Document:

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                        SECOND AMENDED AND RESTATED LEASE

                                     Between

                          V.P.I. PROPERTIES ASSOCIATES
                    d/b/a V.P.I. PROPERTIES ASSOCIATES, LTD.

                                    (Lessor)

                                       and

                   AMERICAN TECHNICAL CERAMICS (FLORIDA), INC.
                                    (Tenant)

                          Effective as of May 16, 2000

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                                TABLE OF CONTENTS

SECTION                                                                     Page
-------                                                                     ----

1. THIS LEASE.............................................................    1

2. PREMISES LEASED........................................................    1

3. TERM  .................................................................    2

4. RENT  .................................................................    2

5. NO RENEWAL OPTIONS.....................................................    4

6. TAXES AND ASSESSMENTS..................................................    5

7. USE   .................................................................    6

8. REPAIR AND MAINTENANCE OF PREMISES.....................................    6

9. UTILITIES..............................................................    7

10. INDEMNIFICATION.......................................................    7

11. INSURANCE.............................................................    7

12. CASUALTY..............................................................   10

13. CONDEMNATION..........................................................   11

14. SIGNS.................................................................   12

15. ALTERATIONS...........................................................   12

16. REMOVAL OF TRADE FIXTURES.............................................   13

17. INSPECTION OF PREMISES................................................   13

18. LIENS0................................................................   13

19. OPTION TO PURCHASE....................................................   13

20. INVESTMENT CREDIT.....................................................   17

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21. ASSIGNMENT AND SUBLETTING.............................................   17

22. CONDITIONAL LIMITATIONS - DEFAULT PROVISIONS..........................   18

23. OBLIGATIONS UNDER AGREEMENT...........................................   21

24. ESTOPPEL CERTIFICATES.................................................   21

25. SURRENDER OF POSSESSION...............................................   22

26. SEPARABILITY..........................................................   22

27. MEMORANDUM OF LEASE...................................................   22

28. NOTICE................................................................   22

29. SUCCESSION............................................................   23

30. RIGHT OF FIRST OFFER..................................................   23

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                        SECOND AMENDED AND RESTATED LEASE

         THIS SECOND AMENDED AND RESTATED LEASE, entered into as of the 16 day
of May, 2000 between V.P. I. PROPERTIES ASSOCIATES, a New York limited
partnership, qualified to do business in the State of Florida under the name
V.P.I. Properties Associates, Ltd. and having its offices at One Norden Lane,
Huntington Station, New York, New York 11746-2102 herein called "Lessor," and
AMERICAN TECHNICAL CERAMICS (FLORIDA), INC., a Florida corporation and having
its offices at 2201 Corporate Square Boulevard, Jacksonville, Florida 32216,
herein called "Tenant."

                                    RECITALS

         A.   Lessor and Tenant entered into an agreement of lease effective as
              of October 1, 1980 and amended it by Amendment of Lease dated June
              20, 1994 (collectively, the "Initial Lease");

         B.   Lessor and Tenant amended the Initial Lease and restated it in
              full in one unified document by Amended and Restated Lease, dated
              as of July 1, 1996, and amended it by First Amendment to Amended
              and Restated Lease, dated as of May 1, 1998, and amended it by
              Second Amendment to Amended and Restated Lease, dated as of May 1,
              1998 (as so amended, the "Existing Lease");

         C.   Lessor and Tenant want to further amend the Existing Lease and
              restate it in full in one unified document.

         NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the sufficiency of which is hereby acknowledged, the
parties agree as follows:

1. THIS LEASE. This Second Amended and Restated Lease is intended to and hereby
does amend and restate the Existing Lease in such a fashion as to render this
document (the "Lease") the fully integrated instrument setting forth the
understandings of the parties in full without reference back to the Existing
Lease or the Initial Lease. The leasehold estate created by the Initial Lease
and thereafter the Existing Lease remains uninterrupted, but the agreements
between Lessor and Tenant with respect thereto are governed entirely by this
Lease.

2. PREMISES LEASED.

         (a) Lessor hereby leases to Tenant and Tenant hereby rents from Lessor
all that piece, parcel or tract of land situate and lying and being in Duval
County, Florida, as more particularly described in EXHIBIT A attached hereto and
made a part hereof, together with the buildings and improvements constructed and
to be constructed thereon, including all improvements located thereon, and
together with all rights, easements and appurtenances to the same belonging or
usually held and

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enjoyed therewith. The land and all such buildings, improvements, rights,
easements and appurtenances are hereinafter sometimes referred to as the "leased
premises."

         (b) Lessor hereby agrees to make available to Tenant up to $1,800,000
to construct on the leased premises one or more buildings (the "New
Construction") pursuant to plans and specifications to be approved by Lessor.
Tenant shall effect such construction in accordance with all applicable laws and
the provisions of this Lease. Lessor shall be the owner of the New Construction
and all other improvements located on the leased premises.

3. TERM. This Lease shall be for a term commencing on October 1, 1980, and
expiring September 30, 2010 (the "Term").

4. RENT.

         (a) (i) As payments on account of rent for the properties leased
hereunder, and having made all requested payments of rent, supplemental rent and
other charges owed to Lessor through May 31, 2000, Tenant hereby unconditionally
promises to pay to Lessor as rent the sum of $502,404.24 per annum ("Fixed
Rent"). All such payments shall be made in immediately available funds, at such
place as Lessor shall designate at any time in writing to Tenant, in equal
monthly installments in advance on the first day of each and every remaining
calendar month during the Term, with any necessary adjustments being paid by the
Tenant (or credited against future payments of Fixed Rent) as promptly as
practicable (but in no event more than 30 days) after the end of the applicable
lease year.

         (ii) (A) Effective as of each date (each a "Substantial Completion
Date") on which Tenant occupies or could occupy any building to be constructed
in connection with the New Construction, Fixed Rent shall be increased to the
Fair Market Rent (as hereinafter defined).

              (B) Within thirty (30) days after each Substantial Completion
Date, Tenant shall choose an appraiser (the "Appraiser") to determine the fair
market rent of the leased premises (the "Fair Market Rent"). The identity of the
Appraiser shall be subject to the approval of Lessor, such approval not to be
unreasonably withheld or delayed.

              (C) The Appraiser shall determine the Fair Market Rent as soon as
reasonably practicable, taking into consideration all factors determined by the
Appraiser to be relevant. The Appraiser's determination of the Fair Market Rent
shall be binding upon the parties. Tenant shall pay all fees and expenses of the
Appraiser.

              (D) Until such time as the Appraiser shall have determined the
Fair Market Rent, Tenant shall pay Fixed Rent in accordance with Lessor's good
faith estimate of Fair Market Rent. Upon the determination of Fair Market Rent
by the Appraiser, Lessor or Tenant, as the case may be, shall pay to the

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other the amount of any overpayment or underpayment made based on Lessor's
estimate.

              (E) The provisions of this Section 4(a)(ii) shall apply upon
substantial completion of each building to be constructed in connection with the
New Construction. Lessor and Tenant may delay engaging the Appraiser until
substantial completion of more than one building, in which event Lessor's good
faith estimate of Fair Market rent shall be adjusted upon substantial completion
of each additional building.

         (iii) On the first anniversary of the first day of the calendar month
in which the Substantial Completion Date shall occur (the "First Escalation
Date"), Fixed Rent shall be increased by the percentage increase, if any, in the
CPI (hereinafter defined) for the last reported month available to the public on
the first day of the calendar month (the "CPI Change Month") preceding the
calendar month in which the First Escalation Date shall occur as compared to the
CPI for the same month in the previous calendar year (the "Base CPI").
Thereafter, on each anniversary of the First Escalation Date, Fixed Rent shall
be increased by the percentage increase, if any, in the last reported month
available to the public on the first day of the CPI Change Month of the next
preceding lease year as compared to the Base CPI. On or before the fifteenth
(15th) day of each CPI Change Month during the Term, Lessor shall provided
Tenant with written notice of the amount to be used in calculating Fixed Rent
for the next succeeding lease year and the calculation for determining such
amount. Notwithstanding the result of any calculation of Fixed Rent hereunder,
in no event shall Fixed Rent for any lease year be less than Fixed Rent for the
preceding lease year. By way of example only, if the last Substantial Completion
Date is November 15, 2000, then (A) the First Escalation Date shall be November
1, 2001, (B) the CPI Change Month shall be October, (C) the Base CPI shall be
the CPI for the last reported month available to the public on October 1, 2000,
and (D) Fixed Rent shall be increased each November 1 by the percentage increase
in the CPI from the Base CPI to the CPI for the last reported month available to
the public on the October 1 of the calendar year in which such November 1 date
occurs.

         (iv) As used herein "CPI" means the Consumer Price Index for All Urban
Consumers published by the Bureau of Labor Statistics of the United States
Department of Labor, [Northeastern United States Area], All Items (1982-84=100),
or any successor index thereto, appropriately adjusted. In the event that the
CPI is converted to a different standard reference base or otherwise revised,
the determination of adjustments provided for herein shall be made with the use
of such conversion factor, formula or table for converting the CPI as may be
published by the Bureau of Labor Statistics or, if said Bureau shall not publish
the same, then with the use of such conversion factor, formula or table as may
be published by Prentice-Hall, Inc., or any other nationally recognized
publisher of similar statistical information. If the CPI ceases to be published,
and there is no successor thereto, such other index as Lessor and Tenant shall
agree upon in writing shall be substituted for the CPI. If Lessor and Tenant are
unable to agree as to such substituted index, such matter shall be submitted to
the American Arbitration Association or any successor organization for

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determination in accordance with the regulations and procedures thereof then
obtaining for commercial arbitration.

         (v) Notwithstanding anything contained herein to the contrary, in no
event shall the monthly payments in respect of Fixed Rent under this Lease be
less than the monthly payments of principal and interest due and payable by the
Lessor under the Mortgage Documents (as hereinafter defined).

(b) Tenant shall pay any and all sales or rental taxes becoming due in respect
of the rents payable under this Lease.

(c) Notwithstanding anything to the contrary in this Lease, Tenant hereby
unconditionally promises to make payments on account of rent under SUBSECTION
4(A). Tenant agrees that its obligation to make payments of said payment on
account of rent is absolute and unconditional, and shall not be subject to any
defense, reduction, diminution or postponement or any right of setoff,
counterclaim, crossclaim, recoupment or abatement, or otherwise, for any reason
whatsoever, whether arising out of any breach of the obligations of the Lessor
or arising out of or in connection with this Lease or otherwise or out of any
indebtedness or liability at any time owing to Tenant by the Lessor or arising
from any other matter, event or condition of any kind. Tenant will not suspend
or discontinue any such payment on account of rent payments for any cause,
including without limitation failure to complete the construction and equipping
of the leased premises, any defect in the condition of the leased premises or
any part thereof, failure of consideration, failure of or a defect in title to
the leased premises or any part thereof, eviction or constructive eviction, any
breach or representation or warranty, destruction of or damage to the leased
premises, commercial frustration of purpose, any change in the tax or other
laws, ordinances, rules, regulations, orders or other actions of the United
States of America, the State of Florida or any subdivision, agency or
instrumentality of either, or any default in the performance of any agreement,
express or implied, or in the payment or performance of any duty, liability or
obligation arising out of or in connection with this Lease or otherwise. Nothing
contained in this SUBSECTION 4(C) shall be construed to release the Lessor from
any of its obligations contained in this Lease. If Lessor defaults in the
observance or performance of any of its obligations under this Lease, Tenant may
institute such action against Lessor as Tenant may deem necessary to compel
observance and performance, provided that no such action shall violate Tenant's
agreements under this SUBSECTION 4(C).

5. NO RENEWAL OPTIONS. There are no renewal options hereunder for the leased
premises.

6. TAXES AND ASSESSMENTS.

(a) Tenant shall at all times during the Term, as additional rent, pay before
delinquency all real estate taxes and any and all special assessments and all
other charges levied upon or against the leased premises or any interest
therein, which become payable during the term hereof, including any tax,
assessment or charge that now or hereafter may be levied, assessed or imposed
upon Lessor or the leased premises based upon or arising out of its leasing, use
or operation of the leased

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premises. Tenant's obligation to pay taxes, special assessments and other
charges shall be contingent upon and subject to the following provisions and
conditions:

              (1) Tenant may take the benefit of the provisions of any statute
or ordinance permitting any special assessment to be paid over a period of time,
and Tenant shall be obligated to pay only the installments of such special
assessments as shall become due and payable during the term hereof.

              (2) Tenant shall pay only its pro rata share of taxes, special
assessments (or instruments thereof), other charges which become due and payable
during the years in which the term of this Lease commences and ceases, such pro
rata share to be calculated by multiplying the amount due and payable by the
ratio which the number of months of the term of this Lease occurring during the
then current tax year bears to the entire number of months in that tax year.

         (b) Nothing herein contained shall be construed to require Tenant to
pay any franchise or income tax assessed against Lessor or to require Tenant to
pay any tax upon the sale, transfer or assignment of the title or estate of
Lessor in the leased premises.

         (c) Tenant may, at its expense and in its own name, or in the name of
Lessor, or in both names, as may be necessary, in good faith, contest any such
taxes, assessments and other charges to the same extent as Lessor shall be
entitled to contest the same under the Mortgage. As used herein, the term
"Mortgage" means any mortgage on Lessor's interest in the leased premises,
including, without limitation, that certain Amended and Restated Mortgage and
Security Agreement dated as of the date hereof made by the Lessor in favor of
Bank of America, N.A., successor to Barnett Bank, N.A., in the aggregate
principal amount of $4,667,474.83, the term "Mortgagee" means the holder of any
such Mortgage, and the term "Mortgage Documents" means the Mortgage and any
other documents and instruments evidencing and/or securing the indebtedness
secured by the Mortgage, as the same may be amended from time to time.

         Notwithstanding the other provisions of this SECTION 6, Lessor may
require that Tenant deposit with Lessor or with the Mortgagee as security an
amount sufficient in the sole judgment of Lessor to pay any such tax, assessment
or other charge, and all interest and penalties in connection therewith, and all
other amounts which are or might become a charge or lien on the leased premises
or any part thereof in any such proceedings. If at any time Lessor shall deem
the money so deposited to be insufficient security, Tenant shall, upon demand,
deposit with Lessor or the Mortgagee, as the case may be, such additional moneys
as in the judgment of Lessor shall be sufficient to pay all such items. Upon
conclusion of the proceedings or at such other times as Lessor shall direct, the
moneys so deposited shall be applied to the payment of such tax, assessment,
charge or lien, and to the interest and penalties in connection therewith, and
any charges accruing in such proceedings, and the balance, if any, shall be paid
to Tenant if Tenant is not in default under this Lease. In the event money

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deposited hereunder shall be insufficient for such payments, Tenant shall
forthwith pay over to or at the direction of Lessor the balance required for
such payments.

         (d) All refunds received as a result of the overpayment of, and all
funds received as a result of a rebate of any tax, special assessment or other
charge or deriving from any proceeding contesting the validity of such tax,
special assessment or other charge, to the extent attributable to items paid by
Tenant, shall belong to Tenant.

         (e) Tenant shall furnish to Lessor, within 45 days after the date when
any tax, special assessment or other charge is payable, copies of the official
receipts or other proof satisfactory to Lessor evidencing payment thereof.

7. USE. The leased premises shall be used by Tenant, Tenant's parent
corporation, American Technical Ceramics Corp., a Delaware corporation ("ATC"),
and/or any wholly-owned subsidiary of either Tenant or ATC, as a facility for
the manufacture or processing of electric components and for research and
product development relating thereto. Tenant shall not use or occupy the leased
premises or permit the same to be used or occupied contrary to any statute,
rule, order, ordinance or regulation applicable thereto or in any manner which
would violate any certificate of occupancy affecting the same, or which would
cause structural injury to the improvements or cause the value or usefulness of
the leased premises or any part thereof to diminish or which would constitute a
public or private nuisance or waste.

8. REPAIR AND MAINTENANCE OF PREMISES. Tenant agrees that, beginning on the date
it takes possession of the leased premises and continuing throughout the term of
this Lease, at its sole cost and expense, it will keep and maintain the leased
premises, including without limitation any altered, rebuilt or additional
buildings, structures, equipment, machinery, fixtures, furnishings and other
personal property, improvements and appurtenances thereto, in good repair and
appearance, and will with reasonable promptness make all structural and
nonstructural, foreseen and unforeseen, and ordinary and extraordinary changes,
repairs, and replacements of every kind and nature which may be required to be
made upon or in connection with the leased premises or any part thereof in order
to keep and maintain the leased premises in such good repair and appearance. All
such changes, repairs and replacements shall be of first class quality
sufficient for the proper maintenance and operation of the leased premises.
Tenant shall not permit the accumulation of waste or refuse matter, nor permit
anything to be done on the leased premises which would invalidate or prevent the
procurement of any insurance policies which may at any time be required pursuant
to the provisions of SECTION 11. Lessor shall not be required to maintain,
repair or rebuild or to make any alterations, replacements or renewals of any
nature or description in or to the leased premises or any part thereof, whether
ordinary or extraordinary, structural or nonstructural, foreseen or unforeseen,
or to maintain the leased premises or any part thereof in any way, and Tenant
hereby expressly waives any right to make repairs at the expense of Lessor which
may be provided for in any statute or law in effect at the time of the execution
of this lease or any statute or law which may thereafter be enacted.

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9. UTILITIES. Tenant shall pay for all gas, electricity, water, sewer, heat and
other utilities used in and about the leased premises.

10. INDEMNIFICATION. Tenant agrees to pay, and to protect, indemnify and save
harmless Lessor from and against any and all liabilities, obligations, losses,
damages, costs, penalties, expenses (including all attorney's fees and expenses
of Tenant and Lessor), causes of action, suits, claims, demands or judgments of
any nature whatsoever arising from (i) any accident or injury to, or the death
of, any person, or any damage to property on the leased premises or upon
adjoining sidewalks, streets or ways, or in any manner growing out of or
connected with the use, non-use, condition or occupancy of the leased premises
or any part thereof or of adjoining sidewalks, streets or ways, (ii) violation
of any agreements or conditions of this lease and of any contracts, agreements,
restrictions, statutes, laws, ordinances or regulations or other documents
(whether or not recorded) affecting the leased premises or any part thereof or
the ownership, occupancy or use thereof, or (iii) any tortious act or omission
on the part of Tenant or of any of its agents, contractors, sublessees,
licensees or invitees. In case any action, suit or proceeding is brought against
Lessor by reason of any occurrence herein described, Tenant will at its own
expense defend such action, suit or proceeding with counsel satisfactory to
Lessor.

11. INSURANCE.

(a) During such time as Lessor is required by the Mortgage Documents to carry
the insurance described therein, the Tenant shall perform the Lessor's
obligations thereunder. In addition to any parties named as co-insureds in the
Mortgage Documents, the Lessor shall also be designated as a co-insured.

(b) After the Mortgage has been terminated, Tenant will maintain at all times
from the date Tenant is deemed to have taken possession of the leased premises
insurance on the leased premises of the following character:

(i) insurance against loss or damage by fire, lighting, windstorm, hail,
explosion, aircraft, smoke, vandalism, malicious mischief, vehicle damage and
other risks from time to time included under "extended coverage" policies and
such other risks as are or shall customarily be insured against with respect to
property that is similar to the leased premises, in amounts sufficient to
prevent Tenant and Lessor from becoming a co-insurer of any loss under the
applicable policies, but in any event in amounts not less than the full
insurable value of the leased premises. The term "full insurable value," as used
herein, means actual replacement value;

(ii) general public liability insurance against claims for bodily injury, death
or property damage occurring on, in or about the leased premises and the
adjoining streets, sidewalks and passageways, such insurance to afford
protection to Tenant and Lessor of not less than a single limit of $1,000,000
with respect to bodily injury or death resulting from any one accident, and not
less than $1,000,000 with respect to property damage; all such insurance may be
maintained under general contractual liability policies, which policies shall
cover the obligations of Tenant under

(iii) SECTION 11 hereof;

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(iv) workmen's compensation insurance covering all persons employed in
connection with any work done on or about the leased premises in connection with
which claims for death or bodily injury could be asserted against Tenant,
Lessor, any Mortgagee or the leased premises; and

(v) such other insurance on the leased premises as Lessor may from time to time
reasonably request to protect the leased premises in such amounts and against
such other insurable hazards which at the time are commonly obtained in the case
of property similar to the leased premises, including rent insurance, war risk
insurance (when and to the extent obtainable from the United States Government
or any agency thereof) and boiler and pressure vessel insurance.

         Such insurance shall be written by companies of recognized financial
standing approved by Lessor authorized to do an insurance business in the state
in which the leased premises are located, and such insurance shall be in form
acceptable to Lessor and shall name as the insured parties thereunder Tenant and
the Lessor, as their interests may appear. The Lessor shall not be required to
prosecute any claim against any insurer or to contest any settlement proposed by
any insurer; provided, however, that Tenant may, at its sole cost and expense,
prosecute any such claim or contest any such settlement, and in such event
Tenant may bring any such prosecution or contest in the name of Lessor, Tenant
or both, and Lessor will join therein at Tenant's written request upon the
receipt by Lessor of an indemnity from Tenant against any and all costs,
liabilities and expenses in connection with such prosecution or contest. In any
case in which Tenant may be entitled to reimbursement of any expense or to
payment of any sum by Lessor, Tenant shall be entitled to participate in any
proceeding to determine the amount of any such sum, and no settlement with the
insurer shall be made without the consent of Tenant.

