Exhibit 10.1

 

THIS DOCUMENT HAS

BEEN PREPARED BY:

 

David A. Weill, Esq.

Kutak Rock LLP

1650 Farnam Street

Omaha, Nebraska 68102

 

THIS DOCUMENT IS TO

BE RETURNED TO:

 

LandAmerica Financial Group

3636 North Central Avenue, Suite 350

Phoenix, Arizona 85012

Attn:  Mr. Allen Brown / Kimberly Bleecks

X-02-25965

 

AMENDED AND RESTATED

MORTGAGE, ASSIGNMENT OF RENTS AND LEASES,

SECURITY AGREEMENT AND FIXTURE FILING

 

STATE OF FLORIDA DOCUMENTARY STAMP TAX AND NONRECURRING INTANGIBLE TAX WERE
PREVIOUSLY PAID IN CONNECTION WITH THE ORIGINAL NOTE AND MORTGAGE RECORDED AT
OFFICIAL RECORDS VOLUME 8509, PAGE 1565 OF THE PUBLIC RECORDS OF DUVAL COUNTY,
FLORIDA

 

THIS AMENDED AND RESTATED MORTGAGE, ASSIGNMENT OF RENTS AND LEASES, SECURITY
AGREEMENT AND FIXTURE FILING (this "Mortgage") is dated as of October 9, 2002,
between FAMILY STEAK HOUSES OF FLORIDA, INC., a Florida corporation
("Borrower"), whose address is 2113 Florida Boulevard, Neptune Beach, FL 32266,
to and for the benefit of GE CAPITAL FRANCHISE FINANCE CORPORATION, a Delaware
corporation ("Lender"), whose address is 17207 North Perimeter Drive,
Scottsdale, Arizona 85255.

 

RECITALS:

 

Lender is the holder of a promissory note dated December 18, 1996, in the
original principal amount of $750,000 (the "Original Note") made by Borrower and
payable to the order of Lender. The Original Note is secured by a Mortgage,
Assignment of Rents and Leases, Security Agreement and Fixture Filing dated
December 18, 1996 from Borrower to FFCA Mortgage Corporation ("Original Lender")
recorded among the Public Records of Duval County, Florida in Official Record
Volume 8509 at Page 1565 ("Original Mortgage") on certain improved real property
located in Duval County, Florida. The Original Mortgage was assigned by Original
Lender to LaSalle Bank National Association, f/k/a LaSalle National Bank,
Trustee pursuant to that certain Indenture dated as of May 1, 1997 ("LaSalle")
pursuant to an Assignment of Mortgage dated December 18, 1996 and recorded among
the Public Records of Duval County, Florida in Official Record Volume 8562 at
Page 1598 and assigned by LaSalle to Lender pursuant to an Assignment of
Mortgage dated as of the date hereof and recorded among the Public Records of
Duval County, Florida in Official Record Volume       at Page     . The Original
Note is being amended and restated in its entirety (the "Note") to reflect among
other things, a change in the interest rate and terms of payment. The Borrower
and the Lender now desire to amend and modify the terms of the Original Mortgage
and have agreed, for purposes of convenience, to amend and restate the Original
Mortgage, in its entirety.

 

 

 

 

The capitalized terms used in this Mortgage, if not elsewhere defined herein,
are defined as indicated in Article I. Borrower holds the fee simple interest in
the Premises, subject to the Permitted Exceptions. Borrower is executing this
Mortgage for the purpose of granting the interest of Borrower in and to the
Mortgaged Property (as defined in the Granting Clauses below) as security for
the payment of the Obligations. The Mortgaged Property shall be and remain
subject to the lien of this Mortgage and shall constitute security for the
Obligations so long as the Obligations shall remain outstanding.

 

GRANTING CLAUSES:

 

Borrower, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, by
these presents does hereby create a security interest in, mortgage, grant,
bargain, sell, assign, pledge, give, transfer, set over and convey unto Lender
and to its successors and assigns WITH POWER OF SALE AND RIGHT OF ENTRY, for the
benefit and security of Lender and its successors and assigns, all of Borrower's
estate, right, title and interest in, to and under any and all of the following
property (the "Mortgaged Property"), whether now owned or hereafter acquired,
subject only to the Permitted Exceptions:

 

Premises, Rents and Derivative Interests

 

The Premises, all rents, issues, profits, royalties, income and other benefits
derived from the property comprising the Premises and the Personal Property (as
defined below) or any portion thereof (collectively, the "Rents"); all leases or
subleases covering the Premises and the Personal Property or any portion thereof
now or hereafter existing or entered into, including, without limitation, the
Lease (collectively, "Leases" and individually, a "Lease"), including, without
limitation, all cash or security deposits, advance rentals and deposits or
payments of similar nature and all guaranties relating to the Leases; all
options to purchase or lease the Premises and the Personal Property or any
portion thereof or interest therein, and any greater estate in the Premises; all
interests, estate or other claims, both in law and in equity, with respect to
the Premises and the Personal Property or any portion thereof; all easements,
rights-of-way and rights used in connection therewith or as a means of access
thereto, and all tenements, hereditaments and appurtenances thereof and thereto,
and all water rights and shares of stock evidencing the same; all land lying
within the right-of-way of any street, open or proposed, adjoining the Premises
and any and all sidewalks, alleys and strips and gores of land adjacent to or
used in connection with the Premises;

 

Personal Property

 

All tangible personal property now or at any time hereafter located on or at the
Premises or used in connection therewith, including, without limitation, all
machinery, appliances, furniture, equipment and inventory (the "Personal
Property");

 

Intangibles

 

All existing and future accounts, contract rights, including, without
limitation, with respect to equipment leases, general intangibles, files, books
of account, agreements, franchise, license and/or area development agreements,
distributor agreements, Indemnity Agreements, permits, licenses and certificates
necessary or desirable in connection with the acquisition, ownership, leasing,
construction, operation, servicing or management of the property comprising the
Premises and the Personal Property or any portion thereof, whether now existing
or entered into or obtained after the date hereof, all existing and future names
under or by which the property comprising the Premises and the Personal Property
or any portion thereof may at any time be operated or known, all rights to carry
on business under any such names or any variant thereof, and all existing and
future telephone numbers and listings, advertising and marketing materials,
trademarks and good will in any way relating to the property comprising the
Premises and the Personal Property or any portion thereof; and

 

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Claims and Awards

 

All the claims or demands with respect to the Premises and the Personal Property
or any portion thereof, including, without limitation, claims or demands with
respect to the proceeds of insurance in effect with respect thereto, claims
under any indemnity agreement, including, without limitation, any indemnity
agreement executed for the benefit of the Premises and the Personal Property or
any portion thereof with respect to Hazardous Materials or USTs, and any and all
awards made for the taking by eminent domain, or by any proceeding or purchase
in lieu thereof, of the whole or any part of the Premises and the Personal
Property, including, without limitation, any awards resulting from a change of
grade of streets and awards for severance damages.

 

The Mortgaged Property shall include all products and proceeds of the foregoing
property.

 

TO HAVE AND TO HOLD the Mortgaged Property hereby granted or mortgaged or
intended to be granted or mortgaged, unto Lender, and its successors and
assigns, upon the terms, provisions and conditions set forth herein.

 

THIS MORTGAGE SHALL SECURE THE FOLLOWING INDEBTEDNESS AND OBLIGATIONS (the
"Obligations"):

 

(i)          Payment of indebtedness evidenced by the Note together with all
extensions, renewals, amendments and modifications thereof;

 

(ii)         Payment of all other indebtedness and other sums, with interest
thereon, which may be owed under, and performance of all other obligations and
covenants contained in, any Loan Document (other than the Environmental
Indemnity Agreement), together with any other instrument given to evidence or
further secure the payment and performance of any obligation secured hereby or
thereby; and

 

(iii)        Payment of all indebtedness and other sums, with interest thereon,
which may be owed under, and performance of all other obligations and covenants
contained in any Other Agreement, together with any other instrument given to
evidence or further secure the payment and performance of any obligation secured
thereby.

 

It is the intention of the parties hereto that the Mortgaged Property shall
secure all of the Obligations presently or hereafter owed, and that the priority
of the security interest created by this Mortgage for all such Obligations shall
be controlled by the time of proper recording of this Mortgage. In addition,
this Mortgage shall also secure unpaid balances of advances made with respect to
the Mortgaged Property for the payment of taxes, assessments, insurance
premiums, costs or any other advances incurred for the protection of the
Mortgaged Property, together with interest thereon until paid at the Default
Rate, all as contemplated in this Mortgage, all of which shall constitute a part
of the Obligations. This paragraph shall serve as notice to all persons who may
seek or obtain a lien on the Mortgaged Property subsequent to the date of
recording of this Mortgage, that until this Mortgage is released, any debt owed
Lender by Borrower, including advances made subsequent to the recording of this
Mortgage, shall be secured with the priority afforded this Mortgage as recorded.

 

Notwithstanding the foregoing or any other provisions of this Mortgage to the
contrary:

 

(x)          in the event that the Loan becomes the subject of a Securitization,
Participation or Transfer, this Mortgage shall only secure indebtedness and
obligations relating to the Loan and any other loans between any of the Borrower
Parties on the one hand and any of the Lender Entities on the other hand which
are part of the same Loan Pool as the Loan; and

 

(y)          in the event that any loans between any of the Borrower Parties on
the one hand and any of the Lender Entities on the other hand (other than the
Loan) become the subject of a Securitization, Participation or Transfer, this
Mortgage shall not secure any indebtedness and obligations relating to such
loans unless the Loan is part of the same Loan Pool as such loans.

 

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IT IS HEREBY COVENANTED, DECLARED AND AGREED that the Note and the other Loan
Documents are to be executed, delivered and secured and that the Mortgaged
Property is to be held and disposed of by Lender, upon and subject to the
provisions of this Mortgage.

 

ARTICLE I

 

DEFINED TERMS

 

Section 1.01. Incorporation of Definitions. Initially capitalized terms not
otherwise defined in this Mortgage shall have the meanings set forth in that
certain Loan Agreement dated as of the date of this Mortgage between Borrower
and Lender, as the same may be amended from time to time (the "Loan Agreement")

 

Section 1.02. Additional Definitions. Unless the context otherwise specifies or
requires, the following terms shall have the meanings specified (such
definitions to be applicable equally to singular and plural nouns and verbs of
any tense):

 

"Environmental Indemnity Agreement" means that certain Environmental Indemnity
Agreement dated as of the date of this Mortgage executed by Borrower for the
benefit of Lender and such other parties as are identified in such agreement
with respect to the Premises, as the same may be amended from time to time.

 

"Event of Default" has the meaning set forth in Section 6.01.

