Exhibit 10.25

RECORDING REQUESTED BY

AND WHEN RECORDED MAIL TO:

Wells Fargo Bank, National Association

Real Estate Group (AU# 02955)

2030 Main Street, Suite 800

Irvine, CA 92614

Attn: Jeri Gehrer

Loan No. 1002835

 

 

 

THIS MORTGAGE SECURES A NOTE WHICH PROVIDES FOR A VARIABLE INTEREST RATE

AMENDED AND RESTATED MORTGAGE

WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

THE PARTIES TO THIS AMENDED AND RESTATED MORTGAGE WITH ABSOLUTE ASSIGNMENT OF
LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING (“Mortgage”), made as of
January 27, 2011, are KBSII NATIONAL CITY TOWER, LLC, a Delaware limited
liability company, having an address at c/o KBS Capital Advisors, 620 Newport
Center Drive, Suite 1300, Newport Beach, CA 92660 (“Mortgagor”) and WELLS FARGO
BANK, NATIONAL ASSOCIATION, as Administrative Agent for itself and certain
additional lenders (“Mortgagee”), having an address and principal place of
business in the county of Orange, State of California, located at Wells Fargo
Bank, National Association, 2030 Main Street, Irvine, California 92614.

RECITALS

 

  A. Administrative Agent and Lenders (as defined in the Original Loan Agreement
referenced below) previously made a loan to Mortgagor in the original principal
amount of Sixty-Nine Million Dollars ($69,000,000) (the “Original National City
Loan”).

 

  B. The Original National City Loan is evidenced by (i) a Secured Promissory
Note, dated December 16, 2010, executed by Mortgagor for the benefit of Wells
Fargo Bank, National Association (the “Original Note”), (ii) a Loan Agreement,
dated December 16, 2010, executed by Mortgagor, Mortgagee and Lenders (the
“Original Loan Agreement”) and (iii) each of the other Loan Documents (as such
term is defined in the Original Loan Agreement), and secured by, among other
things, a Mortgage with Absolute Assignment of Leases and Rents, Security
Agreement and Fixture Filing, dated December 16, 2010, executed by Mortgagor for
the benefit of Mortgagee, and recorded December 21, 2010, in Mortgage Book 12264
Page 0293 of the Office of the Clerk of Jefferson County, Kentucky, and in
Fixture Filing Book 00082, Page 0843 of the aforesaid office (the “Original
Mortgage”).

 

  C.

Mortgagor, certain additional borrowers, each of which is an affiliate of the
Mortgagor (“New Borrowers”, and together with Mortgagor, the “Borrowers”),
Mortgagee and Lenders, have now entered into an Amended and Restated and
Consolidated Loan Agreement, dated January 27, 2011 (as the same may be amended,
restated or replaced from time to time, the “Loan Agreement”), whereby (i) the
principal amounts of the Original National City Loan and the Original Horizon
Loan (as defined in the Loan Agreement) have been consolidated and increased to
an aggregate principal amount of $360,000,000, which amount may, subject to the
terms and

 

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Loan No. 1002835

 

 

conditions of the Loan Agreement, increase to a maximum principal amount of
$372,000,000 (the “Loan”); and (ii) certain additional collateral has been
provided for the Loan.

 

  D. In connection with the Loan Agreement, Mortgagor and Mortgagee now wish to
enter into this Mortgage, which amends, restates and replaces the Original
Mortgage.

NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, Mortgagor and Mortgagee hereby agree as follows:

ARTICLE 1. GRANT

 

1.1

GRANT. For the purposes of and upon the terms and conditions in this Mortgage
and to secure the full and timely payment, performance and discharge of the
Secured Obligations (as herein defined), Mortgagor irrevocably GRANTS, CONVEYS,
MORTGAGES, ASSIGNS, BARGAINS and SELLS and has by these presents GRANTED,
CONVEYED, ASSIGNED, BARGAINED and SOLD, to Mortgagee and its successors and
assigns, with power of sale and right of entry and possession, all of that real
property located in the City of Louisville, County of Jefferson, Commonwealth of
Kentucky, described on Exhibit A attached hereto and fully incorporated herein
for all purposes, together with the Collateral (as defined in Section 4.1 below)
together with all right, title, interest, and privileges of Mortgagor in and to
all streets, ways, roads and alleys used in connection with or pertaining to
such real property or the improvements thereon, all development rights or
credits, air rights, water, water rights and water stock related to the real
property, all timber, and all minerals, oil and gas, and other hydrocarbon
substances in, on or under the real property, and all licenses, appurtenances,
reversions, remainders, easements, rights and rights of way appurtenant or
related thereto; any and all rights of Mortgagor, as a declarant, under any
covenants, conditions, and restrictions now or hereafter pertaining to the real
property described on Exhibit A, hereto, provided, however, that Mortgagee shall
have no liability under such covenants, conditions, and restrictions unless and
until Mortgagee forecloses on the real property; all buildings, other
improvements and fixtures now or hereafter located on the real property,
including, but not limited to, all apparatus, equipment, and appliances used in
the operation or occupancy of the real property, it being intended by the
parties that all such items shall be conclusively considered to be a part of the
real property, whether or not attached or affixed to the real property (the
“Improvements”); all interest or estate which Mortgagor may hereafter acquire in
the property described above, and all additions and accretions thereto, and the
proceeds of any of the foregoing; (all of the foregoing being collectively
referred to as the “Subject Property”). The listing of specific rights or
property shall not be interpreted as a limit of general terms; TO HAVE AND TO
HOLD the Subject Property and every privilege, hereditament and appurtenance
belonging or appertaining to it unto Mortgagee, its successors, substitutes in
trust and its assignees, forever, and Mortgagor does hereby bind itself, its
successors and assigns, to WARRANT AND FOREVER DEFEND the title to the Subject
Property unto Mortgagee against every person whomsoever lawfully claiming or to
claim the same or any part thereof; provided, however, that if Mortgagor shall
pay (or cause to be paid) and shall perform and discharge (or cause to be
performed and discharged) the Secured Obligations on or before the date same are
to be paid, performed and discharged, then the liens, security interests,
estates, rights and titles granted by this Mortgage shall terminate in
accordance with the provisions hereof, otherwise same shall remain in full force
and effect.

 

1.2

ADDRESS. The address of the Subject Property is: 101 South Fifth St.,
Louisville, Kentucky. However, neither the failure to designate an address nor
any inaccuracy in the address designated shall affect the validity or priority
of the lien of this Deed of Trust on the Subject Property as described on
Exhibit A.

 

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Loan No. 1002835

 

ARTICLE 2. OBLIGATIONS SECURED

 

2.1 OBLIGATIONS SECURED. Mortgagor makes this Mortgage for the purpose of
securing the following obligations (“Secured Obligations”):

 

  a.

Payment to Lenders (as defined in the Loan Agreement (as defined below) and as
identified on Exhibit B attached hereto) of all sums at any time owing under one
or more secured promissory notes (initially dated January 27, 2011, and maturing
on January 27, 2016 (subject to extension in accordance with the Loan Agreement
referenced below)) made in the aggregate principal amount of Three Hundred and
Sixty Million Dollars ($360,000,000) (the “Loan”) evidencing the Loan executed
by Mortgagor and certain other parties, as Borrowers, from time to time in
connection with the Loan Agreement, and payable to the order of one or more
Lenders, including, without limitation (i) any replacement Note executed
pursuant to Section 2.15 of the Loan Agreement in connection with an increase of
the Loan to a maximum principal amount of Three Hundred and Seventy-Two Million
Dollars ($372,000,000) and (ii) any replacement Note executed pursuant to
Section 3.4 of the Loan Agreement in connection with the joinder of additional
Borrowers to the Loan Agreement (collectively, as the same may be amended,
restated or replaced from time to time, the “Note”); and

 

  b.

Payment and performance of all covenants and obligations of Mortgagor under this
Mortgage; and

 

  c.

Payment and performance of all covenants and obligations on the part of
Borrowers under that certain Amended and Restated and Consolidated Loan
Agreement (as the same may be amended, restated or replaced from time to time,
“Loan Agreement”), dated January 27, 2011, by and among Borrowers, Mortgagee,
and Lenders, the Hazardous Materials Indemnity Agreement (as defined in the Loan
Agreement), and all other “Loan Documents” as defined in the Loan Agreement; and

 

  d.

Payment and performance of all covenants and obligations, if any, of any rider
attached as an Exhibit to this Mortgage; and

 

  e.

Payment and performance of all future advances and other obligations that the
then record owner of all or part of the Subject Property may agree to pay and/or
perform (whether as principal, surety or guarantor) for the benefit of
Mortgagee, when such future advance or obligation is evidenced by a writing
which recites that it is secured by this Mortgage up to a maximum additional
indebtedness of $372,000,000.00; and

 

  f.

Payment and performance of all covenants and obligations of Borrowers (or any of
them) under (i) the Existing Swap and (ii) any other Swap Agreement, which
agreement is evidenced by a writing that recites it is secured by this Mortgage;
and

 

  g.

All modifications, extensions and renewals of any of the obligations secured
hereby, however evidenced, including, without limitation: (i) modifications of
the required principal payment dates or interest payment dates or both, as the
case may be, deferring or accelerating payment dates wholly or partly; or
(ii) modifications, extensions or renewals at a different rate of interest
whether or not in the case of a note, the modification, extension or renewal is
evidenced by a new or additional promissory note or notes.

 

2.2

OBLIGATIONS. The term “obligations” is used herein in its broadest and most
comprehensive sense and shall be deemed to include, without limitation, all
interest and charges, prepayment charges (if any), late charges and loan fees at
any time accruing or assessed on any of the Secured Obligations.

 

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Loan No. 1002835

 

2.3

INCORPORATION. All capitalized terms not defined herein shall have the meanings
given to them in the Loan Agreement. All terms of the Secured Obligations and
the documents evidencing such obligations are incorporated herein by this
reference. All persons who may have or acquire an interest in the Subject
Property shall be deemed to have notice of the terms of the Secured Obligations
and to have notice, if provided therein, that: (a) the Note or the Loan
Agreement may permit borrowing, repayment and re-borrowing so that repayments
shall not reduce the amounts of the Secured Obligations; and (b) the rate of
interest on one or more Secured Obligations may vary from time to time.

ARTICLE 3. ASSIGNMENT OF LEASES AND RENTS

 

3.1

ASSIGNMENT. Mortgagor hereby irrevocably assigns to Mortgagee all of Mortgagor’s
right, title and interest in, to and under: (a) all leases of the Subject
Property or any portion thereof, and all other agreements of any kind relating
to the use or occupancy of the Subject Property or any portion thereof, whether
now existing or entered into after the date hereof (“Leases”); and (b) the
rents, revenue, income, issues, deposits and profits of the Subject Property,
including, without limitation, all parking income and all amounts payable and
all rights and benefits accruing to Mortgagor under the Leases (“Payments”). The
term “Leases” shall also include all guarantees of and security for the lessees’
performance thereunder, and all amendments, extensions, renewals or
modifications thereto which are permitted hereunder. This is a present and
absolute assignment, not an assignment for security purposes only, and
Mortgagee’s right to the Leases and Payments is not contingent upon, and may be
exercised without possession of, the Subject Property.

 

3.2

GRANT OF LICENSE. Mortgagee confers upon Mortgagor a license (“License”) to
collect and retain the Payments as they become due and payable, until the
occurrence of a Default (as hereinafter defined). Upon a Default, the License
shall be automatically revoked and Mortgagee may collect and apply the Payments
pursuant to Section 6.4 without notice and without taking possession of the
Subject Property. Mortgagor hereby irrevocably authorizes and directs the
lessees under the Leases to rely upon and comply with any notice or demand by
Mortgagee for the payment to Mortgagee of any rental or other sums which may at
any time become due under the Leases, or for the performance of any of the
lessees’ undertakings under the Leases, and the lessees shall have no right or
duty to inquire as to whether any Default has actually occurred or is then
existing hereunder. Mortgagor hereby relieves the lessees from any liability to
Mortgagor by reason of relying upon and complying with any such notice or demand
by Mortgagee. Furthermore, upon any Default and revocation of the License as
aforesaid, Mortgagee shall be entitled to receive and Mortgagor covenants to
deliver immediately to Mortgagee, upon demand, any and all Payments theretofore
collected by Mortgagor which remain in the possession or control of Mortgagor,
whether or not commingled with other funds of Mortgagor, and to the extent such
Payments have not been delivered, the Payments shall be held in trust for
Mortgagee.

