MORTGAGE, ASSIGNMENT OF RENTS & LEASES, SECURITY AGREEMENT AND FIXTURE FILING

 

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                                                                 EXHIBIT 10.34.4

 

                THIS MORTGAGE IS SUBJECT TO ARBITRATION PURSUANT

           TO THE FEDERAL ARBITRATION ACT AND/OR Section 15-48-10 OF

               THE SOUTH CAROLINA CODE OF LAWS (1976), AS AMENDED

 

STATE OF SOUTH CAROLINA    )      MORTGAGE, ASSIGNMENT OF RENTS AND

                          )      LEASES, SECURITY AGREEMENT AND

COUNTY OF HORRY            )      FIXTURE FILING

 

      THE COLLATERAL SUBJECT TO THIS MORTGAGE, ASSIGNMENT OF RENTS AND LEASES,

      SECURITY AGREEMENT AND FIXTURE FILING INCLUDES GOODS THAT ARE OR ARE TO

      BECOME FIXTURES.

 

      THIS MORTGAGE, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT AND

      FIXTURE FILING IS TO BE FILED IN THE REAL PROPERTY RECORDS FOR HORRY

      COUNTY, AND SHALL SERVE AS A FIXTURE FILING FINANCING STATEMENT

 

      THIS INSTRUMENT IS A CONSTRUCTION MORTGAGE WITHIN THE MEANING OF SECTION

      36-9-334(h) OF THE CODE OF LAWS OF SOUTH CAROLINA, 1976 (Revised 2003), AS

      AMENDED, AND SECURES AN OBLIGATION INCURRED FOR THE CONSTRUCTION OF AN

      IMPROVEMENT UPON LAND.

 

            THE PROMISSORY NOTE (DEFINED BELOW) SECURED BY THIS INSTRUMENT

            PROVIDES FOR A VARIABLE RATE OF INTEREST ON THE SECURED INDEBTEDNESS

            (DEFINED BELOW).

 

(This Document Serves as a Fixture Filing under Section 36-9-502 of the South

Carolina Uniform Commercial Code.)

 

Mortgagor's Organizational Identification Number: 20-0785850

 

      THIS MORTGAGE, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT AND

FIXTURE FILING (this "Mortgage") is made this 27th day of April 2005, by GRANDE

PALMS, L.L.C., having a notice address 545 E. John Carpenter Freeway, Suite

1300, Irving, Texas 75062-3933 ("Mortgagor"), for the benefit of BANK OF

AMERICA, N.A., having a notice address at 200 Meeting Street, Suite 104,

Charleston, South Carolina 29401, as Administrative Agent under the Loan

Agreement on behalf of the Lenders (as defined in the Loan Agreement) (together

with its successors and assigns, "Mortgagee").

 

                                    ARTICLE 1

 

               Definitions: Granting Clauses; Secured Indebtedness

 

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      Section 1.1 Principal Secured. This Mortgage secures the aggregate

principal amount of Sixty-Nine Million, Eight Hundred Thousand and No/100

Dollars ($69,800,000.00) plus other obligations as provided herein and such

additional amounts as Mortgagee may from time to time advance pursuant to the

terms and conditions of this Mortgage or for the protection of the lien of this

Mortgage, together with interest thereon.

 

      Section 1.2 Definitions.

 

      (a) In addition to other terms defined herein, each of the following terms

shall have the meaning assigned to it, such definitions to be applicable equally

to the singular and the plural forms of such terms and to all genders:

 

      "Loan Agreement": That certain Construction Loan Agreement by and among

Mortgagor, as Borrower, Mortgagee, as Administrative Agent, and certain Lenders

described therein (the "Lenders").

 

      "Mortgagee": Bank of America, N.A. as Administrative Agent under the Loan

Agreement for the benefit of the Lender (as defined in the Loan Agreement), its

successors and assigns, whose place of business is 200 Meeting Street, Suite

104, Charleston, South Carolina 29401, Attention: Loan Administration Section,

Real Estate Banking Group, Location Code SC1300-01-03.

 

      "Mortgagor": Grande Palms, L.L.C., whose address is 545 E. John Carpenter

Freeway, Suite 1300, Irving, Texas 75062-3933 and its permitted successors and

assigns.

 

      "Promissory Note": means those certain promissory notes designated

"Promissory Note (Name of Lender)" dated of even date herewith made by Mortgagor

and payable to the order of particular Lenders in the aggregate principal face

amount of Sixty-Nine Million, Eight Hundred Thousand and No/100 Dollars

($69,800,000.00), each bearing interest as therein provided, containing a

provision for, among other things, the payment of attorneys' fees (such

promissory notes, as each may hereafter be renewed, extended, supplemented,

increased or modified and in effect from time to time, and all other notes given

in substitution therefor, or in modification, renewal, or extension thereof, in

whole or in part).

 

      "Swap Transaction": means any agreement, whether or not in writing,

relating to any transaction that is a rate swap, basis swap, forward rate

transaction, commodity swap, commodity option, equity or equity index swap or

option, bond, note or bill option, interest rate option, forward foreign

exchange transaction, cap, collar or floor transaction, currency swap,

cross-currency rate swap, swap option currency option or any other, similar

transaction (including any option to enter into any of the foregoing) or any

combination of the foregoing, and, unless the context otherwise clearly

requires, any form of master agreement (the "Master Agreement") published by the

International Swaps and Derivatives Association, Inc., or any other master

agreement, entered into between Holder (or its affiliates) and Mortgagor,

together with any related schedules, as amended, supplemented, superseded or

replaced from time to time, relating to or governing any or all of the

foregoing.

 

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      (b) Any term used or defined in the South Carolina Uniform Commercial

Code, as in effect from time to time, and not defined in this Mortgage has the

meaning given to the term in the South Carolina Uniform Commercial Code, as in

effect from time to time, when used in this Mortgage; provided, however, if a

term is defined in Chapter 9 of the South Carolina Uniform Commercial Code

differently than in another chapter of the South Carolina Uniform Commercial

Code, the term has the meaning specified in Chapter 9.

