8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 27, 2017

CNL HEALTHCARE PROPERTIES II, INC.

(Exact Name of Registrant as Specified in its Charter)

Maryland	000-55777	47-4524619
(State or other jurisdiction of incorporation)	(Commission File No.)	(I.R.S. Employer Identification No.)
450 South Orange Avenue, Orlando, FL		32801
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code (407) 650-1000

Not applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☒

Item 1.01 Entry into a Material Definitive Agreement.

The information appearing in Items 2.01 and 2.03 of this Current Report is incorporated by reference herein and made a part of this Item 1.01.

Item 2.01 Completion of Acquisition or Disposition of Assets.

On December 27, 2017, CNL Healthcare Properties II, Inc. (referred to herein as “we”, “us”, “our” or the “Company”), through CHP II Partners, LP, our operating partnership and its subsidiaries, completed the acquisition of ground lease interests in the land and a fee simple interest in the improvements which constitute a medical office building located in Overland Park, Kansas (“Overland”) from MidAmerica Surgery Institute Properties II, LLC (the “Seller”) for an aggregate purchase price of approximately $14.0 million, excluding closing costs. We are not affiliated with the Seller of Overland. As part of the acquisition, the Company was also granted a license to use the name “Mid-America Surgery Institute” in connection with identifying and publicizing the Overland property. The Overland medical office building comprises approximately 38,496 square feet and was built in 2007. As of December 27, 2017, Overland is 100 percent leased to a total of five tenants. We funded the purchase of Overland with proceeds from our public offering and proceeds from a loan agreement with Synovus Bank (“Synovus”), which is described further in Item 2.03 below.

Following the closing of the acquisition, Overland will be managed and operated by Holladay Properties Services Midwest, Inc. (“Holladay Properties Services”), an independent third-party property manager, pursuant to a one-year property management and leasing agreement, which will automatically renew for successive one-year terms, and which may be terminated without penalty under certain circumstances. Pursuant to the property management and leasing agreement, Holladay Property Services will receive a management fee equal to (i) 3% of all rent collected with respect to Overland; plus (ii) a 4% leasing commission on all new leases; (iii) a 2% leasing commission on all existing lease renewals; and (iv) 5% of the amount of any construction contracts equal to or less than $250,000 and 3% of the amount of any construction contracts over $250,000 for which Holladay Property Services provides construction management services.

An investment services fee of approximately $315,000, which is equal to 2.25% of the purchase price of Overland was paid to our advisor, CHP II Advisors, LLC, in connection with the acquisition of Overland.

A copy of the Company’s press release describing the acquisition of Overland is filed herewith as Exhibit 99.1.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On December 27, 2017, in connection with the Company’s acquisition of Overland, we entered into a credit agreement dated as of December 15, 2017 with Synovus pursuant to which we were provided a term loan (the “Overland Loan”), in the maximum aggregate principal amount of $8.4 million, of which approximately $5.6 million was funded in connection with the acquisition of Overland and approximately $2.8 million can be funded upon request during the initial 36-month term of the loan provided certain debt service coverage requirements are met.

The Overland Loan matures on December 15, 2020, subject to one 24-month extension option provided certain conditions are met. The Overland Loan accrues interest at a rate equal to the sum of the one-month London Interbank Offered Rate plus 2.20%, with monthly payments of interest only for the initial 36-month term and the remaining principal balance payable at maturity. We may prepay, without a penalty, all or any part of the Overland Loan at any time.

The Overland Loan is secured by a leasehold mortgage on all fixtures and improvements located in or on the Overland medical office buildings, the assignment of our interests in all leases and rents due from Overland, and the assignment of our rights and interest in the ground lease underlying the Overland medical office building. The Overland Loan contains affirmative, negative, and financial covenants customary for a loan of this type, including quarterly financial reporting obligations and minimum debt service coverage requirements.

We paid Synovus a loan commitment fee of $33,600 in connection with the Overland Loan, or 0.40% of the aggregate Overland Loan amount.

Item 8.01 Other Events

In connection with the acquisition of Overland, the Company issued a press release, a copy of which is attached herewith as Exhibit 99.1 and incorporated by reference herein.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired

Pursuant to Item 9.01 of Form 8-K, the registrant hereby undertakes to file financial statements filed in response to Item 2.01 through an amendment to this Current Report on Form 8-K no later than March 15, 2018.

(b) Pro Forma Financial Information

Pursuant to Item 9.01 of Form 8-K, the registrant hereby undertakes to file pro forma financial information for the transaction described in Item 2.01 through an amendment to this Current Report on Form 8-K no later than March 15, 2018.

(d) Exhibits

Exhibit Number	Description
10.1	Credit Agreement dated December 15, 2017, by and between CHP II Overland Park KS MOB Owner, LLC and Synovus Bank
10.2	Promissory Note dated December 15, 2017, by and between CHP II Overland Park KS MOB Owner, LLC and Synovus Bank
10.3	Leasehold Mortgage / Mortgage and Security Agreement dated December 15, 2017, by and between CHP II Overland Park KS MOB Owner, LLC and Synovus Bank
99.1	Press Release dated January 2, 2018

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CNL Healthcare Properties II, Inc.
January 2, 2018
	By:	/s/ Stephen H. Mauldin
		Stephen H. Mauldin
		Chief Executive Officer, President and Vice Chairman

EX-10.1

Exhibit 10.1

CREDIT AGREEMENT

DATED AS OF DECEMBER 15, 2017

CHP II OVERLAND PARK KS MOB OWNER, LLC

and

SYNOVUS BANK

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Table of Contents

			Page
Article I				1
1.	DEFINITIONS			1
	1.1	Defined Terms		1
	1.2	Accounting Terms		19
	1.3	UCC Terms		20
	1.4	Construction of Terms		20
	1.5	Computation of Time Periods		20
	1.6	Reference to Borrower Parties and Bank Parties		20
	1.7	Bank Swap Documents		20
	1.8	Bank as Agent for Other Bank Parties		20
Article II				20
2.	THE LOAN			20
	2.1	General Terms		20
	2.2	Disbursement Provisions		20
	2.3	General Disbursement Provisions		21
	2.4	The Note		21
	2.5	Interest Rate		21
	2.6	Payments of Principal and Interest		21
	2.7	Use of Proceeds of Loan		22
Article III				22
3.	PAYMENTS, ADDITIONAL COSTS, ETC.			22
	3.1	Default Rate		22
	3.2	Payments Under Bank Swap Documents		22
	3.3	Late Payments		23
	3.4	Payment to Bank		23
	3.5	Prepayment		23
	3.6	No Setoff or Deduction		24
	3.7	Payment on Non-Business Day; Payment Computations		24
	3.8	Additional Costs		24
	3.9	Illegality and Impossibility		25
	3.10	360-Day Year		25
	3.11	Indemnification		26
	3.12	No Requirement to Actually Obtain Funds		26
	3.13	Usury Limitation		26
Article IV				26
4.	CONDITIONS PRECEDENT			26
	4.1	Documents Required for the Closing		26
	4.2	Certain Events		29
	4.3	Election to Make Advances Prior to Satisfaction of Conditions Precedent		29
Article V				29
5.	COLLATERAL SECURITY			29
	5.1	Grant of Lien		29
	5.2	Maintenance of Lien		30

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Article VI			30
6.	REPRESENTATIONS AND WARRANTIES		30
	6.1	Existence	30
	6.2	Authority	30
	6.3	Consents or Approvals	31
	6.4	Violations or Actions Pending	31
	6.5	Existing Indebtedness	31
	6.6	Tax Returns	31
	6.7	Financial Statements	31
	6.8	Title	32
	6.9	Solvency	32
	6.10	Priority of Liens	32
	6.11	Accuracy of Documents	32
	6.12	Environmental and Healthcare Laws	32
	6.13	Restrictions and Covenants Affecting the Mortgaged Property	33
	6.14	Condemnation	33
	6.15	Compliance with Laws	33
	6.16	Assigned Documents	33
	6.17	Anti-Terrorism Laws	33
	6.18	Continuing Effectiveness	34
Article VII			34
7.	BORROWER’S COVENANTS		34
	7.1	Affirmative Covenants	34
	7.2	Negative Covenants	39
	7.3	Insurance and Condemnation Covenants	41
	7.4	Assigned Document Covenants	43
	7.5	Escrow Deposits	44
	7.6	Filing Fees and Taxes	44
	7.7	Further Assurances	45
	7.8	Qualified ECP Keepwell	45
Article VIII			45
8.	DEFAULT		45
	8.1	Events of Default	45
	8.2	No Advances After Default	48
	8.3	Acceleration	48
	8.4	General Remedies	48
	8.5	Bank’s Additional Rights and Remedies	48
	8.6	Right of Set-Off	49
	8.7	No Limitation on Rights and Remedies	50
	8.8	Application of Proceeds	50
Article IX			50
9.	MISCELLANEOUS		50
	9.1	Termination of Bank’s Lien	50
	9.2	Construction	51
	9.3	Indemnity	51
	9.4	Bank’s Consent or Approval	51
	9.5	Enforcement and Waiver by Bank	52
	9.6	Expenses of Bank	52

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9.7	Attorneys’ Fees	52
9.8	Exclusiveness	53
9.9	Notices	53
9.10	Waiver and Release by Borrower	54
9.11	Limitation on Waiver of Notice, Etc	54
9.12	Participation	54
9.13	Governing Law	55
9.14	SUBMISSION TO JURISDICTION; WAIVERS	55
9.15	Binding Effect, Assignment	56
9.16	Entire Agreement, Amendments	56
9.17	Severability	56
9.18	Headings	56
9.19	Counterparts	56
9.20	Seal	56

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CREDIT AGREEMENT

THIS CREDIT AGREEMENT is dated as of December 15, 2017, between CHP II OVERLAND PARK KS MOB OWNER, LLC, a Delaware limited liability company (the “Borrower”), and SYNOVUS BANK, a Georgia banking corporation (the “Bank”). Capitalized terms used herein shall have the meanings ascribed thereto in Section 1.1 of this Agreement.

WHEREAS, Bank has been requested to extend to Borrower the Loan in the maximum principal amount of $8,400,000.00 for the purposes hereinafter described, and Bank has agreed to extend the Loan on the terms and conditions herein contained.

NOW, THEREFORE, in consideration of the promises herein contained, and each intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE I

1. DEFINITIONS.

1.1    Defined Terms. Capitalized terms used herein shall have the meanings ascribed thereto in the recitals set forth above and as follows (such meanings to be equally applicable to the singular and plural forms thereof):

“Acquisition Date” means December 15, 2017.

“Advance” means each loan of money or credit made or extended to or for the benefit of Borrower by Bank pursuant to this Agreement.

“Affiliate” means, as to any Person, each other Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or under common control with, such Person.

“Agreement” means this Credit Agreement, together with all modifications and amendments hereafter made.

“ALTA” means the American Land Title Association.

“Annualized” means, with reference to the computation of an applicable component of Debt Service Coverage, the number derived from the relevant computation, multiplied by two (2) (the “multiplication factor”); provided, however, that (i) with respect the Quarter-End of December 31, the multiplication factor shall be 6; and (ii) with respect to the Quarter-End of March 31, 2018, the multiplication factor shall be 2.4.

“Annualized Rolling Period” means a period of time ending on an applicable Quarter-End and beginning the first day of the Quarter immediately preceding such Quarter (viz. a total of two (2) Quarters); provided, however, that the beginning date for the Quarter-Ends of December 31, 2017 and March 31, 2018 shall be the Acquisition Date.

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“Anti-Terrorism Laws” means any laws relating to terrorism or money laundering, including Executive Order No. 13224 and the USA Patriot Act.

“Assigned Documents” means (i) the Assigned Leases and all guaranties or other similar arrangements providing for the payment or performance of any obligation under any Assigned Lease, (ii) any and all agreements entered into by or for the benefit of Borrower with any developer, property manager, broker, or other Person with respect to the development, management, leasing, operation, or use of the Project, (iii) any and all Governmental Approvals with respect to the Project, (iv) any and all operating, service, supply, and maintenance contracts with respect to the Project, and (v) any and all rights of Borrower under any of the foregoing, including, without limitation, any rights to receive any payments or other monies under any of the foregoing.

“Assigned Leases” means all leases presently existing or hereafter made, whether written or verbal, or any letting of, or agreement for the use or occupancy of, any part of the Mortgaged Property, and each modification, extension, renewal and guarantee thereof.

“Assignment Documents” means the documentation executed and delivered in connection with Borrower’s purchase of the Project, including, but not limited to, (i) that certain Bill of Sale dated as of the Acquisition Date between Seller and Borrower; (ii) that certain Assignment and Assumption of Ground Lease dated as of the Acquisition Date between Seller and Borrower, and (iii) that certain Assignment and Assumption of Leases and Deposits dated as of the Acquisition Date between Seller and Borrower.

“Assignment of Management Agreement” means that certain Assignment and Subordination of Management Agreement of even date herewith, among Borrower, Manager and Bank, together with all modifications and amendments at any time made thereto.

“Attorneys’ Fees” means attorneys’ fees actually incurred at ordinary and customary rates.

“Bank” means Synovus Bank, a Georgia banking corporation.

“Bank Parties” means Bank and any Affiliate of Bank that is now or hereafter becomes a party to this Agreement, any other Loan Document or any Bank Swap Document.

“Bank Swap Documents” means any and all Swap Documents, if any, entered into between Borrower and any Bank Party and relating to any Loan.

“Bank Swap Obligations” means the obligations (including obligations of performance) and liabilities of any Borrower Party to any Bank Party of every kind and description whatsoever, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter incurred, contracted or arising, or acquired by Bank Party from any source, joint or several, liquidated or unliquidated, regardless of how they arise or by what agreement or instrument they may be evidenced, and whether incurred as counterparty, maker, endorser, surety, guarantor, general partner, drawer, tort-feasor, indemnitor, account party with respect to a letter of credit or otherwise, and arising out of, incurred pursuant to and/or in connection with any Bank Swap Document, and any and all extensions and renewals of any of the same.

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“Bankruptcy Law” means Title 11, U.S. Code, or any similar Laws of any Jurisdiction for the relief of debtors, and “Bankruptcy” means the commencement of any case or other action for relief under Bankruptcy Law.

“Bank’s Lien” means the Lien granted to Bank by Borrower pursuant to this Agreement and the other Security Documents.

“Borrower Parties” means Borrower, Guarantors and any other Person that hereafter becomes a party to this Agreement, any other Loan Document or any Bank Swap Document, and which Person is responsible in whole or in part for any of the Obligations; and for the avoidance of any doubt, Borrower Parties shall specifically exclude any ground lessor, any tenant and any manager of the Project.

“Borrower” means CHP II Overland Park KS MOB Owner, LLC, a Delaware limited liability company.

“Borrower’s Interest” means all the right, title and interest of Borrower of whatever kind, nature and description, whether now existing or hereafter arising.

“Borrower’s Representatives” means the president, a senior vice president or treasurer of Borrower, and any other person otherwise designated in writing by Borrower as Borrower’s Representatives.

“Business Day” means any day of the year, other than Saturday or Sunday, on which dealings in United States Dollars are carried on in the London interbank market and banks open for business in New York, New York and in Birmingham, Alabama are not required or authorized to close.

“Carveout Guarantor” means CNL Healthcare Properties II, Inc., a Maryland corporation.

“Carveout Guaranty” means that certain Carveout Guaranty of even date herewith, executed and delivered by Carveout Guarantor in favor of Bank, as amended from time to time.

“Change in Control” means a change in the Equity Interests and/or the Voting Power of Borrower so that, after the change, Carveout Guarantor owns (directly or indirectly) less than 51% of the outstanding Equity Interests and Voting Power of Borrower.

“Closing” means the time and place of actual execution and delivery of this Agreement, the Note, and except as waived by Bank, the other documents, instruments, and things required by Section 4.1 hereof.

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“Closing Certificates” means those certain Closing Certificates of even date herewith, executed and delivered by Borrower Parties in favor of Bank.

“Collateral” means all of the assets of Borrower of every kind, nature and description, wherever located, whether now owned or hereafter acquired, including, but not limited to, the following:

(A)    The Mortgaged Property;

(B)    The Assigned Leases and the other Assigned Documents;

(C)    The Rents;

(D)    All amounts that may be owing from time to time by Bank to Borrower in any capacity, including, without limitation, any balance or share belonging to Borrower, of any Deposit Accounts or other account with Bank;

(E)    All of Borrower’s assets which are or may be subject to Article 9 of the Uniform Commercial Code, together with all replacements therefor, additions and accessions thereto, and proceeds (including, but without limitation, insurance proceeds) and products thereof, including, without limitation, the following:

(1)    Accounts;

(2)    Chattel Paper;

(3)    Commercial Tort Claims;

(4)    Deposit Accounts;

(5)    Documents;

(6)    Equipment;

(7)    General Intangibles;

(8)    Instruments;

(9)    Intellectual Property Rights;

(10)    Inventory;

(11)    Investment Property;

(12)    Letter-of-Credit Rights;

(13)    Payment Intangibles;

(14)    Supporting Obligations;

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(15)    Rights as seller of Goods and rights to returned or repossessed Goods;

(16)    All existing and future leases and use agreements of personal property entered into by Borrower as lessor with other Persons as lessees, including without limitation the right to receive and collect all rentals and other monies, including security deposits, at any time payable under such leases and agreements;

(17)    Any existing and future leases and use agreements of personal property entered into by Borrower as lessee with other Persons as lessors, including without limitation the leasehold interest of Borrower in such property, and all options to purchase such property or to extend any such lease or agreement;

(18)    All Fixtures of Borrower (including, but not limited to, all fixtures now or hereafter located on the Mortgaged Property);

(19)    All moneys of Borrower and all bank accounts, deposit accounts, lock boxes and other accounts in which such moneys may at any time be on deposit or held and all investments or securities in which such moneys may at any time be invested and all certificates, instruments and documents from time to time representing or evidencing any of the same;

(20)    All claims of Borrower in any pending litigation and/or claims for any insurance proceeds;

(21)    All Records pertaining to any of the Collateral;

(F)    Any and all other assets of Borrower of any kind, nature, or description and which are intended to serve as collateral for the Loan under any one or more of the Security Documents; and

(G)    All interest, dividends, Proceeds, products, rents, royalties, issues and profits of any of the property described above, including, without limitation, all monies due and to become due with respect to such property, together with all rights to receive the same, and all notes, certificates of deposit, checks and other instruments and property from time to time delivered to or otherwise possessed by Bank for or on behalf of Borrower in substitution for or in addition to any of said property.

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

“Curable Default” means any Default which, in Bank’s reasonable discretion, is capable of being cured within the cure period provided in Section 8.1(B) with respect to such Default.

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“Debt Service” means an assumed debt service (principal and interest) during the one year period of time next following the applicable Quarter-End, based on the principal indebtedness owing on the Note on the applicable Quarter-End and an assumed 360 month amortization schedule at an imputed interest rate equal to the Imputed Interest Rate.

“Debt Service Coverage Requirement” means the requirement that on each Quarter-End during the term of this Agreement, the ratio of Net Operating Income to Debt Service shall be not less than 1.15 to 1.0.

“Default” means the occurrence of an event described in Section 8.1 hereof regardless of whether there shall have occurred any passage of time or giving of notice that would be necessary in order to constitute such event as an Event of Default.

“Default Costs” means all Indemnified Losses incurred by Bank by reason of a Default.

“Default Rate” means a variable per annum rate of interest equal to the lesser of (1) four percent (4%) in excess of the Interest Rate otherwise payable hereunder, or (2) the maximum rate allowed by applicable Laws.

“Disability Laws” means all Laws of any Jurisdiction relating to access and facilities for disabled individuals, including without limitation the Americans With Disabilities Act of 1990 (“ADA”), as amended (42 U.S.C. Sections 12101, et seq.), and the rules and regulations adopted and publications promulgated pursuant thereto.

“Environmental Laws” means all Laws of any Jurisdiction relating to the governance or protection of the environment, including without limitation, the Comprehensive Environmental Response Compensation and Liability Act of 1980 (“CERCLA”), as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), the Resource Conservation and Recovery Act (“RCRA”), as amended (42 U.S.C. Sections 6901, et seq.), the Clean Water Act, as amended (42 U.S.C. Sections 7401, et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Sections 2601, et seq.), and the rules and regulations adopted and publications promulgated pursuant thereto, and the rules and regulations of the Occupational Safety and Health Administration (OSHA) pertaining to occupational Laws.

“Environmental Indemnification Release Date” means the date of the first to occur of the following dates: (a) the date on which Bank, or any of its successors or assigns, takes actual possession of the Mortgaged Property following the foreclosure of the Mortgage, (b) the date on which Bank takes actual possession of the Mortgaged Property following the acceptance by Bank (or its successors or assigns) of a deed to the Mortgaged Property in lieu of foreclosure of the Mortgage, (c) the date on which all of the Obligations are paid and satisfied in full and the Mortgage is terminated as provided therein, or (d) the date on which Borrower transfers its interest in the Mortgaged Property to another Person pursuant to a transfer permitted hereunder, provided that concurrently with such transfer Bank receives from such Person an agreement to indemnify Bank substantially identical to the terms provided in this Agreement.

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“Equity Interests” means any and all ownership or other equitable interests in an applicable Person, including any interest represented by any capital stock, membership interests, partnership interests, or similar interests, but specifically excluding any interests of any Person solely as a creditor of Borrower.

“Equity Owner” means any Person owning an Equity Interest.

“Event of Default” means the occurrence of an event described in Section 8.1 hereof provided that there shall have occurred any passage of time or giving of notice that would be necessary in order to constitute such event as an Event of Default under Section 8.1.

