Document:

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                                                                    EXHIBIT 10-4
                                                                    ------------

                            SECOND SENIOR BRIDGE NOTE
                            -------------------------

$3,000,000.00                                                  DECEMBER 15, 2000

         FOR VALUE RECEIVED, HIGH FALLS BREWING COMPANY, LLC, a New York limited
liability company with an address at 445 St. Paul Street, Rochester, New York
14605 ("MAKER"), promises to pay to THE GENESEE BREWING COMPANY, INC. a New York
Corporation ("PAYEE"), at its office at 445 St. Paul Street, Rochester, New York
14605 or at such other address as may hereafter be specified by Payee, in lawful
money of the United States of America, the principal sum of THREE MILLION AND
00/100 DOLLARS ($3,000,000.00), together with interest thereon at the rate, in
the installments and at the times hereinafter provided.

         1. MATURITY DATE; PRINCIPAL AND INTEREST PAYMENTS; PREPAYMENTS.

                  1.1 Maturity. The outstanding principal balance of this Note
plus all accrued and unpaid interest thereon and all other sums due hereunder
shall be due and payable by Maker in full on or before midnight on June 1, 2004
(the "MATURITY DATE").

                  1.2 Interest Rate. Prior to Acceleration (defined below), the
principal sum outstanding from time to time hereunder shall bear interest at a
rate (the "INTEREST RATE") equal to the prime rate of Manufactures & Traders
Trust Company ("M&T") as announced from time to time plus one percent (1%) per
annum. In the event that M&T's prime rate is hereafter increased or decreased,
then the Interest Rate will be automatically, without notice, increased or
decreased as of the date of such change so that the Interest Rate shall at all
times be one percent (1%) higher than the "prime rate," as announced by M&T from
time to time. Upon the occurrence, and during the continuance, of an Event of
Default, Payee may, at its option, increase the Interest Rate by three percent
(3%) over the "prime rate".

                  1.3 Payments of Principal and Interest. .Maker shall pay
accrued interest on the 15th day of each month commencing on January 15, 2001
and continuing through and until August 15, 2001. Unless earlier Accelerated,
commencing on September 15, 2001 and continuing on a monthly basis thereafter
until the unpaid principal balance of this Note together with all accrued
interest thereon shall be paid in full, on the 15th day of each month (each a
"PAYMENT DATE") Maker shall make installment payments of principal and accrued,
but unpaid, interest equal to the amount required to completely amortize this
Note over a two hundred forty (240) month period commencing on September 15,
2001, and continuing on in a like manner on each succeeding Payment Date through
the Maturity Date, when the entire remaining principal balance of this Note,
plus all accrued and unpaid interest thereon, shall be paid in full

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         1.4 Mandatory Prepayments. Maker shall on the same business day that it
receives any proceeds from the HUD Financing or the Alternative Financing,
whichever occurs earlier, pay all proceeds therefrom directly to Maker as a
prepayment of the principal outstanding hereunder until such principal amount
and all accrued interest thereon have been paid in full, provided, however, that
if the HUD Financing or the Alternative Financing closes in more than one
transaction or if the HUD Financing or Alternative Financing does not yield
sufficient proceeds to prepay in their entirety both this Note and Maker's First
Bridge Note, then Maker may direct how the proceeds from any such financing
shall be applied in the prepayment of this Note and the First Bridge Note.

         For the purposes of this Note, the following terms shall apply:

         "ACT" means the Housing and Community Development Act of 1974, Pub. L.
No. 93-383 codified as 42 U.S.C. 5301 et seq., as amended, and regulations
promulgated thereunder.

         "ALTERNATIVE FINANCING" means financing (other than the JDA Financing)
in the aggregate amount of Six Million Five Hundred Thousand Dollars
($6,500,000) less the principal amount received or to be received pursuant to
the HUD Loan and the EDI Grant amount received or to be received pursuant to the
EDI Grant.

         "CITY" means the City of Rochester, New York, a New York municipal
corporation.

         "EDI GRANT" means a grant under HUD's Economic Development Initiative
in the amount of One Million Five Hundred Thousand Dollars ($1,500,000) or such
lesser amount as may actually be disbursed to Maker after Maker exerts best
efforts to secure a grant in the amount of no less than One Million Five Hundred
Thousand Dollars ($1,500,000).

          "FIRST BRIDGE NOTE" shall mean Maker's First Senior Bridge Note of
even date herewith payable to Payee in the original principal amount of Three
Million Five Hundred Thousand Dollars ($3,500,000).

         "HUD" means the United States Department of Housing and Urban
Development and fiscal agents and other entities involved in Section 108 Loan
Guarantee funding transactions with the City.

         "HUD LOAN" means one or more loans to the Maker from the City of
Rochester from the proceeds of a loan made to the City by the Federal Short-Term
U.S. Government Trust or such other entity designated by HUD to which HUD
provides financial accommodations in the aggregate principal amount of up to
$5,000,000 or such lesser principal amount as the City may actually loan to the
Maker after the Maker exerts best efforts to secure a loan from the City under
this program in the principal amount of $5,000,000; the HUD Loan shall consist
of a $2,000,000 ten (10) year term loan secured only by a first lien on all
Sankey Cooperage and filling equipment of the Maker and

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a $3,000,000 twenty (20) year first mortgage loan secured by all real property
of the Maker, each bearing interest at a fixed rate not exceeding that of a
Treasury note or bond of comparable maturity plus 2% per annum.

         "HUD FINANCING" means the EDI Grant and the HUD Loan.

         "HUD FINANCING CLOSING" shall mean the closing and funding of the HUD
Financing or any Alternative Financing.

         "JDA" means the New York Job Development Authority d/b/a Empire State
Development Corporation.

         "JDA COMMITMENT" means the commitment letter dated October 23, 2000
issued by the JDA.

         "JDA FINANCING" means the financing contemplated in the JDA Commitment.

         "SECTION 108" means Section 108 of the Act, codified as 42 U.S.C. 5308,
as amended, and regulations promulgated thereunder.

         1.5 Voluntary Prepayments. Subject to the Intercreditor Agreement
referred to below, this Note may be prepaid in whole or in part at any time
prior to the Maturity Date without prior notice to Payee, without penalty or
premium. Any partial prepayments shall be applied to installments of principal
last falling due, and shall have no effect on Maker's mandatory prepayment
obligations under Section 1.4. No partial prepayment shall postpone or interrupt
payments of interest or the payment of the remaining principal balance, all of
which shall continue to be due and payable at the time and in the manner set
forth above.

         1.6 Time and Manner of Payments.

                  (a) All payments (including prepayments) to be made in respect
of principal, interest or other amounts due from Maker hereunder shall be made
to Payee in United States dollars in funds immediately available, without
set-off, counterclaim or other deduction of any nature. Maker shall have no
right to offset against any installments of principal of, or interest due under,
this Note, whether under the Asset Purchase Agreement dated August 29, 2000, as
amended by Amendment No. 1 dated December 15, 2000 (the "ASSET PURCHASE
AGREEMENT") or any other agreement or instrument of any kind.

                  (b) All payments hereunder shall be applied in the following
order of priority: costs, expenses, accrued interest and thereafter to the
reduction of principal. After payment of the foregoing, all prepayments of any
kind shall be applied to the extent of available proceeds to the principal
installments payable hereunder in the inverse order of

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maturity. All prepayments of any kind shall be accompanied by all accrued
interest due on the prepaid principal at the time of prepayment.

                  (c) All interest shall be payable in arrears. Interest hereon
shall be calculated on the basis of a 360-day year applied to the actual number
of days elapsed. All payments of interest and principal shall be payable in
lawful currency of the United States of America.

         2. SECURITY. As security for the payment when due of the principal of
and interest on this Note, the Maker has, (a) under a "SECURITY AGREEMENT" dated
of even date herewith and financing statements filed pursuant thereto, granted
to Payee a continuing perfected security interest in all of the personal
property of Maker, and all proceeds and products of such property, including
insurance payable by reason of loss or damage and (b) under a "MORTGAGE" dated
of even date herewith, granted Payee a mortgage lien on the real property
located at 445 St. Paul Street, Rochester, New York and the improvements thereon
(collectively, the "COLLATERAL").

         3. INTERCREDITOR AGREEMENT. This Note and the Security Agreement and
the rights of Payee hereunder and thereunder are subject to an Intercreditor
Agreement (the "INTERCREDITOR AGREEMENT") by and among Payee, M&T and Cephas
Capital Partners, L.P. ("CEPHAS") and such other creditors of Maker as the three
named creditors may determine to make a party to such Intercreditor Agreement.
Payment of this Note is guaranteed by a certain secured Guaranty of even date
herewith executed by Genesee Brewing Equipment, LLC.

         4. REPRESENTATIONS AND WARRANTIES. Maker represents and warrants to
Payee that:

                  4.1 Organization, Authority, Etc. (a) Maker's execution and
delivery of this Note and the enforceability against Maker of the transactions
hereby contemplated, including the HUD Financing and the JDA Financing, have
been duly authorized by all requisite limited liability company action; (b) this
Note has been duly and validly executed and delivered by Maker and constitutes
Maker's legal, valid and binding obligation; (c) the execution and delivery of
this Note by Maker does not, and the performance by it of the transactions
hereby contemplated will not result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default or event of
default (or give rise to any right of termination, cancellation or acceleration)
under its Articles of Organization or Operating Agreement or any terms,
conditions or provisions of any note, debenture, security agreement, lien,
mortgage or other agreement, instrument or obligation, oral or written, to which
Maker is a party (whether as an original party or as an assignee or successor)
or by which it or any of its properties is or will be bound; (d) except as set
forth in EXHIBIT A annexed hereto, Maker has all licenses, permits, approvals,
franchises, registrations, accreditations, authorizations, variances and the
like (the "PERMITS") necessary for the conduct of its intended business after
closing the acquisition pursuant to the Asset Purchase Agreement (the
"Acquisition"), all of which are in full force and effect; (e) no approval or
consent by any third party or governmental authority

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under any statutes, regulations or the Permits (collectively, the"GOVERNMENTAL
REGULATIONS") is required in connection with Maker's execution and delivery of
this Note and the transactions hereby contemplated; and (f) Maker has provided
Payee with true and complete copies of the JDA Commitment letter and all
amendments thereto and extensions thereof and to the knowledge of the Maker, the
JDA Commitment is in full force and effect.

