Exhibit 10.4


 


CONSTRUCTION LOAN AGREEMENT


 


between


 


SENTIO GEORGETOWN, LLC, a Delaware limited
liability company and 

SENTIO GEORGETOWN TRS, LLC, a Delaware limited liability company,

collectively as Lender


 


and


 


WESTMINSTER – LCS GEORGETOWN LLC,
an Iowa limited liability company

as Borrower


 


Dated as of January 15, 2015


 




    	 



    	 



    

 


Table
of Contents


 


	 	 	 	Page
	 	 	 	 
	1.	Definitions and Interpretation	1
	 	 	 
	 	1.1	Exhibits Incorporated	1
	 	 	 	 
	 	1.2	Defined Terms	1
	 	 	 	 
	 	1.3	Singular and Plural Terms	16
	 	 	 	 
	 	1.4	Accounting Principles	16
	 	 	 	 
	 	1.5	References and Other Terms	16
	 	 	 	 
	2.	The Loan; Equity Requirements; Reserves	17
	 	 	 
	 	2.1	Agreement to Borrow and Lend	17
	 	 	 	 
	 	2.2	Promises to Pay	17
	 	 	 	 
	 	2.3	Notes	17
	 	 	 	 
	 	2.4	Interest	17
	 	 	 	 
	 	2.5	Default Rate	18
	 	 	 	 
	 	2.6	Interest Calculations	18
	 	 	 	 
	 	2.7	Mandatory Monthly Payments	18
	 	 	 	 
	 	2.8	Late Charges	18
	 	 	 	 
	 	2.9	Payment on Maturity Date	19
	 	 	 	 
	 	2.10	Repayment of Protective Advances	19
	 	 	 	 
	 	2.11	Prepayments	20
	 	 	 	 
	 	2.12	Prepayments Tendered or Debt Accelerated During the Lockout Period	20
	 	 	 	 
	 	2.13	Appraised Value and Participation Amount	21
	 	 	 	 
	 	2.14	Participation	23
	 	 	 	 
	 	2.15	Usury Savings and Characterization of Participation	23
	 	 	 	 
	 	2.16	Loan Commitment Fee	24
	 	 	 	 
	 	2.17	Equity Contributions	24
	 	 	 	 
	 	2.18	Interest Reserve	25
	 	 	 	 
	 	2.19	Allocation of Payments	25
	 	 	 	 
	3.	Conditions to Closing	26
	 	 	 
	 	3.1	Conditions to Closing	26
	 	 	 	 
	 	3.2	Closing Certificate	32
	 	 	 	 
	 	3.3	Other Conditions Precedent	32


 




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Table
of Contents


(continued)


 


	 	 	 	Page
	 	 	 	 
	 	3.4	Termination of Agreement	32
	 	 	 	 
	4.	Disbursement Procedures	32
	 	 	 
	 	4.1	Conditions Precedent to Disbursement of Loan Proceeds	32
	 	 	 	 
	 	4.2	Loan Disbursement	33
	 	 	 	 
	 	4.3	Documents Required for Each Construction Disbursement	35
	 	 	 	 
	 	4.4	Loan In Balance	37
	 	 	 	 
	 	4.5	Lender’s Verification of Contracts	38
	 	 	 	 
	 	4.6	[Intentionally Deleted]	38
	 	 	 	 
	 	4.7	Frequency of Payouts	38
	 	 	 	 
	 	4.8	Consultants	38
	 	 	 	 
	 	4.9	Retainages	39
	 	 	 	 
	 	4.10	Stored and Unincorporated Materials	39
	 	 	 	 
	 	4.11	Final Construction Disbursement	39
	 	 	 	 
	 	4.12	Expenses and Advances Secured by Security Instrument	41
	 	 	 	 
	 	4.13	Acquiescence not a Waiver	41
	 	 	 	 
	 	4.14	No Liability for Disbursements	41
	 	 	 	 
	5.	Representations and Warranties	41
	 	 	 
	 	5.1	Formation, Qualification and Compliance	41
	 	 	 	 
	 	5.2	Execution and Performance of Loan Documents	42
	 	 	 	 
	 	5.3	Financial and Other Information	43
	 	 	 	 
	 	5.4	No Material Adverse Change	43
	 	 	 	 
	 	5.5	Enforceability	43
	 	 	 	 
	 	5.6	Consents	44
	 	 	 	 
	 	5.7	Tax Liability	44
	 	 	 	 
	 	5.8	[Intentionally Deleted]	44
	 	 	 	 
	 	5.9	 Title to Property; Survey	44
	 	 	 	 
	 	5.10	Utility Services	45
	 	 	 	 
	 	5.11	Construction of the Project	45
	 	 	 	 
	 	5.12	Major Project Agreements	45
	 	 	 	 
	 	5.13	Development Agreement	45


 




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Table
of Contents


(continued)


 


	 	 	 	Page
	 	 	 	 
	 	5.14	Governmental Requirements	46
	 	 	 	 
	 	5.15	Rights of Others	46
	 	 	 	 
	 	5.16	Approved Budget; Draw Schedule	46
	 	 	 	 
	 	5.17	Litigation	46
	 	 	 	 
	 	5.18	Name and Principal Place of Business	46
	 	 	 	 
	 	5.19	Delivery of Documents	46
	 	 	 	 
	 	5.20	ERISA	46
	 	 	 	 
	 	5.21	No Prohibited Persons	47
	 	 	 	 
	 	5.22	Foreign Person	47
	 	 	 	 
	 	5.23	Environmental	47
	 	 	 	 
	 	5.24	Continuing Nature of Representations and Warranties	49
	 	 	 	 
	6.	Project Covenants	49
	 	 	 
	 	6.1	Completion of Project	49
	 	 	 	 
	 	6.2	Conformity With Plans	49
	 	 	 	 
	 	6.3	Change Orders	49
	 	 	 	 
	 	6.4	Entry and Inspection	50
	 	 	 	 
	 	6.5	Project Information	50
	 	 	 	 
	 	6.6	Permits and Warranties	50
	 	 	 	 
	 	6.7	Project Contracts	51
	 	 	 	 
	 	6.8	Protection Against Liens	51
	 	 	 	 
	 	6.9	Lender Consultant	51
	 	 	 	 
	 	6.10	Development Agreement	51
	 	 	 	 
	 	6.11	Management Agreement	51
	 	 	 	 
	 	6.12	Reappraisal Requirements	52
	 	 	 	 
	7.	Maintenance, Operation, Preservation and Repair of Property	52
	 	 	 
	 	7.1	Alterations and Repair	52
	 	 	 	 
	 	7.2	Compliance	52
	 	 	 	 
	 	7.3	Changes in Property Restrictions	52
	 	 	 	 
	 	7.4	Books and Records	53
	 	 	 	 
	 	7.5	Consultation with Lender Consultant	53


 




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Table
of Contents


(continued)


 


	 	 	 	Page
	 	 	 	 
	8.	Other Affirmative Covenants	53
	 	 	 
	 	8.1	Existence	53
	 	 	 	 
	 	8.2	Protection of Liens	53
	 	 	 	 
	 	8.3	Title Insurance Endorsements	53
	 	 	 	 
	 	8.4	Notice of Certain Matters	53
	 	 	 	 
	 	8.5	Additional Reports and Information	54
	 	 	 	 
	 	8.6	Further Assurances	55
	 	 	 	 
	 	8.7	Financial Statements; Access to Business Information	55
	 	 	 	 
	 	8.8	[Intentionally Deleted]	57
	 	 	 	 
	 	8.9	 Keeping Guarantor Informed	57
	 	 	 	 
	 	8.10	Single Purpose Entity	57
	 	 	 	 
	 	8.11	Compliance	59
	 	 	 	 
	 	8.12	[Intentionally Deleted]	59
	 	 	 	 
	 	8.13	Taxes	59
	 	 	 	 
	 	8.14	Escrow Deposits	60
	 	 	 	 
	 	8.15	Affidavits of Commencement and Completion	61
	 	 	 	 
	9.	Other Negative Covenants	61
	 	 	 
	 	9.1	Liens on Property	61
	 	 	 	 
	 	9.2	Liens on Personal Property	61
	 	 	 	 
	 	9.3	Removal of Personal Property	61
	 	 	 	 
	 	9.4	Amendment of Organizational Documents	61
	 	 	 	 
	 	9.5	Management Agreement	62
	 	 	 	 
	 	9.6	Major Project Agreements	62
	 	 	 	 
	 	9.7	Transfers	62
	 	 	 	 
	 	9.8	Limitations on Additional Indebtedness; Other Prohibited Transactions	63
	 	 	 	 
	10.	Insurance, Casualty and Condemnation	63
	 	 	 
	 	10.1	Insurance Coverage	63
	 	 	 	 
	 	10.2	Casualty Loss; Proceeds of Insurance	65
	 	 	 	 
	 	10.3	Condemnation and Eminent Domain	67
	 	 	 	 
	 	10.4	Disbursement of Insurance Proceeds and Awards	69


 




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Table
of Contents


(continued)


 


	 	 	 	Page
	 	 	 	 
	11.	Defaults and Remedies	70
	 	 	 
	 	11.1	Events of Default	70
	 	 	 	 
	 	11.2	Remedies Upon Default	73
	 	 	 	 
	 	11.3	Cumulative Remedies, No Waiver	74
	 	 	 	 
	12.	Permitted Partial Releases	74
	 	 	 
	13.	[Intentionally Deleted]	75
	 	 	 
	14.	Miscellaneous	75
	 	 	 
	 	14.1	Nonliability	75
	 	 	 	 
	 	14.2	Indemnification of the Lender	76
	 	 	 	 
	 	14.3	Reimbursement of Lender	78
	 	 	 	 
	 	14.4	Obligations Unconditional and Independent	78
	 	 	 	 
	 	14.5	Notices	78
	 	 	 	 
	 	14.6	Survival of Representations and Warranties	79
	 	 	 	 
	 	14.7	Signs	79
	 	 	 	 
	 	14.8	No Third Parties Benefited	79
	 	 	 	 
	 	14.9	Binding Effect, Assignment of Obligations	79
	 	 	 	 
	 	14.10	Counterparts	79
	 	 	 	 
	 	14.11	Prior Agreements; Amendments; Consents	80
	 	 	 	 
	 	14.12	Governing Law	80
	 	 	 	 
	 	14.13	Severability of Provisions	80
	 	 	 	 
	 	14.14	Headings	80
	 	 	 	 
	 	14.15	Conflicts	80
	 	 	 	 
	 	14.16	Time of the Essence	80
	 	 	 	 
	 	14.17	Participations, Pledges and Syndication and Securitization	81
	 	 	 	 
	 	14.18	Rights to Share Information	82
	 	 	 	 
	 	14.19	Servicing	82
	 	 	 	 
	 	14.20	Guaranties Unsecured	83
	 	 	 	 
	 	14.21	Joint and Several	83
	 	 	 	 
	 	14.22	JURY WAIVER	83
	 	 	 	 
	 	14.23	JURISDICTION AND VENUE	84


 




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Table
of Contents


(continued)


 


	 	 	 	Page
	 	 	 	 
	 	14.24	Patriot Act	84
	 	 	 	 
	 	14.25	Right of Setoff	84
	 	 	 	 
	 	14.26	Times	84
	 	 	 	 
	15.	REIT Compliance	84


 




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Table of Contents


(continued)


 


	 	 	 	Page




 


EXHIBITS


 


	A	-	LEGAL DESCRIPTION
	 	 	 
	B	-	PERMITTED ENCUMBRANCES
	 	 	 
	C	-	DISBURSEMENT REQUEST
	 	 	 
	D	-	LOAN DOCUMENTS
	 	 	 
	E	-	APPROVED BUDGET
	 	 	 
	F	-	DRAW SCHEDULE
	 	 	 
	G	-	AFFIDAVIT OF COMMENCEMENT
	 	 	 
	H	-	AFFIDAVIT OF COMPLETION
	 	 	 
	I	-	INSURANCE REQUIREMENTS
	 	 	 
	J	 	QUARTERLY COMPLIANCE CERTIFICATE


 




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CONSTRUCTION
LOAN AGREEMENT


 


THIS CONSTRUCTION LOAN
AGREEMENT (the “Agreement”), dated for reference January 15, 2015, is made by and among WESTMINSTER –
LCS GEORGETOWN LLC, an Iowa limited liability company (“Borrower”), SENTIO GEORGETOWN, LLC, a Delaware limited
liability company (“Lender A”), and SENTIO GEORGETOWN TRS, LLC, a Delaware limited liability company (“Lender
B”). Lender A and Lender B are referred to herein, individually and collectively as the context may require, as “Lender”.


 


RECITALS:


 


A.           Borrower
is, as of the date hereof, the holder of fee simple title to an undeveloped 25 acre parcel real estate at 371 Village Commons Boulevard,
near Shell Road, in Georgetown, Texas, legally described on Exhibit A attached hereto (together with all easements
and other rights appurtenant thereto, the “Land”).


 


B.           Borrower
proposes to develop, construct and lease the Project (as defined herein).


 


C.           Borrower
has applied to Lender for a loan for the purpose of providing a portion of the funds required to construct the Project and Lender
is willing to make the loan upon the terms and conditions hereinafter set forth.


 


NOW, THEREFORE,
in consideration of the above premises, and the mutual covenants and agreements set forth herein, and for one dollar and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:


 


1.           Definitions
and Interpretation.


 


1.1           Exhibits Incorporated.
All exhibits to this Agreement, as now existing and as the same may from time to time be modified, are fully incorporated herein
by this reference.


 


1.2           Defined
Terms. All capitalized terms used in this Agreement and not otherwise defined in this Agreement shall have the following meanings:


 


“Affidavit of
Commencement” means an affidavit, duly executed and acknowledged, substantially in the form of Exhibit G.


 


“Affidavit of
Completion” means an affidavit, duly executed and acknowledged, substantially in the form of Exhibit H.


 


“Affiliate”
means, with respect to any Person, (a) any other Person which directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, (i) such Person or (ii) any general partner, manager or managing
member of such Person; or (b) any other Person with 50% or more of the equity interest of which is held beneficially or of
record by (i) such Person or (ii) any general partner, manager or managing member of such Person. As used in the previous
sentence, “control” means the possession, directly or indirectly, of the power to cause the direction of the management
of a Person, whether through voting securities, by contract, family relationship or otherwise.


 




    	 



    	 



    

 


“Applicable
Laws” means all laws, statutes, ordinances, rules, regulations, judgments, decrees or orders of any state, federal or
local Governmental Agency which are applicable to Borrower, the Guarantor or/or the Property.


 


“Appraisal”
means a written statement setting forth an opinion of the Appraised Value of the Property as of the date of the Appraisal Event,
including the Land and the Improvements, that has been prepared by a Qualified Appraiser. If any Permitted Affiliate Agreement
is in effect as of the date of the Appraisal Event and such agreement generates less income or greater expense than would an agreement
negotiated at arm’s length on market terms, the Appraisal shall assume that such agreement is replaced by an agreement negotiated
at arm’s length on market terms.


 


“Appraisal Event”
means the earliest to occur of any of the following: (a) one hundred eighty (180) days prior to the Stated Maturity Date (giving
effect to the extension of the Stated Maturity Date provided in the definition thereof if Lender has exercised such extension),
(b) the date that Lender accelerates the Loan on account of an Event of Default, (c) upon demand of Borrower, provided that such
demand may not be made, and shall be without effect, until after the Stabilization Date, or (d) upon demand of Lender, provided
that such demand may not be made, and shall be without effect, until the earlier of the Stabilization Date or January 15, 2019.


 


“Appraised Value”
shall mean the fair market value of the Property as of the Appraisal Event, on a going concern basis including good will, determined
in accordance with Section 2.13 hereof. For avoidance of doubt, it is understood that if Borrower stills owns
the Released Parcel on the date of the Appraisal Event, then the Released Parcel will be included in the Property for purposes
of determining Appraised Value.  Any proceeds of sale of the Released Parcel that have been released to Borrower or are
held in the Partial Release Escrow will not be considered part of the Property, and will not be considered in determining Appraised
Value; except that such proceeds will be deducted from the Appraised Value if such proceeds were generated after the Appraisal
Event.


 


“Approved Budget”
means the line item budget for the Project inclusive of all Project Costs, including, without limitation, all hard and soft costs
of the Project and the sources of all funds required to pay Project Costs, as reviewed and approved by Lender and as set forth
in Exhibit E attached hereto, as modified from time to time in accordance with this Agreement.


 


“Architect”
means PRDG, LLC, or any other architect for the Project approved by Lender from time to time.


 


“Architect’s
Contract” means that certain Standard Form of Agreement Between Owner and Consultant by and between Borrower and Architect
dated October 1, 2013, as amended from time to time after the date hereof as permitted hereby, which shall provide for the design
of all Improvements and construction administration services by the Architect and of which Lender shall receive an assignment.


 




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“Arm’s
Length Sale” means a sale of the Property (i) that is negotiated on an arm’s length basis, (ii) that is a one-off
transaction unrelated to any other transaction involving Borrower or its Affiliates, (iii) in which neither Borrower nor any Affiliate
of Borrower receives any material consideration for the sale of the Property other than the purchase price for the Property, and
(if applicable) a management agreement or operating lease with an Affiliate of Borrower, and (iv) in which no other facts or circumstances
exist which could reasonably be expected to result in a gross sales price for the Property that was less than its fair market value.


 


“Assignment
of Leases” means the Assignment of Leases and Rents of even date herewith executed by Borrower in favor of Lender, as
amended from time to time after the date hereof.


 


“Available Funds”
has the meaning provided in Section 4.4 of this Agreement.


 


“Balancing Deposit”
has the meaning provided in Section 4.4 of this Agreement.


 


“Borrower Entity
Documents” means the Operating Agreement and the Articles of Organization of Borrower, as amended from time to time
after the date hereof as permitted hereby.


 


“Business Day”
means any day that federally regulated commercial banks located in Orlando, Florida are open and conducting regular banking business.


 


“Change Orders”
means changes in the Plans and/or the scope of the work to be completed under the General Contract.


 


“City”
means the City of Georgetown, Texas.


 


“Closing”
means the execution and delivery of the Loan Documents.


 


“Closing Date”
means the date upon which the Closing occurs.


 


“Code”
means the Internal Revenue Code of 1986, as amended.


 


“Constituent
Entities” has the meaning set forth in Section 3.1(t)(iii).


 


“Construction
Completion” means the date on which all of the following events have occurred: (i) construction of the Project is
substantially complete, lien-free and defect free, to the reasonable satisfaction of the Lender and final or temporary certificates
of occupancy or the functional equivalent thereof issued by the City, permitting occupancy without condition, have been issued
for the Project; (ii) the Architect has issued a certificate of completion in the form of AIA Document G704 or a substantially
similar form reasonably acceptable to the Lender, subject only to “punch list” items; (iii) all amounts owing
to the General Contractor for the construction of the Project have been paid-in-full (subject to holdbacks for “punch list
items”); (iv) subject to holdbacks for “punch list” items, final lien waivers have been obtained; and (v) all
other conditions to the Final Construction Disbursement as provided in Section 4.11 of this Agreement have been
satisfied.


 




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“Construction
Completion Date” means two (2) years from the date of this Agreement.


 


“Construction
Contracts” means the General Contract and the Subcontracts.


 


“Construction
Disbursement” means a disbursement of Loan Proceeds for construction of the Project.


 


“Construction
Schedule” has the meaning provided in Section 3.1(q) of this Agreement.


 


“Control”
as to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management,
policies or activities of such Person, whether through ownership of voting securities or other beneficial interests, by contract
or otherwise, and the terms “controlled” or “controlling” shall have a correlative meaning. For clarification,
an investor in a Person shall not be deemed to have relinquished Control over such Person solely on account of the exercise, by
a co-investor in such Person, of a right to grant or withhold consent to a major decision.


 


“Debt”
means the Loan A Debt and the Loan B Debt, individually or collectively as the context may require.


 


“Debt Service”,
as of any date of determination, means the scheduled monthly payment of interest on the Debt during the trailing three calendar
months multiplied by four (4), whether or not actually paid, and without regard to whether any payment was made by Borrower or
from the Interest Reserve.


 


“Debt Service
Coverage Ratio”, as of any date of determination, means the ratio of Operating Cash Flow on that date of determination
to Debt Service on that date of determination. For purposes of this definition, Operating Cash Flow for any date of determination
shall be determined by annualizing the Gross Revenues and Operating Expenses during a measurement period of the last three full
consecutive calendar months prior to the date of determination. Such annualization shall disregard any recurring Gross Income to
the extent collected in advance for the period past the measurement period, shall disregard any Gross Income or Operating Expense
not reasonably expected to recur, and shall disregard any recurring Operating Expenses to the extent incurred for the period prior
to or after the measurement period.


 


“Default”
means the occurrence of any event, circumstance or condition which constitutes a breach of or a default under this Agreement or
any other Loan Document and which, after the giving of any required notice and/or the passage of any applicable cure period, would
constitute an Event of Default under this Agreement or any other Loan Document.


 


“Default Rate”
means the Loan A Default Rate or the Loan B Default Rate, as applicable.


 


“Development
Agreement” means the Development Agreement, of even date herewith, between Borrower and Sponsor, as may be amended from
time to time after the date hereof, as permitted hereby.


 




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“Disbursements”
means disbursements by Lender of proceeds of the Loan.


 


“Disbursement
Request” has the meaning provided in Section 4.3(a) of this Agreement.


 


“Draw Schedule”
means the draw schedule for the Project attached hereto as Exhibit F, showing the funding sources for the Project
and the projected draw schedule for each funding source for the Project, as such draw schedule may hereafter be amended with the
prior written consent of Lender (not to be unreasonably withheld or delayed).


 


“Eligible Transferee”
means a bank, insurance company, or other regulated financial institution regularly engaged in the business of making commercial
mortgage loans secured by properties similar to the Property or other senior housing real estate; provided that, following either
Construction Completion or advance of all proceeds of the Loan (other than the Interest Reserve), “Eligible Transferee shall
also include any Person that has (A) substantial experience in the ownership of properties similar to the Property or other senior
housing real estate, and (B) net worth (including, in the case of funds, committed capital) of not less than Two Hundred Fifty
Million and No/100 Dollars ($250,000,000.00).


 


“Engineer”
means Kimbell Bruhel Garcia Estes, or “KBGE”, or any other engineer for the Project approved by Lender from time to
time.


 


“Engineer’s
Contract” means that certain Proposal for Civil Engineering Services by and between Borrower and Engineer dated July
22, 2013, as revised on July 25, 2013, as may be amended from time to time after the date hereof, as permitted hereby.


 


“Environmental
Indemnity Agreement” means that certain Environmental Indemnity Agreement dated as of even date herewith executed by
Borrower and Guarantor for the benefit of Lender, as may be amended from time to time after the date hereof.


 


“Equity Contributions”
has the meaning provided in Section 2.17 of this Agreement


 


“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated
thereunder.


 


“Event of Default”
means any event so designated in Section 11.1, or any other section or provision, of this Agreement.


 


“Excluded Taxes”
means any of the following taxes imposed on or with respect to Lender or required to be withheld or deducted from a payment to
Lender: (a) taxes imposed on or measured by net income (however denominated), franchise taxes, and branch profits taxes, in each
case (i) imposed as a result of such Lender being organized under the laws of, or having its principal office or lending office
located in, the jurisdiction imposing such taxes or (ii) that are Other Connection Taxes, (b) U.S. federal withholding tax that
is imposed on amounts payable to any Lender that is not a “United States person” within the meaning of Section 7701(a)(30)
of the Internal Revenue Code of 1986, as amended from time to time, and (d) any U.S. federal withholding Taxes imposed under FATCA.


 




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“Fiscal Year”
means Borrower’s fiscal year, ending on December 31st of each calendar year.


 


“Force Majeure
Event” means an event not reasonably foreseeable that is beyond the reasonable control of the Borrower or the Guarantor
and is of the kind and/or nature of a riot, war, act of enemies (including terrorism within the continental United States), national
emergency, fire, flood, act of God, severe weather conditions, material shortage or strike or other event that materially impairs
the ability of the Borrower to pursue completion of the Project.


 


“Full Underwritten
Occupancy”, with respect to any calendar quarter, means that, as of the last day of the calendar quarter, at least ninety
percent (90%) of the rentable units at the Property (including assisted care and memory care units) are occupied by residents unrelated
to any officer or director of Borrower or any Affiliate of Borrower, who are contractually obligated to pay fair market unabated
rent and are not delinquent in payment of such rent. For purposes of calculating whether Full Underwritten Occupancy has been achieved,
if only one of the two beds in a semi-private unit is rented, such unit shall be considered fifty percent (50%) occupied.


 


“GAAP”
means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in
the United States, that are applicable to the circumstances as of the date of determination, consistently applied.


 


“General Contract”
means that certain Standard Form of Agreement Between Owner and Contractor by and between Borrower and the General Contractor
dated as of December 12, 2014 as amended from time to time in accordance with the terms and provisions of this Agreement.


 


“General Contractor”
means Charles N. White Construction Company (doing business as White Construction Company), or any other general contractor for
the Project approved by Lender from time to time.


 


“Governmental
Agency” means any governmental or quasi-governmental agency, board, bureau, commission, department, court, administrative
tribunal or other instrumentality or authority, and any public utility.


 


“Gross Revenues”
means, during any measurement period, all revenues of Borrower, determined on a cash basis, derived from the ownership, operation,
use, leasing and occupancy of the Property during such period; however, that in no event shall Gross Revenues include (i) any
loan proceeds; (ii) proceeds or payments under insurance policies (except proceeds of rent loss and business interruption
insurance); (iii) condemnation proceeds; (iv) any security deposits received from tenants or residents in the Property,
unless and until the same are applied to rent or other obligations in accordance with the tenant’s or resident’s Lease;
or (v) any other extraordinary items.


 




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“Guarantor”
means Life Care Companies LLC, and any Person who now or hereafter partially or fully guarantees the payment or performance of
any indebtedness or other obligation to Lender under any Loan Document.


 


“Guarantor Fiscal
Year” has the meaning provided in Section 8.7(e) of this Agreement


 


“Guaranty”
means, collectively, all guaranties required pursuant to this Agreement and all guaranties pursuant to which any Person now or
hereafter partially or fully guarantees the payment or performance of any indebtedness or other obligation to Lender under any
Loan Document, and initially means the Guaranty of Completion and Non-Resource Carve-outs dated as of even date herewith given
by Guarantor in favor of Lender.


 


“Hazardous Materials”
has the meaning given that term in the Environmental Indemnity Agreement.


 


“Improvements”
means all buildings and other improvements and fixtures now or hereafter comprising any portion of the Property, including, without
limitation all on-site and off-site improvements required for the construction and operation of the Project.


 


“In Balance”
has the meaning provided in Section 4.4 of this Agreement.


 


“Indebtedness”
means any and all obligations, contingent or otherwise, whether now existing or hereafter arising, of Borrower to Lender or to
any of its Affiliates or successors, arising under or in connection with the Loan, this Agreement, any other Loan Document, or
arising under or in connection with any Rate Management Agreement.


 


“Interest Rate”
means the Loan A Interest Rate or the Loan B Interest Rate, as applicable.


 


“Interest Reserve”
has the meaning provided in Section 2.18 of this Agreement.


 


“Land”
has the meaning provided in Recital A of this Agreement.


 


“Leases”
means all leases or occupancy agreements now or hereafter executed by or on behalf of tenants or residents pertaining to the rental
or use of space or facilities within the Property and all amendments, modifications, or restatements thereof.


 


“Lender”
has the meaning provided in the first paragraph hereof.


 


“Lender Consultant”
means any third-party engineering, architectural or consulting firm hired by Lender to advise and assist Lender in connection with
the Project.


 


“Loan”
means Loan A and Loan B, individually or collectively as the context may require.


 


“Loan A”
means the loan made by Lender A to Borrower pursuant to this Agreement and the other Loan Documents.


 




    	7



    	 



    

 


“Loan A Amount”
means an amount not to exceed Forty Million Nine Hundred Twelve Thousand and No/100 Dollars ($40,912,000.00).


 


“Loan A Debt”
means, as of any date of determination, the outstanding principal amount of Loan A as of that date together with all interest accrued
and unpaid thereon and all other amounts (including protective advances, Yield Maintenance Premiums, and other fees and costs)
due to Lender A pursuant to this Agreement and the other Loan Documents.


 


“Loan A Default
Rate” means the Loan A Interest Rate plus four percent (4%).


 


“Loan A Interest
Rate” means (i) until the Participation Due Date, Eight and 05/100 percent (8.05%) per annum, and (ii) from and after
the Participation Due Date, Seven and 90/100 percent (7.90%).


 


“Loan Amount”
means an amount not to exceed the sum of the Loan A Amount and the Loan B Amount.


 


“Loan B”
means the loan made by Lender B to Borrower pursuant to this Agreement and the other Loan Documents.


 


“Loan B Amount”
means an amount not to exceed One Million and No/100 Dollars ($1,000,000.00).


 


“Loan B Base
Debt” means, as of any date of determination, the Loan B Debt but excluding the Participation.


 


“Loan B Debt”
means, as of any date of determination, the outstanding principal amount of Loan B as of that date together with all interest accrued
and unpaid thereon and all other amounts (including Yield Maintenance Premiums, the Participation, and other fees and costs) due
to Lender B pursuant to this Agreement and the other Loan Documents.


 


“Loan B Default
Rate” means the applicable Loan B Interest Rate plus four percent (4%).


 


“Loan B Interest
Rate” means (i) until the Participation Due Date, One and 75/100 percent (1.75%) per annum, and (ii) from and after the
Participation Due Date, Seven and 90/100 percent (7.90%) per annum.


 


“Loan Documents”
means, collectively, this Agreement, the documents set forth in Exhibit D, and any other agreement, document
or instrument evidencing and/or securing the obligations of Borrower or Guarantor to Lender that Lender requires in connection
with the execution of this Agreement or from time to time to effectuate the purposes of this Agreement, together with all amendments,
restatements, supplements and modifications thereof.


 


“Loan Expenses”
has the meaning provided in Section 4.2(c) of this Agreement.


 


“Loan Proceeds”
means all amounts advanced as part of the Loan, whether advanced directly to Borrower or otherwise.


 




    	8



    	 



    

 


“Loan Transfer”
has the meaning provided in Section 14.17(a) of this Agreement.


 


“Lockout Period”
means the period from origination of the Loan until the Option Termination Date. However, if at any time during the Lockout Period
the “Buyer” under the Option Agreement timely delivers an Option Exercise Notice, then the delivery of such notice
shall automatically extend the Lockout Period until the earlier of (a) the closing of the purchase of the Property pursuant to
the PSA, or (b) the PSA Termination Date.


 


“Lockout Release
Date” means the first day after the Lockout Period.


 


“Major Project
Agreements” means, collectively, the Management Agreement, the Architect’s Agreement, the Engineer’s Agreement,
the Development Agreement and the General Contract.


 


“Management
Agreement” means that certain Management Agreement between Borrower and Operator of even date herewith, and any amendments
thereto.


 


“Managing Interest”,
with respect to the Loan, means the contractual right, under any co-lender, intercreditor, or agency agreement among the Lenders
in the Loan, to act on behalf of all such Lenders in connection with the administration and enforcement of the Loan, and to serve
as the single point of contact for the Borrower in connection therewith. The holder of the Managing Interest may be designated
as the “Administrative Agent”, “Lead Lender”, or analogous terms. A Person shall not be deemed to have
relinquished the Managing Interest solely on account of an agreement that grants to other Lenders the right to approve or consent
to major decisions.


