Exhibit 10.11

PROPERTY MANAGEMENT AGREEMENT

BETWEEN

HEALTHCARE EQUITY PARTNERS, LLC

AND

CHP KNOXVILLE PLAZA A MOB OWNER, LLC

Medical Plaza A

7557A Dannaher Drive, Powell, TN 37489

 

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Table of Contents

 

Article I. SUMMARY OF BASIC TERMS

     2   

Article II. APPOINTMENT; TERM OF AGREEMENT

     3   

2.1

 

Appointment of Manager

     3   

2.2

 

Term

     3   

2.3

 

Termination For Cause

     3   

Article III. RESPONSIBILITIES OF THE PARTIES

     4   

3.1

 

Standard of Care

     4   

3.2

 

Indemnity by Owner

     4   

3.3

 

No Obligation to Third Parties

     5   

3.4

 

General Authority

     5   

3.5

 

Operation of Property

     5   

3.6

 

Employees

     6   

3.7

 

Enforcement of Leases

     6   

3.8

 

Compliance with Leases and Laws

     7   

3.9

 

Notifications To Owner

     7   

3.10

 

Books and Records

     8   

3.11

 

Reports To Owner

     8   

3.12

 

Limitations on Manager’s Authority

     8   

3.13

 

Property Disbursements

     9   

3.14

 

Obligations Upon Termination

     9   

3.15

 

Income Tax Returns

     9   

3.16

 

Ad Valorem and Other Tax Matters

     9   

3.17

 

Construction Management/General Contracting Services

     10   

3.18

 

Strategic Advisory Services and Surveys/Polls

     10   

3.19

 

Quarterly Meetings

     11   

3.20

 

Emergencies

     11   

Article IV. BANK ACCOUNTS

     11   

4.1

 

Separate Accounts

     11   

4.2

 

Owners Duty to Provide Funds

     11   

4.3

 

Investment of Funds

     11   

Article V. BUDGETS AND EXPENDITURES

     12   

5.1

 

Budget

     12   

5.2

 

Expenses Paid From Operating Account

     12   

Article VI. INSURANCE

     12   

6.1

 

Insurance Coverage

     12   

6.2

 

Certificates and Policies of Insurance

     12   

Article VII. COMPENSATION OF MANAGER

     13   

7.1

 

Management Fee

     13   

7.2

 

Reimbursement of Expenses

     13   

7.3

 

Construction Management Fee

     13   

 

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Article VIII. LEASING

     13   

8.1

 

Leasing

     13   

8.2

 

Leasing Commission

     14   

8.3

 

Brokers/Referral Service

     14   

8.4

 

Accepting Deposits

     14   

Article IX. REMEDIES

     14   

Article X. MISCELLANEOUS

     15   

10.1

 

Usage

     15   

10.2

 

Headings

     15   

10.3

 

Notice

     15   

10.4

 

Relationship of the Parties

     15   

10.5

       15   

10.6

 

Assignment

     15   

10.7

 

Legal Representatives, Successors and Assigns

     15   

10.8

 

Time of the Essence

     15   

10.9

 

Governing Law

     15   

10.10

 

Severability

     16   

10.11

 

No Interest in Condemnation or Insurance Proceeds

     16   

10.12

 

Mutual Waiver

     16   

10.13

 

Owners Operating Procedures

     16   

10.14

 

Other Engagements

     16   

10.15

 

Reasonable Control

     16   

10.16

 

Attorney’s Fee

     16   

10.17

 

Execution in Counterparts

     16   

10.18

 

Allocations

     17   

10.19

 

Exhibits

     17   

10.20

 

Right of First Refusal to Manage Additional Buildings

     17   

10.21

 

Protection of REIT Status

     17   

10.22

 

Defined Terms

     18   

 

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MANAGEMENT AGREEMENT

THIS AGREEMENT (herein after referred to as “Agreement”) is effective as of the
Effective Date by and between the Owner and the Manager.

RECITALS:

1. Owner is the owner of the Property and desires to appoint Manager to manage
and supervise the day-to-day management and leasing operations of the Property.

2. Manager desires manage and supervise the day-to-day management and leasing
operations of the Property.

3. This Agreement is entered into for the purpose of setting forth the terms on
which Manager will manage and lease property.

NOW, THEREFORE, incorporating the recitals as set forth above, and in
consideration of the mutual covenants herein contained, and Ten and No/100
Dollars ($10.00) and other good and valuable consideration paid by the parties
hereto to one another, the receipt and sufficiency of which are acknowledged,
the parties hereto do covenant and agree as follows:

[Remainder of Page Intentionally Left Blank]

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ARTICLE I.

SUMMARY OF BASIC TERMS

This Summary of Basic Terms (the “Summary Sheet”) is incorporated into and made
a part of the attached Management Agreement (this Summary Sheet and the
Management Agreement are collectively referred to as the “Agreement”). In the
event of a conflict between the terms of this Summary Sheet and the Management
Agreement, the terms of the Summary Sheet shall prevail. All capitalized terms
used in this Summary Sheet but not defined herein shall have the meaning
ascribed to them in the Management Agreement.

