Exhibit 10.8

 

ARTICLE 1

 

    

 (Space above for recorder’s use only)

Loan No. 70004520

 

WATERMARK PINEBROOK OWNER, LLC,

a Delaware limited liability company

(Mortgagor)

 

to

 

GENERAL ELECTRIC CAPITAL CORPORATION

(Mortgagee)

 

     

 

OPEN END MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

 

     

 

Dated as of December 27, 2013

 

Property Location: Milford, Miami Township, Ohio

 

Prepared by, and after Recording

Return to:

 

Loren Kessler Higgins, Esq.

Winston & Strawn LLP

101 California Street, 39th Floor

San Francisco, California 94111

 

 

 

 

OPEN END MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY

AGREEMENT AND FIXTURE FILING

 

This Open End Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing (this “Mortgage”), dated as of December 27, 2013, is made by
WATERMARK PINEBROOK OWNER, LLC, a Delaware limited liability company, whose
organizational number is 5436181 (“Mortgagor”), whose address for notice
hereunder is 2020 W. Rudasill Road, 2nd Floor, Tucson, Arizona 85704, Attention:
Carl Mittendorff, for the benefit of GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation, in its capacity as administrative agent for the Lenders
under the hereinafter described Loan Agreement (in such capacity, together with
its successors and assigns, “Mortgagee”), for the benefit of Lenders, whose
address for notice 500 West Monroe Street, Chicago, Illinois 50551, Attention”
Jeffrey M. Muchmore, Loan No. 70004520.

 

ARTICLE 2

DEFINITIONS

 

Section 2.1           Definitions.    As used herein, the following terms shall
have the following meanings:

 

“Indebtedness”: The sum of all principal, interest and all other amounts due
under or secured by the Loan Documents.

 

“Lenders” means the Persons from time to time signatory to the Loan Agreement as
“Lenders”.

 

“Loan”: that certain loan, in the principal amount of up to $10,500,000, made to
the Mortgagor by Lenders and evidenced and secured by the Loan Documents.

 

“Loan Agreement” that certain Loan Agreement, dated as of even date herewith,
among Mortgagor, Mortgagee, and the Lenders.

 

“Loan Documents”:    The (a) Loan Agreement, (b) one or more promissory notes
(the “Notes”) executed by Mortgage in favor of each Lender, which collectively
evidence the Loan, (c) this Mortgage, (d) the Business Associate Agreement
executed by Mortgagee and Mortgagor, (e) all other documents now or hereafter
executed by Mortgagor, to evidence or secure the payment of all or any portion
of the Indebtedness or the performance of all or any portion of the Obligations,
and (f) all modifications, restatements, extensions, renewals and replacements
of the foregoing; provided however, in no event shall the term “Loan Documents”
include that certain Hazardous Materials Indemnity Agreement dated the date
hereof in favor of Mortgagee.

 

“Mortgaged Property”:    (a) the real property described in Exhibit A, together
with any greater estate therein as hereafter may be acquired by Mortgagor (the
“Land”), (b) all buildings,

 

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structures and other improvements, now or at any time situated, placed or
constructed upon the Land (the “Improvements”), (c) all materials, supplies,
equipment, apparatus and other items of personal property now owned or hereafter
acquired by Mortgagor and now or hereafter attached to, installed in or used in
connection with any of the Improvements or the Land, and water, gas, electrical,
storm and sanitary sewer facilities and all other utilities whether or not
situated in easements (the “Fixtures”), (d) all right, title and interest of
Mortgagor in and to all goods, accounts, general intangibles, investment
property, instruments, letters of credit, letter-of-credit rights, deposit
accounts, documents, chattel paper and all other personal property of any kind
or character, including such items of personal property as presently or
hereafter defined in the UCC, now owned or hereafter acquired by Mortgagor and
now or hereafter affixed to, placed upon, used in connection with, arising from
or otherwise related to the Land and Improvements or which may be used in or
relating to the planning, development, financing or operation of the Mortgaged
Property, including, without limitation, furniture, furnishings, equipment,
machinery, money, insurance proceeds, accounts, contract rights, software,
trademarks, goodwill, promissory notes, electronic and tangible chattel paper,
payment intangibles, documents, trade names, licenses and/or franchise
agreements, rights of Mortgagor under leases of Fixtures or other personal
property or equipment, inventory, all refundable, returnable or reimbursable
fees, deposits or other funds or evidences of credit or indebtedness deposited
by or on behalf of Mortgagor with any governmental authorities, boards,
corporations, providers of utility services, public or private, including
specifically, but without limitation, all refundable, returnable or reimbursable
tap fees, utility deposits, commitment fees and development costs, and
commercial tort claims arising from the development, construction, use,
occupancy, operation, maintenance, enjoyment, acquisition or ownership of the
Mortgaged Property (exclusive of any of the foregoing owned by tenants of space
in the Improvements who are not Affiliates of Mortgagor) (collectively, the
“Personalty”), (e) all reserves, escrows or impounds required under the Loan
Agreement and all deposit accounts (including accounts holding security
deposits) maintained by Mortgagor with respect to the Mortgaged Property, (f)
all of Mortgagor’s right, title and interest in and to all plans,
specifications, shop drawings and other technical descriptions prepared for
construction, repair or alteration of the Improvements, and all amendments and
modifications thereof (the “Plans”), (g) all leases, subleases, licenses,
concessions, occupancy agreements, rental contracts, or other agreements
(written or oral) now or hereafter existing relating to the use or occupancy of
all or any part of the Mortgaged Property, together with all guarantees, letters
of credit and other credit support, modifications, extensions and renewals
thereof (whether before or after the filing by or against Mortgagor of any
petition of relief under 11 U.S.C. § 101 et seq., as same may be amended from
time to time (the “Bankruptcy Code”)) and all related security and other
deposits (the “Leases”) and all of Mortgagor’s claims and rights (the
“Bankruptcy Claims”) to the payment of damages arising from any rejection by a
lessee of any Lease under the Bankruptcy Code, (h) all of the rents, revenues,
liquidated damages payable upon default under the Leases, issues, income,
proceeds, profits, and all other payments of any kind under the Leases for
using, leasing, licensing, possessing, operating from, residing in, selling or
otherwise enjoying the Mortgaged Property whether paid or accruing before or
after the filing by or against Mortgagor of any petition for relief under the
Bankruptcy Code (the “Rents”), (i) all of

