Exhibit 10.17

 

PREPARED BY, AND AFTER RECORDING RETURN TO:

 

Thomas K. Slattery, Esq.

Law Offices of Thomas K. Slattery, P.L.L.C.

1250 24th Street, N.W., Suite 300

Washington, D.C.  20037

 

MORTGAGE, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT AND FIXTURE FILING

 

MORTGAGOR:                 CSCC PROPERTY HOLDINGS, LLC, a Georgia limited
liability company, having an address of Two Buckhead Plaza, 3050 Peachtree Road
NW, Suite 355, Atlanta, Georgia 30305

 

LENDER:                             CONTEMPORARY HEALTHCARE SENIOR LIEN FUND I,
L.P., a Delaware limited partnership, having an address at 1040 Broad Street,
Suite 103, Shrewsbury, New Jersey 07702

 

A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE.  A POWER OF SALE MAY ALLOW
THE MORTGAGEE/LENDER TO TAKE THE MORTGAGED PROPERTY AND SELL IT WITHOUT GOING TO
COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE MORTGAGOR/BORROWER UNDER THIS
MORTGAGE.

 

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MORTGAGE, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT AND FIXTURE FILING

 

THIS MORTGAGE, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT AND FIXTURE
FILING (this “Mortgage”), made and entered into as of the 17 day of August,
2012, by CSCC PROPERTY HOLDINGS, LLC, a Georgia limited liability company, whose
address is Two Buckhead Plaza, 3050 Peachtree Road NW, Suite 355, Atlanta,
Georgia 30305 and whose organization number is 12034119, (the “Mortgagor”) in
favor of CONTEMPORARY HEALTHCARE SENIOR LIEN FUND I, L.P., a Delaware limited
partnership, having an office in Shrewsbury, New Jersey, whose address is 1040
Broad Street, Suite 103, Shrewsbury, New Jersey 07702, Attention: Mr. Eric Smith
(the “Lender”; said term referring always to the lawful owner and holder of the
indebtedness secured hereby).

 

WITNESSETH:

 

For and in consideration of the Loan, described herein, and other valuable
considerations, the receipt and sufficiency whereof are hereby acknowledged, and
in order to secure the indebtedness and other obligations of Borrower
hereinafter set forth, Mortgagor does hereby GRANT, BARGAIN, SELL, MORTGAGES AND
CONVEY TO LENDER, WITH POWER OF SALE, all of the following described land and
interests in land, estates, easements, rights, improvements, fixtures,
appurtenances, and other property whether now owned or hereafter acquired and
including replacements and additions thereto (hereinafter referred to
collectively as the “Collateral”):

 

THIS MORTGAGE SECURES ADVANCES TO BE USED FOR COMMERCIAL PURPOSES.

 

THIS INSTRUMENT SHALL ALSO CONSTITUTE A UNIFORM COMMERCIAL CODE FINANCING
STATEMENT WHICH IS BEING FILED AS A FIXTURE FILING IN ACCORDANCE WITH THE
OKLAHOMA UNIFORM COMMERCIAL CODE.  THE RECORD OWNER OF THE REAL ESTATE DESCRIBED
HEREIN IS THE MORTGAGOR.  THE COLLATERAL IS DESCRIBED IN THIS INSTRUMENT AND
SOME OF THE COLLATERAL DESCRIBED HEREIN IS OR IS TO BECOME FIXTURES ON THE REAL
ESTATE DESCRIBED HEREIN.

 

(a)                                 The tract(s) or parcel(s) of land located in
Tulsa County, Oklahoma as are more particularly described in Exhibit A attached
hereto and by this reference made a part hereof (referred to individually and
collectively as (the “Property”);

 

(b)                                 All Improvements and Equipment, all of which
are hereby declared and shall be deemed to be fixtures and accessions to the
Property and a part of the Property as between the parties hereto and all
persons claiming by, through or under them, and which shall be deemed to be a
portion of the security for the Loan Obligations herein described to be secured
by this Mortgage;

 

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(c)                                  All building materials, equipment,
fixtures, fittings, and personal property of every kind or character now owned
or hereafter acquired by Mortgagor for the purpose of being used or useful in
connection with the Improvements, whether such materials, equipment, fixtures,
fittings, and personal property are actually located on or adjacent to the
Property or not, and whether in storage or otherwise, wheresoever the same may
be located, including, but without limitation, all lumber and lumber products,
bricks, building stones, and building blocks, sand and cement, roofing material,
paint, doors, windows, hardware, nails, wires and wiring, plumbing and plumbing
fixtures, heating and air conditioning equipment and appliances, electrical and
gas equipment and appliances, pipes and piping, ornamental and decorative
fixtures, furniture, and in general all building materials and equipment of
every kind and character used or useful in connection with said Improvements;

 

(d)                                 All Appurtenant Rights;

 

(e)                                  All Rents;

 

(f)                                   All Accounts, General
Intangibles, Instruments, Inventory, Money, and (to the full extent assignable)
Permits; and

 

(g)                                  All Proceeds.

 

Mortgagor further grants to Lender a security interest in all of the Collateral
constituting goods that are or are to become fixtures related to the Property.

 

This Mortgage, and all rights, remedies, powers, privileges, and benefits and
all titles, interests, liens, and security interests created hereby or arising
by virtue hereof, are given to secure payment and performance of the following
indebtedness, obligations, loans, advances, and liabilities:

 

(a)                                 To secure the loan (the “Loan”), including
future advances, evidenced by or arising under that certain Promissory Note of
even date herewith as the same may hereafter be renewed, extended, amended and
modified (together with all renewals, extensions, amendments, and modifications
thereof hereafter made, collectively, the “Note”), executed by Mortgagor and
CSCC Nursing, LLC, a Georgia limited liability company (also collectively
referred to herein as the “Borrowers”), which Note is payable to the order of
Lender in the stated principal amount of up to FIVE MILLION AND NO/100 DOLLARS
($5,000,000.00), bearing interest and being payable in installments as therein
stated, which is due and payable in full on August 20, 2015;

 

(b)                                 To secure all sums advanced by Lender to
Borrowers or expended by Lender for Borrowers’ account, including but not
limited to advances for taxes and insurance, or for Borrowers’ benefit pursuant
to the terms of this Mortgage and the faithful performance by Mortgagor of all
terms and conditions contained herein;

 

(c)                                  To secure the payment of all court costs,
expenses and costs of whatever kind incident to the collection of any
indebtedness secured hereby and the enforcement or protection

 

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of the lien of this conveyance and the enforcement of one or more of the Loan
Documents, including reasonable attorneys’ fees, whether at trial, on appeal or
review or other proceedings, or in any bankruptcy case or proceedings and
including issues particular to bankruptcy; and

 

(d)                                 To secure all fees (including exit fees),
premiums (including prepayment premiums), charges, expenses and other amounts
from time to time due to Lender pursuant to the Loan Documents and all other
Loan Obligations.

 

Should the Loan Obligations be paid according to the tenor and effect thereof
when the same shall become due and payable, then this Mortgage shall be canceled
and released.

 

AND the Mortgagor covenants with the Lender and represents and warrants unto
Lender as follows:

 

ARTICLE I

DEFINITIONS

 

The following terms will have the following meanings:

 

“Accounts” means any rights of Mortgagor arising from the operation of the
Facility to payment for goods sold or leased or for services rendered, not
evidenced by an Instrument, including, without limitation, (a) all accounts
arising from the operation of the Facility, (b) all moneys and accounts held by
Lender pursuant to any Debt Service Coverage Requirements of the Loan Agreement,
and (c) all rights to payment from Medicare or Medicaid programs, or similar
state or federal programs, boards, bureaus or agencies and rights to payment
from patients, residents, private insurers, and others arising from the
operation of the Facility, including rights to payment pursuant to Reimbursement
Contracts.  Accounts shall include the proceeds thereof (whether cash or
noncash, moveable or immoveable, tangible or intangible) received from the sale,
exchange, transfer, collection or other disposition or substitution thereof.

