Mortgage and Security Agreement between Enclaves of Eagle Nest LLC and K&B Equity Group, Inc. (Magellan Mortgage Group) dated December 9, 2005

 Exhibit 10.2 INSTRUMENT PREPARED BY, RECORD AND RETURN TO: SCOTT A. ELK, ESQ. ELK, BANKIER, CHRISTU & BAKST LLP 4800 N. Federal Hwy., #200-E Boca Raton, Florida 33431 MORTGAGE AND SECURITY AGREEMENT THIS IS A BALLOON MORTGAGE SECURING A FIXED RATE OBLIGATION AND THE FINAL PRINCIPAL PAYMENT OR THE PRINCIPAL BALANCE DUE UPON MATURITY IS $1,250,000.00 TOGETHER WITH ACCRUED INTEREST, IF ANY, AND ANY ADVANCEMENTS MADE BY THE MORTGAGEE UNDER THE TERMS OF THE MORTGAGE. THIS MORTGAGE AND SECURITY AGREEMENT ("Mortgage"), made this 9th day of December, 2005 between Enclaves of Eagle Nest LLC, a Florida limited liability company, whose address is 45 Knollwood Road, Fifth Floor, Elmsford, New York 10523 (hereinafter called "Mortgagor") and K&B Equity Group, Inc. d/b/a Magellan Mortgage Group, its successors and/or assigns, whose office address is 314 Clematis St., Suite 202, West Palm Beach, Florida 33401, as Mortgagee and Secured Party (hereinafter called the "Mortgagee"). W I T N E S S E T H : WHEREAS, Mortgagor is justly indebted to Mortgagee in the principal sum of ONE MILLION TWO HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($1,250.000.00) as evidenced by a certain Promissory Note of even date herewith (the "Note"), executed by Mortgagor and delivered to Mortgagee, payable according to the terms therein provided, and by reference being a part hereof to the same extent as though set out in full herein; NOW THIS INDENTURE WITNESSETH, to secure the performance and observance by the Mortgagor of all the covenants, conditions and agreements in the Note, this Mortgage, and any other instrument, agreement or document collateral to or executed or delivered in connection with the loan transaction, (collectively the "Loan Documents"), and in order to charge the properties, interest and rights hereinafter described with such payment, performance and observance, and for and in consideration of the sum of TEN AND NO/100 ($10.00) DOLLARS paid by the Mortgagee to the Mortgagor, and for other valuable considerations, the receipt and sufficiency of which is hereby acknowledged, the Mortgagor does hereby grant, bargain, sell, alien, remise, release, convey, assign, transfer, 1  mortgage, hypothecate, pledge, deliver, set over, warranty and confirm unto the Mortgagee, its successors and assigns forever; THE MORTGAGED PROPERTY ("Mortgaged Property"): ALL those certain pieces, parcels or tracts of land in which the Mortgagor has a fee simple interest situate in the County of Lee County, State of Florida (hereinafter called the "Land"), more particularly described in Exhibit "A" attached hereto and made a part hereof; TOGETHER WITH all lands, buildings, structures and improvements of every nature whatsoever now or hereafter situated on the Land, and all fixtures, machinery, equipment, furniture and other personal property of every nature whatsoever now or hereafter owned by the Mortgagor and located in, on, or used or intended to be used in connection with the operation of the Land, building, structures or other improvements, betterments, renewals, and replacements to any of the foregoing, including without limitation, all materials intended for construction, reconstruction, alteration, and repairs of improvements now or hereafter erected thereon, all of which materials shall be considered to be included within the mortgaged premises immediately on the delivery thereof to the mortgaged premises, it being mutually agreed that all the aforesaid property owned by Mortgagor and placed by it on the premises shall, so far as permitted by law, be considered to be affixed to the realty and covered by this mortgage, and all of the right, title and interest of the Mortgagor in any such personal property or fixtures subject to a conditional sales contract, chattel mortgage or similar lien or claim together with the benefit of any deposits or payments now or hereafter made by the Mortgagor or on Mortgagor's behalf; TOGETHER WITH all easements, rights-of-way, strips and gores of land, streets, ways, alleys, passages, sewer rights, rights, title, interest, privileges, liberties, tenements, hereditaments and appurtenances whatsoever, in any way belonging, relating or appertaining to any of the property hereinabove described or which hereafter shall in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by Mortgagor, and the reversion and reversions, remainder and remainders, rents, issues, profits thereof, and all the estate, right, title, interest, property, possession, claim and demand whatsoever, at law as well as in equity, of Mortgagor of, in and to the same, including, but not limited to, all judgments, awards of damages, and settlements hereafter made resulting from condemnation proceedings or the taking of the Mortgaged Property or any part thereof under the power of eminent domain, the alteration of the grade of any street, or for any damage (whether caused by such taking or otherwise) to the Mortgaged Property or any part thereof, or to any rights appurtenant thereto, and all proceeds of any sales or other dispositions of the Mortgaged Property or any part thereof; TOGETHER WITH all rents, royalties, issues, profits, revenue, income and other benefits from the Mortgaged Property to be applied against the indebtedness secured hereby, provided however, that permission is hereby given to Mortgagor so long as no default has occurred hereunder, to collect, receive, take, use and enjoy such rents, royalties, issues, profits, revenue, income, licenses, foreclosures, concessions, and other benefits as they become due and payable, but not in advance thereof. The foregoing assignment shall be fully operative without any further action on the part of either party and specifically Mortgagee shall be entitled, at its option upon the occurrence of a 2  default hereunder, to all rents, royalties, issues, profits, revenue, income and other benefits from the Mortgaged Property, whether or not Mortgagee takes possession of the Mortgaged Property. Upon any such notice of default hereunder, the permission hereby given to Mortgagor to collect such rents, royalties, issues, profits, revenue, income and other benefits from the Mortgaged Property shall terminate and such permission shall not be reinstated upon a cure of the default without Mortgagee's specific written consent. Exercise of rights under this paragraph and the application of such rents, royalties, issues, profits, revenue, income or other benefits to such indebtedness, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant hereto, but shall be cumulative and in addition to all other rights and remedies to Mortgagee; TOGETHER WITH all right, title and interest of Mortgagor in and to any and all leases now or hereafter on or affecting the Mortgaged Property, together with all security therefor and all monies payable thereunder, subject, however, to the conditional permission hereinabove given to Mortgagor to collect the rentals under such lease. The foregoing assignment of any lease shall not be deemed to impose upon Mortgagee any of the obligations or duties of Mortgagor provided in any such lease, and Mortgagor agrees to fully perform all obligations of the lessor under all such leases. Upon Mortgagee's request, Mortgagor agrees to send a Mortgagee a list of all leases covered by the foregoing assignment and as any such lease shall expire or terminate or as any new lease shall be made, Mortgagor shall so notify Mortgagee in order that at all times Mortgagee shall have a current list of all leases affecting the Mortgaged Property. Mortgagee shall have the right, any time and from time to time, to notify any lessee of the rights of Mortgagee as provided by this paragraph. From time to time, upon request of Mortgagee, Mortgagor shall specifically assign to Mortgagee as additional security hereunder, by an assignment in writing in form approved by Mortgagee, all right, title and interest of Mortgagor in and to any and all leases now or hereafter on or affecting the Mortgaged Property, together with all security therefore and all monies payable hereunder, subject to the conditional permission hereinabove given to Mortgagor to collect the rentals under any such lease. Mortgagor shall also execute and deliver to Mortgagee any notification, financing statement, or other document reasonably required by Mortgagee to perfect the foregoing assignment as to any such lease. (This instrument constitutes an absolute and present assignment of the terms, royalties, issues, profits, revenues, income and other benefits from the Mortgaged Property, subject, however, to the conditional permission given to Mortgagor to collect, receive, take, use and enjoy the same as provided hereinabove; provided, further, that the existence or exercise of such right of Mortgagor shall not operate to subordinate the assignment to any subsequent assignment, in whole or in part, by Mortgagor and any such subsequent assignment by Mortgagor shall be subject to the rights of the Mortgagee hereunder); TOGETHER WITH a security interest in (i) all property, equipment and fixtures affixed to or located on the Mortgaged Property, which, to the fullest extent permitted by law, shall be deemed fixtures and a part of the real property, (ii) all articles of personal property and all materials delivered to the Mortgaged Property for the use and operation of said property or for use in any construction being conducted thereon, and owned by Mortgagor; (iii) all contract rights, including construction contracts, service contracts, advertising contracts, purchase orders, equipment leases, all other contract rights associated with the Mortgaged Property, general intangibles, actions and rights of action, all deposits prepaid expenses, permits, licenses, including all rights to insurance proceeds, (iv) all right, title and interest of the Mortgagor in all tradenames and trademarks hereinafter used in connection with 3  the use of the Mortgaged Property, and (v) all proceeds, products, replacements, additions, substitutions, renewals and accessions of any of the foregoing. Mortgagor