 

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Mortgagor’s right, title and interest in and to all other agreements, such as
construction contracts, architects’ agreements, engineers’ contracts, utility
contracts, maintenance agreements, franchise agreements, service contracts,
permits, licenses, certificates and entitlements in any way relating to the
development, construction, use, occupancy, operation, maintenance, enjoyment,
acquisition or ownership of the Mortgaged Property (the “Property Agreements”),
(j) all rights, privileges, tenements, hereditaments, rights-of-way, easements,
appendages and appurtenances appertaining to the foregoing, and all right, title
and interest, if any, of Mortgagor in and to any streets, ways, alleys, strips
or gores of land adjoining the Land or any part thereof, (k) all accessions,
replacements and substitutions for any of the foregoing and all proceeds
thereof, (l) all insurance policies (regardless of whether required by
Mortgagee), unearned premiums therefor and proceeds from such policies covering
any of the above property now or hereafter acquired by Mortgagor, (m) all of
Mortgagor’s right, title and interest in and to all mineral, water, oil and gas
rights now or hereafter acquired and relating to all or any part of the
Mortgaged Property, (n) all of Mortgagor’s right, title and interest in and to
all tradenames, trademarks, service marks, logos, copyrights, goodwill, books
and records and all other general intangibles relating to or used in connection
with the operation of the Mortgaged Property; and (o) all of Mortgagor’s right,
title and interest in and to any awards, remunerations, reimbursements,
settlements or compensation heretofore made or hereafter to be made by any
governmental authority pertaining to the Land, Improvements, Fixtures or
Personalty. As used in this Mortgage, the term “Mortgaged Property” shall mean
all or, where the context permits or requires, any portion of the above or any
interest therein.

 

“Obligations”:    All of the agreements, covenants, conditions, warranties,
representations and other obligations (other than to repay the Indebtedness)
made or undertaken by Mortgagor or any other person or entity to Mortgagee or
others as set forth in the Loan Documents, including, without limitation, the
obligations under any Secured Hedge Agreements.

 

“Permitted Encumbrances”:    The outstanding liens, easements, restrictions,
security interests and other exceptions to title set forth in the policy of
title insurance insuring the lien of this Mortgage, together with the liens and
security interests in favor of Mortgagee created by the Loan Documents, none of
which, individually or in the aggregate, materially interfere with the benefits
of the security intended to be provided by this Mortgage, materially and
adversely affect the value of the Mortgaged Property, impair the use or
operations of the Mortgaged Property or impair Mortgagor’s ability to pay its
obligations in a timely manner.

 

“State”:    The State of Ohio.

 

“UCC”:    The Uniform Commercial Code of the State in effect from time to time
or, if the creation, perfection and enforcement of any security interest herein
granted is governed by the laws of a state other than the State, then, as to the
matter in question, the Uniform Commercial Code in effect in that state from
time to time.

 

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Section 2.2           Other Terms.    Capitalized terms not otherwise defined
herein shall have the meaning set forth in the Loan Agreement.

 

ARTICLE 3
GRANT

 

Section 3.1           Grant.    To secure the full and timely payment of the
Indebtedness and the full and timely performance of the Obligations, Mortgagor
hereby irrevocably MORTGAGES, GRANTS, BARGAINS, SELLS, CONVEYS, ALIENS,
ENFEOFFS, ASSIGNS, RELEASES AND CONFIRMS to Mortgagee, its heirs, successors,
successors-in-title and assigns, for the benefit of the Lenders, all of its
right, title and interest in and to the Mortgaged Property, subject, however, to
the Permitted Encumbrances; TO HAVE AND TO HOLD the Mortgaged Property to
Mortgagee, its successors and assigns, and Mortgagor does hereby bind itself,
its successors and assigns to WARRANT AND FOREVER DEFEND the title to the
Mortgaged Property unto Mortgagee, for the benefit of the Lenders.

 

ARTICLE 4

WARRANTIES, REPRESENTATIONS AND COVENANTS

 

Mortgagor warrants, represents and covenants to Mortgagee as follows:

 

Section 4.1           Title to Mortgaged Property and Lien of this
Instrument.    Mortgagor owns the Mortgaged Property free and clear of any
liens, claims or interests, except the Permitted Encumbrances. This Mortgage
creates valid, enforceable first priority liens and security interests against
the Mortgaged Property. Mortgagor warrants that Mortgagor has good, marketable
and insurable title to the Mortgaged Property and has the full power, authority
and right to execute, deliver and perform its obligations under this Mortgage.

