Exhibit 10.3

SERVICE AGREEMENT

THIS SERVICE AGREEMENT (“Agreement”) is made and entered into as of the 2nd day
of March, 2016 (the “Effective Date”), by and between CNL Capital Markets Corp.
(“CCM”), and CNL Healthcare Properties II, Inc. (the “Issuer”).

WHEREAS, the Issuer has prepared and filed with the U.S. Securities and Exchange
Commission (the “SEC”) a registration statement on Form S-11 and intends to
raise capital through this and other follow on offerings of securities to the
public, each under Rule 415 (collectively, the “Offering”), pursuant to the
Securities Act of 1933, as amended, and the rules and regulations of the SEC
promulgated thereunder; and

 

WHEREAS, the Issuer desires to retain CCM to act as an agent on its behalf and
to provide certain services in connection with the Offering, as set forth
herein, and CCM is willing and desires to accept such retention, all upon the
terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the terms and conditions hereinafter set
forth and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, it is agreed between CCM and Issuer
(collectively, the “Parties”), as follows:

1.Appointment and Third Party Agreements

A.Transfer Agent Services.  Subject to and in accordance with the terms and
conditions herein set forth, the Issuer hereby retains and appoints CCM to act
as an agent duly authorized to act on its behalf for purposes of negotiating and
executing on behalf of the Issuer a Transfer Agency and Service Agreement and
related amendments with a duly registered transfer agent, DST Systems, Inc., a
Delaware corporation, or their successor in CCM’s sole discretion, for the
purposes of obtaining transfer agent, registrar, paying agent and redemption
agent services for the term of the Offering and as required thereafter (“the
TASA Agreement”).

B.Electronic Account Services.  Subject to and in accordance with the terms and
conditions herein set forth, the Issuer hereby retains and appoints CCM to act
as an agent duly authorized to act on its behalf for purposes of negotiating and
executing on behalf of the Issuer an agreement with an investor and financial
advisor online account and data access and service provider, DST Systems, Inc.,
a Delaware corporation, or their successor in CCM’s sole discretion, for the
term of the Offering, and as required thereafter (the “DST Agreement”).

C.Alternative Investment Product Services.  Subject to and in accordance with
the terms and conditions herein set forth, the Issuer hereby retains and
appoints CCM to act as an agent duly authorized to act on its behalf for
purposes of negotiating and executing on behalf of the Issuer an agreement with
the National Securities Clearing Corporation (“NSCC”), or their successor in
CCM’s sole discretion, (the “NSCC Agreement”) for the purposes of Issuer’s
participation in Alternative Investment Product.

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D.Additional Agency.  The Issuer hereby retains and appoints CCM to act as an
agent duly authorized to act on its behalf for purposes of negotiation and
execution on behalf of the Issuer of any and all agreements ancillary to or
required for completion of the services set forth in Exhibit A attached hereto,
as amended from time to time (collectively, the “Services”) in addition to the
TASA Agreement, the DST Agreement and the NSCC Agreement (the TASA Agreement,
the DST Agreement, the NSCC Agreement, and these ancillary agreements, if any,
collectively referred to as the “Service Agreements”). CCM’s signature on any
Service Agreement shall be fully binding upon the Issuer. Each act or omission
of CCM under or pursuant to the Service Agreements is hereby adopted by the
Issuer as authorized and shall be binding on the Issuer as if it had acted or
omitted to act. 

E.Acceptance.  CCM hereby accepts the appointment as agent and agrees to perform
the Services in accordance with the terms and conditions hereinafter set forth.
In connection with the TASA Agreement and the DST Agreement and all services
provided thereunder, CCM shall be considered as the Issuer’s agent, and shall
not be deemed to provide such services. The Issuer also acknowledges and accepts
the terms and fees associated with the Service Agreements.

2.Services and Terms

A.CCM shall perform the Services, pursuant to Issuer’s reasonable established
policies and procedures applicable to such Services as timely provided in
writing to CCM.

B.CCM shall enter into the Service Agreements as set forth above.

C.CCM shall determine the levels and priorities applicable to the Services and
related actions taken in connection therewith, but shall in all cases performing
Services within a commercially reasonable time as applicable.

D.In the event an investor, broker-dealer or financial advisor contacts CCM
regarding any of the issues set forth in Exhibit B attached hereto, CCM shall
refer such investor, broker-dealer or financial advisor to another party per the
written instructions of the Issuer.

