihe Land or the Improvements.
Mortgagor shall comply with all existing and future requirements of all
governmental authorities having jurisdiction over the Property. Mortgagor shall
keep all

                                       43
<PAGE>

licenses, permits, franchises and other approvals necessary for the operation
of the Property in full force and effect. Mortgagor shall operate the Property
in accordance with its current usage or any other lawful use, for so long as the
indebtedness secured hereby is outstanding. If, under applicable zoning
provision, the use of all or any part of the Land or the Improvements is or
becomes a nonconforming use, Mortgagor shall not cause or permit such use to be
discontinued or abandoned without the prior written consent of Mortgagee.
Without limiting the foregoing, in no event shall Mortgagor take any action that
would reduce or impair either (a) the number of parking spaces, at the Property,
or (b) the access to the Property from adjacent public roads. Further, without
Mortgagee's prior written consent, Mortgagor shall not file or subject any part
of the Land or the Improvements to any declaration of condominium or
co-operative or convert any part of the Land or the Improvements to a
condominium, co-operative or other form of multiple ownership and governance.

      Section 1.18 Financial Statements and Books and Records. Mortgagor shall
keep accurate books and records of account of the Property and its own financial
affairs sufficient to permit the preparation of financial statements therefrom
in accordance with generally accepted accounting principles. Mortgagee and its
duly authorized representatives shall have the right to examine, copy and audit
Mortgagor's records and books of account at all reasonable times and upon
reasonable prior notice. So long as this Mortgage continues in effect, Mortgagor
shall provide to Mortgagee, in addition to any other financial statements
required hereunder or under any of the other Loan Documents, the following
financial statements and information, all of which must be certified to
Mortgagee as being true and correct by Mortgagor or the person or entity to
which they pertain, as applicable, be prepared in accordance with generally
accepted accounting principles consistently applied and be in form and substance
acceptable to Mortgagee:

            (a)   monthly operating statements for the Property (including a
current Rent Roll to the extent required under Paragraph 1.12(c) above), within
ten (10) days after the end of each month during the first twelve (12) months of
the term of the Loan Or until the occurrence of a Secondary Market Transaction;

            (b)   quarterly operating statements for the Property within twenty
(20) days after the end of each calendar quarter;

            (c)   annual operating statements for the Property and financial
statements for the Guarantor within ninety (90) days after the end of each
calendar year, each certified by the chief financial officer of Mortgagor (or
Guarantor, as the case may be) to be true, complete and correct and, if
requested by Mortgagee, such statements shall be audited, by an independent
certified public accountant reasonably acceptable to Mortgagee; and

            (d)   such other information with respect to the Property,
Mortgagor, the principals or general partners Or managing members, as
applicable, in Mortgagor, and each indemnitor and guarantor under any indemnity
or guaranty executed in connection with the loan secured hereby, which may be
reasonably requested from time to time by Mortgagee, within a reasonable time
after the applicable request.

                                       44
<PAGE>

If any of the aforementioned materials are not furnished to Mortgagee within the
applicable time periods or Mortgagee is in good faith dissatisfied with the
contents of any of the foregoing, in addition to any other rights and remedies
of Mortgagee contained herein, Mortgagee shall have the right, but not the
obligation, to obtain the same by means of an audit by an independent certified
public accountant selected by Mortgagee, in which event Mortgagor agrees to
pay, or to reimburse Mortgagee for, any expense of such audit and further agrees
to provide all necessary information to said accountant and to otherwise
cooperate in the making of such audit.

      Section 1.19 Further Documentation.

            (a)   Mortgagor shall, on the request of Mortgagee and at the
expense of Mortgagor (1) promptly correct any defect, error or omission which
may be discovered in the contents of this Mortgage or in the contents of any of
the other Loan Documents; (2) promptly execute, acknowledge, deliver and record
or file such further instruments (including, without limitation, further
mortgages, deeds of trust, security deeds, security agreements, financing
statements continuation statements and assignments of rents or leases) and
promptly do such further acts as may be reasonably necessary, desirable or
proper to carry out more effectively the purposes of this Mortgage and the
other Loan Documents and to subject to the liens and security interests hereof
and thereof any property intended by the terms hereof and thereof to be covered
hereby and thereby, including specifically, but without limitation, any
renewals, additions, substitutions, replacements or appurtenances to the
Property; (3) promptly execute, acknowledge, deliver, procure and record or file
any document or instrument (including specifically any financing statement)
deemed reasonably advisable by Mortgagee to protect, continue or perfect the
liens or the security interests hereunder against the rights or interests of
third persons; and (4) promptly furnish to Mortgagee, upon Mortgagee's request,
a duly acknowledged written statement and estoppel certificate addressed to such
party or parties as directed by Mortgagee and in form and substance supplied by
Mortgagee, setting forth all amounts due under the Note, stating whether any
Event of Default has occurred or whether any event has occurred or any state of
facts exist, which, with the giving of notice and/or the passage of time, would
constitute an Event of Default (such event or state of facts, a "Default" ),
stating whether any offsets or defenses exist against the indebtedness secured
hereby and containing such other matters as Mortgagee may reasonably require.

            (b)   Mortgagor acknowledges that Mortgagee and its successors
and assigns may effectuate a Secondary Market Transaction. Mortgagor shall
cooperate in good faith with Mortgagee in effecting any such Secondary Market
Transaction and shall cooperate in good faith to implement all requirements
imposed by any Rating Agency (as defined herein) involved in any Secondary
Market Transaction including, without limitation, all structural or other
changes to the indebtedness secured hereby, modifications to any documents
evidencing or securing the loan; provided, however, that Mortgagor shall not be
required to modify any documents evidencing or securing the indebtedness
secured hereby which would modify (A) the interest rate payable under the Note,
(B) the stated maturity of the Note, (C) the amortization of principal of the
Note, or (D) any other material economic term of the indebtedness secured hereby
including, without limitation, notice and cure periods and assignment and other
transfer rights. Mortgagor shall provide such information, and documents
relating to Mortgagor, any

                                       45
<PAGE>
guarantor or indemnitor, the Property and any tenants of the Improvements in
Mortgagor's possession (or readily obtainable by Mortgagor) as Mortgagee may
reasonably request in connection with such Secondary Market Transaction.
Mortgagor shall make available to Mortgagee all information concerning its
business and operations that Mortgagee may reasonably request. Mortgagor shall
not be required to expend in excess of $10,000 in actual, direct out-of-pocket
costs in complying with the foregoing provisions of this Section 1.19. Mortgagee
shall be permitted to share all such information with the investment banking
firms, Rating Agencies, accounting firms, Law firms and other third-party
advisory firms involved with the Loan Documents or the applicable Secondary
Market Transaction. It is understood that the information provided by Mortgagor
to Mortgagee may ultimately be incorporated into the offering documents for the
Secondary Market Transaction and thus various investors may also see some or all
of the information. Mortgagee and all of the aforesaid third-party advisors and
professional firms shall be entitled to rely on the information supplied by, or
on behalf of, Mortgagor and Mortgagor indemnifies Mortgagee as to any losses,
claims, damages or liabilities that arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in such
information or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated in such information or
necessary in order to make the statements in such information, or in light of
the circumstances under which they were made, not misleading. Mortgagee may
publicize the existence of the indebtedness secured hereby in connection with
its marketing for a Secondary Market Transaction or otherwise as part of its
business development. For purposes hereof, a "Secondary Market Transaction"
shall be (1) any sale of the Mortgage, Note and Other Loan Documents to one or
more investors as a whole loan, (2) a participation of the indebtedness secured
hereby to one or more investors, (3) any deposit of the Mortgage, Note and other
Loan Documents with a trust or other entity which may sell certificates or other
instruments to investors evidencing an ownership interest in the assets of such
trust or other entity, or (4) any other sale or transfer of the indebtedness
secured hereby or any interest therein to one or more investors. For purposes
hereof, "Rating Agency" shall mean any nationally-recognized statistical rating
organization that has been designated by Mortgagee or that provides a rating on
Mortgagor, the loan evidenced by any interests therein or any securities
evidencing an interest in, inter alia, a trust or other entity which is the
holder of the Note.

      Section 1.20 Payment of Costs: Reimbursement to Mortgagee. Mortgagor shall
pay all reasonable costs and expenses of every character incurred in connection
with the closing of the loan evidenced by the Note and secured hereby or
otherwise attributable or chargeable to Mortgagor as the owner of the Property,
including, without limitation, appraisal fees, recording fees, documentary,
stamp, mortgage or intangible taxes, brokerage fees and commissions, title
policy premiums, and title search fees, uniform commercial code/tax
lien/litigation search fees, escrow fees and reasonable attorneys' fees. If
Mortgagor defaults in any such payment, which default is not cured within any
applicable grace or cure period, Mortgagee may pay the same and Mortgagor shall
reimburse Mortgagee on demand for all such costs and expenses incurred or paid
by Mortgagee, together with such interest thereon at the Default Interest Rate
from and after the date of Mortgagee's making such payment until reimbursement
thereof by Mortgagor. Any such sums disbursed by Mortgagee, together with such
interest thereon, shall be additional indebtedness of Mortgagor secured by this
Mortgage and by all of the other Loan Documents

                                       46
<PAGE>

securing all or any part of the indebtedness evidenced by the Note. Further,
Mortgagor shall promptly notify Mortgagee in writing of any litigation or
threatened litigation affecting the Property, or any other demand or claim
which, if enforced, could impair or threaten to impair Mortgagee's security
hereunder, in each case of which Mortgagor is aware. Without limiting or waiving
any other rights and remedies of Mortgagee hereunder, if Mortgagor fails to
perform any of its covenants or agreements contained in this Mortgage or in any
of the other Loan Documents and such failure is not cured within any applicable
grace of cure period, or if any action or proceeding of any kind (including, but
not limited to, any bankruptcy, insolvency, arrangement, reorganization or other
debtor relief proceeding) is commenced which might affect Mortgagee's interest
in the Property or Mortgagee's, right to enforce its security, then Mortgagee
may, at its option, with or without notice to Mortgagor, make any appearances,
disburse any sums and take any actions as may be necessary or desirable to
protect or enforce the security of this Mortgage or to remedy the failure of
Mortgagor to perform its covenants and agreements (without, however, waiving any
default of Mortgagor). Mortgagor agrees to pay on demand all expenses of
Mortgagee incurred with respect to the foregoing (including, but not limited to,
reasonable fees and disbursements of counsel), together with interest thereon at
the Default Interest Rate from and after the date on which Mortgagee incurs such
expenses until reimbursement thereof by Mortgagor. Any such expenses so incurred
by Mortgagee, together with interest thereon as provided above, shall be
additional indebtedness of Mortgagor secured by this Mortgage and by all of the
other Loan Documents securing all or any part of the indebtedness evidenced by
the Note. The necessity for any such actions and of the amounts to be paid shall
be determined by Mortgagee in its reasonable discretion. Subject to the rights
to tenants under the leases, Mortgagee is hereby empowered to enter and to
authorize others to enter upon the Property or any part thereof for the purpose
of performing or observing any such defaulted term, covenant or condition
without thereby becoming liable to Mortgagor or any person in possession holding
under Mortgagor. Mortgagor hereby acknowledges and agrees that the remedies set
forth in this Section 1.20 shall be exercisable by Mortgagee, and any and all
payments made or costs or expenses incurred by Mortgagee in connection
therewith shall be secured hereby and shall be, without demand, immediately
repaid by Mortgagor with interest thereon at the Default Interest Rate,
notwithstanding the fact that such remedies were exercised and such payments
made and costs incurred by Mortgagee after the filing by Mortgagor of a
voluntary case or the filing against Mortgagor of an involuntary case pursuant
to or within the meaning of the Bankruptcy Reform Act of 1978, as amended, Title
11 U.S.C. (as amended from time to time, the "Bankruptcy Code"), or after any
similar action pursuant to any other debtor relief law (whether statutory,
common law, case law or otherwise) of any jurisdiction whatsoever, now or
hereafter, in effect, which may be or become applicable to Mortgagor, Mortgagee,
any guarantor or indemnitor, the secured indebtedness or any of the Loan
Documents. Mortgagor hereby indemnifies and holds Mortgagee harmless from and
against all Loss, cost and expenses with respect to any Event of Default hereof,
any liens (i.e., judgments, mechanics' and materialmen's liens, or otherwise),
charges and encumbrances filed against the Property, and from any claims and
demands for damages or injury, including claims for property damage, personal
injury or wrongful death, arising out of or in connection with any accident or
fire or other casualty on the Land or the Improvements or any nuisance made or
suffered thereon, including, in any case, reasonable attorneys' fees costs and
expenses as aforesaid, whether at pretrial, trial or appellate level, and such
indemnity shall survive payment in full of the

                                       47
<PAGE>

indebtedness secured hereby. This Section shall not be construed to require
Mortgagee to incur any expenses, make any appearances or take any actions.

      Section 1.21 Security Interest. This Mortgage is also intended to encumber
and create a security interest in, and Mortgagor hereby grants to Mortgagee a
security interest in all sums on deposit with Mortgagee pursuant to the
provisions of Sections 1.6 and 1.8 hereof or any other Section hereof and all
fixtures, chattels, accounts, equipment, inventory, contract rights, general
intangibles and other personal property included within the Property, all
renewals, replacements of any of the aforementioned items, or articles in
substitution therefor or in addition thereto or the proceeds thereof(said
property is hereinafter referred to collectively as the "Collateral"), whether
or not the same shall be attached to the Land or the Improvements in any manner.
It is hereby agreed that to the extent permitted by law, all of the foregoing
property is to be deemed and held to be a part of and affixed to the Land and
the Improvements. The foregoing security interest shall also cover Mortgagor's
leasehold interest in any of the foregoing property which is leased by
Mortgagor. Notwithstanding the foregoing, all of the foregoing property shall be
owned by Mortgagor and no leasing or installment sales or other financing or
title retention agreement in connection therewith shall be permitted without the
prior written approval of Mortgagee. Mortgagor shall, from time to time upon the
request of Mortgagee, supply Mortgagee with a current inventory of all of the
property in which Mortgagee is granted a security interest hereunder, in such
detail is Mortgagee may require. Mortgagor shall promptly replace all of the
Collateral subject to the lien or security interest of this Mortgage when worn
or obsolete with Collateral comparable to the worn out or obsolete Collateral
when new and win not, without the prior written consent of Mortgagee, remove
from the Land or the Improvements any of the Collateral subject to the lien or
security interest of this Mortgage except such as is replaced by an article of
equal suitability and value as above provided, owned by Mortgagor free and clear
of any lien or security interest except that created by this Mortgage and the
other Loan Documents and except as otherwise expressly permitted by the terms of
Section 1.13 of this Mortgage. All of the Collateral shall be kept at the
location of the Land except as otherwise required by the terms of the Loan
Documents. Mortgagor shall not use any of the Collateral in violation of any
applicable statute, ordinance or insurance policy.

      Section 1.22 Security Agreement. This Mortgage constitutes a security
agreement between Mortgagor and Mortgagee with respect to the Collateral in
which Mortgagee is granted a security interest hereunder, and, cumulative of all
other rights and remedies of Mortgagee hereunder, Mortgagee shall have all of
the rights and remedies of a secured party under any applicable Uniform
Commercial Code. Mortgagor hereby agrees to execute and deliver on demand and
hereby irrevocably constitutes and appoints Mortgagee the attorney-in-fact of
Mortgagor to execute and deliver and, if appropriate, file with the appropriate
filing officer or office such security agreements, financing statements,
continuation statements or other instruments as Mortgagee may reasonably request
or require in order to impose, perfect or continue the perfection of the lien or
security interest created hereby. Except with respect to Rents and Profits to
the extent specifically provided herein to the contrary, Mortgagee shall have
the right of possession of all cash, securities, instruments, negotiable
instruments, documents, certificates and any other evidences of cash or other
property or evidences of rights to cash rather than property, which are now or
hereafter a part of the Property and Mortgagor shall promptly

                                       48
<PAGE>

deliver the same to Mortgagee, endorsed to Mortgagee, without further notice
from Mortgagee. Mortgagor agrees to furnish Mortgagee with notice of any change
in the name, identity, organizational structure, residence, or principal place
of, business or mailing address of Mortgagor within ten (10) days (or thirty
(30) days, if the change is a change of principal place of business or mailing
address and such place or address remains within the County of New York) of the
effective date of any such change. Upon an Event of Default, Mortgagee shall
have the rights and remedies as prescribed in this Mortgage, or as prescribed by
general law, or as prescribed by any applicable Uniform Commercial Code, all at
Mortgagee's election. Any disposition of the Collateral may be conducted by an
employee or agent of Mortgagee. Any person, including both Mortgagor and
Mortgagee, shall be eligible to purchase any part or all of the Collateral at
any such disposition. Expenses of retaking, holding, preparing for sale, selling
or the like (including, without limitation, Mortgagee's reasonable attorneys'
fees and legal expenses), together with interest thereon at the Default Interest
Rate from the date incurred by Mortgagee until actually paid by Mortgagor, shall
be paid by Mortgagor on demand and shall be secured by this Mortgage and by all
of the other Loan Documents securing all or any part of the indebtedness
evidenced by the Note. Subject to the rights of tenants under the Leases,
Mortgagee shall have the right to enter upon the Land and the Improvements or
any real property where any of the property which is the subject of the security
interest granted herein is located to take possession of, assemble and collect
the same or to render it unusable, or Mortgagor, upon demand of Mortgagee, shall
assemble such property and make it available to Mortgagee at the Land, a place
which is hereby deemed to be reasonably convenient to Mortgagee and Mortgagor.
If notice is required by law, Mortgagee shall give Mortgagor at least ten (10)
days' prior written notice of the time and place of any public sale of such
property or of the time of or after which any private sale or any other intended
disposition thereof is to be made, and if such notice is sent to Mortgagor, as
the same is provided for the mailing of notices herein, it is hereby deemed that
such notice shall be and is reasonable notice to Mortgagor. No such notice is
necessary for any such property which is perishable, threatens to decline
speedily in value or is of a type customarily sold on a recognized market. Any
sale made pursuant to the provisions of this Section shall be deemed to have
been a public sale conducted in a commercially reasonable manner if held
contemporaneously with the foreclosure sale as provided in Section 3.1(e) hereof
upon giving the same notice with respect to the sale of the Property hereunder
as is required under said Section 3.1(e). Furthermore, to the extent permitted
by law, in conjunction with, in addition to or in substitution for the rights
and remedies available to Mortgagee pursuant to any applicable Uniform
Commercial Code:

            (a) In the event of a foreclosure sale, the Property may, at the
option of Mortgagee, be sold as a whole or in parts, as determined by Mortgagee
in its sole discretion; and

            (b) It shall not be necessary that Mortgagee take possession of the
aforementioned Collateral, or any part thereof, prior to the time that any sale
pursuant to the provisions of this Section is conducted and it shall not be
necessary that said Collateral, or any part thereof, be present at the location
of such sale; and

                                       49
<PAGE>

            (c) Mortgagee may appoint or delegate any one or more persons as
agent to perform any act or acts necessary or incident to any sale held by
Mortgagee, including the sending of notices and the conduct of the sale, but in
the name and on behalf of Mortgagee.

      The name and address of Mortgagor (as Debtor under any applicable
Uniform Commercial Code) are:

               FOSS(NH)QRS 16-3, INC.
               c/o W.P. Carey & Co. LLC,
               50 Rockefeller Plaza, 2nd Floor,
               New York, New York 10020

      The name and address of Mortgagee (as Secured Party under any applicable
Uniform Commercial Code) are:

               CIBC INC., a Delaware corporation
               622 Third Avenue, 8th Floor
               Attn: Real Estate Finance Group
               New York, New York 10017

      Section 1.23 Easements and Rights-of-Way. Mortgagor shall not grant any
easement or right-of-way with respect to all or any portion of the Land or the
Improvements without the prior written consent of Mortgagee (which shall not be
unreasonably withheld) other than easements or rights-of-way which could not in
any respect impair the value or utility of the Property or the lien of the Loan
Documents thereon, with inspect to which Mortgagor shall give. Mortgagee ten
(10) days' prior written notice, together with a detailed and accurate
description thereof. The purchaser at any foreclosure sale hereunder may, at its
discretion, disaffirm any easement or right-of-way granted in violation of any
of the provisions of this Mortgage and may take immediate possession of the
Property free from, and despite, the terms of, such grant of easement or
right-of-way. If Mortgagee consents to the grant of an easement or
right-of-way, Mortgagee agrees to grant such consent and to subordinate the lien
of this Mortgage to such easement provided that Mortgagee is paid a reasonable
standard review fee together with all other expenses, including, without
limitation, reasonable attorneys' fees, incurred by Mortgagee in the review of
Mortgagor's request and in the preparation of documents effecting the
subordination. Mortgagor shall at all times comply with all easement agreements,
reciprocal easement agreements, declarations, restrictive covenants and any
other similar types of agreements now or hereafter affecting the Property, and
Mortgagor shall not amend, modify or terminate any such easement agreements,
reciprocal easement agreements, declarations, restrictive covenants or any other
similar types of agreements without Mortgagee's prior written consent, which
such consent shall not be unreasonably withheld. If Mortgagee's consent is
required by the terms of this Section 1.23, Mortgagee's consent shall be deemed
withheld absent notice from Mortgagee to the contrary unless Mortgagor complies
with the following procedures: Mortgagor shall request such consent by
delivering notice to Mortgagee in accordance with Section 5.5 of this, Mortgage,
with the following legend on such request: THIS IS A REQUEST FOR CONSENT UNDER
THE LOAN BY CIBC INC. TO FOSS (NH) QRS 16-3, INC. FAILURE TO RESPOND TO THIS
REQUEST WILL RESULT IN THE REQUEST BEING

                                       50
<PAGE>

DEEMED GRANTED. If, within fifteen (15) business days of delivery of notice as
aforesaid, Mortgagee has not responded (either affirmatively or negatively) to
Mortgagor With respect to such written request, then such request shall be
deemed granted.

