<PAGE>   1
                                                                    EXHIBIT 10.2



RECORDING REQUESTED
BY AND WHEN
RECORDED RETURN TO:

Edward L. Kelly, Esq.
Rogers, Towers, Bailey, Jones & Gay
1301 Riverplace Boulevard
Suite 1500
Jacksonville, Florida  32207




                        MORTGAGE, SECURITY AGREEMENT AND

                                 FIXTURE FILING

                                       BY

                          FLAGLER DEVELOPMENT COMPANY,

                             a Florida corporation,

                                   as Borrower

                                       TO

                      METROPOLITAN LIFE INSURANCE COMPANY,

                             a New York corporation,

                                    as Lender

                                  June 28, 2001

                     Gran Park at Beacon Station Phase 1(A)


<PAGE>   2


                                TABLE OF CONTENTS

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ARTICLE I         GRANT OF SECURITY....................................................................3

         Section 1.01          REAL PROPERTY GRANT.....................................................3

         Section 1.02          PERSONAL PROPERTY GRANT.................................................4

         Section 1.03          CONDITIONS TO GRANT.....................................................5

ARTICLE II        BORROWER COVENANTS...................................................................5

         Section 2.01          DUE AUTHORIZATION, EXECUTION, AND DELIVERY..............................5

         Section 2.02          PERFORMANCE BY BORROWER.................................................5

         Section 2.03          WARRANTY OF TITLE.......................................................5

         Section 2.04          TAXES, LIENS AND OTHER CHARGES..........................................6

         Section 2.05          ESCROW DEPOSITS.........................................................6

         Section 2.06          CARE AND USE OF THE PROPERTY............................................7

         Section 2.07          COLLATERAL SECURITY INSTRUMENTS.........................................8

         Section 2.08          SUITS AND OTHER ACTS TO PROTECT THE PROPERTY............................8

         Section 2.09          LIENS AND ENCUMBRANCES..................................................8

ARTICLE III       INSURANCE............................................................................9

         Section 3.01          REQUIRED INSURANCE AND TERMS OF INSURANCE POLICIES......................9

         Section 3.02          ADJUSTMENT OF CLAIMS...................................................11

         Section 3.03          ASSIGNMENT TO LENDER...................................................11

ARTICLE IV        BOOKS, RECORDS AND ACCOUNTS.........................................................11

         Section 4.01          BOOKS AND RECORDS......................................................11

         Section 4.02          PROPERTY REPORTS.......................................................12

         Section 4.03          ADDITIONAL MATTERS.....................................................12

ARTICLE V         LEASES AND OTHER AGREEMENTS AFFECTING THE PROPERTY..................................12

         Section 5.01          BORROWER'S REPRESENTATIONS AND WARRANTIES..............................12

         Section 5.02          ASSIGNMENT OF LEASES...................................................13

         Section 5.03          PERFORMANCE OF OBLIGATIONS.............................................13

         Section 5.04          SUBORDINATE LEASES.....................................................13

         Section 5.05          LEASING COMMISSIONS....................................................14

ARTICLE VI        ENVIRONMENTAL HAZARDS...............................................................14

         Section 6.01          REPRESENTATIONS AND WARRANTIES.........................................14

         Section 6.02          REMEDIAL WORK..........................................................14

         Section 6.03          ENVIRONMENTAL SITE ASSESSMENT..........................................15
</TABLE>

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                                TABLE OF CONTENTS
                                   (continued)

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         Section 6.04          UNSECURED OBLIGATIONS..................................................15

         Section 6.05          HAZARDOUS MATERIALS....................................................15

         Section 6.06          REQUIREMENTS OF ENVIRONMENTAL LAWS.....................................16

ARTICLE VII       CASUALTY, CONDEMNATION AND RESTORATION..............................................16

         Section 7.01          BORROWER'S REPRESENTATIONS.............................................16

         Section 7.02          RESTORATION............................................................16

         Section 7.03          CONDEMNATION...........................................................17

         Section 7.04          REQUIREMENTS FOR RESTORATION...........................................18

ARTICLE VIII      REPRESENTATIONS OF BORROWER.........................................................19

         Section 8.01          ERISA..................................................................19

         Section 8.02          NON-RELATIONSHIP.......................................................19

         Section 8.03          NO ADVERSE CHANGE......................................................20

         Section 8.04          FOREIGN INVESTOR.......................................................20

ARTICLE IX        EXCULPATION AND LIABILITY...........................................................20

         Section 9.01          LIABILITY OF BORROWER..................................................20

ARTICLE X         CHANGE IN OWNERSHIP, CONVEYANCE OF PROPERTY.........................................21

         Section 10.01         TRANSFER OF PROPERTY, CHANGE IN OWNERSHIP AND COMPOSITION..............21

         Section 10.02         DEFEASANCE.............................................................25

         Section 10.03         RELEASES AND SUBSTITUTIONS OF PROPERTY.................................27

         Section 10.04         PROHIBITION ON SUBORDINATE FINANCING...................................30

         Section 10.05         [INTENTIONALLY DELETED]................................................30

         Section 10.06         STATEMENTS REGARDING OWNERSHIP.........................................30

ARTICLE XI        DEFAULTS AND REMEDIES...............................................................30

         Section 11.01         EVENTS OF DEFAULT......................................................30

         Section 11.02         REMEDIES UPON DEFAULT..................................................31

         Section 11.03         APPLICATION OF PROCEEDS OF SALE........................................32

         Section 11.04         WAIVER OF JURY TRIAL...................................................32

         Section 11.05         LENDER'S RIGHT TO PERFORM BORROWER'S OBLIGATIONS.......................32

         Section 11.06         LENDER REIMBURSEMENT...................................................32

         Section 11.07         FEES AND EXPENSES......................................................32

         Section 11.08         WAIVER OF CONSEQUENTIAL DAMAGES........................................32
</TABLE>

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                                TABLE OF CONTENTS
                                   (continued)

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ARTICLE XII       BORROWER AGREEMENTS AND FURTHER ASSURANCES..........................................33

         Section 12.01         PARTICIPATION AND SALE OF LOAN.........................................33

         Section 12.02         REPLACEMENT OF NOTE....................................................33

         Section 12.03         BORROWER'S ESTOPPEL....................................................33

         Section 12.04         FURTHER ASSURANCES.....................................................33

         Section 12.05         SUBROGATION............................................................34

         Section 12.06         FUTURE ADVANCES........................................................34

ARTICLE XIII      SECURITY AGREEMENT..................................................................34

         Section 13.01         SECURITY AGREEMENT.....................................................34

         Section 13.02         REPRESENTATIONS AND WARRANTIES.........................................35

         Section 13.03         CHARACTERIZATION OF PROPERTY...........................................35

         Section 13.04         PROTECTION AGAINST PURCHASE MONEY SECURITY INTERESTS...................35

ARTICLE XIV       MISCELLANEOUS COVENANTS.............................................................36

         Section 14.01         NO WAIVER..............................................................36

         Section 14.02         NOTICES................................................................36

         Section 14.03         HEIRS AND ASSIGNS; TERMINOLOGY; CONSTRUCTION...........................36

         Section 14.04         SEVERABILITY...........................................................36

         Section 14.05         APPLICABLE LAW.........................................................36

         Section 14.06         CAPTIONS...............................................................36

         Section 14.07         TIME OF THE ESSENCE....................................................36

         Section 14.08         NO MERGER..............................................................36

         Section 14.09         NO MODIFICATIONS.......................................................37

ARTICLE XV        CROSS COLLATERALIZATION AND CROSS DEFAULT...........................................37

         Section 15.01         THE LOANS..............................................................37

         Section 15.02         CROSS DEFAULT..........................................................37

         Section 15.03         CROSS COLLATERALIZATION................................................37

         Section 15.04         REMEDIES...............................................................38

         Section 15.05         APPLICATION OF PROCEEDS................................................38

         Section 15.06         WAIVER OF MARSHALING...................................................38
</TABLE>


                                     -iii-
<PAGE>   5

                 MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING
                     Gran Park at Beacon Station Phase 1(A)

                                  DEFINED TERMS
<TABLE>
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=========================================================================================================================
EXECUTION DATE:  June 28, 2001
-------------------------------------------------------------------------------------------------------------------------
NOTE: The promissory note dated as of the Execution Date made by Borrower to the order of Lender in the principal
amount of Forty Million and No/100 Dollars ($40,000,000.00)
-------------------------------------------------------------------------------------------------------------------------
LENDER & ADDRESS:.Metropolitan Life Insurance Company, a New York corporation
                                    200 Park Avenue, 12th Floor
                                    New York, New York  10166
                                    Attention:  Senior Vice President
                                    Real Estate Investments

                  and:              Metropolitan Life Insurance Company
                                    2400 Lakeview Parkway, Suite 400
                                    Alpharetta, GA 30004
                                    Attention:  Mortgage Portfolio Services
-------------------------------------------------------------------------------------------------------------------------
BORROWER & ADDRESS:           Flagler Development Company
                              10151 Deerwood Park Boulevard, Building 100, Suite 330
                              Jacksonville, Florida  32256
-------------------------------------------------------------------------------------------------------------------------
LIABLE PARTIES & ADDRESS:       Flagler Development Company
                                10151 Deerwood Park Boulevard, Building 100, Suite 330
                                Jacksonville, Florida  32256
-------------------------------------------------------------------------------------------------------------------------
COUNTY AND STATE IN WHICH THE PROPERTY IS LOCATED:   Miami-Dade County, State of Florida
-------------------------------------------------------------------------------------------------------------------------
USE:     Office/Industrial Park
-------------------------------------------------------------------------------------------------------------------------
INSURANCE FOR THE PROPERTY AND OTHER PROPERTIES (AS DEFINED HEREIN) IN THE AGGREGATE:
Commercial General Liability        $2,000,000 primary coverage, plus $25,000,000 excess liability

All Risk Property (including Boiler and Machinery Coverage):  $160,000,000

Business Income: $28,000,000
ADDRESS FOR INSURANCE NOTIFICATION:
      Metropolitan Life Insurance Company
      One Madison Avenue
      New York, New York 10010-3690
      Attn:  Risk Management Unit, Area:  3 D/E
-------------------------------------------------------------------------------------------------------------------------
LOAN DOCUMENTS: The Note, this Mortgage and any other documents related to the Note and/or this Mortgage including
without limitation that certain Mortgage Application (the "Application") executed and delivered by the Borrower to the
Lender, and accepted by the Lender as of June 4, 2001 (the "Acceptance Date") and all renewals, amendments,
modifications, restatements and extensions of these documents. Indemnity Agreement: Unsecured Indemnity Agreement dated
as of the Execution Date and executed by Borrower and Liable Parties in favor of Lender in connection with this
Mortgage. The Indemnity Agreement is not a Loan Document and shall survive repayment of the Loan or other termination
of the Loan Documents.
-------------------------------------------------------------------------------------------------------------------------
APPROVAL: Unless a different standard is specifically set forth herein, whenever reference is made in this Mortgage to
Lender's "Approval" or "Approved" by Lender, such term means accepted or approved in writing by an officer of Lender
using a standard of commercial reasonableness in good faith.
=========================================================================================================================
</TABLE>


<PAGE>   6


         This MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING (this "Mortgage")
is entered into as of the Execution Date by Borrower to Lender with reference to
the following Recitals:

                                    RECITALS

         A. This Mortgage secures: (1) the payment of the indebtedness evidenced
by the Note with interest at the rates set forth in the Note, together with all
renewals, modifications, consolidations and extensions of the Note, all
additional advances or fundings made by Lender, and any other amounts required
to be paid by Borrower under any of the Loan Documents, (sometimes referred to
as the "Loan"); (2) the Other Loans as identified and in the manner described in
ARTICLE XV hereof (collectively, with the Loan, the "Secured Indebtedness"); and
(3) the full performance by Borrower of all of the terms, covenants and
obligations set forth in any of the Loan Documents.

         B. Borrower makes the following covenants and agreements for the
benefit of Lender or any party designated by Lender, including any prospective
purchaser of the Loan Documents or participant in the Loan, and their respective
officers, employees, agents, attorneys, representatives and contractors (all of
which are collectively referred to as, "Lender").

NOW, THEREFORE, IN CONSIDERATION of the Recitals and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, Borrower
agrees as follows:

                                    ARTICLE I
                                GRANT OF SECURITY

Section 1.01 REAL PROPERTY GRANT. Borrower irrevocably sells, transfers, grants,
conveys, assigns and warrants to Lender, its successors and assigns, all of
Borrower's present and future estate, right, title and interest in and to the
following which are collectively referred to as the "Real Property":

         (a) that certain real property located in the County and State which is
more particularly described in EXHIBIT "A" attached to this Mortgage or any
portion of the real property; all easements, rights-of-way, gaps, strips and
gores of land; streets and alleys; sewers and water rights; privileges,
licenses, tenements, and appurtenances appertaining to the real property, and
the reversion(s), remainder(s), and claims of Borrower with respect to these
items, and the benefits of any existing or future conditions, covenants and
restrictions affecting the real property (collectively, the "Land");

         (b) all things now or hereafter affixed to or placed on the Land,
including all buildings, structures and improvements, all fixtures and all
machinery, elevators, boilers, building service equipment (including, without
limitation, all equipment for the generation or distribution of air, water,
heat, electricity, light, fuel or for ventilating or air conditioning purposes
or for sanitary or drainage purposes or for the removal of dust, refuse or
garbage), partitions, appliances, furniture, furnishings, building materials,
supplies, computers and software, window coverings and floor coverings, lobby
furnishings, and other property now or in the future attached, or installed in
the improvements and all replacements, repairs, additions, or substitutions to
these items (collectively, the "Improvements");

         (c) all present and future income, rents, revenue, profits, proceeds,
accounts receivables and other benefits from the Land and/or Improvements and
all deposits made with respect to the Land and/or Improvements, including, but
not limited to, any security given to utility companies by Borrower, any advance
payment of real estate taxes or assessments, or insurance premiums made by
Borrower and all claims or demands relating to such deposits and other security,
including claims for refunds of tax payments or



                                       2
<PAGE>   7

assessments, and all insurance proceeds payable to Borrower in connection with
the Land and/or Improvements whether or not such insurance coverage is
specifically required under the terms of this Mortgage ("Insurance Proceeds")
(all of the items set forth in this paragraph are referred to collectively as
"Rents and Profits");

         (d) all damages, payments and revenue of every kind that Borrower may
be entitled to receive, from any person owning or acquiring a right to the oil,
gas or mineral rights and reservations of the Land;

         (e) all proceeds and claims arising on account of any damage to, or
Condemnation (as hereinafter defined) of any part of the Land and/or
Improvements, and all causes of action and recoveries for any diminution in the
value of the Land and/or Improvements;

         (f) all licenses, contracts, management agreements, guaranties,
warranties, franchise agreements, permits, or certificates relating to the
ownership, use, operation or maintenance of the Land and/or Improvements but not
relating to Borrower's operations or existence generally; and

         (g) all names by which the Land and/or Improvements may be operated or
known, and all rights to carry on business under those names, and all
trademarks, trade names (but excluding the name "Gran Park"), and goodwill
relating solely to the Land and/or Improvements, but not relating to Borrower's
operations or existence generally.

         TO HAVE AND TO HOLD the Real Property, unto Lender, its successors and
assigns, forever subject to the terms, covenants and conditions of this
Mortgage.

Section 1.02 PERSONAL PROPERTY GRANT. Borrower irrevocably sells, transfers,
grants, conveys, assigns and warrants to Lender, its successors and assigns, a
security interest in Borrower's interest in the following personal property
which is collectively referred to as "Personal Property":

         (a) any portion of the Real Property which may be personal property,
and all other personal property, whether now existing or acquired in the future
which is attached to, appurtenant to, or used in the construction or operation
of, or in connection with, the Real Property;

         (b) all rights to the use of water, including water rights appurtenant
to the Real Property, pumping plants, ditches for irrigation, all water stock or
other evidence of ownership of any part of the Real Property that is owned by
Borrower in common with others and all documents of membership in any owner's
association or similar group;

         (c) all plans and specifications prepared for construction of the
Improvements; and all contracts and agreements of Borrower relating to the plans
and specifications or to the construction of the Improvements;

         (d) all equipment, machinery, fixtures, goods, accounts, general
intangibles, documents, instruments and chattel paper relating solely to the
Land and Improvements, but not relating to Borrower's operations or existence
generally, and all substitutions, replacements of, and additions to, any of the
these items;

         (e) all sales agreements, deposits, escrow agreements, other documents
and agreements entered into with respect to the sale of any part of the Real
Property, and all proceeds of the sale; and



                                       3
<PAGE>   8

         (f) all proceeds from the voluntary or involuntary disposition or claim
respecting any of the foregoing items (including judgments, condemnation awards
or otherwise).

