EX-10.18






Open-End Mortgage, Assignment of Rents,

Security Agreement and(Illinois)




 Fixture Filing

Project Location: 7101 Old York Road, Philadelphia, Pennsylvania

Made by

G&E HC REIT II Cheltenhem York SNF, L.P.,

as Mortgagor

to

Grubb & Ellis Healthcare REIT II Holdings, LP,

as Mortgagee and Assignor




and also to




KeyBank national Association,

as Agent,




as Mortgagee and Assignee













Dated June 23, 2011, Effective as of June 30, 2011

Re: Grubb & Ellis Healthcare REIT II Holdings, LP




PREPARED BY AND UPON RECORDATION RETURN TO:

Sean T. Maloney, Esq.

Schiff Hardin LLP

233 South Wacker Drive

Suite 6600

Chicago, Illinois 60606




Open-End Mortgage Assignment of Rents, Security

Agreement and(Illinois)




 Fixture Filing




Project Location: 7101 Old York Road, Philadelphia, Pennsylvania




This Open-End Mortgage, Assignment of Rents, Security Agreement and Fixture Filing
(this “Mortgage”) is dated June 23, 2011 but made effective as of June 30, 2011, by G&E HC
REIT II Cheltenhem York SNF, L.P., a Delaware limited partnership (“Mortgagor”), whose address
is c/o Grubb & Ellis Healthcare REIT II, Inc., 1551 North Tustin Avenue, Suite 300, Santa Ana,
California 92705, in favor of (a) Grubb & Ellis Healthcare REIT II Holdings, LP, a
Delaware limited partnership (“Borrower”), as mortgagee and also as assignor, whose address is c/o
Grubb & Ellis Healthcare REIT II, Inc., 1551 North Tustin Avenue, Suite 300, Santa Ana, California
92705 and (b) KeyBank National Association, as Agent, its successors and assigns
(“Mortgagee”), as mortgagee and also as assignee, whose address is Mailcode WA-31-13-2313, 1301
5th Avenue, 23rd Floor, Seattle, Washington 98101.



Recitals:




A. Mortgagor, directly or indirectly, is a subsidiary of Borrower.



B. The Borrower has entered into that certain Credit Agreement dated as of June 30, 2011 (as
the same may be amended, supplemented, restated or otherwise modified from time to time, the
“Credit Agreement”) among the Borrower, KeyBank National Association, as Agent (the “Agent”) and
each of the Lenders from time to time parties thereto (the “Lenders”), providing for, among other
things, Revolving Credit Loans to the Borrower of up to $71,500,000 (herein, and as defined in the
Credit Agreement, the “Revolving Credit Loans”).



C. The proceeds of the Revolving Credit Loans will be used by Borrower to provide funds (each,
an “Intercompany Loan”) from time to time to each Subsidiary Guarantor (as defined in the Credit
Agreement) to purchase or refinance an Eligible Facility (as defined in the Credit Agreement) that
is owned or operated by such Subsidiary Guarantor.



D. Each Intercompany Loan will be (i) evidenced by an Intercompany Note (as defined in the
Credit Agreement) from each such Subsidiary Guarantor, which Intercompany Note will be assigned
(including an assignment of Mortgagor’s Intercompany Note contemporaneously herewith) to Agent as
collateral for all of the Revolving Credit Loans and (ii) secured by this Mortgage, the rights of
Borrower with respect hereto are being contemporaneously assigned in toto to Mortgagee pursuant to
the assignment contained at the end of this Mortgage.



E. Mortgagor is a Subsidiary Guarantor under that certain Subsidiary Guaranty Agreement dated
as of the date hereof (as supplemented, modified or amended from time to time, the “Subsidiary
Guaranty”) providing a guarantee of all of Borrower’s Obligations (as defined in the Credit
Agreement) under the Loan Documents (as defined in the Credit Agreement).



F. The below defined Property is (on the date hereof) an Eligible Facility.



G. The Agent and the Lenders have required as a condition of their making Revolving Credit
Loans from time to time that the Borrower cause the Mortgagor to enter into this Mortgage, and the
Borrower has agreed to cause the undersigned Mortgagor to execute this Mortgage, in order to induce
the Agent and the Lenders to make the Revolving Credit Loans and thereby benefit the Borrower and
its Subsidiaries by providing funds to the Borrower for the purposes described in Schedule 2.8 of
the Credit Agreement.



Now, therefore, as required by the Credit Agreement and in consideration of the
premises and other good and valuable consideration, the receipt and sufficiency whereof are hereby
acknowledged, Mortgagor does hereby covenant and agree as follows:



1. Grant and Secured Obligations.



1.1 Grant. For the purpose of securing payment and performance of the Secured
Obligations defined and described in Section 1.2 below, Mortgagor hereby irrevocably and
unconditionally grants, bargains, sells, conveys, mortgages and warrants to Borrower and Mortgagee
(as their interests may appear), with (to the extent permitted by law) power of
sale and with right of entry and possession, all estate, right, title and interest which
Mortgagor now has or may later acquire in and to the following property (all or any part of such
property, or any interest in all or any part of it, as the context may require, the “Property”):




(a) The real property located in the County of Philadelphia, Commonwealth of
Pennsylvania, as described in Exhibit A, together with all existing and future easements and
rights affording access to it (the “Premises”); together with




(b) All buildings, structures and improvements now located or later to be constructed
on the Premises (the “Improvements”); together with




(c) All existing and future appurtenances, privileges, easements, franchises and
tenements of the Premises, including all minerals, oil, gas, other hydrocarbons and
associated substances, sulphur, nitrogen, carbon dioxide, helium and other commercially
valuable substances which may be in, under or produced from any part of the Premises, all
development rights and credits, air rights, water, water rights (whether riparian,
appropriative or otherwise, and whether or not appurtenant) and water stock, and any
Premises lying in the streets, roads or avenues, open or proposed, in front of or adjoining
the Premises and Improvements; together with




(d) All existing and future leases, subleases, subtenancies, licenses, occupancy
agreements and concessions (“leases”) relating to the use and enjoyment of all or any part
of the Premises and Improvements, and any and all guaranties and other agreements relating
to or made in connection with any of such leases; together with




(e) All real property and improvements thereon, and all appurtenances and other
property and interests of any kind or character, whether described in Exhibit A or not,
which may be reasonably necessary or desirable to promote the present and any reasonable
future beneficial use and enjoyment of the Premises and Improvements; together with




(f) All goods, materials, supplies, chattels, furniture, fixtures, equipment and
machinery now or later to be attached to, placed in or on, or used in connection with the
use, enjoyment, occupancy or operation of all or any part of the Premises and Improvements,
whether stored on the Premises or elsewhere, including all pumping plants, engines, pipes,
ditches and flumes, and also all gas, electric, cooking, heating, cooling, air conditioning,
lighting, refrigeration and plumbing fixtures and equipment, all of which shall be
considered to the fullest extent of the law to be real property for purposes of this
Mortgage and any manufacturer’s warranties with respect thereto; together with




(g) All building materials, equipment, work in process or other personal property of
any kind, whether stored on the Premises or elsewhere, which have been or later will be
acquired for the purpose of being delivered to, incorporated into or installed in or about
the Premises or Improvements; together with




(h) All of Mortgagor’s interest in and to all operating accounts, the Loan funds,
whether disbursed or not, all reserves set forth in the Budget relating to the Property, and
any other bank accounts of Mortgagor; together with




(i) All rights to the payment of money, accounts, accounts receivable, reserves,
deferred payments, refunds, cost savings, payments and deposits, whether now or later to be
received from third parties (including all earnest money sales deposits) or deposited by
Mortgagor with third parties (including all utility deposits), contract rights, development
and use rights, governmental permits and licenses, applications, architectural and
engineering plans, specifications and drawings, as-built drawings, chattel paper,
instruments, documents, notes, drafts and letters of credit (other than letters of credit in
favor of Mortgagee), which arise from or relate to construction on the Premises or to any
business now or later to be conducted on it, or to the Premises and Improvements generally
and any builder’s or manufacturer’s warranties with respect thereto; together with