                  4.2 Pro Forma Financial Statements. (a) Maker's Pro Forma
Financial Statements dated December 7, 2000 ("Pro Forma Financial Statements")
delivered by Maker to Payee and their underlying assumptions are reasonable and
have been prepared by Maker in good faith; and (b) except as set forth in
Maker's Recission Offer dated December 8, 2000, nothing has come to the Maker's
attention since the preparation thereof that would lead it to believe that the
Pro Forma Financial Statements are inaccurate, incomplete or misleading in any
material respect.

                  4.3 Debt, Etc. Except for indebtedness and obligations to
Payee and third parties contemplated by the Asset Purchase Agreement between
Maker and Payee of even date herewith, set forth on EXHIBIT A annexed hereto is
a complete and correct list of all credit agreements, indentures, guaranties,
capital leases, and other investments, agreements, and arrangements presently in
effect providing for or related to borrowed money; and the maximum principal or
face amounts of the credits in questions, outstanding or to be outstanding, are
correctly stated, and all security interests, liens or encumbrances of any
nature given or agreed to be given as security therefor are correctly described
or indicated in such Schedule.

                  4.4 Capitalization. (i) Maker has provided Payee with a true
and complete copy of its Articles of Organization and Operating Agreement and
all subscription agreements and there are no obligations for the repurchase or
acquisition of any membership, capital, distribution or other equity interest in
Maker except with respect to the repurchase obligations for the warrants issued
to Cephas Capital Partners, L.P. on even date herewith, (ii) the capitalization
of Maker is as set forth on EXHIBIT B; and (iii) all issued and outstanding
membership, capital distribution or equity interests in Maker are fully paid and
non-assessable.

                  4.5 Solvency. Both before and after giving effect to the
transactions contemplated by the Asset Purchase Agreement and the financing
therefor, Maker is and will be Solvent. As used herein, "SOLVENT" means Maker
(i) has assets having a fair value in excess of its Debts, and (ii) has and
expects to continue to have adequate capital for the conduct of its business and
the ability to pay its Debts as the same mature. For a definition of "Debt" see
Section 16 of Exhibit C.

         5. COVENANTS. So long as any portion of the principal amount of this
Note remains outstanding and unpaid or any accrued interest has not been paid,
(a) Maker shall comply with each of the affirmative covenants set forth in
EXHIBIT C annexed hereto and (b) without the prior written consent of the Payee,
Maker shall observe and not violate any of the negative covenants set forth in
EXHIBIT D annexed hereto. All exhibits are incorporated herein by reference.

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         6. EVENTS OF DEFAULT. Each of the following shall constitute an event
of default (each, an "EVENT OF DEFAULT") hereunder:

                  6.1 Payment Failure. If Maker fails to make any payment of any
installment of interest and/or principal hereunder or any other sum due
hereunder within ten (10) days after such payment is due.

                  6.2 Failure to Perform, Etc.

                    (a) Any representation or warranty made or deemed made by
Maker herein, in the Security Agreement or the Intercreditor Agreement shall
prove to have been incorrect, incomplete or misleading in any material respect
on or as of the date made or deemed made.

                    (b) Maker shall fail to perform or observe any term,
covenant or agreement set forth on EXHIBIT C, which failure is not cured within
thirty (30) days after receipt of notice from Payee, or Maker fails to observe
or abide by any term, covenant or agreement contained in EXHIBIT D.

                  6.3 Bankruptcy. If any proceeding under the Bankruptcy Code or
any law of the United States or of any state relating to insolvency,
receivership, or debt adjustment is instituted by Maker or any Guarantor, or if
any such proceeding is instituted against Maker or any Guarantor and is
consented to by the respondent or an order for relief shall be entered in such
proceeding or such proceeding shall remain undismissed for sixty (60) days, or
if a trustee or receiver is appointed for any substantial part of Maker's or any
Guarantor's property and such appointment remains undismissed for sixty (60)
days, or if Maker or any Guarantor makes an assignment for the benefit of
creditors, admits in writing its inability to pay debts generally as they become
due or becomes insolvent.

                  6.4 Cross-Default. Maker shall (i) fail to pay any Debt for
borrowed money of Maker (including but not limited to Manufacturers and Traders
Trust Company, Cephas Capital, L.P., financing provided by Maker pursuant to the
Asset Purchase Agreement and certain investor notes issued by Maker pursuant to
the Offering Summary dated September 20, 2000 and Recission Offer dated December
8, 2000), or any interest or premium thereon, when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise); (ii) fail to
perform or observe any term, covenant, or condition on its part to be performed
or observed under any agreement or instrument relating to any such Debt when
required to be performed or observed, if the effect of such failure to perform
or observe is to accelerate, or to permit the acceleration after the giving of
notice or passage of time, or both, of the maturity of such Debt, whether or not
such failure to perform or observe shall be waived by the holder of such Debt,
or any such Debt shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment), prior to the
stated maturity thereof; (iii) materially breach the Asset Purchase Agreement;
or (iv) Maker shall fail to perform or observe any material term, covenant or
agreement set forth in any agreement or instrument executed by Maker with or in
favor of Payee (other than in the Asset

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Purchase Agreement and other than those instruments referred to above in this
Section 6.4), which failure is not cured within thirty (30) days after receipt
of notice from Payee.

                  6.5 Judgment. A final judgment or order for the payment of
money in excess of $100,000 shall be rendered against the Maker or any Guarantor
and such judgment or order shall continue unsatisfied, in effect and unstayed
for a period of thirty (30) consecutive days.

                  6.6 Discontinuance of Business. Maker's failure to conduct
business in the ordinary course, dissolution or termination of existence.

                  6.7 Change of Control. The occurrence of a Change of Control.
As used herein a "CHANGE OF CONTROL" means a change of control of the Maker of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act,
whether or not the Maker is then subject to such reporting requirement;
provided, that, without limitation, such a Change of Control shall be deemed to
have occurred if:

                    (i) any "person" (as defined in Sections 13(d) and 14(d) of
the Exchange Act) or "group" (as defined in Section 13(d) of the Exchange Act)
other than the Management Group is or becomes the "beneficial owner" (as defined
in Rule 13(d)(3) of the Exchange Act), directly or indirectly, of securities of
Maker representing 30% or more of the combined voting power of the Maker's then
outstanding securities in the election of Managers or with respect to any sale
or disposition by Maker of its assets or the dissolution of Maker ("VOTING
power");

                    (ii) the members of the Maker approve a merger or
consolidation of the Maker with any other limited liability company or
corporation, other than a merger or consolidation which would result in the
voting securities of the Maker outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 70% of the combined voting power of
the voting securities of the Maker or such surviving entity outstanding
immediately after such merger or consolidation;

                    (iii) if any recapitalization event occurs as a result of
which the holders of voting securities of the Maker outstanding immediately
prior thereto do not continue to hold at least 70% of the combined voting power
of the voting securities of the Maker immediately after such recapitalization
event;

                    (iv) the members of the Maker approve a plan of complete
liquidation of the Maker or an agreement for the sale or disposition by the
Maker of all or substantially all of the Maker's assets.

                  6.8 Intercreditor Agreement. The Intercreditor Agreement shall
at any time after its execution and delivery and for any reason cease to be in
full force and effect or shall be declared null and void, or the enforceability
thereof shall be contested by any party thereunder other than Payee, or any such
party shall deny that it is bound thereby.

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                  6.9 Guarantees. Any guaranty of this Note shall at any time
after its executed and delivery for any reason cease to be in full force and
effect or shall be declared null and voice, or the validity or enforceability
thereof shall be contested by any guarantor, or any guarantor shall deny it has
any further liability or obligation under, or shall fail to perform its
obligations under the Security Agreement.

                  6.10 Boston Beer. The occurrence of any event which would
entitle Boston Brewing Company, Inc. d/b/a The Boston Beer Company, a
Massachusetts corporation, for itself and as the sole general partner of Boston
Beer Company Limited Partnership, a Massachusetts limited partnership
(collectively, "BOSTON BEER") to receive payment from Payee on its Guaranty of
even date herewith made in favor of Boston Beer by Payee for the benefit of the
Maker in respect of a certain Amended and Restated Agreement dated April 30,
1997, other than (i) pursuant to a Refunding Obligation Payment (as defined in
an Indemnification Agreement of even date herewith between Maker and Payee) or
(ii) a breach by Payee of its "Net Worth" covenant under its Guaranty in favor
of Boston Beer Company.

                  6.11 UDV Agreement. Borrower shall fail to execute an
agreement before January 3, 2001 with UDV North America, Inc. ("UDV") upon the
terms and conditions referenced in that certain letter agreement by UDV to Maker
dated September 25, 2000.

                  6.12 Security Agreement. The Security Agreement shall at any
time after its execution and delivery and for any reason cease (a) to create a
valid and perfected security interest in and to the property purported to be
subject to such Security Agreement, except as provided in the Intercreditor
Agreement; or (b) to be in full force and effect or shall be declared null and
void, or the validity or enforceability thereof shall be contested by Maker or
Maker shall deny it has any further liability or obligation under the Security
Agreement, or Maker shall fail to perform in any material respect any of its
obligations under the Security Agreement.

         7. REMEDIES. Upon the occurrence of any Event of Default hereunder, the
entire unpaid principal balance of this Note, together with all accrued and
unpaid interest thereon and all other sums owing hereunder shall, at the option
of Payee, become immediately due and payable (an "ACCELERATION"), without
presentation, demand or further action of any kind, and Payee may forthwith
exercise, singly, concurrently, successively or otherwise, any and all rights
and remedies available to Payee hereunder. The failure of payee to accelerate
the outstanding principal balance of this Note upon the occurrence of an Event
of Default hereunder shall not constitute a waiver of such Event of Default or
of the right to accelerate this Note at any time thereafter so long as the Event
of Default remains uncured. If Payee retains the services of counsel in order to
enforce any remedy available to Payee hereunder, all reasonable attorneys' fees
which are actually incurred by Payee shall be payable upon demand. Upon the
occurrence and continuation of any one or more Events of Default, and whether or
not the Payee shall have accelerated the maturity of this Note, the Payee may,
proceed to protect and enforce its rights by suit in equity, action at law or
other appropriate proceeding, whether for the specific performance of any
covenant or agreement contained in this Note or any instrument pursuant to which
the obligations to the Payee are evidenced, including as permitted by

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applicable law the obtaining of the ex parte appointment of a receiver, and, if
such amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any other legal or equitable right of the Payee.
No remedy herein conferred upon the Payee or the holder of this Note is intended
to be exclusive of any other remedy and each and every 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 or any other provision
of law.

         8. INTEREST LIMITATIONS. Nothing herein contained nor any transaction
related hereto shall be construed or shall operate either presently or
prospectively to require Maker to pay interest at a rate greater than is now
lawful in such case to contract for, but shall require payment of interest only
to the interest paid in excess of the lawful rate shall be refunded to Maker.