      Section 1.24 Compliance with Laws: ERISA. (a) Mortgagor shall at all times
comply or cause compliance with (i) all statutes, ordinances, orders, rules,
regulations and other governmental or quasi-governmental requirements and
private covenants now or hereafter relating to the ownership, construction, use
or operation of the Property, including all applicable statutes, rules and
regulations pertaining to requirements for equal opportunity,
anti-discrimination, fair housing, environmental protection, zoning, land use
and health, fire and building codes (collectively, "Laws"), including, but not
limited to, those concerning employment and compensation of persons engaged in
operation and maintenance of the Properly and any environmental or ecological
requirements, even if such compliance shall require structural changes to the
Property; provided, however, that Mortgagor may, upon providing Mortgagee with
security satisfactory to Mortgagee, proceed diligently and in good faith to
contest the validity or applicability of any such statute, ordinance, regulation
or requirement so long as during such contest the Property shall not be subject
to any lien, charge, fine or other liability and shall not be in danger of being
forfeited, lost or closed. Mortgagor shall not use or occupy, or allow the use
or occupancy of, the Property in any manner which violates any Lease of or any
other agreement applicable to the Property or any applicable law, rule,
regulation or under or which constitutes a public or private nuisance or which
makes void, voidable or cancelable, or increases the premium of, any insurance
then in force with respect thereto.

            (b) Mortgagor has made and shall continue to make all required
contributions to all employee benefit plans, if any, and Mortgagor has no
knowledge of any material liability which has been incurred by Mortgagor which
remains, unsatisfied for any taxes or penalties with respect to any employee
benefit plan or any multi-employer plan, and each such plan has been
administered in compliance with its terms and the applicable provisions of ERISA
and any other federal or state law.

      Section 1.25 Additional Taxes. In the event of the enactment after this
date of any law of the state where the Property is located or of any other
governmental entity deducting from the value of the Property for the purpose of
taxation any lien or security interest thereon, or imposing upon Mortgagee the
payment of the whole or any part of the taxes or assessments or charges of liens
herein required to be paid by Mortgagor, or changing in any way the laws
relating to the taxation of deeds of trust, mortgages or security agreements or
debts secured by deeds of trust, mortgages or security agreements or the
interest of the beneficiary, mortgagee or secured party in the property covered
thereby, or the manner of collection of such taxes, so as to adversely affect
this Mortgage or the indebtedness secured hereby or Mortgagee, then, and in any
such event, Mortgagor, upon demand by Mortgagee, shall pay such taxes,
assessments, charges or liens, or reimburse Mortgagee therefor; provided,
however, that if in the opinion of counsel for Mortgagee (a) it might be
unlawful to require Mortgagor to make such payment, or (b) the making of such
payment might result in the imposition of interest beyond the maximum amount
permitted by law, then and in either such event, Mortgagee may elect, by notice
in writing given to Mortgagor, to declare all of the indebtedness secured hereby
to be and become due and

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<PAGE>

payable in full one hundred twenty (120) days from the giving of such notice.
Provided no Event of Default shall exist and be continuing at the time that
Mortgagee makes any such election, nor at the time that such indebtedness
actually becomes due and payable pursuant to such notice, then, notwithstanding
anything to the contrary contained herein, in the Note, or in the other Loan
Documents, Mortgagor shall be permitted to prepay the entire unpaid principal
balance of the Note, together with all unpaid interest accrued thereon (through
and including the date of prepayment) and any other fees and expenses then owing
to Mortgagee by Mortgagor pursuant hereto, the Note and the other Loan
Documents without any penalty or any prepayment consideration otherwise set
forth in this Mortgage or in the Note, provided, however, that such prepayment
must occur, if at all, on the date set forth in such notice for such
prepayment.

      Section 1.26 Secured Indebtedness. It is understood and agreed that this
Mortgage shall secure payment of not only the indebtedness evidenced by the
Note but also any and all substitutions, replacements, renewals, restatements,
amendments and extensions of the Note, any and all indebtedness and obligations
arising pursuant to the terms hereof and any and all indebtedness and obligation
arising pursuant to the terms of any of the other Loan Documents (excluding the
Hazardous Substances Indemnity Agreement), all of which indebtedness is equally
secured with and his the same priority as any amounts advanced as of the date
hereof. It is agreed that any future advances made by Mortgagee to or for the
benefit of Mortgagor from time to time under this Mortgage or the other Loan
Documents and whether or not such advances are obligatory or are made at the
option of Mortgagee, or otherwise, made for any purpose, and all interest
accruing thereon, shall be equally secured by this Mortgage and shall have the
same priority as all amounts, if any, advanced as of the date hereof and shall
be subject to all of the terms and provisions of this Mortgage.

      Section 1.27 Mortgagor's Waivers. To the full extent permitted by law,
Mortgagor agrees that Mortgagor shall not at any time insist upon, plead, claim
or take the benefit or advantage of any law now or hereafter in force providing
for any appraisement, valuation, stay, moratorium or extension, or any law now
or hereafter in force providing for the reinstatement of the indebtedness
secured hereby prior to any sale of the Property to be made pursuant to any
provisions contained herein or prior to the entering of any decree, judgment or
order of any court of competent jurisdiction, or any right under any statute to
redeem all or any part of the Property so sold. Mortgagor, for Mortgagor and
Mortgagor's successors and assigns, and for any and all persons ever claiming
any interest in the Property, to the full extent permitted by law, hereby
knowingly, intentionally and voluntarily with and upon the advice of competent
counsel: (a) waives, releases, relinquishes and forever forgoes all rights of
valuation, appraisement, stay of execution, reinstatement and notice of election
or intention to mature or declare due the secured indebtedness (except such
notices as are specifically provided for herein); (b) waives, release,
relinquishes and forever forgoes all right to a marshalling of the assets of
Mortgagor, including the Property, to a sale in the inverse order of alienation,
or to direct the order in which any of the Property shall be sold in the event
of foreclosure of the liens and security interests hereby created and agrees
that any court having jurisdiction to foreclose such liens and security
interests may order the Property sold as an entirety; and (c) waives, releases,
relinquishes and forever forgoes all rights and periods of redemption provided
under applicable law. To the full extent permitted by Jaw, Mortgagor shall not
have or assert any right

                                       52
<PAGE>

under any statute or rule of law pertaining to the exemption of homestead or
other exemption under any federal, state or local law now or hereafter in
effect, the administration of estates of decedents or other matters whatever to
defeat, reduce or affect the right of Mortgagee under the terms of this Mortgage
to a sale of the Property, for the collection of the secured indebtedness
without any prior or different resort for collection, or the right of Mortgagee
under the terms of this Mortgage to the payment of the indebtedness secured
hereby out of the proceeds of sale of the Property in preference to every other
claimant whatever. Further, Mortgagor hereby knowingly, intentionally and
voluntarily, with and upon the advice of competent counsel, waives, releases,
relinquishes and forever forgoes all present and future statutes of limitations
as a defense to any action to enforce the provisions of this Mortgage or to
collect any of the indebtedness secured hereby to the fullest extent permitted
by law. Mortgagor covenants and agrees that upon the commencement of a
voluntary or involuntary bankruptcy proceeding by or against Mortgagor,
Mortgagor shall not seek a supplemental stay or otherwise shall not seek
pursuant to 11 U.S.C. Section 105 or any other provision of the Bankruptcy Code,
or any other debtor relief law (whether statutory, common law, case law, or
otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may
be or become applicable, to stay, interdict, condition, reduce or inhibit the
ability of Mortgagee to enforce any rights of Mortgagee against any guarantor or
indemnitor of the secured obligations or any other party liable with respect
thereto by virtue of any indemnity, guaranty or otherwise.

      Section 1.28 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL

            (a) MORTGAGOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT
COUNSEL, (i) SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF NEW HAMPSHIRE OVER
ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THE
NOTE, THIS MORTGAGE OR ANY OTHER OF THE LOAN DOCUMENTS, (ii) AGREES THAT ANY
SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION OVER THE COUNTY IN WHICH THE LAND IS LOCATED, (iii)
SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND, (iv) TO THE FULLEST EXTENT
PERMITTED BY LAW, AGREES THAT IT WILL NOT BRING ANY ACTION, SUIT OR PROCEEDING
IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF MORTGAGEE TO
BRING ANY ACTION, SUIT OR PROCEEDING IK ANY OTHER FORUM). MORTGAGOR FURTHER
CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS
IN ANY SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL,
POSTAGE PREPAID, TO THE MORTGAGOR AT THE ADDRESS FOR NOTICES DESCRIBED IN
SECTION 5.5 HEREOF, AMD CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE
IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT
THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY
LAW).

                                       53
<PAGE>

            (b) MORTGAGEE AND MORTGAGOR, TO THE FULLEST EXTENT PERMITTED BY LAW,
HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF
COMPETENT COUNSEL, WAIVE, RELINQUISH AND FOREVER FOREGO THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY
RELATING TO THIS MORTGAGE OR ANY CONDUCT, ACT OR OMISSION OF MORTGAGEE OR
MORTGAGOR OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, PARTNERS, MEMBERS,
MANAGERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH
MORTGAGEE OR MORTGAGOR, IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE.

      Section 1.29 Contractual Statute of Limitations. Mortgagor hereby agrees
that any claim or cause of action by Mortgagor against Mortgagee, or any of
Mortgagee's directors, officers, employees, agents, accountants or attorneys,
based upon, arising from or relating to the indebtedness secured hereby, or any
other matter, cause or thing whatsoever, whether or not relating thereto,
occurred, done, omitted or suffered to be done by Mortgagee or by Mortgagee's
directors, officers, employees, agents, accountants or attorneys, whether
sounding in contract or in tort or otherwise, shall be barred unless asserted by
Mortgagor by the commencement of an action or proceeding in a court of competent
jurisdiction by the filing of a complaint within two (2) years after Mortgagor
first acquires or reasonably should have acquired knowledge of the first act,
occurrence or omission upon which such claim or cause of action, or any part
thereof, is based and service of a summons and complaint on an officer of
Mortgagee or any other person authorized to accept service of process on behalf
of Mortgagee, within thirty (30) days thereafter. Mortgagor agrees that such
two (2) year period of time is reasonable and sufficient time for a borrower to
investigate and act upon any such claim or cause of action. The two (2) year
period provided herein shall not be waived, tolled or extended except by the
specific written agreement of Mortgagee. This provision shall survive any
termination of this Mortgage or any of the other Loan Documents.

      Section 1.30 Management. Except as provided in the following sentence, the
management of the Property shall be by either: (a) Mortgagor or an entity
affiliated with Mortgagor approved by Mortgagee for so long as Mortgagor or said
affiliated entity is managing the Property in a first class manner; or (b) a
professional property management company approved by Mortgagee. Mortgagor hereby
represents and warrants that Primary Tenant will self-manage the Property (it
being agreed that, for so long as such self-management constitutes performance
by Primary Tenant or, if applicable, any Replacement Primary Tenant, of all
Mortgagor's obligations hereunder and under the other Loan Documents in respect
of the maintenance, management and repair of the Property in accordance with the
terms hereof and thereof, Mortgagee shall accept such performance by Primary
Tenant as if performed by Mortgagor). Any right of payment of Mortgagor (or any
manager other than Primary Tenant) (or of Primary Tenant on receive any payment
from Mortgagor or any affiliate thereof) arising out of or in any way connected
with the management and ownership of the Property shall be fully and completely
subordinated to the lien of this Mortgage and the other Loan Documents, and to
Mortgagee's right to payment under the Note and the other Loan Documents.
Mortgagor shall

                                       54
<PAGE>

not enter into any agreement relating to the management or operation of the
property with any other party without the express written consent of Mortgagee
in Mortgagee's sole discretion. If management is by an affiliated entity of
Mortgagor or Primary Tenant or a professional property management company, such
management shall be pursuant to a written agreement approved by Mortgagee. In no
event shall any manager be removed or replaced or the terms of any management
agreement modified or amended without the prior written consent of Mortgagee,
which consent shall not be unreasonably withheld or delayed. After an Event of
Default hereunder or a default under any management contract then in effect,
which default is not cured within any applicable grace or cure period, Mortgagee
shall have the right to terminate, or to direct Mortgagor to terminate (or cause
Primary Tenant to terminate), such management contract upon thirty (30) days'
notice and to retain, or to direct Mortgagor to retain (or to cause Primary
Tenant to retain), a new management agent approved by Mortgagee (provided that
if Primary Tenant or a Replacement Primary Tenant, if applicable, is not in
default under the Primary Lease or Replacement Primary Lease, if applicable,
then such tenant may continue to self-manage the Property). All Rents and
Profits generated by or derived from the Property shall first be utilized
solely for current expenses directly attributable to the ownership and operation
of the Property, including, without limitation, current expenses relating to
Mortgagor's liabilities and obligations with respect to this Mortgage and the
other Loan Documents, and none of the Rents and Profits generated by or derived
from the Property shall be diverted by Mortgagor and utilized for any other
purposes unless all such current expenses attributable to the ownership and
operation of the Property have been fully paid and satisfied. It shall be a
condition of Mortgagee's consent to any management agreement, whether with an
affiliate of Mortgagor or a professional property management company, that such
manager enter into an agreement with Mortgagee whereby the manager acknowledges
and agrees to the aforesaid rights of Mortgagee, and as to such other matters as
Mortgagee may require.

      Section 1.31 Hazardous Substances.

            (a) Mortgagor hereby represents and warrants to Mortgagee that, to
Mortgagor's knowledge, except as disclosed in the Phase I Environmental Site
Assessment, prepared by Professional Service Industries, Inc., dated June 14,
2004 (the "Environmental Report") and delivered to Mortgagee,: (i) to the best
of Mortgagor's knowledge, information and belief, the Property is not in
violation of any applicable local, state or federal law, rule or regulation
pertaining to environmental regulation, contamination or clean-up (collectively,
"Environmental Laws"), including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C.
Section 9601 et seq. and 40 CFR Section 302.1 et seq.), the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq. and 40 CFR
Section 116.1 et seq.), those relating to lead based paint, and the Hazardous
Materials Transportation Act (49 U.S.C. Section 1801 et seq.), and the
regulations promulgated pursuant to said laws, all as amended; (ii) to the best
of Mortgagor's knowledge, information and belief, no hazardous, toxic or harmful
substances, wastes, materials, pollutants or contaminants (including, without
limitation, asbestos, lead based paint, polychlorinated biphenyls, petroleum
products, flammable explosives, radioactive materials, infectious substances or
raw materials which include hazardous constituents) or any other substances or
materials which are included under or regulated by

                                       55
<PAGE>

Environmental Laws, or any molds, spores or fungus or other harmful microbial
matter (collectively, 'Hazardous Substances") are located on or have been
handled, generated, stored, processed or disposed of on or released or
discharged from the Property (including underground contamination) except for
those substances used by Mortgagor or Mortgagor's tenants in the ordinary
course of its business and in compliance with all applicable Environmental Laws;
(iii) to the best of Mortgagor's knowledge, information and belief, the Property
is not subject to any private or governmental lien or judicial or administrative
notice or action relating to Hazardous Substances; (iv) there are no existing or
closed underground storage tanks or other underground storage receptacles for
Hazardous Substances on the property; (v) Mortgagor has received no notice of,
and to the best of Mortgagor's knowledge and belief, there exists no
investigation, action, proceeding, or claim by any agency, authority or unit of
government or by any third party which could result in any liability, penalty,
sanction or judgement under any Environmental Laws with respect to any
condition, use or operation of the Property nor does Mortgagor know of any basis
for such a claim; (vi) Mortgagor has received no notice of and, to the best of
Mortgagor's knowledge and belief, there has been no claim by any party that any
use, operation or condition of the Property has caused any nuisance or any other
liability or adverse condition on any other property nor does Mortgagor know of
any basis for such a claim.

            (b) Mortgagor shall keep or cause the Property to be kept (i) free
from Hazardous Substances (except those substances as they relate to specific
conditions disclosed in the Environmental Report or used by Mortgagor or its
tenants in the ordinary course of its business and in compliance with all
applicable Environmental laws), and (ii) in compliance with all applicable
Environmental Laws, shall not install or use (unless already installed as of the
date hereof and used in compliance with all applicable Environmental Laws) any
underground storage tanks, shall expressly prohibit the use, generation,
handling, storage, production, processing and disposal of Hazardous Substances
by all tenant of space in the Improvements (except those substances used by
Mortgagor or its tenants in the ordinary course of business and in compliance
with all applicable Environmental Laws) and, without limiting the generality of
the foregoing, during the term of this Mortgage, shall not install in the
Improvements or permit to be installed in the Improvements asbestos or any
substance containing asbestos.

            (c) Mortgagor shall promptly notify Mortgagee if Mortgagor shall
become aware of the existence (or probable existence) of any Hazardous
Substances on the Property (except those substances as they relate to specific
conditions disclosed in the Environmental Report or used by Mortgagor or its
tenants in the ordinary course of business and in compliance with all applicable
Environmental Laws) or if Mortgagor shall become aware that the Property is or
may be in violation of any applicable Environmental Laws. Further, within five
(5) business days after receipt of the same, Mortgagor shall deliver to
Mortgagee copies of any and all orders, notices, permits, applications, reports,
and other communications, documents and instruments received by Mortgagor (it
being agreed that Mortgagor shall use all reasonable efforts to cause Primary
Tenant to deliver to Mortgagor copies of any such items received by Primary
Tenant) pertaining to the actual, alleged or potential presence or existence of
any Hazardous Substances (except those substances used by Mortgagor or its
tenants in the ordinary course of business and in compliance with all applicable
Environmental Laws) at, on, about, under, within, near or in connection with the
Property. Mortgagor shall, promptly and when and as required by

                                       56
<PAGE>

Mortgagee, at Mortgagor's sole cost and expense, take all actions as shall be
necessary, in Mortgagee's discretion, for the clean-up as required by applicable
Environmental Laws of any and all portions of the Property or other affected
property in or on which Hazardous Substances from the Property have come to be
located, including, without limitation, all investigative, monitoring, removal,
containment and remedial actions in accordance with all applicable Environmental
Laws (and in all events in a manner reasonably satisfactory to Mortgagee), and
shall further pay or cause to be paid, at no expense to Mortgagee, all clean-up,
administrative and enforcement costs of applicable governmental agencies which
may be asserted against the Property. In the event Mortgagor fails to do so,
Mortgagee may, but shall not be obligated to, cause the Property or other
affected property in or on which Hazardous Substances from the Property have
come to be located, to be brought into compliance with applicable Environmental
Laws and any and all costs and expenses incurred by Mortgagee in connection
therewith, together with interest thereon at the Default Interest Rate from the
date incurred by Mortgagee until actually paid by Mortgagor, shall be
immediately paid by Mortgagor on demand and shall be secured by this Mortgage
and by all of the other Loan Documents securing all or any pant of the
indebtedness evidenced by the Note. Mortgagor hereby grants to Mortgagee and its
agents and employees access to the Property and a license to remove or remediate
any Hazardous Substances (except those substances as they relate to specific
conditions disclosed in the Environmental Report or used by Mortgagor or its
tenants in the ordinary course of business and in compliance with all applicable
Environmental Laws) determined to be in violation of any applicable
Environmental Laws and to do all things Mortgagee shall deem necessary to bring
the Property in conformance with applicable Environmental Laws. Mortgagor
covenants and agrees, at Mortgagor's sole cost and expense, to indemnify, defend
(at trial and appellate levels, and with attorneys, consultants and experts
reasonably acceptable to Mortgagee), and hold Mortgagee harmless from and
against any and all liens, damages, losses, liabilities, obligations, settlement
payments, penalties, assessments, citations, directives, claims, litigation,
demands, defenses, judgments, suits, proceedings, costs, disbursements or
expenses of any kind or of any nature whatsoever (including, without limitation,
reasonable attorneys', consultants' and experts' fees and disbursements actually
incurred in investigating, defending, setting or prosecuting any claim,
litigation or proceeding) ("Claims") which may at any time be imposed upon,
incurred by or asserted or awarded against Mortgagee or the Property, and
arising directly or indirectly from or out of: (i) the presence, release or
threat of release of any Hazardous Substances on, in, under or affecting all or
any portion of the Property or any surrounding areas, regardless of whether or
not caused by or within the control of Mortgagor; (ii) the violation of any
Environmental Laws relating to or affecting the Property, whether or not caused
by or within the control of Mortgagor; (iii) the failure by Mortgagor to comply
fully with the terms and conditions of this Section 1.31; (iv) the breach of any
representation or warranty contained in this Section 1.31; or (v) the
enforcement of this Section 1.31, including, without limitation, the cost of
assessment, containment and/or removal of any and all Hazardous Substances from
all or any portion of the Property or any surrounding areas in or on which
Hazardous Substances from the Property have come to be located, the cost of any
actions taken in response to the presence, release, or threat of release of any
Hazardous Substances on, in, under or affecting any portion of the Property or
any surrounding areas to prevent or minimize such release or threat of release
so that it does not migrate or otherwise cause or threaten danger to present or
future public health, safety, welfare or the environment, and costs incurred to
comply with applicable Environmental Laws in

                                       57
<PAGE>

connection with all any portion of the Property or any surrounding areas in or
on which Hazardous Substances from the Property have come to be located. The
indemnity set forth in this Section 1.31(c) shall also include any diminution in
the value of the security afforded by the Property or any future reduction in
the sales price of the Property by reason of any matter set forth in this
Section 1.31(c). Mortgagee's rights under this Section shall survive payment in
full of the indebtedness hereby and shall be in addition to all other rights of
Mortgagee under this Mortgage, the Note and the other Loan Documents; provided
that Mortgagor shall have no obligation to indemnify Mortgagee against any
claims arising solely due to (x) the gross negligence or willful misconduct of
Mortgagee or (y) hazardous Substance or violations of Environmental Laws in
connection with any condition that first arises from and after the date on which
Mortgagee acquires title to the Property at a foreclosure sale or other transfer
in lieu of foreclosure.