hereby grants to Mortgagee, as a secured party, a security interest in all fixtures, rights in action and personal property described herein. This Mortgage is a self-operative security agreement with respect to such property, but Mortgagor agrees to execute and deliver on demand such other security agreements, financing statements and other instruments as Mortgagee may request in order to perfect its security interest or to impose the lien hereof more specifically upon any of such property. In addition to those specified herein Mortgagee shall have all the rights and remedies of a secured party under the Uniform Commercial Code. PROVIDED, HOWEVER, that these presents are upon the condition that, if the Mortgagor shall pay or cause to be paid to the Mortgagee the principal and interest payable in respect to the dates on the day or days when payment shall become due, all without deduction or credit for taxes or other similar charges paid by the Mortgagor, and shall keep, perform and observe all and singular the covenants and promises in the Note, and any renewal, extension, consolidation or modification thereof, and in this Mortgage expressed to be kept, performed and observed by and on the part of the Mortgagor, all without fraud or delay then this Mortgage and all the properties, interest and rights granted, bargained, sold, liened, remised, released, conveyed, assigned, transferred, mortgaged, hypothecated, pledged, delivered, set over, warranted and confirmed, shall cease, terminate and be void, but shall otherwise remain in full force and effect. ARTICLE ONE PARTICULAR COVENANTS OF MORTGAGE 1.01 PERFORMANCE OF NOTE AND MORTGAGE. The Mortgagor will perform, observe and comply with all provisions hereof, of the Note secured hereby and any of the other Loan Documents, and will promptly pay to the Mortgagee the sum of money expressed in the Note with interest thereof and all other sums required to be paid by the Mortgagor pursuant to the provisions of the Note and the Mortgage on the day or days when payment shall become due, all without deduction or credit for taxes or other similar charges paid by the Mortgagor, time being of the essence for such payments. 1.02 WARRANTY OF TITLE. The Mortgagor covenants that it is indefeasibly seized of the Land in fee simple, has good, marketable and absolute title to the Mortgaged Property and has full power and lawful right to convey and mortgage the same in the manner and form aforesaid. That the Mortgaged Property is free from all encumbrances except taxes for the current year and any other permitted encumbrance as shown on the Title Commitment delivered to Mortgagee simultaneously herewith. The Mortgage hereby makes further assurance to perfect fee simple title to the Land in the Mortgagee as may be reasonably required. The Mortgagor does hereby fully warranty the title to the Mortgaged Property against claims of all persons whomsoever. 4  1.03 TAXES, LIENS AND UTILITY CHARGES. (a) The Mortgagor covenants and agrees to deliver to the Mortgagee, on or before April 1, of each year, tax receipts evidencing the payment of all lawfully imposed taxes upon the Mortgaged Property for the immediately preceding calendar year; to deliver to the Mortgagee receipts evidencing the payment of all liens, levies, and assessments for public improvements within thirty (30) days after same shall become due and payable; and to pay or discharge within 30 days after the due date, any and all governmental levies that may be made on the Mortgaged Property, on this Mortgage or the Note or in any other way resulting from the mortgage indebtedness secured by this Mortgage. Mortgagor shall have the right to contest the payment of ad valorem real property taxes pursuant to and in accordance with applicable state and local law. Mortgagor agrees to supply proof of such contest to the Mortgagee on or before November 1 of each year. (b) The Mortgagor shall not permit any mechanic's, laborer's, statutory or other lien to be created or to remain outstanding upon any of the Mortgage Property and shall cause same to be released and discharged, or transferred to Bond as permitted by law, on demand or as provided for in any collateral loan agreement pertaining thereto. (c) In the event of the passage of any state, federal, municipal or other governmental law, order, rule or regulation, subsequent to the date hereof, in any manner changing or modifying the laws now in force governing the taxation of mortgages or debts secured by mortgages, or the manner of collecting taxes so as to adversely affect the Mortgage, at the option of the Mortgagee, the entire balance of the principal sum secured by this Mortgage and all interest accrued thereon shall without notice become immediately due and payable unless the Mortgage shall and does in a proper and legal manner pay any and all sums of whatever kind which may be incurred or charged under such new or modified laws. (d) Mortgagor shall, upon the request of Mortgagee, make monthly deposits with Mortgagee on the date of such regular installment of interest as required by the Note secured hereby (or on the first day of each month if the interest payments are due other than monthly), until the Note is fully paid, in an amount equal to one-twelfth (1/12th) of such proportionate share of the yearly taxes and assessments as estimated by the Mortgagee to be sufficient to enable the Mortgagee to pay at least thirty (30) days before they become due, all taxes, assessments and other similar charges against the Mortgaged Property or any part thereof. Such added payment shall not be, nor be deemed to be, trust funds, but may be commingled with the general funds of the Mortgagee, and no interest shall be payable to Mortgagor with respect thereof. Upon demand of the Mortgagee, the Mortgagor agrees to deliver to the Mortgagee such additional monies as are required to makeup any deficiencies in the amounts necessary to enable the Mortgagee to pay such taxes, assessments or similar charges. In the event of a default by the Mortgagor in the performance of any of the terms, covenants and conditions of this Mortgage or the Note secured hereby, the Mortgagee may apply to the reduction of the principal sum or any other sum secured hereby in such manner as the Mortgagee shall determine, any amount under this Paragraph 1.03(d) of Article One remaining to the Mortgagor's credit. 5  (e) The Mortgagor will pay when due and will not suffer to remain outstanding, all taxes, assessments and other similar charges and any charges for utilities, whether public or private, with respect to the Mortgaged Property. 1.04 NO TAX CREDITS. The Mortgagor will not claim or demand or be entitled to receive any credit or credits on the principal or interest payable under the terms of the Note or on any other sums secured hereby, for so much of the taxes, assessments or similar impositions assessed against the Mortgaged Property or any part thereof, as are applicable to the indebtedness secured hereby or to the Mortgagee's interest in the Mortgaged Property. No deduction shall be claimed from the taxable value of the Mortgaged Property or any part thereof by reason of the Note or Mortgage. 1.05 INSURANCE. (a) Mortgagor shall at its sole expense obtain for delivery to, and maintain for the benefit of, Mortgagee during the life of the Mortgage, public liability insurance in such amounts and for such periods as Mortgagee may require. Mortgagor shall pay promptly, when due, all premiums on the insurance policies and renewals. (b) Mortgagor shall carry Builder's Risk Insurance once vertical improvements have commenced and shall keep the improvements now existing or hereafter erected on the Mortgaged Property, insured against loss by fire or other hazards, casualties, and contingencies, including but not limited to flood, in such amounts and for such periods as may be required by Mortgagee, and to pay promptly when due, all premiums on such insurance policies or renewals. (c) All insurance shall be carried on companies approved by the Mortgagee as to financial standing according to such guidelines as may be adopted from time to time by Mortgagee, and the policies and renewals thereof shall be held by Mortgagee and shall have attached thereto loss payable clauses in favor of and in form acceptable to the Mortgagee. At least thirty (30) days prior to the expiration date of all such policies, renewals thereof satisfactory to the Mortgagee shall be delivered to the Mortgagee. The Mortgagor shall deliver to the Mortgagee receipts evidencing the payment of all such insurance policies and renewals. The delivery of the insurance policies shall constitute an assignment, as further security of all unearned premiums. In the event of loss, Mortgagor will give immediate notice by mail to Mortgagee and Mortgagee may make proof of loss if not made promptly by Mortgagor, and each insurance company concerned is hereby authorized and directed to make payment for such loss directly to Mortgagee instead of to Mortgagor and Mortgagee jointly, and so long as this Mortgage is current and the Mortgage is not in default hereunder the insurance proceeds or any part thereof shall be applied by Mortgagee to the restoration or repair of the property damage provided the insurance proceeds are sufficient to cover all costs of such restoration and repair. In the event of foreclosure of this Mortgage or other transfer of title to the Mortgaged Property in extinguishment of the indebtedness secured hereby, all right, title and interest of the Mortgagor in and to any insurance policies then in force shall pass to the purchaser or grantee. 