E.Issuer hereby agrees that CCM shall have full discretion to engage
subcontractors and third-party service providers to perform, and assist CCM with
the performance of, any and all of its obligations under this Agreement.

F.It is intended that CCM be deemed an independent service provider and that no
employment relationship shall be created between Issuer on the one hand and CCM
or CCM’s employees, agents or subcontractors on the other hand.

G.Nothing in this Agreement shall in any way be deemed to restrict the right of
CCM to perform services for any other person or entity, and the performance of
such services for others shall not be deemed to violate or give rise to any duty
or obligation to Issuer or any investor not specifically undertaken by CCM
hereunder.

H.Issuer agrees to use reasonable efforts to provide CCM (1) advance written
notice in the event that there are any administrative changes to Issuer’s
governing documents or business practices which changes would have an impact on
the Services provided pursuant to this

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Agreement, including, but not limited to, changes to Issuer’s dividend
reinvestment plan, redemption plan, commissions and fees (including discounts)
paid on sales of shares, distribution and stockholder servicing fees, offering
prices of shares, classes of shares being offered, investor suitability
standards, the states where shares are offered, distribution rates or
declaration and payable dates, introduction of new securities offerings, and
changes in business practices pertaining to certification of shares, book entry,
electronic delivery of information to stockholders; and (2) prompt notice of
Issuer’s filing of a Registration Statement or any other form with the
Securities and Exchange Commission, and any amendments thereto, that affect the
Services provided by CCM pursuant to this Agreement. 

I.Within the sixty (60) day period after the effective date of this Agreement,
the parties hereto shall confer, diligently and in good faith, to agree upon (1)
the operational service level standards that shall be measured under this
Agreement, if any, and (2) the ongoing reports to the Issuer to be provided
under this Agreement, if any, and/or as they arise.

3.Compensation and Payments

As consideration for the provision of the Services under this Agreement, Issuer
shall pay: (1) An annual fee calculated and payable as noted below and in
Exhibit C attached hereto, (the “Annual Service Fee”); (2) fees and payments
paid directly to third parties for services provided to the Issuer in connection
with a Service Agreement (“Service Agreement Fees”); and (3) fees and payments
in connection with Communications Services, defined and payable as noted in
Exhibit C.   In addition, Issuer may, at its sole discretion, request and pay
for Additional Services, as defined herein. Issuer agrees to timely pay any and
all fees due under this Agreement and all Services Agreements.

A.The Annual Service Fee

The Annual Service Fee is paid as consideration for the covered Services
described in Exhibit A attached hereto.  The Annual Service fee is calculated
based upon CCM and the Issuer’s mutually agreed upon best efforts approximation
of the average number of investor accounts that will be open over the entire
course of the Agreement’s current term.  This average account approximation and
the table in Exhibit C, may then be used to determine the Annual Service Fee.

 

The Annual Service Fee shall be paid in twelve (12) equal monthly installments,
each payable in advance of the performance of the Services.  By way of example,
if the determined Annual Service Fee is $120,000, CCM would invoice the Issuer
for $10,000 on January 1, and then for an additional $10,000 on the first of
each month thereafter through December 1.

 

The number of monthly installment payments for the Annual Fee during the initial
term of this Agreement shall equal the number of months in the year from the
Service Start Date, as defined below, through December, exclusive of the month
in which the Service Start Date occurs.  By way of example, if the Service Start
Date occurs in April, the entire Annual Fee would be payable in eight (8) equal
monthly installments beginning May 1.  The Service Start Date is defined as the
first day upon which an investor account is opened for the Issuer.

 

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B.Service Agreement Fees 

Service Agreement Fees are pass through fees billed directly to the Issuer by
the party providing a Service under a Service Agreement.  The Issuer is
exclusively responsible for their timely payment, and for any fees or costs
associated with any late payments. In the event of a disputed payment, CCM will
cooperate with Issuer to resolve the matter in accordance with the terms of the
applicable Service Agreement. Changes in pricing that result from changes in
fees or new features or activities under a Service Agreement will be the sole
responsibility of the Issuer.  Certain Service Agreements, including but not
limited to the TASA Agreement, will contain fee and pricing features that are
determined (1) based on actual specific performance of Services for the Issuer;
and (2) based upon aggregate numbers of investor accounts served by all CCM
issuer clients that are beneficiaries of a given Service Agreement, including
but not limited to the Issuer (the “Platform Size Benefits”).  Issuer
acknowledges that CCM cannot control fluctuations in the aggregate number of
issuer accounts that determine the calculation of Platform Size Benefits.