 

3.3

EFFECT OF ASSIGNMENT. The foregoing irrevocable assignment shall not cause
Mortgagee to be: (a) a mortgagee in possession; (b) responsible or liable for
the control, care, management or repair of the Subject Property or for
performing any of the terms, agreements, undertakings, obligations,
representations, warranties, covenants and conditions of the Leases; or
(c) responsible or liable for any waste committed on the Subject Property by the
lessees under any of the Leases or any other parties; for any dangerous or
defective condition of the Subject Property; or for any negligence in the
management, upkeep, repair or control of the Subject Property resulting in loss
or injury or death to any lessee, licensee, employee, invitee or other person.
Mortgagee shall not directly or indirectly be liable to Mortgagor or any other
person as a consequence of: (i) the exercise or failure to exercise by
Mortgagee, or any of its employees, agents, contractors or subcontractors, any
of the rights, remedies or powers granted to Mortgagee hereunder; or (ii) the
failure or refusal of Mortgagee to perform or discharge any obligation, duty or
liability of Mortgagor arising under the Leases.

 

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3.4

REPRESENTATIONS AND WARRANTIES. Mortgagor represents and warrants that, to the
best of Mortgagor’s knowledge: (a) Mortgagor has delivered to Mortgagee a rent
roll that, as of the date hereof, contains a true, accurate and complete list of
all Leases; (b) all existing Leases are in full force and effect and are
enforceable in accordance with their respective terms, and no breach or default,
or event which would constitute a breach or default after notice or the passage
of time, or both, exists under any existing Leases on the part of any party;
(c) no rent or other payment under any existing Lease has been paid by any
lessee for more than one (1) month in advance; and (d) none of the lessor’s
interests under any of the Leases has been transferred or assigned.

 

3.5

COVENANTS. Mortgagor covenants and agrees at Mortgagor’s sole cost and expense
to: (a) perform the obligations of lessor contained in the Leases and enforce by
all appropriate remedies performance by the lessees of the obligations of the
lessees contained in the Leases; (b) give Mortgagee prompt written notice of any
material default which occurs with respect to any of the Leases, whether the
default be that of the lessee or of the lessor; (c) exercise Mortgagor’s best
efforts to keep all portions of the Subject Property that are capable of being
leased leased at rental rates pursuant to the terms of the Loan Agreement;
(d) deliver to Mortgagee fully executed, copies of each and every Lease that it
is required to deliver in accordance with the Loan Agreement; and (e) execute
and record such additional assignments of any Lease or, if required by the terms
of the Loan Agreement, use commercially reasonable efforts to obtain specific
subordinations (or subordination, attornment and non-disturbance agreements
executed by the lessor and lessee) of any Lease to the Mortgage, in form and
substance acceptable to Mortgagee, as Mortgagee may request. Mortgagor shall
not, without Mortgagee’s prior written consent or as otherwise permitted by any
provision of the Loan Agreement: (i) to the extent prohibited by the terms of
the Loan Agreement, enter into any Leases after the date hereof; (ii) execute
any other assignment relating to any of the Leases; (iii) to the extent
prohibited by the terms of the Loan Agreement, discount any rent or other sums
due under the Leases or collect the same in advance, other than to collect
rentals one (1) month in advance of the time when it becomes due; (iv) to the
extent prohibited by the terms of the Loan Agreement, terminate, modify or amend
any of the terms of the Leases or in any manner release or discharge the lessees
from any obligations thereunder; (v) to the extent prohibited by the terms of
the Loan Agreement, consent to any assignment or subletting by any lessee; or
(vi) subordinate or agree to subordinate any of the Leases to any other deed of
trust or encumbrance. Any such attempted action in violation of the provisions
of this Section 3.5 shall be null and void. Without in any way limiting the
requirement of Mortgagee’s consent hereunder, any sums received by Mortgagor in
consideration of any termination (or the release or discharge of any lessee)
modification or amendment of any Lease shall be applied as set forth in the Loan
Agreement.

 

3.6

ESTOPPEL CERTIFICATES. Within thirty (30) days after written request by
Mortgagee, Mortgagor shall deliver to Mortgagee and to any party designated by
Mortgagee estoppel certificates executed by Mortgagor, and use its best efforts
to obtain such estoppel certificates executed by each of the lessees, in each
case in recordable form, certifying (if such be the case): (a) that the
foregoing assignment and the Leases are in full force and effect; (b) the date
of each lessee’s most recent payment of rent; (c) that there are no defenses or
offsets outstanding, or stating those claimed by Mortgagor or lessees under the
foregoing assignment or the Leases, as the case may be; and (d) any other
information reasonably requested by Mortgagee.

ARTICLE 4. SECURITY AGREEMENT AND FIXTURE FILING

 

4.1

SECURITY INTEREST. Mortgagor hereby grants and assigns to Mortgagee as of the
date hereof a security interest, to secure payment and performance of all of the
Secured Obligations, in all of the following described personal property in
which Mortgagor now or at any time hereafter has any interest (collectively, the
“Collateral”):

 

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All goods, building and other materials, supplies, inventory, work in process,
equipment, machinery, fixtures, furniture, furnishings, signs and other personal
property and embedded software included therein and supporting information,
wherever situated, which are or are to be incorporated into, used in connection
with, or appropriated for use on (i) the real property described on Exhibit A
attached hereto and incorporated by reference herein (to the extent the same are
not effectively made a part of the real property pursuant to Section 1.1 above)
or (ii) the Improvements; together with all rents (to the extent, if any, they
are not subject to Article 3); all inventory, accounts, cash receipts, deposit
accounts, accounts receivable, contract rights, licenses, agreements,
(including, without limitation, all acquisition agreements with respect to the
Subject Property); all of Mortgagor’s rights under any Swap Agreement,
including, without limitation, the Existing Swap; all Contracts referenced in
Section 5.16 below (including property management and leasing agreements),
architects’ agreements, and/or construction agreements with respect to the
completion of any improvements on the Subject Property), general intangibles,
chattel paper (whether electronic or tangible), instruments, documents,
promissory notes, drafts, letters of credit, letter of credit rights, supporting
obligations, insurance policies, insurance and condemnation awards and proceeds,
any other rights to the payment of money, trade names, trademarks and service
marks arising from or related to the ownership, management, leasing, or
operation of the Subject Property or any business now or hereafter conducted
thereon by Mortgagor; all permits, consents, approvals, licenses, authorizations
and other rights granted by, given by or obtained from, any governmental entity
with respect to the Subject Property; all deposits or other security now or
hereafter made with or given to utility companies by Mortgagor with respect to
the Subject Property; all advance payments of insurance premiums made by
Mortgagor with respect to the Subject Property; all plans, drawings and
specifications relating to the Subject Property; all loan funds held by
Mortgagee, whether or not disbursed; all funds deposited with Mortgagee pursuant
to any loan agreement; all reserves, deferred payments, deposits, accounts,
refunds, cost savings and payments of any kind related to the Subject Property
or any portion thereof; together with all replacements and proceeds of, and
additions and accessions to, any of the foregoing; together with all books,
records and files relating to any of the foregoing.

As to all of the above described personal property which is or which hereafter
becomes a “fixture” under applicable law, this Mortgage constitutes a fixture
filing under the Uniform Commercial Code as in effect in the Commonwealth of
Kentucky, as amended or recodified from time to time (the “UCC”), and is
acknowledged and agreed to be a “mortgage” under the UCC. The name, address and
organizational number of the debtor (Mortgagor) are KBSII National City Tower,
LLC, c/o KBS Capital Advisors, 620 Newport Center Drive, Suite 1300, Newport
Beach, CA 92660, Delaware ID# 4893582, and the name and address of the secured
party (Mortgagee) are Wells Fargo Bank, National Association, as Administrative
Agent, 2030 Main Street, Suite 800, Irvine, California 92614.

The filing of a financing statement covering the Collateral shall not be
construed to derogate from or impair the lien or provisions of this Mortgage
with respect to any property described herein which is real property or which
the parties have agreed to treat as real property. Similarly, nothing in such
financing statement shall be construed to alter any of the rights of Mortgagee
under this Mortgage or the priority of the Mortgagee’s lien created hereby, and
such financing statement is declared to be for the protection of Mortgagee in
the event any court shall at any time hold that notice of Mortgagee’s priority
of interest in any property or interests described in this Mortgage must, in
order to be effective against a particular class of persons, including but not
limited to the federal government and any subdivision, agency or entity of the
federal government, be filed in the Uniform Commercial Code records.

 

4.2

REPRESENTATIONS AND WARRANTIES. Mortgagor represents and warrants that:
(a) Mortgagor has, as of the date of recordation of this Mortgage, and will
have, good title to the Collateral; (b) Mortgagor has not previously assigned or
encumbered the Collateral, and no

 

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financing statement covering any of the Collateral has been delivered to any
other person or entity, except for the Permitted Liens; (c) Mortgagor’s
principal place of business is located at the address shown in Section 7.10; and
(d) Mortgagor’s legal name is exactly as set forth on the first page of this
Mortgage and all of Mortgagor’s organizational documents or agreements delivered
to Mortgagee are complete and accurate in every respect.

 

4.3

COVENANTS. Mortgagor agrees: (a) to execute and deliver such documents as
Mortgagee deems necessary to create, perfect and continue the security interests
contemplated hereby; (b) not to change its name, and as applicable, its chief
executive office, its principal residence or the jurisdiction in which it is
organized and/or registered without giving Mortgagee 30 days prior written
notice thereof; (c) to cooperate with Mortgagee in perfecting all security
interests granted herein, and in obtaining such agreements from third parties as
Mortgagee deems necessary, proper or convenient in connection with the creation,
preservation, perfection, priority or enforcement of any of its rights
hereunder; and (d) that Mortgagee is authorized to file financing statements in
the name of Mortgagor to perfect Mortgagee’s security interest in Collateral.

 

4.4

RIGHTS OF MORTGAGEE. In addition to Mortgagee’s rights as a “Secured Party”
under the UCC, Mortgagee may, but shall not be obligated to, at any time without
notice and at the expense of Mortgagor: (a) give notice to any person of
Mortgagee’s rights hereunder and enforce such rights at law or in equity;
(b) insure, protect, defend and preserve the Collateral or any rights or
interests of Mortgagee therein; (c) inspect the Collateral; and (d) endorse,
collect and receive any right to payment of money owing to Mortgagor under or
from the Collateral. Notwithstanding the above, in no event shall Mortgagee be
deemed to have accepted any property other than cash in satisfaction of any
obligation of Mortgagor to Mortgagee unless Mortgagee shall make an express
written election of said remedy under the UCC, or other applicable law.

 

4.5

RIGHTS OF MORTGAGEE ON DEFAULT. Upon the occurrence and during the continuance
of a Default (hereinafter defined) under this Mortgage, then in addition to all
of Mortgagee’s rights as a “Secured Party” under the UCC or otherwise at law,
and subject to applicable law:

 

  a.

Mortgagee may (i) upon written notice, require Mortgagor to assemble any or all
of the Collateral and make it available to Mortgagee at a place designated by
Mortgagee; (ii) without prior notice, enter upon the Subject Property or other
place where any of the Collateral may be located and take possession of,
collect, sell, lease, license and dispose of any or all of the Collateral, and
store the same at locations acceptable to Mortgagee at Mortgagor’s expense;
(iii) sell, assign and deliver at any place or in any lawful manner all or any
part of the Collateral and bid and become the purchaser at any such sales;

 

  b.

Mortgagee may, for the account of Mortgagor and at Mortgagor’s expense:
(i) operate, use, consume, sell, lease, license or dispose of the Collateral as
Mortgagee deems appropriate for the purpose of performing any or all of the
Secured Obligations; (ii) enter into any agreement, compromise, or settlement,
including insurance claims, which Mortgagee may deem desirable or proper with
respect to any of the Collateral; and (iii) endorse and deliver evidences of
title for, and receive, enforce and collect by legal action or otherwise, all
indebtedness and obligations now or hereafter owing to Mortgagor in connection
with or on account of any or all of the Collateral; and

 

  c.