 

      Section 1.3 Granting Clause. To secure and enforce the payment and

performance of the following promissory notes, obligations, indebtedness, duties

and liabilities and all renewals, extensions, supplements, increases and

modifications thereof in whole or in part from time to time (collectively, the

"Secured Indebtedness"): (A) the performance and observance by Mortgagor of all

covenants and conditions contained in the Promissory Note, and all other

promissory notes given in substitution therefor or in modification, supplement,

increase, renewal or extension thereof, in whole or in part (such promissory

note or promissory notes whether one or more, as from time to time renewed,

extended, supplemented, increased or modified, being hereinafter called the

"Note" and Mortgagee, or the subsequent holder at the time in question of the

Note or any of the Secured Indebtedness, as hereinafter defined, being herein

collectively called "Holder"), in this Mortgage, and in all other instruments

securing the Note; and (B) all indebtedness, liabilities, duties, covenants,

promises and other obligations whether joint or several, direct or indirect,

fixed or contingent, liquidated or unliquidated, and the collection of all such

amounts, owed by Mortgagor to Holder now or hereafter incurred or arising

pursuant to or permitted by the provisions of the Note, this Mortgage, or any

other document now or hereafter evidencing, governing, guaranteeing, securing or

otherwise executed in connection with the loan evidenced by the Note, including

but not limited to any loan or credit agreement, letter of credit or

reimbursement agreement, tri-party financing agreement, Master Agreement

relating to any Swap Transactions or other agreement between Mortgagor and

Holder, or among Mortgagor, Holder and any other party or parties, pertaining to

the repayment or use of the proceeds of the loan evidenced by the Note (the

Note, this Mortgage, any Master Agreement relating to any Swap Transactions and

such other documents, as they or any of them may have been or may be from time

to time renewed, extended, supplemented, increased or modified, being herein

sometimes collectively called the "Loan Documents"); (C) any and all other loans

made by Holder to Mortgagor and all other debts, obligations and liabilities of

Mortgagor of every kind and character now or hereafter existing in favor of

Holder, whether direct or indirect, primary or secondary, joint or several,

fixed or contingent, secured or unsecured, and whether originally payable to

Holder or to a third party and subsequently acquired by Holder, it being

contemplated that Mortgagor may hereafter become indebted to Holder for such

further debts, obligations and liabilities; provided, however, and

notwithstanding the foregoing provisions of this clause (c), this Mortgage shall

not secure any such other loan, advance, debt, obligation or liability with

respect to which Holder is by applicable law prohibited from obtaining a lien on

real estate nor shall this clause (c) operate or be effective to constitute or

require any assumption or payment by any person, in any way, of any debt of any

other person to the extent that the same would violate or exceed the limit

provided in any applicable usury or other law; and (D) also to secure in

accordance with Section 29-3-50, as amended, Code of Laws of South Carolina

1976, all future advances and readvances that may subsequently be made to

Mortgagor by the Holder, evidenced by the Note, or any other promissory notes,

and all renewals and extensions thereof-, provided, however, that nothing

contained herein shall create an obligation on the part of Holder to make

 

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future advances or readvances to Mortgagor, the maximum amount of all

indebtedness outstanding at any one time secured hereby not to exceed twice the

face amount of the Promissory Note, plus interest thereon, all charges and

expenses of collection incurred by Holder, including court costs, and reasonable

attorneys' fees; and (E) also in order to charge the properties, interests and

rights hereinafter described with such payment, performance and observance; and

(F) for and in consideration of the sum of One and No/100 ($1.00) Dollar paid by

Holder to Mortgagor this date, and for other valuable consideration, the receipt

of which is acknowledged, Mortgagor does hereby grant, bargain, sell, alien,

remise, release, convey, assign, transfer, mortgage, hypothecate, pledge,

deliver, set over, warrant and confirm unto Holder, its successors and assigns

forever all right, title and interest of Mortgagor in and to the following: (a)

the real property described in Exhibit A which is attached hereto and

incorporated herein by reference (the "Land") together with: (i) any and all

buildings, structures, improvements, alterations or appurtenances now or

hereafter situated or to be situated on the Land (collectively the

"Improvements"); and (ii) all right, title and interest of Mortgagor, now owned

or hereafter acquired, in and to (1) all streets, roads, alleys, easements,

rights-of-way, licenses, rights of ingress and egress, vehicle parking rights

and public places, existing or proposed, abutting, adjacent, used in connection

with or pertaining to the Land or the Improvements; (2) any strips or gores

between the Land and abutting or adjacent properties; (3) all options to

purchase the Land or the Improvements or any portion thereof or interest

therein, and any greater estate in the Land or the Improvements; and (4) all

water and water rights, timber, crops and mineral interests on or pertaining to

the Land (the Land, Improvements and other rights, titles and interests referred

to in this clause (a) being herein sometimes collectively called the

"Premises"); (b) all fixtures, equipment, systems, machinery, furniture,

furnishings, appliances, inventory, goods, building and construction materials,

supplies, and articles of personal property, of every kind and character,

tangible and intangible (including software embedded therein), now owned or

hereafter acquired by Mortgagor, which are now or hereafter attached to or

situated in, on or about the Land or the Improvements, or used in or necessary

to the complete and proper planning, development, use, occupancy or operation

thereof, or acquired (whether delivered to the Land or stored elsewhere) for use

or installation in or on the Land or the Improvements, and all renewals and

replacements of, substitutions for and additions to the foregoing (the

properties referred to in this clause (b) being herein sometimes collectively

called the "Accessories," all of which are hereby declared to be permanent

accessions to the Land); (c) all (i) plans and specifications for the

Improvements; (ii) Mortgagor's rights, but not liability for any breach by

Mortgagor, under all commitments (including any commitment for financing to pay

any of the Secured Indebtedness, as defined below), insurance policies, (or

additional or supplemental coverage related thereto, including from an insurance

provider meeting the requirements of the Loan Documents or from or through any

state or federal government sponsored program or entity), Swap Transactions (as

hereinbefore defined), contracts and agreements for the design, construction,

operation or inspection of the Improvements and other contracts and general

intangibles (including but not limited to payment intangibles, trademarks, trade

names, goodwill, software and symbols) related to the Premises or the

Accessories or the operation thereof; (iii) deposits and deposit accounts

arising from or related to any transactions related to the Premises or the

Accessories (including but not limited to Mortgagor's rights in tenants'

security deposits, deposits with respect to utility services to the Premises,

and any deposits, deposit accounts or reserves hereunder or under any other Loan

Documents for taxes, insurance or otherwise), rebates or refunds of impact fees

or other taxes, assessments or charges, money, accounts

 