C.Communication Services Fees

The Communications Services Fees are paid as consideration for the covered
Communication Services described in Exhibit A attached hereto, which may be
provided by CCM or a designated affiliate.  Communication Services Fees are
invoiced from CCM to Issuer based on actual time spent an amount equal to the
lower of the CCM’s actual cost or the amount the Company would be required to
pay third parties for the provision of comparable communication services in the
same geographic location; and provided, further, that such costs are reasonably
allocated on the basis of time records or other method conforming with generally
accepted accounting principles..  Out-of pocket expenses of CCM, including
reasonable travel, lodging or other actual expenses incurred in connection with
approved Communications Services will also be invoiced to Issuer.  CCM will
provide Issuer with reasonably detailed invoices regarding all hourly fees and
expenses.

Communication Services Fees may also include pass through fees billed directly
to the Issuer by a third party providing a Communication Service, either under a
Service Agreement or at the request of CCM in connection with its completion of
the Communication Services.  The issuer is exclusively responsible for their
timely payment, and for any fees or costs associated with any late payments.  In
the event of a disputed payment, CCM will cooperate with Issuer to resolve the
matter.

D.Subsequent Pricing

At least sixty (60) days before the expiration of the initial term of this
Agreement or a Renewal Term as defined in Section 8 hereof, CCM and the Issuer
agree to each evaluate and the need for an updated Exhibit C fee schedule for
each upcoming Renewal Term, and if it is determined a new schedule is needed,
the parties agree to negotiate in good faith.  Changes to the fee schedule in
Exhibit C shall be effective upon written approval and an amendment to Exhibit
C, setting forth the new fee schedule, shall be attached as Amended Exhibit C to
this Agreement.  

In the event the parties fail to agree upon a new fee schedule as of such date
and neither party exercises its right to terminate by such date, an automatic
pricing update to the Annual Fee

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shall take effect based on the following calculation:  The Annual Fee shall be
adjusted at a minimum to an amount equal to the current Annual Fee paid by
Issuer for the Services increased by the percentage increase for the
twelve-month period of the previous calendar year of the CPI-W (defined below),
or, in the event that publication of such index is terminated, any successor or
substitute index, appropriately adjusted, reasonably acceptable to the
Parties.  As used herein, “CPI-W” shall mean the Consumer Price Index for Urban
Wage Earners and Clerical Workers for Boston-Brockton-Nashua, MA-NH-ME-CT, (Base
Period: 1982-84 = 100), as published by the United States Department of Labor,
Bureau of Labor Statistics.

E.Payment Schedule

All amounts due and payable under this Agreement, including all Exhibits
thereto, shall be due and payable to CCM by Issuer within thirty (30) calendar
days of request for payment or reimbursement by CCM, except for any fees or
expenses that are subject to good faith dispute.  In the event of such a
dispute, only that portion of the fee or expense subject to the good faith
dispute may be withheld. Issuer shall notify CCM in writing within thirty (30)
calendar days following the receipt of each invoice if an Issuer is disputing
any amounts in good faith together with a statement specifying the portion of
fees or expenses being withheld and a reasonably detailed explanation of the
reasons for withholding such fees or expenses. If Issuer does not provide such
notice of dispute within the required time, the invoice will be deemed accepted.
Whenever Issuer withholds payment of a disputed portion of any invoice, the
parties hereto will negotiate expeditiously and in good faith to resolve any
such disputes within thirty (30) calendar days of the original notice of
dispute. Issuer shall settle such disputed amounts within ten (10) calendar days
of the day on which the parties hereto agree on the amount to be paid by payment
of the agreed amount. If no agreement is reached, such disputed amounts shall be
settled as may be required by law or legal process.