            (d) Upon Mortgagee's request, at any time after the occurrence of an
Event of Default hereunder or at such other time as Mortgagee has reasonable
grounds to believe that Hazardous Substances (except those substances used by
Mortgagor or its tenants in the ordinary course of business and in compliance
with all applicable Environmental Laws) are or have been released, stored or
disposed of on or around the Property in violation of any applicable
Environmental Laws or that the Property may be in violation of applicable
Environmental Laws, Mortgagor shall provided, at Mortgagor's sole cost and
expense, an inspection or audit of the Property prepared by a hydrogeologist or
environmental engineer or other appropriate consultant reasonably approved by
Mortgagee indicating the presences or absence of Hazardous Substances on the
Property in violation of applicable Environmental Laws or an inspection or audit
of the Improvements prepared by an engineering or consulting firm approved by
Mortgagee indicating the presence or absence of friable asbestos or substances
containing asbestos on the Property. If Mortgagor fails to provide such
inspection or audit within thirty (30) days after such request, Mortgagee may
order the same, and Mortgagor hereby grants to Mortgagee and its employees and
agents access to the Property and a license to undertake such inspection or
audit. The cost of such inspection or audit, together with interest thereon at
the Default Interest Rate from the date incurred by Mortgagee until actually
paid by Mortgagor, shall be immediately due and payable to Mortgagee by
Mortgagor on demand and shall be secured hereby and by all of the other Loan
Documents securing all or any parts of the indebtedness evidenced by the Note.

            (e) Reference is made to that certain Hazardous Substances Indemnity
Agreement of even date herewith by and among by Mortgagor, Guarantor and
Mortgagee (as hereafter amended or modified from time to time, the "Hazardous
Indemnity Agreement"). The Hazardous Indemnity Agreement is a separate
obligation of Mortgagor which is not secured by this Mortgage and, except as
otherwise provided herein, it shall survive any foreclosure of this Mortgage.

      Section 1.32 Indemnification; Subrogation

            (a) Mortgagor shall indemnify, defend and hold Mortgagee harmless
against: (i) any and all claims for brokerage, leasing, finders or similar fees
which may be made relating to the Property or the secured indebtedness, and (ii)
any and all liability, obligations,

                                       58
<PAGE>
losses, damages, penalties, claims, actions, suits, costs and expenses
(including Mortgagee's reasonable attorneys' fees, together with reasonable
appellate counsel fees, if any) of whatever kind or nature which may be asserted
against, imposed on or incurred by Mortgagee in connection with the secured
indebtedness, this Mortgage, the Property, or any part thereof, or the exercise
by Mortgagee of any rights or remedies granted to it under this Mortgage;
provided, however, that nothing herein shall be construed to obligate Mortgagor
to indemnify, defend and hold harmless Mortgagee from and against any and all
liabilities, obligations, losses, damages, Mortgagee by reason of Mortgagee's
willful misconduct or gross negligence.

            (b) If Mortgagee is made a party defendant to any litigation or any
claim is threatened or brought against Mortgagee concerning the secured
indebtedness, this Mortgage, the Property, or any part thereof, or any interest
therein, or the construction, maintenance, operation or occupancy or use
thereof, then Mortgagor shall indemnify, defend and hold Mortgagee harmless from
and against all liability by reason of said litigation or claims, including
reasonable attorneys' fees (together with reasonable appellate counsel fees, if
any) and expenses incurred by Mortgagee in any such litigation or claim, whether
or not any such litigation or claim is prosecuted to judgment. If Mortgagee
commences an action against Mortgagor to enforce any of the terms hereof or to
prosecute any breach by Mortgagor of any of the terms hereof or of any of the
other Loan Documents, or to recover any sum secured hereby, Mortgagor shall pay
to Mortgagee its reasonable attorneys' fees (together with reasonable appellate
counsel fees, if any) and expenses. The right to such attorneys' fees (together
with reasonable appellate counsel fees, if any) and expenses shall be deemed to
have accrued on the commencement of such action, and shall be enforceable
whether or not such action is prosecuted to judgment. If Mortgagor breaches any
term of this Mortgage, Mortgagee may engage the services of an attorney or
attorneys to protect its rights hereunder, and in the event of such engagement
following any breach by Mortgagor, Mortgagor shall pay Mortgagee reasonable
attorneys' fees (together with reasonable appellate counsel fees, if any) and
expenses incurred by Mortgagee, whether or not an action is actually commenced
against Mortgagor by reason of such breach. All references to "attorneys" in
this Subsection and elsewhere in this Mortgage shall include without limitation
any attorney or law firm engaged by Mortgagee and Mortgagee's in-house counsel,
and all references to "fees and expenses" in this Subsection and elsewhere in
this Mortgage shall include without limitation any fees of such attorney or law
firm.

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

      Section 1.33 Negative Covenants with Respect to Indebtedness, Operations
and Fundamental Changes of Mortgagor. Mortgagor hereby represents, warrants and
covenants as of the date hereof and until such time as the indebtedness secured
hereby is paid in full, that Mortgagor;

                                       59
<PAGE>

            (a) will not, nor will any general partner, member of shareholder
thereof, as applicable, amend, modify or otherwise change its partnership
certificate, partnership agreement, articles of incorporation, bylaws,
operating agreement, articles of organization, or other formation agreement or
document, as applicable, in any material term or manner or in a manner which
adversely effects Mortgagor's existence as a single purpose bankruptcy remote
entity;

            (b) will not enter into any transaction of merger or consolidation,
or liquidate or dissolve itself (or suffer any liquidation or dissolution), or
acquire by purchase or otherwise all or substantially all the business or
assets, or any stock or other evidence of beneficial ownership of, any entity;

            (c) has not and will not guarantee, pledge its assets for the
benefit of, or otherwise become liable on or in connection with any obligation
of any other person or entity;

            (d) has not owned, does not own and will not own any asset other
than (i) the Property, and (ii) incidental personal property necessary for the
operation of the Property;

            (e) has not engaged, is not engaged and will not engage, directly or
indirectly, in any business other than the ownership, financing , management and
operation of the Property;

            (f) will not enter into any contract or agreement with any general
partner, managing member or shareholder, as applicable, principal or Affiliate
(as hereinafter defined) of Mortgagor or any Affiliate of the general partner,
managing member or shareholder, as applicable , of Mortgagor except upon terms
and conditions that are intrinsically fair and substantially similar to those
that would be available on an arms-length basis with third parties other than
such general partner, managing member, shareholder, principal or Affiliate;

            (g) has not incurred and will not incur any debt, secured or
unsecured, direct or contingent (including guaranteeing any obligation), other
than (i) the indebtedness secured hereby, and (ii) trade Payables or accrued
expenses incurred in the ordinary course of business of operating the Property,
provided that such debt (1) is not evidenced by a note, (2) is not outstanding
for more than sixty (60) days with trade creditors and in amounts as are normal
and reasonable under the circumstances, and (3) does not exceed in the aggregate
an amount equal to two percent (2.00%) of the original principal balance of the
Note; no other debt may be secured (senior, subordinate or pari passu) by the
Property;

            (h) has not made and will not make any loans or advances to any
third party (including any Affiliate);

            (i) is solvent and will pay its debt from its assets as a same Shall
become due;

            (j) has done or cost to be done and will do all things necessary to
preserve its existence, and will not , nor will any partner, limited or general,
or shareholder

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<PAGE>

thereof, amend, modify or otherwise change its partnership certificate,
partnership agreement, articles, of incorporation or bylaws in a manner which
adversely affects Mortgagor's existence as a single purpose bankruptcy remote
entity;

            (k) will conduct and operate its business as presently conducted and
operated;

            (l) will maintain financial statements, books and records and
bank accounts separate from those of its Affiliates, including its general
partners, managing members or shareholders, as applicable, except that
Mortgagor's financial position, assets, liabilities, net worth and operating
results may be included in the consolidated financial statements of Corporate
Property Associates 16-Global Incorporated;

            (m) will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity (including
any Affiliate thereof, including the general partner, managing member or
shareholders, as applicable, or any Affiliate of the general partner. managing
member or shareholders, as applicable, of Mortgagor);

            (n) to the extent that Mortgagor is required to file tax
returns, it will file its own tax returns (unless required or permitted
otherwise by applicable legal requirements);

            (o) will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations;

            (p) will not seek the dissolution or winding up, in whole or
in part, of Mortgagor;

            (q) will not commingle the funds and other assets of Mortgagor with
those of any general partner, managing member or shareholder, as applicable, any
Affiliate or any other person;

            (r) has and will maintain its assets in such a manner that it
is not costly or difficult to segregate, ascertain or identify its individual
assets from those of any Affiliate or any other person;

            (s) does not and will not hold itself out to be responsible for the
debts or obligations of any other person;

            (t) will not do any act which would make it impossible to carry on
the ordinary business of Mortgagor;

            (u) will not possess or assign the Property or incidental
personal property necessary for the operation of the Property for other than a
business or company purpose;

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<PAGE>

            (v) will not sell, encumber or otherwise dispose of all or
substantially all of the Property or incidental personal property necessary for
the operation of the Property;

            (w) will not hold title to Mortgagor's assets other than in
Mortgagor's name;

            (x) will not, without the affirmative vote of all of its directors,
members, partners or shareholders, as applicable, including any independent
directors or independent members of the Mortgagor or the Mortgagor's general
partner or managing member, as applicable, institute proceedings to be
adjudicated bankrupt or insolvent; or consent to the institution of bankruptcy
or insolvency proceedings against it; or file a petition seeking, or consent to,
reorganization or relief under any applicable, federal or State law relating to
bankruptcy; or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of Mortgagor or a substantial
part of Mortgagor's property; or make any assignment for the benefit of
creditors; Or admit in writing its inability to pay its debts generally as they
become due; or take any action in furtherance of any such action;

            (y) will, at the option of Mortgagor and to the extent Mortgagor
actually uses office space, either (i) maintain its principal executive office
and Telephone and facsimile numbers separate from that of any Affiliate of same
and conspicuously identify such office and numbers as its own or (ii) allocate
fairly and reasonably any rent, overhead and expenses for shared office space;

            (z) shall make investments in the name of Mortgagor directly by
Mortgagor or on its behalf by brokers engaged and paid by Mortgagor or its
agents;

            (aa) shall pay or cause to be paid its own liabilities and expenses
of any kind, including but not limited to salaries of its employees, only out of
its own separate funds and assets;

            (bb) shall correct any misunderstanding that is known by Mortgagor
regarding its name or separate identity;

            (cc) shall not fail to observe all customary formalities regarding
the corporate existence of the Mortgagor, including holding meetings of or
obtaining the consent of its board of directors, as appropriate, and its
Stockholders and maintaining current accurate minute books separate from those
of any Affiliate;

            (dd) At least one (1) of the directors of the Mortgagor shall be an
Independent Director. Independent Director means a natural person who has not
been, and during the continuation of his or her services as Independent Director
(i) except in the capacity as an Independent Director of the Mortgagor, is not a
present or former employee, officer, director, shareholder, partner, member,
counsel, accountant, advisor or agent of the Mortgagor or any Affiliate of same,
(ii) is not a present or former customer or supplier of the Mortgagor or any
Affiliate of same, or other person or entity who derives or is entitled to
derive any of its profits or revenues or any payments (other than any fee paid
to such director as compensation for such

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<PAGE>
director to serve as an Independent Director) from the Mortgagor or any
Affiliate of same, (iii) is not (and is not affiliated with an entity that is) a
present or former advisor or consultant to the Mortgagor or any Affiliate of
same, (iv) is not a spouse, parent, child, grandchild or sibling of, or
otherwise related (by blood or by law) to, any of (i), (ii) or (iii) above, and
(v) is not affiliated with a person or entity of which the Mortgagor or any
Affiliate of same is a present or former customer or supplier, provided,
however, that an entity that provides independent directors as a service for a
fee is not prohibited under this paragraph from providing one or more
independent directors to the Mortgagor. In the event of the death, incapacity,
resignation or removal of an Independent Director, the Board of Directors of the
Mortgagor shall promptly appoint a replacement Independent Director and no
action requiring the consent of the Independent Director shall be taken until a
replacement Independent Director has been appointed. In addition, no Independent
Director may be removed unless his or her successor satisfying the definition
hereunder has been appointed;

            (ee) Mortgagor shall, and shall cause Corporate Property Associates
16-Global Incorporated to, conduct its business so as to cause all of the
assumptions set forth in that certain legal opinion of Reed Smith LLP with
respect to substantive consolidation and similar matters dated on or about the
date hereof, to be true, correct and complete; and

            (ff) shall not invest any of the Mortgagor's funds in securities
issued by any Affiliate.

      "Affiliate" means, with respect to a person or entity, any other person or
entity (i) which owns beneficially, directly or indirectly, more than ten
percent (10%) of the outstanding shares of Common Stock or which is otherwise in
control of the person or entity in question, (ii) of which more than ten percent
(10%) of the outstanding voting securities are owned beneficially, directly or
indirectly, by such person or entity or by any entity described in clause (i)
above, or (iii) which is controlled by an entity described in clause (i) above;
provided that for the purposes of this definition the term "control" and
"controlled by" shall have the meanings assigned to them in Rule 405 under the
Securities Act of 1933, as amended.

                                   ARTICLE II

                               EVENTS OF DEFAULT

       Section 2.1 Events of Default. The occurrence of any of the following
shall be an "Event of Default" hereunder:

            (a) Mortgagor fails to punctually perform any convenant, agreement,
obligation, term or condition of the Note, this Mortgage or any other Loan
Document which requires payment of any money to Mortgagee, and such failure
continues for the applicable period set forth therein or, if no period is set
forth, for seven (7) days after such payment becomes due or, if due on demand,
seven (7) days after such payment is demanded in writing (except those regarding
payments to be made under the Note, which failure is subject to any grace
periods set forth in the Note).

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<PAGE>

            (b) Mortgagor fails to provide insurance as required by Section 1.4
hereof or fails to perform any covenant, agreement, obligation, term or
condition set forth in Section 1.5 or 1.33 hereof unless, with respect to
Section 1.33, within ten (10) days after notice from Mortgagee thereof, such
failure is cured.

            (c) Mortgagor fails to perform any other covenant, agreement,
obligation, term or condition set forth herein other than those otherwise
described in this Section 2.1 and, to the extent such failure or default is
susceptible of being cured, the continuance of such failure or default for
thirty (30) days after written notice thereof from Mortgagee to Mortgagor;
provided, however, that if such default is susceptible of cure but such cure
cannot be accomplished with reasonable diligence within said period of time, and
if Mortgagor commences to cure such default promptly after receipt of notice
thereof from Mortgagee, and thereafter prosecutes the curing of such default
with reasonable diligence, such period of time shall be extended for such period
of time as may be necessary to cure such default with reasonable diligence, but
not to exceed ninety (90) days in the aggregate.

            (d) Any representation or warranty made herein, in or in connection
with any application or commitment relating to the loan evidenced by the Note,
or in any of the other Loan Documents to Mortgagee by Mortgagor, by any
principal or general partner, managing member or shareholder, as applicable, in
Mortgagor or by any indemnitor or guarantor under any indemnity or guaranty
executed in connection with the indebtedness secured hereby is determined by
Mortgagee to have been false or misleading in any material respect at the time
made.

            (e) There shall be a sale, conveyance, disposition, alienation,
hypothecation, leasing, assignment, pledge, mortgage, granting of a security
interest in or other transfer or further encumbrancing of the Property,
Mortgagor or its general partners, managing members or shareholder, as
applicable, or any portion thereof or any interest therein, in violation of
Section 1.13 hereof.

            (f) A default occurs under any of the other Loan Documents which has
not been cured within any applicable notice, grace or cure period therein
provided.

            (g) Mortgagor, any principal or general partner or managing member,
as applicable, in Mortgagor or any indemnitor or guarantor under any indemnity
or guaranty executed in connection with the indebtedness secured hereby shall
make a transfer in fraud of creditors, or shall make an assignment for the
benefit of creditors, shall file a petition in bankruptcy, shall voluntarily be
adjudicated insolvent or bankrupt, shall petition or apply to any tribunal for
or shall consent to or shall not contest the appointment of a receiver, trustee,
custodian or similar officer for Mortgagor, for any such principal or general
partner or managing member, as applicable, of Mortgagor or for any such
indemnitor or guarantor or for a substantial part of the assets of Mortgagor, of
any such principal or general partner or managing member, as applicable, of
Mortgagor or of any such indemnitor or guarantor, or shall commence any case,
proceeding or other action under any bankruptcy, reorganization, arrangement,
readjustment or debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect.

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<PAGE>

              (h) A petition is filed or any case, proceeding or other action is
commenced against Mortgagor, against any principal or general partner or
managing member, as applicable, of Mortgagor or against any indemnitor or
guarantor under any indemnity or guaranty executed in connection with the
indebtedness secured hereby seeking to have an order for relief entered against
it as debtor or seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts or other relief under any law
relating to bankruptcy, insolvency, arrangement, reorganization, receivership or
other debtor relief under any law or statute of any jurisdiction whether now or
hereafter in effect or a court of competent jurisdiction enters an order for
relief against Mortgagor, against any principal or general partner or managing
member, as applicable, of Mortgagor or against any indemnitor or guarantor under
any indemnity or guaranty executed in connection with the loan secured hereby,
as debtor, or an order, judgment or decree is entered appointing, with or
without the consent of Mortgagor, of any such principal or general partner or
managing member, as applicable, of Mortgagor or of any such indemnitor or
guarantor, a receiver, trustee, custodian or similar officer for Mortgagor, for
any such principal or general partner or managing member, as applicable, of
Mortgagor or for any such indemnitor or guarantor, or for any substantial part
of any of the properties of Mortgagor, of any such principal or general partner
or managing member, as applicable, of Mortgagor or of any such indemnitor or
guarantor, and if any such event shall occur, such petition, case, proceeding,
action, order, judgment or decree shall not be dismissed within sixty (60) days
after being commenced.

            (i) The Property or any material part thereof shall be taken on
execution or other process of law in any action against Mortgagor (but expressly
executing any taking by power of eminent domain).

            (j) Mortgagor abandons all or a portion of the Property.

            (k) The holder of any lien or security interest on the Property
(without implying the consent of Mortgagee to the existence or creation of any
such lien or security interest), whether superior or subordinate to this
Mortgage or any of the other Loan Documents, declares a default and such default
is not cured within any applicable grace or cure period set forth in the
applicable document and such holder institutes foreclosure or other proceedings
for the enforcement of its remedies thereunder.

            (l) The Property, or any part thereof, is subjected to actual waste
or to removal, demolition or material alteration so that the value of the
Property is materially diminished hereby and Mortgagee determines (in its
subjective determination) that it is not adequately protected from any loss,
damage or risk associated therewith.

            (m) Any dissolution, termination, partial or complete liquidation,
merger or consolidation of Mortgagor or any general partner or Guarantor.

            (n) Mortgagor defaults under the Primary Lease, and such default
continues beyond any applicable notice and/or cure period thereunder.

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<PAGE>

                                   ARTICLE III

                                    REMEDIES

      Section 3.1 Remedies Available. If there shall occur on Event of Default
under this Mortgage, then this Mortgage is subject to foreclosure as provided by
law and Mortgagee may, at its option and by or through a trustee nominee,
assignee or otherwise, to the fullest extent permitted by law, exercise any or
all of the following rights, remedies and recourses, either successively or
concurrently:

            (a) Acceleration. Accelerate the maturity date of the Note and
declare any or all of the indebtedness secured hereby to be immediately due and
payable without any presentment, demand, protest, notice or action of any kind
whatever (each of which is hereby expressly waived by Mortgagor), whereupon the
same shall become immediately due and payable. Upon any such acceleration,
payment of such accelerated amount shall constitute a prepayment of the
principal balance of the Note and any applicable prepayment fee provided for in
the Note shall then be immediately due and payable.

            (b) Entry on the Property. Either in person or by agent, with or
without bringing any action or proceeding, or by a receiver appointed by a court
and without regard to the adequacy of its security, enter upon and take
possession of the Property, or any part thereof, without force or with such
force as is permitted by law and without notice or process or with such notice
or process as is required by law unless such notice and process is waivable, in
which case Mortgagor hereby waives such notice and process, and do any and all
acts and perform any and all work which may be desirable or necessary in
Mortgagee's judgment to complete any unfinished construction on the Land, to
preserve the value, marketability or rentability of the Property, to increase
the income therefrom, to manage and operate the Property or to protect the
security hereof and all sums expended by Mortgagee therefor, together with
interest thereon at the Default Interest Rate, shall be immediately due and
payable to Mortgagee by Mortgagor on demand and shall be secured hereby and by
all of the other Loan Documents securing all or any part of the indebtedness
evidenced by the Note.

            (c) Collect Rents and Profits. With or without taking possession of
the Property, sue or otherwise collect the Rents and Profits, including those
past due and unpaid.