 


“Material Change
Order” has the meaning provided in Section 6.3(e) of this Agreement


 


“Maturity Date”
means the Stated Maturity Date. However, (a) if the “Buyer” under the Option Agreement fails to timely exercise the
Option, and the Stated Maturity Date is less than six months after the Option Termination Date, then the Maturity Date shall be
automatically extended to six (6) months after the Option Termination Date, and (b) if the “Buyer” under the Option
Agreement timely exercises the Option, then the Maturity Date shall automatically be amended to be the latest of (i) the Stated
Maturity Date, or (ii) six (6) months after the PSA Termination Date. Notwithstanding the foregoing, the Maturity Date shall be
deemed to occur on the date that Lender accelerates the Loan on account of an Event of Default, or on the date that the Loan becomes
due and payable on account of a closing of a sale of the Property, including a sale pursuant to the PSA.


 


“Maximum Legal
Rate” means the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged or received on the Debt and/or as provided for in the Loan Documents, under the laws of such state or
states whose laws are held by any court of competent jurisdiction to govern the interest rate provisions of the Loan.


 


“Note”
means Note A and Note B, individually and collectively as the context may require.


 




    	9



    	 



    

 


“Note A”
means that certain Promissory Note A, dated as of the date hereof, made by Borrower to the order of Lender A, in the stated principal
amount of the Loan A Amount, as the same may be amended, restated, modified or supplemented and in effect from time to time.


 


“Note B”
means that certain Promissory Note B, dated as of the date hereof, made by Borrower to the order of Lender A, in the stated principal
amount of the Loan B Amount and also containing a promise to pay the Participation Amount, as the same may be amended, restated,
modified or supplemented and in effect from time to time.


 


“Operator”
means Life Care Services LLC or any other operator or manager for the Property approved by Lender from time to time.


 


“Operating Agreement”
means that certain First Amended Operating Agreement of Borrower of even date herewith.


 


“Operating Cash
Flow” means, during any measurement period, all Gross Revenues (as defined herein) actually received in the applicable
measurement period arising from the ownership and operation of the Property (excluding tenant security deposits and rent paid during
the applicable measurement period by any tenant for more than the number of months of rental obligations contained in the measurement
period) less all Operating Expenses paid for the applicable measurement period.


 


“Operating Expenses”
means, during any measurement period, the actual, reasonable and necessary costs and expenses of owning, operating, managing and
maintaining the Property incurred by Borrower during such period, determined on a cash basis (except for real and personal property
taxes and insurance premiums, and other similar items not paid on a monthly basis, which shall be determined on an accrual basis),
including, $250 per Unit per year (prorated for the relevant measuring period) as a capital reserve and the actual management fees;
excepting, however, (a) interest or principal due on the Loan; (b) capital expenditures; and (c) non-cash charges
such as depreciation and amortization.


 


“Option”
has the meaning provided in the Option Agreement.


 


“Option Agreement”
means that certain Option Agreement, of even date herewith, between Sentio Georgetown, LLC as “Buyer” and Borrower
as “Seller”, as the same may be amended, restated, modified or supplemented and in effect from time to time.


 


“Option Exercise
Notice” has the meaning provided in the Option Agreement.


 


“Option Termination
Date” has the meaning provided in the Option Agreement.


 


“Partial Release
Escrow” shall have the meaning provided in Section 12(e).


 


“Participation”
means the right of Lender B to receive from Borrower, and the obligation of Borrower to pay to Lender B, the Participation Amount
pursuant to the terms and conditions of this Agreement.


 




    	10



    	 



    

 


“Participation
Amount” means the amount determined in accordance with Section 2.13.


 


“Participation
Due Date” shall mean the earliest to occur of (a) the Maturity Date (giving effect to any adjustments or accelerations
thereof provided in the definition of “Maturity Date”), (b) the date of prepayment of the Debt in full in accordance
with the terms hereof, or (c) the date that Borrower or any other Person tenders to Lender a prepayment of the Loan or any part
thereof (other than a partial prepayment resulting from an application of casualty or condemnation proceeds or repayment of Protective
Advances).


 


“Party”
means any Person (other than Lender) who is a party or signatory to any Loan Document.


 


“Payment Date”
means the first day of each calendar month; provided that, following the final disbursement of funds from the Interest Reserve,
if the Payment Date falls on a date that is not a Business Day, then the payment due on the Payment Date may be made on the first
Business Day following the applicable Payment Date.


 


“Payment and
Performance Bonds” has the meaning provided in Section 3.1(p) of this Agreement.


 


“Permits”
has the meaning provided in Section 3.1(e)(ii) of this Agreement.


 


“Permitted Affiliate
Agreements” means (i) the provision of insurance brokerage services by an Affiliate of the Borrower to the Borrower on
terms not less favorable to the Borrower than could be obtained on an arm’s-length basis from unrelated third parties, so
long as such Affiliate’s only remuneration for such services are customary and reasonable brokerage fees paid by the insurance
companies providing insurance policies to the Borrower, (ii) the provision of group purchasing services by an Affiliate of the
Borrower to the Borrower on terms no less favorable to the Borrower than could be obtained on an arm’s-length basis from
unrelated third parties, so long as such Affiliate’s only remuneration for such services are fees paid by the vendors participating
in such program, the amount of such fees do not exceed three percent (3%) of the payments to such vendors, and such arrangements
are terminable by Borrower without penalty on not more than sixty (60) days written notice, (iii) the operation of an assistance
in living program (home health services) by an Affiliate of the Borrower for the Borrower under the terms of a written agreement
in customary form and amount and reasonably approved by Lender, (iv) the Development Agreement, and (v) the Management Agreement.


 




    	11



    	 



    

 


“Permitted Encumbrances”
means, collectively, (i) liens arising in favor of Lender pursuant to the Loan Documents; (ii) all matters listed on Exhibit B
to this Agreement as permitted title insurance exceptions; (iii) liens for taxes or other governmental charges not at the time
delinquent or thereafter payable without penalty, or being contested in good faith and by appropriate proceedings, provided that
adequate reserves for the payment of such contested taxes have been established in accordance with GAAP and no property of the
Borrower is subject to impending risk of loss or forfeiture by reason of nonpayment of the obligations secured by such liens; (iv)
liens of carriers, warehousemen, mechanics, materialmen, vendors, and landlords and other similar Liens imposed by law incurred
in the ordinary course of business for sums which are not overdue more than thirty (30) days or are being contested in good faith
and by appropriate proceedings, provided that adequate reserves for the payment of any such contested matters have been established
in accordance with GAAP; (v) deposits under workers’ compensation unemployment insurance and social security laws or to secure
the performance of bids, tenders, contracts (other than for repayment of borrowed money) or leases, or to secure statutory obligations
of surety or appeal bonds or to secure indemnity, performance or other similar bonds in the ordinary course of business; (vi) capitalized
leases up to Fifty Thousand Dollars ($50,000) in the aggregate outstanding at any time so long as the assets subject to such liens
are only the assets acquired by the Borrower with respect to such capitalized leases; and (vii) such other title and survey exceptions
as Lender has approved or may approve in writing in Lender’s reasonable discretion so long as such exceptions do not and
will not materially adversely affect the value of such real property currently affected thereby, materially impair the same, or
materially impair or materially interfere with the operation and usefulness thereof for the purpose for which such real property
was acquired or is held, and do not contain any reversionary interest or right of reverter.


 


“Permitted Indebtedness”
means (i) the Debt, (ii) payment obligations under the Project Agreements, Development Agreement, and Management Agreement, and
(iii) reasonable and customary trade payables directly relating to the operation of the Property, not evidenced by a note, that
are due and payable and actually paid within sixty (60) days of incurring the obligation therefor.


 


“Permitted Partial
Release” shall have the meaning provided in Section 12.


 


“Permitted Transfer”
means (i) any sale of a security registered with the Securities and Exchange Commission and traded on a public exchange, (ii) a
Transfer of direct or indirect membership, stock, partnership or other interests in Borrower or any Restricted Party or any other
Transfer with respect to Borrower or any Restricted Party provided that, after giving effect to any such Transfer and all prior
Transfers, Guarantor continues to own (directly or indirectly through intermediaries) not less than fifty percent (50%) of each
class of equity interest in Borrower and Guarantor or one of its subsidiaries serves as Borrower’s manager and continues
to possess Control of Borrower, (iii) a Lease or license of a residential unit in the Property, in the ordinary course of business,
to a resident (provided that not more than three units may be leased or licensed to any one resident, (iv) a Permitted Partial
Release, and (v) a transfer of the Property to the “Buyer” (as defined in the Option Agreement) pursuant to an exercise
of the Buyer’s rights under the Option Agreement.


 


“Person”
means any natural person or any entity, whether a trustee, corporation, partnership, limited liability company, trust, unincorporated
organization, Governmental Agency or otherwise.


 


“Personal Property”
means all of Borrower’s right, title and interest, whether now existing or hereafter acquired, in and to all furniture, furnishings,
fixtures, machinery, equipment, inventory and other personal property of every kind, tangible and intangible, now or hereafter
(i) located on or about the Property, (ii) used or to be used in connection with the Property, or (iii) relating
or arising with respect to the Property, excluding any personal property owned by a tenant or third party contractor located at
the Property.


 




    	12



    	 



    

 


“Plans”
means the detailed plans and specifications and/or project manual for the construction of the Project, which are prepared in accordance
with the terms of the Architect’s Contract and Engineer’s Contract and accepted by Lender and the Lender Consultant
in their reasonable discretion, including any shop or field drawings made in furtherance thereof, together with any changes made
therein which are permitted under the terms of this Agreement.


 


“Prepayment
Notice” has the meaning provided in Section 2.11(a).


 


“Project”
means the acquisition of the Land and construction and development of the Improvements as a senior housing project containing 207
Units in substantial accordance with this Agreement, the Plans and all Applicable Laws.


 


“Project Costs”
means each of the following items, but only to the extent specifically set forth in the Approved Budget:


 


(a)          The
actual hard costs of completing construction of the Improvements, including demolition and environmental remediation costs;


 


(b)          The
actual costs of acquiring the Land and acquiring and installing the Personal Property;


 


(c)           Premiums
for title, casualty, liability and other insurance required by Lender;


 


(d)          The
cost of recording and filing the applicable Loan Documents;


 


(e)           Real
estate taxes and other assessments which Borrower is obligated to pay during the term of the Loan;


 


(f)            Interest,
fees and similar charges payable by Borrower to Lender hereunder or under the Note or any of the other Loan Documents;


 


(g)          Legal
and other closing costs;


 


(h)          Architectural,
engineering and consulting fees;


 


(i)           Such
other soft costs as Lender approves;


 


(j)           All
other Loan Expenses; and


 


(k)          All
other costs set forth in the Approved Budget.


 


“Property”
means all of Borrower’s right, title and interest, whether now existing or hereafter acquired, in and to the Land, all Improvements
and fixtures now or hereafter located thereon, and all additions and accretions thereto.


 




    	13



    	 



    

 


“Protective
Advance” means any amount advanced by Lender to protect and preserve the Property, to protect the validity, attachment,
perfection, or priority of Lender’s lien on the Property, or to protect Lender’s economic interest in the Property
while an Event of Default exists. The term “Protective Advance” shall include any advance made by Lender to (a) complete
construction of the Improvements if Borrower defaults in its obligations hereunder with respect thereto, (b) pay taxes, assessments,
and insurance if Borrower defaults in its obligations with respect thereto, (c) pay or bond over any liens on the Property if Borrower
defaults in its obligations hereunder with respect thereto, (d) enforce any of Lender’s rights and remedies hereunder, (e)
collect any of the Debt, and (f) pay any other cost which, under applicable law or custom pertaining to mortgage loans, is deemed
a protective advance.


 


“PSA”
means the Purchase and Sale Agreement that comes into effect as a result of an exercise of the Option under the Option Agreement.


 


“PSA Termination
Date” means the effective date of termination of the PSA without a closing of the purchase of the Property.


 


“Qualified Appraiser”
means a nationally or regionally recognized appraiser of good reputation and duly licensed to provide appraisals of commercial
real property located in the State of Texas, with substantial experience appraising senior housing facilities having independent
living, assisted living and healthcare units similar to the Property for institutional lenders and institutional investors.


 


“Released Parcel”
shall have the meaning provided in Section 12.


 


“Released Parcel
Sale” shall have the meaning provided in Section 12(d).


 


“Required Report”
means any report, certificate, financial statement, budget, filing, or other document that, pursuant to the terms of the Loan Documents,
Borrower or Guarantor is required to deliver to Lender from time to time.


 


“Reservation
Notice” has the meaning provided in Section 2.13(f).


 


“Restricted
Party” means, collectively, (i) Borrower, (ii) Guarantor, and (iii) any shareholder, partner, member, non-member manager
or any other direct or indirect legal or beneficial owner of any of the foregoing Persons.


 


“Right of First
Negotiation Agreement” means that certain Non-Competition and Right of First Negotiation Agreement, of even date herewith,
between Sentio Georgetown, LLC and Sponsor, as the same may be amended restated, modified or supplemented and in effect from time
to time.


 


“Security Instrument”
means that certain Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of even date herewith
from Borrower to and for the benefit of Lender, encumbering the Property, as the same may be amended, restated, modified or supplemented
and in effect from time to time.


 


“Servicer”
has the meaning provided in Section 14.19(a).


 


“Sponsor”
means LCS Development LLC, an Iowa limited liability company.


 




    	14



    	 



    

 


“Stabilization
Date” means the first day of the first calendar quarter following two (2) consecutive calendar quarters in which the
Property has achieved Full Underwritten Occupancy.


 


“Stated Maturity
Date” means January 15, 2020; provided that, by written notice from Lender to Borrower at time not later than one hundred
eighty (180) days prior to such date, Lender in its sole discretion may elect to extend the Stated Maturity Date to January 15,
2021.


 


“Subcontract”
means any contract and/or purchase order between General Contractor and a Subcontractor, or a Subcontractor and another Subcontractor,
for the construction or equipping of the Property or for the furnishing of labor or materials for all or any portion of the Property.


 


“Subcontractor”
means any person or entity having a contract with General Contractor or another Subcontractor for the construction, equipping or
supplying by such Subcontractor of any portion of the Property.


 


“Sworn Construction
Cost Statement” has the meaning provided in Section 3.1(o) of this Agreement.


 


“Taxes”
means all general and special taxes, assessments, water charges, sewer charges, and other fees, taxes, charges and assessments
of every kind and nature whatsoever levied or assessed against the Property, or any part thereof, or any interest therein and all
installments thereof.


 


“Title Company”
means Stewart Title Guaranty Company.


 


“Title Policy”
has the meaning provided in Section 3.1(b) of this Agreement.


 


“Toxic Mold”
means mold or fungus of a type that may pose a risk to human health or the environment or would negatively and materially impact
the value of the Property.


 


“Transfer”
has the meaning provided in Section 9.7.


 


“Unit”
means any independent living unit, assisted living unit, or memory care unit within the Project.


 


“Valuation Date”
means the date of delivery of the Valuation Notice.


 


“Valuation Notice”
has the meaning provided in Section 2.13(f).


 




    	15



    	 



    

 


“Yield Maintenance
Premium” means an amount equal to the greater of: (i) one percent (1%) of the principal amount of the Debt being prepaid,
or (ii) the present value as of the Prepayment Date of the Calculated Payments from the Prepayment Date through the Stated Maturity
Date (giving effect to Lender’s right hereunder to extend the Stated Maturity Date only if such right has been exercised
by Lender (i) prior to the Prepayment Date, or (ii) if the Yield Maintenance Premium becomes due and payable on account of an acceleration
following an Event of Default, prior to the acceleration, determined by discounting such payments at the Discount Rate. As used
in this definition, the term “Prepayment Date” means the date on which the prepayment is tendered to Lender.
As used in this definition, the term “Calculated Payments” means the monthly payments of interest only with
respect to the combined Loan A Debt and Loan B Debt which would be due (with payments based on the full amount of interest accrued
and no right to accrue any portion thereof to principal) based on the principal amount of the Loan A Debt being prepaid on the
Prepayment Date plus the principal amount of the Loan B Debt being prepaid on the Prepayment Date and assuming an interest rate
per annum equal to the difference (if such difference is greater than zero) between (y) seven and 90/100 percent (7.90%) (i.e.,
the weighted average of the Loan A Interest Rate and the Loan B Interest Rate) and (z) the Yield Maintenance Treasury Rate. As
used in this definition, the term “Discount Rate” means the rate which, when compounded monthly, is equivalent
to the Yield Maintenance Treasury Rate, when compounded semi-annually. As used in this definition, the term “Yield Maintenance
Treasury Rate” means the yield calculated by Lender by the linear interpolation of the yields, as reported in the Federal
Reserve Statistical Release H.15 Selected Interest Rates under the heading U.S. Government Securities/Treasury Constant Maturities
for the week ending prior to the Prepayment Date, of U.S. Treasury Constant Maturities with maturity dates (one longer and one
shorter) most nearly approximating the Stated Maturity Date. In the event that Release H.15 is no longer published, Lender shall
select a comparable publication to determine the Yield Maintenance Treasury Rate. In no event, however, shall Lender be required
to reinvest any prepayment proceeds in U.S. Treasury obligations or otherwise. Lender’s determination of the Yield Maintenance
Premium shall be final and binding absent manifest error.


 


1.3           Singular
and Plural Terms. Any defined term used in the plural in any Loan Document shall refer to all members of the relevant class
and any defined term used in the singular shall refer to any number of the members of the relevant class.


 


1.4           Accounting
Principles. Any accounting term used and not specifically defined in any Loan Document shall be construed in conformity with,
and all financial data required to be submitted under any Loan Document shall be prepared in conformity with, generally accepted
accounting principles applied on a consistent basis or in accordance with such other principles or methods as are reasonably acceptable
to Lender.


 


1.5           References
and Other Terms. Any reference to any Loan Document or other document shall include such document both as originally executed
and as it may from time to time be modified. References herein to Articles, Sections and Exhibits shall be construed
as references to this Agreement unless a different document is named. References to subparagraphs shall be construed as references
to the same Section in which the reference appears. The term “document” is used in its broadest sense and encompasses
agreements, certificates, opinions, consents, instruments and other written material of every kind. The terms “including”
and “include” mean “including (include) without limitation.” Each agreement herein by any party not to
unreasonably withhold consent or approval to a proposed action shall be construed to include a covenant not to unreasonably condition
or delay such consent or approval.


 




    	16



    	 



    

 


2.           The
Loan; Equity Requirements; Reserves.


 


2.1         Agreement
to Borrow and Lend. Borrower agrees to borrow from Lender A an amount not to exceed the Loan A Amount, and Lender A agrees
to lend to Borrower an amount not to exceed the Loan A Amount, on the terms of and subject to the conditions of this Agreement
and the other Loan Documents. Borrower agrees to borrow from Lender B an amount not to exceed the Loan B Amount, and Lender B agrees
to lend to Borrower an amount not to exceed the Loan B Amount, on the terms of and subject to the conditions of this Agreement
and the other Loan Documents. The commitments of Lender A to lend the Loan A Amount and the commitment of Lender B to lend the
Loan B Amount are several, not joint. Neither Loan is a revolving facility, and Borrower shall not have the right to re-borrow
any portion of any Loan repaid by Borrower. Upon satisfaction of the terms and conditions hereunder for any Disbursement of Loan
proceeds, Lender A and Lender B shall each disburse its pro rata share of the amount available to be disbursed hereunder. The pro
rata share of each shall be based on the Loan A Amount and the Loan B Amount (i.e. Lender A shall disburse 40,912/41,912 of the
amount available to be disbursed, and Lender B shall disburse 1,000/41.912 of the amount available to be disbursed).


 


2.2         Promises
to Pay. Borrower promises to pay to Lender A the amount advanced by Lender A and interest thereon and all other amounts due
and payable pursuant to the terms and conditions of this Agreement and the other Loan Documents. Borrower promises to pay to Lender
B the amount advanced by Lender B and interest thereon and all other amounts due and payable pursuant to the terms and conditions
of this Agreement and the other Loan Documents. In addition, Borrower promises to pay to Lender B the Participation Amount pursuant
to the terms and conditions of this Agreement.


 


2.3         Notes.
Loan A shall be evidenced by Note A. Loan B and the Participation shall be evidenced by Note B.


 


2.4         Interest.


 


(a)          Subject
to Section 2.5, interest on the Loan A Debt outstanding from time to time shall accrue from the first advance
of any proceeds of Loan A until the Loan A Debt is repaid in full at the Loan A Interest Rate.


 


(b)          Subject
to Section 2.5, interest on the Loan B Debt outstanding from time to time shall accrue from the first advance of
any proceeds of Loan B until the Loan B Debt is repaid in full at the Loan B Interest Rate. For purposes of calculating interest,
the Participation Amount shall not be deemed outstanding until the Participation Due Date. If the Participation Amount has not
been determined as of the Participation Due Date, then interest on the Participation Amount, at the Loan B Interest Rate (or Default
Rate if applicable), retroactive to the Participation Due Date, shall be determined and added to the Loan B Debt when the Participation
Amount is determined. However, if the Participation Amount has not been determined as of the Participation Due Date as a result
of events beyond the reasonable control of Borrower, as the result of Lender’s failure to timely deliver an Appraisal, or
any other act or omission of Lender in violation of this Agreement relating to determination of the Participation Amount, then
no interest (whether at the Loan B Interest Rate or at the Default Rate, as applicable) shall accrue on the Participation Amount
during the period attributable to such delay.


 




    	17



    	 



    

 


2.5         Default
Rate. From and after the commencement of and during the continuance of an Event of Default and from and after a Default arising
from a failure to repay the Debt on the Maturity Date, interest on the Loan A Debt and Loan B Debt outstanding from time to time
shall accrue and be payable at the applicable Default Rate in lieu of the Interest Rate. Notwithstanding the foregoing, with respect
to regularly scheduled payments of interest that are due and payable prior to the Maturity Date, Lender shall waive its right to
charge interest at the Default Rate in lieu of the Interest Rate if the payment is made not later than the close of business on
the tenth (10th) day of the applicable calendar month.


 


2.6         Interest
Calculations. Interest with respect to each Loan shall be calculated by multiplying (a) the actual number of days elapsed in
the period for which the calculation is made, by (b) a daily rate (determined by dividing the applicable Interest Rate or Default
Rate, as applicable, by 360), and by (c) the outstanding Debt with respect to the applicable Loan during such period.


 


2.7         Mandatory
Monthly Payments. On each Payment Date Borrower shall pay to Lender A all interest that has accrued with respect to the Loan
A Debt during the immediately preceding calendar month, and Borrower shall pay to Lender B all interest that accrued with respect
to the Loan B Debt during the immediately preceding calendar month. So long as and to the extent that funds are available to be
disbursed from the Interest Reserve pursuant to the terms and conditions hereof, and provided that Borrower has satisfied all conditions
to disbursement from the Interest Reserve, Borrower’s monthly payment obligations under this Section shall be satisfied
by disbursements from the Interest Reserve. However, on any Payment Date, if and to the extent funds are not available to be disbursed
from the Interest Reserve (whether due to the exhaustion of such funds or the failure by Borrower to satisfy the terms and conditions
hereunder for disbursements from the Interest Reserve), then Borrower shall make the payments required by this Section from
its own funds. If Borrower fails to make any monthly payment required by this Section within ten (10) days of the due date
therefor, then the required amount of such payment shall be deemed added to the Loan A Debt and Loan B Debt as applicable and thereafter
the entire Loan A Debt and the entire Loan B Debt shall accrue interest at the Default Rate until paid in full or all Events of
Default are cured; provided that nothing in this sentence shall be construed to excuse Borrower from its obligation to make any
such monthly payment and, notwithstanding the addition of such delinquent amount to the Debt, Borrower shall remain obligated to
pay such delinquent monthly payment to Lender.


 


2.8         Late
Charges.


 


(a)          If
Borrower fails to pay any monthly installment of interest within ten (10) days after the date on which the same is due (but excluding
the principal due on the Maturity Date and the Participation Amount), Borrower shall pay to Lender a late charge on such past-due
amount, as liquidated damages and not as a penalty, equal to five percent (5%) of such amount, but not in excess of the Maximum
Legal Rate. The foregoing late charge is intended to compensate Lender for the expenses incident to handling any such delinquent
payment and for the costs, losses and inconvenience incurred by Lender as a result of such delinquent payment. Borrower agrees
that, considering all of the circumstances existing on the Closing Date, the late charge represents a reasonable estimate of the
costs, losses and inconvenience Lender will incur by reason of late payment. Borrower and Lender further agree that proof of actual
costs, losses and inconvenience would be costly, inconvenient, impracticable and extremely difficult to fix or quantify. Acceptance
of the late charge shall not constitute a waiver of any Default or Event of Default arising from the overdue payment, and shall
not prevent Lender from exercising any other rights or remedies available to Lender. For clarification, with respect to regularly
scheduled payments of interest that are due and payable prior to the Maturity Date, Lender shall waive the late charge if the payment
is made not later than the close of business on the tenth (10th) day of the applicable calendar month.


 




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(b)          Without
limiting any other right or remedy hereunder, Borrower shall pay to Lender a late charge of One Thousand Dollars ($1,000) per month
for each full or partial month that a Required Report is delivered to Lender past the date that it is due to Lender. With respect
to each delinquent Required Report, this late charge shall be assessed on the first Business Day that the Required Report is delinquent
and shall continue to be assessed monthly thereafter, on the first day of each calendar month, until the delinquency is cured.
This late charge shall accrue separately and cumulatively for each Required Report that is not delivered when due. The foregoing
late charge is intended to compensate Lender for the costs, losses, and inconvenience incident to handling any such delinquent
Required Report and for the costs, losses and inconvenience suffered or incurred by Lender as a result of such delinquent Required
Report. Borrower agrees that, considering all of the circumstances existing on the Closing Date, the late charge represents a reasonable
estimate of the costs, losses and inconvenience Lender will incur by reason of such delinquent Required Reports. Borrower and Lender
further agree that proof of actual costs, losses and inconvenience would be costly, inconvenient, impracticable and extremely difficult
to fix or quantify. Acceptance of the late charge shall not constitute a waiver of any Default or Event of Default arising from
such delinquent Required Reports, and shall not prevent Lender from exercising any other rights or remedies available to Lender.


 


2.9         Payment
on Maturity Date. On the Maturity Date, Borrower shall pay Lender A the Loan A Debt in full and shall pay Lender B the Loan
B Debt in full.


 


2.10       Repayment
of Protective Advances. If Lender makes any Protective Advance, Borrower shall repay the amount thereof to Lender, together
with interest thereon at the Interest Rate or Default Rate, as applicable, within five (5) days of Lender’s written demand.
If Borrower fails to repay any Protective Advance immediately upon Lender’s demand, then the required amount of such payment
shall be deemed added to the Debt effective as of the date that Lender advanced the Protective Advance and thereafter shall accrue
interest at the Default Rate until paid in full; provided that nothing in this sentence shall be construed to excuse Borrower from
its obligation to repay such Protective Advance and, notwithstanding the addition of the Protective Advance to the Debt, Borrower
shall remain obligated to repay such Protective Advance with interest to Lender within five (5) days of written demand. Unless
otherwise designated in writing by Lender A, each Protective Advance shall be deemed made by Lender A and be part of Loan A.


 




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2.11       Prepayments.
During the Lockout Period, Borrower shall have no right to prepay any of the Debt (other than delinquent monthly payments and Protective
Advances that have been added to the Debt and other than in connection with a closing of the sale of the Property under the Purchase
Option Agreement), subject to Section 10.2(c) and Section 10.3(b) hereof. On or after the
Lockout Release Date, Borrower may prepay the Debt in whole, but not in part, subject to the following conditions and Section 10.2(c)
and Section 10.3(b) hereof:


 


(a)          Borrower
must deliver to Lender advance written notice of its intent to prepay the Debt in full (the “Prepayment Notice”).
The Prepayment Notice may not be delivered prior to the Lockout Release Date. The prepayment must be tendered on a Business Day
that is not earlier than two (2) Business Days after delivery of the Prepayment Notice. If more than thirty (30) days has passed
since delivery of a Prepayment Notice, then the Prepayment Notice shall expire and Borrower shall not tender a prepayment until
a Business Day that is not earlier than two (2) Business Days after Borrower delivers a new Prepayment Notice. Notwithstanding
the foregoing, no Prepayment Notice shall be required in connection with a prepayment made concurrently with the closing of a sale
under the PSA


 


(b)          Subject
to Section 2.14, the Loan A Debt and the Loan B Debt (including the Participation Amount) must be prepaid in full
concurrently.


 


(c)          Concurrently
with the prepayment, Borrower must pay to each Lender all interest that has accrued with respect to the Loan A Debt and Loan B
Debt, respectively, through the date of prepayment.


 


2.12       Prepayments
Tendered or Debt Accelerated During the Lockout Period.


 


(a)          If
Borrower or any other Person tenders to Lender a prepayment of the Debt or any portion thereof (i) during the Lockout Period (other
than delinquent monthly payments or Protective Advances that have been added to the Debt and other than payments pursuant to Section 10.2(c)
or 10.3(b) hereof and other than in connection with a closing of the sale of the Property under the Purchase Option
Agreement), or (ii) following acceleration of the Debt by reason of an Event of Default if both the Event of Default and acceleration
occurred during the Lockout Period, such tender shall be deemed an attempt to circumvent the prohibition of prepayment during the
Lockout Period, an attempt to circumvent the obligation to pay the Participation Amount, or both. Upon the occurrence of such a
tender, the Participation Due Date shall be deemed to occur, the Participation Amount (if not already determined) shall be determined
in accordance with Section 2.13, and the Participation Amount shall be added to the Loan B Debt retroactive
to the date of the tender. In addition, upon the occurrence of such a tender, the Yield Maintenance Premium calculated with respect
to the Loan A Debt and Loan B Debt shall become immediately due and payable and shall be added to the Loan A Debt and Loan B Debt,
as applicable, retroactive to the tender of the prepayment.


 


(b)          Lender
shall have no obligation to release its lien on the Property or any other collateral for the Loan unless and until all amounts
due and payable to Lender under this Agreement, including this Section 2.12, are determined and paid in full.


 




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2.13       Appraised
Value and Participation Amount. Upon the occurrence of an Appraisal Event, Lender B and Borrower shall promptly confer in good
faith with a view to determining the Appraised Value as of the date of the Appraisal Event and the Participation Amount by mutual
written agreement. However, except to the extent that Lender and Borrower otherwise agree in writing, at any time from and after
ten (10) Business Days following the Appraisal Event, upon the written demand of either Lender B or Borrower, Lender B and Borrower
shall promptly commence a determination of the Appraised Value as of the date of the Appraisal Event and the Participation Amount
in accordance with this Section 2.13.


 


(a)          Not
later than ten (10) Business Days after delivery of the demand referenced above, Lender B and Borrower shall each engage a Qualified
Appraiser to determine the Appraised Value of the Property. Each Qualified Appraiser shall be directed to deliver an Appraisal
within forty five (45) days of its engagement. The parties shall cooperate in good faith to furnish both Qualified Appraisers with
all information pertaining to the Property reasonably requested by the Qualified Appraisers, and shall furnish the Qualified Appraisers
with the definitions of “Appraisal”, “Appraised Value”, and “Property” to guide them in the
preparation of the Appraisals.


