Document:

Exhibit 10.32

Exhibit 10.32
	
					
	 
	 
	 
	 
	 

	This instrument was prepared by 
and should be mailed to:  
 
 
Gutnicki LLP 
4711 Golf Road, Suite 200 
Skokie, Illinois 60076 
Attn:  Stacy J. Flanigan
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	This space reserved for Recorder’s use only.

	 
	 
	 
	 
	 

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

by

QC PROPERTY HOLDINGS, LLC 
a Georgia limited liability company

to and for the benefit of

HOUSING & HEALTHCARE FUNDING, LLC
a Delaware limited liability company
(Borrower Tax ID 37-1692398)

Attention to Recording Officers:  This Mortgage covers goods which are, or are to become, affixed to or fixtures on the land described in Exhibit A hereto.  This Mortgage is a fixture filing and is to be indexed, among other places, in the real estate records of each county of the State of Oklahoma in which said land or any portion thereof is located.
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A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE.  A POWER OF SALE MAY ALLOW THE MORTGAGEE TO TAKE THE MORTGAGEDPROPERTY AND SELL IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE MORTGAGOR UNDER THIS MORTGAGE.

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

THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FILING (“Mortgage”) is made as of September 27, 2013 by QC Property Holdings, LLC, a Georgia limited liability company (“Mortgagor”), to and for the benefit of Housing & Healthcare Funding, LLC, a Delaware limited liability company, its successors and assigns (“Mortgagee”).
RECITALS:
(A)    Pursuant to the terms and conditions of that certain Loan and Security Agreement of even date herewith (as amended, restated or replaced from time to time “Loan Agreement”) by and between Mortgagor and Mortgagee, Mortgagee has agreed to extend to Mortgagor a loan in the original principal amount of FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00) (the “Loan”).  The Loan is evidenced by a promissory note of even date herewith made payable by Mortgagor to the order of Mortgagee in the maximum principal amount of the Loan (the “Note”).  The Note is made by Mortgagor and payable to Mortgagee and due as provided for in the Note (the “Maturity Date”), except as may be accelerated pursuant to the terms hereof or of the Note, the Loan Agreement or any other Loan Documents (as defined in the Loan Agreement).   
(B)    A condition precedent to Mortgagee’s extension of the Loan to Mortgagor is the execution and delivery by Mortgagor of this Mortgage. 

NOW, THEREFORE, in consideration of the foregoing recitals, which are hereby incorporated as if fully set forth herein, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Mortgagor agrees as follows:
Mortgagor and by these presents does hereby irrevocably mortgage (with power of sale), give, bargain, grant, hypothecate, assign, remise, release, warrant and convey to Mortgagee, its successors and assigns, with power of sale, and grants a security interest in, the following described property, rights and interests (referred to collectively herein as the “Premises”), all of which property, rights and interests are hereby pledged primarily and on a parity with the Real Estate (as defined below) and not secondarily:  
THE REAL ESTATE located in the State of Oklahoma and legally described on Exhibit A attached hereto and made a part hereof (“Real Estate”);
TOGETHER WITH all improvements of every nature whatsoever now or hereafter situated on the Real Estate, and all fixtures and personal property of every nature whatsoever now or hereafter owned by Mortgagor and on, or used in connection with, the Real Estate or the improvements thereon, or in connection with any construction thereon, including all extensions, additions, improvements, betterments, renewals, substitutions and replacements to any of the foregoing and all of the right, title and interest of Mortgagor in and to any such personal property or fixtures 

together with the benefit of any deposits or payments now or hereafter made on such personal property or fixtures by Mortgagor or on its behalf (“Improvements”);
TOGETHER WITH all easements, rights of way, gores of real estate, streets, ways, alleys, passages, sewer rights, waters, water courses, water rights and powers, mineral interests on or pertaining to the Real Estate not previously conveyed or reserved of record, air rights, development rights, and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments and appurtenances whatsoever, in any way now or hereafter belonging, relating or appertaining to the Real Estate, and the reversions, remainders, rents, issues and profits thereof, and all the estate, right, title, interest, property, possession, claim and demand whatsoever, at law as well as in equity, of Mortgagor of, in and to the same;
TOGETHER WITH all rents, revenues, issues, profits, proceeds, income, royalties, “accounts” including “health-care insurance receivables”, escrows, letter-of-credit rights (each as defined in the Code, as hereinafter defined), security deposits, impounds, reserves, tax refunds and other rights to monies from the Premises and/or the businesses and operations conducted by Mortgagor thereon (collectively, the “Rents”), to be applied against the Indebtedness (hereinafter defined); provided, however, that Mortgagor, so long as no Event of Default (as hereinafter defined) has occurred hereunder, may collect rent, revenues, issues, profits, proceeds, and income as it becomes due, but not more than one (1) month in advance thereof;
TOGETHER WITH all interest of Mortgagor in all leases now or hereafter on the Premises, whether written or oral (“Leases”), together with all security therefor and all monies payable thereunder, subject, however, to the conditional permission hereinabove given to Mortgagor to collect the rentals under any such Lease;
TOGETHER WITH all fixtures and articles of personal property now or hereafter owned by Mortgagor and forming a part of or used in connection with the Real Estate or the Improvements, including, but without limitation, any and all air conditioners, antennae, appliances, apparatus, awnings, basins, bathtubs, bidets, boilers, bookcases, cabinets, carpets, coolers, curtains, dehumidifiers, disposals, doors, drapes, dryers, ducts, dynamos, elevators, engines, equipment, escalators, exercise equipment, fans, fittings, floor coverings, furnaces, furnishings, furniture, hardware, heaters, humidifiers, incinerators, lighting, machinery, motors, ovens, pipes, plumbing, pumps, radiators, ranges, recreational facilities, refrigerators, screens, security systems, shades, shelving, sinks, sprinklers, stokers, stoves, toilets, ventilators, wall coverings, washers, windows, window coverings, wiring, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Real Estate or the Improvements in any manner; it being mutually agreed that all of the aforesaid property owned by Mortgagor and placed on the Real Estate or the Improvements, so far as permitted by law, shall be deemed to be fixtures, a part of the Real Estate, and security for the Indebtedness; provided, however, notwithstanding the agreement hereinabove expressed that certain articles of property form a part of the Real Estate covered by this Mortgage and be appropriated to its use and deemed to be realty, to the extent that such agreement and declaration may not be effective and that any of said articles may constitute goods (as said term is used in the Uniform Commercial Code of the State of Oklahoma (the “Code”) in effect from time to time, provided that if by reason of mandatory provisions of law, 

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the perfection or the effect of perfection or non-perfection of the security interests in any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect on or after the date hereof in any other jurisdiction, “Code” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection or availability of such remedy), this instrument shall constitute a security agreement, creating a security interest in such goods, as collateral, in Mortgagee, as a secured party, and Mortgagor, as Debtor, all in accordance with the Code; 
TOGETHER WITH all of Mortgagor’s interests in “general intangibles” including “payment intangibles” and “software” (each as defined in the Code) now owned or hereafter acquired and related to the Premises, including, without limitation, all of Mortgagor’s right, title and interest in and to: (i) all agreements, licenses, permits and contracts to which Mortgagor is or may become a party and which relate to the Premises; (ii) all obligations and indebtedness owed to Mortgagor thereunder; (iii) all intellectual property related to the Premises; and (iv) all choses in action and causes of action relating to the Premises;
TOGETHER WITH all of Mortgagor’s accounts now owned or hereafter created or acquired, including, without limitation, all of the following now owned or hereafter created or acquired by Mortgagor: (i) accounts, contract rights, health-care insurance receivables, book debts, notes, drafts, and other obligations or indebtedness owing to Mortgagor arising from the sale, lease or exchange of goods or other property and/or the performance of services; (ii) Mortgagor’s rights in, to and under all purchase orders for goods, services or other property; (iii) Mortgagor’s rights to any goods, services or other property represented by any of the foregoing; (iv) monies due or to become due to Mortgagor under all contracts for the sale, lease or exchange of goods or other property and/or the performance of services including the right to payment of any interest or finance charges in respect thereto (whether or not yet earned by performance on the part of Mortgagor); (v) “securities“, “investment property,” “financial assets,” and “securities entitlements” (each as defined in the Code), and (vi) proceeds of any of the foregoing and all collateral security and guaranties of any kind given by any person or entity with respect to any of the foregoing; and all warranties, guarantees, permits and licenses in favor of Mortgagor with respect to the Premises; and
TOGETHER WITH all proceeds of the foregoing, including, without limitation, all judgments, awards of damages and settlements hereafter made resulting from condemnation proceeds or the taking of the Premises or any portion thereof under the power of eminent domain, any proceeds of any policies of insurance maintained with respect to the Premises or proceeds of any sale, option or contract to sell the Premises or any portion thereof.
TO HAVE AND TO HOLD the Premises, unto Mortgagee, its successors and assigns, forever, for the purposes and upon the uses herein set forth together with all right to possession of the Premises after the occurrence of any Event of Default, Mortgagor hereby RELEASING AND WAIVING all rights under and by virtue of the homestead exemption laws of the State of Oklahoma.
FOR THE PURPOSE OF SECURING: (i) the payment of the Loan and all interest, late charges, reimbursement obligations, fees and expenses for letters of credit issued by Mortgagee for the benefit of Mortgagor, if any, and other indebtedness or other amounts evidenced by or owing under the Loan Agreement, the Note, this Mortgage or any of the other Loan Documents, any interest 

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rate swap or hedge agreement now or hereafter entered into between Mortgagor and Mortgagee or any of Mortgagee’s affiliates, and any application for letters of credit and master letter of credit agreement, together with any extensions, modifications, renewals or refinancings of any of the foregoing; (ii) the performance and observance of the covenants, conditions, agreements, representations, warranties and other liabilities and obligations of Mortgagor or any other obligor to or benefiting Mortgagee which are evidenced or secured by or otherwise provided in the Loan Agreement, the Note, this Mortgage or any of the other Loan Documents; and (iii) the reimbursement to Mortgagee of any and all sums incurred, expended or advanced by Mortgagee pursuant to any term or provision of, or constituting additional indebtedness under or secured by, this Mortgage, any of the other Loan Documents, any interest rate swap or hedge agreement or any application for letters of credit and master letter of credit agreement, with interest thereon as provided herein or therein (collectively, the “Indebtedness”).
IT IS FURTHER UNDERSTOOD AND AGREED THAT:
1.    Title.  Mortgagor represents, warrants and covenants that (a) Mortgagor is the holder of the fee simple title to the Premises, free and clear of all liens and encumbrances, except those liens and encumbrances in favor of Mortgagee and as otherwise described on Exhibit B attached hereto (“Permitted Exceptions”); and (b) Mortgagor has legal power and authority to mortgage and convey the Premises.
2.    Maintenance, Repair, Restoration, Prior Liens, Parking.  Mortgagor covenants that, so long as any portion of the Indebtedness remains unpaid, Mortgagor will:
a.    promptly repair, restore or rebuild any Improvements now or hereafter on the Premises which may become damaged or be destroyed to a condition substantially similar to the condition immediately prior to such damage or destruction, whether or not proceeds of insurance are available or sufficient for such purpose;
b.    keep the Premises in good condition and repair, without waste, and free from mechanics’, materialmen’s or like liens or claims or other liens or claims for lien (subject to Mortgagor’s right to contest liens as permitted by the terms of Paragraph 30 hereof);
c.    pay when due the Indebtedness in accordance with the terms of the Loan Agreement, the Note and the other Loan Documents and duly perform and observe all of the terms, covenants and conditions to be observed and performed by Mortgagor under the Loan Agreement, the Note, this Mortgage and the other Loan Documents;
d.    pay when due any indebtedness which may be secured by a permitted lien or charge on the Premises on a parity with, superior to or inferior to the lien hereof, and upon request, exhibit satisfactory evidence of the discharge of such lien to Mortgagee (subject to Mortgagor’s right to contest liens as permitted by the terms of Paragraph 30 hereof);
e.    complete within a reasonable time any Improvements now or at any time in the process of erection upon the Premises;