            (d) Appointment of Receiver. Upon, or at any time prior to or after,
initiating the exercise of any power of sale, instituting any judicial
foreclosure or instituting any other foreclosure of the liens and security
interests provided for herein or any other legal proceedings hereunder, make
application to a court of competent jurisdiction for appointment of a receiver
for all or any part of the Property, as a matter of strict right and without
notice to Mortgagor and without regard to the adequacy of the Property for the
repayment of the indebtedness secured hereby or the solvency of Mortgagor or any
person or persons liable for the payment of the indebtedness secured hereby, and
Mortgagor does hereby irrevocably consent to such appointment, waives any and
all noticed of and defenses to such appointment and agrees not to oppose any
application therefor by Mortgagee, but nothing herein is to be construed to
deprive Mortgagee of any other right, remedy or privilege Mortgagee may now have
under the law to

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<PAGE>

have a receiver appointed, provided, however, that, the appointment of such
receiver, trustee or other appointee by virtue of any court order, statute or
regulation shall not impair or in any manner prejudice the rights of Mortgagee
to receive payment of the Rents and Profits pursuant to other terms and
provisions hereof. Any such receiver shall have all of the usual powers and
duties of receivers in similar cases, including, without limitation, the full
power to hold, develop, rent, lease, manage, maintain, operate and otherwise use
or permit the use of the Property upon such terms and conditions as said
receiver may deem to be prudent and reasonable under the circumstances as more
fully set forth in Section 3.3 below. Such receivership shall, at the option of
Mortgagee, continue until full payment of all of the indebtedness secured hereby
or until title to the Property shall have passed by foreclosure sale under this
Mortgage or deed in lieu of foreclosure. This Mortgage is given upon the
conditions stated herein and upon the statutory conditions for any breach of
which Mortgagee shall have statutory power of sale.

            (e) Foreclosure. Immediately commence an action or proceeding to
foreclose this Mortgage or to specifically enforce its provisions with respect
to the indebtedness secured hereby pursuant to the statutes in such case made
and provided and sell the Property or cause the Property to be sold in
accordance with the requirements and procedures provided by said statutes in a
single parcel or in several parcels at the option of Mortgagee.

                  (1) In the event foreclosure proceedings are filed by
      Mortgagee, all expenses incident to such proceeding, including, but not
      limited to, attorneys' fees and costs, shall be paid by Mortgagor and
      secured by this Mortgage and by all of the other Loan Documents securing
      all or any part of the indebtedness evidenced by the Note. The secured
      indebtedness and all other obligations secured by this Mortgage,
      including, without limitation, interest at the Default Interest Rate (as
      defined in the Note), any prepayment charge, fee or premium required to be
      paid under the Note in order to prepay principal (to the extent permitted
      by applicable law), attorneys' fees and any other amounts due and unpaid
      to Mortgagee under the Loan Documents, may be bid by Mortgagee in the
      event of a foreclosure sale hereunder. In the event of a judicial sale
      pursuant to a foreclosure decree, it is understood and agreed that
      Mortgagee or its assigns may become the purchaser of the Property or any
      part thereof.

                  (2) Mortgagee may, by following the procedures and satisfying
      the requirements prescribed by applicable law, foreclose on only a portion
      of the Property and, in such event, said foreclosure shall not affect the
      lien of this Mortgage on the remaining portion of the Property foreclosed.

            (f) Other. Exercise any other right or remedy available hereunder,
under any of the other Loan Documents or at law or in equity.

      Section 3.2 Application of Proceeds. To the fullest extent permitted by
law, the proceeds of any sale under this Mortgage shall be applied to the extent
funds are so available to the following items in such order as Mortgagee in its
discretion may determine:

            (a) To payment of the costs, expenses and fees of taking possession
of the Property, and of holding, operating, maintaining, using, leasing,
repairing, improving, marketing

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<PAGE>
and selling the same and of otherwise enforcing Mortgagee's rights and remedies
hereunder and under the other Loan Documents, including, hut not limited to,
receivers' fees, court costs, attorneys', accountants', appraisers', managers'
and other professional fees, title charges and transfer taxes.

            (b) To payment of all sums expended by Mortgagee under the terms of
any of the Loan Documents and not yet repaid, together with interest on such
sums at the Default Interest Rate.

            (c) To payment of the secured indebtedness and all other obligations
secured by this Mortgage, including, without limitation, interest at the Default
Interest Rate and, to the extent permitted by applicable law, any prepayment
fee, charge or premium required to be paid under the Note in order to prepay
principal, in any order that Mortgagee chooses in its sole discretion.

            The remainder, if any, of such funds shall be disbursed to Mortgagor
or to the person or persons legally entitled thereto.

      Section 3.3 Right and Authority of Receiver or Mortgagee in the Event of
Default; Power of Attorney. Upon the occurrence of an Event of Default
hereunder, and entry upon the Property pursuant to Section 3.1(b) hereof or
appointment of a receiver pursuant to Section 3.1(d) hereof, and under such
terms and conditions as may be prudent and reasonable under the circumstances in
Mortgagee's or the receiver's sole discretion, all at Mortgagor's expense,
Mortgagee or said receiver, or such other persons or entities as they shall
hire, direct or engage, as the case may be, may do or permit one or more of the
following, successively or concurrently: (a) enter upon and take possession and
control of any and all of the Property; (b) take and maintain possession of all
documents, books, records, papers and accounts relating to the Property; (c)
exclude Mortgagor and its agents, servants and employees wholly from the
Property; (d) manage and operate the Property; (e) preserve and maintain the
Property; (f) make repairs and alterations to the Property; (g) complete any
construction or repair of the Improvements, with such changes, additions or
modifications of the plans and specifications or intended disposition and use of
the Improvements as Mortgagee may in its sole discretion deem appropriate or
desirable to place the Property in such condition as will, in Mortgagee's sole
discretion, make it or any part thereof readily marketable or rentable;
(h) conduct a marketing or leasing program with respect to the Property, or
employ a marketing or leasing agent or agents to do so, and direct the leasing
or sale of the Property under such terms and conditions as Mortgagee may in its
sole discretion deem appropriate or desirable; (i) employ such contractors,
subcontractors, materialmen, architects, engineers, consultants, managers,
brokers, marketing agents, or other employees, agents, independent contractors
or professionals, as Mortgagee may in its sole discretion deem appropriate or
desirable to implement and effectuate the rights and powers herein granted; (j)
execute and deliver, in the name of Mortgagee as attorney-in-fact and agent of
Mortgagor or in its own name as Mortgagee, such documents and instruments as are
necessary or appropriate to consummate authorized transactions; (k) enter into
such Leases, whether of real or personal property, under such terms and
conditions as Mortgagee may in its sole discretion deem appropriate or
desirable; (l) collect and receive the Rents and Profits from

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<PAGE>
the Property; (m) eject Tenants or repossess personal property, as provided by
law, for breaches of the conditions of their Leases; (n) sue for unpaid Rents
and Profits, payments, income or proceeds in the name of Mortgagor or Mortgagee;
(o) maintain actions in forcible entry and detainer, ejectment for possession
and actions in distress for rent; (p) compromise or give acquittance for Rents
and Profits, payments, income or proceeds that may become due; (q) delegate or
assign any and all rights and powers given to Mortgagee by this Mortgage; and
(r) do any acts which Mortgagee in its sole discretion deems appropriate or
desirable to protect the security hereof and use such measures, legal or
equitable, as Mortgagee may in its sole discretion deem appropriate or desirable
to implement and effectuate the provisions of this Mortgage. This Mortgage shall
constitute a direction to and full authority to any Tenant, lessee, or other
third party who has heretofore dealt or contracted or may hereafter deal or
contract with Mortgagor or Mortgagee, at the request of Mortgagee, to pay all
amounts owing under any Lease, contract or other agreement to Mortgagee without
proof of the Event of Default relied upon. Any such Tenant, lessee or third
party is hereby irrevocably authorized to rely upon and comply with (and shall
be fully protected by Mortgagor in so doing) any request, notice or demand by
Mortgagee for the payment to Mortgagee of any Rents and Profits or other sums
which may be or thereafter become due under its Lease, contract or other
agreement, or for the performance of any undertakings under any such Lease,
contract or other agreement, and shall have no right or duty to inquire whether
any Event of Default under this Mortgage, or any default under any of the other
Loan Documents, has actually occurred or is then existing. Mortgagor hereby
constitutes and appoints Mortgagee, its assignees, successors, transferees and
nominees, as Mortgagor's true and lawful attorney-in-fact and agent, with full
power of substitution in the Property, in Mortgagor's name, place and stead, to
do or permit any one or more of the foregoing described rights, remedies, powers
and authorities, successively or concurrently, and said power of attorney shall
be deemed a power coupled with an interest and irrevocable so long as any
indebtedness secured hereby is outstanding. Any money advanced by Mortgagee in
connection with any action taken under this Section 3.3, together with interest
thereon at the Default Interest Rate from the date of making such advancement by
Mortgagee until actually paid by Mortgagor, shall be a demand obligation owing
by Mortgagor to Mortgagee and shall be secured by this Mortgage and by every
other instrument securing the secured indebtedness.

      Section 3.4 Occupancy After Foreclosure. In the event there is a
foreclosure sale hereunder and at the time of such sale, Mortgagor or
Mortgagor's representatives, successors or assigns, or any other persons
claiming any interest in the Property by, through or under Mortgagor (except
tenants of space in the Improvements subject to Leases entered into prior to the
date hereof), is or are occupying or using the Property, or any part thereof,
then, to the extent not prohibited by applicable law, each and all shall, at the
option of Mortgagee or the purchaser at such sale, as the case may be,
immediately become the tenant of the purchaser at such sale, which tenancy shall
be a tenancy from day-to-day, terminable at the will of either landlord or
tenant, at a reasonable rental per day based upon the value of the Property
occupied or used, such rental to be due daily to the purchaser. Further, to the
extent permitted by applicable law, in the event the tenant fails to surrender
possession of the Property upon the termination of such tenancy, the purchaser
shall be entitled to institute and maintain an action for unlawful detainer of
the Property in the appropriate court of the county in which the Land is
located.

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<PAGE>

      Section 3.5 Notice to Account Debtors. Mortgagee may, at any time after an
Event of Default hereunder, notify the account debtors and obligors of any
accounts, chattel paper, negotiable instruments or other evidences of
indebtedness, to Mortgagor included in the Property to pay Mortgagee directly.
Mortgagor shall at any time or from, time to time upon the request of Mortgagee
provide to Mortgagee a current list of all such account debtors and obligors and
their addresses.

      Section 3.6 Cumulative Remedies. All remedies contained in this Mortgage
are cumulative and Mortgagee shall also have all other remedies provided at law
and in equity or in any other Loan Documents. Such remedies may be pursued
separately, successively or concurrently at the sole subjective discretion of
Mortgagee and may be exercised in any order and as often as occasion therefor
shall arise. No act of Mortgagee shall be construed as an election to proceed
under any particular provisions of this Mortgage to the exclusion of any other
provision of this Mortgage or as an election of remedies to the exclusion of any
other remedy which may then or thereafter he available to Mortgage. No delay or
failure by Mortgagee to exercise any right or remedy under this Mortgage shall
be construed to be a waiver of that right or remedy or of any Event of Default
hereunder. Mortgagee may exercise any one or more of its rights add remedies at
its option without regard to the adequacy of its security.

      Section 3.7 Payment of Expenses. Mortgagor shall pay on demand all of
Mortgagee's expenses incurred in any efforts to enforce any terms of this
Mortgage whether or not any lawsuit is filed and whether or not foreclosure is
commenced but not completed, including, but not limited to, reasonable legal
fees and disbursements, foreclosure costs and title charges, together with
interest thereon from and after the date incurred by Mortgagee until actually
paid by Mortgagor at the Default Interest Rate, and the same shall be secured by
this Mortgage and by all of the other Loan Documents securing all or any part
of the indebtedness evidenced by the Note.

                                   ARTICLE IV

                             INTENTIONALLY OMITTED

                                   ARTICLE V

                       MISCELLANEOUS TERMS AND CONDITIONS

      Section 5.1 Time of Essence. Time is of the essence with, respect to all
provisions of this Mortgage.

      Section 5.2 Release of Mortgage. If all of the secured indebtedness be
paid, then and in that event only, all rights under this Mortgage shall
terminate except for those provisions hereof which by their terms survive, and
the Property shall become wholly clear of the liens, Security interests,
conveyances and assignment evidenced hereby, which shall be released by
Mortgagee in due form at Mortgagor's cost. No release of this Mortgage or the
lien hereof shall be valid unless executed by Mortgagee.

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      Section 5.3 Certain Rights of Mortgagee. Without affecting Mortgagor's
liability for the payment of and of the indebtedness secured hereby, Mortgage
may from time to time and without notice to Mortgagor: (a) release any person
liable for the payment of the indebtedness secured hereby; (b) extend or modify
The terms of payment of the indebtedness secured hereby; (c) accept additional
real or personal property of any kind as security or alter, substitute, or
release any property securing the indebtedness secured hereby; (d) recover any
part of the Property; (e) consent in writing to the making of any subdivision
map or plat thereof; (f) join in granting any easement therein; or (g) join in
any extension agreement of the Mortgage or any agreement subordinating the lien
hereof.

      Section 5.4 Waiver of Certain Defenses. No action for the enforcement of
the lien hereof or of any provision hereof shall be subject to any defense which
would not be good and available to the party interposing the same in an action
at law upon the Note or any of the other Loan Documents.

      Section 5.5 Notices. All notices, demands, requests or other
communications to be sent by one party to the other hereunder or required by law
shall be in writing and shall be deemed to have been validly given or served by
delivery of the same in person to the intended addressee, or by depositing the
same with Federal Express or another reputable private courier service for next
business day delivery, or by depositing the same in the United States mail,
postage prepaid, registered or certified mail, return receipt requested, in any
event addressed to the intended addressee at its address set forth on the first
page of this Mortgage (provided that any notice to Mortgagor hereunder shall
include the following at the end of the address: "Attention: Director, Asset
Management") or at such other address, as may be designated by such party as
herein provided with a copy of any notice to Mortgagor sent to Reed Smith LLP,
One Liberty Place, 1650 Market Street, Philadelphia, PA 19103, Attention: Chair,
Real Estate Group. All notices, demands, and requests shall be effective upon
such personal delivery, or one (1) business day after being deposited with the
private- courier service, or two (2) business days after being deposited in the
United States mail as required above. Rejection or other refusal to accept or
the inability to deliver because of changed address of which no notice was given
as herein required shall be deemed to be receipt of the notice, demand or
request sent. By giving to the other party hereto at least fifteen (15) days'
prior written notice thereof in accordance with the provisions hereof, the
parties hereto shall have the right from time to time to change their respective
addresses and each shall have the right to specify as its address any other
address within the United States of America.

      Section 5.6 Successors and Assigns. The terms, provisions, indemnities,
covenants and conditions hereof shall be binding upon Mortgagor and the
successors and assigns of Mortgagor, including all successors in interest of
Mortgagor in and to all or any part of the Property, and shall inure to the
benefit of Mortgagee, its directors, officers, shareholders, employees and
agents and their respective successors and assigns and shall constitute
covenants running with the land. All references in this Mortgage to Mortgagor or
Mortgagee shall be deemed to include all such parties' successors and assigns,
and the term "Mortgagee" as used herein shall also mean and refer to any lawful
holder or owner, including pledgees and participants, of any of the
indebtedness secured hereby. If Mortgagor consists of more than one

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person or entity, each will be jointly and severally liable to perform the
obligations of Mortgagor.

      Section 5.7 Severability. A determination that any provision of this
Mortgage is unenforceable or invalid shall not affect the enforceability or
validity of any other provision, and any determination that the application of
any provision of this Mortgage to any person or circumstance is illegal or
unenforceable shall not affect the enforceability or validity of such provision
as it may apply to any other persons or circumstances.

      Section 5.8 Gender. Within this Mortgage, words of any gender shall be
held and construed to include any other gender, and words in the singular shall
be held and construed to include the plural, and vice versa, unless, the context
otherwise requires.

      Section 5.9 Waiver; Discontinuance of Proceedings. Mortgagee may waive any
single Event of Default by Mortgagor hereunder without waiving any other prior
or subsequent Event of Default. Mortgagee may remedy any Event of Default by
Mortgagor hereunder without waiving the Event of Default remedied. Neither the
failure by Mortgagee to exercise, nor the delay by Mortgagee in exercising, any
right, power or remedy upon any Event of Default by Mortgagor hereunder shall be
construed as a waiver of such Event of Default or as a waiver of the right to
exercise any such right, power or remedy at a later date. No single or partial
exercise by Mortgagee of any right, power or remedy hereunder shall exhaust the
same or shall preclude any other or further exercise thereof, and every such
right, power or remedy hereunder may be exercised at any time and from time to
time. No modification or waiver of any provision hereof nor consent to any
departure by Mortgagor therefrom shall in any event be effective unless the same
shall be in writing and signed by Mortgagee, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
given. No notice to nor demand on Mortgagor in any case shall of itself entitle
Mortgagor to any other or further notice or demand in similar or other
circumstances. Acceptance by Mortgagee of any payment in an amount less than the
amount then due on any of the secured indebtedness shall be deemed in acceptance
on account only and shall not in any way affect the existence of a Default or an
Event of Default hereunder. In case Mortgagee shall have proceeded to invoke any
right, remedy or recourse permitted hereunder or under the other Loan Documents
and shall thereafter elect to discontinue or abandon the same for any reason,
Mortgagee shall have the unqualified right to do so and, in such an event.
Mortgagor and Mortgagee shall be restored to their former positions with respect
to the indebtedness secured hereby, the Loan Documents, the Property and
otherwise, and the rights, remedies, recourses and powers of Mortgagee shall
continue as if the same had never been invoked.

      Section 5.10 Section Headings. The headings of the sections and paragraphs
of this Mortgage are for convenience of reference only, are not to be considered
a part hereof and shall not limit or otherwise affect any of the terms hereof.

      Section 5.11 Governing Law. This Mortgage will be governed by and
construed in accordance with the laws of the State of New Hampshire,provided
that to the extent any of such laws may now or hereafter be preempted by Federal
law, in such case such Federal law shall so govern and be controlling.

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      Section 5.12 Counting of Days. The term "days" when used herein shall
mean calender days. If any time period ends on a Saturday, Sunday or holiday
officially recognized by the state within which the Land is located, the period
shall be deemed to end on the next succeeding business day. The term "business
day" when used herein shall mean a weekday, Monday through Friday, except a
legal holiday or a day on which banking institutions, in the State in which the
Land is located are authorized by law to be closed.

      Section 5.13 Relationship of the Parties. The relationship between
Mortgagor and Mortgagee is that of a borrower and a lender only and neither of
those parties is, nor shall it hold itself to be, the agent, employee, joint
venturer or partner of the other party.

      Section 5.14 Application of the Proceeds of the Note. To the extent that
proceeds of the Note are used to pay indebtedness secured by any outstanding
lien, security interest, charge or prior encumbrance against the Property, such
proceeds have been advanced by Mortgagee at Mortgagor's request and Mortgagee
shall be subrogated to any and all rights, security interests and liens owned by
any owner or holder of such outstanding liens, security interests, charges or
encumbrances, irrespective of whether said liens, security interests, charges or
encumbrances are released.

      Section 5.15 Unsecured Portion of Indebtedness. If any part of the secured
indebtedness cannot be lawfully secured by this Mortgage or if any part of the
Property cannot be lawfully subject to the lien and security interest hereof to
the full extent of such indebtedness, then all payments made shall be applied on
said indebtedness first in discharge of that portion thereof which is unsecured
by this Mortgage.

      Section 5.16 Cross Default. An Event of Default shall be a default under
each of the other Loan Documents.

      Section 5.17 Interest After Sale. In the event the Property or any part
thereof shall be sold upon foreclosure as provided hereunder, to the extent
permitted by law, the sum for which the same shall have been sold shall, for
purposes of redemption (pursuant to the laws of the state in which the Property
is located), bear interest at the Default Interest Rate.

      Section 5.18 Inconsistency with Other Loan Documents. In the event of any
inconsistency between the provisions hereof and the provisions in any of the
other Loan Documents, it is intended that the provisions selected to control by
Mortgagee in its sole subjective discretion shall be controlling.

      Section 5.19 Construction of this Document. This document may be construed
an a mortgage, security deed, deed of trust, chattel mortgage, conveyance,
assignment, security agreement, pledge, financing statement, hypothecation or
contract, or any one or more of the foregoing, in order to fully effectuate the
liens and security interests created hereby and the purposes and agreements
herein set forth.

      Section 5.20 No Merger. It is the desire and intention of the parties
hereto that this Mortgage and the lien hereof do not merge in fee simple title
to the Property. It is hereby

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understood and agreed that should Mortgagee acquire any additional or other
interests in or to the Property or the ownership thereof, then, unless a
contrary intent is manifested by Mortgagee as evidenced by an appropriate
document duly recorded, this Mortgage and the lien hereof shall not merge in
such other or additional interests in or to the Property, toward the end that
this Mortgage may be foreclosed as if owned by a stranger to said other or
additional interests.

      Section 5.21 Rights With Respect to Junior Encumbrances. Any person or
entity purporting to have or to take a junior mortgage or other lien upon the
Property or any interest therein shall be subject to the rights of Mortgagee to
amend, modify, increase, vary, alter or supplement this Mortgage, the Note or
any of the other Loan Documents and to extend the maturity date of the
indebtedness secured hereby and to increase the amount of the indebtedness
secured hereby and to waive or forebear the exercise of any of its rights and
remedies hereunder or under any of the other Loan Documents and to release any
collateral or security for the indebtedness secured hereby, in each and every
case without obtaining the consent of the holder of such junior lien and without
the Lien or security interest of this Mortgage losing its priority over the
rights of any such junior lien.

      Section 5.22 Mortgagee May File Proofs of Claim. In the case of any
receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment,
composition or other proceedings affecting Mortgagor or the principals or
general partners or members in Mortgagor, or their respective creditors or
property, Mortgagee, to the extent permitted by law, shall be entitled to file
such proofs of claim and other documents as may be necessary or advisable in
order to have the claims of Mortgagee allowed in such proceedings for the entire
secured indebtedness at the date of the institution of such proceedings and for
any additional amount which may become due and payable by Mortgagor hereunder
after such date.

