Balloon Note

Commercial Mortgage as Security for Balloon Promissory Note

This is a balloon mortgage and the final payment or the principal balance due on maturity is , together with accrued interest, if any, and all advancements made by Mortgagee under the terms of this Mortgage.

This Mortgage is given on (date), by (name), of referred to herein as Mortgagor, to , a corporation organized and existing under the laws of the state of , with its principal office located at referred to herein as Mortgagee.

In consideration of the premises and in order to secure the payment of both the principal of the Note, and interest and any other sums payable on the note or this Mortgage, and the performance and observance of all of the provisions of this Mortgage and of the Note, Mortgagor grants, sells, warrants, conveys, assigns, transfers, mortgages and sets over and confirms to Mortgagee, all of Mortgagor's estate, right, title and interest in, to and under real property in , more particularly described in the attached Exhibit A;

Together with all improvements now or later located on the real property and all fixtures, appliances, apparatus, equipment, furnishings, heating and air conditioning equipment, machinery and articles of personal property and replacement of it now or later affixed to, attached to, placed on, or used in any way in connection with the complete and comfortable use, occupancy, or operation of the real property, all licenses and permits used or required in connection with the use of the real property, all leases of the real property now or later entered into and all right, title and interest of Mortgagor under it, including, but not limited to, all rents, issues, proceeds, and profits accruing from the real property and together with all proceeds of the conversion, voluntary or involuntary of any of the above into cash or liquidated claims, including, but not limited to, proceeds of insurance and condemnation awards (the above real property, tangible and intangible personal property referred to collectively below as the Mortgaged Property). Mortgagor grants to Mortgagee a security interest in the above described tangible and intangible personal property;

To hold the Mortgaged Property, together with all the tenements, hereditaments and appurtenances belonging to or in anyway appertaining and the reversion and reversions of it and all the estate, right, title, interest, homestead, dower and right of dower, separate estate, possession, claim and demand, as well in law as in equity, of Mortgagor and to the same, and every part of it, with the appurtenances of Mortgagor in and to the same, and every part and parcel of it to Mortgagee.

Mortgagor warrants that Mortgagor has a good and marketable title to an indefeasible fee estate in the real property comprising the Mortgaged Property subject to no lien, charge or encumbrance except as Mortgagee has agreed to accept in writing. Mortgagor covenants that this mortgage is and will remain a valid and enforceable Mortgage on the Mortgaged Property subject only to the exceptions provided in this Mortgage. Mortgagor has full power and lawful authority to mortgage the Mortgaged Property in the manner and form used here whether intended now or intended to be done later. Mortgagor will preserve the title and will forever warrant and defend it to Mortgagee and will forever warrant and defend the validity and priority of the lien against the claims of all persons and parties;

Mortgagor will, at the cost of Mortgagor, and without expense to Mortgagee, do any acts and execute, acknowledge and deliver all deeds, conveyances, mortgages, assignments, notices of assignments, transfers and assurances as Mortgagee shall from time to time require to preserve the priority of the lien of this Mortgage or to facilitate the performance of the terms of it;

Provided, however, that if Mortgagor pays to Mortgagee the indebtedness in the principal sum of as evidenced by a promissory note (the Note), of even date with this Mortgage, or any renewal or replacement of the Note, executed by Mortgagor and payable to order of Mortgagee, with interest and on the terms as provided in it, and together with all other sums advanced by Mortgagee to or on behalf of Mortgagor pursuant to the Note or this Mortgage, on or before the final maturity date of the Note and this Mortgage as specified in the Note, and shall perform all other covenants and conditions of the Note, all of the terms of which are incorporated by reference as though set forth fully here, and of any renewal, extension or modification of the Note and of this Mortgage, then this Mortgage and the estate created by it shall cease and terminate.

Mortgagor further agrees with Mortgagee as follows:

1. Payment of Principal and Interest

To pay all sums, including interest secured, when due, as provided for in the Note and any renewal, extension or modification of it and in this Mortgage, all sums to be payable in lawful money of the United States of America at Mortgagee's principal office mentioned above, or at any other place as Mortgagee may designate in writing.

2. Payment of Property Charges

To pay when due, and without requiring any notice from Mortgagee, all taxes, assessments of any type or nature and other charges levied or assessed against the Mortgaged Property or this Mortgage and produce receipts for it on demand. To immediately pay and discharge any claim, lien or encumbrance against the Mortgaged Property which may be or become superior to this Mortgage and to permit no default or delinquency on any other lien, encumbrance or charge against the Mortgaged Property.

3. Payment by Monthly Deposits; Acceleration

If required by Mortgagee, to also make monthly deposits with Mortgagee, in a non-interest bearing account, together with and in addition to interest and principal, of a sum equal to of the yearly taxes and assessments which may be levied against the Mortgaged Property, and (if so required) of the yearly premiums for insurance on it.

The amount of the taxes, assessments and premiums, when unknown, shall be estimated by Mortgagee. The deposits shall be used by Mortgagee to pay the taxes, assessments and premiums when due. Any insufficiency of an account to pay the charges when due shall be paid by Mortgagor to Mortgagee on demand.