In disposing of Collateral hereunder, Mortgagee may disclaim all warranties of
title, possession, quiet enjoyment and the like. Any proceeds of any disposition
of any Collateral may be applied by Mortgagee to the payment of expenses
incurred by Mortgagee in connection with the foregoing, including reasonable
attorneys’ fees, and the balance of such proceeds may be applied by Mortgagee
toward the payment of the Secured Obligations in such order of application as
Mortgagee may from time to time elect.

Notwithstanding any other provision hereof, Mortgagee shall not be deemed to
have accepted any property other than cash in satisfaction of any obligation of
Mortgagor to Mortgagee unless

 

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Loan No. 1002835

 

Mortgagor shall make an express written election of said remedy under UCC
§9.621, or other applicable law, and the provisions of UCC §9.620 have been
satisfied. Mortgagor agrees that Mortgagee shall have no obligation to process
or prepare any Collateral for sale or other disposition.

 

4.6

POWER OF ATTORNEY. Mortgagor hereby irrevocably appoints Mortgagee as
Mortgagor’s attorney-in-fact (such agency being coupled with an interest), and
as such attorney-in-fact Mortgagee may, without the obligation to do so, in
Mortgagee’s name, or in the name of Mortgagor, prepare, execute and file or
record financing statements, continuation statements, applications for
registration and like papers necessary to create, perfect or preserve any of
Mortgagee’s security interests and rights in or to any of the Collateral, and,
upon a Default hereunder, take any other action required of Mortgagor; provided,
however, that Mortgagee as such attorney-in-fact shall be accountable only for
such funds as are actually received by Mortgagee.

 

4.7

POSSESSION AND USE OF COLLATERAL. Except as otherwise provided in this Section
or the other Loan Documents (as defined in the Loan Agreement), so long as no
Default exists under this Mortgage or any of the Loan Documents, Mortgagor may
possess, use, move, transfer or dispose of any of the Collateral in the ordinary
course of Mortgagor’s business and in accordance with the Loan Agreement.

ARTICLE 5. RIGHTS AND DUTIES OF THE PARTIES

 

5.1

TITLE. Mortgagor represents and warrants that, except as disclosed to Mortgagee
in a writing which refers to this warranty and the Permitted Liens, Mortgagor
lawfully holds and possesses fee simple title to the Subject Property without
limitation on the right to encumber, and that this Mortgage is a first and prior
lien on the Subject Property. Mortgagor hereby represents and warrants that all
of the Subject Property is one or more tax parcels and there are no properties
included in such tax parcels other than the Subject Property. Mortgagor further
covenants and agrees that it shall not cause all or any portion of the Subject
Property to be replatted or for any lots or boundary lines to be adjusted,
changed or altered for either ad valorem tax purposes or otherwise, and shall
not consent to the assessment of the Subject Property in more than one tax
parcel or in conjunction with any property other than the Subject Property.

 

5.2 TAXES AND ASSESSMENTS.

 

  a.

Subject to Mortgagor’s rights to contest in good faith payment of taxes as
provided in Section 5.2(c) below, Mortgagor shall pay prior to delinquency all
taxes, assessments, levies and charges imposed by any public or quasi-public
authority or utility company which are or which may become a lien upon or cause
a loss in value of the Subject Property, or any interest therein. Mortgagor
shall also pay prior to delinquency all taxes, assessments, levies and charges
imposed by any public authority upon Mortgagee by reason of its interest in any
of the Secured Obligations or in the Subject Property, or by reason of any
payment made to Mortgagee pursuant to any of the Secured Obligations; provided,
however, Mortgagor shall have no obligation to pay taxes which may be imposed
from time to time upon Mortgagee and which are measured by and imposed upon
Mortgagee’s net income.

 

  b.

Mortgagor will not, without the prior written consent of Mortgagee, which may be
withheld in Mortgagee’s reasonable discretion, consent to or allow the creation
of any so-called special districts, special improvement districts, benefit
assessment districts or similar districts of any nature, or any other body or
entity of any type, or allow to occur any other event, that would or might
result in the imposition of any additional taxes, assessments or other monetary
obligations or burdens on the Subject Property, and this provision shall serve
as RECORD NOTICE to any such district or districts or any governmental entity
under whose authority such district or districts or any governmental entity
under whose authority such district or

 

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districts exist or are being formed that, should Mortgagor or any other person
or entity include all or any portion of the Subject Property in such district or
districts, whether formed or in the process of formation, without first
obtaining Mortgagee’s express written consent, then the lien of this Mortgage
and the rights and interests in the Subject Property arising by virtue of this
Mortgage in favor of Mortgagee or its successors in interest (which term shall
include, without limitation, any foreclosure purchaser or purchaser acquiring by
deed of lieu of foreclosure, and any transferee of the Subject Property
following completion of foreclosure or deed in lieu thereof) shall be senior and
superior to any taxes, assessments or impositions of any nature, or any liens
(whether statutory, contractual or otherwise) levied or imposed upon the Subject
Property or any portion thereof as a result of the inclusion of the Subject
Property in such district or districts.

 

  c.

Mortgagor may contest in good faith any taxes or assessments if: (i) Mortgagor
pursues the contest diligently and in compliance with applicable laws, in a
manner which Mortgagee determines is not prejudicial to Mortgagee, and does not
impair the rights of Mortgagee under any of the Loan Documents; and
(b) Mortgagor deposits with Mortgagee any funds or other forms of assurance
which Mortgagee in good faith determines from time to time appropriate to
protect Mortgagee from the consequences of the contest being unsuccessful.
Mortgagor’s compliance with this Section shall operate to prevent such claim,
demand, levy or assessment from becoming a Default.

 

5.3

TAX AND INSURANCE IMPOUNDS. At any time following the occurrence of a Default,
at Mortgagee’s option and upon its demand, Mortgagor shall, until all Secured
Obligations have been paid in full, pay to Mortgagee monthly, annually or as
otherwise directed by Mortgagee an amount estimated by Mortgagee to be equal to:
(a) all taxes, assessments, levies and charges imposed by any public or
quasi-public authority or utility company which are or may become a lien upon
the Subject Property or Collateral and will become due for the tax year during
which such payment is so directed; and (b) premiums for fire, hazard and
insurance required or requested pursuant to the Loan Documents when same are
next due. If Mortgagee determines that any amounts paid by Mortgagor are
insufficient for the payment in full of such taxes, assessments, levies, charges
and/or insurance premiums, Mortgagee shall notify Mortgagor of the increased
amounts required to pay all amounts when due, whereupon Mortgagor shall pay to
Mortgagee within thirty (30) days thereafter the additional amount as stated in
Mortgagee’s notice. All sums so paid shall not bear interest, except to the
extent and in any minimum amount required by law; and Mortgagee shall, unless
Mortgagor is otherwise in Default hereunder or under any Loan Document, apply
said funds to the payment of, or at the sole option of Mortgagee release said
funds to Mortgagor for the application to and payment of, such sums, taxes,
assessments, levies, charges, and insurance premiums. Upon Default by Mortgagor
hereunder or under any Loan Document, Mortgagee may apply all or any part of
said sums to any Secured Obligation and/or to cure such Default, in which event
Mortgagor shall be required to restore all amounts so applied, as well as to
cure any other events or conditions of Default not cured by such application.
Upon assignment of this Mortgage, Mortgagee shall have the right to assign in
writing all amounts collected and in its possession to its assignee whereupon
Mortgagee shall be released from all liability with respect thereto. Within
ninety-five (95) days following full repayment of the Secured Obligations (other
than full repayment of the Secured Obligations as a consequence of a foreclosure
or conveyance in lieu of foreclosure of the liens and security interests
securing the Secured Obligations) or at such earlier time as Mortgagee may
elect, the balance of all amounts collected and in Mortgagee’s possession shall
be paid to Mortgagor and no other party shall have any right or claim thereto.

 

5.4

PERFORMANCE OF SECURED OBLIGATIONS. Mortgagor shall promptly pay and perform
each Secured Obligation.

 

5.5

LIENS, ENCUMBRANCES AND CHARGES. Mortgagor shall immediately discharge any lien
not permitted under the Loan Documents or approved by Mortgagee in writing that
has or may attain priority over this Mortgage. Subject to the following
sentence, Mortgagor shall pay when due all

 

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obligations secured by or which may become liens and encumbrances which shall
now or hereafter encumber or appear to encumber all or any part of the Subject
Property or Collateral, or any interest therein, whether senior or subordinate
hereto. If a claim of lien is recorded which affects the Subject Property or a
bonded stop notice is served upon Mortgagee, Mortgagor shall, within twenty
(20) calendar days of such recording or service or within five (5) calendar days
of Mortgagee’s demand, whichever occurs first: (a) pay and discharge the claim
of lien or bonded stop notice; (b) effect the release thereof by recording or
delivering to Mortgagee a surety bond in sufficient form and amount; or
(c) provide Mortgagee with other assurances which Mortgagee deems, in its sole
discretion, to be satisfactory for the payment of such claim of lien or bonded
stop notice and for the full and continuous protection of Mortgagee from the
effect of such lien or bonded stop notice.

 

5.6 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS.

 

  a.

The following (whether now existing or hereafter arising) are all absolutely and
irrevocably assigned by Mortgagor to Mortgagee and, at the request of Mortgagee,
shall be paid directly to Mortgagee: (i) all awards of damages and all other
compensation payable directly or indirectly by reason of a condemnation or
proposed condemnation for public or private use affecting all or any part of, or
any interest in, the Subject Property or Collateral; (ii) all other claims and
awards for damages to, or decrease in value of, all or any part of, or any
interest in, the Subject Property or Collateral; (iii) all proceeds of any
insurance policies (whether or not expressly required by Beneficiary to be
maintained by Trustor, including, without limitation, earthquake insurance,
environmental insurance and terrorism insurance, if any) payable by reason of
loss sustained to all or any part of the Subject Property or Collateral; and
(iv) all interest which may accrue on any of the foregoing. Subject to
applicable law and Section 5.6(b) below, and without regard to any requirement
contained in Section 5.7(d), Mortgagee may at its discretion apply all or any of
the proceeds it receives to its expenses in settling, prosecuting or defending
any claim and may apply the balance to the Secured Obligations in any such order
acceptable to Mortgagee, and/or Mortgagee may release all or any part of the
proceeds to Mortgagor upon any conditions Mortgagee may impose. Mortgagee may
commence, appear in, defend or prosecute any assigned claim or action and may
adjust, compromise, settle and collect all claims and awards assigned to
Mortgagee; provided, however, in no event shall Mortgagee be responsible for any
failure to collect any claim or award, regardless of the cause of the failure,
including, without limitation, any malfeasance or nonfeasance by Mortgagee or
its employees or agents.

 

  b.

Mortgagee shall permit insurance or condemnation proceeds held by Mortgagee to
be used for repair or restoration but may condition such application upon
reasonable conditions, including, without limitation: (i) the deposit with
Mortgagee of such additional funds which Mortgagee determines are needed to pay
all costs of the repair or restoration, (including, without limitation, taxes,
financing charges, insurance and rent during the repair period); (ii) the
establishment of an arrangement for lien releases and disbursement of funds
acceptable to Mortgagee; (iii) the delivery to Mortgagee of plans and
specifications for the work, a contract for the work signed by a contractor
acceptable to Mortgagee, a cost breakdown for the work and a payment and
performance bond for the work, all of which shall be acceptable to Mortgagee;
and (iv) the delivery to Mortgagee of evidence acceptable to Mortgagee (aa) that
after completion of the work the income from the Subject Property will be
sufficient to pay all expenses and debt service for the Subject Property; (bb)
of the continuation of Leases acceptable to and required by Mortgagee; (cc) that
upon completion of the work, the size, capacity and total value of the Subject
Property will be at least as great as it was before the damage or condemnation
occurred; (dd) that there has been no material adverse change in the financial
condition or credit of Mortgagor since the date of this Mortgage; (ee) no
Default shall have occurred, and (ff) of the satisfaction of any additional
conditions that Mortgagee may reasonably establish to protect its security.
Mortgagor hereby acknowledges that the conditions described above are
reasonable, and, if such conditions have not been satisfied within sixty
(60) days of receipt by Mortgagee of such insurance or condemnation proceeds,

 

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then Mortgagee may apply such insurance or condemnation proceeds to pay the
Secured Obligations in such order and amounts as Mortgagee in its sole
discretion may choose.