6  (d) Mortgagor shall, upon the request of Mortgagee, make monthly deposits with Mortgagee on the date of each regular installment of interest as required by the Note secured hereby (or on the first day of each month if the interest payments are due other than monthly), until the Note is fully paid, in an amount equal to one-twelfth (1/12) or such proportionate share of the yearly premium for insurance as shall enable Mortgagee to pay for the insurance premiums due. Such added payments shall not be, nor be deemed to be, trust funds, but may be commingled with the general funds of the Mortgagee, and no interest shall be payable to Mortgagor with respect thereof. Upon demand of the Mortgagee, the Mortgagor agrees to deliver to the Mortgagee such additional monies as are necessary to make up any deficiencies in the amounts necessary to enable the Mortgagee to pay such insurance premiums when due. 1.06 CONDEMNATION. If all or any part of the Mortgaged Property shall be damaged or taken through condemnation (which term when used in this Mortgage shall include any damage or taking by any governmental authority, and any transfer by private sale in lieu thereof, either temporarily or permanently), the entire indebtedness secured hereby shall at the option of the Mortgagee become immediately due and payable if the Mortgagee in its sole discretion determines that its security under this Mortgage is impaired. The Mortgagee shall be entitled to all compensation, awards, and any other payments of relief therefore and is hereby authorized, at its option to commence, appear in and prosecute, in its own or the Mortgagor's name, any action or proceeding relating to any condemnation, and to settle or compromise any claim in connection therewith. All such compensation, awards, damages, claims, rights of action and proceeds and the rights thereto are hereby assigned by the Mortgagor to the Mortgagee, who after deducting therefrom all its expenses including attorneys' fees, may release any monies so received by it without affecting the lien of this Mortgage or may apply the same in such manner as the Mortgagee shall determine, to the reduction of the sums secured hereby, and any balance of such monies then remaining shall be paid to the Mortgagor. The Mortgagor agrees to execute such further assignments of any compensations, awards, damages, claims, rights of action and proceeds as the Mortgagee may require. 1.07 CARE OF PROPERTY. (a) The Mortgagor shall preserve and maintain the Mortgaged Property in good condition and repair. Mortgagor shall not remove or demolish any building presently on or hereafter existing on the Land without the written consent of the Mortgagee. Mortgagor shall not permit, commit or suffer any waste, impairment or deterioration of the Mortgaged Property or of any part thereof, and will not take any action which will increase the risk of fire or other hazard to the Mortgaged Property or to any part thereof. (b) Except as otherwise provided herein, no buildings, fixtures, personal property, or other part of the Mortgaged Property shall be removed, demolished or substantially altered without the prior written consent of the Mortgagee. The Mortgagor may sell or otherwise dispose of, free from the lien of the Mortgage, furniture, furnishings, equipment, tools, appliances, machinery, fixtures or appurtenances, subject to the lien hereof, which may become worn out, undesirable, obsolete, disused or unnecessary for use in the operation of the 7  Mortgaged Property, not exceeding in value the replacement of same by, substituting for the same, other furniture, equipment, tools, appliances, machinery fixtures or appurtenances not necessarily of the same character, but of at least equal value to the Mortgagor and costing not less than the amount realized from the property sold or otherwise disposed of, which shall forthwith become, without further action, subject to the lien of this Mortgage. (c) If the Mortgaged Property or any part thereof is damaged by fire or any other cause, the Mortgagor shall give immediate written notice of same as soon as practicable to Mortgagee. (d) The Mortgagee is hereby authorized to enter upon and to inspect the Mortgaged Premises at any time during normal business hours during the life of this Mortgage. (e) The Mortgagor will promptly comply with all present and future laws, ordinances, rules and regulations of any governmental authority affecting the Mortgaged Property or any part thereof. (f) If all or any part of the Mortgaged Property shall be damaged by fire or other casualty, the Mortgagor shall promptly restore the Mortgaged Property to the equivalent of its original condition regardless of whether or not there shall be any insurance proceeds therefor. If a part of the Mortgaged Property shall be physically damaged through condemnation, the Mortgagor shall promptly restore, repair or alter the remaining property in a manner satisfactory to the Mortgagee. (g) If any work required to be performed under this Paragraph 1.07 of Article One, no such work shall be undertaken until plans and specifications therefor, prepared by an architect and/or engineer satisfactory to the Mortgagee, have been submitted to and approved by the Mortgagee. 1.08 FURTHER ASSURANCES. Mortgagor will make, execute and deliver to the Mortgagee and, where appropriate, shall cause to be recorded and/or filed and from time to time thereafter to be re-recorded and/or refiled at such time and in such offices and places as shall be deemed desirable by the Mortgagee, any and all such further mortgages, instruments of further assurance, certificates and other documents as may, in the opinion of the Mortgagee, be necessary or desirable in order to effectuate, complete, perfect, or to continue and preserve: (a) The obligation of the Mortgagor under this Mortgage and Note secured hereby, and (b) The lien of this Mortgage as a first lien, upon all of the Mortgaged Property, whether now owned or hereafter acquired by the Mortgagor. Upon any failure by the Mortgagor to do so, the Mortgagee may make, execute, record, file, re-record and/or re-file any and all such mortgages, instruments, certificates and documents for and in the name of the Mortgagor, 8  and the Mortgagor hereby irrevocably appoints the Mortgagee the agent and the attorney-in-fact for the Mortgagor to do so. 1.09 AFTER ACQUIRED PROPERTY. The lien of this Security Agreement will automatically attach, without further act, to all after acquired property attached to or used in the operation of the Mortgaged Property or any part hereof. 1.10 LEASES AFFECTING MORTGAGED PROPERTY. The Mortgagor will comply with and observe its obligations as landlord under any leases affecting the Mortgaged Property or any part thereof. Mortgagor will furnish Mortgagee with executed copies of all leases hereafter created on said premises, and all leases hereafter entered into will be in form and substance subject to the approval of Mortgagee. The Mortgagee specifically reserves the right to approve all proposed lessees as to financial capabilities. Unless otherwise herein specifically provided, all leases shall be inferior and subordinate in all respects to the lien of this Mortgage, and the terms of each lease shall so provide. Mortgagor will not, without the express written consent of the Mortgagee, modify, surrender or terminate, either orally or in writing, any lease hereafter created upon the Mortgaged Property, nor will the Mortgagor permit an assignment or sub-lease without the express written consent of the Mortgagee. Mortgagor shall not accept payment of rent more than two (2) months in advance without the express written consent of the Mortgagee. If requested by the Mortgagee, the Mortgagor will specifically assign to the Mortgagee as additional security any and all such leases hereafter created, including, without limitation, all rents, royalties, issues and profits of the premises from time to time accruing, the parties hereto acknowledging that this Mortgage constitutes a general assignment of any and all such future leases. Mortgagor hereby represents that there are no leases or agreements to lease all or any part of the mortgaged property now in effect, except as previously disclosed by Mortgagor to Mortgagee. 1.11 EXPENSES. Mortgagor shall pay, or reimburse Mortgagee for all costs, charges and expenses, including reasonable attorneys' fees, including appellate proceedings, and disbursements, and costs of abstracts of title incurred or paid by Mortgagee in any action, proceeding or dispute in which Mortgagee is made a part or appears as a party plaintiff or party defendant because of the failure of the Mortgagor promptly and fully to perform and comply with all conditions and covenants of this Mortgage and the Note secured hereby, including but not limited to, the foreclosure of this Mortgage, condemnation of all or part of the Mortgaged Property, or any action to protect the security thereof. All costs, charges and expenses so incurred by Mortgagee shall become due and payable whether or not there be notice, demand, attempt to collect or suit pending. The amounts so paid or incurred by Mortgagee, together with interest thereon at the default rate as hereinafter defined from the date incurred until paid by Mortgagor, shall be secured by the lien of this Mortgage. 1.12 MORTGAGEE'S PERFORMANCE OF DEFAULTS. Except as otherwise provided for herein, if the Mortgagor shall be in default in the payment of any tax assessment, encumbrance or other imposition, or in its obligation to furnish insurance hereunder or performance or observance of any other covenant, condition or term in this Mortgage, the Mortgagee, may, at its option, without waiving or affecting its option to foreclose or any other rights to which the Mortgagee may be entitled hereunder, perform or observe the same, and all payments made or costs or expenses incurred by the Mortgagee in connection therewith, shall be secured hereby and shall be immediately repaid by the 9  Mortgagor to the Mortgagee, with interest thereon at the default rate as hereinafter defined. Nothing contained herein shall be construed as requiring Mortgagee to advance or expend monies for any purpose mentioned in this paragraph. The Mortgagee is hereby empowered to enter upon the Mortgaged Property or any part thereof for the purpose of performing or observing any such defaulted covenant, condition or terms, without thereby becoming liable to the Mortgagor or any person in possession holding under the Mortgagor. 