 

"Improvements" means all buildings, fixtures and other improvements now or
hereafter located on the Land (whether or not affixed to the Land).

 

"Indemnified Parties" means Lender and Environmental Insurer and any person or
entity who is or will have been involved in the origination of the Loan, any
person or entity who is or will have been involved in the servicing of the Loan,
any person or entity in whose name the encumbrance created by this Mortgage is
or will have been recorded, persons and entities who may hold or acquire or will
have held a full or partial interest in the Loan (including, but not limited to,
investors or prospective investors in any Securitization, Participation or
Transfer, as well as custodians, trustees and other fiduciaries who hold or have
held a full or partial interest in the Loan for the benefit of third parties),
as well as the respective directors, officers, shareholders, partners, members,
employees, lenders, agents, servants, representatives, contractors,
subcontractors, affiliates, subsidiaries, participants, successors and assigns
of any and all of the foregoing (including but not limited to any other person
or entity who holds or acquires or will have held a participation or other full
or partial interest in the Loan or the Mortgaged Property, whether during the
term of the Loan or as a part of or following a foreclosure of the Loan and
including, but not limited to, any successors by merger, consolidation or
acquisition of all or a substantial portion of Lender's assets and business).

 

"Land" means the parcel or parcels of real estate legally described in Exhibit A
attached hereto, and all rights, privileges and appurtenances therewith.

 

"Lease" and "Leases" has the meaning set forth in the Granting Clause.

 

"Lessee" means Barnhill’s Buffet, Inc.

 

"Loan" means the loan made by Lender to Borrower which is evidenced by the Note
and secured by this Mortgage.

 

"Loan Agreement" has the meaning set forth in Section 1.01.

 

"Mortgaged Property" has the meaning set forth in the Granting Clause.

 

"Net Award" has the meaning set forth in Section 4.01(b)(v).

 

"Net Insurance Proceeds" has the meaning set forth in Section 4.01(a)(iii)

 

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"Note" means the promissory note dated as of even date herewith in the amount of
$644,000.00 executed by Borrower and payable to Lender which is secured by this
Mortgage and any amendments, extensions or modifications thereof, including,
without limitation, any amendment and restatement of the Note as a result of a
prepayment contemplated by Section 9 of the Loan Agreement.

 

"Obligations" has the meaning set forth in the Granting Clause.

 

"Other Agreements" means, collectively, all agreements and instruments between,
among or by (1) any of the Borrower Parties, and, or for the benefit of, (2) any
of the Lender Entities, including, without limitation, promissory notes and
guaranties; provided, however, the term "Other Agreements" shall not include the
agreements and instruments defined in the Loan Agreement as the Loan Documents.

 

"Outstanding Obligations" has the meaning set forth in Section
4.01(b)(iv)(x)(aa).

 

"Partial Taking" has the meaning set forth in Section 4.01(b)(ii).

 

"Personal Property" has the meaning set forth in the Granting Clause.

 

"Premises" means the Land and the Improvements.

 

"Rents" has the meaning set forth in the Granting Clause.

 

"Restoration" means the restoration, replacement or rebuilding of the Premises,
or any part thereof, as nearly as possible to its value, condition and character
immediately prior to any damage, destruction or Taking.

 

"State" means the State in which the Premises is located.

 

"Taking" has the meaning set forth in Section 4.01(b)(i).

 

"Total Taking" has the meaning set forth in Section 4.01(b)(ii).

 

"UCC" has the meaning set forth in Section 6.02(iii).

 

ARTICLE II

 

INCORPORATION OF REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER

 

The representations, warranties and covenants of Borrower set forth in the Loan
Agreement are incorporated by reference into this Mortgage as if stated in full
in this Mortgage. All representations and warranties as incorporated herein
shall be deemed to have been made as of the date of this Mortgage and all
representations, warranties and covenants incorporated herein shall survive the
execution and delivery of this Mortgage.

 

ARTICLE III

 

COVENANTS OF BORROWER

 

In addition to any covenants of Borrower set forth in the Loan Agreement or any
other Loan Document, Borrower hereby covenants to Lender and agrees as follows
until the Obligations are satisfied in full:

 

Section 3.01. Recording. Borrower shall, upon the execution and delivery hereof
and thereafter from time to time, take such actions as Lender may request to
cause this Mortgage, each supplement and amendment to such instrument and
financing statements with respect thereto and each instrument of further
assurance (collectively, the "Recordable Documents") to be filed, registered and
recorded as may be required by law to publish notice and maintain the first lien
or security interest, as applicable, hereof upon the Mortgaged Property and to
publish notice of and protect the validity of the Recordable Documents. Borrower
shall, from time to time, perform or cause to be performed any other act and
shall execute or cause to be executed any and all further instruments (including
financing statements, continuation statements and similar statements with
respect to any of said documents) requested by Lender for carrying out the
intention of, or facilitating the performance of, this Mortgage. Lender shall be
and is hereby irrevocably appointed the agent and attorney-in-fact of Borrower
to comply therewith (including the execution, delivery and filing of such
financing statements and other instruments), which appointment is coupled with
an interest; provided, however, Lender shall not exercise such power of attorney
unless Borrower has first failed to comply with this Section, and provided,
further, that this sentence shall not prevent any default in the observance of
this Section from constituting an Event of Default. To the extent permitted by
law, Borrower shall pay or cause to be paid recording taxes and fees incident
thereto and all expenses, taxes and other governmental charges incident to or in
connection with the preparation, execution, delivery or acknowledgment of the
Recordable Documents, any instruments of further assurance and the Note.

 

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Section 3.02. Use; Maintenance and Repair; Leases. (a) The Mortgaged Property
shall be used solely for the operation of a Permitted Concept and for no other
purpose. Except as set forth below, and except during periods when the Premises
is untenantable by reason of fire or other casualty or condemnation (provided,
however, during all such periods while the Premises is untenantable, Borrower
shall strictly comply with the terms and conditions of Section 4.01 of this
Mortgage), Borrower shall at all times while this Mortgage is in effect occupy
the Mortgaged Property, or cause Lessee to occupy the Mortgaged Property, and
diligently operate its business, or cause Lessee to diligently operate its
business, on the Mortgaged Property. Borrower may cease or allow Lessee to cease
diligent operation of business at the Mortgaged Property for a period not to
exceed 90 days and may do so only once within any five-year period while this
Mortgage is in effect. If Borrower or Lessee does discontinue operation as
permitted by this Section, Borrower shall (i) give written notice to Lender
within 10 days after Borrower or Lessee elects to cease operation, (ii) provide
adequate protection and maintenance of the Mortgaged Property during any period
of vacancy and (iii) pay all costs necessary to restore the Mortgaged Property
to its condition on the day operation of the business ceased at such time as the
Mortgaged Property is reopened for Borrower's or Lessee’s business operations or
other substituted use. Notwithstanding anything herein to the contrary, Borrower
shall pay monthly the principal and interest due under the Note during any
period in which Borrower or Lessee discontinues operation.

 

Borrower shall not, and shall not permit any lessee to, by itself or through any
lease or other type of transfer, convert the Premises to an alternative use
while this Mortgage is in effect without Lender's consent, which consent shall
not be unreasonably withheld. Lender may consider any or all of the following in
determining whether to grant its consent, without being deemed to be
unreasonable: (i) whether the converted use will be consistent with the highest
and best use of the Mortgaged Property, and (ii) whether the converted use will
increase Lender's risks or decrease the value of the Mortgaged Property.

 

(b)          Borrower shall, or shall cause Lessee to, (i) maintain the
Mortgaged Property in good condition and repair, subject to reasonable and
ordinary wear and tear, free from actual or constructive waste, (ii) operate,
remodel, update and modernize the Mortgaged Property in accordance with those
standards adopted from time to time by Lessee on a system-wide basis for the
acceptable Permitted Concept, with such remodeling and modernizing being
undertaken in accordance with Lessee’s system-wide timing schedules for such
activities, and (iii) pay all operating costs of the Premises in the ordinary
course of business.

 

(c)          Borrower shall not, and shall not permit Lessee to, (i) enter into
any Leases (other than the Lease) without Lender's prior written consent; (ii)
modify or amend the terms of any Lease without Lender's prior written consent;
(iii) grant any consents under any Lease, including, without limitation, any
consent to an assignment of any Lease, a mortgaging of the leasehold estate
created by any Lease or a subletting by the lessee under any Lease, without
Lender's prior written consent; (iv) terminate, cancel, surrender, or accept the
surrender of, any Lease, or waive or release any person from the observance or
performance of any obligation to be performed under the terms of any Lease or
liability on account of any warranty given thereunder, without Lender's prior
written consent; or (v) assign, transfer, mortgage, pledge or hypothecate any
Lease or any interest therein to any party other than Lender, without Lender's
prior written consent. Any lease, modification, amendment, grant, termination,
cancellation, surrender, waiver or release in violation of the foregoing
provision shall be null and void and of no force and effect. Unless Lender
otherwise consents or elects, Borrower's title to the Mortgaged Property and the
leasehold interest in the Mortgaged Property created by any Lease shall not
merge, but shall always be kept separate and distinct, notwithstanding the union
of such estates in Borrower, Lender or any other person by purchase, operation
of law, foreclosure of this Mortgage, sale of the Mortgaged Property pursuant to
this Mortgage or otherwise.

 

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(d)          Borrower shall (i) fulfill, perform and observe in all respects
each and every condition and covenant of Borrower contained in any Lease; (ii)
give prompt notice to Lender of any claim or event of default under any Lease
given to or by Borrower, together with a complete copy or statement of any
information submitted or referenced in support of such claim or event of
default; (iii) at the sole cost and expense of Borrower, enforce the performance
and observance of each and every covenant and condition of any Lease to be
performed or observed by any other party thereto, unless such enforcement is
waived in writing by Lender; (iv) appear in and defend any action challenging
the validity, enforceability or priority of the lien created hereby or the
validity or enforceability of any Lease; and (v) hold that portion of the Rents
which is sufficient to discharge all current sums due under the Note for use in
the payment of such sums.

 

Section 3.03. Alterations and Improvements. Borrower shall not alter, or permit
Lessee to alter, the exterior, structural, plumbing or electrical elements of
the Mortgaged Property in any manner without the consent of Lender, which
consent shall not be unreasonably withheld or conditioned; provided, however,
Borrower or Lessee may undertake nonstructural alterations to the Mortgaged
Property costing less than $100,000 without Lender's consent. For purposes of
this Mortgage, alterations to the exterior, structural, plumbing or electrical
elements of the Mortgaged Property shall mean:

 

(i)          alterations which affect the foundation or "footprint" of the
Improvements;

 

(ii)         alterations which involve the structural elements of the
Improvements, such as a load-bearing wall, structural beams, columns, supports
or roof; or

 

(iii)        alterations which materially affect any of the building systems,
including, without limitation, the electrical systems, plumbing, HVAC and fire
and safety systems.