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f.    comply with all requirements of law, municipal ordinances or restrictions and covenants of record with respect to the Premises and the use thereof;
g.    obtain and maintain in full force and effect, and abide by and satisfy the material terms and conditions of, all material permits, licenses, registrations and other authorizations with or granted by any governmental or quasi-governmental authorities that may be required from time to time with respect to the performance of its obligations under this Mortgage;
h.    make no material alterations in the Premises or demolish any portion of the Premises without Mortgagee’s prior written consent, except as required by law or municipal ordinance;
i.    suffer or permit no change in the use or general nature of the occupancy of the Premises, without Mortgagee’s prior written consent;
j.    pay when due all operating costs of the Premises;
k.    not initiate or acquiesce in any zoning reclassification with respect to the Premises, without Mortgagee’s prior written consent;
l.    provide and thereafter maintain adequate parking areas within the Premises as may be required by law, ordinance or regulation (whichever may be greater), together with any sidewalks, aisles, streets, driveways and sidewalk cuts and sufficient paved areas for ingress, egress and right‐of‐way to and from the adjacent public thoroughfares necessary or desirable for the use thereof; and
m.    cause the Premises at all times to be operated in compliance with all federal, state, local and municipal environmental, health and safety laws, statutes, ordinances, rules and regulations.
3.    Payment of Taxes and Assessments.  Mortgagor will pay when due and before any penalty attaches, all general and special taxes, assessments, water charges, sewer charges, and other fees, taxes, charges and assessments of every kind and nature whatsoever (all herein generally called “Taxes”), whether or not assessed against Mortgagor, if applicable to the Premises or any interest therein, or the Indebtedness, or any obligation or agreement secured hereby, subject to Mortgagor’s right to contest the same, as provided by the terms hereof; and Mortgagor will furnish to Mortgagee duplicate receipts therefor marked “paid” on or before the date on which such taxes become delinquent.  Mortgagee shall pay the Oklahoma Mortgage Tax.
4.    Tax Deposits.  If requested by Mortgagee, Mortgagor shall deposit with Mortgagee, on the first day of each month until the Indebtedness is fully paid, a sum equal to one‐twelfth (1/12th) of 105% of the most recent ascertainable annual Taxes on the Premises.  If requested by Mortgagee, Mortgagor shall also deposit with Mortgagee an amount of money which, together with the aggregate of the monthly deposits to be made pursuant to the preceding sentence as of one month prior to the date on which the next installment of annual Taxes for the current calendar year becomes due, shall be sufficient to pay in full such installment of annual Taxes, as estimated by Mortgagee.  Such 

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deposits are to be held without any allowance of interest and are to be used for the payment of Taxes next due and payable when they become due.  In the event that deposits are made in accordance with this Paragraph 4, Mortgagee shall pay such Taxes when the same become due and payable (upon submission of appropriate bills therefor from Mortgagor) or shall release sufficient funds to Mortgagor for the payment thereof.  If the funds so deposited are insufficient to pay any such Taxes for any year (or installments thereof, as applicable) when the same shall become due and payable, Mortgagor shall, within ten (10) days after receipt of written demand therefor, deposit additional funds as may be necessary to pay such Taxes in full.  If the funds so deposited exceed the amount required to pay such Taxes for any year, the excess shall be applied toward subsequent deposits.  Said deposits need not be kept separate and apart from any other funds of Mortgagee.  Mortgagee, in making any payment hereby authorized relating to Taxes, may do so according to any bill, statement or estimate procured from the appropriate public office without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien or title or claim thereof.  The foregoing to the contrary notwithstanding, so long as an Event of Default has not occurred, Mortgagee shall not require Mortgagor to make deposits hereunder; provided that if an Event of Default does occur, even if the same shall be cured, Mortgagee has the right to require Mortgagor to make the deposits hereunder at any time thereafter.
5.    Mortgagee’s Interest In and Use of Deposits.  Upon an Event of Default, Mortgagee may, at its option, apply any monies at the time on deposit pursuant to Paragraph 4 hereof to cure an Event of Default or to pay any of the Indebtedness in such order and manner as Mortgagee may elect.  If such deposits are used to cure an Event of Default or pay any of the Indebtedness, Mortgagor shall immediately, upon demand by Mortgagee, deposit with Mortgagee an amount equal to the amount expended by Mortgagor from the deposits.  When the Indebtedness has been fully paid, any remaining deposits shall be returned to Mortgagor.  Such deposits are hereby pledged as additional security for the Indebtedness and shall not be subject to the direction or control of Mortgagor.  Mortgagee shall not be liable for any act or omission taken in good faith or pursuant to the instruction of any party.
6.    Insurance.
a.    Mortgagor shall at all times keep all buildings, improvements, fixtures and articles of personal property now or hereafter situated on the Premises insured against loss or damage by fire and such other hazards as may reasonably be required by Mortgagee, naming Mortgagee and its successors and assigns as mortgagee and loss payee under such insurance policies, and such other insurance as Mortgagee may from time to time reasonably require, including a public liability insurance policy naming Mortgagee and its successors and assigns as an additional insured, with such policy limits and deductibles as Mortgagee may require.  Such insurance policies shall be maintained with insurance companies as approved by Mortgagee.  Unless Mortgagor provides to Mortgagee evidence of the insurance coverages required hereunder, Mortgagee may purchase insurance at Mortgagor’s expense to cover Mortgagee’s interest in the Premises.  The insurance may, but need not, protect Mortgagor’s interest.  The coverages that Mortgagee purchases may not pay any claim that Mortgagor makes or any claim that is made against Mortgagor in connection with the Premises.  Mortgagor may later cancel any insurance purchased by Mortgagee, but only 

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after providing Mortgagee with evidence that Mortgagor has obtained insurance as required by this Mortgage.  If Mortgagee purchases insurance for the Premises, Mortgagor will be responsible for the costs of such insurance, including, without limitation, interest and any other charges which Mortgagee may impose in connection with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance.  The costs of the insurance may be added to the Indebtedness.  The cost of the insurance may be more than the cost of insurance Mortgagor may be able to obtain on its own.
b.    Mortgagor shall not take out separate insurance concurrent in form or contributing in the event of loss with that required to be maintained hereunder unless Mortgagee is included thereon as the loss payee or an additional insured as applicable, under a standard mortgagee clause acceptable to Mortgagee and such separate insurance is otherwise acceptable to Mortgagee.
c.    In the event of loss, Mortgagor shall give prompt notice thereof to Mortgagee, who, if such loss exceeds Fifty Thousand Dollars ($50,000) (“Threshold”), shall have the sole and absolute right to make proof of loss.  If such loss exceeds the Threshold or if such loss is equal to or less than the Threshold and the conditions set forth in clauses (i), (ii) and (iii) of the immediately succeeding sentence are not satisfied, then Mortgagee, solely and directly, shall receive such payment for loss from each insurance company concerned.  If and only if (i) such loss is equal to or less than the Threshold, (ii) no Event of Default or event that with the passage of time, the giving of notice or both would constitute an Event of Default then exists, and (iii) Mortgagee determines that the work required to complete the repair or restoration of the Premises necessitated by such loss can be completed no later than six (6) months prior to the Maturity Date, then Mortgagee shall endorse to Mortgagor any such payment and Mortgagor may collect such payment directly.  Mortgagee shall have the right, at its option and in its sole discretion, to apply any insurance proceeds received by Mortgagee pursuant to the terms of this paragraph, after the payment of all of Mortgagee’s expenses, either (i) on account of the Indebtedness, irrespective of whether such principal balance is then due and payable, whereupon Mortgagee may declare the whole of the balance of Indebtedness to be due and payable, or (ii) to the restoration or repair of the property damaged as provided in subparagraph d below; provided, however, that Mortgagee hereby agrees to permit the application of such proceeds to the restoration or repair of the damaged property, subject to the provisions of subparagraph d below, if (i) the financial covenants set forth in Section 11.18 of the Loan Agreement shall be satisfied, (ii) Mortgagee has received satisfactory evidence that such restoration or repair shall be completed no later than the date that is six (6) months prior to the Maturity Date, and (iii) no Event of Default, or event that with the passage of time, the giving of notice or both would constitute an Event of Default, then exists.  If insurance proceeds are made available to Mortgagor by Mortgagee as hereinafter provided, Mortgagor shall repair, restore or rebuild the damaged or destroyed portion of the Premises so that the condition and value of the Premises are substantially the same as the condition and value of the Premises prior to being damaged or destroyed.  In the event of foreclosure of this Mortgage, all right, title and interest of Mortgagor in and to any insurance policies then in force shall pass to the purchaser at the foreclosure sale. 

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d.    If insurance proceeds are made available by Mortgagee to Mortgagor, Mortgagor shall comply with the following conditions:
i.    Before commencing to repair, restore or rebuild following damage to, or destruction of, all or a portion of the Premises, whether by fire or other casualty, Mortgagor shall obtain from Mortgagee its approval of all site and building plans and specifications pertaining to such repair, restoration or rebuilding.
ii.    Prior to each payment or application of any insurance proceeds to the repair or restoration of the Improvements upon the Premises to the extent permitted in subparagraph c above (which payment or application may be made, at Mortgagee’s option, through an escrow, the terms and conditions of which are satisfactory to Mortgagee and the cost of which is to be borne by Mortgagor), Mortgagee shall be satisfied as to the following:
(a)    no Event of Default or any event which, with the passage of time or giving of notice would constitute an Event of Default, has occurred;
(b)    either such Improvements have been fully restored, or the expenditure of money as may be received from such insurance proceeds will be sufficient to repair, restore or rebuild the Premises, free and clear of all liens, claims and encumbrances, except the lien of this Mortgage and the Permitted Exceptions, or, if such insurance proceeds shall be insufficient to repair, restore and rebuild the Premises, Mortgagor has deposited with Mortgagee such amount of money which, together with the insurance proceeds shall be sufficient to restore, repair and rebuild the Premises; and
(c)    prior to each disbursement of any such proceeds, Mortgagee shall be furnished with a statement of Mortgagee’s architect (the cost of which shall be borne by Mortgagor), certifying the extent of the repair and restoration completed to the date thereof, and that such repairs, restoration, and rebuilding have been performed to date in conformity with the plans and specifications approved by Mortgagee and with all statutes, regulations or ordinances (including building and zoning ordinances) affecting the Premises; and Mortgagee shall be furnished with appropriate evidence of payment for labor or materials furnished to the Premises, and total or partial lien waivers substantiating such payments.
iii.    If Mortgagor shall fail to restore, repair or rebuild the Improvements within a time deemed satisfactory by Mortgagee, then Mortgagee, at its option, may (a) commence and perform all necessary acts to restore, repair or rebuild the said Improvements for or on behalf of Mortgagor, or (b) declare an Event of Default.  If insurance proceeds shall exceed the amount necessary to complete the repair, restoration or rebuilding of the Improvements, such excess shall be applied on account of the Indebtedness irrespective of whether such Indebtedness is then due and payable without payment of any premium or penalty.

