# EDGAR Filing Document

**Accession Number:** 0001788427
**File Stem:** 0001104659-26-073407
**Filing Date:** 2026-6
**Character Count:** 271684
**Document Hash:** 83a88fffeb59d76bf4e12d673d72c473
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001104659-26-073407.hdr.sgml**: 20260612

**ACCESSION NUMBER**: 0001104659-26-073407

**CONFORMED SUBMISSION TYPE**: 1-K

**PUBLIC DOCUMENT COUNT**: 5

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260612

**DATE AS OF CHANGE**: 20260612

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** GK Investment Property Holdings II LLC
- **CENTRAL INDEX KEY:** 0001788427
- **STANDARD INDUSTRIAL CLASSIFICATION:** REAL ESTATE [6500]
- **ORGANIZATION NAME:** 05 Real Estate & Construction
- **EIN:** 843013125
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 1-K
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 24R-00292
- **FILM NUMBER:** 261086400

**BUSINESS ADDRESS:**
- **STREET 1:** 257 EAST MAIN STREET
- **STREET 2:** SUITE 200
- **CITY:** BARRINGTON
- **STATE:** IL
- **ZIP:** 60010
- **BUSINESS PHONE:** 8472779930

**MAIL ADDRESS:**
- **STREET 1:** 257 EAST MAIN STREET
- **STREET 2:** SUITE 200
- **CITY:** BARRINGTON
- **STATE:** IL
- **ZIP:** 60010

## Part

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 1-K**

**ANNUAL REPORT PURSUANT TO REGULATION A OF THE SECURITIES ACT OF 1933**

**For the fiscal year ended: <u>December 31, 2025</u>**

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| |
|:---|
| **GK Investment Property Holdings II, LLC** |
| (Exact name of issuer as specified in its charter) |

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| | |
|:---|:---|
| **Delaware** | **84-3013125** |
| (State or other jurisdiction of incorporation or<br> organization) | (I.R.S. Employer Identification No.) |

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**257 East Main Street, Suite 200**

**<u>Barrington, Illinois 60010</u>**

(Full mailing address of principal executive offices)

**<u>(847) 277-9930</u>**

(Issuer's telephone number, including area code)

**STATEMENTS REGARDING FORWARD-LOOKING INFORMATION AND FIGURES**

This Annual Report on Form 1-K, or the Annual Report, of GK Investment Property Holdings II, LLC, a Delaware limited liability company, contains certain forward-looking statements that are subject to various risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "potential," "intend," "expect," "outlook," "seek," "anticipate," "estimate," "approximately," "believe," "could," "project," "predict," or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain financial and operating projections or state other forward-looking information. Our ability to predict results or the actual effect of future events, actions, plans, or strategies is inherently uncertain. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth or anticipated in our forward-looking statements.

When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this report. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this report. The matters summarized below and elsewhere in this report could cause our actual results and performance to differ materially from those set forth or anticipated in forward-looking statements. Accordingly, we cannot guarantee future results or performance. Furthermore, except as required by law, we are under no duty to, and we do not intend to, update any of our forward-looking statements after the date of this report, whether as a result of new information, future events or otherwise.

**Item 1. Business**

*Unless the context otherwise requires or indicates, references in this annual report to "us," "we," "our" or "our Company" refer to GK Investment Property Holdings II, LLC, a Delaware limited liability company.*

**General**

GK Investment Property Holdings II, LLC is a Delaware limited liability company formed on July 11, 2019 in order to invest in, lend on and operate commercial rental properties, lease such properties to multiple tenants, and make such other real estate related investments as are consistent with its investment objectives and that GK Development, Inc. dba GK Real Estate (referred to herein as "GK Real Estate"), our manager, deems appropriate. As of the date of this Annual Report (December 31, 2025), our company has made three loans: (1) The Ridgmar Loan, (2) the DeMarcay Loan, (3) the GK Festival Loan (as defined and described below). The Company also owns a 37.21% preferred interest in an affiliated rental real estate property Station Plaza Self-Storage (as defined and described below).

Since 1995, GK Real Estate and its management team has had experience successfully acquiring, redeveloping, and managing a diversified portfolio of office, retail, and multifamily real estate properties. GK Real Estate controls a portfolio of real estate assets currently valued at over $500 million which represents 5.4 million square feet of office, multifamily and commercial space throughout the U.S. We benefit from GK Real Estate's real estate operating and leasing skills, including releasing, redeveloping, renovating, refinancing, repositioning, and selling.

We do not have any employees. GK Real Estate's management team is comprised of operation managers who are responsible for the day-to-day operation of GK Real Estate and our company.