      Section 5.23 Fixture Filing. This Mortgage shall be effective from the
date of its recording as a financing statement filed as a filing with respect to
all goods constituting part of the Property which are or are to become fixtures.
This Mortgage shall also be effective as a financing statement covering mineral
or the like (including oil and gas) and is to be filed for record in the Real
Estate Records of the county where the Property is situated. The mailing address
of Mortgagor and the address of Mortgagee from which information concerning the
security interests may be obtained are set forth in Section 1.22 above.

      Section 5.24 After-Acquired Property. All property acquired by Mortgagor
after the date of this Mortgage which by the terms of this Mortgage shall be
subject to the lien and the security interest created hereby, shall immediately
upon the acquisition thereof by Mortgagor and without further mortgage,
conveyance or assignment become subject to the lien and security interest
created by this Mortgage. Nevertheless Mortgagor shall execute, acknowledge,
deliver and record or file, as appropriate, all and every such, further
mortgages, Security agreements, financing statement, assignments and assurances,
as Mortgagee shall require for accomplishing the purposes of this Mortgage.

      Section 5.25 No Representation. By accepting delivery of any item required
to be observed, performed or fulfilled or to be given to Mortgagee pursuant to
the Loan Documents, including, but not limited to, any officer's certificates,
balance sheet, statement of profit and loss

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or other financial statement, survey , appraisal or insurance policy, Mortgagee
shall not be deemed to have warranted, consented to, or affirmed the
sufficiency, legality, effectiveness or legal effect of the same, or of any term
provision or condition thereof, and such acceptance of delivery thereof shall
not be or constitute any warranty, consent or affirmation with respect thereto
by Mortgagee.

      Section 5.26 Counterparts. This Mortgage may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, for the same effect as if all parties hereto had signed the
same signature page. Any signature page of this Mortgage may be detached from
any counterpart of this Mortgage without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Mortgage
identical in form hereto but having attached to it one or more additional
signature pages.

      Section 5.27 Personal Liability. Notwithstanding anything to the contrary
contained in this Mortgage, the liability of Mortgagor and its officers,
directors, members and general partners for the indebtedness secured hereby and
for the performance of the other agreements, covenants and obligations contained
herein and in the other Loan Documents shall be limited as set forth in Section
1.05 of the Note.

      Section 5.28 Recording and Filing. Mortgagor will cause the Loan Documents
and all amendments and supplements thereto and substitutions therefor to be
recorded, filed, rerecorded and re-filed in such manner and in such places as
Mortgagee shall reasonably request, and will pay on demand all such recording,
filing, re-recording and re-filing taxes, fees and other charges. Mortgagor
shall reimburse Mortgagee, or its servicing agent, for the costs incurred in
obtaining a tax service company to verify the status of payment of taxes and
assessments on the Property.

      Section 5.29 Entire Agreement and Modification. This Mortgage and the
other Loan Documents contain the entire agreements between the parties relating
to the subject matter hereof and thereof and all prior agreements relative
hereto and there which are not contained herein or therein are terminated. This
Mortgage and the other Loan Documents may not be amended, revised, waived,
discharged, released or terminated orally but only by a written instrument or
instruments executed by the party against which enforcement of the amendment,
revision, waiver, discharge, release or termination is asserted. Any alleged
amendment, revision, waiver, discharge, release or termination which is not so
documented shall not be effective as to any party.

      Section 5.30 Maximum Interest. The provisions of this Mortgage and of all
agreements between Mortgagor and Motgagee, whether now existing or hereafter
arising and whether written or oral, are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of demand or acceleration of
the maturity of the Note or otherwise, shall the amount paid, or agreed to be
paid ("Interest"), to Mortgagee for the use, forbearance or retention of the
money loaned under the Note exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, performance or fulfillment
of any provision hereof or of any agreement between Mortgagor and Mortgagee
shall,

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at the time performance or fulfillment of such provision shall be due, exceed
the limit for Interest prescribed by law or otherwise transcend the Limit of
validity prescribed by applicable law, then jpso facto the obligation to be
performed or fulfilled shall be reduced to such limit and if, from any
circumstance whatsoever, Mortgagee shall ever receive anything of value deemed
Interest by applicable law in excess of the maximum lawful amount, an amount
equal to any excessive Interest shall be applied to the reduction of the
principal balance owing under the Note in the inverse order of its maturity
(whether or not then due) or at the option of Mortgagee be paid over to
Mortgagor, and not to the payment of Interest. All Interest (including any
amounts or payments deemed to be Interest) paid or agreed to be paid to
Mortgagee shall, to the extent permitted by applicable Law, be amortized,
prorated, allocated and spread throughout the full period until payment in full
of the principal balance of the Note so that the Interest thereon for such full
period will not exceed the maximum amount permitted by applicable law. This
paragraph will control all agreements between Mortgagor and Mortgagee.

            Section 5.31 Interest Payable by Mortgagee. Mortgagee shall cause
funds in the Replacement Reserve, the Leasing Reserve and any Cash Security
Deposit, as applicable, (the foregoing, the "Interest Bearing Reserves") to be
deposited into an Eligible Account and invested in Permitted Investments(each as
defined in Exhibit D). All interest earned on amounts Contributed to the
Interest Bearing Reserves shall be retained by Mortgagee and accumulated for the
benefit of and added to the balance in the applicable account and shall be
disbursed for payment of the items for which other funds in the applicable
Reserve or the Cash Security Deposit are to be disbursed.

            Section 5.32 Further Stipulations. The additional covenants,
agreements and provisions set forth in Exhibits C and D attached hereto and made
a part hereof, if any, shall be a part of this Mortgage and shall, in the event
of any conflict between such further stipulations and any of the other
provisions of this Mortgage, be deemed to control.

            Section 5.33 Request for Notice. Mortgagor hereby requests a copy of
any notice of default and any notice of sale hereunder be mailed to Mortgagor at
the address set forth in the first paragraph of this Mortgage and to the
attention of the Asset Director or at such other address or addresses that
Mortgagor may designate pursuant to Section 5.5 hereof with a copy to Reed Smith
LLP, One Liberty Place, Philadelphia, Pennsylvania 19103, Attn: Chairman, Real
Estate Department.

            Section 5.34 Modification of Primary Lease for Expansion of the
Improvements.

      (a) The Lafayette Factory Expansion (as defined in the Primary Lease)
and/or the Additional Improvements (as defined in the Primary Lease) may be
constructed, but only if Mortgagor satisfies all of the provisions of this
Section 5.34 with respect thereto.

      (b) As used herein, "Expansion" shall Mean the Lafayette Factory Expansion
and/or any Additional Improvements, as applicable. As used herein, "Expansion
Work" shall mean any Lafayette Factory Expansion Work (as defined below) and/or
any Additional Improvements Expansion Work (as defined below), as applicable.

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      (c) Construction of the Lafayette Factory Expansion. The construction of
the Lafayette Factory Expansion may be performed (and same shall not violate the
provisions of Section 1.16 hereof) so long no site preparation, demolition,
construction, alteration, renovation or other work performed in connection with
the Lafayette Factory Expansion ("Lafayette Factory Expansion Work") shall be
performed unless all of the following conditions are satisfied (in each case as
determined by Mortgagee):

   1. No Event of Default has occurred and is continuing as of the commencement
      of the Lafayette Factory Expansion Work;

   2. Mortgagor shall provide Mortgagee with written notice of the proposed
      Lafayette Factory Expansion not less than 45 days prior to the
      commencement of the proposed Lafayette Factory Expansion Work (a
      "Lafayette Expansion Notice");

   3. Mortgagor shall provide evidence to Mortgagee that the contractor
      performing such work maintains, during any construction, builder's risk
      and other insurance coverage in amounts, with carriers and with
      deductibles as required under Section 1.4 of this Mortgage (which such
      insurance policies shall name Mortgagee as an additional insured and shall
      in all events comply with all of the requirements set forth in Section 1.4
      of this Mortgage with respect to insurance coverages);

   4. Mortgagee must approve, in advance, (i) the plans and specifications for
      the Lafayette Factory Expansion Work (collectively, the "Lafayette Factory
      Expansion Plans"), which approval shall not be unreasonably withheld so
      long as Mortgagee determines that the Lafayette Factory Expansion will not
      have an adverse effect on the use, operation or value of the Property
      and/or the existing Improvements and that the Lafayette Factory Expansion
      will be architecturally harmonious in both material and design with the
      existing Improvements and (ii) the general contract for the Expansion
      Work, and such other items as Mortgagee may reasonably request in
      connection with same, which such approval shall not be unreasonably
      withheld; Mortgagor must deliver to Mortgagee the items required pursuant
      to the foregoing clause not less than twenty (20) days prior to the
      commencement of any Lafayette Factory Expansion work;

   5. Mortgagor shall deliver to Mortgagee evidence reasonably satisfactory to
      Mortgagee that Mortgagor (or Primary Tenant, if Primary tenant shall
      perform the Lafayette Factory Expansion Work) has obtained, or caused to
      be obtained, all necessary governmental approvals and permits in
      connection with the performance of the Lafayette Factory Expansion Work
      pursuant to the Lafayette Factory Expansion Plans;

   6. Mortgagor shall demonstrate to the reasonable satisfaction that Mortgagor
      (or Primary Tenant, if Primary Tenant shall perform the Lafayette Factory
      Expansion Work) has available sufficient funds to pay for all of the
      projected costs of the Lafayette Factory Expansion Work plus a reasonable
      contingency therefor not to exceed 10% of such projected costs. In
      furtherance of the foregoing, Mortgagor (or Primary Tenant, if Primary
      Tenant shall perform the Lafayette Factory Expansion Work) shall be
      required to provide to Mortgagee such security for payment of the cost of
      any such Lafayette Factory Expansion Work as may be reasonably required by
      Mortgagee, which may be in

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      the form of (A) a cash deposit or (B) a letter of Credit in form and
      issued by a financial institution acceptable to Mortgagee (and, so long as
      no Event of Default has occurred and is continuing, the amount of such
      security shall be reduced periodically upon Mortgagor's request on a
      prorata basis as the related construction work is completed).

7.    The general contractor shall provide a payment and performance bond in an
      amount not less than the general contract price;

8.    Mortgagor shall provide to Mortgagee evidence reasonably satisfactory to
      Mortgagee that the Lafayette Factory Expansion Work shall not impair the
      use of the Improvements by any Tenant and its respective invitees nor
      shall it impair the use of the on-site parking areas at the Property;

9.    All improvements constructed in connection with the Lafayette Factory
      Expansion Work shall be the property of Mortgagor and shall be subject to
      the lien of this Mortgage;

10.   All of the General Conditions (as defined below) shall be satisfied;
      and

11.   If the Initial Condominium Recording (as defined in Exhibit E hereof) has
      occurred prior to the completion of the Lafayette Factory Expansion Work,
      then upon the completion of the Lafayette Factory Expansion Work,
      Mortgagor shall record (or cause to be recorded) in the Rockingham County
      Registry of Deeds an amendment to the Condominium Declaration (as defined
      in Exhibit E hereof) and the Condominium Site Plan (as defined in
      Exhibit E hereof) (together with the Foss Condominium Exterior Unit Plan
      for Unit 2 (as defined in the Condominium Declaration), which such
      amendment shall add the Lafayette Factory Expansion to Unit 2 of the
      Condominium (as defined in Exhibit E hereof).

      (d) Construction of the Additional Improvements. The construction of
Additional Improvements may be performed (and same shall not violate the
provisions of Section 1.16 hereof) so long no site preparation demolition,
construction, alteration, renovation or other work performed in connection with
the Additional Improvements ("Additional Improvements Expansion Work") shall be
performed unless, all of the following conditions (collectively, the "Additional
Improvements Requirements") are satisfied (in each case as determined by
Mortgagee):

1.    No Event of Default has occurred and is continuing as of the commencement
      of the Additional Improvements Expansion Work;

2.    Mortgagor shall provide Mortgagee with written notice of the proposed
      Additional Improvements (an "Additional Improvements Notice") not less
      than 45 days prior to the commencement of the proposed Additional
      Improvements Expansion Work;

3.    Mortgagor shall provide evidence to Mortgagee that the contractor
      performing such work maintains, during any construction, builder's risk
      and other insurance coverage in amounts, with carriers and with
      deductibles as required under Section 1.4 of this Mortgage (which such
      insurance policies shall name Mortgagee as an additional insured and shall
      in all events comply with all of the requirements set forth in Section 1.4
      of this

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      Mortgage with respect to insurance coverages);

4.    Mortgagee most approve, in advance, the plans and specifications for the
      Additional Improvements Expansion Work (collectively, the "Additional
      Improvements Plans"), which approval shall not be unreasonably withheld so
      long as Mortgagee reasonably determines that the Additional Improvements
      will not have an adverse effect on the use, operation or value of the
      Property and/or the existing Improvements, Mortgagor must deliver to
      Mortgagee the items required pursuant to the foregoing clause not less
      than twenty (20) days prior to the commencement of any Additional
      Improvements Expansion Work;

5.    Mortgagor shall deliver to Mortgagee evidence reasonably satisfactory to
      Mortgagee that Mortgagor (or Primary Tenant, if Primary Tenant shall
      perform the Additional Improvements Expansion Work) has obtained, or
      caused to be obtained, all necessary governmental approvals and permits in
      connection with the performance of the Additional Improvements Expansion
      Work pursuant to the Additional Improvements Plans;

6.    Mortgagor shall demonstrate to the reasonable satisfaction of
      Mortgagee that the Mortgagor (or Primary Tenant, if Primary Tenant shall
      perform the Additional Improvements Expansion Work) has available
      sufficient funds to pay for all of the projected costs of the Additional
      Improvements Expansion Work plus a reasonable contingency therefor not to
      exceed 10% of such projected costs. In furtherance of the foregoing,
      Mortgagor (or Primary Tenant, if Primary Tenant shall perform the
      Additional Improvements Expansion Work) shall be required to provide to
      Mortgagee such security for payment of the cost of any such Additional
      Improvements Expansion Work as may be reasonably required by Mortgagee,
      which may be in the form of (A) a cash deposit or (B) a letter of credit
      in form and issued by a financial institution acceptable to Mortgagee
      (and, so long as no Event of Default has occurred and is continuing, the
      amount of such security shall be reduced periodically upon Mortgagor's
      request on a prorata basis as the related construction work is completed;

7.    The general contractor shall provide a payment and performance bond in an
      amount not less than the general contract price;

8.    Mortgagor shall provide to Mortgagee evidence reasonably satisfactory to
      Mortgagee that the Additional Improvements Expansion Work shall not
      impair the use of the on-site parking areas at the Property;

9.    Mortgagor shall provide evidence satisfactory to Mortgagee that the
      Additional Improvements can be constructed without the requirement for any
      modification of the Improvements (except for minor relocations of certain
      parking areas and driveways within the Property, provided that same shall
      in no event decrease the number of parking spaces available for use by the
      Tenants at the Property or adversely affect the vehicular access to or
      within the Property);

10.   In no event shall the Basic Rent (as defined in the Primary Lease) under
      the Primary Lease be reduced below $2,769,250 per annum in connection with
      the construction of the Additional Improvements and/or the release of the
      New Unit (as defined below) from the

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      Primary Lease.

11.   Prior to the commencement of any Additional Improvements Expansion Work,
      the Mortgagor shall satisfy all of the provisions set forth on Exhibit E
      annexed hereto (collectively, the "Condominium Provisions");

12.   Prior to the commencement of any Additional Improvements Expansion Work,
      Mortgagee shall have received confirmation in writing from each of the
      Rating Agencies that such Additional Improvements Expansion Work (and any
      related actions in connection therewith) will not result in a
      qualification, downgrade or withdrawal of any rating in effect immediately
      prior thereto for any securities issued in connection with a Secondary
      Market Transaction.

13.   All of the General Conditions (as defined below) shall be satisfied;

14.   Upon the completion of the Additional Improvements, Mortgagor shall record
      (or cause to be recorded) in the Rockingham County Registry of Deeds an
      amendment to the Condominium Declaration (as defined in Exhibit E hereof)
      and the Condominium Site Plan (as defined in Exhibit E hereof (together
      with the foss Condominium Exterior Unit Plan fur Units 4 and 5, as the
      case may be,) (collectively, a "New Unit Amendment"), which such amendment
      shall designate the Additional Improvements as a separate and distinct
      unit under the Condominium (as defined in Exhibit E hereof) (the "New
      Unit") which such New Unit shall be located on either the Unit 4
      Convertible Land (as defined in the Primary Lease) or the Unit 5
      Convertible Land (as defined in the Primary Lease). Upon the acceptance of
      the New Unit Amendment by the Rockingham County Registry of Deeds and the
      final designation of the New Unit under the Condominium, the following
      shall occur in the following order: (i) Mortgagee shall release the lien
      of this Mortgage on the New Unit (the "New Unit Mortgage Release"), (ii)
      Mortgagor shall transfer by deed in form customary in New Hampshire and
      reasonably approved by Mortgagee (the "New Unit Deed"), title to the New
      Unit to a third party (the "New Unit Owner") and (iii) the Primary Lease
      shall be amended to terminate solely with respect to the New Unit. In no
      event shall the New Unit Owner be the Mortgagor.

15.   Mortgagor shall provide Mortgagee with an opinion of counsel to Mortgagor
      to the effect that (i) the Condominium Documents (as defined in Exhibit E
      hereof), as modified by the New Unit Amendment, satisfy all applicable
      governmental requirements, including but but limited to those of the
      Condominium Act (as defined in Exhibit E hereof), and that the New Unit
      Amendment was duly prepared and executed and, where necessary, duly filed
      and recorded, (ii) all requirements of every applicable statute, rule or
      ordinance have been duly satisfied so that the New Unit has been validly
      created and (iii) no filing, registration or other requirements of federal
      or state securities or other law or regulation will be required to ensure
      that the enforceability of the lien of the Mortgage is not adversely
      affected (except for the New Unit Mortgage Release); and

16.   The title insurance policy insuring the lien of the Mortgage shall be
      endorsed to provide affirmative insurance to the effect that (A) the
      Mortgage encumbers all of the interests of Mortgagor in the Condominium
      (including, without limitation, all of the Units other than the New Unit),
      (B) the lien of the Mortgage cannot be impaired nor is any superior lien

                                       80
<PAGE>

      on the Property created by the execution or filing of the New Unit
      Amendment, the New Unit Mortgage Release or the New Unit Deed, and (E) all
      of the Units (including the New Unit) are entitled, by law to be assessed
      for real property taxes as separate parcels.

      (c) General Conditions. The following requirements and conditions
(collectively, the "General Conditions") shall apply to both the Lafayette
Factory Expansion Work and any Additional Improvements Expansion work, all of
which shall be satisfied by Mortgagor (as reasonably determined by Mortgagee):

1.    All Expansion Work shall be performed in a workmanlike manner and in
      compliance with all applicable laws, ordinances codes, rules and
      regulations;

2.    The Expansion Work shall not affect, in any respect, the compliance of the
      Property with any applicable law, ordinance, code, rule or regulation, or
      increase the extent of any existing non-conformity therewith;

3.    With respect to the Expansion Work, Mortgagor provides Mortgagee with (i)
      evidence that the Expansion Work will not have an adverse effect on the
      value of the Property and/or the existing improvements, (ii) evidence that
      the Expansion Work will not have a material adverse effect on the use or
      operation of the Property and/or the existing Improvements, (iii) evidence
      that the Expansion Work will not adversely impact the structural integrity
      of the improvements, (iv) evidence that the proposed Expansion Work has
      been approved (and all applicable building permits issued by all
      applicable governmental authorities;

4.    In no event shall Mortgagor incur any indebtedness in connection with the
      Expansion Work and in no event shall all or any portion of the Property be
      encumbered or subjected to any Lien in connection, with the Expansion
      Work.

5.    Mortgagor and Guarantor must indemnify Mortgagee in connection with any
      loss, cost, expense or liability that Mortgagee may incur arising out of
      the Expansion Work, pursuant to a written instrument reasonably
      satisfactory to Mortgagee.

6.    All of the conditions set forth in the Primary Lease with respect to the
      Expansion Work shall have been satisfied;

7.    Upon completion of the Expansion, the Property shall have available to it
      all necessary Utility and other services for its use, occupancy and
      operation, and adequate, free and unimpeded and unencumbered, access for
      pedestrian and vehicular ingress and egress onto adjacent public roads at
      all such locations as are reasonably necessary for the use, occupancy and
      operation of the Property; and

8.    Upon the completion of the Expansion Work, Mortgagor shall provide or
      cause in be provided to Mortgagee an updated as-built survey of the
      Property.

                                       81
<PAGE>

      (f) Whether the proposed Expansion is the Lafayette Factory Expansion or
any Additional Improvements, Mortgagor shall remit to Mortgagee, together with
Mortgagor's notice of the proposed Expansion, a non-refundable processing fee of
$10,000. In addition, to the foregoing, upon demand from time to time. Mortgagor
shall pay or cause to be paid to Mortgagee all costs and expenses incurred by
Mortgagee in connection with this Section 5.34 (including, without limitation,
all reasonable attorneys' fees and costs and any Rating Agency fees).

            Section 5.35 State Specific Provisions. The following provisions
shall govern and control in the event of a conflict with any other provision of
this Mortgage:

                  (a) Mortgage Covenants. This Mortgage is granted with MORTGAGE
COVENANTS.

                  (b) Statutory Conditions. In addition to all provisions stated
above, this Mortgage is subject to the STATUTORY CONDITIONS.

                  (c) Power of Sale. Upon a breach of this Mortgage, the
Mortgagee shall have, in addition to all other remedies set forth above, the
STATUTORY POWER OF SALE.