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7.    Condemnation.  If all or any part of the Premises are damaged, taken or acquired, either temporarily or permanently, in any condemnation proceeding, or by exercise of the right of eminent domain, the amount of any award or other payment for such taking or damages made in consideration thereof, to the extent of the full amount of the remaining unpaid Indebtedness, is hereby assigned to Mortgagee, who is empowered to collect and receive the same and to give proper receipts therefor in the name of Mortgagor and the same shall be paid forthwith to Mortgagee.  Such award or monies shall be applied on account of the Indebtedness, irrespective of whether such Indebtedness is then due and payable and, at any time from and after the taking, Mortgagee may declare the whole of the balance of the Indebtedness to be due and payable.  Notwithstanding the provisions of this paragraph to the contrary, if any condemnation or taking of less than the entire Premises occurs, and provided that no Event of Default and no event or circumstance which with the passage of time, the giving of notice or both would constitute an Event of Default then exists, and if such partial condemnation, in the reasonable discretion of Mortgagee, has no material adverse effect on the operation or value of the Premises, then the award or payment for such taking or consideration for damages resulting therefrom may be collected and received by Mortgagor, and Mortgagee hereby agrees that in such event it shall not declare the Indebtedness to be due and payable, if it is not otherwise then due and payable.
8.    Stamp Tax.  If, by the laws of the United States of America, or of any state or political subdivision having jurisdiction over Mortgagor, any tax is due or becomes due in respect of the execution and delivery of this Mortgage, the Loan Agreement, the Note or any of the other Loan Documents, Mortgagor shall pay such tax in the manner required by any such law.  Mortgagor further agrees to reimburse Mortgagee for any sums which Mortgagee may expend by reason of the imposition of any such tax.  Notwithstanding the foregoing, Mortgagor shall not be required to pay any income or franchise taxes of Mortgagee.
9.    Assignment of Leases and Rents.  In order to further secure payment of the Indebtedness and the observance, performance and discharge of the obligations of Mortgagor under this Mortgage and the other Loan Documents (the “Obligations”), Mortgagor acknowledges that, concurrently herewith, Mortgagor is delivering to Mortgagee, as additional security for the repayment of the Loan, an Assignment of Rents and Leases (the “Assignment”) pursuant to which Mortgagor has assigned to Mortgagee all of its interests in the rents and income from the Premises.  All of the provisions of the Assignment are hereby incorporated herein as if fully set forth at length in the text of this Mortgage.  Mortgagor agrees to abide by all of the provisions of the Assignment.                            
10.    Effect of Extensions of Time and Other Changes.  If the payment of the Indebtedness or any part thereof is extended or varied, if any part of any security for the payment of the Indebtedness is released, if the rate of interest charged under the Note is changed or if the time for payment thereof is extended or varied, all persons now or at any time hereafter liable therefor, or interested in the Premises or having an interest in Mortgagor, shall be held to assent to such extension, variation, release or change, and their liability and the lien and all of the provisions hereof shall continue in full force, any right of recourse against all such persons being expressly reserved by Mortgagee, notwithstanding such extension, variation, release or change.

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11.    Effect of Changes in Laws Regarding Taxation.  If any law is enacted after the date hereof requiring (a) the deduction of any lien on the Premises from the value thereof for the purpose of taxation or (b) the imposition upon Mortgagee of the payment of the whole or any part of the Taxes, charges or liens herein required to be paid by Mortgagor, or (c) a change in the method of taxation of mortgages or debts secured by mortgages or Mortgagee’s interest in the Premises, or the manner of collection of taxes, so as to affect this Mortgage or the Indebtedness or the holders thereof, then Mortgagor, upon demand by Mortgagee, shall pay such Taxes or charges, or reimburse Mortgagee therefor; provided, however, that Mortgagor shall not be deemed to be required to pay any income or franchise taxes of Mortgagee.  Notwithstanding the foregoing, if in the opinion of counsel for Mortgagee it is or may be unlawful to require Mortgagor to make such payment or the making of such payment might result in the imposition of interest beyond the maximum amount permitted by law, then Mortgagee may declare all of the Indebtedness to be immediately due and payable.
12.    Mortgagee’s Performance of Defaulted Acts and Expenses Incurred by Mortgagee.  If an Event of Default has occurred, Mortgagee may, but need not, make any payment or perform any act herein required of Mortgagor in any form and manner deemed expedient by Mortgagee, and may, but need not, make full or partial payments of principal or interest on prior encumbrances, if any, and purchase, discharge, compromise or settle any tax lien or other prior lien or title or claim thereof, or redeem from any tax sale or forfeiture affecting the Premises or consent to any tax or assessment or cure any default of Mortgagor in any lease of the Premises.  All monies paid for any of the purposes herein authorized and all expenses paid or incurred in connection therewith, including reasonable attorneys’ fees, and any other monies advanced by Mortgagee in regard to any tax referred to in  Paragraph 8 above or to protect the Premises or the lien hereof, shall be so much additional Indebtedness, and shall become immediately due and payable by Mortgagor to Mortgagee, upon demand, and with interest thereon accruing from the date incurred until paid at the Default Rate (as defined in the Note) then in effect.  In addition to the foregoing, any costs, expenses and fees, including reasonable attorneys’ fees, incurred by Mortgagee in connection with (a) sustaining the lien of this Mortgage or its priority, (b) protecting or enforcing any of Mortgagee’s rights hereunder, (c) recovering any Indebtedness, (d) any litigation or proceedings affecting the Loan Agreement, the Note, this Mortgage, any of the other Loan Documents or the Premises, including without limitation, bankruptcy and probate proceedings, or (e)  preparing for the commencement, defense or participation in any threatened litigation or proceedings affecting the Loan Agreement, the Note, this Mortgage, any of the other Loan Documents or the Premises shall be so much additional Indebtedness, and shall become immediately due and payable by Mortgagor to Mortgagee, upon demand, and with interest thereon accruing from the date of such demand until paid at the Default Rate.  The interest accruing under this paragraph shall be immediately due and payable by Mortgagor to Mortgagee, and shall be additional Indebtedness evidenced by the Note and secured by this Mortgage.  Mortgagee’s failure to act shall never be considered as a waiver of any right accruing to Mortgagee on account of any Event of Default.  Should any amount paid out or advanced by Mortgagee hereunder, or pursuant to any agreement executed by Mortgagor in connection with the Loan, be used directly or indirectly to pay off, discharge or satisfy, in whole or in part, any lien or encumbrance upon the Premises or any part thereof, then Mortgagee shall be subrogated to any and all rights, equal or superior titles, liens and equities, owned or claimed by any owner or holder of said outstanding liens, charges and indebtedness, regardless of whether said liens, charges and 

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indebtedness are acquired by assignment or have been released of record by the holder thereof upon payment.
13.    Security Agreement. Mortgagor and Mortgagee agree that this Mortgage shall constitute a “Security Agreement” within the meaning of the Code with respect to (a) all sums at any time on deposit for the benefit of Mortgagor or held by Mortgagee (whether deposited  by or on behalf of Mortgagor or anyone else) pursuant to any of the provisions of this Mortgage or the other Loan Documents, and (b) with respect to any personal property included in the granting clauses of this Mortgage, which personal property may not be deemed to be affixed to the Premises or may not constitute “fixtures” (within the meaning of Section 9-102(41) of the Code) (which property is hereinafter referred to as “Personal Property”), and all replacements of, substitutions for, additions to, and the proceeds thereof, and the “supporting obligations” (as defined in the Code) (all of said Personal Property and the replacements, substitutions and additions thereto and the proceeds thereof being sometimes hereinafter collectively referred to as the “Collateral”), and that a security interest in and to the Collateral is hereby granted to Mortgagee, and the Collateral and all of Mortgagor’s right, title and interest therein are hereby assigned to Mortgagee, all to secure payment of the Indebtedness.  All of the provisions contained in this Mortgage pertain and apply to the Collateral as fully and to the same extent as to any other property comprising the Premises; and the following provisions of this paragraph shall not limit the applicability of any other provision of this Mortgage but shall be in addition thereto:
a.    Mortgagor (being the Debtor as that term is used in the Code) is and will be the true and lawful owner of the Collateral and has rights in and the power to transfer the Collateral, subject to no liens, charges or encumbrances other than the lien hereof, other liens and encumbrances benefiting Mortgagee and no other party, and liens and encumbrances, if any, expressly permitted by the other Loan Documents.
b.    The Collateral is to be used by Mortgagor solely for business purposes.
c.    The Collateral will be kept at the Real Estate and, except for Collateral no longer useful in connection with the operation of the Premises or other dispositions in the ordinary course of Mortgagor’s business (“Obsolete Collateral”), will not be removed therefrom without the consent of Mortgagee (being the “Secured Party” as that term is used in the Code). The Collateral may be affixed to the Real Estate but will not be affixed to any other real estate.
d.    The only persons having any interest in the Premises are Mortgagor, Mortgagee and holders of interests, if any, expressly permitted hereby.
e.    No financing statement (other than financing statements showing Mortgagee as the sole secured party, or with respect to liens or encumbrances, if any, expressly permitted hereby) covering any of the Collateral or any proceeds thereof is on file in any public office except pursuant hereto; and Mortgagor, at its own cost and expense, upon demand, will furnish to Mortgagee such further information and will execute and deliver to Mortgagee such financing statements and other documents in form satisfactory to Mortgagee and will do all such acts as Mortgagee may request at any time or from time to time as may be 

11

necessary or appropriate to establish and maintain a perfected security interest in the Collateral as security for the Indebtedness, subject to no other liens or encumbrances, other than liens or encumbrances benefiting Mortgagee and no other party, and liens and encumbrances (if any) expressly permitted hereby; and Mortgagor will pay the cost of filing or recording such financing statements or other documents, and this instrument, in all public offices wherever filing or recording is deemed by Mortgagee to be desirable.  Mortgagor hereby irrevocably authorizes Mortgagee at any time, and from time to time, to file in any jurisdiction any initial financing statements and amendments thereto that (i) indicate the Collateral as all assets of Mortgagor (or words of similar effect), regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the Uniform Commercial Code of the jurisdiction wherein such financing statement or amendment is filed, or as being of an equal or lesser scope or with greater detail, and (ii) contain any other information required by Section 5 of Article 9 of the Uniform Commercial Code of the jurisdiction wherein such financing statement or amendment is filed regarding the sufficiency or filing office acceptance of any financing statement or amendment, including whether Mortgagor is an organization, the type of organization, and any organization identification number issued to Mortgagor, and in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of the real property to which the Collateral relates.  Mortgagor agrees to furnish any such information to Mortgagee promptly upon request.  Mortgagor further ratifies and affirms its authorization for any financing statements and/or amendments thereto executed and filed by Mortgagee in any jurisdiction prior to the date of this Mortgage.
f.    Upon an Event of Default hereunder, Mortgagee shall have the remedies of a “Secured Party” under the Code, including, without limitation, the right to take immediate and exclusive possession of the Collateral, or any part thereof, and for that purpose, so far as Mortgagor can give authority therefor, with or without judicial process, may enter (if this can be done without breach of the peace) upon any place which the Collateral or any part thereof may be situated and remove the same therefrom (provided that if the Collateral is affixed to real estate, such removal shall be subject  to the conditions stated in the Code); and Mortgagee shall be entitled to hold, maintain, preserve and prepare the Collateral for sale, until disposed of, or may propose to retain the Collateral subject to Mortgagor’s right of redemption, if any, in satisfaction of Mortgagor’s obligations, as provided in the Code.  Mortgagee may render the Collateral unusable without removal and may dispose of the Collateral on the Premises.  Mortgagee may require Mortgagor to assemble the Collateral and make it available to Mortgagee for its possession at a place to be designated by Mortgagee which is reasonably convenient to both parties.  Mortgagee will give Mortgagor at least ten (10) days’ notice of the time and place of any public sale of the Collateral or of the time at or after which any private sale or any other intended disposition thereof is to be made.  The requirements of reasonable notice shall be met if such notice is mailed, by certified United States mail or equivalent, postage prepaid, to the address of Mortgagor hereinafter set forth at least ten (10) days before the time of the sale or disposition.  Mortgagee may buy at any public sale.  Mortgagee may buy at private sale if the Collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations.  Any such sale may be held in conjunction with any foreclosure sale of the 

12

Premises.  If Mortgagee so elects, the Premises and the Collateral may be sold as one lot.  The net proceeds realized upon any such disposition, after deduction for the expenses of retaking, holding, preparing for sale, selling and the reasonable attorneys’ fees and legal expenses incurred by Mortgagee, shall be applied against the Indebtedness in such order or manner as Mortgagee shall select.  Mortgagee will account to Mortgagor for any surplus realized on such disposition.
g.    The terms and provisions contained in this paragraph, unless the context otherwise requires, shall have the meanings, and be construed as, provided in the Code.
h.    This Mortgage is intended to be a financing statement within the purview of Section 9-502(b) of the Code with respect to the Collateral and the goods described herein, which goods are or may become fixtures relating to the Premises.  The addresses of Mortgagor (“Debtor”) and Mortgagee (“Secured Party”) are herein below set forth.  This Mortgage is to be filed for recording with the Recorder of Deeds of the county or counties where the Premises are located.  
i.    To the extent permitted by applicable law, the security interest created hereby is specifically intended to cover all Leases between Mortgagor or its agents as lessor, and various tenants named therein, as lessee, including all extended terms and all extensions and renewals of the terms thereof, as well as any amendments to or replacement of said Leases, together with all of the right, title and interest of Mortgagor, as lessor thereunder.
j.    Mortgagor represents and warrants that:
i.    Mortgagor is the record owner of the Premises;
ii.    Mortgagor’s chief executive office is located in the State of Georgia;
iii.    Mortgagor’s state of organization is the State of Georgia;
iv.    Mortgagor’s exact legal name is as set forth in the first paragraph of this Mortgage; and
v.    Mortgagor’s organizational identification number is 12032774.   
k.    Mortgagor agrees that:
i.    Where Collateral is in possession of a third party, Mortgagor will join with Mortgagee in notifying the third party of Mortgagee’s interest and obtaining an acknowledgment from the third party that it is holding the Collateral for the benefit of Mortgagee;
ii.    Mortgagor will cooperate with Mortgagee in obtaining control with respect to Collateral consisting of:  deposit accounts, investment property, letter of credit rights and electronic chattel paper; and 