We filed an offering statement on Form 1-A with the United States Securities and Exchange Commission, or the SEC, on September 17, 2019, which offering statement was qualified by the SEC on January 28, 2020 and requalified by the SEC on March 12, 2021 and March 17, 2022 (the "Offering Statement"). Pursuant to the Offering Statement, we offered a maximum of $50,000,000 of the Company's 7% bonds (the "Bonds"). Proceeds from the sale of the Bonds were used to acquire commercial rental properties and interests therein in our target asset class. Our offering concluded on January 27, 2023, and we had sold $16,538,000 in Bonds as of the conclusion of the offering. As of December 31, 2025, $10,793,000 of Bonds remained outstanding.

On January 28, 2020, GK Investment Property Holdings II, LLC, commenced active operations. Since such time, we have applied proceeds from our offering of Bonds to investment in properties and other real estate assets and the payment or reimbursement of selling commissions and other fees, expenses and uses as described throughout this Annual Report. As of the date of this Annual Report, our offering of Bonds has terminated in accordance with its terms and we do not have any immediate plans to raise additional capital and the realization of our investments in our other assets. We are actively seeking reinvestment of our cash on hand and the proceeds of the sale of the beneficial interests in the Trust (defined below).

We have made reserve allocations as necessary to aid our objective of preserving capital for our investors by supporting the maintenance and viability of properties we acquire in the future. If reserves and any other available income become insufficient to cover our operating expenses and liabilities, it may be necessary to obtain additional funds by borrowing, refinancing properties or liquidating our investment in one or more properties. There is no assurance that such funds will be available, or if available, that the terms will be acceptable to us. Additionally, our ability to borrow additional funds will be limited by the restrictions placed on our and our subsidiaries' borrowing activities by our Indenture.

On May 12, 2020, our Company formed RF Grocery, LLC ("RF Grocery"), an Illinois limited liability company, for the purpose of acquiring a rental property leased to a single tenant, Fresh Thyme Farmers Market, located at 7501 North Avenue, in River Forest Illinois, or Fresh Thyme Farmers Market. On May 27, 2020 our Company, through RF Grocery, entered into an assignment of Purchase and Sale Agreement, as amended, to acquire Fresh Thyme Farmers Market. The contract purchase price for Fresh Thyme Farmers Market was $8,050,000, and total acquisition cost was $8,214,213 including financing fees paid to the lender and other closing costs. Of the total acquisition cost, $5,190,000 was funded by a first mortgage loan secured by Fresh Thyme Farmers Market. Our company funded $1,824,213 of the total purchase price with proceeds raised from the offering of Bonds through a capital contribution to RF Grocery. The remaining $1,200,000 of the total purchase price was funded through an investment by Garo Kholamian through the Garo Kholamian Revocable Trust (the "Preferred Member"), which received preferred equity in RF Grocery in exchange for the investment. On December 17, 2020, RF Grocery redeemed and retired 100% of the Preferred Member's equity for $1,308,000, constituting a total return of approximately 9% for the Preferred Member, comprised of a 6% minimum preferred return and a 3% capital premium in addition to the return of the Preferred Member's contributed capital. RF Grocery's operating agreement was amended following the redemption, and the company became the sole member of RF Grocery.

On July 23, 2021, pursuant to a Contribution Agreement, dated as of June 25, 2021 (the "Contribution Agreement"), the Company, through RF Grocery, a wholly owned subsidiary of the Company, contributed its fee simple interest in the Fresh Thyme Farmers Market property located at 7501 West North Avenue in River Forest, IL to GK DST - River Forest Grocery (the "Trust"), in exchange for 100% of the initial beneficial interests in the Trust (the "Unsold Interests") for an aggregate value for Fresh Thyme Farmers Market of $10,778,490 (the "Transaction Value"). The Transaction Value was comprised of an equity portion of $5,588,490 (the "Equity Value"), which represents the Company's capital contribution to the Trust, in addition to the principal of the loan secured by Property in the amount of $5,190,000 which was assumed by the Trust. The Trust extended the term of the mortgage loan to July 10, 2028 in connection with its assumption of the loan, among other things, pursuant to that certain Loan Modification Agreement and Amended and Restated Note, each dated as of July 21, 2021. The Company recognized a gain of $2,299,522 related to the sale of Fresh Thyme Farmers Market in exchange for beneficial interests in the Trust.

The Trust received additional capital equal to the Equity Value, in addition to other fees and expenses incurred by the Trust, in order to redeem the Unsold Interests held by the Company. Pursuant to the terms of the Trust Agreement of the Trust, dated as of June 10, 2021 (the "Trust Agreement"), each sale of the Unsold Interests will reduce the Company's ownership in the Trust by a proportionate amount, and the proceeds from the Trust's capital raise will be used by the signatory trustee of the Trust, in part, to redeem the beneficial interests held by the Company. The Company will remain a beneficial interest holder of the Trust and be bound by the terms of the Trust Agreement until the Trust redeems all of the Unsold Interests held by the Company. As of December 31, 2025, the Trust has redeemed 100.00% of the Unsold Interests and the Company no longer owns any interest in RF Grocery.