“Excluded Swap Obligation” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guaranty of such Guarantor of such Swap Obligation (or any guaranty of such Swap Obligation), or the grant by such Guarantor of a Lien to secure such Swap Obligation (or any guaranty of such Swap Obligation), is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guaranty of such Guarantor or the grant of such Lien becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guaranty or Lien is or becomes illegal.

“Existing Indebtedness” means Indebtedness of Borrower as reflected on the Financial Statements.

“Extended Maturity Date” means the date twenty-four (24) months from the Initial Maturity Date (viz., December 15, 2022).

“Extension Requirements” means the requirements that as of the Initial Maturity Date (i) Borrower shall have given Bank at least 30 days (but not more than 90 days) written notice of Borrower’s intention to extend the maturity of the Loan until the Extended Maturity Date; (ii) the Pro-Forma Debt Service Coverage Requirement shall have been met; (iii) Borrower shall have paid to Bank a fee in an amount equal to one-tenth of one percent (0.10%) of the outstanding principal balance of the Loan at the applicable time; (iv) Bank shall have received and approved the most recent financial statements of Borrower and Mid-America Surgery Institute, LLC; and (v) there shall not be existing any Default (including a Default on account of the failure to have met and maintained the Debt Service Requirement, and for these purposes, the thirty (30) day grace period afforded under Section 8.1(D) shall not be applicable; provided however that Borrower may prepay a portion of the Loan on or before the Initial Maturity Date in order to cause the Debt Service Coverage Requirement to be met).

7

“Financial Reporting Agreements” means any financial reporting (or similar) agreement from any Person, providing for, among other things, such Person’s agreement to deliver to Bank financial statements and similar reports, together with all modifications and amendments hereafter made in connection with the Loan.

“Financial Statements” means the most recent balance sheet and income statement of Borrower delivered to Bank.

“Financing Statements” means the UCC-1 financing statements (including any amendments and continuations) required under this Agreement.

“Fiscal Year” means a twelve-month period of time commencing on the first day of January.

“Generally Accepted Accounting Principles” means generally accepted principles of accounting in effect from time to time in the United States applied in a manner consistent with those used in preparing such financial statements as have theretofore been furnished to Bank by the applicable Person.

“Governing Body” means the board of directors of a Person (or any Person or group of Persons exercising similar authority).

“Governmental Approvals” means all authorizations, consents, approvals, licenses and exemptions of, registrations and filings with, and reports to, any Governmental Authority.

“Governmental Authority” means any nation or government and any political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory, or administrative functions pertaining thereto, which has or asserts jurisdiction over Bank, any Borrower Party, or any property of any of them.

“Ground Lease” means that certain Ground Lease dated as of February 28, 2005 between Ground Lessor, as landlord, and Seller, as tenant; as amended by that certain First Amendment of Ground Lease dated as of February 28, 2005, as further amended by that certain Second Amendment of Ground Lease dated as of October 21, 2005, as further amended by that certain Third Amendment of Ground Lease dated as of May 17, 2007; as further amended and memorialized by that certain Memorandum of Lease dated as of February 28, 2005, recorded on March 2, 2005 in Book 20050302 at Page 000938 in the Register’s Office of Johnson County, Kansas, as amended by that certain Amendment to Memorandum of Lease dated as of January 9, 2007, recorded on February 26, 2007 in Book 20070226 at Page 0007473, as further amended by that certain Third Amendment of Ground Lease dated as of May 17, 2007, recorded on June 25, 2007 in Book 20070625 at Page 008529 in the Register’s Office of Johnson County, Kansas; as assigned pursuant to that certain Assignment and Assumption of Ground Lease dated as of the Acquisition Date between Seller and Borrower; and as otherwise amended from time to time.

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“Ground Lessor” means Central Tennessee Hospital Corporation, a Tennessee corporation.

“Ground Lessor’s Consent” means that certain Ground Lease Consent and Estoppel of even date herewith among Ground Lessor, Borrower and Bank, as amended from time to time.

“Guarantor” means Carveout Guarantor and any other Person who executes and delivers a Guaranty.

“Guaranty” means the Carveout Guaranty and any other guaranty at any time delivered to Bank in connection with the Loan.

“Hazardous Materials” and “Hazardous Substances” means “hazardous materials” and “hazardous substances” as defined under any applicable Environmental Law.

“Healthcare Laws” means all Laws of any Jurisdiction relating to the governance or provision of healthcare services or the operation of healthcare facilities, and any rules and regulations adopted and publications promulgated pursuant thereto, including, without limitation, any Laws, rules and regulations relating to obtaining or the maintenance of certificates of need, licenses, permits, authorizations, certificates, and the unauthorized practice of medicine.

“Improvements” means the “Improvements” as defined in the Mortgage.

“Imputed Interest Rate” means, at an applicable time, an interest rate equal to the greater of (i) 6.5%, or (ii) the actual interest rate on the Loan at the applicable time.

“Indebtedness” means, as to any Person, all items of indebtedness, obligation or liability, whether matured or unmatured, liquidated or unliquidated, direct or contingent, joint or several, including, but without limitation or duplication:

(A)    All obligations of such Person for borrowed money;

(B)    All indebtedness guaranteed, directly or indirectly, in any manner, or endorsed (other than for collection or deposit in the ordinary course of business) or discounted with recourse;

(C)    All indebtedness in effect guaranteed, directly or indirectly, through agreements, contingent or otherwise:

(1)    To purchase such indebtedness; or

(2)    To purchase, sell or lease (as lessee or lessor) property, products, materials or supplies or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such indebtedness or to assure the owner of the indebtedness against loss; or

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(3)    To supply funds to or in any other manner invest in the debtor;

(D)    All indebtedness secured by (or which the holder of such indebtedness has a right, contingent or otherwise, to be secured by) any mortgage, deed of trust, pledge, lien, security interest or other charge or encumbrance upon property owned or acquired subject thereto, whether or not the liabilities secured thereby have been assumed; and

(E)    All indebtedness incurred as the lessee of goods or services under leases that, in accordance with Generally Accepted Accounting Principles, should be reflected on the lessee’s balance sheet.

“Indemnified Losses” means all damages, dues, penalties, fines, costs (including costs of collection and court fees), amounts paid in settlement, taxes, losses, expenses, and fees (including Attorneys’ Fees and expenses).

“Initial Advance” means an initial Advance in the amount made at Closing to pay a portion of the purchase price of the Project, and to pay closing costs in connection with the Loan (the exact amount to be agreed between Bank and Borrower, and estimated to be in the approximate amount of $5,600,000.00).

“Initial Maturity Date” means the date thirty-six (36) months from the date of this Agreement (viz., December 15, 2020).

“Interest Rate” means the actual interest rate at which the outstanding principal balance of the Note bears interest from time to time during the term of the Note.

“Interest Rate Conversion Date” means the Payment Due Date coinciding with the expiration of any applicable One Month LIBOR Rate Interest Period.

“Jurisdiction” means each and every nation or any political subdivision thereof.

“Land” means the “Land” as defined in the Mortgage.

“Laws” means each and all laws, treaties, ordinances, statutes, rules, regulations, orders, injunctions, writs or decrees of any Governmental Authority, or any court or similar entity established by any thereof, and any requirement of Licenses and Permits, whether now in effect or hereafter enacted, including, without limitation, Disability Laws, Environmental Laws and Healthcare Laws.

“LIBOR Business Day” means a day on which the office of Bank at which payments under this Agreement and/or the Note are to be made is open for business and on which dealings in U.S. dollar deposits are carried out in the London interbank market.

“Licenses and Permits” means all building permits, certificates of occupancy, and other permits, licenses, approvals, and authorizations of any Governmental Authority necessary for Borrower to lease, own, use, occupy, operate, or maintain the Mortgaged Property or any part thereof.

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“Lien” means any mortgage, pledge, encumbrance, charge, security interest, assignment or other preferential arrangement of any nature whatsoever, including any conditional sale agreement or other title retention agreement.

“Loan Documents” means this Agreement, the Note, the Security Documents, the Carveout Guaranty and any other Guaranties, the Financial Reporting Agreements, the Closing Certificates, and any and all other documents or instruments of any kind heretofore, contemporaneously herewith or hereafter executed or delivered in connection with, or evidencing, securing, guaranteeing or relating to, the Loan, whether heretofore, simultaneously herewith, or hereafter delivered, together with any and all extensions, revisions, modifications or amendments at any time made to any of the foregoing (but specifically excluding any Bank Swap Documents).

“Loan Fee” means a fee in the amount of 0.4% of the Loan Amount (viz., $33,600.00), payable to Bank at the Closing.

“Loan” means the credit facility being extended to Borrower pursuant to Article II of this Agreement.

“Loan Amount” means up to Eight Million Four Hundred Thousand and 00/100 Dollars ($8,400,000.00).

“London Interbank Offered Rate” means, with respect to any One Month LIBOR Rate Interest Period, the rate for deposits in U.S. dollars on or up to two LIBOR Business Days preceding the first day of such One Month LIBOR Rate Interest Period as appearing on Reuters Page LIBOR01(or such other page or service as may replace that page or that service or such other comparable financial information reporting service used by Bank, in its reasonable discretion in consultation with Borrower) and for a period comparable to the term of such One Month LIBOR Rate Interest Period to be the London Interbank Offered Rate; provided, however, that (i) if at any time Bank determines that the London Interbank Offered Rate is no longer readily available or regularly updated, then, at Bank’s option, all references in any Loan Document to the London Interbank Offered Rate shall be replaced by a comparable equivalent or replacement benchmark rate or index as determined by Bank in Bank’s discretion in consultation with Borrower, and the One Month Adjusted LIBOR Rate shall be replaced with a floating rate, changing monthly as of each Payment Due Date, equal to such replacement benchmark rate or index plus a spread or margin in an amount that, when added to the replacement benchmark rate or index, would result in the new floating rate being substantially equivalent, in the opinion of Bank, to the One Month Adjusted LIBOR Rate, and (ii) in no event shall the London Interbank Offered Rate or the replacement benchmark rate or index for purposes of this Agreement be less than zero percent (0%).

“Manager” means Holladay Property Services Midwest, Inc., an Indiana corporation.

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“Margin” means two and two-tenths percent (2.2%).

“Material Adverse Change” means the occurrence of an event giving rise to a Material Adverse Effect.

“Material Adverse Effect” means a material adverse effect on (a) the business, condition (financial or otherwise), operations, performance, properties or prospects of any Borrower Party; (b) the material rights and remedies of Bank under any Loan Document; (c) the ability of any Borrower Party to perform its Obligations under any Loan Document to which it is or is to be a party; or (d) the priority of Bank’s Lien, each as determined using commercially reasonable standards.

“Maturity Date” means, as applicable, the Initial Maturity Date or the Extended Maturity Date.

“Mortgage” means that certain Leasehold Mortgage / Mortgage and Security Agreement of even date herewith, executed and delivered by Borrower in favor of Bank, together with all modifications and amendments at any time made thereto.

“Mortgaged Property” means the “Mortgaged Property” as defined in the Mortgage.

“Net Operating Income” means, as of an applicable Quarter-End as determined by Bank:

(i) Annualized gross revenues received by Borrower (including tenant reimbursements for operating expenses and additional rent) during the applicable Annualized Rolling Period arising from (x) leases of the Project and amounts withdrawn or available for withdrawal from the Rent Abatement Reserve Account by Borrower during such Annualized Rolling Period (but only to the extent, if withdrawn, such withdrawal is not in violation of the covenant set forth in Section 7.1(W)), and less

(ii) Annualized ordinary and customary expenses incurred in the ordinary course of owning, leasing and operating the Project during the applicable Annualized Rolling Period, and less

(iii) Annualized expense allocations for taxes (based upon taxes actually assessed for the current calendar year, or if such assessment for the current calendar year has not been made, then, until such assessment has been made, ad valorem taxes shall be estimated based on the last such assessment for the Project) and insurance (based upon the last billed insurance premium for the Project (and as allocated to the Project under a master bill for properties that include the Project, if applicable); and less

(iv) a reserve for replacements of $0.10 per rentable square foot;

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provided however, (x) expenses shall not include non-cash items such as depreciation and any amounts payable by Borrower for which Borrower is due to be, but has not yet been, reimbursed by any tenant under a lease or otherwise, costs for leasehold improvements and other expenses that are capitalized in accordance with Generally Accepted Accounting Principles, and (y) to the extent that any such gross revenues or expenses are of a nature that are extraordinary or are incurred in a particular Annualized Rolling Period but are of a type which are attributable to a longer period (e.g. an annual expense incurred during the applicable Annualized Rolling Period), the amount thereof shall be equitably adjusted to take into account the same.

“Note” means that certain Promissory Note of even date herewith in the principal amount of Eight Million Four Hundred Thousand and No/100 Dollars ($8,400,000.00), executed and delivered by Borrower in favor of Bank, and includes any amendment to or modification of such note and any promissory note given in extension of or renewal of, or in substitution for, such note.

“Obligations” means the obligations (including obligations of performance) and liabilities of any Borrower Party to Bank of every kind and description whatsoever, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter incurred, contracted or arising, or acquired by Bank from any source, joint or several, liquidated or unliquidated, regardless of how they arise or by what agreement or instrument they may be evidenced, and whether incurred as maker, endorser, surety, guarantor, general partner, drawer, tort-feasor, indemnitor, account party with respect to a letter of credit or otherwise, and incurred pursuant to and/or in connection with this Agreement and any of the other Loan Documents, and any and all extensions and renewals of any of the same, including but not limited to the obligation:

(A)    To pay the principal of and interest on the Note in accordance with the respective terms thereof and/or hereof, including any and all extensions, modifications, and renewals thereof and substitutions therefor;

(B)    To repay to Bank all amounts advanced by Bank hereunder, under any of the Loan Documents or otherwise on behalf of Borrower, including, but without limitation, future advances and advances for principal or interest payments to prior secured parties, mortgagees, or lienors, or for taxes, levies, insurance, rent, or repairs to or maintenance or storage of, any of the Collateral;

(C)    To pay, repay or reimburse to Bank Party the Bank Swap Obligations; and

(D)    To reimburse Bank, on demand, for all of Bank’s expenses and costs, including Attorneys’ Fees and expenses, in connection with the preparation, administration, amendment, modification, or enforcement of this Agreement and the other Loan Documents, including, without limitation, any proceeding brought or threatened to enforce payment of any of the obligations referred to in the foregoing paragraphs (A), (B) and (C).

Anything in the foregoing or in any Loan Document to the contrary notwithstanding, Excluded Swap Obligations of any Borrower Party shall not constitute Obligations.

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“One Month Adjusted LIBOR Rate” means, for each respective One Month LIBOR Rate Interest Period, an interest rate equal to the sum of (i) the applicable One Month LIBOR Rate, plus (ii) the Margin.

“One Month LIBOR Rate” means, as applicable to each respective One Month LIBOR Rate Interest Period, a per annum rate of interest equal to the quotient obtained (stated as an annual percentage rate rounded upward to the next higher 1/100^th of 1%) by dividing (A) the London Interbank Offered Rate, by (B) 1.00 minus any Reserve Requirement for the One Month LIBOR Rate Interest Period (expressed as a decimal).

“One Month LIBOR Rate Interest Period” means (i) in the case of a One Month LIBOR Rate Interest Period commencing on the date of Closing, a period from such date to the first (1^st) Payment Due Date thereafter, and (ii) with respect to any other One Month LIBOR Rate Interest Period, a period from the applicable Interest Rate Conversion Date to the first (1^st) Payment Due Date thereafter.

“Ordinary Course of Business” means an action taken by a Person only if:

(A)    Such action is consistent with the past practices of such Person and is taken in the ordinary course of the normal day-to-day operations of such Person;

(B)    Such action is not required to be authorized by the Governing Body of such Person; and

(C)    Such action is similar in nature and magnitude to actions customarily taken, without any authorization by any Governing Body, in the ordinary course of the normal day-to-day operations of other Persons that are in the same line of business as such Person.

“Organizational Documents” means (i) the articles of incorporation and the bylaws of a corporation, (ii) the partnership agreement and any statement of partnership of a general partnership, (iii) the limited partnership agreement and the certificate of limited partnership of a limited partnership, (iv) the certificate of formation and the limited liability company agreement of a limited liability company, (v) any charter or similar document adopted or filed in connection with the creation, formation, or organization of a Person, and (vi) any amendment to any of the foregoing.

“Participant” means any bank, financial institution, Affiliate of Bank, or other entity which enters into a participation agreement with Bank and/or to whom Bank assigns all or a portion of its rights and obligations under this Agreement.

“Payment Due Date” means the fifteenth (15^th) day of each calendar month during the term of this Agreement.

“Permitted Leases and Other Transfers of Collateral” means the Qualified Leases and other transfers of Collateral approved by Bank in its discretion.

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“Permitted Liens” means:

(A)    Bank’s Lien;

(B)    Liens as set forth in the Title Insurance Policy;

(C)    The following Liens, if the granting of such Lien or the attachment of such Lien to the Collateral (i) does not otherwise constitute a Default under the terms of this Agreement, and (ii) does not give rise to a Material Adverse Change:

(1)    If the validity or amount thereof is being contested in good faith by appropriate and lawful proceedings, so long as levy and execution thereon have been stayed and continue to be stayed, (a) Liens for taxes, assessments or charges due and payable and subject to interest or penalty, (b) Liens upon, and defects of title to, real or personal property, including any attachment of personal or real property or other legal process prior to adjudication of a dispute on the merits; (c) Liens of mechanics, materialmen, warehousemen, carriers, or other like Liens; and (d) adverse judgments on appeal;

(2)    Liens for ad valorem taxes not delinquent;

(3)    Pledges or deposits made in the Ordinary Course of Business to secure payment of workmen’s compensation, or to participate in any fund in connection with workmen’s compensation, unemployment insurance, old age pensions or other social security programs;

(4)    Good faith pledges or deposits made in the Ordinary Course of Business to secure performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, not in excess of ten percent (10%) of the aggregate amount due thereunder, or to secure statutory obligations, or surety, appeal, indemnity, performance or other similar bonds required in the Ordinary Course of Business; and

(5)    Purchase money security interests granted in the Ordinary Course of Business to secure not more than one hundred percent (100%) of the purchase price of assets; and

(D)    Easements arising by reason of zoning restrictions, easements, licenses, reservations, covenants, rights-of-way, utility easements, building restrictions and other similar encumbrances on the use of real property which do not materially detract from the value of such real property or interfere with the ordinary conduct of the business conducted and proposed to be conducted at such real property.

“Person” means any individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization, joint venture, court or Governmental Authority.

“Petroleum Products” means “petroleum products” as defined under any applicable Environmental Law.

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“Place for Payment” means a place for payment as from time to time designated by Bank, which place for payment currently is at the address of Bank as hereinafter provided for with respect to notices.

“Project” means an approximately 38,496 square foot medical office building and related site improvements, to be owned by Borrower pursuant to the Ground Lease, and constituting part of the Mortgaged Property.

“Pro-Forma Debt Service Coverage Requirement” means the requirement that

(A)    with respect to the Advances to be made pursuant to Section 2.2(B) of this Agreement, on the date of such Advance and until the Initial Maturity Date, and based on the compliance certificate most recently delivered as provided in this Agreement (as the same may need to be equitably adjusted to take into account facts and circumstances occurring after the applicable Quarter-End of such compliance certificate until the applicable date (e.g. the termination of or entering into a lease after the date of such compliance certificate)), the ratio of Net Operating Income to Debt Service shall be not less than 1.15 to 1.0; and

(B)    with respect to the Extension Requirements, on the Initial Maturity Date and until the Extended Maturity Date, and based on the compliance certificate most recently delivered as provided in this Agreement (as the same may need to be equitably adjusted to take into account facts and circumstances occurring after the applicable Quarter-End of such compliance certificate until the applicable date (e.g. the termination of or entering into a lease after the date of such compliance certificate)), the ratio of Net Operating Income to Debt Service shall be not less than 1.15 to 1.0.

“Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Borrower Party that has total assets exceeding $10,000,000 at the time the relevant Guaranty or grant of the relevant Lien becomes effective with respect to such Swap Obligation, or such other Person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder, or such other Person that can cause another Person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

“Qualified Lease” means

(A)    any lease of the Project in effect as of the date of this Agreement, and renewals of any such lease on substantially similar terms;

(B)    any other tenant lease of space in the Project with a third party who is not an Affiliate of Borrower and which lease (i) has been fully executed by landlord; (ii) provides a rental rate of not less than 90% of the “market rate” for leases of similar space in comparable projects in the market; (iii) does not have a free or reduced rent period in excess of free or reduced rent periods for comparable projects in the market; (iv) has a lease term of not more than five (5) years (unless otherwise approved by Bank); (vi) if any tenant is other than an individual physician , is guaranteed by one or more financially responsible lease guarantors (provided that such lease guaranties shall not be required so long as Borrower uses good faith and commercially reasonable efforts to secure such lease guaranties); and (vii) if the tenant lease is for more than 25% of the Project, requires the applicable tenant and any lease guarantors to deliver financial statements not less frequently than annually; and

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(C)    Any other tenant lease of space in the Project approved by Bank in its discretion (such approval not to be unreasonably withheld or delayed).

“Quarter” means a period of time of three (3) consecutive calendar months.

“Quarter-End” means the last day of each of the months of March, June, September, and December.

“Records” means correspondence, memoranda, tapes, discs, microfilm, microfiche, papers, books and other documents, or transcribed information of any type, whether expressed in ordinary or machine language, and all filing cabinets and other containers in which any of the foregoing is stored or maintained.

“Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System from time to time in effect and shall include any successor or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System.

“Regulation “T”, Regulation “U”, or Regulation “X”” means Regulation T, Regulation U, or Regulation X of the Board of Governors of the Federal Reserve System as now or from time to time hereafter in effect and shall include any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve System.