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iii.    Until the Indebtedness is paid in full, Mortgagor will not change the state where it is located or change its company name without giving Mortgagee at least thirty (30) days’ prior written notice in each instance.
14.    Restrictions on Transfer.  Mortgagor, without the prior written consent of Mortgagee, shall not effect, suffer or permit any Prohibited Transfer (as such term is defined in the Loan Agreement).
15.    Single Asset Entity.  Mortgagor shall not hold or acquire, directly or indirectly, any ownership interest (legal or equitable) in any real or personal property other than the Premises, or become a shareholder of, or a member or partner in, any entity which acquires any property other than the Premises, until such time as the Indebtedness has been fully repaid.  Mortgagor’s articles of incorporation, partnership agreement or operating agreement, as applicable, shall limit its purpose to the acquisition, ownership, operation, leasing, maintenance, management, development and disposition of the Premises, and to engage in any lawful act or activity, and to exercise any powers, permitted to limited liability companies organized under the laws of its jurisdiction of formation that are related or incidental to and necessary, or advisable for the accomplishment of the foregoing purposes, and such purposes shall not be amended without the prior written consent of Mortgagee.  Mortgagor covenants:
a.    To maintain its assets, accounts, books, records, financial statements, stationery, invoices, and checks separate from and not commingled with any of those of any other person or entity;
b.    To conduct its own business in its own name, pay its own liabilities out of its own funds, allocate fairly and reasonably any overhead for shared employees and office space, and to maintain an arm’s length relationship with its affiliates;
c.    To hold itself out as a separate entity, correct any known misunderstanding regarding its separate identity, maintain adequate capital in light of its contemplated business operations, and observe all organizational formalities;
d.    Not to guarantee or become obligated for the debts of any other entity or person or hold out its credit as being available to satisfy the obligations of others, including not acquiring obligations or securities of its partners, members or shareholders; 
e.    Not to pledge its assets for the benefit of any other entity or person or make any loans or advances to any person or entity; 
f.    Not to enter into any contract or agreement with any party which is directly or indirectly controlling, controlled by or under common control with Mortgagor (an “Affiliate”), except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’s‐length basis with third parties other than any Affiliate;

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g.    Neither Mortgagor nor any constituent party of Mortgagor will seek the dissolution or winding up, in whole or in part, of Mortgagor, nor will Mortgagor merge with or be consolidated into any other entity;
h.    Mortgagor has and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any constituent party of Mortgagor, Affiliate, any guarantor of the Note (including, without limitation, Guarantor) or any other person;
i.    Mortgagor now has and will hereafter have no debts or obligations other than normal accounts payable in the ordinary course of business, this Mortgage, and the Loan; and any other indebtedness or other obligation of Mortgagor has been paid in full prior to, or through application of proceeds from, the funding of the Loan.
16.    Events of Default; Acceleration.  Each of the following shall constitute an “Event of Default” for purposes of this Mortgage:
a.    Mortgagor fails to pay (i) any installment of principal or interest payable pursuant to the Note within on or before the date when any such payment is due, or (ii) any other amount payable to Mortgagee under the Loan Agreement, the Note, this Mortgage or any of the other Loan Documents within three (3) days after the date when any such payment is due in accordance with the terms hereof or thereof;
b.    Mortgagor fails to perform or cause to be performed any other obligation or observe any other condition, covenant, term, agreement or provision required to be performed or observed by Mortgagor under the Loan Agreement, the Note, this Mortgage or any of the other Loan Documents; provided, however, that if such failure by its nature can be cured, then so long as the continued operation and safety of the Premises, and the priority, validity and enforceability of the liens created by the Mortgage or the Loan Documents and the value of the Premises are not impaired, threatened or jeopardized, then Mortgagor shall have a period (“Cure Period”) of thirty (30) days after Mortgagor obtains knowledge of such failure or receives written notice of such failure to cure the same and an Event of Default shall not be deemed to exist during the Cure Period, provided further that if Mortgagor commences to cure such failure during the Cure Period and is diligently and in good faith attempting to effect such cure, the Cure Period shall be extended for thirty (30) additional days, but in no event shall the Cure Period be longer than sixty (60) days in the aggregate;
c.    the existence of any inaccuracy or untruth in any material respect in any representation or warranty contained in this Mortgage or any of the other Loan Documents or in any statement or certification as to facts delivered to Mortgagee by Mortgagor or any guarantor of the Note which remains uncured;  
d.    (i) Mortgagor or any guarantor of the Note files a voluntary petition in bankruptcy or is adjudicated a bankrupt or insolvent or files any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar 

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relief under the present or any future federal, state, or other statute or law, or seeks or consents to or acquiesces in the appointment of any trustee, receiver or similar officer of Mortgagor or of all or any substantial part of the property of Mortgagor or any guarantor of the Note or any of the Premises, or (ii) all or a substantial part of the assets of Mortgagor or any guarantor of the Note are attached, seized, subjected to a writ or distress warrant or are levied upon unless the same is released or vacated within thirty (30) days;
e.    the commencement of any involuntary petition in bankruptcy against Mortgagor or any guarantor of the Note or the institution against Mortgagor or any guarantor of the Note of any reorganization, arrangement, composition, readjustment, dissolution, liquidation or similar proceedings under any present or future federal, state or other statute or law, or the appointment of a receiver, trustee or similar officer for all or any substantial part of the property of Mortgagor or any guarantor of the Note which shall remain undismissed or undischarged for a period of sixty (60) days;
f.    the dissolution, insolvency, termination, merger or winding-up of Mortgagor or any entity guarantor of the Note or the occurrence of the death or declaration of legal incompetency of any individual guarantor of the Note;   
g.    the occurrence of a Prohibited Transfer (as defined in the Loan Agreement); or
h.    the occurrence of an “Event of Default” under the Loan Agreement, the Note or any of the other Loan Documents.
If an Event of Default occurs, Mortgagee may, at its option, declare the whole of the Indebtedness to be immediately due and payable without further notice to Mortgagor, with interest thereon accruing from the date of such Event of Default until paid at the Default Rate.
17.    Foreclosure; Expense of Litigation. 
a.    Foreclosure.  Mortgagee may foreclose this Mortgage either by judicial proceeding or pursuant to the Oklahoma Power of Sale Mortgage Foreclosure Act, 46 Okla. Stat. 40 et seq. (1991), as amended from time to time (the "Act").  The Mortgagor hereby confers upon the Mortgagee and grants to the Mortgagee the power to sell the Premises pursuant to the Act or any other applicable authority.  No action of the Mortgagee based upon the provisions contained herein or contained in the Act, including, without limitation, the giving of any of the notices provided for in the Act shall constitute an election of remedies which would preclude the Mortgagee from pursuing judicial foreclosure before or at any time after commencement of the power of sale foreclosure procedure.
b.    Waiver of Appraisement.  Appraisement of the Premises is hereby expressly waived, or not, at the option of the Mortgagee, such option to be exercised at the time judgment is rendered in any judicial foreclosure proceeding or at any time prior thereto.
c.    Power of Sale.  A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE.  A POWER OF SALE MAY ALLOW THE MORTGAGEE TO TAKE 

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THE PROPERTY AND SELL IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE MORTGAGOR UNDER THIS MORTGAGE.
d.    Expenses of Litigation.  In any suit to foreclose the lien hereof, there shall be allowed and included as additional indebtedness in the decree for sale all expenditures and expenses which may be paid or incurred by or on behalf of Mortgagee for reasonable attorneys’ fees, appraisers’ fees, 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 the 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 or the value of the Premises.  All expenditures and expenses of the nature mentioned in this paragraph and such other expenses and fees as may be incurred in the enforcement of Mortgagor’s obligations hereunder, the protection of said Premises and the maintenance of the lien of this Mortgage, including the reasonable fees of any attorney employed by Mortgagee in any litigation or proceeding affecting this Mortgage, the Loan Agreement, the Note, or any of the other Loan Documents or the Premises, 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 until paid at the Default Rate and shall be secured by this Mortgage.
18.    Application of Proceeds of Foreclosure Sale.  The proceeds of any foreclosure sale of the Premises shall be distributed and applied in such order as Mortgagee may determine in its sole and absolute discretion.
19.    Appointment of Receiver.  Upon or at any time after the filing of a complaint to foreclose this Mortgage, the court in which such complaint is filed shall, upon petition by Mortgagee, appoint a receiver for the Premises.  Such appointment may be made either before or after sale, without notice, and without giving bond to Mortgagor or anyone claiming under Mortgagor, without regard to the solvency or insolvency of Mortgagor at the time of application for such receiver and without regard to the value of the Premises or whether the same shall be then occupied as a homestead or not and Mortgagee hereunder or any other holder of the Note may be appointed as such receiver.  Such receiver shall have power to collect the rents, issues and profits of the Premises (i) during the pendency of such foreclosure suit, (ii) in case of a sale and a deficiency, during the full statutory period of redemption, whether there be redemption or not, and (iii) during any further times when Mortgagor, but for the intervention of such receiver, would be entitled to collect such rents, issues and profits.  Such receiver also shall have all other powers and rights that may be necessary or are usual in such cases for the protection, possession, control, management and operation of the Premises during said period, including, to the extent permitted by law, the right to lease all or any portion of the Premises for a term that extends beyond the time of such receiver’s possession without obtaining prior court approval of such lease.  The court from time to time may authorize the application of the net income received by the receiver in payment of (a) the Indebtedness, or by any decree 

17

foreclosing this Mortgage, or any tax, special assessment or other lien which may be or become superior to the lien hereof or of such decree, provided such application is made prior to foreclosure sale, and (b) any deficiency upon a sale and deficiency.
20.    Mortgagee’s Right of Possession in Case of Default.  At any time after an Event of Default has occurred, Mortgagor shall, upon demand of Mortgagee, surrender to Mortgagee possession of the Premises.  Mortgagee, in its discretion, may, with process of law, enter upon and take and maintain possession of all or any part of the Premises, together with all documents, books, records, papers and accounts relating thereto, and may exclude Mortgagor and its employees, agents or servants therefrom, and Mortgagee may then hold, operate, manage and control the Premises, either personally or by its agents.  Mortgagee shall have full power to use such measures, legal or equitable, as in its discretion may be deemed proper or necessary to enforce the payment or security of the Rents of the Premises, including actions for the recovery of rent, actions in forcible detainer and actions in distress for rent.  Without limiting the generality of the foregoing, Mortgagee shall have full power to:
a.    cancel or terminate any Lease or sublease for any cause or on any ground which would entitle Mortgagor to cancel the same;
b.    elect to disaffirm any Lease or sublease which is then subordinate to the lien hereof; 
c.    extend or modify any then existing Leases and to enter into new Leases, which extensions, modifications and Leases may provide for terms to expire, or for options to lessees to extend or renew terms to expire, beyond the Maturity Date and beyond the date of the issuance of a deed or deeds to a purchaser or purchasers at a foreclosure sale, it being understood and agreed that any such Leases, and the options or other such provisions to be contained therein, shall be binding upon Mortgagor and all persons whose interests in the Premises are subject to the lien hereof and upon the purchaser or purchasers at any foreclosure sale, notwithstanding any redemption from sale, discharge of the Indebtedness, satisfaction of any foreclosure judgment, or issuance of any certificate of sale or deed to any purchaser;
d.    make any repairs, renewals, replacements, alterations, additions, betterments and improvements to the Premises as Mortgagee deems are necessary;
e.    insure and reinsure the Premises and all risks incidental to Mortgagee’s possession, operation and management thereof; and
f.    receive all of such Rents.
21.    Mortgagee’s Right to Sell in Case of Default.  At any time after an Event of Default has occurred, Mortgagee, in its sole discretion, may, with or without entry, personally or by attorney, sell to the highest bidder all or any part of the Premises, and all right, title and interest therein as an entirety, or in separate lots, as Mortgagee may elect, and in one sale or in any number of separate sales held at one time or at any number of times, all in any manner and upon such notice as provided by the Code or the Act.  Upon the completion of any such sale or sales, Mortgagee shall transfer 