1.13 BOOKS AND RECORDS. The Mortgagor shall keep and maintain, at all times, full, true and accurate books of accounts and records, adequate to reflect correctly the results of the operation of the Mortgaged Property. Upon request of the Mortgagee, the Mortgagor will furnish to the Mortgagee, within 90 days after the end of each annual fiscal period of the Mortgagor, a balance sheet and a statement of income and expenses, both in reasonable detail and certified by Borrowers chief financial officer or if there is none then by any authorized party to act on behalf of the Borrower, and, if applicable, a rent schedule of the Mortgaged Property, certified by an accounting officer of the Mortgagor, showing the name of each tenant, and for each tenant, the space occupied, the lease expiration date and the rent paid. 1.14 ESTOPPEL AFFIDAVITS. The Mortgagor, within ten days after written request from the Mortgagee, shall furnish a written statement, duly acknowledged, setting forth the unpaid principal of, and interest on, the Note and whether or not any offsets or defenses exist against such principal and interest. Upon request setting forth the current unpaid principal balance and interest on the Note and whether any defaults exist thereunder. ARTICLE TWO DEFAULTS 2.01 EVENT OF DEFAULT. The term "Event of Default" wherever used in the Mortgage, shall mean any one or more of the following events: (a) Failure by Mortgagor to pay, within five (5) days of its due date any installments of principal or interest due under the Note, or any deposits for taxes and assessments or insurance premiums due hereunder, or any other sums to be paid by Mortgagor hereunder or under any other instrument securing the Note. (b) Failure by Mortgagor to duly keep, perform and observe any other covenant, condition or agreement in the Note, this Mortgage or any of the other Loan Documents for a period of thirty (30) days after the Mortgagee gives written notice specifying the breach. If the default cannot be cured within such thirty (30) days, the commencement of such action to cure the default and the diligent and continuing effort to cure same shall be acceptable. (c) If Mortgagor or any endorser or guarantor of this Note shall file a voluntary petition in bankruptcy or shall be adjudicated a bankrupt or insolvent, or shall file any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, wage earner's plan, assignment for the benefit of creditors, receivership, dissolution, or similar relief under any present or 10  future Federal Bankruptcy Act or any other present or future applicable federal, state or other statute or law, or shall seek or consent to or acquiesce in the appointment of any trustee, receiver or liquidator of Mortgagor for all or any part of the properties of Mortgagor or of any guarantor or endorser of the Note; or if within thirty (30) days after commencement of any proceeding against Mortgagor or any guarantor or endorser of the Note, seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution, debtor relief or similar relief under any present or future federal, state or other statute or law, such proceeding shall not have been dismissed or stayed on appeal; or if, within the thirty days after appointment without the consent or acquiescence of Mortgagor or of any endorser or guarantor of the Note, of any trustee, receiver, or liquidator of Mortgagor or any endorser or guarantor of the Note, or of all or any portion of the Mortgaged Property, such appointment shall not have been vacated or stayed on appeal or otherwise; or if within ten (10) days after the expiration of any such stay, such appointment shall not have been vacated. (d) The entry by any court of last resort of a decision that an undertaking by the Mortgagor as herein provided to pay taxes, assessments, levies, liabilities, obligations or encumbrances is legally inoperative or cannot be enforced, or in the event of the passage of any law changing in any way or respect the laws now in force for the taxation of mortgages or debts secured thereby for any purpose or the manner of collection of any such taxes, so as to effect adversely this Mortgage or the debt secured hereby unless the Mortgagor can and does in a proper and legal manner, pay any and all sums of whatever kind which may be incurred or charged under such new or modified law. (e) If foreclosure proceedings should be instituted on any mortgage inferior or superior to the Mortgage, or if any foreclosure proceeding is instituted on any lien of any kind which is not dismissed or transferred to bond within thirty (30) days of the service of foreclosure proceedings on the Mortgagor. (f) Any default under any mortgage superior or inferior to the Mortgage. (g) Any modification of any mortgage superior or inferior to the Mortgage, increase in the amount outstanding under any superior or inferior mortgage, whether pursuant to a future advance agreement or otherwise, or waiver of any principal or interest payments on any note or mortgage superior or inferior to this Mortgage, or release of any guarantor or modification of any guaranty affecting any superior or inferior mortgage. (h) Any breach of any warranty or material untruth of any representation of Mortgagor contained in the Note, this Mortgage or any of the other Loan Documents. (i) Any action prohibited by paragraph 3.01 infra. (j) Entry into a management contract for the Mortgaged Property or any portion thereof by the Mortgagor without the prior written consent of the Mortgagee. 11  (k) Any default in connection with any ongoing borrowing which the Mortgagor or any guarantor hereof may have outstanding from the Mortgagee or any of its affiliates during the pendency of this transaction and notwithstanding anything to the contrary contained herein, the Mortgagee shall not be obligated to release any of the Mortgaged Property held as collateral hereby or in connection with any other loan so long as any loan given by the Mortgagee to the Mortgagor or any guarantor is in default. For the purpose of the operation of this subparagraph (k), borrowing and loans between the Mortgagee and any guarantors hereof shall be defined as, and limited to, those in which any one or more of the Guarantors individually or collectively own a fifty-one (51%) percent interest in the borrower. (l) If the Mortgagor, pursuant to Florida Statutes 697.04(1)(b), as amended from time to time, shall file for record a limitation of the maximum amount which may be secured by this Mortgage. (m) If the Mortgagor shall terminate a Defined Benefit Plan organized under the Employee Retirement Income Security Act of 1974 (ERISA) in force as of the date hereof or at any time during the pendency of this transaction. 2.02 ACCELERATION OF MATURITY. If an Event of Default shall have occurred and be continuing, the Mortgagee may, at its sole option, declare the entire principal amount of the Note then unpaid, and the interest accrued thereon to be due and payable immediately, and upon such declaration such principal and interest shall forthwith become and be due and payable, as fully and to the same effect as if the date of such declaration were the date originally specified for the maturity of the unpaid balance of the Note. 2.03 MORTGAGEE'S RIGHT TO ENTER AND TAKE POSSESSION, OPERATE AND APPLY INCOME. (a) If any Event of Default shall have occurred and be continuing, the Mortgagor, upon demand of the Mortgagee, shall forthwith surrender to the Mortgagee the actual possession of the Mortgaged Property, and to the extent permitted by law the Mortgage itself, or such officers or agents as it may appoint, may enter and take possession of all the Mortgaged Property, and may exclude the Mortgagor and its agents and employees wholly therefrom, and may have joint access with the Mortgagor to the books, papers and accounts of the Mortgagor. (b) If the Mortgagor shall, for any reason, fail to surrender or deliver any such Mortgaged Property or any part thereof after such demand by the Mortgagee, the Mortgagee may obtain a judgment or decree conferring on the Mortgagee the right to immediate possession of all or part of such Mortgaged Property to the Mortgagee, to the entry of which such judgment or decree the Mortgagor hereby specifically consents. (c) The Mortgagor will pay to the Mortgagee, upon demand, all expenses of obtaining such judgment or decree and reasonable compensation to the Mortgagee, its attorneys and agents; and all such 12  expenses and compensation shall, until paid, be secured by the lien of this Mortgage. (d) Upon every such entering upon or taking of possession, the Mortgagee may hold, store, use, operate, manage and control the Mortgaged Property and conduct the business thereof, and, from time to time: (i) Make all reasonably necessary, as determined by Mortgagee in its sole discretion, maintenance, repairs, renewals, replacements, additions, betterments and improvements thereto and thereon, and purchase or otherwise acquire additional fixtures, personalty and other property. (ii) insure or keep the Mortgaged Property insured and exercise all the rights and powers of the Mortgagor in its name or otherwise, with respect to the same; (iii) manage and operate the Mortgaged Property and exercise all rights and powers of the Mortgagor and exercise all the rights and powers of the Mortgagor in its name or otherwise, with respect to the same; (iv) enter into any and all agreements with respect to the exercise by others of any of the powers herein granted by the Mortgagee, all as the Mortgagee from time to time may determine to be to its best advantage; and the Mortgagee may collect and receive all the income, revenues, maintenance assessments, special assessments, rents, issues and profits of the same, including those past due as well as those accruing thereafter, and after deducting: (aa) all expenses of taking, holding, managing and operating the Mortgaged Property (including compensation for the services of all persons employed for such purposes); (bb) the cost of all such maintenance, repairs, renewals, replacements, additions, betterments, improvements and purchases and acquisitions; (cc) the cost of such insurance; (dd) such taxes, assessments and other charges prior to the lien of this Mortgage as the Mortgagee may determine to pay; (ee) other proper charges upon the Mortgaged Property or any part thereof; and (ff) the reasonable compensation expenses, and disbursements of the attorneys and agents of the Mortgagee 13  shall apply the remainder