*Ridgmar Loan*

The Company entered into a senior secured participatory mortgage loan ("Note 1") effective July 30, 2021, in favor of GK Preferred Income II (Ridgmar), LLC ("GKPI II") and 1551 Kingsbury Partners SPE, LLC ("Kingsbury" and, together with GKPI II, the "Ridgmar Borrowers") (the "Ridgmar Loan"). The Company and the Ridgmar Borrowers are affiliates of one another, and the Ridgmar Loan is a related party transaction. GK Development, Inc. ("GK Real Estate") is the manager of the Company and the Ridgmar Borrowers. Mr. Garo Kholamian is the sole director and shareholder of GK Real Estate and effectively manages the Company and the Ridgmar Borrowers. Mr. Garo Kholamian has a direct and material interest in the transaction described above.

Pursuant to the terms of the Note 1, the Company initially advanced $3,500,000 to the Ridgmar Borrowers for a term of three (3) months, originally maturing on October 31, 2021. Note 1 is collateralized by a senior security interest on the rental property, Ridgmar Mall. On October 15, 2021, the Company advanced an additional $200,000 to the Ridgmar Borrowers and simultaneously extended the maturity of Note 1 until November 30, 2021. On December 1, 2021, the Company advanced an additional $2,500,000 to the Ridgmar Borrowers increasing the balance of the Note to $6,200,000 and extended the maturity of Note 1 until December 31, 2021. The note bore interest at 20% per annum, payable 12% monthly and 8% deferred and due upon maturity of the note.

On January 1, 2022, the Company was repaid $100,000 of the outstanding principal balance of Note 1 and further extended the maturity of Note 1 until December 31, 2022, when remaining principal and any accrued and unpaid interest is due in full. The interest rate was reduced to 8% per annum, with principal being repaid during the term of the extension based on a 25-year amortization rate. On September 1, 2022, the Note 1 maturity was further extended until December 31, 2023.

On December 31, 2023, the Note 1 maturity was further extended until December 31, 2024. Note 1 bears interest at 12.22% paid currently until maturity. The current rate was charged retroactively to January 1, 2022.

During the year ended December 31, 2024, the Company advanced an additional $625,000 proceeds to the Ridgmar Borrowers and also received $44,438 in repayments from the Ridgmar Borrowers. As of December 31, 2024, the Note 1 balance was $6,816,729. On December 31, 2024, the Note 1 maturity was further extended until December 31, 2025.

During the year ended December 31, 2025, the Company advanced an additional $125,000 proceeds to the Ridgmar Borrowers and also received $55,045 in repayments from the Ridgmar Borrowers. As of December 31, 2025, the Note 1 balance was $6,886,685, which does not include $769,350 of accretive interest which is due at maturity. On January 1, 2026, the Note 1 maturity was further extended until December 31, 2026.

Interest income for the year ended December 31, 2025 was $1,239,768, which includes $523,956 of interest receivable as of December 31, 2025.

In the case of any event of default under Note 1, the Company will be entitled to an additional five percent (5%) interest on Note 1 until such event of default is cured. Note 1 is secured by a first priority lien on the Ridgmar Borrowers' commercial property, the Ridgmar regional mall ("Ridgmar Mall") located in Ft. Worth, Texas.

Concurrently with the original making of Note 1, GK Investment Holdings, LLC ("GKIH") and GK Secured Income V, LLC ("GKSI V") loaned $3,700,000 (subsequently reduced to $1,100,000) and $750,000, respectively, to the Ridgmar Borrowers on terms substantially similar to the terms of Note 1 for an aggregate loan amount of $7,950,000 (the "Aggregate Ridgmar Loan"). On July 30, 2021, the Company entered into an intercreditor agreement (the "Intercreditor Agreement"), dated as of July 30, 2021, by and among the Company, GKIH and GKSI V (collectively, the "Lenders") in order to establish and acknowledge the *pari passu* ranking of the Lenders' respective loans to the Ridgmar Borrowers and certain other matters. Pursuant to the terms of the Intercreditor Agreement, the Lenders acknowledge that the security interest held by each of the Lenders ranks equally and ratably without priority over one another and that any and all payments under the respective loans as between all Lenders will be paid equally and ratably. The Intercreditor Agreement has been subsequently amended to reflect the changes in Note 1.