(j) All insurance policies pertaining to the Premises and all proceeds, including all
claims to and demands for them, of the voluntary or involuntary conversion of any of the
Premises, Improvements or the other property described above into cash or liquidated claims,
including proceeds of all present and future fire, hazard or casualty insurance policies and
all condemnation awards or payments now or later to be made by any public body or decree by
any court of competent jurisdiction for any taking or in connection with any condemnation or
eminent domain proceeding, and all causes of action and their proceeds for any damage or
injury to the Premises, Improvements or the other property described above or any part of
them, or breach of warranty in connection with the construction of the Improvements,
including causes of action arising in tort, contract, fraud or concealment of a material
fact; together with




(k) All books and records pertaining to any and all of the property described above,
including computer-readable memory and any computer hardware or software necessary to access
and process such memory, but not including, to the extent required by applicable laws and
rules concerning resident privacy, resident files (“Books and Records”); together with




(l) All proceeds of, additions and accretions to, substitutions and replacements for,
and changes in any of the property described above.



Capitalized terms used above and elsewhere in this Mortgage without definition have the
meanings given them in the above defined Credit Agreement.



1.2 Secured Obligations.




(a) Mortgagor makes the grant, conveyance, and mortgage set forth in Section 1.1 above,
and grants the security interest set forth in Section 3 below for the purpose of securing
the following obligations (the “Secured Obligations”) in any order of priority that
Mortgagee may choose:




(i) Payment of all obligations at any time owing under (A) the various
promissory notes (the “Note”) dated as of June 30, 2011, payable by Borrower, as
maker in the aggregate principal amount of Seventy-One Million Five Hundred Thousand
and No/100 Dollars ($71,500,000.00) to the order of Lenders, (B) that certain
Intercompany Note of the Mortgagor dated as of the date hereof payable to Borrower
and assigned to Agent, (C) those certain Intercompany Notes of the other Subsidiary
Guarantors from time to time, as maker(s), payable to Borrower and assigned to Agent
(together with the Note, the “Notes”), and (D) the Subsidiary Guaranty;




(ii) Payment and performance of all Guaranteed Obligations (as defined in the
Subsidiary Guaranty);




(iii) Payment and performance of all obligations of Mortgagor under this
Mortgage;




(iv) Payment and performance of all obligations of Borrower under the Credit
Agreement and the other Loan Documents;




(v) Payment and performance of any obligations of Mortgagor and the other Loan
Parties (including each other Subsidiary Guarantor) under the other Loan Documents;




(vi) Payment and performance of all future advances and other obligations that
Mortgagor or any successor in ownership of all or part of the Property may agree to
pay and/or perform (whether as principal, surety or guarantor) for the benefit of
Mortgagee, when a writing evidences the parties’ agreement that the advance or
obligation be secured by this Mortgage; and




(vii) Payment and performance of all modifications, amendments, extensions, and
renewals, however evidenced, of any of the Secured Obligations.




(b) All persons who may have or acquire an interest in all or any part of the Property
will be considered to have notice of, and will be bound by, the terms of the Secured
Obligations and each other agreement or instrument made or entered into in connection with
each of the Secured Obligations. Such terms include any provisions in the Notes or the
Credit Agreement which permit borrowing, repayment and reborrowing, or which provide that
the interest rate on one or more of the Secured Obligations may vary from time to time.



2. Assignment of Rents.



2.1 Assignment. Mortgagor hereby irrevocably, absolutely, presently and unconditionally
assigns to Mortgagee all rents, royalties, issues, profits, revenue, income, accounts, proceeds and
other benefits of the Property, whether now due, past due or to become due, including all prepaid
rents and security deposits (some or all collectively, as the context may require, “Rents”). This
is an absolute assignment, not an assignment for security only.



2.2 Grant of License. Mortgagee hereby confers upon Mortgagor a license (“License”) to
collect and retain the Rents as they become due and payable, so long as no Event of Default, as
defined in Section 6.2 below, shall exist and be continuing. If an Event of Default has occurred
and is continuing, Mortgagee shall have the right, which it may choose to exercise in its sole
discretion, to terminate this License without notice to or demand upon Mortgagor, and without
regard to the adequacy of Mortgagee’s security under this Mortgage.



2.3 Collection and Application of Rents. Subject to the License granted to Mortgagor under
Section 2.2 above, Mortgagee has the right, power and authority to collect any and all Rents.
Mortgagor hereby appoints Mortgagee its attorney-in-fact to perform any and all of the following
acts (if an Event of Default has occurred and is continuing) if and at the times when Mortgagee in
its sole discretion may so choose:




(a) Demand, receive and enforce payment of any and all Rents; or




(b) Give receipts, releases and satisfactions for any and all Rents; or




(c) Sue either in the name of Mortgagor or in the name of Mortgagee for any and all
Rents.



Mortgagee and Mortgagor agree that the mere recordation of the assignment granted herein entitles
Mortgagee immediately to collect and receive rents upon the occurrence (and during the continuance)
of an Event of Default without first taking any acts of enforcement under applicable law, such as,
but not limited to, providing notice to Mortgagor, filing foreclosure proceedings, or seeking
and/or obtaining the appointment of a receiver. Further, Mortgagee’s right to the Rents does not
depend on whether or not Mortgagee takes possession of the Property as permitted under Subsection
6.3(c). In Mortgagee’s sole discretion, Mortgagee may choose to collect Rents either with or
without taking possession of the Property. Mortgagee shall apply all Rents collected by it in the
manner provided under Section 6.6. If an Event of Default occurs while Mortgagee is in possession
of all or part of the Property and is collecting and applying Rents as permitted under this
Mortgage, Mortgagee and any receiver shall nevertheless be entitled to exercise and invoke every
right and remedy afforded any of them under this Mortgage and at law or in equity.



2.4 Mortgagee Not Responsible. Under no circumstances shall Mortgagee have any duty to
produce Rents from the Property. Regardless of whether or not Mortgagee, in person or by agent,
takes actual possession of the Premises and Improvements, unless Mortgagee agrees in writing to the
contrary, Mortgagee is not and shall not be deemed to be:




(a) A “mortgagee in possession” for any purpose; or




(b) Responsible for performing any of the obligations of the lessor under any lease; or




(c) Responsible for any waste committed by lessees or any other parties, any dangerous
or defective condition of the Property, or any negligence in the management, upkeep, repair
or control of the Property; or




(d) Liable in any manner for the Property or the use, occupancy, enjoyment or operation
of all or any part of it.



2.5 Leasing. Mortgagor shall not accept any deposit or prepayment of rents under the leases
for any rental period exceeding one (1) month without Mortgagee’s prior written consent, which
shall not be unreasonably withheld, delayed or conditioned. Mortgagor shall not lease the Property
or any part of it except strictly in accordance with the Credit Agreement.



3. Grant of Security Interest.



3.1 Security Agreement. The parties intend for this Mortgage to create a lien on the
Property, and an absolute assignment of the Rents, all in favor of Mortgagee. The parties
acknowledge that some of the Property and some or all of the Rents may be determined under
applicable law to be personal property or fixtures. To the extent that any Property or Rents may
be or be determined to be personal property, Mortgagor as debtor hereby grants Mortgagee as secured
party a security interest in all such Property and Rents, to secure payment and performance of the
Secured Obligations. This Mortgage constitutes a security agreement under the Uniform Commercial
Code of the State in which the Property is located, covering all such Property and Rents.