         So long as there is a Mortgage or similar lien on the leased premises,
every such insurance policy referred to in CLAUSES (I) and (IV) of SUBSECTION
11(B) shall bear a noncontributory mortgagee endorsement in favor of the
Mortgagee, and loss under any such policy shall be made payable to the
Mortgagee, provided, however, that the net proceeds under policies carried
pursuant to SUBSECTIONS (I) AND (IV) above shall be applied in the manner
provided in SECTION 12 hereof, and the net proceeds under policies carried
pursuant to SUBSECTIONS (II) AND (III) above shall be applied toward the
extinguishment or satisfaction of the liability with respect to which such
proceeds have been paid. Every such policy shall contain, to the extent
obtainable, an agreement by the insurer that it will not cancel such policy
except after 10 days' prior written notice to Lessor and that any loss otherwise
payable thereunder shall be payable notwithstanding any act or negligence of
Lessor or Tenant which might, absent such agreement, result in a forfeiture of
all or a part of such insurance payment and notwithstanding (i) the occupation
or use of the leased premises for purposes more hazardous than permitted by the
terms of such policy; (ii) any foreclosure or other action or proceeding taken
pursuant to any provision of the mortgage or similar instrument upon the
happening of an event of default, as defined therein, or (iii) any change in
title or ownership of the leased premises.

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         Tenant shall deliver to Lessor promptly after the execution and
delivery of this Lease, the original or duplicate policies or certificates of
the insurers evidencing all the insurance which is then required to be
maintained by Tenant hereunder, and Tenant shall, within 30 days prior to the
expiration of any such insurance, deliver other original or duplicate policies
or other certificates of insurers evidencing the renewal of such insurance.
Should Tenant fail to effect, maintain or renew any insurance provided for in
this SECTION 11, or to pay the premium therefor, or to deliver to Lessor and any
Mortgagee any of such policies or certificates, then and in any such event
Lessor, at its option but without obligation so to do, may procure such
insurance, and any sums expended by Lessor them to procure any such insurance,
together with interest thereon at 15% per annum from date of payment to date of
reimbursement by Tenant, shall be additional rent hereunder and shall be repaid
by Tenant within 30 days after receipt of bills therefor.

         Tenant shall not obtain or carry separate insurance concurrent in form
or contributing in the event of loss with that required in this SUBSECTION 11(B)
to be furnished by Tenant unless Lessor is included therein as a named insured,
with loss payable as in this Lease provided. Tenant shall immediately notify
Lessor whenever any such separate insurance is obtained and shall deliver the
policy or policies or certificates evidencing the same to Lessor.

12. CASUALTY.

(a) If the leased premises or any part thereof shall be damaged or destroyed by
fire or any other cause, Tenant shall immediately notify Lessor and the
Mortgagee of such destruction or damage and, subject to the further provisions
of this SECTION 12, Tenant shall repair the damage and restore the leased
premises to not less than the same quality and condition as existed immediately
before the casualty. Tenant expressly waives the provisions of any present or
future law relating to such damage or destruction and agrees that the provisions
of this Lease shall control the rights of Lessor and Tenant.

(b) Subject to the further provisions of this SECTION 12, there shall be no
abatement of rent pending repairs or rebuilding occasioned by any casualty,
except to the extent to which Lessor shall have received a net sum as proceeds
of any rent insurance with respect to such casualty.

(c) If and to the extent any Mortgagee makes the proceeds of any casualty
insurance policy available to Lessor, and provided no default hereunder shall
exist at the time, Lessor shall make such proceeds available to Tenant for any
restoration work required by this SECTION 12. If no Mortgage shall then be in
effect, Lessor shall make any such proceeds available to Tenant in accordance
with standard construction lending practice.

         (d) If and to the extent any Mortgagee does not make any casualty
insurance proceeds available for restoration (the amount not being made
available being referred to herein as the "Deficiency"), Lessor shall have the
right, but not the

<PAGE>

obligation, to provide to Tenant funds in the amount of the Deficiency, whether
by refinancing or otherwise. Lessor shall notify Tenant, within thirty (30) days
of receipt of notice that the Mortgagee is not making all such proceeds
available for restoration, of whether Lessor intends to provide the Deficiency.

         (e) If (i) Lessor notifies Tenant that Lessor does not intend to
provide funds in the amount of the Deficiency, or (ii) the entire leased
premises or any substantial portion of the leased premises which is sufficient
to render the remaining portion thereof unsuitable for Tenant's continued use or
occupancy in Tenant's reasonable judgment shall be damaged or destroyed by any
casualty, then Tenant shall have the right to terminate this Lease by written
notice given to Lessor within ninety days of learning of Lessor's intent with
respect to the Deficiency or the occurrence of the casualty, whichever is later.
Such notice shall be signed by an authorized employee of Tenant, and shall: (A)
specify such termination date, which shall be the first day of any month
occurring not less than 30 days after the delivery of such notice; and (B)
contain a certification by Tenant, signed by an authorized employee, to the
effect that the leased premises have suffered such a casualty. In such event,
this Lease and all obligations hereunder shall terminate on such termination
date, but only upon payment by Tenant of all rent and other sums due and payable
by it under this Lease to and including such termination date.

13. CONDEMNATION.

(a) If the leased premises or any part thereof shall be taken by condemnation or
other eminent domain proceedings (a "Taking"), Lessor or Tenant shall
immediately notify the other and the Mortgagee of such proceedings. Tenant
expressly waives the provisions of any present or future law relating to such
Taking and agrees that the provisions of this Lease shall control the rights of
Lessor and Tenant.

(b) Tenant hereby irrevocably assigns to Lessor any award or payment to which it
may be or become entitled by reason of any taking of the leased premises or a
part thereof, in or by condemnation or other eminent domain proceedings pursuant
to any law, general or special, or by reason of the temporary requisition of the
use or occupancy of leased premises or any part thereof, by any governmental
authority, civil or military, whether the same shall be paid or payable in
respect of Tenant's leasehold interest hereunder or otherwise. Lessor shall be
entitled to participate fully in any such proceedings at Tenant's cost and
expense.

(c) If and to the extent any Mortgagee makes the award from any Taking (the
"Award") available to Lessor, and provided no default hereunder shall exist at
the time, Lessor shall make such Award available to Tenant for any restoration
work required by this SECTION 13. If no Mortgage shall then be in effect, Lessor
shall make any such Award available to Tenant in accordance with standard
construction lending practice.

         (d) If and to the extent any Mortgagee does not make any Award
available for restoration (the amount not being made available being referred to
herein

<PAGE>

as the "Deficiency"), Lessor shall have the right, but not the obligation, to
provide to Tenant funds in the amount of the Deficiency, whether by refinancing
or otherwise. Lessor shall notify Tenant, within thirty (30) days of receipt of
notice that the Mortgagee is not making all such proceeds available for
restoration, of whether Lessor intends to provide the Deficiency.

         (e) If (i) Lessor notifies Tenant that Lessor does not intend to
provide funds in the amount of the Deficiency, or (ii) the entire leased
premises shall be taken (including any transfer in lieu thereof) in or by
condemnation or other eminent domain proceedings pursuant to any law, general or
special, or any substantial portion of the leased premises which is sufficient
to render the remaining portion thereof unsuitable for Tenant's continued use or
occupancy shall be taken in or by any such proceedings, then Tenant shall have
the right to terminate this Lease by written notice given to Lessor within
ninety days of learning of Lessor's intent with respect to the Deficiency or the
effective date of the taking, whichever is later. Such notice shall be signed by
an authorized employee of Tenant and shall (A) specify such termination date,
which shall be the first day of any month occurring not less than 30 days after
the delivery of such notice; and (B) if less than the entire leased premises
shall have been taken, contain a certification by Tenant, signed by an
authorized employee, to the effect that the portion of the leased premises so
taken is sufficient to fulfill the conditions set forth in this SUBSECTION
13(E). In such event, this Lease and all obligations hereunder shall terminate
on such termination date, but only upon payment by Tenant of all rent and other
sums due and payable by it under this Lease, to and including such termination
date.

         (f) If this Lease is not terminated as provided in SUBSECTION 13(E),
then this Lease shall continue in full force and effect and Tenant shall
promptly and diligently after any such taking and at its cost and expense (but
with the funds made available by Lessor) either restore and rebuild the leased
premises to a condition substantially equivalent to their condition prior to
such condemnation or eminent domain proceedings or such temporary taking or
replace the leased premises by the acquisition, construction and installation of
land, improvements, fixtures, furnishings, machinery, equipment and other
personal property fully adequate to replace the leased premises or the portions
thereof so lost or taken; provided, however, that if the cost of such
replacement or restoration and rebuilding would exceed the net condemnation
award, Tenant shall have the right to terminate this Lease upon notice as
provided in SUBSECTION 13(E).

         (g) Effective as of the date of any permanent Taking following which
this Lease remains in effect, Fixed Rent shall be reduced in an amount
proportionate to the amount of usable building area Taken. If the use or
occupancy of the entire leased premises or any part thereof shall be temporarily
Taken by any government authority, civil or military, then Fixed Rent shall be
reduced during such temporary Taking by the amount of the Award therefor,
amortized on a monthly basis over the term of the temporary Taking.

<PAGE>

         (h) For the purposes of this Lease, all amounts paid pursuant to any
agreement with any condemning authority which has been made in settlement of any
condemnation or other eminent domain proceeding affecting the leased premises
shall be deemed to constitute an Award made in such proceeding.

14. SIGNS. Tenant shall have the right to use the exterior of any building on
the leased premises, including the roof, for the purpose of erecting or panting
thereon or attaching thereto a sign or signs advertising Tenant's business,
provided such sign or signs shall not injure any such building and that any sign
attached to any such building shall be in conformity with all applicable laws,
ordinances, rules or regulations. If not previously removed, Tenant shall remove
any such sign or signs upon the termination of this Lease. Any defacement or
damage to the leased premises caused by the removal of such sign or signs shall
be repaired promptly by Tenant at its expense.

15. ALTERATIONS. Subject to any limitation contained in the Mortgage during the
period the Mortgage is in effect, Tenant shall have the right at its own expense
to make such alterations, additions, installations, changes and improvements in
and upon the leased premises as may be necessary for Tenant's purposes, provided
such alterations, additions, installations, changes and improvements shall not
adversely affect the market value of the leased premises or change the character
of the leased premises, nor permanently injure the buildings or diminish their
value. Tenant shall have the right to remove any such alterations, additions,
installations, changes and improvements to the leased premises made by Tenant,
provided that any damage to the leased premises caused thereby will be fully
repaired by Tenant at its expense. In the event Tenant fails to remove any of
such alterations, installations, changes or improvements which Tenant has the
right to remove prior to the termination of this lease, Tenant shall be deemed
to have abandoned the same and thereupon the same shall become the property of
Lessor.

16. REMOVAL OF TRADE FIXTURES. If no default or event of default hereunder has
happened and is continuing, Tenant may at any time during the term hereof remove
from the leased premises any trade fixtures, machinery or equipment belonging to
Tenant or third partes, provided that Tenant shall repair at its expense any
damage to the leased premises caused by such removal.

17. INSPECTION OF PREMISES. Tenant shall permit the Mortgagee, the Lessor and
their duly authorized representatives to enter upon the leased premises at all
reasonable times during business hours for the purpose of inspecting the leased
premises. If any such inspection discloses the need for repairs or replacements
which Tenant is obliged to make under the provisions of this Lease, Tenant shall
make the same promptly.

18. LIENS. Tenant shall commit no act which shall in any way encumber the title,
estate or interest of, the Mortgagee or the Lessor in and to the leased
premises.

<PAGE>

19. OPTION TO PURCHASE.

         (a) Tenant shall have the one-time option to purchase the leased
premises for its fair market value (the "PURCHASE OPTION") provided that:

              (i) This Lease shall be in full force and effect without default
beyond applicable grace periods on the part of Tenant;

              (ii) Tenant shall give Lessor written notice (the "OPTION NOTICE")
of its election to exercise the Purchase Option not later than one (1) year
prior to the expiration of the Term, time being of the essence;

              (iii) The Purchase Option, in the sole and absolute discretion of
Lessor, shall be inapplicable, null, void and of no further force and effect if,
either as of the time of the giving of the Option Notice or as of the Closing
Date, Tenant shall be in default under any of the terms and conditions of this
Lease; and

              (iv) Tenant shall, as of the date of the Option Notice and the
Closing Date, be in actual occupancy of an amount of space equal to at least 90%
of the leased premises.

         (b) The purchase price for the leased premises payable by Tenant
to Lessor shall be either:

              (i) an amount equal to the "FAIR MARKET VALUE" (as defined and
determined in this SECTION 19), which determination shall be as of the date of
the Option Notice; or

              (ii) the price determined and submitted with the Option Notice,
(the "PRICE DETERMINATION NOTICE"). If Lessor shall dispute Tenant's
determination of such price and shall be unable to resolve such dispute with
Tenant, then Lessor shall initiate the arbitration process provided for herein
by designating its arbitrator in a notice (the "LESSOR'S ARBITRATION NOTICE") to
Tenant (which notice must specify the name, address and telephone number of the
person designated to act as an arbitrator on its behalf) given to Tenant no
later than thirty (30) days after Tenant shall have delivered the Price
Determination Notice. The determination of the Fair Market Value of the leased
premises shall then be made in accordance with the provisions of SUBSECTION (C)
hereof. If Lessor fails to deliver the Arbitration Notice as provided above,
then Tenant's determination of the purchase price in the Price Determination
Notice shall be final and conclusive.

         (c) "FAIR MARKET VALUE" shall mean the fair market value of the leased
premises based upon the following factors:

              (i) that Lessor and Tenant are typically motivated;

<PAGE>

              (ii) that Lessor and Tenant are well informed and well advised and
each is acting in what it considers its own best interest;

              (iii) that a reasonable time under then existing market conditions
is allowed for exposure of the leased premises on the open market;

              (iv) that in the event the leased premises or any portion thereof
have been destroyed or damaged by fire or other casualty, such damage has been
fully restored;

              (v) that Tenant will incur no moving or storage costs;

              (vi) that Tenant will incur no holdover or termination charges
with respect to any existing leases;

              (vii) that market rents then being charged for comparable space in
other similar office buildings are being charged at the leased premises;

              (viii) that the leased premises is considered free and clear of
this Lease;

              (ix) that the leased premises is being purchased in "as is"
condition and Lessor is not obligated to perform any work or make any
improvements of any kind whatsoever; and

              (x) that the leased premises is being sold "subject to" all
matters of record other than any Mortgage or other lien placed on the leased
premises by Lessor.

         (d) Within thirty (30) days after Tenant's receipt of Lessor's
Arbitration Notice, Tenant shall give notice to Landlord specifying the name,
address and telephone number of the person designated to act as an arbitrator on
Landlord's behalf ("Tenant's Arbitration Notice"). If Tenant fails to deliver
the Tenant's Arbitration Notice within the time above specified, then Lessor
shall provide an additional notice to Tenant requiring Tenant's appointment of
an arbitrator within fifteen (15) days after Tenant's receipt thereof. If Tenant
fails to deliver the Tenant's Arbitration Notice within such fifteen (15) day
period, then Landlord's arbitrator shall be appointed in the same manner as if
both arbitrators cannot agree on the appointment of a third arbitrator as set
forth in SUBSECTION (F) below.

         (e) If Tenant designates an arbitrator within the time period specified
above, the two arbitrators so chosen shall meet within thirty (30) days after
Landlord's arbitrator is appointed, and shall exchange sealed envelopes each
containing such arbitrator's written determination of the Fair Market Value.
Neither arbitrator shall be

<PAGE>

bound by nor shall either arbitrator make any reference to the determination of
the Purchase Price which was previously furnished by Tenant to Lessor. The Fair
Market Value specified by Lessor's arbitrator shall herein be called "Lessor's
Submitted Value" and the Fair Market Rent specified by Tenant's arbitrator shall
herein be called "Tenant's Submitted Value". Copies of such written
determinations shall promptly be sent to both Lessor and Tenant. Any failure of
either such arbitrator to exchange such determinations shall be deemed
acceptance of the other party's arbitrator's determination as the Fair Market
Value, if, and only if, such failure persists for ten (10) days after notice to
the party for whom such arbitrator is acting.

         (f) If the higher determination of Fair Market Value for the space in
question is not more than 105% of the lower determination of such Fair Market
Value, then the Fair Market Value for such space shall be deemed to be the
average of the two determinations. If, however, the higher determination is more
than 105% of the lower determination, then within ten (10) days after the date
the arbitrators submitted their respective Fair Market Value determinations, the
two arbitrators shall together appoint a third arbitrator. In the event of their
being unable to agree upon such appointment within thirty (30) days after the
submission of the respective arbitrators' determinations to Lessor and Tenant,
the third arbitrator shall be selected by the parties themselves if they can
agree thereon within a further period of fifteen (15) days. If the parties do
not so agree, then either party, on behalf of both and on notice to the other,
may request such appointment of an arbitrator meeting the requirements set forth
in SUBSECTION (H) below by the American Arbitration Association located in
Jacksonville, Florida or, if it does not then exist, such successor organization
as may then exist. Such third arbitrator shall, within thirty (30) days after
his appointment, make his own determination of the Fair Market Value and send
copies of this determination promptly to both Lessor and Tenant and their
arbitrators. Whichever of Lessor's Submitted Value or Tenant's Submitted Value
shall be closer to the determination of such third arbitrator shall be averaged
with the amount of the determination of the third arbitrator and the result will
conclusively be deemed to be the Fair Market Value.

         (g) Each party shall pay the fees and expenses of the arbitrator
appointed by or for such party, and the fees and expenses of the third
arbitrator and all other expenses (not including the attorneys' fees, witness
fees and similar expenses of the parties, which shall be borne separately by
each of the parties) of the arbitration shall be borne by the parties equally.

         (h) Each of the arbitrators selected as herein provided must be a
professional employee or principal of an unaffiliated respectable company
engaged in the business of real estate brokerage and/or consulting operating in
the greater Jacksonville area with at least ten (10) years' experience in the
sales of improved industrial and commercial property.

         (i) Each arbitrator shall certify to Lessor and Tenant whether or not,
in the previous three (3) years, the arbitrator or his or her company have (x)
been retained by Lessor or Tenant, and/or (y) been involved in an adversarial
arbitration or

<PAGE>

litigation proceeding with either Lessor or Tenant. Lessor and Tenant reserve
the right to reject any arbitrator for good cause within ten (10) business days
after receipt of the certification provided above.

         (j) The arbitration shall be conducted, to the extent consistent with
this SECTION 19, in accordance with the then prevailing rules of the American
Arbitration Association (other than the American Arbitration Association rules
relating to the appointment of arbitrators), or such other procedures as are
agreed to by the arbitrators or the parties hereto. In rendering such decision
and award, the arbitrators shall not add to, subtract from or otherwise modify
the provisions of this Lease. Judgment may be had on the decision and award of
the arbitrator(s) so rendered in any court of competent jurisdiction.

         (k) In the event the arbitration process is continuing at the end of
the Term, Tenant may remain in possession until the closing under this SECTION
19 of the purchase by Tenant of the leased premises at the same rental being
charged by Lessor in the last month of the Term.

         (l) Within ten (10) days after the determination of the purchase price
for the leased premises, Lessor and Tenant shall diligently and in good faith
negotiate and execute a formal contract of sale for the leased premises. If
Lessor and Tenant do not succeed in so negotiating and executing such formal
contract of sale within such ten (10) day period, the Purchase Option shall then
and thereupon be extinguished. Time is and shall be of the essence with respect
to all of the time periods set forth in this SECTION 19.

         (m) Lessor shall not be deemed to have failed to negotiate such formal
contract of sale in good faith by requiring, among other things, (a) that the
purchase price be paid by wire transfer or good certified or cashier's check,
(b) that Tenant take title to the leased premises in "as is" condition and
"subject to" all matters of record other than any mortgage or other lien placed
on the leased premises by Lessor, and (c) that Tenant deposit in escrow with
Lessor's counsel a down payment equal to ten (10%) percent of the sales price
forfeitable as liquidated damages in the event of Tenant's default under such
contract of sale.

         (n) The closing of the purchase of the leased premises by Tenant shall
occur on a business date fixed by Tenant which is prior to the 45th day
following the determination of the purchase price for the leased premises.

         (o) Neither the Purchase Option nor a memorandum thereof shall be
recorded against the leased premises.

20. INVESTMENT CREDIT.

         To the extent permissible by law, the Lessor agrees to elect and take
all other action necessary to pass on to the Tenant any investment credits
allowable for federal, state and local income tax purposes in regard to any item
of property leased hereunder.

<PAGE>

21. ASSIGNMENT AND SUBLETTING.

(a) Tenant may not assign this Lease or sublet the leased premises or any part
thereof without the prior written consent of Lessor. No assignment or sublease
made as permitted by this SECTION 21 shall affect or reduce any of the rights of
Lessor or obligations of Tenant hereunder, and all the obligations of Tenant
hereunder shall continue in full force and effect as the obligations of a
principal and not as the obligations of a guarantor or surety, to the same
extent as though no assignment or subletting had been made. Neither this Lease
nor the term hereby demised shall be mortgaged or otherwise encumbered by
Tenant. Tenant shall, within 10 days after the execution and delivery of any
such assignment or sublease, deliver a conformed copy thereof to Lessor.

(b) Tenant hereby irrevocably assigns to Lessor all rents and other sums due or
to become due under any sublease of all or any portion of the leased premises
entered into pursuant to this Lease, provided that so long as no Event of
Default shall have occurred or be continuing hereunder and Lessor shall not have
given notice of such default to Tenant, Tenant shall have the right to collect
and receive such rents and other sums for its own uses and purposes. Upon the
occurrence of any Event of Default hereunder, if Lessor shall give notice of
such default to Tenant, Lessor shall have absolute title to such rents and other
sums and the absolute right to collect and receive the same.