 

F.Late Payments

If any undisputed amount in an invoice (for fees or reimbursable expenses
hereunder) is not paid when due, CCM may, after prior written notice to the
Issuer, charge such undisputed amount against any monies held under this
Agreement on behalf of the applicable Issuer. Without limiting the foregoing, if
any undisputed amount in an invoice of CCM (for fees or reimbursable expenses)
is not paid when due, or if any disputed amount in an invoice of CCM (for fees
or reimbursable expenses) is not paid when due and is subsequently determined to
have been due, Issuer shall pay CCM interest thereon (from due date to the date
of payment) at a per annum rate equal to one percent (1.0%) plus the Prime Rate
(that is, the base rate on corporate loans posted by large domestic banks)
published by the The Wall Street Journal (or, in the event such rate is not so
published, a reasonable equivalent published rate selected by CCM) on the first
day of the publication during the month when such amount was due.
Notwithstanding any other provision hereof, such interest rate shall be no
greater than permitted under applicable provisions of law.

 

G.Additional Services

From time to time Issuer may request that CCM provide services to it beyond
those Services contemplated in this Agreement (“Additional Services”).  If CCM,
in its sole discretion,

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determines that contemplated Additional Services may require employees of CCM to
spend in excess of 20 work hours dedicated to such Additional Services, CCM and
Issuer shall negotiate a separate statement of work and fee schedule regarding
such Additional Services.  

 

4.Confidentiality of Records

A.As used herein, “Issuer Data” means all information and facts owned by the
Issuer or collected on behalf of the Issuer, including, without limitation, any
technical, business or investor information, of any kind, or in any form, format
or medium (including, without limitation, all interrelated, unique data items or
records in one or more computer files).  CCM shall keep confidential any Issuer
Data it receives, maintains, processes or otherwise accesses while providing the
Services contemplated herein and will use such Issuer Data solely for performing
its obligations under this Agreement.  CCM will not release Issuer Data except
as otherwise provided for in Section 4 or with the consent of
Issuer.  Notwithstanding the above, CCM may release Issuer Data to its nominees,
subcontractors or third-party service providers, including providers under the
Service Agreements (“the Third Parties”), provided that each such Third Party
shall be required by CCM to agree to comply with the terms of confidentiality in
this Agreement or other substantially similar terms.

B.Issuer will provide CCM with such information as CCM may reasonably require in
order to comply with its duties under this Agreement.  CCM will maintain such
reports and records as Issuer may reasonably require and for such length of time
as required by applicable laws, rules and regulations, and as set forth by
Issuer’s record retention policies, but at least as long as required by the
record retention policy of CCM.

C.All records, data files, material, reports and other data received pursuant to
this Agreement are the property of Issuer, are confidential and will be
delivered to Issuer upon Issuer’s demand at Issuer’s expense.

D.Both CCM and the Issuer shall have in place and comply with reasonable privacy
and confidentiality policies and/or procedures in order to comply with all
applicable privacy laws, rules and regulations and to safeguard all Issuer
Data.  Such policies and/or procedures shall be available for review by either
CCM or the Issuer upon request to the other party.  

E.Notwithstanding anything to the contrary in this Agreement, CCM may disclose
this Agreement and any amendments, terminations and renewals thereof to: (i)
third party due diligence firms and their broker-dealer clients, upon such due
diligence firm’s request, to facilitate the review of Issuer’s offerings in
connection with the sale thereof; or (ii) upon the advice of counsel; or (iii)
as may be required by applicable laws, rules and regulations.

F.CCM is authorized to disclose information concerning Issuer Data to its
affiliates and to Third Parties as may be necessary solely in connection with
the administration of or performance of this Agreement as set forth herein, to
CCM’s internal and external auditors, accountants and counsel, and to any other
person or entity when so advised by counsel where CCM may incur liability for
failing to do, including as may be required under applicable laws, rules and
regulations or based upon requests by regulators or other government agencies.

 

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G.Except for the agreement to exert reasonable efforts to attempt to correct
failures of any third party to operate in material compliance with the
operational and confidentiality requirements provided herein and in their
respective service agreements, CCM makes no warranty that errors or failures
will not occur or that they may be resolved.  Except as expressly stated herein
or for an incident arising from CCM’s gross negligence or willful misconduct,
CCM expressly disclaims responsibility for breaches of confidentiality or for
loss of confidential data and Issuer Data by third parties. 