 

  c.

Notwithstanding the foregoing provisions of this Section 5.6, if the insurance
or condemnation proceeds equal $1,000,000 or less, Mortgagee shall release such
proceeds to Mortgagor for repair or restoration of the Subject Property without
any additional requirements or conditions.

 

5.7

MAINTENANCE AND PRESERVATION OF THE SUBJECT PROPERTY. Subject to the provisions
of the Loan Agreement, Mortgagor covenants: (a) to insure the Subject Property
and Collateral against such risks as Mortgagee may require pursuant to the Loan
Agreement and, at Mortgagee’s request (but not more than fifteen (15) days prior
to the termination date of any existing coverage), to provide evidence of such
insurance to Mortgagee, and to comply with the requirements of any insurance
companies providing such insurance; (b) to keep the Subject Property and
Collateral in good condition and repair; (c) not to remove or demolish the
Subject Property or Collateral or any part thereof, not to alter, restore or add
to the Subject Property or Collateral and not to initiate or acquiesce in any
change in any zoning or other land classification which affects the Subject
Property without Mortgagee’s prior written consent or as provided in the Loan
Agreement; (d) to complete or restore promptly and in good and workmanlike
manner the Subject Property and Collateral, or any part thereof which may be
damaged or destroyed, without regard to whether Mortgagee elects to require that
insurance proceeds be used to reduce the Secured Obligations as provided in
Section 5.6; (e) to comply with all laws, ordinances, regulations and standards,
and all covenants, conditions, restrictions and equitable servitudes, whether
public or private, of every kind and character which affect the Subject Property
or Collateral and pertain to acts committed or conditions existing thereon,
including, without limitation, any work, alteration, improvement or demolition
mandated by such laws, covenants or requirements; (f) not to commit or permit
waste of the Subject Property or Collateral; and (g) to do all other acts which
from the character or use of the Subject Property or Collateral may be
reasonably necessary to maintain and preserve its value.

 

5.8

DEFENSE AND NOTICE OF LOSSES, CLAIMS AND ACTIONS. At Mortgagor’s sole expense,
Mortgagor shall protect, preserve and defend the Subject Property and Collateral
and title to and right of possession of the Subject Property and Collateral, the
security hereof and the rights and powers of Mortgagee hereunder against all
adverse claims. Mortgagor shall give Mortgagee prompt notice in writing of the
assertion of any claim, of the filing of any action or proceeding, of the
occurrence of any damage to the Subject Property or Collateral and of any
condemnation offer or action.

 

5.9

POWERS OF MORTGAGEE. Mortgagee may, without affecting the personal liability of
any person for payment of any indebtedness or performance of any obligations
secured hereby and without liability therefor and without notice: (a) release
all or any part of the Subject Property; (b) consent to the making of any map or
plat thereof; and (c) join in any grant of easement thereon, any declaration of
covenants and restrictions, or any extension agreement or any agreement
subordinating the lien or charge of this Mortgage.

 

5.10 COMPENSATION; EXCULPATION; INDEMNIFICATION.

 

  a.

Mortgagor shall pay to Mortgagee reasonable compensation for services rendered
concerning this Mortgage, including without limit any statement of amounts owing
under any Secured Obligation. Mortgagee shall not directly or indirectly be
liable to Mortgagor or any other person as a consequence of (i) the exercise of
the rights, remedies or powers granted to Mortgagee in this Mortgage; (ii) the
failure or refusal of Mortgagee to perform or discharge any obligation or
liability of Mortgagor under any agreement related to the Subject Property or
Collateral or under this Mortgage; or (iii) any loss sustained by Mortgagor or
any third party resulting from Mortgagee’s failure (whether by malfeasance,
nonfeasance or refusal to act) to lease the Subject Property after a Default
(hereinafter defined) or from any other act or

 

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omission (regardless of whether same constitutes negligence) of Mortgagee in
managing the Subject Property after a Default unless the loss is caused by the
gross negligence or willful misconduct of Mortgagee and no such liability shall
be asserted against or imposed upon Mortgagee, and all such liability is hereby
expressly waived and released by Mortgagor.

 

  b.

Mortgagor indemnifies Mortgagee against, and holds Mortgagee harmless from, all
losses, damages, liabilities, claims, causes of action, judgments, court costs,
attorneys’ fees and other legal expenses, cost of evidence of title, cost of
evidence of value, and other expenses which it may suffer or incur: (i) by
reason of this Mortgage; (ii) by reason of the execution of this Mortgage or in
performance of any act required or permitted hereunder or by law; (iii) as a
result of any failure of Mortgagor to perform Mortgagor’s obligations; or
(iv) by reason of any alleged obligation or undertaking on Mortgagee’s part to
perform or discharge any of the representations, warranties, conditions,
covenants or other obligations contained in any other document related to the
Subject Property. The above obligation of Mortgagor to indemnify and hold
harmless Mortgagee shall survive the release and cancellation of the Secured
Obligations and the release of this Mortgage.

 

  c.

Mortgagor shall pay all amounts and indebtedness arising under this Section 5.10
immediately upon demand by Mortgagee together with interest thereon from the
date the indebtedness arises at the rate of interest then applicable to the
principal balance of the Note as specified therein.

 

5.11 DUE ON SALE OR ENCUMBRANCE. Mortgagor represents, agrees and acknowledges
that:

 

  (a)

Improvement and operation of real property is a highly complex activity which
requires substantial knowledge of law and business conditions and practices, and
an ability to control, coordinate and schedule the many factors affecting such
improvement and operation. Experience, financial stability, managerial ability
and a good reputation in the business community enhance an owner’s and
operator’s ability to obtain market rents and to induce cooperation in
scheduling and are taken into account by Mortgagee in approving loan
applications.

 

  (b)

Mortgagor has represented to Mortgagee, not only in the representations and
warranties contained in the Loan Documents, but also in its initial loan
application and in all of the negotiations connected with Mortgagee making the
Loan, certain facts concerning Mortgagor’s financial stability, managerial and
operational ability, reputation, skill, and creditworthiness. Mortgagee has
relied upon these representations and warranties as a substantial and material
consideration in its decision to make the Loan.

 

  (c)

The conditions and terms provided in the Loan Agreement were induced by these
representations and warranties and would not have been made available by
Mortgagee in the absence of these representations and warranties.

 

  (d)

Mortgagee would not have made this Loan if Mortgagee did not have the right to
sell, transfer, assign, or grant participations in the Loan and in the Loan
Documents, and that such participations are dependent upon the potential
participants’ reliance on such representations and warranties.

 

  (e)

Mortgagor’s financial stability and managerial and operational ability and that
of those persons or entities having a direct or beneficial interest in Mortgagor
are a substantial and material consideration to any third parties who have
entered or will enter into agreements with Mortgagor.

 

  (f)

Mortgagee has relied upon the skills and services offered by such third parties
and the provision of such skills and services is jeopardized if Mortgagor
breaches its covenants contained below regarding Transfers.

 

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Loan No. 1002835

 

  (g)

A transfer of possession of or title to the Subject Property, or a change in the
person or entity operating, developing, constructing or managing the Subject
Property, would substantially increase the risk of Default under the Loan
Documents and significantly and materially impair and reduce Mortgagee’s
security for the Note.

 

  (h)

As used herein, the term “Transfer” shall mean each of the following actions or
events: the sale, transfer, assignment, lease as a whole, encumbrance,
hypothecation, mortgage or pledge in any manner whatsoever, whether voluntarily,
involuntarily or by operation of law of: (i) the Subject Property or Collateral
or any interest therein; (ii) title to any other security more specifically
described in any Loan Document; (iii) Mortgagor’s right, title and/or interest
in the Loan Documents and any subsequent documents executed by Mortgagor in
connection therewith; (iv) legal or beneficial ownership of any partnership
interest in Mortgagor if Mortgagor is a partnership; (v) legal or beneficial
ownership of any membership interest in Mortgagor if Mortgagor is a limited
liability company; (vi) legal or beneficial ownership of any partnership
interest in any general partner, venturer or member of Mortgagor; or (vii) legal
or beneficial ownership of any of the stock in Mortgagor if Mortgagor is a
corporation or in any general partner, venturer or member in Mortgagor that is a
corporation.

 

  (i)

Mortgagor shall not make or commit to make any Transfer without Mortgagee’s
prior written consent, which it may grant or withhold at its sole discretion
(except with respect to those Transfers reasonably approved by Mortgagee or
otherwise expressly permitted under Sections 9.17, 9.18 and 9.19 of the Loan
Agreement). It is expressly agreed that Mortgagee may predicate Mortgagee’s
decision to grant consent to a Transfer on such terms and conditions as
Mortgagee may require, in Mortgagee’s sole discretion, including without
limitation (i) consideration of the creditworthiness of the party to whom such
Transfer will be made and its development and management ability with respect to
the Subject Property, (ii) consideration of whether the security for repayment,
performance and discharge of the Secured Obligations, or Mortgagee’s ability to
enforce its rights, remedies, and recourses with respect to such security, will
be impaired in any way by the proposed Transfer, (iii) an increase in the rate
of interest payable under the Note or any other change in the terms and
provisions of the Note and other Loan Documents, (iv) reimbursement of Mortgagee
for all costs and expenses incurred by Mortgagee in investigating the
creditworthiness and management ability of the party to whom such Transfer will
be made and in determining whether Mortgagee’s security will be impaired by the
proposed Transfer, (v) payment to Mortgagee of a transfer fee to cover the cost
of documenting the Transfer in its records, (vi) payment of Mortgagee’s
reasonable attorneys’ fees in connection with such Transfer, (vii) endorsements
(to the extent available under applicable law) to any existing mortgagee title
insurance policies or construction binders insuring Mortgagee’s liens and
security interests covering the Subject Property, and (viii) require additional
security for the payment, performance and discharge of the Secured Obligations.
If Mortgagee’s consent should be given, any Transfer shall be subject to the
Loan Documents and any transferee of Mortgagor’s interest shall: (i) assume all
of Mortgagor’s obligations thereunder; and (ii) agree to be bound by all
provisions and perform all obligations contained therein; provided, however,
that such assumption shall not release Mortgagor or any maker or any guarantor
of the Note from any liability thereunder or under any other Loan Documents
without the prior written consent of Mortgagee. In the event of any Transfer
without the prior written consent of Mortgagee, whether or not Mortgagee elects
to enforce its right to accelerate the Loan pursuant to Sections 6.1 and 6.2,
all sums owing under the Note, as well as all other charges, expenses and costs
owing under the Loan Documents, shall at the option of Mortgagee, automatically
bear interest at five percent (5%) above the rate provided in the Note, from the
date (or any date thereafter) of such unconsented to Transfer. Mortgagor
acknowledges that the automatic shift(s) to this alternate rate is reasonable
since the representations that Mortgagee relied upon in making the Loan may no
longer be relied upon. A consent by Mortgagee to one or more Transfers shall not
be construed as a

 

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consent to further Transfers or as a waiver of Mortgagee’s consent with respect
to future Transfers.

 

5.12

RELEASES, EXTENSIONS, MODIFICATIONS AND ADDITIONAL SECURITY. Without notice to
or the consent, approval or agreement of any persons or entities having any
interest at any time in the Subject Property and Collateral or in any manner
obligated under the Secured Obligations (“Interested Parties”), Mortgagee may,
from time to time, release any person or entity from liability for the payment
or performance of any Secured Obligations, take any action or make any agreement
extending the maturity or otherwise altering the terms or increasing the amount
of any Secured Obligations, or accept additional security or all or a portion of
the Subject Property and Collateral and other security for the Secured
Obligations. None of the foregoing actions shall release or reduce the personal
liability of any of said Interested Parties, or release or impair the priority
of the lien of and security interests granted under this Mortgage upon the
Subject Property and the Collateral.