22. CONDITIONAL LIMITATIONS - DEFAULT PROVISIONS.

(a) Any of the following occurrences and acts shall constitute an Event of
Default under this Lease:

(i) if Tenant at any time during the term of this Lease (and regardless of the
pendency of any bankruptcy, reorganization, receivership, insolvency or other
proceedings, in law, in equity or before any administrative tribunal, which have
or might have the effect of preventing Tenant from complying with the terms of
this Lease), shall (a) fail to make when due any payment of rent herein required
to be paid by Tenant, or (b) fail to make when due any payment of additional
rent or any other sum herein required to be paid by Tenant, or (c) fail to
observe or perform any of Tenant's other covenants, agreements or obligations
hereunder, and if any such failure shall continue as to (b) above for 10 days
after Lessor shall have given Tenant notice of such failure, or as to (c) above
for 30 days after Lessor shall have given Tenant notice specifying such failure
(or if such default cannot be cured by the payment of money and cannot, with due
diligence, be cured within such 30 day period owing to causes beyond the control
of Tenant, if Tenant shall fail to proceed promptly to cure the same and
thereafter prosecute the curing of such default with diligence and continuity),
or

(ii) if any Event of Default shall occur under the Mortgage or any of the
Mortgage Documents as a result of any act or omission of Tenant, or

(iii) if Tenant or ATC shall file a petition in bankruptcy or for reorganization
or for an arrangement pursuant to any present or future federal

<PAGE>

bankruptcy act or under any similar federal or state law, or shall be
adjudicated a bankrupt or insolvent or shall make an assignment for the benefit
of its creditors or shall admit in writing its inability to pay its debts
generally as they become due, or if a petition or answer proposing the
adjudication of Tenant or ATC as a bankrupt or its reorganization under any
present or future federal bankruptcy act or any similar federal or state law
shall be filed in any court and such petition or answer shall not be discharged
or denied within 90 days after the filing thereof, or

(iv) if a receiver, trustee or liquidator of Tenant or ATC or of all or
substantially all of the property of Tenant or ATC or of the leased premises
shall be appointed in any proceeding brought by Tenant or ATC, or if any such
receiver, trustee or liquidator shall be appointed in any proceeding brought
against Tenant or ATC and shall not be discharged within 90 days after such
appointment or if Tenant or ATC shall consent to or acquiesce in such
appointment, or

(v) if at any time the leased premises shall have been abandoned or left
substantially unoccupied for 30 consecutive days, or

(vi) if the interest of Tenant in the leased premises or part thereof shall be
levied upon or attached in any proceeding and such process shall not be vacated
or discharged within 90 days after such levy or attachment.

(b) This Lease and the Term and estate hereby granted are subject to the
limitation that whenever an event of default shall have happened and be
continuing, then Lessor shall have the right at its election, then or at any
time thereafter while any such event of default shall continue and regardless of
and notwithstanding the fact that Lessor has or may have some other remedy
hereunder or by virtue hereof, in law or in equity, to give Tenant written
notice of Lessor's intention to terminate the Term on a date specified in such
notice, and upon the giving of any such notice, the Term and the estate hereby
granted shall expire and terminate upon the date so specified in said notice as
fully and completely and with the same force and effect as if the date specified
in such notice were the date hereinbefore fixed for the expiration of the Term,
and all rights of Tenant hereunder shall expire and terminate, but Tenant shall
remain liable as hereafter provided. In the event any such notice is given,
Lessor shall have the immediate right of re-entry and possession of the leased
premises and the right to remove all persons and property therefrom. Should
Lessor elect to re-enter as herein provided or should Lessor take possession
pursuant to legal proceedings or pursuant to any notice provided for by law,
Lessor may from time to time relet the leased premises or any part thereof for
such term or terms and at such rental or rentals and upon such terms and
conditions as Lessor may deem advisable, with the right to make alterations in
and repairs of the leased premises.

(c) In the event of any termination of the Term as in this SECTION 22 above
provided or as otherwise permitted by law, Tenant shall then peaceably quit and
surrender the leased premises to Lessor, and Lessor may, without further notice,
enter upon, re-enter, possess and repossess the same by force, summary
proceedings, ejectment or otherwise and again have, repossess and enjoy the same
as if this Lease

<PAGE>

had not been made, and in any such event, neither Tenant nor any person claiming
through or under Tenant by virtue of any statute or of an order of any court
shall be entitled to possession or to remain in possession of the leased
premises, but shall forthwith quit and surrender the leased premises, and
Lessor, at its option, shall forthwith, notwithstanding any other provisions of
this Lease to the contrary, be entitled to recover from Tenant (in lieu of all
other claims for damages on account of such termination) as and for liquidated
damages an amount equal to the excess of all the rents reserved hereunder for
the unexpired portion of this Lease discounted to the then present worth over
the fair rental value of the leased premises at the time of termination for such
unexpired portion. The discount rate to be used in discounting reserve rents and
in determining such fair rental value shall be the Prime Rate of Bank of
America, N.A. in effect at the time the calculation pursuant to this SUBSECTION
(C) shall be required to be made. Nothing herein contained shall, however, limit
or prejudice the right of Lessor, in any bankruptcy or reorganization or
insolvency proceedings, to prove for and obtain as liquidated damages by reason
of such termination an amount equal to the maximum allowed by any bankruptcy or
reorganization or insolvency proceedings, or to prove for and obtain as
liquidated damages by reason of such termination an amount equal to the maximum
allowed by any statute or rule of law in effect at the time when, and governing
the proceedings in which, such damages are to be proved, whether or not such
amount shall be greater, equal to, or less than the amount of the excess
referred to above.

(d) If Lessor shall re-enter and obtain possession of the leased premises by
reason of or following an event of default, Lessor shall have the right, without
notice, to repair or alter the leased premises in such manner as to Lessor may
seem necessary or advisable so as to put the leased premises in good order and
to make the same rentable, and shall have the right, at Lessor's option to relet
the leased premises or any part thereof, and Tenant agrees to pay to Lessor on
demand all expenses incurred by Lessor in obtaining possession, and in altering,
repairing and putting the leased premises in good order and condition, and in
reletting the same, including reasonable fees of attorneys, architects and other
experts, and also any other reasonable and legitimate expenses or commissions,
and Tenant further agrees to pay to Lessor upon each rental payment date
following the date of such re-entry to and including the date set forth in
SECTION 3 hereof for the expiration of the Term in effect immediately prior to
such re-entry the sums of money which would have been payable by Tenant as rent
hereunder on said rent payment dates if Lessor had not re-entered and resumed
possession of the leased premises, deducting only the net amount of rent, if
any, which Lessor shall actually receive (after deducting from the gross
receipts the expenses, costs and payments of every kind of Lessor which in
accordance with the terms of this Lease would have been borne by Tenant) in the
meantime from and by any reletting of the leased premises, and Tenant hereby
agrees to be and remain liable for all sums otherwise payable by Tenant under
this Lease including, but not limited to, the expenses of Lessor aforesaid, as
well as for any deficiency aforesaid, and Lessor shall have the right from time
to time to begin and maintain successive actions or other legal proceedings
against Tenant for the recovery of such deficiency or damages or for a sum equal
to any installment or installments of rent or additional rent and any other sums
payable hereunder, and to recover the same

<PAGE>

upon the liability of Tenant herein provided, which liability it is expressly
covenanted shall survive the issuance of any action to secure possession of the
leased premises. Nothing herein contained shall be deemed to require Lessor to
wait to begin such action or other legal proceedings until the date when this
Lease would have expired by limitation had there been no such event of default.

(e) If under any of the preceding provisions of this SECTION 22, Lessor shall be
entitled to give Tenant a notice of termination of the Term, Lessor, without
giving such notice of termination, and notwithstanding the continuance of the
Term and notwithstanding that Lessor may have re-entered or taken possession of
the leased premises pursuant to this SECTION 22, shall have, to the extent
permitted by law, all the rights, powers and remedies given to Lessor by the
preceding provisions of this SECTION 22, and Tenant shall have the obligations
imposed upon it by such provisions. No such re-entry or taking of possession of
the leased premises by Lessor shall be construed as an election on Lessor's part
to terminate the Term unless a written notice of such intention be given to
Tenant or unless such termination be decreed by a court of competent
jurisdiction.

(f) The words "enter," "re-enter" or "re-entry" are not restricted to their
technical legal meaning.

(g) No right or remedy herein conferred upon or reserved to Lessor is intended
to be exclusive of any other right or remedy, and each and every right and
remedy shall be cumulative and in addition to any other right or remedy given
hereunder, or now or hereafter existing at law or in equity or by statute. The
failure of Lessor to insist at any time upon the strict performance of any of
the covenants or agreements or to exercise any option, right, power or remedy
contained in this Lease shall not be construed as a waiver or a relinquishment
thereof for the future. The receipt by Lessor of any rent, any additional rent
or any other sum payable hereunder with knowledge of the breach of any covenant
or agreement contained in this Lease shall not be deemed a waiver of such
breach, and no waiver by Lessor of any provision of this Lease shall be deemed
to have been made unless expressed in writing and signed by Lessor. In addition
to other remedies provided in this Lease, Lessor shall be entitled, to the
extent permitted by law, to injunctive relief in case of the violation, or
attempted or threatened violation, of any of the covenants, agreements,
conditions or provisions of this Lease or to a decree compelling performance of
any of the covenants, agreements, conditions or provisions of this Lease, or to
any other remedy allowed to Lessor at law or in equity.

(h) In the event either Lessor or Tenant shall be in default in the performance
of any obligations under this Lease and an action shall be brought for the
enforcement thereof, the prevailing party shall be entitled to reimbursement of
all the expenses incurred in connection therewith, including reasonable
attorneys' fees.

23. OBLIGATIONS UNDER AGREEMENT. Notwithstanding anything herein to the
contrary, Tenant hereby agrees to perform any and all obligations, duties and
covenants of the Lessor under the Mortgage in a timely and efficient manner,
provided;

<PAGE>

however, that the payments required to be made under such Mortgage when paid by
Tenant shall be credited toward Tenant's obligations to pay rent hereunder. Said
credits shall be made against Tenant's obligations in the order in which they
come due starting with the obligations which come due at the earliest time.

24. ESTOPPEL CERTIFICATES. Tenant will, at any time and from time to time, upon
not less than 20 days' prior request by Lessor or the Mortgagee, execute,
acknowledge and deliver to Lessor or the Mortgagee, as the case may be, a
statement in writing, executed by an authorized employee, certifying that this
Lease is unmodified and in full effect (or, if there have been modifications,
that this Lease is in full effect as modified, and setting forth such
modifications) and the dates to which the rent, additional rent and other sums
payable hereunder have been paid, and either stating that to the knowledge of
the signer of such certificate no default exists hereunder or specifying each
such default of which the signer may have knowledge; it being understood and
intended that any such statement by Tenant may be relied upon by Lessor or the
Mortgagee or by any prospective purchaser of the leased premises.

25. SURRENDER OF POSSESSION. Upon the expiration or earlier termination of this
Lease, Tenant shall peaceably leave and surrender the leased premises to Lessor
in the same condition in which the leased premises were originally received from
Lessor at the commencement of the Term, except as improved, repaired, rebuilt,
restored, altered or added to as provided in or required by any provision of
this Lease and except for ordinary wear and tear and in the case of termination
pursuant to SECTION 12 OR 13, except for the condemned portion or the damage
giving rise to such termination, as the case may be. Tenant shall remove from
the leased premises on or prior to such expiration or earlier termination all
property situated thereon which is not owned by Lessor, including, without
limitation, Tenant's trade fixtures, and at its sole cost and expense shall on
or prior to such expiration or earlier termination, repair any damage caused by
such removal. Property not so removed shall become the property of Lessor, which
may thereafter cause such property to be removed from the leased premises and
disposed of, but the cost of any such removal and disposition as well as the
cost of repairing any damage caused by such removal shall be borne by Tenant.

26. SEPARABILITY. Each and every covenant and agreement contained n this Lease
shall be for all purposes construed to be a separate and independent covenant
and agreement and the breach of any such covenant or agreement by Lessor shall
not to any extent discharge or relieve Tenant from Tenant's obligation to
perform each and every covenant and agreement of this Lease to be performed by
Tenant. If any term or provision of this Lease or the application thereof to any
person or circumstance shall to any extent be found invalid and unenforceable by
a court of competent jurisdiction, the remainder of this Lease, or the
application of such term or provision to persons or circumstances other than
those to which it is invalid or unenforceable, shall no be affected thereby, and
each term and provision of this Lease shall be valid and shall be enforced to
the extent permitted by law.

<PAGE>

27. MEMORANDUM OF LEASE. This Lease shall not be recorded, but the parties
agree, at the request of either of them, to execute a Memorandum of Lease for
recording, containing, inter alia, the names of the parties, the legal
description of the leased premises and the Term.

28. NOTICE. Whenever under this Lease a provision is made for notice of any
kind, it shall be deemed sufficient notice and service thereof if such notice is
in writing and is delivered or sent by: (i) certified mail, postage prepaid,
return receipt requested, (ii) nationally recognized overnight carrier or (iii)
telecopier facsimile, with "hard" copy to follow by one of the methods in (i) or
(ii) above addressed to the address of the party in question first above written
and to the Mortgagee at such address as is designated in the Mortgage Documents,
or to such other address as either party or the Mortgagee may designate by
notice pursuant to this Section. Notices shall be deemed given either one
business day after delivery to the overnight carrier, the day of delivery and
receipt if delivered by fax (or the first business day thereafter if the day of
delivery and receipt is not a business day) or three business days after being
mailed as provided in clause (i) above. Notices under this Lease may be given by
the attorneys for the respective parties.

29. SUCCESSION. All of the covenants, agreements, conditions and undertakings in
this Lease shall extend and inure to and be binding upon the successors in
interest and the assigns of the respective parties hereto.

30. RIGHT OF FIRST OFFER.

         (a) Provided that this Lease shall be in full force and effect without
default on the part of Tenant, and that the leased premises are for sale, Lessor
shall first give to Tenant notice of Lessor's willingness to sell the leased
premises to Tenant for the sales price set forth in such notice (the "Price
Notice"). Tenant shall have 15 days after Lessor gives the Price Notice to agree
to purchase the leased premises for such price or reject the Price Notice. If
Tenant does not return a copy of the Price Notice to Lessor indicating thereon
Tenant's unconditional agreement to so purchase within such 15-day period, the
Price Notice shall be deemed rejected. If Tenant rejects or is deemed to have
rejected the Price Notice, Lessor shall be free to sell the leased premises to
any other person or entity at the price stated in the Price Notice or at any
higher price and on such commercially comparable terms as may have been set
forth in the Price Notice. If, however, Lessor does not convey the leased
premises to such other person within 150 days after the date Lessor gave the
Price Notice, and if the leased premises are for sale, Lessor shall again offer
the leased premises to Tenant by Price Notice as provided herein, and Tenant
shall have the same right to agree to purchase the leased premises or reject the
Price Notice. In the event Tenant agrees to purchase the leased premises as
provided herein, Lessor and Tenant shall diligently and in good faith negotiate
and execute a formal contract of sale for the leased premises within ten (10)
business days after such agreement is given to Tenant. If Lessor and Tenant do
not succeed in so negotiating and executing such formal contract of sale within
such ten (10) day period, or if Lessor shall convey the leased premises within
the 150-day period as aforesaid, this right of first offer shall then and

<PAGE>

thereupon be extinguished. Time is and shall be of the essence with respect to
all of the time periods set forth in this SUBSECTION 30(A).

         (b) Lessor shall not be deemed to have failed to negotiate such formal
contract of sale in good faith by requiring, among other things, (a) that the
purchase price be paid by wire transfer or good certified or cashier's check,
(b) that Tenant take title to the leased premises in "as is" condition and
"subject to" all matters of record other than any mortgage or other lien placed
upon the leased premises by Lessor, and (c) that Tenant deposit in escrow with
Lessor's counsel a down payment equal to ten (10%) percent of the sales price
forfeitable as liquidated damages in the event of Tenant's default under such
contract of sale.

         (c) The closing of the purchase of the leased premises by Tenant shall
occur on a business date fixed by Tenant which is prior to the 90th day
following the giving by Lessor of the operative Price Notice.

         (d) Neither this right of first offer nor a memorandum hereof shall be
recorded against the leased premises.

         IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the date first written above.

                                            V.P.I. PROPERTIES ASSOCIATES, d/b/a
                                            V.P.I. PROPERTIES ASSOCIATES, LTD.,
                                            (Lessor)

                                            By
                                              Name:
                                              Title:

                                            AMERICAN TECHNICAL CERAMICS
                                            (FLORIDA), INC., (Tenant)

                                            By
                                              Name:
                                              Title:

         The undersigned hereby guarantees performance by AMERICAN TECHNICAL
CERAMICS (FLORIDA), Inc. of its obligations under this Lease.

                                            AMERICAN TECHNICAL CERAMICS CORP.

                                            By
                                              Name:
                                              Title:

<PAGE>

STATE OF FLORIDA  )
                  )
COUNTY OF DUVAL   )

         The foregoing instrument was acknowledged before me this 16th day of
May, 2000, by Victor D. Insetta, General Partner of V.P.I. Properties
Associates, a New York limited partnership, qualified to do business in the
State of Florida under the name V.P.I. Properties Associates, Ltd., on behalf of
the partnership.

                                            Notary Public, State of Florida
                                              at Large.

NOTARIAL SEAL)                              My Commission Expires: _____

STATE OF NEW YORK )
                  )
COUNTY OF SUFFOLK )

         The foregoing instrument was acknowledged before me this 16th day of
May, 2000, by Kathleen M. Kelly, Vice President - Administration of American
Technical Ceramics (Florida), Inc., a Florida corporation, on behalf of the
corporation.

                                            Notary Public, State of New York
                                              at Large.

NOTARIAL SEAL)                              My Commission Expires: _____

<PAGE>

STATE OF NEW YORK )
                  )
COUNTY OF SUFFOLK )

         The foregoing instrument was acknowledged before me this 16th day of
May, 2000, by Kathleen M. Kelly, Vice President - Administration of American
Technical Ceramics Corp, a Delaware corporation, on behalf of the corporation.

                                            Notary Public, State of New York
                                              at Large.

NOTARIAL SEAL)                              My Commission Expires: _____

<PAGE>

                                    EXHIBIT A

A part of Tract "E" as shown on map of John B. Uebelhoer's Subdivision, Plat
Book 7, Page 10 of the Current Public Records of Duval County, Florida, more
particularly described as follows: Commence at the Southwest corner of Section
24, Township 2 South, Range 27 East; thence South 88 degrees 24 minutes 18
seconds West, 110 feet to the Westerly right-of-way line of Corporate Square
Boulevard as established for a width of 100 feet thence South 01 degrees 32
minutes 58 seconds East along the said Westerly right-of-way line, 63.43 fee to
the point of curve of a curve to the right, said curve having a radius of 750
feet, thence along the arc of said curve and along said right-of-way line an arc
distance of 431.13 feet, said curve having a chord bearing and distance of South
14 degrees 55 minutes 07 seconds West, 425. 22 feet to the point of tangency of
said curve; thence continue along said Westerly right-of-way line South 31
degrees 23 minutes 11 seconds West, 113.62 feet to the point of curve of a curve
to the left, said curve having a radius of 1,350 feet; thence along the arc of
said curve and along said right-of-way line an arc distance of 925. 69 feet,
said curve having a chord bearing and distance of South 11 degrees 44 minutes 33
seconds West, 907.66 feet; thence continue along the arc of said curve and along
said right-of-way line an arc distance of 80.08 feet, said curve having a chord
bearing and distance of South 09 degrees 36 minutes 03 seconds East, 80.07 feet,
to the intersection with a curve concave Easterly having a- radius of 60 feet;
thence Southerly along and around said curve an arc distance of 71. 80 feet,
said curve having a chord bearing and distance of South 12 degrees 44 minutes 05
seconds East, 67.59 feet, to an intersection with the aforesaid Westerly
right-of-way line of Corporate Square Boulevard, said Westerly right-of-way line
being in a curve concave Easterly having a radius of 1,350 feet; thence
Southerly along and around said curve an arc distance of 18.13 feet, said curve
having a chord bearing and distance of South 14 degrees 33 minutes 14 seconds
East, 18.13 feet to the Point of Beginning. From said Point of Beginning, run
thence North 75 degrees 03 minutes 41 seconds East, 17.78 feet to the
intersection with a curve concave Northerly having a radius of 60 feet; thence
Easterly along and around said curve an arc distance of 70. 32 feet, said curve
having a chord bearing and distance of North 75 degrees 03 minutes 41 seconds
East, 66.36 feet; thence North 75 degrees 03 minutes 41 seconds East, 15.85
feet; thence Southerly along and around a curve concave Easterly having a radius
of 1,250 feet an arc distance of 15.26 feet, said curve having a chord bearing
and distance of South 15 degrees 17 minutes 18 seconds East, 15.26 feet; thence
North 88 degrees 26 minutes 48 seconds East, 289.50 feet to an intersection with
the Westerly line of lands described in Official Records Volume 3458, Page 363;
thence South 02 degrees 09 minutes 19 seconds East along the Westerly line of
said lands, 200.28 feet to the Southwest corner of said lands; thence North 88
degrees 26 minutes 34 seconds East, along the Southerly line of said lands,
99.85 feet to the Southeast corner of said lands; thence South 02 degrees 07
minutes 47 seconds East, along the Westerly line of Southside Estates Unit No.
4, as recorded in Plat Book 18, Pages 79, 79A and 79B, 426.8 feet: thence South
87 degrees 52 minutes 13 seconds West, 328.0 feet; thence North 02 degrees 07
minutes 47 seconds West, 539.8 feet; thence South 87 degrees 52 minutes 13
seconds West, 143.92 feet; thence North 14 degrees 33 minutes 14 seconds West,
85.89 feet to the Point of Beginning. Said parcel contains, 4.5838 acres more or
less.<PAGE>

MORTGAGE NOTE

$795,000.00                                                Date: AUGUST 17, 2000

         FOR VALUE RECEIVED, the undersigned, AMERICAN TECHNICAL CERAMICS CORP.,
a Delaware corporation having an office at One Norden Lane, Huntington Station,
New York 11743, promises to pay to the order of EUROPEAN AMERICAN BANK (the
"Bank"), the principal sum of Seven Hundred Ninety Five Thousand ($795,000.00)
Dollars, together with interest as set forth below on or before September 1,
2010, (the "Maturity Date") in one hundred twenty (120) equal, consecutive
monthly installments of principal in the amount of $6,625.00 each on the first
day of each month commencing October 1, 2000; provided the last installment
shall in any event be equal to the remaining principal amount outstanding.