 


(b)          If
the opinion of Appraised Value as reported in the Appraisal indicating the higher value is less than or equal to one hundred ten
percent (110%) of the opinion of value as reported in the Appraisal indicating the lower value, then the Appraised Value shall
be the average of the two opinions of value.


 


(c)          If
the opinion of Appraised Value as reported in the Appraisal indicating the higher value is greater than one hundred ten percent
(110%) of the opinion of Appraised Value as reported in the Appraisal indicating the lower value, then the parties shall jointly
direct the two Qualified Appraisers to jointly select a third Qualified Appraiser within ten (10) days, and then shall deliver
each of their appraisals to the third Qualified Appraiser and jointly direct the third Qualified Appraiser to deliver a formal
written Appraisal of the Appraised Value of the Property. The two Qualified Appraisers shall notify Lender B and Borrower of the
name and address of the third Qualified Appraiser. Not later than fifteen (15) days after receipt of the notice identifying the
third Qualified Appraiser, each of Lender B and Borrower may, but will not be required to, furnish the third Qualified Appraiser
with a memorandum or other material providing commentary on the Appraisals. The parties shall cooperate in good faith to furnish
the third Qualified Appraiser with all information pertaining to the Property reasonably requested by such Appraiser, and shall
furnish the such Appraiser with the definitions of “Appraisal”, “Appraised Value”, and “Property”
to guide the appraiser in the preparation of the Appraisal. In addition, prior to issuing its Appraisal, the third Qualified Appraiser
shall engage in at least one consultation (which may be in person or by telephone) with each of the initial two Qualified Appraisers
separately, and may engage in such additional consultations with such appraisers, separately or together, to the extent that the
third Qualified Appraiser elects. Lender B and Borrower shall have no ex parte communications with the third Qualified Appraiser;
and communications by Borrower or Lender B with the third Qualified Appraiser shall be made jointly or in the presence of the other
party. Lender B and Borrower may have ex parte communications with the respective initial Qualified Appraisers selected by them,
and such initial appraisers may have ex parte communications with the third Qualified Appraiser. The engagement of the third Qualified
Appraiser shall provide that, after consideration of the initial two Appraisals and any commentary material timely submitted by
Borrower or Lender B, and after at least one consultation with each of the initial Qualified Appraisers, the third Qualified Appraiser
shall deliver its Appraisal within forty-five (45) days after its selection. The Appraised Value shall then be determined by (i)
ascertaining which of the first two Appraisals has an opinion of Appraised Value closest to the opinion of Appraised Value in the
third Appraisal, and then (ii) averaging that closer opinion of Appraised Value with the opinion of Appraised Value in the third
Appraisal.


 




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(d)          The
reasonable fees and expenses of all of the Appraisals described above shall be paid by Borrower. However, such fees and expenses
shall be taken into account in determining the Participation Amount as described below.


 


(e)          The
Participation Amount shall be determined by Lender B promptly following determination of the Appraised Value, as follows: The Participation
Amount shall be twenty-one percent (21%) of the following: (i) the Appraised Value, minus (ii) the fees and expenses all of the
Qualified Appraisers who provided Appraisals that were used to determine the Appraised Value, minus (iii) the lesser of (A) the
Approved Budget and (B) the actual Project Costs incurred by Borrower. Notwithstanding the foregoing, if the “Buyer”
under the Option Agreement did not exercise its option to purchase under the Option Agreement, or if after exercising such option
the Buyer failed to close on such purchase for reasons other than default by the “Seller” under the PSA, and if the
Debt is repaid in full with the proceeds of an Arm’s Length Sale, then the formula in this Section 2.14(e)
for determining the Participation Amount shall be modified by replacing clause (i) in the prior sentence with the following: “the
average of (x) the Appraised Value and (y) the gross purchase price of the Property in the Arm’s Length Sale, minus”.


 


(f)          When
Lender determines the Appraised Value and Participation Amount in accordance with this Section 2.13, Lender shall
promptly disclose to Borrower its calculations and any appropriate documentation supporting such calculations. Within five (5)
Business Days following such disclosure, Borrower shall notify Lender whether it has any disagreements with such calculations and
the reasons for such disagreements. If Borrower has any disagreements, Lender and Borrower shall promptly consult in good faith
with a view to resolving such disagreements. Thereafter, as soon as reasonably practicable, Lender shall prepare and deliver to
Borrower a memorandum (the “Valuation Notice”) which shall memorialize the Appraised Value, the Participation
Amount, and the Valuation Date as determined by Lender after good faith consideration of any disagreements communicated by Borrower.
Borrower shall promptly countersign and return to Lender a counterpart of the Valuation Notice. Borrower shall be deemed to have
waived any disagreements with regard to the Appraised Value, Participation Amount, and Valuation Date, except to the extent that
it reserves such disagreements in a writing delivered to Lender concurrently with its countersignature of the Valuation Notice
that sets forth its disagreements in reasonable detail (a “Reservation Notice”). Whether or not Borrower countersigns
the Valuation Notice or delivers a Reservation Notice, absent manifest error the Valuation Notice as issued by Lender shall be
deemed final and binding on the parties for purposes of administering the terms of this Agreement and the Option Agreement, including
determination of Appraised Value and Participation Amount to be used in connection with repayment of the Debt or purchase of the
Property pursuant to the Option Agreement and PSA (except to the extent otherwise provided in the second sentence of Section
2.13(e)). To the extent that Borrower reserves any disagreements in a Reservation Notice in reasonable detail, such
claims shall survive repayment of the Debt or purchase of the Property pursuant to the Option Agreement and PSA. But such reserved
claims shall be for money damages only; such reserved claims shall not entitle Borrower to injunctive or equitable relief, to a
release of the Property or other collateral absent repayment of the Debt in full including the Participation Amount as stated in
the Valuation Notice, or relieve the Seller under the Option Agreement and PSA from its obligation to sell the Property in accordance
with the terms and conditions of the Option Agreement and PSA.


 




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2.14       Participation.
Borrower shall pay Lender B the Participation Amount on the earlier of (a) the Maturity Date or (b) the Participation Due Date
(provided that, if the Participation Due Date occurs before the Maturity Date and the Participation Amount has not been determined
as of three (3) Business Days prior to the Participation Due Date, then the Participation Amount and interest thereon as provided
in Section 2.4 shall be due and payable to Lender on the earlier of the Maturity Date or three (3) Business Days after the
Participation Amount has been determined). Borrower’s obligation to pay the Participation Amount is secured by the Security
Instrument and all other security for the Loan.


 


2.15       Usury
Savings and Characterization of Participation.


 


(a)          This
Agreement and the other Loan Documents are subject to the express condition that at no time shall Borrower be required to pay interest
on the principal balance of the Loan at a rate which could subject Lender to either civil or criminal liability as a result of
being in excess of the Maximum Legal Rate. If by the terms of this Agreement or the other Loan Documents, Borrower is at any time
required or obligated to pay interest on the principal balance due hereunder at a rate in excess of the Maximum Legal Rate, the
Interest Rate or the Default Rate, as the case may be, shall be deemed to be immediately reduced to the Maximum Legal Rate, and
the relevant provision in the Loan Documents will be deemed to be revised such that the interest contracted for does not exceed
the Maximum Legal Rate. All payments received by Lender in excess of the Maximum Legal Rate shall be deemed to have been payments
in reduction of principal and not on account of the interest due hereunder. All sums paid or agreed to be paid to Lender for the
use, forbearance, or detention of the sums due under the Loan, shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full stated term of the Loan until payment in full so that the rate or amount of
interest on account of the Loan does not exceed the Maximum Legal Rate from time to time in effect and applicable to the Loan for
so long as the Loan is outstanding.


 




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(b)          Lender
A, Lender B, and Borrower agree to treat the obligations of Borrower hereunder and under the other Loan Documents (including the
Participation) as debt for all U.S. federal income tax purposes, agree to treat all payments by Borrower hereunder and under the
other Loan Documents (including the Participation Amount) as interest or principal for all purposes under federal tax law, and
agree to treat all interest paid to Lender A and Lender B (other than the Participation Amount and any interest paid thereon) as
qualifying under Section 856 of the Code.


 


(c)          Borrower
acknowledges, and agrees that it shall be estopped to deny, that notwithstanding the tax treatment described in Section 2.15(b),
for all purposes other than federal tax law, including the Finance Code of the State of Texas (the “Finance Code”):
(i) the Loan is a “Qualified Commercial Loan” as defined in Section 306.001 of the Finance Code, and (ii) the
Participation qualifies as an option or other right described in Section 306.101(b)(4) of the Finance Code.


 


(d)          Lender
A, Lender B, and Borrower acknowledge and agree that Lender A has no right, title, or interest in the Participation or Participation
Amount, and that all right, title, and interest therein is allocated solely to Lender B.


 


(e)          Lender
B and Borrower acknowledge and agree that the terms and conditions relating to the Participation and the Participation Amount were
negotiated at arm’s length between Borrower and Lender B, and that Lender B’s obligations and commitments hereunder
represent fair and adequate consideration for the Borrower’s obligations hereunder in respect of the Participation and the
Participation Amount.


 


2.16       Loan
Commitment Fee. On the Closing Date, Borrower shall pay to Lender A, for Lender A’s sole account in immediately available
funds, a loan commitment fee in the amount of $419,120.00, with said fee received as consideration for entering into this Agreement.


 


2.17       Equity
Contributions. As a condition to any disbursement of the Loan, the Borrower shall have provided evidence reasonably satisfactory
to Lender that Borrower’s equity invested in the Project (collectively, the “Equity Contributions”)
is not less than the difference between the total Project Costs as set forth in the Approved Budget and the maximum Loan Amount;
provided, however, in no event shall Borrower’s equity in the Project be less than fifteen percent (15%) of the total Project
Costs as set out in the Approved Budget approved by Lender hereunder, and not less than seven and one-half percent (7 1/2 %) of
such total Project Costs must have been paid from equity contributed to Borrower by Sponsor. Borrower’s equity must be either
(i) deposited with the Lender on or prior to the date of this Agreement and disbursed prior to the first disbursement of Loan
proceeds or (ii) used to pay direct Project Costs approved by Lender with evidence of payment delivered to Lender prior to
the first disbursement of Loan proceeds. For purposes of determining satisfaction of the minimum equity requirements hereunder,
the Land shall be valued at its acquisition cost.


 




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2.18       Interest
Reserve. A portion of the Loan A Amount, in the amount of Five Million Five Hundred Thirty Nine Thousand and No/100 Dollars
($5,539,000.00) is hereby allocated to and designated as the “Interest Reserve”. The Interest Reserve is an
unfunded reserve, representing a portion of the undisbursed Loan Proceeds, dedicated to the sole purpose of lending funds to Borrower
to enable Borrower to pay interest on Loan A and Loan B as and when such interest becomes due and payable. Provided that no Event
of Default shall have occurred and be continuing, Lender A shall make advances from the Interest Reserve to itself on each Payment
Date for the purpose of payment when due of accrued and unpaid interest on Loan A. Each such advance shall be credited to the amount
of interest due and payable by Borrower on such Payment Date and shall reduce, by an equivalent amount, the remaining amount available
to be advanced from the Interest Reserve. Borrower acknowledges and agrees that the payment of such accrued and unpaid interest
by the method described herein is for its convenience and benefit. If at any time the amount available to be advanced from the
Interest Reserve is reduced to zero, Lender shall no longer have any obligation for funding of accrued and unpaid interest, whereupon
Borrower shall be and remain responsible for the continuation of all such payments from funds other than Loan Proceeds. If at any
time Lender, in its reasonable judgment, estimates that the interest remaining to be paid on the Loan through the Maturity Date
exceeds the undisbursed Loan Proceeds allocated to the Interest Reserve plus the amount of Operating Cash Flow that Lender reasonably
estimates will be available for payment of such interest plus the amount of any cost savings or Contingency that may be reallocated
to the interest expense line item as permitted by this Agreement, Borrower, within ten (10) days after request by Lender,
will make a “Balancing Deposit” (as defined in Section 4.4) in the amount of the shortfall
which shall first be exhausted before any further disbursement of the Loan Proceeds to pay interest on the Loan.


 


2.19       Allocation
of Payments. Any amounts received by the Servicer that are available for application to the Debt shall be allocated by the
Servicer and applied to the components of the Debt in the following order:


 


(a)          First,
to amounts due and payable to Lender A or Lender B other than interest or principal or the Participation Amount, in any order as
Servicer may determine in good faith, until all such amounts have been paid in full;


 


(b)          then
to accrued and unpaid interest on the Debt, allocated by the Servicer pro rata between the Loan A Debt and the Loan B Debt based
on the accrued and unpaid amounts of interest on the Loan A Debt and Loan B Base Debt, respectively, that are outstanding as of
the date of receipt, until all accrued and unpaid interest on the Debt has been paid in full;


 


(c)          then
to the outstanding principal balance of the Debt, allocated by the Servicer pro rata between the Loan A Debt and the Loan B Debt
based on the respective amounts of Loan A Debt and Loan B Base Debt outstanding as of the date of receipt, until the Loan A Debt
and the Loan B Base Debt has been paid in full; and


 


(d)          then
to Loan B until the Participation Amount is paid in full.


 




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3.           Conditions
to Closing.


 


3.1         Conditions
to Closing. As a condition precedent to the Closing, Borrower shall furnish to Lender the following, all of which must be strictly
satisfactory to Lender and Lender’s counsel in form, content and execution:


 


(a)          Loan
Documents. Fully executed original copies of each of the Loan Documents listed on Exhibit D hereto.


 


(b)          Title
Insurance Policy. At the Closing (or as soon as practicable thereafter, with a marked-up pro-forma policy to be delivered at
the Closing), a loan policy in the form promulgated by the State Board of Insurance of the State of Texas (“Title Policy”)
issued by the Title Insurance Company in the full amount of the Loan naming Lender as the insured party and Borrower as the owner
and fee simple title holder of the Property, in each case subject only to the Permitted Encumbrances, and insuring the lien of
the Security Instrument as a first and prior lien upon the Property, subject to no exceptions other than exceptions approved by
Lender. The Title Policy must specifically insure Lender for claims and questions related to claims for mechanics’ or materialmen’s
liens and shall include endorsements satisfactory to Lender, including, without limitation, the following endorsements or modifications:
(i) a Restrictions, Encroachments, Minerals Endorsement (T-19), (ii) Access Endorsement (T-23); (iii) Assignment of Rents/Leases
Endorsement (T-27); (iv) Amendment of Exception as to Area, Boundaries -Texas “Survey” (R-15); (v) Contiguity Endorsement
(as applicable) (T-25); (vi) Environmental Endorsement (T-36); (vii) Variable Rate Mortgage Endorsement (T-33); (viii) Tax Deletion
(T-30) and such other endorsements or modifications as the Lender may require.


 


(c)          Survey.
A survey (“Survey”) of the Land dated no earlier than six (6) months prior to the Closing Date, which Survey
must be prepared by a registered land surveyor in accordance with the current survey standards of the American Land Title Association
and American Congress on Surveying and Mapping for urban surveys. The Survey must be certified to Borrower, Lender and the Title
Company. The Survey must satisfy all of Lender’s current standards for surveys, as delivered by Lender to Borrower, and include
such additional information as may be required by the Title Company to provide survey coverage in the Title Policy. Borrower shall
furnish three (3) copies of a final as-built Survey on completion of construction showing the location of all Improvements
on the Property and otherwise complying with the foregoing requirements.


 


(d)          Insurance
Policies. Certificates of insurance for all insurance policies required pursuant to Section 10 hereof, or
at Lender’s request copies of the insurance policies.


 


(e)          Utilities;
Licenses; Permits. Evidence reasonably satisfactory to Lender that:


 


(i)          all
utility and municipal services required for the construction, occupancy and operation of the Project are available for use and
tap-on at the Property, subject only to payment of fees included in the Approved Budget, or will be available after construction
thereof as provided in the Construction Contracts, subject only to payment of costs and fees included in the Approved Budget;


 




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(ii)         all
permits, licenses and governmental approvals (“Permits”), including all general building permits required to
be issued by the applicable Governmental Agency to authorize construction of the Project in accordance with the Plans, required
by applicable law to construct the Project have been issued, are in full force and all fees therefor have been fully paid (provided
that Lender agrees that satisfaction of this condition, with respect to final building permits, may be deferred until the first
Disbursement or, if earlier, until Borrower directs General Contractor to commence work);


 


(iii)        the
storm and sanitary sewage disposal system, the water system and all mechanical systems serving the Project do (or when constructed
will) comply with all Applicable Laws, including Environmental Laws and the applicable environmental protection agency, pollution
control board and/or other governmental agencies having jurisdiction of the Property have issued their Permits for the construction
and operation thereof; and


 


(iv)        all
utility, parking, access (including curb-cuts and public street access), construction, recreational and other easements and permits
required or, in Lender’s reasonable judgment, necessary for the construction and use of the Project have been granted or
issued;


 


which evidence shall include
a complete list of all Permits required to construct, occupy and operate the Project and copies of all Permits issued to date and
all utility letters, licenses and grants of easements.


 


(f)          Geotechnical
Report. A geotechnical report prepared by a licensed soil engineer satisfactory to Lender showing the locations of all borings,
containing boring logs for all borings together with recommendations for the design of the foundations, paved areas and underground
utilities for the Project, confirming that there are no mining facilities, sink holes or voids beneath the Land, confirming that
no conditions exist which could cause subsidence of any portion of the Land and showing no state of facts which could materially
adversely affect the Project.


 


(g)          Environmental
Report. A written report or reports (collectively, “Environmental Report”) prepared at Borrower’s
sole cost and expense by an independent professional environmental consultant approved by Lender in its sole and absolute discretion,
together with a reliance letter addressed to Lender or a separate agreement with such consultant permitting Lender to rely on such
report. The Environmental Report shall be subject to Lender’s approval in its sole and absolute discretion.


 


(h)          Documents
of Record. Copies of all covenants, conditions, restrictions, easements and matters of record which affect the Premises.


 




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(i)          Searches.
A report from a national search company acceptable to Lender indicating that no judgments, tax or other liens, security interests,
leases of personalty, financing statements or other encumbrances (other than Permitted Encumbrances and liens and security interests
in favor of Lender) are of record or on file encumbering any portion of the Property, and that there are no judgments, tax liens,
pending litigation or bankruptcy actions outstanding with respect to Borrower or Guarantor (or, with respect to a Guarantor only,
explanations satisfactory to Lender of any judgments or pending litigation in existence).


 


(j)          Plans
and Specifications. Three hard copies of the final detailed Plans for the Project, as submitted to the appropriate Governmental
Agency for issuance of the general building permit, including all changes to the date of submission thereof, showing identification
thereof by the Architect and generally consistent with any preliminary plans theretofore submitted to Lender, together with evidence
satisfactory to Lender that the Plans have been approved by the General Contractor, and all sureties on the Payment and Performance
Bonds. The Plans must be satisfactory to Lender and Lender Consultant in all respects and must be approved in writing by Lender.


 


(k)          Construction
Contracts. Certified copies of the executed General Contract and, if requested by Lender, such Subcontracts as Lender may identify
after review of the General Contractor’s sworn statement. The General Contract shall be (i) for a guaranteed maximum
price or a stipulated sum, (ii) shall conform to applicable terms of this Agreement, including, without limitation, provisions
regarding retainage, changes in Plans, Change Orders, extras, bonds and construction schedule, and (iii) upon such other terms
and provisions as shall be satisfactory to Lender and Lender’s counsel in all respects. Subcontracts covering not less than
33% of the guaranteed maximum price under the General Contract, including excavating, concrete, electrical, HVAC, and mechanical,
shall be let prior to the initial disbursement of Loan Proceeds.


 


(l)          General
Contractor Financial Statements. A detailed resume of the credentials and experience of the General Contractor, together with
the financial statements for the prior two (2) fiscal years of the General Contractor;


 


(m)         Architect’s
and Engineer’s Contracts. A certified copy of the executed Architect’s Contract and the executed Engineer’s
Contract, which shall be in a format and of a scope which is commensurate with industry practice for projects of a similar size
and nature, conform to applicable terms of this Agreement, and which must be reasonably satisfactory to Lender and Lender’s
counsel in all respects and which, as to the Architect’s Contract, shall provide for inspection services;


 


(n)          Sworn
Statements. A sworn construction cost statement (the “Sworn Construction Cost Statement”) from Borrower
in the form required by Lender, and a sworn statement from the General Contractor setting forth a description of all contracts
executed by Borrower or by the General Contractor with respect to the Property, the names and addresses of the contractors, engineers
and other parties under those contracts, the date of each such contract and of any supplements or amendments thereto, the nature
and scope of the work covered thereby, and the aggregate amounts theretofore paid and thereafter to be paid to each contractor
thereunder; and further stating whether said contracts include all of the work required to be done and all of the material necessary
for completion of the Project in accordance with the Plans, and, if not, providing sufficient information to enable Lender to estimate
the cost of any work or materials not so covered;


 




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(o)          Bonds.
Payment and performance bonds (the “Payment and Performance Bonds”) for the amount of the General Contract.
The Payment and Performance Bonds shall be on AIA Document A312 “Performance Bond and Payment Bond” or other bond form
acceptable to Lender in form and terms, including but not limited to identification of Lender as an additional obligee thereunder.
The bonding company shall have a current A.M. Best performance rating of not less than A and a financial classification rating
of not less than X. Provided that Lender has approved the identity of the bonding company and the form and amount of the Payment
and Performance Bonds prior to Closing, the issuance of such bonds may be deferred until the first Disbursement or, if earlier,
until Borrower directs General Contractor to commence work;


 


(p)          Statutory
Payment Bond. A Statutory Payment Bond meeting the requirements of the Texas Property Code, Section 53.201, duly filed;


 


(q)          Construction
Schedule. A schedule (“Construction Schedule”) in form and content satisfactory to Lender which, among other
things, sets forth dates for commencement and completion of the Project, indicates the projected time for performance of the work
to be accomplished under the General Contract and each Subcontract, and, if not attached as an exhibit to the General Contract,
includes a statement from the General Contractor that, in its best professional judgment, the Construction Schedule is realistic
and can be adhered to in completing the Project in accordance with the Plans and by the Construction Completion Date;


 


(r)          Draw
Schedule. The Draw Schedule;


 


(s)          Borrower’s
and Guarantor’s Attorney’s Opinion. An opinion of one or more counsel for the Borrower and Guarantor addressing
such issues as Lender may reasonably request, including the following propositions and questions of law:


 


(i)          that
each of Borrower and each Guarantor is duly organized, validly existing and in good standing to do business in the state of its
organization and in the State of Texas;


 


(ii)         that
Borrower has the necessary legal right, power and authority to conduct its business, to develop the Project and to enter into and
perform its obligations under this Agreement and the other Loan Documents;


 


(iii)        that
all necessary corporate, shareholder, membership, partnership approvals, resolutions and directions have been obtained for the
development of the Project and the execution of this Agreement and the Loan Documents;


 




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(iv)        that
the execution and delivery of this Agreement and the other Loan Documents, and the performance thereunder by Borrower and Guarantor,
as applicable, will comply with all applicable law and will not violate or conflict with the instruments under which Borrower and
Guarantor, as applicable, is organized or any applicable contracts or agreements;


 


(v)         that
this Agreement and the other Loan Documents have been duly and validly executed and delivered, are enforceable in accordance with
their respective terms (subject to bankruptcy laws and laws pertaining to the exercise of creditors’ rights generally) and
are subject to no defenses of any kind;


 


(vi)        that
the making of the Loan, the charging of all interest and fees due thereunder do not violate any usury or consumer credit laws;
and


 


(vii)       if
permitted under applicable law, that Borrower has effectively waived in the Security Instrument any rights of redemption from a
decree or order foreclosing the Security Instrument on behalf of itself and all persons claiming through Borrower.


 


(t)          Organizational
Documents. A certified copy (certified, where applicable, by the state office in which such documents were filed, and in all
other cases by an appropriate representative of the entity) of:


 


(i)          A
copy of the Operating Agreement for Borrower;


 


(ii)         The
Articles of Organization of Borrower;


 


(iii)        The
Articles of Incorporation and By-laws / Partnership Agreement / Partnership Agreement and Certificate of Limited Partnership
/ Articles of Organization / Certificate of Formation and operating agreement of the General Partner / Manager / Managing
Member of Guarantor and each entity whose authorization is necessary to authorize the execution, delivery and performance of the
Loan Documents, or whose authorization is necessary to authorize any other entity whose authorization is necessary in respect thereto,
certified by the appropriate officer or representative. For purposes hereof, the Borrower, Guarantor, and all such other entities
are referred to herein below as the “Constituent Entities”;


 


(iv)        Resolutions
by the applicable Constituent Entities authorizing the execution and delivery of the documents evidencing and securing the Loan,
certified by an appropriate representative of the Constituent Entities;


 


(v)         An
incumbency certificate, including specimen signatures for all individuals executing any of the Loan Documents, for each Constituent
Entity executing any of the Loan Documents, certified by the secretary or other appropriate representative of such entity;


 




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(vi)        Certificates
of existence for all limited partnerships and certificates of good standing for all corporations or limited liability companies
that are Constituent Entities from their state of formation, and, if the Borrower was not formed in the State of Texas, a certificate
of good standing or existence, as applicable, from the State of Texas; and


 


(vii)       All
other instruments and documents concerning the formation and existence of the Constituent Entities, and the execution and delivery
of the Loan Documents by the Constituent Entities, reasonably required by the Lender.


 


(u)          Real
Estate and Personal Property Taxes. Evidence satisfactory to Lender that real estate taxes due and payable with respect to
the Land, if any, have been paid in full and evidence reasonably satisfactory to Lender that any personal property taxes due and
payable with respect to the Project, if any, have been paid in full. Copies of the most recent real estate and personal property
tax bills for the Property.


 


(v)         Lender
Consultant Report. A written report(s) prepared at Borrower’s expense by the Lender Consultant, which report(s) shall
be based upon an evaluation and/or investigation of specific factors and shall describe in detail the investigation and evaluations,
as well as the findings. The report(s) shall include an evaluation of the Plans and their compliance with governmental regulations;
an evaluation of the adequacy of the Approved Budget, an evaluation of the Construction Schedule and any other matters reasonably
required by Lender.


 


(w)          Financial
Statements. All financial information requested by Lender with respect to Borrower and Guarantor, including but not limited
to financial statements for Guarantor for the year ending December 31, 2013.


 


(x)          Zoning.
Evidence that the Property complies with all applicable zoning and other land use laws.


 


(y)          Management
Agreement. A copy of the Management Agreement, if any.


 


(z)          Other
Major Project Agreements. Copies of the Project Agreements (to the extent not listed above).


 


(aa)         Feasibility
Study. A feasibility study for the Project.


 


(bb)         Affidavit
of Commencement. An Affidavit of Commencement, duly executed and acknowledged by all necessary parties. Lender and Borrower
shall jointly complete any blank spaces in the Affidavit of Commencement, and shall jointly authorize its recordation, within one
Business Day after confirmation of recordation of the Security Instrument.


 


(cc)         Additional
Documents. Such other papers and documents regarding Borrower and Guarantor or the Property as Lender may reasonably require.


 




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3.2         Closing
Certificate. The following statements shall be true and correct on the Closing Date and the Lender shall have received a certificate
executed by Borrower, dated the Closing Date, stating that:


 


(a)          The
representations and warranties contained in Section 5 of this Agreement are correct on and as of the Closing
as though made on and as of such date;


 


(b)          No
Default has occurred and is continuing, and no Event of Default has occurred, hereunder, or would result from the execution and
delivery of the Loan Documents or the other Major Project Agreements;


 


(c)          To
Borrower’s knowledge, no default, or event or condition that with notice or the passage of time or both, would result in
a default, exists on the part of the counterparty under any of the Major Project Agreements;


 


(d)          No
litigation has been instituted against the Borrower or Guarantor which would be reasonably likely to have a material adverse effect
on the condition (financial or otherwise) of the Borrower or Guarantor or such party’s ability to perform its obligations
hereunder, under any of the Loan Documents or under any of the Project Agreements; and


 


(e)          No
material adverse change has occurred in the condition or operations, financial or otherwise, of Borrower or Guarantor since the
date of the most recent financial statements of each such party delivered to Lender.


 


3.3         Other
Conditions Precedent. On or before the Closing Date:


 


(a)          All
other Major Project Agreements shall have been duly authorized, executed and delivered; and


 


(b)          The
Borrower shall have complied with all terms and conditions applicable to the Borrower under each of the Major Project Agreements.


 


3.4         Termination
of Agreement. Borrower agrees that all conditions precedent to the Closing will be complied with on or prior to the Closing
Date. If all of the conditions precedent to the Closing hereunder shall not have been performed on or before the Closing Date,
Lender, at its option at any time prior to the Closing, may terminate this Agreement and all of its obligations hereunder by giving
a written notice of termination to Borrower. In the event of such termination, Borrower shall pay all Loan Expenses which have
accrued or been charged prior to such date.


 


4.           Disbursement
Procedures.


 


4.1         Conditions
Precedent to Disbursement of Loan Proceeds. No Disbursement of Loan Proceeds shall be made by Lender to Borrower at any time
unless:


 




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(a)          all
conditions precedent to that disbursement have been satisfied, including, without limitation, performance of all of the then pending
obligations of Borrower under this Agreement and the Loan Documents;


 


(b)          the
Loan is In Balance;


 


(c)          Lender
shall be satisfied as to the continuing accuracy of the Approved Budget;


 


(d)          no
Event of Default or material Default shall have occurred and be continuing. For purposes of the foregoing, a Default shall not
be deemed material if (i) such default is capable of cure in a reasonable time, (ii) Borrower or Guarantor, as applicable, is diligently
pursuing such cure, (iii) Borrower or Guarantor, as applicable, has delivered to Lender a feasible plan and timetable for cure
of such Default in a reasonable time, and (iv) no irreparable damage has occurred to the condition, use, or operation of the Property
as a result of such Default;


 


(e)          no
litigation or proceedings are pending (except as previously disclosed to Lender in writing, including mechanics lien actions previously
disclosed to Lender and for which title insurance has been provided to Lender under the Lender’s Title Policy) or threatened
in writing (including proceedings under Title 11 of the United States Code) against Borrower, Guarantor, the Property or the
General Contractor, which would be reasonably likely to have a material adverse effect on the condition of Borrower or Guarantor,
as applicable, or such party’s ability to perform its obligations hereunder, under the Loan Documents, or under any of the
Major Project Agreements;


 


(f)          all
representations and warranties made by Borrower and Guarantor to Lender herein and otherwise in connection with this Loan are accurate
in all material respects as of the date of such Disbursement (except for those representations made as of a certain date);


 


(g)          with
respect to the first Disbursement, Borrower has furnished Lender an Affidavit of Commencement executed by Borrower and General
Contractor, that: (i) has been sworn to before and acknowledged by a notary public and (ii) was recorded in the appropriate county
real property records after recordation of the Security Instrument;


 


(h)          to
the extent that Lender agrees to defer satisfaction of any conditions of Closing until the first Disbursement, Lender may condition
the first Disbursement on satisfaction of such conditions; and


 


(i)          if
the proposed disbursement is a Construction Disbursement, the additional requirements of Section 4.3 hereof
have been satisfied.