 

Effective Date of Agreement:    July 10, 2013 Owner (with notice address):   

CHP KNOXVILLE PLAZA A MOB OWNER, LLC

450 South Orange Avenue

Orlando, FL 32801

Attention: Tracey B. Bracco, Esquire

Telephone: (407) 540-7526

Facsimile: (407) 540-2544

With a copy to:

  

CHP KNOXVILLE PLAZA A MOB OWNER, LLC

450 South Orange Avenue

Orlando, FL 32801

Attention: Joseph Johnson

Telephone: (407) 540-7526

Facsimile: (407) 540-2544

With a copy to:

  

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

215 North Eola Drive

Orlando, Florida 32801

Attention: William T. Dymond, Jr., Esquire

Telephone: (407) 843-4600

Telefax No.: (407) 843-4444

 

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Manager (with notice address):   

Healthcare Equity Partners, LLC

977 Seminole Trail

PMB 344

Charlottesville VA 22901-2824

Attention: Ben Ochs

Telephone: (434) 293-8004

Facsimile: (434) 293-6256

With a copy to:

  

Baker, Donelson, Bearman, Caldwell & Berkowitz

Baker Donelson Center, Suite 800

211 Commerce Street

Nashville, TN 37201

Attention: Kenneth P. Ezell, Jr.

Telephone: (615) 726-5721

Telefax No.: (615) 744-5721

Property:   

Medical Plaza A

7557A Dannaher Drive,

Powell, TN 37489

ARTICLE II.

APPOINTMENT; TERM OF AGREEMENT

2.1 Appointment of Manager. Owner hereby appoints Manager and delegates to
Manager the sole and exclusive right to manage, supervise, operate, maintain and
lease the Property in accordance with the terms and conditions of this
Agreement. Manager hereby agrees to manage, supervise, operate, maintain and
lease the Property in accordance with the terms and conditions of this
Agreement.

2.2 Term. The term of this Agreement (hereinafter referred to as “Term”) shall
commence on the Effective Date and shall continue for a period of five
(5) years, and shall automatically renew for successive periods of one (1) year
thereafter. Either party may terminate this agreement at the end of any Term by
giving the other party at least ninety (90) days prior written notice.
Notwithstanding the foregoing, Owner may terminate this Agreement upon the sale
of the Property or Owner’s interest in the Property. In the event of a
termination of this Agreement by Owner upon the sale of the Property or Owner’s
interest in the Property during the first five (5) years of the Term, Owner
shall pay to Manager an acceleration fee (hereinafter referred to as
“Acceleration Fee”) of the remaining Management Fees (as later defined) for the
Term. The Acceleration Fee for the remainder of the Term shall be calculated by
multiplying the average of the three (3) previous months of Management Fees
prior to termination times the remaining months of the then applicable Term.

2.3 Termination For Cause. This Agreement shall terminate, and all obligations
of the parties hereunder shall cease (except as to liabilities for obligations
which have arisen prior to such termination), upon the occurrence of any of the
following events:

 

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(a) Non-Monetary Breach of Agreement - Thirty (30) days after receipt of notice
by either party to the other specifying in detail a material breach of this
Agreement and such breach remains uncured after the expiration of such thirty
(30) day period; provided however, that if such breach is of a nature that it
cannot be cured within said thirty day period but can be cured within a
reasonable time thereafter, then this Agreement shall not terminate upon the
expiration of such thirty (30) day period so long as efforts to cure such breach
have commenced and/or such efforts are proceeding and being continued diligently
both during and after such thirty (30) day period; provided further, however,
that no such cure period shall exceed sixty (60) days.

(b) Monetary Breach of Agreement - Five (5) days after receipt of notice by
either party to the other specifying in detail a breach of this Agreement
relating to the payment of any amounts to be paid hereunder and such breach
remains uncured after the expiration of such five (5) day period.

Owner, at its option, may terminate this Agreement for “Cause” at any time upon
giving written notice thereof and the term “Cause” shall include (a) fraud,
misrepresentation, misappropriation of funds, furnishing any statement, report,
notice, writing, or schedule to Owner that Manager knows is untrue or misleading
of any material respect on the date as of which the facts set forth therein are
stated or certified, or breach of trust by Manager; (b) the failure of Manager
to comply with any term or condition of this Agreement, which, although not
listed in (a) immediately preceding, has a material and adverse effect on any of
the Property; (c) the bankruptcy or insolvency of, the assignment for the
benefit of creditors by, or the appointment of a receiver for any of the
property of Manager; (d) an intentional or grossly negligent or illegal act
committed by Manager against Owner; (e) Manager’s grossly negligent, willful
and/or reckless misconduct that causes damage to Owner; (f) the destruction or
condemnation of the Property under circumstances where the Property will not be
rebuilt; and (g) if at any time during the Term, Norman T. Brinkman, Georgia C.
Brinkman and Benjamin W. Ochs collectively own (either directly or indirectly)
less than fifty percent (50%) of the equity interests in Manager or otherwise do
not retain the power to direct the management and policies of Manager, directly
or indirectly, whether through the ownership of voting securities or other
beneficial interests, by contract or otherwise. The termination of this
Agreement shall not relieve Owner from its obligation to pay any fees which are
payable pursuant to this Agreement or any of Manager’s rights to fees which
expressly survive the termination of this Agreement.

ARTICLE III.

RESPONSIBILITIES OF THE PARTIES

3.1 Standard of Care. It shall be the duty of the Manager at all times during
the term of this Agreement, to operate and maintain the Property in accordance
with the terms hereof and in accordance with any expressed written plan of
Owner. Manager is to exercise supervision over the physical conditions of the
building and equipment, to make periodic inspections and authorize and supervise
such repair and maintenance as may be necessary or desirable to keep the
building and equipment in good condition.