         Each Loan (each a "Loan" and collectively, the "Loans") hereunder which
is maintained at a rate of interest based on Reserved Adjusted Libor (a
"Eurodollar Loan") shall bear interest on the unpaid principal amount thereof
for the Interest Period applicable thereto at a rate per annum equal to the
Reserve Adjusted Libor determined for each Interest Period therefor in
accordance with the terms of this Note plus a margin of 1.50% per annum. Each
Loan which is maintained at a rate of interest based on the Prime Rate (a "Prime
Rate Loan") shall bear interest on the unpaid principal amount thereof from the
date thereof until payment of such Prime Rate Loan in full at a fluctuating rate
per annum equal to the Prime Rate. The initial Loan hereunder shall be a Prime
Rate Loan unless the Bank shall have agreed otherwise in writing.

         Any Eurodollar Loan may be continued as a Eurodollar Loan upon
expiration of an Interest Period with respect thereto by complying with the
notice provisions contained in the definition of Interest Period; provided,
however, that no Eurodollar Loan may be continued as such when any Event of
Default or event which upon notice, passage of time or both would constitute an
Event of Default has occurred and is continuing, but shall be automatically
converted to a Prime Rate Loan on the last date of the Interest Period in effect
when the Bank is notified of such default or Event of Default.

         The undersigned may elect from time to time to convert outstanding
Eurodollar Loans to Prime Rate Loans by giving the Bank at least three Business
Days prior irrevocable notice of such election; provided that any conversion of
a Eurodollar Loan may be made only on the last day of an Interest Period with
respect thereto. The undersigned may elect from time to time to convert an
outstanding Prime Rate Loan to a Eurodollar Loan by giving the Bank irrevocable
written notice of such election not later than 12 noon, three Business Days
prior to the date of the proposed conversion and further provided that (i) the
conversion shall be in the minimum principal amount of $10,000.00, and (ii) no
Event of Default or event upon notice, passage of time or both would constitute
an Event of Default shall have occurred and be continuing. Notwithstanding the
foregoing, no Loan may be converted to or continued as a Eurodollar Loan if the
Interest Period would extend beyond the Maturity Date.

         The undersigned agrees to indemnify the Bank and hold the Bank harmless
from any loss or expense which the Bank may sustain or incur, including without
limitation, interest or fees payable by the Bank to lenders of funds obtained by
it in order to maintain a Eurodollar Loan hereunder, as a consequence of (a)
default by the undersigned in payment of the principal amount of or interest on
a Eurodollar Loan, (b) default by the undersigned in making any prepayment of a
Eurodollar Loan after the undersigned gives notice in accordance with this Note
and/or (c) the making of any payment of a Eurodollar Loan on a day which is not
the last day of the then applicable Interest Period with respect thereto. When
claiming indemnification under this paragraph, the Bank shall provide to the
undersigned a statement explaining the amount of any such loss or expense, which
statement shall in the absence of manifest error be conclusive with respect to
the undersigned. The indemnity obligations hereunder shall survive payment in
full of the Note.

<PAGE>

         In the event that the Bank shall have determined (which determination
shall be conclusive and binding upon the undersigned) that, by reason of
circumstances affecting the London interbank market, adequate and reasonable
means do not exist for ascertaining the Reserve Adjusted Libor for any requested
Interest Period or with respect to the continuation of a Eurodollar Loan beyond
the expiration of the then current Interest Period with respect thereto, the
Bank shall forthwith give notice of such determination, confirmed in writing, to
the undersigned. If such notice is given, any outstanding Eurodollar Loan shall
be converted, on the last day of the then current Interest Period with respect
thereto, to a Prime Rate Loan. Such notice shall be withdrawn by the Bank when
the Bank shall determine that adequate and reasonable means exist for
ascertaining Reserve Adjusted Libor.

         Notwithstanding anything to the contrary contained elsewhere in this
Note, if any change after the date hereof in law, rule, regulation, guideline or
order or in the interpretation thereof by any governmental authority charged
with the administration thereof, shall make it unlawful for the Bank to make or
maintain any Loan as a Eurodollar Loan, then by written notice to the
undersigned, the Bank may require that the Eurodollar Loan be converted to a
Prime Rate Loan, whereupon the Eurodollar Loan shall be automatically converted
to a Prime Rate Loan as of the date of such notice to the undersigned.

         Eurodollar Loans may be prepaid without premium or penalty (except as
provided in the next succeeding paragraph) together with accrued interest
thereon to and including the date of prepayment, provided such prepayment date
must be the last day of the then current Interest Period of such Loan.

         Each of said payments shall be applied first to the payment of accrued
interest on this Note and the balance thereof to the reduction of the unpaid
principal balance of this Note.

         Any amount of principal hereunder which is not paid when due (whether
at stated maturity, by acceleration or otherwise) shall bear interest until paid
in full at a rate 3% per annum in excess of the interest rate otherwise payable
with respect thereto. Interest in respect of Prime Rate Loans shall be payable
on the first day of each month, commencing on the first such date to occur after
the date of this Note, and on the Maturity Date. Interest in respect of
Eurodollar Loans shall be payable on the last day of the Interest Period in
respect thereof. Interest shall be calculated on the basis of a 360 day year for
the actual number of days elapsed. All payments hereunder shall be payable in
immediately available funds in lawful money of the United States. The
undersigned authorizes the Bank to charge any of the undersigned's accounts for
payments of principal or interest.

         A late payment of 2% of any principal or interest payment made more
than 10 days after the due date thereof shall be due with any such late payment.

         This Note is secured by, among other things, a mortgage and security
agreement of even date herewith (the "Mortgage") made by the Maker to the Bank
encumbering, among other things, the property located as indicated below and
more particularly described in the Mortgage; all of the covenants, conditions
and agreements of the Mortgage being made a part hereof by this reference.

         It is expressly agreed that, upon the failure of the Maker timely to
make any payment due hereunder after any applicable grace period or upon the
happening of any event of default under the Mortgage (each, an "Event of
Default"), the principal sum hereof, or so much thereof as may be outstanding,
together with accrued interest and all other expenses, payable by Maker under
the Mortgage, including, but not limited to reasonable attorneys' fees for legal
services incurred by the holder hereof in collecting or enforcing payment hereof
whether or not suit is brought, and if suit is brought, then through all
appellate actions, shall immediately become due and payable at the option of the
holder of the Note,

<PAGE>

notwithstanding the Maturity Date set forth herein.

         Notwithstanding anything to the contrary contained in this Note, the
rate of interest payable on this Note shall never exceed the maximum rate of
interest permitted under applicable law. If at any time the rate of interest
otherwise prescribed herein shall exceed such maximum rate, and such prescribed
rate is thereafter below such maximum rate, the prescribed rate shall be
increased to the maximum rate for such period of time as is required so that the
total amount of interest received by the Bank is that which would have been
received by the Bank, except for the operation of the first sentence hereof.

         As security for the payment of all amounts due or to become due under
this Note and of all other obligations and liabilities of the undersigned to the
Bank, whether now or hereafter existing, joint, several, direct, indirect,
absolute, contingent, secured, matured or unmatured, the undersigned grants to
the Bank a right of setoff against, a continuing security interest in, and an
assignment and pledge of, all moneys, deposits (general or special), securities
and other property of the undersigned and the proceeds thereof, now or hereafter
held by the Bank on deposit, in safekeeping, in transit or otherwise, at any
time credited by or due from the Bank to the undersigned, or in which the
undersigned shall have any interest.

         Upon the occurrence and during the continuance of an Event of Default,
the Bank shall be entitled to setoff against and apply to the payment hereof the
balance of any account or accounts maintained with the Bank by the undersigned
and to exercise any other right or remedy granted hereunder, or under any
agreement between the undersigned and the Bank or available at law or in equity,
including, but not limited to, the rights and remedies of a secured party under
the New York Uniform Commercial Code. The failure by the Bank at any time to
exercise any such right shall not be deemed a waiver thereof, nor shall it bar
the exercise of any such right at a later date. Each and every right and remedy
granted to the Bank hereunder or under any agreement between the undersigned and
the Bank or available at law or in equity shall be cumulative and not exclusive
of any other rights, powers, privileges or remedies, and may be exercised by the
Bank from time to time and as often as may be necessary in the sole and absolute
discretion of the Bank.

         In the event that the Bank for any reason shall refer this Note to an
attorney for the enforcement thereof, the undersigned agrees to pay in addition
to the unpaid principal, interest and late charges due hereunder, the Bank's
reasonable attorneys' fees (whether in-house or outside counsel), together with
all costs and expenses of any such action.

         The Bank shall not, by any act, delay, omission or otherwise, be deemed
to have waived any of its rights and/or remedies hereunder. No change,
amendment, modification, termination, waiver, or discharge, in whole or in part,
of any provision of this Note shall be effective unless in writing and signed by
the Bank, and if so given by the Bank, shall be effective only in the specific
instance in which given. The undersigned acknowledges that this Note and the
undersigned's obligations under this Note are, and shall at all times continue
to be, absolute and unconditional in all respects, and shall at all times be
valid and enforceable irrespective of any other agreements or circumstances of
any nature whatsoever which might otherwise constitute a defense to this Note
and the obligations of the undersigned under this Note. The undersigned
absolutely, unconditionally and irrevocably waives any and all right to assert
any set-off, counterclaim or crossclaim of any nature whatsoever with respect to
this Note or the undersigned's obligations hereunder.

         This Note shall be governed by and construed in accordance with the
laws of the State of

<PAGE>

New York without giving effect to principles of conflict or choice of laws.

         THE UNDERSIGNED HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
FEDERAL OR STATE COURT IN THE STATE OF NEW YORK IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS NOTE OR
ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND CONSENTS TO THE PLACING OF VENUE
IN THE COUNTY OF NASSAU OR OTHER COUNTY PERMITTED BY LAW. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THE UNDERSIGNED HEREBY WAIVES AND AGREES NOT TO
ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR
PROCEEDING ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF
SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT
THIS NOTE OR ANY OTHER DOCUMENT OR INSTRUMENT REFERRED TO HEREIN MAY NOT BE
LITIGATED IN OR BY SUCH COURTS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
UNDERSIGNED AGREES NOT TO SEEK AND HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE
JUDGMENT OF ANY SUCH COURT BY ANY COURT OF ANY OTHER NATION OR JURISDICTION
WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT. THE
UNDERSIGNED AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR
REGISTERED MAIL TO ITS ADDRESS SET FORTH BELOW OR SUCH OTHER ADDRESS THAT THE
UNDERSIGNED SHALL HAVE NOTIFIED THE BANK IN WRITING OR ANY METHOD AUTHORIZED BY
THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS PROHIBITED BY LAW, THE UNDERSIGNED
HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS NOTE.

         The undersigned and the Bank hereby agree and acknowledge that any and
all information relating to the undersigned which is furnished by the
undersigned to the Bank (or to any affiliate of the Bank), and which is
non-public, confidential or proprietary in nature, shall be kept confidential by
the Bank or such affiliate in accordance with applicable law; provided, however,
that such information and other credit information relating to the undersigned
may be distributed by the Bank or such affiliate (a) to the Bank's or such
affiliate's directors, officers, employees, attorneys, affiliates, attorneys,
auditors and regulators, and (b) upon the order of a court or other governmental
agency having jurisdiction over the Bank or such affiliate, to any other party.
The undersigned and the Bank further agree that this provision shall survive the
termination of this Note.

         The undersigned hereby waives presentment, demand for payment, protest,
notice of dishonor, and any and all other notices or demands in connection with
the delivery, acceptance, performance, default, or enforcement of this Note.

         As used herein the following terms shall have the following meanings:

         "Bank" shall be deemed to include the Bank, its successors and assigns
and any holder hereof.

         "Business Day" means (a) a day other than a Saturday, Sunday or other
day on which

<PAGE>

commercial banks in New York, New York are authorized or required by law to
close and (b) relative to the date of (i) continuing a Loan as, or converting a
Loan to, a Eurodollar Loan, (ii) making any payment or prepayment of principal
of or payment of interest on a Eurodollar Loan, or (iii) the undersigned giving
any notice (or the number of Business Days to elapse prior to the effectiveness
thereof) in connection with any matter referred to in (b)(i) or (b)(ii), any day
on which dealings in U.S. dollars are carried on the London interbank eurodollar
market.

         "Eurocurrency Reserve Requirement" means for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates (expressed as
a decimal fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board of Governors of the Federal Reserve System or other
governmental authority having jurisdiction with respect thereto), as from time
to time hereafter in effect, dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of such Board) maintained by a member bank of such system.

         "Interest Period" with respect to any Eurodollar Loan means:

         (a) initially, the period commencing on the date such Eurodollar Loan
is made and ending three or six months thereafter; and

         (b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan and ending three or
six months thereafter, as selected by the undersigned by irrevocable written
notice to the Bank not less than three (3) Business Days prior to the last day
of the then current Interest Period with respect to such Eurodollar Loan;
provided, however, that all of the foregoing provisions relating to Interest
Periods are subject to the following:

              (i) if any Interest Period pertaining to a Eurodollar Loan would
         otherwise end on a day which is not a Business Day, the Interest Period
         shall be extended to the next succeeding business day unless the result
         of such extension would be to carry such Interest Period into another
         calendar month in which event such Interest Period shall end on the
         immediately preceding Business Day;

              (ii) if the undersigned shall fail to give notice as provided in
         clause (b) above, the undersigned shall be deemed to have requested
         conversion of the affected Eurodollar Loan to a Prime Rate Loan on the
         last day of the then current Interest Period with respect thereto;

              (iii) any Interest Period that begins on the last Business Day of
         a calendar month (or on a day for which there is no numerically
         corresponding day in the calendar month at the end of such Interest
         Period) shall end on the last Business Day of a calendar month; and

              (iv) no Interest Period may be selected which ends later than the
         Maturity Date.

         "Prime Rate" shall mean a fluctuating rate per annum equal to the rate
of interest publicly announced by the Bank at its principal office from time to
time as its Prime Rate. Any change in the Prime Rate shall be effective on the
date such change is announced by the Bank.

<PAGE>

         "Reserve Adjusted Libor" shall mean with respect to the Interest Period
pertaining to a Eurodollar Loan, the rate per annum equal to the quotient
(rounded upwards to the next higher 1/16 of one percent) of (a) the annual rate
of interest at which dollar deposits of an amount comparable to the amount of
such Loan and for a period equal to the Interest Period applicable thereto are
offered to the Bank in the London interbank market at approximately 11:00 a.m.
(London time) on the second Business Day prior to the beginning of such Interest
Period, divided by (b) a number equal to 1.00 minus the Eurocurrency Reserve
Requirement.

         In the event any one or more provisions contained in this Note should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.

         Any consents, agreements, instructions or requests pertaining to any
matter in connection with this Note, signed by any one of the undersigned, shall
be binding upon all of the undersigned.

         IN WITNESS WHEREOF, the undersigned has duly executed this Note the day
and year first above written.

                                       AMERICAN TECHNICAL CERAMICS CORP..

                                       By:
                                          Kathleen Kelly
                                          VP Administration

Location of Property:                     Address of Borrower:

11 Stepar Place                           One Norden Lane
Huntington Station, NY  11743             Huntington Station, NY  11743

<PAGE>

================================================================================

                                    MORTGAGE
                                       AND
                               SECURITY AGREEMENT

                             Dated: August 17, 2000

                                in the amount of

                                   $795,000.00
                             (the "Mortgage Amount")

                                      from

                        AMERICAN TECHNICAL CERAMICS CORP.

                              having an office at:

                                 One Norden Lane
                       Huntington Station, New York 11743

                                (the "Mortgagor")

                                       to

                             EUROPEAN AMERICAN BANK
                         A New York banking corporation

                              having an office at:

                                   1 EAB Plaza
                            Uniondale, New York 11555

                                (the "Mortgagee")

LOCATION OF PREMISES:

Street Address         :     11 Stepar Place
Town of                :     Huntington
County of              :     Suffolk

<PAGE>

                             SNYMS AGR
State of               :     New York
District               :     0400
Section                :     136.00
Block                  :     01.00
Lot                    :     005.000
================================================================================
After recording, please return to:

EUROPEAN AMERICAN BANK
Commercial Loan Department
1 EAB Plaza
Uniondale, New York  11555

Recital

The Mortgagor is the owner of the premises described in Schedule A and has
borrowed the Mortgage Amount as evidenced by its note, dated the date hereof,
obligating it to pay the Mortgage Amount. The note, together with any
modifications and/or amendments thereof, is hereinafter referred to as the
"Note". In order to secure the payment thereof, the Mortgagor has duly
authorized the execution of this Mortgage.

Certain Definitions

The Mortgagor and the Mortgagee agree that, unless the context otherwise
specifies or requires, the following terms shall have the meanings herein
specified, such definitions to be applicable equally to the singular and to the
plural forms of such terms.

"Chattels" means all fixtures, fittings, appliances, apparatus, equipment,
machinery and articles of personal property, and replacements thereof owned by
Mortgagor, other than those owned by lessees, now or at any time hereafter
affixed to, attached to, placed upon or used in any way in connection with the
complete and comfortable use, enjoyment, occupancy or operation of the
Improvements on the Premises.

"Events of Default" means the events and circumstances described as such in
Section 2.01 hereof.

"Guarantor" means the party or parties who have guaranteed the payment of the
Note.

<PAGE>

"Improvements" means all structures and buildings, and replacements thereof, now
or hereafter located upon the Premises by the Mortgagor, including all plant
equipment, apparatus, machinery and fixtures of every kind and nature whatsoever
forming part of said structures and/or buildings.

"Intangibles" means all "general intangibles" (as such quoted term is defined in
the Uniform Commercial Code of the State of New York) in any way relating to the
Premises and/or the Improvements and which the Mortgagor owns, all licenses,
trade names, good will and books and records relating to the business operated
or to be operated on the Premises or any part thereof, and all unearned
premiums, accrued, accruing or to accrue under all insurance policies now or
hereafter obtained by the Mortgagor insuring the Mortgaged Property, as
hereinafter defined, and all rights and interest of Mortgagor thereunder.

"Involuntary Rate" means the Interest Rate provided in the Note plus 3%, but in
no event to exceed the maximum rate allowed by law.

"Material Adverse Change" means (i) a material adverse change in the financial
condition, business, operations, properties, prospects or results of operations
of the Mortgagor, or (ii) any event or occurrence which is reasonably likely to
have a material adverse effect on the ability of the Mortgagor to perform its
obligations hereunder.

"Premises" means the premises described in Schedule A hereto, including all of
the air space, easements, rights, privileges, royalties and appurtenances
thereunto belonging or in anywise appertaining, and all of the estate, right,
title, interest, claim or demand whatsoever of the Mortgagor therein and in the
streets, alleys and ways adjacent thereto, either at law or in equity, in
possession or expectancy, now or hereafter acquired.

All terms of this Mortgage which are not defined above have the meaning set
forth in this Mortgage.

Granting Clause

NOW, THEREFORE, the Mortgagor, in consideration of the premises and in order to
secure payment of both the principal of the Note and the interest and any other
sums payable thereon, and/or under this Mortgage and the performance and
observance of all the provisions hereof and of the Note including the payment of
any sums advanced by the Mortgagee pursuant to this Mortgage (collectively, all
of such obligations are hereinafter referred to as the "Indebtedness"), hereby
gives, grants, bargains, sells, warrants, aliens, remises, releases, conveys,
assigns, transfers, mortgages, hypothecates, deposits, pledges, sets over

<PAGE>

and confirms unto the Mortgagee all its estate, right, title and interest in, to
and under any and all of the following described property (the "Mortgaged
Property"), whether now owned or held or hereafter acquired:

         (a) the Premises;

         (b) the Improvements;

         (c) the Chattels;

         (d) the Intangibles;

         (e) all proceeds of the conversion, voluntary or involuntary, of any of
the foregoing into cash or liquidated claims, including, without limitation,
proceeds of hazard and title insurance and condemnation awards;

         (f) all leases and lettings of the Premises now or hereafter entered
into and all right, title and interest of the Mortgagor thereunder, including,
without limitation, cash or securities deposited thereunder to secure
performance by the lessees of their obligations thereunder, whether such cash or
securities are to be held until the expiration of the terms of such leases or
applied to one or more of the installments of rent coming due immediately prior
to the expiration of such terms, subject to the Mortgagor's right to possess and
apply such cash or securities prior to an Event of Default, including, further,
the right, upon the happening of an Event of Default, to receive and collect the
rents thereunder.