 

If Lender's consent is required hereunder and Lender consents to the making of
any such alterations, the same shall be made by Borrower at Borrower's or
Lessee’s sole expense by a licensed contractor and according to plans and
specifications approved by Lender and subject to such other conditions as Lender
shall require. Any work at any time commenced on the Mortgaged Property shall be
prosecuted diligently to completion, shall be of good workmanship and materials
and shall comply fully with all the terms of this Mortgage. Upon completion of
any alterations or any Restoration, Borrower shall promptly provide Lender with
(i) evidence of full payment to all laborers and materialmen contributing to the
alterations, (ii) an architect's certificate certifying the alterations to have
been completed in conformity with the plans and specifications, (iii) a
certificate of occupancy (if the alterations are of such a nature as would
require the issuance of a certificate of occupancy), and (iv) any other
documents or information reasonably requested by Lender.

 

Section 3.04. After-Acquired Property. All right, title and interest of Borrower
in and to all improvements, alterations, substitutions, restorations and
replacements of, and all additions and appurtenances to, the Mortgaged Property,
hereafter acquired by or released to Borrower, immediately upon such acquisition
or release and without any further granting by Borrower, shall become part of
the Mortgaged Property and shall be subject to the lien hereof fully, completely
and with the same effect as though now owned by Borrower and specifically
described in the Granting Clauses hereof. Borrower shall execute and deliver to
Lender any further assurances, mortgages, grants, conveyances or assignments
thereof as the Lender may reasonably require to subject the same to

the lien hereof.

 

Section 3.05. Taxes, Assessments, Charges and Other Impositions. (a) Borrower
shall do or cause to be done everything necessary to preserve the lien hereof
without expense to Lender, including, without limitation, paying and discharging
or causing to be paid and discharged, whether or not payable directly by
Borrower or subject to withholding at the source, (i) all taxes, assessments,
levies, fees, water and sewer rents and charges and all other governmental
charges, general, special, ordinary or extraordinary, and all charges for
utility or communications services, which may at any time be assessed, levied or
imposed upon Borrower, Lessee, the Mortgaged Property, this Mortgage, the
Obligations or the Rents or which may arise in respect of the occupancy, use,
possession or operation thereof, (ii) all income, excess profits, sales, gross
receipts and other taxes, duties or imposts, whether similar or not in nature,
assessed, levied or imposed by any Governmental Authority on Borrower, Lessee,
the Mortgaged Property or the Rents, and (iii) all lawful claims and demands of
mechanics, laborers, materialmen and others which, if unpaid, might create a
lien on the Mortgaged Property, or on the Rents, unless Borrower shall contest
the amount or validity thereof in accordance with subsection (b).

 

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(b)          Borrower may, at its own expense, contest or cause to be contested,
by appropriate legal proceedings conducted in good faith and with due diligence,
the amount or validity or application, in whole or in part, of any item
specified in subsection (a) or lien therefor, provided that (i) Borrower shall
provide written notice to Lender of any contest involving more than $10,000.00,
(ii) such proceeding shall suspend the collection thereof from the Mortgaged
Property or any interest therein, (iii) neither the Mortgaged Property nor any
interest therein would be in any danger of being sold, forfeited or lost by
reason of such proceedings, (iv) no Event of Default has occurred and is
continuing, and (v) Borrower shall have deposited with Lender adequate reserves
for the payment of the taxes, together with all interest and penalties thereon,
unless paid in full under protest, or Borrower shall have furnished the security
as may be required in the proceeding or as may be required by Lender to insure
payment of any contested taxes.

 

Section 3.06. Insurance. (a) Borrower shall maintain, or shall cause Lessee to
maintain, with respect to the Mortgaged Property, at its sole expense, the
following types and amounts of insurance (which may be included under a blanket
insurance policy if all the other terms hereof are satisfied), in addition to
such other insurance as Lender may reasonably require from time to time:

 

(i)          Insurance against loss, damage or destruction by fire and other
casualty, including theft, vandalism and malicious mischief, flood (if the
Premises is in a location designated by the Federal Emergency Management
Administration as a Special Flood Hazard Area), earthquake (if the Premises is
in an area subject to destructive earthquakes within recorded history), boiler
explosion (if there is any boiler upon the Premises), plate glass breakage,
sprinkler damage (if the Premises have a sprinkler system), all matters covered
by a standard extended coverage endorsement, special coverage endorsement
commonly known as an "all risk" endorsement and such other risks as Lender may
reasonably require, insuring the Mortgaged Property for not less than 100% of
their full insurable replacement cost.

 

(ii)         Commercial general liability and property damage insurance,
including a products liability clause, covering Lender and Borrower against
bodily injury liability, property damage liability and automobile bodily injury
and property damage liability, including without limitation any liability
arising out of the ownership, maintenance, repair, condition or operation of the
Mortgaged Property or adjoining ways, streets or sidewalks and, if applicable,
insurance covering Lender, against liability arising from the sale of liquor,
beer or wine on the Premises. Such insurance policy or policies shall contain a
broad form contractual liability endorsement under which the insurer agrees to
insure Borrower's obligations under Section 7.09 hereof to the extent insurable,
and a "severability of interest" clause or endorsement which precludes the
insurer from denying the claim of either Borrower or Lender because of the
negligence or other acts of the other, shall be in amounts of not less than
$1,000,000.00 per injury and occurrence with respect to any insured liability,
whether for personal injury or property damage, or such higher limits as Lender
may reasonably require from time to time, and shall be of form and substance
reasonably satisfactory to Lender.

 

(iii)        Business income insurance equal to 100% of the principal and
interest payable under the Note for a period of not less than six months.

 

(iv)        State Worker's compensation insurance in the statutorily mandated
limits, employer's liability insurance with limits not less than $500,000 or
such greater amount as Lender may from time to time require and such other
insurance as may be necessary to comply with applicable laws.

 

(b)          All insurance policies shall:

 

(i)          Provide for a waiver of subrogation by the insurer as to claims
against Lender, its employees and agents and provide that such insurance cannot
be unreasonably cancelled, invalidated or suspended on account of the conduct of
Borrower, its officers, directors, employees or agents;

 

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(ii)         Provide that any "no other insurance" clause in the insurance
policy shall exclude any policies of insurance maintained by Lender and that the
insurance policy shall not be brought into contribution with insurance
maintained by Lender;

 

(iii)        Contain a standard without contribution mortgage clause endorsement
in favor of Lender and its successors and assigns as their interests may appear
and any other lender designated by Lender;

 

(iv)        Provide that the policy of insurance shall not be terminated,
cancelled or substantially modified without at least thirty (30) days' prior
written notice to Lender and to any lender covered by any standard mortgage
clause endorsement;

 

(v)         Provide that the insurer shall not have the option to restore the
Premises if Lender elects to terminate this Mortgage in accordance with the
terms hereof;

 

(vi)        Be issued by insurance companies licensed to do business in the
state in which the Premises is located and which are rated A:VI or better by
Best's Insurance Guide or otherwise approved by Lender; and

 

(vii)       Provide that the insurer shall not deny a claim because of the
negligence of Borrower, anyone acting for Borrower or any tenant or other
occupant of the Mortgaged Property.

 

It is expressly understood and agreed that the foregoing minimum limits of
insurance coverage shall not limit the liability of Borrower for its acts or
omissions as provided in this Mortgage. All liability insurance policies (with
the exception of worker's compensation insurance to the extent not available
under statutory law) shall designate Lender and its successors and assigns as
additional insureds as their interests may appear and shall be payable as set
forth in Article IV hereof. All such policies shall be written as primary
policies, with deductibles not to exceed 10% of the amount of coverage. Any
other policies, including any policy now or hereafter carried by Lender, shall
serve as excess coverage. Borrower shall procure , or shall cause Lessee to
procure, policies for all insurance for periods of not less than one year and
shall provide to Lender certificates of insurance or, upon Lender's request,
duplicate originals of insurance policies evidencing that insurance satisfying
the requirements of this Mortgage is in effect at all times.

 

Section 3.07. Impound Account. Upon the occurrence of an Event of Default under
this Mortgage or any other Loan Document, Lender may require Borrower to pay to
Lender sums which will provide an impound account (which shall not be deemed a
trust fund) for paying up to the next one year of taxes, assessments and/or
insurance premiums. Upon such requirement, Lender will estimate the amounts
needed for such purposes and will notify Borrower to pay the same to Lender in
equal monthly installments, as nearly as practicable, in addition to all other
sums due under this Mortgage. Should additional funds be required at any time,
Borrower shall pay the same to Lender on demand. Borrower shall advise Lender of
all taxes and insurance bills which are due and shall cooperate fully with
Lender in assuring that the same are paid. Lender may deposit all impounded
funds in accounts insured by any federal or state agency and may commingle such
funds with other funds and accounts of Lender. Interest or other gains from such
funds, if any, shall be the sole property of Lender. If an Event of Default
shall occur subsequent to Lender requiring the establishment of an impound
account pursuant to this Section, Lender may apply all impounded funds against
any sums due from Borrower to Lender. Lender shall give to Borrower an annual
accounting showing all credits and debits to and from such impounded funds
received from Borrower.

 

Section 3.08. Advances by Lender. Lender may make advances to perform any of the
covenants contained in this Mortgage on Borrower's behalf and all sums so
advanced (and all sums advanced pursuant to any other provision hereof) by
Lender shall be secured hereby. Borrower shall repay on demand all sums so
advanced with interest thereon at the Default Rate, such interest to be computed
from and including the date of the making of such advance to and including the
date of such repayment, and at Lender's election, Lender may add the amount of
such advance to the principal balance of the Loan.

 

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Section 3.09. Negative Covenants. Without limiting the terms and conditions of
Section 8 of the Loan Agreement, Borrower agrees that Borrower shall not,
without the prior written consent of Lender, sell, convey, mortgage, grant,
bargain, encumber, pledge, assign, or otherwise transfer the Mortgaged Property
or any part thereof or permit the Mortgaged Property or any part thereof to be
sold, conveyed, mortgaged, granted, bargained, encumbered, pledged, assigned, or
otherwise transferred (each, a "Prohibited Transaction"), other than sales from
inventory in the ordinary course of business and the replacement of obsolete
Personal Property. A sale, conveyance, mortgage, grant, bargain, encumbrance,
pledge, assignment, or transfer within the meaning of this Section shall be
deemed to include, but not limited to, (a) an installment sales agreement
wherein Borrower agrees to sell the Mortgaged Property or any part thereof for a
price to be paid in installments; and (b) an agreement by Borrower leasing all
or any part of the Mortgaged Property (other than the Lease) or a sale,
assignment or other transfer of, or the grant of a security interest in,
Borrower's right, title and interest in and to any Lease or any Rents.