“Rent Abatement Period” means the period from the date of this Agreement until the commencement of regular payments of Rent with respect to Suites 200 and 220 of the Project (expected to be in the calendar months of December 2017 (the “Suite 200 Rent Abatement Period”) and April, 2018 (the “Suite 220 Rent Abatement Period”), respectively).

“Rent Abatement Reserve Account” means account number 1009213172075 at Bank in the name of Borrower.

“Rent Abatement Funds” means the amount of $32,131.35, received by Borrower as a credit from Seller in connection with Borrower’s purchase of the Project, due to rent abatements with respect to Suites 200 and 220 of the Project.

“Rents” means all the rents, issues, and profits now due and which may hereafter become due under or by virtue of the Assigned Leases, together with all claims and rights to the payment of money at any time arising in connection with any rejection or breach of any of the Assigned Leases under Bankruptcy Law, including without limitation, all rights to recover damages arising out of such breach or rejection, all rights to charges payable by a tenant or trustee in respect of the leased premises following the entry of an order for relief under Bankruptcy Law in respect of a tenant and all rentals and charges outstanding under the Assigned Leases as of the date of entry of such order for relief.

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“Required Endorsements” means, to the extent available in the State of Kansas, a comprehensive endorsement, an ALTA Form 3.0 zoning endorsement, a survey endorsement specifically insuring Bank that the survey required herein is accurate and accurately depicts the same real estate covered by the Title Insurance Policy, an access endorsement, a usury endorsement, endorsements for future advances under the Mortgage, endorsements for mechanics’ and materialmen’s liens, and any other endorsements of the Title Insurance Policy required by Bank.

“Reserve Requirement” with respect to a One Month LIBOR Rate Interest Period, means the weighted average during the One Month LIBOR Rate Interest Period of the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves and taking into account any transitional adjustments or other scheduled changes in reserve requirements during the One Month LIBOR Rate Interest Period) which is imposed under Regulation D.

“Security Documents” means all documents or instruments of any kind executed or delivered in connection with the Loan, whether delivered prior to, at, or after the Closing, wherein Bank is granted a Lien in Borrower’s assets, and all documents and instruments executed and delivered in connection with any of the foregoing, together with any and all extensions, revisions, modifications or amendments at any time made to any of such documents or instruments, including but not limited to this Agreement, the Mortgage, the Assignment of Management Agreement, and the Financing Statements.

“Seller” means Mid-America Surgery Institute Properties II, LLC, a Kansas limited liability company.

“Solid Wastes” means “solid wastes” as defined under any applicable Environmental Law.

“Solvent” and “Solvency” mean, with respect to any Person on a particular date, that on such date (a) the fair value of the property and assets of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

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“Swap Documents” means (a) any agreement (including terms and conditions incorporated by reference therein) which is a rate swap agreement, basis swap, forward rate agreement, commodity swap, interest rate option, forward foreign exchange agreement, spot foreign exchange agreement, rate cap agreement, rate floor agreement, rate collar agreement, currency swap agreement, cross-currency rate swap agreement, currency option, any other similar agreement (including any option to enter into any of the foregoing); (b) any combination of the foregoing; or (c) any master agreement for any of the foregoing, as any of the foregoing may be amended or supplemented from time to time.

“Swap Obligation” means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

“Swap Rate” means the interest rate on the Bank Swap Documents, if applicable.

“Third Party” means a Person not a party to this Agreement.

“Title Insurance Company” means First American Title Insurance Company or any other title insurance company acceptable to Bank in its discretion and authorized under applicable Law to issue the Title Insurance Policy.

“Title Insurance Policy” means a standard ALTA form title insurance policy with respect to the Mortgaged Property and acceptable to Bank in its discretion, containing the Required Endorsements, dated as of the time of recording the Mortgage and endorsed or “dated-down” to a date no more than three (3) days prior to each Advance, and issued by the Title Insurance Company to Bank upon the Mortgaged Property, subject only to those exceptions and matters of title acceptable to Bank, in Bank’s discretion, including the Permitted Liens.

“Unsecured Indebtedness” means Indebtedness not secured by any Lien.

“Voting Power” means, with respect to any Person, the right to vote for the election of the Governing Body of such Person under ordinary circumstances.

“Without Notice” means without demand of performance or other demand, advertisement, or notice of any kind to or upon the applicable Person, except as may be expressly required by applicable Law.

1.2    Accounting Terms. Accounting terms used and not otherwise defined in this Agreement have the meanings determined by, and all calculations with respect to accounting or financial matters unless otherwise provided herein shall be computed in accordance with, Generally Accepted Accounting Principles.

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1.3    UCC Terms. As used herein, “Accounts”, “Chattel Paper”, “Commercial Tort Claims”, “Deposit Accounts”, “Documents”, “Equipment”, “Fixtures”, “General Intangibles”, “Goods”, “Instruments”, “Inventory”, “Investment Property”, “Letter-of-Credit Rights”, “Payment Intangible”, “Proceeds”, “Supporting Obligations”, and other terms not specifically defined herein shall have the same respective meanings as are given to those terms in the Uniform Commercial Code as presently adopted and in effect in the State of Delaware (except in cases and with respect to Collateral when the perfection, the effect of perfection or nonperfection, and the priority of a Lien in the Collateral is governed by another Jurisdiction, in which case such capitalized words and phrases shall have the meanings attributed to those terms under such other Jurisdiction).

1.4    Construction of Terms. Whenever used in this Agreement, the singular number shall include the plural and the plural the singular, pronouns of one gender shall include all genders, and use of the terms “herein”, “hereof”, and “hereunder” shall be deemed to be references to this Agreement in its entirety unless otherwise specifically provided.

1.5    Computation of Time Periods. For purposes of computation of periods of time hereunder, the word “from” means “from and including”, the words “to” and “until” each mean “to but excluding”, and the word “through” means “through and including”.

1.6    Reference to Borrower Parties and Bank Parties. Any reference in this Agreement to (i) “Borrower Party” shall mean each and any Borrower Party, singularly; (ii) “Borrower Parties” shall mean all of the Borrower Parties, collectively; (iii) “Bank Party” shall mean each and any Bank Party, singularly; and (iv) “Bank Parties” shall mean all of the Bank Parties, collectively.

1.7    Bank Swap Documents. Notwithstanding any provision of this Agreement or any other Loan Document to the contrary, (i) no covenant or agreement of Borrower Party shall prohibit Borrower Party from entering into any Bank Swap Document; (ii) any default or event of default under any Bank Swap Document shall constitute an Event of Default under this Agreement; and (iii) the right of Bank to accelerate any of the Obligations shall not be construed to require the termination or unwinding of any transactions the subject of any Bank Swap Documents.

1.8    Bank as Agent for Other Bank Parties. To the extent that any Lien is granted to Bank in this Agreement or under any Loan Document as security for any Obligation of any Borrower Party to any Bank Party other than Bank, the Lien so granted shall be deemed to be a Lien granted to Bank as agent for such other Bank Party, without the necessity of any act or consent of any Person.

ARTICLE II

2. THE LOAN.

2.1    General Terms. Subject to the terms hereof, Bank will lend Borrower an amount not to exceed the Loan Amount.

2.2    Disbursement Provisions. The Loan shall be disbursed as follows:

(A)    with the Initial Advance funded at Closing, and

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(B)    with additional Advances funded from time to time during the period from the date of this Agreement through the Initial Maturity Date, upon at least five (5) Business Days’ prior written notice from Borrower to Bank, provided, however, that Bank shall not be obligated to make Advances under this paragraph 2.2(B) if there is existing any Default, or (ii) if the Pro Forma Debt Service Coverage Requirement would not be met after taking into account the making of such Advance.

2.3    General Disbursement Provisions.

(A)    Bank will credit or pay the proceeds of each Advance of the Loan to Borrower’s deposit account with Bank, or in such other manner as Borrower and Bank may agree (including disbursement of the Initial Advance to the Title Insurance Company’s escrow account at Closing).

(B)    Notwithstanding anything contained herein to the contrary, Bank shall not be required to make any Advance after the Initial Maturity Date, nor upon the occurrence and during the continuance of a Default. The submission by Borrower to Bank of a request for such an Advance shall constitute Borrower’s representation and warranty to Bank that there is not then existing any Default.

(C)    If Bank or the Title Insurance Company shall so require, Borrower will submit with its requisitions for Advances of the Loan lien waivers in form reasonably satisfactory to Bank and the Title Insurance Company, showing amounts paid and amounts due to all Persons furnishing labor or materials in connection with any construction work at the Project. If the Title Insurance Policy is not written so as to insure any and all disbursements of the Loan up to the face amount of the Mortgage (including coverage for losses sustained by reason of the lack of priority of the Mortgage over any statutory Lien for services, labor or materials furnished subsequent to the date of this Agreement), Borrower shall have the Title Insurance Company deliver to Bank an endorsement to the Title Insurance Policy insuring each Advance of the Loan being requisitioned and insuring Bank for said Advance under the Title Insurance Policy.

2.4    The Note. Borrower’s obligation to repay the Loan shall be evidenced by the Note.

2.5    Interest Rate. During the entire period that the Loan is outstanding, the outstanding principal balance of the Loan shall bear interest at the One Month Adjusted LIBOR Rate during each applicable One Month LIBOR Rate Interest Period.

2.6    Payments of Principal and Interest. Principal and interest on the Loan shall be payable as follows:

(A)    On the first Payment Due Date following the date of this Agreement, and on each successive Payment Due Date thereafter until the Initial Maturity Date, Borrower shall pay to Bank all accrued and unpaid interest on the outstanding principal balance of the Note.

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(B)    If the Extension Requirements have not been met, then the outstanding principal balance of the Note, together with all accrued and unpaid interest thereon, shall be due and payable to Bank on the Initial Maturity Date.

(C)    If the Extension Requirements have been met, then on the first (1^st) Payment Due Date following the Initial Maturity Date, and on each of the next eleven (11) Payment Due Dates, Borrower shall pay to Bank (1) all accrued and unpaid interest on the outstanding principal balance of the Note, and (2) a principal payment equal to the product of (i) one-twelfth, times (ii) the total principal payments that would be made over twelve (12) consecutive months, based on the monthly amortization of principal and interest on a hypothetical loan where (x) the principal indebtedness being amortized is equal to the principal indebtedness owing under the Note as of the Initial Maturity Date, (y) the interest rate during the amortization period is equal to the Imputed Interest Rate, and (z) the amortization period is three hundred sixty (360) months.

(D)    On the thirteenth (13^th) Payment Due Date following the Initial Maturity Date, and on each of the next eleven Payment Due Dates, Borrower shall pay to Bank (1) all accrued and unpaid interest on the outstanding principal balance of the Note, and (2) a principal payment equal to the product of (i) one-twelfth, times (ii) the total principal payments that would be made over twelve (12) consecutive months, based on the monthly amortization of principal and interest on a hypothetical loan where (x) the principal indebtedness being amortized is equal to the principal indebtedness owing under the Note as of the date one (1) year after the Initial Maturity Date, (y) the interest rate during the amortization period is equal to the Imputed Interest Rate, and (z) the amortization period is three hundred forty-eight (348) months.

(E)    If not earlier demanded pursuant to Section 8.3 hereof, the outstanding principal balance of the Note, together with all accrued and unpaid interest thereon, shall be due and payable to Bank on the Extended Maturity Date.

2.7    Use of Proceeds of Loan. The proceeds of the Loan shall be used to finance a portion of the acquisition cost of the Project, to pay closing costs in connection with the Loan, and other purposes as may be approved by Bank.

ARTICLE III

3. PAYMENTS, ADDITIONAL COSTS, ETC.

3.1    Default Rate. Notwithstanding any provision herein or in any other Loan Document to the contrary, upon the occurrence and during the continuance of an Event of Default, the Interest Rate payable on the Loan shall be the Default Rate.

3.2    Payments Under Bank Swap Documents. Notwithstanding anything contained in this Agreement or any other Loan Document to the contrary, if all or any portion of the Loan is subject to a Bank Swap Document, and such Bank Swap Document provides for a payment schedule for principal and interest contrary to the provisions of this Agreement or any other Loan Document, the payment schedule set forth in such Bank Swap Document shall govern with respect to that portion of the Loan subject to such Bank Swap Document.

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3.3    Late Payments. If any scheduled payment, whether principal, interest, or principal and interest, is late twelve (12) days or more, Borrower agrees to pay a late charge equal to five percent (5%) of the amount of the payment which is late, but not more than the maximum amount allowed by applicable Laws nor less than $10.00. The foregoing provision shall not be deemed to excuse a late payment or be deemed a waiver of any other rights Bank may have under this Agreement, including, subject to the terms hereof, the right to declare the entire unpaid principal and interest immediately due and payable.

3.4    Payment to Bank.

(A)    All sums payable to Bank under this Agreement or under any other Loan Document shall be paid directly to Bank in immediately available funds or by good check at the Place for Payment. If Bank shall send Borrower statements of amounts due hereunder, such statements shall be considered correct and conclusively binding on Borrower unless Borrower notifies Bank to the contrary within thirty (30) days of its receipt of any statement which it deems to be incorrect.

(B)    All payments to be made by Borrower hereunder will be made to Bank not later than 2:00 p.m. at the Place for Payment on the date payment is due. Payments received after 2:00 p.m. at the Place for Payment shall be deemed to be payments made prior to 2:00 p.m. at the Place for Payment on the next succeeding Business Day.

(C)    Bank may charge against any deposit account of Borrower all or any part of any amount owed by Borrower hereunder, and Borrower hereby authorizes Bank to charge Borrower’s accounts with Bank in order to cause timely payment of amounts due hereunder to be made (subject to sufficient funds being available in such account for that purpose).

(D)    At the time of making each such payment, Borrower shall, subject to the other terms and conditions of this Agreement, specify to Bank the Note or other obligation of Borrower hereunder to which such payment is to be applied. In the event that Borrower fails to so specify the relevant Note or if an Event of Default shall have occurred and be continuing, Bank may apply such payments as it may determine in its discretion.

3.5    Prepayment. Borrower may prepay the principal of the Loan in whole or, from time to time, in part, without premium or penalty. In the case of any partial prepayment, Bank shall have the right to require and shall permit the remaining principal balance to be re-amortized over the remaining term of the Loan. All partial prepayments, whether voluntary or mandatory, shall (except as may be directed by Borrower to the contrary) be applied against the next principal payment of the Loan next coming due and in the inverse order of maturity, and no prepayment shall entitle Borrower to cease making any payment as otherwise scheduled hereunder.

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3.6    No Setoff or Deduction. All payments of principal and interest on the Loan and other amounts payable by Borrower hereunder shall be made by Borrower without setoff or counterclaim, and, subject to the next succeeding sentence, free and clear of, and without deduction or withholding for, or on account of, any present or future taxes, levies, imposts, duties, fees, assessments, or other charges of whatever nature, imposed by any Governmental Authority. If any such taxes, levies, imposts, duties, fees, assessments or other charges are imposed on any such payments, Borrower will pay such additional amounts as may be necessary so that payment of principal of and interest on the Loan and other amounts payable hereunder, after withholding or deduction for or on account thereof, will not be less than any amount provided to be paid hereunder and, in any such case, Borrower will furnish to Bank certified copies of all tax receipts evidencing the payment of such amounts within thirty (30) days after the date any such payment is due pursuant to applicable Laws.

3.7    Payment on Non-Business Day; Payment Computations. Except as otherwise provided in this Agreement to the contrary, whenever any installment of principal of, or interest on, the Loan or other amount due hereunder becomes due and payable on a day which is not a Business Day, the maturity thereof shall be extended to the next succeeding Business Day and, in the case of any installment of principal, interest shall be payable thereon at the rate per annum determined in accordance with this Agreement during such extension.

3.8    Additional Costs.

(A)    In the event that any applicable Law now or hereafter in effect and whether or not presently applicable to Bank, or any interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or compliance by Bank with any guideline, request or directive of any such Governmental Authority (whether or not having the force of law), shall (i) affect the basis of taxation of payments to Bank of any amounts payable by Borrower under this Agreement (other than taxes imposed on the income of Bank), or (ii) shall impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by Bank, or (iii) shall impose any other condition with respect to this Agreement, any other Loan Document or the Loan, and the result of any of the foregoing is to increase the cost to Bank of making, funding or maintaining the Loan or to reduce the amount of any sum receivable by Bank thereon, then Borrower shall pay to Bank from time to time, within sixty (60) days after written request by Bank, additional amounts sufficient to compensate Bank for such increased cost or reduced sum receivable to the extent Bank is not compensated therefor in the computation of the Interest Rate applicable to the Loan. A statement as to the amount of such increased cost or reduced sum receivable, prepared in good faith and in reasonable detail by Bank and submitted by Bank to Borrower, shall be conclusive and binding for all purposes absent manifest error in computation.

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(B)    In the event that any applicable Law now or hereafter in effect and whether or not presently applicable to Bank, or any interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or compliance by Bank with any guideline, request or directive of any such Governmental Authority (whether or not having the force of law), including any risk-based capital guidelines, affects or would affect the amount of capital required or expected to be maintained by Bank (or any corporation controlling Bank) and Bank determines that the amount of such capital is increased by or based upon the existence of Bank’s obligations hereunder and such increase has the effect of reducing the rate of return on Bank’s (or such controlling corporation’s) capital as a consequence of such obligations hereunder to a level below that which Bank (or such controlling corporation) could have achieved but for such circumstances (taking into consideration its policies with respect to capital adequacy), then Borrower shall pay to Bank from time to time, within sixty (60) days after written request by Bank, additional amounts sufficient to compensate Bank (or such controlling corporation) for any increase in the amount of capital and reduced rate of return which Bank reasonably determines to be allocable to the existence of such Bank’s obligations hereunder. A statement as to the amount of such compensation, prepared in good faith and in reasonable detail by Bank shall be conclusive and binding for all purposes absent manifest error in computation.

3.9    Illegality and Impossibility. In the event that any applicable Law now or hereafter in effect and whether or not presently applicable to Bank, or any interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or compliance by Bank with any guideline, request or directive of such Governmental Authority (whether or not having the force of law), including without limitation exchange controls, shall make it unlawful or impossible for Bank to maintain the Loan under this Agreement, Borrower shall upon receipt of notice thereof from Bank repay in full the then outstanding principal amount of such Loan, together with all accrued interest thereon to the date of payment and all amounts owing to Bank, (a) on a date no later than one hundred twenty (120) days after such notice, if Bank may lawfully continue to maintain the Loan for such period, or (b) immediately if Bank may not continue to maintain the Loan to such day.

3.10    360-Day Year. All interest payable under the Note shall be calculated on the basis of a 360-day year by multiplying the outstanding principal amount by the applicable per annum rate, multiplying the product thereof by the actual number of days elapsed, and dividing the product so obtained by 360.

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3.11    Indemnification. If Borrower makes any payment of principal with respect to the Loan on any other date than the last day of a One Month LIBOR Rate Interest Period applicable thereto, or if Borrower fails to borrow any Advance after notice has been given to Bank in accordance with this Agreement, or if Borrower fails to make any payment of principal or interest in respect of the Loan when due, Borrower shall reimburse Bank on demand for any resulting loss or expense actually incurred by Bank, including without limitation any loss incurred in obtaining, liquidating or employing deposits from a Third Party, whether or not Bank shall have funded or committed to fund such Advance. A statement as to the amount of such actual loss or expense (such as LIBOR breakage costs), prepared in good faith and in reasonable detail by Bank will be submitted by Bank to Borrower, and shall be conclusive and binding for all purposes absent manifest error in computation. Calculation of all amounts payable to Bank under this Section shall be made as though Bank shall have actually funded or committed to fund the applicable Advance through the purchase of an underlying deposit in an amount equal to the amount of such Advance in the relevant market and having a maturity comparable to the related One Month LIBOR Rate Interest Period and through the transfer of such deposit to a domestic office of such Bank in the United States; provided, however, that Bank may fund the Loan in any manner it sees fit and the foregoing assumption shall be utilized only for the purpose of calculation of amounts payable under this Section.

3.12    No Requirement to Actually Obtain Funds. Notwithstanding the fact that the Interest Rate pursuant to the Loan may be calculated based upon Bank’s cost of funds, Borrower agrees that Bank shall not be required actually to obtain funds from such source at any time.

3.13    Usury Limitation. If, at any time, the Interest Rate payable on the Loan shall be deemed by any competent court of law or any Governmental Authority to exceed the maximum rate of interest permitted by any applicable Laws, then, for such time as the Interest Rate would be deemed excessive, its application shall be suspended and there shall be charged instead the maximum rate of interest permissible under such Laws, and any excess interest actually collected by Bank shall be credited as a partial prepayment of principal.