         All of the Real Property and the Personal Property are collectively
referred to as the "Property."

Section 1.03 CONDITIONS TO GRANT. If Borrower shall pay to Lender the Secured
Indebtedness, at the times and in the manner stipulated in the Loan Documents,
and if Borrower shall perform and observe each of the terms, covenants and
agreements set forth in the Loan Documents, then this Mortgage and all the
rights granted by this Mortgage shall be released by Lender in accordance with
the laws of the State.

                                   ARTICLE II
                               BORROWER COVENANTS

Section 2.01 DUE AUTHORIZATION, EXECUTION, AND DELIVERY.

         (a) Borrower represents and warrants that the execution of the Loan
Documents and the Indemnity Agreement have been duly authorized and there is no
provision in the organizational documents of Borrower requiring further consent
for such action by any other entity or person.

         (b) Borrower represents and warrants that it is duly organized, validly
existing and is in good standing under the laws of the state of its formation
and in the State, that it has all necessary licenses, authorizations,
registrations, permits and/or approvals to own its properties and to carry on
its business as presently conducted.

         (c) Borrower represents and warrants that the execution, delivery and
performance of the Loan Documents will not result in Borrower's being in default
under any provision of its organizational documents or of any mortgage, lease,
credit or other agreement to which it is a party or which affects it or the
Property.

         (d) Borrower represents and warrants that the Loan Documents and the
Indemnity Agreement have been duly authorized, executed and delivered by
Borrower and constitute valid and binding obligations of Borrower which are
enforceable in accordance with their terms.

Section 2.02 PERFORMANCE BY BORROWER. Borrower shall pay the Secured
Indebtedness to Lender and shall keep and perform each and every other
obligation, covenant and agreement of the Loan Documents.

Section 2.03 WARRANTY OF TITLE.

         (a) Borrower warrants that it holds marketable and indefeasible fee
simple absolute title to the Real Property, and that it has the right and is
lawfully authorized to sell, convey or encumber the Property subject only to
those property specific exceptions to title recorded in the real estate records
of the County and contained in Schedule B-1 of the title insurance policy or
policies which have been Approved by Lender (the "Permitted Exceptions"). The
Property is free from all delinquent taxes, assessments and mechanics' and
construction liens.

         (b) Borrower further covenants to warrant and forever defend Lender
from and against all persons claiming any interest in the Property, except with
respect to the Permitted Exceptions.



                                       4
<PAGE>   9

Section 2.04 TAXES, LIENS AND OTHER CHARGES.

         (a) Unless otherwise deposited with Lender as provided in Section 2.05,
Borrower shall pay all real estate and other taxes, assessments, water and sewer
charges, and other licenses or permit fees, and all liens, fines, penalties and
interest thereon, and other similar public and private claims which may be
payable, assessed, levied, imposed upon or become a lien on or against any
portion of the Property (all of the foregoing items are collectively referred to
as the "Imposition(s)"). The Impositions shall be paid not later than thirty
(30) days before the dates on which the particular Imposition would become
delinquent and Borrower shall produce to Lender receipts of the imposing
authority, or other evidence reasonably satisfactory to Lender, evidencing the
payment of the Imposition in full. If Borrower elects by appropriate legal
action to contest any Imposition, Borrower shall first deposit cash with Lender
as a reserve in an amount which Lender determines is sufficient to pay the
Imposition plus all fines, interest, penalties and costs which may become due
pending the determination of the contest. If Borrower deposits this sum with
Lender, Borrower shall not be required to pay the Imposition provided that the
contest operates to prevent enforcement or collection of the Imposition, or the
sale or forfeiture of, the Property, and is prosecuted with due diligence and
continuity. Upon termination of any proceeding or contest, Borrower shall pay
the amount of the Imposition as finally determined in the proceeding or contest.
Provided that there is not then an Event of Default (as defined in Section
11.01), the monies which have been deposited with Lender pursuant to this
Section shall be applied toward such payment and the excess, if any, shall be
returned to Borrower.

         (b) In the event of the passage, after the Execution Date, of any law
which deducts from the value of the Property, for the purposes of taxation, any
lien or security interest encumbering the Property, or changing in any way the
existing laws regarding the taxation of mortgages, deeds of trust and/or
security agreements or debts secured by these instruments, or changing the
manner for the collection of any such taxes, and the law has the effect of
imposing payment of any Impositions upon Lender, at Lender's option, the Secured
Indebtedness shall immediately become due and payable. Notwithstanding the
preceding sentence, the Lender's election to accelerate the Loan shall not be
effective if (1) Borrower is permitted by law (including, without limitation,
applicable interest rate laws) to, and actually does, pay the Imposition or the
increased portion of the Imposition and (2) Borrower agrees in writing to pay or
reimburse Lender in accordance with Section 11.06 for the payment of any such
Imposition which becomes payable at any time when the Loan is outstanding.

Section 2.05 ESCROW DEPOSITS. Without limiting the effect of Section 2.04 and
Section 3.01, at any time after (i) an Event of Default under the Loan Documents
or Indemnity Agreement has occurred (regardless of whether or not such default
has been cured) or (ii) Flagler Development Company, a Florida corporation or
its Affiliate (as defined in the Note) no longer owns the Property (whether or
not resulting from an approved or Permitted Transfer, as defined herein), or
(iii) such deposits are required in connection with the securitization or
participation of the Loan, the Lender may, in Lender's sole and absolute
discretion, thereafter require that Borrower shall pay to Lender monthly on the
same date the monthly installment of principal and interest is payable under the
Note, an amount equal to 1/12th of the amounts Lender reasonably estimates are
necessary to pay, on an annualized basis, (1) all Impositions and (2) the
premiums for the insurance policies required under this Mortgage (collectively
the "Premiums") until such time as Borrower has deposited an amount equal to the
annual charges for these items and on demand, from time to time, shall pay to
Lender any additional amounts necessary to pay the Premiums and Impositions.
Borrower will furnish to Lender bills for Impositions and Premiums thirty (30)
days before Impositions become delinquent and such Premiums become due for
payment. No amounts paid as Impositions or Premiums shall be deemed to be trust
funds and these funds may be commingled with the general funds of Lender without
any requirement to pay interest to Borrower on account of these funds. If an
Event of Default occurs, Lender shall have the right, at its election, to apply
any



                                       5
<PAGE>   10

amounts held under this Section 2.05 in reduction of the Secured Indebtedness,
or in payment of the Premiums or Impositions for which the amounts were
deposited.

Section 2.06 CARE AND USE OF THE PROPERTY.

         (a) Borrower represents and warrants to Lender as follows:

                  (i) All authorizations, licenses and operating permits
required to allow the Improvements to be operated by the Borrower for the Use
have been obtained, paid for and are in full force and effect.

                  (ii) To the best of Borrower's knowledge, except as previously
disclosed in writing to Lender, the Improvements and their Use comply with (and
no notices of violation have been received in connection with) all Requirements
(as defined in this Section) and Borrower shall at all times comply with all
present or future Requirements affecting or relating to the Property and/or the
Use. Borrower shall furnish Lender, on request, reasonable evidence of
continuing compliance with the Requirements if there is a material change in the
Improvements or in the Use of the Property after the Execution Date. Borrower
shall not use or permit the use of the Property, or any part thereof, for any
illegal purpose. "Requirements" shall mean all laws, ordinances, orders,
covenants, conditions and restrictions and other requirements relating to land
and building design and construction, use and maintenance, that may now or
hereafter pertain to or affect the Property or any part of the Property or the
Use, including, without limitation, planning, zoning, subdivision,
environmental, air quality, flood hazard, fire safety, handicapped facilities,
building, health, fire, traffic, safety, wetlands, coastal and other
governmental or regulatory rules, laws, ordinances, statutes, codes and
requirements applicable to the Property, including permits, licenses and/or
certificates that may be necessary from time to time to comply with any of the
these requirements.

                  (iii) To the best of Borrower's knowledge, except as
previously disclosed in writing to Lender, Borrower has complied with (and no
notices of violation have been received in connection with) all requirements of
all instruments and agreements affecting the Property, whether or not of record,
including without limitation all covenants and agreements by and between
Borrower and any governmental or regulatory agency pertaining to the
development, use or operation of the Property. Borrower, at its sole cost and
expense, shall keep the Property in good order, condition, and repair, and make
all necessary structural and non-structural, ordinary and extraordinary repairs
to the Property and the Improvements.

                  (iv) Borrower shall abstain from, and not permit, the
commission of waste to the Property and shall not remove or alter in any
substantial manner, the structure or character of any Improvements without the
prior written consent of Lender.

                  (v) The zoning approval for the Property is not dependent upon
the ownership or use of any property which is not encumbered by this Mortgage.

                  (vi) Construction of the Improvements on the Property is
complete other than normal interior tenant improvements in the ordinary course
of leasing the Property.

                  (vii) As of the Execution Date, the Property is in good repair
and condition, free of any material damage.

         (b) Lender shall have the right, at any time and from time to time
during normal business hours, and upon notice to the Borrower and accompanied by
a representative of Borrower, to enter the Property in order to ascertain
Borrower's compliance with the Loan Documents, to examine the condition of the
Property,



                                       6
<PAGE>   11

to perform an appraisal, to undertake surveying or engineering work, and to
inspect premises occupied by tenants. Borrower shall cooperate with Lender
performing these inspections.

         (c) Borrower shall use, or cause to be used, the Property continuously
for the Use, subject only to periodic tenant vacancies in the ordinary course of
Borrower's business and interruption of use during periods of restoration due to
casualty or condemnation. Borrower shall not use, or permit the use of, the
Property for any other use other than the Use without the prior written consent
of Lender.

         (d) Without the prior written consent of Lender, Borrower shall not (i)
initiate or acquiesce in a change in the zoning classification of and/or
restrictive covenants affecting the Property or seek any variance under existing
zoning ordinances, (ii) use or permit the use of the Property in a manner which
may result in the Use becoming a non-conforming use under applicable zoning or
land use ordinances, or (iii) subject the Property to restrictive covenants.

Section 2.07 COLLATERAL SECURITY INSTRUMENTS. Borrower covenants and agrees that
if Lender at any time holds additional security for any obligations secured by
this Mortgage, it may enforce its rights and remedies with respect to the
security, at its option, either before, concurrently or after a sale of the
Property is made pursuant to the terms of this Mortgage. Lender may apply the
proceeds of the additional security to the Secured Indebtedness without
affecting or waiving any right to any other security, including the security
under this Mortgage, and without waiving any breach or default of Borrower under
this Mortgage or any other Loan Document.

Section 2.08 SUITS AND OTHER ACTS TO PROTECT THE PROPERTY.

         (a) Borrower shall immediately notify Lender of the commencement, or
receipt of notice, of any and all actions or proceedings or other material
matter or claim affecting the Property and/or the interest of Lender under the
Loan Documents (collectively, "Actions"). Borrower shall appear in and defend
any Actions.

         (b) Lender shall have the right, at the cost and expense of Borrower,
to institute, maintain and participate in Actions and take such other action, as
it may deem appropriate in the good faith exercise of its discretion to preserve
or protect the Property and/or the interest of Lender under the Loan Documents.
Any money paid by Lender under this Section shall be reimbursed to Lender in
accordance with Section 11.06 hereof.

Section 2.09 LIENS AND ENCUMBRANCES. Without the prior written consent of
Lender, to be exercised in Lender's sole and absolute discretion, other than the
Permitted Exceptions and the Leases, Borrower shall not create, place or allow
to remain any lien or encumbrance on the Property, including deeds of trust,
mortgages, security interests, conditional sales, mechanic liens, tax liens or
assessment liens (other than ad valorem tax liens or special assessment liens
not yet delinquent) regardless of whether or not they are subordinate to the
lien created by this Mortgage (collectively, "Liens and Encumbrances"). If any
Liens and Encumbrances are recorded without Lender's prior written consent
against the Property or any part of the Property, Borrower shall obtain a
discharge and release of any Liens and Encumbrances within thirty (30) days
after receipt of notice of their existence.



                                       7
<PAGE>   12

                                   ARTICLE III
                                    INSURANCE

Section 3.01 REQUIRED INSURANCE AND TERMS OF INSURANCE POLICIES.

         (a) During the term of this Mortgage, Borrower at its sole cost and
expense must provide insurance policies and certificates of insurance
satisfactory to Lender as to amounts, types of coverage and the companies
underwriting these coverages. In no event shall such policies be terminated or
otherwise allowed to lapse. Borrower shall be responsible for its own
deductibles. Borrower shall also pay for any insurance, or any increase of
policy limits, not described in this Mortgage which Borrower requires for its
own protection or for compliance with government statutes. Borrower's insurance
shall be primary and without contribution from any insurance procured by Lender.
Insurance coverage may be provided pursuant to a blanket policy or policies
maintained by Florida East Coast Industries, Inc. ("FECI"), covering FECI and
all of its subsidiaries, including Flagler Development Company, as Borrower.

         Policies of insurance shall be delivered to Lender in accordance with
the following requirements unless otherwise Approved in writing by the Lender:

                  (i) All Risk Property insurance on all Improvements and the
Personal Property, including contingent liability from Operation of Building
Laws, Demolition Costs and Increased Cost of Construction endorsements, in each
case (1) in an aggregate amount, for the Property and all Other Properties (as
defined in ARTICLE XV hereof) not less than that required in the Defined Terms,
with a waiver of depreciation and with a Replacement Cost Endorsement; (2)
containing an agreed amount endorsement with respect to the Improvements waiving
all co-insurance provisions; (3) providing for no deductible in excess of
$100,000; and (4) containing an "Ordinance or Law Coverage" or "Enforcement"
endorsement if any of the Improvements or the use of the Property shall
constitute non-conforming structures or uses.

                  (ii) Commercial General Liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon, in or
about the Property, such insurance (1) to be on the so-called "occurrence" form
as to the primary limits and on the "claims made with tail coverage" form as to
excess liability limits, with a combined single limit of not less than the
amount set forth in the Defined Terms; (2) to continue at not less than this
limit until required to be changed by Lender in writing by reason of changed
economic conditions making such protection inadequate; and (3) to cover at least
the following hazards: (A) premises and operations; (B) products and completed
operations on an "if any" basis; (C) independent contractors; (D) blanket
contractual liability for all written and oral contracts; and (E) contractual
liability covering the indemnities contained in this Mortgage to the extent
available.

                  (iii) Business Income insurance in an amount not less the
amount set forth in the Defined Terms. "Business Income" shall mean the sum of
(1) the total anticipated gross income from occupancy of the Property, (2) the
amount of all charges (such as, but not limited to, operating expenses,
insurance premiums and taxes) which are the obligation of tenants or occupants
to Borrower, (3) the fair market rental value of any portion of the Property
which is occupied by Borrower, and (4) any other amounts payable to Borrower or
to any affiliate of Borrower pursuant to leases.

                  (iv) If Lender determines at any time that any part of the
Property is located in an area identified on a Flood Hazard Boundary Map or
Flood Insurance Rate Map issued by the Federal Emergency Management Agency as
having special flood hazards and flood insurance has been made available,
Borrower will maintain a flood insurance policy meeting the requirements of the
current guidelines of the Federal



                                       8
<PAGE>   13

Insurance Administration with a generally acceptable insurance carrier, in an
amount not less than the lesser of (1) the outstanding principal balance of the
Loan or (2) the maximum amount of insurance which is available under the
National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973
or the National Flood Insurance Reform Act of 1994, as amended.