 

“Applicable Environmental Law” shall mean any applicable laws, rules or
regulations pertaining to health or the environment or petroleum products or
radon radiation, or oil or hazardous substances, including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended (“CERCLA”), as codified at 42 U.S.C. § 9601 et seq., as
amended, the Resource Conservation and Recovery Act of 1976, as amended (“RCRA”)
and the Federal Emergency Planning and Community Right-To-Know Act of 1986.  The
terms “hazardous substance” and “release” shall have the meanings specified in
CERCLA, and the terms “solid waste,” disposal,” “dispose,” and “disposed” shall
have the meanings specified in RCRA, except that if such acts are amended to
broaden the meanings thereof, the broader meaning shall apply herein
prospectively from and after the date of such amendments); notwithstanding the
foregoing, provided, to the extent that the laws of the State where the Property
is located establish a meaning for “hazardous substance” or “release” which is
broader than that specified in CERCLA, as CERCLA may be amended from time to
time, or a meaning for “solid waste,” “disposal,” and “disposed” which is
broader than specified in RCRA,

 

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as RCRA may be amended from time to time, such broader meanings under said state
law shall apply in all matters relating to the laws of such State.

 

“Appurtenant Rights” means all easements, rights-of-way, strips and gores of
land, vaults, streets, ways, alleys, passages, sewer rights, waters, water
courses, water rights and powers, minerals, flowers, shrubs, crops, trees,
timber and other emblements now or hereafter appurtenant to, or used or useful
in connection with, or located on, under or above the Property, or any part or
parcel thereof, and all ground leases, estates, rights, titles, interests,
privileges, liberties, tenements, hereditaments and appurtenances, reversions,
and remainders whatsoever, in any way belonging, relating or appertaining to the
Property or any other Collateral, or any part thereof.

 

“Bankruptcy Default” means an Event of Default pursuant to Section 6.1(e) or
6.1(f) of the Loan Agreement.

 

“Equipment” means all of Mortgagor’s fixtures and equipment located on, attached
to or used or useful in connection with the Property or Facility, including, but
not limited to, all beds, linen, televisions, carpeting, telephones, cash
registers, computers, lamps, glassware, rehabilitation equipment, and restaurant
and kitchen equipment; provided, however, that with respect to any items which
are leased and not owned, the Equipment shall include the leasehold interest
only together with any options to purchase any of said items and any additional
or greater rights with respect to such items which are hereafter acquired.

 

“Facility” means the skilled nursing facility now or hereafter located at the
Property.

 

“General Intangibles” means all of Mortgagor’s general intangibles and other
intangible personal property arising out of or connected with the Property or
the Improvements (other than Accounts, Rents, Instruments, Inventory, Money,
Permits and Reimbursement Contracts), including, without limitation, things in
action, contract rights and other rights to payment of money.

 

“Improvements” means all buildings, structures and improvements of every nature
whatsoever now or hereafter situated on the Property, including, but not limited
to, all gas and electric fixtures, radiators, heaters, engines and machinery,
boilers, ranges, elevators and motors, plumbing and heating fixtures, air
conditioning equipment, carpeting and other floor coverings, water heaters,
awnings and storm sashes, cleaning apparatus, signs, landscaping and parking
areas, which are or shall be attached to the Property or said buildings,
structures or improvements.

 

“Instruments” means all of Mortgagor’s instruments, chattel paper, documents or
other writings obtained from or in connection with the operation of the Property
or the construction and operation of the Facility (including, without
limitation, all ledger sheets, computer records and printouts, data bases,
programs, books of account, trademarks or trade names, utility contracts,
maintenance and service contracts, and files relating thereto).

 

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“Inventory” means all of Mortgagor’s inventory from time to time used at the
Facility, including, but not limited to, food, beverages, other comestibles,
soap, paper supplies, medical supplies, drugs and all other such goods, wares
and merchandise held by Mortgagor for sale to or for consumption or use by
guests or residents of the Property or the Facility, including all such goods
that are returned to or repossessed by Mortgagor.

 

“Loan Agreement” means the certain Loan Agreement dated the same date herewith
between the Borrowers and Lender.

 

“Loan Documents” means, collectively, the Loan Agreement, the Note, this
Mortgage and all other Loan Documents, each as defined in the Loan Agreement,
together with any and all other documents executed by Mortgagor or others,
evidencing, securing, or otherwise relating to the Loan.

 

“Loan Obligations” means the aggregate of all principal and interest owing from
time to time under the Note, and all expenses, fees, premiums, charges, and
other amounts from time to time owing under the Note, the Loan Agreement, this
Mortgage or any other Loan Documents and all covenants, agreements and other
obligations from time to time owing to, or for the benefit of, Lender pursuant
to the Loan Documents.

 

“Money” means all of Mortgagor’s monies, cash, rights to deposit or savings
accounts or other items of legal tender obtained from or for use in connection
with the operation of the Facility.

 

“Note” has the meaning heretofore set forth in this Mortgage.

 

“Permits” means all licenses, permits and certificates, obtained by Mortgagor
from any governmental or quasi-governmental authority, or from any private
person or entity, and used or useful in connection with the ownership,
operation, use or occupancy of the Property or the Facility, including, without
limitation, business licenses, state health department licenses, food service
licenses, licenses to conduct business, certificates of need and all such other
permits, licenses and rights.

 

“Permitted Encumbrances” means all matters set forth in Exhibit B attached
hereto and made a part hereof, provided that to the extent any of the same are
listed as subordinate, such matters are permitted only so long as they are in
fact subordinate to this Mortgage.

 

“Proceeds” means all awards, payments, earnings, royalties, issues, profits,
liquidated claims and proceeds (including proceeds of insurance and condemnation
or any conveyance in lieu thereof), from the sale, conversion (whether voluntary
or involuntary), exchange, transfer, collection, loss, damage, condemnation,
disposition, substitution or replacement of any of the Collateral.

 

“Reimbursement Contracts” shall mean all of Mortgagor’s contracts and rights
pursuant to reimbursement or third party payor programs and contracts for the
Facility which are

 

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now or hereafter in effect with respect to residents qualifying for coverage
under the same, including, but not limited to, Medicare, Medicaid, any successor
program or other similar reimbursement program (whether operated by a
governmental or quasi-governmental agency or by a private Person) and private
insurance agreements.

 

“Rents” means all rent and other payments of whatever nature from time to time
payable to Mortgagor pursuant to any lease of the Property or the Facility or
any part thereof, including, but not limited to, leases of individual units to
residents and leases of retail space or other space at the Property for
businesses such as newsstands, barbershops, beauty shops, physicians’ offices,
pharmacies and specialty shops.

 

Singular terms shall include the plural forms and vice versa, as applicable of
the terms defined.

 

All references to other documents or instruments shall be deemed to refer to
such documents or instruments as they may hereafter be extended, renewed,
modified or amended, and all replacements and substitutions therefor.

 

All other capitalized terms not otherwise defined in this Mortgage shall have
the meanings set forth in the Loan Agreement.

 

ARTICLE II

MORTGAGOR’S COVENANTS, AGREEMENTS, AND REPRESENTATIONS

 

Section 2.1                                    Performance of Loan Documents. 
The Mortgagor will perform, observe and comply with the provisions hereof and of
each of the other Loan Documents when due or within any applicable cure period
and duly and punctually will pay to the Lender when due or within any applicable
cure period the sum of money expressed in the Note with interest thereon and all
other sums required to be paid by the Mortgagor pursuant to the provisions of
this Mortgage, all without any deduction or credit for taxes or other similar
charges paid by the Mortgagor.