3.2 Financing Statements. Mortgagor hereby authorizes Mortgagee to file one or more financing
statements. In addition, Mortgagor shall execute such other documents as Mortgagee may from time
to time reasonably require to perfect or continue the perfection of Mortgagee’s security interest
in any Property or Rents. As provided in Section 5.9 below, Mortgagor shall pay all fees and costs
that Mortgagee may incur in filing such documents in public offices and in obtaining such record
searches as Mortgagee may reasonably require. In case Mortgagor fails to execute any financing
statements or other documents for the perfection or continuation of any security interest,
Mortgagor hereby appoints Mortgagee as its true and lawful attorney-in-fact to execute any such
documents on its behalf. If any financing statement or other document is filed in the records
normally pertaining to personal property, that filing shall never be construed as in any way
derogating from or impairing this Mortgage or the rights or obligations of the parties hereunder.



4. Fixture Filing.



This Mortgage constitutes a financing statement filed as a fixture filing under Article 9 of
the Uniform Commercial Code in the State in which the Property is located, as amended or recodified
from time to time, covering any Property which now is or later may become fixtures attached to the
Premises or Improvements. For this purpose, the respective addresses of Mortgagor, as debtor, and
Mortgagee, as secured party, are as set forth in the preamble of this Mortgage



5. Rights and Duties of the Parties.



5.1 Representations and Warranties. Mortgagor represents and warrants that:




(a) Mortgagor lawfully possesses and holds fee simple title to all of the Premises and
Improvements;




(b) Mortgagor has or will have good title to all Property other than any portion
thereof that is personal property owned by any tenant;




(c) Mortgagor has the full and unlimited power, right and authority to encumber the
Property and assign the Rents;




(d) This Mortgage creates a first and prior lien on the Property subject only to
Permitted Liens;




(e) The Property includes all property and rights which may be reasonably necessary or
desirable to promote the present and any reasonable future beneficial use and enjoyment of
the Premises and Improvements;




(f) Except for any portion thereof that is personal property owned by any tenant,
Mortgagor owns any Property which is personal property free and clear of any security
agreements, reservations of title or conditional sales contracts, and there is no financing
statement affecting such personal property on file in any public office;




(g) Mortgagor expects to derive a direct benefit (and its board of directors or other
governing body had determined that it may reasonably be expected to derive such benefit)
from: (1) the Revolving Credit Loans and the Intercompany Loans to finance its business;
(2) the successful operations of Borrower and each other Subsidiary Guarantor individually
and as a group; (3) its rights of contribution and subrogation against the Borrower and each
other Subsidiary Guarantor as provided in the Subsidiary Guaranty or under applicable law;
and (4) the Credit Agreement and the other Loan Documents; and




(h) Mortgagor’s place of business, or its chief executive office if it has more than
one place of business, is located at the address specified below.



5.2 Taxes, and Assessments. Mortgagor shall pay prior to delinquency all taxes, levies,
charges and assessments, in accordance with Section 6.6 of the Credit Agreement.



5.3 Performance of Secured Obligations. Mortgagor shall promptly pay and perform each Secured
Obligation to be performed by it under the Loan Documents in accordance with its terms.



5.4 Liens, Charges and Encumbrances. Mortgagor shall immediately discharge any lien on the
Property that is not a Permitted Lien and which Mortgagee has not otherwise consented to in writing
in accordance with the terms of Section 7.2 of the Credit Agreement.



5.5 Damages and Insurance and Condemnation Proceeds. In the event of any casualty or
condemnation of the Property, the provisions of Section 6.17 of the Credit Agreement shall govern.



5.6 Maintenance and Preservation of Property.




(a) Mortgagor shall insure (or cause its tenant to insure) the Property as more
specifically required by the Credit Agreement and keep the Property in good condition and
repair.




(b) Mortgagor shall not remove or demolish the Property or any part of it, or
materially alter, restore or add to the Property, or initiate or allow any change or
variance in any zoning or other Premises use classification which materially and adversely
affects the Property or any part of it, except as permitted or required by the Credit
Agreement or with Mortgagee’s express prior written consent in each instance, which consent
shall not be unreasonably withheld, delayed or conditioned.




(c) If all or part of the Property becomes damaged or destroyed, Mortgagor shall
promptly and completely repair and/or restore the Property in a good and workmanlike manner
in accordance with (and as required by) the Credit Agreement.




(d) Mortgagor shall not commit or allow any act upon or use of the Property which would
violate (i) any applicable Laws or order of any Governmental Authority, whether now existing
or later to be enacted and whether foreseen or unforeseen, in any material adverse manner;
or (ii) any public or private covenant, condition, restriction or equitable servitude
affecting the Property. Mortgagor shall not bring or keep any article on the Property or
cause or allow any condition to exist on it, if that could invalidate or would be prohibited
by any insurance coverage required to be maintained by Mortgagor on the Property or any part
of it under the Credit Agreement.




(e) Mortgagor shall not commit or allow waste of the Property, including those acts or
omissions characterized under the Credit Agreement as waste which arises out of Hazardous
Material.




(f) Mortgagor shall perform (or cause to be performed) all other acts which from the
character or use of the Property may be reasonably necessary to maintain and preserve its
value.



5.7 Releases, Extensions, Modifications and Additional Security. From time to time, Mortgagee
may perform any of the following acts without incurring any liability or giving notice to any
person:




(a) Release any person liable for payment of the Secured Obligations;




(b) Extend the time for payment, or otherwise alter the terms of payment, of the
Secured Obligations;




(c) Accept additional real or personal property of any kind as security for the Secured
Obligations, whether evidenced by deeds of trust, mortgages, security agreements or any
other instruments of security;




(d) Alter, substitute or release any property securing the Secured Obligations;




(e) Consent to the making of any plat or map of the Property or any part of it;




(f) Join in granting any easement or creating any restriction affecting the Property;
or




(g) Join in any subordination or other agreement affecting this Mortgage or the lien of
it; or




(h) Release the Property or any part of it.



5.8 Release. When the Secured Obligations (or such sums as required by Section 2.5(f) of the
Credit Agreement) have been paid in full and all fees and other sums owed by Mortgagor under
Section 5.9 of this Mortgage by Mortgagor and the other Loan Parties under the other Loan Documents
have been received (and subject to the terms and conditions of Section 7.7 of the Credit
Agreement), Mortgagee shall release this Mortgage, the lien created thereby, and all notes and
instruments evidencing the Secured Obligations. In such event, Mortgagee shall, at the request of
Mortgagor, deliver to Mortgagor, in recordable form, all such documents as shall be reasonably
necessary to release this Mortgage and all liens, security interests, conveyances and assignments
created hereunder. Mortgagor shall pay any costs of preparation and recordation of such release.