                  (v) During the period of any construction or renovation or
alteration of the Improvements, a so-called "Builder's All Risk" insurance
policy in non-reporting form for any Improvements under construction, renovation
or alteration including, without limitation, for demolition and increased cost
of construction or renovation, in an amount Approved by Lender including an
Occupancy endorsement and Worker's Compensation Insurance covering all persons
engaged in the construction, renovation or alteration in an amount at least
equal to the minimum required by statutory limits of the State.

                  (vi) Workers' Compensation insurance, subject to the statutory
limits of the State, and employer's liability insurance with a limit of at least
$1,000,000 per accident and per disease per employee, and $1,000,000 for disease
in the aggregate in respect of any work or operations on or about the Property,
or in connection with the Property or its operations (if applicable).

                  (vii) Boiler & Machinery insurance (which may be included in
the All Risk Property insurance policy provided under Subsection (a)(i) above)
covering the major components of the central heating, air conditioning and
ventilating systems, boilers, other pressure vessels, high pressure piping and
machinery, elevators and escalators, if any, and other similar equipment
installed in the Improvements, in an amount equal to one hundred percent (100%)
of the full replacement cost of all equipment installed in, on or at the
Improvements. These policies shall insure against physical damage to and loss of
occupancy and use of the Improvements arising out of an accident or breakdown.

                  (viii) Such other insurance as may from time to time be
reasonably required by Lender against other insurable hazards, including, but
not limited to, vandalism, sinkhole and mine subsidence, and insurance to cover
environmental contamination of the Property.

         (b) Lender's interest must be clearly stated by endorsement in the
insurance policies described in this Section 3.01 as follows:

                  (i) The policies of insurance referenced in Subsections
(a)(i), (a)(iii), (a)(iv), (a)(v) and (a)(vii) of this Section 3.01 shall
identify Lender under the New York Standard Mortgagee Clause (non-contributory)
endorsement.

                  (ii) The insurance policy referenced in Section 3.01(a)(ii)
shall name Lender as an additional insured.

                  (iii) All of the policies referred to in Section 3.01 shall
provide for at least thirty (30) days' written notice to Lender in the event of
policy cancellation and/or material change.

         (c) All the insurance companies must be authorized to do business in
New York State and the State and be Approved by Lender. The insurance companies
must have a general policy rating of A or better and a financial class of X or
better by A.M. Best Company, Inc. and a claims paying ability of BBB or better
according to Standard & Poors. If there are any Securities (as defined in
Section 12.01) issued with respect to this Loan which have been assigned a
rating by a credit rating agency Approved by Lender (a "Rating Agency"), the
insurance company shall have a claims paying ability rating by such Rating
Agency equal to or



                                       9
<PAGE>   14

greater than the rating of the highest class of the Securities. Borrower shall
deliver evidence satisfactory to Lender of payment of premiums due under the
insurance policies.

         (d) Certified copies of the policies, and any endorsements, shall be
made available for inspection by Lender upon request. If any policy is canceled
before the Loan is satisfied, and Borrower fails to immediately procure
replacement insurance, Lender reserves the right but shall not have the
obligation immediately to procure replacement insurance at Borrower's cost.

         (e) Borrower shall be required during the term of the Loan to continue
to provide Lender with original renewal policies or replacements of the
insurance policies referenced in Section 3.01(a). Lender may accept Certificates
of Insurance evidencing insurance policies referenced in Subsections (a)(ii),
(a)(iv), and (a)(vi) of this Section 3.01 instead of requiring the actual
policies. Lender shall be provided with renewal Certificates of Insurance, or
Binders, not less than fifteen (15) days prior to each expiration. The failure
of Borrower to maintain the insurance required under this ARTICLE III shall not
constitute a waiver of Borrower's obligation to fulfill these requirements.

         (f) All binders, policies, endorsements, certificates, and cancellation
notices are to be sent to the Lender's Address for Insurance Notification as set
forth in the Defined Terms until changed by notice from Lender.

Section 3.02 ADJUSTMENT OF CLAIMS. Borrower hereby authorizes and empowers
Lender to use commercially reasonably efforts and to cooperate with Borrower to
settle, adjust or compromise any claims for damage to, or loss or destruction
of, all or a portion of the Property, regardless of whether there are Insurance
Proceeds available or whether any such Insurance Proceeds are sufficient in
amount to fully compensate for such damage, loss or destruction. Nevertheless,
no final settlement, adjustment or compromise of any such claim shall be made by
the Borrower without the Lender's written consent, which shall not be
unreasonably withheld or delayed. Should an Event of Default have occurred and
be continuing, the Lender shall be empowered to settle, adjust or compromise any
such claim.

Section 3.03 ASSIGNMENT TO LENDER. In the event of the foreclosure of this
Mortgage or other transfer of the title to the Property in extinguishment of the
Loan, all right, title and interest of Borrower in and to any insurance policy,
or premiums or payments in satisfaction of claims or any other rights under
these insurance policies and any other insurance policies covering the Property
shall pass to the transferee of the Property, except to the extent such coverage
is provided pursuant to a blanket policy or policies maintained by FECI covering
FECI and all of its subsidiaries, including Flagler Development Company, as
Borrower.

                                   ARTICLE IV
                           BOOKS, RECORDS AND ACCOUNTS

Section 4.01 BOOKS AND RECORDS. Borrower shall keep adequate books and records
of account in accordance with generally accepted accounting principles ("GAAP"),
or in accordance with other methods acceptable to Lender in its sole discretion,
consistently applied and furnish to Lender:

         (a) quarterly certified rent rolls signed and dated by Borrower,
detailing the names of all tenants of the Improvements, the portion of
Improvements occupied by each tenant, the base rent and any other charges
payable under each Lease (as defined in ERROR! REFERENCE SOURCE NOT FOUND.) and
the term of each Lease, including the expiration date, and any other information
as is reasonably required by Lender, within thirty (30) days after the end of
each fiscal quarter;



                                       10
<PAGE>   15

         (b) a quarterly operating statement of the Property and year to date
operating statements detailing the total revenues received, total expenses
incurred, total cost of all capital improvements, total debt service and total
cash flow, to be prepared and certified by Borrower in the form required by
Lender, and if available, any quarterly operating statement prepared by an
independent certified public accountant, within thirty to sixty (30-60) days
after the close of each fiscal quarter of Borrower;

         (c) an annual balance sheet and profit and loss statement of Borrower
in the form required by Lender, prepared and certified by Borrower, as the case
may be, and any audited financial statements prepared by or for FECI (and
Borrower, should Borrower hereafter obtain audited financial statements) within
ninety (90) days after the close of each fiscal year of Borrower and FECI, as
the case may be; and

         (d) an annual operating budget presented on a monthly basis consistent
with the annual operating statement described above for the Property including
cash flow projections for the upcoming year and all proposed capital
replacements and improvements at least fifteen (15) days prior to the start of
each calendar year.

Section 4.02 PROPERTY REPORTS. Upon request from Lender or its representatives
and designees, Borrower shall furnish in a timely manner to Lender a property
management report for the Property, showing the number of inquiries made and/or
rental applications received from tenants or prospective tenants and deposits
(including security deposits) received from tenants and any other information
requested by Lender, in reasonable detail and certified by Borrower (or an
officer, general partner, member or principal of Borrower if Borrower is not an
individual) to be true and complete, but no more frequently than quarterly.

Section 4.03 ADDITIONAL MATTERS.

         (a) Borrower shall furnish Lender with such other additional financial
or management information as may, from time to time, be reasonably required by
Lender or the rating agencies in form and substance satisfactory to Lender or
any applicable Rating Agency.

         (b) Borrower shall furnish Lender and its agents convenient facilities
at the office where such books and records are located for the examination and
audit of any such books and records.

         (c) Lender and its representatives shall have the right upon prior
written notice to examine and audit, at any time, if an Event of Default has
occurred and is continuing and otherwise on an annual basis, the records, books,
management and other papers of Borrower which reflect upon Borrower's financial
condition and/or the income, expenses and operations of the Property, at the
Property or at any office regularly maintained by Borrower where the books and
records are located. Lender shall have the right upon notice to make copies and
extracts from the foregoing records and other papers.

                                    ARTICLE V
               LEASES AND OTHER AGREEMENTS AFFECTING THE PROPERTY

Section 5.01 BORROWER'S REPRESENTATIONS AND WARRANTIES.

         Borrower represents and warrants to Lender as follows:

         (a) There are now in existence no leases or occupancy agreements
affecting the Property except those leases and amendments listed on the Rent
Roll delivered to the Lender as of the date hereof, and Borrower has delivered
to Lender true, correct and complete copies of all leases, including amendments


                                       11
<PAGE>   16

(collectively, "Existing Leases") and all guaranties and amendments of
guaranties given in connection with the Existing Leases (the "Guaranties").

         (b) There are no defaults by Borrower under the Existing Leases and
Guaranties and, to the best knowledge of Borrower, there are no defaults by any
tenants under the Existing Leases or any guarantors under the Guaranties except
as otherwise previously disclosed in writing to Lender. The Existing Leases and
the Guaranties are in full force and effect.

         (c) To the best knowledge of Borrower, none of the tenants now
occupying 10% or more of the Property or having a current lease affecting 10% or
more of the Property is the subject of any bankruptcy, reorganization or
insolvency proceeding or any other debtor-creditor proceeding except as
otherwise previously disclosed in writing to Lender.

         (d) Except as may be provided therein for specific purposes (e.g., a
purchase option, lease relocation right, etc.) no Existing Leases may be
amended, terminated or canceled unilaterally by a tenant and no tenant may be
released from its obligations, except in the event of (i) material damage to, or
destruction of, the Property or (ii) condemnation.

Section 5.02 ASSIGNMENT OF LEASES. In order to further secure payment of the
Secured Indebtedness and the performance of Borrower's obligations under the
Loan Documents, Borrower absolutely, presently and unconditionally grants,
assigns and transfers to Lender all of Borrower's right, title, interest and
estate in, to and under (i) all of the Existing Leases and Guaranties affecting
the Property and (ii) all of the future leases, lease amendments, guaranties and
amendments of guaranties affecting the Property and (iii) the Rents and Profits.
So long as no Event of Default exists, Borrower shall have a license to receive
and use the Rents and Profits. This license shall be terminable at the sole
option of Lender, without regard to the adequacy of its security under this
Mortgage, upon written notice to Borrower, upon the occurrence of an Event of
Default. The Existing Leases and Guaranties and all future leases, lease
amendments, guaranties and amendments of guaranties are collectively referred to
as the "Leases."

Section 5.03      PERFORMANCE OF OBLIGATIONS.

         (a) Borrower shall perform all of its obligations under any and all
Leases. If any of the acts described in this Section are done without the
written consent of Lender, at the option of Lender, they shall be of no force or
effect and shall constitute a default under this Mortgage.

         (b) Borrower agrees to furnish Lender executed copies of all Leases
entered into after the Acceptance Date. Borrower shall not, without the express
written consent of Lender, (i) hereafter enter into or extend any Lease unless
the Lease complies with the Leasing Guidelines which are attached to this
Mortgage as EXHIBIT "B", or (ii) cancel or terminate any Leases except in the
case of a default unless Borrower has entered into new Leases covering all of
the premises of the Leases being terminated or surrendered, or (iii) modify or
amend any Leases in any material way or reduce the rent, or (iv) unless the
tenants remain liable under the Leases, consent to an assignment of the tenant's
interest or to a subletting of the demised premises under any Lease, or (v)
accept payment of advance rents or security deposits in an amount in excess of
one month's rent or (vi) enter into any options to purchase the Property.

Section 5.04 SUBORDINATE LEASES. Each Lease affecting the Property entered into
after the Acceptance Date hereof shall be absolutely subordinate to the lien of
this Mortgage and shall also contain a provision, satisfactory to Lender, to the
effect that in the event of the judicial or non-judicial foreclosure of the



                                       12
<PAGE>   17

Property, at the election of the acquiring foreclosure purchaser, the particular
Lease shall not be terminated and the tenant shall attorn to the purchaser.

Section 5.05 LEASING COMMISSIONS. Borrower covenants and agrees that all
contracts and agreements relating to the Property requiring the payment of
leasing commissions, management fees or other similar compensation shall (i)
provide that the obligation will not be enforceable against Lender and (ii) be
subordinate to the lien of this Mortgage. Lender will be provided evidence of
Borrower's compliance with this Section upon request.

                                   ARTICLE VI
                              ENVIRONMENTAL HAZARDS

Section 6.01 REPRESENTATIONS AND WARRANTIES. Borrower hereby represents,
warrants, covenants and agrees to and with Lender that (a) except as previously
disclosed by the Borrower to the Lender or contained in an environmental site
assessment of the Property provided to the Lender and approved by the Lender
("Borrower's Disclosures") (i) neither Borrower nor, to the best of Borrower's
knowledge, after due inquiry, any tenant, subtenant or occupant of the Property,
has at any time placed, suffered or permitted the presence of any Hazardous
Materials (as defined in Section 6.05) at, on, under, within or about the
Property except in accordance with applicable Requirements of Environmental Laws
(as defined in Section 6.06) and except as otherwise disclosed in writing to
Lender by Borrower or contained in an environmental site assessment of the
Property provided to Lender and Approved by Lender in writing and (ii) all
operations or activities upon the Property, and any use or occupancy of the
Property by Borrower are presently and shall in the future be in compliance with
all Requirements of Environmental Laws (as defined in Section 6.06), (iii)
Borrower does not know of, and has not received, any written or oral notice of
other communication from any person or entity (including, without limitation, a
governmental entity) relating to Hazardous Materials or Remedial Work pertaining
thereto, of possible liability of any person or entity pursuant to any
Requirements of Environmental Laws, other environmental conditions in connection
with the Property, or any actual administrative or judicial proceedings in
connection with any of the foregoing, and (b) Borrower (i) will use best efforts
to assure that any tenant, subtenant or occupant of the Property shall in the
future be in compliance with all Requirements of Environmental Laws, (ii)
Borrower shall not do or authorize any tenant or other user of the Property to
do any act that materially increases the dangers to human health or the
environment, poses an unreasonable risk of harm to any person or entity (whether
on or off the Property), impairs or may impair the value of the Property, is
contrary to any requirement of any insurer, constitutes a public or private
nuisance, constitutes waste, or violates any covenant, condition, agreement or
easement applicable to the Property, and (iii) Borrower has truthfully and fully
provided to Lender, in writing, any and all information relating to
environmental conditions in, on, under or from the Property that is known to
Borrower and that is contained in Borrower's files and records, including,
without limitation, any reports relating to Hazardous Materials in, on, under or
from the Property and/or to the environmental condition of the Property.

Section 6.02 REMEDIAL WORK. In the event any investigation or monitoring of site
conditions or any clean-up, containment, restoration, removal or other remedial
work (collectively, the "Remedial Work") is required under any Requirements of
Environmental Laws, Borrower shall perform or cause to be performed the Remedial
Work in compliance with the applicable law, regulation, order or agreement. All
Remedial Work shall be performed by one or more contractors, selected by
Borrower and Approved in advance in writing by Lender, and under the supervision
of a consulting engineer, selected by Borrower and Approved in advance in
writing by Lender. All costs and expenses of Remedial Work shall be paid by
Borrower including, without limitation, the charges of the contractor(s) and/or
the consulting engineer, and Lender's reasonable attorneys', architects' and/or
consultants' fees and costs incurred in connection with monitoring or review of


                                       13
<PAGE>   18

the Remedial Work. In the event Borrower shall fail to timely commence, or cause
to be commenced, or fail to diligently prosecute to completion, the Remedial
Work, Lender may, but shall not be required to, cause such Remedial Work to be
performed, subject to the provisions of Section 11.05 and Section 11.06.

Section 6.03 ENVIRONMENTAL SITE ASSESSMENT. Lender shall have the right, at any
time and from time to time, to undertake an environmental site assessment on the
Property, including any testing that Lender may determine, in its sole
discretion, is necessary or desirable to ascertain the environmental condition
of the Property and the compliance of the Property with Requirements of
Environmental Laws. Borrower shall cooperate fully with Lender and its
consultants performing such assessments and tests. If Lender undertakes such
assessments because Lender reasonably believes contamination has occurred, or if
the assessment reveals contamination not previously known to Lender, the expense
of such assessment shall be paid by the Borrower. Otherwise, any such assessment
shall be at Lender's expense.