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(including deposit accounts), instruments, documents, promissory notes and

chattel paper (whether tangible or electronic) arising from or by virtue of any

transactions related to the Premises or the Accessories and any account or

deposit account from which Mortgagor may from time to time authorize Holder to

debit and/or credit payments due with respect to the Loan or any Swap

Transaction, all rights to the payment of money from Holder under any Swap

Transaction, and all accounts, deposit accounts and general intangibles,

including payment intangibles, described in any Swap Transaction; (iv) permits,

licenses, franchises, certificates, development rights, commitments and rights

for utilities, and other rights and privileges obtained in connection with the

Premises or the Accessories; (v) leases, rents, royalties, bonuses, issues,

profits, revenues and other benefits of the Premises and the Accessories

(without derogation of Article 3 hereof); (vi) as-extracted collateral produced

from or allocated to the Land including, without limitation, oil, gas and other

hydrocarbons and other minerals and all products processed or obtained

therefrom, and the proceeds thereof, and (vii) engineering, accounting, title,

legal, and other technical or business data concerning the Property which are in

the possession of Mortgagor or in which Mortgagor can otherwise grant a security

interest; and (d) all (i) accounts and proceeds (cash or non-cash and including

payment intangibles) of or arising from the properties, rights, titles and

interests referred to above in this Section 1.3, including but not limited to

proceeds of any sale, lease or other disposition thereof, proceeds of each

policy of insurance (or additional or supplemental coverage related thereto,

including from an insurance provider meeting the requirements of the Loan

Documents or from or through any state or federal government sponsored program

or entity) relating thereto (including premium refunds), proceeds of the taking

thereof or of any rights appurtenant thereto, including change of grade of

streets, curb cuts or other rights of access, by condemnation, eminent domain or

transfer in lieu thereof for public or quasi-public use under any law, and

proceeds arising out of any damage thereto; (ii) all letter-of-credit rights

(whether or not the letter of credit is evidenced by a writing) Mortgagor now

has or hereafter acquires relating to the properties, rights, titles and

interests referred to in this Section 1.3; (iii) all commercial tort claims

Mortgagor now has or hereafter acquires relating to the properties, rights,

titles and interests referred to in this Section 1.3; and (iv) other interests

of every kind and character which Mortgagor now has or hereafter acquires in, to

or for the benefit of the properties, rights, titles and interests referred to

above in this Section 1.3 and all property used or useful in connection

therewith, including but not limited to rights of ingress and egress and

remainders, reversions and reversionary rights or interests; and if the estate

of Mortgagor in any of the property referred to above in this Section 1.3 is a

leasehold estate, this conveyance shall include, and the lien and security

interest created hereby shall encumber and extend to, all other or additional

title, estates, interests or rights which are now owned or may hereafter be

acquired by Mortgagor in or to the property demised under the lease creating the

leasehold estate; TO HAVE AND TO HOLD the foregoing rights, interests and

properties, together with all rights, estates, powers, privileges,

hereditaments, easements and appurtenances thereto (herein collectively called

the "Property") to the Holder and the Holder's successors and assigns to secure

the obligations of Grantor under the Note and Loan Documents and all other

indebtedness and matters defined as secured.

 

      Section 1.4 Security Interest. Mortgagor hereby grants to Holder a

security interest in all of the Property which constitutes personal property or

fixtures, all proceeds and products thereof, and all supporting obligations

ancillary to or arising in any way in connection therewith (herein sometimes

collectively called the "Collateral") to secure the obligations of Mortgagor

 

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under the Note and Loan Documents and all other indebtedness and matters defined

as Secured Indebtedness in Section 1.3 of this Mortgage. In addition to its

rights hereunder or otherwise, Holder shall have all of the rights of a secured

party under the South Carolina Uniform Commercial Code, as in effect from time

to time, or under the Uniform Commercial Code in force, from time to time, in

any other state to the extent the same is applicable law. It is intended that as

to the Collateral this Mortgage shall be effective as a financing statement

filed as a fixture filing from the date of its filing for record in the real

estate records of the county in which the Land is located. Information

concerning the security interest created by this instrument may be obtained from

the Holder as secured party or the Mortgagor as debtor at the addresses shown

herein.

 

                                    ARTICLE 2

 

                    Representations, Warranties and Covenants

 

      Section 2.1 Mortgagor represents, warrants, and covenants as follows:

 

      (a) Payment and Performance. Mortgagor will make due and punctual payment

of the Secured Indebtedness. Mortgagor will timely and properly perform and

comply with all of the covenants, agreements, and conditions imposed upon it by

this Mortgage and the other Loan Documents and will not permit a default to

occur hereunder or thereunder. Time shall be of the essence in this Mortgage.

 

      (b) Title and Permitted Encumbrances. Mortgagor has, in Mortgagor's own

right, and Mortgagor covenants to maintain, lawful, good and marketable title to

the Property, is lawfully seized and possessed of the Property and every part

thereof, and has the right to convey the same, free and clear of all liens,

charges, claims, security interests, and encumbrances except for (i) the

matters, if any, set forth under the heading "Permitted Encumbrances" in Exhibit

B hereto, which are Permitted Encumbrances only to the extent the same are valid

and subsisting and affect the Property, (ii) the liens and security interests

evidenced by this Mortgage, (iii) statutory liens for real estate taxes and

assessments on the Property which are not yet due and payable, and (iv) other

liens and security interests (if any) in favor of Mortgagee (the matters

described in the foregoing clauses (i), (ii), (iii) and (iv) being herein called

the "Permitted Encumbrances"). Mortgagor, and Mortgagor's successors and

assigns, will warrant generally and forever defend title to the Property,

subject as aforesaid, to Holder and its successors or substitutes and assigns,

against the claims and demands of all persons claiming or to claim the same or

any part thereof. Mortgagor will punctually pay, perform, observe and keep all

covenants, obligations and conditions in or pursuant to any Permitted

Encumbrance and will not modify or permit modification of any Permitted

Encumbrance without the prior written consent of Holder. Inclusion of any matter

as a Permitted Encumbrance does not constitute approval or waiver by Holder of

any existing or future violation or other breach thereof by Mortgagor, by the

Property or otherwise. No part of the Property constitutes all or any part of

the principal residence of Mortgagor if Mortgagor is an individual. If any right

or interest of Holder in the Property or any part thereof shall be endangered or

questioned or shall be attacked directly or indirectly, Holder (whether or not

named as party to legal proceedings with respect thereto), is hereby authorized

and empowered to take such steps as in its discretion may be proper for the

defense of any such legal proceedings or the protection of such right or

interest of Holder, including but not limited

 