                  (d) Maximum Stated Amount. The maximum stated amount secured
by this Mortgage shall include all obligations, costs and expenses set forth in
Sections (1),1.26 and 3.1(e)(i) above, and for the purposes of NH RSA 479:3
shall be $17,000,000.00.

                  (e) No Construction. This is not a construction loan and no
portion of the loan proceeds are being disbursed for constructions purposes.

                  (f) Disclosure of Finance Charges. Pursuant to NH RSA 399-B,
Mortgagor makes the Disclosure of Finance Charges dated of even date herewith.

             [No Further Text on this Page; Signature Page Follows]

                                       82
<PAGE>

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

                                        FOSS (NH) QRS 16-3, INC.,
                                        a Delaware corporation

                                        By: /s/ Anne R. Coolidge
                                            -------------------------
                                            Name: Anne R. Coolidge
                                            Title: Managing Director

<PAGE>

State of New York

County of New York

This instrument was acknowledged before me on June 30, 2004, by Anne R.
Coolidge, as Managing Director of FOSS (NH) QRS 16-3, INC., a Delaware
corporation.

                                    /s/ Ziad A. Hammodi
                                    --------------------------
                                    Notary Public, State of NY

                                                       ZIAD A. HAMMODI
                                               Notary Public, State of New York
                                                       No. 01HA8028402
                                                 Qualified in New York County
                                             Commission Expires February 1, 2006

                                      A-1
<PAGE>

                                   EXHIBIT A

                               LEGAL DESCRIPTION

TRACT 1- FACTORY PARCEL

      A certain lot of land with building thereon situated on the southerly
sideline of Exeter Road, in the Town of Hampton, County of Rockingham, State of
New Hampshire being bounded and described as follows:

      Beginning at a 1/4" iron pin found (flush) along the southerly sideline of
Exeter Road at the northeast corner of land now or formerly of Gertrude Lougee;
said pin being located S 60 degrees 41' 43" E, 63.12 feet from a 2 foot high
vertical rail found with scribed "X"; thence along said road S 33 degrees 13'
28" E, 45.76 feet to a 1/4" iron pin found 0.1 feet underground at land now or
formerly of Boston & Maine Railroad Corporation; thence along said railroad land
S 29 degrees 33' 53" W, 49.60 feet; thence by said land S 60 58' 12" E, 17.02
feet to a 1/4" iron pin found 0.3 feet underground; thence along said railroad
land the following courses S 29 degrees 43' 00" W, 456.00 feet to an iron pin;
thence N 66 degrees 29 degrees 11' W, 25.10 feet to an iron pin; thence S 29
degrees 43' 00" W, 511.41 feet to an iron pin; thence N 63 degrees 40' 38" W,
10.02 feet to an iron pin; thence S 29 degrees 43' 00" W, 567.00 feet to a point
at land now or formerly of Foss Realty, Inc., said point being located S 65
degrees 17' 04" W, 1.38 feet from a 5" square granite bound found 1 foot high;
thence along said Foss Realty land the following coursed; N 85 degrees 20' 52"
W, 178.57 feet; thence N 84 degrees 51' 21" W, 193.48 feet; thence N 86 degrees
13' 31" W, 64.37 feet; thence N 84 degrees 11' 51" W, 445.12 feet; thence 85
degrees 47' 11" W, 265.51 feet to an iron pin; thence N 86 degrees 50' 11" W,
196.56 feet; thence N 85 degrees 14' 01" W, 194,42 feet to a point on the
easterly right of way sideline to New Hampshire Route 51; said point being
located N 24 degrees 43' 43" W, 210.03 feet from a New Hampshire Highway bound
found; thence, along said sideline northwesterly along a curve concave to the
east having a radius of 5,025.00 feet and a length of 473.52 feet with a Delta
of 5 degrees 23' 57 and Chord/Bearing of 473.35 feet/ N 20 degrees 49' 53" W to
a New Hampshire Highway bound found; thence, by said sideline N 71 degrees 54'
13" E, 25.08 feet to a new Hampshire Highway Bound found: thence along said
sideline northwesterly along a curve concave to the East having a radius of
5,000,00 feet and length of 414.17 feet with a delta of 4 degrees 44' 46" and a
chord/bearing of 414.05 feet, N 15 degrees 45' 32" W to land now or formerly of
the Timberland Company; thence along said land the following courses; S 68
degrees 07' 38 E, 392.53 feet to an iron pin; thence N 25 degrees 12' 59" E,
71.04 feet to an iron pin thence S 78 degrees 21' 41" E, 320.08 feet to a 30
inch red oak with wire; thence S 77 degrees 17' 21" E, 112.59 feet; thence S 77
degrees 42' 11" E 356.23 feet; thence S 78 degrees 17' 21" E, 105.46 feet;
thence S 78 degrees 56' 11" E, 238,90 feet to an iron pin; thence S 8 degrees
36' 31" E, 12.19 feet to an iron pin; thence S 79 degrees 51" 51" E, 216.42
feet; thence S 77 degrees 26' 11" E, 132.37 feet to a road nail in pavement at
the southeast corner of said land of Timberland Company; thence N 24 degrees 09'
08" E, 37.23 feet; thence N 21 degrees 42 08" E, 298.32 feet to a 12 inch spike
set in northeast base of 24 inch white pine with wire at corner of fence; thence
N 68 degrees 25' 32" W, 1,106.86 feet to a 2 inch iron pipe found 1 foot high
thence N 22 degrees 38' 03" E, 241.73 feet to land now or formerly of Gertrude
Lougee; thence along land of said Lougee the following courses: S 64 degrees 03'
04" E, 114.66 feet to a 1/4 inch iron pin set 0.5 feet high with cap at base of
fence post; thense S 64 degrees 03' 04" E, 286.13 feet to a nail set in 30 inch
red oak with barbed wire; thence S 61 degrees 57' 55" E, 190.59 feet to a nail
set in 30 inch beech with barbed wire; thence S 65 degrees 21' 26" E, 426.20
feet to a nail set in 24 inch yellow birch with barbed wire; thence S 66 degrees
14' 16" E, 269.91 feet to a 1/4 inch iron pin with Hislop cap set at base of
fence post; thence S 75 degrees 05' 15" E, 106.48 feet to an iron pin at the
southeast corner of said land now or formerly of Gertrude Lougee; thence N 29
degrees 42' 36" E, 290.07 feet to a t-bar found flush; thence N 29 degrees 42'
37" E, 242.43 feet to the point beginning.

                                        2
<PAGE>

      The above described parcel containing 37.62 acres is more particularly
shown on plan entitled "As Built Land Title Survey" of land owned by Foss
Manufacturing company, Inc., by Knight Hill Land Surveying Services, Inc., dated
July, 1998, and recorded at the Rockingham County Registry of Deeds as Plan
#D-26503.

      Meaning and intending to convey and describe the premises acquired by the
Grantor herein by deed recorded in the Rockingham County Registry of Deeds at
Book 3631, Page 2762.

      The above described property includes the rights granted under a certain
casement granted by the Boston and Maine Corporation described in an casement
deed recorded at the Rockingham County Registry of Deeds at Book 2261, Page 1262
which casement allows for passage under the railroad trestle to gain access from
Lafayette Road to the above described premises as shown on plan #D-26503.

      The above described property also includes the rights granted to Foss
Manufacturing Company, LLC under a certain "Declaration of Reciprocal Easements"
recorded in the Rockingham County Registry of Deeds at Book 3631, Page 2715.

TRACT II - CORPORATE OFFICE

      A certain lot of land with the buildings thereon situated on the westerly
sideline of Lafayette Road, in the Town of Hampton, County of Rockingham and
State of New Hampshire being bounded and described as follows:

      Beginning at a point on the easterly right of way sideline of Boston &
Maine Railroad corp. at the northwest corner of land now or formerly of Joseph F
Lorusso, II; said point being located N 72 degrees 11' 47" W,4.98 feet from a 3
inch iron pipe found 3 feet high; thence N 29 degrees 43' 00" E,220.77 feet to a
point along an access right of way at land now or formerly of Foss Realty, Inc.;
said point being located S 63 degrees 25' 02" E,23.46 feet from a 2 inch iron
pipe found 0.2 feet high; thence, along said Foss Realty land along said right
of way the following courses: S 79 degrees 09' 50"E,105,43 feet, thence S 74
degrees 14' 47" E,92.50 feet; thence S 63 degrees 13' 39" E,63.55 feet to a
railroad spike in pavement at the westerly right of way sideline of Lafayette
Road; thence along said road sideling the following courses: S 24 degrees 37'
14" W, 44.52 feet; thence S 22 degrees 48' 44" W, 96.21 feet; along a curve
concave to the southeast having a radius of 730 feet and length of 40.00 feet
with a delta of 3 degrees 08'22" and chord/bearing of 39.99 feet; S 21 degrees
14'33" W; S 19 degrees 40'14" W, 35.88 feet to an iron pin at land now or
formerly of Joseph J.Lorusso. II; thence, along said land S 73 degrees 27'47"
E,288.26 feet to the point of beginning.

      The above described parcel containing 1.39 acres is more particularly
shown on a plan entitled "As Built Land Title Survey" of land owned by Foss
Manufacturing Company, Inc., by Knight Hill Land Surveying Services, Inc. dated
July 1998 and recorded in the Rockingham County Registry of Deeds as Plan
#D-26503.

      The above premises include the rights granted under a Declaration of
Reciprocal Easements recorded in the Rockingham County Registry of Deeds at Book
3631,Page 2715.

TRACT III - KNOWN AS THE "TIMBERLAND TRACT"

      A certain lot or land with the buildings thereon situated along the
southerly terminus of Merrill Industrial Drive in the Town of Hampton, County of
Rockingham and State of New Hampshire, being bounded and described as follows:

                                        3
<PAGE>
      Beginning at a 1 1/2 inch iron pipe at the southwest corner of land now or
formerly of Foss Manufacturing Company, Inc.; thence along land of said Foss N
22 degrees 38' 03" E,241.73 feet to a brook at the northern most corner of the
herein described lot at land now or formerly of Snap on tools Corporation;
thence westerly along land of Snap On Tools, the terminus of Merrill Industrial
Drive and land now or formerly of Continental Microwave and Tool Company all
along said brook 715 feet +/- to Drakes River at land now or formerly of Towle
Farm Road Riverwalk Condominiums; thence southwesterly along land of said
condominiums and land now or formerly of Elanor Woodman all at Long Drakes Drive
925 feet +/- to Route 51 right of way boundary; thence along said Route 51
boundary southeasterly along a curve concave to the East having a radius of
5,000 feet and a length of 71.78 feet +/- with a delta of 00 degrees 49' 21" and
chord bearing of 71.78 feet S 12 degrees 58' 29" E to a point at land now or
formerly of Foss Manufacturing Company, Inc., said point being located S 62
degrees 08' 47" W,1172,75 feet from the said northernmost lot corner at brook;
thence along said land the following courses: S 68 degrees 07' 38" E,392.53 feet
to an iron pin; thence N 25 degrees 12' 59" E, 71.04 feet to an iron pin; thence
S 88 degrees 21' 41" E, 320.08 feet to a 40" red oak with wire; thence S 77
degrees 17' 21" E, 112.59 feet; thence S 77 degrees 42' 11" E, 356.23 feet;
thence S 78 degrees 17' 21" E, 105.46 feet; thence S 78 degrees 56' 11" E,
238.90 feet, thence S 78 degrees 56' 11" E, 238.90 feet to an pin thence S 08
degrees 36' 31" E, feet to an iron pin; thence S 79 degrees 51' 51" E, 216.42
feet, thence S 77 degrees 26' 11" E, 132,27 feet to a road nail; thence N 24
degrees 09' 08" E , 37.23 feet; thence N 21 degrees 42' 08" E, 298.32 feet to
spike in pine at fence corner at land now or formerly of Foss Realty, Inc.;
thence along said land of Foss Realty, Inc. N 68 degrees 25' 32" W, 1,106.86
feet to the point of beginning.

      The above described parcel containing 23.6 acres is more particularly
shown on a plan entitled "As Built Land Title Survey of Land Owned by Foss
Manufacturing Company, Inc.," by Knight Hill Land Surveying Services, Inc.,
dated July 1998 and recorded at the Rockingham County Registry of Deeds as Plan
#D-26503.

      Also included hereunder is the right of the Grantor, its successors,
assigns, licences, invitees, in common with other s to pass and repass over
Industrial Drive as shown on a plan entitled "Consolidation and Subdivision Plan
of Land, Towle Farm Road Realty Trust" dated May 26, 1982 which plan is recorded
in the Rockingham County Registry of Deeds as Plan #D-11609.

      The above described premises include the rights granted under the
Declaration of reciprocal Easements recorded at the Rockingham County Registry
of Deeds at Book 3631, Page 2715.

TRACK IV-13 ACRE PARCEL

      A certain parcel of land situate on the southwesterly side of Excter
Road, so-called, in the Town of Hampton, County of Rockingham and State of
New Hampshire containing 13.1 acres, and being bounded and the described as
follows:

      Beginning at point on the westerly side of the B & M Railroad tracks,
thence N 75 degrees 05' 15" W for a distance of 106.48 feet to a point; thence N
66 degrees 14' 16" W for a distance of 269.91 feet to a point; thence N 65
degrees 21' 26" W for a distance of 286.13 feet to a point; thence N 64 degrees
03' 04" W for a distance of 114.66 feet to point; thence along a brook along a
survey tie line N 67 degrees 14' 07" E for a distance of 545.48 feet to a
point; thence N 25 degrees 01' 43" W for a distance of 177.73 feet to a point;
thence N 86 degrees 11' 52" E for a distance of 114.96 feet to a point; thence N
84 degrees 06' 16" E for a distance of 151.51 feet to a point; thence N 85
degrees 42' 04" E for a distance of 394.59 feet to a point; thence N 85 degrees
42' 04" E for a distance of 31.13 feet to a point; thence S 29 degrees 46' 48" E
for a distance of 19.18 feet to a point; thence S 29 degrees 46' 48" E for a
distance of 185.55 feet to a point; hence S 83 degrees 58' 50" for a distance of

                                        4
<PAGE>
398.84 feet to a point; thence S 16 degrees 14' 16" E for a distance of 119.07
feet to a point; thence S 87 degrees 20'16" W for a distance of 300 feet to a
point; thence S 22 degrees 33'22" E for a distance of 163.10 feet to a point;
thence S 64 degrees 39'37" E for a distance of 6.35 feet; thence S 84 degrees
34'59" E for a distance of 159.77 feet to a point; thence S 80 degrees 08'44" E
for a distance of 448.88 feet to a point; thence S 53 degrees 51'12" E for a
distance of 168.60 feet to a point; thence N 32 degrees 03'03" E for  a distance
of 212.15 feet to a point; thence N 32 degrees 03'03" E For a distance of 33.74
feet to a point; thence S 28 degrees 30'03" E along Exeter Road for a distance
of 23.93 feet to a point; thence S 33 degrees 48'23" E still along said Exeter
Road for a distance of 46.27 feet to a point; thence S 29 degrees 42'37" W for a
distance of 242.43 feet to a point; thence S 29 degrees 42'36" W for a distance
of 29 degrees.07 feet to the point of beginning.

      Meaning and intending to describe a 13.1 +/- acre tract shown on a plan
entitled "Standard Boundary Survey Plan of Land Owned by Foss Manufacturing
Company, Inc." known as Town of Hampton Tax Map 143, Lot 19.

      This conveyance includes the rights granted under a Declaration of
Reciprocal Easements recorded at the Rockingham County Registry of Deeds as Book
3631, Page 2715.

TRACT V - 21 ACRE TRACT

      A certain tract or parcel of land situated in the Town of Hampton, County
of Rockingham and State of New Hampshire and bounded and described as follows:

      Beginning a point at an iron pipe on the westerly side of the B & M
Railroad tract property, thence N 88 degrees 00'42" W for a distance of 231.38
feet to a point; thence N 88 degrees 22' 36" W for a distance of 20.64 feet to a
point; thence N 87 degrees 37'17" W for a distance of 140.46 feet to a point;
thence N 88 degrees 08' 05" W for a distance of 226.66 feet to a point; thence N
20 degrees 00'00" W for a distance of 178.61 feet to a point; thence N 26
degrees 00'00" W for a distance of 643.37 feet to a point; thence along a curve
with a radius of 5025 feet and a length of 210.05 feet with a delta of 02
degrees 23'42" and chord bearing of 210.03 feet N 240 43'42" W to a point;
thence S 85 degrees 14'01" E for a distance of 194.42 feet to a point; thence S
86 degrees 50'11" E for a distance of 196.56 feet to a point; thence S 85
degrees 47'11" E for a distance of 265.51 feet to a point; thence S 84 degrees
11'51" E for a distance of 445.12 feet to a point; thence S 86 degrees 13'31" E
for a distance of 64.37 feet to a point; thence S 84 degrees 51'21" E for a
distance of 193.48 feet to a point; thence S 85 degrees 20'52" E for a distance
of 178.57 feet to a point; thence S 85 degrees 20'52" E for a distance of 5.51
feet to a point; thence S 29 degrees 43'00" W for a distance of 584.12 feet to a
point; thence along a curve with a radius of 10777 feet and a length of 123.98
feet with a delta of 00 degrees 39'33" and a chord bearing of 123.98 feet S 30
degrees 02'46" W to a point; thence S 22 degrees 44'07" W for a distance of
40.36 feet to a point; thence along a curve with a radius of 10782.68 feet and a
length of 200.52 feet with a delta of 01 degrees 03'56" and a chord bearing of
200.52 feet S 31 degrees 12'04" W to the point beginning.

      Meaning and intending to describe a certain "21 acre tract" shown as Tax
Map 175, Lot on a plan for Foss Manufacturing Company, Inc. recorded at the
Rockingham County Registry of Deeds as Plan #D26503, sheet 2 of 3.

Subject to and with the benefit of a Declaration of Reciprocal Easements
recorded at the Rockingam County Registry of Deeds at Book 3631, Page 2715.

                                        5
<PAGE>
                                   EXHIBIT B

                             MORTGAGOR'S CERTIFICATE

The undersigned is the ________ of FOSS (NH) QRS 16-3, INC., a Delaware
corporation (collectively, "Mortgagor") and has made due investigation as to the
matters hereinafter set forth and does hereby certify the following to induce
CIBC Inc. ("Mortgagee") to advance the aggregate sum of $____________ (the
"Disbursement") [from the Replacement Reserve or Leasing Reserve or Repair and
Remediation Reserve] to Mortgagor pursuant to the terms of that certain Mortgage
and Rents, Security Agreement, dated as of___________________ _________, 2004,
from Mortgagor to the trustee thereunder for the benefit of Mortgagee (together
with any amendments, modifications, supplements and replacements thereof or
therefore the 'Mortgage'), pursuant to that certain Disbursement request
dated _____________________ which is being submitted to Mortgagee. (Capitalized
terms used and not otherwise define shall have the respective meanings given to
them in due Mortgage.)

            1. No default beyond any applicable notice and/or grace period
exists under the Mortgage or under any of the other Loan Documents.

            2. The [Repairs, Deferred Maintenance or Leasing Costs] relative do
the Disbursement have been delivered or provided to Mortgagor and are properly,
completely and permanently installed on or about the Property or otherwise
properly completed, as applicable.

            3. All of the statements invoice, receipts and information delivered
in connection with the Disbursement request being submitted to Mortgagee in
connection herewith are true and correct as of the date hereof, and the amount
requested in said Disbursement request accurately reflects the precise amounts
due and payable during the period covered by such Disbursement request. All of
the funds to be received pursuant to such Disbursement request shall be used
solely for the purpose of reimbursing Mortgagor for items previously paid.

            4. Nothing has occurred subsequent to the date of the Mortgage which
has or may result in the creation of any lien, charge or encumbrance upon the
Land or the Improvements or any part thereof, or anything affixed thereto or
used in connection therewith, or which has or may substantially and adversely
impair the ability of Mortgagor to make any payments of principal and interest
on the Note or the ability of Mortgagor to meet its obligations under the
Mortgage.

            5. None of the labor, materials, overhead or other items of expense
specified in the Disbursement request submitted herewith has previously been
the basis of any Disbursement request by Mortgagor or any payment by Mortgagee
and, when added to all sums previously disbursed by Mortgagee on account of the
[Repairs, Deferred Maintenance or Leasing Costs], do not exceed the costs of all
[Repairs, Deferred Maintenance or Leasing Costs] services completed, installed
and/or delivered, as applicable, to the date of that certificate.

            6. The amount remaining in the [Account] allocated to the payment of
items on the [Repairs, Deferred Maintenance or Leasing Costs] will be sufficient
in Mortgagor's

                                       B-1
<PAGE>

reasonable estimation to pay in full the entire remaining cost of [Repairs,
Deferred Maintenance or Leasing Costs] required to be completed in accordance
with the Mortgage.

            7. All work required permits and approvals required to complete the
work which work is now in process or was previously completed have been
obtained.

            8. All conditions to the Disbursement to be made in accordance with
the disbursement request submitted herewith have been met in accordance with the
terms of the Mortgage.