ARTICLE IV

4. CONDITIONS PRECEDENT.

The obligation of Bank to make the Loan and any Advance hereunder is subject to the following conditions precedent:

4.1    Documents Required for the Closing. Prior to or concurrently with the Closing, the following instruments, documents, and things duly executed by all proper Persons, and all in form and substance acceptable to Bank, shall have been delivered to Bank:

(A)    This Agreement;

(B)    The Note;

(C)    The Mortgage, together with the following:

(1)    Evidence that the Mortgage has been (or will be) duly recorded in all filing or recording offices that Bank may deem necessary or desirable, and that all filing and recording taxes and fees have been paid,

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(2)    The fully-paid Title Insurance Policy, in an amount not less than the amount of the Note, insuring the Mortgage to be a valid first Lien on the Mortgaged Property, free and clear of all Liens (including, but not limited to, mechanics’ and materialmen’s Liens), excepting only Permitted Liens and other Liens approved by Bank in its discretion, and providing for such other affirmative insurance (to the extent available) and such coinsurance and direct access reinsurance as Bank may deem reasonably necessary or desirable,

(3)    Such consents and agreements of lessors, lessees, and other Third Parties, and such estoppel letters and other confirmations, as Bank may deem necessary or desirable in its reasonable discretion;

(4)    Evidence that all other action that Bank may deem necessary or desirable in its reasonable discretion in order to create and perfect a valid first Lien on the Mortgaged Property has been taken;

(D)    The Assignment of Management Agreement, together with a copy of the management agreement the subject thereof (which management agreement and property manager thereunder are subject to the review and approval of Bank);

(E)    Closing Certificates of Borrower and Carveout Guarantor;

(F)    Financing Statements naming Borrower as debtor and Bank as secured party, together with evidence that each such Financing Statements have been duly recorded in all filing or recording offices that Bank may deem necessary or desirable, and that all filing and recording taxes and fees have been paid;

(G)    With respect to each Borrower Party, a certificate of an officer or other representative acceptable to Bank dated as of the date of this Agreement, certifying as to the incumbency and signatures of the representatives of such Borrower Party signing each Loan Document to which such Borrower Party is a party, together with the following documents attached thereto:

(1)    A copy of the resolutions of such Borrower Party’s Governing Body authorizing the execution, delivery and performance of each Loan Document to which such Borrower Party is a party;

(2)    A copy, certified as of the most recent date practicable by the secretary of state (or similar Governmental Authority) of the state, province, or other Jurisdiction where such Borrower is organized, of such Borrower Party’s Organizational Documents filed with such secretary of state (or similar Governmental Authority); and

(3)    A copy of such Borrower Party’s other Organizational Documents;

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(H)    A certificate, as of the most recent date practicable, of the secretary of state (or similar appropriate Governmental Authority) and department of revenue or taxation (or similar appropriate Governmental Authority) of the Jurisdiction in which each Borrower Party is organized as to the existence and good standing of such Borrower Party within such Jurisdiction, and a certificate, as of the most recent date practicable, of the secretary of state (or similar appropriate Governmental Authority) of each state where any of the Collateral is located as to the qualification and good standing of each Borrower as a foreign entity doing business in each such state;

(I)    Written opinions of counsel to Borrower Parties, addressed to Bank and dated as of the date of Closing;

(J)    The Financial Statements of Borrower Parties;

(K)    UCC-11 reports showing no Liens superior to Bank’s Lien on the Mortgaged Property and the other Collateral;

(L)    Evidence satisfactory to Bank that Borrower has obtained all insurance policies as required under the Loan Documents, together with evidence satisfactory to Bank that all premiums therefor have been paid and that all such policies are in full force and effect;

(M)    An ALTA form survey of the Project, prepared by an approved surveyor, and either (i) evidence satisfactory to Bank that no part of the Project is located in a flood hazard area, or (ii) a flood insurance policy satisfactory to Bank;

(N)    An appraisal of the Project, made at Borrower’s expense, which must be by an M.A.I. appraiser engaged and approved by Bank, and must be in form and substance satisfactory to Bank, and reflecting a loan to value ratio of not more than 60%;

(O)    A copy of the purchase closing statement for the Project, reflecting a loan to cost ratio of not more than 60%;

(P)    An environmental/hazardous substances survey and report with respect to the Project, and, if applicable, reports and certifications in such form and from such Person(s) as Bank may require setting forth with such particularity as may be required by Bank: (i) the plans for removal of any and all Hazardous Substances, Petroleum Products and Solid Wastes, if any, located on the Mortgaged Property, including an appropriate verification that such removal will be accomplished in accordance with applicable Law; (ii) the qualifications of those Persons engaged to so remove the Hazardous Substances, Petroleum Products and Solid Wastes; and (iii) upon completion of the removal of the Hazardous Substances, Petroleum Products and Solid Wastes, certification that the Hazardous Substances, Petroleum Products and Solid Wastes have in fact been removed;

(Q)    A copy of the Ground Lease, together with the Ground Lessor’s Consent;

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(R)    Copies of all Assigned Leases of the Project in effect at the time of Closing, together with any applicable lease guaranties, together with the deposit with Bank of the Rent Abatement Funds into the Rent Abatement Reserve Account;

(S)    Copies of the Assignment Documents;

(T)    The form of lease to be utilized in connection with the leasing of the Project;

(U)    Except as may be waived by Bank in its discretion, estoppel certificates and subordination, attornment and non-disturbance agreements with respect to the Assigned Leases in effect at the time of Closing; and

(V)    All other items required to be provided to Bank and not otherwise set forth above.

4.2    Certain Events. At the time of Closing and each Advance:

(A)    No Default shall have occurred and be continuing;

(B)    No Material Adverse Change shall have occurred;

(C)    All of the Loan Documents shall have remained in full force and effect;

(D)    Borrower shall have paid all fees, expenses, costs, and other amounts then owing to Bank, including the Loan Fee; and

(E)    All legal matters incidental thereto shall be reasonably satisfactory to Gibbons Law LLC, counsel to Bank.

4.3    Election to Make Advances Prior to Satisfaction of Conditions Precedent. In the event Bank, at its option, elects to make one or more Advances prior to receipt and approval of all items required by this Article, such election shall not constitute any commitment or agreement of Bank to make any subsequent Advance until all items required by this Article have been delivered.

ARTICLE V

5. COLLATERAL SECURITY

5.1    Grant of Lien.

(A)    As security for the prompt satisfaction of all Obligations, Borrower hereby assigns, transfers, and sets over to Bank all of Borrower’s Interest in and to, and grants Bank a Lien on, upon and in Borrower’s Interest in and to the Collateral.

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(B)    No submission by Borrower to Bank of a schedule or other particular identification of Collateral shall be necessary to vest in Bank security title to and a security interest in each and every item of Collateral now existing or hereafter created and acquired, but rather such title and security interest shall vest in Bank immediately upon the creation or acquisition or any item of Collateral hereafter created or acquired, without the necessity for any other or further action by Borrower or by Bank.

5.2    Maintenance of Lien.

(A)    Borrower authorizes Bank to file one or more Financing Statements to perfect Bank’s Lien pursuant to the Uniform Commercial Code, such Financing Statements to be in form and substance as required by Bank.

(B)    Borrower hereby appoints Bank as its attorney-in-fact (without requiring Bank to act as such) to file any Financing Statement in the name of Borrower, and to perform all other acts that Bank deems appropriate to perfect and continue Bank’s Lien and to protect and preserve the Collateral.

(C)    In connection with Bank’s Lien, Borrower will:

(1)    Execute and deliver, and cause to be executed and delivered, such documents and instruments, including amendments to the Security Documents in form reasonably satisfactory to Bank as Bank, from time to time, may specify, and pay, or reimburse Bank upon demand for paying, all costs and taxes of filing or recording the same in such Jurisdictions as Bank may designate; and

(2)    Take such other steps as Bank, from time to time, may reasonably direct to protect, perfect, and maintain Bank’s Lien.

ARTICLE VI

6. REPRESENTATIONS AND WARRANTIES.

Borrower represents and warrants to Bank, knowing that Bank will rely on such representations and warranties as an inducement to make the Loan, that:

6.1    Existence. Borrower is a duly organized and existing entity in good standing under the Laws of the Jurisdiction of its organization, is duly qualified and in good standing as a foreign entity in the Jurisdiction where the Project is located, and has full power and authority to consummate the transactions contemplated by this Agreement.

6.2    Authority. The execution, delivery and performance of all of the Loan Documents have been duly authorized by all requisite action by Borrower. All of the Loan Documents have been duly executed and delivered and constitute valid and binding obligations of Borrower, enforceable in accordance with their respective terms, and Bank will be entitled to the benefits of all of the Loan Documents.

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6.3    Consents or Approvals. No consent of any Third Party and no authorization, approval or other action by, and no notice to or filing with, any Governmental Authority or other Third Party is required (other than those that are required and have been obtained) either (i) for the due execution, delivery, recordation, filing or performance by any Borrower Party of this Agreement or any other Loan Document or for the consummation of the transaction contemplated hereby; (ii) for the mortgage, pledge, assignment, or grant by Borrower of Bank’s Lien; (iii) for the perfection or maintenance of Bank’s Lien, except for the recording of the Mortgage and the Financing Statements; (iv) for the exercise by Bank of its rights or remedies provided for in this Agreement or in any of the other Loan Documents, except as may be required by applicable Laws in connection with the foreclosure and disposition of the Collateral; or (v) for the operation of Borrower’s business (other than those permits that have been or will be obtained in Borrower’s Ordinary Course of Business). All applicable waiting periods, if any, in connection with the transactions contemplated hereby have expired without any action having been taken by any Person restraining, preventing or imposing materially adverse conditions upon the rights of Borrower to enter into and perform its obligations under this Agreement.

6.4    Violations or Actions Pending. There are no actions, suits, or proceedings pending or, to the best of Borrower’s knowledge, threatened, which might have a Material Adverse Effect or which might impair the value of the Collateral. Borrower is not in violation of any agreement the violation of which will or might reasonably be expected to have a Material Adverse Effect, and Borrower is not in violation of any order, judgment, or decree of any court, or any statute or governmental regulation to which Borrower is subject. The execution and performance of this Agreement and the other Loan Documents by Borrower will not result in any breach of any mortgage, lease, credit or loan agreement or any other instrument which may bind or affect Borrower.

6.5    Existing Indebtedness. Borrower has no existing Indebtedness (except Indebtedness incurred pursuant to the Loan Documents).

6.6    Tax Returns. Except as may otherwise be permitted herein, all federal, state, local and other tax returns and reports of Borrower required by Laws have been completed in full and have been duly filed, and all taxes, assessments and withholdings shown on such returns or billed to Borrower have been paid, and Borrower maintains adequate provisions and accruals in respect of all such federal, state, local and other taxes, assessments and withholdings. There are no unpaid assessments pending against Borrower for any taxes or withholdings, and Borrower knows of no basis therefor.

6.7    Financial Statements. All financial statements of Borrower heretofore given and hereafter to be given to Bank are and will be true and complete in all material respects as of their respective dates and prepared in accordance with Generally Accepted Accounting Principles, and fairly represent and will fairly represent the financial conditions of Borrower, and no Material Adverse Change has or will have occurred in the financial conditions reflected therein after the respective date thereof upon delivery to Bank, except as may be disclosed in writing to Bank.

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6.8    Title. Borrower has good and marketable title to all its assets, including, without limitation, the Collateral, subject to no Liens, except for Permitted Liens.

6.9    Solvency. Borrower is Solvent.

6.10    Priority of Liens. Bank’s Lien constitutes a first Lien against the Collateral, prior to all other Liens, including those which may hereafter accrue, except for the Permitted Liens.

6.11    Accuracy of Documents. To the best of Borrower’s knowledge, all documents and other things furnished to Bank by or on behalf of any Borrower Party as part of or in support of the application for the Loan or pursuant to this Agreement are true, correct, complete and accurately represent in all material respects the matters to which they pertain.

6.12    Environmental and Healthcare Laws. To the best of Borrower’s knowledge, except as disclosed in the Phase I Environmental Site Assessment approved by Bank with respect to the Project, neither the Mortgaged Property nor Borrower is in violation of or subject to any existing, pending or threatened investigation or inquiry by any Governmental Authority or any remedial obligations under any applicable Environmental Laws or Healthcare Laws, and there are no facts, conditions or circumstances known to it which could result in any such investigation or inquiry if such facts, conditions and circumstances, if any, were fully disclosed to the applicable Governmental Authority, and Borrower will promptly notify Bank if Borrower becomes aware of any such facts, conditions or circumstances or any such investigation or inquiry. Borrower has not obtained and is not required to obtain any Governmental Approvals to construct, occupy, operate or use any buildings, improvements, fixtures or equipment in connection with the Mortgaged Property or Improvements constructed or to be constructed by reason of any Environmental Laws or Healthcare Laws. No Petroleum Products, Hazardous Substances or Solid Wastes have been disposed of or released on the Mortgaged Property in violation of any applicable Environmental Laws, and Borrower covenants and agrees that it will not cause there to be any violation of any Environmental Laws or Healthcare Laws in connection with its ownership and use of the Mortgaged Property, including any violation arising from the disposal or release of Petroleum Products, Hazardous Substances or Solid Wastes on the Mortgaged Property. Notwithstanding anything to the contrary herein, Borrower shall indemnify and hold Bank harmless from and against any fines, charges, expenses, fees, Attorneys’ Fees and costs incurred by Bank in the event Borrower or the Mortgaged Property (whether or not due to any fault of Borrower) is hereafter determined to be in violation of any Environmental Laws or Healthcare Laws (excluding, however, any violation arising from circumstances occurring after the Environmental Indemnification Release Date, or any violation arising from the gross negligence or willful misconduct of Bank), and this indemnity shall survive any foreclosure or deed in lieu of foreclosure and repayment of the Loan.

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6.13    Restrictions and Covenants Affecting the Mortgaged Property. To the best of Borrower’s knowledge, neither Borrower nor the Mortgaged Property is in violation of any easements, covenants or restrictions affecting the Mortgaged Property.

6.14    Condemnation. There are no proceedings pending, or, to the best of Borrower’s knowledge, threatened, to exercise any power of condemnation or eminent domain, with respect to the Mortgaged Property, or any interest therein, or to enjoin or similarly prevent the use of the Project.

6.15    Compliance with Laws. All necessary action has been taken to permit full use of the Project for its intended purpose under applicable Laws, and the Project complies with all applicable Laws.

6.16    Assigned Documents.

(A)    Borrower is (or, with respect to any Assigned Documents hereafter made, will be) the sole owner and holder of Borrower’s Interest in each Assigned Document, and Borrower has not transferred or otherwise assigned any interest of Borrower as a party to any Assigned Document.

(B)    Each of the Assigned Documents is (or, with respect to any Assigned Documents hereafter made, will be) valid and enforceable in accordance with its respective terms, and in full force and effect, and has not been (or, with respect to any Assigned Documents hereafter made, will not be) altered, modified or amended in any manner whatsoever except as permitted by this Agreement.

(C)    None of the Rents have been or will be assigned, pledged or in any manner transferred or hypothecated, except pursuant to the Loan Documents.

(D)    None of the Rents, for any period subsequent to the date of this Agreement, have been or will be collected in advance of the time when such Rents become due under the terms of the Assigned Leases.

6.17    Anti-Terrorism Laws.

(A)    General. No Borrower Party is in violation of any Anti-Terrorism Law, and no Borrower Party engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

(B)    Executive Order No. 13224.

(1)    No Borrower Party is any of the following (each a “Blocked Person”):

(a)    A Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224;

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(b)    A Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224;

(c)    A Person with which any bank or other financial institution is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;

(d)    A Person that commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224;

(e)    A Person that is named as a “specially designated national” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list; or

(f)    A Person who is affiliated with a Person listed above.

(2)    No Borrower Party (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224.

6.18    Continuing Effectiveness. All representations and warranties contained herein shall be deemed continuing and in effect at all times while Borrower remains indebted to Bank pursuant to the Loan and shall be deemed to be incorporated by reference in each requisition for Advance by Borrower unless Borrower specifically notifies Bank of any change therein.

ARTICLE VII

7. BORROWER’S COVENANTS

Borrower does hereby covenant and agree with Bank that, so long as any of the Obligations remain unsatisfied or any commitments hereunder remain outstanding, Borrower at all times will comply or cause to be complied with the following covenants:

7.1    Affirmative Covenants.

(A)    Borrower will duly and promptly pay and perform all of Borrower’s Obligations to Bank Parties according to the terms of this Agreement, the other Loan Documents and the Bank Swap Documents, and will cause each other Borrower Party to perform such other Borrower Party’s Obligations to Bank Parties according to the terms of this Agreement, the other Loan Documents and the Bank Swap Documents.

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(B)    Borrower will use the proceeds of the Loan only for the purposes permitted herein, or as Bank may have otherwise approved from time to time; and Borrower will furnish Bank such evidence as it may reasonably require with respect to such uses.

(C)    Borrower will furnish or cause to be furnished to Bank during the term of the Loan:

(1)    With respect to Borrower, (i) no later than ninety (90) days after each Quarter-End, an income statement, detailed operating statement and balance sheet (which information may be compiled by Borrower’s in-house certified public accountants) for the preceding Quarter, all in reasonable detail, including all supporting schedules and comments; and (ii) no later than ninety (90) days after the end of each Fiscal Year, an income statement, detailed operating statement and balance sheet (which information may be compiled by Borrower’s in-house certified public accountants) for the preceding Fiscal Year, all in reasonable detail, including all supporting schedules and comments; and

(2)    No later than ninety (90) days after each Quarter-End, a rent roll and operating statement of the Project for the preceding Quarter in form satisfactory to Bank in its reasonable discretion, together with a compliance certificate in reasonable detail and in form and substance reasonably satisfactory to Bank evidencing the computation of the Debt Service Coverage Requirement for the applicable Quarter.

(D)    Borrower will (i) engage in no business or activity other than the ownership, management and operation of the Project; (ii) enter into no contract or agreement with any Person except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arms-length basis with third parties other than such Person (except for such contracts or agreements which have been reviewed and approved by Bank); (iii) make no loan or advance to any Person (except as permitted by the Loan Documents); (iv) hold itself out to the public as a legal entity separate and distinct from any other Person; (v) conduct business in its own name; (vi) not make any distributions that would cause it to fail to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; and (vii) maintain its assets in such a manner that it shall not be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person.

(E)    Borrower will duly and promptly perform all of Borrower’s material obligations under the Ground Lease and the Assigned Leases, all according to the respective terms thereof.

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(F)    (i) Bank agrees that Bank shall not require preapproval of a Qualified Lease of less than 25 % of the space in the Project. With respect to any other leases of the Project entered into after the date of this Agreement (exclusive of any renewals of leases of the Project in effect as of the date of this Agreement on substantially similar terms), Borrower will furnish or cause to be furnished to Bank financial information relating to the prospective tenant and any guarantors of such lease, and a draft of such lease and any guaranties thereof (it being understood that Bank reserves the right to approve the creditworthiness of any such tenant and to require guaranties of any such lease), for Bank’s approval prior to the execution of any such lease. Bank’s approval shall be deemed given if (i) Bank fails to respond to such request within ten (10) Business Days after such request, (ii) within five (5) Business Days after the expiration of such ten (10) Business Days, Borrower makes the same identical request in writing (viz. a second request) for such consent or approval except such second request shall, on the top page thereof, contain the following conspicuous all-capitalized, bold language: “THIS IS THE SECOND REQUEST FOR THE APPROVAL OR CONSENT SET FORTH BELOW, AND BANK’S FAILURE TO RESPOND TO SUCH REQUEST WITHIN FIVE (5) BUSINESS DAYS SHALL CONSTITUTE BANK’S APPROVAL PURSUANT TO SECTION 7.1(F) OF THE CREDIT AGREEMENT, (iii) Bank fails to respond to such second request within five (5) Business Days of such second request, and (iv) with respect to both the first and second requests, the request shall have been made both by email (at the email addresses set forth in Section 9.10) and the approved means as set forth in the first sentence of Section 9.10

(ii) Upon Bank’s approval of any such tenants, guarantors, leases and guaranties (if any), and after execution and delivery of any lease, Borrower will furnish or cause to be furnished to Bank a copy of the fully-executed lease and any applicable lease guaranties, together with an estoppel certificate and a subordination, non-disturbance and attornment agreement signed by each tenant thereunder, all such documentation to be in form and substance satisfactory to Bank. In addition, if required by Bank with respect to any tenant occupying more than 25% of the Project, Borrower will furnish or cause to be furnished to Bank one or more Financial Reporting Agreements and agreements providing for the Bank to have notice of and an opportunity to cure any defaults thereunder, all such documentation to be in form and substance satisfactory to Bank.

(G)    Borrower will pay when due all commitment and loan fees of Bank, all fees of any “tax-service” firm reporting on the payment of ad valorem taxes, all expenses involved in perfecting Bank’s Lien or the priority of Bank’s Lien, and all other expenses of Bank related to the Loan, or the protection and preservation of the Collateral, or the enforcement of any provision of this Agreement, or the preparation of this Agreement, any of the other Loan Documents, or amendments to any of them, including, without limitation, recording fees and taxes, tax, title and lien search charges, title insurance charges, architects’, engineers’ and Attorneys’ Fees (including Attorneys’ Fees at trial and on any appeal by either Borrower or Bank), real property taxes and insurance premiums.

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(H)    Borrower will furnish promptly to Bank such information as Bank may require concerning costs, marketing and such other factors as Bank may reasonably require; will notify Bank promptly of any litigation instituted or threatened against any Borrower Party which, if adversely determined, would give rise to a Material Adverse Change, any deficiencies asserted or Liens filed by the Internal Revenue Service against any Borrower Party, the Collateral, any audits of any Federal or State tax return of any Borrower Party, and the results of any such audit; will notify Bank promptly after becoming aware of any condemnation or similar proceedings with respect to any of the Collateral, any proceeding seeking to enjoin the intended use of the Project, and of all changes in governmental requirements pertaining to the Project, utility availability, anticipated costs of completion, and any other matters which could reasonably be expected to adversely affect Borrower’s ability to perform its obligations under this Agreement.

(I)    Borrower will permit Bank and its agents to have access to the Collateral at reasonable times.

(J)    Borrower will furnish to Bank, if Bank so requests, the contracts, bills of sale, receipted vouchers, and agreements, or any of them, to the extent in Borrower’s possession or control, under which Borrower claims title to the materials, articles, fixtures and other personal property used or to be used in the construction or operation of the Project.

(K)    If requested by Bank, Borrower will cause, or permit Bank to cause, the Project to be reappraised at Borrower’s expense at any time (but not more than once during any twelve-month period except (i) after an Event of Default, or (ii) if required on account of the requirements of any Governmental Authority or regulatory authority).