 


4.2         Loan
Disbursement. Subject to the satisfaction of the terms and conditions herein contained, the Loan Proceeds shall be disbursed
as follows:


 




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(a)         The
Closing shall be made at such time as all of the conditions and requirements of this Agreement required to be performed by Borrower
or any other Person prior to the Closing have been satisfied or performed.


 


(b)         Advances
of Loan Proceeds for construction hard costs shall be based on the Architect’s certificate of work in place and shall not
be made more than once per month.


 


(c)          Borrower
hereby requests and authorizes Lender to make advances directly to itself for payment and reimbursement of all interest, charges,
costs and expenses incurred by Lender in connection with the Loan, including, but not limited to, (i) interest due on the Loan,
and any loan fees, service charges, commitment fees or other fees due to Lender in connection with the Loan; (ii) all fees and
disbursements of the Lender Consultant; (iii) all documentary stamp and other taxes and charges imposed by law on the issuance
or recording of any of the Loan Documents; (iv) all Appraisal fees; (v) all reasonable fees and disbursements of legal counsel
engaged by Lender in connection with the Loan, including, without limitation, counsel engaged in connection with the enforcement
or administration of this Agreement or any of the Loan Documents; and (vi) any amounts required to be paid by Borrower under this
Agreement, the Security Instrument or any Loan Document after the occurrence of an Event of Default (all of which are herein collectively
referred to as “Loan Expenses”).


 


(d)          No
disbursement of Loan Proceeds shall be made at any time that the Loan is not In Balance. Any disbursement of Loan Proceeds must
be made for payment of the Project Costs in strict accordance with the Approved Budget. No amendment of the Approved Budget shall
be made without Lender’s prior written consent in Lender’s sole discretion; provided that Lender shall not unreasonably
withhold consent to amendments to the Approved Budget if (i) no Event of Default has occurred and is continuing, (ii) the Plans
have not been modified except in accordance with Change Orders approved by Lender to the extent required pursuant to the terms
hereof, and (iii) after giving effect to the proposed amendment to the Approved Budget and any Balancing Deposit to be made concurrently
with the proposed modification, the Loan will remain In Balance. No reallocation of line items within the Approved Budget shall
be made unless Borrower can demonstrate to Lender’s reasonable satisfaction that (i) sufficient funds remain in the line
item from which the amount is to be reallocated to pay all Project Costs which may be paid from that line item; and (ii) no line
items in the Approved Budget (other than the line item to which the reallocation is sought) are required, in Lender’s reasonable
judgment, to be increased. Notwithstanding the foregoing, upon notice but without the prior approval of Lender, Borrower may reallocate
cost savings in one line item of the Approved Budget to cover cost overruns in another line item, provided that (i) reallocations
of cost savings from any line item pursuant to this sentence shall not exceed, when aggregated with prior reallocations of cost
savings from the same line item, ten percent (10%) of the budgeted amount for such line item in the Approved Budget as initially
approved by Lender in connection with origination of the Loan, (ii) construction and development of the Improvements is at least
fifty percent (50%) complete as reasonably determined by Lender’s Consultant, (iii) no such reallocation shall reduce a line
item for interest, (iv) no such reallocation shall increase a line item associated with the Development Agreement or any other
agreement with an Affiliate of Borrower, (v) no such reallocation shall reduce a line item for Operating Cash Flow to be retained
for purposes of funding Project Costs, and (vi) no Event of Default shall have occurred and be continuing.


 




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(e)          Lender
shall not have any obligation to consent to any disbursement from funds, regardless of source, allocated in the Approved Budget
to any “Contingency” line item, or to consent to any reallocation to any other line item of funds allocated in the
Approved Budget to the “Contingency” line item; provided, however, upon notice to Lender but without the prior approval
of Lender, Borrower may reallocate funds allocated to “Contingency” in the Approval Budget so long as, immediately
following such reallocation, the undisbursed portion of the funds allocated to the “Contingency” line item, expressed
as a percentage of the total funds allocated to the “Contingency” line item in the original Approved Budget, does not
exceed that portion of the Project then remaining to be completed and paid for, expressed as a percentage of the total Project
remaining to be completed and paid for, based on the most recent percentage of completion estimate provided by or approved by the
Lender Consultant.


 


(f)          All
Disbursements of funds to or for the benefit of the Project, shall be made in accordance with the Draw Schedule, which shall not
be modified without the prior written consent of Lender, such consent not to be unreasonably withheld or delayed provided the Loan
is In Balance and the construction is progressing in accordance with the Construction Schedule.


 


(g)          If
Borrower does not request or qualify for a Disbursement concurrently with Closing, then Lender shall have the right, but not the
obligation, to make a nominal Disbursement to Borrower at Closing with a view to ensuring the priority of the lien of the Deed
of Trust over subsequent liens for labor or materials. If Lender elects to make such a nominal Disbursement, Borrower shall apply
it to Project Costs. Such a nominal Disbursement shall not be regarded as the “first” Disbursement for purposes of
Section 4.1(h). Nothing in this section shall be construed as an acknowledgement by Lender that such a Disbursement is required
under applicable law to ensure the priority of the lien of the Deed of Trust over subsequent liens for labor or materials.


 


4.3         Documents
Required for Each Construction Disbursement. At least ten (10) days prior to, and as a condition of, each Construction Disbursement,
(or at such other date as is expressly provided for herein) Borrower shall furnish to Lender, the Title Company and to the Lender
Consultant the following documents covering such disbursement:


 


(a)          Borrower’s
disbursement request (“Disbursement Request”) in the form of Exhibit C attached hereto. Each
such Disbursement Request shall be deemed to be Borrower’s direction to Lender to disburse the funds requested by such Disbursement
Request to be disbursed from the proceeds of the Loan in accordance with this Agreement;


 




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(b)          A
certificate as to completion and payment authorization in form reasonably approved by Lender, properly executed by the Architect
and the Lender Consultant;


 


(c)          General
Contractor’s and Subcontractors’ conditional partial or full waivers of lien covering all work and/or materials for
which disbursement is to be made, otherwise paid for or to be paid for by Borrower or any other person, all in compliance with
the mechanics’ lien laws of the State of Texas (including without limitation Section 53.284 of the Texas Property Code)
in form satisfactory to the Title Company (for issuance of interim title endorsements covering such disbursement), together with
such invoices, contracts, Change Orders or other supporting data as Lender or the Title Company may reasonably require;


 


(d)          Endorsements
to the Title Policy, including, without limitation, a “Downdate Endorsement” to cover the amount and date of the Construction
Disbursement (whether into escrow or otherwise) insuring that the Security Instrument is a first, prior and paramount lien on the
Property subject only to Permitted Encumbrances (and to exceptions and objections in the usual form relating to the issuance of
a mortgage title insurance policy, which by their nature cannot be waived or removed until the Final Construction Disbursement
of the proceeds of the Loan), that nothing has intervened to affect the validity or priority of the Security Instrument, insuring
against mechanics’ lien claims for work performed prior to the date covered by such continuation, and containing a mechanics’
lien interim certification to cover the amount of the Loan then disbursed (including the Construction Disbursement for the prior
month); which endorsements may be delivered to Lender concurrently with the disbursement of the Loan Proceeds which are the subject
of the endorsements;


 


(e)          A
statement indicating what payment requests, if any, have been received by Borrower from the General Contractor but have not yet
been approved by Borrower for payment;


 


(f)          Such
other papers and documents as the Title Company may reasonably require for the issuance of endorsements to the Title Policy for
each Construction Disbursement;


 


(g)         An
updated Construction Schedule, including a statement from each of the General Contractor and the Architect that, in their best
professional judgment, the Construction Schedule, as updated, subject to Force Majeure Events, and can be adhered to in completing
the Project in accordance with the Plans;


 


(h)         A
report from the Lender Consultant, in form and substance satisfactory to Lender;


 


(i)          If
applicable, an updated Draw Schedule, if the Borrower is requesting any modification to the Draw Schedule previously approved
by Lender;


 


(j)          Copies
of any Change Orders to the General Contract not theretofore delivered to Lender, together with a statement of any anticipated
changes in any line item of Project Costs which could reasonably be anticipated to result in a future Change Order; and


 




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(k)          Copies
of any Subcontracts, or Change Orders to Subcontracts, not theretofore delivered to Lender and requested by Lender in Lender’s
sole discretion.


 


4.4         Loan
In Balance. Anything in this Agreement contained to the contrary notwithstanding, it is expressly understood and agreed that
the Loan at all times shall be In Balance (as hereinafter defined). The Loan shall be deemed to be “In Balance”
only if the total of the Available Funds (as hereinafter defined) on a total and on a line item Project Cost basis, in Lender’s
sole and absolute judgment, shall equal or exceed on a line item and on a total, aggregate basis, the amount of all Project Costs
as set forth on the then current Approved Budget, taking into account reallocation of cost savings and application of Contingency
as permitted pursuant to Section 4.2(d) and 4.2(e) hereof, including, without limitation:


 


(a)          the
amount required to pay interest on the Loan to the Maturity Date;


 


(b)          the
amounts to be paid as retainage to persons who have supplied labor, services or materials to the Project including, without limitation,
the General Contractor, the Architect, the Engineer and all Subcontractors; and


 


(c)          the
amount necessary to pay for all unpaid costs incurred or to be incurred in the completion of the construction of the Project and
operation of the Property until the Stabilization Date, including the cost of purchase and installation of all fixtures and equipment
and all work required to finish or improve any portion of the Property to be leased.


 


As used herein, the term “Available
Funds” shall mean:


 


(i)          the
undisbursed proceeds of the Loan, net of any unpaid accrued interest on the Loan; plus


 


(ii)         any
funds held by Lender in the Partial Release Escrow; plus


 


(iii)        any
other amounts deposited by Borrower pursuant to this Section 4.4 and then held by Lender; plus


 


(iv)        any
portion of the Equity Contributions as may be then held in cash by Lender or deposited in the Construction Escrow to the extent
such funds are designated by the Approved Budget or the Draw Schedule as a source of payment of costs included above; plus


 


(v)         Operating
Cash Flow retained for purposes of funding costs set forth on the Approved Budget.


 




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In the event Lender shall determine in
its sole and absolute discretion that any source of funding (other than the Loan) included in the Approved Budget is no longer
available to pay for costs included above, that source of funding shall not be included in the In Balance calculation. Borrower
agrees if for any reason any line item in the Approved Budget is not In Balance, subject to and after giving effect to any reallocation
of cost savings and Contingency as permitted herein, Borrower, within ten (10) days after request by the Lender, will deposit
with Lender cash in an amount which will place the Loan In Balance (a “Balancing Deposit”), which deposit shall
first be exhausted before any further disbursement of the Loan Proceeds shall be made. No interest shall be payable on such amounts.
As additional security for the Indebtedness, Borrower hereby pledges to Lender, and grants to Lender a security interest in, any
Balancing Deposit.


 


4.5           Lender’s
Verification of Contracts. Prior to the Closing, and from time to time thereafter, Lender or the Title Company may forward
to the General Contractor listed on the Sworn Construction Cost Statement or the Contractor’s sworn statement a contract
verification to confirm the terms and amount of the General Contract for the General Contractor. If there is any discrepancy between
the terms and amounts as shown by the Construction Contracts, the sworn statements, and the verifications, Lender may require,
as a condition to further Disbursements, that such discrepancies be eliminated to its reasonable satisfaction.


 


4.6           [Intentionally
Deleted]


 


4.7           Frequency
of Payouts. Subsequent to the Closing, Disbursements of Loan Proceeds shall be made from time to time as construction progresses,
but no more frequently than once in each calendar month.


 


4.8           Consultants.
In connection with the transactions contemplated hereby, Lender shall have the right (but not the duty) to employ such consultants,
including the Lender Consultant, as it may deem appropriate from time to time, to (a) review and make recommendations regarding
the Plans, the Approved Budget and the Construction Schedule, (b) inspect the Property from time to time to insure that the
same are being duly constructed and equipped as herein provided, (c) review and make recommendations regarding any elements
of a Disbursement Request, (d) obtain information and documentation respecting the Project, attend meetings respecting the
Project and formulate reports for Lender pertaining to the Project and (e) perform such other services as Lender from time
to time may require, all solely on behalf of Lender. The costs and disbursements of such consultants shall be deemed Loan Expenses
and shall be paid by Borrower. Neither Lender nor any such consultants shall be deemed to have assumed any responsibility to, or
be liable to, Borrower or the Guarantor with respect to any actions taken or omitted by Lender or such consultants pursuant to
this Section (provided that this sentence shall not be construed to limit the liability of any Person for its own willful misconduct).
Notwithstanding the aforesaid or anything else provided in this Agreement to the contrary, Borrower shall not be entitled to rely
on any statements or actions of the Lender Consultant or any of Lender’s other consultants and neither the Lender Consultant
nor any other consultant retained by Lender shall have the power or authority to grant any consents or approvals or bind Lender
in any manner, absent confirmation by Lender of the accuracy of the information conveyed by such consultant to Borrower. Borrower
covenants and agrees to cooperate fully with the Lender Consultant and any other consultants retained by Lender, including but
not limited to providing such consultants full access to the Property, providing coordination between such consultants and the
contractors and any representatives of Borrower involved with the Project, providing any information or reports concerning the
Project reasonably requested by such consultants, and providing any other assistance reasonably requested by such consultants.


 




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4.9         Retainages.
Lender shall withhold from each Disbursement hereunder, as retainage, the amount of retainage contemplated by the Construction
Contract. Lender agrees that retainage shall not apply to Project land cost or Project “soft costs”. Upon certification
by the Architect, General Contractor, and Lender Consultant that the work of any Subcontractor has been satisfactorily completed,
the retainage withheld hereunder applicable to such Subcontract may be disbursed and paid to the Subcontractor.


 


4.10       Stored
and Unincorporated Materials. No disbursement for materials purchased by Borrower but not yet installed or incorporated into
the Project shall be made without Lender’s prior approval of the conditions under which such materials are purchased and
stored, which approval shall not be unreasonably withheld. In no event shall any such disbursement be made unless the materials
involved have been delivered to the Property or stored with a bonded warehouseman, with satisfactory evidence of security, insurance
naming Lender as an additional insured both during storage and transit and suitable storage. Borrower shall provide Lender, in
connection with such materials, a copy of a bill of sale or other evidence of title in Borrower, together with a copy of UCC searches
against Borrower and the warehouseman, if applicable, indicating no liens or claims which may affect such materials. Borrower shall
provide Lender, Architect and any applicable Governmental Agency or testing authority having jurisdiction over the Project with
access to inspect, test or otherwise examine such stored and unincorporated materials during reasonable business hours. Borrower
shall provide to Lender a schedule for the prompt incorporation thereof into the Property, and unless the Lender Consultant has
verified and approved the cost and acquisition of said materials (such approval to be deemed given to the extent included in an
Approved Budget), their physical presence at the approved storage site, and the security and protection provided therefor in accordance
with this Section 4.10, no disbursement by Lender for such materials shall be made.


 


4.11       Final
Construction Disbursement. Subject to the disbursement limitations in this Agreement, Lender will advance to Borrower, for
payment of Project Costs only and in accordance with the Approved Budget and the Draw Schedule, the full amount of the Loan allocated,
pursuant to the Draw Schedule, for payment of construction costs and not theretofore disbursed (“Final Construction Disbursement”)
when the following conditions shall have been complied with, provided that such compliance shall have occurred prior to the Construction
Completion Date and no Default has occurred and is continuing and no Event of Default has occurred:


 


(a)          The
Architect, Borrower and the Lender Consultant certify in writing to Lender that the Project has been fully and satisfactorily completed
substantially in accordance with the Plans;


 




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(b)          Borrower
shall have delivered to Lender fully executed copies, in form and content satisfactory to Lender, of (i) AIA Document G704
(Certificate of Substantial Completion); (ii) AIA Document G707 (Consent of Surety to Final Payment), and (iii) AIA Document
G707A (Consent of Surety to Reduction in or Partial Release of Retainage);


 


(c)          If
required by Lender, Lender has received as-built Plans for the Project reasonably satisfactory to Lender in form and content;


 


(d)          The
General Contractor has supplied Lender and the Title Company with final sworn statement and all Subcontractors and General Contractor
have supplied Lender and the Title Company with full and complete waivers of all mechanics’ lien claims;


 


(e)          Lender
has received a commitment to issue a date-down “Completion Endorsement” to the Title Policy in the full amount of the
Loan insuring the Security Instrument as a valid first, prior and paramount lien on the Property, subject only to the Permitted
Exceptions, deleting all exceptions and objections relating to any right to assert claims for mechanics’ liens on account
of labor and/or materials theretofore furnished to the Property, and any other endorsement reasonably required by Lender;


 


(f)          Borrower
shall have furnished to Lender permanent insurance in form and amount and with companies satisfactory to Lender in accordance with
the requirements of this Agreement and the Security Instrument;


 


(g)          Borrower
shall have furnished Lender a temporary or permanent certificate of occupancy and all other governmental licenses and permits required
to use, occupy and operate the Property as contemplated from appropriate governmental authorities;


 


(h)          Borrower
shall have furnished a final plat of survey locating the completed Project, including all paving, driveways, fences and other exterior
Improvements and otherwise in compliance with Section 3.1(c) hereof;


 


(i)          All
fixtures and equipment required for the operation of the Property shall have been installed free and clear of all liens, title
retention agreements and security interests except security interests granted to Lender;


 


(j)          Lender
shall have received reports from the Title Company or the appropriate filing offices of the state and county in which the Property
are located, indicating that no judgments, tax or other liens, security interests, leases of personalty, financing statements or
other encumbrances (other than Permitted Encumbrances and liens and security interests in favor of Lender and no other party),
are of record or on file encumbering any portion of the Property (or, if any such mechanics’ liens exist, the Title Company
shall have agreed to insure over such items in Lender’s Title Policy), and that there are no judgments or tax liens outstanding
in respect to Borrower; and


 


(k)          Borrower
has furnished to Lender a copy of an Affidavit of Completion executed by Borrower and General Contractor that: (i) has been sworn
to before and acknowledged by a notary public; and (ii) was recorded in the appropriate county real property records.


 




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4.12       Expenses
and Advances Secured by Security Instrument. Any and all advances or payments made by Lender hereunder, from time to time,
and any amounts expended by Lender pursuant to this Agreement, together with the Lender Consultant’s fees and attorneys’
fees, if any, and all other Loan Expenses and Protective Advances, as and when advanced or incurred, shall be deemed to have been
disbursed as part of the Loan and be and become Debt hereunder secured and guaranteed by the Loan Documents to the same extent
and effect as if the terms and provisions of this Agreement were set forth therein, whether or not the aggregate of such Indebtedness
shall exceed the face amount of the Note.


 


4.13       Acquiescence
not a Waiver. To the extent that Lender may have acquiesced (whether intentionally or unintentionally) in the Borrower’s
failure to comply with and satisfy any condition precedent to the Closing, to any Construction Disbursement or to any Disbursement
of Loan Proceeds, such acquiescence shall not constitute a waiver by Lender of any condition precedent set forth in this Agreement,
and Lender at any time thereafter may require the Borrower to comply with and satisfy all conditions and requirements of this Agreement.


 


4.14       No
Liability for Disbursements. Under no circumstances shall Lender be responsible or liable to any Person, other than Borrower,
for or on account of any disbursement of, or failure to disburse, the Loan Proceeds or any part thereof, and neither the General
Contractor nor any Subcontractor shall have any right or claim against Lender under this Agreement or in connection with the administration
of the Loan. The forgoing shall be in addition to all other limitations on the responsibility and liability of Lender set forth
in this Agreement.


 


5.           Representations
and Warranties. As a material inducement to Lender’s entry into this Agreement, Borrower represents and warrants
to Lender as of the Closing Date and as of the date of each Construction Disbursement (unless made as of another date as otherwise
expressly stated below) that:


 


5.1         Formation,
Qualification and Compliance.


 


(a)          Borrower
is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Iowa and is
qualified to conduct business in the State of Texas. Borrower has full power and authority to conduct its business as presently
conducted, to acquire the Property and construct the Improvements, to enter into this Agreement, the other Loan Documents and the
Major Project Agreements to which it is a party and to perform all of its duties and obligations under this Agreement, such other
Loan Documents and such Major Project Agreements. Such execution and performance have been duly authorized pursuant to the Operating
Agreement and the Borrower’s Articles of Organization.


 




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(b)          Guarantor
is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Iowa. Guarantor
has full power and authority to conduct its business as presently conducted; to enter into any Loan Documents to which it is a
party and to perform all of its duties and obligations under such Loan Documents. Such execution and performance have been duly
authorized pursuant to the operating agreement of the Guarantor and the Guarantor’s Articles of Organization.


 


5.2         Execution
and Performance of Loan Documents.


 


(a)          Borrower
and Guarantor have all requisite authority to execute, deliver, and perform their obligations under the Loan Documents to which
they are a party.


 


(b)          The
execution and delivery by Borrower and Guarantor of, and the performance by Borrower and Guarantor of their obligations under each
Loan Document to which they are a party have been authorized by all necessary action and do not and will not:


 


(i)          require
any consent or approval not heretofore obtained of any Person having any interest in Borrower or Guarantor;


 


(ii)         violate
any provision of, or require any consent or approval not heretofore obtained under, any partnership agreement, articles of incorporation,
bylaws, operating agreement or other governing document applicable to Borrower or Guarantor;


 


(iii)        result
in or require the creation of any lien, claim, charge or other right of others of any kind (other than under or as provided for
in the Loan Documents) on or with respect to any property now or hereafter owned or leased by Borrower or Guarantor;


 


(iv)        violate
any provision of any Law presently in effect; or


 


(v)         constitute
a breach or default under, or permit the acceleration of obligations owed under, any material contract, loan agreement, lease or
other agreement or document to which Borrower or Guarantor is a party or by which Borrower or Guarantor or any of their property
is bound.


 


(c)          None
of Borrower or Guarantor is in default, in any respect would have any material adverse effect on the ability of Borrower or Guarantor,
as applicable, to perform its obligations under the Loan Documents, under any Law, contract, lease or other material agreement
or document described in subparagraph (ii) or (v) of the previous subsection.


 


(d)          No
approval, license, exemption or other authorization from, or filing, registration or qualification with, any Governmental Agency
is required in connection with:


 




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(i)          the
execution by Borrower and Guarantor of, and the performance by Borrower and Guarantor of their obligations under, the Loan Documents
and Major Project Agreements to which they are a party (other than Permits required in connection with the construction, occupancy
and operation of the Project); and


 


(ii)         the
creation of the liens described in the Loan Documents other than the recording of recordable documents and filing the financing
statements.


 


5.3           Financial
and Other Information. All financial information furnished to Lender with respect to Borrower and Guarantor in connection with
the Loan (a) is complete and correct in all material respects as of the date or dates indicated (or if no date or dates are
indicated, then as of the date of delivery), (b) accurately presents the financial condition of Borrower or Guarantor, as
applicable, as of the date or dates indicated (or if no date or dates are indicated, then as of the date of delivery) and (c) has
been prepared in accordance with generally accepted accounting principles consistently applied or in accordance with such other
principles or methods as are reasonably acceptable to Lender. All other documents and information furnished to Lender with respect
to Borrower and Guarantor in connection with the Loan are to Borrower’s knowledge correct in all material respects as of
the date or dates indicated (or if no date or dates are indicated, then as of the date of delivery) and complete insofar as completeness
is necessary to give Lender an accurate knowledge of their subject matter. Neither Borrower nor Guarantor has any material liability
or contingent liability not disclosed to Lender in writing that would materially and adversely affect such party’s ability
to perform its obligations under the Loan Documents, and there is no material lien, claim, charge or other right of others of any
kind (including liens or retained security titles of conditional vendors) on any property of any such Person not disclosed in such
financial statements or otherwise disclosed to Lender and Lender in writing.


 


5.4           No
Material Adverse Change. There has been no material adverse change in the condition, financial or otherwise, or the properties
or businesses of Borrower or Guarantor since the dates of the latest financial statements furnished to Lender. Since those dates,
none of Borrower or Guarantor has entered into any material transaction whether or not disclosed in such financial statements or
otherwise disclosed to Lender in writing. Further, there are no existing Defaults under any of the Loan Documents or the Major
Project Agreements, nor do there exist any circumstances or conditions that with the passage of time or giving of notice or both
would result in an Event of Default under any of the Loan Documents or the Major Project Agreements.


 


5.5           Enforceability.
The Loan Documents, and any other documents and instruments required to be executed and delivered in connection with the Loan,
to which Borrower or Guarantor is a party have been duly authorized, executed and delivered by or on behalf of Borrower or Guarantor
a party thereto, and when executed and delivered, will constitute the duly authorized, valid and legally binding obligations of
the party required to execute the same and may be enforced strictly in accordance with their respective terms (except to the extent
that enforceability may be affected or limited by applicable bankruptcy, insolvency and other similar debtor relief laws affecting
the enforcement of creditors’ rights generally). No basis presently exists for any claim against Lender under this Agreement,
under the Loan Documents or with respect to the Loan, and the Loan Documents and enforcement thereof are not subject to, and neither
Borrower nor Guarantor has asserted, any right of rescission, set-off, counterclaim or defense, including the defense of usury.
The Security Instrument when properly recorded in the appropriate records, together with any UCC Financing Statements required
to be filed in connection therewith, will create (i) a valid, perfected first priority lien on the Borrower’s interest
in the Property and (ii) valid and perfected first priority security interests in and to, and perfected collateral assignments
of, all personality (including the Leases), all in accordance with the terms thereof, in each case subject only to any applicable
Permitted Encumbrances. All mortgage, recording, stamp, intangible or other similar taxes required to be paid by any Person under
Applicable Laws in connection with the execution, delivery, recordation, filing, registration, perfection and/or enforcement of
any of the Loan Documents have been paid, or have been paid by Borrower to an escrow agent authorized to make such payment upon
recordation.


 




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5.6           Consents.
No approval of, or consent from, any Governmental Agency or any other Person not holding a direct or indirect ownership interest
in Borrower or Guarantor is required in connection with the execution and delivery by Borrower or Guarantor of this
Agreement or any of the other Loan Documents to which each is a party, or compliance by Borrower with, the Loan Documents to which
each is a party, or the consummation of the transactions contemplated hereby and thereby, other than those which have been obtained
by Borrower and Guarantor and are in full force and effect. If a third party is required under any covenants, conditions
and restrictions of record or any other agreement to consent to the use and/or operation of the Property, such approval has been
obtained from such party.


 


5.7           Tax
Liability. Each of Borrower and Guarantor has filed all required federal, state and local tax returns and has paid, prior to
delinquency, all taxes payable by it (including interest and penalties, but subject to lawful extensions disclosed to Lender and
Lender in writing) other than taxes being promptly and actively contested in good faith and by appropriate proceedings. Borrower
agrees to maintain adequate reserves for tax liabilities (including contested liabilities) in accordance with generally accepted
accounting principles.


 


5.8           [Intentionally
Deleted].


 


5.9           Title to Property; Survey. Borrower has, subject to the Permitted Encumbrances, good and merchantable fee simple title to the
Property. Except for the current, non-delinquent taxes and assessments, if any, there are no taxes, assessments or liens pending
or, to Borrower’s knowledge, threatened against the Property for any present or past due taxes or for paving, sidewalk, curbing,
sewer or any other street improvements of any kind. No portion of the Property is now damaged or injured as the result of any fire,
explosion, accident, flood or other casualty, nor is any part of the Property subject to any pending or, to Borrower’s knowledge,
threatened eminent domain or condemnation proceeding. Except as disclosed by the Survey, the Property does not presently, and upon
construction of the Project in accordance with the Plans will not, encroach upon any building line, set back line, sideyard line,
or any recorded or visible easement (or other easement of which Borrower is aware or has reason to believe may exist) which exists
with respect to the Property.


 




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5.10         Utility
Services. All utility and municipal services required for the construction, occupancy and operation of the Property, including,
but not limited to, water supply, storm and sanitary sewage disposal systems, cable services, gas, electric and telephone facilities
are presently available for use at the Property or will be upon Construction Completion. The storm and sanitary sewage disposal
system, water system, drainage system and all mechanical systems of the Property comply or upon installation will comply with all
applicable laws, statutes, ordinances, rules and regulations, including, without limitation, all Environmental Laws (as defined
in the Environmental Indemnity Agreement).


 


5.11         Construction
of the Project. The Plans are complete in all material respects, and contain all details requisite for the construction of
the Project which, when built and equipped in accordance therewith, shall be ready for the intended use thereof; the Plans as submitted
to Lender at or prior to the Closing Date have not been changed or modified in any way since the date of their submission to Lender,
except as approved in accordance with the Loan Documents. The General Contract covers substantially all labor, material and equipment
required by the Plans or necessary to complete the construction of the Project in accordance with the Plans. No work or materials
have been or will be furnished to the Property during the six (6) months prior to the recordation of the Security Instrument,
or, in the event work has occurred or materials furnished during the six (6) months prior to recordation of the Security Instrument,
title coverage insuring Lender against any mechanics’ liens arising from such work or materials shall be provided under the
Title Policy.


 


5.12         Major
Project Agreements. Borrower has delivered to Lender a true and complete copy of each of the Major Project Agreements. Each
of the Major Project Agreements is in full force and effect. Borrower is not in default in any material respect under any of the
Major Project Agreements, and Borrower does not have any knowledge of a default in any material respect by any other party under
any of the Major Project Agreements. Borrower has not received any written notice from any other party to any of the Major Project
Agreements alleging any default in the performance or observance of any agreement or covenant or breach of any representation or
warranty contained in any of the Major Project Agreements by any party to any of the Major Project Agreements, nor has Borrower
delivered any written notice to any party under any of the Major Project Agreements alleging any default in the performance or
observance of any agreement or covenant or breach of any representation or warranty contained in any of the Major Project Agreements
by any party to any of the Major Project Agreements.


 


5.13         Development
Agreement. Borrower has delivered to Lender a true and complete copy of the Development Agreement. The Development Agreement
is in full force and effect. Neither Borrower nor Guarantor, to the extent any of them is a party to the Development Agreement,
is in default under the Development Agreement, and neither Borrower nor Guarantor has any knowledge of a default by any other party
under the Development Agreement. Neither Borrower nor Guarantor has received any notice, whether oral or written, from any other
party to the Development Agreement alleging any default in the performance or observance of any agreement or covenant or breach
of any representation or warranty contained in the Development Agreement by any party to the Development Agreement, nor have Borrower
or Guarantor delivered any notice, whether written or oral, to any party under the Development Agreement alleging any default in
the performance or observance of any agreement or covenant or breach of any representation or warranty contained in the Development
Agreement by any party to the Development Agreement. Under the terms of the Development Agreement, the development fee payable
to the developer does not exceed five percent (5%) of (a) the total Approved Budget minus (b) (i) the total Interest Reserve plus
(ii) the total development fee payable to the developer under the Development Agreement. Under the terms of the Development Agreement,
the development fee payable to the developer is due and payable according to the following schedule: Forty-five percent (45%) with
the first construction draw under the Loan, thirty percent (30%) in equal monthly installments during the anticipated period of
construction, and the remaining twenty-five percent (25%) only upon Construction Completion and full licensure of the property
from all Government Agencies, including the Texas Department of Aging and Disability Services, necessary for the operation of the
Property in accordance with the business plan approved by Lender in connection with origination of the Loan.