Section 6.04 UNSECURED OBLIGATIONS. No amounts which may become owing by
Borrower to Lender under this ARTICLE VI or under any other provision of this
Mortgage as a result of a breach of or violation of this ARTICLE VI shall be
secured by this Mortgage. The obligations shall continue in full force and
effect and any breach of this ARTICLE VI shall constitute an Event of Default.
The lien of this Mortgage shall not secure (i) any obligations evidenced by or
arising under the Indemnity Agreement ("Unsecured Obligations"), or (ii) any
other obligations to the extent that they are the same or have the same effect
as any of the Unsecured Obligations. The Unsecured Obligations shall continue in
full force, and any breach or default of any such obligations shall constitute a
breach or default under this Mortgage but the proceeds of any foreclosure sale
shall not be applied against Unsecured Obligations. Nothing in this Section
shall in any way limit or otherwise affect the right of Lender to obtain a
judgment in accordance with applicable law for any deficiency in recovery of all
obligations that are secured by this Mortgage following foreclosure,
notwithstanding that the deficiency judgment may result from diminution in the
value of the Property by reason of any event or occurrence pertaining to
Hazardous Materials or any Requirements of Environmental Laws.

Section 6.05 HAZARDOUS MATERIALS.

"Hazardous Materials" shall include without limitation:

         (a) Those substances included within the definitions of "hazardous
substances," "hazardous materials," "toxic substances," or "solid waste" in the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980 as
amended, 42 U.S.C. Sections 9601 et seq., the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. Sections 6901 et seq., and the Hazardous Materials
Transportation Act, 49 U.S.C. Sections 1801 et seq., and in the regulations
promulgated pursuant to said laws;

         (b) Those substances defined as "hazardous wastes" in Chapter 403 of
the Florida Statutes and in the regulations promulgated pursuant to such laws;

         (c) Those chemicals regulated or prohibited under state or federal laws
which are known to cause cancer or reproductive toxicity, as published pursuant
to applicable state or federal statutes, if any (provided, however, that
alcoholic beverages, tobacco products and FDA approved pharmaceutical and
bio-products shall not be considered Hazardous Materials for purposes of this
definition);

         (d) Those substances listed in the United States Department of
Transportation Table (49 CFR 172.101 and amendments thereto) or by the
Environmental Protection Agency (or any successor agency) as hazardous
substances (40 CFR Part 302 and amendments thereto);



                                       14
<PAGE>   19

         (e) Any material, waste or substance which is (A) petroleum, (B)
asbestos, (C) polychlorinated biphenyls, (D) designated as a "hazardous
substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C. Section
1251 et seq. (33 U.S.C. Section 1321) or listed pursuant to Section 307 of the
Clean Water Act (33 U.S.C. Section 1317); (E) a chemical substance or mixture
regulated under the Toxic Substances Control Act of 1976, 15 U.S.C. Sections
2601 et seq.; (F) flammable explosives; or (G) radioactive materials; and

         (f) Such other substances, materials and wastes which are or become
regulated as hazardous or toxic under applicable local, state or federal law, or
the United States government, or which are classified as hazardous or toxic
under federal, state, or local laws or regulations, except those excluded in
Section 6.05(c) above.

Section 6.06 REQUIREMENTS OF ENVIRONMENTAL LAWS. "Requirements of Environmental
Laws" means all requirements of environmental, ecological, health, or industrial
hygiene laws or regulations or rules of common law related to the Property,
including, without limitation, all requirements imposed by any environmental
permit, law, rule, order, or regulation of any federal, state, or local
executive, legislative, judicial, regulatory, or administrative agency, which
relate to (i) exposure to Hazardous Materials; (ii) pollution or protection of
the air, surface water, ground water, land; (iii) solid, gaseous, or liquid
waste generation, treatment, storage, disposal, or transportation; or (iv)
regulation of the manufacture, processing, distribution and commerce, use, or
storage of Hazardous Materials.

                                   ARTICLE VII
                     CASUALTY, CONDEMNATION AND RESTORATION

Section 7.01 BORROWER'S REPRESENTATIONS.

         Borrower represents and warrants as follows:

         (a) Except as expressly Approved by Lender in writing, no casualty or
damage to any part of the Property which would cost more than $50,000 to restore
or replace has occurred which has not been fully restored or replaced.

         (b) No part of the Property has been taken in condemnation or other
similar proceeding or transferred in lieu of condemnation, nor has Borrower
received notice of any proposed condemnation or other similar proceeding
affecting the Property.

         (c) There is no pending proceeding for the total or partial
condemnation of the Property.

Section 7.02 RESTORATION.

         (a) Borrower shall give prompt written notice of any casualty to the
Property to Lender whether or not required to be insured against. The notice
shall describe the nature and cause of the casualty and the extent of the damage
to the Property. Borrower covenants and agrees to commence and diligently pursue
to completion the Restoration.

         (b) Borrower assigns to Lender all Insurance Proceeds which Borrower is
entitled to receive in connection with a casualty whether or not such insurance
is required under this Mortgage, and Lender shall apply such proceeds as
provided herein. In the event of any damage to or destruction of the Property,
and provided (i) an Event of Default does not currently exist, and (ii) Lender
has determined that (1) there has not been an Impairment of the Security (as
defined in Section 7.02(c)), and (2) the repair, restoration and



                                       15
<PAGE>   20

rebuilding of any portion of the Property that has been partially damaged or
destroyed (the "Restoration") can be accomplished in full compliance with all
Requirements to the same condition, character and general utility as nearly as
possible to that existing prior to the casualty and not resulting in an
Impairment of Security as defined in Section 7.02(c) hereof, the Net Insurance
Proceeds shall be applied to the Cost of Restoration in accordance with the
terms of this Article. Lender shall hold and disburse the Insurance Proceeds
less the cost, if any, to Lender of recovering the Insurance Proceeds including,
without limitation, reasonable attorneys' fees and expenses, and adjusters' fees
(the "Net Insurance Proceeds") to the Restoration.

         (c) For the purpose of this Article, "Impairment of Security" shall
mean that, based upon Lender's commercially reasonable projections, twelve (12)
months after the date of the damage, destruction, condemnation or casualty, (i)
the ratio of the annual cash flow derived from the Property to the annual debt
service for the Loan will be less than 1.40:1, as determined in accordance with
GAAP, or (ii) the ratio of the remaining balance of the Loan to the value of the
Property (which will be determined by Lender in Lender's sole discretion acting
in good faith and which may, at Lender's sole discretion, be based on MAI
appraisal) will be greater than the ratio resulting from dividing the
outstanding principal balance of the Loan by the agreed value of the Property as
of the Acceptance Date, as shown on Exhibit "B" to the Application, minus three
percent (3%).

         (d) If the Net Insurance Proceeds are to be used for the Restoration in
accordance with this Article, Borrower shall comply with Lender's Requirements
For Restoration as set forth in Section 7.04 below. Upon Borrower's satisfaction
and completion of the Requirements For Restoration and upon confirmation that
there is no Event of Default then existing, Lender shall pay any remaining
Restoration Funds (as defined in Section 7.04 below) then held by Lender to
Borrower.

         (e) In the event that the conditions for Restoration set forth in this
Section have not been met, after notice to the Borrower and opportunity to cure
as provided in Section 7.04(c) hereof, Lender may, at its option, apply the Net
Insurance Proceeds to the reduction of the Loan and Lender may declare the Loan
immediately due and payable. After payment in full of the Loan, so long as no
other Event of Default has occurred and is continuing, any remaining Restoration
Funds shall be paid to Borrower.

Section 7.03 CONDEMNATION.

         (a) If the Property or any part of the Property is taken by reason of
any condemnation or similar eminent domain proceeding, or by a grant or
conveyance in lieu of condemnation or eminent domain ("Condemnation"), Lender
shall be entitled to all compensation, awards, damages, proceeds and payments or
relief for the Condemnation ("Condemnation Proceeds"), and Lender shall apply
such proceeds as provided herein. At its option, Lender shall be entitled to
commence, appear in and prosecute in its own name any action or proceeding or to
make any compromise or settlement in connection with such Condemnation. Borrower
hereby irrevocably constitutes and appoints Lender as its attorney-in-fact,
which appointment is coupled with an interest, to commence, appear in and
prosecute any action or proceeding or to make any compromise or settlement in
connection with any such Condemnation.

         (b) Borrower assigns to Lender all Condemnation Proceeds which Borrower
is entitled to receive and Lender shall apply such proceeds as provided herein.
In the event of any Condemnation, and provided (i) an Event of Default does not
currently exist, and (ii) Lender has determined that (1) there has not been an
Impairment of the Security, and (2) the Restoration of any portion of the
Property that has not been taken can be accomplished in full compliance with all
Requirements to the same condition, character and general utility as nearly as
possible to that existing prior to the taking and not resulting in an Impairment
of Security as



                                       16
<PAGE>   21

defined in Section 7.02(e) hereof, then Borrower shall commence and diligently
pursue to completion the Restoration. Lender shall hold and disburse the
Condemnation Proceeds less the cost, if any, to Lender of recovering the
Condemnation Proceeds including, without limitation, reasonable attorneys' fees
and expenses, and adjusters' fees (the "Net Condemnation Proceeds") to the
Restoration. Notwithstanding the foregoing, if the Condemnation is of such a
nature that no Restoration of the Property is required (e.g., a portion of the
Property not improved with buildings or other improvements is taken for road
widening purposes), then Lender may either apply the Net Condemnation Proceeds
to reduction of the Loan or disburse the same to the Borrower without requiring
any further action on the part of the Borrower, so long as no Event of Default
has occurred and is continuing and no Impairment of Security has resulted from
such taking.

         (c) In the event the Net Condemnation Proceeds are to be used for the
Restoration, Borrower shall comply with Lender's Requirements For Restoration as
set forth in Section 7.04 below. Upon Borrower's satisfaction and completion of
the Requirements For Restoration and upon confirmation that there is no Event of
Default then existing, Lender shall pay any remaining Restoration Funds (as
defined in Section 7.04 below) then held by Lender to Borrower.

         (d) In the event that Restoration is required, the conditions for
Restoration set forth in this Section have not been met, Lender may, at its
option, after notice to the Borrower and opportunity to cure as provided in
Section 7.04(c) below, apply the Net Condemnation Proceeds to the reduction of
the Loan and Lender may declare the Loan immediately due and payable. After
payment in full of the Loan, so long as no other Event of Default hereunder has
occurred and is continuing, any remaining Restoration Funds shall be paid to
Borrower.

Section 7.04 REQUIREMENTS FOR RESTORATION. Unless otherwise expressly agreed in
a writing signed by Lender, the following are the Requirements For Restoration:

         (a) If the Net Insurance Proceeds or Net Condemnation Proceeds are to
be used for the Restoration, prior to the commencement of any Restoration work
(the "Work"), Borrower shall provide Lender for its review and written Approval
(i) complete plans and specifications for the Work which (A) have been approved
by all required governmental authorities, (B) have been approved by an architect
satisfactory to Lender (the "Architect") and (C) are accompanied by Architect's
signed statement of the total estimated cost of the Work (the "Approved Plans
and Specifications"); (ii) the amount of money which Lender reasonably
determines will be sufficient when added to the Net Insurance Proceeds or
Condemnation Proceeds to pay the entire cost of the Restoration (collectively
referred to as the "Restoration Funds"); (iii) a building permit evidencing that
the Approved Plans and Specifications and the Work are in compliance with all
Requirements; (iv) an executed contract for construction with a contractor
satisfactory to Lender (the "Contractor") in a form Approved by Lender in
writing; and (v) if required by the Lender, a surety bond and/or guarantee of
payment with respect to the completion of the Work. Any such bond or guarantee
shall be satisfactory to Lender in form and amount and shall be signed by a
surety or other entities who are reasonably acceptable to Lender. Lender shall
provide Borrower with Lender's written Approval or disapproval of the foregoing
items (i) within seven (7) business days after receipt thereof for Restoration
contemplating a cost of $1,000,000 or less and (ii) within a reasonable time
after receipt thereof for Restoration contemplating a cost greater than
$1,000,000; if disapproved, Lender will specify the reasons for disapproval in
writing.

         (b) Borrower shall not commence the Work, other than temporary work to
protect the Property or prevent interference with business, until Borrower shall
have complied with the requirements of subsection (a) of this Section 7.04. So
long as there does not currently exist an Event of Default and the following
conditions have been complied with or, in Lender's discretion, waived, Lender
shall disburse the Restoration Funds in increments to Borrower, from time to
time as the Work progresses:



                                       17
<PAGE>   22

                  (i) Architect or a developer shall be in charge of the Work.

                  (ii) Lender shall disburse the Restoration Funds directly or
through escrow with a title company selected by Borrower and Approved by Lender,
upon not less than ten (10) days' prior written notice from Borrower to Lender
and Borrower's delivery to Lender of (1) Borrower's written request for payment
(a "Request for Payment") accompanied by a certificate by Architect in a form
satisfactory to Lender which states that (A) all of the Work completed to that
date has been completed in compliance with the Approved Plans and Specifications
and in accordance with all Requirements, (B) the amount requested has been paid
or is then due and payable and is properly a part of the cost of the Work, and
(C) when added to all sums previously paid by Lender, the requested amount does
not exceed the value of the Work completed to the date of such certificate; and
(2) evidence satisfactory to Lender that the balance of the Restoration Funds
remaining after making the payments shall be sufficient to pay the balance of
the cost of the Work. Each Request for Payment shall be accompanied by (x)
waivers of liens covering that part of the Work previously paid for, if any (y)
a title search or by other evidence satisfactory to Lender that no mechanic's or
materialmen's liens or other similar liens for labor or materials supplied in
connection with the Work have been filed against the Property and not discharged
of record, and (z) an endorsement to Lender's title policy insuring that no
encumbrance exists on or affects the Property other than the Permitted
Exceptions.

                  (iii) The final Request for Payment shall be accompanied by
(1) a final certificate of occupancy or other evidence of approval of
appropriate governmental authorities for the use and occupancy of the
Improvements, (2) a certificate from the Architect that the Restoration has been
completed in accordance with the Approved Plans and Specifications and all
Requirements, (3) evidence that the costs of the Restoration have been paid in
full, and (4) evidence that no mechanic's or similar liens for labor or material
supplied in connection with the Restoration are outstanding against the
Property, including final waivers of liens covering all of the Work and an
endorsement to Lender's title policy insuring that no encumbrance exists on or
affects the Property other than the Permitted Exceptions.

         (c) If (i) within sixty (60) days after the occurrence of any damage,
destruction or condemnation requiring Restoration, Borrower fails to submit to
Lender and receive Lender's Approval of plans and specifications or fails to
deposit with Lender the additional amount necessary to accomplish the
Restoration as provided in subparagraph (a) above, or (ii) after such plans and
specifications are Approved by all such governmental authorities and Lender,
Borrower fails to commence promptly or diligently continue to completion the
Restoration, or (iii) Borrower becomes delinquent in payment to mechanics,
materialmen or others for the costs incurred in connection with the Restoration,
or (iv) there exists an Event of Default, then, in addition to all of the rights
herein set forth and after thirty (30) days' written notice of the
non-fulfillment of one or more of these conditions, Lender may apply the
Restoration Funds to reduction of the Loan, and at Lender's option and in its
sole discretion, Lender may declare the Loan immediately due and payable
together with the Prepayment Fee.

                                  ARTICLE VIII
                           REPRESENTATIONS OF BORROWER

Section 8.01 ERISA. Borrower hereby represents, warrants and agrees that: (i) it
is acting on its own behalf and that it is not an employee benefit plan as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), which is subject to Title 1 of ERISA, nor a plan as
defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended
(each of the foregoing hereinafter referred to collectively as a "Plan"); (ii)
Borrower's assets do not constitute "plan assets" of one or



                                       18
<PAGE>   23

more such Plans within the meaning of Department of Labor Regulation Section
2510.3-101; and (iii) it will not be reconstituted as a Plan or as an entity
whose assets constitute "plan assets".