5.9 Compensation, Exculpation, Indemnification.




(a) Mortgagor agrees to pay a reasonable fee for any services that Mortgagee may render
in connection with this Mortgage, including Mortgagee’s providing a statement of the Secured
Obligations (but specifically excluding a fee, but not reimbursement for costs or expenses,
for providing the release pursuant to Section 5.8 above). Mortgagor shall also pay or
reimburse all of Mortgagee’s reasonable out-of-pocket costs and expenses which may be
incurred in rendering any such services. Mortgagor further agrees to pay or reimburse
Mortgagee for all actual, reasonable, out-of-pocket costs, expenses and other advances which
may be incurred or made by Mortgagee in any efforts to enforce any terms of this Mortgage,
including any rights or remedies afforded to Mortgagee under Section 6.3, whether any
lawsuit is filed or not, or in defending any action or proceeding arising under or relating
to this Mortgage, including attorneys’ fees and other legal costs, costs of any Foreclosure
Sale (as defined in Subsection 6.3(i) below) and any cost of evidence of title. If
Mortgagee chooses to dispose of Property through more than one Foreclosure Sale, Mortgagor
shall pay all costs, expenses or other advances that may be incurred or made by Mortgagee in
each of such Foreclosure Sales. In any suit to foreclose the lien hereof or enforce any
other remedy of Mortgagee under this Mortgage or the Note, there shall be allowed and
included as additional indebtedness in the decree for sale or other judgment or decree all
expenditures and expenses which may be paid or incurred by or on behalf of Mortgagee for
reasonable attorneys’ costs and fees (including the costs and fees of paralegals), survey
charges, appraiser’s fees, inspecting engineer’s and/or architect’s fees, fees for
environmental studies and assessments and all additional expenses incurred by Mortgagee with
respect to environmental matters, outlays for documentary and expert evidence,
stenographers’ charges, publication costs, and costs (which may be estimated as to items to
be expended after entry of the decree) of procuring all such abstracts of title, title
searches and examinations, title insurance policies and similar data and assurances with
respect to title as Mortgagee may deem reasonably necessary either to prosecute such suit or
to evidence to bidders at any sale which may be had pursuant to such decree the true
condition of the title to, the value of or the environmental condition of the Property.
All expenditures and expenses of the nature in this Subsection mentioned, and such expenses
and fees as may be incurred in the protection of the Property and maintenance of the lien of
this Mortgage, including the fees of any attorney (including the costs and fees of
paralegals) employed by Mortgagee in any litigation or proceeding affecting this Mortgage,
the Notes or the Property, including probate and bankruptcy proceedings, or in preparation
for the commencement or defense of any proceeding or threatened suit or proceeding, shall be
immediately due and payable by Mortgagor, with interest thereon at the Default Rate and
shall be secured by this Mortgage.




(b) Mortgagee shall not be directly or indirectly liable to Mortgagor or any other
person as a consequence of any of the following:




(i) Mortgagee’s exercise of or failure to exercise any rights, remedies or
powers granted to Mortgagee in this Mortgage;




(ii) Mortgagee’s failure or refusal to perform or discharge any obligation or
liability of Mortgagor under any agreement related to the Property or under this
Mortgage; or




(iii) Any loss sustained by Mortgagor or any third party resulting from
Mortgagee’s failure to lease the Property, or from any other act or omission of
Mortgagee in managing the Property, during the continuance of an Event of Default,
unless the loss is caused by the gross negligence, willful misconduct or bad faith
of Mortgagee.




Mortgagor hereby expressly waives and releases all liability of the types described above,
and agrees that no such liability shall be asserted against or imposed upon Mortgagee.




(c) Mortgagor agrees to indemnify Mortgagee against and hold it harmless from all
losses, damages, liabilities, claims, causes of action, judgments, court costs, attorneys’
fees and other legal expenses, cost of evidence of title, cost of evidence of value, and
other costs and expenses which it may suffer or incur:




(i) In performing any act required or permitted by this Mortgage or any of the
other Loan Documents or by law;




(ii) Because of any failure of Mortgagor to perform any of its obligations
under this Mortgage or the other Loan Documents; or




(iii) Because of any alleged obligation of or undertaking by Mortgagee to
perform or discharge any of the representations, warranties, conditions, covenants
or other obligations in any document relating to the Property other than the Loan
Documents, unless this loss is caused by the gross negligence, willful misconduct or
bad faith of Mortgagee.




This agreement by Mortgagor to indemnify Mortgagee shall survive the release and
cancellation of any or all of the Secured Obligations and the full or partial release of
this Mortgage.




(d) Mortgagor shall pay all obligations to pay money arising under this Section 5.9
promptly upon demand by Mortgagee. Each such obligation shall be added to, and considered
to be part of, the principal of the Note, and shall bear interest from the date the
obligation arises at the Default Rate.



5.10 Defense and Notice of Claims and Actions. At Mortgagor’s sole expense, Mortgagor shall
protect, preserve and defend the Property and title to and right of possession of the Property, and
the security of this Mortgage and the rights and powers of Mortgagee created under it, against all
adverse claims. Mortgagor shall give Mortgagee prompt notice in writing if any claim is asserted
which does or could materially affect any such matters, or if any action or proceeding is commenced
which alleges or relates to any such claim.



5.11 Subrogation. Mortgagee shall be subrogated to the liens of all encumbrances, whether
released of record or not, which are discharged in whole or in part by Mortgagee in accordance with
this Mortgage or with the proceeds of any loan secured by this Mortgage.



5.12 Site Visits, Observation and Testing. Mortgagee and its agents and representatives shall
have the right at any reasonable time (subject to rights of tenants to quiet enjoyment under
applicable leases) to enter and visit the Property for the purpose of performing appraisals,
observing the Property, taking and removing soil or groundwater samples, and conducting tests on
any part of the Property. Mortgagee has no duty, however, to visit or observe the Property or to
conduct tests, and no site visit, observation or testing by Mortgagee, its agents or
representatives shall impose any liability on any of Mortgagee, its agents or representatives. In
no event shall any site visit, observation or testing by Mortgagee, its agents or representatives
be a representation that Hazardous Material are or are not present in, on or under the Property, or
that there has been or shall be compliance with any law, regulation or ordinance pertaining to
Hazardous Material or any other applicable governmental law. Neither Mortgagor nor any other party
is entitled to rely on any site visit, observation or testing by any of Mortgagee, its agents or
representatives. Neither Mortgagee, its agents or representatives owe any duty of care to protect
Mortgagor or any other party against, or to inform Mortgagor or any other party of, any Hazardous
Material or any other adverse condition affecting the Property. Mortgagee shall give Mortgagor
reasonable advance notice before entering the Property. Mortgagee shall make reasonable efforts to
avoid interfering with Mortgagor’s use of the Property in exercising any rights provided in this
Section 5.12.



5.13 Notice of Change. Mortgagor shall give Mortgagee prior written notice of any change in
(a) the location of its place of business or its chief executive office if it has more than one
place of business; (b) the location of any of the Property, including the Books and Records; and
(c) Mortgagor’s name, business structure or jurisdiction of organization. Unless otherwise
approved by Mortgagee in writing, all Property that consists of personal property (other than the
Books and Records) will be located on the Premises and all Books and Records will be located at
Mortgagor’s place of business or chief executive office if Mortgagor has more than one place of
business.



6. Accelerating Transfers, Default and Remedies.



6.1 Accelerating Transfers.




(a) “Accelerating Transfer” means any transfer not expressly permitted under Sections
7.7 or 10.12 of the Credit Agreement.




(b) Mortgagor acknowledges that Lenders are making one or more advances under the
Credit Agreement in reliance on the expertise, skill and experience of Mortgagor. In
consideration of Mortgagee’s reliance, Mortgagor agrees that Mortgagor shall not make any
Accelerating Transfer, unless the transfer is preceded by Mortgagee’s express written
consent to the particular transaction and transferee. Mortgagee may withhold such consent
in its sole discretion. If any Accelerating Transfer occurs, Mortgagee in its sole
discretion may declare all of the Secured Obligations to be immediately due and payable, and
Mortgagee may invoke any rights and remedies provided by Section 6.3 of this Mortgage.



6.2 Events of Default. Mortgagor will be in default under this Mortgage upon the occurrence
of any “Event of Default” under the Credit Agreement or any other Loan Document.



6.3 Remedies. At any time after an Event of Default, Mortgagee shall be entitled to invoke
any and all of the rights and remedies described below, in addition to all other rights and
remedies available to Mortgagee at law or in equity. All of such rights and remedies shall be
cumulative, and the exercise of any one or more of them shall not constitute an election of
remedies.




(a) Acceleration. Mortgagee may declare any or all of the Secured Obligations to be
due and payable immediately.