(L)    Borrower will certify to Bank, upon request by Bank, that:

(1)    Borrower has materially complied with and is in compliance with all terms, covenants and conditions of this Agreement that are binding upon it;

(2)    To Borrower’s knowledge, there exists no Default; or, if such is not the case, that one or more specified Defaults have occurred; and

(3)    The representations and warranties contained in this Agreement are true in all material respects with the same effect as though made on the date of such certificate.

(M)    Borrower will, when requested so to do, make available for inspection and audit by duly authorized representatives of Bank any of its Records, and will furnish Bank any information regarding its business affairs and financial condition within a reasonable time after written request therefor. Borrower shall reimburse Bank for all costs associated with such audit if the audit reveals a material discrepancy in any financial report, statement or other document provided to Bank pursuant to this Agreement.

(N)    Borrower will keep accurate and complete Records, consistent with sound business practices.

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(O)    Within ten (10) Business Days of Bank’s request therefor, Borrower will furnish or cause to be furnished to Bank copies of income tax returns filed by any Borrower Party.

(P)    Borrower will notify Bank thirty (30) days in advance of any change in the location of any of its places of business or of the establishment of any new place of business, or the discontinuance of any existing place of business.

(Q)    Borrower will notify Bank promptly if it becomes aware of the occurrence of any Default, or if it becomes aware of any Material Adverse Change or the occurrence of any event that might have or give rise to a Material Adverse Effect.

(R)    Borrower will pay or cause to be paid when due, and before the accrual of penalties thereon, all taxes, including all real and personal property taxes and assessments levied or assessed against Borrower or the Mortgaged Property, and will provide Bank with receipted bills therefor if requested by Bank.

(S)    Borrower will cause the Mortgaged Property to be maintained in good and safe condition and repair, and shall, subject to the provisions of Section 7.3 below, promptly repair, replace or rebuild any part of the Mortgaged Property which may be destroyed by any casualty, or become damaged, worn or dilapidated or which may be affected by any condemnation or similar proceeding.

(T)    Borrower will keep the Collateral free from all Liens except the Permitted Liens; will pay promptly all Persons supplying work or materials to the Project; will immediately discharge, or make other arrangements acceptable to Bank with respect to, any mechanic’s or other Lien filed against the Collateral or Borrower; and will duly perform and observe all agreements, covenants and restrictions with respect to the Permitted Liens (except those that Borrower is contesting as permitted by this Agreement) and with respect to any other easement, covenant or restriction now or hereafter affecting the Collateral.

(U)    Borrower shall maintain the Debt Service Coverage Requirement.

(V)    During the term of this Agreement, Borrower shall maintain with Bank all of their operating accounts and other deposit accounts with respect to the Project.

(W)    Borrower shall cause the Rent Abatement Funds to be deposited and maintained in the Rent Abatement Reserve Account, provided that so long as there is not existing any Default, Borrower shall have the right to withdraw (a) Rent Abatement Funds from the Rent Abatement Reserve Account:

(1)     once each calendar month (beginning the month of November, 2017) in an amount equal to the sum of:

(a)    (i) the amount of Rent Abatement Funds originally deposited and allocable to Suite 200, multiplied by (ii) a fraction, (x) the numerator of which is 1, and (y) the denominator of which is the number of months in the Suite 200 Rent Abatement Period;

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(b)    (i) the amount of Rent Abatement Funds originally deposited and allocable to Suite 220, multiplied by (ii) a fraction, (x) the numerator of which is 1, and (y) the denominator of which is the number of months in the Suite 220 Rent Abatement Period; and

(2)    any Rent Abatement Funds remaining in the Rent Abatement Reserve Account at the expiration of the Suite 220 Rent Abatement Period.

7.2    Negative Covenants.

(A)    Borrower will not change its name, enter into any merger, consolidation, liquidation, reorganization or recapitalization, or dissolve, nor amend nor modify any of its Organizational Documents in any material respect without the consent of Bank.

(B)    Borrower will not sell, transfer, lease or otherwise dispose of, or enter into any agreement to sell, lease, transfer, assign or otherwise dispose of the Collateral, except for Permitted Leases and Other Transfers of Collateral.

(C)    Borrower will not declare or pay any dividends, or make any other payment or distribution to any of its Equity Owners, if such payment or distribution would otherwise give rise to a Default.

(D)    Borrower will not become liable, directly or indirectly, as guarantor or otherwise for any obligation of any Third Party (which does not include rent abatements or deferred maintenance credits from Seller) in an amount exceeding (i) $250,000.00 for tenant improvements with respect to the Women’s Clinic, $125,000.00 for tenant improvements with respect to the Surgical Center, and (ii) $10,000.00 in the aggregate for any other purpose.

(E)    Borrower will not incur, create, assume, or permit to exist any Indebtedness except:

(1)    The Loan;

(2)    The Existing Indebtedness;

(3)    Indebtedness otherwise expressly permitted under the terms of this Agreement or any other Loan Document, if any; and

(4)    Indebtedness incurred in Borrower’s Ordinary Course of Business, so long as such Indebtedness is either Unsecured Indebtedness or Indebtedness secured by a Permitted Lien.

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(F)    Borrower will not permit any material changes to the Ground Lease or any Assigned Lease, unless there is first obtained the prior written approval of Bank.

(G)    Borrower will not permit any material changes to the form of tenant lease to be used in connection with the leasing of the Project, unless there is first obtained the prior written approval of Bank.

(H)    Borrower will not, without Bank’s prior written consent, issue, redeem, purchase or retire any of its Equity Interests or grant or issue any warrant, right or option pertaining thereto or any other security convertible into any of the foregoing, nor otherwise permit any voluntary transfer, sale, redemption, retirement, or other change in the ownership of any Equity Interests of Borrower by the owners of such Equity Interests if the same would result in a Change in Control.

(I)    Borrower will not furnish Bank any certificate or other document that will contain any untrue statement of material fact or that will omit to state a material fact necessary to make it not misleading in light of the circumstances under which it was furnished.

(J)    Borrower will not, directly or indirectly, apply any part of the proceeds of the Loan to the purchasing or carrying of any “margin stock” within the meaning of Regulation T, Regulation U, or Regulation X, or any regulations, interpretations or rulings thereunder.

(K)    Borrower will not treat, store, handle, discharge, or dispose of any Hazardous Materials, Petroleum Products, or Solid Wastes except in compliance with all Environmental Laws.

(L)    Borrower will not mortgage, assign, pledge or grant any mortgage, security interest, or other right in any Collateral to any Person other than Bank and under Permitted Liens, nor permit any Lien to attach to any Collateral or any levy to be made thereon or any financing statement (other than those of Bank or as may be filed with regard to the Permitted Liens) to be on file in any public office with respect to any of the Collateral.

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7.3    Insurance and Condemnation Covenants.

(A)    Borrower will obtain and maintain, or cause to be obtained and maintained, at all times while Borrower is indebted to Bank, at Borrower’s sole expense: (a) the Title Insurance Policy; (b) “special perils” insurance with respect to all insurable property comprising the Project, against loss or damage by fire, lightning, windstorm, explosion, hail, tornado and such hazards as are presently included in so-called “special perils” coverage, in an amount not less than 100% of the full replacement cost, including the cost of debris removal but exclusive of costs and expenses as would not be re-incurred in the event of a loss, without deduction for depreciation and sufficient to prevent Bank and Borrower from becoming a coinsurer, (c) with respect to any construction on the Land Project, builder’s risk insurance for all Improvements under construction, on a 100% completed value (replacement cost) form and must include perils covered under a special causes of loss form and include, without limitation, costs of demolition and increased cost of construction; and (d) such other insurance on the Project as may from time to time be required by Bank (including, but not limited to, boiler and machinery insurance, earthquake insurance, and terrorism insurance) against insurable hazards or casualties which at the time are commonly insured against in the case of premises similarly situated, due regard being given to the height, type, construction, location, use and occupancy of buildings and improvements. All insurance policies shall be issued and maintained by insurers, in amounts, with deductibles, and in form reasonably satisfactory to Bank, and shall require not less than thirty (30) days’ prior written notice to Bank of any cancellation or change of coverage. All insurance policies maintained, or caused to be maintained, by Borrower with respect to the Project, except for public liability insurance, shall contain a standard “non-contributory mortgagee” endorsement or its equivalent relating, among other things, to recovery by Bank notwithstanding the negligent or willful acts or omissions of Borrower. If any insurer which has issued a policy of title, hazard, liability or other insurance required pursuant to this Agreement or any other Loan Document becomes insolvent or the subject of any Bankruptcy, receivership or similar proceeding or if in Bank’s reasonable opinion the financial responsibility of such insurer is or becomes inadequate, Borrower shall, in each instance promptly upon the request of Bank and at Borrower’s expense, obtain and deliver to Bank a like policy (or, if and to the extent permitted by Bank, a certificate of insurance) issued by another insurer, which insurer and policy meet the requirements of this Agreement or such other Loan Documents, as the case may be. A satisfactory certificate of insurance of each initial insurance policy shall be delivered to Bank at the time of execution of this Agreement, with premiums fully paid. Upon renewal or substitution of such insurance policies, certificates of insurance evidencing such renewal or substitution shall be delivered to Bank as promptly as possible, but in no event later than three (3) Business Days after the expiration date of the policy it renews or replaces (and, upon request of Bank, Borrower shall also deliver copies of such renewed or substituted insurance policies). If the insurance required by this Agreement shall be effected by a blanket or umbrella policies, Borrower shall furnish to Bank copies of policies, redacting any information regarding unrelated properties or insured parties (unless such blanket policy is comprised of multiple insurers then Borrower shall provide a duplicate copy of the lead insurance carrier policy, subject to all other policies following the same form as the lead), with schedules attached thereto showing the amount of the insurance provided under such policies which is applicable to the Project.

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Borrower shall pay all premiums on policies required hereunder as they become due and payable and promptly deliver to Bank evidence satisfactory to Bank of the timely payment thereof. In the event Borrower fails to provide, maintain, keep in force or deliver and furnish to Bank the insurance required by this Section, upon three (3) Business Days prior written notice from Bank to Borrower to comply, Bank may procure such insurance or single-interest insurance for such risks covering Bank’s interest, and Borrower will pay all premiums thereon promptly upon demand by Bank. Until such payment is made by Borrower, the amount of all such premiums shall be added to and become part of the Obligations. If any loss occurs at any time when Borrower has failed to perform Borrower’s covenants and agreements in this Section, Bank shall nevertheless be entitled to the benefit of all insurance covering the loss and held by or for Borrower, to the same extent as if it had been made payable to Bank. Upon any foreclosure of the Mortgage or transfer of title to the Project in extinguishment of the whole or any part of the Loan or any other amounts owing by Borrower to Bank, all of Borrower’s right, title and interest in and to all proceeds payable thereunder shall thereupon vest in the purchaser at foreclosure or other such transferee, to the extent permissible under such policies. After the occurrence of an Event of Default or in case of any loss in excess of $500,000.00, Bank shall have the right (but not the obligation) to make proof of loss for, settle and adjust any claim under, and receive the proceeds of, all insurance for loss of or damage to the Project, and the expenses incurred by Bank in the adjustment and collection of insurance proceeds shall be added to and become part of the Obligations and shall be due and payable to Bank on demand. Bank shall not be, under any circumstances (other than Bank’s gross negligence or willful misconduct), liable or responsible for failure to collect or exercise diligence in the collection of any of such proceeds or for the obtaining, maintaining or adequacy of any insurance or for failure to see to the proper application of any amount paid over to Borrower. Any such proceeds received by Bank shall be applied and disbursed as provided in this Agreement. Borrower appoints Bank as Borrower’s attorney in fact to cause the issuance of or an endorsement of any policy and to otherwise bring Borrower into compliance with the provisions of this Section and to make any claim for, receive payment for, and execute and endorse any documents, checks or other instruments in payment for loss, theft, or damage under any such insurance policy.

(B)    Subject to the provisions of the immediately succeeding paragraph and paragraph (F) below, after deducting from any casualty insurance proceeds all of its expenses incurred in the collection and administration of such sums, including Attorneys’ Fees, Bank shall apply the same at its option (i) to the payment of the Obligations, whether or not due and in whatever order Bank elects (in which case a portion of or the entire Obligations shall, at Bank’s option, immediately become due and payable), (ii) to the repair and/or restoration of the Improvements, or (iii) for any other purposes or objects for which Bank is entitled to advance funds under any Loan Document, all without affecting Bank’s Lien, and any balance of such monies then remaining shall be paid to Borrower or the Person lawfully entitled thereto.

(C)    Notwithstanding the foregoing, if no Event of Default has occurred (and if there shall then be no event which with the passage of time and/or giving of notice would constitute an Event of Default), then Borrower shall have the right to settle, adjust or compromise any claim for Damage if the total amount of such claim is less than $500,000.00, provided that Borrower promptly uses the full amount of such insurance proceeds for Restoration of the Damage and provides evidence thereof to Bank in a manner acceptable to Bank. If Borrower receives any insurance proceeds for the Damage, then Borrower shall promptly deliver the proceeds to Bank.

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(D)    If all or any material portion of the Project shall be damaged or taken through condemnation (which term shall include any damage or taking by any Governmental Authority and any transfer by private sale in lieu thereof), either temporarily or permanently, other than a taking for the purpose of widening existing roads bordering the Land or for utility easements or any other similar purpose which does not adversely affect access or the use of the Project for its intended purposes, then a portion of or the entire Obligations shall, at the option of Bank, immediately become due and payable. Borrower, immediately upon obtaining knowledge of the institution, or the proposed, contemplated or threatened institution of any action or proceeding for the taking through condemnation of the Project or any part thereof will notify Bank, and Bank is hereby authorized, at its option, to commence, appear in and prosecute, through counsel selected by Bank, any action or proceeding relating to any condemnation. Borrower may compromise or settle any claim for compensation; but shall not make any compromise or settlement for an award unless all of the Obligations are paid and satisfied in full, without the prior written consent of Bank; such compensation, awards, damages, claims, rights of action and proceeds and the right thereto are hereby assigned by Borrower to Bank, and Bank is authorized, at its option, to collect and receive all such compensation, awards or damages and to give proper receipts and acquittances therefor without any obligation to question the amount of any such compensation, awards or damages; and after deducting from said condemnation proceeds all of its expenses incurred in the collection and administration of such sums, including Attorneys’ Fees, the net proceeds shall be dealt with by Bank in accordance with, and subject to, the same terms and conditions as set forth in Paragraph (B) or Paragraph (C), as applicable, of Section 7.3 hereof as if the condemnation proceeds were insurance proceeds and as if the date the condemnation proceeds become payable to Borrower was the date of loss.

7.4    Assigned Document Covenants.

(A)    Except as may otherwise be expressly provided for in this Agreement, including the immediately following paragraph (B), Borrower shall (a) observe and perform all the obligations imposed upon Borrower under each Assigned Document; (b) not do, or permit to be done, anything to impair the security of any Assigned Document; (c) promptly send to Bank copies of each notice of default which Borrower shall send or receive under the Assigned Documents; (d) enforce the performance and observance of the provisions of each Assigned Document; (e) not collect any of the Rents except as set forth in this Agreement; (f) not subordinate any Assigned Document to any Lien, or permit, consent, or agree to any such subordination without the prior written consent of Bank; (g) not alter, modify or change, in any material respect, the terms of any Assigned Document, nor give any consent to exercise any option required or permitted by such terms (to the extent such consent is required) without the prior written consent of Bank in each such case; (h) not cancel or terminate any Assigned Document, or accept a surrender of any Assigned Document; (i) not convey or transfer, and shall not suffer or permit a conveyance or transfer of, the Mortgaged Property, or of any interest in the Mortgaged Property, so as to affect directly or indirectly, approximately or remotely, a merger of the estates and rights of, or a termination or diminution of the obligations of any other party to and under any Assigned Lease; (j) not alter, modify or change, in any material respect, the terms of any guaranty of any Assigned Document, and shall not cancel or terminate any such guaranty, without the prior written consent of Bank in each such case; (k) not consent to any assignment of, or subletting under, any Assigned Lease (to the extent such consent is required) without the prior written consent of Bank; (l) at Bank’s request, execute any documentation confirming the assignment and transfer to Bank of each Assigned Document; and (m) execute and deliver, at the request of Bank, all other further assurances, confirmations and assignments in the Assigned Documents as Bank shall, from time to time, reasonably require in order to evidence or secure the rights of Bank hereunder.

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(B)    Notwithstanding the provisions of the immediately preceding paragraph (A), so long as there shall not exist any Event of Default, then Borrower shall have the revocable license to continue to operate and manage the Project in Borrower’s Ordinary Course of Business and in connection therewith, take such actions with respect to the Assigned Documents and enter into such agreements and exercise (or refrain from exercising) all its rights and perform its obligations under the Assigned Documents (so long as the same does not otherwise give rise to an Default), including the right to collect each payment of Rents at the time provided in the applicable Assigned Lease for such payment, it being understood and agreed that if any law exists requiring Bank to take actual possession of the Land or Improvements (or some action equivalent to taking possession of the Land or Improvements (such as securing the appointment of a receiver) for Bank to “perfect” or “activate” the rights and remedies of Bank as provided in this Agreement or any other Loan Document, Borrower waives the benefit of such law. Upon the occurrence of any Event of Default, (i) the license granted herein shall immediately and automatically cease and terminate and shall be void and of no further force or effect, and (ii) Bank shall immediately be entitled to possession of all Rents (whether or not Bank enters upon or takes control of all or any portion of the Collateral).

7.5    Escrow Deposits. At the option of Bank and further to secure the payment of taxes, assessments, other charges, and insurance premiums applicable or attributable to the Mortgaged Property, Borrower shall upon request of Bank following a Default deposit with Bank, on the first day of each month, such amounts as, in the reasonable estimation of Bank, shall be necessary to pay such taxes, assessments, charges and premiums as they become due; said deposits to be held and to be used by Bank to pay such taxes, assessments, charges and premiums as the same accrue and are payable. Payment from said sums for said purposes shall be made by Bank at its discretion and may be made even though such payments will benefit subsequent owners of the Mortgaged Property. Said deposits shall not be, nor be deemed to be, trust funds, but may be, to the extent permitted by applicable Law, commingled with the general funds of Bank, and no interest shall be payable in respect thereof. If said deposits are insufficient to pay the taxes and assessments, insurance premiums and other charges in full as the same become payable, Borrower will deposit with Bank such additional sum or sums as may be required in order for Bank to pay such taxes and assessments, insurance premiums and other charges in full. Upon any Event of Default, Bank may, at its option, apply any money in the fund relating from said deposits to the payment of the Obligations in such manner as it may elect.

7.6    Filing Fees and Taxes. Borrower covenants and agrees to pay all recording and filing fees, revenue stamps, taxes and other expenses and charges payable in connection with the execution and delivery to Bank of this Agreement and the other Loan Documents, and the recording, filing, satisfaction, continuation and release of any financing statements or other instruments filed or recorded in connection herewith or therewith.

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7.7    Further Assurances. Borrower covenants and agrees that, at Borrower’s cost and expense, upon request of Bank, Borrower shall duly execute and deliver, or cause to be duly executed and delivered, to Bank such further instruments and do and cause to be done such further acts as may be reasonably necessary or proper in the opinion of Bank or its counsel to carry out more effectively the provisions and purposes of this Agreement.

7.8    Qualified ECP Keepwell. Borrower shall cause each Borrower Party which is a Qualified ECP Guarantor to provide such funds or other support as may be needed from time to time by each other Borrower Party to honor all of such Borrower Party’s obligations under its Guaranty in respect of Swap Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section or otherwise under its Guaranty hereunder, as it relates to such other Borrower Party, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP Guarantor under this Section shall be the joint and several, absolute, unconditional and irrevocable obligation of each Qualified ECP Guarantor, and shall remain in full force and effect until (i) payment in full of the Obligations (including termination of all transactions outstanding under any Bank Swap Documents and payment in full of all amounts payable thereunder), and (ii) Bank is no longer obligated to extend credit to or for the benefit of Borrower under this Agreement. Each Qualified ECP Guarantor intends that this Section constitute, and this Section shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Borrower Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

ARTICLE VIII

8. DEFAULT

8.1    Events of Default. The occurrence of any one or more of the following events shall constitute an Event of Default hereunder:

(A)    Borrower shall fail to pay (i) any installment of principal or interest payable to Bank hereunder or under any other Loan Document within ten (10) days of the date the same becomes due, or (ii) any other amount payable to Bank hereunder or under any other Loan Document within ten (10) days of written notice by Bank.

(B)    Borrower Party shall fail to observe or perform any other obligation, condition or covenant to be observed or performed by it hereunder or under any of the Loan Documents, and if the same is a Curable Default, such failure shall continue for thirty (30) days (or such longer period up to ninety (90) days if such failure is not capable of being cured within thirty (30) days, provided that Borrower Party has commenced and continues to diligently pursue cure of such failure) after:

(1)    Notice of such failure from Bank; or

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(2)    The date Borrower should have notified Bank pursuant to the provisions hereof or any other Loan Document.

(C)    At Bank’s election and upon ten (10) days’ prior written notice from Bank to Borrower, the occurrence of any default or event of default by Borrower under the Ground Lease that is not cured within any applicable cure or grace period and/or the termination of the Ground Lease.

(D)    Borrower shall fail to maintain the Debt Service Coverage Requirement and such failure shall continue for thirty (30) days after notice of such failure from Bank (provided that Borrower may prepay a portion of the Loan or deposit cash collateral with Bank during such thirty-day period in order to cause the Debt Service Coverage Requirement to be met (the amount of such cash collateral to be deducted from the principal amount of the Loan outstanding for purposes of computation of Debt Service Coverage, and Bank agrees to release all or a portion of such cash collateral upon request of Borrower, provided that at the time of the release there is not existing any Default and the Debt Service Coverage Requirement is satisfied after taking into account such release of such cash collateral).