TO HAVE AND TO HOLD unto the Mortgagee, its successors and assigns forever
together with all the Improvements now or hereafter erected on the Premises to
its and their own proper use and behoof. And also the Mortgagor does for itself,
its successors and assigns, covenant with the said Mortgagee, its successors and
assigns, that at and until the ensealing of these presents it is well seized of
the Premises in fee simple, and has good right to bargain and sell the same and
that the same are free from all encumbrances whatsoever except such as are
listed as exceptions to title in the title policy insuring the lien of this
Mortgage (the "Permitted Encumbrances").

<PAGE>

And furthermore, the Mortgagor does by these presents bind itself and its
successors and assigns forever to warrant and defend the Premises described in
Schedule A to the Mortgagee, its successors and assigns, against all claims and
demands whatsoever except as mentioned herein.

ARTICLE I

Particular Covenants of the Mortgagor

The Mortgagor covenants and agrees as follows:

SECTION 1.01. The Mortgagor represents and warrants that it has a good and
marketable title to an indefeasible fee estate in the Premises subject to no
lien, charge or encumbrance, except the Permitted Encumbrances; that it will own
the Chattels free and clear of liens and claims; that this Mortgage is and will
remain a valid and enforceable first lien on the Mortgaged Property subject only
to the exceptions referred to above; that the execution and delivery of this
Mortgage and the Note has been duly authorized by the Mortgagor and that there
is no provision in any document that evidences or establishes the existence of
the Mortgagor requiring further consent for such action by any other entity or
person; that it is duly organized, validly existing and is in good standing
under the laws of the state of its formation or incorporation, as the case may
be; that it has (i) all necessary licenses, authorizations, registrations,
permits and/or approvals and (ii) full power and authority to own its properties
and carry on its business as presently conducted and the execution and delivery
by it of and performance of its obligations under, this Mortgage and the Note
will not result in the Mortgagor being in default under any provisions of any
document which evidences or establishes the existence of the Mortgagor or of any
mortgage, credit or other agreement to which Mortgagor is a party or which
affects the Mortgagor or the Premises, or any part thereof; that it will
preserve such title, and will forever warrant and defend the same to the
Mortgagee, and will forever warrant and defend the validity and priority of the
lien hereof against the claims of all persons and parties whomsoever except for
the Permitted Encumbrances.

<PAGE>

SECTION 1.02. The Mortgagor will, at the sole cost of the Mortgagor, and without
expense to the Mortgagee, do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, mortgages, assignments, notices of
assignment, transfers and assurances as the Mortgagee shall from time to time
reasonably require, for the better assuring, conveying, assigning, transferring
and confirming unto the Mortgagee the property and rights hereby conveyed or
assigned or intended now or hereafter so to be, or which the Mortgagor may be or
may hereafter become bound to convey or assign to the Mortgagee, or for carrying
out the intention or facilitating the performance of the terms of this Mortgage,
or for filing, registering or recording this Mortgage and, on demand, will
execute and deliver and hereby authorizes the Mortgagee to execute and file in
the name of the Mortgagor to the extent it may lawfully do so, one or more
financing statements, chattel mortgages or comparable security instruments to
evidence more effectively the lien hereof upon the Mortgaged Property or any
part thereof.

SECTION 1.03. (a) The Mortgagor forthwith upon the execution and delivery of
this Mortgage, and thereafter from time to time, upon reasonable prior notice,
will cause this Mortgage and any security instrument creating a lien or
evidencing the lien hereof upon the Chattels and/or the Intangibles and each
instrument of further assurance to be filed, registered and/or recorded in such
manner and in such places as may be required by any present or future law in
order to publish notice of and fully to protect the lien hereof upon, and the
interest of the Mortgagee in, the Mortgaged Property.

         (b) The Mortgagor will pay all filing, registration or recording fees,
and all expenses incident to the execution and acknowledgment of this Mortgage,
any mortgage supplemental hereto, any security instrument with respect to the
Chattels or the Intangibles, and any instrument of further assurance, and all
federal, state, county and municipal stamp taxes and other taxes, duties,
impositions, assessments and charges arising out of or in connection with the
execution and delivery of the Note, this Mortgage or any mortgage supplemental
hereto, any security instrument with respect to the Chattels and/or the
Intangibles or any instrument of further assurance.

SECTION 1.04. The Mortgagor will punctually pay the principal and interest and
all other sums to become due in respect of the

<PAGE>

Note at the time and place and in the manner specified in the Note, according to
the true intent and meaning thereof, all in any coin or currency of the United
States of America which at the time of such payment shall be legal tender for
the payment of public and private debts.

SECTION 1.05. (a) The Mortgagor will, so long as it is owner of the Mortgaged
Property or any part thereof, do all things necessary to preserve and keep in
full force and effect its existence, franchises, rights and privileges as a
business or stock corporation under the laws of the state of its incorporation
and will comply with all regulations, rules, ordinances, statutes, orders and
decrees of any governmental authority or court applicable to the Mortgagor or to
the Mortgaged Property or any part thereof.

         (b) Nothing in this Section 1.05 shall require the payment or discharge
of any obligation imposed upon the Mortgagor by this Section so long as the
Mortgagor shall in good faith and at its own expense contest the same or the
validity thereof by appropriate legal proceedings which shall operate to prevent
the collection thereof or other realization thereon and the sale or forfeiture
of the Premises or any part thereof to satisfy the same; provided that during
such contest the Mortgagor shall, at the option of the Mortgagee, provide
security satisfactory to the Mortgagee, assuring the discharge of the
Mortgagor's obligation hereunder and of any additional charge, penalty or
expense arising from or incurred as a result of such contest; and provided
further that if, at any time, payment of any obligation imposed upon the
Mortgagor by subsection (a) of this Section shall become necessary to prevent
the delivery of a tax deed, or its equivalent, conveying the Mortgaged Property,
or any part thereof, because of nonpayment, then the Mortgagor shall pay the
same in sufficient time to prevent the delivery of such tax deed or its
equivalent.

SECTION 1.06. All right, title and interest of the Mortgagor in and to all
extensions, improvements, betterments, renewals, substitutes and replacements
of, and all additions and appurtenances to, the Mortgaged Property hereafter
acquired by, or released to, the Mortgagor, or constructed, assembled or placed
by the Mortgagor on the Premises or any part thereof, and all conversions of the
security constituted thereby, immediately upon such acquisition, release,
construction, assembling,

<PAGE>

placement or conversion, as the case may be, and in each such case, without any
further mortgage, conveyance, assignment or other act by the Mortgagor, shall
become subject to the lien of this Mortgage as fully and completely, and with
the same effect, as though now owned by the Mortgagor and specifically described
in the granting clause hereof, but at any and all times the Mortgagor will
execute and deliver to the Mortgagee any and all such further assurances,
mortgages, conveyances or assignments thereof as the Mortgagee may require for
the purpose of expressly and specifically subjecting the same to the lien of
this Mortgage.

SECTION 1.07. (a) The Mortgagor, from time to time when the same shall become
due and payable, will pay and discharge all taxes of every kind and nature, all
general and special assessments, levies, permits, inspection and license fees,
all water and sewer rents and charges, and all other public charges whether of a
like or different nature, imposed upon or assessed against the Mortgaged
Property, or any part thereof, or upon the revenues, rents, issues, income and
profits of the Mortgaged Property, or any part thereof, or arising in respect of
the occupancy, use or possession thereof collectively the "Taxes"). The
Mortgagor will, upon the request of the Mortgagee, deliver to the Mortgagee
receipts evidencing the payment of all such Taxes.

         (b) The Mortgagor will, at the option of Mortgagee, pay to Mortgagee on
the first day of each calendar month one-twelfth of an amount (the "Escrow
Fund") which would be sufficient to pay the Taxes payable, or estimated by
Mortgagee to be payable, during the ensuing twelve (12) months. Mortgagee will
apply the Escrow Fund to the payment of Taxes which are required to be paid by
Mortgagor pursuant to the provisions of this Mortgage. If the amount of the
Escrow Fund shall exceed the amount of the Taxes payable by Mortgagor pursuant
to the provisions of this Mortgage, Mortgagee shall, in its discretion, (a)
return any excess to Mortgagor, or (b) credit such excess against future
payments to be made to the Escrow Fund. If the Escrow Fund is not sufficient to
pay the Taxes, as the same become payable, Mortgagor shall pay to Mortgagee,
upon demand, the amount which Mortgagee shall estimate as sufficient to make up
the deficiency. Until expended or applied as above provided, any amounts in the
Escrow Fund may be commingled with the general

<PAGE>

funds of Mortgagee and shall constitute additional security for the Debt and
shall not bear interest.

         (c) The Mortgagor will pay, from time to time when the same shall
become due, all lawful claims and demands of mechanics, materialmen, laborers
and others, which claims and demands, if unpaid, might result in, or permit the
creation of, a lien on the Mortgaged Property or any part thereof, or on the
revenues, rents, issues, income and profits arising therefrom and in general
will do or cause to be done everything necessary so that the lien of this
Mortgage shall be fully preserved, at the cost of the Mortgagor, without expense
to the Mortgagee.

         (d) Nothing in this Section shall require the payment or discharge of
any obligation imposed upon the Mortgagor by this Section so long as the
Mortgagor shall in good faith and at its own expense contest the same or the
validity thereof by appropriate legal proceedings which shall operate to prevent
the collection thereof or other realization thereon and the sale or forfeiture
of the Premises or any part thereof to satisfy the same; provided that during
such contest the Mortgagor shall, at the option of the Mortgagee, provide
security satisfactory to the Mortgagee, assuring the discharge of the
Mortgagor's obligation hereunder and of any additional charge, penalty or
expense arising from or incurred as a result of such contest; and provided
further that if, at any time, payment of any obligation imposed upon the
Mortgagor by subsection (a) of this Section shall become necessary to prevent
the delivery of a tax deed, or its equivalent, conveying the Mortgaged Property,
or any part thereof, because of non-payment, then the Mortgagor shall pay the
same in sufficient time to prevent the delivery of such tax deed or its
equivalent.

SECTION 1.08. The Mortgagor will pay any and all taxes, charges, fees and/or
levies by reason of the Mortgagee's ownership of the Note or this Mortgage
and/or resulting from the exercise by the Mortgagee of any of its rights and/or
remedies provided for under this Mortgage, except for income taxes and any gains
tax law which may hereafter be enacted. The obligations assumed by the Mortgagor
pursuant to this Section shall survive the exercise by the Mortgagee of any of
its rights and/or remedies under this Mortgage.

<PAGE>

SECTION 1.09. (a) The Mortgagor shall keep the Improvements and Chattels insured
against damage by fire and other hazards covered by the standard extended
coverage insurance policy, and each policy shall be endorsed to name the
Mortgagee as an insured thereunder, as its interest may appear, with loss
payable to the Mortgagee, without contribution or assessment, pursuant to a
standard first mortgage endorsement substantially equivalent to the New York
standard mortgagee endorsement. All insurance policies and endorsements required
pursuant to this Section shall be fully paid for, nonassessable and contain such
provisions and expiration dates and be in such form and amounts and issued by
such insurance companies satisfactory to the Mortgagee. Without limiting the
foregoing, each policy shall specifically provide that (i) such policy may not
be cancelled except upon thirty (30) days' prior written notice to the Mortgagee
and that no act or thing done by the Mortgagor shall invalidate the policy as
against the Mortgagee and (ii) any and all insurance proceeds will be paid to
the Mortgagee so long as Mortgagee certifies to the insurer that the unpaid
Indebtedness exceeds the proceeds of insurance. In addition, the Mortgagee may
require the Mortgagor to carry such other insurance on the Improvements and
Chattels in such amounts as may from time to time be required by institutional
lenders, against insurable casualties (including risks of war and nuclear
explosion) which at the time are commonly insured against in the case of
Premises similarly situated. The Mortgagor will assign and deliver the policy or
policies of all such insurance to the Mortgagee, which policy or policies shall
have endorsed thereon an endorsement substantially equivalent to the New York
standard mortgagee endorsement in the name of the Mortgagee, so and in such
manner and form that the Mortgagee and its successors and assigns shall at all
times have and hold said policy or policies as collateral and further security
for the payment of the Indebtedness until the full payment of the Indebtedness.
In addition, from time to time, upon occurrence of any change in the use,
operation or value of the Premises, or in the availability of insurance in the
area in which the Premises are located, the Mortgagor shall, within five (5)
days after demand by the Mortgagee, take out such additional amounts and/or such
other kinds of insurance as the Mortgagee may reasonably require.

         (b) The Mortgagor shall not take out separate insurance concurrent in
form or contributing in the event of loss with that required to be maintained
under this Section, unless the

<PAGE>

Mortgagee is included thereon as a named insured with loss payable to the
Mortgagee under the standard mortgage endorsement of the character above
described. The Mortgagor shall immediately notify the Mortgagee whenever any
such separate insurance is taken out and shall promptly deliver to the Mortgagee
the policy or policies of such insurance.

         (c) If the Premises, or any part thereof, are located in an area which
has been identified by the Secretary of Housing and Urban Development as a flood
hazard area, the Mortgagor will keep, for as long as any Indebtedness remains
unpaid, the Improvements covered by flood insurance in an amount at least equal
to the full amount of the Note or the maximum limit of coverage available for
the Premises under the National Flood Insurance Act of 1968 and the Flood
Disaster Protection Act of 1973, as the same may have been or may hereafter be
amended or modified (and any successor act thereto), whichever is less.

         (d) The Mortgagor shall give the Mortgagee prompt notice of any loss
covered by insurance and the Mortgagee shall have the right to join the
Mortgagor in adjusting any loss in excess of $50,000. Notwithstanding anything
to the contrary contained herein or in Section 254 of the Real Property Law of
the State of New York or any other provision of applicable law, the proceeds of
insurance policies coming into the possession of the Mortgagee shall not be
deemed trust funds and the Mortgagee shall have the option in its sole
discretion to apply any insurance proceeds it may receive pursuant hereto, or
otherwise, to the payment of the Indebtedness or to allow all or a portion of
such proceeds to be used for the restoration of the Mortgaged Property. In the
event any such insurance proceeds shall be used to reduce the Indebtedness, the
same shall be applied by the Mortgagee, after the deduction therefrom and
repayment to the Mortgagee of any and all costs incurred by the Mortgagee in the
recovery thereof, in any manner it shall designate including but not limited to,
the application of such proceeds to the then unpaid installments of the
principal balance due under the Note in the inverse order of their maturity,
such that the regular payments, if any, under the Note shall not be reduced or
altered in any manner.

         (e) INTENTIONALLY OMITTED.

<PAGE>

         (f) The Mortgagor shall give the Mortgagee prompt written notice of
damage to or destruction of the Improvements and Chattels or any part thereof
and, unless the Indebtedness is paid in full to Mortgagee within thirty (30)
days of the date of said damage or destruction, and provided that such proceeds
are made available to Mortgagor, Mortgagor shall promptly commence and
diligently continue to perform the repairs, restoration and rebuilding of the
portion of the Improvements and Chattels so damaged or destroyed (hereinafter
the "Work") so as to restore the Improvements and Chattels in full compliance
with all legal requirements and so that the Mortgaged Property shall be at least
equal in value and general utility as they were prior to such damage or
destruction, and if such damage or destruction, in the reasonable judgment of
the Mortgagee, shall exceed Seventy Five Thousand ($75,000) Dollars
(hereinafter, collectively "Major Work"), the Mortgagor shall, prior to the
commencement of the work, furnish to the Mortgagee for its approval: (1)
complete plans and specifications for the Work, with satisfactory evidence of
the approval thereof (i) by all governmental authorities whose approval is
required and (ii) by an architect satisfactory to the Mortgagee (hereinafter,
the "Architect") and which shall be accompanied by the Architect's signed
estimate, bearing the Architect's seal, of the entire cost of completing the
Work; (2) certified or photostatic copies of all permits and approvals required
by law in connection with the commencement and conduct of the Work; and (3) a
surety bond or guaranty of the payment for and completion of the Work, which
bond or guaranty shall be in form satisfactory to Mortgagee and shall be signed
by surety or sureties, or guarantor or guarantors, as the case may be, who are
acceptable to the Mortgagee, and in an amount not less than the Architect's
estimate of the entire cost of completing the Work, less the amount of insurance
proceeds and Mortgagor deposits, if any, then held by the Mortgagee for
application toward the cost of the Work. The Mortgagor shall not commence any of
the Work until the Mortgagor shall have complied with applicable requirements
referred to in this subsection (f), and after commencing the Work the Mortgagor
shall perform the Work diligently and in good faith in accordance with the plans
and specifications referred to in this subsection (f), if applicable.

         (g) If the insurance proceeds, less the cost, if any, to the Mortgagee
of such recovery and of paying out such proceeds

<PAGE>

(including reasonable attorneys' fees and costs allocable to inspecting the Work
and the plans and specifications therefor) should be paid towards restoration of
the Improvements and Chattels or if such insurance proceeds are applied toward
such restoration, then such insurance proceeds shall be applied by the Mortgagee
as follows:

         (i) To the payment of the cost of the Work and shall be paid out from
time to time to the Mortgagor and/or, at the Mortgagee's option exercised from
time to time, directly to the contractor, subcontractors, materialmen, laborers,
engineers, architects and other persons rendering services or materials for the
Work, as said Work progresses except as otherwise hereinafter provided, but
subject to the following conditions, any of which the Mortgagee may freely
waive:

              (A) If the Work to be done is Major Work, as determined by the
Mortgagee, the Architect shall be in charge of the Work;

              (B) Each request for payment shall be made on seven (7) days prior
notice to the Mortgagee and shall be accompanied by a certificate of the
Architect if one is required under subsection (f) above, otherwise by a
certificate of an officer of the Mortgagor, stating (i) that all of the Work
completed has been done in compliance with the approved plans and
specifications, if any be required under said subsection (f), and in accordance
with all provisions of law; (ii) the sum requested is justly required to
reimburse the Mortgagor for payments by the Mortgagor to, or is justly due to,
the contractor, subcontractor, materialmen, laborers, engineers, architects or
other persons rendering services or materials for the Work (giving a brief
description of such services and materials), and that when added to all sums, if
any, previously paid out by the Mortgagee does not exceed the value of the Work
done to date of such certificate, and (iii) that the amount of such proceeds and
other deposits remaining in the hands of the Mortgagee will be sufficient on
completion of the Work to pay for the same in full (giving in such reasonable
detail as the Mortgagee may require an estimate of the cost of such completion);

              (C) Each request shall be accompanied by waivers of liens
satisfactory to the Mortgagee covering that

<PAGE>

part of the Work previously paid for, if any, and by a search prepared by the
title company which insured the lien of the Mortgage or by other evidence
satisfactory to the Mortgagee, that there has not been filed with respect to the
Mortgaged Property or any part thereof any mechanic's lien or other lien or
instrument for the retention of title in respect of any part of the Work not
discharged of record and that there exist no encumbrances on or affecting the
Mortgaged Property or any part thereof other than encumbrances, if any, existing
as of the date hereof and which have been approved by the Mortgagee;

              (D) The request for any payment after the Work has been completed
shall be accompanied by a copy of all certificates, permits, licenses, waivers
and/or other documents required by law to render occupancy of the Premises
and/or Improvements legal; and

         (ii) Upon completion of the Work and payment in full therefor, or upon
failure on the part of the Mortgagor to commence, as provided in subsection (f)
of this Section, or diligently to continue the Work, or at any time upon request
by the Mortgagor, the Mortgagee may apply the amount of any such proceeds then
or thereafter in the hands of the Mortgagee to the payment of the Indebtedness,
provided, however, that nothing herein contained shall prevent the Mortgagee
from applying at any time the whole or any part of such proceeds to the curing
of any default under this Mortgage or the Note.

SECTION 1.10. If the Mortgagor shall fail to perform any of the covenants
contained in Section 1.01, 1.03, 1.05, 1.07, 1.08, 1.09, 1.12 or 1.21 the
Mortgagee may make advances to perform the same in its behalf upon fifteen (15)
days' prior written notice to Mortgagor, and all sums so advanced shall be a
lien upon the Mortgaged Property and shall be secured hereby. The Mortgagor will
repay on demand all sums so advanced on its behalf with interest at the
Involuntary Rate. The provisions of this Section shall not prevent any default
in the observance of any covenant contained in said Section 1.01, 1.03, 1.05,
1.07, 1.08, 1.09, 1.12 or 1.21 from constituting an Event of Default.

SECTION 1.11. (a) The Mortgagor will keep adequate records and books of account
in accordance with generally accepted accounting principles ("GAAP") and will
permit the Mortgagee, by

<PAGE>

its agents, accountants and attorneys, to visit and inspect the Premises and
examine its records and books of account and to discuss its affairs, finances
and accounts with the officers of the Mortgagor, at such reasonable times as may
be requested by the Mortgagee.

         (b) The Mortgagor shall deliver or cause to be delivered to the
Mortgagee:

         (i) as soon as available and in any event not later than the date
required to be filed with the United States Securities and Exchange Commission
(the "SEC"), a copy of the 10-K report of the Mortgagor for each fiscal year,
including audited financial statements with balance sheets with related
statements of income and retained earnings and statements of cash flows, all in
reasonable detail and setting forth in comparative form the figures for the
previous fiscal year, together with an unqualified opinion, prepared by
independent certified public accountants selected by the Mortgagor and
reasonably satisfactory to the Mortgagee, all such financial statements to be
prepared in accordance with GAAP;

         (ii) as soon as available and in any event not later than the date
required to be filed with the SEC, a copy of the 10-Q report of the Mortgagor
for each fiscal quarter, including financial statements for such quarter and for
year to date, including a balance sheet with related statements of income and
retained earnings and a statement of cash flows, all in reasonable detail and
setting forth in comparative form the figures for the comparable quarter and
comparable year to date period for the previous fiscal year, all such financial
statements to be prepared by management of the Mortgagor in accordance with
GAAP; and

         (iii) promptly upon the Mortgagee's request such additional financial
or other information as may be reasonably requested by the Mortgagee.