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to the employment of independent counsel, the prosecution or defense of

litigation, and the compromise or discharge of adverse claims. All expenditures

so made of every kind and character shall be a demand obligation (which

obligation Mortgagor hereby promises to pay) owing by Mortgagor to Holder, and

the Holder shall be subrogated to all rights of the person receiving such

payment.

 

      (c) Taxes and Other Impositions. Mortgagor will pay, or cause to be paid,

all taxes, assessments and other charges or levies imposed upon or against or

with respect to the Property or the ownership, use, occupancy or enjoyment of

any portion thereof, or any utility service thereto, as the same become due and

payable, including but not limited to all real estate taxes assessed against the

Property or any part thereof, and shall deliver promptly to Holder such evidence

of the payment thereof as Holder may require.

 

      (d) Insurance. Mortgagor shall obtain and maintain at Mortgagor's sole

expense: (1) mortgagee title insurance issued to Holder covering the Premises as

required by Holder without exception for mechanics' liens; (2) property

insurance with respect to all insurable Property, against loss or damage by

fire, lightning, windstorm, explosion, hail, tornado and such additional hazards

as are presently included in "Special Form" (also known as "all-risk") coverage

and such other insurable hazards as Holder may require (provided, however, that

Administrative Agent has waived the requirement for insurance covering loss from

terrorist acts to the extent such coverage is unavailable without payment of an

additional premium amount), in an amount not less than 100% of the full

replacement cost, including the cost of debris removal, without deduction for

depreciation and sufficient to prevent Mortgagor and Holder from becoming a

coinsurer, such insurance to be in "builder's risk" completed value

(non-reporting) form during and with respect to any construction on the

Premises; (3) if and to the extent any portion of the Improvements is, under the

Flood Disaster Protection Act of 1973 ("FDPA"), as it may be amended from time

to time, in a Special Flood Hazard Area, within a Flood Zone designated A or V

in a participating community, a flood insurance policy in an amount required by

Holder, but in no event less than the amount sufficient to meet the requirements

of applicable law and the FDPA, as such requirements may from time to time be in

effect; (4) general liability insurance, on an "occurrence" basis, against

claims for "personal injury" liability, including bodily injury, death or

property damage liability, for the benefit of Mortgagor as named insured and

Holder as additional insured; (5) statutory workers' compensation insurance with

respect to any work on or about the Premises (including employer's liability

insurance, if required by Holder), covering all employees of Mortgagor and any

contractor; (6) if there is a general contractor, commercial general liability

insurance, including products and completed operations coverage, and in other

respects similar to that described in clause (4) above, for the benefit of the

general contractor as named insured and Mortgagor and Holder as additional

insureds, in addition to statutory workers' compensation insurance with respect

to any work on or about the Premises (including employer's liability insurance,

if required by Holder), covering all employees of the general contractor and any

contractor; and (7) such other insurance on the Property and endorsements as may

from time to time be required by Holder (including but not limited to soft cost

coverage, automobile liability insurance, business interruption insurance or

delayed rental insurance, boiler and machinery insurance, earthquake insurance,

wind insurance, sinkhole coverage, and/or permit to occupy endorsement) and

against other insurable hazards or casualties which at the time are commonly

insured against in the case of premises similarly situated, due regard being

given to

 

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the height, type, construction, location, use and occupancy of buildings and