As previously disclosed, the Ridgmar Borrowers acquired Ridgmar Mall as tenants in common in 2013. As a result of the continued decline of retail sales and consumer traffic at regional malls, the value of Ridgmar Mall was subsequently impaired, and ultimately the Borrowers' senior secured lender and mezzanine lender (together, the "Prior Lenders") foreclosed on the property. The Prior Lenders offered the Borrowers a discounted payoff of $7,950,000 to retire the existing debt on Ridgmar Mall, comprised of a $26,600,000 CMBS mortgage loan and a $10,000,000 mezzanine loan. On July 30, 2021, the Ridgmar Borrowers used the proceeds of the Aggregate Loan to fund the discounted payoff paid to the Prior Lenders. The Ridgmar Borrowers intend to repay Note 1 and corresponding GKIH and GKSI V loans with proceeds of future capital raises.

The Company, the Ridgmar Borrowers, GKIH and GKSI V are each affiliates of one another, and Note 1 and each of the GKIH and GKSI V loans are related party transactions. GK Development, Inc. ("GK Real Estate") is the manager of each of the Company, the Ridgmar Borrowers, GKIH and GKSI V. Mr. Garo Kholamian is the sole director and shareholder of GK Real Estate and effectively manages the Company, the Ridgmar Borrowers, GKIH and GKSI V. Mr. Garo Kholamian has a direct and material interest in the transactions described above.

The Ridgmar Loan was paid in full, including all principal ($6,883,050), accrued current interest ($10,270) and accretive interest due ($769,350), on January 30, 2026.

*Station Plaza Loan*

The Company has entered into a note receivable and loan agreement ("Note 2") effective January 10, 2024, in favor of Station Plaza Self-Storage, LLC ("Station Plaza") (the "Station Plaza Loan"). The Company and Station Plaza are affiliates of one another, and as such, Note 2 is a related party transaction. GK Development, Inc. ("GK Real Estate") is the manager of the Company and Station Plaza. Mr. Garo Kholamian is the sole director and shareholder of GK Real Estate and effectively manages the Company and the Borrower. Mr. Garo Kholamian has a direct and material interest in the transaction described above.

Pursuant to the terms of Note 2, the Company advanced $2,000,000 to Station Plaza for a term of twelve (12) months, maturing on December 31, 2024. Note 2 is secured by a certain Collateral Assignment, Pledge and Security Agreement with Station Plaza. The interest rate is 12.22% per annum and is non-amortizing with only interest due on a monthly basis. The entire principal and any accrued interest are due at maturity. On December 31, 2024, the Note 2 maturity was further extended until December 31, 2025.

In the case of any event of default under Note 2, the Company will be entitled to an additional five percent (5%) interest on Note 2 until such event of default is cured.

On May 1, 2025, the Note 2 balance of $2,000,000 was converted into a 37.21% preferred equity investment with SPSS Developer, LLC ("SPSS Developer"), the parent company of the original borrower, Station Plaza Self-Storage LLC (the "Preferred Equity Conversion"). SPSS Developer and the Company are affiliates of one another, and as such, they are related parties. The preferred equity position requires SPSS Developer to pay a 12.22% preferred capital return to the Company.

Interest income for the year ended December 31, 2025 was $81,467, including $0 of which was unpaid and is included in interest receivable as of December 31, 2025.

*DeMarcay Development Mezz Loan*

The Company has entered into a note receivable and non-revolving Line of Credit loan agreement ("Note 3") effective April 29, 2024, in favor of DeMarcay Development Mezz Partners, LLC ("DeMarcay") (the "DeMarcay Loan"). The Company and DeMarcay are affiliates of one another, and as such, Note 3 is a related party transaction. GK Development, Inc. ("GK Real Estate") is the manager of the Company and DeMarcay. Mr. Garo Kholamian is the sole director and shareholder of GK Real Estate and effectively manages the Company and the Borrower. Mr. Garo Kholamian has a direct and material interest in the transaction described above.

Pursuant to the terms of Note 3, the Company advanced $523,774 to DeMarcay for a term of eighteen (18) months, maturing on December 31, 2025. Note 3 is unsecured. The interest rate is 12.22% per annum and is non-amortizing with only interest due on a monthly basis. The entire principal and any accrued interest are due at maturity.

In the case of any event of default under Note 3, the Company will be entitled to an additional five percent (5%) interest on Note 3 until such event of default is cured.

Interest income for the year ended December 31, 2025 was $64,894, including $5,512 of which was unpaid and is included in interest receivable as of December 31, 2025.

On January 1, 2026, the Note 3 maturity was extended until December 31, 2026.