         9. SEVERABILITY. In the event that for any reason one or more of the
provisions of this Note or their application to any person or circumstance shall
be held to be invalid, illegal or unenforceable in any respect or to any extent,
such provisions shall, to such extent, be held for naught as though not herein
contained but shall nevertheless remain valid, legal and enforceable in all such
other respects and to such extent as may be permissible. In addition, any such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Note, but this Note shall be construed as if such invalid, illegal or
unenforceable provisions had never been contained herein.

         10. SUCCESSORS AND ASSIGNS. This Note inures to the benefit of Payee,
its successors and assigns, and is binding upon Maker, its successors and
assigns, provided that any successor or assign of the Payee of this Note first
executes a written undertaking agreeing to be bound by all of the provisions of
the Intercreditor Agreement. The words "Payee" and "Maker" whenever used herein
shall be deemed and construed to include such respective successors and assigns.

         11. NOTICES. All notices required to be given to any of the parties
hereunder shall be in writing and shall be deemed to have been sufficiently
given for all purposes when given in accordance with the terms and conditions of
the Asset Purchase Agreement.

         12. CAPTIONS. The captions or headings of the sections in this Note are
for convenience only and shall not control or affect the meaning or construction
of any of the terms or provisions of this Note.

         13. GOVERNING LAW; AMENDMENT. This Note shall be governed by and
construed in accordance with the laws of the State of New York. This Note may
only be amended by an instrument in writing signed by both Maker and Payee.

         IN WITNESS WHEREOF, Maker, intending to be legally bound hereby, has
duly executed this Note, under seal, on the date and year first above written.
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MAKER:                                        HIGH FALLS BREWING COMPANY, LLC

                                              By: /s/ Samuel T. Hubbard, Jr.
                                                 ---------------------------
                                              Name:  Samuel T. Hubbard, Jr.

                                              Title: President

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                                Page 114 of 272

                                    EXHIBIT A

                          REQUIRED PERMITS AND LICENSES

1.       Ohio Beer Malt Beverage Certificate of Registration - Application in
         process per Donna Cuccio of Ohio Liquor Authority.

2.       New Jersey Limited Wholesale License (transfer from Seller) - Seeking
         temporary license.

3.       Colorado Non-Resident Manufacturer License - State will issue upon
         proof of closing of Acquisition.

4.       Connecticut Out-of-State Beer Permit - State will issue upon closing of
         Acquisition.

5.       Arizona Out-of-State Brewer's License - State will issue week of
         12/10/00.

6.       Delaware Suppliers' License - State will issue week of 12/10/00, per
         Edith Butler of Delaware Liquor Authority.

7.       Arkansas Non-Resident Beer Seller Permit - Transfer permitted by State;
         awaiting documentation.

8.       Alabama Out-of-State Manufacturer's License (Transfer) - Transfer
         allowed upon surrender of Seller's license.

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                                    EXHIBIT C

                              AFFIRMATIVE COVENANTS
                              ---------------------

         So long as the outstanding principal amount under the Note and all
accrued interest thereon has not been paid in full, the Maker shall:

1. MAINTENANCE OF EXISTENCE. Preserve and maintain, and cause each Person
required to become a guarantor (each a "GUARANTOR") of this Note to preserve and
maintain, its corporate existence and good standing in the jurisdiction of its
incorporation, and qualify and remain qualified, as a foreign corporation in
each jurisdiction in which qualification is required.

2. MAINTENANCE OF PERMITS. Maintain in full force and effect all license,
permits, approvals, franchises, registrations, accreditations, authorizations,
variances and the like necessary for the conduct of its intended business after
closing the Acquisition.

3. MAINTENANCE OF RECORDS. Keep, and cause any Guarantor to keep, adequate
records and books or account, in which complete entries will be made in
accordance with GAAP consistently applied.

4. MAINTENANCE OF PROPERTIES. Maintain, keep, and preserve, and cause any
Guarantor to maintain, keep, and preserve, all of its material properties
(tangible and intangible) necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted.

5. CONDUCT OF BUSINESS. Continue to engage in an efficient and economical manner
in a business of the same general type as proposed to be conducted by it upon
consummation of the Acquisition.

6. MAINTENANCE OF INSURANCE. Maintain, and cause any Guarantor to maintain,
insurance with financially sound and reputable insurance companies or
associations in such amounts and covering such risks as are usually carried by
companies engaged in the same or a similar business and similarly situated,
which insurance may provide for reasonable deductibility from coverage thereof
and which shall name the Payee as additional insured and loss payee, as its
interests may appear.

7. COMPLIANCE WITH LAWS. Comply, and cause each Guarantor to comply, in all
material respects with all applicable laws, rules, regulations, and orders, such
compliance to include, without limitation, paying before the same become
delinquent all taxes, assessments, governmental charges imposed upon it or upon
its property.

8. RIGHT OF INSPECTION. At any reasonable time and from time to time, permit the
Payee or any agent or representative thereof to examine and make copies of and
abstracts from the records and books of account of, and visit the properties

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of, the Maker and any Guarantor, and to discuss the affairs, finances, and
accounts of the Maker and any Guarantor with any of their respective officers
and directors and the Makers' independent accountants.

9. REPORTING REQUIREMENTS. Furnish to Payee:

         (a) Financial Statements.

                  (i) As soon as available and in any event within one hundred
twenty (120) days after the end of Maker's fiscal year ending on or after
December 31, 2001, consolidated and consolidating balance sheets of Maker and
its subsidiaries as of the end of such Fiscal Year, consolidated and
consolidating statements of income and retained earnings of Maker and its
Subsidiaries for such Fiscal Year, and consolidated and consolidating statements
of changes in financial position of Maker and its subsidiaries for such Fiscal
Year, all in reasonable detail and stating in comparative form the respective
figures for the corresponding dates and period in the prior fiscal year or in
the Pro Forma Financial Statements, as the case may be, all prepared in
accordance with GAAP consistently applied and as to the consolidated statements
accompanied by an opinion thereon acceptable to the Payee by Arthur Anderson &
Co. or other independent accountants acceptable to the Payee;

                  (ii) As soon as available and in any event within one hundred
twenty (120) days after the end of Fiscal Year 2000, internally prepared and
certified consolidated and consolidating balance sheets of Maker and its
subsidiaries as of the end of such fiscal year, consolidated and consolidating
statements of income and retained earnings of Maker and its subsidiaries for
such fiscal year, and consolidated and consolidating statements of changes in
financial position of Maker and its subsidiaries for such fiscal year, all in
reasonable detail and stating in comparative form the respective figures for the
corresponding dates and period in the prior fiscal year or in the Pro Forma
Financial Statements, as the case may be, all prepared in accordance with GAAP
consistently applied.

                  (iii) As soon as available and in any event within twenty-five
(25) days after the end of March 31, June 30, September 30 and December 31 of
each Fiscal Year, consolidated and individual balance sheets of Maker and its
Subsidiaries as of the end of the three month period then ended (each a "Fiscal
Quarter") and the period to date then ended of the then current fiscal year,
consolidated and individual statements of income and retained earnings of Maker
and its Subsidiaries for the period commencing at the end of the previous fiscal
year and ending with the end of such month, and consolidated and individual
statements of changes in financial position of Maker and its Subsidiaries for
the portion of the fiscal year ended with the last day of such month, all in
reasonable detail and stating in comparative form the respective figures for the
corresponding date and period in the previous fiscal year and with the Pro Forma
Financial Statements and all prepared in accordance with GAAP consistently
applied and certified, to the best of his knowledge, by the chief financial
officer of Maker (subject to year-end adjustments);

<PAGE>
                                Page 117 of 272

         (b) Management Letters. Promptly upon receipt thereof, copies of any
reports submitted to the Maker by independent certified public accountants in
connection with examination of the financial statements of the Maker made by
such accountants;

         (c) Quarterly Compliance Certificate. Within twenty-five (25) days
after the end of each Fiscal Quarter, a certificate of the chief financial
officer of Maker (a) certifying that to the best of his knowledge no Event of
Default has occurred and is continuing, or if an Event of Default has occurred
and is continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto; and (b) containing computations
demonstrating compliance with the covenants contained in Section 15 of this
Exhibit C;

         (d) Accountant's Report. Simultaneously with the delivery of the annual
financial statements required under this Note, a certificate of the independent
public accountants who audited such statements to the effect that, in making the
examination necessary for the audit of such statements, they have obtained no
knowledge of any condition or event which constitutes an Event of Default, or if
such accountants shall have obtained knowledge of any such condition or event,
specifying in such certificate each such condition or event of which they have
knowledge and the nature and status thereof;

         (e) Notice of Litigation. Promptly after the commencement thereof,
notice of all actions, suits, and proceedings before any court or governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, affecting the Maker or any Guarantor which, if determined adversely to
the Maker or such Guarantor, could have a material adverse effect on the
financial condition, properties, or operations of the Maker or such Guarantor;

         (f) Notice of Defaults and Events of Default. As soon as possible and
in any event within five (5) days after the occurrence of each Event of Default,
a written notice setting forth the details of such Event of Default and the
action which is proposed to be taken by the Maker with respect thereto;

         (g) Reports to Other Creditors. Promptly after the furnishing thereof,
copies of any statements or report furnished to any other party pursuant to the
terms of any indenture, loan, credit, or similar agreement and not otherwise
required to be furnished to the Maker pursuant to any other clause above; and

         (h) General Information. Such other information respecting the
condition or operations, financial or otherwise, of Maker or any Guarantor as
the Payee may from time to time reasonably request.

10. ENVIRONMENT. Be and remain, and cause any Guarantor to be and remain, in
compliance in all material respects with the provisions of all federal, state,
and local environmental, health, and safety laws, codes and ordinances, and all
rules and regulations issued thereunder; notify Payee promptly of any notice of
a hazardous

<PAGE>
                                Page 118 of 272

discharge or environmental complaint received from any governmental agency or
any other party; notify Payee promptly of any hazardous discharge occurring
after the date of this Note from or affecting its premises; undertake and
complete all removal and other remedial actions required of Maker by a
governmental authority with respect to such hazardous discharge, in compliance
in all material respects with all applicable laws; promptly pay any fine or
penalty assessed in connection therewith; permit the Payee to inspect all books,
correspondence, and records pertaining thereto; and at the Payee's request, and
at the Maker's expense, provide a report of a qualified environmental engineer,
satisfactory in scope, form, and content to the Payee, and such other and
further assurances reasonably satisfactory to the Payee that the condition has
been corrected as required in accordance with applicable law.