 

Lender's consent to a Prohibited Transaction shall be subject to the
satisfaction of such conditions as Lender shall determine in its sole
discretion, including, without limitation, (i) Borrower having executed and
delivered such modifications to the terms of this Mortgage and the other Loan
Documents as Lender shall request, (ii) the Prohibited Transaction having been
approved by each of the rating agencies which have issued ratings in connection
with any Securitization of the Loan as well as any other rating agency selected
by Lender, and (iii) the proposed transferee having assumed the Note, this
Mortgage and the other Loan Documents (as modified pursuant to clause (i)
above). In addition, any such consent shall be conditioned upon the payment by
Borrower to Lender of (x) a fee equal to one percent (1%) of the then
outstanding principal balance of the Note and (y) all out-of-pocket costs and
expenses incurred by Lender in connection with such consent, including, without
limitation, reasonable attorneys' fees. Lender shall not be required to
demonstrate any actual impairment of its security or any increased risk of
default hereunder in order to declare the Obligations immediately due and
payable upon Borrower's sale, conveyance, mortgage, grant, bargain, encumbrance,
pledge, assignment, or transfer of the Mortgaged Property without Lender's
consent, as required hereunder. The provisions of this Section shall apply to
every sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment, or transfer of the Mortgaged Property regardless of whether
voluntary or not, or whether or not Lender has consented to any previous sale,
conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or
transfer of the Mortgaged Property.

 

ARTICLE IV

 

POSSESSION, USE AND RELEASE OF THE MORTGAGED PROPERTY

 

Section 4.01. Casualty or Condemnation. Borrower, immediately upon obtaining
knowledge of any casualty to any portion of the Mortgaged Property or of any
proceeding or negotiation for the taking of all or any portion of the Mortgaged
Property in condemnation or other eminent domain proceedings, shall notify
Lender of such casualty, proceeding or negotiation. Any award, compensation or
other payment resulting from such casualty or condemnation or eminent domain
proceeding, as applicable, shall be applied as set forth below (the "Proceeds").
Lender may participate in any condemnation or eminent domain proceeding, and
Borrower will deliver or cause to be delivered to Lender all instruments
reasonably requested by Lender to permit such participation.

 

(a)          Casualty. (i) In the event of any material damage to or destruction
of the Mortgaged Property or any part thereof, Borrower will promptly give
written notice to Lender, generally describing the nature and extent of such
damage or destruction. No damage to or destruction of the Mortgaged Property
shall relieve Borrower of its obligation to pay any monetary sum due under the
Loan Documents at the time and in the manner provided in the Loan Documents.

 

(ii)         In the event of any damage to or destruction of the Mortgaged
Property or any part thereof, Borrower, whether or not the Proceeds, if any, on
account of such damage or destruction shall be sufficient for the purpose, at
its expense, shall promptly cause the Restoration to be commenced and completed.

 

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(iii)        Proceeds received by Lender and Borrower on account of any
occurrence of damage to or destruction of the Mortgaged Property or any part
thereof, less the costs, fees and expenses incurred by Lender and Borrower in
the collection thereof, including, without limitation, adjuster's fees and
expenses and attorneys' fees and expenses (the "Net Insurance Proceeds"), shall
be paid to (1) Borrower, if the amount of such Net Insurance Proceeds is less
than $100,000 and applied by Borrower toward the cost of the Restoration, and
(2) Lender, if the amount of such Net Insurance Proceeds is $100,000 or greater.
Net Insurance Proceeds paid to Lender shall be held and disbursed by Lender, or
as Lender may from time to time direct, as the Restoration progresses, to pay or
reimburse Borrower for the cost of the Restoration, upon written request of
Borrower accompanied by evidence, reasonably satisfactory to Lender, that (aa)
the Restoration is in full compliance with all Applicable Regulations and all
private restrictions and requirements, (bb) the amount requested has been paid
or is then due and payable and is properly a part of such cost, (cc) there are
no mechanics' or similar liens for labor or materials theretofore supplied in
connection with the Restoration, (dd) if the estimated cost of the Restoration
exceeds the Net Insurance Proceeds (exclusive of Proceeds received from
Borrower's business income insurance), Borrower has deposited into an escrow
satisfactory to Lender such excess amount, which sum will be disbursed pursuant
to escrow instructions satisfactory to Lender, and (ee) the balance of such Net
Insurance Proceeds, together with the funds deposited into escrow, if any,
pursuant to the preceding subsection (dd), after making the payment requested
will be sufficient to pay the balance of the cost of the Restoration. Upon
receipt by Lender of evidence reasonably satisfactory to it that the Restoration
has been completed and the cost thereof paid in full, and that there are no
mechanics' or similar liens for labor or materials supplied in connection
therewith, the balance, if any, of such Net Insurance Proceeds shall be paid to
Borrower. If at the time of the damage or destruction to the Mortgaged Property
or at any time thereafter an Event of Default shall have occurred and be
continuing under the Loan Documents, all Net Insurance Proceeds shall be paid to
Lender, and Lender may retain and apply the Net Insurance Proceeds toward the
Obligations whether or not then due and payable, in such order, priority and
proportions as Lender in its discretion shall deem proper, or to cure such Event
of Default, or, in Lender's discretion, Lender may pay such Net Insurance
Proceeds in whole or in part to Borrower to be applied toward the cost of the
Restoration. If Lender shall receive and retain Net Insurance Proceeds, the lien
of this Mortgage shall be reduced only by the amount received and retained by
Lender and actually applied by Lender in reduction of the Obligations.

 

(b)          Condemnation. (i) In case of a taking of all or any part of the
Mortgaged Property or the commencement of any proceedings or negotiations which
might result in a taking, for any public or quasi-public purpose by any lawful
power or authority by exercise of the right of condemnation or eminent domain or
by agreement between Lender, Borrower and those authorized to exercise such
right ("Taking"), Borrower will promptly give written notice thereof to Lender,
generally describing the nature and extent of such Taking. Lender shall file and
prosecute on behalf of Lender and Borrower any and all claims for Proceeds, and
all Proceeds on account of a Taking shall be paid to Lender.

 

(ii)         In case of a Taking of the whole of the Mortgaged Property, other
than for temporary use ("Total Taking"), or in case of a Taking of less than all
of the Mortgaged Property ("Partial Taking"), the Loan Documents shall remain in
full force and effect. In the case of a Partial Taking, Borrower, whether or not
the Proceeds, if any, on account of such Partial Taking shall be sufficient for
the purpose (but provided they are made available by Lender for such purpose),
at its own cost and expense, will promptly commence and complete the
Restoration. In case of a Partial Taking, other than a temporary use, of such a
substantial part of the Mortgaged Property as shall result in the Mortgaged
Property remaining after such Partial Taking being unsuitable for use, such
Taking shall be deemed a Total Taking.

 

(iii)        In case of a temporary use of the whole or any part of the
Mortgaged Property by a Taking, the Loan Documents shall remain in full force
and effect without any reduction of any monetary sum payable under the Loan
Documents. In any proceeding for such Taking, Lender shall have the right to
intervene and participate; provided that, if such intervention shall not be
permitted, Borrower shall consult with Lender, its attorneys and experts, and
make all reasonable efforts to cooperate with Lender in the prosecution or
defense of such proceeding. At the termination of any such use or occupation of
the Mortgaged Property, Borrower will, at its own cost and expense, promptly
commence and complete the Restoration.

 

(iv)        Proceeds on account of a Taking, less the costs, fees and expenses
incurred by Lender and Borrower in connection with the collection thereof,
including, without limitation, attorneys' fees and expenses, shall be applied in
the following order:

 

(x)          Proceeds received on account of a Total Taking shall be allocated
as follows:

 

(aa)         There shall be paid to the Lender an amount up to the sum of the
outstanding principal, including all sums advanced by Lender hereunder, and
interest under the Note, all as of the date on which such payment is made, such
amount shall be applied first against all sums advanced by Lender under this
Mortgage, second against the accrued but unpaid interest on the Note, and third
to the remaining unpaid principal amount of the Note. If the Proceeds received
on account of a Total Taking are not sufficient to satisfy the outstanding
principal balance of the Note, all accrued but unpaid interest on the Note, all
other sums due under the Note, all sums advanced by Lender under this Mortgage
and all other sums due and payable under this Mortgage and the other Loan
Documents corresponding to the Premises (collectively, the "Outstanding
Obligations"), Borrower shall pay to Lender simultaneously with the payment of
such Proceeds to Lender the difference between the amount of such Proceeds and
the amount of the Outstanding Obligations.

 

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(bb)         Any remaining balance shall be paid to Borrower.

 

(y)          Proceeds received on account of a Partial Taking shall be held and
allocated as follows:

 

(i) first, toward the cost of the Restoration, such application of net awards
and other payments to be made substantially in the manner provided in Section
4.01(a)(iii) of this Mortgage; and

 

(ii) then, all or any portion of the balance of such proceeds shall, in Lender's
sole discretion, either be paid to:

 

(1) Lender, as the holder of this Mortgage, and applied toward the Outstanding
Obligations in such order, priority and proportion, and at such time on or prior
to the Maturity Date (as defined in the Note), as Lender shall determine; or

 

(2) Borrower; provided, however, in Lender's sole discretion, such proceeds
shall be pledged to Lender to secure the Outstanding Obligations pursuant to a
security agreement reasonably satisfactory to Lender, or, with Lender's consent,
Borrower shall provide Lender with alternative security satisfactory to Lender
in its sole discretion.

 

Lender may deposit any funds held by it in accounts insured by any federal or
state agency and may commingle such funds with other funds and accounts of
Lender. Interest or gains from such funds, if any, shall be the sole property of
Lender.

 

(z)          Proceeds received on account of a Taking for temporary use shall be
held by Lender and applied to the payment of the monthly installments of
combined interest and principal becoming due under the Note, until such Taking
for temporary use is terminated and the Restoration, if any, has been completed;
provided, however, that, if any portion of any such award or payment is made by
reason of any damage to or destruction of the Mortgaged Property, such portion
shall be held and applied as provided in Section 4.01(a)(iii) hereof. The
balance, if any, of such awards and payments shall be paid to Borrower.