Section 8.02 NON-RELATIONSHIP. Neither Borrower nor any general partner,
director, member or officer of Borrower nor, to Borrower's knowledge, any person
who is a Borrower's Constituent (as defined in Section 8.03) is (i) a director
or officer of Metropolitan Life Insurance Company ("MetLife"), (ii) a parent,
son or daughter of a director or officer of MetLife, or a descendent of any of
them, (iii) a stepparent, adopted child, stepson or stepdaughter of a director
or officer of MetLife, or (iv) a spouse of a director or officer of MetLife.

Section 8.03 NO ADVERSE CHANGE.

         Borrower represents and warrants that:

         (a) there has been no material adverse change from the conditions shown
in the application submitted for the Loan by Borrower ("Application") or in the
materials submitted in connection with the Application in the credit rating or
financial condition of Borrower, or shareholders of Borrower or any entity which
is a shareholder of Borrower, respectively as the case may be (collectively,
"Borrower's Constituents").

         (b) Borrower has delivered to Lender true and correct copies of all
Borrower's organizational documents and except as expressly Approved by Lender
in writing, there have been no changes in Borrower's Constituents since the date
that the Application was executed by Borrower.

         (c) Neither Borrower, nor any of the Borrower's Constituents, is a
debtor in any bankruptcy, reorganization, insolvency, dissolution or liquidation
proceeding, and to the best knowledge of Borrower, no such proceeding is
contemplated or threatened.

         (d) Borrower has received reasonably equivalent value for the granting
of this Mortgage.

Section 8.04 FOREIGN INVESTOR. Neither Borrower nor any stockholder of Borrower
is, and no legal or beneficial interest in a stockholder of Borrower is or will
be held, directly or indirectly by, a "foreign person" within the meaning of
Sections 1445 and 7701 of the Internal Revenue Code of l986, as amended.

                                   ARTICLE IX
                            EXCULPATION AND LIABILITY

Section 9.01 LIABILITY OF BORROWER.

         (a) Upon the occurrence of an Event of Default, except as provided in
this Section 9.01, Lender will look solely to the Property and the security
under the Loan Documents for the repayment of the Loan and will not enforce a
deficiency judgment against Borrower. However, nothing contained in this section
shall limit the rights of Lender to proceed against Borrower and/or the Liable
Parties, if any, (i) to enforce any Leases entered into by Borrower or its
affiliates as tenant, guarantees, or other agreements entered into by Borrower
in a capacity other than as borrower or any policies of insurance; (ii) to
recover damages for fraud, material misrepresentation, material breach of
warranty or intentional waste; (iii) to recover any Condemnation Proceeds or
Insurance Proceeds or other similar funds which have been misapplied by Borrower
or which, under the terms of the Loan Documents, should have been paid to
Lender; (iv) following an Event of Default, to recover any tenant security
deposits, tenant letters of credit or other deposits or fees paid to Borrower
that are part of the collateral for the Loan or prepaid rents for a period of
more than 30 days which have not been delivered to Lender; (v) to recover Rents
and Profits received by Borrower after the first day of the month in



                                       19
<PAGE>   24

which an Event of Default occurs and prior to the date Lender acquires title to
the Property which have not been applied to the Loan or in accordance with the
Loan Documents to operating and maintenance expenses of the Property; (vi) to
recover damages, costs and expenses arising from, or in connection with ARTICLE
VI of this Mortgage pertaining to hazardous materials or the Indemnity
Agreement; (vii) to recover all amounts due and payable pursuant to Section
11.06 and Section 11.07 of this Mortgage; and/or (viii) to recover actual
damages arising from Borrower's failure to comply with Section 8.01 of this
Mortgage pertaining to ERISA.

         (b) In addition to the foregoing exceptions to exculpation in
subsection (a) above, to the extent that the Lender does not require deposits
for the payment of Impositions or Premiums, as contemplated in Section 2.04
hereof, the Lender may proceed against the Borrower to recover the amount of all
sums which were required to be paid by the Borrower for such purposes but which
Borrower has failed to pay.

                                    ARTICLE X
                   CHANGE IN OWNERSHIP, CONVEYANCE OF PROPERTY

Section 10.01 TRANSFER OF PROPERTY, CHANGE IN OWNERSHIP AND COMPOSITION.

         (a) Limitations on Transfers. Except as otherwise permitted in this
Section 10.01, Borrower shall not cause or permit: (i) the Property or any
interest in the Property, to be conveyed, transferred, assigned, encumbered,
sold or otherwise disposed of; or (ii) any merger, reorganization, dissolution
or other change in the ownership structure of Borrower (collectively,
"TRANSFERS").

         (b) Permitted Transfers. The forgoing prohibitions on Transfers shall
not be applicable to the following (the "PERMITTED TRANSFERS"): (i) Transfers as
a result of the death of a natural person who is Borrower; (ii) Transfers in
connection with estate planning by a natural person to a spouse, son or daughter
or descendant of either, a stepson or stepdaughter or descendant of either;
(iii) the granting of easements or similar interests to public or private
utilities for the purpose of facilitating utility service to the Property; and
(iv) any Transfer permitted under subsections 10.01(c), (d) or (e), hereof,
Transfers of Property accompanied by a release thereof from this Mortgage as
permitted in Section 10.03 hereof, or any Transfer which occurs in connection
with a Defeasance permitted under Section 10.02 hereof. As used herein, the
terms "Other Loans" and "Other Properties" shall have the meanings attributed to
such terms in ARTICLE XV hereof.

         (c) One Time Transfer Right. Borrower shall have a one-time right to
assign and transfer its obligations under the Loan to a third party in
connection with a sale of the Property, provided that each of the following
conditions shall be satisfied, after giving effect to such Transfer:

                  (i) Borrower is not then in default under this Mortgage, the
Loan Documents or the Indemnity Agreement;

                  (ii) Lender has Approved the proposed third party transferee,
which Approval shall not be unreasonably withheld;

                  (iii) the proposed transferee shall be able to make the ERISA
representations set forth in the Loan Documents;

                  (iv) neither (1) the ratio of the annual cash flow derived
from the Property to the annual debt service for the Loan, nor (2) the combined
annual cash flow derived from the Other Properties to the combined annual debt
service for the Other Loans, shall be less than 1.40:1, as determined in
accordance with GAAP;



                                       20
<PAGE>   25

                  (v) The ratio of the remaining balance of the Loan to the
value of the Property at the time of the Transfer (which will be determined by
Lender at the time of the proposed Transfer in Lender's sole discretion acting
in good faith and which may, at Lender's sole discretion, be based on an MAI
appraisal) shall not be greater than the ratio resulting from dividing the
outstanding principal balance of the Loan at the time of Transfer by the agreed
value of the Property as of the Acceptance Date, as shown on Exhibit "B" to the
Application, minus three percent (3%).

                  (vi) the ratio of the total of the aggregate remaining
balances of the Other Loans to the value of the Other Properties at the time of
the Transfer (which will be determined by Lender at the time of the proposed
transfer in Lender's sole discretion acting in good faith and which may, at
Lender's sole discretion, be based on an MAI appraisal) shall not be greater
than the ratio resulting from dividing such aggregate outstanding principal
balances at the time of transfer by the combined agreed value of the Other
Properties as of the Acceptance Date, as shown on Exhibit "B" to the
Application, minus three percent (3%);

                  (vii) Borrower shall pay to the Lender a fee equal to one
percent (1%) of the outstanding principal balance of the Note at the time of the
assumption;

                  (viii) Borrower shall pay to the Lender a processing fee of
$20,000;

                  (ix) the proposed third party transferee shall expressly
assume the obligations of the Borrower under Loan Documents and the Indemnity
Agreement in a manner satisfactory to Lender;

                  (x) the third party transferee must have a net worth of at
least $200 million;

                  (xi) the third party transferee must be experienced in the
ownership, management and leasing of properties similar to the Property;

                  (xii) Borrower or the third party transferee shall pay all
costs and expenses incurred by the Lender in connection with the Transfer,
including title insurance premiums, documentation costs and reasonable
attorneys' fees and the cost of any appraisal required by the Lender.

                  (xiii) The Transfer of the Loan secured hereby may be made as
provided herein only if the Loan secured by the Beacon Station 1(B) Mortgage
(identified in Section 15.01 hereof) is simultaneously transferred as part of
such Permitted Transfer to the same third party transferee.

No Transfer permitted hereunder shall release Borrower from its obligations
under the Loan Documents or the Indemnity Agreement with respect to events
arising or occurring prior to the date of transfer.

         (d) Additional Transfer Provisions. The Borrower shall have the
following additional rights to make Transfers which shall not (except for
subsection 10.01(d)(iv) below), require Lender's Approval nor constitute the One
Time Transfer described in subsection 10.01(c) above (an "Additional Permitted
Transfer"):

                  (i) Transfers of Property. Provided the conditions set forth
in subsection (d)(v) below are met, the Transfer of the Property and the Other
Properties then owned by Borrower to any one entity in which Flagler Development
Company, a Florida corporation, or Florida East Coast Industries, Inc., a
Florida corporation, the parent of Borrower ("FECI"), shall own, directly or
indirectly, at least fifty-one percent (51%) of the equity interest and retain
management control shall be permitted without the necessity of obtaining
Lender's consent. A processing fee of $10,000 for each Loan then outstanding
shall be required.



                                       21
<PAGE>   26

                  (ii) Transfers of Ownership Interests in Borrower. Provided
the conditions set forth in subsection (d)(v) below are met, the Transfer of
ownership interests in Borrower to any entity in which Flagler Development
Company or FECI shall own, directly or indirectly, at least fifty-one percent
(51%) of the equity interest and retain management control shall be permitted
without the necessity of obtaining Lender's consent. A processing fee of $10,000
will be required.

                  (iii) Merger of Flagler Development Company With a Publicly
Held Entity. Provided the conditions set forth in subsection 10.01(d)(v) below
are met, Flagler Development Company may merge with any publicly held entity
without the consent of Lender. Any reference herein to "Flagler Development
Company" shall mean Flagler Development Company or its successor pursuant to a
merger. A processing fee of $25,000 shall be required.

                  (iv) Mergers of Flagler Development Company With a Privately
Held Entity. Flagler Development Company may merge with a privately held entity
provided that a transfer under this section will be treated as the One Time
Transfer referenced in subsection 10.01(c) above and shall be subject to the
conditions stated therein. Any reference herein to "Flagler Development Company"
shall mean Flagler Development Company or its successor pursuant to a merger.

                  (v) Conditions Applicable to Additional Transfer Provisions.
The following conditions must be met in order for Borrower to effect the
Transfers set forth in subsections 10.01(d)(i), (ii) and (iii) above without
first obtaining Lender's consent (which consent can be granted or withheld in
Lender's sole discretion acting in good faith):

                           (1) there being no Event of Default under the Loan
Documents or Indemnity Agreement;

                           (2) Borrower will have provided Lender with no less
than forty-five (45) days prior written notice of any such Transfer;

                           (3) the management and day to day operations of the
Property shall not change as a result of such Transfer;

                           (4) at the time of and after such Transfer or merger,
Flagler Development Company or its successor shall have a net worth of at least
$200 million;

                           (5) after such Transfer, Flagler Development Company,
a Florida corporation, or FECI, shall retain voting control;

                           (6) with respect to any Transfer or merger
contemplated above, any new entity shall execute written agreements in favor of
Lender whereby such entity shall expressly assume the obligations under the Loan
Documents and the obligations of Borrower hereunder, and furthermore, Borrower
shall not be released from its obligations under the Loan Documents and
Indemnity Agreement;

                           (7) Borrower shall pay any costs and expenses of
Lender in connection with such transfers or mergers, including attorneys' fees
and expenses, title costs and title insurance premium and processing fees as set
forth above; and the transferee or successor shall be able to make the ERISA
representations set forth in the Loan Documents.



                                       22
<PAGE>   27

         (e) One Time Transfer of Ownership Interest. In the event of a
transaction involving a Transfer of ownership interests in Borrower that does
not meet the provisions of (d) above, Borrower or FECI shall have a one-time
right to Transfer any or all of its ownership interest in Borrower, subject to
Lender's Approval, provided that the following conditions shall be satisfied:

                  (i) Borrower is not then in default under the Loan Documents
or the Indemnity Agreement;

                  (ii) The borrowing entity as newly composed shall be able to
make the ERISA representations set forth in the Loan Documents;

                  (iii) the ratio of the combined annual cash flow derived from
the Property and the Other Properties to the annual debt service for the Loan
and Other Loans shall be no less than 1.40:1, as determined in accordance with
GAAP;

                  (iv) the loan-to-value ratio of the aggregate outstanding
principal balance of the Loan and Other Loans to the value of the Property and
Other Properties at the time of the change in the borrowing entity (which will
be determined by Lender at the time of the proposed change in the borrowing
entity, in Lender's sole discretion acting in good faith and which may, at
Lender's sole discretion, be based on an MAI appraisal) shall not be greater
than the ratio resulting from dividing such aggregate outstanding principal
balance at the time of transfer by the agreed value of the Property and Other
Properties as of the Acceptance Date, as shown on Exhibit "B" to the
Application, minus three percent (3%);

                  (v) Borrower shall pay to the Lender a fee equal to one
percent (1%) of the aggregate outstanding principal balance of the Note and the
Other Notes at the time of the change in the borrowing entity;

                  (vi) Borrower shall pay to the Lender a processing fee of
$20,000;

                  (vii) the borrowing entity as newly composed shall expressly
assume the Loan Documents and the Indemnity Agreement in a manner satisfactory
to Lender;

                  (viii) the borrowing entity as newly composed must have a net
worth of at least $200 million;

                  (ix) the borrowing entity as newly composed must be
experienced in the ownership, management and leasing of properties similar to
the Property and Other Properties;

                  (x) Borrower or the borrowing entity as newly composed shall
pay all costs and expenses incurred by Lender in connection with the Transfer,
including title insurance premiums, documentation costs and reasonable
attorneys' fees and the cost of any appraisal required by Lender.

No Transfer of an ownership interest in Borrower permitted under subsections
10.01(d) or (e) hereof shall release Borrower from its obligations under the
Loan Documents or the Indemnity Agreement with respect to events arising or
occurring prior to the date of such Transfer.

A series of Transfers that are part of a common plan of reorganization,
restructuring or change of ownership of Borrower provided such series of
transfers in completed within two (2) years will be considered a single Transfer
for purposes of the one-time right of transfer permitted under this subsection
10.01(e).



                                       23
<PAGE>   28

Notwithstanding anything to the contrary contained in this Section 10.01, in the
event that a Transfer is subject to the Approval of the Lender and the Lender
does not give such approval, Borrower may either prepay the outstanding
principal balance of the Loan, subject to payment of the applicable Prepayment
Fee pursuant to the Note, or defease the Loan as provided in Section 10.02, at
the option of the Lender, with forty-five (45) days prior written notice from
the Borrower of Borrower's intent to make such Transfer.

Section 10.02 DEFEASANCE. (a) Should the Lender elect to require defeasance
pursuant to Section 10.01, Borrower may obtain the release of the Property from
the lien of the Mortgage upon the satisfaction of the following conditions
precedent:

                  (i) not less than forty-five (45) days prior written notice to
Lender specifying a regularly scheduled payment date (the "Release Date") on
which the Defeasance Deposit (hereinafter defined) is to be made;

                  (ii) the payment to Lender of interest accrued and unpaid on
the principal balance of the Note to and including the Release Date, and all
other sums then due and payable under the Note, the Mortgage and the other Loan
Documents;

                  (iii) the payment to Lender of the Defeasance Deposit; and

                  (iv) the delivery to Lender of:

                           (1) a security agreement (the "Defeasance Security
Agreement") in form and substance satisfactory to Lender, creating a first
priority lien on and a perfected security interest in the Defeasance Collateral
Account (as hereinafter defined) and the U.S. Obligations (as hereinafter
defined) and purchased on behalf of Borrower with the Defeasance Deposit in
accordance with this provision of this Section;

                           (2) a release of the Property from the lien of the
Mortgage (for execution by Lender) in a form acceptable to Lender and
appropriate for the jurisdiction in which the Property is located;

                           (3) a certificate from an officer of Borrower
certifying that the requirements set forth in this Section have been satisfied;

                           (4) an opinion of counsel for Borrower in form and
substance and delivered by counsel satisfactory to Lender, stating, among other
things, (x) that Lender has a perfected first priority security interest in the
U.S. Obligations purchased by Lender on behalf of Borrower and the Defeasance
Collateral Account, (y) that the Defeasance Security Agreement is enforceable
against Borrower in accordance with its terms, and (z) if required by the
applicable rating agencies, a non-consolidation opinion with respect to the
Successor Borrower (as hereinafter defined);

                           (5) evidence in writing from the applicable Rating
Agencies to the effect that such release will not result in a requalification
reduction or withdrawal of any rating in effect immediately prior to such
defeasance for any securities issued in connection with a Secondary Market
Transaction;

                           (6) such other certificates, opinions, documents or
instruments as Lender may reasonably request.