4. Payments Required by Subsequent Law

To promptly pay all taxes and assessments assessed or levied under and by virtue of any state, federal or municipal law or regulation passed later, against Mortgagee on this Mortgage or the debt secured by this Mortgage, or on its interest under this Mortgage; provided, however, that the total amount paid for any taxes pursuant to this paragraph together with the interest payable on the indebtedness shall not exceed the highest lawful rate of interest in .

5. Insurance

To keep the Mortgaged Property insured against loss or damage by fire, and all perils insured against by an extended coverage endorsement, and any other risks and perils as Mortgagee in its discretion may require.

6. Written Mortgagee Consent

To first obtain the written consent of Mortgagee, the consent to be granted or withheld at the sole discretion of Mortgagee, before:

A. Removing or demolishing any building now or erected later on the premises covered by this Mortgage;

B. Altering the arrangement, design or structural character of it;

C. Making any repairs which involve the removal of structural parts or the exposure of the interior of the building to the elements;

D. Cutting or removing or permitting the cutting and removal of any trees or timber on the Mortgaged Property;

E. Removing or exchanging any tangible personal property which is part of the Mortgaged Property; or

F. Entering into or modifying any leases of the Mortgaged Property.

7. Preservation and Maintenance of Property

To maintain the Mortgaged Property in good condition and repair, including but not limited to the making of any repairs as Mortgagee may from time to time determine to be necessary for the preservation of the Mortgaged Property and to not commit or permit any waste. Mortgagee shall have the right to inspect the Mortgaged Property on reasonable notice to Mortgagor.

8. Compliance with Laws

To comply with all laws, ordinances, regulations, covenants, conditions and restrictions affecting the Mortgaged Property, and not to cause or permit any violation of them.

9. Payment by Mortgagee; Subrogation

If Mortgagor fails to pay any claim, lien or encumbrance which is superior to this Mortgage, or when due, any tax or assessment of insurance premium, or to keep the Mortgaged Property in repair, or commits or permits waste, or if there is commenced any action or proceeding affecting the Mortgaged Property or the title to it, or the interest of Mortgagee in it, including, but not limited to, eminent domain and bankruptcy or reorganization proceedings, then Mortgagee, at its option, may pay the claim, lien, encumbrance, tax, assessment or premium, with right of subrogation.

10. Moneys Advanced to Protect Security

Mortgagor will pay to Mortgagee, immediately and without demand, all sums of money advanced by Mortgagee to protect the security pursuant to this Mortgage, including all costs, reasonable attorney's fees and other items of expense, together with interest on each advancement at the highest lawful rate of interest per year allowed by the law of . All such sums and interest shall be secured by this Mortgage.

11. Valuation/Appraisement Laws Inapplicable to Security

All sums of money secured by this Mortgage shall be payable without any relief from any valuation or appraisement laws.

12. Default; Acceleration

If default is made in payment of any installment of principal or interest of the Note or any part of it when due, or in payment, when due, or any other sum secured by this Mortgage, or in performance of any of Mortgagor's obligations, covenants or agreements under this Mortgage, all of the indebtedness secured by it shall become and be immediately due and payable at the option of Mortgagee, without notice or demand, which are waived. In this event, Mortgagee may avail itself of all rights and remedies, at law or in equity, and this Mortgage may be foreclosed with all rights and remedies afforded by the laws of and Mortgagor shall pay all costs, charges and expenses, including a reasonable attorney's fee, including all costs, expenses and attorney's fees for any retrial, rehearing or appeals.

13. Remedies on Default

If default is made in payment, when due, of any indebtedness secured by this Mortgage, or in performance of any of Mortgagor's obligations, covenants or agreements contained in this Mortgage:

A. Mortgagee is authorized at any time, without notice, in its sole discretion to enter on and take possession of the Mortgaged Property or any part of it, to perform any acts Mortgagee deems necessary or proper to conserve the security and to collect and receive all rents, issues and profits of it, including those past due and those accruing later; and

B. Mortgagee shall be entitled, as a matter of strict right, without notice and ex parte, and without regard to the value or occupancy of the security, or the solvency of Mortgagor, or the adequacy of the Mortgaged Property as security for the Note, to have a receiver appointed to enter on and take possession of the Mortgaged Property, collect the rents and profits from it and apply them as the court may direct, the receiver to have all the rights and powers permitted under the laws of .

Mortgagee shall be liable to account only for the rents, issues and profits actually received by Mortgagee.

14. Further Security; Mortgagee Options

If the indebtedness secured in this Mortgage is now or later further secured by chattel mortgages, security interest, financing statements, pledges, contracts of guaranty, assignments of leases, or other securities, or if the Mortgaged Property encumbered consists of more than one parcel of real property, Mortgagee may at its option exhaust any one or more of the securities and security under this Mortgage, or any parcels of the security under this Mortgage, either concurrently or independently, and in such an order as it may determine.