 

Section 2.2                                    Warranty of Title.  The Mortgagor
is lawfully seized of an estate in fee simple in the Property, Improvements, and
Appurtenant Rights hereby mortgaged and has good and absolute title to all other
Collateral in which a security interest is herein granted, and Mortgagor has
good right, full power and lawful authority to sell, convey, mortgage, and grant
a security interest in the same in the manner and form aforesaid subject to any
limitations which may be imposed under applicable law on the granting of a
security interest in or assignment of certain of the Collateral, such as
Medicare and Medicaid Accounts and Permits; that, except for Permitted
Encumbrances and the Liens permitted by the Loan Agreement, the same are free
and clear of all liens, charges, and encumbrances whatsoever, including, as to
the Equipment (subject to the terms and conditions of the leases existing as of
the Closing Date for certain copy machines), conditional sales contracts,
chattel mortgages, security agreements, financing statements, and anything of a
similar nature, and that Mortgagor shall and will warrant and

 

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forever defend the title thereto unto the Lender and Lender, their successors
and assigns, against the lawful claims of all persons whomsoever.

 

Section 2.3                                    Taxes, Liens and Other Charges.

 

(a)                                                                                
Subject to Mortgagor’s right to duly contest the same in accordance with this
Section 2.3(a), Mortgagor shall pay, on or before the due date thereof, all
taxes, levies, license fees, permit fees and all other charges (in each case
whether general or special, ordinary or extraordinary, or foreseen or
unforeseen) of every character whatsoever (including all penalties and interest
thereon) now or hereafter levied, assessed, confirmed or imposed on, or in
respect of, or which may be a lien upon the Collateral, or any part thereof, or
any estate, right or interest therein, or upon the rents, issues, income or
profits thereof, and shall submit to Lender such evidence of the due and
punctual payment of all such taxes, assessments and other fees and charges as
may be required by law.  Mortgagor shall have the right before they become past
due to contest or object to the amount or validity of any such tax, assessment,
fee or charge by appropriate legal proceedings, but this shall not be deemed or
construed in any way as relieving, modifying or extending Mortgagor’s covenant
to pay any such tax, assessment, fee or charge at the time and in the manner
provided herein, unless Mortgagor has given prior written notice to Lender of
Mortgagor’s intent to so contest or object, and unless (i) Mortgagor shall
demonstrate to Lender’s reasonable satisfaction that the legal proceedings shall
conclusively operate to prevent the sale of the Collateral, or any part thereof,
to satisfy such tax, assessment, fee or charge prior to final determination of
such proceedings; and (ii) if required by Lender, Mortgagor shall furnish a good
and sufficient bond or surety as requested by and satisfactory to Lender in an
amount sufficient to fully pay the contested amount, with penalties, interest
and other charges if Mortgagor should be unsuccessful in such contest; and
(iii) Mortgagor shall diligently pursue such contest. Mortgagor’s right to
reimbursement from any amounts paid to Lender in escrow for taxes shall be
subject to the terms and conditions of the Tax and Insurance Escrow and Security
Agreement with Lender of even date herewith, if such agreement is in effect.

 

(b)                                                                                
Mortgagor shall pay, on or before the due date thereof, all taxes, assessments,
charges, expenses, costs and fees which may now or hereafter be levied upon, or
assessed or charged against, or incurred in connection with, the Note, this
Mortgage or any other Loan Documents; provided, however, nothing herein shall be
construed as requiring Mortgagor to pay any of Lender’s income or gross receipts
taxes.

 

(c)                                                                                 
Mortgagor shall pay, on or before the due date thereof, all premiums on policies
of insurance covering, affecting or relating to the Collateral, as required by
the Loan Agreement; all ground lease rents and other payments; and all utility
charges with respect to the Collateral, or which may become a charge or lien
against the Collateral, for gas, electricity, water and sewer services and the
like furnished to the Collateral, and all other public or private assessments or
charges of a similar nature affecting the Collateral or any portion thereof,
whether or not the nonpayment of same may result in a lien thereon.  Mortgagor
shall

 

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submit to Lender such evidence of the due and punctual payment of all such
premiums, rentals and other sums as Lender may reasonably require.

 

(d)                                                                                
Mortgagor shall not suffer any construction, mechanic’s, materialman’s,
laborer’s, statutory or other lien (except as expressly permitted by the Loan
Agreement) to be created or remain outstanding against the Collateral; provided,
however, that Mortgagor may contest any such lien in good faith by appropriate
legal proceedings provided the lien is bonded off and removed as an encumbrance
upon the Collateral.  Lender has not consented and will not consent to the
performance of any work or the furnishing of any materials which might be deemed
to create a lien or liens superior to the lien hereof.

 

(e)                                                                                 
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 security agreements or debts secured thereby or the manner of
collecting such taxes so as to adversely affect Lender, Mortgagor will pay any
such tax on or before the due date thereof.  If Mortgagor fails to make such
prompt payment or if, in the opinion of Lender, any such state, federal,
municipal, or other governmental law, order, rule or regulation prohibits
Mortgagor from making such payment or would penalize Lender if Mortgagor makes
such payment or if, in the opinion of Lender, the making of such payment might
result in the imposition of interest beyond the maximum amount permitted by
applicable law, then the entire balance of the Loan Obligations shall, at the
option of Lender, become immediately due and payable.

 

(f)                                                                                  
The Mortgagor hereby indemnifies, agrees to reimburse Lender and holds Lender
harmless for, from and against any sales or use tax that may be imposed on the
Lender by virtue of Lender’s Loan to Borrowers; provided, however, nothing
herein shall be construed as requiring Mortgagor to pay any of Lender’s income
or gross receipts taxes.

 

Section 2.4                                    Monthly Deposits.  Mortgagor
shall, as required by the Loan Documents, deposit with Lender, on the due date
of each installment under the Note, an amount equal to one-twelfth (1/12) of the
yearly taxes and assessments and insurance premiums with respect to the
Collateral as estimated by the Lender to be sufficient to pay such charges all
in accordance with the Tax and Insurance Escrow and Security Agreement with
Lender of even date herewith; said deposits to be held and to be used by Lender
to pay current taxes and assessments, insurance premiums and other charges on
the Collateral as the same accrue and are payable.  Payment from said sums for
said purposes shall be made by Lender at its discretion and may be made even
though such payments will benefit subsequent owners of the Collateral.  Said
deposits shall not be, nor be deemed to be, trust funds, but may be, to the
extent permitted by applicable law, commingled with the general funds of Lender
without payment of interest.  If said deposits are insufficient to pay the taxes
and assessments, insurance premiums and other charges in full as the same become
payable, Mortgagor will deposit with Lender such additional sum or sums as may
be required in order for Lender to pay such taxes and assessments, insurance
premiums and other charges in full.  Upon any Event of Default, Lender may, at
its option, apply any money in the

 

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fund relating from said deposits to the payment of the Loan Obligations in such
manner as it may elect.

 

Section 2.5                                    Condemnation.

 

(a)                                                                                
If all or any part of the Collateral 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, other than a taking of a part of
the Collateral which does not in Lender’s reasonable opinion adversely affect
access to or use of the Collateral or operation of the Facility, the entire Loan
Obligations secured hereby shall at the option of the Lender become due and
payable in accordance with Article IV of the Loan Agreement.

 

(b)                                                                                
Mortgagor, immediately upon obtaining knowledge of any institution, or any
proposed, contemplated or threatened institution of any action or proceeding for
the taking through condemnation of the Collateral or any part thereof, will
notify Lender, and Lender is hereby authorized, at its option, to commence,
appear in and prosecute, through counsel selected by Lender, in its own or in
Mortgagor’s name, any action or proceeding relating to any condemnation. 
Mortgagor may compromise or settle any claim for compensation so long as no
Event of Default exists and any compromise or settlement results in a payment to
Lender not less than the amount that would permit Mortgagor to obtain a release
of the Property and Improvements pursuant to the Loan Agreement.  If an Event of
Default exists, Lender shall have the sole and exclusive right to compromise or
settle any claim for compensation.  All such compensation, awards, damages,
claims, rights of action and proceeds and the right thereto are hereby assigned
by Mortgagor to Lender, and Lender is authorized, at its option, to collect and
receive all such compensation, awards or damages and to give proper receipts and
acquittances therefor without any obligation to question the amount of any such
compensation, awards or damages.  After deducting from said condemnation
proceeds all of its expenses incurred in the collection and administration of
such sums, including reasonable attorney’s fees, Lender may release any moneys
so received by it for the repair or restoration of the Collateral taken, or may
apply the same in such manner as the Lender shall reasonably determine to reduce
the Loan Obligations in such order as Lender may elect, whether or not then due,
and without affecting this Mortgage as security for any remaining Loan
Obligations, and any balance of such moneys shall be paid to the Mortgagor.