                                       24
<PAGE>   29

                  (v) Payment of all costs and expenses incurred in connection
with the defeasance, including, without limitation, reasonable attorneys' fees.

         (b) In connection with the conditions set forth in clause (a)(iv) of
this Section, Borrower hereby appoints Lender as its agent and attorney-in-fact
for the purpose of using the Defeasance Deposit to purchase U.S. Obligations
which provide payments on or prior to, but as close as possible to, all
successive scheduled payment dates after the Release Date upon which interest
and principal payments are required under the Note (including, without
limitation, the amounts due on the Maturity Date) and in amounts equal to or
greater than the scheduled payments due on such dates under the Note (the
"Scheduled Defeasance Payments"). Borrower, pursuant to the Defeasance Security
Agreement or other appropriate document, shall authorize and direct that the
payments received from the U.S. Obligations may be made directly to Lender and
applied to satisfy the obligations of Borrower under the Note. Borrower shall,
at Lender's option, open an account Approved by Lender at an institution
acceptable to Lender ("Defeasance Collateral Account"). The Defeasance
Collateral Account shall contain only the U.S. Obligations and cash from
interest and principal paid on the U.S. Obligations. All cash from interest and
principal payments paid on the U.S. Obligations shall be paid over to Lender as
Scheduled Defeasance Payments and applied first to accrued and unpaid interest
and then to principal. Borrower shall cause the Eligible Institution at which
the U.S. Obligations are deposited to enter into an agreement with Borrower and
Lender, satisfactory to Lender in its discretion, pursuant to which such
Eligible Institution shall agree to hold and distribute the U.S. Obligations in
accordance with this Section. Borrower shall be the owner of the Defeasance
Collateral Account and shall report all income accrued on the U.S. Obligations
for federal, state and local income tax purposes in its income tax return.
Borrower shall prepay all costs and expenses associated with opening and
maintaining the Defeasance Collateral Account. Lender shall not, in any way, be
liable by reason of any insufficiency in the Defeasance Collateral Account.

         (c) Upon compliance with the requirements of this Section, the Property
shall be released from the lien of the Mortgage and the pledged U.S. Obligations
and the Defeasance Collateral Account together with any Other Properties
encumbered by the Other Mortgages shall secure the Note. Any portion of the
Defeasance Deposit in excess of the amount necessary to purchase the U.S.
Obligations required by clause (a) above to satisfy Borrower's obligations under
this Section shall be remitted to Borrower with the release of the Property from
the lien of the Mortgage.

         (d) In connection with a defeasance under this Section, Borrower may,
and at the request of Lender shall, establish or designate a successor entity
(the "Successor Borrower") which shall be a single purpose bankruptcy remote
entity Approved by Lender. Borrower shall transfer and assign all obligations,
rights and duties under and to the Note together with the pledged U.S.
Obligations to such Successor Borrower. Such Successor Borrower shall execute an
assumption agreement in form and substance satisfactory to Lender in its sole
discretion, pursuant to which such Successor Borrower shall assume Borrower's
obligations under the Note and the Defeasance Security Agreement. As a condition
to such assignment and assumption, Borrower shall (i) deliver to Lender an
opinion of counsel in form and substance and delivered by counsel satisfactory
to Lender, in its sole discretion, stating, among other things, that such
assumption agreement is enforceable against Borrower and such Successor Borrower
in accordance with its terms and that the Note, the Defeasance Security
Agreement, and the other Loan Documents, as so assumed, are enforceable against
such Successor Borrower in accordance with their respective terms, and (ii) pay
all costs and expenses incurred by Lender or its agents in connection with such
assignment and assumption (including, without limitation, the review of the
proposed Successor Borrower and the preparation of the assumption agreement and
related documentation). Borrower shall pay $1,000.00 to any such Successor
Borrower as consideration for assuming the obligations under the Note and the
Defeasance Security



                                       25
<PAGE>   30

Agreement. No other assumption fee shall be payable upon a transfer of the Note
in accordance with this Section.

         (e) For purposes of this Section, the following terms shall have the
following meanings:

                  (i) The term "Defeasance Deposit" shall mean an amount equal
to the remaining principal amount of the Note, the Yield Maintenance Premium (as
hereinafter described), any costs and expenses incurred or to be incurred in the
purchase of U.S. Obligations necessary to meet the Scheduled Defeasance Payments
and any revenue, transfer, transaction, documentary stamp or intangible taxes or
any other tax or charge due in connection with the transfer of the Note or
otherwise required to accomplish the agreements of this Section;

                  (ii) The term "Yield Maintenance Premium" shall mean the
amount (if any) which, when added to the remaining principal amount of the Note,
will be sufficient to purchase U.S. Obligations providing the required Scheduled
Defeasance Payments; and

                  (iii) The term "U.S. Obligations" shall mean direct,
non-callable obligations of the United States of America.

Section 10.03 RELEASES AND SUBSTITUTIONS OF PROPERTY. Property may be released
from the lien of the Mortgage (and other Loan Documents) only upon the following
terms and conditions:

         (a) Partial Release of Collateral Option. Borrower will have the right
and option (referred to as the "Partial Release of Collateral Option") to
release in the aggregate, not more than ten individual Parcels (upon which the
buildings described in Exhibit "A" to the Application are located) of the
Property and Other Properties, combined, during the last five (5) years of the
Loan term, upon and subject to the following terms and conditions:

                  (i) Borrower will have the right or option to exercise the
Partial Release of Collateral Option for an individual Parcel, and obtain a
release of such Parcel (the "Release Parcel"), provided however, that in no
event shall any such Partial Release be allowed: (1) if Borrower is in default
under the Loan or an event has occurred which with the giving of notice or
passage of time would constitute a default; or (2) prior to the end of the fifth
Loan Year; or (3) if Borrower has not complied with each of the provisions of
the Mortgage with respect to the remaining Parcels encumbered by the Mortgage
(the "Unreleased Parcels") and with any required modification of the Loan
Documents with respect to the Release Parcel; or (4) if the rent rolls, tenants,
and terms of the Leases of the remaining Parcels are not satisfactory to Lender,
in its sole discretion.

                  (ii) Borrower shall prepay the amount of principal on the Loan
as is necessary to reduce the then outstanding aggregate principal balance of
the Loan by 110% of the then current balance allocated to the Release Parcel
(after applying principal payments on a pro rata basis to each Parcel based upon
the Loan's 30-year amortization schedule) together with the applicable
Prepayment Fee provided in the Note, upon sixty (60) days advance notice to
Lender. The initial balance of the Loan to be allocated to the Release Parcel
shall be as set forth in Exhibit B to the Application, under the column "Loan
Amount," as applicable to such Release Parcel (the "Release Price").

In addition, the Unreleased Parcels shall be required to: (1) provide sufficient
cash flow, such that the ratio of the annual combined cash flow of the
Unreleased Parcels and the Other Properties to the annual combined debt



                                       26
<PAGE>   31

service for the Loan and all of the Other Loans shall be at least 1.40:1 and (2)
support a loan to value ratio at the time of the partial release (which will be
determined by Lender at the time of the partial release in Lender's sole
discretion acting in good faith and which may, at Lender's sole discretion, be
based on an MAI appraisal) which is no greater than the ratio resulting from
dividing the aggregate outstanding principal balances of the Loan (after
application of the Release Price) and the Other Loans at the time of transfer,
by the agreed combined value of the Unreleased Parcels and the Other Properties
as of the Acceptance Date, as shown on Exhibit "B" to the Application, minus
three percent (3%);.

                  (iii) Upon payment of the Release Price, the monthly principal
and interest payments shall be recalculated as of the first day of the month
immediately following such repayment so as to reflect a new payment based on the
new outstanding principal balance of the Loan accruing interest at the Annual
Interest Rate then being paid based upon the terms of the Note for the remaining
portion of the amortization period.

                  (iv) No such partial release by Lender will affect any of
Borrower's obligations as stated in the Loan Documents.

                  (v) Borrower shall pay to Lender all costs and expenses
incurred by Lender in connection with any request for the release of the Release
Parcel or in connection with any appraisal required by Lender pursuant to this
subsection (a), including, without limitation, reasonable attorneys' fees and
costs, recording costs and title insurance premiums. In addition, Borrower shall
pay a $20,000 processing fee for each exercise of the Partial Release of
Collateral Option.

         (b) Additional Release Provisions. [Gran Park - Avenues and Gran Park
Beacon Mortgages only] Borrower will also have the right and option (referred to
as the "Additional Release Option"), exercisable at any time in Borrower's
discretion, to obtain a release of any Undeveloped Parcel of the Property from
the lien and encumbrance of the Mortgage (and other Loan Documents) without
payment of a release price or fee, prepayment of any principal on the Loan, or
any other consideration to Lender, except as otherwise set forth below, provided
that the following conditions are satisfied in connection with the exercise of
the Additional Release Option:

                  (i) there shall then exist no Event of Default under the Loan
Documents, the release of the Undeveloped Parcel(s) shall not violate any of the
leases, any restrictive covenants on the remaining Property or adversely affect
the zoning, easements, streets, access rights or use of the remaining portion of
the Property considered as a unit without the Undeveloped Parcel(s), and the
remaining Property and the Undeveloped Parcels being released are taxed as
separate parcels;

                  (ii) As to the Undeveloped Parcels to be located within Gran
Park at Beacon Station, Borrower shall have delivered to Lender a filed replat
of Gran Park at Beacon Station, establishing the boundaries of the Undeveloped
Parcels located therein, and otherwise in form and content acceptable to Lender.

                  (iii) No such partial release by Lender will affect any of
Borrower's obligations as stated in the Loan Documents, as to the remaining
Parcels.

                  (iv) Lender agrees to cooperate reasonably with Borrower in
connection with the proposed replat of Gran Park at Beacon Station, and agrees
to the reconfiguration of certain lot lines therein to establish the Undeveloped
Parcels to be located therein, provided that such reconfiguration and replat is
in full compliance with applicable laws, regulations and governmental
requirements.



                                       27
<PAGE>   32

                  (v) Borrower shall pay to Lender all costs and expenses
incurred by Lender in connection with the exercise of the Additional Release
Option, including, without limitation, reasonable attorneys' fees and costs,
recording costs and title insurance premiums, if any. In addition, Borrower
shall pay a $10,000 processing fee for each exercise of the Additional Release
Option.

                  (vi) For purposes of the Additional Release Option,
capitalized terms used above will have the following definitions:

                           (1) "Undeveloped Parcel" means those three separate
parcels of land to be created out of unimproved portions of Lots 14, 15 and 16,
Block 6, Beacon Station First Addition, as generally depicted on the Beacon
Station Survey, as proposed to be created pursuant to a replat of Gran Park at
Beacon Station.

                           (2) "Beacon Station Survey" means the ALTA/ACSM Land
Title Survey of Portion of Beacon Station Second Addition, prepared by Ludovici
& Orange Consulting Engineers, Inc., Project No. 2000-16D, dated 4-27-2001, and
to be recertified prior to the date hereof.

         (c) Collateral Substitution. Borrower shall have the right from time to
time to obtain the release of a Parcel or group of Parcels within a single
office or office/industrial park (a "group") and to substitute the same for a
new parcel or group of parcels not then subject to the lien of the Mortgage
("New Property"), the value of which New Property must be equal to or greater
than 110% of the initial value (as determined by Lender in Lender's sole
discretion acting in good faith and which determination may, at Lender's sole
discretion, be based on an MAI appraisal) of the Parcel(s) to be replaced
subject to the following: (i) Borrower is not in default under the Loan or an
event has not occurred which with the giving of notice or passage of time would
constitute a default, (ii) with respect to the Property and the Other Properties
combined, substitution is limited to no more than one transaction involving a
Parcel or group of Parcels per year, and to no more than five (5) transactions
involving a Parcel or group of Parcels and in no event more than ten (10)
Parcels over the term of the Loan, (iii) the Parcel(s) to be replaced shall be
limited to the original Parcel(s) encumbered by this Mortgage and the Other
Mortgages, respectively, (iv) the New Property is acceptable to Lender in its
sole discretion acting in good faith and (v) Borrower and any other Liable
Parties have complied with each of the provisions of the Loan Documents and
Indemnity Agreement. Lender shall have the right to charge a processing fee for
the substitution of each New Property, which processing fee shall be $20,000 per
transaction. Borrower shall also pay to Lender all costs and expenses incurred
by Lender in connection with any request for the collateral substitution or in
connection with any appraisal required by Lender pursuant to this subsection
10.03(c), including, without limitation, reasonable attorneys' fees and costs,
recording costs and title insurance premiums. In addition, the Property,
including the New Property, shall be required to: (1) provide sufficient cash
flow such that the ratio of the annual cash flow from the Property (following
the substitution of the New Property) to the annual debt service for the Loan is
at least 1.40:1, and (2) support a loan to value ratio based on the value of the
Property less the value of the Parcel(s) to be replaced and including the value
of the New Property being substituted (which will be determined by Lender at the
time of the collateral substitution in Lender's sole discretion acting in good
faith and which may, at Lender's sole discretion, be based on an MAI appraisal)
which is not greater than the ratio resulting from dividing the outstanding
principal balance of the Loan at the time of transfer by the agreed value of the
Property as of the Acceptance Date as shown on Exhibit "B" to the Application,
minus three percent (3%).

Borrower acknowledges and agrees that Lender's right to accept or reject any New
Property shall be exercisable in Lender's sole discretion acting in good faith.
Without limiting the basis for Lender's rejection in good faith of a proposed
collateral substitution, Lender shall be deemed to have exercised its sole
discretion



                                       28
<PAGE>   33

in good faith if it rejects a proposed collateral substitution based on any of
the following criteria: value, environmental condition, market, location,
product type, governmental restrictions, or condition of improvements or the
rent rolls, tenants, and terms of the leases of tenants remaining after the
substitution of the New Property. Borrower further acknowledges and agrees that
Lender's right is a material inducement to Lender's agreeing to this collateral
substitution provision, and but for Borrower's agreement that Lender may accept
or reject any New Property Lender would not agree to provide this collateral
substitution provision.

Section 10.04 PROHIBITION ON SUBORDINATE FINANCING. Borrower shall not incur or
permit the incurring of (i) any financing in addition to the Loan that is
secured by a lien, security interest or other encumbrance of any part of the
Property or (ii) any pledge or encumbrance of any beneficial interest in
Borrower.

Section 10.05 [INTENTIONALLY DELETED]

Section 10.06 STATEMENTS REGARDING OWNERSHIP. Borrower agrees to submit or cause
to be submitted to Lender within thirty (30) days after December 3lst of each
calendar year during the term of this Mortgage and ten (10) days after any
written request by Lender, a sworn, notarized certificate, signed by an
authorized officer of Borrower, stating whether (i) any part of the Property, or
any interest in the Property, has been conveyed, transferred, assigned,
encumbered, or sold, and if so, to whom; or (ii) any conveyance, transfer,
pledge or encumbrance of any interest in Borrower has been made by Borrower and
if so, to whom.