18

and deliver, or cause to be transferred and delivered, to the purchaser the property so sold, in the manner and form provided by the Code or the Act, and Mortgagee is hereby irrevocably appointed the true and lawful attorney-in-fact of Mortgagor, in its name and stead, to make all necessary transfers of property thus sold, and for that purpose Mortgagee may execute and deliver, for and in the name of Mortgagor, all necessary instruments of assignment and transfer, Mortgagor hereby ratifying and confirming all that said attorney-in-fact shall lawfully do.  All proceeds of any such sale or sales remaining after payment of the Indebtedness shall be paid to Mortgagee, its successors and assigns, or to whomever is entitled to receive them.
22.    Application of Income Received by Mortgagee.  Mortgagee, in the exercise of the rights and powers hereinabove conferred upon it, shall have full power to use and apply the Rents of the Premises to the payment of or on account of the following, in such order as Mortgagee may determine:
a.    to the payment of the operating expenses of the Premises, including cost of management and leasing thereof (which shall include compensation to Mortgagee and its agent or agents, if management be delegated to an agent or agents, and shall also include lease commissions and other compensation and expenses of seeking and procuring tenants and entering into Leases), established claims for damages, if any, and premiums on insurance hereinabove authorized;
b.    to the payment of taxes and special assessments now due or which may hereafter become due on the Premises; and
c.    to the payment of any Indebtedness, including any deficiency which may result from any foreclosure sale.
23.    Compliance with Oklahoma Mortgage Foreclosure Law.  
a.    If any provision in this Mortgage shall be inconsistent with any provision of the Act, provisions of the Act shall take precedence over the provisions of this Mortgage, but shall not invalidate or render unenforceable any other provision of this Mortgage that can be construed in a manner consistent with the Act.
b.    If any provision of this Mortgage shall grant to Mortgagee (including Mortgagee acting as a mortgagee‐in‐possession) or a receiver appointed pursuant to the provisions of Paragraph 20 of this Mortgage any powers, rights or remedies prior to, upon or following the occurrence of an Event of Default which are more limited than the powers, rights or remedies that would otherwise be vested in Mortgagee or in such receiver under the Act in the absence of said provision, Mortgagee and such receiver shall be vested with the powers, rights and remedies granted in the Act to the full extent permitted by law.
c.    Without limiting the generality of the foregoing, all expenses incurred by Mortgagee, which are of the type referred to in the Act, whether incurred before or after any decree or judgment of foreclosure, and whether or not enumerated in Paragraph 12, 18 or 31 of this Mortgage, shall be added to the Indebtedness and/or the judgment of foreclosure.

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24.    Rights Cumulative.  Each right, power and remedy herein conferred upon Mortgagee is cumulative and in addition to every other right, power or remedy, express or implied, given now or hereafter existing under any of the Loan Documents or at law or in equity, and each and every right, power and remedy herein set forth or otherwise so existing may be exercised from time to time as often and in such order as may be deemed expedient by Mortgagee, and the exercise or the beginning of the exercise of one right, power or remedy shall not be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy, and no delay or omission of Mortgagee in the exercise of any right, power or remedy accruing hereunder or arising otherwise shall impair any such right, power or remedy, or be construed to be a waiver of any Event of Default or acquiescence therein.
25.    Mortgagee’s Right of Inspection.  Mortgagee and its representatives shall have the right to inspect the Premises and the books and records with respect thereto at all reasonable times upon not less than twenty‐four (24) hours prior notice to Mortgagor, and access thereto, subject to the rights of tenants in possession, shall be permitted for that purpose.  Prior to the occurrence of an Event of Default, Mortgagee may elect to make Mortgagor liable for the costs, fees and expenses incurred by Mortgagee, or for which Mortgagee has become obligated, in connection with up to two such inspections per year, and after the occurrence of an Event of Default, Mortgagor shall be liable for the costs, fees and expenses incurred by Mortgagee, or for which Mortgagee has become obligated, in connection with all such inspections and/or verifications.  Mortgagor’s obligation to pay such costs shall constitute part of the Indebtedness, payable by Mortgagor to Mortgagee on demand.
26.    Release Upon Payment and Discharge of Mortgagor’s Obligations.  Mortgagee shall release this Mortgage and the lien hereof by proper instrument upon payment and discharge of all Indebtedness, including payment of all reasonable expenses incurred by Mortgagee in connection with the execution of such release.
27.    Notices.  Any notices, communications and waivers under this Mortgage shall be in writing and shall be (i) delivered in person, (ii) mailed, postage prepaid, either by registered or certified mail, return receipt requested, (iii) by overnight express carrier, or (iv) by facsimile transmission or email, addressed in each case as follows:
	
		
	To Mortgagee:
	Housing & Healthcare Funding, LLC

	 
	2 Wisconsin Circle, Ste. 540

	 
	Chevy Chase, Maryland 20815

	 
	Attention: Michael Gehl

	 
	Phone: 212-971-9779

	 
	Facsimile: ___________________

	 
	Email: mgehl@hhcfinance.com

	 
	 

	With a copy to:
	Gutnicki LLP

	 
	4711 Golf Road, Suite 200

20

	
		
	 
	Skokie, Illinois 60076

	 
	Attn: Abraham A. Gutnicki

	 
	Facsimile: 847-933-9285

	 
	Email: agutnicki@gutnicki.com

	 
	 

	To Mortgagor:
	QC Property Holdings, LLC

	 
	1145 Hembree Road

	 
	Roswell, GA 30076

	 
	Attn: Boyd P. Gentry

	 
	Facsimile: 678-869-5123

	 
	Email: bpg@adcarehealth.com

	 
	 

	With copy to:
	Holt Ney Zatcoff & Wasserman, LLP

	 
	100 Galleria Parkway, Suite 1800

	 
	Atlanta, GA 30339

	 
	Attn: Ellen W. Smith

	 
	Facsimile: 770-956-1490

	 
	Email: esmith@hnzw.com

or to any other address as to any of the parties hereto, as such party shall designate in a written notice to the other party hereto.  All notices sent pursuant to the terms of this paragraph shall be deemed received (i) if personally delivered, then on the date of delivery, (ii) if sent by overnight express carrier, then on the next federal banking day immediately following the day sent, (iii) if sent by registered or certified mail, then on the earlier of the third federal banking day following the day sent or when actually received, or (iv) if sent by facsimile or email, as evidenced by receipt of a successful transmission report, (followed by delivery by one of the other means identified in (i)-(iii)); provided, however, that if any notice is tendered to an addressee and delivery thereof is refused by such addressee, such notice shall be effective upon such tender unless expressly set forth in such notice.
28.    Waiver of Rights.  Mortgagor hereby covenants and agrees that it will not at any time insist upon or plead, or in any manner claim or take any advantage of, any stay, exemption or extension law or any so‐called “Moratorium Law” now or at any time hereafter in force providing for the valuation or appraisement of the Premises, or any part thereof, prior to any sale or sales thereof to be made pursuant to any provisions herein contained, or to any decree, judgment or order of any court of competent jurisdiction; or, after such sale or sales, claim or exercise any rights under any statute now or hereafter in force to redeem the property so sold, or any part thereof, or relating to the marshalling thereof, upon foreclosure sale or other enforcement hereof, and without limiting the foregoing:
a.    Mortgagor hereby expressly waives any and all rights of reinstatement and redemption, if any, under any order or decree of foreclosure of this Mortgage, on its own 

21

behalf and on behalf of each and every person, it being the intent hereof that any and all such rights of reinstatement and redemption of the Mortgagor and of all other persons are and shall be deemed to be hereby waived to the full extent permitted by the provisions of applicable law;
b.    Mortgagor will not invoke or utilize any such law or laws or otherwise hinder, delay or impede the execution of any right, power remedy herein or otherwise granted or delegated to Mortgagee but will suffer and permit the execution of every such right, power and remedy as though no such law or laws had been made or enacted; and
c.    If Mortgagor is a trustee, Mortgagor represents that the provisions of this paragraph (including the waiver of reinstatement and redemption rights) were made at the express direction of Mortgagor’s beneficiaries and the persons having the power of direction over Mortgagor, and are made on behalf of the trust estate of Mortgagor and all beneficiaries of Mortgagor, as well as all other persons mentioned above.
29.    Reserved.
30.    Contests.  Notwithstanding anything to the contrary herein contained, Mortgagor shall have the right to contest by appropriate legal proceedings diligently prosecuted any Taxes imposed or assessed upon the Premises or which may be or become a lien thereon and any mechanics’, materialmen’s or other liens or claims for lien upon the Premises (all herein called “Contested Liens”), and no Contested Liens shall constitute an Event of Default hereunder if, but only if:
a.    Mortgagor shall forthwith give notice of any Contested Lien to Mortgagee at the time the same shall be asserted;
b.    Mortgagor shall either pay under protest or deposit with Mortgagee the full amount (herein called “Lien Amount”) of such Contested Lien, together with such amount as Mortgagee may reasonably estimate as interest or penalties which might arise during the period of contest; provided that in lieu of such payment Mortgagor may furnish to Mortgagee a bond or title indemnity in such amount and form, and issued by a bond or title insuring company, as may be satisfactory to Mortgagee;
c.    Mortgagor shall diligently prosecute the contest of any Contested Lien by appropriate legal proceedings having the effect of staying the foreclosure or forfeiture of the Premises, and shall permit Mortgagee to be represented in any such contest and shall pay all expenses incurred in so doing, including fees and expenses of Mortgagee’s counsel (all of which shall constitute so much additional Indebtedness bearing interest at the Default Rate until paid, and payable upon demand);
d.    Mortgagor shall pay such Contested Lien and all Lien Amounts together with interest and penalties thereon (i) if and to the extent that any such Contested Lien shall be determined adverse to Mortgagor, or (ii) forthwith upon demand by Mortgagee if, in the opinion of Mortgagee, and notwithstanding any such contest, the Premises shall be in jeopardy or in danger of being forfeited or foreclosed; provided that if Mortgagor shall fail 

22

so to do, Mortgagee may, but shall not be required to, pay all such Contested Liens and Lien Amounts and interest and penalties thereon and such other sums as may be necessary in the judgment of Mortgagee to obtain the release and discharge of such liens; and any amount expended by Mortgagee in so doing shall be so much additional Indebtedness bearing interest at the Default Rate until paid, and payable upon demand; and provided further that Mortgagee may in such case use and apply monies deposited as provided in subsection (b) above and may demand payment upon any bond or title indemnity furnished as aforesaid.
31.    Expenses Relating to Note and Mortgage.  
a.    Mortgagor will pay all expenses, charges, costs and fees relating to the Loan or necessitated by the terms of the Loan Agreement, the Note, this Mortgage or any of the other Loan Documents, including without limitation, Mortgagee’s reasonable attorneys’ fees in connection with the negotiation, documentation, administration, servicing and enforcement of the Loan Agreement, the Note, this Mortgage and the other Loan Documents, all filing, registration and recording fees, all other expenses incident to the execution and acknowledgment of this Mortgage and all federal, state, county and municipal taxes, and other taxes (provided Mortgagor shall not be required to pay any income or franchise taxes of Mortgagee), duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of the Loan Agreement, the Note and this Mortgage.  Mortgagor recognizes that, during the term of this Mortgage, Mortgagee:
i.    May be involved in court or administrative proceedings, including, without restricting the foregoing, foreclosure, probate, bankruptcy, creditors’ arrangements, insolvency, housing authority and pollution control proceedings of any kind, to which Mortgagee shall be a party by reason of the Loan Documents or in which the Loan Documents or the Premises are involved directly or indirectly;
ii.    May make preparations following the occurrence of an Event of Default hereunder for the commencement of any suit for the foreclosure hereof, which may or may not be actually commenced;
iii.    May make preparations following the occurrence of an Event of Default hereunder for, and do work in connection with, Mortgagee’s taking possession of and managing the Premises, which event may or may not actually occur;
iv.    May make preparations for and commence other private or public actions to remedy an Event of Default hereunder, which other actions may or may not be actually commenced;
v.    May enter into negotiations with Mortgagor or any of its agents, employees or attorneys in connection with the existence or curing of any Event of Default hereunder, the sale of the Premises, the assumption by any third party of liability for any of the Indebtedness or the transfer of the Premises in lieu of foreclosure; or