         (c) The Mortgagor, within ten (10) days upon request by mail, will
furnish a written statement duly acknowledged of the amount due whether for
principal or interest on the Note and whether any offsets, counterclaims or
defenses exist against the Mortgagee, or the Indebtedness, or any part thereof.

<PAGE>

         (d) The Mortgagor shall, upon reasonable notice from the Mortgagee,
permit the Mortgagee and its agents, representatives or designees access to the
Premises from time to time for the purpose of conducting an appraisal of the
fair value of the Premises. The Mortgagor agrees that it shall be solely
responsible for the costs and expenses of any such appraisal conducted not
earlier than sixty (60) months after the date hereof and each successive
interval of sixty (60) months thereafter. No failure or omission on the part of
the Mortgagee to request any such appraisals shall relieve the Mortgagor of any
of its obligations under this Paragraph.

         (e) Debt Service Coverage Ratio. The Mortgagor shall maintain at all
times a ratio of (i) net income plus depreciation and amortization to (ii) the
current portion of long term debt plus interest expense of not less than 1.20 to
1.

SECTION 1.12. The Mortgagor will not commit any waste on the Mortgaged Property,
or any part thereof, or make any change in the use of the Mortgaged Property, or
any part thereof, which will in any way increase any ordinary fire or other
hazard arising out of construction or operation. The Mortgagor will, at all
times, maintain the Improvements in good operating order and condition and will
promptly make, from time to time, all repairs, renewals, replacements, additions
and improvements in connection therewith which are needful or desirable to such
end. The Improvements shall not be demolished or substantially altered, nor
shall any Chattels be removed without the prior written consent of the Mortgagee
except where appropriate replacements free of superior title, liens and claims
are immediately made having value at least equal to the value of the removed
Chattels.

SECTION 1.13. The Mortgagor, immediately upon obtaining knowledge of the
institution of any proceedings for the condemnation of the Premises or any part
thereof, will notify the Mortgagee of the pendency of such proceedings. The
Mortgagee may participate in any such proceedings and the Mortgagor from time to
time will deliver to the Mortgagee all instruments requested by it to permit
such participation. In the event of such condemnation proceedings, the award or
compensation payable is hereby assigned to and shall be paid to the Mortgagee.
The Mortgagee shall be under no obligation to question the amount of any such
award or compensation and may

<PAGE>

accept the same in the amount in which the same shall be paid. In any such
condemnation proceedings, the Mortgagee may be represented by counsel selected
by the Mortgagee. The proceeds of any award or compensation so received shall be
applied toward the restoration of the Mortgaged Property pursuant to the same
terms, provisions and conditions which are applicable to the use of insurance
proceeds as set forth in Sections 1.09 (d), (e), (f) and (g) herein provided
that the Mortgagor has met the conditions contained in Sections 1.09 (d), (e),
(f) and (g) or, if the Mortgagor has not met the conditions contained in
Sections 1.09 (d), (e), (f) and (g), to the payment of the Indebtedness,
notwithstanding the fact that the Indebtedness may not then be due and payable,
or to the restoration of the Improvements. In the event that any portion of the
condemnation awards or compensation shall be used to reduce the Indebtedness,
same shall be applied by the Mortgagee in any manner it shall designate,
including, but not limited to, the application of such award or compensation to
the then unpaid installments of the principal balance due under the Note in the
inverse order of their maturity such that the regular payments under the Note
shall not be reduced or altered in any manner. The Mortgagor, upon request by
the Mortgagee, shall make, execute and deliver any and all instruments requested
for the purpose of confirming the assignment of the aforesaid awards and
compensation to the Mortgagee free and clear of any liens, charges or
encumbrances of any kind or nature whatsoever. The Mortgagee shall not be
limited to the interest paid on the proceeds of any award or compensation, but
shall be entitled to the payment by the Mortgagor of interest at the applicable
rate provided for in the Note.

SECTION 1.14. (a) The Mortgagor will not (i) execute an assignment of the rents,
or any part thereof, from the Premises unless such assignment shall provide that
it is subordinate to the assignment contained in this Mortgage and any
assignment executed pursuant hereto, or (ii) except where the lessee is in
default thereunder, terminate or consent to the cancellation or surrender of any
lease of the Premises, or any part thereof, now existing or hereafter to be
made, having an unexpired term of two (2) years or more, except that any lease
may be cancelled provided that promptly after the cancellation or surrender
thereof a new lease is entered into with a new lessee having a credit standing,
in the reasonable judgment of the Mortgagee, at least equivalent to that of the
lessee whose lease was

<PAGE>

cancelled, on substantially the same or better terms as the terminated or
cancelled lease, or (iii) modify any such lease so as to shorten the unexpired
term thereof or so as to decrease the amount of the rents payable thereunder, or
(iv) accept prepayments of any installments of rents to become due under such
leases, except prepayments in the nature of security for the performance of the
lessees thereunder, or (v) in any other manner materially impair the value of
the Mortgaged Property or the security of this Mortgage in the reasonable
judgment of the Mortgagee.

         (b) The Mortgagor will not execute any lease of all or a substantial
portion of the Premises except for actual occupancy by the lessee thereunder,
and will at all times promptly and faithfully perform, or cause to be performed
promptly, all of the covenants, conditions and agreements contained in all
leases of the Premises, or any part thereof, now or hereafter existing, on the
part of the lessor thereunder to be kept and performed and will at all times do
all things necessary to compel performance by the lessee under each lease of all
obligations, covenants and agreements by such lessee to be performed thereunder.
If any of such leases provide for the giving by the lessee of certificates with
respect to the status of such leases, the Mortgagor shall exercise its right to
request such certificates within five (5) days of any demand therefor by the
Mortgagee.

         (c) The Mortgagor shall furnish to the Mortgagee, within thirty (30)
days after a request by the Mortgagee to do so, a written statement containing
the names of all lessees of the Premises, the terms of their respective leases,
the space occupied and the rentals payable thereunder not more than once per
year.

SECTION 1.15. To the extent not so provided by applicable law each lease of the
Premises, or of any part thereof, shall provide that, in the event of the
enforcement by the Mortgagee of the remedies provided for by law or by this
Mortgage, the lessee thereunder will, upon request of any person succeeding to
the interest of the Mortgagor as a result of such enforcement, automatically
become the lessee of said successor in interest, without change in the terms or
other provisions of such lease, provided, however, that said successor in
interest shall not be bound by (i) any payment of rent or additional rent for
more

<PAGE>

than one month in advance, except prepayments in the nature of security for the
performance by said lessee of its obligations under said lease, or (ii) any
amendment or modification of the lease made without the consent of the Mortgagee
or such successor in interest. If the Premises, or any part thereof, are located
within the State of New York, then reference is hereby made to Section 291-f of
the Real Property Law of the State of New York, for purposes of obtaining for
the Mortgagee the benefit of Section 291-f in connection with this Mortgage.
Each such lease shall provide that upon request by such successor in interest,
such lessee shall execute and deliver an instrument or instruments confirming
such attornment.

SECTION 1.16. (a) Subject to the conditions specified in the next paragraph of
this Section, the Mortgagee will, upon request of the Mortgagor, execute
non-disturbance and attornment agreements with lessees of the Premises, which
agreements shall provide that, in the event the Mortgagee or any purchaser at
foreclosure shall succeed to the Mortgagor's interest in the Premises, the
leases of such lessees will remain in full force and effect and be binding upon
the Mortgagee or such purchaser and such lessee as though each was the original
party thereto.

         (b) The Mortgagee's obligation to execute such agreements shall be
subject to the following conditions: (i) the credit of the lessee and the terms
of the lease shall be satisfactory to Mortgagee, (ii) the Mortgagee shall have
been provided with a standard form of lease to be used in connection with the
leasing of the Premises and shall have reasonably approved the same, (iii) upon
each request for such an agreement the Mortgagee shall receive a counterpart of
the executed lease in which all changes from the standard form shall be
indicated by appropriate markings, such markings to be certified to be true and
complete by the responsible officer of the Mortgagor or by its counsel, (iv) the
Mortgagee shall receive a letter, signed by the Mortgagor and addressed to the
lessee, to be forwarded to the lessee by the Mortgagee, giving notice of the
assignment of each lease provided for herein, and (v) there has not occurred any
Event of Default under this Mortgage or any event which with notice, the passage
of time or both would become an Event of Default under this Mortgage.

         (c) Notwithstanding anything to the contrary, as of right, the
Mortgagee agrees by the acceptance hereof to grant

<PAGE>

Non-Disturbance Agreements for all existing or future tenants of the Mortgaged
Premises if such tenants shall request such Agreement, and said tenants are
rated AAA-1 by Dun & Bradstreet (or successor) and their leases are as a result
of an arms-length negotiation.

SECTION 1.17. In the event any payment provided for herein or in the Note shall
become overdue for a period in excess of ten (10) days, a late charge of two
cents ($0.02) for each dollar so overdue shall become immediately due to the
Mortgagee for the purpose of defraying the expenses incident to handling such
delinquent payment, and such charge shall be deemed to be part of the
Indebtedness and therefore secured by the lien of this Mortgage. Late charges
shall be payable with the next installment of principal and/or interest due
under the Note.

SECTION 1.18. The Mortgagor, in compliance with Section 13 of the Lien Law of
the State of New York, will receive the advances secured by this Mortgage and
will hold the right to receive such advances as a trust fund to be applied first
for the purpose of paying the cost of improvement and will apply the same first
to the payment of the cost of improvement before using any part of the total of
the same for any other purpose.

SECTION 1.19. The Mortgagor agrees that it shall indemnify and hold the
Mortgagee harmless against any loss or liability, cost or expense, including
without limitation, any judgments, attorneys' fees, costs of appeal bonds and
printing costs, arising out of or relating to any proceedings instituted by any
claimant alleging priority over the lien of this Mortgage and/or if the Premises
or any part thereof is within the State of New York by any claimant alleging a
violation by the Mortgagor or the Mortgagee of any section of Article 3-A of the
Lien Law of the State of New York.

SECTION 1.20. The Mortgagor shall execute and deliver to the appropriate
governmental authority any affidavit, instrument, document and/or filing
required pursuant to any applicable statute, ordinance, rule and/or regulation.

SECTION 1.21. The Mortgagor expressly covenants and agrees to pay in full the
reasonable fees and expenses of the Mortgagee's counsel, promptly upon the
receipt of a statement therefor, which are incurred prior to and after the date
hereof and which

<PAGE>

fees and expenses arise in connection with any matter incidental to the loan
which is evidenced by the Note and secured by this Mortgage.

SECTION 1.22. (a) The Mortgagor represents and warrants that, to the best of
Mortgagor's knowledge, after due inquiry and investigation, other than as set
forth in that certain Phase I environmental audit of the Mortgaged Property
conducted by EEA, Inc. dated June, 2000 and that certain Phase II environmental
audit of the Mortgaged Property conducted by EEA, Inc. dated July, 2000, the
Mortgaged Property is not now and has not ever been used to generate,
manufacture, refine, transport, treat, store, handle, dispose, transfer,
produce, process or in any manner deal with, Hazardous Materials (as hereinafter
defined), and that no Hazardous Materials have ever been installed, placed, or
in any manner dealt with on the Mortgaged Property other than in accordance with
the Environmental Laws (as hereinafter defined), and that no owner of the
Mortgaged Property or any tenant, subtenant, occupant, prior tenant, prior
subtenant or prior occupant has received any notice or advice from any
governmental agency or any tenant, subtenant or occupant with regard to
Hazardous Materials on, from or affecting the Mortgaged Property. The Mortgagor
shall covenant that the Mortgaged Property shall not be used to generate,
manufacture, refine, transport, treat, store, handle, dispose, transfer,
produce, process or in any manner deal with, Hazardous Materials other than in
accordance with the Environmental Laws, and the Mortgagor shall not cause or
permit, as a result of any intentional or unintentional act or omission on the
part of the Mortgagor or any tenant or subtenant or occupant, the installation
of Hazardous Materials in the Mortgaged Property or onto any other property
other than in accordance with the Environmental Laws or suffer the presence of
Hazardous Materials on the Mortgaged Property other than in accordance with the
Environmental Laws. The Mortgagor shall agree to comply with and ensure
compliance by all tenants, subtenants and occupants with all applicable federal,
state and local laws, ordinances, rules and regulations, with respect to
Hazardous Materials (collectively the "Environmental Laws"), and shall agree to
keep the Mortgaged Property free and clear of any liens imposed pursuant to such
laws, ordinances, rules and regulations. In the event that the Mortgagor
received or receives any notice or advice from any governmental agency, any
tenant, subtenant or occupant with regard to Hazardous Materials on, from or

<PAGE>

affecting the Mortgaged Property, the Mortgagor shall agree to immediately
notify the Mortgagee. The Mortgagor shall conduct and complete all
investigations, studies, sampling, and testing, and all remedial, removal, and
other actions necessary to clean up and remove all Hazardous Materials, on, from
or affecting the Mortgaged Property in accordance with the Environmental Laws
and to the satisfaction of the Mortgagee. For these purposes, "Hazardous
Materials" shall include, without limitation, any flammable explosives,
radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic
substances, or related or similar materials, asbestos or any material containing
asbestos, or any other substance or material as defined by the Environmental
Laws including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et
seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C. Section
1801, et seq.), the Resource Conservation and Recovery Act, as amended (42
U.S.C. Sections 6901, et seq.), and in the regulations adopted and publications
promulgated pursuant thereto. These obligations and liabilities of the Mortgagor
shall survive any foreclosure involving the Mortgaged Property or the delivery
of a deed in lieu of foreclosure.

         (b) The Mortgagor shall protect, indemnify and save harmless the
Mortgagee from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including without limitation
attorney's fees and expenses, investigation and laboratory fees, court costs and
litigation expenses), imposed upon or incurred by or asserted against the
Mortgagee by reason of (A) the presence, disposal, escape, seepage, leakage,
spillage, discharge, emission, release, or threatened release of any Hazardous
Materials on, from or affecting the Mortgaged Property or any other property
affecting the Mortgaged Property; (B) any claims of personal injury (including
wrongful death) or property damage (real or personal) arising out of or related
to such Hazardous Materials; (C) any lawsuit brought or threatened, settlement
reached, or government order relating to such Hazardous Materials; or (D) any
violation of Environmental Laws or demands of government authorities, or any
policies or requirements of the Mortgagee which are based upon or in any related
to such Hazardous Materials.

(End of Article I)

<PAGE>

ARTICLE II

Events of Default and Remedies

SECTION 2.01. If one or more of the following Events of Default shall happen,
that is to say:

         (a) if (i) default shall be made in the payment of any interest due
under the Note, or in the payment of any installment of principal due under the
Note, in either such case, when and as the same shall become due and payable, or
(ii) default shall be made in any other payment of the principal of the Note,
when and as the same shall become due and payable, whether at maturity or by
acceleration or as part of any prepayment or otherwise, in each case, as in the
Note and this Mortgage provided or default in the payment of any other
Indebtedness due to Mortgagee under this Mortgage, or (iii) default shall be
made in the payment of any tax required by Section 1.07 to be paid and said
default shall have continued for a period of thirty (30) days; or

         (b) if default shall be made in the due observance or performance of
any covenant, term or agreement on the part of the Mortgagor contained in
Section 1.01, 1.03, or 1.08, and such default shall have continued for a period
of thirty (30) days after written notice specifying such default shall have been
given to the Mortgagor by the Mortgagee, unless such term, covenant or agreement
cannot be complied with or such default be cured in such period and provided
further that the Mortgagor shall commence compliance with such term, covenant or
agreement or curing such default and shall continue to diligently prosecute such
compliance or curing such default; or

         (c) if any representation made in Section 1.01 shall have been false
when made; or

         (d) if default shall be made in the due observance or performance of
any other covenant, term or agreement on the part of the Mortgagor in the Note
or in this Mortgage contained, and such default shall have continued for a
period of thirty (30) days after written notice specifying such default shall
have been given to the Mortgagor by the Mortgagee, unless such term, covenant or
agreement cannot be complied with or such default be cured in such period and
provided further that the Mortgagor shall commence compliance with such term,

<PAGE>

covenant or agreement or curing such default and shall continue to diligently
prosecute such compliance or curing such default; or

         (e) if by the order of a court of competent jurisdiction, a trustee,
receiver or liquidator of the Mortgaged Property, or any part thereof, or of the
Mortgagor shall be appointed and such order shall not be discharged or dismissed
within sixty (60) days after such appointment; or

         (f) if the Mortgagor shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in an involuntary
case under any such law or to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Mortgagor or of any substantial part of its property,
or if the Mortgagor shall make any general assignment for the benefit of
creditors, or if the Mortgagor shall fail generally to pay its debts as such
debts become due, or if the Mortgagor shall take any action in furtherance of
any of the foregoing; or

         (g) if any of the creditors of the Mortgagor shall commence against the
Mortgagor an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect and if such case shall not be
discharged or dismissed within sixty (60) days after the date on which such case
was commenced, or

         (h) if final judgment for the payment of money in excess of a sum
reasonably determined by the Bank to be sufficient to cause a Material Adverse
Change in the Mortgagor shall be rendered against the Mortgagor and the
Mortgagor shall not discharge the same or cause it to be discharged within sixty
(60) days from the entry thereof, or shall not appeal therefrom or from the
order, decree or process upon which or pursuant to which said judgment was
granted, based or entered, and secure a stay of execution pending such appeal;
or

<PAGE>

         (i) if any of the events enumerated in clauses (e) through (h) of this
Section 2.01 shall happen to any Guarantor, if any, or any of its property; or

         (j) if any Guarantor defaults under or attempts to withdraw, cancel or
disclaim liability under any guaranty issued to Mortgagee; or

         (k) if the Mortgagor sells, transfers, assigns, conveys or encumbers
the Mortgaged Property or any part thereof or any interest therein without the
prior written consent of the Mortgagee; or

         (l) if a default occurs under any mortgage that is prior or subordinate
to the lien of this Mortgage or the mortgagee under any prior or subordinate
mortgage commences a foreclosure action in connection with said mortgage; it
being further agreed by the Mortgagor that an Event of Default hereunder shall
constitute an Event of Default under any such other mortgage or deed of trust
held by the Mortgagee; or

         (m) if the Mortgagor defaults under any other agreement with the
Mortgagee; or

         (n) if any shares of the capital stock of the Mortgagor or any
Guarantor, if the Mortgagor or such Guarantor is a corporation, shall be sold,
assigned, transferred, conveyed, mortgaged, pledged, hypothecated or alienated
without the prior written consent of the Mortgagee; or

         (o) if any partnership interest in the Mortgagor or any Guarantor, if
the Mortgagor or such Guarantor is a partnership, shall be sold, assigned,
transferred, conveyed, mortgaged, pledged, hypothecated or alienated without the
prior written consent of the Mortgagee; or

         (p) if it shall be illegal for the Mortgagor to pay any tax referred to
in Section 1.08 hereof or if the payment of such tax by the Mortgagor would
result in the violation of the usury laws of the State of New York; or

         (q) if any person or entity having or claiming an interest in the
Mortgagor or the Mortgaged Property commences an action or proceeding against
the Mortgagor, the Mortgaged

<PAGE>

Property or any person or entity having or claiming an interest in the Mortgagor
or the Mortgaged Property;

then and in every such case:

I. During the continuance of any such Event of Default, the Mortgagee, by
written notice given to the Mortgagor, may declare the entire principal of the
Note then outstanding (if not then due and payable), and all accrued and unpaid
interest thereon, together with all other Indebtedness, to be due and payable
immediately, and upon any such declaration the principal of the Note, said
accrued and unpaid interest thereon, and all other Indebtedness shall become and
be immediately due and payable, anything in the Note or in this Mortgage to the
contrary notwithstanding;

II. During the continuance of any such Event of Default, the Mortgagee
personally, or by its agents or attorneys, may enter into and upon all or any
part of the Premises, and each and every part thereof, and may exclude the
Mortgagor, its agents and servants wholly therefrom; and having and holding the
same, may use, operate, manage and control the Premises and conduct the business
thereof, either personally or by its superintendents, managers, agents,
servants, attorneys or receivers; and upon every such entry, the Mortgagee, at
the expense of the Mortgaged Property, from time to time, either by purchase,
repairs or construction, may maintain and restore the Mortgaged Property,
whereof it shall become possessed as aforesaid, may complete the construction of
any of the Improvements and in the course of such completion may make such
changes in the contemplated Improvements as it may deem desirable and may insure
the same; and likewise, from time to time, at the expense of the Mortgaged
Property, the Mortgagee may make all necessary or proper repairs, renewals and
replacements and such useful alterations, additions, betterments and
improvements thereto and thereon as to it may seem advisable; and in every such
case the Mortgagee shall have the right to manage and operate the Mortgaged
Property and to carry on the business thereof and exercise all rights and powers
of the Mortgagor with respect thereto either in the name of the Mortgagor or
otherwise as it shall deem best; and the Mortgagee shall be entitled to collect
and receive all earnings, revenues, rents, issues profits and income of the
Mortgaged Property and every part thereof, all of which shall for all purposes

<PAGE>

constitute property of the Mortgagor; and in furtherance of such right the
Mortgagee may collect the rents payable under all leases of the Premises
directly from the lessees thereunder upon notice to each such lessee that an
Event of Default exists hereunder accompanied by a demand on such lessee for the
payment to the Mortgagee of all rents due and to become due under its lease, and
the Mortgagor FOR THE BENEFIT OF MORTGAGEE AND EACH SUCH LESSEE hereby covenants
and agrees that the lessee shall be under no duty to question the accuracy of
the Mortgagee's statement of default and shall unequivocally be authorized to
pay said rents to the Mortgagee without regard to the truth of the Mortgagee's
statement of default and notwithstanding notices from the Mortgagor disputing
the existence of an Event of Default such that the payment of rent by the lessee
to the Mortgagee pursuant to such a demand shall constitute performance in full
of the lessee's obligation under the lease for the payment of rents by the
lessee to the Mortgagor; and after deducting the expenses of conducting the
business thereof and of all maintenance, repairs, renewals, replacements,
alterations, additions, betterments and improvements and amounts necessary to
pay for taxes, assessments, insurance and prior or other proper charges upon the
Mortgaged Property, or any part thereof, as well as just and reasonable
compensation for the services of the Mortgagee and for all attorneys, counsel,
agents, clerks, servants and other employees by it properly engaged and
employed, the Mortgagee shall apply the moneys arising as aforesaid, first to
the payment of the principal of the Note and the interest thereon, when and as
the same shall become payable, and second to the payment of any other
Indebtedness and sums required to be paid by the Mortgagor under this Mortgage.