                                   ARTICLE XI
                              DEFAULTS AND REMEDIES

Section 11.01 EVENTS OF DEFAULT. Any of the following shall be deemed to be a
material breach of Borrower's covenants in this Mortgage and shall constitute a
default ("Event of Default"):

         (a) The failure of Borrower to pay any installment of principal,
interest or principal and interest, any required escrow deposit or any other sum
required to be paid under any Loan Document, whether to Lender or otherwise,
within seven (7) days of the due date of such payment;

         (b) The failure of Borrower to perform or observe any other term,
provision, covenant, condition or agreement under this Mortgage, the Note or any
other Loan Documents evidencing or securing the Loan for a period of more than
thirty (30) days after receipt by the Borrower of notice of such failure;

         (c) The filing by Borrower or one of the Liable Parties (an "Insolvent
Entity") of a voluntary petition or application for relief in bankruptcy, the
filing against an Insolvent Entity of an involuntary petition or application for
relief in bankruptcy which is not dismissed within sixty (60) days, or an
Insolvent Entity's adjudication as a bankrupt or insolvent, or the filing by an
Insolvent Entity of any petition, application for relief or answer seeking or
acquiescing in any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under any present or
future federal, state or other statute, law, code or regulation relating to
bankruptcy, insolvency or other relief for debtors, or an Insolvent Entity's
seeking or consenting to or acquiescing in the appointment of any trustee,
custodian, conservator, receiver or liquidator of an Insolvent Entity or of all
or any substantial part of the Property or of any or all of the Rents and
Profits, or the making by an Insolvent Entity of any general assignment for the
benefit of creditors, or the admission in writing by an Insolvent Entity of its
inability to pay its debts generally as they become due;



                                       29
<PAGE>   34

         (d) If any warranty, representation, certification, financial statement
or other information made or furnished at any time pursuant to the terms of the
Loan Documents by Borrower, or by any person or entity otherwise liable under
any Loan Document shall be materially false or misleading;

         (e) If Borrower shall suffer or permit the Property, or any part of the
Property, to be used in a manner that might (i) impair Borrower's title to the
Property, (ii) create rights of adverse use or possession, or (iii) constitute
an implied dedication of any part of the Property and such act or omission is
not cured within thirty (30) days after receipt of written notice thereof by the
Borrower; or

         (f) An Event of Default occurs under any of the "Other Loan Documents "
(as defined in Section 15.01 hereof) and is not cured as provided therein.

Section 11.02 REMEDIES UPON DEFAULT. Upon the happening of an Event of Default,
the Secured Indebtedness shall, at the option of Lender, become immediately due
and payable, without further notice or demand (except to the extent provided in
Section 11.01 above), and Lender may undertake any one or more of the following
remedies:

         (a) Foreclosure. Institute a foreclosure action in accordance with the
law of the State, or take any other action as may be allowed, at law or in
equity, for the enforcement of the Loan Documents and realization on the
Property or any other security afforded by the Loan Documents. In the case of a
judicial proceeding, Lender may proceed to final judgment and execution for the
amount of the Secured Indebtedness owed as of the date of the judgment, together
with all costs of suit, reasonable attorneys' fees and interest on the judgment
at the maximum rate permitted by law from the date of the judgment until paid.
If Lender is the purchaser at the foreclosure sale of the Property, the
foreclosure sale price shall be applied against the total amount due Lender;
and/or

         (b) Other. Take such action and exercise such rights and remedies,
procedural and substantive, as may be allowable now or in the future by
statutory or case law, or in equity.

         (c) Entry. Enter into possession of the Property, lease the
Improvements, collect all Rents and Profits and, after deducting all costs of
collection and administration expenses, apply the remaining Rents and Profits in
such order and amounts as Lender, in Lender's sole discretion, may elect to the
payment of Impositions, operating costs, costs of maintenance, restoration and
repairs, Premiums and other charges, including, but not limited to, costs of
leasing the Property and fees and costs of counsel and receivers, and in
reduction of the Secured Indebtedness; and/or

         (d) Receivership. Have a receiver appointed to enter into possession of
the Property, lease the Property, collect the Rents and Profits and apply them
as the appropriate court may direct. Lender shall be entitled to the appointment
of a receiver without the necessity of proving either the inadequacy of the
security or the insolvency of Borrower or any of the Liable Parties. Borrower
and Liable Parties shall be deemed to have consented to the appointment of the
receiver. The collection or receipt of any of the Rents and Profits by Lender or
any receiver shall not affect or cure any Event of Default.

Section 11.03 APPLICATION OF PROCEEDS OF SALE. In the event of a sale of the
Property pursuant to Section 11.02 of this Mortgage, to the extent permitted by
law, the Lender shall determine in its sole discretion the order in which the
proceeds from the sale shall be applied to the payment of the Secured
Indebtedness, including without limitation, the expenses of the sale and of all
proceedings in connection with the sale, including reasonable attorneys' fees
and expenses; Impositions, Premiums, liens, and other charges and



                                       30
<PAGE>   35

expenses; the outstanding principal balance of the Secured Indebtedness; any
accrued interest; any Prepayment Fee; and any other amounts owed under any of
the Loan Documents.

Section 11.04 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW,
BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THEIR
RESPECTIVE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING AND/OR HEARING ON
ANY MATTER WHATSOEVER ARISING OUT OF, OR IN ANY WAY CONNECTED WITH, THE NOTE,
THIS MORTGAGE OR ANY OF THE LOAN DOCUMENTS, OR THE ENFORCEMENT OF ANY REMEDY
UNDER ANY LAW, STATUTE, OR REGULATION. NEITHER PARTY WILL SEEK TO CONSOLIDATE
ANY SUCH ACTION IN WHICH A JURY HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH
A JURY TRIAL CANNOT OR HAS NOT BEEN WAIVED. EACH PARTY HAS RECEIVED THE ADVICE
OF COUNSEL WITH RESPECT TO THIS WAIVER.

Section 11.05 LENDER'S RIGHT TO PERFORM BORROWER'S OBLIGATIONS. Borrower agrees
that, if Borrower fails to perform any act or to pay any money which Borrower is
required to perform or pay under the Loan Documents, Lender may make the payment
or perform the act at the cost and expense of Borrower and in Borrower's name or
in its own name. Any money paid by Lender under this Section 11.05 shall be
reimbursed to Lender in accordance with Section 11.06.

Section 11.06 LENDER REIMBURSEMENT. All payments made, or funds expended or
advanced by Lender pursuant to the provisions of any Loan Document, shall (i)
become a part of the Secured Indebtedness, (ii) bear interest at the Interest
Rate (as defined in the Note) from the date such payments are made or funds
expended or advanced, (iii) become due and payable by Borrower upon demand by
Lender, and (iv) bear interest at the Default Rate (as defined in the Note) from
the date of such demand. Borrower shall reimburse Lender within ten (10) days
after receipt of written demand for such amounts.

Section 11.07 FEES AND EXPENSES. If Lender becomes a party (by intervention or
otherwise) to any action or proceeding affecting, directly or indirectly,
Borrower, the Property or the title thereto or Lender's interest under this
Mortgage, or employs an attorney to collect any of the Secured Indebtedness or
to enforce performance of the obligations, covenants and agreements of the Loan
Documents, Borrower shall reimburse Lender in accordance with Section 11.06 for
all expenses, costs, charges and legal fees incurred by Lender (including,
without limitation, the fees and expenses of experts and consultants), whether
or not suit is commenced.

Section 11.08 WAIVER OF CONSEQUENTIAL DAMAGES. Borrower covenants and agrees
that in no event shall Lender be liable for consequential damages, and to the
fullest extent permitted by law, Borrower expressly waives all existing and
future claims that it may have against Lender for consequential damages.

                                   ARTICLE XII
                   BORROWER AGREEMENTS AND FURTHER ASSURANCES

Section 12.01 PARTICIPATION AND SALE OF LOAN.

         (a) Lender may sell, transfer or assign its entire interest or one or
more participation interests in the Loan and the Loan Documents at any time and
from time to time, including, without limitation, its rights and obligations as
servicer of the Loan. Lender may issue mortgage pass-through certificates or
other securities evidencing a beneficial interest in a rated or unrated public
offering or private placement, including



                                       31
<PAGE>   36

depositing the Loan Documents with a trust that may issue securities (the
"Securities") provided that any such action shall not be at the Borrower's cost
or expense. Lender may forward to each purchaser, transferee, assignee,
servicer, participant, investor in such Securities (collectively, the
"Investor") or any Rating Agency rating such Securities and each prospective
Investor, all documents and information which Lender now has or may hereafter
acquire relating to the Secured Indebtedness and to Borrower or any Liable
Parties and the Property, whether furnished by Borrower, any Liable Parties or
otherwise, as Lender determines necessary or desirable.

         (b) At Lender's cost and expense, Borrower will cooperate with Lender
and the rating agencies in furnishing such information and providing such other
assistance, reports and legal opinions as Lender may reasonably request in
connection with any such transaction. In addition, Borrower acknowledges that
Lender may release or disclose to potential purchasers or transferees of the
Loan, or potential participants in the Loan, originals or copies of the Loan
Documents, title information, engineering reports, financial statements,
operating statements, appraisals, Leases, rent rolls, and all other materials,
documents and information in Lender's possession or which Lender is entitled to
receive under the Loan Documents, with respect to the Loan, Borrower, Liable
Parties or the Property. Borrower shall also furnish to such Investors or such
prospective Investors or such Rating Agency any and all information concerning
the Property, the Leases, the financial condition of Borrower or any Liable
Parties as may be requested by Lender, any Investor or any prospective Investor
or any Rating Agency in connection with any sale, transfer or participation
interest.

Section 12.02 REPLACEMENT OF NOTE. Upon notice to Borrower of the loss, theft,
destruction or mutilation of the Note, Borrower will execute and deliver, in
lieu of the original Note, a replacement note, identical in form and substance
to the Note and dated as of the Execution Date. Upon the execution and delivery
of the replacement note, all references in any of the Loan Documents to the Note
shall refer to the replacement note.

Section 12.03 BORROWER'S ESTOPPEL. Within ten (10) days after a request by
Lender, Borrower shall furnish an acknowledged written statement in form
satisfactory to Lender (i) setting forth the amount of the Secured Indebtedness,
(ii) stating either that no offsets or defenses exist against the Secured
Indebtedness, or if any offsets or defenses are alleged to exist, their nature
and extent, (iii) whether any default then exists under the Loan Documents or
any event has occurred and is continuing, which, with the lapse of time, the
giving of notice, or both, would constitute such a default, and (iv) any other
matters as Lender may reasonably request. If Borrower does not furnish an
estoppel certificate within the 10-day period, Borrower appoints Lender as its
attorney-in-fact to execute and deliver the certificate on its behalf, which
power of attorney shall be coupled with an interest and shall be irrevocable.

Section 12.04 FURTHER ASSURANCES. Borrower shall, without expense to Lender,
execute, acknowledge and deliver all further acts, deeds, conveyances,
mortgages, deeds of trust, assignments, security agreements, and financing
statements as Lender shall from time to time reasonably require, to assure,
convey, assign, transfer and confirm unto Lender the Property and rights
conveyed or assigned by this Mortgage or which Borrower may become bound to
convey or assign to Lender, or for carrying out the intention or facilitating
the performance of the terms of this Mortgage or any of the other Loan
Documents, or for filing, refiling, registering, reregistering, recording or
rerecording this Mortgage. If Borrower fails to comply with the terms of this
Section, Lender may, at Borrower's expense, perform Borrower's obligations for
and in the name of Borrower, and Borrower hereby irrevocably appoints Lender as
its attorney-in-fact to do so. The appointment of Lender as attorney-in-fact is
coupled with an interest.



                                       32
<PAGE>   37

Section 12.05 SUBROGATION. Lender shall be subrogated to the lien of any and all
encumbrances against the Property paid out of the proceeds of the Loan and to
all of the rights of the recipient of such payment.

Section 12.06 FUTURE ADVANCES. This mortgage shall secure any additional loans
as well as any and all present or future advances and readvances made by Lender
to or for the benefit of Borrower or the Property within twenty (20) years from
the date hereof (whether such advances are obligatory or are made at the option
of Lender or otherwise), including, without limitation: (i) principal, interest,
late charges, fees and other amounts due under this Mortgage; (ii) all advances
by Lender to Borrower or any other person to pay costs of erection,
construction, alteration, repair, restoration, maintenance and completion of any
improvements on the Real Property; (iii) all advances made or costs incurred by
Lender for the payment of real estate taxes, assessments or other governmental
charges, maintenance charges, insurance premiums, appraisal charges,
environmental inspection, audit, testing or compliance costs, and costs incurred
by Lender for the enforcement and protection of the Property or the lien of this
Mortgage; and (iv) all legal fees, costs and other expenses incurred by Lender
by reason of any default or otherwise in connection with the Secured
Indebtedness. The amount that may be so secured may decrease to a zero amount
from time to time, or may increase from time to time, but the total amount of
such secured indebtedness shall not exceed at any one time a maximum principal
amount equal to double the aggregate face amount of the Note and the Other
Notes, plus interest, and any advances or disbursements made for the benefit or
protection of or the payment of taxes, assessments, levies or insurance upon the
Property with interest on such disbursements as provided herein.

                                  ARTICLE XIII
                               SECURITY AGREEMENT

Section 13.01 SECURITY AGREEMENT.

         THIS MORTGAGE CREATES A LIEN ON THE PROPERTY. IN ADDITION, TO THE
EXTENT THE PROPERTY IS PERSONAL PROPERTY OR FIXTURES UNDER APPLICABLE LAW, THIS
MORTGAGE CONSTITUTES A SECURITY AGREEMENT UNDER THE UNIFORM COMMERCIAL CODE OF
THE STATE IN WHICH THE PROPERTY IS LOCATED (THE "U.C.C.") AND ANY OTHER
APPLICABLE LAW AND IS FILED AS A FIXTURE FILING. UPON THE OCCURRENCE OF AN EVENT
OF DEFAULT, LENDER MAY, AT ITS OPTION, PURSUE ANY AND ALL RIGHTS AND REMEDIES
AVAILABLE TO A SECURED PARTY WITH RESPECT TO ANY PORTION OF THE PROPERTY, AND/OR
LENDER MAY, AT ITS OPTION, PROCEED AS TO ALL OR ANY PART OF THE PROPERTY IN
ACCORDANCE WITH LENDER'S RIGHTS AND REMEDIES WITH RESPECT TO THE LIEN CREATED BY
THIS MORTGAGE. THIS FINANCING STATEMENT SHALL REMAIN IN EFFECT AS A FIXTURE
FILING UNTIL THIS MORTGAGE IS RELEASED OR SATISFIED OF RECORD.

Section 13.02 REPRESENTATIONS AND WARRANTIES.

         Borrower warrants, represents and covenants as follows:

         (a) Borrower owns the Personal Property free from any lien, security
interest, encumbrance or adverse claim, except as otherwise expressly Approved
by Lender in writing. Borrower will notify Lender of all claims and demands of
all persons at any time claiming any rights or interest in the Personal
Property.

         (b) The Personal Property has not been used and shall not be used or
bought for personal, family, or household purposes, but shall be bought and used
solely for the purpose of carrying on Borrower's business.



                                       33
<PAGE>   38

         (c) Borrower will not remove the Personal Property without the prior
written consent of Lender, except the items of Personal Property which are
consumed or worn out in ordinary usage shall be promptly replaced by Borrower
with other Personal Property of value equal to or greater than the value of the
replaced Personal Property.

Section 13.03 CHARACTERIZATION OF PROPERTY. The grant of a security interest to
Lender in this Mortgage shall not be construed to limit or impair the lien of
this Mortgage or the rights of Lender with respect to any property which is real
property or which the parties have agreed to treat as real property. To the
fullest extent permitted by law, everything used in connection with the
production of Rents and Profits is, and at all times and for all purposes and in
all proceedings, both legal and equitable, shall be regarded as real property,
irrespective of whether or not the same is physically attached to the Land
and/or Improvements.

Section 13.04 PROTECTION AGAINST PURCHASE MONEY SECURITY INTERESTS. It is
understood and agreed that in order to protect Lender from the effect of U.C.C.
Section 9-313, as amended from time to time and as enacted in the State, in the
event that Borrower intends to purchase any goods which may become fixtures
attached to the Property, or any part of the Property, and such goods will be
subject to a purchase money security interest held by a seller or any other
party:

         (a) Before executing any security agreement or other document
evidencing or perfecting the security interest, Borrower shall obtain the prior
written Approval of Lender. All requests for such written Approval shall be in
writing and contain the following information: (i) a description of the
fixtures; (ii) the address at which the fixtures will be located; and (iii) the
name and address of the proposed holder and proposed amount of the security
interest.