23

vi.    May enter into negotiations with Mortgagor or any of its agents, employees or attorneys pertaining to Mortgagee’s approval of actions taken or proposed to be taken by Mortgagor which approval is required by the terms of this Mortgage.
b.    All expenses, charges, costs and fees described in this Paragraph 31 shall be so much additional Indebtedness, shall bear interest from the date so incurred until paid at the Default Rate and shall be paid, together with said interest, by Mortgagor forthwith upon demand.
32.    Financial Statements.  Mortgagor represents and warrants that the financial statements for Mortgagor and the Premises previously submitted to Mortgagee are true, complete and correct in all material respects, disclose all actual and contingent liabilities of Mortgagor and/or relating to the Premises and do not contain any untrue statement of a material fact or omit to state a fact material to such financial statements.  No material adverse change has occurred in the financial condition of Mortgagor or the Premises from the dates of said financial statements until the date hereof.  Mortgagor shall furnish to Mortgagee such financial information as required by the Loan Agreement.  
33.    Statement of Indebtedness.  Mortgagor, within seven (7) days after being so requested by Mortgagee, shall furnish a duly acknowledged written statement setting forth the amount of the debt secured by this Mortgage, the date to which interest has been paid and stating either that no offsets or defenses exist against such debt or, if such offsets or defenses are alleged to exist, the nature thereof. 
34.    Further Instruments.  Upon request of Mortgagee, Mortgagor shall execute, acknowledge and deliver all such additional instruments and further assurances of title and shall do or cause to be done all such further acts and things as may reasonably be necessary to fully effectuate the intent of this Mortgage and of the other Loan Documents.
35.    Additional Indebtedness Secured.  All persons and entities with any interest in the Premises or about to acquire any such interest should be aware that this Mortgage secures more than the stated principal amount of the Note and interest thereon; this Mortgage secures any and all other amounts which may become due under the Note or any other document or instrument evidencing, securing or otherwise affecting the Indebtedness, including, without limitation, any and all amounts expended by Mortgagee to operate, manage or maintain the Premises or to otherwise protect the Premises or the lien of this Mortgage. 
36.    Indemnity.  Mortgagor hereby covenants and agrees that no liability shall be asserted or enforced against Mortgagee in the exercise of the rights and powers granted to Mortgagee in this Mortgage, and Mortgagor hereby expressly waives and releases any such liability.  Mortgagor shall indemnify and save Mortgagee harmless from and against any and all liabilities, obligations, losses, damages, claims, costs and expenses (including reasonable attorneys’ fees and court costs) (collectively, “Claims”) of whatever kind or nature which may be imposed on, incurred  by or asserted against Mortgagee at any time by any third party which relate to or arise from:  (a) any suit or proceeding (including probate and bankruptcy proceedings), or the threat thereof, in or to which Mortgagee may or does become a party, either as plaintiff or as a defendant, by reason of this 

24

Mortgage or for the purpose of protecting the lien of this Mortgage; (b) the offer for sale or sale of all or any portion of the Premises; and (c) the ownership, leasing, use, operation or maintenance of the Premises, if such Claims relate to or arise from actions taken prior to the surrender of possession of the Premises to Mortgagee in accordance with the terms of this Mortgage; provided, however, that Mortgagor shall not be obligated to indemnify or hold Mortgagee harmless from and against any Claims directly arising from the gross negligence or willful misconduct of Mortgagee.  All costs provided for herein and paid for by Mortgagee shall be so much additional Indebtedness and shall become immediately due and payable upon demand by Mortgagee and with interest thereon from the date incurred by Mortgagee until paid at the Default Rate.
37.    Subordination of Property Manager’s Lien.  Any property management agreement for the Premises entered into hereafter with a property manager shall contain a provision whereby the property manager agrees that any and all mechanics’ lien rights that the property manager or anyone claiming by, through or under the property manager may have in the Premises shall be subject and subordinate to the lien of this Mortgage and shall provide that Mortgagee may terminate such agreement at any time after the occurrence of an Event of Default hereunder.  Such property management agreement or a short form thereof, at Mortgagee’s request, shall be recorded with the Recorder of Deeds of the county where the Premises are located.  In addition, if any property management agreement in existence as of the date hereof does not contain a subordination provision, Mortgagor shall cause the property manager under such agreement to enter into a subordination of the management agreement with Mortgagee, in recordable form, whereby such property manager subordinates present and future lien rights and those of any party claiming by, through or under such property manager to the lien of this Mortgage.
38.    Compliance with Environmental Laws.  Mortgagor acknowledges that concurrently herewith Mortgagor has executed and delivered to Mortgagee an Environmental Indemnity Agreement (“Indemnity”) pursuant to which Mortgagor and the Guarantor (as defined in the Loan Agreement) have fully indemnified Mortgagee for certain environmental matters concerning the Premises, as more particularly described therein.  The provisions of the Indemnity are hereby incorporated herein, and this Mortgage shall secure the obligations of Mortgagor thereunder.  Mortgagor agrees to abide by all of the provisions of the Indemnity.  
39.    Miscellaneous.  
a.    Successors and Assigns.  This Mortgage and all provisions hereof shall be binding upon and enforceable against Mortgagor and its assigns and other successors.  This Mortgage and all provisions hereof shall inure to the benefit of Mortgagee, its successors and assigns and any holder or holders, from time to time, of the Note.
b.    Invalidity of Provisions; Governing Law; Non-Homestead.  In the event that any provision of this Mortgage is deemed to be invalid by reason of the operation of law, or by reason of the interpretation placed thereon by any administrative agency or any court, Mortgagor and Mortgagee shall negotiate an equitable adjustment in the provisions of the same in order to effect, to the maximum extent permitted by law, the purpose of this Mortgage, and the validity and enforceability of the remaining provisions, or portions or applications 

25

thereof, shall not be affected thereby and shall remain in full force and effect.  This Mortgage is to be construed in accordance with and governed by the laws of the State of Oklahoma.  
c.    Municipal Requirements.  Mortgagor shall not by act or omission permit any building or other improvement on premises not subject to the lien of this Mortgage to rely on the Premises or any part thereof or any interest therein to fulfill any municipal or governmental requirement, and Mortgagor hereby assigns to Mortgagee any and all rights to give consent for all or any portion of the Premises or any interest therein to be so used.  Similarly, no building or other improvement on the Premises shall rely on any premises not subject to the lien of this Mortgage or any interest therein to fulfill any governmental or municipal requirement.  Any act or omission by Mortgagor which would result in a violation of any of the provisions of this subparagraph shall be void.
d.    Rights of Tenants.  Mortgagee shall have the right and option to commence a civil action to foreclose this Mortgage and to obtain a decree of foreclosure and sale subject to the rights of any tenant or tenants of the Premises having an interest in the Premises prior to that of Mortgagee.  The failure to join any such tenant or tenants of the Premises as party defendant or defendants in any such civil action or the failure of any decree of foreclosure and sale to foreclose their rights shall not be asserted by Mortgagor as a defense in any civil action instituted to collect the Indebtedness or any part thereof or any deficiency remaining unpaid after foreclosure and sale of the Premises, any statute or rule of law at any time existing to the contrary notwithstanding.
e.    Option of Mortgagee to Subordinate.  At the option of Mortgagee, this Mortgage shall become subject and subordinate, in whole or in part (but not with respect to priority of entitlement to insurance proceeds or any condemnation or eminent domain award) to any and all leases of all or any part of the Premises upon the execution by Mortgagee of a unilateral declaration to that effect and the recording thereof in the Office of the Recorder of Deeds in and for the county wherein the Premises are situated.  
f.    Mortgagee-in-Possession.  Nothing herein contained shall be construed as constituting Mortgagee a mortgagee-in-possession in the absence of the actual taking of possession of the Premises by Mortgagee pursuant to this Mortgage.
g.    Relationship of Mortgagee and Mortgagor.  Mortgagee shall in no event be construed for any purpose to be a partner, joint venturer, agent or associate of Mortgagor or of any lessee, operator, concessionaire or licensee of Mortgagor in the conduct of their respective businesses, and, without limiting the foregoing, Mortgagee shall not be deemed to be such partner, joint venturer, agent or associate on account of Mortgagee becoming a mortgagee-in-possession or exercising any rights pursuant to this Mortgage, any of the other Loan Documents, or otherwise.  The relationship of Mortgagor and Mortgagee hereunder is solely that of debtor/creditor.
h.    Time of the Essence.  Time is of the essence for the payment by Mortgagor of all amounts due and owing to Mortgagee under the Loan Agreement, the Note and the other 

26

Loan Documents and the performance and observance by Mortgagor of all terms, conditions, obligations and agreements contained in this Mortgage and the other Loan Documents.
i.    No Merger.  The parties hereto intend that the Mortgage and the lien hereof shall not merge in fee simple title to the Premises, and if Mortgagee acquires any additional or other interest in or to the Premises or the ownership thereof, then, unless a contrary intent is manifested by Mortgagee as evidenced by an express statement to that effect in an appropriate document duly recorded, this Mortgage and the lien hereof shall not merge in the fee simple title and this Mortgage may be foreclosed as if owned by a stranger to the fee simple title.
j.    Intentionally omitted.
k.    Consent to Jurisdiction.  TO INDUCE MORTGAGEE TO ACCEPT THE NOTE, MORTGAGOR IRREVOCABLY AGREES THAT, SUBJECT TO MORTGAGEE’S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR RELATED TO THE LOAN, THE NOTE AND THIS MORTGAGE WILL BE LITIGATED IN COURTS HAVING SITUS IN CHEVY CHASE, MARYAND, UNLESS APPLICABLE LAW REQUIRES JURISDICTION OF THE STATE WHERE THE PREMISES IS LOCATED.  MORTGAGOR HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY COURT LOCATED WITHIN CHEVY CHASE, MARYAND.
l.    Waiver of Jury Trial.  MORTGAGOR AND MORTGAGEE (BY ACCEPTANCE HEREOF), HAVING BEEN REPRESENTED BY COUNSEL EACH KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (a) UNDER THIS MORTGAGE OR ANY RELATED AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THIS MORTGAGE OR (b) ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS MORTGAGE, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.  MORTGAGOR AGREES THAT IT WILL NOT ASSERT ANY CLAIM AGAINST MORTGAGEE OR ANY OTHER PERSON INDEMNIFIED UNDER THIS MORTGAGE ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.
m.    Complete Agreement.  This Mortgage, the Loan Agreement, the Note and the other Loan Documents constitute the complete agreement between the parties with respect to the subject matter hereof, and the Loan Documents may not be modified, altered or amended except by an agreement in writing signed by both Mortgagor and Mortgagee.
n.    Government Regulation.  Mortgagor shall not (a) be or become subject at any time to any law, regulation, or list of any government agency (including, without limitation, 

27

the U.S. Office of Foreign Asset Control list) that prohibits or limits Mortgagee from making any advance or extension of credit to Mortgagor or from otherwise conducting business with Mortgagor, or (b) fail to provide documentary or other evidence of Mortgagor's identity as may be requested by Mortgagee at any time to enable Mortgagee to verify Mortgagor's identity or to comply with any applicable law or regulation, including, without limitation, Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318.
o.    USA PATRIOT ACT NOTIFICATION.  The following notification is provided to Mortgagor pursuant to Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318:  IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT.  To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person or entity that opens an account, including any deposit account, treasury management account, loan, other extension of credit or other financial services product.  What this means for Mortgagor:  When Mortgagor opens an account, if Mortgagor is an individual, Mortgagee will ask for Mortgagor’s name, taxpayer identification number, residential address, date of birth, and other information that will allow Mortgagee to identify Mortgagor.  Mortgagee may also ask, if Mortgagor is an individual, to see Mortgagor’s driver’s license or other identifying documents, and, if Mortgagor is not an individual, to see Mortgagor’s legal organizational documents or other identifying documents.
p.    Collateral Protection Act.  Mortgagor is hereby notified as follows: Unless Mortgagor provides Mortgagee with evidence of the insurance coverage required by this Mortgage, or any of the other Loan Documents, Mortgagee may purchase insurance at Mortgagor's expense to protect Mortgagee's interests in the Premises or any other collateral for the Indebtedness or Obligations.  This insurance may, but need not protect Mortgagor's interests.  The coverage Mortgagee purchases may not pay any claim that Mortgagor makes or any claim that is made against Mortgagor in connection with the Premises or any other collateral for the Indebtedness or Obligations.  Mortgagor may later cancel any insurance purchased by Mortgagee but only after providing Mortgagee with evidence that Mortgagor has obtained insurance as required by this Mortgage, or any of the other Loan Documents.  If Mortgagee purchases insurance for the Premises or any other collateral for the Indebtedness or Obligations, Mortgagor will be responsible for the costs of that insurance, including interest on any other charges that Mortgagee may lawfully impose in connection with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance.  The costs of the insurance may be added to the total outstanding Indebtedness.  The costs of the insurance may be more than the cost of insurance that Mortgagor may be able to obtain on its own.  