*GK Festival Loan*

The Company has entered into a note receivable and loan agreement ("Note 4") effective May 8, 2024, in favor of GK Festival, LLC ("Festival") (the "GK Festival Loan"). The Company and Festival are affiliates of one another, and as such, Note 4 is a related party transaction. GK Development, Inc. ("GK Real Estate") is the manager of the Company and the Borrower. Mr. Garo Kholamian is the sole director and shareholder of GK Real Estate and effectively manages the Company and the Borrower. Mr. Garo Kholamian has a direct and material interest in the transaction described above.

Pursuant to the terms of Note 4, the Company initially advanced $3,751,000 to Festival for a term of twenty-one months (21) months, maturing on June 30, 2026. Note 4 is secured by a certain Mortgage and Security Agreement with Festival. The interest rate is 12.22% per annum and is non-amortizing with only interest due on a monthly basis. The entire principal and any accrued interest are due at maturity. The Company advanced an additional $25,000 on December 11, 2024, to Festival. The total amount the Company advanced to Festival of $3,776,000 is represented in a substitute promissory note dated December 11, 2024.

On February 21, 2025, Festival refinanced its rental property and paid down $2,800,000 of the principal amount owed to the Company for Note 4. The outstanding balance of Note 4 was reduced to $976,000.

In the case of any event of default under Note 4, the Company will be entitled to an additional five percent (5%) interest on Note 4 until such event of default is cured.

Interest income for the year ended December 31, 2025 was $170,211, including $10,270 of which was unpaid and is included in interest receivable as of December 31, 2025.

*Investment in Rental Real Estate*

As mentioned above in the Station Plaza loan description, the preferred equity investment in SPSS Developer, LLC, the parent company of Station Plaza Self Storage, LLC, of $2,000,000 requires SPSS Developer to pay a 12.22% preferred capital return to the Company. Of the aggregate preferred capital return, seven percent (7%) is paid monthly if there is available cash. The remaining portion of the preferred capital return is expected to accrue and remain unpaid until the preferred capital contribution is repaid in full.

The Company earned $164,049 in preferred capital return for the year ended December 31, 2025. As of December 31, 2025, the Company was owed unpaid preferred capital return of $80,826.

**Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations**

**Results of Operations**

We operate on a calendar year. Set forth below is a discussion of our operating results for 2025 and 2024, from January 1, 2025 to December 31, 2025 and January 1, 2024 to December 31, 2024, respectively.

As of December 31, 2025, our assets consisted of: (i) the investment in SPSS Developer, LLC, the parent company of Station Plaza Self-Storage; (ii) the Ridgmar Loan; (iii) the DeMarcay Loan; (iv) the GK Festival Loan and (v) cash and cash equivalents.

For the year ended December 31, 2025, we had no revenues from operations. Operating costs for the same period, excluding interest expense of $1,479,760, amounted to $95,038. This resulted in an operating loss of $95,038. Net income for the year amounted to $190,410 after taking into account $164,049 of preferred return income from the investment in SPSS Developer, LLC, $10,071 of investment income from our ownership of beneficial interests in the Trust, $1,587,699 in interest income from the various Loans and interest earned on short term investments, such as US Treasuries, bank Certificates of Deposits and general money market interest, and lastly $3,389 in miscellaneous income. The Company incurred $1,479,760 in interest expense due to its bondholders and an affiliated lender GK Preferred Income I (Lakeview Square), LLC.

For the year ended December 31, 2024, we had no revenues from operations. Operating costs for the same period, excluding interest expense of $1,797,036, amounted to $116,830. This resulted in an operating loss of $116,830. Net loss for the year amounted to $404,244 after taking into account $75,613 of investment income from our ownership of beneficial interests in the Trust, and $1,462,675 in interest income from the various Loans and interest earned on short term investments, such as US Treasuries, bank Certificates of Deposits and general money market interest. The Company also recognized $28,666 in income tax expense. The Company incurred $1,797,036 in interest expense due to its bondholders.

**Liquidity and Capital Resources**

As of December 31, 2025, we had cash and cash equivalents on hand of $249,129 and restricted cash (funded reserves) of $136,888. The funded reserves are comprised of a bond service reserve of $136,888, which is required pursuant to the Indenture which required that 7% of the gross proceeds from the offering be placed into a reserve account held by the bond trustee for the purpose of paying our bond service obligations.

As of December 31, 2025 we had sold $16,538,000 in gross proceeds of our Bonds, of which $10,793,000 was outstanding. We retired $5,374,000 of our bonds during the year ended December 31, 2025. The Company targets asset dispositions to meet our obligations at maturity. Until our Bonds mature, our principal demands for cash will be for acquisition costs, including the purchase price of any properties, loans, and securities we acquire, improvement costs, the payment of our operating and administrative expenses, and all continuing debt service obligations, including our bond service obligations. Generally, we will fund our acquisitions from the net proceeds of our offering of the Bonds. We intend to acquire our assets with cash and mortgage or other debt, but we also may acquire assets free and clear of permanent mortgage or other indebtedness by paying the entire purchase price for the asset in cash.