11. GUARANTORS. Cause each subsidiary of Maker created or acquired after the
date hereof to execute and deliver to the Payee a guaranty of payment of this
Note and all other Debt of Maker to Payee of any kind, whereby such subsidiary
shall guaranty payment of all such Debt, together with legal opinions in form
and substance satisfactory to the Payee as to validity and enforceability of
such guaranty, and to such other matters as the Payee may reasonably request. In
addition, Maker shall notify the Payee of the acquisition or creation of any new
subsidiary. (Each guarantor of this Note is referred to herein as a
"Guarantor").

12. HUD FINANCING CLOSING. Take all actions necessary to consummate the HUD
Financing on the terms previously disclosed to Payee and use best efforts to
consummate the HUD Financing on or prior to September 30, 2000. The Maker shall
not undertake or enter into any transaction that would prevent the consummation
of the HUD Financing or which would prevent the Maker from obtaining such
financing. In the event that Maker is unable to obtain the HUD Financing, then
Maker shall exert best efforts to secure and close Alternative Financing as soon
as reasonably practicable. Upon request by the Payee, Maker shall provide Payee
with copies of all correspondence, written communications and draft documents
delivered to Maker, HUD, the City and/or any lender proposing to provide the
Alternative Financing by one another relating to, or involving the HUD
Financing.

13. JDA FINANCING CLOSING. Exert best efforts to close the JDA Financing as soon
as reasonably practicable, but in no event later than the expiration date
provided for under the JDA Commitment. Upon request by the Payee, Maker shall
provide Payee with copies of all correspondence between the JDA and Maker.

14. FURTHER ASSURANCES. Cooperate with the Payee and execute such further
instruments and documents as the Payee shall reasonably request to carry out to
its satisfaction the transactions contemplated by this Note and all related
agreements and documents.

15. CASH FLOW. Maintain Cash Flow Coverage of not less than 1.0 to 1.0 for the
immediately preceding twelve (12) month period (or for the first three (3)

<PAGE>
                                Page 119 of 272

Fiscal Quarters following the date hereof for the period since the date hereof
to the end of such Fiscal Quarter), measured as of the end of each Fiscal
Quarter as shown on the financial statements required to be provided by Maker to
Payee pursuant to Section 9(a) above.

16. CERTAIN DEFINITIONS. As used herein, the following terms shall apply:

         "CAPITAL EXPENDITURES" means for the applicable period, expenditures
made to acquire or construct fixed assets, plant and equipment (including
improvements, renovations and replacements required to be classified in
accordance with GAAP as capital expenditures, but excluding maintenance and
repairs not required to be so classified). Capital Expenditures shall include
the capital leases.

         "CASH FLOW COVERAGE" means, for the applicable measurement period,
EBITDA plus the proceeds from the issuance of membership, capital, distribution
or other equity interests ("EQUITY INTERESTS") or Debt for borrowed money issued
by Maker after the date hereof (other than in connection with the financing of
the Acquisition or any refinancing or modification thereof) subordinated to this
Note (in form satisfactory to Payee) (including any amendments, modifications or
replacements hereof), compared to (i) for the measurement periods ending through
and including December 31, 2002, interest, principal and tax payments due and/or
paid plus cash required to fund repurchases of Equity Interests and (ii) for
measurement periods ending thereafter, interest, principal and tax payments due
and/or paid plus Capital Expenditures to the extent not funded by Debt for
borrowed money plus cash required to fund repurchases of Equity Interests.

         "DEBT" means (a) indebtedness or liability for borrowed money; (b)
obligations evidenced by bonds, debentures, notes or other similar instruments;
(c) obligations for the deferred purchase price of property or services
(including trade obligations); (d) obligations as lessee under capital leases;
(e) current liabilities in respect of unfunded vested benefits under plans
covered by ERISA; (f) obligations under letters of credit; (g) obligations under
acceptance facilities; (h) all guarantees, endorsements (other than for
collection or deposit in the ordinary course of business), and other contingent
obligations to purchase, to provide funds for payment, to supply funds to invest
in any person or entity, or otherwise to assure a creditor against loss; and (i)
obligations secured by any liens, whether or not the obligations have been
assumed.

         "EBITDA" means Maker's consolidated earnings before interests, taxes,
depreciation, amortizations, dividends, distributions, and the like.

17. AMENDMENTS TO INVESTMENT NOTES. Without Payee's prior written consent, Maker
shall not agree to any amendment to its Investor Notes issued pursuant to
Maker's Offering Summary dated September 20, 2000 and Recission Offer dated
December 8, 2000.

<PAGE>
                                Page 120 of 272

                                    EXHIBIT D
                                    ---------

                               NEGATIVE COVENANTS

         So long as the Note shall remain unpaid, Maker will not, and will not
permit any Guarantor to:

         1. LIENS. Create, incur assume, or suffer to exist, or permit any
Guarantor to create, incur, assume, or suffer to exist, any mortgage, deed of
trust, pledge, security interest, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority, or
other security agreement or preferential arrangement, charge, or encumbrance of
any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the Uniform Commercial Code or comparable law
of any jurisdiction to evidence any of the foregoing) (each a "LIEN") upon or
with respect to any of its properties, now owned or hereafter acquired, except:

         (a) Liens in favor of M&T securing Debt to M&T to the extent such Debt
is permitted by Section 2;

         (b) Liens in favor of the Payee;

         (c) Liens subordinated on terms satisfactory to the Payee to the
Maker's obligations under this Note and the Maker's Second Senior Bridge Note;

         (d) Liens for taxes or assessments or other government charges or
levies if not yet due and payable or, if due and payable, if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained;

         (e) Liens imposed by law, such as mechanics', materialmen's,
landlords', warehousemen's, and carriers' Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due for more than forty five (45) days or which are being contested in good
faith by appropriate proceedings and for which appropriate reserves have been
established;

         (f) Lien's under workers' compensation, unemployment insurance, Social
Security, or similar legislation;

         (g) Liens, deposits, or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement), public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds, or other
similar obligations arising in the ordinary course of business;

         (h) Judgments and other similar Liens arising in connection with court
proceedings, provided that, if the amount in question exceeds $100,000.00, the
execution or other enforcement of such Liens is effectively stayed and the
claims

<PAGE>
                                Page 121 of 272

secured thereby are being actively contested in good faith and by appropriate
proceedings;

         (i) Easements, rights-of-way, restrictions, and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use, and enjoyment by the Maker or any Guarantor of the property or
assets encumbered thereby in the normal course of its business or materially
impair the value of the property subject thereto; and

         (j) Purchase money security interests securing Debt permitted pursuant
to Section 2(g), provided that no such Lien (i) secures any other Debt, or (ii)
extends to assets not acquired with the proceeds of such permitted Debt; and

         (k) Other Liens set forth in Exhibit B and not otherwise described
above.

2. DEBT. Create, incur, assume, or suffer to exist, or permit any Guarantor to
create, incur, assume, or suffer to exist, any Debt, except:

         (a) Debt of the Maker to M&T (i) pursuant to the Revolving Loan and
Term Loan Agreement dated December 15, 2000 between M&T and Maker (the "M&T
AGREEMENT"); and (ii) as otherwise permitted by, and subject to the limitations
set forth in, the Intercreditor Agreement;

         (b) Debt outstanding under this Note, the Maker's Second Bridge Note or
another Debt to Payee;

         (c) Debt disclosed on EXHIBIT B (provided that the HUD Loan described
therein are on terms reasonably satisfactory to Payee), but no voluntary
prepayments, renewals, extensions, or refinancing thereof;

         (d) Debt subordinated on terms satisfactory to the Payee to the Maker's
obligations under this Note and the Maker's Second Senior Bridge Note;

         (e) Debt of Maker to any Guarantor or of any Guarantor to Maker;

         (f) Accounts payable to trade creditors for goods or services which are
aged not more than ninety (90) days from the billing date and current operating
liabilities (other than for borrowed money) which are not more than ninety (90)
days past due, in each case incurred in the ordinary course of business, as
presently conducted, and paid within the specified time, unless contested in
good faith and by appropriate proceedings; and

         (g) Debt incurred to finance the acquisition of fixed or capital assets
and secured by Liens permitted by Section 1(j), including capital leases,
provided that the aggregate principal balance of all such Debt does not exceed
such amount as permitted by the M&T Agreement at any time.

<PAGE>
                                Page 122 of 272

3. MERGERS, ETC. Wind up, liquidate or dissolve itself, reorganize, merge or
consolidate with or into, or convey, sell, assign, transfer, lease, or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to any
individual, entity or organization, (each a "Person"), or acquire all of
substantially all of the assets or the business of any Person, except that (a)
any Guarantor may merge into or transfer assets to Maker and (b) any Guarantor
may merge into or consolidate with or transfer assets to any other Guarantor, so
long as such merger does not violate the covenants set forth herein.

4. LEASES. Create, incur, assume, or suffer to exist, any obligation as lessee
for the rental or hire of any real or personal property, except (a) leases
existing on the date of this Agreement as described on EXHIBIT B and any
extensions or renewals thereof; (b) leases (other than capital leases) which do
not in the aggregate require the Maker and the Guarantors on a consolidated
basis to make payments (including taxes, insurance, maintenance, and similar
expenses which the Maker or the Guarantors are required to pay under the terms
of any lease) in any Fiscal Year in excess of such amount as is permitted under
the M&T Agreement; and (c) leases between the Maker and any Guarantor or between
any Guarantors.

5. SALE AND LEASEBACK. Sell, transfer, or otherwise dispose of, any real or
personal property to any Person and thereafter directly or indirectly lease back
the same or similar property.

6. RESTRICTED PAYMENTS. Maker shall not declare or pay any dividends, other than
reasonable "tax distributions" sufficient to cover the members' tax liabilities
associated with their membership interests in Maker; or pay more than $200,000
per year to, purchase, redeem, retire, or otherwise acquire for value any of its
equity interests now or hereafter outstanding, or make any distribution of
assets to its members or other holders of equity securities issued by Maker; or
allocate or otherwise set apart any sum for the payment of any dividend or
distribution on, or for the purchase, redemption, or retirement of any
membership interest, whether in income, distributions, capital or otherwise; or
make any other distribution by reduction of capital or otherwise in respect of
any membership interest.