[Signature Page Follows]

28

IN WITNESS WHEREOF, Mortgagor has executed and delivered this Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing the day and year first above written.
	
				
	 
	MORTGAGOR:

	 
	 
	 
	 

	 
	QC Property Holdings, LLC, A Georgia limited liability company

	 
	 
	 
	 

	 
	 
	By:
	/s/ Ronald W. Fleming

	 
	 
	Name:
	Ronald W. Fleming

	 
	 
	Title:
	Manager

	
			
	STATE OF ______________
	)
	 

	 
	)
	ss

	COUNTY OF ____________
	)
	 

I, the undersigned, a Notary Public in and for said County, in the State aforesaid, do hereby certify that Ronald W. Fleming, the Manager of QC Property Holdings, LLC, a Georgia limited liability company (the “Company”), who is personally known to me to be the same person whose name is subscribed to the foregoing instrument as such __________________, appeared before me this day in person and acknowledged that he signed and delivered the said instrument as his own free and voluntary act as _____________________ of the Company and as the free and voluntary act of the Company, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal, this ___ day of _______, 2013.
	
		
	 
	 

	 
	NOTARY PUBLIC

	 
	 

	 
	(SEAL)

HHC Funding / QC Property Holdings, LLC
Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing
Signature Page

EXHIBIT A
LEGAL DESCRIPTION

A part of the Northeast Quarter (NE/4) of Section Sixteen (16), Township Thirteen (13) North, Range Four (4) West of the Indian Meridian in the City of Oklahoma City, Oklahoma County, Oklahoma, said part being more particularly described as follows:

Beginning at a point located South 00°28'33" East a distance of 503.87 feet and North 89°31 '27" East a distance of 30.00 feet from the Northwest Comer of said Northeast Quarter (NE/4);

Thence from said Point of Beginning South 00°28'33" East a distance of293.65 feet to a point on a curve to the right, said curve having a central angle of 15°52'38" and a radius of
205.65 feet;

Thence along the arc of said curve in a Southwesterly direction a distance of 56.99 feet;

Thence South 89°51'09" East a distance of 722.34 feet;

Thence North 00°28'33" West a distance of 350.00 feet;
Thence North 89°51 '09" West a distance of 714.50 feet to the Point of Beginning. 
Together with rights of ingress and egress established by the easement estate created by
Weschase Partners Limited Partnership, an Oklahoma limited partnership in favor of Weschase Land Co. Limited Partnership, an Oklahoma limited partnership,  filed January 20, 1987, recorded in Book 5576, Page 1628, and more particularly described as follows:

The North  15 feet of the following described tract:

A part of the Northeast Quarter (NE/4) of Section Sixteen (16), Township Thirteen (13) North, Range Four (4) West of the Indian Meridian, in the City of Oklahoma City, Oklahoma County, Oklahoma, said part being more particularly described as follows:

Beginning at a point located on the East right-of-way line of Brandon Place, South 00°28'33" East 503.87 feet and North 89°31 '27" East 30.00 feet from the Northwest Comer of said Northeast Quarter (NE/4);

Thence from said Point of Beginning, said easement being 15.00 feet North and 15.00 feet South of the following described line;

South 89°51'09" East 584.00 feet to the point of termination.

Property Address: 13500 Brandon Place, Oklahoma City, OK APN:  3861-14-947-1090

A-1

EXHIBIT B
PERMITTED EXCEPTIONS
1.Ad valorem taxes for 2013, amount of which is not ascertainable, not yet due or payable.

2.    All interest in and to all oil, gas, coal and other minerals and all rights pertaining thereto.

		
	3.
	Journal Entry entered in Logan County District Court Case No. 11244 establishing Conservancy District No. 11 recorded in Book 2213, Page 228.

		
	4.
	Rights of residents of the facility on the land pursuant to unrecorded residency agreements, if any.

		
	5.
	Easement in favor of Westchase Land Co., Limited Partnership recorded in Book 5576,

Page 1628.

6.    Easement in favor of the City of Oklahoma City recorded in Book 5594, Page 1558.

7.    Easement in favor of the City of Oklahoma City recorded in Book 5594, Page 1561.

8.    Right-of-Way in favor of the City of Oklahoma City, recorded in Book 5702, Page 874.

		
	9.
	Right-of-Way in favor of Conoco, Inc., via Assignment, recorded in Book 7214, Page 1010.

		
	10.
	Memorandum of Agreement in favor of Cox Communications Oklahoma City, Inc., recorded in Book 11391, Page 1621.

		
	11.
	Easement In favor of CoxCom, Inc., d/b/a Cox Communications Oklahoma City recorded in Book  11671,  Page  1681.

		
	12.
	The following matters disclosed by an ALTA/ACSM survey made by James S. Yager, LPLS No.  1006 on  May  11,  2012:

		
	a.
	Encroachment of sign into public street right of way near Northwest corner of subject property.

		
	b.
	Rights, if any, of property owners adjoining on the South in and to that portion of subject property lying between the property line and fence inside said line.

		
	13.
	Notice of West Edmond Hunton Lime Unit and Surface Rights recorded in Book 12208, Page 1863.

    

     

B-1Exhibit 10.33

Exhibit 10.33

GUARANTY

THIS GUARANTY (this “Guaranty”) is dated as of September 27, 2013 by AdCare Health Systems, Inc., an Ohio corporation (“Guarantor”), to and for the benefit of Housing & Healthcare Funding, LLC, a Delaware limited liability company, its successors and assigns (“Lender”).

R E C I T A L S:

A.Pursuant to the terms and conditions of that certain Loan and Security Agreement of even date herewith (as amended and/or restated from time to time, the “Loan Agreement”) between Lender and QC Property Holdings, LLC, a Georgia limited liability company (“Borrower”), Lender has extended to Borrower a loan in the original principal amount of FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00) (the “Loan”).  All terms not otherwise defined herein shall have the meanings set forth in the Loan Agreement.

B.    The Loan is evidenced by that certain Promissory Note of even date herewith made payable by Borrower to the order of Lender in the maximum principal amount of the Loan (as amended and/or restated from time to time, the “Note”).
C.    The Note is secured by, among other things:  (i) a Mortgage, Security Agreement Assignment of Leases and Rents and Fixture Filing of even date herewith (as amended and/or restated from time to time, the “Mortgage”), from Borrower to and for the benefit of Lender encumbering the real property, improvements and personalty described therein (the “Property”) and (ii) all other Loan Documents (as defined in the Loan Agreement).  
D.    As a condition precedent to Lender’s extension of the Loan to Borrower and in consideration therefor, Lender has required the execution and delivery of (i) this Guaranty by Guarantor, (ii) the Note, (iii) the Mortgage, (iv) the Loan Agreement, and (v) the other Loan Documents (as defined in the Loan Agreement).
E.    Guarantor, as an affiliate of Borrower, having a financial interest in the success of Borrower, has therefore agreed to execute and deliver this Guaranty to Lender.   

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, Guarantor hereby agrees as follows:

1.Guaranty.  Guarantor hereby, unconditionally and irrevocably guarantees to Lender the punctual payment and performance when due, whether at stated maturity or by acceleration or otherwise, of the indebtedness and other obligations of Borrower to Lender evidenced by the Note and any other amounts that may become owing by Borrower under the Loan Documents (such indebtedness, obligations, and other amounts are hereinafter referred to as the “Payment Obligations”).  This Guaranty is a present and continuing guaranty of payment and not of 

collectibility, and Lender shall not be required to prosecute collection, enforcement or other remedies against Borrower or any other guarantor of the Payment Obligations, or to enforce or resort to any collateral for the repayment of the Payment Obligations or other rights or remedies pertaining thereto, before calling on Guarantor for payment.  If for any reason Borrower shall fail or be unable to pay, punctually and fully, any of the Payment Obligations, Guarantor shall pay such obligations to Lender in full immediately upon demand.  One or more successive actions may be brought against Guarantor, as often as Lender deems advisable, until all of the Payment Obligations are paid and performed in full.  The Payment Obligations together with all other payment and performance obligations of Guarantor hereunder are referred to herein as “Borrower’s Obligations”.

2.Representations and Warranties.  The following shall constitute representations and warranties of Guarantor, and Guarantor hereby acknowledges that Lender intends to make the Loan in reliance thereon:  

a.Guarantor is a corporation, duly organized, validly existing and in good standing under the laws of the State of Ohio.  Guarantor has full power and authority to enter into this Guaranty and to perform all of its duties and obligations under this Guaranty; such execution and performance have been duly authorized by all necessary manager, member and/or shareholder approval.

b.Guarantor is not in default and no event has occurred that with the passage of time and/or the giving of notice will constitute a default under any agreement to which a Guarantor is a party, the effect of which will impair performance by a Guarantor of its or his obligations under this Guaranty.  Neither the execution and delivery of this Guaranty nor compliance with the terms and provisions hereof will violate any applicable law, rule, regulation, judgment, decree or order, or will conflict with or result in any breach of any of the terms, covenants, conditions or provisions of any indenture, mortgage, deed of trust, instrument, document, agreement or contract of any kind that creates, represents, evidences or provides for any lien, charge or encumbrance upon any of the property or assets of a Guarantor, or any other indenture, mortgage, deed of trust, instrument, document, agreement or contract of any kind to which a Guarantor is a party or to which a Guarantor or the property of a Guarantor may be subject.

c.There is not any litigation, arbitration, governmental or administrative proceedings, actions, examinations, claims or demands pending, or to knowledge of Guarantor, threatened that could adversely affect performance by a Guarantor of its obligations under this Guaranty.

d.Neither this Guaranty nor any statement or certification as to facts previously furnished or required herein to be furnished to Lender by Guarantor contains any material inaccuracy or untruth in any representation, covenant or warranty or omits to state a fact material to this Guaranty.

e.Guarantor has received copies of, and has had the opportunity to review, all of the Loan Documents referred to in this Guaranty, and the representations and warranties 

2

made in the Loan Agreement with respect to Guarantor are true and correct as of the date hereof, and shall remain true and correct at all times hereafter so long as any part of the Payment Obligations shall remain outstanding.

f.This Guaranty creates legal, valid, and binding obligations of Guarantor enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, moratorium, insolvency, reorganization, fraudulent conveyance or other laws affecting the enforcement of creditors’ rights generally or by general equitable principles. 