 

Section 4.2           First Lien Status.    Mortgagor shall preserve and protect
the first lien and security interest status of this Mortgage and the other Loan
Documents. Subject to Mortgagor’s contest rights set forth in Section 12.14 of
the Loan Agreement, if any lien or security interest other than the Permitted
Encumbrances is asserted against the Mortgaged Property, Mortgagor shall
promptly, and at its expense, (a) give Mortgagee a detailed written notice of
such lien or security interest (including origin, amount and other terms), and
(b) pay the underlying claim in full or take such other action so as to cause it
to be released or, in Mortgagee’s discretion, provide a bond or other security
satisfactory to Mortgagee for the payment of such claim.

 

Section 4.3           Payment and Performance.    Mortgagor shall pay the
Indebtedness when due under the Loan Documents and shall perform the Obligations
in full when they are required to be performed.

 

Section 4.4           Replacement of Fixtures and Personalty.    Mortgagor shall
not, without the prior written consent of Mortgagee, permit any of the Fixtures
or Personalty to be

 

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removed at any time from the Land or Improvements, unless the removed item is
removed temporarily for maintenance and repair or, if removed permanently, is
obsolete and is replaced by an article of equal or better suitability and value,
owned by Mortgagor subject to the liens and security interests of this Mortgage
and the other Loan Documents, and free and clear of any other lien or security
interest except such as may be first approved in writing by Mortgagee.

 

Section 4.5           Maintenance of Rights of Way, Easements and Licenses.
   Mortgagor shall maintain all rights of way, easements, grants, privileges,
licenses, certificates, permits, entitlements and franchises necessary for the
use of the Mortgaged Property and, subject to the terms and conditions of the
Loan Agreement, will not, without the prior consent of Mortgagee, consent to any
public restriction (including any zoning ordinance) or private restriction as to
the use of the Mortgaged Property. Mortgagor shall comply with all restrictive
covenants affecting the Mortgaged Property, and all zoning ordinances and other
public or private restrictions as to the use of the Mortgaged Property.

 

Section 4.6           Inspection.    Subject to the terms and conditions of the
Loan Agreement, Mortgagor shall permit Mortgagee, and Mortgagee’s agents,
representatives and employees, upon reasonable prior notice to Mortgagor, to
inspect the Mortgaged Property and conduct such environmental and engineering
studies as Mortgagee may require, provided that such inspections and studies
shall not materially interfere with the use and operation of the Mortgaged
Property.

 

Section 4.7           Other Covenants.    All of the covenants in (a) the Loan
Agreement, (b) the Notes and (c) any of the other Loan Documents are
incorporated herein by reference and are made a part of this Mortgage to the
same extent and with the same force as if fully set forth herein and, together
with covenants in this Article 3, shall be covenants running with the land. The
covenants set forth in the Loan Agreement include, among other provisions: (a)
the obligation to pay when due all taxes on the Mortgaged Property or assessed
against Mortgagee with respect to the Loan, (b) the right of Mortgagee to
inspect the Mortgaged Property, (c) the obligation to keep the Mortgaged
Property insured as Mortgagee may require, (d) the obligation to comply with all
legal requirements (including environmental laws), maintain the Mortgaged
Property in good condition, and promptly repair any damage or casualty, and (e)
except as otherwise permitted under the Loan Agreement, the obligation of
Mortgagor to obtain Mortgagee’s consent prior to entering into, modifying or
taking other actions with respect to Leases.

 

Section 4.8           Condemnation Awards and Insurance Proceeds.

 

(a)      Condemnation Awards.    Mortgagor assigns all awards and compensation
for any condemnation or other taking, or any purchase in lieu thereof, to
Mortgagee and authorizes Mortgagee to collect and receive such awards and
compensation and to give proper receipts and acquittances therefor, subject to
the terms of the Loan Agreement.

 

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(b)       Insurance Proceeds.    Subject to the terms and provisions of the Loan
Agreement, Mortgagor assigns to Mortgagee all proceeds of any insurance policies
insuring against loss or damage to the Mortgaged Property. Mortgagor authorizes
Mortgagee to collect and receive such proceeds and authorizes and directs the
issuer of each of such insurance policies to make payment for all such losses
directly to Mortgagee, instead of to Mortgagor and Mortgagee jointly.

 

Section 4.9           Transfer or Encumbrance of Mortgaged Property.

 

(a)       No Transfer.    Mortgagor shall not permit or suffer any Transfer to
occur, unless specifically permitted by Section 8.1 of the Loan Agreement or
unless Mortgagee shall consent thereto in writing.

 

(b)      Transfer Defined.    As used in this Section 3.9, “Transfer” shall have
the meaning given to the term “Sale or Pledge” in the Loan Agreement.

 

ARTICLE 5

DEFAULT AND FORECLOSURE

 

Section 5.1           Remedies.   If an Event of Default (as defined in the Loan
Agreement) exists, Mortgagee may, at Mortgagee’s election, exercise any or all
of the following rights, remedies and recourses:

 

(a)      Acceleration.    Declare the Indebtedness to be immediately due and
payable, without further notice, presentment, protest, notice of intent to
accelerate, notice of acceleration, demand or action of any nature whatsoever
(each of which hereby is expressly waived by Mortgagor), whereupon the same
shall become immediately due and payable.