 

5.13

RELEASES. If the Secured Obligations are paid, performed and discharged in full
in accordance with the terms of this Mortgage, the Note, and the other Loan
Documents, then this conveyance shall become null and void and be released by
Mortgagee at Mortgagor’s request and expense. Notwithstanding anything contained
herein to the contrary, Mortgagee hereby agrees, subject to the provisions of
Section 2.10 of the Loan Agreement, to release this Mortgage notwithstanding the
fact that all of the Secured Obligations have not been satisfied.

 

5.14

SUBROGATION. Mortgagee shall be subrogated to the lien of all encumbrances,
whether released of record or not, paid in whole or in part by Mortgagee
pursuant to the Loan Documents or by the proceeds of any loan secured by this
Mortgage.

 

5.15

RIGHT OF INSPECTION. Mortgagee, its agents and employees, may enter the Subject
Property at any reasonable time for the purpose of inspecting the Subject
Property and Collateral and ascertaining Mortgagor’s compliance with the terms
hereof.

 

5.16

CONTRACTS. Mortgagor will deliver to Mortgagee a copy of each Contract promptly
after the execution of same by all parties thereto and subject to any approval
of Mortgagee required by any of the Loan Documents. Within twenty (20) days
after a request by Mortgagee, Mortgagor shall prepare and deliver to Mortgagee a
complete listing of all Contracts, showing date, term, parties, subject matter,
concessions, whether any defaults exist, and other information specified by
Mortgagee, of or with respect to each of such Contracts, together with a copy
thereof (if so requested by Mortgagee). Mortgagor represents and warrants that
none of the Contracts encumber or create a lien on the Subject Property or
Collateral, but are personal with Mortgagor. As used herein, the term “Contract”
shall mean any management agreement, leasing and brokerage agreement, and
operating or service contract with respect to the Subject Property or
Collateral.

 

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Loan No. 1002835

 

ARTICLE 6. DEFAULT PROVISIONS

 

6.1

DEFAULT. For all purposes hereof, the term “Default” shall mean (a) the
existence of any Event of Default as defined in the Loan Agreement; (b) at
Mortgagee’s option, the failure of Mortgagor to make any payment of principal or
interest on the Note or to pay any other amount due hereunder or under the Note
when the same is due and payable, whether at maturity, by acceleration or
otherwise; (c) the failure of Mortgagor to perform any non-monetary obligation
hereunder, or the failure to be true of any representation or warranty of
Mortgagor contained herein and the continuance of such failure for ten (10) days
after notice, or within any longer grace period, if any, allowed in the Loan
Agreement for such failure, or (d) if Mortgagor or any other Person shall make a
Transfer without the prior written consent of Mortgagee (which consent may be
withheld in Mortgagee’s sole discretion (except for those Transfers reasonably
approved by Mortgagee or otherwise expressly permitted under Sections 9.17, 9.18
and 9.19 of the Loan Agreement) or conditioned as provided in Section 5.11
above).

 

6.2

RIGHTS AND REMEDIES. At any time after Default, Mortgagee shall have all the
following rights and remedies:

 

  (a)

With or without notice, to declare all Secured Obligations immediately due and
payable.

 

  (b)

With or without notice, and without releasing Mortgagor from any Secured
Obligations, and without becoming a mortgagee in possession, to cure any breach
or Default of Mortgagor and, in connection therewith, to enter upon the Subject
Property and do such acts and things as Mortgagee deems necessary or desirable
to protect the security hereof, including, without limitation: (i) to appear in
and defend any action or proceeding purporting to affect the security of this
Mortgage or the rights or powers of Mortgagee under this Mortgage; (ii) to pay,
purchase, contest or compromise any encumbrance, charge, lien or claim of lien
which, in the sole judgment of Mortgagee, is or may be senior in priority to
this Mortgage, the judgment of Mortgagee being conclusive as between the parties
hereto; (iii) to obtain insurance; (iv) to pay any premiums or charges with
respect to insurance required to be carried under this Mortgage; or (v) to
employ counsel, accountants, contractors and other appropriate persons.

 

  (c)

To commence and maintain an action or actions in any court of competent
jurisdiction to foreclose this instrument as a mortgage or to obtain specific
enforcement of the covenants of Mortgagor hereunder, and Mortgagor agrees that
such covenants shall be specifically enforceable by injunction or any other
appropriate equitable remedy and that for the purposes of any suit brought under
this subparagraph, Mortgagor waives the defense of laches and any applicable
statute of limitations.

 

  (d)

To apply to a court of competent jurisdiction for and obtain appointment of a
receiver of the Subject Property as a matter of strict right and without regard
to the adequacy of the security for the repayment of the Secured Obligations,
the existence of a declaration that the Secured Obligations are immediately due
and payable, or the filing of a notice of default, or the commencement of a
foreclosure, and Mortgagor hereby consents to such appointment by a court of
competent jurisdiction upon ex parte application, and without notice; notice
being hereby expressly waived. Such receiver and his agents shall be empowered
(i) to take possession of the Subject Property and any businesses conducted by
Mortgagor or any other person thereon and any business assets used in connection
therewith and, if the receiver deems it appropriate, to operate the same,
(ii) to exclude Mortgagor and Mortgagor’s agents, servants, and employees from
the Subject Property, (iii) to collect all Payments and the rents, issues,
profits, and income from the Subject Property, (iv) to complete any construction
which may be in progress, (v) to do such maintenance and make such repairs and
alterations as the receiver deems necessary, (vi) to use all stores of
materials, supplies, and maintenance equipment on the Subject Property and
replace such items at the expense of the receivership estate, (vii) to pay all
taxes and assessments against the Subject Property and the Collateral, all
premiums for

 

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insurance thereon, all utility and other operating expenses, and all sums due
under any prior or subsequent encumbrance, and (viii) generally to do anything
which Mortgagor could legally do if Mortgagor were in possession of the Subject
Property. All expenses incurred by the receiver or his agents shall constitute a
part of the Secured Obligations. Any revenues collected by the receiver shall be
applied first to the expenses of the receivership, including attorneys’ fees
incurred by the receiver and by Mortgagee, together with interest thereon from
the date incurred until repaid at the rate of interest applicable under the Note
upon its maturity (whether by acceleration or otherwise), and the balance shall
be applied toward the Secured Obligations or in such other manner as the court
may direct. Unless sooner terminated with the express consent of Mortgagee, any
such receivership will continue until the Secured Obligations have been
discharged in full, or until title to the property has passed after foreclosure
sale and all applicable periods of redemption have expired.

 

  (e)

To enter upon, possess, manage and operate the Subject Property or any part
thereof, to take and possess all documents, books, records, papers and accounts
of Mortgagor or the then owner of the Subject Property, to make, terminate,
enforce or modify Leases of the Subject Property upon such terms and conditions
as Mortgagee deems proper, to make repairs, alterations and improvements to the
Subject Property as necessary, in Mortgagee’s sole judgment, to protect or
enhance the security hereof. Mortgagee may also take possession of any and all
Payments that may previously have been collected by or on behalf of Mortgagor
and that remain in the possession or control of Mortgagor, whether or not
commingled with other funds of Mortgagor, and together with any bank or similar
accounts in which such Payments may be deposited or held.

 

  (f)

Notwithstanding the availability of legal remedies, the right to obtain specific
performance, mandatory or prohibitory injunctive relief, or other equitable
relief requiring Mortgagor to cure or refrain from repeating any default.

 

  (g)

With or without accelerating the maturity of the Secured Obligations, sue from
time to time for any payment due under any of the Loan Documents or for money
damages resulting from Mortgagor’s default under any of the Loan Documents.

 

  (h)

Foreclose this Mortgage in any other manner then permitted by law. If this
Mortgage encumbers more than one parcel of real estate, foreclosure may be by
separate parcel or en masse, as Mortgagee may elect in its sole discretion. All
fees, costs and expenses of any kind incurred by Mortgagee in connection with
foreclosure of this Mortgage, including, without limitation, the costs of any
appraisals of the Subject Property obtained by Mortgagee, all costs of any
receivership for the Subject Property advanced by Mortgagee, and all attorneys’
and consultants’ fees incurred by Mortgagee, shall constitute a part of the
Secured Obligations and may be included as part of the amount owing from
Mortgagor to Mortgagee at any foreclosure sale.

 

  (i)

To resort to and realize upon the security hereunder and any other security now
or later held by Mortgagee concurrently or successively and in one or several
consolidated or independent judicial actions, and to apply the proceeds received
upon the Secured Obligations all in such order and manner as Mortgagee
determines in its sole discretion.

 

  (j)

Upon sale of the Subject Property at foreclosure, Mortgagee may bid (as
determined by Mortgagee in its sole and absolute discretion) all or any portion
of the Secured Obligations. In determining such bid, to the extent permitted by
law, Mortgagee may, but is not obligated to, take into account all or any of the
following: (i) appraisals of the Subject Property as such appraisals may be
discounted or adjusted by Mortgagee in its sole and absolute underwriting
discretion; (ii) expenses and costs incurred by Mortgagee with respect to the
Subject Property prior to foreclosure; (iii) expenses and costs which Mortgagee
anticipates will be incurred with respect to the Subject Property after
foreclosure, but prior to resale,

 

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Loan No. 1002835

 

 

including, without limitation, costs of structural reports and other due
diligence, costs to carry the Subject Property prior to resale, costs of resale
(e.g. commissions, attorneys’ fees, and taxes), costs of any hazardous materials
clean-up and monitoring, costs of deferred maintenance, repair, refurbishment
and retrofit, costs of defending or settling litigation affecting the Subject
Property, and lost opportunity costs (if any), including the time value of money
during any anticipated holding period by Mortgagee; (iv) declining trends in
real property values generally and with respect to properties similar to the
Subject Property; (v) anticipated discounts upon resale of the Subject Property
as a distressed or foreclosed property; (vi) the fact of additional collateral
(if any), for the Secured Obligations; and (vii) such other factors or matters
that Mortgagee (in its sole and absolute discretion) deems appropriate. In
regard to the above, Mortgagor acknowledges and agrees that: (w) Mortgagee is
not required to use any or all of the foregoing factors to determine the amount
of its bid; (x) this Section does not impose upon Mortgagee any additional
obligations that are not imposed by law at the time the bid is made; (y) the
amount of Mortgagee’s bid need not have any relation to any loan-to-value ratios
specified in the Loan Documents or previously discussed between Mortgagor and
Mortgagee; and (z) Mortgagee’s bid may be (at Mortgagee’s sole and absolute
discretion) higher or lower than any appraised value of the Subject Property.

 

6.3

MORTGAGEE’S JUDICIAL REMEDIES. Mortgagee may proceed by suit or suits, at law or
in equity, to enforce the payment, performance and discharge of the Secured
Obligations in accordance with the terms hereof, of the Note, and the other Loan
Documents, to foreclose the liens and security interests of this Mortgage as
against all or any part of the Subject Property and Collateral, and to have all
or any part of the Subject Property and Collateral sold under the judgment or
decree of a court of competent jurisdiction. This remedy shall be cumulative of
any other nonjudicial remedies available to the Mortgagee with respect to the
Loan Documents. Proceeding with a request or receiving a judgment for legal
relief shall not be or be deemed to be an election of remedies or bar any
available nonjudicial remedy of the Mortgagee.