(E)    The validity or enforceability of this Agreement or any Loan Document shall be contested by any Borrower Party, and/or any Borrower Party shall deny that it has any or further liability or obligation hereunder or thereunder.

(F)    The failure of Borrower or any member or manager of Borrower to comply in all material respects with any covenants or agreements set forth in any Organizational Document of Borrower, including the covenants and agreements set forth in Section 9 of the Limited Liability Company Agreement of Borrower.

(G)    Except as permitted herein, assignment or attempted assignment by Borrower of this Agreement, any rights hereunder, or any Advance to be made hereunder.

(H)    Except as otherwise permitted herein, the transfer of Borrower’s interest in, or rights under, this Agreement by operation of law or otherwise, including, without limitation, such transfer by Borrower as debtor in possession under the Bankruptcy Code, or by a trustee for Borrower under the Bankruptcy Code, to any Third Party, whether or not the obligations of Borrower under this Agreement are assumed by such Third Party.

(I)    The institution of a foreclosure or other possessory action against the Collateral or any part thereof.

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(J)    Substantial damage to, or partial or total destruction of, the Improvements by fire or other casualty or the taking of any of the Mortgaged Property, temporarily or permanently, by eminent domain, and Borrower’s failure to restore, repair, replace, or rebuild the Improvements as and when required under the terms of any Loan Document (unless attributable to Bank’s failure to comply with the release of casualty proceeds as provided in Section 7.3(C) hereof).

(K)    The dissolution of Borrower or any Change in Control.

(L)    Any financial statement, representation, warranty or certificate made or furnished by any Borrower Party to Bank in connection with this Agreement, or as inducement to Bank to enter into this Agreement, or in any separate statement or document to be delivered hereunder to Bank, shall be materially false, incorrect, or incomplete when made.

(M)    Any Material Adverse Change which is not remedied within thirty (30) days after written notice to Borrower thereof or, if the condition cannot be fully remedied within said thirty (30) days, substantial progress, in the opinion of Bank, has not been made within said thirty (30) days toward remedy of the condition.

(N)    Proceedings in Bankruptcy, or for reorganization of Borrower, or for the readjustment of any of its debts, under the Bankruptcy Code, as amended, or any part thereof, or under any other Laws, whether state or federal, for the relief of debtors, now or hereafter existing, shall be commenced by Borrower, or shall be commenced against Borrower and shall not be discharged within sixty (60) days of commencement.

(O)    A receiver or trustee shall be appointed for Borrower or for any substantial part of its assets, or any proceedings shall be instituted for the dissolution or the full or partial liquidation of Borrower, and such receiver or trustee shall not be discharged within thirty (30) days of his appointment, or such proceedings shall not be discharged within sixty (60) days of its commencement, or Borrower shall discontinue business or materially change the nature of its business.

(P)    Borrower shall suffer final judgments for payment of money aggregating in excess of $50,000.00 and shall not discharge the same within a period of thirty (30) days unless, pending further proceedings (including appeals), execution has not been commenced or if commenced has been effectively stayed.

(Q)    A judgment creditor of Borrower shall obtain possession of any of the Collateral by any means, including, without limitation, levy, distraint, replevin or self-help.

(R)    There shall occur any default, event of default or termination event under any Bank Swap Document for which Borrower Party is a defaulting party or an affected party.

Provided that with respect to any of the foregoing, such Event of Default will be deemed to have occurred upon the occurrence of such event Without Notice if Bank is prevented from giving notice by Bankruptcy or other applicable Law.

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8.2    No Advances After Default. Upon the occurrence and during the continuance of any Default, and notwithstanding any provision contained herein or in any other Loan Document to the contrary, Bank shall have the absolute right to refuse to make, and shall be under no obligation to make, any further Advances.

8.3    Acceleration. All Obligations shall, at the option of Bank, become immediately due and payable, Without Notice, upon the occurrence of an Event of Default without further action of any kind.

8.4    General Remedies. Upon the occurrence of any Event of Default, Bank shall have, in addition to the rights and remedies given it by this Agreement and the other Loan Documents, all those allowed by all applicable Laws as enacted in any Jurisdiction in which any Collateral may be located. Without limiting the generality of the foregoing, Bank may immediately, Without Notice, sell at public or private sale or otherwise realize upon, the whole or, from time to time, any part of the Collateral, or any interest which Borrower may have therein.

8.5    Bank’s Additional Rights and Remedies. Upon the occurrence of any Event of Default and except as may otherwise be prohibited or expressly provided for to the contrary under applicable Law, in addition to any rights or remedies Bank may otherwise have under this Agreement, any other Loan Documents, or under applicable Laws, Bank shall have the right, Without Notice, to take any or all of the following actions at the same or different times:

(A)    To cancel Bank’s obligations arising under this Agreement;

(B)    To institute appropriate proceedings to specifically enforce performance of the terms and conditions of this Agreement;

(C)    To appoint or seek appointment of a receiver, Without Notice and without regard to the solvency of Borrower or the adequacy of the security, for the purpose of preserving the Collateral, preventing waste, and to protect all rights accruing to Bank by virtue of this Agreement and the other Loan Documents. All expenses incurred in connection with the appointment of such receiver, or in protecting or preserving, shall be charged against Borrower and shall be secured by Bank’s Lien and enforced as a Lien against the Collateral;

(D)    To proceed to perform any and all of the duties and obligations and exercise all the rights and remedies of Borrower contained in the Assigned Documents as fully as Borrower could itself; and

(E)    To take possession of the Mortgaged Property and/or the Rents and have, hold, manage, lease and operate the Mortgaged Property on such terms and for such period of time as Bank may in its discretion deem proper, and, either with or without taking possession of the Mortgaged Property in Bank’s own name:

(1)    Make any payment or perform any act which Borrower has failed to make or perform, in such manner and to such extent as Bank may deem necessary to protect the security provided for in this Agreement, or otherwise, including without limitation, the right to appear in and defend any action or proceeding purporting to affect the security provided for in this Agreement, or the rights or powers of Bank;

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(2)    Lease the Mortgaged Property or any portion thereof in such manner and for such Rents as Bank shall determine in its discretion; or

(3)    Demand, sue for, or otherwise collect and receive from all Persons all Rents, including those past due and unpaid, with full power to make from time to time all alterations, renovations, repairs or replacements of and to the Mortgaged Property (or any part thereof) as may seem proper to Bank and to apply the Rents to the payment of (in such order of priority as Bank, in its discretion, may determine):

(a)    All expenses of managing the Mortgaged Property, including, without limitation, the salaries, fees and wages of a managing agent and such other employees as Bank may deem necessary or desirable;

(b)    All taxes, charges, claims, assessments, water rents, sewer rents, and any other liens, and premiums for all insurance which Bank may deem necessary or desirable, and the cost of all alterations, renovations, repairs, or replacements, and all expenses incidental to taking and retaining possession of the Mortgaged Property;

(c)    All or any portion of the Loan; and/or

(d)    All costs and Attorneys’ Fees incurred in connection therewith.

In connection with the foregoing, Borrower hereby authorizes and directs each party to any Assigned Document (other than Borrower), upon receipt from Bank of written notice to the effect that an Event of Default exists, to perform all of its obligations under the Assigned Document as directed by Bank, and to continue to do as so directed until otherwise notified by Bank.

8.6    Right of Set-Off. Upon the occurrence of any Event of Default, Bank may, and is hereby authorized by Borrower, at any time and from time to time, to the fullest extent permitted by applicable Laws, and Without Notice to Borrower, set-off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and any other indebtedness at any time owing by Bank to, or for the credit or the account of, Borrower against any or all of the Obligations of Borrower now or hereafter existing whether or not such Obligations have matured and irrespective of whether Bank has exercised any other rights that it has or may have with respect to such Obligations, including without limitation any acceleration rights. The aforesaid right of set-off may be exercised by Bank against Borrower or against any trustee in bankruptcy, debtor in possession, assignee for the benefit of the creditors, receiver, or execution, judgment or attachment creditor of Borrower, or such trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, receiver, or execution, judgment or attachment creditor, notwithstanding the fact that such right of set-off shall not have been exercised by Bank prior to the making, filing or issuance, or service upon Bank of, or of notice of, any such petition; assignment for the benefit of creditors; appointment or application for the appointment of a receiver; or issuance of execution, subpoena, order or warrant. Bank agrees to promptly notify Borrower after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of Bank under this Section are in addition to the other rights and remedies (including, without limitation, other rights of set-off) which Bank may have.

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8.7    No Limitation on Rights and Remedies. The enumeration of the powers, rights and remedies in this Article shall not be construed to limit the exercise thereof to such time as an Event of Default occurs if, under applicable Law or any other provision of this Agreement or any other Loan Document, Bank has any of such powers, rights and remedies regardless of whether an Event of Default has occurred, and any limitation contained herein or in any of the other Loan Documents as to Bank’s exercise of any power, right or remedy for a period of time only during the continuance of an Event of Default shall only be applicable at such time as Bank shall have actual knowledge that such Event of Default is no longer continuing and for a reasonable time thereafter as may be necessary for Bank to cease the exercise of such powers, rights and remedies (it being expressly understood and agreed that until such time as Bank shall obtain such knowledge and after the expiration of such reasonable time, Bank shall have no liability whatsoever for the commencement of or continuing exercise of any such power, right or remedy).

8.8    Application of Proceeds. Except as otherwise expressly required to the contrary by applicable Law, the provisions hereof or any other Loan Document, the net cash proceeds resulting from the exercise of any of the rights and remedies of Bank under this Agreement, after deducting all charges, expenses, costs and Attorneys’ Fees relating thereto, shall be applied by Bank to the payment of the Obligations, whether due or to become due, in such order and in such proportions as Bank may elect; and Borrower shall remain liable to Bank for any deficiency ; provided, however, that no proceeds realized from any Guaranty or Collateral of a Borrower Party who is not a Qualified ECP Guarantor shall be applied to the payment of Swap Obligations that constitute Obligations.

ARTICLE IX

9. MISCELLANEOUS.

9.1    Termination of Bank’s Lien. This Agreement and Bank’s Lien shall terminate upon payment and performance in full of all Obligations (provided that Bank is no longer is obligated to extend credit to Borrower hereunder), and Bank agrees to promptly provide a written termination or satisfaction agreement at or after such time upon written request of Borrower. Except as otherwise expressly provided for in this Agreement, no termination of this Agreement shall in any way affect or impair the representations, warranties, agreements, covenants, obligations, duties and Obligations of Borrower or the powers, rights, and remedies of Bank under this Agreement with respect to any transaction or event occurring prior to such termination, all of which shall survive such termination.

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9.2    Construction. The provisions of this Agreement shall be in addition to those of any other Loan Document and any guaranty, pledge or security agreement, mortgage, deed of trust, security deed, note or other evidence of liability given by any Borrower Party to or for the benefit of any Bank Party with respect to the Loan, all of which shall be construed as complementary to each other, and all existing liabilities and obligations of any Borrower Party to any Bank Party with respect to the Loan and any Liens heretofore granted to or for the benefit of any Bank Party with respect to the Loan shall, except and only to the extent expressly provided herein to the contrary, remain in full force and effect, and shall not be released, impaired, diminished, or in any other way modified or amended as a result of the execution and delivery of this Agreement or any other Loan Document or by the agreements and undertaking of any Borrower Party contained herein and therein. Nothing herein contained shall prevent any Bank Party from enforcing any or all other notes, guaranties, pledges or security agreements, mortgages, deeds of trust, or security deeds in accordance with their respective terms. In the event of a conflict between any of the provisions of this Agreement or any of the other Loan Documents, the terms and provisions of this Agreement shall control. There are no third party beneficiaries to this Agreement or any other Loan Document.

9.3    Indemnity. Borrower hereby agrees to indemnify Bank Parties and their respective officers, directors, agents, and attorneys against, and to hold Bank Parties and all such other Persons harmless from all Default Costs, which indemnification is in addition to, and not in derogation of, any statutory, equitable, or common law right or remedy Bank Parties may have for breach of representation, warranty, statement or covenant or otherwise may have under any of the Loan Documents. This agreement of indemnity shall be a continuing agreement and shall survive payment of the Loan and termination of this Agreement.

9.4    Bank’s Consent or Approval.

(A)    Except where otherwise expressly provided in the Loan Documents, in any instance where any matter or thing is required to be “satisfactory” to Bank or to Bank’s “satisfaction”, or in Bank’s “discretion” and/or where the approval, consent, or the exercise of Bank’s judgment or discretion is otherwise required or permitted, the granting or denial of such approval or consent and the exercise of such judgment or discretion shall be (a) within the sole and absolute discretion of Bank; and (b) deemed to have been given only by a specific writing intended for the purpose given and executed by Bank.

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(B)    Notwithstanding any approvals or consents by Bank, Bank has no obligation or responsibility whatsoever for the adequacy, form or content of any contract, any lease, or any other matter incident to the Project. Any inspection or audit of the Project or the Records of Borrower, or the procuring of documents and financial and other information, by or on behalf of Bank shall be for Bank’s protection only, and shall not constitute any assumption of responsibility to Borrower or anyone else with regard to the condition, maintenance or operation of the Project, or relieve Borrower of any of Borrower’s obligations. Bank has no duty to supervise or to inspect the Project nor any duty of care to Borrower or any other Person to protect against, or inform Borrower or any other Person of, the existence of negligent, faulty, inadequate or defective design or construction of the Project.

9.5    Enforcement and Waiver by Bank. Bank shall have the right at all times to enforce the provisions of this Agreement and each of the other Loan Documents in strict accordance with the terms hereof and thereof, notwithstanding any conduct or custom on the part of Bank in refraining from so doing at any time or times. The failure of Bank at any time or times to enforce its rights under such provisions, strictly in accordance with the same, shall not be construed as having created a custom in any way or manner contrary to specific provisions of this Agreement or as having in any way or manner modified or waived the same. All rights and remedies of Bank are cumulative and concurrent and the exercise of one right or remedy shall not be deemed a waiver or release of any other right or remedy.

9.6    Expenses of Bank. Borrower will, on demand, reimburse Bank for all expenses incurred by Bank in connection with the preparation, amendment, modification or enforcement of this Agreement and the other Loan Documents and/or in the collection of any amounts owing from Borrower or any other Person to Bank under this Agreement or any other Loan Document and, until so paid, the amount of such expenses shall be added to and become part of the Obligations.

9.7    Attorneys’ Fees. If at any time or times hereafter Bank employs counsel to advise or provide other representation with respect to this Agreement, any Loan Document, or any other agreement, document or instrument heretofore, now or hereafter executed by any Borrower Party and delivered to Bank with respect to the Obligations, or to commence, defend or intervene, file a petition, complaint, answer, motion or other pleadings or to take any other action in or with respect to any suit or proceeding relating to this Agreement, any Loan Document, or any other agreement, instrument or document heretofore, now or hereafter executed by any Borrower Party and delivered to Bank with respect to the Obligations, or to represent Bank in any litigation with respect to the affairs of any Borrower Party, or to enforce any rights of Bank or obligations of any Borrower Party or any other Person which may be obligated to Bank by virtue of this Agreement, any Loan Document, or any other agreement, document or instrument heretofore, now or hereafter delivered to Bank by or for the benefit of Borrower with respect to the Obligations, or to collect from Borrower any amounts owing hereunder, then in any such event, all of the Attorneys’ Fees incurred by Bank arising from such services and any expenses, costs and charges relating thereto shall constitute additional obligations of Borrower payable on demand and, until so paid, shall be added to and become part of the Obligations.

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9.8    Exclusiveness. This Agreement and the other Loan Documents are made for the sole protection of Borrower Parties and Bank, and Bank’s successors and assigns, and no other Person shall have any right of action hereunder.

9.9    Notices. Any notices or consents required or permitted by this Agreement shall be in writing and shall be deemed delivered if delivered in person or if sent by certified mail, postage prepaid, return receipt requested, or by nationally-recognized overnight courier service (such as Federal Express), as follows, unless such address is changed by written notice hereunder:

(A)    If to Borrower:

CHP II Overland Park KS MOB Owner, LLC

c/o CNL Healthcare Properties II, Inc.

450 South Orange Avenue

Orlando, Florida 32801

Attention: Chief Financial Officer and Assistant General Counsel

with copy to:

Peter L. Lopez, Esq.

Lowndes, Drosdick, Doster, Kantor & Reed, P.A.

215 North Eola Drive

Orlando, Florida 32801

(B)    If to Carveout Guarantor:

CNL Healthcare Properties II, Inc.

450 South Orange Avenue

Orlando, Florida 32801

Attention: Chief Financial Officer and Assistant General Counsel

with copy to:

Peter L. Lopez, Esq.

Lowndes, Drosdick, Doster, Kantor & Reed, P.A.

215 North Eola Drive

Orlando, Florida 32801

(C)    If to Bank:

Synovus Bank

800 Shades Creek Parkway

Birmingham, Alabama 35209

Attention: Eric Smith

Email: EricSmith@Synovus.com

with a copy to:

Ray D. Gibbons, Esq.

Gibbons Law LLC

100 Corporate Parkway, Suite 125

Birmingham, Alabama 35242

Rgibbons@gibbonsawllc.com

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9.10    Waiver and Release by Borrower. Unless and only to the extent as may be expressly limited or prohibited under applicable Laws or as provided for herein or in any other Loan Document to the contrary, Borrower (A) waives protest of all commercial paper at any time held by Bank on which Borrower is any way liable; (B) waives notice of acceleration and of intention to accelerate; (C) waives notice and opportunity to be heard, after acceleration, before exercise by Bank of the remedies of self-help, set-off, or of other summary procedures permitted by any applicable Laws or by any agreement with Borrower, and except where required hereby or by any applicable Laws which requirement cannot be waived, notice of any other action taken by Bank; and (D) releases Bank Parties and their respective officers, attorneys, agents and employees from all claims for loss or damage caused by any act or omission on the part of any of them except willful misconduct.

9.11    Limitation on Waiver of Notice, Etc. Notwithstanding any provision of this Agreement to the contrary, to the extent that any applicable Law expressly limits any waiver of any right contained herein or in any other Loan Document (including any waiver of any notice or other demand), such waiver shall be ineffective to such extent.

9.12    Participation. Notwithstanding any other provision of this Agreement, Borrower understands and agrees that Bank may enter into participation or other agreements with Participants whereby Bank will allocate certain percentages of its commitment to them and/or assign all or a portion of its rights and obligations under this Agreement. Borrower acknowledges and agrees that, for the convenience of all parties, this Agreement is being entered into with Bank only and that its obligations under this Agreement are undertaken for the benefit of, and as an inducement to each such Participant as well as Bank, and Borrower hereby agrees that, at Bank’s election and if consistent with the terms of any such participation or other agreement, upon notice from Bank to Borrower, each such Participant shall have the same rights and/or obligations as if it were an original party to this Agreement, subject only to any contrary provision in such participation or other agreement, and Borrower hereby grants to each such Participant, the right to set off deposit accounts maintained by Borrower with such Participant. Borrower authorizes Bank to disclose financial and other information regarding Borrower to Participants and potential Participants (provided however, that until the occurrence of an Event of Default, Bank agrees to not disclose such information without prior written notice to Borrower if the recipient of such information is not a financial institution subject to federal or state Laws prohibiting the unlawful disclosure of such information).

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9.13    Governing Law. This Agreement is entered into and performable in Jefferson County, Alabama, and the substantive Laws, without giving effect to principles of conflict of laws, of the United States and the State of Alabama shall govern the construction of this Agreement and the documents executed and delivered pursuant hereto, and the rights and remedies of the parties hereto and thereto, except to the extent that the location of any Collateral in a state or Jurisdiction other than Alabama requires that the perfection of Bank’s Lien under the Loan Documents, and the enforcement of certain of Bank’s remedies with respect to the Collateral, be governed by the Laws of such other state or Jurisdiction.

9.14    SUBMISSION TO JURISDICTION; WAIVERS.

(A)    BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY:

(1)    SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF ALABAMA, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ALABAMA, AND APPELLATE COURTS FROM ANY THEREOF;

(2)    CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS, AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

(3)    AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO BORROWER AT ITS ADDRESS SET FORTH IN SECTION 9.9 OR AT SUCH OTHER ADDRESS OF WHICH BANK SHALL HAVE BEEN NOTIFIED PURSUANT THERETO; AND

(4)    AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

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(B)    BORROWER AND BANK HEREBY:

(1)    IRREVOCABLY AND UNCONDITIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OR COUNTERCLAIM OF ANY TYPE AS TO ANY MATTER ARISING DIRECTLY OR INDIRECTLY OUT OF OR WITH RESPECT TO THIS AGREEMENT, THE NOTE, ANY OF THE OTHER LOAN DOCUMENTS OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH; AND

(2)    AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED FOR AGREEMENT BETWEEN THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY, AND THAT ANY DISPUTE OR CONTROVERSY OF ANY KIND WHATSOEVER BETWEEN THEM SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

9.15    Binding Effect, Assignment. This Agreement shall inure to the benefit of, and shall be binding upon, the respective successors and permitted assigns of the parties hereto. Borrower does not have any right to assign any of its rights or obligations hereunder without the prior written consent of Bank.

9.16    Entire Agreement, Amendments. This Agreement, including the Exhibit hereto, which is hereby incorporated herein by reference, and the documents executed and delivered pursuant hereto, constitute the entire agreement between the parties, and which may be amended only by a writing signed on behalf of each party.

9.17    Severability. If any provision of this Agreement, the Note, or any of the other Loan Documents shall be held invalid under any applicable Laws, such invalidity shall not affect any other provision of this Agreement or such other instrument or agreement that can be given effect without the invalid provision, and, to this end, the provisions hereof are severable.

9.18    Headings. The section and paragraph headings hereof are inserted for convenience of reference only, and shall not alter, define, or be used in construing the text of such sections and paragraphs.