3.2 Indemnity by Owner. Owner agrees to hold and save Manager free and harmless
from any liability or expense (including reasonable attorney’s fees and court
costs) arising out of

 

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injuries or damages to persons or property by reason of any cause whatsoever
occurring on or with respect to the Property, and for claims arising out of
Manager’s management of the Property for Owner (other than injuries, damages or
claims arising out of the negligence or willful and intentional misconduct of
Manager) if such injury, damage or claim is incurred while Manager is acting
pursuant to this Agreement or under the direction of, or with the approval of
Owner.

3.3 No Obligation to Third Parties. None of the obligations and duties of
Manager or of Owner under this Agreement shall in any way or in any manner be
deemed to create an obligation of Manager or of Owner to any Person or entity
not a part to this Agreement.

3.4 General Authority. In the performance of its duties hereunder, Manager shall
have and is hereby granted full and complete power and authority in accordance
with the terms and conditions of this Agreement. Manager shall act for, and in
the name, place, and stead of, Owner with respect to all matters relating to the
Management, operation and leasing of the Property. Such management, operation,
and leasing shall be undertaken in accordance with the Budgets for the Property.
Notwithstanding the foregoing, Manager shall not have authority to execute, on
behalf of Owner, leases or other occupancy agreements with respect to the
Property.

3.5 Operation of Property. Manager shall collect the Gross Monthly Collections
(as defined in Section 7.01(b) hereof), and institute, be responsible for and
supervise, at the expense of Owner (but at all times in accordance with the
Approved Budgets, subject, however, to Section 3.20), all maintenance and
operational activities of the Property including, but not limited, to the
following:

(a) providing any necessary repairs to the Property and managing the work orders
for such repairs;

(b) providing a preventative maintenance program for all mechanical, electrical
and plumbing systems and equipment on the Property, unless a lease has created a
third party responsibility therefore;

(c) contracting in the name of Owner for gas, electricity, water and such other
utility services to be furnished to the Property as Manager deems appropriate;

(d) contracting with independent contractors for the performance of services
required to be provided at the Property;

(e) manage all signage on or in the Property;

(f) manage the affairs of the owner’s association (for any Property that is a
condominium);

(g) pay all invoices or bills, relating to the operation and maintenance of the
Property; and

(h) any other activity expedient to the operation of the Property.

 

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Except as set forth herein, all expenses incurred by Manager in performing its
obligations under this Agreement shall be incurred in accordance with the
Approved Budgets and any such expenses so incurred shall be at the expense of
Owner and shall be paid from monies on deposit in the Operating Account (as
defined in Section 4.01 herein).

3.6 Employees.

(a) All matters pertaining to the employment, supervision, compensation,
promotion and discharge of employees who are managing and operating the Property
are the responsibility of Manager.

(b) Manager shall fully comply with all applicable laws and regulations having
to do with workers’ compensation, social security, unemployment insurance, hours
of labor, wages, working conditions and other employer-employee related
subjects. Manager shall execute and file punctually when due, all forms, reports
and returns required by law relating to the employment of personnel.

(c) All such employees shall be employees of Manager and not of Owner, and all
such employees shall be under the supervision, direction and control of Manager.
Manager hereby agrees to inform all such employees at the time of their
employment that they are employed solely by Manager. Salaries and benefits paid
or granted Manager’s employees shall be an expense of Manager and not Owner.

(d) [Intentionally Omitted.]

(e) [Intentionally Omitted.]

3.7 Enforcement of Leases.

(a) Manager shall use diligent efforts to enforce the terms of all tenant leases
and to collect all rents (including tenants’ obligations to pay a portion of
operating expenses, taxes and common area maintenance charges) and other charges
which may become due at any time from tenant or from others for services
provided in connection with or for the use of the Property. All monies so
collected shall be deposited in the “Operating Account” (as term is defined in
section 4.01 herein).

(b) All leases executed during the term of this Agreement shall identify Owner
(not Manager) as the holder of any security deposits required to be placed as
security for such lease.

(c) Manager may institute legal proceedings and engage legal counsel in the name
of Owner for the collection of overdue rents and other charges and for the
dispossession of tenants and other persons from the Property. Owner will be
informed as soon as possible with respect to any legal action which may be
contemplated and no legal proceeding shall be instituted without Owner’s prior
written approval (which approval may be granted or withheld in Owner’s sole and
absolute discretion) (i) with respect to the institution of such legal
proceeding, and (ii) the selection of legal counsel in

 

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connection with such legal proceeding. Any expenses incurred in connection
therewith shall be deemed an Owner expense.

3.8 Compliance with Leases and Laws. Manager shall fulfill all the obligations
of the Owner as landlord under leases pertaining to the Property. Manager shall
operate the Property in compliance with federal, state and local laws,
ordinances, regulations and orders and the terms of the local Board of Fire
Underwriter or similar body. Manager shall promptly give written notice to Owner
of any order or notice of requirements when received and what action, if any,
Manager has or will be taking.

Manager shall not take action pursuant to any such notice so long as: (i) Owner
is contesting any such order or requirement, and (ii) Owner requests Manager in
writing, not to take such action, and (iii) Owner indemnifies Manager from and
against any liability incurred by Manager in failing to take such action at
Owner’s request as set forth in (i) and (ii) above; provided however, that if
failure to comply with any such order or requirement would or might expose
Manager to criminal liability, Manager shall, with or without Owner’s approval,
cause the same to be complied with.