of the monies so received by the Mortgagee, first to the payment of accrual interest; second to the payment of any required tax deposit, insurance deposit or expenses required by Mortgagee; and third toward the outstanding principal balance on the Note. 2.04 MORTGAGEE'S POWER OF ENFORCEMENT. If an Event of Default shall have occurred and be continuing the Mortgagee may, at its sole option, either with or without entry or taking possession as hereinabove provided or otherwise proceed by suit or suits at law or in equity or by any other appropriate proceeding or remedy (a) to enforce payment of the Note or the performance of any term hereof or any other right (b) to foreclose this Mortgage and to sell, as an entirety or in separate lots or parcels, the Mortgaged Property, under the judgment or decree of a court or courts of competent jurisdiction, and (c) to pursue any other remedy available to it, all as the Mortgagee shall deem most effectual for such purposes. Mortgagee may institute an action to foreclose this mortgage against the mortgaged property or take such other action at law or in equity for the enforcement of this mortgage and realization on the mortgage security or any other security herein or elsewhere provided for, as the law may allow, and may proceed therein to final judgment and execution for the entire unpaid balance of the principal debt, with interest at the rate stipulated in the note to the date of default, and, thereafter, at a rate that shall be 6% higher than the rate in the note at the time of default, together with all other sums due by Mortgagor in accordance with the provisions of the note and this mortgage, including all sums that may have been lent by Mortgagee to Mortgagor after the date of this mortgage, and all sums that may have been advanced by Mortgagee for taxes, water or sewer rents, charges or claims, payments on prior liens, or insurance or repairs to the mortgaged property, and all costs of suit, together with interest at such rate on any judgment obtained by Mortgagee from and after the date of any foreclosure sale until actual payment is made of the full amount due Mortgagee and of an attorneys' fees for collection that shall be 2% of the total of the foregoing sums but not less than $5000; or Mortgagee may foreclose only as to the sum past due with interest and costs, as above provided, without injury to this mortgage or the displacement or impairment of the remainder of the lien thereof, and, at such foreclosure sale, the mortgaged property shall be sold subject to all remaining items of indebtedness; and Mortgagee may again foreclose, in the same manner, as often as there may be any sum past due; or Mortgagee may enter into possession of the mortgaged property with or without legal action and by force, if necessary. Mortgagee may then collect therefrom all rentals (which term shall also include sums payable for use and occupation) and, after deducting all costs of collection and administration expenses, apply the net rentals to any or all of the following in such order and amounts as Mortgagee, in Mortgagee's sole discretion, may elect: the payment of taxes, water and sewer rents, charges and claims, insurance premiums, and all other carrying charges; the maintenance, repair, or restoration of the mortgaged property; and on account and in reduction of the principal or interest, or both, hereby secured. In and for that purpose, Mortgagor hereby assigns to Mortgagee all rentals due and to become due under any lease or leases or rights to use and occupation of the mortgaged property hereafter created, as well as all rights and remedies provided in such lease or leases or at law or in equity for the collection of the rentals. Mortgagee shall be entitled to the appointment of a receiver of all the rents, issues, and profits, as a matter of strict right, regardless of the value of the mortgaged property and the solvency or insolvency of Mortgagor and other persons liable to pay such indebtedness. Mortgagor hereby specifically waives the right to object to the appointment of a receiver as aforesaid and hereby expressly consents that such appointment shall be made as an admitted equity and that the same may be done without notice to Mortgagor. The Mortgagee shall take action either by 14  proceedings or by the exercise of its powers with respect to entry or taking possession, as the Mortgagee may determine. 2.05 LEASES. The Mortgagee, at the Mortgagee's option, is authorized to foreclose this Mortgage subject to the rights of any tenants of the Mortgaged Property, and the failure to make any such tenants parties defendant to any such foreclosure proceedings and to foreclose their rights will not be, nor be asserted to by the Mortgagor, a defense to any proceedings instituted by the Mortgagor to collect the sums secured thereby, or any deficiency remaining unpaid after the foreclosure sale of the Mortgaged Property. 2.06 PRINCIPAL AND INTEREST BECOME DUE ON FORECLOSURE. Upon commencement of suit or foreclosure of this Mortgage, the unpaid principal of the Note, if not previously declared due, and the interest accrued thereon, shall at once become and be immediately due and payable. 2.07 PURCHASE BY MORTGAGEE. Upon any such foreclosure sale, pursuant to judicial proceedings, the Mortgagee may bid for and purchase the Mortgaged Property and, upon compliance with the terms of sale, may hold, retain and possess and dispose of such property in its own absolute right, without further accountability. 2.08 APPLICATION OF INDEBTEDNESS TOWARD PURCHASE PRICE. Upon such foreclosure sale, pursuant to judicial proceedings, the Mortgagee may, if permitted by law, after allowing for the proportion of the total purchase price required to be paid in cash for the costs and expenses of the sale, compensation and other charges, in paying the purchase price, apply to the purchase price any portion of or all sums due to the Mortgagee under the Note and this Mortgage, in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon. 2.09 WAIVER OF APPRAISEMENT, VALUATION, STAY, EXTENSION AND REDEMPTION LAWS. The Mortgagor agrees to the full extent permitted by law, that in case of default on its part hereunder, neither the Mortgagor nor anyone claiming through or under it shall or will set up, claim or seek to take advantage of any appraisement, valuation, stay, extension, or redemption laws now or hereafter in force, in order to prevent or hinder the enforcement or foreclosure of this Mortgage, or the absolute sale of the Property being conveyed, to the final and absolute putting into possession thereof, immediately after such sale; the purchasers thereof, and the Mortgagor, for itself and all who may at any time claim through or under it, hereby waive to the full extent that it may lawfully do so, the benefit of all such laws, and any and all right to have the assets comprised in the security intended to be created hereby marshalled upon any foreclosure of the lien hereof and agrees that the Mortgagee or any court having jurisdiction to foreclose such lien may sell the Mortgaged Property as an entirety. 2.10 RECEIVER. If an Event of Default shall occur and be continuing, then upon the filing of a complaint or other commencement of judicial proceedings to enforce the rights of the Mortgagee, the Mortgagee to the extent permitted by law and without regard to the value or occupancy of the security shall be entitled as a matter of right to the appointment of a receiver to enter 15  upon and take possession of the Mortgaged Property. The receiver shall collect all rents, revenues, issues, income, products and profits thereof, pending such proceedings and apply the same as the Court may direct. The receiver shall have all rights and powers permitted under the laws of Florida and such other powers as the court making such appointment shall confer. The expenses, including receiver's fees, counsel fees, costs and agent's commission, incurred pursuant to the powers herein contained shall be secured by this Mortgage. The right to enter and take possession of, to manage and operate, the Mortgaged Property, to collect the rents, issues and profits thereof, whether by a receiver or otherwise, shall be cumulative to any other right or remedy hereunder or afforded by law, and may be exercised concurrent therewith or independently thereof. Mortgagee shall be liable to account only for such rents, issues and profits actually received by Mortgagee, whether received pursuant to this Paragraph 2.10 or Paragraph 2.03 above. Notwithstanding the appointment of a receiver, trustee or other custodian, the Mortgagee shall be entitled as pledgee to the possession and control of any cash, or other instruments at the time held by, or payable or deliverable under the terms of this Mortgage to the Mortgagee. 2.11 SUITS TO PROTECT THE MORTGAGED PROPERTY. The Mortgagee shall have power (a) to institute and maintain such suits and proceedings as it may deem expedient to prevent any waste or impairment of the Mortgaged Property by any acts which may be unlawful or any violation of the Mortgage, (b) to preserve or protect its interest in the Mortgaged Property and in the income, revenues, rents and profits arising therefrom, and (c) to restrain the enforcement of or compliance with any legislation or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement or of compliance with, such enactment, rule or order would impair the security hereunder or be prejudicial to the interest of the Mortgagee. 