                                              By:_______________________________

                                       B-2
<PAGE>

                                    EXHIBIT C

                             ADDITIONAL STIPULATIONS

            1. Repair and Remediation Reserve. Prior to the execution of this
Mortgage, Mortgagee has caused the Property to be inspected and such inspection
has revealed that the Property is in need of certain maintenance, repairs and/or
remedial or corrective work. Contemporaneously with the execution hereof,
Mortgagor has established with the Mortgagee a reserve (the "REPAIR AND
REMEDIATION RESERVE"). On the date hereof, Mortgagor shall pay to Mortgagee for
deposit in the Repair and Remediation Reserve an amount equal to $15,312.50.
Mortgagor shall cause (or cause Primary Tenant to cause) each of the items
described, in Exhibit C-1 attached hereto and made a part hereof (the "DEFERRED
MAINTENANCE") to be completed, performed, remediated and corrected to the
satisfaction of Mortgagee and as necessary to bring the Property into compliance
with all applicable laws, ordinances, rules and regulations on or before the
number of days specified next to each item described in Exhibit C-2 attached
hereto and made a part hereof, as such time period may be extended by Mortgagee
in its sole discretion. So long as no Event of Default hereunder or under the
other Loan Documents has occurred and is continuing, all sums in the Repair and
Remediation Reserve shall be held by Mortgagee in the Repair and Remediation
Reserve to pay the costs and expenses of completing the Deferred Maintenance. So
long as no Event of Default hereunder, and no default under any of the other
Loan Documents, has occurred and is continuing, Mortgagee shall to the extent
funds are available for such purpose in the Repair and Remediation Reserve,
disburse to Mortgagor the amount paid or incurred by Mortgagor or Primary Tenant
in completing, performing, remediating or correcting the Deferred Maintenance
upon (a) the receipt by Mortgagee of a written request from Mortgagor for
disbursement from the Repair and Remediation Reserve and a certification by
Mortgagor in the form annexed hereto as Exhibit B that the applicable item of
Deferred Maintenance has been completed in accordance with the terms of this
Mortgage, (b) delivery to Mortgagee of invoices, receipts or other evidence
reasonably satisfactory to Mortgagee verifying the costs of the Deferred
Maintenance to be reimbursed, (c) delivery to Mortgagee of a certification from
an inspecting architect, engineer or other consultant reasonably acceptable to
Mortgagee describing the completed work, verifying the completion of the work
and the value of the completed work and, if applicable, certifying that the
Property is, as a result of such work, in compliance with all applicable laws,
ordinances rules and regulations relating to the Deferred Maintenance so
performed, (d) delivery to Mortgagee of evidence reasonably satisfactory to
Mortgagee showing that all materialmen, laborers, subcontractors and any other
parties who might or could claim statutory or common law liens and are
furnishing or have furnished materials or labor to the Property have been paid
all amounts due for such labor and materials furnished to the Property, and (e)
the receipt by Mortgagee of an administrative fee in the amount of $150.00.
Mortgagee shall not be required, to make advances from the Repair and
Remediation Reserve more frequently than once in any thirty (30) day period. In
making any payment from the Repair and Remediation Reserve, Mortgagee shall be
entitled to rely on such request from Mortgagor or without any inquiry into the
accuracy, validity or contestability of any such amount. Mortgagor hereby grants
to Mortgagee, as additional security for payment of the indebtedness secured
hereby, a security interest in the Repair and Remediation Reserve. In no event
may Mortgagor be entitled to reimbursement of any costs, with respect to each
item of

                                       C-1
<PAGE>

Deferred Maintenance in excess of the applicable amount set forth in Exhibit C-1
attached hereto and made part hereof. The Repair and Remediation Reserve shall
not, unless otherwise explicitly required by applicable law, be or be deemed to
escrow or trust funds, but at Mortgagee's option and in Mortgagee's discretion,
may either be held in a separate account or be commingled by Mortgagee with the
general funds of Mortgagee. No interest on the funds contained in the Repair and
Remediation Reserve shall be paid by Mortgagee to Mortgagor. The Repair, and
Remediation Reserve is solely for the protection of Mortgagee and entails no
responsibility on Mortgagee's part beyond the payment of the costs and expenses
described in this paragraph in accordance with the terms hereof and beyond the
allowing of due credit for the sums actually received. In the event that the
amounts on deposit or available in the Repair and Remediation Reserve are
inadequate to pay the costs of the Deferred Maintenance, Mortgagor shall pay the
amount of such deficiency. Upon assignment of this Mortgage by Mortgagee and
assumption by the assignee of the Mortgagee's obligations hereunder, any funds
in the Repair and Remediation Reserve shall be turned over to the assignee and
any responsibility of Mortgagee, as assignor, with respect thereto shall
terminate. Upon an event of Default, Mortgagee may, but shall not be obligated
to, apply at any time the balance then remaining in the Repair and Remediation
Reserve against the indebtedness secured hereby in whatever order Mortgagee
shall subjectively determine. No such application of the Repair and Remediation
Reserve shall be deemed to cure any Default hereunder. Mortgagor hereby grants
to Mortgagee a power-of-attorney, coupled with an interest, to cause the
Deferred Maintenance to be completed, performed, remediated and corrected to the
satisfaction of Mortgagee upon 30 days notice to Mortgagor following Mortgagor's
failure to do so in accordance with the terms and conditions of this Mortgage
(provided that no such notice shall be required during the existence of an Event
of Default or if Mortgagee determines that its security hereunder is
threatened), and to apply the amounts on deposit in the Repair and Remediation
Reserve to the costs associated therewith, all as Mortgagee may determine in its
sole and absolute discretion but without obligation to do so. Upon the earlier
to occur of full payment of the indebtedness secured hereby in accordance with
its terms, the completion of the Deferred Maintenance to the reasonable
satisfaction of the Mortgagee or at such earlier time as Mortgagee may elect,
the balance of the Repair and Remediation reserve then in Mortgagee's possession
shall be paid over to Mortgagor and no other party shall have any right or claim
thereto.

            2. Leasing Reserve. As additional security for the indebtedness
secured hereby, Mortgagor shall establish a reserve (the "Leasing Reserve") with
Mortgagee for payment of leasing commissions and tenant improvement costs and
expenses incurred by Mortgagor in connection with re-leasing the Property
pursuant to Leases approved, or deemed approved, by Mortgagee (collectively, the
"Leasing Costs"). The Leasing Reserve shall be funded, if at all, as set forth
in Section 1.12(h) of this Mortgage. So long as no Event of Default hereunder
has occurred and is continuing, all sums in the Leasing Reserve shall be held by
Mortgagee to pay Leasing Costs. Additionally, so long as no Event of Default
hereunder has occurred and is continuing, Mortgagee shall, to the extent funds
are available for such purpose in the Leasing Reserve, disburse to Mortgagor the
amount paid or incurred by Mortgagor in performing such Leasing Costs within
five (5) business days following: (a) the receipt by Mortgagee of a written
request from Mortgagor for disbursement from the Leasing Reserve and a
certification by Mortgagor that (i) for Leasing Costs consisting of commissions
payable to brokers not affiliated

                                       C-2
<PAGE>

with Mortgagor and at a rate not greater than the then current market rate, such
leasing commission has been paid by Mortgagor, and (ii) for Leasing Costs
consisting of amounts required to be expended pursuant to the relevant Lease
for tenant improvement or related costs, said Leasing Costs have been incurred
and the tenant under such Lease has taken possession of its demised premises and
begun to pay rent under its Lease, (b) the delivery to Mortgagee of invoices,
receipts or other evidence satisfactory to Mortgagee verifying the cost of such
Leasing Costs; (c) for disbursement requests in excess of $10,000.00, the
delivery to Mortgagee of affidavits, lien waivers or other evidence reasonably
satisfactory to Mortgagee showing that all materialmen, laborers, subcontractors
and any other parties who might or could claim statutory or common law liens and
are furnishing or have furnished material or labor to the property have been
paid (or will be paid out of such disbursement all amounts due for labor and
materials furnished to the Property; (d) for disbursement requests in excess of
$10,000.00 other than with respect to leasing commissions), delivery to
Mortgagee of a certification from an inspecting architect or other third party
acceptable to Mortgagee describing the completed tenant improvement or other
work, and verifying the completion and the value thereof; (e) for disbursement
request in excess of $10,000.00 (other than with respect to leasing
commissions), delivery to Mortgagee of a new certificate of occupancy for the
portion of the Improvements covered by such Lease, if said new certificate of
occupancy was required by law, or a certification by Mortgagor that no new
certificate of occupancy was required and (f) the receipt by Mortgagee of an
administrative fee in the amount of $150.00. In making any payment from the
Leasing Reserve, Mortgagee shall be entitled to rely on such request from
Mortgagor without any inquiry into the accuracy, validity or contestability of
any such amount. The Leasing Reserve shall not, unless otherwise explicitly
required by applicable law, be or be deemed to be escrow or trust funds, but, at
Mortgagee's option and in Mortgagee's discretion, may either be held in a
separate account or be commingled by Mortgagee with the general funds of
Mortgagee. The Leasing Reserve is solely for the protection of Mortgagee and
entails no responsibility on Mortgagee's part beyond the payment of the costs
and expenses described in this paragraph in accordance with the terms hereof and
beyond the allowing of due credit for the sums actually received. In the event
that the amounts on deposit or available in the Leasing Reserve are inadequate
to pay Leasing Costs in connection with any Lease, Mortgagor shall pay the
amount of such deficiency. Upon assignment of this Mortgage by Mortgagee, any
funds in the Leasing Reserve shall be turned over to the assignee and any
responsibility of Mortgagee, as assignor, with respect thereto shall terminate.
Upon an Event of Default, Mortgagee may, but shall not be obligated to, apply at
any time the balance then remaining in the Leasing Reserve against the
indebtedness secured hereby in whatever order Mortgagee shall subjectively
determine. No such application of the Leasing Reserve shall be deemed to cure
any Default hereunder. Upon the full payment of the indebtedness secured hereby
in accordance with its terms or at such earlier time as Mortgagee may elect, the
balance of the Leasing Reserve then in Mortgagee's possession shall be paid over
to Mortgagor and no other party shall have any right or claim thereto.

            3. Environmental Reserve. Prior to the execution of this Mortgage,
Mortgagee has caused the Property to be inspected and such inspection has
revealed that the Property is in need of certain environmental remediation.
Contemporaneously with the execution hereof; Mortgagor has established with the
Mortgagee a reserve for such environmental remediation (the "ENVIRONMENTAL
RESERVE") in the amount of $33,600.

                                       C-3
<PAGE>

Mortgagor shall cause (or cause Primary Tenant to cause) each of the items
described in Exhibit C-3 attached hereto and made a part hereof (the
"ENVIRONMENTAL REMEDIATION") to be completed, performed, remediated and
corrected to the satisfaction of Mortgagee and as necessary to bring the
Property into compliance with all applicable laws, ordinances, rules and
regulations. Mortgagor shall diligently undertake and pursue to completion (or
cause Primary Tenant to diligently undertake and pursue to completion) the
Environmental Remediation. Mortgagee shall have the right to inspect the work
from time to time, at Mortgagor's expense, to insure that the work is being
completed in a good and workmanlike manner.

      So long as no Event of Default hereunder or under the other Loan Documents
has occurred and is continuing, all sums in the Environmental Reserve shall be
held by Mortgagee in the Environmental Reserve to pay the costs and expenses of
completing the Environmental Remediation. So long as no default hereunder or
under the other Loan Documents has occurred and is continuing, Mortgagee shall,
to the extent funds are available for such purpose in the Environmental Reserve,
disburse to Mortgagor the amount paid or incurred by Mortgagor in completing,
performing, remediating or correcting the Environmental Remediation upon (a) the
receipt by Mortgagee of a written request from Mortgagor for disbursement from
the Environmental Reserve and a certification by Mortgagor in the form annexed
hereto as Exhibit B that the applicable item of Environmental Remediation has
been completed in accordance with the terms of this Mortgage, (b) delivery to
Mortgagee of invoices, receipts or other evidence reasonably satisfactory to
Mortgagee verifying the costs of the Environmental Remediation to be reimbursed,
(c) delivery to Mortgagee of a certification from an inspecting environmental
engineer or other consultant reasonably acceptable to Mortgagee describing the
completed work, verifying the completion of the work and, if applicable,
certifying that the Property is, as a result of such work, in compliance with
all applicable laws, ordinances rules and regulations relating to the
Environmental Remediation so performed, and (d) delivery to Mortgagee of
evidence reasonably satisfactory to Mortgagee showing that all materialmen,
laborers, subcontractors and any other parties who might or could claim
statutory or common law liens and are furnishing or have furnished materials or
labor to the Property have been paid all amounts due for such labor and
materials furnished to the Property. Mortgagee shall not be required to make
advances from the Environmental Reserve more frequently than once in any thirty
(30) day period. In making any payment from the Environmental Reserve, Mortgagee
shall be entitled to rely on such request from Mortgagor without any inquiry
into the accuracy, validity or contestability of any such amount.

            Mortgagor hereby grants to Mortgagee, as additional security for
payment of the indebtedness secured hereby, a security interest in the
Environmental Reserve. In no event may Mortgagor be entitled to reimbursement of
any costs with respect to each item of Environmental Remediation in excess of
the applicable amount determined by Mortgagee. No interest on the funds
contained in the Environmental Reserve shall be paid by Mortgagee to mortgagor.
Mortgagor hereby grants to Mortgagee a power-of-attorney, coupled with an
interest, to cause the Environmental Remediation to be completed, performed,
remediated and corrected to the satisfaction of Mortgagee upon Mortgagor's
failure to do so in accordance with the terms and conditions of this Mortgage,
and to apply the amounts on deposit in the Environmental Reserve

                                       C-4
<PAGE>

to the costs associated therewith, all as Mortgagee may determine in its sole
and absolute discretion but without obligation to do so.

                                       C-5
<PAGE>

                                   EXHIBIT C-1

                       LIST OF DEFERRED MAINTENANCE ITEMS

<TABLE>
<S>                                                                                         <C>
Install nine (9) ADA compliant parking spaces with two meeting van accessible requirements  $   2,250.00

Remediation of Fire Code violations - (see Exhibit C-2 hereof for itemized descriptions)    $  10,000.00

SUBTOTAL                                                                                    $  12,250.00

Plus 25% Contingency                                                                        $   3,062.50

TOTAL                                                                                       $  15,312.50
</TABLE>

                                       C-1
<PAGE>

                              EXHIBIT C-2

TIME FOR COMPLIANCE WITH PARKING

1. Installation of nine (9) ADA compliant parking spaces with two meeting van
accessible requirements - 30 days.

TIME FOR COMPLIANCE WITH FIRE CODE VIOLATIONS

      1.    Enlist an engineer/company to bring sprinkler systems to code and
            copy Hampton Fire/Rescue Department ("HFD") on plans. Correct
            deficiency in fire sprinkler coverage under the mezzanines in the
            generator room, in the Baler City mezzanine levels, on the Spin City
            1 and 2 mezzanine levels and in the Coating Line tank area. 90 days.

(390 Lafayette)

      2.    Activate in-rack sprinklers in phase 6. 30 days.

(11 Merrill)

      3.    Copy of a report or letter from sprinkler engineer, certifying that
            the change from hoses to stand pipes with caps still meets code. If
            not, make corrections, 30 days.

(390 Lafayette)

      4.    Copy of the phase 6 fire pump test for prior year. 30 days.

(11 Merrill)

      5.    New fire alarm system test report. 30 days.

(All Three buildings)

      6.    Maintain fire extinguisher coverage and upkeep. Correct any signs,
            hangers, etc. 30 days.

(All Three buildings)

      7.    Remove or secure stray propane and other tanks on platform near
            fuel cage. 30 days.

(390 Lafayette)

      8.    Decrease number of pallets out back, to avoid narrowing of road and
            presenting high fire hazard. 30 days.

(Behind 390 Lafayette)

                                       C-2
<PAGE>

      9.    Provide protection for tanks, and restrictions on where used (Not
            comfortable with in-plant use of propane tanks/guns). 30 days.

(Majority 390 Lafayette, some in 11 Merrill)

      10.   Correct sprinkler connection blocked near vehicle shop. 30 days.

(390 Lafayette)

      11. Provide HFD with an updated copy of Emergency Response Plan. 60 days.

(All Three buildings)

      12.   Send a written report of fires that do not involve a response from
            HFD. 30 days. (All Three buildings)

      13.   Make sure they all Exit Doors swing open with one motion to a full
            90 degrees without obstruction, and with minimal effort (15 ft. Ibs
            or lsss). 30 days.

(All Three buildings)

      14.   Correct malfunction in fire alarm panel in phase 6. (There were some
            malfunctions noted on day of inspection. "Trouble" was indicated in
            some office devices. No trouble was indicated for tamper switch on a
            riser with a closed valve). 30 days.

(11 Merrill)

                                       C-3
<PAGE>

                                   EXHIBIT C-3

                    LIST OF ENVIRONMENTAL REMEDIATION ITEMS

<TABLE>
<S>                                                                                <C>
Perform and complete the on-going groundwater remediation at the Property and
obtain a "No Further Action" letter from the New Hampshire Department of
Environmental Services ("NHDES") with respect thereto.                             $ 16,800

SUBTOTAL                                                                           $ 16,800

Plus 100% Contingency                                                              $ 16,800

TOTAL                                                                              $ 33,600
</TABLE>

                                       C-4
<PAGE>

                                    EXHIBIT D

                   ELIGIBLE ACCOUNT AND PERMITTED INVESTMENTS

            "Eligible Account" shall mean either (i) an account or accounts
maintained with an Eligible Bank or (ii) a Trust Account.

            "Eligible Bank" shall mean a bank that (i) satisfies the Rating
Criteria and (ii) insures the deposits hereunder through the Federal Deposit
Insurance Corporation.

            "Person" shall mean any individual, sole proprietorship,
partnership, limited liability partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company, institution,
entity, party or government (whether territorial, national, federal, state,
county, city, municipal or otherwise including, without limitation, any
instrumentality, division, agency, body or department thereof).

            "Permitted Investments" shall mean the following:

            (a) direct debt obligations of, and debt obligations fully
guaranteed as to timely payment of principal and interest by, the United States,
or any agency or instrumentality thereof, provided such obligations are backed
by the full faith and credit of the United States;

            (b) direct debt obligations of, and debt obligations fully
guaranteed as to timely payment of principal and interest by
government-sponsored corporations and agencies of the United States, whether or
not backed by the full faith and credit of the United States, limited to debt
obligations of Federal Home Loan Mortgage Corporation, Federal National
Mortgage Association, Student Loan Marketing Association, Financing Corp. (FICO)
and Resolution Funding Corp, (REFCORP) and Consolidated Systemwide Bonds and
Notes of the Farm Credit System and Consolidated Debt Obligations of the Federal
Home Loan Banks;

            (c) commercial paper of a Depository Institution (as defined below)
or other corporation organized under the law of the United States or any state
thereof which commercial paper is then rated at least "A-1 +" (or an equivalent
rating) by the Rating Agencies;

            (d) unsecured certificates of deposit, time deposit, federal funds
or bankers' acceptances issued by any Depository Institution, provided that the
short-term unsecured debt obligations of such Depository Institution (or in the
case of the principal Depository Institution in a holding company system, the
short-term unsecured debt obligations, of such holding company) are rated at
least "A-1+" (or an equivalent rating) by the Rating Agencies;

            (e) demand and time deposits of any Depository Institution which
deposits are fully insured by the Federal Deposit Insurance Corporation;

            (f) repurchase obligations with respect to any security described in
clauses (a) and (b) of this definition and entered into with a Depository
Institution (acting as principal) described in clause (d) above;

                                       D-1
<PAGE>

            (g) debt obligations (other than stripped bonds or stripped coupons)
bearing interest or sold at a discount and issued by any corporation
incorporated under the laws of the United States or any state thereof the
long-term unsecured debt obligations of which are rated at least "AAA" (or an
equivalent rating by the Rating Agencies;

            (h) money market funds rated "AAAm" or "AAAm-G" (or an equivalent
rating) by the Rating Agencies;

            (i) principal-only strips and interest-only strips in respect of
non-callable obligations issued by the United States Treasury;

            (j) Resolution Funding Corp. (REFCORP) securities stripped by the
Federal Reserve Bank of New York; and

            (k) commercial paper, federal funds, unsecured certificates of
deposit, time deposits, banker's acceptances and repurchase agreements with
respect to any security described in clauses (a) and (b) of definition issued
by, or entered into with, any Depository Institution and commercial paper and
repurchase agreements with respect to any security described in clauses (a) and
(b) of this definition of any corporation incorporated under the laws of the
United States or any state thereof, provided that (i) the short-term unsecured
debt obligations of such Depository Institution (or in the case of the principal
Depository Institution in a holding company system, the short-term unsecured
debt obligations of such holding company) or corporation are rated "A-1+" (or an
equivalent rating) by the Rating Agencies, (ii) the term to maturity of such
instruments is thirty (30) days or less and (iii) investments in such
instruments at any time do not exceed twenty percent (20%) or more of the
outstanding principal amount of the Notes.

            Unless otherwise specified herein, (i) any such. Permitted
Investment must be available for withdrawal without penalty and must mature no
later than the Business day immediately preceding the date upon which the funds
are required to be disbursed; (ii) no such instrument shall have a remaining
term to maturity in excess of three hundred sixty-six (366) days, (iii) no such
instrument set forth above (other than the instrument described in clauses (i)
and (j) of this definition shall constitute a Permitted Investment if such
instrument evidences a right to receive only interest payments with respects to
the obligations underlying such instrument; (iv) in the case of any instrument
rated by the Rating Agencies, the "r" highlighter shall not be affixed to such
rating and, in the case of any instrument not rated by the Rating Agencies, if
the instrument were to be rated by the Rating Agencies, the "r" highlighter
would not be affixed by the Rating Agencies to such rating; (v) such instrument
(other than interest-only strips described in clauses (i) and (j) of this
definition) shall provide for a predetermined fixed dollar payment of principal
that cannot vary or change; (vi) if such instrument bears interest , no such
instrument shall provide for either a fixed rate of interest or a variable rate
of interest tied to a single index plus a fixed spread, if any, which variable
rate of interest moves proportionately with such index; (vii) no instrument
constitute a "Mortgage-backed" security and (viii) such Permitted Investment
must be expressly permitted

                                       D-2
<PAGE>
under the pooling and servicing agreement between Mortgagee and the servicer
applicable to this Loan.