(b) POWER TO CONFESS JUDGMENT.  THE MORTGAGOR AUTHORIZES THE PROTHONOTARY OR ANY
ATTORNEY OF ANY COURT OF RECORD WITHIN THE COMMONWEALTH OF PENNSYLVANIA OR ELSEWHERE AFTER
AN EVENT OF DEFAULT UNDER THIS MORTGAGE TO APPEAR FOR MORTGAGOR TO FILE AN AGREEMENT FOR
ENTERING IN ANY COURT OF COMPETENT JURISDICTION AN AMICABLE ACTION FOR CONFESSION OF
JUDGMENT IN EJECTMENT AGAINST MORTGAGOR AND ALL PERSONS CLAIMING UNDER MORTGAGOR FOR THE
RECOVERY BY MORTGAGEE OF POSSESSION OF THE PROPERTY, FOR WHICH THIS MORTGAGE OR A TRUE AND
CORRECT COPY THEREOF SHALL BE A SUFFICIENT WARRANT, WHEREUPON, IF MORTGAGEE SO DESIRES, A
WRIT OF POSSESSION MAY ISSUE FORTHWITH, WITHOUT ANY PRIOR WRIT OR PROCEEDINGS WHATSOEVER,
AND PROVIDED THAT IF FOR ANY REASON AFTER SUCH ACTION SHALL HAVE BEEN COMMENCED THE SAME
SHALL BE TERMINATED AND POSSESSION REMAIN IN OR BE RESTORED TO MORTGAGOR, MORTGAGEE SHALL
HAVE THE RIGHT UPON ANY SUBSEQUENT DEFAULT OR DEFAULTS, OR UPON THE TERMINATION OR
EXPIRATION OF THIS MORTGAGE AS HEREINBEFORE SET FORTH, TO BRING ONE OR MORE AMICABLE ACTION
OR ACTIONS AS HEREINBEFORE SET FORTH TO RECOVER POSSESSION BY CONFESSION OF JUDGMENT AS
AFORESAID. NO SINGLE EXERCISE OF THE FOREGOING POWER TO CONFESS JUDGMENT SHALL BE DEEMED TO
EXHAUST THAT POWER, WHETHER OR NOT ANY SUCH EXERCISE SHALL BE HELD BY ANY COURT TO BE VALID,
VOIDABLE OR VOID, BUT THE POWER SHALL CONTINUE UNDIMINISHED AND IT MAY BE EXERCISED FROM
TIME TO TIME AND AS OFTEN AS MORTGAGEE SHALL ELECT.




BY SIGNING THIS INSTRUMENT, THE MORTGAGOR HEREBY ACKNOWLEDGES THAT IT HAS READ, HAS HAD
THE OPPORTUNITY TO HAVE IT REVIEWED BY LEGAL COUNSEL, UNDERSTANDS, AND AGREES TO THE
PROVISIONS CONTAINED HEREIN, INCLUDING THE CONFESSION OF JUDGMENT PROVISIONS AND UNDERSTANDS
THAT A CONFESSION OF JUDGMENT CONSTITUTES A WAIVER OF RIGHTS IT OTHERWISE WOULD HAVE TO
PRIOR NOTICE AND A HEARING BEFORE A JUDGMENT IS ENTERED AGAINST IT AND WHICH MAY RESULT IN A
COURT JUDGMENT AGAINST THE MORTGAGOR WITHOUT PRIOR NOTICE OR HEARING AND THAT THE AMOUNTS
PAYABLE UNDER THIS MORTGAGE MAY BE COLLECTED FROM THE MORTGAGOR REGARDLESS OF ANY CLAIM THE
MORTGAGOR MAY HAVE AGAINST THE MORTGAGEE.  MORTGAGOR VOLUNTARILY, INTELLIGENTLY AND
KNOWINGLY WAIVES THESE RIGHTS AND EXPRESSLY AGREES AND CONSENTS TO MORTGAGEE TAKING THE
ACTIONS HEREIN CONTAINED.




SJ




Mortgagor’s Initials




(c) POWER TO EXECUTE ON A JUDGMENT WITHOUT HEARING. THE MORTGAGOR HEREBY AUTHORIZES
AND EMPOWERS THE PROTHONOTARY OR ANY ATTORNEY OF ANY COURT OF RECORD OR THE SHERIFF WITHIN
THE COMMONWEALTH OF PENNSYLVANIA OR ELSEWHERE, TO TAKE ALL ACTION ALLOWED BY OR PROVIDED FOR
IN THE PENNSYLVANIA RULES OF CIVIL PROCEDURE OR OTHER APPLICABLE RULES OF CIVIL PROCEDURE TO
EXECUTE ON ANY JUDGMENT ENTERED AGAINST THE MORTGAGOR PURSUANT TO THE CONFESSION OF JUDGMENT
SET FORTH ABOVE WITHOUT PRIOR NOTICE OR HEARING OF ANY NATURE WHATSOEVER, WAIVING ALL LAWS
EXEMPTING REAL OR PERSONAL PROPERTY FROM EXECUTION, TO THE EXTENT THAT SUCH LAWS MAY
LAWFULLY BE WAIVED BY THE MORTGAGOR. NO SINGLE EXERCISE OF THE FOREGOING POWER TO EXECUTE
ON JUDGMENT WITHOUT A HEARING SHALL BE DEEMED TO EXHAUST THE POWER, WHETHER OR NOT ANY SUCH
EXERCISE SHALL BE HELD BY ANY COURT TO BE VALID, VOIDABLE OR VOID, BUT THE POWER SHALL
CONTINUE UNDIMINISHED AND IT MAY BE EXERCISED FROM TIME TO TIME AS OFTEN AS THE MORTGAGEE
SHALL ELECT UNTIL SUCH TIME AS THE MORTGAGEE SHALL HAVE RECEIVED EXCLUSIVE POSSESSION OF THE
PROPERTY.




BY SIGNING THIS INSTRUMENT THE MORTGAGOR HEREBY ACKNOWLEDGES THAT IT HAS READ, HAS HAD
THE OPPORTUNITY TO HAVE IT REVIEWED BY LEGAL COUNSEL, UNDERSTANDS AND AGREES TO THE
PROVISIONS CONTAINED HEREIN, INCLUDING THE POWER TO EXECUTE ON JUDGMENT WITHOUT A HEARING,
AND UNDERSTANDS THAT THE POWER TO EXECUTE ON A JUDGMENT WITHOUT A HEARING CONSTITUTES A
WAIVER OF RIGHTS IT OTHERWISE WOULD HAVE TO PRIOR NOTICE AND A HEARING BEFORE EXECUTION ON A
JUDGMENT, AND THAT EXCLUSIVE POSSESSION OF THE PROPERTY HEREBY PLEDGED MAY BE GRANTED TO
MORTGAGEE, REGARDLESS OF ANY CLAIM THAT THE MORTGAGOR MAY HAVE AGAINST THE MORTGAGEE.
MORTGAGOR VOLUNTARILY, INTELLIGENTLY AND KNOWINGLY WAIVES THESE RIGHTS AND EXPRESSLY AGREES
AND CONSENTS TO MORTGAGEE TAKING THE ACTIONS HEREIN CONTAINED.




SJ




Mortgagor’s Initials




(d) Receiver. Mortgagee shall, as a matter of right, without notice and without giving
bond to Mortgagor or anyone claiming by, under or through Mortgagor, and without regard for
the solvency or insolvency of Mortgagor or the then value of the Property, to the extent
permitted by applicable law, be entitled to have a receiver appointed for all or any part of
the Property and the Rents, and the proceeds, issues and profits thereof, with the rights
and powers referenced below and such other rights and powers as the court making such
appointment shall confer, and Mortgagor hereby consents to the appointment of such receiver
and shall not oppose any such appointment. Such receiver shall have all powers and duties
prescribed by applicable law, all other powers which are necessary or usual in such cases
for the protection, possession, control, management and operation of the Property, and such
rights and powers as Mortgagee would have, upon entering and taking possession of the
Property under subsection (c) below.