 

6.4

Mortgagee’s UCC Remedies. The Mortgagee may exercise its rights of enforcement
with respect to the Collateral under the UCC, and in conjunction with, in
addition to or in substitution for the rights and remedies under the UCC the
Mortgagee may, and Mortgagor agrees, as follows: (i) without demand or notice to
Mortgagor, enter upon the Subject Property to take possession of, assemble,
receive, and collect the Collateral, or any part thereof, or to render it
unusable; (ii) require Mortgagor to assemble the Collateral and make it
available at a place Mortgagee designates which is mutually convenient to allow
Mortgagee to take possession or dispose of the Collateral; (iii) written notice
mailed to Mortgagor as provided herein at least ten (10) days prior to the date
of public sale of the Collateral or prior to the date after which private sale
of the Collateral will be made shall constitute reasonable notice; (iv) 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 the Subject Property under power of sale as
provided herein upon giving the same notice with respect to the sale of the
Collateral hereunder as is required for such sale of the Subject 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 Section 9.604 of the
UCC; (v) in the event of a foreclosure sale, whether made by the Mortgagee under
the terms hereof, or under judgment of a court, the Collateral and the Subject
Property may, at the option of the Mortgagee, be sold as a whole; (vi) it shall
not be necessary that the Mortgagee take possession of the Collateral, or any
part thereof, prior to the time that any sale pursuant to the provisions of this
subsection is conducted, and it shall not be necessary that the Collateral or
any part thereof be present at the location of such sale; (vii) prior to
application of proceeds of disposition of the Collateral to the Secured
Obligations, such proceeds shall be applied to the reasonable expenses of
retaking, holding, preparing for sale or lease, selling, leasing and the like,
and the reasonable attorneys’ fees and legal expenses incurred by the Mortgagee;
(viii) after notification, if any, hereafter provided in this subsection,
Mortgagee may sell, lease, or otherwise dispose of the Collateral, or any part
thereof, in one or more parcels at public or private sale or sales, at
Mortgagee’s offices or elsewhere, for cash, on

 

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credit, or for future delivery. Upon the request of Mortgagee, Mortgagor shall
assemble the Collateral and make it available to Mortgagee at any place
designated by Mortgagee that is reasonably convenient to Mortgagor and
Mortgagee. Mortgagor agrees that Mortgagee shall not be obligated to give more
than ten (10) days’ written notice of the time and place of any public sale or
of the time after which any private sale may take place and that such notice
shall constitute reasonable notice of such matters. Mortgagor shall be liable
for all expenses of retaking, holding, preparing for sale, or the like, and all
attorneys’ fees, legal expenses, and all other costs and expenses incurred by
Mortgagee in connection with the collection of the Secured Obligations and the
enforcement of Mortgagee’s rights under the Loan Documents. Mortgagee shall
apply the proceeds of the sale of the Collateral against the Secured Obligations
in accordance with the requirements of this Mortgage. Mortgagor shall remain
liable for any deficiency if the proceeds of any sale or disposition of the
Collateral are insufficient to pay, perform and discharge the Secured
Obligations in full. Mortgagor waives all rights of marshalling in respect of
the Collateral; (ix) any and all statements of fact or other recitals made in
any bill of sale or assignment or other instrument evidencing any foreclosure
sale hereunder, the nonpayment of the Secured Obligations, the occurrence of any
Default, the Mortgagee having declared all or a portion of such Secured
Obligations to be due and payable, the notice of time, place, and terms of sale
and of the properties to be sold having been duly given, or any other act or
thing having been duly done by Mortgagee, shall be taken as prima facie evidence
of the truth of the facts so stated and recited; and (x) Mortgagee may appoint
or delegate any one or more persons as agent to perform any act or acts
necessary or incident to any sale held by Mortgagee, including the sending of
notices and the conduct of the sale, but in the name and on behalf of Mortgagee.

 

6.5

Rights Relating to Leases and Rents. Mortgagor has, pursuant to Article 3 of
this Mortgage, assigned to Mortgagee all Payments under each of the Leases
covering all or any portion of the Subject Property. Mortgagee may at any time,
and without notice, either in person, by agent, or by receiver to be appointed
by a court, enter and take possession of the Subject Property or any part
thereof, and in its own name, sue for or otherwise collect the Payments. All
Payments collected by Mortgagee shall be applied as provided for in this
Mortgage; provided, however, that if the costs, expenses, and attorneys’ fees
shall exceed the amount of Payments collected, the excess shall be added to the
Secured Obligations, shall bear interest at the rate of interest then applicable
on the outstanding principal balance of the Note, and shall be immediately due
and payable. The entering upon and taking possession of the Subject Property,
the collection of Payments, and the application thereof as aforesaid shall not
cure or waive any Default or notice of default, if any, hereunder nor invalidate
any act done pursuant to such notice, except to the extent any such Default is
fully cured. Failure or discontinuance by Mortgagee at any time or from time to
time, to collect said Payments shall not in any manner impair the subsequent
enforcement by Mortgagee of the right, power and authority herein conferred upon
it. Nothing contained herein, nor the exercise of any right, power, or authority
herein granted to Mortgagee shall be, or shall be construed to be, an
affirmation by it of any tenancy, lease, or option, nor an assumption of
liability under, nor the subordination of, the lien of this Mortgage, to any
such tenancy, lease, or option, nor an election of judicial relief, if any such
relief is requested or obtained as to Leases or Payments, with respect to the
Subject Property or any other collateral given by Mortgagor to Mortgagee. In
addition, from time to time Mortgagee may elect, and notice hereby is given to
each lessee under any Lease, to subordinate the lien of this Mortgage to any
Lease by unilaterally executing and recording an instrument of subordination,
and upon such election the lien of this Mortgage shall be subordinate to the
Lease identified in such instrument of subordination; provided, however, in each
instance such subordination will not affect or be applicable to, and expressly
excludes any lien, charge, encumbrance, security interest, claim, easement,
restriction, option, covenant and other rights, titles, interests or estates of
any nature whatsoever with respect to all or any portion of the Subject Property
and Collateral to the extent that the same may have arisen or intervened during
the period between the recordation of this Mortgage and the execution of the
Lease identified in such instrument of subordination.

 

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Loan No. 1002835

 

6.6

APPLICATION OF FORECLOSURE SALE PROCEEDS. The proceeds of any foreclosure sale
shall be applied first to the fees and expenses of the officer conducting the
sale, and then to the reduction or discharge of the Secured Obligations; any
surplus remaining shall be paid over to Borrowers or to such other person or
persons as may be lawfully entitled to such surplus.

 

6.7

APPLICATION OF OTHER SUMS. Except as set forth in Section 6.3 above, all sums
received by Mortgagee under Section 6.2 or Section 3.2, less all costs and
expenses incurred by Mortgagee or any receiver under Section 6.2 or Section 3.2,
including, without limitation, attorneys’ fees, shall be applied in payment of
the Secured Obligations in such order as Mortgagee shall determine in its sole
discretion; provided, however, Mortgagee shall have no liability for funds not
actually received by Mortgagee.

 

6.8

NO CURE OR WAIVER. Neither Mortgagee’s nor any receiver’s entry upon and taking
possession of all or any part of the Subject Property and Collateral, nor any
collection of rents, issues, profits, insurance proceeds, condemnation proceeds
or damages, other security or proceeds of other security, or other sums, nor the
application of any collected sum to any Secured Obligations, nor the exercise or
failure to exercise of any other right or remedy by Mortgagee or any receiver
shall cure or waive any breach, Default or notice of default under this
Mortgage, or nullify the effect of any notice of default or sale (unless all
Secured Obligations then due have been paid and performed and Mortgagor has
cured all other defaults), or limit or impair the Secured Obligations or
Mortgagor’s liability therefor, or impair the status of the security, or
prejudice Mortgagee or Trustee in the exercise of any right or remedy, or be
construed as an affirmation by Mortgagee of any tenancy, lease or option or a
subordination of the lien of or security interests created by this Mortgage.

 

6.9

PAYMENT OF COSTS, EXPENSES AND ATTORNEYS’ FEES. Mortgagor agrees to pay to
Mortgagee immediately and without demand all costs and expenses of any kind
incurred by Mortgagee pursuant to Section 6.2 (including, without limitation,
court costs and attorneys’ fees, whether incurred in litigation or not, and
appraisal fees) with interest from the date of expenditure until said sums have
been paid at the rate of interest then applicable to the principal balance of
the Note as specified therein.

 

6.10

POWER TO FILE NOTICES AND CURE DEFAULTS. Mortgagor hereby irrevocably appoints
Mortgagee and its successors and assigns, as its attorney-in-fact, which agency
is coupled with an interest, (a) to execute and/or record any notices of
completion, cessation, or any other notices that Mortgagee deems appropriate to
protect Mortgagee’s security interest, (b) upon the issuance of a deed pursuant
to the foreclosure of the lien of this Mortgageor the delivery of a deed in lieu
of foreclosure, to execute all instruments of assignment or further assurance
with respect to the Subject Property and Collateral, Leases and Payments in
favor of the grantee of any such deed, as may be necessary or desirable for such
purpose, (c) to prepare, execute and file or record financing statements,
continuation statements, applications for registration and like papers necessary
to create, perfect or preserve Mortgagee’s security interests and rights in or
to any of the Subject Property and Collateral, and (d) upon the occurrence of an
event, act or omission which, with notice or passage of time or both, would
constitute a Default, Mortgagee may perform any obligation of Mortgagor
hereunder; provided, however, that: (i) Mortgagee as such attorney-in-fact shall
only be accountable for such funds as are actually received by Mortgagee; and
(ii) Mortgagee shall not be liable to Mortgagor or any other person or entity
for any failure to act (whether such failure constitutes negligence) by
Mortgagee under this Section.

ARTICLE 7. MISCELLANEOUS PROVISIONS

 

7.1

ADDITIONAL PROVISIONS. The Loan Documents contain or incorporate by reference
the entire agreement of the parties with respect to matters contemplated herein
and supersede all prior negotiations. The Loan Documents grant further rights to
Mortgagee and contain further agreements and affirmative and negative covenants
by Mortgagor which apply to this Mortgage

 

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Loan No. 1002835

 

 

and to the Subject Property and Collateral and such further rights and
agreements are incorporated herein by this reference.

 

7.2

MERGER. No merger shall occur as a result of Mortgagee’s acquiring any other
estate in, or any other lien on, the Subject Property unless Mortgagee consents
to a merger in writing. Furthermore, the assignment of the Payments and other
liens, security interests, rights and remedies granted hereunder to Mortgagee,
and the covenants, representations, warranties and obligations of Mortgagor
which are not satisfied or discharged by any foreclosure of the Subject
Property, shall survive such foreclosure and remain in force and effect
thereafter, it being acknowledged and agreed that all obligations of Mortgagor
and rights and remedies of Mortgagee set forth herein are contractual in nature,
and such obligations, rights and remedies, and all liens, assignments, security
interests and other security provided to Mortgagee hereunder and under the other
Loan Documents (but excluding the lien against the Subject Property or portions
thereof that are foreclosed) shall not be extinguished by the subject
foreclosure.

 

7.3

OBLIGATIONS OF MORTGAGOR, JOINT AND SEVERAL. If more than one person has
executed this Mortgage as “Mortgagor”, the obligations of all such persons
hereunder shall be joint and several.

 

7.4

WAIVER OF MARSHALLING RIGHTS. Mortgagor, for itself and for all parties claiming
through or under Mortgagor, and for all parties who may acquire a lien on or
interest in the Subject Property and Collateral, hereby waives all rights to
have the Subject Property and Collateral and/or any other property which is now
or later may be security for any Secured Obligations (“Other Property”)
marshalled upon any foreclosure of the lien of this Mortgagor on a foreclosure
of any other lien or security interest against any security for any of the
Secured Obligations. Mortgagee shall have the right to sell, and any court in
which foreclosure proceedings may be brought shall have the right to order a
sale of, the Subject Property and any or all of the Collateral or Other Property
as a whole or in separate parcels, in any order that Mortgagee may designate.

 

7.5

RULES OF CONSTRUCTION. When the identity of the parties or other circumstances
make it appropriate the masculine gender includes the feminine and/or neuter,
and the singular number includes the plural. The term “Subject Property” and
“Collateral” means all and any part of the Subject Property and Collateral,
respectively, and any interest in the Subject Property and Collateral,
respectively.

 

7.6

SUCCESSORS IN INTEREST. The terms, covenants, and conditions herein contained
shall be binding upon and inure to the benefit of the heirs, successors and
assigns of the parties hereto; provided, however, that this Section 7.7 does not
waive or modify the provisions of Section 5.11.

 

7.7

EXECUTION IN COUNTERPARTS. To facilitate execution, this document may be
executed in as many counterparts as may be convenient or required. It shall not
be necessary that the signature or acknowledgment of, or on behalf of, each
party, or that the signature of all persons required to bind any party, or the
acknowledgment of such party, appear on each counterpart. All counterparts shall
collectively constitute a single document. It shall not be necessary in making
proof of this document to produce or account for more than a single counterpart
containing the respective signatures of, or on behalf of, and the respective
acknowledgments of, each of the parties hereto. Any signature or acknowledgment
page to any counterpart may be detached from such counterpart without impairing
the legal effect of the signatures or acknowledgments thereon and thereafter
attached to another counterpart identical thereto except having attached to it
additional signature or acknowledgment pages.