We expect to use debt financing as a source of capital. We have no limits on the amount of leverage we may employ; however, senior property debt is generally expected to be approximately 65% of the cost of our investments.

***Going Concern and Bond Maturity Considerations***

Our independent registered public accounting firm has included an explanatory paragraph in its audit report regarding substantial doubt about our ability to continue as a going concern. As of December 31, 2025, we did not have sufficient working capital to repay our remaining Series D and Series E Bonds in full upon their respective maturities. Series D Bonds totaling $4,575,000 mature on August 31, 2026, and Series E Bonds totaling $1,988,000 mature on February 28, 2027.

Management's plan to address these liquidity concerns involves the liquidation of our assets, including the collection of our notes receivable and the disposition of our investment in SPSS Developer, LLC. However, there can be no assurance that these efforts will be successful or that we will be able to generate sufficient proceeds to satisfy our bond obligations when due. If we are unable to meet our bond obligations at maturity, bondholders may not receive full repayment of principal and accrued interest, and we may be required to seek additional financing, restructure our obligations, or pursue other alternatives, including potential bankruptcy proceedings.

We anticipate that adequate cash will be generated from interest earned on our notes receivable to fund our operating and administrative expenses, and all continuing debt service obligations, including the Bond service obligations. However, our ability to finance our operations is subject to some uncertainties. Our ability to generate working capital is dependent on our ability to attract and retain tenants and the economic and business environments of the various markets in which our investments are located. Our ability to sell our assets is partially dependent upon the state of real estate markets and the ability of purchasers to obtain financing at reasonable commercial rates. In general, we intend to pay debt service from cash flow from operations. If we have not generated sufficient cash flow from our operations and other sources, such as from borrowings, we may use funds out of the debt service reserve. Moreover, our manager may change this policy, in its sole discretion, at any time.

Potential future sources of capital include secured or unsecured financings from banks or other lenders, establishing additional lines of credit, proceeds from the sale of properties and undistributed cash flow. Note that, currently, we have not identified any source of financing, other than the proceeds of this offering and the sale of beneficial interests in the Trust, and there is no assurance that such sources of financing will be available on favorable terms or at all.

***Related Party Concentration Risk***

As of December 31, 2025, all of our notes receivable and our investment in rental real estate are with entities affiliated with our Manager, GK Development, Inc., and its principal, Mr. Garo Kholamian. This concentration of assets with related parties creates certain risks, including: (i) potential conflicts of interest in the negotiation and enforcement of loan terms, including extensions and modifications; (ii) the possibility that our Manager may prioritize the interests of the affiliated borrowers over the interests of bondholders; (iii) reduced diversification, as the performance of our entire loan portfolio is dependent on the success of affiliated entities managed by the same individuals; and (iv) limited recourse in the event of default, as enforcement actions against affiliates may be subject to conflicts or practical limitations. The interest rates on our related party loans are set at 12.22% per annum, which we believe to be consistent with market rates for similar loans; however, these loans have been extended multiple times, and certain borrowers have experienced financial difficulties.

On January 11, 2026, the Note 3 with DeMarcay was extended until December 31, 2026.

On January 30, 2026, the Note 1 with the Ridgmar Mall borrowers paid in full, including principal of $6,883,050, accrued current interest of $10,270, and accretive interest due of $769,350.

Series C of the Bonds issued and payable were maturing on February 28, 2026. On February 26, 2026, the Company redeemed the Series C Bondholders for a total amount of $4,446,437. The redemption amount paid included $4,230,000 of Bond principal, current interest due of $10,692 and accrued interest due of $205,745.

**Trend Information**

The recent rise in interest rates, resulting at least in part from measures taken to combat inflation, has adversely affected our ability to acquire & dispose of our retail real properties, and may continue to do so in the future. While interest rates have begun to decrease from their recent highs, the interest rate environment remains uncertain and may continue to impact real estate valuations and transaction activity.

**Item 3. Directors and Officers**

The following table sets forth information on the directors and executive officers of GK Real Estate. Our company is managed by GK Real Estate, its sole manager. Consequently, our company does not have its own separate directors or executive officers.

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| | | | |
|:---|:---|:---|:---|
| **Name** | **Age** | **Position with our Company** | **Director/Officer Since** |
| Garo Kholamian | 67 | President and Sole Director | 1995 |
| Sherry Mast | 58 | Principal - Asset Management | 1997 |
| Steven Higdon | 60 | Chief Financial Officer | 2020 |

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**Executive Officers**

Set forth below is biographical information for GK Real Estate's executive officers.

