EX-10.6






	 	 	 	 	 
	 W
	 	ELLS FARGO BANK, CONSEN

NATIONAL ASSOCIATION
	 	T AND ASSUMPTION

AGREEMENT WITH G&E

HEALTHCARE REIT II

SARTELL MOB, LLC

	 
	 	 
	 	 











THIS CONSENT AND ASSUMPTION AGREEMENT (the “Consent Agreement”), effective MARCH 31, 2010 (the
“Effective Date”), is between G&E HEALTHCARE REIT II SARTELL MOB, LLC, a Delaware limited liability
company (the “Buyer”), STINGRAY PROPERTIES, LLC (the “Borrower”) and WELLS FARGO BANK, NATIONAL
ASSOCIATION (the “Bank”).



RECITALS




FIRST: Pursuant to that Construction – Term Loan Agreement effective September 16, 2005, as
amended by that certain deletion of loan covenant letter agreement dated June 4, 2007, as further
amended by that certain First Amendment to Credit Agreement dated September 17, 2009, effective
June 30 2009, as further amended by that certain Second Amendment to Credit Agreement dated the
date hereof (as amended, the “Loan Agreement”), the Bank granted the Borrower a $4,000,000.00
construction – term loan (the “Loan”) to finance the construction of improvements to the property
legally described on Exhibit A attached hereto (the “Property”).



SECOND: The Borrower’s obligation to repay the Loan is evidenced by that certain Construction Loan
Note dated of even date with the Loan Agreement and in the original principal amount of
$4,000,000.00, as amended by that certain Note Modification Agreement dated July 1, 2006, as
further amended by that certain Second Note Modification Agreement dated August 15, 2006 (as
amended, the “Note”). Payment of the Note, in turn, is secured by that certain Third Party
Mortgage, Security Agreement, Fixture Financing Statement, and Assignment of Leases and Rents dated
September 16, 2005 on the Property as amended by that certain Consent and Assumption Agreement
dated July 1, 2006 (as amended, the “Mortgage”). The Note is guaranteed by the individual Guaranty
of each of the Guarantors, as defined in the Loan Agreement, Sylvan Holdings, LLC, Crystal Blue
Properties, LLC, Ronald Berg, Gary Verkinnes, Dr. Jeffrey Gerdes, and Dr. Samir Elghor.



THIRD: The Borrower and the Buyer desire that the Property be conveyed from the Borrower to the
Buyer and have requested that the Bank consent to such transfer. The Bank has agreed to the
request, subject, however, to certain terms and conditions.



NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Borrower, the Buyer and the Bank agree as follows:



1. Mortgage Assumption. The Bank hereby consents to the sale, transfer, and conveyance
of the Property by the Borrower to the Buyer, provided, however, that the Buyer hereby agrees to
assume all obligations of the Borrower under the Mortgage, which obligations the Buyer hereby
affirms and assumes. Notwithstanding the foregoing, the Borrower, the Buyer and the Bank agree
that the Buyer is expressly not assuming personal liability to the Bank to repay the Note.



2. Status of the Loan. As of the Effective Date, the Bank represents to the Buyer in good faith
that: (a) Exhibit B sets forth a list of all material documents, instruments and agreements related
to the Loan; and (b) after giving effect to amendments dated the date hereof, the Bank has no
actual knowledge of any Event of Default under the Loan Agreement or the Mortgage; provided,
however, that Bank shall bear no liability of any kind with respect to such representations and
that such representations do not constitute a waiver of any provision or term of the Loan Agreement
or the Mortgage any related document.



3. Direct Communication and Payment. The Bank and the Borrower authorize and consent to the Bank
communicating directly with the Buyer, and the Buyer communicating directly with the Bank, with
respect to any matters related to the Loan or the Property that otherwise would be handled
exclusively between the Bank and the Borrower. The Buyer may make (and the Bank will accept)
payments related to the Loan otherwise required to be made by the Borrower.



4. Copies of Notices. Any notices required to be given by the Bank to the Buyer under the
Mortgage will be sent to the Buyer at the address set forth under the Buyer’s signature below or
such other address as the Buyer may designate by written notice to the Bank from time to time (the
“Buyer’s Notice Address”) with a copy substantially contemporaneously to the Borrower. Any notices
required to be given by the Bank to the Borrower under the Note, the Loan Agreement and/or any
Related Agreement will be sent to the Borrower as provided in the applicable loan document with a
copy substantially contemporaneously to the Buyer at the Buyer’s Notice Address.



5. Supplemental Buyer Cure Period. Notwithstanding anything to the contrary in the Mortgage, a
default defined as an Event of Default under subsection (h) of the Mortgage, other than a default
defined herein as an “Immediate Default,” shall not be considered an Event of Default under the
Mortgage until twenty (20) days following the occurrence of such default and notice to Buyer, and
the failure to cure such default or to cause such default to be cured within such period of time. 
The cure periods hereunder are not intended to extend any cure or grace period otherwise applicable
under the Note or any Related Agreement, and all such cure or grace periods shall run concurrently
without duplication. “Immediate Default” shall  mean an event of default due to (i) voluntary
bankruptcy or insolvency of Borrower or any Related Party; (ii) the failure of Borrower or any
Related Party to diligently contest and obtain the prompt dismissal of any involuntary bankruptcy
or other insolvency proceeding filed against such Borrower or Related Party; (iii) appointment of a
receiver, trustee, custodian or liquidator of a substantial part of the assets of Borrower or any
Related Party, (iv) service of a writ of garnishment, levy or other seizure with respect to any
collateral securing the Note, or any accounts of Borrower or any Related Party, (v) failure to
maintain insurance coverage for collateral, if any, as may be required; (vi) submission to Lender
of any required financial statement or certificate of Borrower or any Related Party that is
incorrect, false or misleading in any material respect when furnished or made, or (vii) breach of
any covenant or obligation of Borrower or any Related Party that is not reasonably curable within
twenty (20) days of such breach.  “Related Agreement” shall mean each loan agreement, guaranty,
security agreement, mortgage or other loan document relating to or securing the Note. “Related
Party” shall mean each guarantor, co-borrower, mortgagor or other party executing a Related
Agreement.”