2.12 PROOFS OF CLAIM. In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceedings affecting the Mortgagor, its creditors, or its property, the Mortgagee, to the extent permitted by law, shall be entitled to file such proofs of claim and other documents as may be necessary or advisable in order to have the claims of the Mortgagee allowed in such proceedings for the entire amount due and payable by the Mortgagor under this Mortgage at the date of the institution of such proceedings and for any additional amount which may become due and payable by the Mortgagor hereunder after such date. 2.13 ACCELERATION; APPLICATION OF MONIES BY MORTGAGEE. (a) If default shall be made in the payment of any amount due under the Mortgage or the Note secured hereby, then, upon demand of the Mortgagee, the Mortgagor will pay to the Mortgagee the entire amount due and payable under the Note. If Mortgagor shall fail to pay the same forthwith upon such demand, the Mortgagee shall be entitled to sue for and to recover a judgment for the whole amount so due and unpaid together with costs, which shall include the reasonable compensation, expenses and disbursements of the Mortgagee's agents and attorneys either before, after or during the pendency of any proceedings for the enforcement of the Mortgage including appellate proceedings. The right of the Mortgagee to recover such judgment shall not be affected by any taking, possession, or foreclosure sale hereunder, or by the exercise of any other right, power or remedy for the enforcement of the terms of this Mortgage, or the foreclosure of the lien hereof. In case of a foreclosure sale of any of the Mortgaged Property and of the 16  application of the proceeds of sale to the payment of the debt hereby secured, the Mortgagee shall be entitled to enforce payment of and to receive all amounts then remaining due and unpaid upon the Note, and the Mortgagee shall be entitled to recover a judgment for any portion of the debt remaining unpaid, with interest. (c) The Mortgagor agrees to the full extent that it may lawfully so agree, that no recovery of any such judgment by the Mortgagee and no attachment or levy of any execution upon any such judgment upon any of the Mortgaged Property or upon any other property shall in any manner or to any extent release the lien of the mortgage upon the Mortgaged Property or any part thereto for any liens, rights, powers or remedies of the Mortgagee hereunder, but such lien, rights, powers and remedies shall continue unimpaired as before. (d) Any monies thus collected by the Mortgagee or received by the Mortgagee under this Paragraph 2.13 shall be applied as follows: First, to the payment of the reasonable attorneys' fees, costs and expenses incurred by Mortgagee, its agents and attorneys, including but not limited to taxes paid, insurance premiums paid, receivers fees, etc. Second, toward payment of accrued interest on the Note, including the prepayment premium, if applicable. Third, toward payment of the unpaid balance on the Note. 2.14 DELAY OR OMISSION NO WAIVER. No delay or omission of the Mortgage or of any holder of the Note to exercise any right, power, or remedy accruing upon any default shall exhaust or impair any such right, power or remedy nor shall same be construed to be a waiver of any such default, or acquiescence, herein; and every right, power and remedy given by this Mortgage to the Mortgagee may be exercised by Mortgagee from time to time and as often as may be deemed expedient by the Mortgagee. 2.15 NO WAIVER OF ONE DEFAULT TO AFFECT ANOTHER. No waiver of any default hereunder shall extend to or shall affect any subsequent or any other existing default or shall impair any rights, powers or remedies consequent thereon. If the Mortgagee (a) grants forbearance or an extension of time for the payment of any sums secured hereby, (b) takes other or additional security for the payment thereof; (c) waives or does not exercise any right granted herein or in the Note, (d) releases any part of the Mortgaged Property from the Note or Mortgage; (e) consents to the filing of any map, plat or replat thereof, (f) consents to the granting of any easement thereon, or (g) makes or consents to any agreement subordinating the lien hereof, any such act or omission shall not release, discharge, modify, change or affect the original liability under the Note or otherwise of the Mortgagor or any subsequent purchaser of the Mortgaged Property or any part thereof, or any maker, co-signer, endorser, surety or guarantor; nor shall any such act or omission preclude the Mortgagee from exercising any right, power or privilege herein granted or intended to be granted in the event of any other default then made or of any subsequent default nor, except as otherwise expressly provided in an instrument or instruments executed by the Mortgagee, shall the lien of this Mortgage be altered thereby. 17  In the event of the sale or transfer by operation of law or otherwise of all or any part of the Mortgaged Property, the Mortgagee, without notice to any person or corporation, is hereby authorized and empowered to deal with any such vendee or transferee with reference to the Mortgaged Property or the indebtedness secured hereby, as fully and to the same extent as it might deal with the original parties hereto and without in any way releasing or discharging any of the liabilities or undertakings hereunder. 2.16 DISCONTINUANCE OF PROCEEDINGS - DISPOSITION OF PARTIES RESTORED. In case the Mortgagee shall have proceeded to enforce any right or remedy under this Mortgage by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Mortgagee, then in every such case, the Mortgagor and the Mortgagee shall be restored to their former positions and rights hereunder, and all rights, powers and remedies of the Mortgagee shall continue as if no such proceeding has been taken. 2.17 REMEDIES CUMULATIVE. No right, power or remedy conferred upon or reserved by the Mortgagee by this Mortgage, is intended to be exclusive of any other right, power or remedy, but each and every such right, power and remedy shall be cumulative and current and shall be in addition to any other right, power and remedy given hereunder or nor or hereafter existing at law or in equity or by statute. 2.18 SUBROGATION. The Mortgagee hereby is subrogated to the claims and liens of all parties whose claim or liens are discharged or paid with the proceeds of the indebtedness secured by this Mortgage. 2.19 ABSTRACT. The Mortgagee reserves the right to require an abstract of title prepared by a reputable abstracting company acceptable from the earliest public records through a current date, of all instruments affecting the title to the land recorded in the Public Records of the County in which the land is located, evidencing good and marketable title to the land, subject only to such liens or encumbrances and such other matters as shall be acceptable to Mortgagee, and once received, the abstract shall belong to and remain in the possession of the Mortgagee during the lien of this Mortgage. ARTICLE THREE MISCELLANEOUS PROVISIONS 3.01 NO TRANSFER. It is understood and agreed by Mortgagor that as part of the inducement to Mortgagee to make the loan evidenced by the Note, Mortgagee has considered and relied upon the credit worthiness and reliability of Mortgagor. Mortgagor covenants and agrees not to assign, sell, convey, transfer, lease, enter into any management agreement, or further encumber any interest in or any part of the Mortgaged Property without the prior written consent of the Mortgagee, and any such sale, conveyance, transfer, lease, or encumbrance made without Mortgagee's prior written consent shall constitute an event of default hereunder. If the Mortgagor is not an individual, it is further understood and agreed that any assignment, sale, conveyance, transfer, encumbrance or pledge of 18  any ownership interest of the Mortgagor, including without limitation, any transfer of limited liability company membership interests, shares of stock or control in Mortgagor, whether by sale, exchange, conveyance, merger, consolidation, or otherwise without the Mortgagee's prior written consent shall be deemed a transfer of the Mortgaged Property and prohibited herein. Consent by the Mortgagee shall be at the sole and absolute discretion of the Mortgagee. A contract to deed or agreement for deed or assignment of beneficial interest in any trust shall constitute a transfer pursuant to the provisions of this paragraph. If any person or entity , should obtain any interest in all or any part of the Mortgaged Property, pursuant to the execution and enforcement of any lien, security interest, or other right, whether superior, equal or subordinate to this Mortgage or the lien hereof, such event shall be deemed to be a transfer by Mortgagor and an Event of Default hereunder. 3.02 UNIFORM COMMERCIAL CODE. The parties agree that this Mortgage is a security agreement under the Uniform Commercial Code for the purpose of creating a lien on the Mortgaged Property. 3.03 MODIFICATION. It is understood and agreed that the Mortgagee may at any time, without notice to any person, grant to the Mortgagor any modification of any kind or nature whatsoever, or allow any change or changes, substitution or substitutions of any of the property described in this Mortgage or any other collateral which may be held by the Mortgagee without in any manner affecting the liability of the Mortgagor, any endorsers or guarantors of the indebtedness hereby secured or any other person for the payment of said indebtedness, together with interest and any other sums which may be due and payable to the Mortgagee, and also without in any manner affecting or impairing the lien of this Mortgage upon the remainder of the Mortgaged Property and other collateral which is not changed or substituted; and it is also understood and agreed that the Mortgagee may at any time, without notice to any person, release any portion of the property described in this Mortgage or any other collateral, or any portion of any other collateral which may be held as security for the payment of the indebtedness hereby secured, either with or without any consideration of such release or releases, without in any manner effecting the liability of the Mortgagor, all endorsers or guarantors, if any, and all other persons who are or shall be liable for the payment of said indebtedness, and without affecting, disturbing or impairing in any manner whatsoever, the validity and priority of the lien of this Mortgage for the full amount of the indebtedness remaining unpaid, together with all interest and advances which shall become payable, upon the entire remainder of the Mortgaged Property which is unreleased, and without in any manner effecting or impairing to any extent whatsoever any and all other collateral security which may be held by the Mortgagee. It is distinctly understood and agreed by the Mortgagor and the Mortgagee that any release or releases may be made by the Mortgagee without the consent or approval of any other person or persons whomsoever. 