 




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5.14         Governmental
Requirements. As of the Closing Date, all Permits and other authorizations of Governmental Agencies required by applicable
law for the construction of the Project in accordance with the Plans have been validly issued and are in full force, including
but not limited to all building permits.


 


5.15         Rights
of Others. Borrower is in compliance in all material respects with all covenants, conditions, restrictions, easements, rights
of way and other rights of third parties relating to the Property.


 


5.16         Approved
Budget; Draw Schedule. The Approved Budget and the Draw Schedule are each based on information deemed reliable by Borrower
and represent Borrower’s best estimate of all costs required to complete the Project and the sources and payment schedule
for payment of such costs.


 


5.17         Litigation.
There are no actions, investigations or proceedings pending or threatened in writing against or affecting the Property, Borrower,
Guarantor or any property of any of them before any Governmental Agency, except as disclosed to Lender in writing.


 


5.18         Name
and Principal Place of Business. Borrower presently uses no trade name other than its actual name. Borrower’s principal
place of business is c/o LCS, Capital Square, 400 Locust Street, Suite 820, Des Moines, Iowa 50309-2334.


 


5.19         Delivery
of Documents. Borrower has delivered to Lender true and complete copies of each existing lease, contract and other document
that grants rights to, or imposes material obligations on, Borrower in connection with the Property which, if not performed, would
have a material adverse effect on Borrower’s ability to perform its obligations under the Loan Documents.


 


5.20         ERISA.
Borrower is not and will not be an “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject
to Title I of ERISA. The assets of Borrower do not and will not constitute “plan assets” of one or more such plans
within the meaning of 29 C.F.R. Sec. 2510.3-101. Borrower is not and will not be a “governmental plan” within the meaning
of Section 3(32) of ERISA. Transactions by or with Borrower are not and will not be subject to any state or other statute,
regulation or other restriction regulating investments of, or fiduciary obligations with respect to, governmental plans within
the meaning of Section 3(32) of ERISA which is similar to the provisions of Section 406 of ERISA or Section 4975
of the Code and which prohibit or otherwise restrict the transactions contemplated by this Agreement, including but not limited
to the exercise by Lender of any of its rights under the Security Documents. Neither Borrower, nor any member of a “controlled
group of corporations” (within the meaning of Section 414 of the Code) maintains, sponsors or contributes to a “defined
benefit plan” (within the meaning of Section 3(35) of ERISA) or a “multiemployer pension plan” (within the
meaning of Section 3(37)(A) of ERISA).


 




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5.21       No
Prohibited Persons.


 


(a)          Neither
Borrower nor Guarantor, nor any Person Controlling or Controlled by Borrower, nor, to Borrower’s knowledge, any Person having
a direct or indirect beneficial interest in Borrower, nor any Person for whom Borrower is acting as agent or nominee in connection
with this transaction (“Transaction Persons”) (i) is a Person whose property or interest in property is
blocked or subject to blocking pursuant to any Anti-Terrorism Law, (ii) engages in any dealings or transactions prohibited
by any Anti-Terrorism Law, or is otherwise associated with any such Person in any manner violative of any Anti-Terrorism Law, or
(iii) is a Person on the list of Specially Designated Nationals and Blocked Persons or is in violation of the limitations
or prohibitions under any Anti-Terrorism Law.


 


(b)          No
part of the proceeds of the Loan will be used, directly or indirectly, for any payments to any governmental official or employee,
political party, official of a political party, candidate for political office, or anyone else acting in an official capacity,
in order to obtain, retain or direct business or obtain any improper advantage, in violation of any Anti-Terrorism Law and/or the
United States Foreign Corrupt Practices Act of 1977, as amended.


 


(c)          Borrower
acknowledges by executing this Agreement that Lender has notified Borrower and Guarantor that, pursuant to the requirements of
the Patriot Act, Lender is required to obtain, verify and record such information as may be necessary to identify Borrower and
Guarantor (including the name and address of Borrower and Guarantor and such Affiliates) in accordance with the Patriot Act.


 


(d)          Neither
Borrower nor Guarantor has been convicted of a felony and there are no proceedings or investigations being conducted involving
criminal activities of either Borrower or Guarantor.


 


5.22       Foreign
Person. Borrower is not a “foreign person” within the meaning of Section 1445(f)(3) of the Code.


 


5.23       Environmental.
Except as specifically disclosed in the Environmental Report or any subsequent Environmental Assessment delivered to Lender, to
Borrower’s knowledge:


 


(a)          Neither
Borrower nor the Property is in violation of laws relating to Hazardous Materials;


 


(b)          Neither
Borrower nor Guarantor has received, or has received a copy of, any notice of any violation or alleged violation of any laws relating
to Hazardous Materials with respect to the Property;


 




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(c)          The
Property complies in all material respects with all laws relating to Hazardous Materials as to use and conditions on, under or
about the Property including soil and groundwater condition;


 


(d)          There
are no pending civil (including actions by private parties), criminal or administrative actions, suits or proceedings affecting
Borrower, Guarantor or the Property relating to environmental matters (“Environmental Proceedings”) and neither
Borrower nor Guarantor has any knowledge of any threatened Environmental Proceedings;


 


(e)          Neither
Borrower nor, to Borrower’s knowledge, any other Person (including prior to Borrower’s ownership of the Property),
has used, generated, manufactured, stored or disposed of on, under or about the Property or transported to or from the Property
any Hazardous Materials, except small quantities (e.g., cleaning supplies) in the ordinary course of business and in compliance
with all laws relating to Hazardous Materials;


 


(f)          The
Property is not subject to any private or governmental Lien or judicial or administrative notice or action or inquiry, investigation
or claim relating to hazardous, toxic and/or dangerous substances, Toxic Mold or any other Hazardous Materials;


 


(g)          No
Toxic Mold is on or about the Property which requires remediation;


 


(h)          There
have been no environmental investigations, studies, audits, reviews or other analyses conducted by or on behalf of Borrower which
have not been provided to Lender; and


 


(i)          To
Borrower’s knowledge, the Property has not been used (including the period prior to Borrower’s acquisition of thereof),
permanently or temporarily, as a disposal site or storage site for any Hazardous Materials and the Property, and all parts thereof,
are free of all Hazardous Materials other than Hazardous Materials that do not violate any applicable laws relating to Hazardous
Materials. Without limitation on the foregoing: (i) the primary potable or drinking water source does not exceed the EPA Recommended
Maximum Contaminant Level Goals set forth under the Safe Drinking Water Act and Clean Water Act, as amended; (ii) there is
not and has never been landfill containing decomposable material, petroleum wells, mineral bearing mines, sewage treatment facilities,
underground storage tanks, sinkholes, radon or other toxic emissions within the Property, and (iii) no electrical transformers,
fluorescent light fixtures with ballasts or other equipment containing polychlorinated biphenyls (PCBs) have been located on the
Property at any time; and (iv) there are no facilities on the Property which are or have been subject to reporting under any
State laws or Section 312 of the Federal Emergency Planning and Community Right to Know Act of 1986 (42 U.S.C. Section 11022),
and federal regulations promulgated thereunder.


 




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5.24       Continuing
Nature of Representations and Warranties. Borrower acknowledges, understands, and agrees that the representations and warranties
set forth in this Section 5 shall be deemed made as of the Closing Date and as of each date a Construction Disbursement
is made in accordance herewith; provided, however, that representations and warranties made of a specific date shall be true as
of the date made.


 


6.           Project
Covenants.


 


6.1         Completion
of Project. Borrower shall commence construction of the Project no later than thirty (30) days after the Closing Date and thereafter
diligently proceed with the Project in substantial conformity with the Plans. Borrower shall complete construction of the Project
on or before the Construction Completion Date, subject to delays resulting from Force Majeure Events.


 


6.2         Conformity
With Plans. Borrower shall construct the Project in accordance with all Applicable Laws and in substantial conformity with
the Plans and in such a manner as not to encroach upon or overhang any easement, right of way or land of others. If any aspect
of the Project is not in substantial conformity with the Plans or encroaches upon easements, rights of way or land of others, Lender
shall have the right to stop the work and order repair or reconstruction in accordance with the Plans and to withhold further Disbursements
until the Project is in substantial compliance with the Plans and/or does not so encroach. Upon written notice from Lender (or
Borrower’s actual discovery irrespective of such notice) that any aspect of the Project is not in substantial conformity
with the Plans or encroaches upon easements, rights of way or land of others, Borrower shall promptly commence correcting the deviation
or encroachment and shall prosecute such work diligently to completion, which in no event shall be later than ninety (90) days
after such notice or discovery.


 


6.3         Change
Orders. The Plans shall not be modified except pursuant to Change Orders. Each Change Order:


 


(a)          shall
be in writing, numbered in sequence, signed by Borrower and, with regard to Material Change Orders (as defined below), submitted
to Lender prior to the proposed effectiveness thereof and accompanied by working drawings and a written narrative of the proposed
change;


 


(b)          shall
contain an estimate by Borrower of all increases and decreases in itemized Project Costs that would be caused by the change, as
well as the aggregate amount of all changes in estimated Project Costs (both increases and decreases) previously made;


 


(c)          shall
contain a certification by Borrower stating the aggregate amount, including both increases and decreases, of all changes in Project
Costs reflected in Change Orders for which Lender’s written approval has not been obtained or has not been required hereunder;


 


(d)          shall
be certified by Borrower to be in compliance with all Applicable Laws; and


 




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(e)          shall
be subject to Lender’s prior written approval if the Change Order (i) would decrease the number, mix, or density of units
within the Property; (ii) would affect any material structural component of the Property; (iii) would decrease the number, mix,
or density of residential units contemplated by the Plans; (iv) involves a material reduction in the quality of any goods, materials
or finishes to be utilized in constructing or finishing the Property, (v) involves a material change to the appearance of the Property,
or (vi) involves changes, including both increases and decreases, in estimated Project Costs of $100,000 or more for each change
or series of related changes, or if such Change Order, together with Change Orders not approved by Lender in writing, involve an
aggregate amount, including both increases and decreases, of over $750,000 (each change requiring Lender’s approval under
this Subparagraph (e) being referred to herein as a “Material Change Order”); provided that Borrower
shall also produce satisfactory evidence of any consent to any Change Order required on the part of any other party under any Project
Agreement.


 


6.4           Entry
and Inspection. At all times prior to completion of the Project, upon reasonable notice to Borrower (which notice may be written
or oral, except no notice shall be required when Lender reasonably believes exigent or emergency circumstances exist), Lender and
its agents (including but not limited to Lender Consultant) shall, subject to reasonable advance notice and reasonable and customary
safety procedures, reasonable requirements imposed by Borrower’s insurance policies, and the rights of any Property tenants,
have (a) the right of access to the Property and all sites away from the Property where materials for the Project are stored,
(b) the right to inspect all labor performed and materials furnished for the Project and (c) during Borrower’s
normal business hours, the right to inspect and copy all documents pertaining to the Project.


 


6.5           Project
Information. From time to time during the course of the Project, within ten (10) Business Days following Lender’s
written demand therefor, Borrower shall furnish Lender with reports of Project Costs, progress schedules and contractors’
cost breakdowns for the Project, itemized as to trade description and item, showing the name of the contractor(s) and/or subcontractor(s),
and including such indirect costs as real estate taxes, legal and accounting fees, insurance, architects’ and engineers’
fees, loan fees, interest during construction and contractor’s overhead. Without limitation to the foregoing, Borrower shall
provide Lender with monthly construction progress and leasing reports.


 


6.6           Permits
and Warranties. Promptly upon receipt of the same by Borrower, Borrower shall furnish Lender with true and complete copies
of (a) all Permits, approvals, exemptions and other authorizations required in connection with the Project and (b) all
warranties and guaranties received from any Person furnishing labor, materials, equipment, fixtures or furnishings in connection
with the Project.


 




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6.7           Project
Contracts. Borrower shall employ General Contractor as general contractor for the Project pursuant to the General Contract.
Borrower shall not terminate, or modify in any material respect, the General Contract without Lender’s prior written consent.
Borrower shall not enter into any other agreement with any Person with respect to the construction and/or development of the Project
with a total contract price (when aggregated with any other contracts between Borrower and the same Person or any Affiliate of
such Person) in excess of $150,000, without the prior written consent of Lender, which consent shall not be unreasonably withheld
(except that Lender may grant or withhold its consent in its sole discretion if the agreement is with an Affiliate of Borrower).
From time to time during the course of construction of the Project, within ten (10) Business Days after Lender’s written
demand therefor, Borrower shall deliver or cause to be delivered to Lender lists of all contractors and Subcontractors employed
in connection with the Project. Each such list shall show the name, address and telephone number of each contractor and Subcontractor,
a general statement of the nature of the work to be done, the labor and materials to be supplied, the names of materialmen, if
known, the approximate dollar value of labor, work and materials itemized with respect to each contractor, Subcontractor and materialman,
and the unpaid portion and status of such work or whether such materials have been delivered.


 


6.8           Protection
Against Liens. In the event that any claim of lien is asserted against the Property by any Person furnishing labor or materials
to the Project, Borrower shall immediately give notice of the same to Lender and shall, promptly and in any event within ten (10) Business
Days after Lender’s written demand, (a) pay and discharge the same, or (b) contest such lien strictly in accordance
with the requirements of the Security Instrument.


 


6.9           Lender
Consultant. Borrower hereby agrees to pay or reimburse Lender for the reasonable costs charged by the Lender Consultant in
connection with review and approval of all plans, specifications, contracts, budgets and related matters, inspection of the Project,
and approval of Disbursement Requests.


 


6.10         Development
Agreement. Lender hereby consents to the execution and delivery of the Development Agreement and the payment of developer fees
by Borrower to Sponsor pursuant to the terms and conditions of the Development Agreement. Borrower shall not pay any fees or other
consideration to Sponsor or any Affiliate of Sponsor or Borrower in respect of services contemplated by the Development Agreement
or in respect of services pertaining to the development of the Project except strictly in accordance with the Development Agreement.
Borrower shall not terminate or enter into any material modifications or amendments of the Development Agreement, and shall not
waive any material rights thereunder, without Lender’s prior written consent, which consent may be withheld in Lender’s
sole discretion. Borrower shall not enter into any new agreements with Sponsor or any Affiliates of Sponsor or Borrower in respect
of services contemplated by the Development Agreement or in respect of services pertaining to the development of the Project without
Lender’s prior written consent, which consent may be withheld in Lender’s sole discretion.


 


6.11         Management
Agreement. Lender hereby consents to the execution and delivery of the Management Agreement and the payment of expenses and
fees by Borrower to Operator pursuant to the terms and conditions of the Management Agreement. Except pursuant to the Permitted
Affiliate Agreements, Borrower shall not pay any fees or other consideration to Operator or any Affiliate of Operator or Borrower
in respect of services contemplated by the Management Agreement or in respect of services pertaining to the operation of the Project
except strictly in accordance with the Management Agreement. Borrower shall not terminate or enter into any material modifications
or amendments of the Management Agreement, and shall not waive any material rights thereunder, without Lender’s prior written
consent, which consent may be withheld in Lender’s sole discretion. Except the Permitted Affiliate Agreements, Borrower shall
not enter into any new agreements or leases with Operator or any Affiliates of Operator or Borrower in respect of services contemplated
by the Management Agreement or in respect of services pertaining to the occupancy and operation of the Project without Lender’s
prior written consent, which consent may be withheld in Lender’s sole discretion.


 




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6.12         Reappraisal
Requirements. Borrower agrees that Lender shall have the right to obtain, at Borrower’s expense, an Appraisal of the
Property prepared by an appraiser selected by and acceptable to Lender and in conformance with governmental regulations applicable
to Lender and approved by Lender at any time that: (a) an Event of Default has occurred hereunder; (b) any condemnation,
damage or destruction of the Property occurs; (c) Lender determines in its sole reasonable opinion that the security for the
Loan has been physically or financially impaired in any material manner, or (d) such Appraisal is required by then current
banking laws or regulations. In the event that Lender shall elect to obtain such an Appraisal, Lender may immediately commission
an appraiser acceptable to Lender, at Borrower’s cost and expense, to prepare the Appraisal and Borrower shall fully cooperate
with Lender and the appraiser in obtaining the necessary information to prepare such Appraisal. In the event such appraisal is
required by reason of the damage or destruction of a portion of the Property, the fair market value shall be calculated on the
Property after restoration of the Improvements on an as-stabilized basis.


 


7.           Maintenance,
Operation, Preservation and Repair of Property. Borrower shall maintain the Property (and all abutting grounds, sidewalks,
roads, parking and landscape areas) in good condition and repair, shall operate the Property in a businesslike manner, shall prudently
preserve and protect the Property, shall not commit or permit any physical waste or deterioration of the Property, shall not abandon
any portion of the Property, and shall not otherwise act, or fail to act, in such a way as to unreasonably increase the risk of
any damage to the Property or of any other impairment of Lender’s interests under the Loan Documents. Without limiting the
generality of the foregoing, and except as otherwise agreed by Lender in writing from time to time, Borrower shall promptly and
faithfully perform and observe each of the following provisions:


 


7.1           Alterations
and Repair. Borrower shall not remove, demolish or materially alter any Improvement (other than the Improvements currently
existing on the Property on the date of this Agreement, if any, which are to be partially or totally removed, demolished or altered
in connection with the Project, and the Improvements to be constructed, each in accordance with the Plans), and subject to Section 10
hereof, shall promptly restore, in a good and workmanlike manner, any Improvement (or other aspect or portion of the Property)
that is damaged or destroyed from any cause.


 


7.2           Compliance.
Borrower shall comply in all material respects with all Applicable Laws and requirements of Governmental Agencies (including, without
limitation, all requirements relating to the obtaining of Permits and, whenever applicable, the requirements of the Texas Department
of Aging and Disability Services) subject to Borrower’s right to contest the same in good faith pursuant to appropriate legal
proceedings.


 


7.3           Changes
in Property Restrictions. Borrower shall not initiate, join in or consent to any change in any applicable zoning ordinance,
general plan or similar law, or to any private restrictive covenant or any similar public or private restriction on the use of
the Property, except with the prior written consent of Lender.


 




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7.4         Books
and Records. Borrower shall maintain complete books of account and other records reflecting the operations of the Property
in accordance with GAAP or in accordance with such other principles or methods as are reasonably acceptable to Lender.


 


7.5         Consultation
with Lender Consultant. Borrower shall, and to the extent commercially feasible, shall cause the Architect and General Contractor
to, respond promptly to questions concerning the design and construction of the Project from Lender or Lender Consultant.


 


8.           Other
Affirmative Covenants. While any obligation of Borrower or Guarantor under the Loan Documents remains outstanding, the
following provisions shall apply, except to the extent that Lender otherwise consents in writing:


 


8.1         Existence.
Borrower shall maintain its existence as a limited liability company in good standing under the laws of the State of Iowa and qualified
to do business in the State of Texas.


 


8.2         Protection
of Liens. Borrower shall maintain the lien of the Security Instrument as a valid first priority lien on the Property, subject
only to the Permitted Encumbrances, and take all actions, and execute and deliver to Lender all documents, reasonably required
by Lender from time to time in connection therewith; and maintain the lien of the Security Documents on the collateral described
therein and take all actions, and execute and deliver to Lender all documents reasonably required by Lender from time to time in
connection therewith, including supplemental security agreements, financing statements and other documents extending or perfecting
Lender’s security interests in such collateral as they exist from time to time.


 


8.3         Title
Insurance Endorsements. Borrower shall deliver to Lender, at Borrower’s sole expense and in form and content reasonably
satisfactory to Lender, all endorsements to the Title Policy reasonably required by Lender from time to time.


 


8.4         Notice
of Certain Matters. Borrower shall give notice to Lender, within fifteen (15) days after Borrower obtains actual knowledge
thereof, of each of the following:


 


(a)          any
litigation or claim affecting or relating to the Property and involving an amount in excess of $25,000 (excluding any litigation
or claim covered fully by Borrower’s liability insurance); and any litigation or claim against Guarantor which, if determined
adversely to Guarantor, could reasonably be expected to result in a breach by Guarantor of its covenant in the Guaranty pertaining
to maintenance of Net Worth;


 


(b)          any
dispute between Borrower and any Governmental Agency relating to the Property, the adverse determination of which might materially
affect the Property;


 




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(c)          any
written notice or citation from a Governmental Agency, including the Texas Department of Aging and Disability Services, alleging
a violation of or deficiency in compliance with any laws or regulations relating to the Property or its operations;


 


(d)          any
trade name hereafter used by Borrower and any change in Borrower’s principal place of business;


 


(e)          any
circumstance that renders the Approved Budget materially inaccurate with respect to any estimated Project Cost;


 


(f)          any
aspect of the Project that is not in substantial conformity with the Plans;


 


(g)          any
Default or Event of Default;


 


(h)          any
default or breach by Borrower or any other party under any Major Project Agreement, or the receipt by Borrower of any notice of
default or breach under any Major Project Agreement, if an adverse resolution would have a material adverse impact on the Project;


 


(i)          the
filing or claim of any mechanics’ lien or other lien against the Property;


 


(j)          except
as disclosed in the Reports (as defined in the Environmental Indemnity Agreement), the presence of any Hazardous Materials on,
under or about the Property, except in the ordinary course of business and in compliance with all laws relating to Hazardous Materials;
any enforcement, clean-up, removal or other action or requirement of any Governmental Agency relating to any such Hazardous Materials;
and the existence of any occurrence or condition on any property in the vicinity of the Property that could cause the Property
to be otherwise subject to any restrictions relating to Hazardous Materials; and/or


 


(k)          without
limiting the foregoing, any Default by Guarantor under any financial covenant in the Guaranty.


 


8.5           Additional
Reports and Information. Borrower shall deliver to Lender, concurrently with delivery to the third parties noted hereafter,
(a) copies of all financial statements, and (b) copies of all reports which are available for public inspection or which
Borrower is required to file with any Governmental Agency. Borrower also shall deliver to Lender, in form and substance reasonably
satisfactory to Lender and within fifteen (15) days of Lender’s written request therefore, all other information relating
to Borrower, the Property, Guarantor, Sponsor, or the Loan (or the collateral and security therefor) reasonably required by Lender
from time to time.


 




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8.6         Further
Assurances. Borrower shall execute and acknowledge (or cause to be executed and acknowledged) and deliver to Lender all documents,
and take all actions, reasonably required by Lender from time to time to confirm the rights created or now or hereafter intended
to be created under the Loan Documents, to protect and further the validity, priority and enforceability of the Security Documents,
to subject to the Security Documents any property intended by the terms of any Loan Document to be covered by the Security Documents,
or otherwise to carry out the purposes of the Loan Documents and the transactions contemplated thereunder.


 


8.7         Financial
Statements; Access to Business Information. The Borrower represents and warrants that the financial statements for the Borrower
and the Property previously submitted to the Lender fairly present, in all material respects, the financial condition and results
of operation of Borrower and the Property as of the dates thereof and do not contain any untrue statement of a material fact or
omit to state a fact material to such financial statements. No material adverse change has occurred in the financial condition
of the Borrower or the Property from the dates of said financial statements until the date hereof. The Borrower shall furnish to
the Lender such financial information regarding the Borrower, its constituent partners or members, as the case may be, the Property
and any guarantor of the Loan as the Lender may from time to time reasonably request, which shall include, without any further
request therefor:


 


(a)          Annual
Financial Statements. Borrower shall deliver to Lender, within one hundred twenty (120) days after the end of each fiscal year
of Borrower ending on December 31 of each year (each, a “Fiscal Year”), (a) an audited balance sheet
for Borrower as of the end of such Fiscal Year and an audited statement of operations, partners’ equity and cash flow for
Borrower and for Borrower’s operations in connection with the Property for such Fiscal Year, together with all supporting
schedules, and (b) the opinion of an independent certified public accountant acceptable to Lender stating that such materials
(i) were prepared in accordance with GAAP applied on a consistent basis, (ii) fairly present Borrower’s financial
condition, (iii) show all material liabilities, direct and contingent, (iv) fairly present the results of Borrower’s
operations, and (v) disclose the existence of any hedge and/or off-balance sheet transactions.


 


(b)          Quarterly
Financial Statements. Within forty-five (45) days after the end of each fiscal quarter, an unaudited balance sheet for Borrower
as of the end of such fiscal quarter and a statement of operations, partners’ equity and cash flow for Borrower and for Borrower’s
operations in connection with the Property for such fiscal quarter, together with all supporting schedules and certified by the
Borrower in writing as (i) being prepared in accordance with GAAP applied]on a consistent basis, (ii) fairly presenting
Borrower’s financial condition, (iii) showing all material liabilities, direct and contingent, (iv) fairly presenting
the results of Borrower’s operations, and (v) disclosing the existence of any hedge and/or off-balance sheet transactions.


 


(c)          Operating
Statements. Commencing with Construction Completion, within fifteen (15) days after the end of each calendar month, an operating
statement for the Property for the calendar month then ended, together with a current rent roll for the Property, each certified
by Borrower as being true and correct in all material respects and in form and substance satisfactory to Lender. Borrower shall
also deliver to Lender, concurrently with Borrower’s delivery of the monthly operating statement and a monthly rent roll
for the Property described above, a cash flow statement for the Property for the month then ended (to the extent not reflected
in the monthly operating statement), in form and substance satisfactory to Lender.


 




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(d)          Covenant
Compliance Reporting. Within thirty (30) days after the end of each fiscal quarter, a certificate substantially in the form
of Exhibit J attached hereto, signed by a duly authorized officer of Borrower and Guarantor, to the effect that at all times
during the then ended fiscal quarterly period, the Borrower, the Guarantor, and the Property were in full and complete compliance
with the respective requirements applicable thereto set forth in the Loan Documents and (following the Stabilization Date) containing
a calculation of the Debt Service Coverage Ratio including all supporting information and containing a calculation of the covenants
applicable to Guarantor set forth in Section 5 of the Guaranty, together with such evidence of liquidity and net worth
as Lender shall require. Such certificate shall also contain a statement to the effect that for the immediately preceding fiscal
quarterly period no Default or Event of Default shall have occurred and be continuing under any of the Loan Documents.


 


(e)          Guarantor’s
Financial Statements. Borrower shall cause Guarantor to deliver to Lender within one hundred twenty (120) days after the end
of each calendar or Fiscal Year, as applicable, of Guarantor (a “Guarantor Fiscal Year”):


 


(i)          For
guarantors who are not natural Persons (other than trusts established for estate planning purposes), (A) an audited balance
sheet for Guarantor as of the end of Guarantor’s Fiscal Year and an audited statement of profit and loss for Guarantor and
for Guarantor’s operations for Guarantor’s Fiscal Year, together with all supporting schedules, and (B) the opinion
of an independent certified public accountant acceptable to Lender stating that such materials (1) were prepared in accordance
with GAAP applied on a consistent basis, (2) fairly present Guarantor’s financial condition, (3) show all material
liabilities, direct and contingent, and (4) fairly present the results of Guarantor’s operations.


 


(ii)         For
guarantors who are natural Persons or for trusts established for estate planning purposes, a financial statement as of the end
of the calendar year, certified by Guarantor as (1) true, complete and correct, (2) fairly presenting Guarantor’s
financial condition, and (3) showing all material liabilities, direct and contingent, and otherwise in a form substantially
similar to the form of financial statements previously submitted to Lender by Guarantor, unless otherwise approved by Lender in
writing.


 


(f)          Borrower
Tax Returns. Borrower shall deliver to Lender, within thirty (30) days after filing, a copy of the federal income tax return
filed for Borrower for the prior calendar year, in each case prepared by a certified public accountant acceptable to Lender.


 


(g)          Guarantor’s
Tax Returns. Borrower shall cause Guarantor to deliver to Lender, within thirty (30) days after filing, a copy of the federal
income tax return filed for Guarantor for the prior calendar or Fiscal Year.


 




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(h)          Books
and Records. Borrower shall maintain proper books of accounts and records and enter therein complete and accurate entries and
records of all of its transactions in accordance with reasonable cash accounting methods consistently applied in accordance with
the past practices and give representatives of Lender access thereto at all reasonable times, including permission to: (i) examine,
copy and make abstracts from any books and records and such other information which might be helpful to Lender in evaluating the
status of the Indebtedness as it may reasonably request from time to time, and (ii) communicate directly with any of the Borrower’s
officers, employers, agents, accountants or other financial advisors with respect to the business, financial conditions and other
affairs of the Borrower.


 


8.8         [Intentionally
Deleted].


 


8.9         
Keeping Guarantor Informed. Borrower must keep Guarantor informed of Borrower’s financial condition and business operations,
the condition and all uses of the Property, including all changes in condition or use, and any and all other circumstances that
might affect Borrower’s ability to pay or perform its obligations under the Loan Documents and the Project Agreements.


 


8.10       Single
Purpose Entity. Borrower covenants and agrees that it has not and shall not:


 


(a)          engage
in any business or activity other than the acquisition, ownership, development, construction, operation, maintenance, leasing and
disposition of the Property, and activities incidental thereto;


 


(b)          acquire
or own any material asset other than (i) the Property, and (ii) such incidental personal property as may be necessary
for the construction, operation or maintenance of the Property;


 


(c)          merge
into or consolidate with any person or entity or dissolve, terminate or liquidate in whole or in part, transfer or otherwise dispose
of all or substantially all of its assets or change its legal structure;


 


(d)          (i)
fail to preserve its existence as an entity duly organized, validly existing and in good standing under the laws of the jurisdiction
of its organization or formation, (ii) dissolve or otherwise terminate, or fail to comply with the provisions of Borrower’s
organizational documents, or (iii) amend or modify Borrower’s articles of organization or amend or modify any provision
of the Operating]Agreement except as expressly permitted under this Agreement;


 


(e)          own
any subsidiary or make any investment in or acquire the obligations or securities of any other person or entity;


 


(f)          fail
to hold its assets in its own name, or commingle its assets with the assets of any of its partners, affiliates, or of any other
person or entity or transfer any assets to any of its partners or affiliates other than distributions on account of equity interests
in the Borrower, to the extent, if any, permitted hereunder, and any other payments expressly permitted hereunder, including pursuant
to Permitted Affiliate Agreements;


 




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(g)          incur
any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than the Loan and Permitted
Indebtedness;


 


(h)          allow
any Person to pay its debts and liabilities or fail to pay its debts and liabilities solely from its own assets, except for amounts
paid through contributions of equity or pursuant to the Guaranty;


 


(i)          fail
to maintain its records, books of account and bank accounts separate and apart from those of any Affiliates of Borrower, or fail
to prepare and maintain its own financial statements in accordance with GAAP and susceptible to audit, except that Borrower’s
financial position, assets, results of operation and cash flows may be in the consolidated statements of an Affiliate of Borrower
in accordance with GAAP;


 


(j)          enter
into any contract or agreement with a Guarantor, or any Affiliate of Borrower or a Guarantor, except Permitted Affiliate Agreements
and as approved in writing by Lender or upon terms and conditions that are intrinsically fair and substantially similar to those
that would be available on an arms-length basis with third parties other than such Guarantor or such Affiliate of Borrower or a
Guarantor;


 


(k)          seek
dissolution or winding up, in whole or in part;


 


(l)           fail
to correct any known misunderstandings regarding the separate identity of Borrower;


 


(m)         guaranty
or become obligated for the debts of any other entity or person, or hold itself out to be responsible or pledge its assets or credit
worthiness for the debts of another person or entity, or allow any person or entity to hold itself out to be responsible or pledge
its assets or credit worthiness for the debts of the Borrower (except for Guarantor);


 


(n)          make
any loans to any third party, including any Affiliate of Borrower, except pursuant to Permitted Affiliate Agreements;


 


(o)          fail
either to hold itself out to the public as a legal entity separate and distinct from any other entity or person or to conduct its
business solely in its own name in order not (i) to mislead others as to the entity with which such other party is transacting
business, or (ii) to suggest that Borrower is responsible for the debts of any third party (including any Affiliate of Borrower);


 


(p)          fail
to allocate fairly and reasonably among Borrower and any third party (including Guarantor or any Affiliate of any of the foregoing)
any overhead for common employees, shared office space or other overhead and administrative expenses;


 


(q)          fail,
intentionally, to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character
and in light of its contemplated business operations; provided, however, that the foregoing shall not require any equity holder
of Borrower to make additional capital contributions to Borrower; or


 




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(r)          intentionally
conceal assets from any creditor, or enter into any transaction with the intent to hinder, delay or defraud creditors of the Borrower
or the creditors of any other Person.