improvements. All insurance policies shall be issued and maintained by insurers,

in amounts, with deductibles, limits and retentions, and in forms satisfactory

to Holder, and shall require not less than ten (10) days' prior written notice

to Holder of any cancellation for nonpayment of premiums, and not less than

thirty (30) days' prior written notice to Holder of any other cancellation or

any change of coverage. All insurance companies must be licensed to do business

in the state in which the Property is located and must have an A.M. Best Company

financial and performance ratings of A-:IX or better. All insurance policies

maintained, or caused to be maintained, by Mortgagor with respect to the

Property, except for general liability insurance, shall provide that each such

policy shall be primary without right of contribution from any other insurance

that may be carried by Mortgagor or Holder and that all of the provisions

thereof, except the limits of liability, shall operate in the same manner as if

there were a separate policy covering each insured. If any insurer which has

issued a policy of title, hazard, liability or other insurance required pursuant

to this Mortgage or any other Loan Document becomes insolvent or the subject of

any petition, case, proceeding or other action pursuant to any Debtor Relief

Law, or if in Holder's reasonable opinion the financial responsibility of such

insurer is or becomes inadequate, Mortgagor shall, in each instance promptly

upon its discovery thereof or upon the request of Holder therefor, and at

Mortgagor's expense, promptly obtain and deliver to Holder a like policy (or, if

and to the extent permitted by Holder, acceptable evidence of insurance) issued

by another insurer, which insurer and policy meet the requirements of this

Mortgage or such other Loan Document, as the case may be. Without limiting the

discretion of Holder with respect to required endorsements to insurance

policies, all such policies for loss of or damage to the Property shall contain

a standard mortgagee clause (without contribution) naming Holder as mortgagee

with loss proceeds payable to Holder notwithstanding (i) any act, failure to act

or negligence of or violation of any warranty, declaration or condition

contained in any such policy by any named or additional insured; (ii) the

occupation or use of the Property for purposes more hazardous than permitted by

the terms of any such policy; (iii) any foreclosure or other action by Holder

under the Loan Documents; or (iv) any change in title to or ownership of the

Property or any portion thereof, such proceeds to be held for application as

provided in the Loan Documents. The originals of each initial insurance policy

(or to the extent permitted by Holder, a copy of the original policy and such

evidence of insurance acceptable to Holder) shall be delivered to Holder at the

time of execution of this Mortgage, with all premiums fully paid current, and

each renewal or substitute policy (or evidence of insurance) shall be delivered

to Holder, with a-11 premiums fully paid current, at least ten (10) days before

the termination of the policy it renews or replaces. Mortgagor shall pay all

premiums on policies required hereunder as they become due and payable and

promptly deliver to Holder evidence satisfactory to Holder of the timely payment

thereof. If any loss occurs at any time when Mortgagor has failed to perform

Mortgagor's covenants and agreements in this paragraph with respect to any

insurance payable because of loss sustained to any part of the Property whether

or not such insurance is required by Holder, Holder shall nevertheless be

entitled to the benefit of all insurance covering the loss and held by or for

Mortgagor, to the same extent as if it had been made payable to Holder. Upon any

foreclosure hereof or transfer of title to the Property in extinguishment of the

whole or any part of the Secured Indebtedness, all of Mortgagor's right, title

and interest in and to the insurance policies referred to in this Section

(including unearned premiums) and all proceeds payable thereunder shall

thereupon vest in the purchaser at foreclosure or other such transferee, to the

extent permissible under such policies. Holder shall have the right (but not the

obligation) to

 

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make proof of loss for, settle and adjust any claim under, and receive the

proceeds of, all insurance for loss of or damage to the Property regardless of

whether or not such insurance policies are required by Holder, and the expenses

incurred by Holder in the adjustment and collection of insurance proceeds shall

be a part of the Secured Indebtedness and shall be due and payable to Holder on

demand. Holder shall not be, under any circumstances, liable or responsible for

failure to collect or exercise diligence in the collection of any of such

proceeds or for the obtaining, maintaining or adequacy of any insurance or for

failure to see to the proper application of any amount paid over to Mortgagor.

Any such proceeds received by Holder shall, after deduction therefrom of all

reasonable expenses actually incurred by Holder, including attorneys' fees, at

Holder's option be (1) released to Mortgagor, or (2) applied (upon compliance

with such terms and conditions as may be required by Holder) to repair or

restoration, either partly or entirely, of the Property so damaged, or (3)

applied to the payment of the Secured Indebtedness in such order and manner as

Holder, in its sole discretion, may elect, whether or not due. In any event, the

unpaid portion of the Secured Indebtedness shall remain in full force and effect

and the payment thereof shall not be excused. Mortgagor shall at all times

comply with the requirements of the insurance policies required hereunder and of

the issuers of such policies and of any board of fire underwriters or similar

body as applicable to or affecting the Property.

 

      (e) Reserved.

 

      (f) Condemnation. Mortgagor shall notify Holder immediately of any

threatened or pending proceeding for condemnation affecting the Property or

arising out of damage to the Property, and Mortgagor shall, at Mortgagor's

expense, diligently prosecute any such proceedings. Holder shall have the right

(but not the obligation) to participate in any such proceeding and to be

represented by counsel of its own choice. Holder shall be entitled to receive

all sums which may be awarded or become payable to Mortgagor for the

condemnation of the Property, or any part thereof, for public or quasi-public

use, or by virtue of private sale in lieu thereof, and any. sums which may be

awarded or become payable to Mortgagor for injury or damage to the Property.

Mortgagor shall, promptly upon request of Holder, execute such additional

assignments and other documents as may be necessary from time to time to permit

such participation and to enable Holder to collect and receipt for any such

sums. All such sums are hereby assigned to Holder, and shall, after deduction

therefrom of all reasonable expenses actually incurred by Holder, including

attorneys' fees, at Holder's option be (1) released to Mortgagor, or (2) applied

(upon compliance with such terms and conditions as may be required by Holder) to

repair or restoration of the Property so affected, or (3) applied to the payment

of the Secured Indebtedness in such order and manner as Holder, in its sole

discretion, may elect, whether or not due. In any event the unpaid portion of

the Secured Indebtedness shall remain in full force and effect and the payment

thereof shall not be excused. Holder shall not be, under any circumstances,

liable or responsible for failure to collect or to exercise diligence in the

collection of any such sum or for failure to see to the proper application of

any amount paid over to Mortgagor. Holder is hereby authorized, in the name of

Mortgagor, to execute and deliver valid acquittances for, and to appeal from,

any such award, judgment or decree. All costs and expenses (including but not

limited to attorneys' fees) incurred by Holder in connection with any

condemnation shall be a demand obligation owing by Mortgagor (which Mortgagor

hereby promises to pay) to Holder pursuant to this Mortgage.

 

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<PAGE>

 

      (g) Compliance with Legal Requirements. The Property and the use,

operation and maintenance thereof and all activities thereon do and shall at all

times comply with all applicable Legal Requirements (hereinafter defined). The

Property is not, and shall not be, dependent on any other property or premises

or any interest therein other than the Property to fulfill any requirement of

any Legal Requirement. Mortgagor shall not, by act or omission, permit any

building or other improvement not subject to the lien of this Mortgage to rely

on the Property or any interest therein to fulfill any requirement of any Legal

Requirement. No improvement upon or use of any part of the Property constitutes

a nonconforming use under any zoning law or similar law or ordinance. Mortgagor

has obtained and shall preserve in force all requisite zoning, utility,

building, health, environmental and operating permits from the governmental

authorities having jurisdiction over the Property.

 

If Mortgagor receives a notice or claim from any person that the Property, or

any use, activity, operation or maintenance thereof or thereon, is not in

compliance with any Legal Requirement, Mortgagor will promptly furnish a copy of

such notice or claim to Holder. As of the date of this Mortgage, Mortgagor has

received no notice and has no knowledge of any such noncompliance. As used in

this Mortgage: (1) the term "Legal Requirement" means any Law (hereinafter

defined), agreement, covenant, restriction, easement or condition (including,

without limitation of the foregoing, any condition or requirement imposed by any

insurance or surety company), as any of the same now exists or may be changed or

amended or come into effect in the future; and (ii) the term "Law" means any

federal, state or local law, statute, ordinance, code, rule, regulation,

license, permit, authorization, decision, order, injunction or decree, domestic

or foreign.