3.9 Notifications To Owner. In addition to all others notices provided for
herein, Manager shall to extent of its knowledge promptly notify Owner of all
matters concerning the Property which are (A) (i) material, or (ii) which could
reasonably be expected to develop into a material matter and (B) are known to
Manager including, without limitation:

(a) all lawsuits, condemnation proceedings, zoning or any other governmental
orders, notices, actions or threats that may adversely affect the Property;

(b) any claim made by a tenant that Manager or Owner has failed to perform any
obligations of Owner or Manager under any lease or agreement to which the
Manager or Owner is a party;

(c) the occurrence of any fire or other casualty on or about the Property or any
personal injury or property damage (such notice to be in compliance with the
requirements of all insurance policies), and Manager shall permit insurance
adjusters to view damages before repairs are started except for emergency
situations;

(d) any requirement of any insurance carrier or of any governmental agency with
respect to the Property;

(e) any offers to purchase the Property; and

(f) the actual or suspected presence, use, storage, release, disposal, or
transport of any radioactive, hazardous, regulated, or toxic substance or
material on, about, or from any of the Property; the presence, use storage,
release, disposal or transport of which either (i) is prohibited or otherwise
regulated by any now or hereafter existing local, state, or federal statute,
ordinance, rule, regulation, or the like or (ii) poses or may pose a risk to the
health, safely or physical well-being of persons.

 

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3.10 Books and Records. Manager shall maintain complete and identifiable records
and files on all matters pertaining to the Property including but not limited
to, all revenues, expenditures, service contracts and leases. Said books and
records shall be kept at the offices of Manager or such other place as the Owner
and Manager from time to time agree. Manager shall keep accurate and complete
books and accounts in accordance with generally accepted accounting principles,
consistently applied, showing the operations and transactions relating to the
Property and showing (provided that Owner furnishes appropriate information to
Manager) the assets, liabilities, and financial condition of the Property. Duly
authorized representatives of Owner shall at all times during regular business
hours have the right to audit said records and books.

3.11 Reports To Owner. Manager shall provide to Owner such reports pertaining to
its operation of the Property as indicated on Exhibit “B” attached hereto.

3.12 Limitations on Manager’s Authority. Unless otherwise requested by Owner,
and except as set forth in Section 3.20:

(a) all contracts relating to the operation of the Property shall be in the name
of Owner and executed by Manager on behalf of Owner.

(b) Manager may not enter into contracts pertaining to the Property with parties
affiliated with, under the common control of or controlled by Manager unless
specifically consented to by Owner.

(c) Before engaging any independent contractor, Manager shall cause each such
independent contractor to provide evidence of any insurance to Manager, which
Manager, in its reasonable judgment, deems that such independent contractor
should provide.

(d) Manager shall obtain, where reasonable and practicable, competitive bids for
any contract service agreement or purchase order. When entering into any
contracts, service agreements or issuing purchase orders, Manager shall secure
and credit Owner all discounts, rebates or commissions or similar discounts
obtainable with respect to such contracts, service agreements or purchase
orders.

(e) All service contracts relating to the Property which are entered into by the
Manager shall, contain a provision that such service contract is terminable by
Owner without penalty or liability therefore on not more than thirty (30) days’
notice, unless a waiver of such right to terminate on such notice is approved by
Owner.

(f) Manager shall not enter into any material contracts on behalf of Owner or
for the benefit of the Property without the prior consent of Owner. For the
purposes hereof, a material contract shall mean any contract which either
(i) has a total contract sum more than $10,000, except in emergency situations,
or (ii) cannot be terminated on thirty (30) days’ notice or less without fee or
penalty.

 

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3.13 Property Disbursements. Manager shall, from the funds on deposit in the
Operating Account described in Section 4.01, cause to be disbursed regularly and
punctually, amounts which become due and payable from time to time as indicated
below.

 

As Part Of Manager’s Responsibilities

  

At The Request Of Owner

Property Operating Expenses    Property Taxes    Mortgage Payments    Mortgage
Escrow Payments    Insurance Payments    Approved Capital Expenses

It shall be understood that Owner shall be the holder of all security deposits
and such deposits will be disbursed to Owner together with the other funds of
Owner. At the request of Owner, Manager will establish an escrow account to hold
security deposits for the benefit of Owner as required by law.

3.14 Obligations Upon Termination. Upon termination for whatever cause, Manager
shall use commercially reasonable efforts to effectuate the transition of the
leasing and management of the Property to Owner or Owner’s designee. Upon
termination for whatever cause, Manager shall, within thirty (30) days from the
effective date of termination of this Agreement, deliver to Owner copies of all
books, permits, plan, records, leases, licenses, contracts and other documents
pertaining to the Property and their operation, all insurance policies, bills of
sale or the documents evidencing title or rights of Owner, and any and all
records or documents which are in Manager’s possession, whether or not
enumerated herein. At the request of Owner, Manager shall assign unexpired
service and supply contracts to Owner or parties designated by Owner. All
personal property (including, but not limited to, capital equipment, hardware,
trade and non-trade fixtures, materials and supplies) acquired pursuant to this
Agreement, whether paid for directly by Owner or by way of reimbursement to
Manager, shall become the property of Owner and shall remain at the Property
after the termination of this Agreement in accordance with its terms, unless
Owner shall request Manager to remove said property. Upon termination, Owner
shall pay all fees and reimbursements due Manager in accordance with the time
frames established hereby, and, if no timeframe for payment is established
hereby, in accordance with past custom.

3.15 Income Tax Returns. It shall be the responsibility of Owner to file all
income tax returns and report the income herein as required by federal and state
laws affecting the Property. Manager will assist Owner’s accountant in providing
all necessary reports and records.