 


8.11       Compliance.
The Borrower shall (a) ensure that no person who owns a controlling interest in or otherwise controls the Borrower or any
Affiliate is or shall be listed on the “Specially Designated Nationals and Blocked Person List” or other similar lists
maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury, or included in
any Executive Orders, (b) not use or permit the use of the proceeds of the Loan to violate any of the foreign asset control
regulations of OFAC or any enabling statute or Executive Order relating thereto, and (c) comply, and cause each Affiliate
to comply, with all applicable bank secrecy act laws and regulations, as amended.


 


8.12       [Intentionally
Deleted].


 


8.13       Taxes.


 


(a)          Borrower’s
Obligation for Payment of Taxes. Subject to Section 8.13(b), Borrower shall pay or cause to be paid all
Taxes when due and payable, and before any penalty attaches, except to the extent Lender makes payment of any such Taxes from the
deposits made under Section 8.14 hereof. Borrower shall deliver promptly to Lender receipts or other reasonable
evidence evidencing such payment (and such evidence shall be furnished no later than the date that Taxes would otherwise be delinquent).
Borrower shall not suffer, permit, initiate, or otherwise cause for any purpose, the joint assessment of (i) the Property
with any other real property, or (ii) the Property and the Personal Property, or any other procedure whereby the lien of real
property taxes and assessments and the lien of personal property taxes shall be assessed, levied or charged against the Land as
a single lien. While any Indebtedness remains outstanding, the Property shall be segregated on the applicable tax rolls from all
other property, both real and personal. Borrower’s obligations under this Section 8.13 shall not be affected
by any damage to, defects in or destruction of the Property or any other event, including obsolescence of all or any part of the
Property.


 


(b)          Contest
of Taxes. After prior written notice to Lender, Borrower, at its own expense, may contest by appropriate legal proceeding,
promptly initiated and conducted in good faith and with due diligence, the amount or validity or application in whole or in part
of any Taxes, provided that (i) no Event of Default has occurred and is continuing; (ii) such proceeding shall suspend the
collection of the applicable Taxes from Borrower and from the Property or Borrower shall have paid all of the applicable Taxes
under protest, (iii) such proceeding shall be permitted under and be conducted in accordance with the provisions of any other
instrument to which Borrower is subject and shall not constitute a default thereunder, (iv) neither the Property nor any part
thereof or interest therein will be in danger of being sold, forfeited, terminated, cancelled or lost so long as the contest is
being pursued, and (v) Borrower shall have deposited with Lender adequate reserves for the payment of the applicable Taxes,
together with all interest and penalties thereon, unless Borrower has paid all of the applicable Taxes under protest, or Borrower
shall have bonded over any tax lien or provided Lender with title insurance over such liability reasonably satisfactory to Lender
or otherwise furnished such other security as may be accepted by Lender in its sole and absolute discretion to insure the payment
of any contested Taxes, together with all interest and penalties thereon. Lender may pay over any such security or part thereof
held by Lender to the claimant entitled thereto at any time when, in the judgment of Lender, the entitlement of such claimant is
established.


 




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(c)          Effect
of Change in Law. If at any time any law is enacted which deducts from the value of real property, for taxation purposes, any
lien thereon, or changes in any way the laws now in force for the taxation of mortgages, deeds of trust or debts secured thereby,
or the manner of collection of any such taxes so as to affect any interest of Lender hereunder then Borrower shall pay such tax
if it may lawfully do so. If Borrower is not permitted by Applicable Law to pay such tax, or if Borrower is not permitted by Applicable
Law to immediately reimburse Lender for any such payment, then the Indebtedness, at the option of Lender, upon one hundred twenty
(120) days written notice, shall become due and payable.


 


(d)          Change
in Tax Laws. If, by the laws of the United States of America, or of any state or municipality having jurisdiction over the
Lender, the Borrower or the Property, any tax is imposed or becomes due in respect of the Note or the Security Instrument, except
Excluded Taxes, or any liens on the Property created thereby, then the Borrower shall pay such tax in the manner required by such
law.


 


8.14         Escrow
Deposits. Upon Lender’s request, following Construction Completion, and without limiting the effect of Section 8.13
and Section 10 hereof, Lender may require that Borrower pay to the Lender on the first business day of each
calendar month an amount equal to one-twelfth (1/12th) of what the Lender estimates is necessary to pay, on an annualized basis,
(1) all Taxes, and (2) all premiums for the Policies (the “Premiums”) required under Section 10.1
hereof and to enable the Lender to pay same at least thirty (30) days before the Taxes would become delinquent and the Premiums
are due, and, on demand, from time to time shall pay to the Lender additional sums necessary to pay the Premiums and Taxes. No
amounts so paid shall be deemed to be trust funds, but may be commingled with the general funds of the Lender, and no interest
shall be payable thereon. In the event that the Borrower does not pay such sums for Premiums and Taxes, then the Lender may, but
shall not be obligated to, pay such Premiums and Taxes and any money so paid by the Lender shall constitute additional Indebtedness
hereunder and shall be payable by Borrower to Lender on demand with interest thereon from the date of disbursement by Lender at
Default Rate until repaid to Lender. If an Event of Default occurs, the Lender shall have the right, at its election, to apply
any amounts so held under this Section 8.14 against all or any part of the Indebtedness, or in payment of the
Premiums or Taxes for which the amounts were deposited. The Borrower will furnish to the Lender bills for Taxes and Premiums not
less than thirty (30) days before Taxes become delinquent and such Premiums become due.


 




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8.15       Affidavits
of Commencement and Completion.


 


(a)          On
the Closing Date, immediately following recordation of the Security Instrument, Borrower shall file or cause to be filed in the
appropriate records of the county in which the Land is situated, an Affidavit of Commencement duly executed by Borrower and General
Contractor.


 


(b)          Within
ten (10) days after Construction Completion, Borrower shall file or cause to be filed in the appropriate records in the county
in which the Land is situated, an Affidavit of Completion duly executed by Borrower and General Contractor.


 


9.           Other
Negative Covenants. While any obligation of Borrower or Guarantor under the Loan Documents remains outstanding, the following
provisions shall apply, except to the extent that Lender otherwise consents in writing:


 


9.1           Liens
on Property. Except as otherwise provided in this Agreement, Borrower shall not cause or suffer to become effective any lien,
restriction or other title limitation affecting any part of the Property other than (i) the Security Instrument, the Assignment
of Leases and the Permitted Encumbrances, and (ii) real estate and Personal Property taxes and assessments not delinquent,
subject to Borrower’s right to contest the same in good faith pursuant to appropriate legal proceedings to the extent permitted
in the Security Instrument. Borrower shall provide to Lender written evidence of the payment of all real estate and Personal Property
taxes on or before such taxes become delinquent.


 


9.2           Liens
on Personal Property. Borrower shall not install in, or use in connection with, the Property any Personal Property which any
Person other than Lender has the right to remove or repossess under any circumstances, or on which any Person other than Lender
has a lien.


 


9.3           Removal
of Personal Property. Borrower shall not cause or permit the removal from the Property of any items of Personal Property (other
than tools and equipment used in the development of the Project) unless (a) no Default or Event of Default has occurred and
is continuing, and (b) Borrower promptly substitutes and installs on the Property other items of equal or greater value in
the operation of the Property, all of which items shall be free of liens (other than liens in favor of Lender or such other Person
as Lender shall permit in writing) and shall be subject to the lien of the Security Instrument, and executes and delivers to Lender
all documents required by Lender in connection with the attachment of such liens to such items. Borrower shall keep records of
each such removal and shall make such records available to Lender upon written request from time to time.


 


9.4           Amendment
of Organizational Documents. Neither the Operating Agreement nor the Articles of Organization of the Borrower shall be
amended, supplemented or restated, in whole or in part, without the prior, written consent of Lender (which consent shall not be
unreasonably withheld, conditioned or delayed); provided that no such consent shall be required for amendments to the Operating
Agreement executed and delivered exclusively to memorialize a Permitted Transfer. Borrower shall deliver to Lender a copy of any
amendment to the Operating Agreement or the Articles of Organization  of the Borrower within ten (10) days after the
execution of any such amendment, regardless of whether such amendment requires the prior written consent of Lender.


 




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9.5           Management
Agreement. Without the prior written consent of Lender, Borrower shall not enter into any agreement providing for the management,
leasing or operation of any portion of the Property other than the Management Agreement.


 


9.6           Major
Project Agreements. Except as expressly permitted under this Agreement or any other Loan Document, Borrower shall not enter
into any new Major Project Agreement, or amend, modify, supplement, cancel or terminate any Major Project Agreement, in any material
respect, without the prior written consent of Lender.


 


9.7           Transfers.
Except for a Permitted Transfers and Permitted Encumbrances, Borrower shall not, without the prior written consent of Lender (a) sell,
transfer, convey, mortgage, grant, bargain, encumber, pledge, assign, alienate, lease, grant any option with respect to or grant
any other interest in the Property or any part thereof or interest therein, whether directly or indirectly, voluntarily or involuntarily,
by operation of law or otherwise, (b) sell, transfer, issue, convey, mortgage, grant, bargain, encumber, pledge, assign, alienate,
grant any option with respect to or grant any other interest in the Collateral or any part thereof or interest therein, whether
directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, or (c) sell, transfer, convey, mortgage,
grant, bargain, encumber, pledge, assign, alienate, grant any option with respect to or grant any legal, beneficial, economic or
voting interest in Borrower or any other Restricted Party, whether directly or indirectly, voluntarily or involuntarily, by operation
of law or otherwise, or (d) permit or suffer any change in Control of any Restricted Party to occur (each of (a), (b), (c),
and (d), a “Transfer”). A Transfer within the meaning of this Section 9.7 shall be deemed
to include (i) an installment sales agreement wherein any Restricted Party agrees to sell the Property or any part thereof
or interest therein for a price to be paid in installments; (ii) an agreement by Borrower or any Restricted Party for the
leasing of all or a substantial part of the Property for any purpose other than the actual occupancy by a resident or a sale, assignment
or other transfer of, or the grant of a security interest in, Borrower’s right, title and interest in and to the Operating
Agreement; (iii) if Borrower or any other Restricted Party is a corporation, the voluntary or involuntary sale, conveyance
or transfer of such corporation’s stock (or the stock of any corporation directly or indirectly Controlling such corporation
by operation of law or otherwise) or the creation or issuance of new stock such that such corporation’s stock shall be vested
in a party or parties who are not now stockholders; (iv) if Borrower or any other Restricted Party is a limited or general
partnership, joint venture or limited liability company, the change, removal, resignation or addition of a general partner, managing
partner, limited partner, joint venturer, member or non-member manager, the voluntary or involuntary sale, conveyance or transfer
of the partnership interest of any general partner, managing partner or limited partner, the creation or issuance of new partnership
interests, the voluntary or involuntary sale, conveyance or transfer of the interest of any joint venturer, member or non-member
manager or the creation or issuance of new membership interests or interests in any non-member manager; and (v) if Borrower
or any other Restricted Party is a trust or nominee trust, the voluntary or involuntary sale, conveyance or transfer of the legal
or beneficial interest in such trust or nominee trust or the creation or issuance of new legal or beneficial interests.


 




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9.8          Limitations
on Additional Indebtedness; Other Prohibited Transactions.


 


(a)          Except
for Permitted Indebtedness, Borrower shall not, without the prior written consent of Lender granted in its sole discretion, incur
any indebtedness of any kind.


 


(b)          Without
limiting any other restrictions on Transfer or indebtedness, except for Permitted Transfers, (i) neither Borrower nor any Restricted
Party or Affiliate thereof shall become an obligor under a mezzanine loan relating directly or indirectly to the Property or become
an obligor under any indebtedness secured by a pledge or security interest in any collateral which, if enforced, would be a Transfer
that is not a Permitted Transfer, and (ii) neither Borrower nor any Restricted Party shall acquire financing related to the Property
structured as so-called “preferred equity” or issue any class of equity that entitles the holder thereof to acquire
Control of Borrower upon the occurrence of any future event.


 


(c)          Borrower
shall not, without the prior written consent of Lender, engage directly or indirectly in any off balance sheet, hedge or derivative
transactions, including without limitation, interest rate swaps and interest rate caps except with Lender and its affiliates and
subsidiaries. In addition to the foregoing, Borrower shall not cause or allow the proceeds of the Loan to be invested except bank
deposits for temporary holding.


 


10.         Insurance,
Casualty and Condemnation.


 


10.1        Insurance
Coverage. For so long as the Security Instrument is in effect, Borrower shall continuously maintain insurance in accordance
with the following provisions:


 


(a)          At
its own cost, Borrower shall obtain and maintain at all times during the term of the Loan the insurance required by Lender pursuant
to Exhibit I attached hereto. In addition, Borrower shall cause Lender to be named as a named insured under
the policy or policies of insurance required by Lender (each a “Policy” or “Policies”) and
Lender shall be identified in each policy as follows: Sentio Georgetown, LLC, a Delaware limited liability company, Sentio Georgetown
TRS, LLC, a Delaware limited liability company, Sentio Healthcare Properties Inc., and their successors and/or assigns as their
respective interests may appear. Borrower shall provide Lender with evidence of all such insurance required hereunder. Notwithstanding
the foregoing, with respect to the General Contractor’s builder’s risk insurance, Closing is conditioned on Lender’s
approval of the insurer and the form and amount of the policy, but issuance of the Policy may be deferred until the first Disbursement
or, if earlier, until Borrower instructs General Contractor to commence work.


 


(b)          The
Policies to be obtained and maintained by Borrower under the provisions of this Agreement shall be issued by responsible insurance
carriers with a Best’s rating of no less than A/VII, licensed to do business in the State of Texas, who are acceptable
to Lender and shall be in such form and with such endorsements (including a mortgagee clause in favor of Lender), waivers
and deductibles (in no event to exceed $100,000 per occurrence) as Lender shall designate or approve. Without limitation on the
foregoing:


 




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(i)          All
Policies shall name Borrower as the insured, and (with the exception of policies for workmen’s compensation insurance) shall
name Lender as mortgagee and as an additional insured (under a standard non-contributing mortgagee protection clause, in form reasonably
satisfactory to Lender, attached to such Policy or Policies whenever applicable, and providing, among other matters, that all Insurance
Proceeds (as hereinafter defined) shall be paid to Lender).


 


(ii)         All
Policies shall contain: (1) the agreement of the insurer to give Lender at least thirty (30) days’ written notice prior
to cancellation or expiration of or change in such Policies, or any of them; (2) a waiver of subrogation rights against Lender
and, if available Borrower; (3) an agreement that such Policies are primary and non-contributing with any insurance that may
be carried by Lender; (4) a statement that the insurance shall not be invalidated should any insured waive in writing prior
to a loss any or all right of recovery against any party for loss accruing to the property described in the Policy; and (5) if
obtainable, a provision that no act or omission of Borrower shall affect or limit the obligation of the insurance carrier to pay
the amount of any loss sustained. As of the date hereof, and subject to any changes in such requirements which Lender may, in its
discretion, make from time to time pursuant to its rights under this Section 10.1, each Policy of property insurance
hereunder shall contain a lender’s loss payable endorsement, lender clause, or other non-contributory mortgagee clause of
similar form and substance acceptable to Lender in favor of Lender as a mortgagee.


 


(c)          Concurrently
herewith, Borrower shall deliver to Lender original Policies or certificates with Premiums prepaid evidencing the insurance required
hereunder. Borrower shall procure and pay for renewals of such insurance (or shall cause the procurement and payment) from time
to time before the expiration thereof, and Borrower shall deliver to Lender such original renewal Policies or certificates with
Premiums prepaid before the expiration of any existing Policy.


 


(d)          Borrower,
for itself, and on behalf of its insurers, hereby releases and waives any right to recover against Lender on any liability for:
damages for injury to or death of persons; any loss or damage to property, including the property of any occupant of the Property;
any loss or damage to buildings or other improvements comprising the Property; any other direct or indirect loss or damage caused
by fire or other risks, which loss or damage is or would be covered by the insurance required to be carried hereunder by Borrower,
or is otherwise insured; or claims arising by reason of any of the foregoing, except to the extent caused solely by the gross negligence
or willful misconduct of Lender.


 




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(e)          Lender
shall not, by reason of accepting, rejecting, obtaining or failing to obtain insurance, incur any liability for (i) the existence,
non-existence, form, amount or legal sufficiency thereof, (ii) the solvency or insolvency of any insurer, or (iii) the
payment of losses. All insurance required hereunder or carried by Borrower shall be procured at Borrower’s sole cost and
expense. Borrower shall deliver to Lender receipts satisfactory to Lender evidencing full prepayment of the Premiums therefor,
except to the extent Lender makes payments with Borrower’s deposits under Section 8.14 hereof (for the
periods and payments so covered by such payments). In the event of foreclosure on, or other transfer of title in lieu of foreclosure
of, the Property, all of Borrower’s interest in and to any and all Policies in force shall pass to Lender, or the transferee
or purchaser as the case may be, and Lender is hereby irrevocably authorized to assign in Borrower’s name to such purchaser
or transferee all such Policies, which may be amended or rewritten to show the interest of such purchaser or transferee.


 


(f)          [Intentionally
Deleted]


 


(g)          If
the Borrower fails to procure, pay the Premiums for, or deliver to the Lender any of the Policies or renewals as required herein,
the Lender may elect, but shall not be obligated, to obtain such insurance and pay the Premiums therefor. The Borrower shall pay
to the Lender on demand any Premiums so paid with interest thereon at the Default Rate set forth in the Note, from the time of
the advance for such payment by the Lender, until paid to Lender, and said advance and interest shall be a Protective Advance and
part of the Debt.


 


(h)          Approval
by the Lender of any Policies shall not be deemed a representation by the Lender as to the adequacy of coverage of such Policies
or the solvency of the insurer.


 


10.2        Casualty
Loss; Proceeds of Insurance.


 


(a)          The
Borrower will give the Lender prompt written notice of any loss or damage to the Property, or any part thereof, by fire or other
casualty.


 


(b)          In
case of loss or damage covered by any one of the Policies less than or equal to $1,000,000 (a “Minor Casualty”),
provided no Event of Default has occurred and is continuing, Borrower may settle and adjust any claim without the prior consent
of Lender; provided, that such adjustment is carried out in a timely manner, and Borrower is hereby authorized to collect and receive
any and all proceeds payable under such Policies in connection with any such loss (collectively, the “Insurance Proceeds”)
resulting from a Minor Casualty. In case of loss or damage covered by any one of the Policies is in excess of $1,000,000 (the
“Insurance Threshold”), Lender is hereby authorized to settle and adjust any claim under such Policies (and
after the entry of a decree of foreclosure, or a sale or transfer pursuant thereto or in lieu thereof, the decree creditor or such
purchaser or transferee, as the case may be, are hereby authorized to settle and adjust any claim under such Policies) upon consultation
with, and, provided no Event of Default has occurred and is continuing hereunder, the consent of, the Borrower; and the Lender
shall, and is hereby authorized to, collect and receipt for any and all Insurance Proceeds. Borrower hereby irrevocably appoints
Lender as its attorney-in-fact for the purposes set forth in the preceding sentence. Each insurance company is hereby authorized
and directed to make payment (i) of 100% of all such losses (if such loss exceeds the Insurance Threshold) directly to Lender
alone, and (ii) of 100% of all such losses resulting from a Minor Casualty directly to Borrower alone, and in no case to Borrower
and Lender jointly. All reasonable costs and expenses incurred by the Lender in the adjustment and collection of any such Insurance
Proceeds (including without limitation reasonable attorneys’ fees and expenses) shall be so much additional Indebtedness,
and shall be reimbursed to the Lender upon demand or may be paid and deducted by the Lender from such Insurance Proceeds prior
to any other application thereof. Lender shall not be responsible for any failure to collect any Insurance Proceeds due under the
terms of any policy regardless of the cause of such failure, other than the gross negligence or willful misconduct of Lender.


 




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(c)          Net
Insurance Proceeds received by the Lender under the provisions of this Agreement or any instrument supplemental hereto or thereto
or any Policy or Policies covering any Improvements or any part thereof shall be applied by the Lender at its option as and for
a prepayment on the Note, without a prepayment fee or Yield Maintenance Premium (whether or not the same is then due or otherwise
adequately secured), or shall be disbursed for restoration of such Improvements (“Restoration”), in which event
the Lender shall not be obligated to supervise Restoration work nor shall the amount so released or used be deemed a payment of
the indebtedness evidenced by the Note. If Lender elects to permit the use of Insurance Proceeds to restore such Improvements it
may do all necessary acts to accomplish that purpose, including advancing additional funds and all such additional funds shall
constitute part of the Indebtedness. If Lender elects to make the Insurance Proceeds available to Borrower for the purpose of effecting
the Restoration, or, during the existence of an Event of Default, elects to restore such Improvements, any excess of Insurance
Proceeds above the amount necessary to complete the Restoration shall be applied as and for a prepayment on the Note, without a
prepayment fee or premium or Yield Maintenance Premium. No interest shall be payable to Borrower upon Insurance Proceeds held by
Lender.


 


(d)          Notwithstanding
the provisions of Section 10.2(c) above, Lender agrees to allow the Insurance Proceeds to be disbursed for Restoration
provided: (i) no Default has occurred and is continuing and no Event of Default shall have occurred and be continuing; (ii) Lender
shall be satisfied in its good faith judgment, that by expenditure of the Insurance Proceeds hereunder the Property damaged or
destroyed shall be fully restored within a reasonable period of time to the condition and value contemplated by this Agreement
and the Restoration Plans (as hereinafter defined), and all payments required under the Loan will continue to be paid as and when
the same become due and payable; (iii) in Lender’s good faith judgment, such work of repair and Restoration can be completed
in the ordinary course of business not later than the earlier of (A) six (6) months prior to the Maturity Date; (B) the
outside date, if any, under any Lease or under any federal, state, county, municipal or other governmental statute, law, rule,
order, regulation, ordinance, judgment, decree or injunction or any Permit, license, covenant, agreement, restoration or encumbrance;
(iv) the Management Agreement will not be terminated as a result of the casualty or other event resulting in the claim for
payment of such Insurance Proceeds; (v) Lender shall have reviewed and approved Borrower’s plans and specifications for the
repair and Restoration of the Property involving costs in excess of $500,000 (collectively, the “Restoration Plans”),
Borrower’s architect and any general contractors, subcontractors and material suppliers employed to perform such work; (vi)
if so required by Lender for the repair and Restoration of the Property involving costs in excess of $500,000 in its sole and absolute
discretion, all general contractors shall have supplied 100% performance and completion bonds; (vii) if the net Insurance Proceeds
available are insufficient for payment of the full cost of Restoration or repair and the payments under the Loan during the completion
period, as estimated by Lender, then Borrower shall have deposited with Lender sufficient additional funds to insure payment of
all such costs, or made arrangements acceptable to Lender for such sufficient additional funds; (viii) rent loss or business interruption
insurance is available to cover the full amount of any loss of income from the Property during its repair and Restoration; (ix)
Borrower shall provide evidence of the implementation of builder’s risk coverage for the Property with coverage and in such
amounts as Lender shall request and which otherwise complies with the insurance requirements set forth in Section 10.1
hereof; and (x) Borrower shall have satisfied such other conditions as Lender may in good faith determine to be appropriate.


 




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(e)          [Intentionally
Deleted].


 


(f)          So
long as any Debt shall be outstanding and unpaid, and whether or not Insurance Proceeds are available or sufficient therefor, the
Borrower shall promptly commence and complete, or cause to be commenced and completed, with all reasonable diligence, the Restoration
of the Property as nearly as possible to the same value, condition and character which existed immediately prior to such loss or
damage in accordance with the Restoration Plans and in compliance with all legal requirements and if applicable, the requirements
of all Leases. Any Restoration shall be effected in accordance with procedures to be first submitted to and approved by the Lender
in accordance with Section 10.4 hereof. The Borrower shall pay all costs of such Restoration to the extent Insurance
Proceeds are not made available or are insufficient.


 


10.3        Condemnation
and Eminent Domain.


 


(a)          Any
and all awards (the “Awards”) in excess of $1,000,000 heretofore or hereafter made or to be made to the
Borrower (or any subsequent owner of the Property, or any part thereof) by any governmental or other lawful authority for the taking,
by condemnation or eminent domain, of all or any part of the Property (including any award from the United States government at
any time after the allowance of a claim therefor, the ascertainment of the amount thereto, and the issuance of a warrant for payment
thereof), are hereby assigned by the Borrower to the Lender, which Awards the Lender is hereby authorized to collect and receive
from the condemnation authorities, and the Lender is hereby authorized to appear in and prosecute, in the name of and on behalf
of the Borrower, any action or proceeding to enforce any such cause of action in which an award in excess of $1,000,000 is sought
and to make any compromise or settlement in connection therewith and to give appropriate receipts and acquittance therefor in the
name and in behalf of the Borrower; provided, however, that Borrower may collect and receive all Awards equal to or less than $1,000,000
without participation by, or payment to, Lender in respect of such Award. The Borrower shall give the Lender immediate notice of
the actual or threatened commencement of any condemnation or eminent domain proceedings affecting all or any part of the Property
and shall deliver to the Lender copies of any and all papers served in connection with any such proceedings. All reasonable costs
and expenses incurred by the Lender in the adjustment and collection of any such Awards (including without limitation reasonable
attorneys’ fees and expenses) shall be so much additional Indebtedness, and shall be reimbursed with interest thereon to
the Lender from any Award prior to any other application thereof. The Borrower further agrees to make, execute and deliver to the
Lender, at any time upon request, free, clear, and discharged of any encumbrance of any kind whatsoever (other than Permitted Encumbrances),
any and all further assignments and other instruments deemed necessary by the Lender for the purpose of validly and sufficiently
assigning all Awards in excess of $1,000,000 and other compensation heretofore and hereafter made to the Borrower for any permanent
taking, under any such proceeding.


 




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(b)          The
proceeds of any Award received by the Lender under the provisions of this Agreement or any instrument supplemental hereto shall
be applied by the Lender at its option as and for a prepayment of the Debt, without a prepayment fee or Yield Maintenance Premium
(whether or not the same is then due or otherwise adequately secured), or shall be disbursed for Restoration of the Property or
any portion thereof, in which event the Lender shall not be obligated to supervise Restoration work nor shall the amount so released
or used be deemed a payment of the Debt. If Lender elects to permit the use of the proceeds of an Award to restore the Property
or any portion thereof, it may do all necessary acts to accomplish that purpose, including advancing additional funds, all such
additional funds to constitute part of the Debt. If Lender elects to make the proceeds of an Award available to Borrower for the
purpose of effecting the Restoration, or, during the existence of an Event of Default, elects to restore such Improvements, any
excess of such proceeds above the amount necessary to complete the Restoration shall be applied as and for a prepayment of the
Debt, without a prepayment fee or premium. No interest shall be payable to Borrower upon such proceeds held by Lender.


 


(c)          Notwithstanding
the provisions of Section 10.3(b) above, Lender agrees to allow the Award to be disbursed for Restoration provided:
(i) all conditions to the use of casualty proceeds under Section 10.2(d) have been satisfied, and (ii) the
condemnation, in the judgment of Lender, shall have no material adverse effect on the operation or value of the Property remaining
after the condemnation is completed, and (iii) Borrower shall have satisfied such other conditions as Lender may in good faith
determine to be appropriate.


 


(d)          So
long as any Indebtedness shall be outstanding and unpaid, and whether or not Awards are available or sufficient therefor, the Borrower
shall promptly commence and complete, or cause to be commenced and completed, with all reasonable diligence the Restoration of
the portion of the Property not so taken as nearly as possible to the same value, condition and character, which existed immediately
prior to such taking in compliance with all legal requirements. Any Restoration of the Property involving costs in excess of $1,000,000
shall be effected in accordance with Restoration Plans to be first submitted to and approved by the Lender as provided in Section 10.4
hereof. The Borrower shall pay all costs of such Restoration to the extent the Award is not made available or is insufficient.


 




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10.4        Disbursement
of Insurance Proceeds and Awards.


 


(a)          All
Insurance Proceeds and/or Awards received by the Lender as provided in Section 10.2 or Section 10.3
hereof shall, after payment or reimbursement therefrom of all reasonable costs and expenses (including without limitation reasonable
attorneys’ fees and expenses) incurred by the Lender in the adjustment and collection thereof (collectively, the “Net
Proceeds”), shall be deposited with the Lender, or, if in excess of $1,000,000, such other depositary as may be designated
by the Lender, and applied as provided in this Section.


 


(b)          Subject
to Section 10.4(c) hereinbelow, the Lender may elect to apply the Net Proceeds to prepayment of the Indebtedness,
whether then due or not, without prepayment penalty or Yield Maintenance Premium. If the Indebtedness is not prepaid in full, then
the Net Proceeds shall be applied to the installments of principal and interest in the inverse order of maturity.


 


(c)          All
Net Proceeds which are not applied to the payment of the Indebtedness shall be applied to fund the payment of the costs, fees and
expenses incurred for the Restoration of the Property as required under Section 10.2 or Section 10.3
hereof and such Net Proceeds shall be disbursed through the title company which has insured the lien of this Agreement to complete
the Restoration; provided that the Lender shall receive the following:


 


(i)          Restoration
Plans (unless the costs involved in such Restoration shall not exceed $1,000,000), which shall be subject to the reasonable approval
of the Lender prior to the commencement of the Restoration.


 


(ii)         Such
architect’s and engineer’s certificates, waivers of lien, contractor’s sworn statements, payment and performance
bonds (if applicable), title insurance endorsements, plats of survey, opinions of counsel and such other evidences of cost, payment
and performance as the Lender may reasonably require and approve.


 


(d)          If
the Borrower shall fail to commence Restoration within sixty (60) days after the settlement of the claim involving loss or damage
to the Property, and diligently proceed to complete Restoration in accordance with the Restoration Plans and all laws, statutes,
ordinances, rules, regulations, judgments, decrees or orders of any Governmental Authority which are applicable to Borrower or
the Property, or if any other Event of Default shall occur and be continuing hereunder at any time (whether before or after the
commencement of such Restoration), all or any portion of the Indebtedness may be declared to be immediately due and payable and
such Net Proceeds, or any portion thereof, then held, or subsequently received, by the Lender or other depositary hereunder may
be applied, at the option and in the sole discretion of the Lender, to the payment or prepayment of the Indebtedness in whole or
in part, or to the payment and performance of such obligations of the Borrower as may then be in default hereunder.