 

      (h) Maintenance, Repair and Restoration. Mortgagor will keep the Property

in first class order, repair, operating condition and appearance, causing all

necessary repairs, renewals, replacements, additions and improvements to be

promptly made, and will not allow any of the Property to be misused, abused or

wasted or to deteriorate. Notwithstanding the foregoing, Mortgagor will not,

without the prior written consent of Holder, (1) remove from the Property any

fixtures or personal property encumbered by this Mortgage except such as is

replaced by Mortgagor by an article of equal suitability and value, owned by

Mortgagor, free and clear of any lien or security interest (except that created

by this Mortgage), or (ii) make any structural alteration to the Property or any

other alteration thereto which impairs the value thereof. If any act or

occurrence of any kind or nature (including any condemnation or any casualty for

which insurance was not obtained or obtainable) shall result in damage to or

loss or destruction of the Property, Mortgagor shall give prompt notice thereof

to Holder and Mortgagor shall promptly, at Mortgagor's sole cost and expense and

regardless of whether insurance or condemnation proceeds (if any) shall be

available or sufficient for the purpose, secure the Property as necessary and

commence and continue diligently to completion to restore, repair, replace and

rebuild the Property as nearly as possible to its value, condition and character

immediately prior to the damage, loss or destruction.

 

       (i) No Other Liens. Mortgagor will not, without the prior written consent

of Holder, create, place or permit to be created or placed, or through any act

or failure to act, acquiesce in the placing of, or allow to remain, any

mortgage, voluntary or involuntary lien, whether statutory, constitutional or

contractual, security interest, encumbrance or charge, or conditional sale or

other title retention document, against or covering the Property, or any part

thereof, other

 

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<PAGE>

 

than the Permitted Encumbrances, regardless of whether the same are expressly or

otherwise subordinate to the lien or security interest created in this Mortgage,

and should any of the foregoing become attached hereafter in any manner to any

part of the Property without the prior written consent of Holder, Mortgagor will

cause the same to be promptly discharged and released. Mortgagor will own all

parts of the Property and will not acquire any fixtures, equipment or other

property (including software embedded therein) forming a part of the Property

pursuant to a lease, license, security agreement or similar agreement, whereby

any party has or may obtain the right to repossess or remove same, without the

prior written consent of Holder. If Holder consents to the voluntary grant by

Mortgagor of any mortgage, lien, security interest, or other encumbrance

(hereinafter called "Subordinate Lien") covering any of the Property or if the

foregoing prohibition is determined by a court of competent jurisdiction to be

unenforceable as to a Subordinate Lien, any such Subordinate Lien shall contain

express covenants to the effect that: (1) the Subordinate Lien is

unconditionally subordinate to this Mortgage and all Leases (hereinafter

defined); (2) if any action (whether judicial or pursuant to a power of sale)

shall be instituted to foreclose or otherwise enforce the Subordinate Lien, no

tenant of any of the Leases (hereinafter defined) shall be named as a party

defendant, and no action shall be taken that would terminate any occupancy or

tenancy without the prior written consent of Holder; (3) Rents (hereinafter

defined), if collected by or for the holder of the Subordinate Lien, shall be

applied first to the payment of the Secured Indebtedness then due and expenses

incurred in the ownership, operation and maintenance of the Property in such

order as Holder may determine, prior to being applied to any indebtedness

secured by the Subordinate Lien; (4) written notice of default under the

Subordinate Lien and written notice of the commencement of any action (whether

judicial or pursuant to a power of sale) to foreclose or otherwise enforce the

Subordinate Lien or to seek the appointment of a receiver for all or any part of

the Property shall be given to Holder with or immediately after the occurrence

of any such default or commencement; and (5) neither the holder of the

Subordinate Lien, nor any purchaser at foreclosure thereunder, nor anyone

claiming by, through or under any of them shall succeed to any of Mortgagor's

rights hereunder without the prior written consent of Holder.

 

      (j) Operation of Property. Mortgagor will operate the Property in a good

and workmanlike manner and in accordance with all Legal Requirements and will

pay all fees or charges of any kind in connection therewith. Mortgagor will keep

the Property occupied so as not to impair the insurance carried thereon.

Mortgagor will not use or occupy or conduct any activity on, or allow the use or

occupancy of or the conduct of any activity on, the Property in any manner which

violates any Legal Requirement or which constitutes a public or private nuisance

or which makes void, voidable or cancelable, or increases the premium of, any

insurance then in force with respect thereto. Mortgagor will not initiate or

permit any zoning reclassification of the Property or seek any variance under

existing zoning ordinances applicable to the Property or use or permit the use

of the Property in such a manner which would result in such use becoming a

nonconforming use under applicable zoning ordinances or other Legal Requirement.

Mortgagor will not impose any easement, restrictive covenant or encumbrance upon

the Property, execute or file any subdivision plat or condominium declaration

affecting the Property or consent to the annexation of the Property to any

municipality, without the prior written consent of Holder. Mortgagor will not do

or suffer to be done any act whereby the value of any part of the Property may

be lessened. Mortgagor will preserve, protect, renew, extend and retain all

material rights and privileges granted for or applicable to the Property.

Without the

 

                                       11

<PAGE>

 

prior written consent of Holder, there shall be no drilling or exploration for

or extraction, removal or production of any mineral, hydrocarbon, gas, natural

element, compound or substance (including sand and gravel) from the surface or

subsurface of the Land regardless of the depth thereof or the method of mining

or extraction thereof Mortgagor will cause all debts and liabilities of any

character (including without limitation all debts and liabilities for labor,

material and equipment (including software embedded therein) and all debts and

charges for utilities servicing the Property) incurred in the construction,

maintenance, operation and development of the Property to be promptly paid.

 

      (k) Financial Matters. Mortgagor is solvent after giving effect to all

borrowings contemplated by the Loan Documents and no proceeding under any Debtor

Relief Law (hereinafter defined) is pending (or, to Mortgagor's knowledge,

threatened) by or against Mortgagor, or any affiliate of Mortgagor, as a debtor.