 

7.8

CHOICE OF LAW. WITH RESPECT TO MATTERS RELATING TO THE CREATION, PERFECTION AND
PROCEDURES RELATING TO THE ENFORCEMENT OF THE LIENS CREATED PURSUANT TO THIS
MORTGAGE, THIS MORTGAGE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE COMMONWEALTH OF KENTUCKY, IT BEING UNDERSTOOD THAT, EXCEPT AS
EXPRESSLY SET FORTH ABOVE

 

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Loan No. 1002835

 

 

IN THIS PARAGRAPH AND TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE,
THE LAWS OF THE STATE OF CALIFORNIA SHALL GOVERN ALL MATTERS RELATING TO THIS
MORTGAGE, THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ALL OF THE
INDEBTEDNESS OR OBLIGATIONS ARISING THEREUNDER OR HEREUNDER.

 

7.9

INCORPORATION. Exhibit A, Exhibit B and Exhibit C, all as attached, are
incorporated into this Mortgage by this reference.

 

7.10

NOTICES. All notices, demands, or other communications required or permitted to
be given pursuant to the provisions of this Mortgage shall be in writing and
shall be considered as properly given if delivered personally or sent by
certified United States mail, return receipt requested, or by Overnight Express
Mail or by overnight commercial courier service, charges prepaid. Notices so
sent shall be effective upon receipt at the address set forth below; provided,
however, that non-receipt of any communication as the result of any change of
address of which the sending party was not notified or as the result of a
refusal to accept delivery shall be deemed receipt of such communication. For
purposes of notice, the address of the parties shall be:

 

Mortgagor:   

KBSII National City Tower, LLC

c/o KBS Capital Advisors

620 Newport Center Drive, Suite 1300

Newport Beach, CA 92660

Attention: Mr. Giovanni Cordoves

Tel: (949) 797-0324

Fax: (949) 417-6518

E-mail: GCordoves@kbsrealty.com

 

 

Beneficiary:

  

Wells Fargo Bank, National Association

Real Estate Group (AU #02955)

Orange County

2030 Main Street, Suite 800

Irvine, CA 92614

Attn: Bryan Stevens, Senior Vice President

Tel: (949) 251-4125

Fax: (949) 851-9728

Loan #: 1003497

 

 

With a copy to:

  

Wells Fargo Bank, National Association

Minnesota Loan Center

608 2nd Ave S.

Minneapolis, MN 55402

Attention: Eva Lopez

 

 

 

Any party shall have the right to change its address for notice hereunder to any
other location within the continental United States by the giving of thirty
(30) days notice to the other party in the manner set forth hereinabove.
Mortgagor shall forward to Mortgagee, without delay, any notices, letters or
other communications delivered to the Subject Property or to Mortgagor naming
Mortgagee, “Lender” or the “Construction Lender” or any similar designation as
addressee, or which could reasonably be deemed to affect the construction of the
Improvements or the ability of Mortgagor to perform its obligations to Mortgagee
under the Note or the Loan Agreement.

 

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Loan No. 1002835

 

7.11

LIMITATIONS ON RECOURSE. The limitations on personal liability of Mortgagor and
of its directors, officers, partners and members contained in Section 13.27 of
the Loan Agreement shall apply to this Mortgage.

 

7.12

FUTURE ADVANCES. This Mortgage secures not only present indebtedness but also
future advances, whether such future advances are obligatory or are to be made
at the option of Mortgagee or otherwise. The amount of indebtedness secured
hereby may increase or decrease from time to time, and the rate or rates of
interest payable may vary from time to time.

 

7.13

MAXIMUM AMOUNT SECURED. The maximum principal indebtedness secured by this
Mortgage shall not exceed $372,000,000.

 

7.14

AMENDED AND RESTATED. This Mortgage completely amends, restates and replaces the
Original Mortgage.

[Signatures Follow on Next Page]

 

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IN WITNESS WHEREOF, Mortgagor and Mortgagee have executed this Mortgage as of
the day and year set forth above.

 

“MORTGAGOR”

KBSII NATIONAL CITY TOWER, LLC,

a Delaware limited liability company

By:   KBSII REIT ACQUISITION XVI, LLC,  

a Delaware limited liability company,

its sole member

  By:   KBS REIT PROPERTIES II, LLC,    

a Delaware limited liability company,

its sole member

    By:   KBS LIMITED PARTNERSHIP II,      

a Delaware limited partnership,

its sole member

      By:  

KBS REAL ESTATE INVESTMENT TRUST II,

INC., a Maryland corporation,

        general partner         By: /s/ Charles J. Schreiber. Jr.        

        Charles J. Schreiber, Jr.

       

        Chief Executive Officer

 

“MORTGAGEE”

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as administrative agent

By:   /s/ Bryan Stevens Name:   Bryan Stevens Its:   Senior Vice President

This instrument prepared by:

P. Reid Lemasters, Esq.

Frost Brown Todd LLC

201 East Fifth Street

2200 PNC Center

Cincinnati, Ohio 45202-4182

/s/ P. Reid Lemasters

P. Reid Lemasters

--------------------------------------------------------------------------------

STATE OF CALIFORNIA

COUNTY OF ORANGE SS.

On January 20, 2011 before me, K. Godin, Notary Public, personally appeared
Charles J. Schreiber, Jr., who proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.

WITNESS my hand and official seal

Signature /s/ K. Godin

My commission expires June 5, 2013.

STATE OF CALIFORNIA

COUNTY OF ORANGE SS.

On January 20, 2011 before me, Stacy R. Novack, Notary Public, personally
appeared Bryan Stevens who proved to me on the basis of satisfactory evidence to
be the person whose name is subscribed to the within instrument and acknowledged
to me that he executed the same in his authorized capacity, and that by his
signature on the instrument the person, or the entity upon behalf of which the
person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.

WITNESS my hand and official seal

Signature /s/ Stacy R. Novack

My commission expires 1/6/2013.

--------------------------------------------------------------------------------

Exhibit A

Loan No. 1002835

 

DESCRIPTION OF SUBJECT PROPERTY

Exhibit A to Amended and Restated Mortgage with Absolute Assignment of Leases
and Rents, Security Agreement and Fixture Filing executed by KBSII National City
Tower, LLC, a Delaware limited liability company, as Mortgagor to Wells Fargo
Bank, National Association, acting as Administrative Agent for certain lenders,
as Mortgagee, dated as of January 27, 2011.

All the certain real property located in the County of Jefferson, Commonwealth
of Kentucky, described as follows:

Parcel I (Fee Parcel):

Beginning at the Northeast corner of Fifth and Market Streets; thence along the
Northerly line of Market Street South 81 degrees 12 minutes 52 seconds East 105
feet; thence North 8 degrees 46 minutes 38 seconds East 161.03 feet; thence
South 81 degrees 08 minutes 37 seconds East 11.05 feet; thence North 8 degrees
51 minutes 23 seconds East 44 feet; thence South 81 degrees 08 minutes 37
seconds East 93.95 feet to the center line of an alley closed in Action No.
CR-143,089, Jefferson Circuit Court; thence Northwardly with the center line of
said closed alley 216 feet to its intersection with the Southerly line of Main
Street; thence along the Southerly line of Main Street North 81 degrees 08
minutes 37 seconds West 210 feet to the Southeast corner of Fifth and Main
Streets; thence along the Easterly line of Fifth Street South 8 degrees 46
minutes 38 seconds West 421.16 feet to the beginning.

Tax ID: 03-014E-0261-0000

Parcel II (Fee Parcel):

BEGINNING in the Southerly line of Main Street at its intersection with the
center line of an alley running between Market and Main Streets in the block
bounded on the West by Fifth Street and on the East by Fourth Street, said alley
having been closed in Action No. CR-143,089, Jefferson Circuit Court; thence
along the center line of said closed alley South 8 degrees 53 minutes 6 seconds
West 235.41 feet, more or less, to its intersection with the Northerly line
extended of the property conveyed to Greater Louisville First Federal Savings
and Loan Association by deed of record in Deed Book 3745, Page 522 in the Office
of the Clerk of Jefferson County, Kentucky; thence with the Northerly line of
the property conveyed to Greater Louisville First Federal Savings and Loan
Association, and same extended, South 81 degrees 12 minutes 22 seconds East
189.82 feet, more or less, to a point 20 feet West of Fourth Street; thence
along a line 20 feet West of Fourth Street North 8 degrees 56 minutes 13 seconds
East 235.20 feet, more or less, to the Southerly line of Main Street, thence
with the Southerly line of Main Street North 81 degrees 08 minutes 37 seconds
West 190.03 feet, more or less, to the beginning; together with the unlimited
right of ingress and egress across any and all portions of the 20 foot wide
tract of real estate lying between the Easternmost line of the above described
tract and Fourth Street, which 20 foot tract is to be dedicated to public use as
a part of Fourth Street.

Tax ID: 03-014E-0259-0000

Parcel III (Appurtenant Easement Parcel):

Easement for foundation and support as set forth in that certain Deed recorded
February 26, 1971 in Deed Book 4405, Page 109 in the Office of the Clerk of
Jefferson County, Kentucky.

Parcels I, II and III being the same property conveyed to TIC NCT FARE FAMILY
TRUST LLC, a Delaware limited liability company, TIC NCT LYNCH LLC, a Delaware
limited liability company, TIC NCT VAUGHAN LLC, a Delaware limited liability
company, TIC NCT BIRCHER LLC, a Delaware limited liability company, TIC NCT
STAUFFER LLC, a Delaware limited liability company, TIC NCT HUBBARD TRUST LLC, a
Delaware limited liability company, TIC NCT VINCENTI LLC, a Delaware limited
liability company, TIC NCT B JONES LLC, a Delaware limited liability company,
TIC NCT R JONES LLC, a

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Delaware limited liability company, TIC NCT HATAMIYA BROTHERS LLC, a Delaware
limited liability company, TIC NCT DEY LLC, a Delaware limited liability
company, TIC NCT RUTKOWSKI LLC, a Delaware limited liability company, TIC NCT
KIHAPAI LLC, a Delaware limited liability company, TIC NCT READ LLC, a Delaware
limited liability company, TIC NCT KIM LLC, a Delaware limited liability
company, TIC NCT GOLOMB LLC, a Delaware limited liability company, TIC NCT RUNES
LLC, a Delaware limited liability company, TIC NCT HOYLES LLC (aka TIC NCT #45,
LLC according to Amended Certificate of Authority recorded in CB 666, Page 680),
a Delaware limited liability company, TIC NCT DELAND LLC, a Delaware limited
liability company, TIC NCT LAI LLC, a Delaware limited liability company, and
TIC NCT GILL LLC, a Delaware limited liability company, by Deed dated August 30,
2005, of record in Deed Book 8688, Page 620, in the Office of the Clerk of
Jefferson County, Kentucky; see also Lease Termination Memo and Affidavit of
Merger of Title dated July 14, 2006, recorded in Deed Book 8962, Page 569, in
the Office aforesaid.

Parcels I, II and III being the same property conveyed to TIC NCT VILLA SANGRIA
LLC, a Delaware limited liability company, TIC NCT BERKOVICH LLC, a Delaware
limited liability company, TIC NCT POSIK LLC, a Delaware limited liability
company, TIC NCT HOWE LLC, a Delaware limited liability company, and TIC NCT
WALSH LLC, a Delaware limited liability company, by Deed dated September 23,
2005, of record in Deed Book 8701, Page 833, in the Office of the Clerk of
Jefferson County, Kentucky; see also Lease Termination Memo and Affidavit of
Merger of Title dated July 14, 2006, recorded in Deed Book 8962, Page 569, in
the Office aforesaid.

Parcels I, II and III being the same property conveyed to TIC NCT LYNCH LLC, a
Delaware limited liability company, by Deed dated September 30, 2005, of record
in Deed Book 8708, Page 271, in the Office of the Clerk of Jefferson County,
Kentucky; see also Lease Termination Memo and Affidavit of Merger of Title dated
July 14, 2006, recorded in Deed Book 8962, Page 569, in the Office aforesaid.