 




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(e)          Any
surplus which may remain out of such Net Proceeds after payment of all costs, fees and expenses of such Restoration shall be applied
to prepayment of the Indebtedness, without the payment of a prepayment fee, prepayment premium or Yield Maintenance Premium.


 


11.         Defaults
and Remedies.


 


11.1        Events
of Default. The occurrence of any one or more of the following shall constitute an “Event of Default” as
said term is used herein, and any Event of Default which may occur hereunder shall constitute an Event of Default under each of
the other Loan Documents:


 


(a)          Borrower
fails to pay (i) any installment of principal or interest payable pursuant to the terms of the Note when due, or (ii) any
other amount payable to Lender under the Note, this Agreement, the Security Instrument or any of the other Loan Documents within
five (5) days after the date when any such payment is due in accordance with the terms hereof or thereof; or


 


(b)          Borrower
fails to perform or cause to be performed any other obligation or observe any other condition, covenant, term, agreement or provision
required to be performed or observed by Borrower under the Note, this Agreement, the Security Instrument or any of the other Loan
Documents and not specifically described in this Section 11.1 or in the Default Section of any other Loan
Document; provided, however, that if such failure by its nature can be cured, then so long as the continued operation, safety and
value of the Property, and the priority, validity and enforceability of the liens created by the Security Instrument or any of
the other Loan Documents, are not impaired, threatened or jeopardized, then Borrower shall have a period (the “Cure Period”)
of thirty (30) days after Borrower receives written notice of such failure to cure the same and an Event of Default shall not be
deemed to exist during the Cure Period; provided further that if such failure by its nature can be cured but cannot be cured by
the payment of money and Borrower commences to cure such failure during the Cure Period and is diligently and in good faith attempting
to effect such cure, the Cure Period shall be extended for sixty (60) additional days, but in no event shall the aggregate Cure
Period be longer than ninety (90) days in the aggregate; or


 


(c)          The
existence of any material inaccuracy or untruth in any material respect in any certification, representation or warranty contained
in this Agreement or any of the other Loan Documents or of any statement or certification as to facts delivered to the Lender by
the Borrower or Guarantor as of the date made or delivered; provided, however, that if such inaccuracy or untruth is curable, Borrower
shall have a Cure Period pursuant to the same terms provided for in Section 11.1(b) above with respect to such
inaccuracy or untruth, and an Event of Default shall not be deemed to exist during the Cure Period; or


 


(d)          Borrower
or Guarantor is dissolved, liquidated or terminated, or all or substantially all of the assets of Borrower or Guarantor are sold
or otherwise transferred without Lender’s prior written consent; or


 




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(e)          Borrower
or Guarantor is the subject of an order for relief by a bankruptcy court, or is unable or admits in writing its inability (whether
through repudiation or otherwise) to pay its debts as they mature, or makes an assignment for the benefit of creditors; or Borrower
or Guarantor applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator
or similar officer for it or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator
or similar officer is appointed without the application or consent of Borrower or Guarantor, as the case may be, and the appointment
continues undischarged or unstayed for ninety (90) days; or Borrower or Guarantor institutes or consents to any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution, custodianship, conservatorship, liquidation, or similar proceeding
relating to it or any part of its property; or any similar proceeding is instituted without the consent of Borrower or Guarantor,
as the case may be, and continues undismissed or unstayed for ninety (90) days; or


 


(f)          Any
Guaranty is repudiated, revoked or terminated in whole or in part without Lender’s prior written consent; or Guarantor claims
that his, her or its Guaranty is ineffective or unenforceable, in whole or in part and for any reason, with respect to amounts
then outstanding or amounts that might in the future be outstanding; or


 


(g)          [Intentionally
Deleted]


 


(h)          The
occurrence of any other Transfer other than a Permitted Transfer; or


 


(i)          [Intentionally
Deleted]


 


(j)          Lender
or the Lender Consultant shall determine, after consultation with the Borrower, that any construction work theretofore completed
is not in material compliance with the Plans, and Borrower shall fail to commence correction of the same to the satisfaction of
Lender within thirty (30) days after written notice of such determination and thereafter diligently complete the same; or


 


(k)          Unless
caused by a Force Majeure Event, (i) a discontinuance or abandonment of construction for a period of thirty (30) consecutive days;
or (ii) Construction Completion is not, or in Lender’s reasonable judgment will not be, achieved on or before the Construction
Completion Date; or


 


(l)          Unless
caused by a Force Majeure Event, Borrower is enjoined or otherwise prohibited by any Governmental Agency from constructing and/or
occupying the Improvements and such injunction or prohibition continues unstayed for thirty (30) days or more for any reason; or


 


(m)          The
bankruptcy or insolvency of the General Contractor, or the material breach by General Contractor of the General Contract, which
would prevent completion of the Improvements as required by this Agreement, and the failure of Borrower to procure a replacement
General Contractor, or of the General Contractor to remedy such breach in a manner, satisfactory to Lender within sixty (60) days
from the occurrence of such bankruptcy, insolvency or material breach; or


 




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(n)          Any
material provision of this Agreement or the other Loan Documents shall at any time for any reason cease to be valid and binding
on the Borrower, or shall be declared to be null and void, or the validity or enforceability thereof shall be successfully contested
by any Governmental Agency, or Borrower shall deny that it has any or further liability or obligation under this Agreement or the
other Loan Documents; or


 


(o)          Any
default by the Borrower in any payment of principal or interest due and owing upon any other obligations of the Borrower for borrowed
money in excess of One Hundred Thousand Dollars ($100,000) beyond any period of grace provided with respect thereto or in the performance
of any other agreement, term or condition contained in any agreement under which such obligation is created, if the effect of such
default is to accelerate the maturity of such indebtedness or to permit the holder thereof to cause such indebtedness to become
due prior to its stated maturity; or


 


(p)          Guarantor
fails to perform any material obligation (following any applicable notice and cure period) required to be performed by Guarantor
under the Guaranty or Guarantor breaches a financial covenant in the Guaranty; or


 


(q)          Borrower
fails to perform any material obligation (following any applicable notice and cure period) under the Option Agreement; or


 


(r)          Sponsor
fails to perform any material obligation (following any applicable notice and cure period) under the Right of First Negotiation
Agreement; or


 


(s)          The
existence of any fraud, intentional dishonesty or bad faith by or with the acquiescence of Borrower or Guarantor which in any material
adverse way relates to or affects the Loan or the Property; or


 


(t)          Failure
by Borrower to deposit with Lender funds required to maintain the Loan In Balance within the time and in the manner herein required;
or


 


(u)          The
occurrence of any event specifically identified as an Event of Default in any other Section of this Agreement or in any other
Loan Document; or


 


(v)         Borrower
shall have a final unappealable judgment entered against it in excess of One Hundred Thousand Dollars ($100,000.00) in any civil,
administrative or other proceeding, to the extent such judgment is not covered by insurance or for which Borrower has not established
a cash or cash equivalent reserve in the full amount of such judgment, and such judgment remains unpaid, unvacated, unbonded or
unstayed by appeal or otherwise for a period of thirty (30) days from the date of its entry; or


 


(w)          The
termination of the General Contract, the Architect’s Contract or the Engineer’s Contract without Lender’s prior
written consent; or


 




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(x)          Unless
caused by a Force Majeure Event, failure to comply with the conditions set forth in Section 4.11 prior to the
Construction Completion Date; or


 


(y)          Except
as expressly permitted under this Agreement or any other Loan Document, Borrower or Guarantor shall enter into or permit any modification,
amendment or termination of any Major Project Agreement to which it is a party without the prior written consent of Lender; provided,
however, that if such breach is curable, Borrower shall have a Cure Period pursuant to the same terms provided for in Section 11.1(b)
above with respect to such breach, and an Event of Default shall not be deemed to exist during the Cure Period; or


 


(z)          The
occurrence of any default by Borrower or Guarantor in the performance or observance of any agreement or covenant, or breach of
any representation or warranty, contained in any Major Project Agreement, which shall not be cured by the breaching party within
any applicable grace period set forth therein; provided, however, that any non-material breach of any such Major Project Agreement
shall not constitute an Event of Default hereunder unless the non-breaching party under such Major Project Agreement shall have
declared such breach to be a default under such Major Project Agreement and any applicable cure period shall have expired.


 


11.2        Remedies
Upon Default. Upon the occurrence and during the continuance of any Event of Default, Lender may take such action or actions
as Lender may direct, at Lender’s option and in its absolute discretion, including, but not limited to, any or all of the
following actions:


 


(a)          Terminate
any obligation or responsibility on the part of Lender to make further advances of Loan Proceeds or of any other amounts held by
Lender and constituting security for the Indebtedness pursuant to this Agreement or any other Loan Document;


 


(b)          Declare
the outstanding principal balance of the Loan, together with all accrued interest thereon and other amounts owing in connection
therewith, to be immediately due and payable in full, regardless of any other specified due date, and in the event of the occurrence
of an Event of Default under Section 11.1(e) such principal and interest shall become immediately due automatically;


 


(c)          In
its own right or by a court-appointed receiver, take possession of the Property, enter into contracts for and otherwise proceed
with the completion of the Project, and pay the costs thereof out of the proceeds of the Loan; and in the event that such costs
exceed the total of such funds, Lender shall have the right but not the obligation to pay such excess costs by expenditure of their
own respective funds; and/or


 


(d)          Exercise
any of its rights under the Loan Documents and any rights provided by Law, including the right to foreclose on any security and
exercise any other rights with respect to any security, all in such order and manner as Lender elects in its absolute discretion.


 




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11.3        Cumulative
Remedies, No Waiver. Lender’s rights and remedies under the Loan Documents are cumulative and in addition to all rights
and remedies provided by Applicable Law from time to time. The exercise or direction to exercise by Lender of any right or remedy
shall not constitute a cure or waiver of any default, nor invalidate any notice of default or any act done pursuant to any such
notice, nor prejudice Lender in the exercise of any other right or remedy. No waiver of any default shall be implied from any omission
by Lender to take action on account of such default if such default persists or is repeated. No waiver of any default shall affect
any default other than the default expressly waived, and any such waiver shall be operative only for the time and to the extent
stated. No waiver of any provision of any Loan Document shall be construed as a waiver of any subsequent breach of the same provision.
The consent by Lender to any act by Borrower requiring further consent or approval shall not be deemed to waive or render unnecessary
Lender’s consent to or approval of any subsequent act. Lender’s acceptance of the late performance of any obligation
shall not constitute a waiver by Lender of the right to require prompt performance of all further obligations; Lender’s acceptance
of any performance following the sending or filing of any notice of default shall not constitute a waiver of Lender’s right
to proceed with the exercise of remedies for any unfulfilled obligations; and Lender’s acceptance of any partial performance
shall not constitute a waiver by Lender of any rights relating to the unfulfilled portion of the applicable obligation.


 


12.         Permitted
Partial Releases. Lender shall not unreasonably withhold its consent from time to time to a release of a portion of the
Property (the “Released Parcel”) from the lien of the Security Instrument (a “Permitted Partial Release”)
subject to the following conditions:


 


(a)          Lender
must receive evidence, reasonably satisfactory to Lender, that the absence of the Released Parcel will not materially impair the
operation and cash flow of the Property in accordance with the business plan upon which the Loan was predicated.


 


(b)          Lender
must be reasonably satisfied with the form and substance of all easements or covenants benefiting and burdening the Property and
the Released Parcel, or must be reasonably satisfied that such easements or covenants are not necessary.


 


(c)          Lender
must receive evidence, reasonably satisfactory to Lender, that the separation of the Released Parcel from the Property was effected
in accordance with all Applicable Laws, including laws and regulations pertaining to subdivisions, platting, and maps.


 


(d)          Lender
must receive evidence, reasonably satisfactory to Lender, that the Permitted Partial Release is incidental to a sale of the Released
Parcel (the “Release Parcel Sale”), and that the Released Parcel Sale was negotiated on an arm’s length
basis with a third party that is not an Affiliate of Borrower, Guarantor, or any Restricted Party, for fair value.


 




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(e)          Borrower
must account to Lender for one hundred percent (100%) of the net consideration (after prorations, closing credits and transaction
expenses) received by Borrower, Guarantor, or any Restricted Party in connection of the Released Parcel Sale. Borrower and any
other Person acquiring an interest in such consideration must grant a first priority and perfected security interest in such consideration
to Lender as additional security for the Loan, pursuant to agreements in form and substance reasonably satisfactory to Lender.
To the extent that such consideration consists of cash, cash equivalents, or marketable securities, such consideration shall be
deposited in a segregated bank or securities account with a financial institution, under the name of Borrower, but subject to a
control agreement in form and substance satisfactory to Lender sufficient to grant to Lender a first priority and perfected security
interest therein (such account the “Partial Release Escrow”). The security and control agreements described
in this Section shall include terms, reasonably acceptable to Lender, permitting Borrower to (i) obtain releases of collateral
from the Partial Release Escrow in exchange for replacement collateral of ascertainable and reasonably equivalent value, (ii) obtain
releases of collateral from the Partial Release Escrow to fund a Balancing Deposit, to repay Protective Advances, to fund casualty
or condemnation repairs to the extent insurance or other proceeds are not sufficient, and to fund other Property construction,
capital, or operating expenses payable to Persons who are not Affiliates of Borrower or Guarantor, and (iii) obtain such releases
to pay the Debt (including the Participation Amount) when required or permitted to do so under this Agreement. All collateral in
the Partial Release Escrow shall be released to Borrower without restriction promptly upon Borrower providing evidence, reasonably
acceptable to Lender, that the Property has received a certificate of occupancy and has achieved, for two consecutive calendar
quarters (determined as of the end of each calendar quarter), a Debt Service Coverage Ratio of at least 1.20.


 


(f)          Borrower
shall pay all of Lender’s costs, including reasonable legal fees, incurred in connection with a Permitted Partial Release,
all agreements relating thereto, the establishment and administration of any Partial Release Escrow, and any release or exchange
of collateral contemplated hereby.


 


(g)          Any
funds remaining in the Partial Release Escrow after repayment of the Debt (including the Participation Amount) in full shall be
released to Borrower.


 


13.         [Intentionally
Deleted].


 


14.         Miscellaneous.


 


14.1        Nonliability.
Borrower acknowledges and agrees that:


 


(a)          the
relationship among Borrower and Lender is and shall remain solely that of Borrower and Lender and Lender does not undertake or
assume any responsibility to review, inspect, supervise, approve or inform Borrower of any matter in connection with the Project,
including matters relating to: (i) the Plans, (ii) architects, engineers, contractors, subcontractors and materialmen,
or the workmanship of or materials used by any of them, or (iii) the progress of the Project and its conformity with the Plans;
and Borrower shall rely entirely on its own judgment with respect to such matters and acknowledges that any review, inspection,
supervision, approval or information supplied to Borrower by Lender in connection with such matters is solely for the protection
of Lender and that neither Borrower nor any third party is entitled to rely on it;


 




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(b)          notwithstanding
any other provision of any Loan Document: (i) Lender is not and shall not be deemed a partner, joint venturer, alter-ego,
manager, controlling person or other business associate or participant of any kind of Borrower and Lender does not intend to ever
assume any such status; (ii) Lender does not intend to ever assume any responsibility to any Person for the quality or safety
of the Property during the term of the Loan, and (iii) Lender shall not be deemed responsible for or a participant in any
acts, omissions or decisions of Borrower;


 


(c)          Lender
shall not be directly or indirectly liable or responsible in any way for any loss, cost, damage, penalty, expense, liabilities
or injury of any kind to any Person or property resulting from any construction (including without limitation the construction
of the Project) on, or development, occupancy, ownership, management, operation, possession, condition or use of, the Property
(except to the extent proximately caused by Lender’s or Lender’s proven gross negligence or willful misconduct), including
without limitation those resulting or arising directly or indirectly from: (i) any defect in any building or other onsite
or offsite improvement; (ii) any act or omission of Borrower or any of Borrower’s agents, employees, independent contractors,
licensees or invitees; or (iii) any accident on the Property or any fire or other casualty or hazard thereon; and


 


(d)          by
accepting or approving anything required to be performed or given to Lender under the Loan Documents, including any certificate,
financial statement, Survey, Appraisal or insurance policy, Lender shall not be deemed to have warranted or represented the sufficiency
or legal effect of the same, and no such acceptance or approval shall constitute a warranty or representation by Lender to anyone.


 


14.2        Indemnification
of the Lender.


 


(a)          To
the fullest extent permitted by law, the Borrower agrees to indemnify, hold harmless and defend the Lender, and each of its officers,
members, directors, officials, employees, attorneys and agents (collectively, the “Indemnified Parties”), against
any and all actual third party losses, damages, claims, actions, liabilities, costs and expenses of any conceivable nature, kind
or character (including, without limitation, reasonable attorneys’ fees, litigation and court costs, amounts paid in settlement
and amounts paid to discharge judgments) to which the Indemnified Parties, or any of them, may become subject under or any statutory
law (including federal or state securities laws) or at common law or otherwise, arising out of or based upon or in any way relating
to:


 




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(i)          (A) the
making of the Loan; (B) a claim, demand or cause of action that any Person has or asserts against Borrower or Guarantor; (C) the
payment of any commission, charge or brokerage fee incurred in connection with the Loan; (unless arising through Lender); (D) any
act or omission of Borrower, any of their respective agents, employees, licensees, contractor, subcontractor or material supplier,
engineer, architect or other Person with respect to the Loan or the Project; (E) the construction, development, ownership,
occupancy, management, operation, possessing condition or use of the Property; (F) the Loan Documents, the Major Project Agreements,
or the execution or amendment thereof, or in connection with any of the transactions contemplated thereby, including without limitation,
the making of the Loan; and (G) any lien or charge upon payments by the Borrower to the Lender hereunder, or any taxes (including,
without limitation, ad valorem taxes and sales taxes), assessments, impositions and other charges imposed in respect of all or
any portion of the Property;


 


(ii)         any
act or omission of the Borrower or any of its agents, contractors, servants, employees or licensees in connection with the Loan
or the Project, the operation of the Property, or the condition, environmental or otherwise, occupancy, use, possession, conduct
or management of work done in or about, or from the planning, design, acquisition, or construction of, the Project or any part
thereof during the period that Borrower owned the Project, and


 


(iii)        any
violation of any environmental law, rule or regulation with respect to, or the release of any Hazardous Materials from, the Property
or any part thereof (excluding any violation or release that first occurs or arises after Borrower no longer owns the Project)


 


except in the case of the foregoing
indemnification of the Lender or any of the other Indemnified Parties to the extent such damages are caused by the gross negligence
or willful misconduct the Lender or such Indemnified Party; and provided that this Section is not intended to give rise to
a right of the Lender to claim payment of the principal and accrued interest with respect to the Loan as a result of an Indemnified
Party claim. In the event that any action or proceeding is brought against any Indemnified Party with respect to which indemnity
may be sought hereunder, the Borrower, upon written notice from the Indemnified Party, shall assume the investigation and defense
thereof, including the employment of counsel reasonably selected by the Indemnified Party, and shall assume the payment of all
reasonable expenses related thereto, with full power to litigate, compromise or settle the same in its sole discretion; provided
that the Indemnified Party shall have the right to review and approve or disapprove any such compromise or settlement. Each Indemnified
Party shall have the right to employ separate counsel in any such action or proceeding and participate in the investigation and
defense thereof, and the Borrower shall pay the reasonable fees and expenses of such separate counsel; provided, however, that
such Indemnified Party may only employ separate counsel at the expense of the Borrower if in the judgment of such Indemnified Party
a conflict of interest exists by reason of common representation or if all parties commonly represented do not agree as to the
action (or inaction) of counsel.


 




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(b)          Notwithstanding
any transfer of the Property to another owner in accordance with the provisions of this Agreement, the Borrower shall remain obligated
to indemnify each Indemnified Party pursuant to this Section, unless such Indemnified Party has consented to such transfer and
to the assignment of the rights and obligations of the Borrower hereunder, or unless a closing has occurred under the PSA, in which
case the indemnities provided in this Section shall immediately terminate (and shall be replaced by indemnities and other
post-closing obligations and liabilities, if any, in the PSA and closing documents contemplated therein) except to the extent arising
out of a claim against Lender (by reason of its having acted as a lender under the Loan Documents) by an unrelated third party
arising from acts, omissions or circumstances pertaining to the period prior to such transfer or Closing. No recovery may be had
under this Section 14.2 or other provisions of the Loan Documents that is duplicative of recovery for the same loss
under the PSA.


 


(c)          The
rights of any persons to indemnity hereunder and rights to payment of fees and reimbursement of expenses pursuant to this Agreement
shall survive the final repayment of the Loan. The provisions of this Section shall survive the termination of this Agreement.


 


14.3        Reimbursement
of Lender. Borrower shall reimburse Lender for all Loan Expenses within five (5) days after written demand therefor (such date,
the “Expense Due Date”). Such reimbursement obligations shall bear interest following the Expense Due Date at
the Default Rate until paid, and shall be secured by the Security Documents. Such reimbursement obligations shall survive the cancellation
of the Note and the release and reconveyance of the Loan Documents.


 


14.4        Obligations
Unconditional and Independent. Notwithstanding the existence at any time of any obligation or liability of Lender to Borrower,
or any other claim by Borrower against Lender in connection with the Loan or otherwise, except as expressly set forth in the Purchase
Option Agreement, Borrower hereby waives any right it might otherwise have (a) to offset any such obligation, liability or
claim against Borrower’s obligations under the Loan Documents or (b) to claim that the existence of any such outstanding
obligation, liability or claim excuses the nonperformance by Borrower of any of its obligations under the Loan Documents.


 


14.5        Notices.
Any notices, communications and waivers under this Agreement shall be in writing and shall be (a) delivered in person, (b) mailed,
postage prepaid, either by registered or certified mail, return receipt requested, or (c) sent by overnight express carrier,
addressed in each case as follows:


 


	To the Lender:	 	c/o Sentio Investments, LLC
	 	 	189 South Orange Ave.
	 	 	Orlando, Florida 32801
	 	 	Attention:  Spencer Smith
	 	 	 
	With a copy to:	 	DLA Piper LLP (US)
	 	 	7730 East Belleview Ave., Suite A204
	 	 	Greenwood Village, Colorado 80111
	 	 	Attention:  David E. Cher
	 	 	 
	To the Borrower:	 	Westminster-LCS Georgetown LLC
	 	 	c/o LCS
	 	 	Capital Square
	 	 	400 Locust Street, Suite 820
	 	 	Des Moines, Iowa 50309-2334
	 	 	Attn:  Richard Tucker


 




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	With a copy to:	 	Mayer Brown LLP
	 	 	71 South Wacker Drive
	 	 	Chicago, Illinois 60606-4637
	 	 	Attn:  Ivan Kane


 


or to any other address as to any of the parties
hereto, as such party shall designate in a written notice to the other party hereto. All notices sent pursuant to the terms of
this Section shall be deemed received (i) if personally delivered, then on the date of delivery, (ii) if sent by
overnight, express carrier, then on the next Business Day immediately following the day sent, or (iii) if sent by registered
or certified mail, then on the earlier of the third Business Day following the day sent or
when actually received.


 


14.6        Survival
of Representations and Warranties. Subject to Section 6 of the Option Agreement, all representations and warranties
of Borrower and Guarantor in the Loan Documents shall survive the making of the Loan and have been or will be relied on by Lender
and Lender notwithstanding any investigation made by Lender or Lender, as the case may be.


 


14.7        Signs.
If permitted by local code, Lender may each place reasonable signs on the Property during the term of the Loan stating that financing
is being provided by and through Lender and any other participant in the Loan.


 


14.8        No
Third Parties Benefited. This Agreement is made for the purpose of setting forth rights and obligations of Borrower and Lender,
and no other Person shall have any rights hereunder or by reason hereof.


 


14.9        Binding
Effect, Assignment of Obligations. This Agreement shall bind, and shall inure to the benefit of, Borrower and Lender and their
respective successors and assigns. Borrower shall not assign any of its rights or obligations under any Loan Document without the
prior written consent of Lender, which consent may be withheld in Lender’s absolute discretion. Any such assignment without
such consent shall be void.


 


14.10      Counterparts.
Any Loan Document may be executed in counterparts, all of which, taken together, shall be deemed to be one and the same document.


 




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14.11      Prior
Agreements; Amendments; Consents. This Agreement (together with the other Loan Documents) contains the entire agreement among
Lender and Borrower with respect to the Loan, and all prior negotiations, understandings and agreements (including, but not limited
to, any commitment letter issued by Lender to Borrower) are superseded by this Agreement and such other Loan Documents. No modification
of any Loan Document (including waivers of rights and conditions) shall be effective unless in writing and signed by the party
against whom enforcement of such modification is sought, and then only in the specific instance and for the specific purpose given.
Notwithstanding the foregoing, Lender shall have the right to waive or modify, conditionally or unconditionally, the conditions
to its approvals and consents hereunder, without the consent of any party. Consents and approvals to be obtained from Lender shall
be in writing. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN OR AMONG LENDER AND BORROWER
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF LENDER AND BORROWER. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN OR AMONG LENDER AND BORROWER.


 


14.12      Governing
Law. All of the Loan Documents shall be governed by, and construed and enforced in accordance with, the laws of the State of
Texas without regard to the conflicts of laws principles thereof; provided that if Lender has greater rights or remedies under
federal law, then such right and/or remedies under federal law shall also be available to Lender.


 


14.13      Severability
of Provisions. No provision of any Loan Document that is held to be unenforceable or invalid shall affect the remaining provisions,
and to this end all provisions of the Loan Documents are hereby declared to be severable.


 


14.14      Headings.
Article and Section headings are included in the Loan Documents for convenience of reference only and shall not be used
in construing the Loan Documents.


 


14.15      Conflicts.
In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, this Agreement shall
prevail; provided however that, with respect to any matter addressed in both such documents, the fact that one document provides
for greater, lesser or different rights or obligations than the other shall not be deemed a conflict unless the applicable provisions
are inconsistent and could not be simultaneously enforced or performed.


 


14.16      Time
of the Essence. Time is of the essence of all of the Loan Documents.


 






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14.17      Participations,
Pledges and Syndication and Securitization.


 


(a)          Any
Lender and any of its successors may transfer, assign, sell and/or grant Participations (defined in Section 14.17(e) below)
in all or any portion of its Loans without the consent of Borrower. Any Lender and any of its successors may transfer, assign and
sell all or a portion of its interest in the Loans (including a corresponding portion of its commitment to lend hereunder) to a
party who becomes a Lender under this Loan Agreement and the other Loan Documents (a “Loan Syndication”), provided,
however that, subject to Sections 14.17(b) and 14.17(c), any such Loan Syndication shall be subject to Borrower’s
written consent in its sole and absolute discretion. A Participation and/or Loan Syndication are collectively called a “Loan
Transfer”. A Lender may furnish any transferee, assignee, purchaser or participant or prospective transferee, assignee,
purchaser or participant with any and all documents and information (including without limitation, financial information) relating
to Borrower, Guarantor, and the Loan or any of them that Lender deems advisable in connection with a Loan Transfer. To facilitate
any permitted Loan Syndication, Borrower shall, promptly upon Lender’s request, exchange any Note for one or more substitute
promissory notes payable to the order of Lender or any transferee of a portion of the Loan, and shall enter into such other technical
amendments to the Loan Documents as Lender may reasonably request to facilitate the Loan Transfer, provided that neither the exchange
nor the technical amendments increase any material obligation of Borrower with respect to the Loan, and provided that Lender reimburses
Borrower for Borrower’s reasonable costs, including attorneys’ fees, incurred in connection with such exchange and
amendments. Borrower’s indemnity obligations under the Loan Documents shall also apply with respect to any transferee, assignee
or purchaser in a permitted Loan Syndication and the directors, officers, agents and employees of any such transferee, assignee
or purchaser. The Borrower, Guarantor, or any of his, her, its or their respective Affiliates or subsidiaries shall not be given
an opportunity to be a transferee, assignee, purchaser or participant under any circumstances without the prior, written consent
of the Lender which may be withheld in its sole and absolute discretion.


 


(b)          Borrower’s
consent to a Loan Syndication pursuant to Section 14.7(a) shall not be required if any of the following apply:


 


(i)          An
Event of Default has occurred and is continuing.


 


(ii)         The
Loan Syndication occurs concurrently (or substantially concurrently) with a sale or transfer of all or substantially all of the
assets of Sentio Healthcare Properties Inc. and the assignee in the Loan Syndication is the entity which acquired all or substantially
all of such assets.


 


(iii)        The
assignee is an Affiliate of Sentio Healthcare Properties, Inc. and such sale does not relieve the assignor of its obligation to
fund the portion of the Loan sold and assignor Lender holds the Managing Interest in the Loan.


 


(c)          Borrower’s
consent to a Loan Syndication pursuant to Section 14.7(a) shall not be unreasonably withheld if all of the following apply:


 


(i)          The
assignee is an Eligible Transferee,


 


(ii)         After
giving effect to the Loan Syndication and all prior Loan Syndications, Sentio Healthcare Properties Inc. and its Affiliates individually
or collectively own and hold (A) interests in Loan A with a par value or amount of at least Ten Million and No/100 Dollars ($10,000,000.00),
(B) a pro rata share in Loan B that is not less than its pro rata interest in Loan A, and (C) the Managing Interest in the Loan.


 


(iii)        After
giving effect to the Loan Syndication and all prior Loan Syndications, not more than four (4) different Persons held interests
in the Loan.


 


(d)          For
clarification, Borrower’s prior written consent shall not be required for any transfer or change in direct or indirect ownership
or control of Sentio Healthcare Properties Inc.


 




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(e)          As
used herein, a “Participation” means sale of a participation only in the Loans pursuant to which (i) Lender’s
obligations under this Agreement and the other Loan Documents shall remain unchanged, (ii) Lender shall remain solely responsible
to Borrower for the performance of Lender’s obligations, (iii) the Borrower shall continue to deal solely and directly with
Lender in connection with such Lender’s rights and obligations under this Agreement, (iv) Lender shall retain the sole right
to grant or withhold consents under or to enforce this Agreement and the Loan Documents and to approve any amendment, modification
or waiver of any provision of this Agreement or the other Loan Documents, and (v) the participant shall have no privity with and
no rights as against Borrower, and Borrower shall have no privity with and no obligations with respect to such participant, with
respect to the Loans or Loan Documents.


 


14.18      Rights
to Share Information. The Lender shall have the right to discuss the affairs of the Borrower with any officer, director, employee
or Affiliate thereof, any Guarantor and/or other third parties and to discuss the course of construction, lease-up, operation and
management of the Project, the financial condition of the Borrower, any Guarantor and the Property, and to disclose any non-confidential
information received by Lender regarding the Borrower, any Guarantor, the Property or any officer, director, employee or Affiliate
of the Borrower with any other Affiliate of the Borrower, any Guarantor and/or other third parties, singularly or together, as
Lender may choose in its sole and absolute discretion.