 

5.Limitation of Liability; Indemnification

A.Limitation of Liability

 

1.Subject to any limitations imposed by the Issuer’s charter, CCM shall not be
liable for any Losses (as defined in Section 5.B.1.) or action taken or omitted
or for any loss or injury resulting from CCM’s (including, but not limited to,
its agents, nominees and/or subcontractors) or third party service providers’
performance or failure to perform their respective duties hereunder in the
absence of gross negligence or willful misconduct on their respective
parts.  Subject to any limitations imposed by the Issuer’s charter, and except
to the extent of CCM’s gross negligence or willful misconduct, in no event shall
CCM be liable to Issuer, any investor, or any third party (i) for acting in
accordance with Issuer’s instructions or instructions from any entity or
individual reasonably believed by CCM to be an agent of Issuer; (ii) for
special, consequential or punitive damages; (iii) for the acts or omissions of
its correspondents, designees, agents, subagents; (iv) any Losses (as defined in
Section 5.B.1.) due to forces beyond the reasonable control of CCM, including
without limitation, strikes, work stoppages, acts of war or terrorism,
insurrection, revolution, nuclear or natural catastrophes or acts of God, and
interruptions, loss or malfunctions of utilities, communications or computer
(software or hardware) services; or (v) for any violation or alleged violation
of any federal securities law or any “blue sky” or state securities law.  With
respect to any Losses (as defined in Section 5.B.1.) incurred as a result of the
acts or the failure to act by any correspondents, designees, agents, subagents,
sub-agents, contractors or sub-contractors, CCM shall take appropriate action,
as determined by CCM in its sole discretion, to recover such Losses from such
correspondents, designees, agents, sub-agents, contractors or sub-contractors,
and CCM’s sole responsibility and liability to Issuer and investors shall be
limited to such amounts, if any, recovered from same less any costs and expenses
incurred by CCM in any such recovery efforts.  Except with respect to Losses
resulting from CCM’s gross negligence or willful misconduct, with respect to any
and all Losses howsoever arising from or in connection with this Agreement or
the performance of CCM’s (or its nominees’, subcontractors’ or third-party
service providers’) duties hereunder, the enforcement of this Agreement and
disputes between the Parties hereto or otherwise related to CCM’s performance
hereunder, CCM’s sole responsibility and aggregate liability to Issuer shall not
exceed the amount of fees paid by Issuer to CCM (exclusive of costs and expenses
incurred by CCM) pursuant to Section 3 of this Agreement.

2.Notwithstanding any provisions of this Agreement to the contrary, CCM shall be
under no duty or obligation to inquire into, and shall not be liable for:

 

i.

The legality of the issue, purchase, sale, redemption or transfer of any
securities, the sufficiency of the amount to be paid or received in connection
therewith, or

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the authority of Issuer to request such issuance, purchase, sale, redemption or
transfer; 

 

 

ii.

The legality of the declaration of any dividend by Issuer, or the legality of
the issue of any securities in payment of any stock dividend;

 

 

iii.

The legality of any recapitalization or readjustment of the securities; or

 

 

iv.

The legality or accuracy of any tax reporting, withholding or cost basis
reporting.

 

3.Third Party Information

CCM shall have no responsibility for the accuracy of any information that has
been provided by or obtained from third parties.

 

4.Trustee or Fiduciary

Nothing contained herein shall cause CCM to be deemed a trustee or fiduciary for
or on behalf of Issuer, any investor, or any other person.  The Services
provided by CCM hereunder are in addition to the services provided by CCM under
any other agreements, if applicable, between the Parties.

 

B.Indemnification

1.The Issuer agrees, to the extent permitted by the Issuer’s charter and
applicable federal and state law (including, but not limited to, federal and
state securities law), to indemnify, defend and hold harmless CCM, and when
appropriate, its agents, nominees and subcontractors, and their respective
officers, directors, partners, employees, associated persons, agents and control
persons against any and all losses, claims, damages, liabilities and expenses,
including reasonable legal (including attorneys’ fees), and other expenses
incurred in investigating or defending such claims or liabilities (collectively
referred to herein as “Losses”), joint or several, whether or not resulting in
any liability to such persons, to which they or any of them may become subject,
insofar as such Losses (or actions in respect thereof) arise out of or are based
upon this Agreement or the performance of their duties hereunder, the
enforcement of this Agreement and disputes between the Parties hereto or
otherwise related to their performance hereunder.  Provided, however, that
nothing contained herein shall require that CCM (or its agents, nominees and
subcontractors) be indemnified for Losses to the extent they are caused by its
(or its agents’, nominees’ and subcontractors’, respectively)  gross negligence
or willful misconduct.  Nothing contained herein shall limit or in any way
impair the right of CCM to indemnification under any other provision of this
Agreement.  For purposes of this Section B, “control persons” with respect to an
entity, means those persons who possess, directly or indirectly, the power to
direct or cause the direction of the management  or policies of such entity,
whether through the ownership of voting securities, by contract, or otherwise.