7. SALE OF ASSETS. Sell, lease, assign, transfer, or otherwise dispose of, or
permit any Guarantor to sell, lease, assign, transfer, or otherwise dispose of,
any of its now owned of hereafter acquired assets (including, without
limitation, shares of stock and Debt of Subsidiaries, receivables, and leasehold
interests), except: (a) inventory disposed of in the ordinary course of
business; and (b) the sale or other disposition of assets no longer used or
useful in the conduct of its business.

8. INVESTMENTS. Make any loan or advance to any Person; or purchase or otherwise
acquire, any capital stock, assets, obligations, or other securities of, make
any capital contribution to, or otherwise invest in or acquire any interest in
any Person, or participate as a partner or joint venture with any other Person,
except for investments money market mutual funds, provided that: (a) the total
amount of

<PAGE>
                                Page 123 of 272

cash so invested at any one time does not exceed $250,000.00, (b) after giving
effect to each such investment, no Default or Event of Default shall have
occurred hereunder, (c) the Maker shall give the Payee notice of each such
investment as soon as practical and in any event within thirty (30) days thereof
and (d) the Maker shall provide the Payee with such additional information
(including semi-annual financial statements) about any investment under this
Section 8 as it may reasonably request.

9. GUARANTIES, ETC. Assume, guarantee, endorse, or otherwise be or become
directly or contingently responsible or liable (including, but not limited to,
an agreement to purchase any obligation, stock, assets, goods, or services, or
to supply or advance any funds, assets, goods, or services, or an agreement to
maintain or cause such Person to maintain a minimum working capital or net worth
or otherwise to assure the creditors of any Person against loss), for
obligations of any Person, except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business.

10. TRANSACTIONS WITH AFFILIATES. Enter into any transaction or series of
related transactions for a consideration (singly or in the aggregate) of more
than $50,000, including, without limitation, the purchase, sale, or exchange of
property or the rendering of any service, with any Affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of Maker's or
Guarantor's business and upon fair and reasonable terms no less favorable to
Maker or such Guarantor than would obtain in a comparable arm's-length
transaction with a Person not an Affiliate.

11. BUSINESS ACTIVITIES. Engage directly or indirectly (whether through
Subsidiaries or otherwise) in any type of business not engaged in on the date
hereof, unless incidental or related to any type of business engaged in by such
Person on such date.

12. CAPITALIZATION. The Maker will not and will not permit any Guarantor to
issue any Equity Interests interest having debt-like features (such as mandatory
cash dividends, mandatory redemption provisions or other provisions which create
monetary obligations payable in cash), except to the extent that the same, (i)
if classified as Debt, would be permitted by Section 2 hereof and (ii) would not
require Maker to violate Section 6 hereof.

13. FISCAL YEAR. Change the date of its fiscal year end from December 31.

14. MANAGEMENT GROUP. Make any change in the composition or duties and authority
of the Management Group other than by reason of death or disability.

15. MODIFICATIONS TO JDA COMMITMENT AND SUBORDINATED FINANCING DOCUMENTS.
Without Payee's prior written consent, agree or consent to any changes or
modifications in the JDA Commitment or any of the terms of the financing
contemplated thereunder or any subordinated financing documents.

<PAGE>
                                Page 124 of 272

16. MODIFICATIONS TO CERTAIN FINANCING DOCUMENTS. Without Payee's written
consent, agree or consent to any changes or modifications to any financing
documents or any of the terms of the financing contemplated thereunder (other
than a certain Revolving Loan and Term Loan Agreement dated December 15, 2000)
or any subordinated financing documents.

17. CERTAIN DEFINITIONS. As used herein, the following terms shall apply:

         "DEBT" means (a) indebtedness or liability for borrowed money; (b)
obligations evidenced by bonds, debentures, notes or other similar instruments;
(c) obligations for the deferred purchase price of property or services
(including trade obligations); (d) obligations as lessee under capital leases;
(e) current liabilities in respect of unfunded vested benefits under plans
covered by ERISA; (f) obligations under letters of credit; (g) obligations under
acceptance facilities; (h) all guarantees, endorsements (other than for
collection or deposit in the ordinary course of business), and other contingent
obligations to purchase, to provide funds for payment, to supply funds to invest
in any person or entity, or otherwise to assure a creditor against loss; and (i)
obligations secured by any Liens, whether or not the obligations have been
assumed.

         "MANAGEMENT GROUP" means Samuel T. Hubbard, Jr., John B. Henderson,
Gary C. Geminn and Howard R. Jacobson.<PAGE>
                                Page 125 of 272

                                  EXHIBIT 10-5
                                  ------------

                                    MORTGAGE
                                    --------

         This MORTGAGE, made the 15th day of December, 2000 between HIGH FALLS
BREWING COMPANY, LLC, a limited liability company organized and existing under
the laws of the State of New York, with an office and place of business at 445
St. Paul Street, Rochester, New York 14605 (herein called the "MORTGAGOR"), and
THE GENESEE BREWING COMPANY, INC., a New York corporation with its principal
office at 445 St. Paul Street, Rochester, New York 14605 (herein called the
"MORTGAGEE").

         W I T N E S S E T H, to secure the payment of an indebtedness in the
sum of THREE MILLION AND NO/100 DOLLARS ($3,000,000.00) lawful money of the
United States to be paid with interest thereon to be computed from the date
hereof, to be paid according to a certain bond, note, or obligation bearing even
date herewith (the "NOTE"), the Mortgagor hereby mortgages to the Mortgagee the
premises described in SCHEDULE "A" attached hereto and made a part hereof
(herein called the "MORTGAGED PREMISES" or "PREMISES").

         TOGETHER with all the right, title and interest of the Mortgagor in and
to any and all unearned premiums accrued, accruing or to accrue under any and
all insurance policies now or hereafter obtained by the Mortgagor on the
Mortgaged Premises,

         TOGETHER with the appurtenances and all the estate and rights of the
Mortgagor in and to said Premises,

         TOGETHER with all and singular the tenements, hereditaments, and
appurtenances belonging or in any way appertaining to said Premises, and the
reversion and reversions, remainder and remainders, rents, issues and profits
thereof.

         TOGETHER with and including any and all strips and gores of land
adjoining or abutting said Premises,

         TOGETHER with all right, title, and interest of the Mortgagor in and to
the land lying in the bed of any street, road, avenue or alley, open or
proposed, in front of, running through or adjoining said Premises,

         TOGETHER with all buildings, structures, and improvements now or at any
time hereafter erected, constructed or situated upon the Premises, and all
fixtures and equipment and other personal property (and the proceeds thereof)
now or hereafter affixed to or constituting a portion of the Premises or used in
the operation of the buildings standing on said Premises, together with any and
all replacements thereof and additions thereto,

<PAGE>
                                Page 126 of 272

         TOGETHER with all awards heretofore and hereafter made to the Mortgagor
for taking by eminent domain the whole or any part of said Premises or any
easement therein, including any awards for changes of grade of streets, which
said awards are hereby assigned to the Mortgagee, who is hereby authorized to
collect and, except as provided herein, receive the proceeds of such awards and
to give proper receipts and acquittances therefor, and to apply the same toward
the payment of the mortgage debt, notwithstanding the fact that the amount owing
thereof may not then be due and payable; and the said Mortgagor hereby agrees,
upon request, to make, execute and deliver any and all assignments and other
instruments sufficient for the purpose or assigning said awards to the
Mortgagee, free, clear, and discharged of any encumbrances of any kind or nature
whatsoever,

         This is a purchase money mortgage.

         The Mortgagor covenants with the Mortgagee that:

         PAY INDEBTEDNESS. The Mortgagor will pay the indebtedness secured
hereby with interest thereon as herein provided and according to the Note, and
if default shall be made in the payment of part thereof, the Mortgagee shall
have power to foreclose this Mortgage and sell the Mortgaged Premises according
to law. In addition to and not in limitation of the foregoing, 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 laws, 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.

         INSURANCE. The Mortgagor will keep the buildings on the Premises and
the fixtures and articles of personal property covered by the Mortgage insured
against loss by fire and other hazards, casualties and contingencies, including
flood insurance if required by law, regulation or Mortgagee, for the benefit of
the Mortgagee in an amount not less than the unpaid principal balance due
hereunder. The fire insurance policy as required hereby shall contain the usual
extended coverage endorsement and shall provide for twenty (20) days written
notice to Mortgagee prior to cancellation. In addition thereto the Mortgagor
within thirty (30) days after notice and demand will keep the Premises insured
against war risk and any other hazard that may reasonably be required by law,
regulation or Mortgagee. The Mortgagor will assign and deliver said policies to
the Mortgagee and the Mortgagor will reimburse the Mortgagee for any premiums
paid for the insurance made by the Mortgagee on the Mortgagor's default in so
insuring the buildings or in so assigning and delivering the policies. All the
provisions of this paragraph or of any other provisions of the Mortgage
pertaining to fire insurance or any other additional insurance which may be
required hereunder shall be construed in accordance with Section 254 Subdivision
4 of the

<PAGE>
                                Page 127 of 272

New York Real Property Law, but, said section to the contrary notwithstanding,
the Mortgagor consents that the Mortgagee may without qualification or
limitation by virtue of said section, retain and apply the proceeds of any such
insurance in satisfaction or reduction of the Mortgage, or it may at its
election pay the same, either in whole or in part, to the Mortgagor or his heirs
or assigns for the repair or replacement of the buildings or of the insured
articles of personal property or for any other purpose or object satisfactory to
the holder of the Mortgage, and if the Mortgagee shall receive and retain such
insurance money, the lien of the Mortgage shall be affected only by a reduction
of the amount of such lien by the amount of such insurance money received and
retained by the Mortgagee.

         ALTERATIONS, DEMOLITION OR REMOVAL. Except for improvements on the
Gallina property and the actions described in the following sentence, no
building, fixtures or personal property covered by the Mortgage shall be
removed, demolished, or substantially altered without the prior written consent
of the Mortgagee. Mortgagor may remove, demolish or substantially alter those
improvements necessary to relocate the rail line on the Premises due to the
condition of the CSX trestle, provided that Mortgagor performs and completes
such relocation so that rail service to the Premises is restored with all
reasonable dispatch (the "Railway Relocation").