3.Continuing Guaranty.  Guarantor agrees that performance of Borrower’s Obligations by Guarantor shall be a primary obligation, shall not be subject to any counterclaim, set‐off, abatement, deferment or defense based upon any claim that any Guarantor may have against Lender, Borrower, any other guarantor of Borrower’s Obligations, or any other person or entity, and shall remain in full force and effect without regard to, and shall not be released, discharged or affected in any way by, any circumstance or condition (whether or not Guarantors shall have any knowledge thereof), including without limitation:

a.    any lack of validity or enforceability of any of the Loan Documents;

b.    any termination, amendment, modification or other change in any of the Loan Documents, including, without limitation, any modification of the interest rate(s) described therein;

c.    any furnishing, exchange, substitution or release of any collateral securing repayment of the Loan, or any failure to perfect any lien in such collateral;

d.    any failure, omission or delay on the part of Borrower, Guarantor, any other guarantor of Borrower’s Obligations, or Lender to conform or comply with any term of any of the Loan Documents or any failure of Lender to give notice of any Event of Default (as defined in the Loan Agreement);

e.    any waiver, compromise, release, settlement or extension of time of payment or performance or observance of any of the obligations or agreements contained in any of the Loan Documents;

f.    any action or inaction by Lender under or in respect of any of the Loan Documents, any failure, lack of diligence, omission or delay on the part of Lender to perfect, enforce, assert or exercise any lien, security interest, right, power or remedy conferred on it in any of the Loan Documents, or any other action or inaction on the part of Lender;

g.    any voluntary or involuntary bankruptcy, insolvency, reorganization, arrangement, readjustment, assignment for the benefit of creditors, composition, receivership, liquidation, marshalling of assets and liabilities or similar events or proceedings with respect to Borrower, any Guarantor, any other guarantor of Borrower’s Obligations, 

3

as applicable, or any of their respective property or creditors, or any action taken by any trustee or receiver or by any court in any such proceeding;

h.    any merger or consolidation of Borrower into or with any entity, or any sale, lease or transfer of any of the assets of Borrower, any Guarantor or any other guarantor of Borrower’s Obligations to any other person or entity;

i.    any change in the ownership of Borrower or any change in the relationship between Borrower, any Guarantor, any other guarantor of Borrower’s Obligations, or any termination of any such relationship;

j.    any release or discharge by operation of law of Borrower, any Guarantor, or any other guarantor of Borrower’s Obligations, from any obligation or agreement contained in any of the Loan Documents; or

k.    any other occurrence, circumstance, happening or event, whether similar or dissimilar to the foregoing and whether foreseen or unforeseen, which otherwise might constitute a legal or equitable defense or discharge of the liabilities of a guarantor or surety or which otherwise might limit recourse against Borrower or any Guarantor to the fullest extent permitted by law.

4.Waivers.  Guarantor expressly and unconditionally waives (i) notice of any of the matters referred to in Section 3 above, (ii) all notices which may be required by statute, rule of law or otherwise, now or hereafter in effect, to preserve intact any rights against Guarantor, including, without limitation, any demand, presentment and protest, proof of notice of non‐payment under any of the Loan Documents and notice of any Event of Default or any failure on the part of Borrower, any other guarantor of Borrower’s Obligations, or any Guarantor to perform or comply with any covenant, agreement, term or condition of any of the Loan Documents, (iii) any right to the enforcement, assertion or exercise against Borrower, any Guarantor or any other guarantor of Borrower’s Obligations of any right or remedy conferred under any of the Loan Documents, (iv) any requirement of diligence on the part of any person or entity, (v) to the fullest extent permitted by law and except as otherwise expressly provided in this Guaranty or the other Loan Documents, any claims based on allegations that Lender has failed to act in a commercially reasonable manner or failed to exercise Lender’s so‐called obligation of good faith and fair dealing, (vi) any requirement to exhaust any remedies or to mitigate the damages resulting from any default under any of the Loan Documents, and (vii) any notice of any sale, transfer or other disposition of any right, title or interest of Lender under any of the Loan Documents.

5.Subordination.  Guarantor agrees that any and all present and future debts and obligations of Borrower to Guarantor are hereby subordinated to the claims of Lender and are hereby assigned by Guarantor to Lender as security for Borrower’s Obligations and the obligations of Guarantor under this Guaranty.

6.Subrogation Waiver.  Until Borrower’s Obligations are paid in full and all periods under applicable bankruptcy law for the contest of any payment by any Guarantor or Borrower as 

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a preferential or fraudulent payment have expired, Guarantor knowingly, and with advice of counsel, waives, relinquishes, releases and abandons all rights and claims to indemnification, contribution, reimbursement, subrogation and payment which Guarantor may now or hereafter have by and from Borrower and the successors and assigns of Borrower, for any payments made by Guarantor to Lender, including, without limitation, any rights which might allow Borrower, Borrower’s successors, a creditor of Borrower, or a trustee in bankruptcy of Borrower to claim in bankruptcy or any other similar proceedings that any payment made by Borrower or Borrower’s successors and assigns to Lender was on behalf of or for the benefit of a Guarantor and that such payment is recoverable by Borrower, a creditor or trustee in bankruptcy of Borrower as a preferential payment, fraudulent conveyance, payment of an insider or any other classification of payment which may otherwise be recoverable from Lender.

7.Reinstatement.  The obligations of Guarantor pursuant to this Guaranty shall continue to be effective or automatically be reinstated, as the case may be, if at any time payment of any of Borrower’s Obligations is, or the obligations of Guarantor under this Guaranty are, rescinded or otherwise must be restored or returned by Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of a Guarantor or Borrower or otherwise, all as though such payment had not been made.

8.Financial Statements; Furnishing Information.  Guarantor represents and warrants to Lender that (a) the financial statements of Guarantor previously submitted to Lender are true, complete and correct in all material respects, disclose all actual and contingent liabilities, and fairly present the financial condition of Guarantor, and do not contain any untrue material information or omit to state information material to the financial statements submitted or this Guaranty and (b) no material adverse change has occurred in the financial statements from the dates thereof until the date hereof.  Guarantor shall provide to Lender, as soon as available and in no event later than the time frames provided for in the Loan Agreement, such financial statements, reports and other documents and items, all as required for Borrower to remain at all times in compliance with the terms, conditions and covenants under the Loan Agreement, including specifically, but not limited to, such statements, documents and other information required in Section 11.5 of the Loan Agreement.

9.Transfers, Sales, Etc.  Guarantor shall not sell, lease, transfer, convey or assign any of its or his assets, unless such sale, lease, transfer, conveyance or assignment will not have a material adverse effect on the financial condition of such Guarantor or such Guarantor’s ability to perform its or his obligations under this Guaranty or any other Loan Document to which such Guarantor is a party.

10.Enforcement Costs.  If: (a) this Guaranty is placed in the hands of one or more attorneys for collection or is collected through any legal proceeding; (b) one or more attorneys is retained to represent Lender in any bankruptcy, reorganization, receivership or other proceedings affecting creditors’ rights and involving a claim under this Guaranty, or (c) one or more attorneys is retained to represent Lender in any other proceedings whatsoever in connection with this Guaranty, then Guarantor shall pay to Lender upon demand all fees, costs and expenses incurred by Lender 

5

in connection therewith, including, without limitation, reasonable attorneys’ fees, court costs and filing fees, in addition to all other amounts due hereunder.

11.Successors and Assigns; Joint and Several Liability.  Lender may assign its rights under this Guaranty to any third party assignee or successor in the interests of Lender in connection with the Loan.  Guarantor may not assign its obligations under this Guaranty without the prior written consent of Lender.  This Guaranty shall inure to the benefit of Lender and its successors and assigns.  This Guaranty shall be binding on Guarantor and the respective successors and permitted assigns of each Guarantor.  It is agreed that the liability of each Guarantor hereunder is several and independent of any other guarantees or other obligations at any time in effect with respect to Borrower’s Obligations or any part thereof, and that liability of Guarantor hereunder may be enforced regardless of the existence, validity, enforcement or non‐enforcement of any such other guarantees or other obligations.  It is further agreed that the liability of Guarantor hereunder is joint and several, and that Lender may proceed against any or all Guarantor with respect to any liability under this Guaranty.

12.No Waiver of Rights.  No delay or failure on the part of Lender to exercise any right, power or privilege under this Guaranty or any of the other Loan Documents shall operate as a waiver thereof, and no single or partial exercise of any right, power or privilege shall preclude any other or further exercise thereof or the exercise of any other power or right, or be deemed to establish a custom or course of dealing or performance between the parties hereto.  The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies provided by law.  No notice to or demand on Guarantor in any case shall entitle Guarantor to any other or further notice or demand in the same, similar or other circumstance.

13.Modification.  The terms of this Guaranty may be waived, discharged, or terminated only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought.  No amendment, modification, waiver or other change of any of the terms of this Guaranty shall be effective without the prior written consent of Lender.

14.Joinder.  Any action to enforce this Guaranty may be brought against Guarantor without any reimbursement or joinder of Borrower or any other guarantor of Borrower’s Obligations in such action.

15.Severability.  If any provision of this Guaranty is deemed to be invalid by reason of the operation of law, or by reason of the interpretation placed thereon by any administrative agency or any court, Guarantors and Lender shall negotiate an equitable adjustment in the provisions of the same in order to effect, to the maximum extent permitted by law, the purpose of this Guaranty and the validity and enforceability of the remaining provisions, or portions or applications thereof, shall not be affected thereby and shall remain in full force and effect.

16.Applicable Law.  This Guaranty is governed as to validity, interpretation, effect and in all other respects by laws and decisions of the State of Maryland.

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17.Notice.  Any notices, communications and waivers under this Agreement shall be in writing and shall be (i) delivered in person, (ii) mailed, postage prepaid, either by registered or certified mail, return receipt requested, (iii) by overnight express carrier, or (iv) by facsimile or email transmission, addressed in each case as follows:

	
		
	To Lender:
	Housing & Healthcare Funding, LLC

	 
	2 Wisconsin Circle, Ste. 540

	 
	Chevy Chase, Maryland 20815

	 
	Attn: Michael Gehl

	 
	Facsimile: _______________________

	 
	Email: mgehl@hhcfinance.com

	 
	 

	With a copy to:
	Gutnicki LLP

	 
	4711 Golf Road, Suite 200

	 
	Skokie, Illinois 60076

	 
	Attn: Abraham A. Gutnicki

	 
	Facsimile: 847-933-9285

	 
	Email: agutnicki@gutnicki.com

	 
	 

	To Guarantors:
	AdCare Health Systems, Inc.

	 
	1145 Hembree Road

	 
	Roswell, GA 30076

	 
	Attn: Boyd P. Gentry

	 
	Facsimile: 678-869-5123

	 
	Email: bpg@adcarehealth.com

	 
	 

	With a copy to:
	Holt Ney Zatcoff & Wasserman, LLP

	 
	100 Galleria Parkway, Suite 1800

	 
	Atlanta, GA 30339

	 
	Attn: Ellen W. Smith

	 
	Facsimile: 770-956-1490

	 
	Email: esmith@hnzw.com

or to any other address as to any of the parties hereto, as such party shall designate in a written notice to the other party hereto.  All notices sent pursuant to the terms of this paragraph shall be deemed received (i) if personally delivered, then on the date of delivery, (ii) if sent by overnight express carrier, then on the next federal banking day immediately following the day sent, (iii) if sent by registered or certified mail, then on the earlier of the third federal banking day following the day sent or when actually received, or (iv) if sent by facsimile or email, as evidenced by receipt of a successful transmission report (followed by delivery by one of the other means identified in (i)-(iii)).

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18.CONSENT TO JURISDICTION.  TO INDUCE LENDER TO ACCEPT THIS GUARANTY, EACH GUARANTOR IRREVOCABLY AGREES THAT, SUBJECT TO LENDER’S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR RELATED TO THIS GUARANTY WILL BE LITIGATED IN COURTS HAVING SITUS IN CHEVY CHASE, MARYLAND.  EACH GUARANTOR HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY COURT LOCATED WITHIN CHEVY CHASE, MARYLAND.

19.WAIVER OF JURY TRIAL.  EACH GUARANTOR AND LENDER (BY ACCEPTANCE HEREOF), HAVING BEEN REPRESENTED BY COUNSEL, EACH KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH AND AGREES THAT ANY SUCH ACTION OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.  EACH GUARANTOR AGREES THAT IT WILL NOT ASSERT ANY CLAIM AGAINST LENDER ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.

[Signature Page Follows]

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IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date first above written.

	
			
	 
	AdCare Health Systems, Inc., an Ohio corporation

	 
	 
	 

	 
	By:
	/s/ Ronald W. Fleming

	 
	Name:
	Ronald W. Fleming

	 
	Title:
	CFO

HHC Funding, LLC / QC Property Holdings, LLC
Guaranty 
Signature Page

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