All reports, statements, plans, budgets, applications, agreements and other data

and information heretofore furnished or hereafter to be furnished by or on

behalf of Mortgagor to Holder in connection with the loan or loans evidenced by

the Loan Documents (including, without limitation, all financial statements and

financial information) are and will be true, correct and complete in all

material respects as of their respective dates and do not and will not omit to

state any fact or circumstance necessary to make the statements contained

therein not misleading. No material adverse change has occurred since the dates

of such reports, statements and other data in the financial condition of

Mortgagor or, to Mortgagor's knowledge, of any tenant under any lease described

therein. For the purposes of this paragraph, "Mortgagor" shall also include any

person liable directly or indirectly for the Secured Indebtedness or any part

thereof and any joint venturer or general partner of Mortgagor.

 

      (l) Status of Mortgagor; Suits and Claims; Loan Documents. If Mortgagor is

a corporation, partnership, limited liability company, or other legal entity,

Mortgagor is and will continue to be (1) duly organized, validly existing and in

good standing under the laws of its state of organization, (ii) authorized to do

business in, and in good standing in, each state in which the Property is

located, and (iii) possessed of all requisite power and authority to carry on

its business and to own and operate the Property. Each Loan Document executed by

Mortgagor has been duly authorized, executed and delivered by Mortgagor, and the

obligations thereunder and the performance thereof by Mortgagor in accordance

with their terms are and will continue to be within Mortgagor's power and

authority (without the necessity of joinder or consent of any other person), are

not and will not be in contravention of any Legal Requirement or any other

document or agreement to which Mortgagor or the Property is subject, and do not

and will not result in the creation of any encumbrance against any assets or

properties of Mortgagor, or any other person liable, directly or indirectly, for

any of the Secured Indebtedness, except as expressly contemplated by the Loan

Documents. There is no suit, action, claim, investigation, inquiry, proceeding

or demand pending (or, to Mortgagor's knowledge, threatened) against Mortgagor

or against any other person liable directly or indirectly for the Secured

Indebtedness or which affects the Property (including, without limitation, any

which challenges or otherwise pertains to Mortgagor's title to the Property) or

the validity, enforceability or priority of any of the Loan Documents. There is

no judicial or administrative action, suit or proceeding pending (or, to

Mortgagor's knowledge, threatened) against Mortgagor, or against any other

person liable directly or indirectly for the Secured Indebtedness, except as has

been disclosed in writing to Holder in connection with the loan evidenced by the

Note. The Loan Documents constitute

 

                                       12

<PAGE>

 

legal, valid and binding obligations of Mortgagor enforceable in accordance with

their terms, except as the enforceability thereof may be limited by Debtor

Relief Laws (hereinafter defined) and except as the availability of certain

remedies may be limited by general principles of equity. Mortgagor is not a

"foreign person" within the meaning of the Internal Revenue Code of 1986, as

amended, Sections 1445 and 7701 (i.e. Mortgagor is not a non-resident alien,

foreign corporation, foreign partnership, foreign trust or foreign estate as

those terms are defined therein and in any regulations promulgated thereunder).

The loan evidenced by the Note is solely for business and/or investment

purposes, and is not intended for personal, family, household or agricultural

purposes. Mortgagor further warrants that the proceeds of the Note shall be used

for commercial purposes and stipulates that the loan evidenced by the Note shall

be construed for all purposes as a commercial loan. Mortgagor's exact legal name

is correctly set forth at the end of this Mortgage. If Mortgagor is not an

individual, Mortgagor is an organization of the type and (if not an unregistered

entity) is incorporated in or organized under the laws of the state specified in

the introductory paragraph of this Mortgage. If Mortgagor is an unregistered

entity (including, without limitation, a general partnership) it is organized

under the laws of the state specified in the introductory paragraph of this

Mortgage. Mortgagor will not cause or permit any change to be made in its name,

identity (including its trade name or names), or corporate or partnership

structure, unless Mortgagor shall have notified Holder in writing of such change

at least 30 days prior to the effective date of such change, and shall have

first taken all action required by Holder for the purpose of further perfecting

or protecting the lien and security interest of Holder in the Property. In

addition, Mortgagor shall not change its corporate or partnership structure

without first obtaining the prior written consent of Holder. Mortgagor's

principal place of business and chief executive office, and the place where

Mortgagor keeps its books and records, including recorded data of any kind or

nature, regardless of the medium of recording including, without limitation,

software, writings, plans, specifications and schematics concerning the

Property, has for the preceding four months (or, if less, the entire period of

the existence of Mortgagor) been and will continue to be (unless Mortgagor

notifies Holder of any change in writing at least 30 days prior to the date of

such change) the address of Mortgagor set forth at the end of this Mortgage. If

Mortgagor is an individual, Mortgagor's principal residence has for the

preceding four months been and will continue to be (unless Mortgagor notifies

Holder of any change in writing at least 30 days prior to the date of such

change) the address of the principal residence of Mortgagor set forth at the end

of this Mortgage. Mortgagor's organizational identification number, if any,

assigned by the state of incorporation or organization is correctly set forth on

the first page of this Mortgage. Mortgagor shall promptly notify Holder (i) of

any change of its organizational identification number, or (ii) if Mortgagor

does not now have an organization identification number and later obtains one,

of such organizational identification number.

 

      (m) Certain Environmental Matters. Mortgagor shall comply with the terms

and covenants of that certain Environmental Indemnity Agreement dated of even

date herewith (the "Environmental Agreement").

 

      (n) Further Assurances. Mortgagor will, promptly on request of Holder, (i)

correct any defect, error or omission which may be discovered in the contents,

execution or acknowledgment of this Mortgage or any other Loan Document; (ii)

execute, acknowledge, deliver, procure and record and/or file such further

documents (including, without limitation, further mortgages, security

agreements, and assignments of rents or leases) and do such further

 

                                        13

<PAGE>

 

acts as may be necessary, desirable or proper to carry out more effectively the

purposes of this Mortgage and the other Loan Documents, to more fully identify

and subject to the liens and security interests hereof any property intended to

be covered hereby (including specifically, but without limitation, any renewals,

additions, substitutions, replacements, or appurtenances to the Property) or as

deemed advisable by Holder to protect the lien or the security interest

hereunder against the rights or interests of third persons; and (iii) provide

such certificates, documents, reports, information, affidavits and other

instruments and do such further acts as may be necessary, desirable or proper in

the reasonable determination of Holder to enable Holder to comply with the

requirements or requests of any agency having jurisdiction over Holder or any

examiners of such agencies with respect to the indebtedness secured hereby,

Mortgagor or the Property. Mortgagor shall pay all costs connected with any of

the foregoing, which shall be a demand obligation owing by Mortgagor (which

Mortgagor hereby promises to pay) to Holder pursuant to this Mortgage.