 

(b)      Entry on Mortgaged Property.    Enter the Mortgaged Property and take
exclusive possession thereof and of all books, records and accounts relating
thereto. If Mortgagor remains in possession of the Mortgaged Property after an
Event of Default and without Mortgagee’s prior written consent, Mortgagee may
invoke any legal remedies to dispossess Mortgagor.

 

(c)      Operation of Mortgaged Property.    Hold, lease, develop, manage,
operate or otherwise use the Mortgaged Property upon such terms and conditions
as Mortgagee may deem reasonable under the circumstances (making such repairs,
alterations, additions and improvements and taking other actions, from time to
time, as Mortgagee deems necessary or desirable), and apply all Rents and other
amounts collected by Mortgagee in connection therewith in accordance with the
provisions of Section 4.7.

 

(d)      Foreclosure and Sale.    Institute proceedings for the complete
foreclosure of this Mortgage, in which case the Mortgaged Property may be sold
for cash or credit in one or more parcels. At any such sale by virtue of any
judicial proceedings or any other legal right, remedy

 

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or recourse, the title to and right of possession of any such property shall
pass to the purchaser thereof, and to the fullest extent permitted by law,
Mortgagor shall be completely and irrevocably divested of all of its right,
title, interest, claim and demand whatsoever, either at law or in equity, in and
to the property sold and such sale shall be a perpetual bar both at law and in
equity against Mortgagor, and against all other persons claiming or to claim the
property sold or any part thereof, by, through or under Mortgagor. Mortgagee may
be a purchaser at such sale and if Mortgagee is the highest bidder, may credit
the portion of the purchase price that would be distributed to Mortgagee against
the Indebtedness in lieu of paying cash.

 

(e)      Receiver.    Make application to a court of competent jurisdiction for,
and obtain from such court as a matter of strict right and without notice to
Mortgagor or regard to the adequacy of the Mortgaged Property for the repayment
of the Indebtedness, the appointment of a receiver of the Mortgaged Property,
and Mortgagor irrevocably consents to such appointment. Any such receiver shall
have all the usual powers and duties of receivers in similar cases, including
the full power to rent, maintain and otherwise operate the Mortgaged Property
upon such terms as may be approved by the court.

 

(f)      UCC.    Exercise any and all rights and remedies granted to a secured
party upon default under the UCC, including, without limiting the generality of
the foregoing: (i) the right to take possession of the personal property or any
part thereof, and to take such other measures as Mortgagee may deem necessary
for the care, protection and preservation of the personal property, and (ii)
request Mortgagor at its expense to assemble the personal property and make it
available to Mortgagee at a convenient place acceptable to Mortgagee. Any notice
of sale, disposition or other intended action by Mortgagee with respect to the
personal property sent to Mortgagor in accordance with the provisions hereof at
least five (5) days prior to such action, shall constitute commercially
reasonable notice to Mortgagor.

 

(g)      Other.    Exercise all other rights, remedies and recourses granted
under the Loan Documents or otherwise available at law or in equity (including
an action for specific performance of any covenant contained in the Loan
Documents, or a judgment on the Notes either before, during or after any
proceeding to enforce this Mortgage).

 

Section 5.2           Separate Sales.    The Mortgaged Property may be sold in
one or more parcels and in such manner and order as Mortgagee in its sole
discretion, may elect; the right of sale arising out of any Event of Default
shall not be exhausted by any one or more sales.

 

Section 5.3           Remedies Cumulative, Concurrent and Nonexclusive.
   Mortgagee shall have all rights, remedies and recourses granted in the Loan
Documents and available at law or equity (including the UCC), which rights (a)
shall be cumulative and concurrent, (b) may be pursued separately, successively
or concurrently against Mortgagor or others obligated under the Notes and the
other Loan Documents, or against the Mortgaged Property, or against any one or
more of them, at the sole discretion of Mortgagee, (c) may be exercised as often
as occasion therefor shall arise, and the exercise or failure to exercise any of

 

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them shall not be construed as a waiver or release thereof or of any other
right, remedy or recourse, and (d) are intended to be, and shall be,
nonexclusive. No action by Mortgagee in the enforcement of any rights, remedies
or recourses under the Loan Documents or otherwise at law or equity shall be
deemed to cure any Event of Default.

 

Section 5.4           Release of and Resort to Collateral.    Mortgagee may
release, regardless of consideration and without the necessity for any notice to
a consent by the holder of any subordinate lien on the Mortgaged Property, any
part of the Mortgaged Property without, as to the remainder, in any way
impairing, affecting, subordinating or releasing the lien or security interests
created in or evidenced by the Loan Documents or their stature as a first and
prior lien and security interest in and to the Mortgaged Property. For payment
of the Indebtedness, Mortgagee may resort to any other security in such order
and manner as Mortgagee may elect.

 

Section 5.5           Waiver of Redemption, Notice and Marshalling of Assets.
   To the fullest extent permitted by law, Mortgagor hereby irrevocably and
unconditionally waives and releases (a) all benefit that might accrue to
Mortgagor by virtue of any present or future statute of limitations or law or
judicial decision exempting the Mortgaged Property from attachment, levy or sale
on execution or providing for any appraisement, valuation, stay of execution,
exemption from civil process, redemption or extension of time for payment, (b)
all notices of any Event of Default or of Mortgagee’s election to exercise or
its actual exercise of any right, remedy or recourse provided for under the Loan
Documents, and (c) any right to a marshalling of assets or a sale in inverse
order of alienation.