 


14.19      Servicing.


 


(a)          At
the option of either Lender, Loan A individually, Loan B individually, or both Loans collectively may, subject to the limitations
of this Section 14.19(a), be serviced by a servicer (the “Servicer”) appointed by the applicable Lender and
the applicable Lender may delegate its ministerial collection and disbursement responsibilities under this Agreement and the other
Loan Documents to the Servicer pursuant to a servicing agreement between the applicable Lender and Servicer; provided, however,
that the services provided by such Servicer shall be limited to the collection of payments from Borrower, and the disbursement
of payments from Lender, and Lender shall retain all discretion and control over any discretionary decisions to be made by Lender
hereunder and under the other Loan Documents, including without limitation all decisions relating to waivers, conditions to disbursement,
and defaults. Servicer shall be entitled to reimbursement of costs and expenses by Borrower as and to the same extent (but without
duplication) as Lender is entitled thereto under the applicable provisions of this Agreement and the other Loan Documents. Servicer
shall have the right to exercise all rights of collection under this Agreement and enforce all payment obligations of Borrower
pursuant to the provisions of this Agreement and the other Loan Documents. Without limiting the foregoing, Lender A shall have
the right to appoint Lender B as its Servicer, Lender B shall have the right to appoint Lender A as its Servicer, and the Lenders
shall have the right to appoint a third party as Servicer of both Loans collectively. Nothing herein shall limit the ability of
either Lender to utilize the services of the Lender Consultant as provided herein.


 




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(b)          Either
Lender, by written notice to Borrower, may terminate any appointment of a Servicer. Following such notice, the applicable Loan
shall be serviced by the applicable Lender itself, or by a subsequently appointed Servicer.


 


(c)          Lender
A and Lender B hereby notify Borrower that, until further notice, Lender B has appointed Lender A as the Servicer of Loan B, and
that both Loan A and Loan B shall be serviced collectively by Lender A.


 


(d)          Appointment
of a Servicer shall not relieve either Lender of any obligations or liabilities hereunder.


 


14.20      Guaranties
Unsecured. The Security Documents shall secure Borrower’s obligations under the Loan Documents. Notwithstanding the fact
that the Loan Documents may now or hereafter include one or more Guaranties and/or other documents creating obligations of Persons
other than Borrower, and notwithstanding the fact that any Security Document may now or hereafter contain general language to the
effect that it secures “the Loan Documents,” no Security Document shall secure any Guaranty, or any other obligation
of any Person other than Borrower, unless such Security Document specifically describes such Guaranty or other obligation as being
secured thereby.


 


14.21      Joint
and Several. The parties hereto acknowledge that the defined term “Borrower” has been defined to collectively include
each individual Borrower. It is the intent of the parties hereto in determining whether (a) a breach of a representation or
a covenant has occurred, or (b) there has occurred a Default or Event of Default, that any such breach, occurrence or event
with respect to any individual Borrower shall be deemed to be such a breach, occurrence or event with respect to all Borrowers
and that all individual Borrowers need not have been involved with such breach, occurrence or event in order for the same to be
deemed such a breach, occurrence or event with respect to every individual Borrower The obligations and liabilities of each individual
Borrower shall be joint and several.


 


14.22      JURY
WAIVER. BORROWER AND LENDER HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE
IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG BORROWER AND LENDER ARISING OUT OF OR
IN ANY WAY RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR ANY RELATIONSHIP BETWEEN BORROWER AND LENDER. THIS PROVISION
IS A MATERIAL INDUCEMENT TO LENDER TO PROVIDE THE LOAN DESCRIBED HEREIN AND IN THE OTHER LOAN DOCUMENTS.


 




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14.23      JURISDICTION
AND VENUE. BORROWER HEREBY AGREES THAT ALL ACTIONS OR PROCEEDINGS INITIATED BY BORROWER AND ARISING DIRECTLY OR INDIRECTLY
OUT OF THIS AGREEMENT SHALL BE LITIGATED IN THE CIRCUIT COURT OF WILLIAMSON COUNTY, TEXAS, OR THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS OR, IF LENDER INITIATE SUCH ACTION, ANY COURT IN WHICH LENDER SHALL INITIATE SUCH ACTION AND
WHICH HAS JURISDICTION. BORROWER AND LENDER HEREBY EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
PROCEEDING COMMENCED BY LENDER IN ANY OF SUCH COURTS, AND HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER
PROCESS OR PAPERS ISSUED THEREIN, AND AGREE THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO LENDER AT THE ADDRESS TO WHICH NOTICES ARE TO BE SENT PURSUANT TO THIS AGREEMENT. BORROWER
WAIVES ANY CLAIM THAT WILLIAMSON COUNTY, TEXAS OR THE WESTERN DISTRICT OF TEXAS IS AN INCONVENIENT FORUM OR AN IMPROPER FORUM BASED
ON LACK OF VENUE. SHOULD BORROWER OR LENDER, AS APPLICABLE, AFTER BEING SO SERVED, FAIL TO APPEAR OR ANSWER TO ANY SUMMONS, COMPLAINT,
PROCESS OR PAPERS SO SERVED WITHIN THE NUMBER OF DAYS PRESCRIBED BY LAW AFTER THE MAILING THEREOF, BORROWER OR LENDER, AS APPLICABLE,
SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED BY LENDER AGAINST BORROWER OR BY BORROWER AGAINST LENDER,
AS APPLICABLE, AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS.


 


14.24      Patriot
Act. Lender (for itself and not on behalf of any other party) hereby notifies the Borrower that, pursuant to the requirements
of the USA PATRIOT Act, Title III of Pub. L. 107-56, signed into law October 26, 2001 (“Act”), it is required
to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower
and other information that will allow Lender to identify the Borrower in accordance with the Act.


 


14.25      Right
of Setoff. Borrower grants to Lender a contractual security interest in, and hereby assigns, conveys, delivers, pledges, and
transfers to Lender all Borrower’s right, title and interest in and to, Borrower’s accounts with Lender (whether checking,
savings, or some other account), including without limitation all accounts held jointly with someone else and all accounts Borrower
may open in the future, excluding however all IRA and Keogh accounts, and all trust accounts for which the grant of a security
interest would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff
all Indebtedness against any and all such accounts.


 


14.26      Times.
All references of the time of performance of any obligation of the Borrowers or Guarantor contained herein or in any the Loan Documents
shall mean Eastern Standard Time, Orlando, Florida.


 


15.         REIT
Compliance. Borrower acknowledges that Lender A and Lender B are each a subsidiary and/or controlled by one or more real
estate investment trusts (each, a “REIT”). As a material inducement to making the Loans, Borrower shall cooperate
reasonably with any requests of either Lender A or Lender B relating to compliance with laws and regulations pertaining to REITs
and pertaining to federal or state taxation of REITs and affiliates of REITs. Such cooperation may include cooperation with audits
required under securities laws. Borrower shall not be required to waive any material right or incur any material cost or incur
any other material obligation in connection with such cooperation; except that Borrower and its Affiliates, at their cost, shall
(i) maintain and produce books and records in accordance with requests of Lender from time to time that are reasonably related
to compliance with such laws and regulations, and (ii) make available their regularly employed personnel from time to time, upon
reasonable advance notice, for cooperation with audits required under such laws and regulations.


 


REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;

SIGNATURE PAGE FOLLOWS


 




    	84



    	 



    

 


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


 


	BORROWER	
        WESTMINSTER – LCS GEORGETOWN

        LLC, an Iowa limited liability company

	 	 
	 	 	By: LCS Georgetown LLC, an Iowa limited
	 	 	liability company, its Managing Member
	 	 	 
	 	 	/s/ Joel D. Nelson
	 	 	Name: Joel D. Nelson
	 	 	Title: President and COO


 


[signatures continue on following
page]


 




    	 



    	 



    

 


	LENDER A	SENTIO GEORGETOWN, LLC,
	 	a Delaware limited liability company
	 	 
	 	By:	/s/ John Mark Ramsey
	 	Name:	John Mark Ramsey
	 	Title:	Authorized Signatory
	 	 
	LENDER B	SENTIO GEORGETOWN TRS, LLC,
	 	a Delaware limited liability company
	 	 
	 	By:	/s/ John Mark Ramsey
	 	Name:	John Mark Ramsey
	 	Title:	Authorized Signatory


 


[end of signatures]


 




    	2



    	 



    

 


EXHIBIT
A


 


LEGAL
DESCRIPTION


 


Lots 1, 2, 3, 4, 5 and 6, FINAL PLAT OF GEORGETOWN
VILLAGE OAKS, according to the map or plat thereof recorded in Document No. 2014080582, Official Records, Williamson County, Texas.


 


Common Address: 359 Village Commons Boulevard,
Georgetown, Texas 78626


 




    	A-1



    	 



    

 


EXHIBIT
B


 


PERMITTED
ENCUMBRANCES


 


[See Attached]


 


PERMITTED EXCEPTIONS


 


		1.	Any and all easements and dedications as set forth in play recorded in Document No. 2014080582, Official Public Records, Williamson
County, Texas



 


		2.	Public Utility and Drainage Easement to the City of Georgetown. Recorded as Document No. 2002080819, Official Public Records,
Williamson County, Texas



 


		3.	All lease, grants, exceptions or reservation of coal, lignite, oil, gas and other mineral, together with all rights, privileges,
and immunities relating thereto appearing in public records.



 



    	B-1



    	 



    

 


EXHIBIT
C


 


DISBURSEMENT
REQUEST


 


Disbursement No. _________


 


The undersigned, on behalf of Borrower, hereby
requests a Disbursement in the amount, and on the date, set forth below, pursuant to that certain Construction Loan Agreement (the
“Agreement”) dated _____________, 2015, by and between WESTMINSTER – LCS GEORGETOWN LLC, an Iowa limited
liability company (“Borrower”), SENTIO GEORGETOWN, LLC, a Delaware limited liability company (“Lender
A”) and SENTIO GEORGETOWN TRS, LLC, a Delaware limited liability company (“Lender B”) (collectively,
“Lender”). Capitalized terms used and not otherwise defined herein shall have the meanings set forth for them
in the Agreement.


 


REQUESTED AMOUNT: __________________________


 


REQUESTED DATE: ______________________________


 


Borrower hereby certifies
as follows (all terms herein having the meanings set forth in the Agreement):


 


(a)          At
the date hereof no suit or proceeding at law or in equity, and no investigation or proceeding of any governmental body, has been
instituted or, to the knowledge of Borrower, is threatened, which in either case would substantially affect the condition or business
operations of Borrower, except the following:


 


(b)          At
the date hereof, no default or event of default under the Agreement or under any of the other Loan Documents has occurred and is
continuing, and no event has occurred which, upon the service of notice and/or the lapse of time, would constitute an event of
default thereunder, except the following:


 


[insert “None”
if none]


 


(c)          The
representations and warranties set forth in Section 5 of the Agreement are hereby reaffirmed and restated, and
Borrower represents and warrants to Lender that the same are true, correct and complete on the date hereof, except as to the following:


 


[insert “None”
if none]


 


(d)          No
material adverse change has occurred in the financial condition or in the assets or liabilities of Borrower from those set forth
in the latest financial statements for each furnished to Lender, except the following:


 


[insert “None”
if none]


 




    	C-1



    	 



    

 


(e)          The
progress of construction of the Project is such that it can be completed on or before the Construction Completion Date specified
in the Agreement for the cost originally represented to Lender, except for the following:


 


[insert “No Change”
if no changes]


 


(f)          The
Loan, as of the date hereof, is In Balance as required by the Agreement, and the undisbursed proceeds of the Loan, including the
advance requested herein, are adequate and sufficient to pay for all labor, materials, equipment, work, services and supplies necessary
for the completion of the Project, including the installation of all fixtures and equipment required for the operation of the Project,
except for the following Project Cost increases:


 


[insert “No Change”
if no changes]


 


(g)          The
labor, materials, equipment, work, services and supplies described herein have been performed upon or furnished to the Project
in full accordance with the Plans, which have not been amended except as expressly permitted by the Agreement.


 


(h)          There
have been no changes in the costs of the Project from those set forth on the Sworn Construction Cost Statement, as amended by any
amendment thereto heretofore delivered by Borrower to Lender and approved by Lender, if such approval is required by the Construction
Loan Agreement.


 


(i)          All
bills for labor, materials, equipment, work, services and supplies furnished in connection with the Project, which could give rise
to a mechanic’s lien if unpaid, have been paid or will be paid out of the requested advance.


 


(j)          All
claims for mechanics’ liens which shall have arisen or could arise for labor, materials, equipment, work, services or supplies
furnished in connection with the Project through the last day of the period covered by the requested advance have been effectively
waived in writing, or will be effectively waived in writing when payment is made, and such written waivers shall be delivered to
Lender or its disbursing agent.


 


(k)          All
funds advanced under the Agreement to date have been utilized as specified in the Disbursement Requests pursuant to which the same
were advanced, exclusively to pay costs incurred for or in connection with acquiring, constructing and developing the Land and
the Project, and Borrower represents that no part of the Loan Proceeds have been paid for labor, materials, equipment, work, services
or supplies incorporated into or employed in connection with any project other than the Project. Borrower further represents that
all funds covered by this Disbursement Request are for payment for labor, materials, equipment, work, services or supplies furnished
solely in connection with said Project.


 


Borrower authorizes and requests
Lender to charge the total amount of this Disbursement Request against Borrower’s Loan account and to advance from the proceeds
of the Loan the funds hereby requested, and to make or authorize disbursement of said funds to or for the account of the persons
or firms and in amounts up to, but not exceeding, the amounts listed herein, subject to the requirements of and in accordance with
the procedures provided in the Agreement relating to the Loan. The advance made pursuant to this Disbursement Request is acknowledged
to be an accommodation to Borrower and is not a waiver by Lender of any defaults or events of default under the Loan Documents
or any other claims of Lender against Borrower, any Guarantor or the General Contractor.


 




    	C-2



    	 



    

 


The advances and disbursements
on the attached sheets are hereby approved and authorized.


 


	 	WESTMINSTER – LCS
	 	GEORGETOWN LLC, an Iowa limited
	 	liability company
	 	 
	 	 	By: LCS Georgetown LLC, an
	 	 	Iowa limited liability company, its
	 	 	Managing Member
	 	 	 
	 	 	 
	 	 	Name: Joel D. Nelson
	 	 	Title: President and COO


 


[ATTACH EXCEL SPREADSHEET]


 




    	C-3



    	 



    

 


EXHIBIT
D


 


LOAN
DOCUMENTS


 


The instruments and documents required to be
executed, acknowledged (if necessary for recording) and delivered to Lender and Lender, in each case in form and content satisfactory
to Lender and Lender, as conditions precedent to closing, are as follows:


 


		1.	Construction Loan Agreement



 


		2.	$40,912,000 Promissory Note



 


		3.	$1,000,000 Promissory Note



 


		4.	Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing



 


		5.	Assignment of Leases and Rents



 


		6.	Guaranty of Completion and Non-Recourse Carve-Outs



 


		7.	Affidavit of Completion



 


		8.	Non-Competition And Right Of First Negotiation Agreement



 


		9.	Option Agreement



 


		10.	Memorandum Of Option Agreement



 


		11.	Environmental Indemnity Agreement



 


		12.	Affidavit of Commencement



 


		13.	Assignment Of Construction Agreements



 


		14.	Contractor's Consent



 


		15.	Assignment Of Architectural Agreements And Plans And Specifications



 


		16.	Architect's Consent



 


		17.	Assignment Of Designer Agreements



 


		18.	Designer’s Consent



 


		19.	Assignment Of Engineer Agreements



 


		20.	Engineer’s Consent



 






    	D-1



    	 



    

 


		21.	Assignment Of Development Agreements



 


		22.	Developer’s Consent



 


		23.	Certificate of Engineer



 


		24.	Collateral Assignment and Subordination of Property Management Agreement



 


		25.	Consent To Collateral Assignment And Subordination Of Property Management Agreement



 


		26.	Option Agreement



 


		27.	Right of First Negotiation Agreement



 


		28.	UCC Financing Statement



 




    	D-2



    	 



    

 


EXHIBIT
E


 


APPROVED
BUDGET


 


	SOURCES	 	PROJECT COSTS
	 	 	 
	Loan Proceeds	$	 	 
	 	 	 	 
	Cash Equity	$	 	 
	 	 	 
	[Other Funding Sources]	 	[BE SURE TO LIST MAXIMUM CONTINGENCY]


 




    	E-1



    	 



    

 


EXHIBIT
F


 


DRAW
SCHEDULE


 




    	F-1



    	 



    

 


EXHIBIT
G


 


[FORM
OF] AFFIDAVIT OF COMMENCEMENT


 


	STATE OF TEXAS	§
	 	§
	COUNTY  OF  ____________	§


 


BEFORE ME, the undersigned
authority, on this day personally appeared _______________, the _________________ of [Borrower] and
[Name of affiant-Original Contractor or entity Original Contractor’s authorized representative] and each of
them, upon oath, after first being duly sworn, deposed and stated as follows:


 


1.           [Borrower]
is hereinafter referred to in this affidavit as “Owner” and Owner’s business address is: .
The Owner “and the undersigned, as its authorized representative have personal knowledge of the facts set forth herein, and
the undersigned affiant for Owner is competent to make this affidavit.


 


2.           [Name
of Individual Original Contractor or Entity Original Contractor] is hereinafter referred to in this affidavit as “Contractor.”
Contractor’s business address is: . The Contractor [or, if entity contractor, “the undersigned
representative of Contractor”] has personal knowledge of the facts set forth herein, and the undersigned for the
Contractor is competent to make this affidavit.


 


3.           The
name and address of each original contractor, in addition to Contractor, known to the Owner at this time, that is furnishing labor,
service, or materials for the construction of the improvements Owner hereby states to be as follows:


 


	 	 	Name of Original Contractor	 	Address
	 	 	 	 	 
	(1)	 	 	 	 
	(2)	 	 	 	 
	(3)	 	 	 	 


 


4.           The
improvement that is being constructed or repaired is generally described as follows:


 


[here insert general description
of improvement, the construction of which, or delivery of materials for which has commenced on the construction site]


 


5.           The
“Property” (herein so called) being improved is described as follows:


 


[here insert description, legally
sufficient for identification, of the property being improved]


 




    	G-1



    	 



    

 


6.           The
actual commencement of construction of improvements, or delivery of materials, to the land on which the improvements are to be
located and on which the materials are to be used, visible from an inspection of the Property, occurred on [Insert date].


 


	 	 
	 	Signature of Affiant [Borrower]
	 	 
	 	Printed name of Affiant [Borrower]
	 	Title [Title, if Entity] 	                        
	 	 
	 	 
	 	Signature of Affiant [Contractor]
	 	 
	 	Printed name of Affiant [Contractor]
	 	Title [Title, if Entity] ______________________


 


SUBSCRIBED AND SWORN TO
before me on this ___ day of _____________, 20____.


 


	[Seal]	 
	 	Notary Public in and for the State of Texas
	 	 
	 	My Commission Expires:  	 




 




    	G-2



    	 



    

 


	After Recording Return to:	 
	 	 
	 	 
	 	 


 




    	G-3



    	 



    

 


EXHIBIT
H


 


AFFIDAVIT
OF COMPLETION


 


This Affidavit of Completion
is executed and filed in compliance with Section 53.106 of the Texas Property Code.


 


1.          The
name and address of the owner (“Owner”) of the real property (the “Real Property”)
described below are:


 


	 	________________________________
	 	________________________________
	 	________________________________


 


2.          The
name and address of the original contractor constructing the improvements (“Improvements”) described
below on the Real Property are:


 


	 	________________________________
	 	________________________________
	 	________________________________


 


3.          The
Real Property on which the Improvements are located is described on Exhibit A hereto;


 


4.          A
description of the Improvements furnished under the original contract with the original contractor named above is as follows:


 


	 	________________________________
	 	________________________________
	 	________________________________


 


5.          The
Improvements constructed under such original contract have been completed, and the date of completion was ___________; and


 


6.          A
claimant may not have a lien on retained funds unless the claimant files an affidavit claiming the lien not later than the 30th
day after the date of completion as set forth above.


 


	 	 
	 	By:	 
	 	 	“Owner”


 




    	H-1



    	 



    

 


County of ______________________


 


Subscribed and sworn to (or affirmed) before
me on


 


This _____ day of ____________________, 2007,
by __________________________________


 


Personally known to me or proved to me on the
basis of satisfactory evidence to be the person(s) who appeared before me.


 


	(seal)	Signature ___________________________


 




    	H-2



    	 



    

 


EXHIBIT
I


 


INSURANCE REQUIREMENTS


 


		1.	Property Insurance. For so long as any of the Debt is outstanding, Borrower shall continuously
maintain property insurance in accordance with the following provisions:



 


		(a)	Special Perils Form/All Risk Property Coverage. Borrower shall maintain property insurance
with respect to the Improvements, Fixtures and Personal Property insuring against any peril now or hereafter included within the
classification “All Risks of Physical Loss,” including, without limitation, losses from fire, lightning, building collapse,
debris removal, windstorm, hail, explosion, smoke, aircraft and vehicle damage, riot, vandalism and malicious mischief, falling
objects, impact of vehicles and aircraft, weight of snow, ice or sleet, collapse, mudslide, sinkhole, subsidence, tsunami, water
damage and sprinkler leakage, in amounts at all times sufficient to prevent Borrower or Lender from becoming a co-insurer within
the terms of the applicable law, but in any event such insurance shall be maintained in an amount equal to the full replacement
cost of the Improvements, Fixtures and Personal Property. The term “replacement cost” means the actual replacement
cost (without taking into account any depreciation and exclusive of excavations, footings and foundation, landscaping and paving)
determined annually by an insurer, a recognized independent insurance agent or broker or an independent appraiser selected and
paid by Borrower. The policy shall include an agreed amount endorsement or a waiver of the coinsurance requirement and an inflation
guard endorsement.



 


		(b)	Flood and Mudslide. Flood and mudslide insurance in amount equal to the lesser of (1) the
amount required for one hundred percent (100%) of the full replacement value of the Improvements, Fixtures and Personal Property,
with co-insurance clause if any, only as acceptable to Lender, or (2) the maximum limit of coverage available with respect
to the Mortgaged Property under the Federal Flood Insurance Program; provided that such flood and mudslide insurance shall not
be required if Borrower shall provide Lender with evidence satisfactory to Lender that the Mortgaged Property is not situated within
an area identified by the Secretary of Housing and Urban Development (or any other appropriate governmental department, agency,
bureau, board, or instrumentality) as an area having special flood or mudslide hazard, and that no flood or mudslide insurance
is required on the Mortgaged Property by any regulations under which the Lender is governed;



 


		(c)	Boiler and Machinery Coverage. Borrower shall maintain broad form, replacement cost basis
boiler and machinery insurance (without exclusion for explosion) covering all boilers or other pressure vessels, machinery, equipment
and air conditioning or heating units located in, on or about the Mortgaged Property and insurance against physical loss, rental
loss, extra expense, expediting loss and loss of occupancy or use arising from any breakdown in such amounts as are generally required
by institutional lenders for properties comparable to the Mortgaged Property.



 




    	I-1



    	 



    

 


		(d)	Rent Loss/Business Interruption/Extra Expense. Borrower shall maintain business interruption
and/or loss of “rental income” insurance in an amount sufficient to avoid any co-insurance penalty and to provide proceeds
in an amount that will cover a period of not less than twelve (12) months from the date of casualty or loss, the term “rental
income” to mean the sum of (i) the total then ascertainable rents escalations and all other recurring sums payable under
the leases affecting the subject property and (ii) the total ascertainable amount of all other amounts to be received by Borrower
from third parties which are the legal obligation of the tenants, reduced to the extent such amounts would not be received because
of operating expenses not incurred during a period of non-occupancy to that portion of the subject property then not being occupied.
The policy shall include an agreed amount endorsement or a waiver of the coinsurance requirement.



 


		(e)	Building Ordinance or Law. Borrower shall maintain building ordinance coverage in amount
of at least 25% of the building coverage limit.



 


		(f)	Builder’s Risk. Borrower shall maintain at all times during which structural construction,
repair or alterations are being made with respect to the Mortgaged Property (1) owner’s contingent or protective liability
insurance covering claims not covered by or under the terms or provisions of the commercial general liability insurance policy,
and (2) the insurance provided for in subsection (a) above written on a builder’s risk completed
value form (a) on a non-reporting basis, (b) against all risks of physical loss, including earthquake and flood, (c) including
permission to test and occupy the subject property, and (d) with an agreed amount endorsement (including soft costs), specifications,
blueprints/models, demolition, increased cost of construction and rental interruption for delayed opening as pertinent, waiving
co-insurance provisions. Such builder’s risk insurance shall protect the interests of Borrower, General Contractor, and all
Subcontractors.



 


		(g)	Terrorism Coverage. Upon Lender’s request, in the event that such coverage with respect
to terrorist acts is not included as part of the insurance policy required by subsection (a) above, coverage
against loss or damage by terrorist acts in an amount equal to one hundred percent (100%) of the full replacement value of the
Improvements, Fixtures and Personal Property, with a co-insurance clause, if any, only as acceptable to Lender.



 


		2.	Liability Insurance. For so long as any of the Debt is outstanding, Borrower shall continuously
maintain liability insurance in accordance with the following provisions:



 






    	I-2



    	 



    

 





		(a)	Commercial General Liability Insurance. Borrower shall maintain commercial general liability
insurance, including bodily injury and property damage liability insurance and completed operations insurance against any and all
claims, including all legal liability to the extent insurable and imposed upon Lender and all court costs and attorneys’
fees and expenses, arising out of or connected with the possession, use, leasing, operation, maintenance or condition of the subject
property in amounts not less than $2,000,000 per occurrence per year and an excess/umbrella liability coverage in an amount not
less than $10,000,000. This insurance must stand on its own with no shared participation or proration and be on a following form
basis.



 


		(b)	Liquor Liability/Dram Shop. If alcoholic beverages are sold or served at the Mortgaged Property,
by Borrower or tenants, Borrower shall maintain dram shop, host liquor liability of liquor liability coverage of at least Ten Million
Dollars ($10,000,000) per occurrence and annual aggregate. The combination of primary and umbrella/excess liability policies can
be obtained to satisfy these liability limits requirements.



 


		(c)	Automobile. Borrower shall maintain automobile liability insurance if over the road vehicles,
whether owned, hired or non-owned, are operated in conjunction with the Mortgaged Property. The combination of the primary automobile
liability and applicable umbrella/excess liability must equal a minimum of Ten Million Dollars ($10,000,000) combined single limit.



 


		(d)	Workers’ Compensation and Employer’s Liability Insurance. Borrower shall maintain
workers’ compensation and employers’ liability insurance with respect to any work on or about the Mortgaged Property.
Liability limits shall be a minimum of:



 


		(i)	Workers Compensation – Statutory as required by state
law



 


		(ii)	Employers’ Liability –



 


	Bodily injury by accident	$1,000,000 each accident
	Bodily injury by disease	$1,000,000 each employee
	Bodily injury by disease	$1,000,000 policy limit


 


		3.	Additional Insurance. Borrower shall maintain such other insurance with respect to Borrower
and the subject property against loss of damage of the kinds from time to time required by Lender. Without limitation to the foregoing,
Borrower shall cause each Contractor to maintain General Liability insurance, including without limitation, products and completed
operations and auto liability insurance, with limits of no less than $10,000,000 per occurrence and in the aggregate through primary
and umbrella liability policies. Borrower shall also ensure that all subcontractors maintain similar coverage with limits appropriate
to the hazard associated with their respective work on the Mortgaged Property (as defined in the Loan Agreement). All parties engaged
in work on the Mortgaged Property shall maintain statutory Workers Compensation and employers liability insurance with limits of
at least $1,000,000.



 




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EXHIBIT
J


 


borrower
AND GUARANTOR quarterly compliance certificate


 


This Quarterly Compliance
Certificate (the “Certificate”) is delivered by __________________________ (“Borrower”) and ________________________
(“Guarantor”) to _____________________________ (“Lender A”) and _____________________________
(“Lender B”) (collectively, “Lender”) pursuant to Section 8.7(d) of the Construction
Loan Agreement, dated ____________, 2015, between Lender and Borrower (the “Agreement”). All capitalized terms
used in this Certificate, if not otherwise defined herein, have the meanings ascribed to such terms in the Agreement.


 


The undersigned. On behalf
of Borrower and Guarantor, certifies to Lender as follows:


 


		1.	The undersigned is the duly elected ___________________ [title] of Borrower and the duly
elected ______________________ [title] of Guarantor, and, in those capacities, is duly authorized by Borrower and Guarantor
to make the certifications in this Certificate.



 


		2.	Attached hereto are the unaudited balance sheet for Borrower and the statement of profit and loss
for Borrower and for Borrower’s operations in connection with the Property for the most recently concluded fiscal quarter,
together with supporting schedules. The attached were (i) prepared in accordance with GAAP on a consistent basis, (ii) fairly present
Borrower’s financial condition, (iii) show all material liabilities of Borrower, direct and contingent, (iv) fairly present
the results of Borrower’s operations, and (v) disclose the existence of any hedge and/or off-balance sheet transactions.



 


		3.	As of the end of the most recently concluded fiscal quarter, and as of the date hereof, [(if
applicable) except as disclosed in the exception schedule attached hereto,] the Borrower and the Property were and are in compliance
with all requirements of the Loan Documents applicable thereto, no Default or Event of Default has occurred and is continuing,
and no conditions, circumstances, or occurrences exist that would result in, or would, with the passage of time or giving of notice
(or both), reasonably be expected to result in, a Default or Event of Default.



 


		4.	[Applicable after the Stabilization Date]. The Debt Service Coverage Ratio, as of the end
of the most recently concluded fiscal quarter, was ____________. Attached hereto is an accurate and complete calculation of the
foregoing Debt Service Coverage Ratio and true and accurate copies of supporting information pertaining to the same.



 


		5.	Attached hereto are the unaudited balance sheet for Guarantor and the statement of profit and loss
for Guarantor and for Guarantor’s operations for the most recently concluded fiscal quarter, together with supporting schedules.
The attached were (i) prepared in accordance with GAAP on a consistent basis, (ii) fairly present Guarantor’s financial condition,
(iii) show all material liabilities of Guarantor, direct and contingent, (iv) fairly present the results of Guarantor’s operations,
and (v) disclose the existence of any hedge and/or off-balance sheet transactions.



 




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		6.	As of the end of the most recently concluded fiscal quarter, [(if applicable) except as disclosed
in the exception schedule attached hereto,] Guarantor was in compliance with all financial covenants in the Guaranty. As of
the date hereof, [(if applicable) except as disclosed in the exception schedule attached hereto,] no material adverse change
in the financial condition of Guarantor has occurred . As of the end of the most recently concluded quarter, and as of the date
hereof, [(if applicable) except as disclosed in the exception schedule attached hereto,] no Default or Event of Default
under the Guaranty has occurred and is continuing, and no conditions, circumstances, or occurrences exist that would result in,
or would, with the passage of time or giving of notice (or both), reasonably be expected to result in, a Default or Event of Default
under the Guaranty.



 


		7.	As of the end of the most recent fiscal quarter, Guarantor’s Net Worth was _______________________
and Guarantor’s Liquid Assets were _______________________.



 


	Date:  _____________________________	 
	 	 
	Respectfully submitted:	 
	 	 
	 	 
	 	 
	Name:	 
	 	 
	Title:	 
	 	 
	Attachments [List]:	 


 




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