III. The Mortgagee, with or without entry, personally or by its agents or
attorneys, insofar as applicable, may:

         (1) sell the Mortgaged Property, or any part thereof, to the extent
permitted and pursuant to the procedures provided by law, and all estate, right,
title and interest, claim and demand therein, and right of redemption thereof,
at one or more sales as an entirety or in parcels, and at such time and place
upon such terms and after such notice thereof as may be required or permitted by
law; or

         (2) institute proceedings for the complete or partial foreclosure of
this Mortgage; or

<PAGE>

         (3) take such steps to protect and enforce its rights whether by
action, suit or proceeding in equity or at law for the specific performance of
any covenant, condition or agreement in the Note, or in this Mortgage, or in aid
of the execution of any power herein granted, or for any foreclosure hereunder,
or for the enforcement of any other appropriate legal or equitable remedy or
otherwise as the Mortgagee shall elect; or

         (4) the Mortgagee also shall have such other rights and/or remedies
provided to a mortgagee and/or a secured party by the Uniform Commercial Code as
that model statute is enacted and in effect in the jurisdiction wherein the
Premises are situated.

SECTION 2.02. (a) The Mortgagee may adjourn from time to time any sale by it to
be made under or by virtue of this Mortgage by announcement at the time and
place appointed for such sale or for such adjourned sale or sales; and, except
as otherwise provided by any applicable provision of law, the Mortgagee, without
further notice or publication, may make such sale at the time and place to which
the same shall be so adjourned.

         (b) Upon the completion of any sale or sales made by the Mortgagee
under or by virtue of this Article II, the Mortgagee, or an officer of any court
empowered to do so, shall execute and deliver to the accepted purchaser or
purchasers a good and sufficient instrument, or good and sufficient instruments,
conveying, assigning and transferring all estate, right, title and interest in
and to the property and rights sold and shall execute and deliver to the
appropriate governmental authority any affidavit, instrument, document and/or
filing required pursuant to any applicable statute, ordinance, rule and/or
regulation. As long as the loan secured by this Mortgage remains unpaid the
Mortgagee is hereby irrevocably appointed the true and lawful attorney of the
Mortgagor, in its name and stead, to make all necessary conveyances,
assignments, transfers and deliveries of the Mortgaged Property and rights so
sold and for that purpose the Mortgagee may execute all necessary instruments of
conveyance, assignment and transfer, including, without limitation, any
affidavit, instrument, document or filing required pursuant to any applicable
statute, rule or regulation, and may substitute one or more persons with like
power, the Mortgagor hereby ratifying and confirming all that

<PAGE>

its said attorney or such substitute or substitutes shall lawfully do by virtue
hereof. Nevertheless the Mortgagor, if so requested by the Mortgagee, shall
ratify and confirm any such sale or sales by executing and delivering to the
Mortgagee or to such purchaser or purchasers all such instruments as may be
advisable, in the reasonable judgment of the Mortgagee, for that purpose, and as
may be designated in such request. Any such sale or sales made under or by
virtue of this Article II, whether made under or by virtue of judicial
proceedings or of a judgment or decree of foreclosure and sale, shall operate to
divest all the estate, right, title, interest, claim and demand whatsoever,
whether at law or in equity, of the Mortgagor in and to the properties and
rights so sold, and shall be a perpetual bar both at law and in equity against
the Mortgagor and against any and all persons claiming or who may claim the
same, or any part thereof, from, through or under the Mortgagor.

         (c) In the event of any sale made under or by virtue of this Article II
(whether made under or by virtue of judicial proceedings or of a judgment or
decree of foreclosure and sale), the entire principal of, and interest on, the
Note, if not previously due and payable, and all other sums required to be paid
by the Mortgagor pursuant to this Mortgage, immediately thereupon, shall,
anything in the Note or in this Mortgage to the contrary notwithstanding, become
due and payable.

         (d) The purchase money proceeds or avails of any sale made under or by
virtue of this Article II, together with any other sums which then may be held
by the Mortgagee under this Mortgage, whether under the provisions of this
Article II or otherwise, shall be applied as follows:

         First: To the payment of the costs and expenses of such sale,
including, but not limited to, the reasonable compensation to the Mortgagee, its
agents and counsel, and any sums that may be due under and/or pursuant to any
statute, rule, regulation and/or law which imposes any tax, charge, fee and/or
levy in connection with and/or arising from the exercise of any right and/or
remedy under this Mortgage or the requirement that any sum be paid in order to
record and/or file any deed, instrument of transfer or other such document in
connection with any such sale and of any judicial proceedings wherein the same
may be made, and of all expenses, liabilities and advances made or incurred by
the Mortgagee under this Mortgage, together with

<PAGE>

interest at the Involuntary Rate on all advances made by the Mortgagee and all
taxes or assessments, except any taxes, assessments or other charges subject to
which the Mortgaged Property shall have been sold.

         Second: To the payment of the whole amount then due, owing or unpaid
upon the Note for principal, interest, other indebtedness, and any other sums
required to be paid thereunder with interest on the unpaid principal at the
Involuntary Rate from and after the happening of any Event of Default described
in clause (a) of Section 2.01 from the due date of any such payment of principal
until the same is paid.

         Third: To the payment of the whole amount then due, owing or unpaid
upon any other note held by the Mortgagee for principal and interest, with
interest on the unpaid principal at the Involuntary Rate from and after the
happening of any Event of Default described in clause (a) of Section 2.01 from
the due date of any such payment of principal until the same is paid.

         Fourth: To the payment of any other Indebtedness and any other sums
required to be paid by the Mortgagor pursuant to any provision of this Mortgage
or the Note.

         Fifth: To the payment of the surplus, if any, to Mortgagor.

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

SECTION 2.03. (a) In case an Event of Default described in clause (a) of Section
2.01 shall have happened and be continuing, then, upon written demand of the
Mortgagee, the Mortgagor will pay to the Mortgagee the whole amount which then
shall have become due and payable on the Note, for principal or interest or
both, as the case may be, and after the happening of

<PAGE>

said Event of Default will also pay to the Mortgagee interest at the Involuntary
Rate on the then unpaid principal of the Note, and the sums required to be paid
by the Mortgagor pursuant to any provision of this Mortgage, and in addition
thereto such further amount as shall be sufficient to cover the costs and
expenses of collection, including reasonable compensation to the Mortgagee, its
agents, and counsel and any expenses incurred by the Mortgagee hereunder. In the
event the Mortgagor shall fail forthwith to pay such amounts upon such demand,
the Mortgagee shall be entitled and empowered to institute such action or
proceedings at law or in equity as may be advised by its counsel for the
collection of the sums so due and unpaid, and may prosecute any such action or
proceedings to judgment or final decree, and may enforce any such judgment or
final decree against the Mortgagor and collect, out of the property of the
Mortgagor wherever situated, as well as out of the Mortgaged Property, in any
manner provided by law, moneys adjudged or decreed to be payable.

         (b) The Mortgagee shall be entitled to recover judgment as aforesaid
either before or after or during the pendency of any proceedings for the
enforcement of the provisions of this Mortgage; and the right of the Mortgagee
to recover such judgment shall not be affected by any entry or sale hereunder,
or by the exercise of any other right, power or remedy for the enforcement of
the provisions of this Mortgage, or the foreclosure of the lien hereof; and in
the event of a sale of the Mortgaged Property, or any part thereof, and of the
application of the proceeds of sale, as in this Mortgage provided, to the
payment of the debt hereby secured, the Mortgagee shall be entitled to enforce
payment of, and to receive all amounts then remaining due and unpaid upon the
Note, and to enforce payment of all other charges, payments and costs due under
this Mortgage, and shall be entitled to recover judgment for any portion of the
debt remaining unpaid, with interest at the Involuntary Rate. In case of the
commencement of any case against the Mortgagor under any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect or any proceedings
for its reorganization or involving the liquidation of its assets, then the
Mortgagee shall be entitled to prove the whole amount of principal and interest
due upon the Note to the full amount thereof, and all other payments, charges
and costs due under this Mortgage, without deducting therefrom any proceeds
obtained from the sale of the

<PAGE>

whole or any part of the Mortgaged Property, provided, however, that in no case
shall the Mortgagee receive a greater amount than such principal and interest
and such other payments, charges and costs from the aggregate amount of the
proceeds of the sale of the Mortgaged Property and the distribution from the
estate of the Mortgagor.

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

         (d) Any moneys thus collected by the Mortgagee under this Section 2.03
shall be applied by the Mortgagee in accordance with the provisions of
subsection (d) of Section 2.02.

SECTION 2.04. After the happening of any Event of Default and immediately upon
the commencement of any action, suit or other legal proceedings by the Mortgagee
to obtain judgment for the principal of, or interest on, the Note, and all other
Indebtedness and other sums required to be paid by the Mortgagor pursuant to any
provision of this Mortgage, or of any other nature in aid of the enforcement of
the Note or of this Mortgage, the Mortgagor will (a) consent to the service of
process as provided in Section 3.12 and enter its voluntary appearance in such
action, suit or proceeding, and (b) if required by the Mortgagee, consent to the
appointment of a receiver or receivers of the Mortgaged Property, or any part
thereof, and of all the earnings, revenues, rents, issues, profits and income
thereof. After the happening of any Event of Default and during its continuance,
or upon the commencement of any proceedings to foreclose this Mortgage or to
enforce the specific performance hereof or in aid thereof or upon the
commencement of any other judicial proceeding to enforce any right of the
Mortgagee, the Mortgagee shall be entitled, as a matter of right, if it shall so
elect, without the giving of notice to any other party and without regard to the
adequacy or inadequacy of any security for the Indebtedness, forthwith either
before or after declaring the unpaid principal of the

<PAGE>

Note to be due and payable, to the appointment of such a receiver or receivers.

SECTION 2.05. Notwithstanding the appointment of any receiver, liquidator or
trustee of the Mortgagor, or of any of its property, or of the Mortgaged
Property or any part thereof, the Mortgagee shall be entitled to retain
possession and control of all property now or hereafter held under this
Mortgage.

SECTION 2.06. No remedy herein conferred upon or reserved to the Mortgagee is
intended to be exclusive of any other remedy or remedies, and each and every
such remedy shall be cumulative, and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute.
No delay or omission of the Mortgagee to exercise any right or power accruing
upon any Event of Default shall impair any such right or power, or shall be
construed to be a waiver of any such Event of Default or any acquiescence
therein; and every power and remedy given by this Mortgage to the Mortgagee may
be exercised from time to time as often as may be deemed expedient by the
Mortgagee. Nothing in this Mortgage or in the Note shall affect the obligation
of the Mortgagor to pay the principal of, and interest on, the Note in the
manner and at the time and place therein respectively expressed.

SECTION 2.07. The Mortgagor will not at any time insist upon, or plead, or in
any manner whatever claim or take any benefit or advantage of any stay or
extension or moratorium law, any exemption from execution or sale of the
Mortgaged Property or any part thereof, wherever enacted, now or at any time
hereafter in force, which may affect the covenants and terms of performance of
this Mortgage, nor claim, take or insist upon any benefit or advantage of any
law now or hereafter in force providing for the valuation or appraisal of the
Mortgaged Property, or any part thereof, prior to any sale or sales thereof
which may be made pursuant to any provision herein, or pursuant to the decree,
judgment or order of any court of competent jurisdiction; nor, after any such
sale or sales, claim or exercise any right under any statute heretofore or
hereafter enacted to redeem the property so sold or any part thereof and the
Mortgagor hereby expressly waives all benefit or advantage of any such law or
laws, and covenants not to hinder, delay or impede the execution of any power
herein granted or delegated to the Mortgagee, but to suffer and permit the
execution of every

<PAGE>

power as though no such law or laws had been made or enacted. The Mortgagor, for
itself and all who may claim under it, waives, to the extent that it lawfully
may, all right to have the Mortgaged Property, or any part thereof, marshaled
upon any foreclosure hereof.

SECTION 2.08. During the continuance of any Event of Default, and pending the
exercise by the Mortgagee of its right to exclude the Mortgagor from all or any
part of the Premises, the Mortgagor agrees to pay the fair and reasonable rental
value for the use and occupancy of the Mortgaged Property, or any part thereof
that is in its possession for such period, and upon default of any such payment,
will vacate and surrender possession of the Mortgaged Property, or any part
thereof, to the Mortgagee or to a receiver, if any, and in default thereof may
be evicted by any summary action or proceeding for the recovery of possession of
the Premises for non-payment of rent, however designated. (End of Article II)

ARTICLE III

Miscellaneous

SECTION 3.01. In the event any one or more of the provisions contained in this
Mortgage or in the Note shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall, at the option of the Mortgagee, not affect any other provision of this
Mortgage, but this Mortgage shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein or therein.

SECTION 3.02. All notices hereunder shall be in writing and shall be deemed to
have been sufficiently given or served for all purposes three days after being
sent by registered or certified mail, return receipt requested, to any party
hereto at its address above stated (in the case of the Mortgagee, to the
attention of James D. Riley, Jr., V.P. and in the case of the Mortgagor to
Kathleen Kelly, VP Administration) or at such other address of which any party
shall have notified any other party giving such notice in writing as aforesaid.

<PAGE>

SECTION 3.03. All covenants hereof shall be construed as affording to the
Mortgagee rights additional to and not exclusive of the rights conferred under
the provisions of Sections 254 and 273 of the Real Property Law of the State of
New York, or any other applicable law.

SECTION 3.04. All of the grants, terms, conditions, provisions and covenants of
this Mortgage shall run with the land, shall be binding upon the Mortgagor and
shall inure to the benefit of the Mortgagee, subsequent holders of this Mortgage
and their respective successors and assigns. For the purpose of this Mortgage,
the term "Mortgagor" shall include and refer to the mortgagor named herein, any
subsequent owner of the Mortgaged Property, or any part thereof, and their
respective heirs, executors, legal representatives, successors and assigns. If
there is more than one Mortgagor, all their undertakings hereunder shall be
deemed joint and several.

SECTION 3.05. The enforcement of this Mortgage shall be governed, construed and
interpreted by the laws of the State of New York. Nothing in this Mortgage, the
Note or in any other agreement between the Mortgagor and the Mortgagee shall
require the Mortgagor to pay, or the Mortgagee to accept, interest in an amount
which would subject the Mortgagee to any penalty or forfeiture under applicable
law. In the event that the payment of any charges, fees or other sums due
hereunder or under the Note or any such other agreement, which are or could be
held to be in the nature of interest and which would subject the Mortgagee to
any penalty or forfeiture under applicable law, then, ipso facto, the
obligations of the Mortgagor to make such payment shall be reduced to the
highest rate authorized under applicable law. Should the Mortgagee receive any
payment which is or would be in excess of the highest rate authorized under law,
such payment shall have been, and shall be deemed to have been, made in error,
and shall automatically be applied to reduce the outstanding balance of the
Indebtedness.

SECTION 3.06. This Mortgage and all of the terms, covenants, provisions,
conditions and grants contained in this Mortgage cannot be altered, amended,
waived, modified or discharged orally, and no executory agreement shall be
effective to modify, waive or discharge, in whole or in part, anything contained
in this Mortgage unless it is in writing and signed by the party

<PAGE>

against whom enforcement of the modification, alteration, amendment, waiver or
discharge is sought.

SECTION 3.07. The Mortgagor acknowledges that it has received a true copy of
this Mortgage.

SECTION 3.08. This Mortgage may be executed in any number of counterparts, and
each of such counterparts shall for all purposes be deemed to be an original;
and all such counterparts shall together constitute but one and the same
mortgage.

SECTION 3.09. All covenants hereof shall be construed as affording to the
Mortgagee rights additional to and not exclusive of the rights conferred under
the provisions of any applicable law.

SECTION 3.10. The information set forth on the cover hereof is hereby
incorporated herein.

SECTION 3.11. The Mortgagor expressly agrees, intending that the Mortgagee rely
thereon, that this Mortgage also shall constitute a "security agreement," as
such term is defined in the Uniform Commercial Code of the State of New York
(the "Code"). The Mortgaged Property includes, and shall be deemed to include,
inter alia, the Chattels and the Intangibles, regardless of whether they are
held or hereafter acquired, of the Mortgagor in, to and under the Mortgaged
Property. By executing and delivering this Mortgage, the Mortgagor has granted,
in the same manner and with the same effect described in the Granting Clause
hereof, to the Mortgagee, as additional security, a security interest in the
Chattels and the Intangibles which are subject to the Code. If any Event of
Default shall occur, the Mortgagee shall have, in addition to any and all other
rights and remedies set forth in this Mortgage, and may exercise without demand,
any and all rights and remedies granted to a secured party under the Code,
including, but not limited to, the right to take possession of the Chattels and
the Intangibles, or any part thereof, and the right to advertise and sell the
Chattels and the Intangibles, or any part thereof, pursuant to and in accordance
with the power of sale provided for in this Mortgage. The Mortgagor agrees that
any notice of sale or other action intended by the Mortgagee with respect to the
Chattels and the Intangibles, or any part thereof, shall constitute reasonable
notice if it is

<PAGE>

sent to the Mortgagor not less than ten (10) days prior to any such sale or
intended action. The proceeds of any such sale of the Chattels and the
Intangibles, or any part thereof, shall be applied in the manner set forth in
clauses First through Fourth of Section 2.02 (d) of this Mortgage.

SECTION 3.12. The Mortgagor agrees to submit to personal jurisdiction in the
State of New York in any action or proceeding arising out of this Mortgage.

SECTION 3.13. This mortgage does not cover(s) real property principally improved
or to be improved by one or more structures containing in the aggregate not more
than six residential dwelling units, each having their own separate cooking
facilities.

SECTION 3.14. Upon the occurrence of an Event of Default in the performance of
any of the Mortgagor's covenants or agreements herein, the Mortgagee may, at its
option, pay or perform the same and the amount or cost thereof, with interest at
the Involuntary Rate, shall immediately be due from the Mortgagor to the
Mortgagee. If the Mortgagor shall fail to perform any of its obligations under
this Mortgage, then the Mortgagee may make advances to perform the same on its
behalf and, to the extent that any such amounts or costs paid by the Mortgagee
shall constitute payment of (i) taxes, charges or assessments which may be
imposed by law upon the Premises; (ii) premiums on insurance policies covering
the Premises; (iii) expenses incurred in upholding the lien of this Mortgage,
including, but not limited to the expenses of any litigation to prosecute or
defend the rights and lien created by this Mortgage; (iv) any amount, costs or
charge to which the Mortgagee becomes subrogated, upon payment, whether under
recognized principles of law or equity, or under express statutory authority; or
(v) any amount pursuant to the provisions provided for herein that shall become
effective after Event of Default then, and in each such event, such amounts or
costs, together with interest thereon at the Involuntary Rate, shall be added to
the indebtedness secured hereby and shall be secured by this Mortgage.

SECTION 3.15. Upon reasonable notice to the Mortgagor, the Mortgagee, its
officers, employees, agents and contractors, may enter the Premises to inspect
it and to conduct, complete and

<PAGE>

take such tests, samples, analyses and other processes as the Mortgagee shall
require to determine the Mortgagor's compliance with the Environmental Laws. The
costs, expenses and fees of the Mortgagee of such entry, inspection, tests,
samples, analyses and processes shall be paid and reimbursed by the Mortgagor
upon demand by the Mortgagee, provided, however, that the Mortgagor shall have
the obligation to pay for no more than two (2) such inspections in each calendar
year. Any such sum paid by the Mortgagor, with the interest thereon at the rate
provided to be paid on the Indebtedness, shall be a lien on the Premises prior
to any claim, lien, right, title or interest in, to or on the Premises attaching
or accruing subsequent to the lien of this Mortgage, and shall be deemed to be
evidenced and secured by this Mortgage.

SECTION 3.16. MORTGAGOR AND MORTGAGEE HEREBY WAIVE, TO THE EXTENT PERMITTED BY
LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY EITHER PARTY AGAINST THE OTHER, OR IN ANY MATTER WHATSOEVER ARISING
OUT OF OR IN ANY MANNER RELATED TO THIS MORTGAGE.

         SECTION 3.17. Mortgagee may, either with or without entry or taking
possession of the Mortgaged Property as provided in this Mortgage or otherwise,
personally or by its agents or attorneys, and without prejudice to the right to
bring an action for foreclosure of this Mortgage, sell the Mortgaged Property or
any part thereof pursuant to any procedures provided by applicable law,
including, without limitation, the procedures set forth in Article 14 of the New
York Real Property Actions and Proceedings Law (and any amendments or substitute
statutes in regard thereto), and all estate, right, title, interest, claim and
demand therein, and right of redemption thereof, at one or more sales as an
entity or in parcels, and at such time and place upon such terms and after such
notice thereof as may be required or permitted by applicable law.