 

Section 5.6           Discontinuance of Proceedings.    If Mortgagee shall have
proceeded to invoke any right, remedy or recourse permitted under the Loan
Documents and shall thereafter elect to discontinue or abandon it for any
reason, Mortgagee shall have the unqualified right to do so and, in such an
event, Mortgagor and Mortgagee shall be restored to their former positions with
respect to the Indebtedness, the Obligations, the Loan Documents, the Mortgaged
Property and otherwise, and the rights, remedies, recourses and powers of
Mortgagee shall continue as if the right, remedy or recourse had never been
invoked, but no such discontinuance or abandonment shall waive any Event of
Default which may then exist or the right of Mortgagee thereafter to exercise
any right, remedy or recourse under the Loan Documents for such Event of
Default.

 

Section 5.7           Application of Proceeds.    The proceeds of any sale of
the Mortgaged Property, shall be applied by Beneficiary or Trustee in the
following order unless otherwise required by applicable law:

 

(a)      to the payment of the reasonable costs and expenses of taking
possession of the Mortgaged Property, including, without limitation (i)
receiver’s fees and expenses, (ii) court costs, (iii) reasonable attorneys’ and
accountants’ fees and expenses, (iv) costs of advertisement and (v) insurance
premiums;

 

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(b)      to the payment of all amounts (including interest), other than the
unpaid principal balance of the Notes and accrued but unpaid interest, which may
be due to Mortgagee under the Loan Documents;

 

(c)      to the payment of the Indebtedness and performance of the Obligations
in such manner and order of preference as Mortgagee in its sole discretion may
determine; and

 

(d)      the balance, if any, to the payment of the persons legally entitled
thereto.

 

Section 5.8           Occupancy After Foreclosure.    The purchaser at any
foreclosure sale pursuant to Section 4.1(d) shall become the legal owner of the
Mortgaged Property. All occupants of the Mortgaged Property shall, at the option
of such purchaser, become tenants of the purchaser at the foreclosure sale and
shall deliver possession thereof immediately to the purchaser upon demand. It
shall not be necessary for the purchaser at said sale to bring any action for
possession of the Mortgaged Property other than the statutory action of forcible
detainer in any justice court having jurisdiction over the Mortgaged Property.

 

Section 5.9           Additional Advances and Disbursements; Costs of
Enforcement.

 

(a)      If Mortgagor has failed to perform its obligations under any provision
of any Loan Document, Mortgagee shall have the right but not the obligation to
perform or caused to be performed such obligation of Mortgagor. All sums
advanced and expenses incurred at any time by Mortgagee under this Section 4.9,
or otherwise under this Mortgage or any of the other Loan Documents or
applicable law, shall bear interest from the date that such sum is advanced or
expense incurred, to and including the date of reimbursement, computed at the
Default Rate (as defined in the Loan Agreement), and all such sums, together
with interest thereon, shall be secured by this Mortgage.

 

(b)      Mortgagor shall pay all expenses (including reasonable attorneys’ fees
and expenses) of or incidental to the perfection and enforcement of this
Mortgage and the other Loan Documents, or the enforcement, compromise or
settlement of the Indebtedness or any claim under this Mortgage and the other
Loan Documents, and for the curing thereof, or for defending or asserting the
rights and claims of Mortgagee in respect thereof, by litigation or otherwise.

 

Section 5.10    No Mortgagee in Possession.    Neither the enforcement of any of
the remedies under this Article 4, the assignment of the Rents and Leases under
Article 5, the security interests under Article 6, nor any other remedies
afforded to Mortgagee under the Loan Documents, at law or in equity shall cause
Mortgagee to be deemed or construed to be a mortgagee in possession of the
Mortgaged Property, to obligate Mortgagee to lease the Mortgaged Property or
attempt to do so, or to take any action, incur any expense, or perform or
discharge any obligation, duty or liability whatsoever under any of the Leases
or otherwise.

 

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Section 5.11    Actions and Proceedings. Mortgagee has the right to appear in
and defend any action or proceeding brought with respect to the Mortgaged
Property and to bring any action or proceeding, in the name and on behalf of
Mortgagor, which Mortgagee, in its discretion, decides should be brought to
protect its interest in the Mortgaged Property.

 

ARTICLE 6

ASSIGNMENT OF LEASES AND RENTS

 

Section 6.1           Assignment.    Mortgagor acknowledges and confirms that it
has executed and delivered to Mortgagee an Assignment of Leases and Rents of
even date (as amended, restated, supplemented, modified, extended, renewed or
replaced from time to time, the “Assignment of Leases and Rents”), intending
that such instrument create a present, absolute assignment to Mortgagee of the
Leases and Rents. Without limiting the intended benefits or the remedies
provided under the Assignment of Leases and Rents, Mortgagor hereby assigns to
Mortgagee, as further security for the Indebtedness and the Obligations, the
Leases and Rents. While any Event of Default exists, Mortgagee shall be entitled
to exercise any or all of the remedies provided in the Assignment of Leases and
Rents and in Article 4 hereof, including, without limitation, the right to have
a receiver appointed. If any conflict or inconsistency exists between the
assignment of the Rents and the Leases in this Mortgage and the absolute
assignment of the Rents and the Leases in the Assignment of Leases and Rents,
the terms of the Assignment of Leases and Rents shall control.