 

(v)         Notwithstanding the foregoing, if at the time of any Taking or at
any time thereafter an Event of Default shall have occurred and be continuing
under the Loan Documents, Lender is hereby authorized and empowered, in the name
and on behalf of Borrower and otherwise, to file and prosecute Borrower's claim,
if any, for an award on account of any Taking and to collect such award and
apply the same, after deducting all costs, fees and expenses incident to the
collection thereof (the "Net Award"), toward the Obligations whether or not then
due and payable, in such order, priority and proportions as Lender in its
discretion shall deem proper, or to cure such Event of Default, or, in Lender's
discretion, Lender may pay the Net Award in whole or in part to Borrower to be
applied toward the cost of the Restoration. If Lender shall receive and retain
the Net Award, the lien of this Mortgage shall be reduced only by the amount
received and retained by Lender and actually applied by Lender in reduction of
the Obligations.

 

Section 4.02. Conveyance in Anticipation of Condemnation, Granting of Easements,
Etc. If no Event of Default shall have occurred and be continuing, Borrower may,
from time to time with respect to its interest in the Mortgaged Property, and
with Lender's prior written consent, (i) sell, assign, convey or otherwise
transfer any interest therein to any person legally empowered to take such
interest under the power of eminent domain, (ii) grant easements and other
rights in the nature of easements, (iii) release existing easements or other
rights in the nature of easements which are for the benefit of the Mortgaged
Property, (iv) dedicate or transfer unimproved portions of the Mortgaged
Property for road, highway or other public purposes, (v) execute petitions to
have the Mortgaged Property annexed to any municipal corporation or utility
district, and (vi) execute and deliver to any person any instrument appropriate
to confirm or effect such grants, releases, dedications and transfers.

 

12

 

 

Section 4.03. Lender's Power. At any time, or from time to time, without
liability therefor, Lender, without affecting the personal liability of any
person for payment of the Obligations or the effect of this Mortgage upon the
remainder of said Mortgaged Property, may from time to time without notice (i)
release any part of said Mortgaged Property, (ii) consent in writing to the
making of any map or plat thereof, (iii) join in granting any easement thereon,
(iv) join in any extension agreement or any agreement subordinating the lien or
charge hereof, (v) release any person so liable, (vi) extend the maturity or
alter any of the terms of any Obligations, (vii) grant other indulgences, (viii)
take or release any other or additional security for any Obligations, (ix) make
compositions or other arrangements with debtors in relation thereto, or (x)
advance additional funds to protect the security hereof or to pay or discharge
the Obligations in the event Borrower fails to do so, and all amounts so
advanced shall be secured hereby and shall be due and payable upon demand by
Lender.

 

ARTICLE V

 

SECURITY INTEREST

 

Section 5.01. Security Agreement. With respect to the Personal Property or any
portion of the Mortgaged Property which constitutes fixtures or other property
governed by the UCC, this Mortgage shall constitute a security agreement between
Borrower, as the debtor, and Lender, as the secured party, and Borrower hereby
grants to Lender a security interest in such portion of the Mortgaged Property.
Cumulative of all other rights of Lender hereunder, Lender shall have all of the
rights conferred upon secured parties by the UCC. Borrower authorizes Lender to
file financing statements with respect to the security interest of Lender,
continuation statements with respect thereto, and any amendments to such
financing statements which may be necessitated by reason of any of the changes
described in Section 6.C of the Loan Agreement. Furthermore, at any time, and
from time to time, Borrower will execute and deliver to Lender all financing
statements that may from time to time be required by Lender to establish and
maintain the validity and priority of the security interest of Lender, or any
modification thereof. Lender may exercise any or all of the remedies of a
secured party available to it under the UCC with respect to such property. If,
upon the occurrence and during the continuance of an Event of Default, Lender
proceeds to dispose of such property in accordance with the provisions of the
UCC, 10 days' notice by Lender to Borrower shall be deemed to be reasonable
notice under any provision of the UCC requiring such notice; provided, however,
that Lender may at its option dispose of such property in accordance with
Lender's rights and remedies with respect to the real property pursuant to the
provisions of this Mortgage, in lieu of proceeding under the UCC. Borrower
represents that its exact legal name and state of formation or organization are
as set forth in the first paragraph of this Mortgage. Borrower agrees that,
notwithstanding any provision in the UCC to the contrary, Borrower shall not
file a termination statement of any financing statement filed by Lender in
connection with any security interest granted under this Mortgage if Lender
reasonably objects to the filing of such termination statement.

 

Section 5.02. Effective as a Financing Statement and Fixture Filing. This
Mortgage shall be effective as a financing statement filed as a fixture filing
with respect to all fixtures included within the Mortgaged Property and is to be
filed for record in the real estate records of each county where any part of the
Mortgaged Property (including said fixtures) is situated. This Mortgage shall
also be effective as a financing statement covering any other portion of the
Mortgaged Property and may be filed in any other appropriate filing or recording
office. The mailing address of Borrower is the address of Borrower set forth in
the introductory paragraph of this Mortgage, and the address of the Lender from
which information concerning the security interests hereunder may be obtained is
the address of Lender as set forth in the introductory paragraph of this
Mortgage. A carbon, photographic or other reproduction of this Mortgage or of
any financing statement relating to this Mortgage shall be sufficient as a
financing statement for any of the purposes referred to in this Section.

 

ARTICLE VI

 

EVENTS OF DEFAULT AND REMEDIES

 

Section 6.01. Events of Default. Each of the following shall be an event of
default under this Mortgage (each an "Event of Default"):

 

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(i)           Subject to the provisions of Section 3.05(b) of this Mortgage, if
Borrower fails to pay, prior to delinquency, any taxes, assessments or other
charges the failure of which to pay will result in the imposition of a lien
against the Mortgaged Property pursuant to Applicable Regulations.

 

(ii)         If Borrower shall fail to maintain insurance in accordance with the
requirements of Section 3.06 of this Mortgage.

 

(iii)        If Borrower fails to observe or perform any of the covenants,
conditions, or obligations of this Mortgage, provided, however, if any such
failure does not involve the payment of any principal, interest or other
monetary sum due under the Note, is not willful or intentional, does not place
any rights or interest in collateral of Lender in immediate jeopardy, and is
within the reasonable power of Borrower to promptly cure after receipt of notice
thereof, all as determined by Lender in its reasonable discretion, then such
failure shall not constitute an Event of Default hereunder, unless otherwise
expressly provided herein, unless and until Lender shall have given Borrower
notice thereof and a period of 30 days shall have elapsed, during which period
Borrower may correct or cure such failure, upon failure of which an Event of
Default shall be deemed to have occurred hereunder without further notice or
demand of any kind being required. If such failure cannot reasonably be cured
within such 30-day period, as determined by Lender in its reasonable discretion,
and Borrower is diligently pursuing a cure of such failure, then Borrower shall
have a reasonable period to cure such failure beyond such 30-day period, which
shall in no event exceed 90 days after receiving notice of the failure from
Lender. If Borrower shall fail to correct or cure such failure within such
90-day period, an Event of Default shall be deemed to have occurred hereunder
without further notice or demand of any kind being required.

 

(iv)        If there is an "Event of Default" under the Loan Agreement.

 

Section 6.02. Remedies. Upon the occurrence and during the continuance of an
Event of Default subject to the limitations set forth in Section 6.01, Lender
may declare all or any part of the Obligations to be due and payable, and the
same shall thereupon become due and payable without any presentment, demand,
protest or notice (including notice of intent to accelerate and notice of
acceleration) of any kind except as otherwise expressly provided herein.
Furthermore, upon the occurrence and during the continuance of an Event of
Default, Lender may:

 

(i)          Either in person or by agent, with or without bringing any action
or proceeding, or by a receiver appointed by a court, and without regard to the
adequacy of its security, enter upon and take possession of the Mortgaged
Property or any part thereof and do any acts which it deems necessary or
desirable to preserve the value, marketability or rentability of the Mortgaged
Property, or part thereof or interest therein, increase the income therefrom or
protect the security hereof and, with or without taking possession of the
Mortgaged Property, take any action described herein, sue for or otherwise
collect the Rents, including those past due and unpaid, and apply the same, less
costs and expenses of operation and collection including reasonable attorneys'
fees, upon any Obligations, all in such order as Lender may determine and pursue
any remedy available under Chapter 697.07, Florida Statutes as amended,
supplemented or superceded from time to time. The entering upon and taking
possession of the Mortgaged Property, the taking of any action described herein,
the collection of such Rents, and the application thereof as aforesaid, shall
not cure or waive any Event of Default or notice of default or invalidate any
act done in response to such Event of Default or pursuant to such notice of
default and, notwithstanding the continuance in possession of the Mortgaged
Property or the collection, receipt and application of Rents, Lender shall be
entitled to exercise every right provided for in any of the Loan Documents or by
law upon any Event of Default, including the right to exercise the power of sale
herein conferred;

 

(ii)         Commence an action to foreclose this Mortgage in a single parcel or
in several parcels, appoint a receiver or specifically enforce any of the
covenants hereof;

 

(iii)        Exercise any or all of the remedies available to a secured party
under the Uniform Commercial Code as adopted in the State ("UCC"), including,
without limitation:

 

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(1)         Either personally or by means of a court appointed receiver,
commissioner or other officer, take possession of all or any of the Personal
Property and exclude therefrom Borrower and all others claiming under Borrower,
and thereafter hold, store, use, operate, manage, maintain and control, make
repairs, replacements, alterations, additions and improvements to and exercise
all rights and powers of Borrower in respect of the Personal Property or any
part thereof. In the event Lender demands or attempts to take possession of the
Personal Property in the exercise of any rights under any of the Loan Documents,
Borrower promises and agrees to promptly turn over and deliver complete
possession thereof to Lender;

 

(2)          Without notice to or demand upon Borrower, make such payments and
do such acts as Lender may deem necessary to protect its security interest in
the Personal Property, including, without limitation, paying, purchasing,
contesting or compromising any encumbrance, charge or lien which is prior to or
superior to the security interest granted hereunder and, in exercising any such
powers or authority, to pay all expenses incurred in connection therewith;

 

(3)          Require Borrower to assemble the Personal Property or any portion
thereof, at the Premises, and promptly to deliver such Personal Property to
Lender, or an agent or representative designated by it. Lender, and its agents
and representatives, shall have the right to enter upon any or all of Borrower's
premises and property to exercise Lender's rights hereunder;

 

(4)          Sell, lease or otherwise dispose of the Personal Property at public
sale, with or without having the Personal Property at the place of sale, and
upon such terms and in such manner as Lender may determine. Lender may be a
purchaser at any such sale;

 

(5)          Unless the Personal Property is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Lender shall give Borrower at least 10 days' prior written notice of the time
and place of any public sale of the Personal Property or other intended
disposition thereof. Such notice may be delivered to Borrower at the address set
forth at the beginning of this Mortgage and shall be deemed to be given as
provided herein; and

 

(6)          Any sale made pursuant to the provisions of this subsection shall
be deemed to have been a public sale conducted in a commercially reasonable
manner if held contemporaneously with the sale of all or a portion of the other
Mortgaged Property under power of sale as provided herein upon giving the same
notice with respect to the sale of the Personal Property hereunder as is
required for such sale of the other Mortgaged Property under power of sale, and
such sale shall be deemed to be pursuant to a security agreement covering both
real and personal property under the UCC.