9.19    Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument.

9.20    Seal. This Agreement is intended to take effect as an instrument under seal.

* * * * *

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first set forth above.

CHP II OVERLAND PARK KS MOB OWNER, LLC, a Delaware limited liability company
By:	/S/ Brett Bryant
Name:	Brett Bryant
Title:	Vice President
SYNOVUS BANK, a Georgia banking corporation
By:	/S/ Eric Smith
Name:	Eric Smith
Title:	Specialty Healthcare

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EX-10.2

Exhibit 10.2

PROMISSORY NOTE

$8,400,000.00 December 15, 2017

FOR VALUE RECEIVED, the undersigned CHP II OVERLAND PARK KS MOB OWNER, LLC (the “Borrower”), hereby promises to pay to the order of SYNOVUS BANK, a Georgia banking corporation (the “Bank”), the aggregate principal amount of the Advances of the Loan owing to Bank by Borrower pursuant to that certain Credit Agreement of even date herewith between Borrower and Bank (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”; capitalized terms used herein as therein defined), together with interest on the unpaid principal amount of each Advance from the date of such Advance until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement.

This Promissory Note is the Note referred to in, and is entitled to the benefits of, the Credit Agreement, to which reference is made for a statement of the rights and obligations of Borrower and Bank in relation thereto; but neither this reference to the Credit Agreement nor any provision thereof shall affect or impair the absolute and unconditional obligation of Borrower to pay the principal sum of and interest on this Promissory Note when due. The Credit Agreement (i) provides for the making of Advances of the Loan by Bank in an aggregate amount up to the U.S. dollar amount first above mentioned, the indebtedness resulting from the Advances being evidenced by this Promissory Note, and (ii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. The obligations of Borrower under this Promissory Note are secured by the Collateral as provided in the Loan Documents.

* * * * *

IN WITNESS WHEREOF, Borrower has caused this Promissory Note to be executed as of the date first above written.

CHP II OVERLAND PARK KS MOB OWNER, LLC, a Delaware limited liability company
By:	/s/ Brett Bryant
Name:	Brett Bryant
Title:	Vice President

This Promissory Note was executed in the State of Florida and is not secured by real property located in the State of Florida. Accordingly, documentary stamp tax in the amount of $2,450.00 has been, or will be, paid directly to the Florida Department of Revenue upon execution and delivery of this Promissory Note.

2

EX-10.3

Exhibit 10.3

This instrument prepared by

and to be returned to:

Ray D. Gibbons, Esq.

Gibbons Law LLC

100 Corporate Parkway

Suite 125

Birmingham, Alabama 35242

LEASEHOLD MORTGAGE / MORTGAGE AND SECURITY AGREEMENT

THIS LEASEHOLD MORTGAGE / MORTGAGE AND SECURITY AGREEMENT (this “Mortgage”) is made and entered into as of December 15, 2017, by CHP II OVERLAND PARK KS MOB OWNER, LLC,, a Delaware limited liability company, whose address is c/o CNL Healthcare Properties II, Inc., 450 South Orange Avenue, Orlando, Florida 32801 (the “Borrower”), in favor of SYNOVUS BANK, a Georgia banking corporation, whose address is 800 Shades Creek Parkway, Birmingham, Alabama 35209, Attention: Eric Smith (the “Bank”). Any capitalized term used herein but not defined shall have the meaning ascribed to such term in that certain Credit Agreement of even date herewith (as amended from time to time, the “Credit Agreement”) between Borrower and Bank.

WITNESSETH:

WHEREAS, Borrower is justly indebted to Bank in the principal amount of Eight Million Four Hundred Thousand and 00/100 Dollars ($8,400,000.00), such indebtedness being evidenced by the Note, and payable to Bank with interest thereon as provided for in the Credit Agreement; and

WHEREAS, Borrower desires to secure the Obligations, including, but not limited to, the obligations to pay the principal of and interest on the Note in accordance with the respective terms thereof or of the Credit Agreement, including any and all extensions, modifications, and renewals thereof and substitutions therefor, and to pay, repay or reimburse Bank for all amounts owing under any of the Loan Documents, including all Indemnified Losses and Default Costs.

NOW, THEREFORE, for and in consideration of Bank making the Loan and to secure the prompt payment and performance of the Obligations, Borrower does hereby irrevocably CONVEY, MORTGAGE, WARRANT, GRANT, BARGAIN, SELL, ASSIGN, TRANSFER, PLEDGE and set over unto Bank, and the successors and assigns of Bank, all of Borrower’s right, title and interest, of whatever kind, nature or description, whether now owned or hereafter acquired (hereinafter referred to as the “Borrower’s Interest”), in and to the following described land and interests in land, estates, easements, rights, improvements, personal property, fixtures, equipment, furniture, furnishings, appliances and appurtenances, whether now owned or hereafter acquired, and including replacements and additions thereto (herein referred to collectively as the “Mortgaged Property”):

(a)    All of those certain tracts, pieces or parcels of land, and interests in land, located in Johnson County, Kansas, more particularly described in Exhibit A attached hereto and by this reference made a part hereof (the “Land”);

(b)    All buildings, structures and improvements of every nature whatsoever now or hereafter situated on the Land, and all gas and electric fixtures, radiators, heaters, engines and machinery, boilers, ranges, elevators and motors, plumbing and heating fixtures, carpeting and other floor coverings, water heaters, awnings and storm sashes, and cleaning apparatus which are or shall be attached to said buildings, structures or improvements, and all other furnishings, furniture, fixtures, machinery, equipment, appliances, vehicles and personal property of every kind and nature whatsoever now or hereafter owned by Borrower and located in, on or about, or used or intended to be used with or in connection with the construction, use, operation or enjoyment of the Mortgaged Property, including all extensions, additions, improvements, betterments, renewals and replacements, substitutions, or proceeds from a permitted sale of any of the foregoing, and all building materials and supplies of every kind now or hereafter placed or located on the Land (collectively the “Improvements”), all of which are hereby declared and shall be deemed to be fixtures and accessions to the Land and a part of the Mortgaged Property as between the parties hereto and all Persons claiming by, through or under them, and which shall be deemed to be a portion of the security for the indebtedness herein described and to be secured by this Mortgage;

(c)    All easements, rights of way, strips and gores of land, vaults, streets, ways, alleys, passages, sewer rights, waters, water courses, water rights and powers, minerals, flowers, shrubs, crops, trees, timber and other emblements now or hereafter located on the Land or under or above the same or any part or parcel thereof, and all ground leases, estates, rights, titles, interests, privileges, liberties, tenements, hereditaments and appurtenances, reversions, and remainders whatsoever, in any way belonging, relating or appertaining to the Mortgaged Property or any part thereof, or that hereafter shall in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by Borrower;

(d)    All rents, issues, profits, revenues and proceeds from any sale or other disposition of the Mortgaged Property, or any part thereof, from time to time accruing (including without limitation all payments under leases, ground leases or tenancies, proceeds of insurance, condemnation payments, tenant security deposits and escrow funds), and all of the estate, right, title, interest, property, possession, claim and demand whatsoever at law, as well as in equity, of Borrower of, in and to the same;

(e)    All leases (whether presently existing or hereafter made, whether written or verbal, and including any agreement for the letting of or for the use or occupancy of any part of the Mortgaged Property (collectively, the “Assigned Leases”), including each modification, extension, renewal and guaranty thereof), rents, issues, profits, revenues and proceeds from any sale, lease or other disposition of the Mortgaged Property, or any part thereof, from time to time accruing (including without limitation all payments under leases, ground leases or tenancies, proceeds of insurance, condemnation payments, tenant security deposits and escrow funds, and all claims and rights to the payment of money at any time arising in connection with any rejection or breach of any lease under Bankruptcy Law, including, without limitation, all the rents, issues, and profits now due and which may hereafter become due under or by virtue of the Assigned Leases (collectively, the “Rents”), together with all claims and rights to the payment of money at any time arising in connection with any rejection or breach of any of the Assigned Leases under Bankruptcy Law, including without limitation, all rights to recover damages arising out of such breach or rejection, all rights to charges payable by a tenant or trustee in respect of the leased premises following the entry of an order for relief under the Bankruptcy Law in respect of a tenant and all rentals and charges outstanding under the Assigned Lease as of the date of entry of such order for relief, and all of the estate, right, title, interest, property, possession, claim and demand whatsoever at law, as well as in equity, of Borrower of, in and to the same;

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(f)    Borrower’s leasehold estate and other interests of whatever kind, nature or description, and all rights, title and interest pertaining thereto, if any, under that certain Ground Lease dated as of February 28, 2005 between Central Tennessee Hospital Corporation, a Tennessee corporation (the “Ground Lessor”), as landlord, and Mid-America Surgery Institute Properties II, LLC, a Kansas limited liability company (the “Seller”), as tenant, as memorialized by that certain Memorandum of Lease dated as of February 28, 2005, recorded on March 2, 2005 in Book 200503 at Page 000938 in the Register’s Office of Johnson County, Kansas; as amended by that certain First Amendment to Ground Lease to Correct Scrivener’s Error dated as of February 28, 2005; as further amended by that certain Second Amendment to Ground Lease dated as of October 21, 2005; as further amended by that certain Amendment to Memorandum of Lease dated as of January 9, 2007, recorded on February 26, 2007 in Book 20070226 at Page 0007473; as further amended by that certain Third Amendment to Ground Lease dated as of May 17, 2007, recorded on June 25, 2007 in Book 20070625 at Page 008529 in the Register’s Office of Johnson County, Kansas; as assigned by Seller to Borrower pursuant to that certain Assignment and Assumption of Ground Lease dated as of December 15, 2017 between Seller and Borrower (as so assigned and as otherwise amended from time to time, the “Ground Lease”); and

(g)    All of the estate, right, title, interest, property, possession, claim and demand whatsoever at law, as well as in equity, of Borrower of, in and to any of the foregoing.

TO HAVE AND TO HOLD the Mortgaged Property and all parts, rights, members and appurtenances thereof, to the use and benefit of Bank and the successors, successors-in-title and assigns of Bank, forever; and Borrower covenants that Borrower is lawfully seized and possessed of Borrower’s Interest in the Mortgaged Property as aforesaid and has good right to convey the same, that the same are unencumbered except for Permitted Liens and those matters expressly set forth in Exhibit B hereto, and Borrower does warrant and will forever defend the title thereto against the claims of all Persons whomsoever, except as to Permitted Liens and those matters set forth in said Exhibit B.

The Lien of this Mortgage automatically will attach to any further, greater, additional or different estate, rights, titles or interests in or to any of the Mortgaged Property at any time hereafter acquired by Borrower by whatsoever means and without any further action or filing or recording on the part of Borrower or Bank or any other Person.

PROVIDED, HOWEVER, that should the Obligations be paid according to the tenor and effect thereof, and should Borrower have performed all covenants contained in the Loan Documents and Bank shall not be obligated to extend further credit to Borrower, then this Mortgage shall be canceled and released of record.

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BORROWER HEREBY COVENANTS AND AGREES WITH BANK AS FOLLOWS:

ARTICLE I

1.01    Payment and Performance of Loan Documents. Borrower will perform, observe and comply with all the provisions hereof, and of each of the other Loan Documents, including, but not limited to, the due and punctual payment by Borrower of the principal amount due under the Note, together with interest thereon, and all other sums of money required to be paid by Borrower pursuant to any one or more of the Loan Documents, without any deductions, credits or set offs whatsoever.

1.02    Ground Lease.

(a)    Borrower shall promptly:

(i)    Perform, observe and comply with all of the obligations, covenants and agreements required to be performed, observed and complied with by the lessee under the Ground Lease, and do all things necessary to preserve and to keep unimpaired its rights thereunder;

(ii)    Notify Bank of any material default in the performance or observance of any of the covenants or agreements on the part of Borrower to be performed or observed by Borrower under the Ground Lease, or the giving of any notice by the lessor under the Ground Lease to Borrower (A) claiming such a default, or (B) of such lessor’s intention to exercise any remedy reserved to the lessor thereunder; and

(iii)    Cause a copy of each such notice given by such lessor to Borrower to be delivered to Bank.

(b)    In addition to any insurance required pursuant to this Mortgage or any other Loan Document, Borrower will take out and continuously maintain in effect, or cause to be taken out and thereafter continuously maintained in effect, the insurance required to be maintained by the lessee under the Ground Lease. All such insurance policies shall name as additional insured Bank as its interest shall appear. All certificates evidencing the insurance so required to be carried by the Ground Lease and this Mortgage shall be deposited with Bank. Within the time periods required by Section 7.3 of the Credit Agreement, Borrower will furnish to Bank evidence satisfactory to Bank that such policy has been renewed or replaced by another policy.

Borrower covenants, represents and warrants to Bank that so long as this Mortgage remains unsatisfied, it will comply with all the obligations required on its part to be performed under the Ground Lease. In the event that Borrower fails or refuses to perform any of its obligations under the Ground Lease following the expiration of any applicable grace or cure period, Bank may, but shall not be obligated to, perform any and all such obligations of Borrower under such Ground Lease, including, but not limited to, the payment of any or all rent and other sums due from Borrower thereunder. Any costs or expenses incurred by Bank in performing the obligations of Borrower under the Ground Lease, including any rent or other sums paid by Bank, shall constitute part of the Obligations and shall be secured hereby.

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(c)    If Borrower shall fail to perform, observe or comply with any of the obligations, covenants or agreements required to be performed, observed or complied with by it under the Ground Lease following the expiration of any applicable grace or cure period, including, without limitation, payment of all ground rent and other charges due thereunder, Bank, after five (5) days’ written notice (except in emergencies or in situations where a failure sooner to perform or observe the same may result in a forfeiture under the Ground Lease) may, but shall not be obligated to, take such action as is appropriate to cause such covenants, agreements or obligations promptly to be performed, observed or complied with on behalf of Borrower, including, but not limited to, the payment of any or all rent and other sums due from Borrower thereunder, but no action so taken by Bank shall release Borrower from any of its obligations under this Mortgage. Upon receipt by Bank from the lessor under Ground Lease of any notice of default by Borrower thereunder that has not been cured within any applicable grace or cure period, Bank may rely thereon and take any such action as aforesaid to cure such default even though the existence of such default or the nature thereof may be questioned or denied by Borrower or by any party on behalf of Borrower. Any costs or expenses incurred by Bank in taking any action as provided for in this paragraph, including any rent or other sums paid by Bank, shall constitute part of the Obligations and shall be secured hereby.

(d)    Borrower shall not surrender its leasehold estate under the Ground Lease, nor terminate or cancel the Ground Lease to which Borrower is a party, and Borrower shall not modify, change, supplement, alter or amend in any material respect the Ground Lease, either orally or in writing, and any attempt on the part of Borrower to exercise any such right without the consent of Bank shall be null and void.

(e)    The fee title to the properties demised by the Ground Lease and the leasehold estate shall not merge, but always shall remain separate and distinct, notwithstanding the union of such estates either in the lessor or in the lessee under the Ground Lease or in a third party by purchase or otherwise.

(f)    Borrower shall give Bank prompt notice of the commencement of any arbitration or appraisal proceeding pursuant to the Ground Lease. Bank shall have the right to intervene and participate in any such proceeding and Borrower shall confer with Bank and its attorneys and experts and cooperate with them to the extent Bank deems reasonably necessary for the protection of Bank. Upon the request of Bank, Borrower shall exercise all rights of arbitration or appraisal conferred upon it by the Ground Lease. If at the time any such proceeding shall be commenced, Borrower shall be in default in the performance or observance of any covenant or agreement contained in the Ground Lease, or in this Mortgage, on the part of Borrower to be performed or observed, beyond any applicable grace period, Bank shall have, and is hereby granted, the sole and exclusive right to designate and appoint on behalf of Borrower the arbitrator(s) or appraiser(s) in such proceeding.

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(g)    Borrower shall use its reasonable efforts to obtain from the lessor under the Ground Lease, and deliver to Bank, within twenty (20) days after written request by Bank, a statement in writing certifying that the Ground Lease is unmodified and in full force and effect (or if modified, stating the modifications) and the dates to which the ground rent and other charges, if any, have been paid in advance, and stating whether or not, to the best knowledge of the signer of such certificate, Borrower is in default in the performance of any covenant or agreement contained in the Ground Lease, and, if so, specifying each such default of which the signer may have knowledge.

1.03    Security Agreement. With respect to all personal property (the “Personal Property”) constituting part of the Mortgaged Property that is subject to Article 9 of the Uniform Commercial Code as enacted in the state where the Land is situated (the “UCC”), this Mortgage is hereby made and declared to be a security agreement encumbering each and every item or type of Personal Property listed herein or included herein as a part of the Mortgaged Property, in compliance with the provisions of the UCC, and Borrower hereby grants to Bank a security interest in Borrower’s Interest in said items and personal property. Borrower hereby authorizes Bank to file a financing statement or statements reciting this Mortgage to be a security agreement affecting all of the Borrower’s Interest in said Personal Property. The remedies for any violation of the covenants, terms and conditions of the security agreement contained in this Mortgage, or otherwise in respect of an Event of Default hereunder, shall be (a) as prescribed herein, or (b) as prescribed by general Law, or (c) as prescribed by the specific statutory consequences now or hereafter enacted and specified in the UCC, all at Bank’s sole election. Borrower agrees that the filing of such financing statement(s) in the records normally having to do with personal property shall not in any way affect the agreement of Borrower and Bank that everything used in connection with the production of income from the Mortgaged Property or adapted for use therein or that is described or reflected in this Mortgage, is, and at all times and for all purposes and in all proceedings both legal or equitable, shall be regarded as part of the real estate conveyed hereby regardless of whether (i) any such item is physically attached to the Improvements, (ii) serial numbers are used for the better identification of certain items capable of being thus identified in an Exhibit to this Mortgage, or (iii) any such item is referred to or reflected in any such financing statement(s) so filed at any time. Similarly, the mention in any such financing statement(s) of the rights in and to (A) the proceeds of any fire and/or hazard insurance policy, or (B) any award in eminent domain proceedings for taking or for loss of value, or (C) Borrower’s interest as lessor in any present or future lease or rights to income growing out of the use and/or occupancy of the Mortgaged Property, whether pursuant to lease or otherwise, shall not in any way alter any of the rights of Bank as determined by this instrument or affect the priority of Bank’s security interest granted hereby or by any other recorded document, it being understood and agreed that such mention in such financing statement(s) is solely for the protection of Bank in the event any court shall at any time hold, with respect to the foregoing items (A), (B), or (C), that notice of Bank’s priority of interest, to be effective against a particular class of persons, must be filed in the UCC records. This Mortgage may be filed as a financing statement in any office where Bank deems such filing necessary or desirable and Borrower will promptly upon demand reimburse Bank for the costs therefor.

1.04    Use of Mortgaged Property. Borrower shall at all times operate the Mortgaged Property as medical offices and related uses. Borrower shall not be permitted to alter or change the use of the Mortgaged Property without the prior written consent of Bank.

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1.05    Conveyance of Mortgaged Property. Except as otherwise expressly permitted by the Credit Agreement, Borrower shall not directly or indirectly encumber (by Lien, junior mortgage, or otherwise), pledge, convey, transfer or assign any or all of its interest in the Mortgaged Property, or any portion thereof, without the prior written consent of Bank.

1.06    Acquisition of Collateral. Except as otherwise expressly permitted by the Credit Agreement, Borrower shall not acquire any Personal Property subject to any Lien taking precedence over the Lien of this Mortgage.

ARTICLE II

2.01    Events of Default. The term “Event of Default”, wherever used in this Mortgage, shall mean an “Event of Default” as defined in the Credit Agreement.

2.02    Acceleration of Maturity. If an Event of Default shall have occurred and be continuing, then the Obligations shall, at the option of Bank, immediately become due and payable as provided in the Credit Agreement, and no omission on the part of Bank to exercise such option when entitled to do so shall be construed as a waiver of such right.

2.03    Rights and Remedies.

(a)    If an Event of Default shall have occurred, then in addition to the rights and remedies provided for under any other Loan Document or under applicable Law, then at the option of Bank this Mortgage may be foreclosed in any manner now or hereafter provided by Kansas Law, and to the extent provided or allowed by Kansas Law, Bank or its agent may sell the Mortgaged Property or any part of the Mortgaged Property at one or more public sales after having first given notice of the time, place and terms of sale as may be required by applicable Law. At any such sale, Bank may execute and deliver to the purchaser a conveyance of the Mortgaged Property or any part of the Mortgaged Property. Bank or its agent shall have the right to enforce any of its remedies set forth herein and as provided in the Credit Agreement. In the event of any sale under this Mortgage by virtue of the exercise of the powers herein granted, or pursuant to any order in any judicial proceedings or otherwise, the Mortgaged Property may be sold as an entirety or in separate parcels and in such manner or order as Bank in its sole discretion may elect, and if Bank so elects, Bank or its agent may sell the personal property covered by this Mortgage at one or more separate sales in any manner permitted by the UCC, and one or more exercises of the powers herein granted shall not extinguish or exhaust such powers, until the entire Mortgaged Property is sold or the Obligations are paid in full. If the Obligations are now or hereafter further secured by any chattel mortgages, pledges, contracts of guaranty, assignments of lease or other security instruments, Bank at its option may exhaust the remedies granted under any of said security instruments or this Mortgage either concurrently or independently, and in such order as Bank may determine.

(b)    Said sale may be adjourned by Bank, or its agent, and reset at a later date without additional publication; provided that an announcement to that effect be made at the scheduled place of sale at the time and on the date the sale is originally set.