 

Section 2.6                                    Care of Collateral.

 

(a)                                                                                
Mortgagor will keep the Improvements in good condition and repair ordinary wear
and tear excepted, will not commit or suffer any waste and will not do or suffer
to be done anything which would reasonably be expected to increase the risk of
fire or other hazard to the Collateral or any other part thereof or which would
or could result in the cancellation of any insurance policy carried with respect
to the Collateral.

 

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(b)                                                                                
Except in connection with the repair or replacement of the Facility after damage
thereto or destruction or condemnation thereof, Mortgagor will not remove,
demolish or alter the structural character of any Improvements in any material
respect without the written consent of Lender, which such consent shall not be
unreasonably withheld, nor will Mortgagor make or permit use of the Collateral
for any purpose other than that for which the same are now used.

 

(c)                                                                                 
Mortgagor will maintain the insurance relating to Mortgagor or the Collateral as
required by the Loan Agreement.  If the Collateral or any part thereof is
damaged by fire or any other cause, Mortgagor will give immediate written notice
thereof to Lender.

 

(d)                                                                                
Lender or its representative is hereby authorized to enter upon and inspect the
Collateral during normal business hours upon reasonable advance notice to
Mortgagor.

 

(e)                                                                                 
Mortgagor will promptly comply with all present and future laws, ordinances,
rules and regulations of any governmental authority affecting the Collateral or
any part thereof; provided, however, Mortgagor shall have the right to contest
the application of such laws, ordinances, rules and regulations to Mortgagor
provided such contest does not impair the validity of Lender’s lien on the
Collateral or present a risk of forfeiture of the Collateral.

 

(f)                                                                                  
If all or any part of the Collateral shall be damaged by fire or other casualty,
Mortgagor will promptly restore the Collateral to the equivalent of its original
condition in accordance with Section 4.5 of the Loan Agreement (or, if Mortgagor
chooses not to rebuild the Facility or is unable to satisfy the conditions of
Section 4.5 of the Loan Agreement, Mortgagor shall pay to Lender in full an
amount sufficient to obtain a release of the Property and Improvements pursuant
to the Loan Agreement); and if a part of the Collateral shall be taken or
damaged through condemnation, Mortgagor will promptly restore, repair or alter
the remaining portions of the Collateral in a manner satisfactory to Lender.

 

Section 2.7                                    Further Assurances;
After-Acquired Property.  At any time, and from time to time, upon request by
Lender, Mortgagor will make, execute and deliver or cause to be made, executed
and delivered to Lender and, where appropriate, cause to be recorded and/or
filed and from time to time thereafter to be rerecorded and/or refiled at such
time and in such offices and places as shall be requested by Lender such
certificates, documents, statements, amendments and other instruments and/or
filings (i) to perfect and protect the security interest created or purported to
be created hereby; (ii) to enable the Lender to exercise and enforce its rights
and remedies hereunder in respect of the Collateral; or (iii) to effect
otherwise the purposes of this Mortgage, including, without limitation:
(A) executing and filing such financing or continuation statements, or
amendments thereto, as may be necessary or desirable or that the Lender may
request in order to perfect and preserve the security interest created by this
Mortgage as a first and prior security interest upon and security title in and
to all of the Collateral, whether now owned or hereafter acquired by Mortgagor;
provided, however, Mortgagor authorizes Lender to file any financing statements
describing the Collateral in such

 

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jurisdictions and filing offices as Lender deems appropriate without the
necessity of Mortgagor’s signature; (B) if certificates of title are now or
hereafter issued or outstanding with respect to any of the Collateral, by
immediately causing the interest of Lender to be properly noted thereon at
Mortgagor’s expense; and (C) furnishing to the Lender from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Lender may
reasonably request, all in reasonable detail.  Upon any failure by Mortgagor so
to do, Lender may make, execute, record, file, re-record and/or refile any and
all such financing statements, continuation statements, or amendments thereto,
certificates, and documents for and in the name of Mortgagor, and Mortgagor
hereby irrevocably appoints Lender the agent and attorney-in-fact of Mortgagor
so to do.  The lien of this Mortgage will automatically attach, without further
act, to all after-acquired property attached to and/or used in the operation of
the Collateral or any part thereof.

 

Section 2.8                                    Indemnity; Expenses.  Mortgagor
will pay or reimburse Lender for all reasonable attorney’s fees, costs and
expenses incurred by Lender in any suit, action, trial, appeal, review,
bankruptcy (including issues particular to bankruptcy) or other legal proceeding
or dispute of any kind in which Lender is made a party or appears as party
plaintiff or defendant, affecting the Loan Obligations, this Mortgage or the
interest created herein, or the Collateral, or any appeal thereof, including,
but not limited to, any foreclosure action, any condemnation action involving
the Collateral or any action to protect the security hereof, any bankruptcy or
other insolvency proceeding commenced by or against the Mortgagor, any lessee of
the Collateral (or any part thereof), or any guarantor of any of the Loan
Obligations, and including, without limitation, reasonable costs of title
searches, appraisals, environmental reports and expert witness fees, and any
such amounts paid by Lender shall be added to the Loan Obligations and shall be
secured by this Mortgage.  Mortgagor will indemnify, reimburse and hold Lender
harmless for, from and against all claims, actions, losses, damages, costs,
expenses, including reasonable attorney’s fees and court costs, and other
liabilities of every description related to or resulting from any action by a
third party against Lender relating to this Mortgage or any interest created
herein, or the Collateral, including, but not limited to, any action or
proceeding claiming loss, damage or injury to person or property, or any action
or proceeding claiming a violation of any national, state or local law, rule or
regulation, including those Applicable Environmental Laws, including such
matters to the extent caused in whole or part by Lender’s or its agent’s conduct
or negligence; provided Mortgagor shall not be required to indemnify Lender for
matters directly and solely caused by Lender’s willful misconduct or gross
negligence.

 

Section 2.9                                    Assignment of Rents.  All Rents
are hereby assigned to Lender to be applied against the Loan Obligations secured
by this Mortgage in such order as Lender may elect; provided, however, that a
revocable license is hereby given to Mortgagor (subject to the requirement that
Lender approve any lease other than leases with residents of the Improvements),
unless and until the breach of any covenant or condition of this Mortgage which
is not cured within any applicable cure period or the occurrence of any Event of
Default, to collect and use such Rents as they become due and payable, but not
in advance thereof. This Mortgage constitutes an absolute and present assignment
of the Rents, subject, however, to the conditional and revocable license given
to Mortgagor to collect and use the same as provided hereinabove.

 

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The foregoing assignment shall be fully operative without any further action on
the part of either party, and specifically, Lender shall be entitled, at its
option upon the breach of any covenant or condition of this Mortgage which is
not cured within any applicable cure period or the occurrence of any Event of
Default hereunder, to collect all such Rents whether or not Lender takes
possession of the Property.  Exercise by Lender of its rights under this
Section, and the application of any such Rents to such Loan Obligations shall
not cure or waive any Event of Default or notice of Event of Default hereunder
or invalidate any act done pursuant hereto or any such notice, but shall be
cumulative of all other rights and remedies.  Mortgagor shall not, without the
prior written consent of Lender, further assign the Rents that are assigned to
Lender herein, and any such assignment without the express written consent of
Lender shall be void as against Lender (except that assignment of Accounts shall
be permitted to the extent provided in the Loan Agreement).