 

2.CCM agrees, to the extent permitted by applicable federal and state law
(including, but not limited to, federal and state securities law) to indemnify,
defend and hold harmless the Issuer, and its officers, directors, partners,
employees, associated persons, agents

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and control persons, from and against any and all Losses, joint or several,
whether or not resulting in any liability to such persons, to which they or any
of them may become subject, insofar as such Losses (or actions in respect
thereof) arise out of or are based upon this Agreement or the performance of
their duties hereunder, the enforcement of this Agreement and disputes between
the Parties hereto or otherwise related to their performance
hereunder.  Provided, however, that nothing contained herein shall require that
Issuer (or its agents, nominees and subcontractors) be indemnified for Losses
except to the extent they are caused by the gross negligence or willful
misconduct of CCM (or its agents, nominees and subcontractors).  Nothing
contained herein shall limit or in any way impair the right of Issuer to
indemnification under any other provision of this Agreement.   

 

3.The parties hereto agree that CCM may assign to Issuer, at Issuer’s request,
any and all rights of subrogation CCM may have against any third party vendors,
correspondents, agents, sub-agents, contractors, sub-contractors or consultants
as and in full satisfaction of any obligation of indemnity CCM may have to
Issuer under this Agreement.

 

4.Any party entitled to contribution or indemnification will, promptly after
receipt of such notice of commencement of any action, suit, proceeding or claim
against him or it in respect of which a claim for contribution or
indemnification may be made against another indemnifying party or indemnifying
parties, notify such other indemnifying party or indemnifying parties.  Failure
to so notify such other indemnifying party or indemnifying parties shall not
relieve such other indemnifying party or indemnifying parties from any other
obligation it or they may have hereunder or otherwise, unless the indemnifying
party has been materially prejudiced in its ability to defend the action as a
result of such delay.  If such other indemnifying party or indemnifying parties
are so notified, such other indemnifying party or indemnifying parties shall be
entitled to participate in the defense of such action, suit, proceeding or claim
at its or their own expense or in accordance with arrangements satisfactory to
all parties who may be required to contribute.  After notice from such other
indemnifying party or indemnifying parties to the indemnified party entitled to
contribution or indemnification of its or their acknowledgement of its or their
obligations hereunder and its or their election to assume its or their own
defense, the indemnifying party or indemnifying parties so electing shall not be
liable for any legal or other expenses of litigation subsequently incurred by
the indemnified party entitled to indemnification or contribution in connection
with the defense thereof, other than the reasonable costs of investigation.  No
party shall be required to contribute or provide indemnification with respect to
the settlement amount of any action or claim settled without its consent, which
shall not be unreasonably withheld.

 

6.Representations, Warrants and Covenants of CCM

 

A.CCM hereby represents, warrants and covenants during the full term of this
Agreement, that:

 

1.It is duly organized and validly existing under the laws of Florida with full
power and authority to conduct its business.  

 

2.It has the power and authority to enter into and perform this Agreement; and
the execution and delivery of this Agreement by CCM has been duly and validly
authorized by all

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necessary action.  This Agreement constitutes the valid and binding agreement of
CCM, enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar state or federal debtor relief laws from
time to time in effect which affect the enforcement of creditors’ rights
generally and by general equitable principles. CCM is not in violation of its
articles of incorporation or bylaws or in default under any agreement or
instrument the effect of which violation or default would be material to
CCM.  None of: (i) the execution and delivery by CCM of this Agreement; (ii) the
consummation by CCM of any of the transactions herein or therein contemplated;
and (iii) the compliance by CCM with the provisions hereof or thereof, does or
will conflict with or result in a breach of any term or provision of the
articles of incorporation or bylaws of CCM or conflict with, result in a breach,
violation or acceleration of, or constitute a default under, the terms of any
agreement or instrument to which CCM is a party or by which it is bound or, to
the knowledge of CCM, any statute, order or regulation applicable to CCM of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over CCM.  CCM is not a party to, bound by or in breach or
violation of any agreement or instrument or, to the knowledge of CCM, subject to
or in violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction over it
that materially and adversely affects, or may in the future materially and
adversely affect: (i) the ability of CCM to perform its obligations under this
Agreement; or (ii) the business, operations, financial conditions, properties or
assets of CCM.  