         WASTE, MAINTENANCE AND REPAIRS. The Mortgagor will not commit any waste
on the Premises or make any change in the use of the Premises which will in any
way increase any ordinary fire or other hazard arising out of construction or
operation. The Mortgagor will keep and maintain or cause to be kept and
maintained all buildings and other improvements now or at any time hereafter
erected upon or constituting any portion of the Mortgaged Premises, and the
sidewalks and curbs abutting the same, in good order and condition and in a
rentable and tenantable state or repair, and will make or cause to be made, as
and when the same shall become necessary, all structural and non-structural
exterior and interior, ordinary and extraordinary, foreseen and unforeseen
repairs, renewals, and replacements necessary to that end. In the event that the
Mortgaged Premises shall be damaged or destroyed in whole or in part, by fire or
any other casualty, or in the event of a taking of a portion of the Mortgaged
Premises as a result of any exercise of the power of eminent domain, the
Mortgagor shall promptly restore, replace, rebuild or alter the same as nearly
as possible to the condition they were in immediately prior to such fire, other
casualty or taking, provided Mortgagor is allowed to retain and use the proceeds
of any insurance covering such loss or the condemnation proceeds relating to
such taking. Although damage to or destruction of the Mortgaged Premises, or any
portion thereof, shall not of itself constitute a default hereunder, the failure
of the Mortgagor promptly to restore, replace, rebuild, or alter the same, as
hereinabove provided, shall constitute a default hereunder but only if the
amount of the insurance proceeds or condemnation award or settlement recovered
in connection with such damage or destruction has been paid to Mortgagor or to
the contractors retained by Mortgagor to perform the restoration, replacement or
rebuilding. The Mortgagor covenants that it will give to the Mortgagee prompt
written notice of any damage or injury to the Mortgaged Premises and will give
like notice to the Mortgagee of the commencement of any condemnation proceeding
affecting the whole or any portion of Mortgaged Premises. The

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                                Page 128 of 272

Mortgagor shall have the right, at any time and from time to time, to remove and
dispose of building service equipment which may have become obsolete or unfit
for use or which is no longer useful in the operation of the building now or
hereafter constituting a portion of the Mortgaged Premises. The Mortgagor agrees
promptly to replace with other building service equipment, free of superior
title, liens or claims, not necessarily of the same character but of at least
equal usefulness and quality, any such building service equipment so removed or
disposed of, except that, if by reason of technological or other developments in
the operation and maintenance of buildings of the general character of the
building constituting a portion of the Mortgaged Premises, no replacement of the
building service equipment so removed or disposed of is necessary or desirable
in the proper operation or maintenance of said building, the Mortgagor shall not
be required to replace the same.

         TAXES, ASSESSMENTS, ETC. The Mortgagor will pay all taxes, assessments,
insurance premiums, sewer rents, or water rates, and in default thereof, the
Mortgagee may pay the same. Any sums so advanced by the Mortgagee shall bear
interest at the maximum legal rate of interest at the time of such advance or at
the highest rate of interest set forth herein or in the Note, whichever is
greater, and any such sum and the interest thereon shall be a lien on said
Premises, prior to any right, or title to, interest in or claim upon said
Premises, or accruing subsequent to the lien of the Mortgage and shall be deemed
secured hereby. Upon written request from Mortgagee, Mortgagor shall deliver to
Mortgagee receipted tax bills showing payment of all taxes on the Premises
within the applicable grace period.

         ESTOPPEL STATEMENT. The Mortgagor within five (5) days upon request in
person or within ten (10) days upon request by mail will furnish a written
statement duly acknowledged of the amount due on the Mortgage and whether any
offsets or defenses exist against the Note and Mortgage.

         MORTGAGEE MAY CURE MORTGAGOR'S DEFAULTS. The Mortgagor covenants and
agrees with the Mortgagee that the holder of the Mortgage may cure any default
of Mortgagor on the Mortgage or any prior or subsequent mortgage, including
payment of any installments of principal and interest or part thereof, and that
all costs and expenses, including reasonable attorneys' fees together with
interest thereon at the highest rate of interest set forth herein or in the Note
secured by the Mortgage, whichever is the greater, paid by the Mortgagee in so
curing said default, shall be repaid by the Mortgagor to the Mortgagee on demand
and the same shall be deemed to be secured by the Mortgage and to be collectible
in like manner as the principal sum.

         WARRANTY OF TITLE. The Mortgagor warrants the title to the Premises and
will execute any further assurance of the title to the Premises as Mortgagee may
require.

         LIEN LAW COVENANT. The Mortgagor will, in compliance with Section 13 of
the New York Lien Law, receive the advances secured hereby and will hold the
right to receive such advances as a trust fund to be applied first for the
purpose of paying the cost

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                                Page 129 of 272

of the improvement and will apply the same first to the payment of the cost of
the improvements before using any part of the total of the same for any other
purpose.

         ESCROW FOR TAXES/INSURANCE. The Mortgagee may request at any time after
a default by Mortgagor in payment when due of property taxes and/or insurance
premiums on the Mortgaged Premises that, in addition to the monthly payments of
principal and interest, the Mortgagor will pay monthly to the Mortgagee on or
before the first day of each and every calendar month, until the Note is fully
paid, a sum equal to one-twelfth (1/12th) of the known or estimated yearly
taxes, assessments, liens and charges levied or to be levied against the
Mortgaged Premises and/or premiums for insurance held or required by Mortgagee.
The Mortgagee shall hold such payments in trust without obligation to pay
interest thereon, except such interest as may be made mandatory by law or
regulation, to pay such taxes, assessments, liens, charges and insurance
premiums within a reasonable time after they become due. If the total of
payments made by the Mortgagor for taxes, assessments, liens, charges and
insurance premiums shall exceed the amount of payments actually made by the
Mortgagee, such excess shall be credited by the Mortgagee on subsequent payments
to be made by the Mortgagor. If the total of payments made by the Mortgagor for
taxes, assessments, liens, charges and insurance premiums shall not be
sufficient to pay therefor, then the Mortgagor shall pay to the Mortgagee any
amount necessary to make up the deficiency on or before the date when such
amounts shall be due.

         LATE CHARGES. If any payment required to be made under the Mortgage or
the Note or the obligations secured by the Mortgage shall be overdue in excess
of ten (10) days, a late charge of the lesser of $150 or $.06 of each $1.00 so
overdue will be paid by the Mortgagor for the purpose of defraying the expenses
incident to handling such delinquent payments.

         ACCELERATION OF PRINCIPAL ON TRANSFER, ETC. The principal sum with
interest thereon shall become immediately due and payable, upon the voluntary or
involuntary conveyance or transfer by operation of law or otherwise of all or
any part of the Mortgaged Premises, or any interest or estate therein, including
lease and conveyance by land contract. Acceptance of payments by the Mortgagee
subsequent to any such conveyance, transfer, or encumbering shall not be deemed
a waiver of any of the Mortgagee's rights.

         ACCELERATION OF PRINCIPAL ON DEFAULT, ETC. The whole of the principal
sum and interest shall become due at the option of the Mortgagee, after (a)
default in the payment of any installment of principal or of interest for thirty
(30) days; or, (b) default in the payment of any tax, water rate, assessment,
insurance premiums, or sewer rent for thirty (30) days after notice and demand
or default after notice and demand either in assigning and delivering the
policies insuring the buildings against any casualty or in reimbursing the
Mortgagee for premiums paid on such insurance, as herein provided; or (c)
default upon request in furnishing a statement of the amount due and whether any
offsets or defenses exist against the mortgage debt, as herein provided; or (d)
failure to exhibit to the Mortgagee, within ten (10) days after demand, receipts
showing payment of

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                                Page 130 of 272

all taxes, water rates, sewer rents and assessments; or (e) except for the
removal of the improvements on the Gallina property or the actions with respect
to the Railway Relocation described in ALTERATIONS, DEMOLITION OR REMOVAL above,
the actual or threatened alteration, demolition or removal of any improvement on
the Premises without the written consent of the Mortgagee; or (f) the assignment
of the rents of the Premises or any part thereof without the written consent of
the Mortgagee; or (g) the buildings on said Premises are not maintained in
reasonably good repair; or (h) failure to comply with any requirement or order
or notice of violation of law or ordinance issued by any governmental department
claiming jurisdiction over the Premises within two (2) months from the issuance
thereof; or (i) refusal of two or more fire insurance companies lawfully doing
business in the State of New York to issue policies insuring the buildings on
the premises; or (j) the removal, demolition or destruction in whole or in part
of any of the fixtures, chattels or articles of personal property covered
hereby, unless the same are promptly replaced by similar fixtures, chattels and
articles of personal property at least equal in quality and condition to those
replaced, free from security interests or other encumbrances thereon and free
from any reservation of title thereof, or unless prior written approval has been
obtained from Mortgagee; or (k) thirty (30) days notice to the Mortgagor, in the
event of the passage of any law deducting from the value of land for the
purposes of taxation any lien thereon, or changing in any way the laws for the
taxation of mortgages or debts secured thereby for state or local purposes; or
(1) the Mortgagor fails to keep, observe and perform within thirty (30) days
after notice any of the other covenants, conditions or agreements contained in
the Mortgage; or (m) use of said Premises for any unlawful purpose or public or
private nuisance; or (n) the Mortgagor commits or permits waste; or (o) any
default under any mortgage or other lien on the Premises or any default under
any other note, loan agreement or other instrument evidencing Mortgagor's
indebtedness to Mortgagee; or (p) the Mortgagor is no longer personally liable
for repayment of the indebtedness secured hereby.

         NOTICES. Notice and demand to or request upon the Mortgagor shall be in
writing and, if in writing, may be served in person or by registered or
certified mail, return receipt requested.

         APPOINTMENT OF RECEIVER. The Mortgagee, in any action to foreclose the
Mortgage, shall be entitled, without notice or demand and without regard to the
adequacy of any security for the indebtedness hereby or the solvency or
insolvency of any person liable for the payment thereof, to the appointment of a
receiver of the rents, issues and profits of the Mortgaged Premises.

         SALE IN ONE PARCEL. In case of a foreclosure sale, said Premises, or so
much thereof as may be affected by the Mortgage, may be sold in one parcel, any
provision of law to the contrary notwithstanding. In addition to and not in
limitation of the foregoing, 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 laws, including, without limitation, the procedures set forth in

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                                Page 131 of 272

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.