6. Other Buyer Covenants.



(a) The Buyer shall establish a replacement reserve account with the Bank by entering into
Replacement Reserve Agreement with the Bank in form acceptable to the Bank (as the same may be
amended, restated or replaced from time to time, the “Replacement Reserve Agreement”) and will
observe and perform all covenants and agreements in the Replacement Reserve Agreement.



(c) The Buyer shall maintain its principal deposit account with the Bank.



(d) Not later than 60 days after, and as of the end of, each calendar year, the Buyer shall
provide to Bank a rent roll in form and substance reasonably acceptable to Bank.



(e) The Buyer shall cause the Property to maintain an occupancy rate (with bona fide tenants
at market rates) of no less than 60% as of the end of each year beginning December 31, 2010.



(f) The Buyer shall either: (i) cause the Property to maintain an occupancy rate (with bona
fide tenants at market rates) of no less than 90% as of the end of each year beginning December 31,
2010, or (ii) pay and maintain (for so long as such occupancy rate is less than 90%) the Occupancy
Funds. The “Occupancy Funds” mean TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00) to be held by
the Bank as provided herein as additional collateral security for the Indebtedness (as defined in
the Mortgage). No earnings or interest shall be payable to Buyer on the Occupancy Funds. The
Funds shall not be, nor be deemed to be, trust funds, and Bank shall have the right to hold the
Occupancy Funds in any manner Bank elects and may commingle the Occupancy Funds with other moneys
held by Bank. If the amount of the Occupancy Funds held by Bank shall not be sufficient at any
time to satisfy this subsection, Buyer shall pay to Bank any amount necessary to make up the
deficiency upon notice from Bank to Buyer requesting payment. Upon an Event of Default, as defined
in the Mortgage, Bank may apply on the Indebtedness, in the order of application as Bank may
determine, any Occupancy Funds then in Bank’s possession. Upon payment in full of the
Indebtedness, Bank shall promptly remit to Buyer any Occupancy Funds held by Bank.



7. Conditions Precedent. The effectiveness of the Bank’s consent hereunder shall be subject to
the following conditions precedent:




(a) Delivery of the following documents:




(i) this Consent Agreement, fully executed;



	 	 	 
	(ii)
	 	a Mortgage Modification, fully executed;

	(iii)
	 	a title insurance endorsement in form acceptable to the Bank;

	(iv)
	 	the Second Amendment to Credit Agreement, fully executed; and

	(v)
	 	the Replacement Reserve Agreement, fully executed.







(b) Payment of the initial deposit under the Replacement Reserve Agreement.



(c) Payment or reimbursement, as the case may be, of all reasonable fees and expenses incurred
by the Bank or related to this agreement, including, reasonable attorneys’ fees incurred by the
Bank for the preparation of this agreement and ancillary documents.



8. Miscellaneous.



(a) This Consent Agreement may be executed in multiple counterparts, each of which shall be
deemed an original.



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IN WITNESS WHEREOF, the Bank, the Borrower and the Buyer have executed this Consent Agreement as of
the Effective Date.



WELLS FARGO BANK,


NATIONAL ASSOCIATION



	 	 	 
	By: /s/ Roxanne Muehebauer

	Name:

Title:

	 	Roxanne Muehebauer

Assistant Vice President






STINGRAY PROPERTIES, LLC



	 	 	 
	By: /s/ Gary Verkinnes

	Name:

	 	Gary Verkinnes






Title: Partner



G&E HEALTHCARE REIT II SARTELL MOB, LLC,


a Delaware limited liability company



	 	 	 
	By: /s/ Danny Prosky

	Name: Danny Prosky

	Its:

	 	Authorized Signatory






Buyer’s Notice Address:


c/o Grubb & Ellis Equity Advisors, LLC


1551 North Tustin Avenue, Suite 200


Santa Ana, California 92705


Attn: Danny Prosky



With a copy to:


Gregory Kaplan, PLC


7 East Second Street


Richmond, Virginia 23224


Attn: Joseph J. McQuade



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ACKNOWLEDGMENT AND CONSENT




As of the Effective Date, each of the undersigned Guarantors acknowledges and consents to the
foregoing Consent and Assumption Agreement, and agrees that his/its Guaranty remains in full force
and effect.



/s/ Dr. Jeffrey Gerdes


Dr. Jeffrey Gerdes



/s/ Ronald Berg


Ronald Berg



/s/ Gary Verkinnes


Gary Verkinnes



/s/ Dr. Samir Elghor


Dr. Samir Elghor



Sylvan Holdings, LLC



	 	 	 
	By: /s/ Dr. Jeffrey Gerdes

	Name:

	 	Dr. Jeffrey Gerdes






Title: Partner



Crystal Blue Properties, LLC



	 	 	 
	By: /s/ Gary Verkinnes

	Name:

	 	Gary Verkinnes






Title: Partner




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