 

(iv)         Exercise all of Borrower's rights and remedies under the Indemnity
Agreements, including, without limitation, making demands and claims and
receiving payments under the Indemnity Agreements. Borrower hereby grants Lender
a power of attorney (which grant shall be deemed irrevocable and coupled with an
interest) to exercise such rights and remedies;

 

(v)          Apply any sums then deposited in the impound account described in
Section 3.07 toward payment of the taxes, assessment and insurance premiums for
the Mortgaged Property and/or as a credit on the Obligations in such priority
and proportion as Lender may determine in its sole discretion;

 

(vi)         If held by Lender, surrender the insurance policies maintained
pursuant to Section 3.06, collect the unearned insurance premiums and apply such
sums as a credit on the Obligations in such priority and proportion as Lender in
its sole discretion shall deem proper, and in connection therewith, Borrower
hereby appoints Lender as agent and attorney-in-fact (which is coupled with an
interest and is therefore irrevocable) for Lender to collect such insurance
premiums; and

 

(vii)       Sell Borrower's interest in the Mortgaged Property pursuant to the
power of sale herein conferred. If Lender elects to sell Borrower's interest in
the Mortgaged Property by exercise of such power of sale, Lender shall cause
such sale to be performed in the manner then required by law.

 

15

 

 

(aa)          Lender shall cause to be recorded, published and delivered such
notices of default and notices of sale as may then be required by law and by
this Mortgage. Thereafter, Lender shall sell Borrower's interest in the
Mortgaged Property at the time and place of sale fixed by it, either as a whole,
or in separate lots or parcels or items as Lender shall deem expedient, and in
such order as it may determine, at public auction to the highest bidder for cash
in lawful money of the United States payable at the time of sale, or as
otherwise may then be required by law. Lender shall deliver to such purchaser or
purchasers thereof its good and sufficient deed or deeds conveying the property
so sold, without any covenant or warranty, express or implied. The recitals in
such deed of any matters or facts shall be conclusive proof of the truthfulness
thereof. Any person, including, without limitation, Borrower or Lender, may
purchase at such sale. Lender may sell not only the real property but also the
Personal Property and other interests which are a part of the Mortgaged
Property, or any part thereof, as a unit and as a part of a single sale, or may
sell any part of the Mortgaged Property separately from the remainder of the
Mortgaged Property. Lender shall not be required to take possession of any part
of the Mortgaged Property or to have any of the Personal Property present at any
sale of the Mortgaged Property. Lender may appoint or delegate any one or more
persons as agent to perform any act or acts necessary or incident to any sale
held by Lender, including the posting of notices and the conduct of sale, but in
the name and on behalf of Lender. In the event any sale hereunder is not
completed or is defective in the opinion of Lender, such sale shall not exhaust
the power of sale hereunder, and Lender shall have the right to cause a
subsequent sale or sales to be made hereunder.

 

(bb)         As may be permitted by law, Lender shall apply the proceeds of sale
(i) first, to payment of all costs, fees and expenses, including attorneys' fees
and expenses incurred by the Lender in exercising the power of sale or
foreclosing this Mortgage, (ii) second, to the payment of the Obligations
(including, without limitation, the principal, accrued interest and other sums
due and owing under the Note and the amounts due and owing to Lender under this
Mortgage) in such manner and order as Lender may elect, and (iii) third, the
remainder, if any, shall be paid to Borrower, or to Borrower's heirs, devisees,
representatives, successors or assigns, or such other persons as may be entitled
thereto.

 

(cc)         Lender may in the manner provided by law postpone sale of all or
any portion of the Mortgaged Property.

 

Section 6.03. Appointment of Receiver. If an Event of Default shall have
occurred and be continuing, Lender, as a matter of right and without notice to
Borrower or anyone claiming under Borrower, and without regard to the then value
of the Mortgaged Property or the interest of Borrower therein, or the insolvency
of Borrower or the then-owner of the Mortgaged Property, may seek the
appointment of a receiver for the Mortgaged Property upon ex parte application
to any court of the competent jurisdiction. Borrower waives any right to any
hearing or notice of hearing prior to the appointment of a receiver. Such
receiver shall be empowered (a) to take possession of the Mortgaged Property and
any businesses conducted by Borrower thereon and any business assets used in
connection therewith, (b) to exclude Borrower and Borrower's agents, servants
and employees from the Mortgaged Property, or, at the option of the receiver, in
lieu of such exclusion, to collect a fair market rental from any such persons
occupying any part of the Mortgaged Property, (c) to collect the Rents, (d) to
complete any construction that may be in progress, (e) to continue the
development, marketing and sale of the Mortgaged Property, (f) to do such
maintenance and make such repairs and alterations as the receiver deems
necessary, (g) to use all stores of materials, supplies and maintenance
equipment on the Mortgaged Property and replace such items at the expense of the
receivership estate, (h) to pay all taxes and assessments against the Mortgaged
Property, all premiums for insurance thereon, all utility and other operating
expenses, and all sums due under any prior or subsequent encumbrance, (i) to
request that Lender advance such funds as may reasonably be necessary to the
effective exercise of the receiver's powers, on such terms as may be agreed upon
by the receiver and Lender, but not in excess of the Default Rate, and (j)
generally to do anything that Borrower could legally do if Borrower were in
possession of the Mortgaged Property. All expenses incurred by the receiver or
his agents, including obligations to repay funds borrowed by the receiver, shall
constitute a part of the Obligations. Any revenues collected by the receiver
shall be applied first to the expenses of the receivership, including reasonable
attorneys' fees incurred by the receiver and by Lender, together with interest
thereon at the highest rate of interest applicable in the Note from the date
incurred until repaid, and the balance shall be applied toward the Obligations
or in such other manner as the court may direct.

 

16

 

 

Section 6.04. Remedies Not Exclusive. Lender shall be entitled to enforce
payment and performance of any Obligations and to exercise all rights and powers
under this Mortgage or under any Loan Documents or other agreement or any laws
now or hereafter in force, notwithstanding some or all of the Obligations may
now or hereafter be otherwise secured, whether by mortgage, deed of trust,
pledge, lien, assignment or otherwise. Neither the acceptance of this Mortgage
nor its enforcement, whether by court action or pursuant to the power of sale or
other powers herein contained, shall prejudice or in any manner affect Lender's
right to realize upon or enforce any other security now or hereafter held by
Lender, it being agreed that Lender shall be entitled to enforce this Mortgage
and any other security now or hereafter held by Lender in such order and manner
as it may in its absolute discretion determine. No remedy herein conferred upon
or reserved to Lender is intended to be exclusive of any other remedy given
hereunder or now or hereafter existing at law or in equity or by statute. Every
power or remedy given by any of the Loan Documents to Lender, or to which Lender
may be otherwise entitled, may be exercised, concurrently or independently, from
time to time and as often as may be deemed expedient by Lender. Lender may
pursue inconsistent remedies.

 

The acceptance by Lender of any sum after the same is due shall not constitute a
waiver of the right either to require prompt payment, when due, of all other
sums hereby secured or to declare a subsequent Event of Default as herein
provided. The acceptance by Lender of any sum in an amount less than the sum
then due shall be deemed an acceptance on account only and upon condition that
it shall not constitute a waiver of the obligation of Borrower to pay the entire
sum then due, and failure of Borrower to pay such entire sum then due shall be
an Event of Default, notwithstanding such acceptance of such amount on account,
as aforesaid. Lender shall be, at all times thereafter and until the entire sum
then due as contemplated by the Loan Documents shall have been paid, and
notwithstanding the acceptance by Lender thereafter of further sums on account,
or otherwise, entitled to exercise all rights in this instrument conferred upon
them or either of them, and the right to proceed with a sale under any notice of
default, or an election to sell, or the right to exercise any other rights or
remedies hereunder, shall in no way be impaired, whether any of such amounts are
received prior or subsequent to such proceeding, election or exercise. Consent
by Lender to any action or inaction of Borrower which is subject to consent or
approval of Lender hereunder shall not be deemed a waiver of the right to
require such consent or approval to future or successive actions or inactions.

 

Section 6.05. Possession of Mortgaged Property. In the event of a trustee's sale
or foreclosure sale hereunder and after the time of such sale, Borrower occupies
the portion of the Mortgaged Property so sold, or any part thereof, Borrower
shall immediately become the tenant of the purchaser at such sale, which tenancy
shall be a tenancy from day to day, terminable at the will of either tenant or
landlord, at a reasonable rental per day based upon the value of the portion of
the Mortgaged Property so occupied, such rental to be due and payable daily to
the purchaser. An action of unlawful detainer shall lie if the tenant holds over
after a demand in writing for possession of such Mortgaged Property; and this
Mortgage and a trustee's or sheriff's deed shall constitute a lease and
agreement under which the tenant's possession arose and continued. Nothing
contained in this Mortgage shall be construed to constitute Lender as a
"mortgagee in possession" in the absence of its taking actual possession of the
Mortgaged Property pursuant to the powers granted herein.

 

Section 6.06. Waiver of Rights. Borrower waives the benefit of all laws now
existing or that hereafter may be enacted (i) providing for any appraisement
before sale of any portion of the Mortgaged Property, or (ii) in any way
extending the time for the enforcement of the collection of the Obligations or
creating or extending a period of redemption from any sale made in collecting
the Obligations. Borrower agrees that Borrower will not at any time insist upon,
plea, claim or take the benefit or advantage of any law now or hereafter in
force providing for any appraisement, valuation, stay, extension, redemption or
homestead exemption, and Borrower, for Borrower, Borrower's representatives,
successors and assigns, and for any and all persons ever claiming any interest
in the Mortgaged Property, hereby waives and releases all rights of redemption,
valuation, appraisement, stay of execution, homestead exemption, notice of
election to mature or declare due the whole of the Obligations and marshaling in
the event of foreclosure of the liens hereby created. If any law referred to in
this Section and now in force, of which Borrower, Borrower's heirs, devisees,
representatives, successors and assigns or other person might take advantage
despite this Section, shall hereafter be repealed or cease to be in force, such
law shall not thereafter be deemed to preclude the application of this Section.
Borrower expressly waives and relinquishes any and all rights, remedies and
defenses that Borrower may have or be able to assert by reason of the laws of
the State pertaining to the rights, remedies and defenses of sureties.