All notices hereunder or under any applicable law pertaining hereto (including,
without limitation, Article 14 of the New York Real Property Actions and
Proceedings Law) shall be in writing and shall be deemed sufficiently given or
served for all purposes when delivered (i) by personal service or courier
service, and shall be deemed given on the date when signed for or, if refused,
when refused by the person designated as an agent for receipt of service, (ii)
by facsimile transmission, and shall be deemed given when printed confirmation
of completion of transmission is generated by the sender's facsimile
transmission instrument, or (iii) by United States certified mail, return
receipt requested,

<PAGE>

postage prepaid, and shall be deemed given three (3) days after being sent, to
any party hereto in the manner set forth in Section 3.02 hereof or such other
address of which a party shall have notified the party giving such notice in
writing as aforesaid. For purposes hereof, notices may be given by the parties
hereto or by their attorneys.

         IN WITNESS WHEREOF, this Mortgage has been duly executed by the
Mortgagor.

                                       AMERICAN TECHNICAL CERAMICS CORP.

                                       By:
                                          ---------------------------------
                                          Kathleen Kelly
                                          VP Administration

<PAGE>

STATE OF NEW YORK
COUNTY OF NASSAU  ss.:

On the 17th day of August, in the year 2000 before me, the undersigned, a notary
public in and for said State, personally appeared Kathleen Kelly, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that she executed the same in her capacity, and that by her signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.

                          Notary Public

<PAGE>

                                  ASSIGNMENT OF
                                LEASES AND RENTS

                             Dated: August 17, 2000

                                      from

                        AMERICAN TECHNICAL CERAMICS CORP.

                              having an office at:

                                 One Norden Lane
                       Huntington Station, New York 11743
                                (the "Assignor")

                                       to

                             EUROPEAN AMERICAN BANK
                         a New York banking corporation

                              having an office at:

                                   1 EAB Plaza
                            Uniondale, New York 11555

                                (the "Assignee")

                              LOCATION OF PREMISES:

Street Address         :   11 Stepar Place
Town of                :   Huntington
County of              :   Suffolk
State of               :   New York
District                      :     0400
Section                :   136.00
Block                  :   01.00
Lot                    :   005.000

                       After recording, please return to:
                             EUROPEAN AMERICAN BANK
                           Commercial Loan Department
                                   1 EAB Plaza
                            Uniondale, New York 11555

<PAGE>

                         ASSIGNMENT OF LEASES AND RENTS

         ASSIGNMENT OF LEASES AND RENTS, made this 17th day of August, 2000, by
AMERICAN TECHNICAL CERAMICS CORP., a Delaware corporation having an office at
One Norden Lane, Huntington Station, New York 11743 (herein called the
"Assignor"), to EUROPEAN AMERICAN BANK, a New York banking corporation, having
an office at 1 EAB Plaza, Uniondale, New York, 11555 (herein called the
"Assignee").

                              W I T N E S S E T H :

         WHEREAS, Assignor is the owner of certain real property with the
buildings and improvements thereon, situated in the County of Suffolk and State
of New York, covering premises (herein called the "Premises"), as more
particularly described in Schedule A annexed hereto and made a part hereof; and

         WHEREAS, Assignor is about to execute and deliver to Assignee a
Mortgage (the "Mortgage") securing an indebtedness in the principal amount of
$795,000.00, evidenced by a note (the "Note"); and

         WHEREAS, Assignee is unwilling to accept the Mortgage unless Assignor
executes this Assignment.

         NOW THEREFORE, in consideration of the premises and in consideration of
the sum of Ten Dollars ($10.00) and other good and valuable consideration paid
by Assignee to Assignor, the receipt and sufficiency of which are hereby
acknowledged, and to better secure the payment to Assignee of (i) all monies
which may be due and payable to Assignee under the Mortgage and (ii) performance
and discharge of each obligation, covenant and agreement of the Assignor
contained herein or in the Mortgage and the Note secured thereby.

         Assignor hereby grants, transfers, bargains, sells, conveys, sets of
over and assigns to the Assignee, its successors and assigns all of the right,
title and interest of the Assignor in and to (i) all leases, subleases,
licenses, concessions and other occupancy agreements which now or may

<PAGE>

hereafter affect the Premises or any part or parts thereof and all guarantees,
modifications, renewals and extensions thereof (the "Leases"), and (ii) all
deposits, documents and instruments made or hereafter made in respect of the
Leases, together with all of the rents, income, revenues, issues and profits,
due and to become due or to which Assignor is now or may hereafter become
entitled, arising out of the Leases or the Premises or any part or parts thereof
(collectively, the "Profits").

         THE ASSIGNEE AGREES THAT:

         So long as no Event of Default under the Mortgage or this Assignment
has occurred and is continuing, Assignee hereby gives Assignor a license to
collect all the Profits, and to retain, use and enjoy the same and Assignee
agrees that it shall not exercise any power or authority granted to Assignee
hereunder. Assignor agrees to collect and receive said Profits in trust for the
benefit of Assignee and to use said Profits in payment of principal and interest
becoming due under the Note and Mortgage and in payment of taxes, assessments,
water charges, sewer rents and carrying charges becoming due against the
Premises. Such license hereby granted to Assignor to collect and receive said
Profits may be revoked by Assignee upon the occurrence of an Event of Default
under the Mortgage by Assignee giving Assignor not less than five (5) days
written notice of such revocation, served personally upon or sent by registered
or certified mail or by courier offering next day delivery to the Assignor. This
Assignment shall continue in full force and effect until (a) all sums due and
payable under the Note and Mortgage shall have been fully paid and satisfied,
together with any and all other sums which may become due and owing under this
Assignment, and (b) all other obligations of Assignor under the Note and
Mortgage, this Assignment and any other document executed in connection
therewith, are satisfied. Upon termination of this Assignment as hereinbefore
provided, this Assignment and the authority and powers herein granted by
Assignor to Assignee shall cease and terminate, and, in that event, Assignee
shall (i) execute and deliver to Assignor such instrument or instruments
effective to evidence the termination of this Assignment and the reassignment to
Assignor of the rights, powers and authorities granted herein, and (ii) deliver
to Assignor any monies held by Assignee for the benefit of Assignor. Assignor
agrees that upon termination of this Assignment it shall assume payment of all
unmatured or unpaid

<PAGE>

charges, expenses or obligations incurred or undertaken by Assignee in
connection with the management of the Premises.

         THE ASSIGNOR AGREES, JOINTLY AND SEVERALLY IF THERE ARE MORE THAN ONE
ASSIGNOR, WITH RESPECT TO EACH LEASE that:

         1. The Assignor will: fulfill or perform each and every condition and
covenant of the Lease by Lessor to be fulfilled or performed; give prompt notice
to the Assignee of any notice of default by the Assignor under the Lease
received by the Assignor together with a complete copy of any such notice; at
the sole cost and expense of the Assignor, enforce, short of termination of the
Lease, the performance or observance of each and every covenant and condition of
the Lease by the Lessee to be performed or observed; not modify nor in any way
alter the terms of the Lease except as provided for in the Mortgage; not
terminate the term of the Lease nor accept a surrender thereof unless required
to do so by the terms of the Lease; not anticipate the rents thereunder for more
than 30 days prior to accrual except for security deposits not in excess of an
amount equal to two (2) months rent; not to further assign the Leases to which
Assignor may now or hereafter become entitled; and not waive nor release the
Lessee from any obligations or conditions by the Lessee to be performed to
comply with all laws, rules, orders, ordinances and requirements of all
Governmental Authorities; and to deliver copies of all Leases to Assignee. This
Assignment is made with reference to Section 291-f of the New York Real Property
Law.

         2. The rights assigned hereunder include all the Assignor's right and
power to modify the Lease or to terminate the term or to accept a surrender
thereof or to waive, or release the Lessee from the performance or observance by
the Lessee of any obligation or condition thereof or to anticipate rents
thereunder for more than 30 days prior to accrual.

         3. Assignor further gives and grants unto Assignee the power and
authority to: (i) enter upon and take possession of and operate the Premises and
manage the same; (ii) make, enforce, modify, cancel or accept a surrender of any
or all of the Leases; (iii) demand, collect, sue for, attach, levy, recover,
receive, compromise and adjust and make, execute, and deliver receipts and
releases for Profits which may be or may hereafter become due, owing or payable
from any present or

<PAGE>

future lessees, sub-lessees, licenses, concessionaires or other occupants of the
Premises or any part thereof (the "Lessees"); (iv) receive, endorse and deposit
for collection in the name of Assignor or Assignee any checks, promissory notes
or other evidences of indebtedness, whether made payable to Assignor or
Assignee, which are given in payment or on account of rent for the Premises or
any part or parts thereof, or by way of compromise or settlement of any
indebtedness for such rents; (v) give acquittances for rents received; (vi)
institute, prosecute, settle or compromise any summary or other proceedings for
the recovery of the Profits or for removing any and all of the Lessees; (vii)
institute, prosecute, settle or compromise any proceedings for the protection of
the Premises, for the recovery of any damage done to the Premises for the
abatement of any nuisance thereon or thereabouts; (viii) defend, settle or
compromise any legal proceedings brought, or claims made against, Assignee or
its agents, employees or servants which may effect the Premises, and, at the
option of Assignee, defend, settle or compromise any claims made or legal
proceedings brought against Assignor which may affect the Premises or any part
thereof; (ix) lease or rent the Premises or any part thereof for such time and
at such rentals as Assignee, in its sole discretion, may deem advisable; (x)
make any changes or improvements, structural or otherwise, on, in or to the
Premises or any part thereof which Assignee may deem necessary or expedient for
the leasing, renting or preservation thereof; (xi) keep and maintain the
Premises in tenantable and rentable condition and in a good state of repair;
(xii) pay, from and out of the Profits collected by Assignee hereunder, or from
or out of any other funds, all taxes, assessments, water charges, sewer rents,
and other governmental charges levied, assessed or imposed against the Premises
or any part thereof, and any and all other charges, costs and expenses
(including, without limitation, brokers' fees) which Assignee may deem necessary
or advisable to pay in connection with the management and operation of the
Premises; (xiii) contract for and purchase such insurance as Assignee may deem
advisable or necessary for the protection of Assignee and the Premises,
including, without limitation, fire, general liability, boiler, plate glass,
rent, demolition and workmen's compensation insurance; (xiv) execute and comply
with all laws, rules, orders, ordinances and requirements of the United States,
the state in which the Premises is located and any political subdivision
thereof, and any agency, department, bureau, board, commission or
instrumentality of any of them

<PAGE>

(collectively, "Governmental Authorities"), and remove any and all violations
which may be filed against the Premises; (xv) enforce, enjoin or restrain the
violation of any of the terms, provisions and conditions of the Leases; and
(xvi) do anything and everything which Assignor could or would do which might
increase the Profits or which might diminish the expense of operating the
Premises; after any attempt by the Assignor to exercise any of the rights
described in Paragraph 2 or after any default by the Assignor in the payment of
said indebtedness or in the performance of any obligation of the Assignor herein
or in the Mortgage or any other instrument securing said indebtedness, the
Assignee, at its option, without notice and without regard to the adequacy of
security for the indebtedness hereby secured, either in person or by agent with
or without bringing any action or proceeding, or by a receiver to be appointed
by a court, whether herein expressly authorized or not, and in all respects act
in the place and stead of Assignor and have all of the powers as owner as
possessed by Assignor for the purposes aforesaid.

         All of the foregoing powers may be executed by Assignee or by its
agents, servants or attorneys, in the name of Assignee or in the name of
Assignor, and in such manner as Assignee, its agents, servants, or attorneys, in
the name of Assignor, and in such manner as Assignee, its agents, servants, or
attorneys consider to be necessary, desirable, expedient, or appropriate;
provided, however, that under no circumstances shall Assignee be under any
obligation to exercise any of the foregoing rights and shall not, in any manner,
be liable to Assignor or any other party for failure to exercise such rights.

         4. Assignee shall have the unqualified right to receive, use and apply
the Profits collected and received by it under this Assignment (a) for the
payment of any and all costs and expenses incurred in connection with (i)
enforcing the terms of this Agreement; (ii) upholding and defending the rights
of Assignee hereunder, and (iii) collecting rents due under the Leases; and (b)
for the operation and maintenance of the Premises and the payment of all costs
and expenses in connection therewith including, without limitation, the payment
of (i) interest and principal due on any and all mortgages on the Premises,
including the Note and Mortgage, (ii) taxes, assessments, water charges and
sewer rents and other governmental charges levied, assessed or imposed against
the

<PAGE>

Premises or any part thereof, (iii) insurance premiums, (iv) costs and expenses
in prosecuting or defending any litigation referred to herein, and (v) wages and
salaries of employees, commissions of agents and attorneys' fees. After the
payment of all such costs and expenses and after Assignee shall have set up such
reserves as Assignee, in its sole discretion, shall deem necessary for the
proper management of the Premises, Assignee shall apply all remaining Profits
collected and received by it to the reduction of the indebtedness evidenced by
the Note and secured by the Mortgage.

         5. At the Assignor's sole cost and expense, the Assignor will appear in
and defend any action growing out of or in any manner connected with the Lease
or the obligations or liabilities of the Lessor, Lessee or any guarantor
thereunder, and the Assignee, if made a party to any such action, may employ
counsel and incur and pay necessary costs and expenses and reasonable attorney's
fees and all such sums, with interest at the Involuntary Rate (as defined in the
Mortgage), shall immediately be due from the Assignor and secured hereby.

         6. Should the Assignor fail to make any payment or to do any act as
herein provided, then the Assignee, but without obligation so to do and without
notice to or demand on the Assignor and without releasing the Assignor from any
obligation herein, may make or do the same, including specifically, without
limiting its general powers, appearing in and defending any action purporting to
affect the security hereof or the rights or powers of the Assignee and
performing any obligation of the Lessor in the Lease contained, and, in
exercising any such powers paying necessary costs and expenses from and out of
Profits, or from and out of other funds, employing counsel and incurring and
paying reasonable attorneys' fees; and the Assignor will pay immediately upon
demand all sums expended by the Assignee under the authority hereof, together
with interest thereon at the Involuntary Rate, and the same shall be added to
said indebtedness and shall be secured hereby and by the Mortgage.

         7. The whole of said indebtedness shall become due (a) upon the
election by the Assignee to accelerate the maturity of the indebtedness pursuant
to the provisions of the Note and the Mortgage, or any other instrument which
may be held by the Assignee as security for the indebtedness, or (b) at the
option

<PAGE>

of the Assignee, after any attempt by the Assignor to exercise any of the rights
described in Paragraph 2 or after any default by the Assignor hereunder and the
continuance of such default for 10 days after notice and demand.

         8. Assignor hereby irrevocably constitutes and appoints Assignee its
true and lawful attorney-in-fact, to undertake and execute any or all of the
powers described herein either in express terms or generally, with the same
force and effect as if undertaken or executed by Assignor, and Assignor hereby
ratifies and confirms any and all things done or omitted to be done by Assignee,
its agents, servants, employees or attorneys in, to or about the Premises.

         9. Assignee shall not in any way be liable to Assignor for any act done
or anything omitted to be done by it in good faith in connection with the
management of the Premises, except for the consequences of its own gross
negligence or willful misconduct, nor shall Assignee be liable for any act or
omission of its agents, servants, employees or attorneys, provided that due care
is used by Assignee in the selection of such agents, servants, employees and
attorneys. Assignee shall be accountable to Assignor only for monies actually
received by it pursuant to this Assignment.

         10. The Assignor, without the prior written consent of the Assignee,
will not cause or permit the leasehold estate under the Lease to merge with the
Assignor's reversionary interest.

         11. Assignor represents and warrants: (a) Assignor has not executed any
prior assignment of any of its rights under the Lease except to Assignee; (b)
Assignor has not done anything which might prevent the Assignee from or limit
the Assignee in operating under any of the provisions hereof; (c) Assignor has
not accepted rent under the Lease more than 30 days in advance of its due date
or has not accepted a security deposit in excess of an amount equal to two (2)
months rent; (d) so far as Assignor knows, there is no present default by any of
the Lessees under the Leases; (e) the Leases are in full force and effect,
unmodified except as set forth in Schedule B.

         12. It is understood and agreed that nothing contained in this
Assignment shall prejudice or be construed to prejudice

<PAGE>

the right of Assignee, without notice, to institute, prosecute and compromise
any action which it would deem advisable to protect its interest in the
Premises, including any action to foreclose the Mortgage and in such action, to
move for the appointment of a receiver of the Profits, or prejudice any rights
which Assignee shall have by virtue of any default under the Mortgage. This
Assignment shall survive, however, the commencement of any such action and shall
continue in full force and effect in the event of any foreclosure action until a
sale of the Premises shall be had thereunder.

         13. Assignor hereby indemnifies and holds Assignee harmless from and
against any and all liability, loss, damage, cost and expense, including
reasonable attorneys' fees which it may or shall incur under any of the Leases,
or by reason of this Assignment, or by reason of any action taken by Assignee
hereunder, and from and against any and all claims and demands whatsoever which
may be asserted against Assignee by reason of any alleged obligation or
undertaking on its part to perform or discharge any of the terms, covenants and
conditions contained in any of the Leases. Should Assignee incur any such
liability, loss, damage, cost of expense, the amount thereof, together with
interest thereon from the date such amount was suffered or incurred by Assignee
until the same is paid by Assignor to Assignee, at the Involuntary Rate shall be
payable by Assignor to Assignee immediately upon demand, or at the option of
Assignee, Assignee may reimburse itself therefor out of any Profits collected by
Assignee. Assignor agrees that any such charge shall not be deemed to be
additional interest or a penalty, but shall be deemed to be liquidated damages
because of the difficulty in computing the actual amount of damages in advance;
provided, however, that any sums collected by Assignee as liquidated damages, as
aforesaid, which are held to be interest in excess of the maximum rate permitted
by law, shall be deemed a payment in reduction of the principal sum then
outstanding and shall be so applied. Nothing contained herein shall operate or
be construed to obligate Assignee to perform any of the terms, covenants or
conditions contained in the Leases or otherwise to impose any obligation upon
Assignee with respect to any of the Leases.

         14. Upon request of Assignee, Assignor shall execute and deliver to
Assignee, such further instruments as Assignee may deem necessary to effect this
Assignment and the covenants

<PAGE>

of Assignor contained herein. Assignor, at its sole cost and expense, shall
cause such further instruments to be recorded in such manner and in such places
as may be required by Assignee.

         15. Assignor shall pay all recording and filing fees in respect of this
Assignment and any agreements, instruments and documents made pursuant to the
terms hereof or ancillary hereto, as well as any and all taxes which may be due
and payable on the recording of this Assignment and any taxes hereafter imposed
on this Assignment. Should Assignor fail to pay the same, all such recording and
filing fees and taxes may be paid by Assignee on behalf of Assignor and the
amount thereof, together with interest at the Involuntary Rate, shall be payable
by Assignor to Assignee immediately upon demand, or at the option of Assignee,
Assignee may reimburse itself therefor out of the Profits collected by Assignee.
Assignor agrees that any such charge shall not be deemed to be additional
interest or a penalty, but shall be deemed to be liquidated damages because of
the difficulty in computing the actual amount of damages in advance; provided,
however, that any sums collected by Assignee as liquidated damages, as
aforesaid, which are held to be interest in excess of the maximum rate permitted
by law, shall be deemed a payment in reduction of the principal sum then
outstanding under the Note and shall be so applied.

         16. Assignee shall be entitled to the appointment of a receiver for the
Premises, without notice to Assignor.

         17. Failure of Assignee to avail itself of any of the terms, covenants
and conditions of this Assignment shall not be construed or deemed to be a
waiver of any of its rights hereunder. The rights and remedies of the Assignee
under this instrument are cumulative and are not in lieu of but are in addition
to, and shall not be affected by the exercise of, any other rights and remedies
which Assignee shall have under or by virtue of law or equity, the Note, the
Mortgage, or any other document executed in connection therewith (collectively,
the "Other Rights"). The rights and remedies of the Assignee hereunder may be
exercised concurrently with any of the Other Rights.

         18. This Assignment shall inure to the benefit of the successors and
assigns of the Assignee and shall bind the Assignor's legal representatives,
successors and assigns.

<PAGE>

         19. This Assignment may not be changed orally, but only by an agreement
in writing signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.

         20. This Assignment shall be governed by, construed and enforced in
accordance with the laws of the State of New York.

         The parties agree that all notices, demands or documents which are
required or permitted to be given or served hereunder shall be in writing and
shall be given in the manner set forth in the Mortgage.

         21. ASSIGNOR AND ASSIGNEE HEREBY WAIVE, TO THE EXTENT PERMITTED BY LAW,
THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY
EITHER PARTY AGAINST THE OTHER, OR IN ANY MATTER WHATSOEVER ARISING OUT OF OR IN
ANY MANNER RELATED TO THIS ASSIGNMENT.

         IN WITNESS WHEREOF, the Assignor has duly executed this Assignment the
day and year first above written.

                                       AMERICAN TECHNICAL CERAMICS CORP.

                                       By:
                                          ------------------------------------
                                          Kathleen Kelly
                                          VP Administration

<PAGE>

STATE OF NEW YORK
COUNTY OF NASSAU                  ss.:

On the 22nd day of August, in the year 2000 before me, the undersigned, a notary
public in and for said State, personally appeared Kathleen Kelly, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that she executed the same in her capacity, and that by her signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.

                          Notary Public

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