3.16 Ad Valorem and Other Tax Matters. At the request and expense of Owner,
Manager shall:

 

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(a) pay all real estate taxes and other charges, assessments or levies imposed
upon or against the Property of whatever nature before delinquency;

(b) file all sales, gross revenues, personal property and other tax returns
relating to the Property (but excluding any income tax or franchise/excise tax
return of Owner); and/or

(c) seek revision of, or appeal from, any tax assessment or charge deemed
improper.

Manager shall provide Owner with copies of all such tax returns filed by Manager
and evidence of all such tax amounts paid by Manager within thirty (30) days of
such filing or payment.

3.17 Construction Management/General Contracting Services. Manager shall manage
installation of tenant improvements and the maintenance and repair of the
Property (including major construction, rehabilitation and betterments) and
repair or replace improvements due to wear, tear and casualty, including without
limitation:

(a) selection and supervision of design and engineering consultants;

(b) supervision of tenant improvement design and construction;

(c) supervision of capital improvements;

(d) the inspection of the progress of repairs and maintenance, and supervision
of the verification of the materials and labor being expended;

(e) obtaining the necessary receipts, releases, waivers, discharges and
assurances to keep the Property free from mechanics’ and materialmen’s liens and
other claims; and posting and recording notices of non-responsibility in
connection with construction performed by tenants;

(f) requiring that all contractors and subcontractors performing work on the
Property maintain insurance as specified by Owner from time to time; and

(g) obtaining and maintaining all governmental permits and approvals necessary
for use, operation and maintenance of the Property (provided that no permit or
approval creating a burden or obligation on the Owner will be enforceable
without Owner’s signature); and obtaining temporary and permanent certificates
of occupancy for Property tenant improvements.

3.18 Strategic Advisory Services and Surveys/Polls. On or before September 1st
of each year, and as otherwise requested by Owner, Manager shall provide
recommendations to Owner concerning the development of, and shall assist Owner
in developing, annual strategic plans in connection with the Property. Manager
shall coordinate the implementation of the annual strategic plans at the
Property. If requested by Owner, Manager shall participate in and cause its
employees engaged in the direct management of the Property to participate in
meetings (with travel expenses, if any, to be paid by Owner), and property
manager surveys or polls

 

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conducted by Owner. If requested by Owner, Manager shall administer, distribute,
coordinate and collect responses to tenant surveys or polls conducted by Owner.

3.19 Quarterly Meetings. Authorized representatives of Owner and Manager shall
meet as requested by Owner, but at least once each calendar quarter to review
matters relating to the Property and this Agreement, including, without
limitation, budget variances, unanticipated increases in costs and expenses,
performance standards, cost savings measures and performance. Owner shall give
Manager ten (10) Business Days notices of requested meetings and provide a range
of meeting dates and times. All such meetings shall be in Knoxville, Tennessee
unless otherwise agreed. Owner and Manager shall work to coordinate a monthly
call to review the previous month’s operating and financial performance at the
Property.

3.20 Emergencies. In the event maintenance or repairs are immediately necessary
for the preservation and safety of the Property or persons thereon, or to avoid
the suspension of any essential service to the Property, or to avoid harm,
danger or loss to life, limb or property, Manager shall immediately perform such
maintenance or repair and may make expenditures for such emergency repairs which
exceed the amounts set forth herein without prior written approval of Owner.
Manager, however, must inform Owner of any such expenditures and the reasons
therefor before the close of the next business day.

ARTICLE IV.

BANK ACCOUNTS

4.1 Separate Accounts. All Property income and other funds of Owner which are
received by Manager shall be deposited by Manager and held in a separate bank
account or accounts (“Operating Account”) maintained by Manager. All such funds
are the property of Owner and shall be received, held, and disbursed by Manager.
In no event shall the funds of anyone but Owner be deposited by Manager in the
Operating Account and Manager shall not commingle Owner’s funds with the funds
of any other Person in any manner whatsoever. Owner shall establish the
Operating Account in Owner’s name in a financial institution that has branches
in both Charlottesville, Virginia and Orlando. Florida.

4.2 Owners Duty to Provide Funds. In the event that at any time the balance in
the Operating Account falls below an amount equal to the average monthly
expenses of the Property, Manager shall promptly notify Owner who shall deposit
sufficient funds into the Operating Account to restore the balance to the
average monthly expenses of the Property within five (5) business days from
notification by Manager. Under no circumstances shall Manager have any duty or
obligation to advance any funds for the account of Owner.

4.3 Investment of Funds. In the event the Operating Account should at any time
contain funds exceeding the immediate cash needs of the management of Property,
Manager, with consent of Owner, may cause such excess funds or any portion
thereof to be invested in insured instruments or money market bank accounts;
provided, however, that the form of any such investment shall be consistent with
Manager’s or Owner’s need to be able to liquidate any such investment to meet
the cash needs of Owner with respect to the Property.

 

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ARTICLE V.

BUDGETS AND EXPENDITURES

5.1 Budget. Within sixty (60) days after the Commencement Date with respect to
the first calendar year of the Term, and no later than September 1st of each
year during the Term with respect to any subsequent calendar year (or at such
other date as designated by Owner, but no more frequently than once during each
twelve month period), Manager shall prepare and submit to Owner for Owner’s
approval a budget (following Owner’s approval, the “Approved Budgets”) for the
management and operation of the Property for the forthcoming twelve month period
which shall include an operating budget and a capital budget. The Approved
Budgets shall include an operating budget, a capital expenditure budget, and a
budget of projected leasing costs for the applicable period (including tenant
improvement costs and leasing commissions). Approved Budget line items shall
include:

(a) costs necessary for the management, operation, and maintenance of the
Property; and

(b) any and all capital expenditures anticipated to be incurred.

