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).

 

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“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
1/100th 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 (1st) 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 (1st) 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 (15th) 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 (1st)
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 (13th) 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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