 

3.There are no actions or proceedings against, or investigations of, CCM pending
or, to the knowledge of CCM, threatened, before any court, arbitrator,
administrative agency or other tribunal: (i) asserting the invalidity of this
Agreement; (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement; or (iii) that might materially and adversely
affect the performance by CCM of its obligations under, or the validity or
enforceability of, this Agreement.

 

4.CCM will, during the full term of this Agreement, abide by all applicable
provisions of its governing instruments, as the same may be amended.

 

7.Representations, Warrants and Covenants of Issuer

A.Issuer hereby represents, warrants and covenants during the full term of this
Agreement, that:

 

1.It is duly organized and validly existing under the laws of Maryland with full
power and authority to conduct its business.

2.It has the power and authority to enter into and perform this Agreement; and
the execution and delivery of this Agreement by Issuer has been duly and validly
authorized by all necessary action.  This Agreement constitutes the valid and
binding agreement of Issuer, enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar state or federal debtor relief
laws from time to time in effect which affect the enforcement of creditors’
rights generally and by general equitable principles. Issuer is not in violation
of its articles of incorporation or bylaws or in default under any agreement or
instrument the effect of which violation or default

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would be material to Issuer.  None of: (i) the execution and delivery by Issuer
of this Agreement; (ii) the consummation by Issuer of any of the transactions
herein or therein contemplated; and (iii) the compliance by Issuer with the
provisions hereof or thereof, does or will conflict with or result in a breach
of any term or provision of the articles of incorporation or bylaws of Issuer or
conflict with, result in a breach, violation or acceleration of, or constitute a
default under, the terms of any agreement or instrument to which Issuer is a
party or by which it is bound or, to the knowledge of Issuer, any statute, order
or regulation applicable to Issuer of any court, regulatory body, administrative
agency or governmental body having jurisdiction over Issuer.  Issuer is not a
party to, bound by or in breach or violation of any agreement or instrument or,
to the knowledge of Issuer, subject to or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or governmental
body having jurisdiction over it that materially and adversely affects, or may
in the future materially and adversely affect: (i) the ability of Issuer to
perform its obligations under this Agreement; or (ii) the business, operations,
financial conditions, properties or assets of Issuer. 

3.There are no actions or proceedings against, or investigations of, Issuer
pending or, to the knowledge of Issuer, threatened, before any court,
arbitrator, administrative agency or other tribunal: (i) asserting the
invalidity of this Agreement; (ii) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement; or (iii) that might materially
and adversely affect the performance by Issuer of its obligations under, or the
validity or enforceability of, this Agreement.

 

4.The Issuer acknowledges that CCM (1) is not a registered transfer agent under
Section 17A(c) of the Securities Exchange Act of 1934 and is not acting as a
fiduciary or in the capacity of a transfer agent; and (2) is not a member of the
Financial Industry Regulatory Authority (FINRA) and is not acting as a broker or
dealer in connection with performing Services for the Issuer.

 

5.Issuer will, during the full term of this Agreement, abide by all applicable
provisions of its governing instruments, as the same may be amended.

 

8.Term and Termination

A.The initial term of this Agreement shall commence on the Effective Date as
noted above and shall expire on December 31, 2016.  Upon the expiration of such
initial term or any renewal thereof, this Agreement shall then automatically be
renewed for consecutive one (1) year periods (each such renewal, a “Renewal
Term”).  Renewal Terms exactly align with a given calendar
year.  Notwithstanding the above, the Agreement may otherwise be terminated
earlier as follows:

1.By either CCM or Issuer, after having given the other party at least
one-hundred twenty (120) calendar days advance written notice of its intent to
terminate.

2.In the event that CCM shall fail to perform material services hereunder and
such failure may result in a material adverse effect on Issuer’s business,
Issuer may terminated this Agreement immediately on written notice to CCM.