The budget format may be specified by Owner so long as Owner provides Manager
with the specific requirements for such at least 90 days prior to the due date.

5.2 Expenses Paid From Operating Account. All expenditures contemplated to be
incurred and paid from the Operating Account are limited to the extent that such
costs and expenses are authorized by this Agreement and by the amounts set forth
therefor in the applicable Approved Budgets. Manager shall secure Owners
approval for all expenditures in excess of $10,000.00 for any one item of
operation, except for utilities and such specific monthly and recurring
operation and maintenance items which are listed in the Approved Budgets and for
items which would be deemed an emergency and required for maintaining tenancy,
but provided Manager will take diligence to contact Owner for approval in the
event of an emergency.

ARTICLE VI.

INSURANCE

6.1 Insurance Coverage. Upon or prior to commencement of Manager’s services
under this Agreement, Owner and Manager shall each procure and maintain, at
their own expense, all insurance policies and requirements as provided in
Exhibit “C” to this Agreement. The carrier, total insurable values, and the
various coverage types and limits of each policy of insurance must be acceptable
to Owner in its commercially reasonable discretion. Manager shall be designated
as a named insured under each insurance policy procured by Manager. Such
policies, with the exception of Workers’ Compensation, Employer’s Liability,
Employee Dishonesty/Crime, Professional Liability and Employment Practices
Liability, shall name Owner as an additional insured and Owner shall be a named
insured and loss payee under any required Property Insurance coverages.

6.2 Certificates and Policies of Insurance. On or before the Commencement Date,
Certificates of the insurance coverage evidencing that such insurance is in
force as described above shall be delivered to the Owner or Manager, as
applicable. Within ten (10) calendar days

 

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prior to expiration of any such insurance coverage, new certificates shall be
delivered, evidencing renewal of such insurance coverage.

ARTICLE VII.

COMPENSATION OF MANAGER

7.1 Management Fee. Owner agrees to pay Manager, for the services to be rendered
to Owner hereunder during the Term hereof, a sum (the “Management Fee”) equal to
five percent (5%) of the “Gross Monthly Collections” (as defined below) from the
Property when, as, and only to the extent actually collected from the Property.
“Gross Monthly Collections” shall mean the total gross monthly collection of
rents and additional rents received from the Property as a result of rental of
all or any portion of the Property plus interest earned while on deposit in any
accounts maintained by Manager, excluding, however, (i) security deposits
(except when deposits are applied to past due rent or other sundry charges),
(ii) insurance proceeds payable with respect to fire or other casualty of any
portion of the Property or personal property located upon the Property, and
(iii) proceeds for the refinancing of any indebtedness secured by the Property.

7.2 Reimbursement of Expenses. In addition to the Management Fee, Owner shall
reimburse Manager for actual out-of-pocket expenses chargeable to Owner or the
Property as provided in this Agreement, including without limitation, pursuant
to Section 3.6.5. Owner shall also reimburse Manager for actual out-of-pocket
advertising costs, costs of travel of Manager’s employees, long distance
telephone calls, copies, faxes, preparation of reports, postage and overnight or
express delivery services of documents and general office supplies and
professional expenses (legal, accounting and engineering), to the extent such
cost and expenses are directly related to the management or leasing the
Property. Reimbursement for out-of-pocket expenses paid to any Affiliate of
Manager shall not exceed the fair market price or cost generally payable for
comparable goods or services in the area of the Property.

7.3 Construction Management Fee. For providing construction management services
for the Property, at the request of Owner, in accordance with Section 3.17,
Owner agrees to pay Manager a construction management fee equal to a) 5% of the
total cost of the project, if such construction is with respect to less than
fifty thousand (50,000) square feet of the Property; or b) 4% of the total cost
of the project if such construction is with respect to fifty thousand
(50,000) square feet or more of the Property, plus, in each case, Manager’s
travel costs and out-of-pocket expenses.

ARTICLE VIII.

LEASING

8.1 Leasing.

(a) Subject to the terms and conditions hereof, Owner hereby appoints Manager
and delegates to Manager the sole and exclusive right to lease the Property to
third parties. Manager accepts its appointment in accordance with and subject to
the terms of this Agreement.

 

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(b) Manager shall be responsible for coordinating the leasing activities of the
Property. Manager shall use reasonable efforts to retain responsible,
creditworthy tenants and to negotiate leases of the tenant spaces in the
Property at rentals at least equal to the scheduled minimum base rent fixed by
Owner from time to time. Manager shall negotiate leases using the Manager’s
standard lease form and agenda approved by Owner and in accordance with the
leasing guidelines established by Owner, which shall be amended from time to
time at Owner’s sole discretion. Manager shall be entitled to receive leasing
commissions standard within the industry for securing leases approved by Owner.

(c) All leases and occupancy agreements with respect to the Property shall be
approved and executed by Owner in Owner’s sole and absolute discretion.

8.2 Leasing Commission. Owner shall pay Manager a leasing commission as follows:

(a) For all new leases (including lease amendments that expand space for
existing tenants), a commission equal to four and 1/2 percent (4.50%) of the
aggregate base rents payable over the term of the lease.