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(c)    In the event of any sale of the Mortgaged Property as authorized by this Section, all prerequisites of such sale shall be presumed to have been performed, and in any conveyance given hereunder all statements of facts, or other recitals therein made, as to the non-payment or non-performance of the Obligations or as to the advertisement of sale, or the time, place and manner of sale, or as to any other fact or thing, shall be taken in all courts of law or equity as prima facie evidence that the facts so stated or recited are true.

(d)    If an Event of Default shall have occurred, Bank may, in addition to and not in abrogation of the rights covered under Subparagraph (a) of this Section, either with or without entry or taking possession as herein provided or otherwise, proceed by a suit or suits in law or in equity or by any other appropriate proceeding or remedy to pursue any other remedy available to it, all as Bank in its sole discretion shall elect.

2.04    Purchase by Bank. Upon any foreclosure sale or sale of all or any portion of the Mortgaged Property under the power herein granted, Bank may bid for and purchase the Mortgaged Property and shall be entitled to apply all or any part of the Obligations as a credit to the purchase price.

2.05    Borrower as Tenant Holding Over. In the event of any such foreclosure sale or sale under the powers herein granted, Borrower (if Borrower shall remain in possession) and all Persons holding under Borrower shall be deemed tenants holding over and shall forthwith deliver possession to the purchaser or purchasers at such sale or be summarily dispossessed according to provisions of Law applicable to tenants holding over.

2.06    Waiver of Appraisement, Valuation, Etc. Borrower agrees, to the full extent permitted by law, that in case of a Default on the part of Borrower hereunder, neither such Borrower nor anyone claiming through or under Borrower hereunder will set up, claim or seek to take advantage of any appraisement, valuation, stay, extension, homestead, exemption or redemption laws now or hereafter in force, in order to prevent or hinder the enforcement or foreclosure of this Mortgage, or the absolute sale of the Mortgaged Property owned by Borrower, or the delivery of possession thereof immediately after such sale to the purchaser at such sale, and Borrower, for itself and all who may at any time claim through or under it, hereby waives and renounces to the full extent that it may lawfully so do so, the benefit of all such laws, and any and all right to have the assets subject to the security interest of this Mortgage marshaled upon any foreclosure or sale under the power herein granted.

2.07    Waiver of Homestead. Borrower hereby waives and renounces all homestead and exemption rights provided for by the Constitution and the Laws of the United States and of any state, in and to the Mortgaged Property as against the collection of the Obligations, or any part thereof.

2.08    Leases. Bank, at its option, is authorized to foreclose this Mortgage subject to the rights of any tenants of the Mortgaged Property, and the failure to make any such tenants parties to any such foreclosure proceedings and to foreclose their rights will not be, nor be asserted to be by Borrower, a defense to any proceeding instituted by Bank to collect the sums secured hereby.

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

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ARTICLE III

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

3.02    Applicable Law. This Mortgage shall be interpreted, construed and enforced according to the laws of the State of Kansas without regard to that state’s conflict of laws principles.

3.03    Notices. All notices provided for herein shall be given and deemed received when given and received in accordance with the terms of the Credit Agreement.

3.04    Assignment. This Mortgage is assignable by Bank and any assignment of this Mortgage by Bank shall operate to vest in the assignee all rights and powers herein conferred upon and granted to Bank.

3.05    Future Advances. This Mortgage is given to secure not only existing indebtedness, but also future advances, whether such advances are obligatory or ones to be made at the option of Bank, or otherwise. Such future advances, with interest thereon, shall be secured hereby if made under the terms of this Mortgage, the Note or the Credit Agreement, or if made pursuant to any other promissory note, instrument or agreement stating that sums advanced thereunder are secured hereby. The total amount of indebtedness that may be so secured hereby may decrease or increase from time to time, but the total unpaid balance so secured at any one time shall not exceed the original principal amount of the Note, plus interest thereon and any amounts paid for taxes or insurance on the Mortgaged Property. This Section shall serve as notice that Bank claims the priority of the lien of this Mortgage for all such future advances.

3.06    Entire Agreement. THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

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IN WITNESS WHEREOF, this instrument has been duly executed and effective as of the day and year first above written.

CHP II OVERLAND PARK KS MOB OWNER, LLC, a Delaware limited liability company
By:	/s/ Tracey B. Bracco
Name:	Tracey B. Bracco
Title:	Vice President

STATE OF FLORIDA

COUNTY OF ORANGE

The foregoing instrument was acknowledged before me this 18th day of December, 2017, by Tracey B. Bracco as Vice President of CHP II OVERLAND PARK KS MOB OWNER, LLC, a Delaware limited liability company, on behalf of the company. She is personally known to me or has produced                      as identification.

(NOTARY SEAL)	/s/ Amy J. Patterson
	Signature of Notary Public
	Amy J. Patterson
	Typed or Printed Name of Notary
	Commission No.: FF231697
	My Commission Expires: 06/27/19

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EXHIBIT “A”

LEGAL DESCRIPTION OF LAND

TRACT 1:

ALL THAT PART OF LOT 1, MENORAH PARK, FOURTH PLAT (SAID LOT 1 BEING PREVIOUSLY PLATTED AS LOT 4, MENORAH PARK, SECOND PLAT), A SUBDIVISION OF LAND IN THE CITY OF OVERLAND PARK, JOHNSON COUNTY, KANSAS, MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCING AT THE NORTHEAST CORNER OF SAID LOT 1; THENCE S 1°54’33” E, ALONG THE EAST LINE OF SAID LOT 1, A DISTANCE OF 189.31 FEET; THENCE S 1°16’13” W, ALONG THE EAST LINE OF SAID LOT 1, A DISTANCE OF 2.84 FEET; THENCE S 89°59’49” W, A DISTANCE OF 36.62 FEET, TO THE TRUE POINT OF BEGINNING OF SUBJECT TRACT; THENCE CONTINUING S 89° 59’ 49” W, A DISTANCE OF 125.53 FEET; THENCE S 0°00’11” E, PERPENDICULAR TO THE LAST DESCRIBED COURSE, A DISTANCE OF 137.37 FEET; THENCE SOUTHWESTERLY AND SOUTHERLY, ALONG A CURVE TO THE LEFT, HAVING A RADIUS OF 13.20 FEET, A CENTRAL ANGLE OF 46° 29’ AND WHOSE INITIAL TANGENT BEARING IS S 46°28’49” W, A DISTANCE OF 10.71 FEET, TO A POINT OF TANGENCY; THENCE S 0°0’11” E, A DISTANCE OF 13.07 FEET, TO A POINT OF CURVATURE; THENCE SOUTHERLY AND SOUTHEASTERLY, ALONG A CURVE TO THE LEFT, HAVING A RADIUS OF 13.20 FEET AND A CENTRAL ANGLE OF 46°29’, A DISTANCE OF 10.71 FEET; THENCE S 0°00’11” E, A DISTANCE OF 15.74 FEET; THENCE N 89°59’49” E, PERPENDICULAR TO THE LAST DESCRIBED COURSE, A DISTANCE OF 125.53 FEET; THENCE N 0°00’11” W, PERPENDICULAR TO THE LAST DESCRIBED COURSE, A DISTANCE OF 185.32 FEET, TO THE TRUE POINT OF BEGINNING OF SUBJECT TRACT.

TRACT 2:

NONEXCLUSIVE EASEMENTS FOR PARKING, ACCESS AND UTILITIES FOR THE BENEFIT OF TRACT 1 AS SET FORTH AND MORE FULLY DESCRIBED IN A DECLARATION OF COVENANTS, RESTRICTIONS AND EASEMENTS, RECORDED IN BOOK 200503, PAGE 000937, AS AMENDED BY A FIRST AMENDMENT TO DECLARATION OF COVENANTS, RESTRICTIONS AND EASEMENTS RECORDED IN BOOK 200507, PAGE 008859.

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EXHIBIT “B”

PERMITTED ENCUMBRANCES

1. Easements, restrictions and setback lines as per plat, recorded in Plat Book 81, Page 48; Plat Book 89, Page 27; and Book 200804, Page 007674.

2. Terms, provisions, covenants, conditions, restrictions and easements as set forth in Declaration of Covenants, Restrictions and Easements, recorded September 11, 2007 in Book 200709, Page 002447. Said document contains a right of first refusal, which has been waived with respect to this transaction. (Affects Tract 2).

3. An easement granted to Kansas City Power & Light Company in the document recorded January 29, 1981 in Book 1645, Page 452 of Official Records. (Affects Tract 2).

4. Terms and Provisions as set forth in Declaration of Creation of Cost Reimbursement District for Water Main Extension, recorded March 13, 1985 in Book 2129, Page 777.

5. Terms and Provisions as set forth in Storm Drainage Variance, recorded August 7, 1992 as Document No. 2151784 in Book 3671, Page 208 and re-recorded September 15, 1992 in Book 3702, Page 853, as affected by the Supplement to Storm Drainage Variance recorded March 14, 1995 in Book 4541, Page 553.’

6. A right-of-way granted to L.S.D. #18, Sec. 1, Tomahawk Creek Sewer Sub-District No. 3, Tomahawk Creek Sewer Main Sewer District No. 1 in the document recorded December 10, 1992 in Book 3794, Page 347, of Official Records. (Affects Tract 2).

7. An easement granted to Water District No. 1 of Johnson County (Kansas) in the document recorded June 2, 1995 in Book 4597, Page 897, as more specifically located by the instrument recorded August 25, 1998 in Book 5821, Page 5 of Official Records. (Affects Tract 2).

8. Terms and Provisions as set forth in Declaration Delaying Water Service Connections, recorded in Book 4648, Page 311. Partial Release recorded in Book 4720, Page 235 and Refiled in Book 4741, Page 613.

9. Covenants, restrictions and all other terms and provisions, including without limitation annual and/or special maintenance assessments as set forth in Private Agreement and Deed Restrictions recorded in Book 4878, Page 219 and amended in Book 4993, Page 376, but deleting any covenant, condition or restriction indicating a preference, limitation or discrimination based on race, color, religion, sex, handicap, familial status, or national origin to the extent such covenants, conditions or restrictions violate 42 USC 3604.

10. Terms and Provisions as set forth in Interim Unilateral Development Agreement, by and between Health Midwest and the City of Overland Park, Kansas, recorded in Book 4944, Page 41.

11. A right-of-way granted to Consolidated Main Sewer District of Johnson County in the document recorded November 4, 1998 in Book 5911, Page 882 of Official Records. (Affects Tract 2).

12. An easement granted to American Telephone and Telegraph Company in the document recorded November 13, 1970 in Misc. Book 212, Page 582 of Official Records.

13. Permanent right-of-way to The City of Overland Park, Kansas, taken by Condemnation Case No. 85C4127 in the document recorded May 14, 1985 in Book 2158, Page 99 of Official Records. (Affects Tract 2).

14. An easement granted to Kansas City Power & Light Company in the document recorded in Misc. Book 36, Page 311 as amended by the Partial Disclaimer filed in Book 2315, Page 110 of Official Records.

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15. An easement granted to American Telephone and Telegraph Company in the document recorded October 13, 1972 in Book 867, Page 142 of Official Records.

16. An easement granted to Water District No. 1 of Johnson County in the document recorded April 17, 1979 in Book 1449, Page 970 of Official Records.

17. Terms and Provisions as set forth in Contract for the public improvement of 119th Street from Nall Avenue to one quarter mile east of Antioch Road between the Board of County Commissioners of Johnson County, Kansas and the City of Overland Park, Kansas, recorded in Book 2074, Page 586.

18. Deed of Dedication to the City of Overland Park, filed in Book 3239, Page 743.

19. A right-of-way to L.S.D. #18, Sec. 1, Tomahawk Creek Sewer Sub-district No. 3, Tomahawk Creek Sewer Main Sewer District No. 1 in the document recorded in Book 3784, Page 859 of Official Records. (Affects Tract 2).

20. A right-of-way to L.S.D. #18, Sec. 1, Tomahawk Creek Sewer Sub-district No. 3, Tomahawk Creek Sewer Main Sewer District No. 1 in the document recorded in Book 3784, Page 864 of Official Records. (Affects Tract 2).

21. Declaration of Restrictions, recorded in Book 3790, Page 723 but deleting any covenant, condition or restriction indicating a preference, limitation or discrimination based on race, color, religion, sex, handicap, familial status, or national origin to the extent such covenants, conditions or restrictions violate 42USC 3604(c) or any similar state statute or local ordinance. (Affects Tract 2).

22. Terms and Provisions as set forth in Easement, by and between Menorah Health Center, Inc., a Kansas not-for-profit corporation and American Health Properties, Inc., a Delaware corporation, recorded in Book 3820, Page 679 and Subordination recorded in Book 3820, Page 684. (Affects Tract 2).

23. An easement to Kansas City Power & Light Company in the document recorded in Book 4045, Page 591 of Official Records. (Affects Tract 2).

24. Permanent Drainage Easement to the City of Overland Park, Kansas in the document recorded in Book 4461, Page 453 of Official Records. (Affects Tract 2).

25. An easement to Kansas City Power & Light Company in the document recorded in Book 4726, Page 755 of Official Records. (Affects Tract 2).

26. Deed of Dedication to the City of Overland Park, filed in Book 5642, Page 620. (Affects Tract 2).

27. An easement to Water District No. 1 of Johnson County (Kansas) in the document recorded in Book 5965, Page 745 of Official Records.

28. A right-of-way to Consolidated Main Sewer District of Johnson County in the document recorded in Book 6412, Page 695 of Official Records. (Affects Tract 2).

29. Terms and Provisions as set forth in Permanent Drainage Easement Agreement, by and between Health Midwest, a Missouri not for profit corporation and Village Shalom, Inc., a not for profit corporation, recorded in Book 6415, Page 483 and refiled in Book 6524, Page 953. (Affects Tract 2).

30. Terms and provisions of an unrecorded lease dated April 1, 2003, by and between Central Tennessee Hospital Corporation, a Tennessee corporation as lessor and Midwest Division-MMC, LLC, a Delaware limited liability company as lessee, as disclosed by a Memorandum of Lease recorded August 4, 2003 in Book 9335, Page 187. Amendment of Lease Agreement recorded in Book 200604, Page 007057 and Book 200709, Page 002446 of Official Records. (Affects Tract 2).

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31. Terms and Provisions as set forth in Declaration of Covenants, Restrictions and Easements, recorded in Book 200503, Page 000937 and First Amendment to Declaration of Covenants, Restrictions and Easements recorded in Book 200507, Page 008859 and Subordination of Lease recorded in Book 200604, Page 007058; as affected by Second Amendment to Declaration of Covenants, Restrictions and Easements recorded in Book                     , Page     . Said document contains a right of first refusal, which has been waived with respect to this transaction.

32. Terms and provisions of an unrecorded lease dated February 28, 2005, by and between Central Tennessee Hospital Corporation, a Tennessee corporation as lessor and MidAmerica Surgery Institute Properties II, LLC, a Kansas limited liability company as lessee, as disclosed by a Memorandum of Lease and Ground Lease Agreement recorded March 2, 2006 in Book 200503, Page 000938. Amendment to Memorandum of Lease recorded in Book 200702, Page 007473, unrecorded second amendment dated October 21, 2005, Third Amendment of Ground Lease recorded in Book 200706, Page 008529, and Fourth Amendment to Ground Lease recorded in Book                     , Page     ; and as affected by Assignment and Assumption of Ground Lease by and between MidAmerica Surgery Institute Properties II, LLC, as Assignor, and CHP II Overland Park KS MOB Owner, LLC, as Assignee, recorded in Book                     , Page     , of Official Records.

33. A right-of-way to Oneok, Inc., an Oklahoma corporation d/b/a Kansas Gas Service Company in the document recorded in Book 200606, Page 008574 of Official Records.

34. An easement to Kansas City Power & Light Company in the document recorded in Book 200607, Page 007853 of Official Records.

35. A right-of-way to Consolidated Main Sewer District of Johnson County in the document recorded in Book 200511, Page 002829 of Official Records.

36. An easement to Kansas City Power & Light Company in the document recorded in Book 200811, Page 002894 of Official Records. (Affects Tract 2).

37. Terms and Provisions as set forth in Permanent Drainage Easement Agreement, by and between Ventas Realty, Limited Partnership, a Delaware limited partnership and Central Tennessee Hospital Corporation, a Tennessee corporation, recorded in Book 200611, Page 003689. (Affects Tract 2).

38. Easement for Facilities to Southwestern Bell Telephone Company d/b/a AT&T in the document recorded in Book 200901, Page 003546 of Official Records.

39. Tenancy rights, either as month to month, or by virtue of written leases of persons in possession of any part of the subject property.

40. Survey prepared by Blew & Associates, P.A., dated September 27, 2017, last revised October 25, 2017 under Job No. KS-1, shows the following:

1. This item has been intentionally deleted.

2. This item has been intentionally deleted.

41. Terms and conditions of Permanent Utility Easement recorded                      in Book                     , Page     .

42. An easement recorded on January 5, 1981 in Book 1939, Page 1639 of Official Records, as affected by that certain Partial Disclaimer of Easement recorded on December             , 2017 in the document recorded in Book                    , Page     , of Official Records.

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EX-99.1

Exhibit 99.1

News Release

For information contact:

Colleen Johnson

Vice President Communications

CNL Financial Group

407-650-1223

CNL HEALTHCARE PROPERTIES II ACQUIRES

ON-CAMPUS MEDICAL OFFICE BUILDING

— The Overland Park, Kansas, facility is the REIT’s second acquisition —

(ORLANDO, Fla.) Jan. 2, 2018 — CNL Healthcare Properties II, a non-traded real estate investment trust (REIT) focused on seniors housing and healthcare properties, has purchased an on-campus medical office building in Overland Park, Kansas, for approximately $14 million. This is the first medical office investment for CNL Healthcare Properties II and the REIT’s second acquisition.

“The Overland Park building is an ideal second acquisition for CNL Healthcare Properties II and representative of the type and quality of properties we plan to build the company around,” said Stephen H. Mauldin, president and CEO of CNL Healthcare Properties II. “This is a stabilized asset with strong cash flows in a strategic location, and we are pleased to add it to our growing portfolio.”

Overland Park Medical Office Building, Overland Park, Kansas

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Page 2/CNL Healthcare Properties II acquires on-campus medical office building

Purpose-built in 2007, the medical office building is a two-story, 38,496-square-foot, Class A facility in Overland Park, an affluent suburb of Kansas City. It is located on the campus of the 154-bed HCA Midwest Menorah Medical Center. The property is 100 percent leased and anchored by an ambulatory surgical center that is operated as a joint venture between HCA and a leading physicians group. Located at the corner of major thoroughfares, the building maintains close proximity to other medical facilities, retail offerings and the Sprint Corporation’s world headquarters.

CNL Healthcare Properties II was selected to purchase the property over several other credible buyers, including public REITs, based on its ability to close and reputation in the industry as a reliable capital partner.

Over the last 15 years, CNL Financial Group has been especially active in the seniors housing and healthcare sectors. As of June 30, 2017, CNL-sponsored companies have invested in seniors housing and healthcare real estate investments valued at more than $10 billion, collectively.

About CNL Healthcare Properties II

CNL Healthcare Properties II intends to qualify as a real estate investment trust (REIT) for federal income tax purposes beginning with the year ending Dec. 31, 2017, or the first year in which it commences material operations. Based in Orlando, Florida, CNL Healthcare Properties II intends to invest in the seniors housing, medical office, acute care and post-acute care sectors. For more information, visit cnlhealthcarepropertiesii.com.

About CNL Financial Group

CNL Financial Group (CNL) is a private investment management firm providing real estate and alternative investments. Since inception in 1973, CNL and/or its affiliates have formed or acquired companies with more than $34 billion in assets. CNL is headquartered in Orlando, Florida. For more information, visit cnl.com.

Cautionary Note Regarding Forward-Looking Statements

Statements above that are not statements of historical or current fact may constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. CNL Healthcare Properties II (the “Company”) intends that such forward-looking statements be subject to the safe harbor created by Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements that do not relate strictly to historical or current facts, but reflect management’s current understandings, intentions, beliefs, plans, expectations, assumptions and/or predictions regarding the future of the Company’s business and its performance, the economy, and other future conditions and forecasts of future events, and circumstances. Forward-looking statements are typically identified by words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plans,” “continues,” “pro forma,” “may,” “will,” “seeks,” “should” and “could,” and words and terms of similar substance in connection with discussions of future operating or financial performance, business strategy and portfolios, projected growth prospects, cash flows, costs and financing needs, legal proceedings, amount and timing of anticipated future distributions, and/or other matters. The Company’s forward-looking statements are not guarantees of future performance. While the Company’s management believes its forward-looking statements are reasonable, such statements are inherently susceptible to uncertainty and changes in circumstances. As with any projection or forecast, forward-looking statements are necessarily dependent on assumptions, data and/or methods that may be incorrect or imprecise, and may not be realized. The Company’s forward-looking statements are based on management’s current expectations and a variety of risks, uncertainties and other factors, many of which are beyond the Company’s ability to control or accurately predict. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, the Company’s actual results could differ materially from those set forth in the forward-looking statements due to a variety of risks, uncertainties and other factors. These risks include that CNL Healthcare Properties II has limited operating history and there is no assurance that it will be able to achieve its investment objectives; that the board of directors may amend or revise investment and other policies without stockholder consent; that it may have difficulty funding distributions with funds provided by cash flows from operating activities; and that market and business conditions may affect its success, including changes in general or local economic or market conditions and changing demographics. Given these uncertainties, the Company cautions you not to place undue reliance on such statements.

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Page 3/CNL Healthcare Properties II acquires on-campus medical office building

All written and oral forward-looking statements attributable to the Company or persons acting on its behalf are qualified in their entirety by this cautionary note. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to, and expressly disclaims any obligation to, publicly release the results of any revisions to its forward-looking statements to reflect new information, changed assumptions, the occurrence of unanticipated subsequent events or circumstances, or changes to future operating results over time, except as otherwise required by law.

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