 

Section 6.2           No Merger of Estates.   So long as any part of the
Indebtedness and the Obligations secured hereby remain unpaid and undischarged,
the fee and leasehold estates to the Mortgaged Property shall not merge, but
shall remain separate and distinct, notwithstanding the union of such estates
either in Mortgagor, Mortgagee, any lessee or any third party by purchase or
otherwise.

 

ARTICLE 7

SECURITY AGREEMENT

 

Section 7.1           Security Interest.    This Mortgage constitutes a
“Security Agreement” on personal property within the meaning of the UCC and
other applicable law and with respect to the Personalty, Fixtures, Plans,
Leases, Rents and Property Agreements. To this end, Mortgagor grants to
Mortgagee, a first and prior security interest in the Personalty, Fixtures,
Plans, Leases, Rents and Property Agreements and all other Mortgaged Property
which is personal property to secure the payment of the Indebtedness and
performance of the Obligations, and agrees that Mortgagee shall have all the
rights and remedies of a secured party under the UCC with respect to such
property. Any notice of sale, disposition or other intended action by Mortgagee
with respect to the Personalty, Fixtures, Plans, Leases, Rents and Property
Agreements sent to Mortgagor at least five (5) days prior to any action under
the UCC shall constitute reasonable notice to Mortgagor.

 

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Section 7.2           Further Assurances.    Mortgagor shall execute and deliver
to Mortgagee, in form and substance satisfactory to Mortgagee, such further
assurances as Mortgagee may, from time to time, reasonably consider necessary to
create, perfect and preserve Mortgagee’s security interest hereunder and
Mortgagee may cause such assurances to be recorded and filed, at such times and
places as may be required or permitted by law to so create, perfect and preserve
such security interest. Mortgagor’s state of organization is the State of
Delaware, and its chief executive office is in the State of Arizona at the
address set forth in the first paragraph of this Mortgage. Mortgagor authorizes
Mortgagee to file financing statements without the signature of Mortgagor
thereon.

 

Section 7.3           Fixture Filing.    This Mortgage shall also constitute a
“fixture filing” for the purposes of the UCC against all of the Mortgaged
Property which is or is to become fixtures. Information concerning the security
interest herein granted may be obtained at the addresses of Debtor (Mortgagor)
and Secured Party (Mortgagee) as set forth in the first paragraph of this
Mortgage.

 

ARTICLE 8

MISCELLANEOUS

 

Section 8.1           Limitation on Interest.    It is the intention of the
parties hereto to conform strictly to applicable usury laws. Accordingly, all
agreements between Mortgagor and Mortgagee with respect to the Loan are hereby
expressly limited so that in no event, whether by reason of acceleration of
maturity or otherwise, shall the amount paid or agreed to be paid to Mortgagee
or charged by Mortgagee for the use, forbearance or detention of the money to be
lent hereunder or otherwise, exceed the maximum amount allowed by law. If the
Loan would be usurious under applicable law (including the laws of the state
where the Mortgaged Property is located and the laws of the United States of
America), then, notwithstanding anything to the contrary in the Loan Documents:
(a) the aggregate of all consideration which constitutes interest under
applicable law that is contracted for, taken, reserved, charged or received
under the Loan Documents shall under no circumstances exceed the maximum amount
of interest allowed by applicable law, and any excess shall be credited on the
Indebtedness; and (b) if maturity is accelerated by reason of an election by
Mortgagee, or in the event of any prepayment, then any consideration which
constitutes interest may never include more than the maximum amount allowed by
applicable law. In such case, excess interest, if any, provided for in the Loan
Documents or otherwise, to the extent permitted by applicable law, shall be
amortized, prorated, allocated and spread from the date of advance until payment
in full so that the actual rate of interest is uniform through the term hereof.
If such amortization, proration, allocation and spreading is not permitted under
applicable law, then such excess interest shall be canceled automatically as of
the date of such acceleration or prepayment and, if theretofore paid, shall be
credited on the Indebtedness. The Loan Documents are contracts made under and
shall be construed in accordance with and governed by the laws of the State,
except that if at any time the laws of the United States of America permit
Mortgagee to contract for, take, reserve, charge or receive a higher rate of
interest than is allowed by the laws of the State (whether such federal

 

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laws directly so provide or refer to the law of any state), then such federal
laws shall to such extent govern as to the rate of interest which Mortgagee may
contract for, take, reserve, charge or receive under the Loan Documents.

 

Section 8.2           Notices.   Any notice required or permitted to be given
under this Mortgage shall be (a) in writing, (b) sent in the manner set forth in
the Loan Agreement, and (c) effective in accordance with the terms of the Loan
Agreement.

 

Section 8.3           Covenants Running with the Land.    All Obligations
contained in this Mortgage are intended by Mortgagor and Mortgagee to be, and
shall be construed as, covenants running with the Mortgaged Property. As used
herein, “Mortgagor” shall refer to the party named in the first paragraph of
this Mortgage and to any subsequent owner of all or any portion of the Mortgaged
Property (without in any way implying that Mortgagee has or will consent to any
such conveyance or transfer of the Mortgaged Property). All persons or entities
who may have or acquire an interest in the Mortgaged Property shall be deemed to
have notice of, and be bound by, the terms of the Loan Agreement and the other
Loan Documents; however, no such party shall be entitled to any rights
thereunder without the prior written consent of Mortgagee.