**Garo Kholamian***,* age 67, is the President, sole Director and sole shareholder of GK Real Estate. Since the formation of GK Real Estate in 1994, Mr. Kholamian and his affiliates have acquired and developed over 120 million square feet of commercial property including apartments, office, and commercial rental property. Prior to forming GK Real Estate, Mr. Kholamian was Senior Vice President of Development for Homart Development Co., the real estate development arm of Sears Roebuck, specializing in regional shopping malls, power centers, and office buildings. At Homart, Mr. Kholamian was responsible for site selection, negotiation and project development and management of Homart's community shopping centers, including over 2.2 million square feet of commercial rental space in the Midwest and Florida. Before managing the development of these centers, Mr. Kholamian assisted in the development of 1.5 million square feet of regional malls and 1.1 million square feet of office space throughout the U.S. for Homart. Mr. Kholamian received his Master's Degree in Business Management from Loyola University of Chicago in 1985 and his Bachelor's Degree in Architecture from the Illinois Institute of Technology in 1981. He is a member of the International Council of Shopping Centers and a licensed real estate broker in Illinois.

**Sherry Mast***,* age 58, is the Principal - Asset Management at GK Real Estate. Ms. Mast joined GK Real Estate in 1997 and, prior to taking over asset management, established leasing, property management and financial procedures and systems for GK Real Estate. Ms. Mast is responsible for asset managing the company's entire portfolio and also manages the day-to-day leasing activity, including outside broker relationships. Prior to joining GK Real Estate, Ms. Mast was Marketing Manager for Karp's, a nationally recognized bakery supply company. There she was responsible for new product development, creating bakery supply solutions for national retailers. From joining that company in 1992, Ms. Mast was involved in the creation of new products and worked closely with national clients, including Starbucks Coffee, Wal-Mart, Dominick's Finer Foods, and American Superstores. Prior to joining Karp's, Ms. Mast was Quality Assurance Associate for Hyatt Hotel Corporation from 1989 through 1992. There she assisted in improving customer relations and maintaining Hyatt's industry-leading service standards. Ms. Mast received her Bachelor's Degree in Corporate Communications from Northern Illinois University. She is a member of the International Council of Shopping Centers and is a registered real estate salesperson in Illinois.

**Steve Higdon**, age 60, is the Senior Vice-President of Accounting and Finance (Chief Financial Officer) at GK Real Estate. He has been with GK Real Estate since December 2020. With more than 35 years in corporate finance, capital markets, investment banking, and accounting, Steve leads GK Real Estate's financial planning, treasury management, internal controls, risk management, and financial reporting. He oversees the accounting and finance teams, acts as the company's financial spokesperson, and is deeply involved in real estate development, acquisitions, fund administration, and audits. Previously, Steve was CFO at Aegis Asset Management, guiding strategy for a $2B nationwide real estate portfolio. Prior to joining Aegis, Steve was the co-owner/CFO at Bradford Allen, where he led major investment and debt placements for a $1B real estate investment firm. In his capacity at Bradford Allen, he was the lead financial executive in the underwriting of over $200MM in equity placed for 1.5 million sf of commercial/retail and multi-family space in various cities across the United States. He developed the Acquisitions and the Investment/Asset Mgmt. teams to purchase assets and analyze the market dynamics to maximize returns for Investors. Steve holds Bachelor's degrees in Accounting and Finance from Illinois State University. Steve earned his license as a Certified Public Accountant in 1988, but is currently non-practicing.

**Director and Executive Compensation**

Our Company does not have executives. It is operated by a sole manager, GK Real Estate. Garo Kholamian is the sole shareholder and director of GK Real Estate. We will not reimburse our manager for any portion of the salaries and benefits to be paid to its executive officers named in "*Directors and Officers.*"

**Item 4. Security Ownership of Management and Certain Security Holders**

The table below sets forth, as of December 31, 2025, certain information regarding the beneficial ownership of our outstanding membership units for (1) each person who is expected to be the beneficial owner of 10% or more of our outstanding membership units and (2) each of our named executive officers, if together such group would be expected to be the beneficial owners of 10% or more of our outstanding membership units. Each person named in the table has sole voting and investment power with respect to all of the membership units shown as beneficially owned by such person. The SEC has defined "beneficial ownership" of a security to mean the possession, directly or indirectly, of voting power and/or investment power over such security.

*Security Ownership of Certain Beneficial Owners (5% or more)*

---

| | | | |
|:---|:---|:---|:---|
| **Title of Class** | **Name and Address of <br> Beneficial Owner** | **Amount and Nature of <br> Beneficial Ownership** | **Percent of <br> Class** |
| Class A | Garo Kholamian(1)(2) | 100% Membership Interest | 77% |

---

*Security Ownership of Management*

---

| | | | |
|:---|:---|:---|:---|
| **Title of Class** | **Name and Address of <br> Beneficial Owner** | **Amount and Nature of <br> Beneficial Ownership** | **Percent of Class** |
| Class A | Management(2)(3) | 100% Membership Interest | 100% |

---

------

(1) Garo Kholamian individually holds 40% and a related party of Garo Kholamian holds 37%.