15. Future Advances

This Mortgage shall secure not only existing indebtedness, but also any future advances, whether the advances are obligatory or to be made at the option of Mortgagee, or otherwise, as are made within years from the date of this Mortgage, to the same extent as if the future advances were made on the date of the execution of this Mortgage, but the secured indebtedness shall not exceed at any time the maximum principal amount of (e.g., as two times) the amount of the Note, plus interest on it, and any disbursements made for the payment of taxes, levies, or insurance, on the Mortgaged Property, with interest on the disbursements.

16. No Waiver

No delay by Mortgagee in exercising any right or remedy described in this Mortgage, or otherwise afforded by law, shall operate as a waiver of that right or remedy or preclude the exercise of it during the continuance of any default under this Mortgage.

17. Mortgagee Rights

Without affecting the liability of Mortgagor or any other person for payment of any indebtedness secured by this Mortgage or for performance of any obligation contained in it, and without affecting the rights of Mortgagee with respect to any security not expressly released in writing, Mortgagee may, at any time and from time to time, either before or after the maturity of the Note, and without notice or consent:

A. Release any person liable for payment of all or any part of the indebtedness or for performance of any obligation;

B. Make any agreement extending the time or otherwise altering the terms of payment of all or any part of the indebtedness, or modifying or waiving any obligation, or subordinating, modifying or otherwise dealing with the lien or charge here;

C. Exercise or refrain from exercising or waive any right Mortgagee may have;

D. Accept additional security of any kind; and

E. Release or otherwise deal with any property, real or personal, securing the indebtedness, including all or any part of the Mortgaged Property.

18. Subsequent Superior Agreement

Any agreement made later by Mortgagor and Mortgagee pursuant to this Mortgage shall be superior to the rights of the holder of any intervening lien or encumbrance.

19. Waiver of Homestead Exemption

Mortgagor waives all right of homestead exemption, if any, in the Mortgaged Property.

20. Condemnation

In the event of condemnation proceedings of the Mortgaged Property, the award or compensation payable is assigned to and shall be paid to Mortgagee. The proceeds of any award or compensation received, at the option of Mortgagee, will either be applied to the prepayment of the note or paid over to Mortgagor for restoration of the Mortgaged Property.

21. Construction Advances

If Mortgagee, pursuant to a construction loan agreement or loan commitment made by Mortgagee with Mortgagor, agrees to make construction loan advances up to the principal amount of the Note, then Mortgagor covenants that it will comply with all of the terms, provisions and covenants of the construction loan agreement or loan commitment, will diligently construct the improvements to be built pursuant to the terms of the construction loan agreement or loan commitment, all of the terms of which are incorporated in this mortgage by reference as though set forth fully and will permit no defaults to occur and if a default shall occur, it shall constitute a default under this mortgage and the Note.

22. Certified Audited Statements

At the option of Mortgagee, Mortgagor shall provide Mortgagee with periodic certified audited statements of the operations of and the financial condition of Mortgagor.

23. No Assumption; Due on Sale Clause

The loan represented by this mortgage and the Note is personal to Mortgagor, and Mortgagee made the loan to the Mortgagor based on the credit of Mortgagor and Mortgagee's judgment of the ability of Mortgagor to repay all sums due under this Mortgage. Therefore this Mortgage may not be assumed by any subsequent holder of an interest in the Mortgaged Property. If all or any part of the Mortgaged Property, or any interest in it, is sold, conveyed, transferred or further encumbered by Mortgagor without Mortgagee's prior written consent, then Mortgagee may declare all sums secured by this mortgage immediately due and payable.

24. Representations and Warranties of Mortgagor

Mortgagor represents and warrants that if it is a corporation, it is duly organized and validly existing, in good standing under the laws of the state of its incorporation, has stock outstanding which has been duly and validly issued, and is qualified to do business and is in good standing in the state of , with full power and authority to consummate the loan contemplated in this mortgage. If Mortgagor is a limited liability company or a partnership, it represents and warrants that it is duly formed and validly existing, and is fully qualified to do business in the state of , with full power and authority to consummate the loan contemplated in this Mortgage.

25. Severability

If any one or more of the provisions contained in this Mortgage or in the Note is for any reason held to be invalid, illegal or unenforceable in any respect, the invalidity, illegality or unenforceability shall, at the option of Mortgagee, not affect any other provisions of this Mortgage, but this Mortgage shall be construed as if the invalid, illegal or unenforceable provision had never been contained in this Mortgage. The total interest payable pursuant to the note or this Mortgage shall not in any one year exceed the highest lawful rate of interest permitted in .

26. Successors and Assigns Also Bound

The covenants and agreements contained in this Mortgage shall bind and the benefits and advantages shall inure to the respective heirs, executors, administrators, successors, and assigns of the parties. Wherever used, the singular number includes the plural, the plural includes the singular, and the use of any gender applies to all genders. All covenants, agreements and undertakings shall be joint and several.

Mortgagor has executed this mortgage the day and year first above written.

This is a balloon mortgage and the final principal payment or the principal balance due on maturity is , together with accrued interest, if any, and all advancements made by Mortgagee under the terms of this Mortgage.