 

Section 6.07. Relief From Stay. In the event that Borrower commences a case
under the Code or is the subject of an involuntary case that results in an order
for relief under the Code, subject to court approval, Lender shall thereupon be
entitled and Borrower irrevocably consents to relief from any stay imposed by
Section 362 of the Code on or against the exercise of the rights and remedies
otherwise available to Lender as provided in the Loan Documents and Borrower
hereby irrevocably waives its rights to object to such relief. In the event
Borrower shall commence a case under the Code or is the subject of an
involuntary case that results in an order for relief under the Code, Borrower
hereby agrees that no injunctive relief against Lender shall be sought under
Section 105 or other provisions of the Code by Borrower or other person or
entity claiming through Borrower, nor shall any extension be sought of the stay
provided by Section 362 of the Code.

 

17

 

 

Section 6.08. Cash Collateral. Borrower hereby acknowledges and agrees that in
the event that Borrower commences a case under the Code or is the subject of an
involuntary case that results in an order for relief under the Code: (i) that
all of the Rents are, and shall for purposes be deemed to be, "proceeds,
product, offspring, rents, or profits" of the Premises covered by the lien of
this Mortgage, as such quoted terms are used in Section 552(b) of the Code; (ii)
that in no event shall Borrower assert, claim or contend that any portion of the
Rents are, or should be deemed to be, "accounts" or "accounts receivable" within
the meaning of the Code and/or applicable state law; (iii) that the Rents are
and shall be deemed to be in any such bankruptcy proceeding "cash collateral" of
Lender as that term is defined in Section 363 of the Code; and (iv) that Lender
has valid, effective, perfected, enforceable and "choate" rights in and to the
Rents without any further action required on the part of Lender to enforce or
perfect its rights in and to such cash collateral, including, without
limitation, providing notice to Borrower under Section 546(b) of the Code.

 

Section 6.09. Assignment of Rents and Leases. (a) Borrower hereby assigns,
transfers, conveys and sets over to Lender all of Borrower's estate, right,
title and interest in, to and under the Leases, whether existing on the date
hereof or hereafter entered into, together with any changes, extensions,
revisions or modifications thereof and all rights, powers, privileges, options
and other benefits of Borrower as the lessor under the Leases regarding the
current tenants and any future tenants, and all the Rents from the Leases,
including those now due, past due or to become due. Borrower irrevocably
appoints Lender its true and lawful attorney-in-fact, at the option of Lender,
at any time and from time to time upon the occurrence and during the continuance
of an Event of Default, to take possession and control of the Premises, pursuant
to Borrower's rights under the Leases, to exercise any of Borrower's rights
under the Leases, and to demand, receive and enforce payment, to give receipts,
releases and satisfaction and to sue, in the name of Borrower or Lender, for all
of the Rents. The power of attorney granted hereby shall be irrevocable and
coupled with an interest and shall terminate only upon the payment of all sums
due Lender for all losses, costs, damages, fees and expenses whatsoever
associated with the exercise of this power of attorney, and Borrower hereby
releases Lender from all liability (other than as a result of the gross
negligence or willful misconduct of Lender) whatsoever for the exercise of the
foregoing power of attorney and all actions taken pursuant thereto. The
consideration received by Borrower to execute and deliver this assignment and
the liens and security interests created herein is legally sufficient and will
provide a direct economic benefit to Borrower. It is intended by Borrower and
Lender that the assignment set forth herein constitutes an absolute assignment
and not merely an assignment for additional security. Notwithstanding the
foregoing, this assignment shall not be construed to bind Lender to the
performance of any of the covenants, conditions or provisions of Borrower
contained in the Leases or otherwise to impose any obligation upon Lender, and,
so long as no Event of Default shall have occurred and be continuing, Borrower
shall have a license, revocable upon an Event of Default, to possess and control
the Premises and collect and receive all Rents. Upon an Event of Default, such
license shall be automatically revoked. The assignment of Rents and Leases
contained in this Mortgage are intended to provide Lender with all rights and
remedies of mortgagees pursuant to Section 697.07, Florida Statutes, as may be
amended, supplemented or superceded from time to time. However, in no event
shall this reference diminish, alter, impair or affect any other rights or
remedies of Lender

 

(b)          Upon the occurrence and during the continuance of an Event of
Default, Lender may, at any time without notice (except if required by
applicable law), either in person, by agent or by a court-appointed receiver,
regardless of the adequacy of Lender's security, and at its sole election
(without any obligation to do so), enter upon and take possession and control of
the Premises, or any part thereof, to perform all acts necessary and appropriate
to operate and maintain the Premises, including, but not limited to, execute,
cancel or modify the Leases, make repairs to the Premises, execute or terminate
contracts providing for the management or maintenance of the Premises, all on
such terms as are deemed best to protect the security of this assignment, and in
Lender's or Borrower's name, sue for or otherwise collect such Rents as
specified in this Mortgage as the same become due and payable, including, but
not limited to, Rents then due and unpaid. Lender may so sue for or otherwise
collect such Rents with or without taking possession of the Premises. Borrower
agrees that upon the occurrence and during the continuance of an Event of
Default, each tenant of the Premises shall make its rent payable to and pay such
rent to Lender (or Lender's agents) on Lender's written demand therefor,
delivered to such tenant personally, by mail, or by delivering such demand to
each rental unit, without any liability on the part of said tenant to inquire
further as to the existence of an Event of Default by Borrower.

 

18

 

 

(c)           Rents collected subsequent to any Event of Default shall be
applied at the direction of, and in such order as determined by, Lender to the
costs, if any, of taking possession and control of and managing the Premises and
collecting such amounts, including, but not limited to, reasonable attorney's
fees, receiver's fees, premiums on receiver's bonds, costs of repairs to the
Premises, premiums on insurance policies, taxes, assessments and other charges
on the Premises, and the costs of discharging any obligation or liability of
Borrower with respect to the Leases and to the sums secured by this Mortgage.
Lender or the receiver shall have access to the books and records used in the
operation and maintenance of the Premises and shall be liable to account only
for those Rents actually received.

 

(d)           Lender shall not be liable to Borrower, anyone claiming under or
through Borrower or anyone having an interest in the Premises by reason of
anything done or left undone by Lender hereunder, except to the extent of
Lender's gross negligence or willful misconduct.

 

(e)           Any entering upon and taking possession and control of the
Premises by Lender or the receiver and any application of Rents as provided
herein shall not cure or waive any Event of Default hereunder or invalidate any
other right or remedy of Lender under applicable law or provided therein.

 

ARTICLE VII

 

MISCELLANEOUS

 

Section 7.01. Satisfaction. If and when the Obligations shall have become due
and payable (whether by lapse of time or by acceleration or by the exercise of
the privilege of prepayment), and Borrower shall pay or cause to be paid
(provided such payment is permitted or required by the Note) the full amount
thereof and shall also pay or cause to be paid all other sums payable by the
Borrower Parties to the Lender Entities with respect to the Obligations, then
this Mortgage shall be void (otherwise it shall remain in full force and effect
in law and equity forever) and Lender agrees to execute an instrument evidencing
the satisfaction of all obligations under this Mortgage and releasing this
Mortgage which shall be prepared and recorded at Borrower's sole expense.

 

Section 7.02. Limitation of Rights of Others. Nothing in this Mortgage is
intended or shall be construed to give to any person, other than Borrower,
Environmental Insurer and the holder of the Note, any legal or equitable right,
remedy or claim under or in respect of this Mortgage or any covenant, condition
or provision herein contained.

 

Section 7.03. Severability. In case any one or more of the provisions contained
herein or in the Note shall be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision hereof, and this Mortgage shall be construed as if such
provision had never been contained herein or therein.

 

Section 7.04. Notices; Amendments; Waiver. All notices, demands, designations,
certificates, requests, offers, consents, approvals, appointments and other
instruments given pursuant to this Mortgage (collectively called "Notices")
shall be in writing and given by (i) hand delivery, (ii) facsimile, (iii)
express overnight delivery service or (iv) certified or registered mail, return
receipt requested and shall be deemed to have been delivered upon (a) receipt,
if hand delivered, (b) transmission, if delivered by facsimile, (c) the next
Business Day, if delivered by express overnight delivery service, or (d) the
third Business Day following the day of deposit of such notice with the United
States Postal Service, if sent by certified or registered mail, return receipt
requested. Notices shall be provided to the parties and addresses (or facsimile
numbers, as applicable) specified below:

 

  If to Borrower: Family Steak Houses of Florida, Inc.     2113 Florida
Boulevard     Neptune Beach, FL 32266     Attention:    Edward B. Alexander    
Telephone:  (904) 249-4197     Telecopy:    (904) 249-1466

 

19

 

 

  If to Lender: GE Capital Franchise Finance Corporation     17207 North
Perimeter Drive     Scottsdale, AZ  85255     Attention:     General Counsel    
Telephone:   (480) 585-4500     Telecopy:     (480) 585-2226

 

or to such other address or such other person as either party may from time to
time hereafter specify to the other party in a notice delivered in the manner
provided above. Whenever in this Mortgage the giving of Notice is required, the
giving thereof may be waived in writing at any time by the person or persons
entitled to receive such Notice. Except as in this Mortgage otherwise expressly
provided, (i) this Mortgage may not be modified except by an instrument in
writing executed by Borrower and Lender and (ii) no requirement hereof may be
waived at any time except by a writing signed by the party against whom such
waiver is sought to be enforced, nor shall any waiver be deemed a waiver of any
subsequent breach or default.

 

Section 7.05. Successors and Assigns. All of the provisions herein contained
shall be binding upon and inure to the benefit of the respective successors and
assigns of the parties hereto, to the same extent as if each such successor and
assign were in each case named as a party to this Mortgage. Wherever used, the
singular shall include the plural, the plural shall include the singular and the
use of any gender shall include all genders.

 

Section 7.06. Headings. The headings appearing in this Mortgage have been
inserted for convenient reference only and shall not modify, define, limit or
expand the express provisions of this Mortgage.

 

Section 7.07. Time of the Essence. Time is of the essence in the performance of
each and every obligation under this Mortgage.