 

Section 8.4           Attorney-in-Fact.    Mortgagor hereby irrevocably appoints
Mortgagee and its successors and assigns, as its attorney-in-fact, which agency
is coupled with an interest, (a) to execute and/or record any notices of
completion, cessation of labor or any other notices that Mortgagee deems
appropriate to protect Mortgagee’s interest, if Mortgagor shall fail to do so
within ten (10) days after written request by Mortgagee, (b) upon the issuance
of a deed pursuant to the foreclosure of this Mortgage or the delivery of a deed
in lieu of foreclosure, to execute all instruments of assignment, conveyance or
further assurance with respect to the Leases, Rents, Personalty, Fixtures, Plans
and Property Agreements in favor of the grantee of any such deed and as may be
necessary or desirable for such purpose, (c) to prepare, execute and file or
record financing statements, continuation statements, applications for
registration and like papers necessary to create, perfect or preserve
Mortgagee’s security interests and rights in or to any of the collateral, and
(d) while any Event of Default exists, to perform any obligation of Mortgagor
hereunder; however: (i) Mortgagee shall not under any circumstances be obligated
to perform any obligation of Mortgagor; (ii) any sums advanced by Mortgagee in
such performance shall be added to and included in the Indebtedness and shall
bear interest at the Default Rate; (iii) Mortgagee as such attorney-in-fact
shall only be accountable for such funds as are actually received by Mortgagee;
and (iv) Mortgagee shall not be liable to Mortgagor or any other person or
entity for any failure to take any action which it is empowered to take under
this Section.

 

Section 8.5           Successors and Assigns.    This Mortgage shall be binding
upon and inure to the benefit of Mortgagee and Mortgagor and their respective
successors and assigns. Mortgagor shall not, without the prior written consent
of Mortgagee, assign any rights, duties or obligations hereunder.

 

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Section 8.6           No Waiver.    Any failure by Mortgagee to insist upon
strict performance of any of the terms, provisions or conditions of the Loan
Documents shall not be deemed to be a waiver of same, and Mortgagee shall have
the right at any time to insist upon strict performance of all of such terms,
provisions and conditions.

 

Section 8.7           Subrogation.    To the extent proceeds of the Notes have
been used to extinguish, extend or renew any indebtedness against the Mortgaged
Property, then Mortgagee shall be subrogated to all of the rights, liens and
interests existing against the Mortgaged Property and held by the holder of such
indebtedness and such former rights, liens and interests, if any, are not
waived, but are continued in full force and effect in favor of Mortgagee.

 

Section 8.8           Loan Agreement.   If any conflict or inconsistency exists
between this Mortgage and the Loan Agreement, the Loan Agreement shall govern.

 

Section 8.9           Release. Upon payment in full of the Indebtedness and
performance in full of the Obligations, Mortgagee, at Mortgagor’s expense, shall
release the liens and security interests created by this Mortgage.

 

Section 8.10    Waiver of Stay, Moratorium and Similar Rights.    Mortgagor
agrees, to the full extent that it may lawfully do so, that it will not at any
time insist upon or plead or in any way take advantage of any appraisement,
valuation, stay, marshalling of assets, extension, redemption or moratorium law
now or hereafter in force and effect so as to prevent or hinder the enforcement
of the provisions of this Mortgage or the indebtedness secured hereby, or any
agreement between Mortgagor and Mortgagee or any rights or remedies of
Mortgagee.

 

Section 8.11    Limitation on Liability.   Mortgagor’s liability hereunder is
subject to the limitation on liability provisions of Article 13 of the Loan
Agreement.

 

Section 8.12    Obligations of Mortgagor, Joint and Several.   If more than one
person or entity has executed this Mortgage as “Mortgagor,” the obligations of
all such persons or entities hereunder shall be joint and several.

 

Section 8.13    Governing Law.   The provisions of Section 12.28 (Governing Law)
of the Loan Agreement are incorporated herein by reference as though fully set
forth herein.

 

Section 8.14    Venue.    Mortgagor hereby consents to the jurisdiction of any
state or federal court located within the County of Cook, State of Illinois and
irrevocably agrees that, subject to Mortgagee's election, all actions or
proceedings arising out of or relating to this Mortgage or the other loan
documents shall be litigated in such courts; provided, however, that actions or
proceedings relating to the foreclosure or other enforcement of the lien of this
Mortgage shall be litigated in the state courts located within the County of
Clermont, State of Ohio. Mortgagor expressly submits and consents to the
jurisdiction of the aforesaid courts and waives any defense of forum non
conveniens. Mortgagor hereby waives personal service of any and all process and
agrees that all such service of process may be made upon Mortgagor by

 

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certified or registered mail, return receipt requested, addressed to Mortgagor,
at the address set forth in this Mortgage and service so made shall be deemed
complete ten (10) days after the same has been posted.

 

Section 8.15    Headings.   The Article, Section and Subsection titles hereof
are inserted for convenience of reference only and shall in no way alter, modify
or define, or be used in construing, the text of such Articles, Sections or
Subsections.