         (b) Borrower shall pay all sums and perform all obligations secured by
the security agreement. A default by Borrower under the security agreement shall
constitute a default under this Mortgage. If Borrower fails to make any payment
on an obligation secured by a purchase money security interest in the Personal
Property or any fixtures, Lender, at its option, may pay the secured amount and
Lender shall be subrogated to the rights of the holder of the purchase money
security interest.

         (c) Lender shall have the right to acquire by assignment from the
holder of the security interest for the Personal Property or fixtures, all
contract rights, accounts receivable, negotiable or non-negotiable instruments,
or other evidence of indebtedness and to enforce the security interest as
assignee.

         (d) The provisions of subparagraphs (b) and (c) of this Section 13.04
shall not apply if the goods which may become fixtures are of at least
equivalent value and quality as the Personal Property being replaced and if the
rights of the party holding the security interest are expressly subordinated to
the lien and security interest of this Mortgage in a manner satisfactory to
Lender.

                                   ARTICLE XIV
                             MISCELLANEOUS COVENANTS

Section 14.01 NO WAIVER. No single or partial exercise by Lender, or delay or
omission in the exercise by Lender, of any right or remedy under the Loan
Documents shall preclude, waive or limit the exercise of any other right or
remedy. Lender shall at all times have the right to proceed against any portion
of, or interest in, the Property without waiving any other rights or remedies
with respect to any other portion of the Property. No right or remedy under any
of the Loan Documents is intended to be exclusive of any other right or remedy


                                       34
<PAGE>   39

but shall be cumulative and may be exercised concurrently with or independently
from any other right and remedy under any of the Loan Documents or under
applicable law.

Section 14.02 NOTICES. All notices, demands and requests given or required to be
given by, pursuant to, or relating to, this Mortgage shall be in writing. All
notices shall be deemed to have been properly given if mailed by United States
registered or certified mail, with return receipt requested, postage prepaid, or
by United States Express Mail or other comparable overnight courier service to
the parties at the addresses set forth in the Defined Terms (or at such other
addresses as shall be given in writing by any party to the others) and shall be
deemed complete upon receipt or refusal to accept delivery as indicated in the
return receipt or in the receipt of such United States Express Mail or courier
service.

Section 14.03 HEIRS AND ASSIGNS; TERMINOLOGY; CONSTRUCTION.

         (a) This Mortgage applies to Lender, Liable Parties and Borrower, and
their heirs, legatees, devisees, administrators, executors, successors and
assigns. The term "Borrower" shall include both the original Borrower and any
subsequent owner or owners of any of the Property. The term "Liable Parties"
shall include both the original Liable Parties and any subsequent or substituted
Liable Parties.

         (b) In this Mortgage, whenever the context so requires, the masculine
gender includes the feminine and/or neuter, and the singular number includes the
plural.

         (c) To the extent that any provision of this Mortgage contradicts or is
inconsistent with any provision of the Application, the applicable provisions of
this Mortgage will govern and be controlling.

Section 14.04 SEVERABILITY. If any provision of this Mortgage should be held
unenforceable or void, then that provision shall be separated from the remaining
provisions and shall not affect the validity of this Mortgage except that if the
unenforceable or void provision relates to the payment of any monetary sum,
then, Lender may, at its option, declare the Secured Indebtedness immediately
due and payable.

Section 14.05 APPLICABLE LAW. This Mortgage shall be construed and enforced in
accordance with the laws of the State of Florida.

Section 14.06 CAPTIONS. The captions are inserted only as a matter of
convenience and for reference, and in no way define, limit, or describe the
scope or intent of any provisions of this Mortgage.

Section 14.07 TIME OF THE ESSENCE. Time shall be of the essence with respect to
all of Borrower's obligations under this Mortgage and the other Loan Documents.

Section 14.08 NO MERGER. In the event that Lender should become the owner of the
Property, there shall be no merger of the estate created by this Mortgage with
the fee estate in the Property.

Section 14.09 NO MODIFICATIONS. This Mortgage may not be changed, amended or
modified, except in a writing expressly intended for such purpose and executed
by Borrower and Lender.

                                   ARTICLE XV
                    CROSS COLLATERALIZATION AND CROSS DEFAULT

Section 15.01 THE LOANS. The Borrower has this date obtained three additional
loans from the Lender (the "Other Loans"), in the respective amounts of
$42,700,000.00, $41,850,000.00 and $35,450,000.00, each



                                       35
<PAGE>   40

of which is evidenced by a separate note (the "Other Notes"), and each of which
is secured by a separate mortgage (collectively, the "Other Mortgages," and
individually, the "Beacon Station 1(B) Mortgage", the "Deerwood South Mortgage"
and the "Avenues Mortgage") upon certain real property owned by the Borrower in
Duval and Dade Counties, Florida. The Beacon Station 1(B) Mortgage encumbers
certain real property and improvements thereon commonly referred to as "Gran
Park at Beacon Station Phase 1(B)"; the Deerwood South Mortgage encumbers
certain real property and improvements thereon commonly referred to as "Gran
Park at Deerwood South", and the Avenues Mortgage encumbers certain real
property and improvements thereon commonly referred to as "Gran Park at The
Avenues" (collectively, the Other Properties, and together with the Property
encumbered hereby, the "Properties"). (Collectively, the Other Notes, the Other
Mortgages and other loan documents executed by the Borrower to evidence or
secure the Other Loans are called the "Other Loan Documents.") The Loan and the
Other Loans are sometimes collectively called the "Loans"; the Note and the
Other Notes are sometimes collectively called the "Notes"; this Mortgage and the
Other Mortgages are sometimes called the "Mortgages". Borrower knowingly and
intentionally waives any claims or defenses it may have, pursuant to any of the
Loans, the Notes, the Mortgages, the Loan Documents or the Other Loan Documents,
related to, arising from or growing out of the cross default and cross
collateral described or anticipated in this ARTICLE XV.

Section 15.02 CROSS DEFAULT. Upon the occurrence and continuance of an Event of
Default under this Mortgage, Lender may declare all of the principal, interest
and other sums which may be outstanding under the Note and with respect to the
Other Loans (collectively, the "Indebtedness") to be immediately due and payable
without further demand, and Lender may exercise any and all rights and remedies
provided in any of this Mortgage, any of the Other Notes, the Other Mortgages,
the Other Loan Documents, or any of them. An Event of Default in this Mortgage
shall be deemed an Event of Default under each of the Other Mortgages; an Event
of Default in any or all of the Other Mortgages shall be deemed an Event of
Default in this Mortgage. All notice and cure periods, if any, in any of the
Loan Documents and the Unsecured Indemnities, as to all of the Loans, shall run
concurrently, and no additional notices need be given, and no cure periods need
to expire, for an Event of Default under any of the Other Mortgages to be an
Event of Default under this Mortgage.

Section 15.03 CROSS COLLATERALIZATION. The Other Mortgages shall also secure the
Note. This Mortgage shall secure each of the Loans. It is intended by the
parties that, by virtue of the foregoing, the Loan Documents and the Other Loan
Documents shall secure to Lender the payment of the Indebtedness and the
performance of the covenants and agreements set forth in all of the Loan
Documents and the Other Loan Documents (collectively, the "Obligations"), and
that all of which shall be secured to Lender by this Mortgage without
apportionment or allocation of any part or portion of the Property and without
apportionment or allocation of any part or portion of the Properties.
Documentary Stamps and Intangible Taxes for each of the Mortgages and the Notes
which they secure are paid in full, payment being made at time of recording of
each of this Mortgage, and the Other Mortgages, as to the amount of the
applicable Note which is shown in the "Defined Terms" portion of the applicable
mortgage.

Section 15.04 REMEDIES. In addition to the rights and remedies provided to
Lender elsewhere in this Mortgage, upon the breach of any covenant or agreement
of this Mortgage, the Loan Documents, or the Unsecured Indemnities beyond any
applicable notice and cure period, Lender shall be allowed to enforce the
payment of the Indebtedness and performance of the Obligations, and to exercise
all of the rights, remedies and powers provided under this Mortgage or any of
the Loan Documents, or the Unsecured Indemnities, or any of them, or under any
provision of law, in one or more proceedings, whether contemporaneous,
consecutive or both, to be determined by Lender in its sole and absolute
discretion. Lender may enforce its rights against any one or more parcels of the
Properties in such order and manner as Lender may elect in its sole and absolute
discretion. The enforcement of this Mortgage, or any of the Loan Documents, the
Other



                                       36
<PAGE>   41

Loan Documents, against any of the obligors thereunder or the Properties, or
otherwise, whether by court action or otherwise, shall not constitute an
election of remedies, and shall not prejudice or in any way limit or preclude
the enforcement of this Mortgage, the Loan Documents, the Other Loan Documents,
or Unsecured Indemnities, or any of them, through one or more additional
proceedings. No judgment obtained by Lender in any one or more enforcement
proceedings shall merge the Obligations secured hereby into such judgment, and
all of such Obligations which shall remain unpaid shall be a continuing
obligation of Borrower, subject to the provisions of Section 9.01 hereof. This
Mortgage shall secure to Lender the repayment of any amount which Borrower may
owe to Lender, including without limitation the amount of any judgment, together
with any interest thereon, which may be rendered in connection with the
enforcement of the Notes or any of the Loan Documents, the Other Loan Documents,
or the Unsecured Indemnities. Borrower waives and relinquishes any and all
rights it may have, whether at law or equity, to require Lender to proceed to
enforce or exercise any rights, powers or remedies Lender may have under this
Mortgage, the Loan Documents, the Other Loan Documents, or the Unsecured
Indemnities in any particular manner or order, or in any particular county.
Lender may bring any action or proceeding, including without limitation
foreclosure through judicial proceedings, and such proceeding may relate to all
or any part of the Properties without regard to the fact that any one or more
prior or contemporaneous proceedings have been commended elsewhere with respect
to the same or any other part of the Properties. In addition, the Borrower
acknowledges and agrees that because each of the Mortgages secures all of the
Loans, should the Lender, after the occurrence of an Event of Default, elect to
commence foreclosure proceedings under this Mortgage and one or more of the
Other Mortgages encumbering Properties located in another county, the Mortgages
being foreclosed shall, at the option of the Lender, be treated as a single
mortgage within the meaning of Section 702.04, Florida Statutes and such
foreclosures may be filed in either Duval County or Miami-Dade County, Florida.
Borrower hereby consents to the consolidation of any separately filed
foreclosure actions before a single tribunal in one of the two said counties.

Section 15.05 APPLICATION OF PROCEEDS. In the event of the enforcement or
foreclosure of this Mortgage, the proceeds shall be applied first to the
repayment of the indebtedness relating to the Note in the manner and in the
order set forth in Section 11.03 of this Mortgage. If Lender forecloses against
some but not all of the Properties, the proceeds of any resulting foreclosure
shall be applied prorata against the Loans described in the "Defined Terms"
portion of the Mortgages that are the subject matter of such foreclosures on the
basis of the then-outstanding principal balance of such Loans. Any funds
thereafter remaining shall be applied to the payment of the Indebtedness
relating to the other Loans in such order as Lender may determine.

Section 15.06 WAIVER OF MARSHALING. Lender shall have the right to determine the
order in which any or all of the Properties shall be subjected to the remedies
provided in this Mortgage, any of the Loan Documents, the Other Loan Documents,
or the Unsecured Indemnities or applicable law. Lender shall have the right to
determine the order in which any of the Indebtedness is satisfied from the
proceeds realized upon the exercise or such remedies. Borrower and any party who
now has or may in the future have a security or other interest in any of the
Properties, waive any and all rights to require the marshaling of assets or to
require that any of the Properties be sold in the inverse order of alienation,
or that any of the Properties be sold in parcels, or as an entirety, or in any
combination, in connection with the exercise or any of the remedies permitted by
applicable law, this Mortgage, any of the Loan Documents, Other Loan Documents,
or Unsecured Indemnities.

                  [Remainder of Page Intentionally Left Blank]



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<PAGE>   42

         IN WITNESS WHEREOF, Borrower has executed this Mortgage, or has caused
this Mortgage to be executed by its duly authorized representative(s) as of the
Execution Date.

Signed, sealed and delivered                    BORROWER:
In the presence of:

/s/ Karl B. Hanson III
--------------------------------------          FLAGLER DEVELOPMENT COMPANY,
Witness                                         a Florida corporation
Print Name: Karl B. Hanson III
           ---------------------------          By: /s/ G. John Carey
                                                    --------------------------
                                                Name: G. John Carey
                                                Title:  Its President

/s/ Keith A. Tickell
--------------------------------------
Witness
Print Name: Keith A. Tickell                    Address of Borrower:
            --------------------------

                                                10151 Deerwood Park Boulevard
                                                Building 100, Suite 300
                                                Jacksonville, FL  32256



STATE OF FLORIDA

COUNTY OF DUVAL

         The foregoing instrument was acknowledged before me this 27th day of
June, 2001 by G. John Carey, as President of Flagler Development Company,
a Florida corporation, on behalf of said corporation. He/She is personally known
to me or has produced ____________________ as identification.

                                   Notary:  /s/ Karl B. Hanson III
                                            ------------------------------------
[NOTARIAL SEAL]                    Print Name: Karl B. Hanson III
                                               ---------------------------------
                                   Notary Public-State of Florida
                                   My commission expires: Nov. 12, 2004
                                                          ----------------------
                                   Commission Number: CD981150
                                                      --------------------------


<PAGE>   43


                                   EXHIBIT "A"

               TO MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING


                              PROPERTY DESCRIPTION


<PAGE>   44


                                   EXHIBIT "B"



               TO MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING

                               LEASING GUIDELINES

"Leasing Guidelines" shall mean the guidelines approved in writing by Lender,
from time to time, with respect to the leasing of the Property. The following
are the initial Leasing Guidelines:

         (a) All Leases hereafter entered into by the Borrower shall be on the
standard form of lease Approved by Lender in writing with such modification as
Borrower may deem appropriate in its reasonable judgment; provided, however that
any Material Modification of the approved Lease form shall require the prior
written consent of Lender. For purposes of the foregoing, "Material
Modification" will mean any modification or amendment of a Lease that is not
consistent with the "Acceptable Lease Parameters" previously approved by Lender
or as subsequently approved by Lender from time to time;

         (b) Unless Approved by Lender in writing (with Approval or disapproval
will be given within ten (10) business days after receipt of a request in
writing, accompanied by the proposed Lease):

                  (i) All new Leases shall have an initial term of at least 2
years but not more than 10 years;

                  (ii) No new Leases shall be for more than 50,000 square feet
of net leasable area or fifty percent (50%) of a building;

                  (iii) [Gran Park at Deerwood South] All new Leases shall have
an annual minimum rent payable (including rental abatements and external lease
obligation reimbursements) of at least $17.00 per square foot of net leasable
areas, with a requirement that the tenant pay its proportional share of all
increases in taxes, insurance and operating expenses after the first year of the
term of such Lease.

                  (iv) [Gran Park at the Avenues] All new Leases shall have an
annual minimum rent payable (including rental abatements and external lease
obligation reimbursements) of the following amounts, per square foot of leasable
area, for the following categories of rental space:

                          office                                 $16.50
                          office showroom                         $9.00
                          industrial showroom                     $5.00

For "office showroom" and "industrial showroom" space, the Tenant shall be
required to pay its proportionate share of operating expenses, insurance and
taxes. Leases of "office" space shall require the tenant to pay its
proportionate share of all increases in taxes, insurance and operating expenses
after the first year of the term of such Lease.

                  (v) [Gran Park at Beacon Station I] All new Leases shall have
an annual minimum rent payable (including rental abatements and external Lease
obligations reimbursements) of the following amounts, per square foot of
leasable area, for the following categories of rental space:

                          distribution                            $5.00
                          industrial showroom                    $11.00


<PAGE>   45

Each Lease will include a requirement that the tenant pay its proportionate
share of all increases in taxes, insurance and operating expenses after the
first year of the term of such Lease.

         (d) Unless approved by Lender in writing, no Leases shall be entered
into if there is an occurrence and continuance of an Event of Default under any
of the Loan Documents.