3.04 LEASING COMMISSION. Mortgagor covenants that every agreement to pay leasing commissions with respect to the leasing of space in the Mortgaged Property, or any part thereof, if any, are and shall be subject, subordinate and inferior to the right of the Mortgagee, so that in the event Mortgagee acquires title to the Mortgaged Property either at a foreclosure sale or by other means, 19  Mortgagee will be exonerated and discharged from all liabilities for the payment of any such commissions or compensations. 3.05 FINANCIAL STATEMENTS. Mortgagor agrees to deliver quarterly to the Mortgagee financial statements (balance sheet and profit and loss statements) prepared by a certified public accountant approved by Mortgagee in form and content satisfactory to Mortgagee ("Financial Statements") of the Mortgagor and Mortgagor further agrees on behalf of itself, and all guarantors, co-makers and endorsers of the Note, to deliver quarterly to the Mortgagee, financial statements of the Mortgagor and all guarantors, co-makers and endorsers within 30 days of the close of each calendar-year quarter along with a sworn itemized statement of all earnings and expenses of the Mortgaged Property. Mortgagor agrees to make the books and accounts relating to the mortgaged property available for inspection by Mortgagee, or its representatives, upon request at any reasonable time. Mortgagor acknowledges and agrees that this provision is a material consideration of the granting of this Mortgage, and that if the Mortgagor, and all guarantors, co-makers and endorsers fail or refuse to deliver such financial statements, that such failure to delivery such statements shall be considered an Event of Default, and the Mortgagee may, at its option, elect to accelerate the remaining unpaid principal balance due and payable on the Note, together with all accrued interest, as if the Mortgagor had defaulted in a payment due and payable under the terms of the Note. The form of the Financial Statements shall be subject to approval by Mortgagee and shall include such supplemental schedules as Mortgagee may reasonably require. The foregoing notwithstanding, so long as Mortgagee is a subsidiary consolidated with a public corporation required to file statements with the Securities and Exchange Corporation, delivery of the requisite 10-QSB and 10-KSB Statements shall satisfy the requirements of this section 3.05. 3.06 MAXIMUM RATE OF INTEREST. Nothing herein contained nor in the Note secured hereby or any instrument or transaction related thereto, shall be construed or so operate as the require the Mortgagor, Maker, or any person liable for the payment of the loan made pursuant to said Note, to pay interest in an amount or at a rate greater than the maximum allowed by law. Should any interest or other charges in the nature of interest paid by the Mortgagor, Maker or any parties liable for the payment of the loan of interest in excess of the maximum rate of interest allowed by applicable law, then any and all such excess shall be and the same is hereby waived by the holder hereof, and all such excess shall be automatically credited against and in reduction of the principal balance, and any portion of said excess which exceeds the principal, balance shall be paid by the holder hereof to the Mortgagor, Maker or any parties liable for the payment of the loan made pursuant to said Note, it being the intent of the parties hereto that under no circumstances shall the Mortgagor, Maker or any parties liable for the payment of the loan hereunder, be required to pay interest in excess of the maximum rate allowed by law. 3.07 DEFAULT RATE. The Default Rate of interest shall be applicable subsequent to an Event of Default as defined in Paragraph 2.01 and where elsewhere provided for in this Mortgage. The Default Rate shall be the maximum interest rate per annum permissible under Florida Law, or Federal Law in the event Federal Law pre-empts Florida law or is otherwise applicable. 20  3.08 TIME IS OF THE ESSENCE. It is specifically agreed that time is of the essence in this Mortgage and that no waiver of any obligation hereunder or of the obligation secured hereby shall at any time thereafter be held to be a waiver of the terms hereof or of the instrument secured hereby. 3.09 ATTORNEYS' FEES AND EXPENSES. Wherever provision is made herein for payment of reasonable attorneys' fees or counsel fees or expenses incurred by the Mortgagee, said provision shall include, but not limited to, reasonable attorneys' or counsels fees or expenses incurred in any and all judicial, bankruptcy, reorganization, administrative, or other proceedings, including appellate proceedings, whether such proceedings arise before or after entry of a final judgment. 3.10 FLORIDA CONTRACT. This mortgage is made by Mortgagor and accepted by Mortgagee in the State of Florida, with reference to the laws of such State, and shall be construed, interpreted, enforced and governed by and in accordance with such laws (excluding the principles thereof governing conflicts of law), and Federal law in the event and only in the event Federal law pre-empts State law. 3.11 SUCCESSORS, ASSIGNS INCLUDED IN PARTIES. Whenever in this mortgage one of the parties hereto is named or referred to, the successors and assigns of such party shall be included and all covenants and agreements contained in this Mortgage by or on behalf of the Mortgagor or by or on behalf of Mortgagee, shall bind and inure to the benefit of their respective successors and assigns whether so expressed or not. Whenever the singular or plural number, masculine or feminine or neuter gender is used herein, it shall equally include the other. 3.12 NOTICE. (a) Mortgagor. Any notice, demand or instrument authorized by this Mortgage to be served on or give to the Mortgagor may be served on or given to the Mortgagor at: Enclaves of Eagle Nest LLC c/o Enclaves Group, Inc. 45 Knollwood Road, Fifth Floor Elmsford, New York 10523 or at such other address as may have been furnished in writing to the Mortgagee by the Mortgagor. (b) Mortgagee. Any notice, demand or instrument authorized by this Mortgage to be served on or give to the Mortgagor may be served on or given to the Mortgagor at: Magellan Mortgage Group 314 Clematis Street, Suite 202 West Palm Beach, FL 33401 21  with a copy to: SCOTT A. ELK, ESQ. ELK, BANKIER, CHRISTU & BAKST, LLP 4800 North Federal Highway, Suite 200-E Boca Raton, Florida 33431 or at such other address as may have been furnished in writing to the Mortgagor by the Mortgagee. 3.13 HEADINGS. The headings of the articles, sections, paragraphs and subdivisions of this Mortgage are for convenience of reference only, and are not to be considered a part hereof, and shall not limit or otherwise affect any of the terms hereof. 3.14 INVALID PROVISIONS TO AFFECT NO OTHERS. In case any one or more of the covenants, agreements, terms or provisions contained in this Mortgage, the Note or any of the other Loan Documents, shall be invalid, illegal or unenforceable in any respect, the validity of the remaining covenants, agreements, terms or provisions contained herein and in the Note shall be in no way affected, prejudiced or disturbed thereby. 3.15 BANKRUPTCY. Mortgagor hereby agrees that, in consideration of the recitals and mutual covenants contained herein, and for other good and valuable consideration, including the loan proceeds of the Note, the receipt and sufficiency of which is hereby agreed to, Mortgagor represents that it has not (i) entered into any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future federal or state act or law relating to bankruptcy, insolvency, or other relief for debtors, (ii) sought or consented to or acquiesced in the appointment of any trustee, receiver, conservator, or liquidator, (iii) is the subject of any order, judgment, or decree entered by any court of competent jurisdiction approving a petition filed against such party for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future federal or state act or law relating to bankruptcy, insolvency, or other relief for debtors. Mortgagor hereby agrees that, in consideration of the recitals and mutual covenants contained herein, and for other good and valuable consideration, Mortgagor hereby acknowledges that in the event that it shall (i) file in any bankruptcy court of competent jurisdiction a petition in bankruptcy or be the subject of any voluntary or involuntary petition under Title 11 of the U.S. Code as amended ("Bankruptcy Code"); (ii) be the subject of any order of relief issued under the Bankruptcy Code; (iii) file or be the subject of any petition seeking any reorganization, or arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future federal or state act or law relating to bankruptcy, insolvency, or other relief for debtors; (iv) have sought or consented to or acquiesced in the appointment of any trustee or receiver, conservator, or liquidator; or (v) be the subject or any order, judgment, or decree entered by any court of competent jurisdiction approving a petition filed against Mortgagor, for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future federal or state act or law relating to bankruptcy, insolvency, or other relief for debtors under any present or future federal or state law relating to bankruptcy, insolvency or relief for debtors, then, subject only to obtaining prior court approval, and without the need for any further showing of cause, 22  Mortgagee shall thereupon be entitled to, and Mortgagor hereby irrevocably consents to the granting of relief from any automatic stay imposed by Section 362 of the Bankruptcy Code, or otherwise, and waives any rights under Section 11 U.S.C. Section 365, on or against the exercise of the rights and remedies otherwise available to Mortgagor as provided by law, any legal action under the Note, Mortgage, and other Loan Documents (including, without limitation, the right of Mortgagee to begin or complete the foreclosure suit and sale of the collateral) and otherwise provided by law, and Mortgagor irrevocably waives its respective right to object to such relief. Mortgagor specifically agrees not to directly or indirectly oppose, interfere with, impede or otherwise defend against Mortgagee's efforts to gain relief from the automatic stay or to otherwise enforce its rights hereunder. The remedies described in this paragraph are not exclusive and shall not limit Mortgagee's rights. To the extent the terms and conditions of this Article 3.15 are unenforceable, illegal or unconscionable, the same shall be deemed severed and deleted from this Mortgage, and all other terms and conditions shall remain in full force and effect. 