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B.In the event that this Agreement is terminated, regardless of the reason for
such termination, CCM agrees to cooperate with Issuer to provide for an orderly
transfer of functions to the successor service provider. 

9.Survival of Terms

The provisions of Section 4 (Confidentiality of Records) and Section 5
(Limitation of Liability; Indemnification) shall survive any termination of this
Agreement.  

10.Notices

Unless otherwise provided herein, all notices or other communications under this
Agreement must be in writing and signed by an authorized officer (or such other
persons as either party shall specify in written notice to the other).

All such notices shall be deemed given and received when delivered by hand or
facsimile transmission in conjunction with a transmission confirmation, or after
three (3) days following placement in the U.S. mail addressed to the other
party, first class certified mail, or via overnight courier service, at the
applicable address set forth in this Section.

If sent to CCM:

CNL CAPITAL MARKETS CORP.  

CNL Center at City Commons

450 South Orange Avenue

Orlando, Florida 32801

Attention:   Corporate Counsel

 

If sent to the Issuer:

CNL Healthcare Properties II, Inc.

CNL Center at City Commons

450 South Orange Avenue

Orlando, Florida 32801

Attention: Chief Financial Officer

 

 

11.Nonwaiver

The failure of any party to insist upon or enforce strict performance by any
other party of any provision of this Agreement or to exercise any right under
this Agreement shall not be construed as a waiver or relinquishment to any
extent of such party’s right to assert or rely upon any such provision or right
in that or any other instance; rather, such provision or right shall be and
remain in full force and effect.

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12.Assignment 

Except for the assignment by CCM (i) to a successor corporation upon the merger
or consolidation of CCM, (ii) to an affiliate of CCM, or (iii) upon the sale of
all or substantially all of CCM’s business of providing services similar to the
Services, this Agreement shall not be assigned by any party hereto without the
prior written consent of the other party hereto.

13.Governing Law and Venue

This Agreement shall be construed in accordance with the applicable laws of the
State of Florida, excluding the choice of law provisions thereof.  Any aggrieved
party may proceed to enforce its rights in the appropriate action at law or in
equity.  Venue for all suits arising out of this Agreement shall lie exclusively
in the courts of Orange County, Florida.  By execution of this Agreement, each
party hereby submits itself to the in personam jurisdiction of all courts of
Orange County, Florida, and waives any right they may have to seek any change of
jurisdiction or venue.

14.Severability

In the event any provision of this Agreement shall for any reason be held to be
invalid, illegal or unenforceable, the remaining provisions of this Agreement
shall be unimpaired and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable provision, which, being valid, legal and
enforceable, comes closest to the intention of the Parties.

15.Use of CCM’s Name

Issuer shall obtain the prior written consent of CCM for any reference to CCM or
to services to be furnished by CCM in any communication or document, except as
required to be disclosed in any document filed with the SEC; provided that CCM
shall have no responsibility or liability for the content of any such
communication or document.

16.Headings

The section and paragraph headings contained herein are for convenience and
reference only and are not intended to define or limit the scope of any
provision of this Agreement.

17.Counterparts

This Agreement may be executed in counterpart copies, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument comprising this Agreement.

18.Attorneys’ Fees

Unless otherwise contemplated in this Agreement, the parties hereto agree to pay
their own attorneys’ fees and costs as may be incurred in negotiating, preparing
and drafting this Agreement, whether the same is finally entered into and
executed or not.  

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19.Amendment; Entire Agreement 

No modification, amendment, supplement to or waiver of this Agreement or any of
its provisions shall be binding upon CCM or Issuer unless made in writing and
duly signed by authorized officers of each of CCM and Issuer. This Agreement
constitutes the entire understanding between the parties hereto, and all prior
or contemporaneous correspondence, conversations or memoranda are merged in,
replaced by and without effect on this Agreement.

 

 

(signature page follows)

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

 

 

CNL CAPITAL MARKETS CORP. (“CCM”)

 

 

By:

/s/ Neil D. Menard

 

 

Name:

Neil D. Menard

 

 

Title:

President

 

 

 

 

CNL HEALTHCARE PROPERTIES TRUST II, INC. (“ISSUER”)

 

 

By:

/s/ Stephen H. Mauldin

 

 

Name:

Stephen H. Mauldin

 

 

Title:

Chief Executive Officer and President

 

 

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