 

Section 2.10                             Estoppel Affidavits.  Mortgagor, upon
ten (10) days prior written notice from Lender, shall furnish Lender a written
statement, duly acknowledged, based upon its records, setting forth the unpaid
principal of, and interest on, the Loan Obligations, stating whether or not to
its knowledge any offsets or defenses exist against the Loan Obligations, or any
portion thereof, and, if such offsets or defenses exist, stating in detail the
specific facts relating to each such offset or defense.

 

Section 2.11                             Leases.  Mortgagor shall not, without
the prior written consent and approval of Lender, enter into any lease or permit
any tenancy (except for the Lease and those other leases permitted by the terms
of the Loan Agreement, including, but not limited to, tenancy or residency
agreements with patients or residents of individual units at the Facility), or
enter into or permit any management agreement, of or affecting the Collateral,
except as expressly permitted in the Loan Agreement.

 

Section 2.12                             Limit of Validity.  If from any
circumstances whatsoever, fulfillment of any provision of this Mortgage, the
Note or any other Loan Document, at the time performance of such provision shall
be due, shall involve transcending the limit of validity presently prescribed by
any applicable usury statute or any other applicable law, with regard to
obligations of like character and amount, then, ipso facto, the obligation to be
fulfilled shall be reduced to the limit of such validity, so that in no event
shall any exaction be possible under this Mortgage, the Note, or any other Loan
Document that is in excess of the current limit of such validity, but such
obligation shall be fulfilled to the limit of such validity.  The provisions of
this Section shall control every other provision of this Mortgage, the Note and
any other Loan Document.

 

Section 2.13                             Compliance with Other Deeds of Trust. 
To the extent there at any time exists any other deed of trust, mortgage or
security agreement encumbering all or any part of the Collateral (“Other
Mortgage Debt”) (a) the same is expressly permitted so long as, but only if,  it
is shown as a “Permitted Encumbrance” on Exhibit B hereto or is otherwise
expressly permitted by the Loan Agreement, and (b) Mortgagor will perform,
observe and comply with the same and with all related documents and instruments
when due or within any applicable cure period and will maintain the same free
from default and not obtain additional advances or increase the

 

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principal amount secured thereby without Lender’s prior written consent.  If a
default thereunder should occur or an Event of Default exists, Lender shall have
the right, but not the obligation, to cure the same or to advance such
additional amounts as are necessary to protect the Lender’s interest in the
Collateral, including, without limitation, payment in full of all debts and
other obligations if and to the extent Lender deems necessary to prevent
foreclosure or sale of all or any part of the Collateral or purchase such Other
Mortgage Debt.  All amounts so advanced by Lender shall constitute Loan
Obligations and shall bear interest at the Default Rate from the date advanced
until repaid in full, such advance and interest shall be secured by this
Mortgage, and such advance and interest shall be immediately due and payable.

 

ARTICLE III

EVENTS OF DEFAULT; REMEDIES

 

Section 3.1                                    Events of Default.  The terms
“Event of Default” or “Events of Default,” wherever used in this Mortgage, shall
mean any one or more of the following events:

 

(a)                                                                                
The occurrence of any Event of Default (as therein defined) under any other Loan
Documents; or

 

(b)                                                                                
The sale, transfer, lease, assignment, or other disposition, voluntarily or
involuntarily, of the Collateral, or any part thereof or any interest therein,
including a sale or transfer in lieu of condemnation, or, except for Permitted
Encumbrances, any further encumbrance of the Collateral, unless expressly
permitted or required by the Loan Agreement or unless the prior written consent
of Lender is obtained (which consent may be withheld, conditioned or granted
with or without cause in Lender’s sole and unfettered discretion) or unless such
disposition is of any of the Equipment or Inventory which has become worn out or
obsolete provided the same is replaced with property of similar value and of a
similar quality if and to the extent such worn out or obsolete Equipment is
required for the continued lawful operation of the Facility.

 

Section 3.2                                    Acceleration of Maturity.  If an
Event of Default shall exist, then the entire Loan Obligations shall, at the
option of Lender, immediately become due and payable without notice or demand,
time being of the essence of this Mortgage, and no omission on the part of
Lender to exercise such option when entitled to do so shall be construed as a
waiver of such right; provided, however, if a Bankruptcy Default occurs, then
all such amounts shall become immediately due and payable automatically without
any election by the Lender.

 

Section 3.3                                    Right to Enter and Take
Possession.

 

(a)                                                                                
If an Event of Default shall have occurred and be continuing, Mortgagor, upon
demand of Lender, shall forthwith surrender to Lender the actual possession of
the Collateral and, if and to the extent permitted by law, Lender itself, or by
such officers or agents as it may appoint, may enter and take possession of all
or any part of the Collateral without the appointment of a receiver or an
application therefor, and may exclude Mortgagor and

 

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its agents and employees wholly therefrom, and take possession of the books,
papers and accounts of Mortgagor to the extent permitted by applicable law.

 

(b)                                                                                
If Mortgagor shall for any reason fail to surrender or deliver the Collateral or
any part thereof after such demand by Lender, Lender may obtain a judgment or
decree conferring upon Lender the right to immediate possession or requiring
Mortgagor to deliver immediate possession of the Collateral to Lender. 
Mortgagor will pay to Lender, upon demand, all reasonable expenses of obtaining
such judgment or decree, including compensation to Lender, its attorneys and
agents, and all such expenses and compensation shall, until paid, become part of
the Loan Obligations and shall be secured by this Mortgage.

 

(c)                                                                                 
Upon every such entering upon or taking of possession, Lender may hold, store,
use, operate, manage and control the Collateral and conduct the business
thereof, and, from time to time (i) make all necessary and proper 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 Collateral insured; (iii) manage and
operate the Collateral and exercise all of the rights and powers of Mortgagor to
the same extent as Mortgagor could in its own name or otherwise act with respect
to the same; and (iv) enter into any and all agreements with respect to the
exercise by others of any of the powers herein granted to Lender, all as Lender
from time to time may determine to be in its best interest. Lender may collect
and receive all the rents, issues, profits and revenues from the Collateral,
including those past due as well as those accruing thereafter, and, after
deducting (A) all expenses of taking, holding, managing and operating the
Collateral (including compensation for the services of all persons employed for
such purposes); (B) the cost of all such maintenance, repairs, renewals,
replacements, additions, betterments, improvements, purchases and acquisitions;
(C) the cost of such insurance; (D) such taxes, assessments and other similar
charges as Lender may at its option pay; (E) other proper charges upon the
Collateral or any part thereof; and (F) the compensation, expenses and
disbursements of the attorneys and agents of Lender, Lender shall apply the
remainder of the monies and proceeds so received by Lender, first, to the
payment of accrued interest; second, to the payment of any deposits for taxes
and insurance required in this Mortgage and to other sums required to be paid
hereunder; and third, to the payment of overdue installments of principal and
any other unpaid Loan Obligations then due.  Anything in this Section to the
contrary notwithstanding, Lender shall not be obligated to discharge or perform
the duties of a landlord to any tenant except to the extent Lender has agreed to
assume such duties under the terms of any applicable subordination,
non-disturbance and attornment agreement or, absent gross negligence or willful
misconduct, incur any liability as a result of any exercise by Lender of its
rights under this Mortgage, and, absent gross negligence or willful misconduct,
Lender shall be liable to account only for the rents, incomes, issues and
profits actually received by Lender.