 

Section 7.08. Forum Selection; Jurisdiction; Venue; Choice of Law. Borrower
acknowledges that this Mortgage was substantially negotiated in the State of
Arizona, this Mortgage was delivered in the State of Arizona, all payments under
the Loan Documents will be delivered in the State of Arizona and there are
substantial contacts between the parties and the transactions contemplated
herein and the State of Arizona. For purposes of any action or proceeding
arising out of this Mortgage, the parties hereto expressly submit to the
jurisdiction of all federal and state courts located in the State of Arizona.
Borrower consents that it may be served with any process or paper by registered
mail or by personal service within or without the State of Arizona in accordance
with applicable law. Furthermore, Borrower waives and agrees not to assert in
any such action, suit or proceeding that it is not personally subject to the
jurisdiction of such courts, that the action, suit or proceeding is brought in
an inconvenient forum or that venue of the action, suit or proceeding is
improper. The creation of this Mortgage and the rights and remedies of Lender
with respect to the Mortgaged Property, as provided herein and by the laws of
the State, shall be governed by and construed in accordance with the internal
laws of the State without regard to its principles of conflicts of law. With
respect to other provisions of this Mortgage, this Mortgage shall be governed by
the internal laws of the State of Arizona, without regard to its principles of
conflicts of law. Nothing in this Section shall limit or restrict the right of
Lender to commence any proceeding in the federal or state courts located in the
State to the extent Lender deems such proceeding necessary or advisable to
exercise remedies available under the Mortgage or the other Loan Documents.

 

Section 7.09. Indemnification. Borrower shall indemnify and hold harmless each
of the Indemnified Parties for, from and against any and all claims, suits,
liabilities (including, without limitation, strict liabilities), actions,
proceedings, obligations, debts, damages, losses, costs, expenses, diminutions
in value, fines, penalties, charges, fees, expenses, judgments, awards, amounts
paid in settlement and damages of whatever kind or nature (including, without
limitation, attorneys' fees, court costs and other costs of defense)
(collectively, "Losses") (excluding Losses suffered by an Indemnified Party
arising out of such Indemnified Party's gross negligence or willful misconduct;
provided, however, that the term "gross negligence" shall not include gross
negligence imputed as a matter of law to any of the Indemnified Parties solely
by reason of Borrower's interest in the Mortgaged Property or Borrower's failure
to act in respect of matters which are or were the obligation of Borrower under
the Loan Documents) caused by, incurred or resulting from Borrower's or Lessee’s
operations of, or relating in any manner to, the Mortgaged Property, whether
relating to its original design or construction, latent defects, alteration,
maintenance, use by Borrower, Lessee or any person thereon, supervision or
otherwise, or from any breach of, default under or failure to perform any term
or provision of this Mortgage by Borrower, its officers, employees, agents or
other persons. It is expressly understood and agreed that Borrower's obligations
under this Section shall survive the expiration or earlier termination of this
Mortgage for any reason.

 

20

 

 

Section 7.10. Waiver of Jury Trial and Punitive, Consequential, Special and
Indirect Damages. LENDER, BY ACCEPTING THIS MORTGAGE, AND BORROWER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO
AGAINST THE OTHER OR ITS SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR
IN CONNECTION WITH THIS MORTGAGE, THE RELATIONSHIP OF LENDER AND BORROWER,
BORROWER'S USE OR OCCUPANCY OF THE MORTGAGED PROPERTY, AND/OR ANY CLAIM FOR
INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. THIS WAIVER BY THE
PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY HAS BEEN
NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN. FURTHERMORE, BORROWER
AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT
EITHER MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES
FROM THE OTHER AND ANY OF THE OTHER'S AFFILIATES, OFFICERS, DIRECTORS OR
EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY AND ALL ISSUES
PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY EITHER
PARTY AGAINST THE OTHER OR ANY OF THE OTHER'S AFFILIATES, OFFICERS, DIRECTORS OR
EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF
OR IN CONNECTION WITH THIS MORTGAGE OR ANY DOCUMENT CONTEMPLATED HEREIN OR
RELATED HERETO. THE WAIVER BY BORROWER AND LENDER OF ANY RIGHT THEY MAY HAVE TO
SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED
BY THE PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.

 

21

 

 

IN WITNESS WHEREOF, Borrower has executed and delivered this Mortgage as of the
day and year first above written.

 

    BORROWER:     FAMILY STEAK HOUSES OF FLORIDA, INC., a     Florida
corporation                 By /s/ Edward Alexander     Printed Name Edward
Alexander     Title Executive Vice President and Chief Financial Officer        
U.S. Federal Tax Identification Number:           59-2597349          
Organization Identification Number:                   /s/ Cynthia D Newton    
Witness           Cynthia D Newton     Printed Name           /s/ Stephen C.
Travis     Witness           Stephen C. Travis     Printed Name           STATE
OF Florida   )     ) SS. COUNTY OF Duval   )          

 The foregoing instrument was acknowledged before me on Sept 30, 2002 by Ed
Alexander, Exec Vice Pres and Chief Financial Officer of Family Steak Houses of
Florida, Inc., a Florida corporation, on behalf of the corporation. He/She is
personally known to me or has produced a driver's license as identification and
did not take an oath.

 

  /s/ Cynthia D Newton   Notary Public         My Commission Expires:    
[tpg22.jpg]

 

 

 

 

EXHIBIT A

 

LEGAL DESCRIPTION OF PREMISES

 

A portion of the Castro Y Ferrer Grant, Section 38, Township 2 South, Range 29
East, Duval County, Florida, being more particularly described as follows:

 

Commence at the Southwest corner of Lot 15, Block 15, as shown on the plat of
Prado Ferrer Plat No. 2 of Florida Beach, as recorded in Plat Book 11, page 61
of the current public records of Duval County, Florida; thence North 89°29'50"
East along the Northerly line of the 20 foot alley as shown on said plat and its
Easterly prolongation and the Southerly line of those lands described in
Official Records Volume 1659, page 53, of the current public records of said
County, a distance of 714.22 feet to the Southeast corner of Lot 24, Block 16 as
shown on said plat; thence North 00°30’10" West along the Easterly line of said
Lot 24, a distance of 82.00 feet to the Southerly right of way line of Atlantic
Boulevard, County Road No. 10 (as per J.T.A. Right of Way Map Project No.
72100-3178, dated 7/29/66 and as described and recorded in Official Records
Volume 2668, page 781 of the current public records of said County; thence along
said Southerly right of way line, run the following three courses and distances:
Course No. 1) North 89°29'50" East, 80.00 feet; Course No. 2) North 85°l2'29"
East, 240.67 feet; Course No. 3) North 89°29'50" East, 315.00 feet to the
centerline of Castro Trail as shown on the Plat of Prado Ferrer Plat No. 2 of
Florida Beach, and the Point of Beginning; thence Southerly along said
centerline, also being the Easterly boundary of said Prado Ferrer Plat No. 2 of
Florida Beach, run the following two courses and distances: Course No. 1) South
00°30'10" East, 133.48 feet to the Point of Curvature of a curve to the left;
Course No. 2) Southerly along the arc of said curve being concave Easterly and
having a radius of 1796.05 feet, an arc distance of 258.37 feet, said arc being
subtended by a chord bearing and distance of South 04°37'26" East, 258.15 feet;
thence North 80° 00'18" East, 127.11 feet; thence North 87°08'51" East, 100.00
feet; thence South 83°03'09" East, 24.42 feet to the Westerly line of those
lands, described and recorded in Official Records Volume 4454, page 62 of said
current public records; thence Northerly along said Westerly line of last said
lands and along the arc of a curve concave Easterly and having a radius of
1546.05 feet, an arc distance of 236.51 feet, said arc being subtended by a
chord bearing and distance of North 04°53'07" West, 236.28 feet to the Point of
Tangency of said curve; thence North 00°30'10" West and continuing along the
Westerly line of last mentioned lands, 133.48 feet to the aforementioned
Southerly right of way line of Atlantic Boulevard; thence South 89°29'50" West,
along last said line, 250.00 feet to the Point of Beginning.

 

Together with the rights and privileges set forth in Non-exclusive Mutually
Reciprocal Roadway Easement for Ingress and Egress and Parking Easement recorded
in Official Records Volume 6220, page 1086, as amended in Official Records
Volume 6269, page 1436, current public records of Duval County, Florida, more
particularly described as follows:

 

A portion of the Castro Y Ferrer Grant, Section 38, Township 2 South, Range 29
East, Duval County, Florida, being more particularly described as follows:

 

Commence at the Southwest corner of Lot 15, Block 15, as shown on the plat of
Prado Ferrer Plat No. 2, of Florida Beach, as recorded in Plat Book 11, page 61,
of the current public records of Duval County, Florida; thence North 89°29'50"
East along the Northerly line of the 20 foot alley as shown on said plat and its
Easterly prolongation and the Southerly line of those lands described in
Official Records Volume

 

 

 

 

1659, page 53, of the current public records of said County, a distance of
714.22 feet to the Southeast corner of Lot 24, Block 16, as shown on said Plat;
thence North 00°30'10" West along the Easterly line of said Lot 24, a distance
of 82.00 feet to the Southerly right of way line of Atlantic Boulevard, County
Road No. 10 (as per J.T.A. Right of Way Map Project No. 72100-3178, dated
7/29/66 and as described and recorded in Official Records Volume 2668, page 781
of the current public records of said County): thence along said Southerly right
of way line run the following three courses and distances: Course No. 1) North
89°29'50" East, 80.00 feet; Course No. 2) North 85°12'29" East, 240.67 feet;
Course No. 3) North 89°29'50" East, 315.00 feet to the centerline of Castro
Trail as shown on the Plat of Prado Ferrer Plat No. 2 of Florida Beach; thence
Southerly along said centerline, also being the Easterly boundary of said Prado
Ferrer Plat No. 2 of Florida Beach, run the following two courses and distances:
Course No. 1) South 00°30'10" East, 133.48 feet to the Point of Curvature of a
curve to the left; Course No. 2) Southerly along the arc of said curve being
concave Easterly and having a radius of 1796.05 feet, an arc distance of 258.37
feet, said arc being subtended by a chord bearing and distance of South
04°37'26" East, 258.15 feet for a Point of Beginning; thence North 80°00'18"
East, 127.11 feet; thence North 87°08'51" East, 100.00 feet; thence South
83°03'09" East, 24.42 feet to the Westerly line of those lands described and
recorded in Official Records Volume 4454, page 62 of said current public
records; thence Southerly along said Westerly line of last said lands and along
the arc of a curve concave Easterly and having a radius of 1546.05 feet, an arc
distance of 58.46 feet, said arc being subtended by a chord bearing and distance
of South 10°21' 03" East, 58.45 feet; thence South 89°29'50" West, parallel to
said Southerly right of way line of Atlantic Boulevard, a distance of 242.00
feet; thence North 37°55'39" West, a distance of 24.87 feet to said curved
Easterly boundary of Prado Ferrer Plat No. 2 of Florida Beach; thence Northerly
around and along said Easterly boundary and the arc of said curve, a distance of
16.12 feet, said arc being subtended by a chord bearing and distance of North
09°00'08" West, 16.12 feet to the Point of Beginning.