(e) Entry. Mortgagee, in person, by agent or by court-appointed receiver, may enter,
take possession of, manage and operate all or any part of the Property, and may also do any
and all other things in connection with those actions that Mortgagee may in its sole
discretion consider necessary and appropriate to protect the security of this Mortgage.
Such other things may include: taking and possessing all of Mortgagor’s or the then owner’s
Books and Records; entering into, enforcing, modifying or canceling leases on such terms and
conditions as Mortgagee may consider proper; obtaining and evicting tenants; fixing or
modifying Rents; collecting and receiving any payment of money owing to Mortgagee;
completing any unfinished construction; and/or contracting for and making repairs and
alterations. If Mortgagee so requests, Mortgagor shall assemble all of the Property that
has been removed from the Premises and make all of it available to Mortgagee at the site of
the Premises. Mortgagor hereby irrevocably constitutes and appoints Mortgagee as
Mortgagor’s attorney-in-fact to perform such acts and execute such documents as Mortgagee in
its sole discretion may consider to be appropriate in connection with taking these measures,
including endorsement of Mortgagor’s name on any instruments.




(f) Cure; Protection of Security. Mortgagee may cure any breach or default of
Mortgagor, and if it chooses to do so in connection with any such cure, Mortgagee may also
enter the Property and/or do any and all other things which it may in its sole discretion
consider necessary and appropriate to protect the security of this Mortgage, including,
without limitation, completing construction of the improvements at the Property contemplated
by the Credit Agreement. Such other things may include: appearing in and/or defending any
action or proceeding which purports to affect the security of, or the rights or powers of
Mortgagee under, this Mortgage; paying, purchasing, contesting or compromising any
encumbrance, charge, lien or claim of lien which in Mortgagee’s sole judgment is or may be
senior in priority to this Mortgage, such judgment of Mortgagee or to be conclusive as among
the parties to this Mortgage; obtaining insurance and/or paying any premiums or charges for
insurance required to be carried under the Credit Agreement; otherwise caring for and
protecting any and all of the Property; and/or employing counsel, accountants, contractors
and other appropriate persons to assist Mortgagee. Mortgagee may take any of the actions
permitted under this Subsection 6.3(d) either with or without giving notice to any person.
Any amounts expended by Mortgagee under this Subsection 6.3(d) shall be secured by this
Mortgage.




(g) Uniform Commercial Code Remedies. Mortgagee may exercise any or all of the
remedies granted to a secured party under the Uniform Commercial Code in the State in which
the Property is located.




(h) Foreclosure; Lawsuits. Mortgagee shall have the right, in one or several
concurrent or consecutive proceedings, to foreclose the lien hereof upon the Property or any
part thereof, for the Secured Obligations, or any part thereof, by any proceedings
appropriate under applicable law. Mortgagee or its nominee may bid and become the purchaser
of all or any part of the Property at any foreclosure or other sale hereunder, and the
amount of Mortgagee’s successful bid shall be credited on the Secured Obligations. Without
limiting the foregoing, Mortgagee may proceed by a suit or suits in law or equity, whether
for specific performance of any covenant or agreement herein contained or in aid of the
execution of any power herein granted, or for any foreclosure under the judgment or decree
of any court of competent jurisdiction. In addition to the right provided in Subsection
6.3(a), upon, or at any time after the filing of a complaint to foreclose this Mortgage,
Mortgagee shall be entitled to the appointment of a receiver of the property by the court in
which such complaint is filed, and Mortgagor hereby consents to such appointment.




(i) Other Remedies. Mortgagee may exercise all rights and remedies contained in any
other instrument, document, agreement or other writing heretofore, concurrently or in the
future executed by Mortgagor or any other person or entity in favor of Mortgagee in
connection with the Secured Obligations or any part thereof, without prejudice to the right
of Mortgagee thereafter to enforce any appropriate remedy against Mortgagor. Mortgagee
shall have the right to pursue all remedies afforded to a mortgagee under applicable law,
and shall have the benefit of all of the provisions of such applicable law, including all
amendments thereto which may become effective from time to time after the date hereof.




(j) Sale of Personal Property. Mortgagee shall have the discretionary right to cause
some or all of the Property, which constitutes personal property (but excluding the personal
property of any of the patients or residents of the Property), to be sold or otherwise
disposed of in any combination and in any manner permitted by applicable law.




(i) For purposes of this power of sale, Mortgagee may elect to treat as
personal property any Property which is intangible or which can be severed from the
Premises or Improvements without causing structural damage. If it chooses to do so,
Mortgagee may dispose of any personal property, in any manner permitted by Article 9
of the Uniform Commercial Code of the State in which the Property is located,
including any public or private sale, or in any manner permitted by any other
applicable law.




(ii) In connection with any sale or other disposition of such Property,
Mortgagor agrees that the following procedures constitute a commercially reasonable
sale: Mortgagee shall mail written notice of the sale to Mortgagor not later than
thirty (30) days prior to such sale. Mortgagee will publish notice of the sale in a
local daily newspaper of general circulation. Upon receipt of any written request,
Mortgagee will make the Property available to any bona fide prospective purchaser
for inspection during reasonable business hours. Notwithstanding the foregoing,
Mortgagee shall be under no obligation to consummate a sale if, in its judgment,
none of the offers received by it equals the fair value of the Property offered for
sale. The foregoing procedures do not constitute the only procedures that may be
commercially reasonable.




(k) Single or Multiple Foreclosure Sales. If the Property consists of more than one
lot, parcel or item of property, Mortgagee may:




(i) Designate the order in which the lots, parcels and/or items shall be sold
or disposed of or offered for sale or disposition; and




(ii) Elect to dispose of the lots, parcels and/or items through a single
consolidated sale or disposition to be held or made under or in connection with
judicial proceedings, or by virtue of a judgment and decree of foreclosure and sale;
or through two or more such sales or dispositions; or in any other manner Mortgagee
may deem to be in its best interests (any such sale or disposition, a “Foreclosure
Sale;” and any two or more, “Foreclosure Sales”).



If Mortgagee chooses to have more than one Foreclosure Sale, Mortgagee at its option may cause
the Foreclosure Sales to be held simultaneously or successively, on the same day, or on such
different days and at such different times and in such order as Mortgagee may deem to be in its
best interests. No Foreclosure Sale shall terminate or affect the liens of this Mortgage on any
part of the Property which has not been sold, until all of the Secured Obligations have been paid
in full.



6.4 Credit Bids. At any Foreclosure Sale, any person, including Mortgagor or Mortgagee, may
bid for and acquire the Property or any part of it to the extent permitted by then applicable law.
Instead of paying cash for such property, Mortgagee may settle for the purchase price by crediting
the sales price of the property against the following obligations:




(a) First, the portion of the Secured Obligations attributable to the expenses of sale,
costs of any action and any other sums for which Mortgagor is obligated to pay or reimburse
Mortgagee under Section 5.9 above; and




(b) Second, all other Secured Obligations in any order and proportions as Mortgagee in
its sole discretion may choose.



6.5 Application of Foreclosure Sale Proceeds. Mortgagee shall apply the proceeds of any
Foreclosure Sale in the following manner:




(a) First, to pay the portion of the Secured Obligations attributable to the expenses
of sale, costs of any action and any other sums for which Mortgagor is obligated to
reimburse Mortgagee under Section 5.9 of this Mortgage;




(b) Second, to pay the portion of the Secured Obligations attributable to any sums
expended or advanced by Mortgagee under the terms of this Mortgage which then remain unpaid;




(c) Third, to pay all other Secured Obligations in any order and proportions as
Mortgagee in its sole discretion may choose; and




(d) Fourth, to remit the remainder, if any, to the Mortgagor (or as a court of
competent jurisdiction may otherwise order).