            A "Depository Institution" means any depository institution or trust
company incorporated under the laws of the United States or any state thereof
and subject to supervision and examination by federal or state banking
authorities.

            "Rating Criteria" with respect to any Person, shall mean that (i)the
short-term unsecured debt obligations of such Person are rated at least "A-1" by
S&P, P-l by Moody's Investors Service, Inc., and F-1+ by Fitch Investors
Services, L.P., if deposits are held in the account for a period of less than 30
days, or (ii) the long-term unsecured debt obligations of such Person are rated
at least "AA-" by S&P and Fitch and Aa by Moody's and, if deposits are held in
the account for a period of 30 days or more.

            "Trust Account" shall mean a segregated trust account maintained by
a corporate trust department of a federal depository institution or a state
chartered depository institution subject to regulations regarding fiduciary
funds an deposit similar to Title 12 of the Code of Federal Regulations Section
9.10(B) which has corporate trust powers and is acting in its fiduciary
capacity.

                                       D-3
<PAGE>

                                    EXHIBIT E

                          FUTURE CONDOMINIUM PROVISIONS

1.    As used herein, "Condominium" shall mean the commercial condominium REGIME
      created pursuant to the Condominium Declaration.

2.    As used herein, "Condominium Act" shall mean N.H.R.S.A. 356-B and all
      amendments, modification or replacements thereof or regulations with
      respect thereto now or hereafter enacted or promulgated.

3.    As used herein, "Condominium Declaration" shall have the meaning Set forth
      in the Primary Lease.

4.    As used herein, "Bylaws" shall have the meaning set forth in the Primary
      Lease.

5.    As used herein, "Condominium Site Plan" shall have the meaning set forth
      in the Primary Lease.

6.    As used herein, "Condominium Documents" shall mean all documents required
      by the Condominium Act and otherwise, relating in whole or in part to (A)
      the establishment of the Property as a condominium in accordance with the
      Condominium Declaration, the Condominium Site Plan and the Foss
      Condominium Exterior Unit Plan(s) and (B) the regulation, management or
      administration of the Condominium. The Condominium Documents shall include
      (i) the Condominium Declaration, Condominium Site Plan and the Bylaws, all
      of which shall be in the form attached to the Primary Lease with only such
      modifications as are approved by Mortgagee in writing and (ii) such other
      documents related thereto as approved in writing by Mortgagee.

7.    As used herein, "Mortgage Subordination" shall mean the subordination of
      the lien of the Mortgage to the Condominium Declaration.

8.    In no event shall the Condominium declaration, the Condominium Site Plan
      or any other Condominium Document be recorded, and in no event shall
      Mortgagor grant the Mortgage Subordination, unless all of the following
      conditions are satisfied (the "Initial Condominium Requirements"):

      a. No Default or Event of Default shall have occurred and be continuing.

      b. Mortgagor shall have provided to Mortgagee the Lafayette Expansion
notice or the Additional Improvements Notice.

      c. Mortgagee shall have received confirmation in writing from each of the
Rating Agencies that the conversion of the Property to a condominium form of
ownership (and any related actions in connection therewith) will not result in a
qualifications, downgrade or withdrawal of any rating in effect immediately
prior thereto for any securities issued in connection with a Secondary Market
Transaction.

<PAGE>

      d. Mortgagor shall provide Mortgagee all of the following; which shall be
satisfactory in form and substance to Mortgagee in its discretion:

            (i) The Condominium Documents (it being acknowledged that the
Condominium Declaration, the Condominium Site Plan and the Bylaws shall be in
the form attached to the Primary Lease with only such modifications is are
approved by Mortgagee in writing);

            (ii) A conditional assignment of the declarant's rights under the
Declaration;

            (iii) Conditional letters of resignation in favor of Mortgagee from
all the directors and officers of the Association appointed by or elected by or
representing or controlled by Mortgagor or Guarantor or any of their respective
affiliates (the "Conditional Resignation Letters");

            (iv) An opinion of counsel to Mortgagor to the effect that (i) the
Condominium Documents satisfy all applicable governmental requirements,
including but not limited to those of the Condominium Act, and were duly
executed, (ii) no filing, registration or other requirements of federal or state
securities or other law or regulation will be required to ensure that the
enforceability of the lien of the Mortgage is not adversely affected (except for
subordination to the Condominium Declaration), and (iii) the assignment, letters
and agreements referred to in subparagraphs (ii) and (iii) of this Section (d)
have each been duly authorized, executed and delivered by the respective parties
thereto and are enforceable against said parties in accordance with their
respective terms; and

            (v) The title insurance insurer which provided the policy insuring
the lien of the Mortgage (the "Title Insurer") shall have provided Mortgagee
with a commitment to endorse such policy immediately following the Initial
Condominium Recording with an endorsement (the "Condo Endorsement") to provide
affirmative insurance to the effect that (A) the Mortgage encumbers all of the
interests of Mortgagor in the Condominium, (B) the lien of the Mortgage cannot
be impaired nor is any superior lien on the Property created by any of the
Condominium Documents, (C) the Mortgage Subordination will not affect the lien
of the Mortgage, (D) the Property is part of a condominium validity created
under the Condominium Act, and (E) the Units (us defined below) are entitled by
law to be assessed for real property taxes as separate parcels.

            Immediately following the Initial Condominium Recording, Mortgagor
shall cause the Title Insurer to issue the Condo Endorsement to Mortgagee.

9.    Upon the satisfaction of all of the Initial Condominium Requirements and
      prior to the commencement of the construction of any Additional
      Improvements, Mortgagor shall cause the Condominium Declaration and the
      Condominium Site Plan to be recorded in the Rockingham County Registry of
      Deeds (the "Initial Condominium Recording") in compliance with all
      applicable, laws and legal requirements with respect thereto. Mortgagor
      shall be responsible for the recordation of Condominium Declaration and
      the Condominium Site Plan (any and other documents approved by Mortgagee
      and necessary for the lawful creation of the Condominium) and the
      compliance therewith with all

                                       E-4
<PAGE>

      applicable laws and legal requirements, and Mortgagee shall have no
      obligations with respect thereto.

10.   The Mortgage Subordination shall be executed by Mortgagee and delivered to
      Mortgagor contemporaneously with the Initial Condominium Recording.

11    Upon the Initial Condominium Recording, this Mortgage shall constitute a
      first lien on all units (the "Units") of the Condominium together with
      appurtenant parking spaces and undivided percentage interests in and to
      the Common Areas (as defined in the Declaration), and all other rights,
      titles and hereditaments attributable to the Units. Mortgagor shall
      execute any and all documents and take any and all actions reasonably
      required or requested by Mortgagee in furtherance of the foregoing and to
      ensure that this Mortgage constitutes a first lien on all of the Units
      together with appurtenant parking spaces and undivided percentage
      interests in and to the Common Areas, and all other rights, titles and
      hereditaments attributable to the Units.

12.   Prior to the Initial Condominium Recording, Mortgagor shall cause the Unit
      owners, association (the "Association") to provide Mortgagee with an
      estoppel certificate (a "Condominium Estoppel") confirming that Mortgagee
      shall be recognized as a first mortgagee and shall be entitled to all
      rights under the Declaration and the Bylaws of a first mortgagee, together
      with such other information and assurances as Mortgagee shall reasonably
      require. Upon request from time to time by Mortgagee subsequent to the
      Initial Condominium Recordation, Mortgagor shall cause the Association to
      provide additional Condominium Estoppels to Mortgagee within 10 business
      days of Mortgagee's request therefore.

13.   At all times during the existence of the Condominium, Mortgagor shall own
      not less than 51% of the undivided interests in the Common Areas. At all
      times during the existence of the Condominium, officers of Mortgagor shall
      comprise a majority of the Board of Directors of the Condominium and
      Mortgagee shall be entitled to succeed to such director positions pursuant
      to the Conditional Resignation Letters.

14.   From and after the Initial Condominium Recording, the insurance required
      to be maintained pursuant to Section 1.4 of this Mortgage shall either be
      maintained by the Mortgagor or the Primary Tenant as set forth in Section
      1.4 or shall be maintained for the Condominium by the Association. In the
      event that any such insurance is maintained by the Association, the
      following provisions shall apply:

            It shall constitute a default under this Mortgage entitling
            Mortgagee at its option to accelerate the entire unpaid balance of
            the indebtedness secured hereby if the Association or Mortgagor fail
            or refuse to maintain in full force and effect a policy or policies
            of insurance meeting the requirements of Section 1.4(A)(a). Such
            policy of policies maintained by the Association shall be written in
            the name of, and the proceeds thereof shall be payable to, the
            Association, as trustee for each of the owners of the Condominium
            Units, and to the respective mortgagees of the owners of the
            Condominium units, as their interests may appear and apportioned
            based on which owner or unit experienced the insured loss. Said
            policy or policies shall provide for separate protection for each
            Condominium unit

                                       E-4
<PAGE>

            and its attached, built-in, or installed fixtures and equipment to
            the full insurable replacement value thereof, with a separate loss
            payable endorsement in favor of mortgagees of each Condominium Unit.
            Such policy or policies shall permit the waiver of subrogation and
            shall provide that the insurance company or companies will not look
            to the Association, or any owner of the Condominium units for the
            recovery of any loss under said policy or policies. Such policy or
            policies shall not be cancelable except after 30 days written notice
            to Mortgagee and the original or a duplicate of such policy or
            policies shall be deposited with Mortgagee with evidence of the
            payment of premiums and with renewal policies to be deposited with
            Mortgagee not later than 30 days prior to the expiration of existing
            policies. In the event that the policy or policies of insurance
            maintained by the Association insures the Property only on a
            contingent or conditional basis which requires the individual owner
            of the Condominium units to provide its own insurance on its
            Condominium unit, then Mortgagor shall furnish to Mortgagee an
            original policy of insurance meeting the requirements of Section
            1.4(A)(a) for the Units owned by Mortgagor. Anything hereinabove to
            the contrary notwithstanding, in the event the Association,
            Mortgagor or Primary Tenant, fail or refuse to provide insurance
            coverage as above provided, Mortgagee at its election may obtain
            such insurance for its benefit as mortgagee and may add the premium
            therefore to the unpaid balance of the indebtedness secured hereby.

15.   Upon the Initial Condominium Recording, the following Section 1.34 shall
      be deemed added at the end of Article I of this Mortgage:

            "1.34 CONDOMINIUM PROVISIONS.

            (a) Mortgagor shall comply with (and shall cause Primary Tenant to
      comply with) all terms, conditions and covenants of the Declaration and
      the Bylaws and all other rules and regulations promulgated or otherwise
      existing with respect to the Condominium (collectively, the "Rules") as
      those are in force and effect, and Mortgagor shall comply with (and shall
      cause Primary Tenant to comply with) the terms, conditions and covenants
      of all other Condominium Documents.

            (b) Mortgagor shall not, without Mortgagee's prior written consent,
      modify, amend, supplement or in any other manner change the terms,
      conditions and covenants of the Declaration, the Rules or any other
      Condominium Document so as to affect, alter or impair the lien of this
      Mortgage or the security therefor, or in a manner which materially
      increases the obligations or diminishes the rights of Mortgagee, nor,
      without Mortgagee's prior written consent, may Mortgagor waive or consent
      to the waiver of any enforcement of the provisions thereof with respect to
      another unit owner.

            (c) Mortgagor shall promptly deliver to Mortgagee a true and full
      copy of each and every notice of default or notice requiring the
      performance of any act by

                                       E-4
<PAGE>

      Mortgagor received by Mortgagor with respect to any obligation of
      Mortgagor under the provisions of the Declaration, the Rules or any other
      Condominium Documents.

            (d) Mortgagor shall not, except with the prior written consent of
      Mortgagee, (i) institute any action or proceeding for partition of the
      property of which the Property are a part; (ii) vote for or consent to any
      modification of, amendment to or relaxation in the enforcement of any
      provision of the Declaration, the Rules or any other Condominium Document
      which affects, alters or impairs the lien of this Mortgage or the
      security therefor, or which materially increases the obligations or
      diminishes the rights of Mortgagee; (iii) in the event or damage to or
      destruction of the Units or any of them, vote in opposition to a motion to
      repair, restore, or rebuild.

            (e) In each and every case in which, under the provisions of the
      Declaration, the Rules or any other Condominium Document, the consent or
      the vote of the owners of Units is required, Mortgagor shall not vote or
      give such consent so as to impair the lien of this Mortgage or the
      security therefor without, in each and every case, the prior written
      Consent of Mortgagee.

            (f) Mortgagor shall promptly pay or cause to be paid, as the same
      become due and payable, all common charges or other payments for
      maintenance and reserve funds ("Common Charges") and all assessments
      ("Assessments") as required by the Declaration or the Rules or any
      resolutions adopted pursuant thereto, and shall promptly upon demand
      exhibit to Mortgagee receipts for all such payments. In the event that
      Mortgagor fails to make such payments as the same become due and payable,
      Mortgagee may from time to time at its option, but without any obligation
      to do so and without notice to or demand upon Mortgagor, make such
      payments, and the same shall be added to the debt secured hereby, and
      shall bear interest until repaid at the Default Interest rate (as defined
      in the Note); provided, however, that the failure of the Mortgagor to make
      any such payment to the maintenance fund or to exhibit such receipts
      shall, at the election of Mortgagee upon ten (10) days notice to Mortgagor
      constitute a breach of covenant under this Mortgage entitling Mortgagee to
      accelerate the indebtedness secured hereby.

            (g) In the event of the failure of Mortgagor to perform or cause to
      be performed any of its obligations relating to the Land under the
      Declaration, the Rule or any Other Condominium Document within a period of
      ten (10) days with respect to a monetary obligation or thirty (30) days
      with respect to a non-monetary obligation (unless the Association requires
      sooner performance) after notice from the Association or from Mortgagee,
      or in the case of any such default which cannot with due diligence be
      cured or remedied within such period, if Mortgagor fails, to proceed
      promptly after such notice to cure or remedy the same with due diligence,
      then in any such, case, Mortgagee may from time to time at its option, but
      without any obligation to do so, cure or remedy any such default of
      Mortgagor (Mortgagor hereby authorizing Mortgagee to enter upon the Land
      as may be necessary for such purposes), and all sums expended by Mortgagee
      for such purposes, including reasonable counsel fees, shall be added to
      the debt secured hereby, shall become due and payable and shall bear
      interest until repaid at the Default Interest Rate (as defined In the
      Note) and Shall be added to the indebtedness secured hereby; provided,
      however, that the failure of Mortgagor to keep or perform any such

                                       E-4
<PAGE>

      monetary obligation within such ten (10) day period or any non-monetary
      obligation within such thirty (30) day period, or, in the case in which
      such obligation is a non-monetary obligation which cannot be kept or
      performed within such thirty (30) day period, provided Mortgagor has
      commenced to cure such default and is diligently pursuing same to
      completion, such additional time as is needed to so complete, shall, at
      the election of Mortgagee, constitute an Event of Default under this
      Mortgage entitling Mortgagee to accelerate the indebtedness secured
      hereby.

            (h) Upon the occurrence of an Event of Default hereunder, Mortgagee
      may by notice to Mortgagor require the resignation of Mortgagor's
      designees to the Board of Directors, if any, and the appointment in lieu
      thereof of Mortgagee's designees.

            (i) Mortgagor shall, at the option of Mortgagee exercisable at any
      time after the occurrence of an Event of Default hereunder, pay to
      Mortgagee at the time of each payment of an installment of interest or
      principal under the Note, an additional amount sufficient to discharge
      the obligations under clause (f) when they become due. The determination
      of the amount so payable and of the fractional part thereof to be
      deposited with Mortgagee in an Impound Account. Nothing herein contained
      shall be deemed to affect any right or remedy or Mortgagee under any
      provisions of this Mortgage or of any statute or rule of law to pay any
      such amount and to add the amount so paid, together with interest at the
      Default Interest Rate, (as defined in the Note) to the indebtedness hereby
      secured.

            (j) Mortgagor shall comply (and shall cause the Property to comply)
      with all of the provisions of the Condominium Act."

16.   Upon the Initial Condominium Recording, the following Section 2.1(o) shall
      be deemed added at the end of Article II of this Mortgage:

            "(o) If Mortgagor shall fail to perform any of its obligations with
      respect to the Association, Board of Directors, the Declaration, the
      Rules, any other Condominium Document or the Condominium as set forth in
      Section 1.34 (subject to any notice and/or cure period expressly set
      forth in Section 1.34) or if for any reason all or any portion of the
      land subject to the Declaration is withdrawn from condominium ownership
      without Mortgagee's prior written consent; or if by reason of damage or
      destruction of all or any portion of the Improvements the Association or
      the owners of the Condominium units do not duly and promptly resolve to
      proceed with the repair or restoration of any such damage or destruction,
      to the extent Mortgagor is required under Section 1.9 hereof to restore
      such damage or destruction; or if by reason of the failure of Mortgagor to
      perform any act, as for example notification to the Association under the
      Declaration or the Rules, Mortgagee shall not be entitled to the
      protective provisions under the Declaration or the Rules."

17.   If the Lafayette Factory Expansion Work (as defined in section 5.34
      hereof) has been completed prior to the occurrence of the Initial
      Condominium Recording, then in connection with the Initial Condominium
      Recording, the Condominium Declaration and the Condominium Site Plan shall
      be amended prior to the recording thereof in order to include the
      Lafayette Factory Expansion as part of Unit 2 of the Condominium.

                                       E-4
<PAGE>
18.  For purposes of Section 1.9(b), 1.9(e) and 1.9(g) of this Mortgage, from
     and after the Initial Condominium Recording, (i) the term "380 Lafayette
     Property" shall be deemed to refer to Unit #1 (as defined in the
     Condominium Declaration) of the Condominium, (ii) the term "390 Lafayette
     Property" shall be deemed to refer to Unit #2 (as defined in the
     Condominium Declaration) of the Condominium and (iii) the term "11 Merrill
     Property" shall be deemed to refer to Unit #3 (as defined in the
     Condominium Declaration) of the Condominium.

                                   EXHIBIT F

                     INDIVIDUAL PROPERTY RELEASE CONDITIONS

         For purposes of determining whether the Individual Property Release
Conditions (as defined below) are satisfied with respect to an applicable
Individual Property (as defined in Section 1.9(b) hereof), such applicable
Individual Property shall be referred to in this Exhibit F as the "Release
Parcel".

         As used in this Exhibit F, "Individual Property Release Conditions"
shall mean, collectively:

         a. The portion of the Property other than the Release Parcel (the
     "Remaining Property"), and all improvements thereon, shall comply with all
     applicable zoning, land use and similar laws, rules, regulations and
     ordinances of all governmental authorities having or claiming jurisdiction
     thereover, and all other applicable laws, with such determination assuming
     the separate ownership and operation of the Remaining Property and the
     Release Parcel;

         b. Mortgagor provides evidence reasonably acceptable to Mortgagee that
     all zoning and subdivision approvals of governmental authorities having
     jurisdiction as necessary to create legally identifiable tracts of real
     property, and separate zoning and tax lots for all real property taxes,
     have been granted with respect to the Release Parcel and the Remaining
     Property;

         c. Mortgagor provides evidence reasonably satisfactory to Mortgagee
     that, following any such release, the Remaining Property shall have
     available to it all necessary utility and other services for the
     development, use, occupancy and operation of the Remaining Property, and
     adequate, free, unimpeded and unencumbered access for pedestrian and
     vehicular ingress and egress onto all adjacent public roads;

         d. Mortgagor shall procure from the title insurer insuring the lien of
     this Mortgage an endorsement to Mortgagee's title insurance policy which
     shall provide, inter alia, that the lien and priority of this Mortgage on
     the Remaining Property shall be unaffected as a result of the release of
     the Release Parcel, together with such other matters as Mortgagee shall
     reasonably require;

         e. Mortgagor provides Mortgagee with an updated survey of the Remaining
     Property and the Release Parcel, satisfactory to Mortgagee, prepared by a
     registered land surveyor in the State of New Hampshire and certified to the
     Mortgagee, its successors and assigns, and the title insurer in form
     reasonably acceptable to Mortgagee, containing (i) only such encroachments,
     exceptions and state of facts as are (a) set forth in the title policy
     insuring this Mortgage and (b) approved by Mortgagee in writing; and (ii)
     metes and bounds legal descriptions of each of the Release Parcel and the
     Remaining Property;

         f. No Default or Event of Default shall have occurred and be
     continuing;

                                       E-4
<PAGE>
            g. The Remaining Parcel will be in compliance with all provisions of
      any Leases of any portion of the Property that are then in effect
      (including, without limitation, as to required parking spaces,
      restrictions on development, access and similar matters), an easement in
      form and substance reasonably satisfactory to Mortgagee shall be granted
      in favor of the Remaining Property over all parking areas on the Release
      Parcel, and the Release Parcel shall be subject to a restrictive covenant
      prohibiting the use or development thereof in any manner that violates any
      provision of any then-existing Lease of the Remaining Parcel;

            h. Simultaneously with the release of the Release Parcel, the
      Release Parcel shall be transferred and conveyed by Mortgagor to another
      person or entity, such that the ownership of the Release Parcel does not
      cause Mortgagor to violate any of the restrictions set forth in Section
      1.33 hereof; and

            i. Mortgagor pays all of Mortgagee's fees and expenses (including,
      without limitation, reasonable attorneys' fees and expenses) incurred in
      connection with the release of such Release Parcel and confirmation that
      all of the foregoing conditions have been satisfied.

                                       E-4
<PAGE>

                                   SCHEDULE 1

                             ALLOCATED LOAN AMOUNTS
<TABLE>
<S>                              <C>
380 Lafayette Property           $   705,660

390 Lafayette Property           $10,905,660

11 Merrill Property              $ 5,388,680
</TABLE>

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