 

(d)                                                                                
If an Event of Default shall exist, Lender may require that Mortgagor cause all
of its Accounts and Rents to be paid to one or more deposit accounts with
Lender, or at Lender’s option, with another financial institution approved by
Lender.  To the extent allowed by applicable law, Mortgagor assigns and grants
to Lender a security interest in,

 

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pledge of and right of setoff against all moneys from time to time held in such
deposit accounts.  Mortgagor agrees to promptly notify all of its account
debtors and tenants, including all third-party payors pursuant to any
Reimbursement Contracts then in effect, to make payments to one or more such
deposit accounts upon Lender’s request and as designated by Lender, and
Mortgagor agrees to provide any necessary endorsements to checks, drafts and
other forms of payment so that such payments will be properly deposited in such
accounts.  Lender may require that the deposit accounts be established so as to
comply with any applicable Reimbursement Contracts and other legal requirements,
if any, applicable to payments of any accounts receivable.  Lender may cause
moneys to be withdrawn from such deposit accounts and applied to the Loan
Obligations in such order as Lender may elect, whether or not then due subject
to applicable law and the applicable Reimbursement Contract.  Mortgagor appoints
Lender as its attorney-in-fact, with full power of substitution, which
appointment is coupled with an interest and is irrevocable, to provide any
notice, endorse any check, draft or other payment for deposit, or take any other
action which Mortgagor agrees to take in this Section.  Lender shall not be
liable for failure to collect any Accounts or Rents, or to enforce the contracts
or leases pursuant to which such Accounts or Rents are payable, or for any
action or omission on the part of Lender, its officers, agents and employees in
collecting or enforcing such Accounts, Rents, contracts or leases.

 

Section 3.4                                    Performance by Lender.  Upon the
occurrence and during the continuance of an Event of Default in the payment,
performance or observance of any term, covenant or condition of this Mortgage,
Lender may, at its option, pay, perform or observe the same, and all reasonable
payments made or reasonable costs or expenses incurred by Lender in connection
therewith, with interest thereon at the Default Rate or at the maximum rate from
time to time allowed by applicable law, whichever is less, shall be secured
hereby and shall be, without demand, immediately repaid by Mortgagor to Lender. 
Lender shall be the sole judge of the necessity for any such actions and of the
amounts to be paid.  Lender is hereby empowered and authorized to enter and to
authorize others to enter upon the Collateral or any part thereof for the
purpose of performing or observing any such defaulted term, covenant or
condition without thereby becoming liable to Mortgagor or any person in
possession holding under Mortgagor absent gross negligence or willful
misconduct.  Notwithstanding anything to the contrary herein, Lender shall have
no obligation, explicit or implied, to pay, perform, or observe any such term,
covenant, or condition.

 

Section 3.5                                    Receiver.  If any Event of
Default shall exist, Lender, upon application to a court of competent
jurisdiction, to the extent allowed by applicable law, shall be entitled as a
matter of strict right, without regard to the sufficiency or value of any
security for the Loan Obligations or the solvency of any party bound for its
payment, to the appointment of a receiver to take possession of and to operate
the Collateral and to collect and apply the rents, issues, profits and revenues
thereof.  The receiver shall have all of the rights and powers permitted under
the laws of the state wherein the Property is situated.  Mortgagor will pay unto
Lender upon demand all reasonable expenses, including receiver’s fees,
attorney’s fees, costs and agent’s compensation, incurred pursuant to the
provisions of this Section, and upon any Mortgagor’s

 

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failure to pay the same, any such amounts shall be added to the Loan Obligations
and shall be secured by this Mortgage.

 

Section 3.6                                    Enforcement.

 

(a)                                                                                
If an Event of Default exists, Lender may foreclose this Mortgage by the
exercise of the power of sale or by judicial foreclosure.  In lieu of or in
addition to foreclosure, Lender may obtain any other legal or equitable remedy. 
Mortgagor confers on and grants to Lender the power to sell the Property and
Improvements in the manner provided in the “Oklahoma Power of Sale Mortgage
Foreclosure Act.”  The Lender shall have the following options in foreclosing
upon the Collateral:

 

(i)                                                                                    
In the event of any sale under this Mortgage by virtue of the exercise of the
powers herein granted, or pursuant to any order in any judicial proceedings or
otherwise, the Collateral may be sold as an entirety or in separate parcels and
in such manner or order as Lender in its sole discretion may elect, and if
Lender so elects, Lender or Lender may sell the personal property covered by
this Mortgage at one or more separate sales in any manner permitted by the
applicable Uniform Commercial Code, and one or more exercises of the powers
herein granted shall not extinguish or exhaust such powers, until the entire
Collateral is sold or the Loan Obligations are paid in full.  If the Loan
Obligations are now or hereafter further secured by any chattel mortgages,
pledges, contracts of guaranty, assignments of leases or other security
instruments, Lender at its option may exhaust the remedies granted under any of
said security instruments or this Mortgage in such order as Lender may determine
consistent with applicable law.  Said sale may be adjourned by the Lender, or
his agent or successors, and reset at a later date consistent with applicable
law without additional publication (except as may be required by applicable
law); provided that an announcement to that effect be made at the scheduled
place of sale at the time and on the date the sale is originally set.

 

(ii)                                                                                 
To the extent permitted by applicable law, sale of a part of the Collateral
shall not exhaust the power of sale until the Loan Obligations are paid and
performed in full.  It shall not be necessary to have present or to exhibit at
any such sale any of the Collateral.

 

It is intended by each of the foregoing provisions of this subsection that
Lender may sell not only the Property but also the other Collateral, or any part
thereof, along with the Property, or any part thereof, all as a unit and as a
part of the single sale, or may sell any part of the Collateral separately from
the remainder of the Collateral.

 

(b)                                                                                
If an Event of Default shall exist, Lender may, in addition to and not in
abrogation of the rights covered under subsection (a) of this Section, either
with or without entry or taking possession as herein provided or otherwise,
proceed by a suit or suits in law or in

 

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equity or by any other appropriate proceeding or remedy (i) to enforce payment
of the Loan Obligations or the performance of any term, covenant, condition or
agreement of this Mortgage or any other right, (ii) to foreclose this Mortgage
and to sell, as an entirety or in separate lots or parcels, the Collateral, as
provided by applicable law, and (iii) to pursue any other remedy available to
it, all as Lender in its sole discretion shall elect.

 

(c)                                                                                 
After notification, if any, as hereafter provided in this subsection, to the
extent permitted by applicable law, Lender may sell, lease, or otherwise dispose
of (herein, a “disposition”), at the office of Lender, or on the Property, or
elsewhere, as chosen by Lender, all or any part of the Inventory and Equipment,
in their then condition or following any commercially reasonable preparation or
processing, and each disposition may be as a unit or in parcels, by public or
private proceedings, and by way of one or more contracts, and, at any
disposition, it shall not be necessary to have present or exhibit the Inventory
and Equipment, or any part thereof being sold.  The disposition of any part of
the Inventory and Equipment shall not exhaust Lender’s power of disposition, but
dispositions may be made from time to time until the Loan Obligations are paid
and performed in full.  Reasonable notification of the time and place of any
public disposition pursuant to this subsection, or reasonable notification of
the time after which any private disposition is to be made pursuant to this
subsection, shall be sent to Mortgagor and to any other person entitled to
receive notice under the Uniform Commercial Code (the “Code”) of the State of
Oklahoma or other applicable jurisdiction.  It is agreed that notice sent or
given not less than ten calendar days prior to the taking of the action to which
the notice relates is reasonable notification for the purposes of this
subsection.

 

(d)                                                                                
In the event a foreclosure hereunder should be commenced by Lender in accordance
with the powers of sale granted in this Mortgage, Lender may at any time before
the sale, orally or in writing, delay or abandon the sale, and may upon
abandonment institute suit for the collection of the Loan Obligations, and/or
for the foreclosure of the liens hereof.  If Lender should institute a suit for
the collection of the Loan Obligations, and/or for a foreclosure of the liens
hereof, Lender may at any time before the entry of a final judgment in such suit
dismiss such suit (either totally or as to the counts thereof for judicial
foreclosure), and sell the Collateral, or any part thereof, in accordance with
the provisions of this Mortgage.

 

Section 3.7                                    Purchase by Lender.  Upon any
foreclosure sale or sale of all or any portion of the Collateral under the power
herein granted, Lender may bid for and purchase the Collateral and shall be
entitled to apply all or any part of the Loan Obligations as a credit to the
purchase price.