         ASSIGNMENT OF RENTS. The Mortgagor hereby absolutely and
unconditionally assigns, transfers and conveys to the Mortgagee the rents,
issues, and profits of the Premises as further security for the payment of the
Note, it being the intention of Mortgagor and Mortgagee that this assignment be
treated and construed as an absolute assignment and not an assignment for
additional security only. The Mortgagor further grants to the Mortgagee the
right to enter upon and to take possession of the Premises for the purpose of
collecting the same and to let the Premises or any part thereof, and to apply
the rents, issues and profits, after payment of all necessary charges and
expenses, on account of the Note. This assignment and grant shall continue in
effect until the Note is paid. The Mortgagee hereby waives the right to enter
upon and to take possession of the Premises for the purpose of collecting the
rents, issues, and profits, and the Mortgagor shall be entitled to collect and
receive the rents, issues and profits as trustee for the benefit of Mortgagee
and Mortgagor until default under any of the covenants, conditions, or
agreements contained in the Mortgage; Mortgagor agrees to use such rents, issues
and profits in payment of principal and interest and in payment of taxes,
assessments, sewer rents, water rates, and carrying charges against the
Premises, but such right of the Mortgagor may be revoked by the Mortgagee upon
any default, on five (5) days written notice. The Mortgagor will not, without
the written consent of the Mortgagee, receive or collect rent from any tenant of
the Premises or any part thereof for a period of more than one month in advance,
and in the event of any default under the Mortgage will pay monthly in advance
to the Mortgagee, or to any receiver appointed to collect the rents, issues and
profits, the fair and reasonable rental value for the use and occupation of the
Premises or of such part thereof as may be in the possession of the Mortgagor,
and upon default in any such payment will vacate and surrender the possession of
the Premises to the Mortgagee or to such receiver, and in default thereof may be
evicted by summary proceedings. Mortgagor shall and does hereby agree to
indemnify and hold Mortgagee and its representatives harmless of and from any
and all liability, loss of damage which Mortgagor or its representatives may or
might incur under or by reason of (a) any tenant of the Premises, (b) this
Mortgage, (c) any action taken by Mortgagee or its representatives hereunder,
unless constituting willful misconduct or gross negligence, or (d) claims and
demands which may be asserted against Mortgagee or its representatives by reason
of any alleged obligations or undertakings on its or their part to perform or
discharge any of the terms, covenants or agreements contained in any lease
affecting the Premises. This Mortgage shall not operate to place upon Mortgagee
any responsibility for the management, operation or maintenance of the Premises,
and the execution of this Mortgage by Mortgagor shall constitute conclusive
evidence that all responsibility for the management, operation and maintenance
of the Premises is, shall be and shall remain that of Mortgagor, in the absence
of the taking of actual possession of the Premises by Mortgagee. The provisions
of the foregoing indemnification obligation shall survive the

<PAGE>
                                Page 132 of 272

assignment or repayment of the Note, the assignment, satisfaction, foreclosure
or other termination of this Mortgage and the sale or other transfer or
conveyance of the Premises.

         SECURITY AGREEMENT. The Mortgage constitutes a security agreement under
the Uniform Commercial Code and creates a security interest in all fixtures and
equipment and other personal property (and the proceeds thereof) now or
hereafter affixed to or constituting a portion of the Premises. Mortgagor shall
execute, deliver, file and refile any financing statement, continuation
statements, or other security agreements Mortgagee may require from time to time
to confirm the lien of the Mortgage with respect to such property. Without
limiting the foregoing, Mortgagor hereby irrevocably appoints Mortgagee and its
successors in interest as attorney-in-fact of Mortgagor to execute, deliver and
file such instruments, for and on behalf of Mortgagor.

         ANTI-MARSHALLING. The Mortgagee may resort for the payment of any
indebtedness, liability, or obligation secured hereby to its several securities
therefor, in such order and manner as it may see fit, and the Mortgagee may
maintain an action to foreclose the Mortgage notwithstanding the pendency of any
action to recover any part of the indebtedness secured hereby, or the recovery
of any judgment in such action. The Mortgagee shall not be required during the
pendency of any action to foreclose the Mortgage, to obtain leave of any court
in order to commence or maintain any other action to recover any part of the
indebtedness secured hereby.

         The Mortgagee shall also have the right in the event of default under
the Mortgage or the obligation secured hereby to proceed against any or all
interests of the Mortgagor and the Mortgagor agrees that the Mortgagee shall
have the right to elect in writing not to cut off any interest that any
Mortgagor might have and in the event that Mortgagee shall so elect, Mortgagor
agrees that all of its duties and obligations as to such interest shall
continue.

         COMPLIANCE WITH LAWS, ETC. The Mortgagor will comply with, or cause
compliance with, all present and future laws, ordinances, rules, regulations,
zoning and other requirements of all governmental authorities whatsoever having
jurisdiction of or with respect to the Mortgaged Premises or any portion thereof
or the use or occupation thereof; provided, however, that the Mortgagor may
postpone such compliance if and so long as the validity or legality of any such
governmental requirement shall be contested by the Mortgagor, with diligence and
in good faith, by appropriate legal proceedings.

         COMPLIANCE WITH ZONING, ETC. The Mortgagor covenants: (a) that, to the
best of its knowledge, the buildings and improvements now on the Mortgaged
Premises are in full compliance with all applicable zoning codes, ordinances and
regulations and deed restrictions, if any; and (b) buildings or improvements
hereafter constructed on such Premises shall be in compliance as in (a) hereof
provided, shall lie wholly within the boundaries of such Premises and, shall be
independent and self-contained operating units (except for utility lines and
conduits coming directly to the Premises from a public road or from a private
road an easement over which for the maintenance of such utilities is covered by
the lien hereof).

<PAGE>
                                Page 133 of 272

         LEGAL EXPENSES. If any action or proceeding be commenced (except an
action to foreclose the Mortgage or to collect the debt secured thereby), to
which action or proceeding the Mortgagee is made a party, or in which it becomes
necessary to defend or uphold the lien of the Mortgage, all sums paid by the
Mortgagee for the expense of any litigation to prosecute or defend the rights
and lien created by the Mortgage (including reasonable counsel fees), shall be
paid by the Mortgagor, together with interest thereon at the legal rate of
interest at the time of said payment or at the highest rate of interest set
forth herein or in the Note secured by the Mortgage, whichever is greater, and
any such sum and interest thereon shall be a lien on said Premises, prior to any
right, or title to, interest in or claim upon said Premises attaching or
accruing subsequent to the lien of the Mortgage, and shall be deemed to be
secured by the Mortgage.

                  If the Mortgage is referred to attorneys for collection or
foreclosure, the Mortgagor shall pay all sums, including attorneys' fees,
incurred by the Mortgagee, together with all statutory costs, disbursements, and
allowances, with or without the institution of an action or proceeding. All such
sums with interest thereon at the rate set forth herein shall be deemed to be
secured by the Mortgage and collectible out of the Mortgaged Premises.

         INTEREST ON CONDEMNATION AWARD. In the event of condemnation, or taking
by eminent domain, the Mortgagee shall not be limited to the interest paid on
the award by the condemning authority but shall be entitled to receive out of
the award interest on the entire unpaid principal sum at the rate herein
provided; the Mortgagor does hereby assign to the Mortgagee so much of the
balance of the award payable by the condemning authority as is required to pay
such total interest.

         INTEREST IN THE EVENT OF DEFAULT. If default be made in the payment of
the said indebtedness when due, pursuant to the terms hereof, the Mortgagee
shall be entitled to receive interest on the entire unpaid principal sum at the
legal rate of interest at the time of such default or at the highest rate of
interest set forth herein or in the Note secured by the Mortgage, whichever is
the greater, to be computed from the due date and until the actual receipt and
collection of the entire indebtedness. This charge shall be added to and shall
be deemed secured by the Mortgage. The within clause, however, shall not be
construed as an agreement or privilege to extend the Mortgage, nor as a waiver
of any other right or remedy accruing to the Mortgagee by reason of any such
default.

         RENT/BUSINESS INTERRUPTION INSURANCE. The Mortgagor will keep the
buildings and improvements now erected or hereafter to be erected on the
Mortgaged Premises and all personal property and fixtures covered by the
Mortgage insured for the benefit of the Mortgagee against loss of rents or
business income, as the case may be, by reason of fire or other casualties and
in such amounts as may from time to time be required by the Mortgagee and in
companies satisfactory to the Mortgagee, and will assign and deliver to the
Mortgagee such policies of insurance.

<PAGE>
                                Page 134 of 272

         NO SECONDARY FINANCING. Except as allowed by the Asset Purchase
Agreement between Mortgagor and Mortgagee dated August 29, 2000, as amended by
Amendment No. 1 dated December 15, 2000 (together the "Asset Purchase
Agreement"), the Mortgagor will not, without the Mortgagee's prior written
consent, mortgage (including the so-called "wrap-around mortgage"), pledge,
assign, grant a security interest in, cause any lien or encumbrance to attach to
or any levy to be made on the Mortgaged Premises except for (a) taxes and
assessments not yet delinquent and (b) any mortgage, pledge, security interest,
assignment or other encumbrance to the Mortgagee.

         BANKRUPTCY. Upon the making of an assignment for the benefit of
creditors by, or upon the filing of a petition in bankruptcy by or against the
Mortgagor, or any person or corporation who is the guarantor hereof or whose
indebtedness is secured hereby, or upon the application for the appointment of a
receiver of the property of the Mortgagor or any such person or corporation, or
of the property of any person or corporation which may become and be owner of
the Mortgaged Premises, or upon any act of insolvency or bankruptcy of the
Mortgagor or any such person or corporation or of any such subsequent owner, or
upon the legal incapacity of the Mortgagor or any such person or corporation or
owner, or any of them, the whole of said indebtedness of every kind or nature
held by the Mortgagee and now or hereafter secured hereby shall immediately
become due and payable with interest thereon, and Mortgagor and any guarantor(s)
hereby waive presentment, demand of payment, protest, notice of non-payment,
and/or protest of any instrument on which the Mortgagor or such guarantors are
or may become liable now or hereafter secured hereby, and the Mortgagor
expressly agrees that the Mortgagee may release or extend the time of any party
liable on any such obligation without notice and without affecting his
obligation thereon or under this instrument.

         LIENS. Except as provided in the Asset Purchase Agreement, the Premises
shall be kept free and clear from any liens and/or encumbrances of any type and
description. Upon the recording of any lien or encumbrance, and the same not
having been cleared or bonded of record within thirty (30) days after filing
thereof, the entire debt secured hereby shall immediately become due and
payable.

         RIGHT TO INSPECT. The Mortgagee and any persons authorized by Mortgagee
shall have the right, on reasonable notice, to enter and inspect the Mortgaged
Premises at all reasonable times during usual business hours.

         WAIVER. No waiver by the Mortgagee of the breach of any of the
covenants contained in the Note, the Mortgage, or other loan document, or
failure of the Mortgagee to exercise any option given to it, shall be deemed to
be a waiver of any other breach of the same or any other covenant, or of its
rights thereafter to exercise any such option.

         MODIFICATION. No change, amendment, modification, cancellation or
discharge hereof, or any part hereof, shall be valid unless in writing and
signed by the parties hereto or their respective successors and assigns.