Parcels I, II and III being the same property conveyed to TIC NCT MATHWIG LLC, a
Delaware limited liability company, and TIC NCT HANLY LLC, a Delaware limited
liability company, by Deed dated November 15, 2005, of record in Deed Book 8736,
Page 90, in the Office of the Clerk of Jefferson County, Kentucky; see also
Lease Termination Memo and Affidavit of Merger of Title dated July 14, 2006,
recorded in Deed Book 8962, Page 569, in the Office aforesaid.

Parcels I, II and III being the same property conveyed to TIC NCT GILBERT LLC, a
Delaware limited liability company, by Deed dated January 1, 2006, of record in
Deed Book 8759, Page 565, in the Office of the Clerk of Jefferson County,
Kentucky; see also Lease Termination Memo and Affidavit of Merger of Title dated
July 14, 2006, recorded in Deed Book 8962, Page 569, in the Office aforesaid.

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Exhibit B

Loan No. 1002835

 

NAMES AND ADDRESSES OF LENDERS

Exhibit B to Amended and Restated Mortgage with Absolute Assignment of Leases
and Rents, Security Agreement and Fixture Filing executed by KBSII National City
Tower, LLC, a Delaware limited liability company, as Mortgagor to Wells Fargo
Bank, National Association, as Administrative Agent for certain lenders, as
Mortgagee, dated as of January 27, 2011.

 

Name and Address   Amount of Note

Wells Fargo Bank, National Association

2030 Main Street, Suite 800

Irvine, California 92614

Attn: Bryan Stevens

  $360,000,000*

  * Note may increased up to a maximum principal amount of $372,000,000

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Exhibit C

Loan No. 1002835

 

NON-BORROWER MORTGAGOR RIDER

Exhibit C to Amended and Restated Mortgage with Absolute Assignment of Leases
and Rents, Security Agreement and Fixture Filing executed by KBSII National City
Tower, LLC, a Delaware limited liability company, as Mortgagor, to Wells Fargo
Bank, National Association, as Administrative Agent for certain lenders, as
Mortgagee, dated as of January 27, 2011.

To the extent the Mortgage secures a promissory note and other loan documents
(“Loan Documents”) made by a party or parties (“Borrower”) not identical to the
party or parties constituting Mortgagor, the party or parties constituting
Mortgagor agree as follows:

 

1. CONDITIONS TO EXERCISE OF RIGHTS. Mortgagor hereby waives any right it may
now or hereafter have to require Mortgagee, as a condition to the exercise of
any remedy or other right against Mortgagor hereunder or under any other
document executed by Mortgagor in connection with any Secured Obligation: (a) to
proceed against any Borrower or other person, or against any other collateral
assigned to Mortgagee by Mortgagor or any Borrower or other person; (b) to
pursue any other right or remedy in Mortgagee’s power; (c) to give notice of the
time, place or terms of any public or private sale of real or personal property
collateral assigned to Mortgagee by any Borrower or other person (other than
Mortgagor), or otherwise to comply with the UCC (as defined in the Mortgage)
with respect to any such personal property collateral; or (d) to make or give
(except as otherwise expressly provided in the Loan Documents) any presentment,
demand, protest, notice of dishonor, notice of protest or other demand or notice
of any kind in connection with any Secured Obligation or any collateral (other
than the Subject Property) for any Secured Obligation.

 

2.

DEFENSES. Mortgagor hereby waives any defense it may now or hereafter have that
relates to: (a) any disability or other defense of any Borrower or other person;
(b) the cessation, from any cause other than full performance, of the
obligations of Borrower or any other person; (c) the application of the proceeds
of any Secured Obligation, by any Borrower or other person, for purposes other
than the purposes represented to Mortgagor by any Borrower or otherwise intended
or understood by Mortgagor or any Borrower; (d) any act or omission by Mortgagee
which directly or indirectly results in or contributes to the release of any
Borrower or other person or any collateral for any Secured Obligation; (e) the
unenforceability or invalidity of any collateral assignment (other than this
Mortgage) or guaranty with respect to any Secured Obligation, or the lack of
perfection or continuing perfection or lack of priority of any lien (other than
the lien hereof) which secures any Secured Obligation; (f) any failure of
Mortgagee to marshal assets in favor of Mortgagor or any other person; (g) any
modification of any Secured Obligation, including any renewal, extension,
acceleration or increase in interest rate; (h) any and all rights and defenses
arising out of an election of remedies by Mortgagee, even though that election
of remedies, such as a nonjudicial foreclosure with respect to security for a
guaranteed obligation, has destroyed Mortgagor’s rights of subrogation and
reimbursement against the principal by the operation of Section 580d of the
California Code of Civil Procedure or otherwise; (i) any law which provides that
the obligation of a surety or guarantor must neither be larger in amount nor in
other respects more burdensome than that of the principal or which reduces a
surety’s or guarantor’s obligation in proportion to the principal obligation;
(j) any failure of Mortgagee to file or enforce a claim in any bankruptcy or
other proceeding with respect to any person; (k) the election by Mortgagee, in
any bankruptcy proceeding of any person, of the application or non-application
of Section 1111(b)(2) of the United States Bankruptcy Code; (l) any extension of
credit or the grant of any lien under Section 364 of the United States
Bankruptcy Code; (m) any use of cash collateral under Section 363 of the United
States Bankruptcy Code; or (n) any agreement or stipulation with respect to the
provision of adequate protection in any bankruptcy proceeding of any person.
Mortgagor further waives any and all rights and defenses that Mortgagor may have
because Borrower’s debt is secured by real property; this means, among other
things, that: (1) Mortgagee may collect from Mortgagor without first foreclosing
on any real or personal property collateral pledged by Borrower; (2) if
Mortgagee

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forecloses on any real property collateral pledged by Borrower, then (A) the
amount of the debt may be reduced only by the price for which that collateral is
sold at the foreclosure sale, even if the collateral is worth more than the sale
price, and (B) Mortgagee may collect from Mortgagor even if Mortgagee, by
foreclosing on the real property collateral, has destroyed any right Mortgagor
may have to collect from Borrower. The foregoing sentence is an unconditional
and irrevocable waiver of any rights and defenses Mortgagor may have because
Borrower’s debt is secured by real property. These rights and defenses being
waived by Mortgagor include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure. Without limiting the generality of the foregoing or any other
provision hereof, Mortgagor further expressly waives to the extent permitted by
law any and all rights and defenses, including without limitation any rights of
subrogation, reimbursement, indemnification and contribution, which might
otherwise be available to Mortgagor under California Civil Code Sections 2787 to
2855, inclusive, 2899 and 3433, or under California Code of Civil Procedure
Sections 580a, 580b, 580d and 726, or any of such sections.

 

3. SUBROGATION. Mortgagor hereby waives, until such time as all Secured
Obligations are fully performed: (a) any right of subrogation against any
Borrower that relates to any Secured Obligation; (b) any right to enforce any
remedy Mortgagor may now or hereafter have against any Borrower that relates to
any Secured Obligation; and (c) any right to participate in any collateral now
or hereafter assigned to Mortgagee with respect to any Secured Obligation.

 

4. BORROWER INFORMATION. Mortgagor warrants and agrees: (a) that Mortgagee would
not make the Loan but for this Mortgage; (b) that Mortgagor has not relied, and
will not rely, on any representations or warranties by Mortgagee to Mortgagor
with respect to the credit worthiness of any Borrower or the prospects of
repayment of any Secured Obligation from sources other than the Subject
Property; (c) that Mortgagor has established and/or will establish adequate
means of obtaining from each Borrower on a continuing basis financial and other
information pertaining to the business operations, if any, and financial
condition of each Borrower; (d) that Mortgagor assumes full responsibility for
keeping informed with respect to each Borrower’s business operations, if any,
and financial condition; (e) that Mortgagee shall have no duty to disclose or
report to Mortgagor any information now or hereafter known to Mortgagee with
respect to any Borrower, including, without limitation, any information relating
to any of Borrower’s business operations or financial condition; and (f) that
Mortgagor is familiar with the terms and conditions of the Loan Documents and
consents to all provisions thereof.

 

5. REINSTATEMENT OF LIEN. Mortgagee’s rights hereunder shall be reinstated and
revived, and the enforceability of this Mortgage shall continue, with respect to
any amount at any time paid on account of any Secured Obligation which Mortgagee
is thereafter required to restore or return in connection with a bankruptcy,
insolvency, reorganization or similar proceeding with respect to any Borrower.

 

6. SUBORDINATION. Until all of the Secured Obligations have been fully paid and
performed: (a) Mortgagor hereby agrees that all existing and future indebtedness
and other obligations of each Borrower to Mortgagor (collectively, the
“Subordinated Debt”) shall be and are hereby subordinated to all Secured
Obligations which constitute obligations of the applicable Borrower, and the
payment thereof is hereby deferred in right of payment to the prior payment and
performance of all such Secured Obligations; (b) Mortgagor shall not collect or
receive any cash or non-cash payments on any Subordinated Debt or transfer all
or any portion of the Subordinated Debt; and (c) in the event that,
notwithstanding the foregoing, any payment by, or distribution of assets of, any
Borrower with respect to any Subordinated Debt is received by Mortgagor, such
payment or distribution shall be held in trust and immediately paid over to
Mortgagee, is hereby assigned to Mortgagee as security for the Secured
Obligations, and shall be held by Mortgagee in an interest bearing account until
all Secured Obligations have been fully paid and performed.

 

7.

LAWFULNESS AND REASONABLENESS. Mortgagor warrants that all of the waivers in
this Mortgage are made with full knowledge of their significance, and of the
fact that events giving rise

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to any defense or other benefit waived by Mortgagor may destroy or impair rights
which Mortgagor would otherwise have against Mortgagee, Borrower and other
persons, or against collateral. Mortgagor agrees that all such waivers are
reasonable under the circumstances and further agrees that, if any such waiver
is determined (by a court of competent jurisdiction) to be contrary to any law
or public policy, the other waivers herein shall nonetheless remain in full
force and effect.

 

8. ENFORCEABILITY. Mortgagor hereby acknowledges that: (a) the obligations
undertaken by Mortgagor in this Mortgage are complex in nature, and (b) numerous
possible defenses to the enforceability of these obligations may presently exist
and/or may arise hereafter, and (c) as part of Mortgagee’s consideration for
entering into this transaction, Mortgagee has specifically bargained for the
waiver and relinquishment by Mortgagor of all such defenses, and (d) Mortgagor
has had the opportunity to seek and receive legal advice from skilled legal
counsel in the area of financial transactions of the type contemplated herein.
Given all of the above, Mortgagor does hereby represent and confirm to Mortgagee
that Mortgagor is fully informed regarding, and that Mortgagor does thoroughly
understand: (i) the nature of all such possible defenses, and (ii) the
circumstances under which such defenses may arise, and (iii) the benefits which
such defenses might confer upon Mortgagor, and (iv) the legal consequences to
Mortgagor of waiving such defenses. Mortgagor acknowledges that Mortgagor makes
this Mortgage with the intent that this Mortgage and all of the informed waivers
herein shall each and all be fully enforceable by Mortgagee, and that Mortgagee
is induced to enter into this transaction in material reliance upon the presumed
full enforceability thereof.

 

9. WAIVER OF RIGHT TO TRIAL BY JURY. TO THE EXTENT PERMITTED BY THEN APPLICABLE
LAW, EACH PARTY TO THIS MORTGAGE, AND BY ITS ACCEPTANCE HEREOF, MORTGAGEE,
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION (a) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT
LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE; AND EACH PARTY AND MORTGAGEE HEREBY AGREES AND CONSENTS THAT ANY
PARTY TO THIS MORTGAGE AND MORTGAGEE MAY FILE AN ORIGINAL COUNTERPART OR A COPY
OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO AND MORTGAGEE TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

10. INTEGRATION; INTERPRETATION. This Mortgage and the other Loan Documents
contain or expressly incorporate by reference the entire agreement of the
parties with respect to the matters contemplated therein and supersede all prior
negotiations or agreements, written or oral. This Mortgage and the other Loan
Documents shall not be modified except by written instrument executed by all
parties. Any reference to the Loan Documents includes any amendments, renewals
or extensions now or hereafter approved by Mortgagee in writing.