(b) For all lease renewals, a commission equal to two one-quarter percent
(2.25%) of the aggregate base rents payable over the renewal term of the lease.

For purpose of this Section, “base rent” shall not include any portion of base
rent that is calculated to amortize tenant improvement allowances provided by
Owner over the term of the lease. All lease commissions shall be due upon
execution of each lease. Manager may share such commission with a non-affiliated
real estate broker representing a tenant in Manager’s discretion.

8.3 Brokers/Referral Service. In connection with the leasing of space in the
Property, Manager is hereby authorized to enlist the services of non-affiliated
real estate brokers and /or referral services and to pay such companies leasing
commissions or fees which in Manager’s sole opinion are commensurate for the
service. All commissions to non-affiliated real estate brokers shall be
compensated by Manager from its leasing commission.

8.4 Accepting Deposits. Manager is hereby authorized to accept rental deposits
or security deposits from tenants on in the name of and on behalf of Owner.

ARTICLE IX.

REMEDIES

Upon the occurrence of an event of a breach of this Agreement contemplated by
either Section 2.3.1 or Section 2.3.2 which breach continues beyond the notice
and cure periods contemplated thereby, then, in addition to any rights set forth
in Article II, the non-breaching party shall have the right to pursue any other
remedies available to such party at law or in equity.

 

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ARTICLE X.

MISCELLANEOUS

10.1 Usage. The use herein of: (i) the neuter gender includes the masculine and
the feminine, and (ii) the singular number includes the plural, and vice versa,
whenever the context so requires.

10.2 Headings. Captions in this Agreement are inserted for convenience of
reference only and do not define, describe or limit the scope or intent of this
Agreement or any of the terms hereof.

10.3 Notice. Any notice, demand or communication required or permitted hereunder
shall be given in writing and shall be deemed received (a) immediately upon
delivery in person; (b) three (3) days after being deposited in the US mail by
certified mail, postage prepaid; or (c) the first business day after being
deposited with a recognized overnight courier service. Each such notice shall be
addressed to the party to receive such communication at the address set forth in
Article I or other address as any party may hereafter designate by written
notice to the other parties hereto.

10.4 Relationship of the Parties. As to Owner, Manager is an independent
contractor hired by Owner pursuant to the terms hereof. Nothing contained in
this Agreement, nor any acts of the parties hereto, shall be deemed or construed
by the parties hereto to create the relationship of principal and agent or a
partnership or a joint venture between or amount the parties hereto.

10.5 Entire Agreement. This Agreement represents the entire agreement between
the parties and supersedes all other prior agreements, representations, and
covenants, oral or written. Amendments to this Agreement must be in writing and
signed by all parties hereto.

10.6 Assignment. Owner shall have the right at any time and from time to time in
its sole discretion to assign its rights and obligations hereunder to a third
party acquiring the Property provided that any such third party enters into a
written agreement assuming Owner’s obligations hereunder. Manager may assign its
rights and obligations hereunder to an Affiliate of Manager without consent of
the Owner; provided, however, that such assignment shall not release Manager
from any liability of Manager or its assigns arising out of or in connection
with this Agreement. Manager may assign its rights and obligations hereunder to
an entity that is not an Affiliate of Manager only with written permission of
Owner which consent may be granted or withheld in Owner’s sole and absolute
discretion.

10.7 Legal Representatives, Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of Owner, Manager, and their respective
legal representatives, successors, transfers and assigns but nothing contained
herein shall be interpreted to permit any assignment not otherwise expressly
permitted by another provision of this Agreement).

10.8 Time of the Essence. Time is of the essence for this Agreement.

10.9 Governing Law. This Agreement shall be governed by the laws of the State in
which the Property is located. In the event any term or provision contained in
this Agreement, or

 

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any portion thereof is held to be invalid, void or unenforceable by a court of
competent jurisdiction, the remaining portions of this Agreement shall remain in
full force and effect.

10.10 Severability. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal for any reason, such
provision shall be severed from the Agreement and shall not affect the validity
of the remainder of this Agreement.

10.11 No Interest in Condemnation or Insurance Proceeds. Manager shall not have
any interest in or claim to any condemnation proceeds for the Property awarded
to Owner or any insurance proceeds paid to Owner with respect to any casualty to
the Property; provided, however, that nothing contained herein shall prevent or
be deemed to prevent Manager from pursuing or seeking an award separate from
Owner’s award in any condemnation proceeding or a separate claim under any
insurance policy.

10.12 Mutual Waiver. The failure by any party to exercise any right or power
given herein or by law, or to insist upon strict compliance by any other party
with any obligation imposed hereunder, shall in no event constitute a waiver of
such party’s right to demand full and complete compliance with each and every
provision hereof or to exercise and enforce all available powers and remedies.

10.13 Owners Operating Procedures. Manager shall comply with such reasonable
rules and regulations governing operations of the Property as Owner shall from
time to time establish and make known to Manager.

10.14 Other Engagements. Owner acknowledges and consents to the fact that
Manager may be engaged in providing to other owners of other buildings in the
area of the Property the same or similar services which Manager is providing
herein and that such engagement, shall not be or be deemed to be a conflict of
interest or a breach of Manager’s fiduciary duty to Owner.

10.15 Reasonable Control. In the performance of any duty of Manager which is
beyond the reasonable control of Manager, Manager shall take (i) such action as
it deems prudent and reasonable under the circumstances to use its best efforts
to perform such duty and (ii) promptly notify Owner that the performance of such
duty is beyond its reasonable control.