6.6 Application of Rents and Other Sums. Mortgagee shall apply any and all Rents collected by
it, and any and all sums other than proceeds of a Foreclosure Sale which Mortgagee may receive or
collect under Section 6.3 above, in the following manner:




(a) First, to pay the portion of the Secured Obligations attributable to the costs and
expenses of operation and collection that may be incurred by Mortgagee or any receiver;




(b) Second, to pay all other Secured Obligations in any order and proportions as
Mortgagee in its sole discretion may choose; and




(c) Third, to remit the remainder, if any, to the Mortgagor (or as a court of competent
jurisdiction may otherwise order).



Mortgagee shall have no liability for any funds which it does not actually receive.



7. Miscellaneous Provisions.



7.1 Additional Provisions. The Loan Documents fully state all of the terms and conditions of
the parties’ agreement regarding the matters mentioned in or incidental to this Mortgage. The Loan
Documents also grant further rights to Mortgagee and contain further agreements and affirmative and
negative covenants by Mortgagor which apply to this Mortgage and to the Property.



7.2 No Waiver or Cure.




(a) Each waiver by Mortgagee must be in writing, and no waiver shall be construed as a
continuing waiver. No waiver shall be implied from any delay or failure by Mortgagee to
take action on account of any default of Mortgagor. Consent by Mortgagee to any act or
omission by Mortgagor shall not be construed as a consent to any other or subsequent act or
omission or to waive the requirement for Mortgagee’s consent to be obtained in any future
or other instance.




(b) If any of the events described below occurs, that event alone shall not: cure or
waive any breach, Event of Default or notice of default under this Mortgage or invalidate
any act performed pursuant to any such default or notice; or nullify the effect of any
notice of default or sale (unless all Secured Obligations then due have been paid and
performed and all other defaults under the Loan Documents have been cured); or impair the
security of this Mortgage; or prejudice Mortgagee or any receiver in the exercise of any
right or remedy afforded any of them under this Mortgage; or be construed as an affirmation
by Mortgagee of any tenancy, lease or option, or a subordination of the lien of this
Mortgage.




(i) Mortgagee, its agent or a receiver takes possession of all or any part of
the Property in the manner provided in Subsection 6.3(c).




(ii) Mortgagee collects and applies Rents as permitted under Sections 2.3 and
6.6 above, either with or without taking possession of all or any part of the
Property.




(iii) Mortgagee receives and applies to any Secured Obligation any proceeds of
any Property, including any proceeds of insurance policies, condemnation awards, or
other claims, property or rights assigned to Mortgagee under Section 5.5 above.




(iv) Mortgagee makes a site visit, observes the Property and/or conducts tests
as permitted under Section 5.12 above.




(v) Mortgagee receives any sums under this Mortgage or any proceeds of any
collateral held for any of the Secured Obligations, and applies them to one or more
Secured Obligations.




(vi) Mortgagee or any receiver invokes any right or remedy provided under this
Mortgage.



7.3 Powers of Mortgagee.




(a) If Mortgagee performs any act which it is empowered or authorized to perform under
this Mortgage, including any act permitted by Section 5.7 or Subsection 6.3(d) of this
Mortgage, that act alone shall not release or change the personal liability of any person
for the payment and performance of the Secured Obligations then outstanding, or the lien of
this Mortgage on all or the remainder of the Property for full payment and performance of
all outstanding Secured Obligations. The liability of the original Mortgagor shall not be
released or changed if Mortgagee grants any successor in interest to Mortgagor any extension
of time for payment, or modification of the terms of payment, of the Secured Obligations.
Mortgagee shall not be required to comply with any demand by the original Mortgagor that
Mortgagee refuse to grant such an extension or modification to, or commence proceedings
against, any such successor in interest.




(b) Mortgagee may take any of the actions permitted under Subsections 6.3(b) and/or
6.3(c) regardless of the adequacy of the security for the Secured Obligations, or whether
any or all of the Secured Obligations have been declared to be immediately due and payable,
or whether notice of default and election to sell has been given under this Mortgage.




(c) From time to time, Mortgagee may apply to any court of competent jurisdiction for
aid and direction in executing and enforcing the rights and remedies created under this
Mortgage. Mortgagee may from time to time obtain orders or decrees directing, confirming or
approving acts in executing and enforcing these rights and remedies.



7.4 Merger. No merger shall occur as a result of Mortgagee’s acquiring any other estate in or
any other lien on the Property unless Mortgagee consents to a merger in writing.



7.5 [Intentionally Omitted].



7.6 Applicable Law. The creation, perfection and enforcement of the lien of this Mortgage
shall be governed by the law of the Commonwealth of Pennsylvania. Subject to the foregoing, in all
other respects, this Mortgage shall be governed by the internal laws of the State of New York
applicable to contracts made and to be performed entirely within such State, without regard to
conflict of laws principles except Title 14 of Article 5 of the New York General Obligations Law.



7.7 Successors in Interest. The terms, covenants and conditions of this Mortgage shall be
binding upon and inure to the benefit of the heirs, successors and assigns of the parties.
However, this Section 7.7 does not waive the provisions of Section 6.1 above.



7.8 Interpretation.




(a) Whenever the context requires, all words used in the singular will be construed to
have been used in the plural, and vice versa, and each gender will include any other gender.
The captions of the sections of this Mortgage are for convenience only and do not define or
limit any terms or provisions. The word “include(s)” means “include(s), without
limitation,” and the word “including” means “including, but not limited to.”




(b) The word “obligations” is used in its broadest and most comprehensive sense, and
includes all primary, secondary, direct, indirect, fixed and contingent obligations. It
further includes all principal, interest, prepayment charges, late charges, loan fees and
any other fees and charges accruing or assessed at any time, as well as all obligations to
perform acts or satisfy conditions.




(c) No listing of specific instances, items or matters in any way limits the scope or
generality of any language of this Mortgage. The Exhibits to this Mortgage are hereby
incorporated in this Mortgage.



7.9 [Intentionally Omitted].



7.10 Waiver of Statutory Rights. To the extent permitted by law, Mortgagor hereby agrees that
it shall not and will not apply for or avail itself of any appraisement, valuation, stay, extension
or exemption laws, or any so-called “Moratorium Laws,” now existing or hereafter enacted, in order
to prevent or hinder the enforcement or foreclosure of this Mortgage, but hereby waives the benefit
of such laws. Mortgagor for itself and all who may claim through or under it waives any and all
right to have the property and estates comprising the Property marshalled upon any foreclosure of
the lien hereof and agrees that any court having jurisdiction to foreclose such lien may order the
Property sold as an entirety. Mortgagor hereby waives any and all rights of redemption from sale
under any judgment of foreclosure of this Mortgage on behalf of Mortgagor and on behalf of each and
every person acquiring any interest in or title to the Property of any nature whatsoever,
subsequent to the date of this Mortgage. The foregoing waiver of right of redemption is made
pursuant to the provisions of applicable law.



7.11 Severability. If any provision of this Mortgage should be held unenforceable or void,
that provision shall be deemed severable from the remaining provisions and shall in no way affect
the validity of this Mortgage except that if such provision relates to the payment of any monetary
sum, then Mortgagee may, at its option, declare all Secured Obligations immediately due and
payable.



7.12 Notices. Any notice, demand, request or other communication which any party hereto may be
required or may desire to give hereunder shall be in writing and shall be deemed to have been
properly given (a) if hand delivered, when delivered; (b) if mailed by United States Certified Mail
(postage prepaid, return receipt requested), three Business Days after mailing (c) if by Federal
Express or other reliable overnight courier service, on the next Business Day after delivered to
such courier service or (d) if by telecopier on the day of transmission so long as copy is sent on
the same day by overnight courier as set forth below:



	 	 	 	 	 
	Mortgagor:	 	c/o Grubb & Ellis Healthcare REIT II, Inc.