3.16 ENVIRONMENTAL INDEMNITY. (a) COVENANTS, REPRESENTATIONS AND WARRANTIES OF MORTGAGOR. Mortgagor covenants, represents and warrants that: (a) no substances, including without limitation, asbestos or any substance containing more than 0.1 percent asbestos, the group of compounds known as polychlorinated biphenyls, flammable explosives, radioactive materials, chemicals known to cause cancer or reproductive toxicity, pollutants, effluents, contaminants, emissions or related materials or substances (collectively "Hazardous Materials") (any mixture of a Hazardous Material, regardless of concentration, with other materials shall be considered a Hazardous Material) under any law relating to environmental conditions and industrial hygiene, including without limitation, the Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 .S.C. Section 6901 et seq., the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. Section 9601 et seq., as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. Sections 2601-2629, the Safe Drinking Water Act, 42 U.S. Section 300f et seq., and all similar federal, state and local environmental statutes, ordinances and the regulations, orders, decrees now or hereafter promulgated thereunder (collectively, the "Hazardous Material Laws"), have been or shall be installed, used, generated, manufactured, treated, handled, refined, produced, processed, stored or disposed of, or otherwise present in, on or under the Property except that this provision does not prohibit: (1) the use of unrecycled fuel oil as a boiler fuel; (2) the normal use of consumer products; or (3) the normal use of materials such as cleaning products, copies toner, and similar materials routinely used in office; (b) no activity has been or shall be undertaken on the Property would case (1) the Property to become a hazardous waste treatment, storage or disposal facility within the meaning of, or otherwise bring the Property within the ambit of RCRA or any Hazardous Material Law; (2) a release or threatened release of Hazardous Material from the Property within the meaning of, or otherwise bring the Property within the ambit of CERCLA or SARA or any Hazardous Material Law; or (3) the discharge of Hazardous Material into any watercourse, body of surface or subsurface water or wetland, 23  or the discharge into the atmosphere of any Hazardous Material which would require a permit under any Hazardous Material Law; (c) no activity has been or shall be undertaken with respect to the Property which would cause a violation or support a claim under RCRA, CERCLA, SARA or any Hazardous Material Law; (d) no underground storage tanks or underground Hazardous Material deposits are or were located on the Property and subsequently removed or filled; (e) no investigation, administrative order, litigation or settlement with respect to any Hazardous Materials is threatened or in existence with respect to the Property; and (f) no notice has been served on Mortgagor from any entity, governmental body, or individual claiming any violation of any Hazardous Material Law, or requiring compliance with any Hazardous Material Law, or demanding payment or contribution for environmental damage or injury to natural resources (b) INDEMNITIES. Mortgagor hereby agrees to unconditionally indemnify, defend, and hold Mortgagee harmless against any (i) loss, liability, damage, expense or claim arising from the imposition or recording of a lien, the incurring of costs of required repairs, clean up or detoxification and removal under any Hazardous Material Law with respect to the Property or liability to any third party in connection with any violation of a Hazardous Material Law and (ii) other loss, liability, damage, expense or claim which may be incurred by or asserted against Mortgagee directly or indirectly resulting from the presence on or under, or the discharge, emission or release from the Property into or upon the land, atmosphere, or any watercourse, body of surface or subsurface water or wetland, arising from the installation, use, generation, manufacture, treatment, handling, refining, production, processing, storage, removal, clean up or disposal of any Hazardous Material (as defined above) whether or not caused by Mortgagor. Mortgagor shall pay when due any judgments or claims for damages, penalties or otherwise against Mortgagee, and shall assume the burden and expense of defending all suits, administrative proceedings and resolutions of any description with all persons, political subdivisions or government agencies arising out of the occurrences set forth in this Agreement. In the event that such payment is not made to Mortgagee, Mortgagee at its sole discretion, may proceed to file suit against Mortgagor to compel such payments. 3.17 WAIVER OF JURY TRIAL. MORTGAGOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THE MORTGAGE, LOAN DOCUMENTS, AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR MORTGAGEE ENTERING INTO THIS MORTGAGE. 24  ARTICLE FOUR ADDITIONAL PROVISIONS 4.01 LIMITATION ON ADDITIONAL FINANCING: Mortgagor shall not undertake additional financing secured by any lien or security interest on property encumbered in favor of Mortgagee to secure the loan without first obtaining Mortgagee's written consent. Any violation of the foregoing limitation shall, at the option of Mortgagee, be deemed an event of default hereunder. 4.02 COMPLIANCE WITH LAW AND REGULATIONS: Mortgagor shall comply with all laws, ordinances, regulations, and orders of all federal, state, municipal, and other governmental authorities relating to the mortgaged property. 4.03 INSPECTION: Mortgagee and any persons authorized by Mortgagee shall have the right at any time, upon reasonable notice to Mortgagor, to enter the mortgaged property at a reasonable hour to inspect and photograph its condition and state of repair. 4.04 MORTGAGOR'S WAIVERS: Mortgagor hereby waives and releases: (a) all errors, defects, and imperfections in any proceeding instituted by Mortgagee under the note, this mortgage, or both of them; (b) all benefit that might accrue to Mortgagor by virtue of any present or future law exempting the mortgaged property, or any part of the proceeds arising from any sale thereof from attachment, levy, sale on execution, or providing for any stay of execution, exemption from civil process, or extension of time for payment; and (c) unless specifically required herein, all notices of Mortgagor's default or of Mortgagee's election to exercise or Mortgagee's actual exercise of any option under the note or this mortgage. 4.05 AMENDMENT: This mortgage cannot be changed or amended except by agreement in writing signed by the party against whom enforcement of the change is sought. 4.06 CONSTRUCTION: Whenever used in this mortgage, unless the context clearly indicates a contrary intent: (a) The word "Mortgagor" shall mean the person who executes this mortgage and any subsequent owner of the mortgaged property and his or her respective heirs, executors, administrators, successors, and assigns; (b) The word "Mortgagee" shall mean the person specifically named herein as "Mortgagee", or any subsequent holder of this mortgage; (c) The word "person" shall mean individual, corporation, partnership, or unincorporated association; (d) The use of any gender shall include all genders; 25  (e) The singular number shall include the plural and the plural the singular, as the context may require; (f) If Mortgagor is more than one person, all agreements, conditions, covenants, provisions, stipulations, warrants of attorney, authorizations, waivers, releases, options, undertakings, rights, and benefits made or given by Mortgagor shall be joint and several and shall bind and affect all persons who are defined as "Mortgagor" as fully as though all of them were specifically named herein wherever the word "Mortgagor" is used. THIS IS A BALLOON MORTGAGE AND THE FINAL PRINCIPAL PAYMENT OR THE PRINCIPAL BALANCE DUE UPON MATURITY IS $1,250,000.00, TOGETHER WITH ACCRUED INTEREST, IF ANY, AND ALL ADVANCEMENTS MADE BY THE MORTGAGEE UNDER THE TERMS OF THIS MORTGAGE. IN WITNESS WHEREOF the parties hereto have set their hands and seals on the date first written above. WITNESSES: MORTGAGOR: ENCLAVES OF EAGLE NEST LLC By: Enclaves Group, Inc., its /s/ Faith Witt Managing Member - ------------------------------- Printed Name: Faith Witt /s/ Charles Cirillo - ------------------------------- Printed Name: Charles Cirillo By: /s/ Daniel G. Hayes (L.S.) ------------------------------ Name: Daniel G. Hayes Title: President and CEO (Acknowledgment on following page) 26  STATE OF NEW YORK ) ) ss: COUNTY OF WESTCHESTER ) I HEREBY CERTIFY that on this day, before me, an officer duly authorized in the State aforesaid and in the County aforesaid, to take acknowledgements, personally appeared Daniel G. Hayes, President and CEO of Enclaves Group, Inc., a Delaware corporation, the Managing Member of ENCLAVES OF EAGLE NEST LLC, a Florida limited liability company, who [X] is personally known to me, or [_] has produced ______________________ as identification and who, being duly sworn, executed the foregoing instrument and acknowledged before me that he executed the same. WITNESS my hand and official seal in the County and State last aforesaid this 8 day of December, 2005. /s/ David Jay Parker ------------------------------ (Signature) ______________________________ (Printed Name) My Commission Expires: My Commission No. is: David Jay Parker Notray Public, State of New York No. 02PA6105869 Qualified in Westchester County Commission Expires Feb. 23, 2008 27  EXHIBIT A LEGAL DESCRIPTION