 

      (o)    Fees and Expenses. Without limitation of any other provision of this

Mortgage or of any other Loan Document and to the extent not prohibited by

applicable law, Mortgagor will pay, and will reimburse to Holder on demand to

the extent paid by Holder: (1) all appraisal fees, filing, registration and

recording fees, recordation, transfer and other taxes, brokerage fees and

commissions, abstract fees, title search or examination fees, title policy and

endorsement premiums and fees, uniform commercial code search fees, judgment and

tax lien search fees, escrow fees, attorneys' fees, architect fees, engineer

fees, construction consultant fees, environmental inspection fees, survey fees,

and all other costs and expenses of every character incurred by Mortgagor or

Holder in connection with the preparation of the Loan Documents, the evaluation,

closing and funding of the loan evidenced by the Loan Documents, and any and all

amendments and supplements to this Mortgage, the Note or any other Loan

Documents or any approval, consent, waiver, release or other matter requested or

required hereunder or thereunder, or otherwise attributable or chargeable to

Mortgagor as owner of the Property; and (ii) all costs and expenses, including

attorneys' fees and expenses, incurred or expended in connection with the

exercise of any right or remedy, or the defense of any right or remedy or the

enforcement of any obligation of Mortgagor, hereunder or under any other Loan

Document.

 

      (p)    Indemnification.

 

            (i) Mortgagor will indemnify and hold harmless Holder from and

against, and reimburse it on demand for, any and all Indemnified Matters

(hereinafter defined). For purposes of this paragraph (p), the term "Holder"

shall include Holder, and any persons owned or controlled by, owning or

controlling, or under common control or affiliated with Holder and the

directors, officers, partners, employees, attorneys, agents and representatives

of Holder. Without limitation, the foregoing indemnities shall apply to each

indemnified person with respect to matters, which in whole or in part are caused

by or arise out of the negligence of such (and/or any other) indemnified person.

However, such indemnities shall not apply to a particular indemnified person to

the extent that the subject of the indemnification is caused by or arises out of

the gross negligence or willful misconduct of that indemnified person. Any

amount to be paid under this paragraph (p) by Mortgagor to Holder shall be a

demand obligation owing by Mortgagor (which Mortgagor hereby promises to pay) to

Holder pursuant to this Mortgage. Nothing in this paragraph, elsewhere in this

Mortgage or in any other Loan Document shall limit or impair any rights or

remedies of Holder (including without limitation any rights of

 

                                       14

<PAGE>

 

contribution or indemnification) against Mortgagor or any other person under any

other provision of this Mortgage, any other Loan Document, any other agreement

or any applicable Legal Requirement.

 

            (ii) As used herein, the term "Indemnified Matters" means any and

all claims, demands, liabilities (including strict liability), losses, damages

(including consequential damages), causes of action, judgments, penalties,

fines, costs and expenses (including without limitation, reasonable fees and

expenses of attorneys and other professional consultants and experts, and of the

investigation and defense of any claim, whether or not such claim is ultimately

defeated, and the settlement of any claim or judgment including all value paid

or given in settlement) of every kind, known or unknown, foreseeable or

unforeseeable, which may be imposed upon, asserted against or incurred or paid

by Holder at any time and from time to time, whenever imposed, asserted or

incurred, because of, resulting from, in connection with, or arising out of any

transaction, act, omission, event or circumstance in any way connected with the

Property or with this Mortgage or any other Loan Document, including but not

limited to any bodily injury or death or property damage occurring in or upon or

in the vicinity of the Property through any cause whatsoever at any time on or

before the Release Date (hereinafter defined) any act performed or omitted to be

performed hereunder or under any other Loan Document, any breach by Mortgagor of

any representation, warranty, covenant, agreement or condition contained in this

Mortgage or in any other Loan Document, any default as defined herein, any claim

under or with respect to any Lease (hereinafter defined) or arising under the

Environmental Agreement. The term "Release Date" as used herein means the

earlier of the following two dates: (1) the date on which the indebtedness and

obligations secured hereby have been paid and performed in full and this

Mortgage has been released, or (ii) the date on which the lien of this Mortgage

is fully and finally foreclosed or a conveyance by deed in lieu of such

foreclosure is fully and finally effective, and possession of the Property has

been given to the purchaser or grantee free of occupancy and claims to occupancy

by Mortgagor and Mortgagor's heirs, devisees, representatives, successors and

assigns; provided, that if such payment, performance, release, foreclosure or

conveyance is challenged, in bankruptcy proceedings or otherwise, the Release

Date shall be deemed not to have occurred until such challenge is rejected,

dismissed or withdrawn with prejudice. The indemnities in this paragraph (p)

shall not terminate upon the Release Date or upon the release, foreclosure or

other termination of this Mortgage but will survive the Release Date,

foreclosure of this Mortgage or conveyance in lieu of foreclosure, the repayment

of the Secured Indebtedness, the termination of any and all Swap Transactions,

the discharge and release of this Mortgage and the other Loan Documents, any

bankruptcy or other debtor relief proceeding, and any other event whatsoever.

 

      (q)    Records and Financial Reports. Mortgagor will keep accurate books

and records in accordance with sound accounting principles in which full, true

and correct entries shall be promptly made with respect to the Property and the

operation thereof, and will permit all such books and records, and all recorded

data of any kind or nature, regardless of the medium of recording including,

without limitation, all software, writings, plans, specifications and schematics

to be inspected and copied, and the Property to be inspected and photographed,

by Holder and its representatives during normal business hours and at any other

reasonable times. Without limitation of other or additional requirements in any

of the other Loan Documents, Mortgagor will furnish to Holder such financial

information and statements as are set forth in the

 

                                       15

<PAGE>

 

Loan Agreement. Mortgagor will furnish to Holder at Mortgagor's e