10.16 Attorney’s Fee. If any legal action, suit or proceeding is commenced
between the parties regarding their respective rights and obligations under this
Agreement, the prevailing party shall be entitled to recover, in addition to
damages or other relief, costs and expenses, attorneys’ fees and court costs
(including, without limitation, expert witness fees). As used herein, the term
“prevailing party” shall mean the party which obtains the principal relief it
has sought, whether by compromise, settlement or judgment. If the party which
commenced or instituted the action, suit or proceeding shall dismiss or
discontinue it without the concurrence of the other party, such other party
shall be deemed the prevailing party.

10.17 Execution in Counterparts. This Agreement may be executed in two or more
counterparts, either electronically or manually, and manually-executed
counterparts may be delivered in faxed or scanned electronic form, each of which
(whether originally executed or such a faxed or scanned electronic document)
shall be deemed an original, and all of which together shall constitute one and
the same instrument. In making proof of this Agreement, it

 

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shall not be necessary to produce or account for more than one counterpart
hereof signed by each of the Parties.

10.18 Allocations. All of Owner’s expenses and costs incurred hereunder shall be
allocated and accounted for on a property-by-property basis.

10.19 Exhibits. All exhibits referred to herein and attached hereto are a part
hereof.

10.20 Right of First Refusal to Manage Additional Buildings. Owner hereby grants
to Manager a right of first offer/opportunity to manage any medical office
building developed or acquired by Owner or any Affiliate of Owner within a one
mile radius of 7557B Dannaher Drive, Powell, Tennessee 37849, 7557B Dannaher
Drive, Powell, Tennessee 37849, 120 Hospital Drive, Jefferson City, Tennessee
37820, or 900 East Oak Hill Avenue, Knoxville, Tennessee 37917. This right of
first offer/opportunity shall expire on the date which is the fifth
(5th) anniversary of the date hereof.

10.21 Protection of REIT Status. Manager acknowledges that CNL Healthcare
Properties, Inc., a Maryland corporation (“CNL REIT”) and an indirect owner of
Owner, has elected to be treated as a real estate investment trust (a “REIT”)
within the meaning of Sections 856 through 860 of the Internal Revenue Code of
1986, as amended (the “Code”), and Manager agrees that without the prior written
consent of Owner (which may be given or withheld in Owner’s sole discretion), it
will not (a) accept, or cause or allow to be earned, any rents or license fees
or other amounts to be paid by a tenant or occupant at the Property that would
be based, in whole or in part, on the income or profits derived by the business
activities of such tenant or occupant, (b) furnish or render any services to a
tenant or occupant at the Property other than services customarily furnished or
rendered in connection with the rental of real property of a similar class in
the geographic market in which the Property is located, or (c) accept, or cause
or allow to be earned, any payments or other amounts which would fail to qualify
as “rents from real property” as described in Section 856(d) of the Code.
Accordingly, Manager shall not provide any services giving rise to such non
qualifying income and shall not provide or allow to be provided by others any
new services related to the Property without the prior written consent of Owner,
which consent may be withheld in Owner’s sole discretion. In the event Owner
consents to the provision of any non-customary services by Manager to any tenant
or licensee of the Property, such services shall be provided by Manager at
competitive rates and for its own account and neither Owner nor CNL REIT,
directly or indirectly, shall participate in the collection of or share in the
revenues or profits derived from such services. Without limiting the generality
of the foregoing, with respect to any of the services to be rendered by Manager
for the Property, Manager agrees that it will not enter into any subcontract
with or otherwise engage the services of any Person from whom Owner or CNL REIT,
directly or indirectly, derives any revenue (including, for example, from a
tenant of the Property), without the prior written consent of Owner. Manager
further represents and warrants that neither Owner nor CNL REIT, directly or
indirectly, derives any revenue from Manager, except for rent paid by Manager to
occupy Management Space to manage the Property, which space shall be used solely
for the management of the Property. Owner shall reimburse Manager for all
reasonable out-of-pocket legal fees incurred by Manager in complying with the
terms of this Section.

 

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10.22 Defined Terms. In addition to any other terms defined in the body of this
Agreement, as used herein the following terms shall have the meanings indicated
in this Section:

“Affiliate” of any specified Person means any other Person Controlling,
Controlled by or under common Control with such specified Person.

“Control” (and terms correlative thereto) when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities or other beneficial interests, by contract or otherwise.

“Person” means any individual, corporation, limited liability company,
partnership, joint venture, estate, trust, unincorporated association, or any
other entity, any governmental authority, and any fiduciary acting in such
capacity on behalf of any of the foregoing.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

 

MANAGER HEALTHCARE EQUITY PARTNERS, LLC, a Tennessee limited liability company
By:  

/s/ Norman T. Brinkman

Name:  

Norman T. Brinkman

Title:  

Managing Member

OWNER: CHP KNOXVILLE PLAZA A MOB OWNER, LLC, a Delaware limited liability
company By:  

/s/ Tracey B. Bracco

Name:   Tracey B. Bracco Title:   Vice President

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EXHIBIT A

PROPERTY AREA SUBJECT TO RIGHT OF FIRST REFUSAL

PER SECTION 10.20

[Intentionally Omitted]

EXHIBIT B

REPORTS TO OWNER

[Intentionally Omitted]

EXHIBIT C

REQUIRED INSURANCE COVERAGE

[Intentionally Omitted]

EXHIBIT D

OFFICE PROPERTY SERVICES QUESTIONNAIRE

[Intentionally Omitted]