 

Section 8.16    Entire Agreement.   This Mortgage and the other Loan Documents
and the Environmental Indemnity Agreement embody the entire agreement and
understanding between Mortgagee and Mortgagor and supersede all prior agreements
and understandings between such parties relating to the subject matter hereof
and thereof. Accordingly, the Loan Documents and the Environmental Indemnity
Agreement may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements of the parties. There are no unwritten oral
agreements between the parties.

 

Section 8.17    Counterparts.   This Mortgage may be executed in multiple
counterparts, each of which shall constitute an original, but all of which shall
constitute one document.

 

Section 8.18    No Oral Change.   This Mortgage, and any provisions hereof, may
not be modified, amended, waived, extended, changed, discharged or terminated
orally or by any act or failure to act on the part of Mortgagor or Mortgagee,
but only by an agreement in writing signed by the party against whom enforcement
of any modification, amendment, waiver, extension, change, discharge or
termination is sought.

 

Section 8.19    Inapplicable Provisions.    If any term, covenant or condition
of this Mortgage is held to be invalid, illegal or unenforceable in any respect,
this Mortgage shall be construed without such provision.

 

ARTICLE 9

SPECIAL STATE PROVISIONS

 

Section 9.1    Principles of Construction.    In the event of any
inconsistencies between the terms and conditions of this Article 8 and the terms
and conditions of this Mortgage, the terms and conditions of this Article 8
shall control and be binding.

 

Section 9.2      Priority of Mortgage Lien.   Mortgagee is authorized to do all
matters permitted and sanctioned by Ohio Revised Code §1311.14, as now existing
or hereafter amended.

 

Section 9.3      Exculpation.

 

(i)      The parties hereto agree that the Mortgagee shall be afforded all of
the rights, privileges, protections, indemnities and immunities afforded to the
Administrative

 

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Agent under the Credit Agreement in connection with its execution of this
Mortgage and the performance of its duties hereunder.

 

(ii)      There shall be no recourse hereunder to any constituent entity or
individual or any member, shareholder, principal, affiliate or partner of
Mortgagor, direct or indirect, no any director, officer, employee, agent or
representative of any of them.

 

Section 9.4      Fixture Filing.    Mortgagor agrees that Mortgagee may file
this Mortgage, or a reproduction thereof, in the real estate records or other
appropriate index, as, and this Mortgage shall be deemed to be, a financing
statement filed as a fixture filing in accordance with Ohio Revised Code
§1309.502. Mortgagor warrants that Mortgagor’s name, identity and address are as
set forth herein. The mailing address of the Mortgagee from which information
may be obtained concerning the security interest created herein is also set
forth herein. This information hereof is provided in order that this Mortgage
shall comply with the requirements of the Uniform Commercial Code as enacted in
the State for instruments to be filed as financing statements. In accordance
with Ohio Revised Code §1309.515, this Mortgage shall remain effective as a
fixture filing until this Mortgage is released or satisfied of record or its
effectiveness otherwise terminates as to the Mortgaged Property.

 

Section 9.5     Future Advances.    Mortgagor and Mortgagee intend that this
Mortgage shall secure the unpaid balance of Loan advances made by the holder
hereof after this Mortgage is delivered to the County Recorder for record to the
fullest extent and with the highest priority contemplated by Section 5301.232 of
the Ohio Revised Code. The maximum amount of all Loan advances, in the aggregate
and exclusive of interest accrued thereon and protective advances made as
contemplated by the Protective Advances provisions of Section 8.6 of this
Mortgage, which may be outstanding at any time, is $10,500,000.00. If and to the
extent applicable, Mortgagor hereby waives any right it may have under Section
5301.232(C) of the Ohio Revised Code.

 

Section 8.6     Protective Advances.   In addition to securing payment of the
indebtedness and performance of the Mortgagor’s obligations under the Loan
Documents, this Mortgage secures the payment of any and all amounts advanced by
Mortgagee with respect to the Mortgaged Property for the payment of taxes,
assessments, insurance premiums or costs incurred for the protection of the
Mortgaged Property, as contemplated by Section 5301.233 of the Ohio Revised Code

 

Section 8.7     Mortgagee’s Attorneys’ Fees.    With respect to any agreement by
Mortgagor in this Mortgage or in any other Loan Document to pay Mortgagee’s
attorneys’ fees and disbursements incurred in connection with the Loan,
Mortgagor agrees that each Loan Document is a “contract of indebtedness” and
that the attorneys’ fees and disbursements referenced are those which are a
reasonable amount, all as contemplated by Ohio Revised Code Section 1301.21, as
such Section may hereafter be amended. Mortgagor further agrees that the
indebtedness incurred in connection with the Loan is not incurred for purposes
that are primarily

 

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personal, family or household and confirms that the total amount owed on the
contract of indebtedness exceeds One Hundred Thousand and No/100 Dollars
($100,000.00).

 

Section 8.8     Defeasance.    If the Mortgagor pays or causes to be paid, and
performs or causes to be performed, the Obligations, then this Mortgage and the
estate hereby created shall cease and become void, and Mortgagee shall release
and discharge this mortgage at the reasonable cost and expense of Mortgagor.

 

[Signature Page Blank]

 

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EXECUTED as of the date first above written.

 

  WATERMARK PINEBROOK OWNER, LLC,   a Delaware limited liability company      
By: /s/ David Barnes     Name:  David Barnes   Title:  Authorized Signatory

 

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