 

Section 3.8                                    Application of Proceeds of Sale. 
In the event of a foreclosure or other sale of all or any portion of the
Collateral, the proceeds of said sale shall be applied, first, to the reasonable
expenses of such sale and of all proceedings in connection therewith, including
reasonable fees of the attorney (and attorney fees and expenses shall become
absolutely due and payable whenever foreclosure is commenced); then to insurance
premiums, liens, assessments, taxes and charges including utility charges
advanced by Lender, and interest thereon; then to payment of the Note and
accrued interest thereon, and all other Loan Obligations, all in such

 

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order of priority as Lender shall determine, in its sole discretion; and finally
the remainder, if any, shall be paid to Mortgagor, or to the person or entity
lawfully entitled thereto.

 

Section 3.9                                    Mortgagor as Tenant Holding
Over.  In the event of any such foreclosure sale or sale under the powers herein
granted, Mortgagor (if Mortgagor shall remain in possession) shall be deemed a
tenant holding over and shall forthwith deliver possession to the purchaser or
purchasers at such sale or be summarily dispossessed according to provisions of
law applicable to tenants holding over.

 

Section 3.10                             Waiver of Appraisement.  Appraisement
of the Property and Improvements is hereby waived, or not, at the option of
Lender, which option Lender shall exercise at or prior to the time judgment is
rendered in any judicial foreclosure.

 

Section 3.11                             Discontinuance of Proceedings.  In case
Lender shall have proceeded to enforce any right, power or remedy under this
Mortgage by foreclosure, entry or otherwise, and such proceedings shall have
been discontinued or abandoned for any reason, then in every such case,
Mortgagor and Lender shall be restored to their former positions and rights
hereunder, and all rights, powers and remedies of Lender shall continue as if no
such proceedings had occurred.

 

Section 3.12                             Remedies Cumulative.  No right, power
or remedy conferred upon or reserved to Lender 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 concurrent and shall be in addition to
any other right, power and remedy given hereunder or now or hereafter existing
at law, in equity or by statute.

 

Section 3.13                             No Waiver; Waivers.

 

(a)                                                                                
No delay or omission by Lender or by 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 or shall be construed to be a waiver of any such
default, or acquiescence therein, and every right, power and remedy given by
this Mortgage to Lender may be exercised from time to time and as often as may
be deemed expedient by Lender.  No consent or waiver expressed or implied by
Lender to or of any breach or default by Mortgagor in the performance of the
obligations of Mortgagor hereunder shall be deemed or construed to be a consent
or waiver to or of any other breach or default in the performance of the same or
any other obligations of Mortgagor hereunder.  Failure on the part of Lender to
complain of any act or failure to act or failure to declare an Event of Default,
irrespective of how long such failure continues, shall not constitute a waiver
by Lender of its rights hereunder or impair any rights, powers or remedies of
Lender hereunder.

 

(b)                                                                                
No act or omission by Lender shall release, discharge, modify, change or
otherwise affect the original liability under the Note or this Mortgage or any
other obligation of either Borrower or any subsequent purchaser of the
Collateral or any part thereof, or any maker, cosigner, endorser, surety or
guarantor, nor preclude Lender from exercising any

 

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right, power or privilege herein granted or intended to be granted in the event
of any default then existing or of any subsequent default, nor alter the lien of
this Mortgage, except as expressly provided in an instrument or instruments
executed by Lender.  Without limiting the generality of the foregoing, Lender
may: (i) grant forbearance or an extension of time for the payment of all or any
portion of the Loan Obligations; (ii) take other or additional security for the
payment of any of the Loan Obligations; (iii) waive or fail to exercise any
right granted herein or in the Note; (iv) release any part of the Collateral
from the security interest or lien of this Mortgage or otherwise change any of
the terms, covenants, conditions or agreements of the Note or this Mortgage;
(v) consent to the filing of any map, plat or replat affecting the Collateral;
(vi) consent to the granting of any easement or other right affecting the
Collateral; (vii) make or consent to any agreement subordinating the security
title or lien hereof, or (viii) with the consent of Mortgagor modify, amend or
increase the Note or the Loan Obligations hereby secured or take or omit to take
any action whatsoever with respect to the Note, this Mortgage, the Collateral,
the Loan Documents or Loan Obligations, all without releasing, discharging,
modifying, changing or affecting any such liability, or precluding Lender from
exercising any such right, power or privilege or affecting the lien of this
Mortgage (except for any subordination of the lien expressly granted pursuant to
(vii) above).  In the event of the sale or transfer by operation of law or
otherwise of all or any part of the Collateral, Lender, without notice, is
hereby authorized and empowered to deal with any such vendee or transferee with
reference to the Collateral or the Loan Obligations, or with reference to any of
the terms, covenants, conditions or agreements hereof, 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 liabilities, obligations or undertakings.

 

(c)                                                                                 
Mortgagor waives:

 

i.                                          Any defense based upon any legal
disability or other defense of Borrower, any other guarantor, or any other
person, or by reason of the cessation or limitation of the liability of Borrower
from any cause other than full payment and performance of all of the Loan
Obligations;

 

ii.                                       Any defense based upon the application
by Borrower of the proceeds of any credit extended to Borrower by Lender for
purposes other than the purposes represented by Borrower or intended or
understood by Lender or Mortgagor;

 

iii.                                    Any defense based upon Lender’s election
of any remedy against Mortgagor or Borrower and the consequent loss by Mortgagor
of the right to recover any deficiency from Borrower;

 

iv.                                   Any defense based upon any statute or
rule of law that provides that the obligation of a surety must be neither larger
in amount nor in any other respects more burdensome that than of a principal;

 

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v.                                      The benefit of 12 Okla. Stat. § 686 and
15 Okla. Stat. §§ 334, 335, 338, 340, 341, 379, 383, and 384 and any amendments
or replacements of those statutes.

 

Section 3.14                             Suits to Protect the Collateral.  In
the event of the failure by Mortgagor to take any of actions provided for
herein, Lender shall have power to institute and maintain such suits and
proceedings as it may reasonably deem expedient (a) to prevent any impairment of
the Collateral by any acts which may be unlawful or constitute a default under
this Mortgage; (b) to preserve or protect its interest in the Collateral and in
the rents, issues, profits and revenues 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 of or compliance with such enactment, rule or order would
materially impair the security hereunder or be prejudicial to the interest of
Lender.

 

Section 3.15                             Proofs of Claim.  In the case of any
receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment,
composition or other proceedings affecting Mortgagor, its creditors or its
property, Lender, 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 Lender allowed in such proceedings for the entire amount due
and payable by 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 Mortgagor hereunder after such date.

 

Section 3.16                             Tradenames, etc.  During the exercise
of any right in the Collateral pursuant to this Article III, absent gross
negligence or willful misconduct, Lender shall not be liable to Mortgagor for
any inadvertent violation or infringement upon any trade name, trademark,
service mark, or logo relating to the Collateral, and Mortgagor waives any claim
for any such violation or infringement that occurs prior to written notice of
such infringement by Mortgagor to Lender.

 

ARTICLE IV

MISCELLANEOUS

 

Section 4.1                                    Security Agreement.  This
Mortgage creates a lien on and a security interest in that part of the
Collateral which constitutes personal property under any applicable Code, and
shall constitute a security agreement under the applicable Code or other law
applicable to the creation of liens on personal property.  This Mortgage shall
constitute a financing statement under the applicable Code with Mortgagor as the
“debtor” and Lender as the “secured party.”  If an Event of Default exists, the
Lender shall have all rights and remedies of a secured party under the
applicable Code.

 

Section 4.2                                    Assembly of Collateral.  Upon the
occurrence and continuance of an Event of Default, the Mortgagor shall assemble,
if requested by the Lender, at its expense, all of the personal property
Collateral and the documents evidencing such personal property Collateral and
the books and records applicable thereto and make them available to the Lender
at a place to

 

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be designated by the Lender; provided, however, Mortgagor shall have no
obligation to assemble the collateral in a manner which would impair the
continued operation of the Facility as an assisted living/long term care
facility.