	 	 	1551 North Tustin Avenue, Suite 300

	 	 	Santa Ana, California 92705

	 	 	Attention:

	 	Danny Prosky







Telecopier No.: (714)       -     


Telephone No: (714) 667-0611




	 	 	with a copy to:





	 	 	 
	Grubb & Ellis Healthcare REIT II Holdings, LP

	c/o Grubb & Ellis Healthcare REIT II, Inc.

	1551 North Tustin Avenue, Suite 300

	Santa Ana, California 92705

	Attention:

	 	Shannon K. S. Johnson







Telecopier No.: (866) 508-4769


Telephone No: (714) 975-2135


Email: Shannon.Johnson@Grubb-Ellis.com



with a copy to:



	 	 	 
	Arnall Golden Gregory LLP

	171 17th Street NW

	Suite 2100

Atlanta, Georgia

Attention:

	 	

30363

David B. Lotz, Esq.







Telecopier No.: (404) 873-8168


Telephone No: (404) 873-8169


Email: david.lotz@agg.com



	 	 	 
	Mortgagee:
	 	KeyBank National Association, as Agent

Mailcode WA-31-13-2313

1301 5th Avenue, 23rd Floor

Seattle, Washington 98101

Attention: Senior Manager, Healthcare Finance

Telecopier No.: (206) 343-6843

Facsimile: (206)       -     

	With a copy to:
	 	Schiff Hardin LLP







233 South Wacker Drive



Suite 6600



Chicago, Illinois 60606



Attention: Sean T. Maloney



Telephone: (312) 258-5505



Facsimile: (312) 258-5700



or at such other address as the party to be served with notice may have furnished in writing to the
party seeking or desiring to serve notice as a place for the service of notice.



Any notice or demand delivered to the person or entity named above to accept notices and
demands for Mortgagor shall constitute notice or demand duly delivered to Mortgagor, even if
delivery is refused.



7.13 Future Advances. This Mortgage is (a) and Open-End Mortgage under 42 Pa. C.S.A. Section
8143 and (b) given to secure, among other things, indebtedness of the Mortgagor under the Credit
Agreement and shall secure not only presently existing indebtedness and Secured Obligations of
Borrower under the Credit Agreement (and Mortgagor under the Subsidiary Guaranty) but also future
indebtedness of Borrower under the Credit Agreement (and Mortgagor under the Subsidiary Guaranty),
whether such indebtedness is obligatory or at the option of Mortgagee, or otherwise, to the same
extent as if such future indebtedness was made on the date of the execution of this Mortgage,
although there may be no outstanding indebtedness of Mortgagor at the time of execution of this
Mortgage. The lien of this Mortgage shall be valid as to all Secured Obligations, including future
indebtedness of Mortgagor. The total amount of indebtedness secured hereby may increase or
decrease from time to time, but the total unpaid principal balance of indebtedness secured hereby
(including disbursements that the Lenders may, but shall not be obligated to, make under this
Mortgage, the Loan Documents or any other document with respect thereto) at any one time
outstanding may be substantially less but shall not exceed Seventy-One Million Five Hundred
Thousand and No/100 Dollars ($71,500,000.00), plus interest thereon, and any disbursements made for
the enforcement of this Mortgage and the other Loan Documents and any remedies hereunder, payment
of taxes, special assessments, utilities or insurance on the Property or any other Project and
interest on such disbursements and all disbursements by Mortgagee pursuant to applicable law (all
such indebtedness being hereinafter referred to as the maximum amount secured hereby). This
Mortgage shall be valid and have priority to the extent of the maximum amount secured hereby over
all subsequent liens and encumbrances, including statutory liens, excepting solely taxes and
assessments levied on the Property given priority by law.



7.14 Mortgagee’s Lien for Service Charge and Expenses. At all times, regardless of whether
any Loan proceeds have been disbursed, this Mortgage secures (in addition to any Loan proceeds
disbursed from time to time) the payment of any and all loan commissions, service charges,
liquidated damages, expenses and advances due to or incurred by Mortgagee not to exceed the maximum
amount secured hereby.



7.15 WAIVER OF TRIAL BY JURY. MORTGAGOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN
CONNECTION WITH THIS MORTGAGE, THE NOTE, OR ANY OF THE OTHER LOAN DOCUMENTS, THE LOAN OR ANY OTHER
STATEMENTS OR ACTIONS OF MORTGAGOR OR MORTGAGEE. MORTGAGOR ACKNOWLEDGES THAT IT HAS BEEN
REPRESENTED IN THE SIGNING OF THIS MORTGAGE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS DISCUSSED THIS WAIVER WITH SUCH LEGAL
COUNSEL. MORTGAGOR FURTHER ACKNOWLEDGES THAT (i) IT HAS READ AND UNDERSTANDS THE MEANING AND
RAMIFICATIONS OF THIS WAIVER, (ii) THIS WAIVER IS A MATERIAL INDUCEMENT FOR MORTGAGEE TO MAKE THE
LOAN, ENTER INTO THIS MORTGAGE AND EACH OF THE OTHER LOAN DOCUMENTS, AND (iii) THIS WAIVER SHALL BE
EFFECTIVE AS TO EACH OF SUCH OTHER LOAN DOCUMENTS AS IF FULLY INCORPORATED THEREIN.



7.16 Inconsistencies. In the event of any inconsistency between this Mortgage and the Credit
Agreement, the terms hereof shall be controlling as necessary to create, preserve and/or maintain a
valid security interest upon the Property, otherwise the provisions of the Credit Agreement shall
be controlling.



7.17 UCC Financing Statements. Mortgagor hereby authorizes Mortgagee to file UCC financing
statements to perfect Mortgagee’s security interest in any part of the Property. In addition,
Mortgagor agrees to sign any and all other documents that Mortgagee deems necessary in its sole
discretion to perfect, protect, and continue Mortgagee’s lien and security interest on the
Property.



7.18 Certain Matters Relating to Notices Under 42 Pa. C.S.A. § 8143. All communications
provided for herein shall be in writing and shall be deemed to have been given when delivered in
accordance with the terms and provisions of Section 7.12 hereof. Notwithstanding the foregoing,
(a) all notices given to Mortgagee by any person or entity (other than Mortgagor) pursuant to 42
Pa. C.S.A. § 8143(d) shall be in writing and shall be sent exclusively by registered or certified
mail, return receipt requested, to Mortgagee and (b) all notices given by Mortgagor to Mortgagee
pursuant to 42 Pa. C.S.A. § 8143(c) shall be given to Mortgagee in writing, by registered or
certified mail, return receipt requested, and must be signed by all parties necessary to bind
Mortgagor in accordance with all applicable documents of formation of Mortgagor and all applicable
laws.



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In Witness Whereof, Mortgagor has executed this Mortgage as of the date first above
written.



Mortgagor:




	 	 	G&E HC REIT II Cheltenham York SNF, L.P.,






	 	 	a            Delaware limited partnership,





By: G&E HC REIT II Philadelphia SNF Portfolio General Partner, LLC,


A Delaware limited liability company, its general partner



By: /s/ Shannon K S Johnson

Name: Shannon K S Johnson

Title: Authorized Signatory




	 	 	 	 	 	 	 
	STATE OF CALIFORNIA

	 	)

)
	 	

SS:
	COUNTY OF ORANGE

	 	 	)	 	 	







On June 23, 2011 before me, Rex Morishita Notary Public, personally appeared Shannon K S
Johnson, who proved to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that her executed the same in her
authorized capacity, and that by her signature on the instrument the person, or the entity upon
behalf of which person acted, executed the instrument.



I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.



WITNESS my hand and official seal.



Signature /s/ Rex Morishita (Seal)



My Commission Expires:


May 1, 2015




2