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                                Page 135 of 272

         COVENANTS SHALL RUN WITH THE LAND, ETC. The covenants contained in the
Mortgage shall run with the land and bind the Mortgagor, the heirs, personal
representatives, successors and assigns of the Mortgagor and all subsequent
owners, encumbrancers, tenants and subtenants of the Premises, and shall inure
to the benefit of the Mortgagee, the personal representatives, successors and
assigns of the Mortgagee and all subsequent holders of the Mortgage.

         PURCHASE MONEY MORTGAGE. This is a purchase money mortgage for the
amount above stated.

         LIMITED LIABILITY COMPANY MORTGAGOR. The Mortgagor covenants that it is
duly formed and validly existing under the laws of the State of New York, and
that execution of the Mortgage and related instruments is authorized by the
Operating Agreement and/or all members entitled to vote thereon.

         ENVIRONMENTAL REPRESENTATIONS, WARRANTIES AND COVENANTS.

         Mortgagor, after diligent inquiry, makes the following representations,
warranties and covenants which shall survive the closing of this loan:

         1. Mortgagor is and shall remain in material compliance with, and
agrees to cause all operators, tenants, subtenants, licensees and occupants of
the Premises to materially comply with, all applicable environmental laws,
rules, regulations and requirements and agrees to obtain and operate in material
compliance with, and agrees to cause all operators, tenants and subtenants,
licensees and occupants of the Premises to obtain and materially comply with,
all environmental permits, licenses, authorizations, orders and approvals.

         2. Mortgagor shall not cause or permit any change to be made in the
present or intended use of the Premises which would (i) involve the commercial
use of the Premises as a landfill or hazardous and toxic substance or other
waste, generation, treatment, storage or disposal site, (ii) violate any
applicable environmental law, rule, regulation or requirement, or (iii)
constitute non-compliance with any environmental permit, license, authorization
or order reasonably likely to give rise to an adverse environmental condition.

         3. Mortgagor agrees to promptly notify Mortgagee in writing in the
event of any reportable spill or other release or threat of release of any
hazardous or toxic substance on, at or from the Premises or of any accusation or
allegation of any such spill or release and promptly provide Mortgagee with a
copy of all notifications or other communication of whatever nature which it
gives or receives with respect to any past or present release or threat of a
release of any hazardous and toxic substance on, at or from the Premises or any
property adjacent to or within the immediate vicinity of the Premises.

         4. Mortgagor agrees, at its sole cost and expense, to undertake and
complete all investigations, studies, sampling and testing and all removal and
other remedial actions

<PAGE>
                                Page 136 of 272

required of Mortgagor by a governmental authority to contain, remove and clean
up all hazardous and toxic substances that are determined to be present at the
Premises in accordance with all applicable environmental laws, rules,
regulations, requirements and orders, and all environmental permits, licenses
and authorizations, and to promptly pay when due any fines or assessments
against Mortgagor associated therewith.

         5. Mortgagor agrees to allow at all times Mortgagee, Mortgagee's
successors or assigns, and its officers, employees, agents, representatives,
contractors and subcontractors reasonable access to the Premises for the
purposes of ascertaining site conditions, including, but not limited to, a
detailed visual inspection of the Premises, samplings of soil, surface and
groundwater and such other inspection or analysis reasonably necessary or
appropriate to complete this environmental assessment of the Premises.

         6. If at any time Mortgagee reasonably believes that potential
environmental problems exist at the Premises, Mortgagee may require that an
environmental site assessment with respect to the Premises conducted in
accordance with ASTM or another generally accepted standard be prepared by an
environmental engineer or other qualified person mutually acceptable to the
parties, at Mortgagor's expense. If such assessment indicates the release or the
threat of a release of any hazardous and toxic substance on, at or from the
Premises, Mortgagor shall promptly undertake and diligently pursue to completion
all necessary, appropriate and legally required investigative, containment,
removal, clean up and other remedial actions, using methods acceptable to the
appropriate federal, state and local agencies or authorities.

         7. Mortgagor agrees to defend, indemnify and hold harmless Mortgagee,
Mortgagee's successors and assigns, its employees, agents, officers and
directors from and against any claims, actions, demands, penalties, fines,
liabilities, settlements, damages, costs or expenses (including, without
limitation, attorney and consultant fees, investigation and laboratory fees,
court costs and litigation expenses) of whatever kind or nature known or unknown
contingent or otherwise arising out of or in any way related to:

                  A. The disposal, release or threatened release or omission of
any hazardous or toxic substances on the Premises occurring after the date of
this Mortgage;

                  B. Any personal injury (including wrongful death or property
damage, real or personal) arising out of or related to hazardous or toxic
substances arising from the disposal, release, or a threatened release or
emission occurring after the date of this Mortgage;

                  C. Any lawsuit brought or threatened, claim asserted, fine or
penalty assessed, settlement reached or government order given relating to
hazardous or toxic substances released or disposed or emitted after the date of
this Mortgage or to the extent any pre-existing condition was exacerbated by the
Mortgagor after the date of this Mortgage; and/or

<PAGE>
                                Page 137 of 272

                  D. Any violation of any law, order, regulation, requirement,
or demand of any government authority, or any policies or requirements of
Mortgagee, which are based upon or in any way related to hazardous or toxic
substances released, disposed or emitted after the date of this Mortgage and to
the extent such violation arose from the exacerbation of any pre-existing
condition by the Mortgagor after the date of this Mortgage.

         8. Unless waived in writing by Mortgagee, the breach of any of the
covenants and warranties contained in this section shall be an event of default
under the Mortgage.

         9. For purposes of this section, "hazardous and toxic substances,"
includes, without limit, asbestos-containing materials, PCBs, petroleum and
petroleum products, any flammable explosives, radioactive materials, hazardous
materials, hazardous wastes, hazardous or toxic substances or related materials
defined in the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended, the Hazardous Materials Transportation Act, as amended,
the New York State Environmental Conservation Law, the Resource Conservation and
Recovery Act, as amended, and the regulations adopted and publications
promulgated pursuant thereto. The provisions of this section shall be in
addition to any other obligations and liabilities Mortgagor may have to
Mortgagee at common law, and shall survive the transactions contemplated herein.

         10. Mortgagor agrees to defend, indemnify and hold harmless the
Mortgagee, its successors and assigns, and its officers, directors, employees
and agents, from and against any loss, damage, fine, penalty or expense
(including reasonable attorneys' fees and reasonable costs of investigation)
incurred as a result of any misrepresentation of Mortgagor herein or breach by
Mortgagor, its successors and assigns, of any covenant herein.

         The foregoing representations, warranties and covenants are subject to
and shall be applied in conjunction with Mortgagee's representations, warranties
and covenants under that Asset Purchase Agreement between Mortgagor as Purchaser
and Mortgagee as Seller and dated August 29, 2000. In the event of a conflict
between the provisions of the two agreements, the Asset Purchase Agreement shall
be controlling.

         TAX ON NOTE. That in the event that hereafter it is claimed by any
governmental agency that any tax or other governmental charge or imposition is
due, unpaid and payable by the Mortgagor or the Mortgagee upon the Note (other
than a tax on the interest receivable by the Mortgagee thereunder), the
Mortgagor will upon sixty (60) days prior written notice either (a) pay such tax
and within a reasonable time thereafter deliver to the Mortgagee satisfactory
proof of payment thereof or (b) deposit with the Mortgagee the amount of such
claimed tax, together with interest and penalties thereon, pending an
application for a review of the claim for such tax, and within a reasonable
time, deliver to the Mortgagee either (i) evidence satisfactory to the Mortgagee
that such claim of taxability has been withdrawn or defeated in which event any
such deposit shall be returned to the Mortgagor or (ii) a direction from the
Mortgagor to the Mortgagee to pay the same out of the deposit above mentioned,
any excess due over the

<PAGE>
                                Page 138 of 272

amount of said deposit to be paid by the Mortgagor directly to the taxing
authority and any excess of such deposit over such payment by the Mortgagee to
be returned to the Mortgagor. Upon the failure of the Mortgagor to comply with
the provisions of this Article, the whole of said principal sum and interest
secured by the Mortgage shall at the option of the Mortgagee become due and
payable. If liability for such tax is asserted against the Mortgagee, the
Mortgagee will give to the Mortgagor prompt notice of such claim, and the
Mortgagor, upon complying with the provisions of this Article, shall have full
right and authority to contest such claim of taxability.

         CONSTRUCTION. The word "Mortgagor" shall be construed as if it read
"Mortgagors" and the "Mortgagee" shall be construed as if it read "Mortgagees"
whenever the sense of the Mortgage so requires. This Mortgage shall be governed
by and construed in accordance with the laws of the State of New York.

         CONFLICT WITH OTHER LOAN AGREEMENTS. Mortgagor represents and warrants
to Mortgagee that the execution and delivery of this Mortgage and all related
documents and the performance of any term, covenant, condition herein provided
in any agreement or instrument executed in connection therewith, are within
Mortgagor's power as a New York limited liability company, have been duly
authorized on behalf of the Mortgagor by all proper and necessary action, and
are not in conflict with, or result in any breach of, or constitute a default
under or violate:

                  A. Mortgagor's Articles of Organization or Operating
Agreement; or

                  B. Any of the terms, conditions, or provisions of any
agreement, lease or other instrument to which Mortgagor is a party or subject
to; or

                  C. Any law, regulation, order, writ, injunction or decree to
which Mortgagor is subject or any rules or regulations of any administrative
agency which have jurisdiction over Mortgagor or over any property of Mortgagor
that would have a material adverse affect on Mortgagor's business or financial
condition.

         SEVERABILITY. In the event any one or more of the provisions of the
Mortgage or the Note shall for any reason be invalid, illegal or unenforceable
in whole or in part, then only such provision or provisions shall be deemed to
be null and void and of no force or effect, but shall not affect any other
provision of the Mortgage or the Note.

         MARGINAL NOTES OR CAPTIONS. The marginal notes or captions herein are
inserted only as a matter of convenience and for reference and are not and shall
not be deemed to be any part of the Mortgage.

         IN WITNESS WHEREOF, the Mortgage has been duly executed by the
Mortgagor, the day and year first above written.

<PAGE>
                                Page 139 of 272

                                            MONROE BREWING CO., LLC

                                            By: /s/ Samuel T. Hubbard, Jr.
                                               ---------------------------------
                                                Samuel T. Hubbard, Jr.
                                                President

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

         On the 15th of December in the year 2000 before me, the undersigned, a
Notary Public in and for said State, personally appeared Samuel T. Hubbard, Jr.,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.

                                               --------------------------------
                                               Notary Public

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