 

Section 4.3                                    Successors and Assigns; Successor
Lender.  This Mortgage shall inure to the benefit of and be binding upon
Mortgagor and Lender and their respective heirs, executors, legal
representatives, successors, successors-in-title, and assigns.  Whenever a
reference is made in this Mortgage to “Mortgagor” or “Lender,” such reference
shall be deemed to include a reference to the heirs, executors, legal
representatives, successors, successors-in-title and assigns of Mortgagor or
Lender, as the case may be, but shall not imply any permission to make or permit
any transfer which is otherwise prohibited.

 

Section 4.4                                    Terminology.  All personal
pronouns used in this Mortgage, whether used in the masculine, feminine or
neuter gender, shall include all other genders; the singular shall include the
plural, and vice versa.  Titles and Articles are for convenience only and
neither limit nor amplify the provisions of this Mortgage, and all references
herein to Articles, Sections or subsections shall refer to the corresponding
Articles, Sections or subsections of this Mortgage unless specific reference is
made to Articles, Sections or subsections of another document or instrument.

 

Section 4.5                                    Severability; Complete
Agreement.  If any provisions of this Mortgage or the application thereof to any
person or circumstance shall be invalid or unenforceable to any extent, the
remainder of this Mortgage and the application of such provisions to other
persons or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law.  This Mortgage, the Note and the
instruments executed in connection herewith constitute the full and complete
agreement of the parties and supersede all prior negotiations, correspondence,
and memoranda relating to the subject matter hereof, and this Mortgage may not
be amended except by a writing signed by the parties hereto.

 

Section 4.6                                    Applicable Law.  This Mortgage
shall be interpreted, construed and enforced according to the laws of the state
wherein the Property is situated.  If, for any reason or to any extent any word,
term, provision, or clause of this Mortgage or any of the other Loan Documents,
or its application to any person or situation, shall be found by a court or
other adjudicating authority to be invalid or unenforceable, the remaining
words, terms, provisions or clauses shall be enforced, and the affected word,
term, clause or provision shall be applied, to the fullest extent permitted by
law.

 

Section 4.7                                    Limitation of Interest.  It is
the intent of Mortgagor and Lender in the execution of this Mortgage and all
other Loan Documents to contract in strict compliance with the usury laws
governing the Loan Obligations.  In furtherance thereof, Lender and Mortgagor
stipulate and agree that none of the terms and provisions contained in the Loan
Documents shall ever be construed to create a contract for the use, forbearance,
or detention of money requiring payment of interest at a rate in excess of the
maximum interest rate permitted to be charged by the laws governing the Loan
Obligations.  Mortgagor or any guarantor, endorser or other party

 

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now or hereafter becoming liable for the payment of the Loan or other amounts
due to Lender shall never be liable for unearned interest on the Loan or other
amounts due to Lender and shall never be required to pay interest on the Loan or
other amounts due to Lender at a rate in excess of the maximum interest that may
be lawfully charged under the laws governing the Loan Obligations, and the
provisions of this paragraph shall control over all other provisions of the Note
and other Loan Documents and any other instrument executed in connection
therewith which may be in apparent conflict herewith.  In the event Lender shall
collect monies that are deemed to constitute interest and that would otherwise
increase the effective interest rate on the Loan Obligations or other amounts
due to Lender to a rate in excess of that permitted to be charged by the laws
governing the Loan Obligations, all such sums deemed to constitute interest in
excess of the legal rate shall be applied to the unpaid principal balance of the
Loan Obligation and if in excess of such balance, shall be immediately returned
to the Mortgagor upon such determination.

 

Section 4.8                                    Notices, etc/Lender’s Consent. 
All notices and other communications provided for hereunder shall be in writing
and be given and deemed received in accordance with the provisions of the Loan
Agreement.  Except where this Mortgage or the other instruments relating to the
Loan Obligations expressly provides otherwise, wherever Lender’s consent or
approval is called for, Lender shall not unreasonably condition or withhold such
approval or consent.

 

Section 4.9                                    Assignment.  This Mortgage is
assignable by Lender and any assignment hereof by Lender shall operate to vest
in the assignee all rights and powers herein conferred upon and granted to
Lender.  This Mortgage may not be assigned by Mortgagor.

 

Section 4.10                             Time of the Essence.  Time is of the
essence with respect to each and every covenant, agreement and obligation of
Mortgagor under this Mortgage, the Note and any and all other instruments now or
hereafter evidencing, securing or otherwise relating to the Loan Obligation.

 

Section 4.11                             Attorney Fees.  Mortgagor agrees to
reimburse Lender for all costs, expenses, and attorneys’ fees that Lender incurs
in connection with the enforcement of any obligation contained in this Mortgage
or the collection of any rents assigned herein, with or without litigation,
including, without limitation, any costs, expenses, and fees incurred: (a) in
making demands for and collecting any rents; (b) in any action for rents against
Lessor or any lessee; (c) on appeal; (d) in any petition for review; (e) in any
arbitration or mediation; (f) in any action contesting or seeking to restrain,
enjoin, stay, or postpone the exercise of any remedy in which Lender prevails;
(g) in any bankruptcy, probate, receivership or other proceeding involving
Lessor; and (h) in connection with all negotiations, documentation, and other
actions relating to any work-out, compromise, settlement or satisfaction
relating to this Mortgage.  All such costs, expenses, and fees shall be due and
payable upon demand and shall bear interest from the date incurred through the
date of collection at the default rate stated in the Loan Documents.

 

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Section 4.12                             Waiver of Jury Trial.  MORTGAGOR BY ITS
EXECUTION HEREOF HEREBY WAIVES ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY ON
ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING
OUT OF OR IN ANY WAY RELATED TO THIS MORTGAGE, THE LOAN DOCUMENTS OR THE LOAN,
OR (B) IN ANY WAY CONNECTED WITH OR PERTAINING OR RELATED TO OR INCIDENTAL TO
ANY DEALINGS OF LENDER AND/OR MORTGAGOR WITH RESPECT TO THE LOAN DOCUMENTS OR IN
CONNECTION WITH THIS MORTGAGE OR THE EXERCISE OF EITHER PARTY’S RIGHTS AND
REMEDIES UNDER THIS MORTGAGE OR OTHERWISE, OR THE CONDUCT OR THE RELATIONSHIP OF
THE PARTIES HERETO, IN ALL OF THE FOREGOING CASES WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. 
MORTGAGOR AGREE THAT THE LENDER MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT
AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY, AND BARGAINED AGREEMENT OF
MORTGAGOR IRREVOCABLY TO WAIVE ITS RIGHTS TO TRIAL BY JURY AS AN INDUCEMENT OF
LENDER TO ENTER INTO THE LOAN AGREEMENT AND OTHER LOAN DOCUMENTS AND OF LENDER
TO MAKE THE LOAN EVIDENCED AND SECURED THEREBY, AND THAT, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ANY DISPUTE OR CONTROVERSY WHATSOEVER BETWEEN
MORTGAGOR AND LENDER SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION
BY A JUDGE SITTING WITHOUT A JURY.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be executed as of the
day and year first above written.

 

 

 

CSCC PROPERTY HOLDINGS, LLC, a Georgia limited liability company

 

 

 

 

 

 

By:

/s/ Christopher F. Brogdon

 

 

Name:

Christopher F. Brogdon

 

 

Title:

Manager

 

 

 

 

 

 

 

 

STATE OF

 

)

 

[SEAL]

 

) ss.

 

COUNTY OF

 

)

 

 

 

 

 

This instrument was acknowledged before me on August        , 2012, by
Christopher F. Brogdon, as Manager of CSCC Property Holdings, LLC, a Georgia
limited liability company.

 

 

 

 

(Seal)

 

 

 

 

 

/s/ [Illegible]

 

 

Notary Public

 

 

My commission expires:

 

 

Commission #:

 

MORTGAGE SIGNATURE PAGE — ADCARE - SENIOR

 

Mortgage – Exhibit A

 

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