(2) Address is: 257 East Main Street, Suite 200, Barrington, IL 60010.

(3) Certain other employees of GK Real Estate, the Company's manager, collectively hold 23% of the Company's Class A Membership Interests. Includes Mr. Garo Kholamian's ownership of Class A securities.

We may provide incentive grants of economic profit interest of our Company to employees of GK Real Estate or an affiliate in the future. The time, manner, and terms of any such grants, which will be subject to the sole discretion of GK Real Estate as our manager, have not been determined as of the date of this report.

**Item 5. Interest of Management and Others in Certain Transactions**

GK Real Estate, our company's manager, or its affiliates will be responsible for all aspects of the management of our company's assets. Through this management, GK Real Estate or its affiliates will be entitled to the fees enumerated below:

**Acquisition Fees.** GK Real Estate will be entitled to 2% of the purchase price of each property purchased from non-affiliated, third -party sellers for identifying, reviewing, evaluating, investing in, and the purchase of real property acquisitions. These acquisition fees are payable by our company regardless of whether the property ever generates positive cash flow.

**Property Management Services Fee.** Each property owned by our company will be managed by a property manager, which may be GK Real Estate or an affiliate of GK Real Estate. For its services, the property manager will be paid property management fees, leasing compensation, and other compensation, provided that property management fees for any property may not exceed 5% of annual gross revenues from that property. The property management fees will be paid in arrears on a monthly basis. The property management fees are payable by our company regardless of whether the property ever generates positive cash flow.

**Disposition Fees.** GK Real Estate will receive 2% of the gross sale price from the disposition of each property by our company. These disposition fees are payable by our company regardless of whether the investment is sold at a gain or a loss.

**Asset Management Fees.** Each property owned by our company in our future portfolio will be managed by GK Real Estate. For its services, GK Real Estate will be entitled to an asset management fee equal to 1% of the appraisal value of real properties acquired by the company or its subsidiaries or pro rata portion of such value if a company subsidiary is not wholly-owned. No asset management fees will be earned on undeployed cash. The asset management fees will be paid in arrears on a monthly basis. The asset management fees are payable by our company regardless of whether the asset ever generates positive cash flow.

**Financing Fees.** GK Real Estate will be entitled to 2% of the principal amount of any financing in conjunction with the purchase or refinance of an asset. These financing fees are payable by our company regardless of whether the asset generates positive cash flow.

**Other Fees.** GK Real Estate may be entitled to certain additional, reasonable fees in association with other activities imperative to the operations of our company. Such activities include, but are not limited to, property leasing, property development, and loan guarantees. GK Real Estate will endeavor to determine such fees based upon benchmark market rates.

With respect to related parties, amounts incurred in 2025 and 2024 consisted of the following:

---

| | |
|:---|:---|
| 2025 |  |
| **GK Real Estate.** |  |
| Disposition fee (2% of the net sales price) | $0 |
| Property Management service fees (5% of gross collections) | $0 |
| Asset Management fees (1% of the appraised value of the rental property) | $0 |
| Reimbursed expenses | $21151 |
| Promotional Fees from sale of Bonds (2.5% of proceeds) - capitalized | $0 |

---

---

| | |
|:---|:---|
| 2024 |  |
| **GK Real Estate.** |  |
| Acquisition fee (2% of the purchase price) - capitalized | $0 |
| Property Management service fees (5% of gross collections) | $0 |
| Asset Management fees (1% of the appraised value of the rental property) | $0 |
| Reimbursed expenses | $25516 |
| Promotional Fees from sale of Bonds (2.5% of proceeds) - capitalized | $0 |

---

The description of the transactions involving our manager, affiliates and subsidiaries described in *Item 1. Business*, including the Ridgmar Loan, the Station Plaza Loan, the DeMarcay Loan, the GK Festival Loan, and the Preferred Equity Conversion are hereby incorporated by reference in this *Item 5. Interest of Management and Others in Certain Transactions.*

**Item 7. Financial Statements**

**GK Investment Property Holdings II, LLC**

**(a Delaware limited liability company)**

**Consolidated Financial Statements**

**December 31, 2025 and 2024**

**GK Investment Property Holdings II, LLC**

**Table of Contents**

**December 31, 2025 and 2024**

---

| | |
|:---|:---|
| [Report of Independent Registered Public Accounting Firm](#f_001) | [F-2](#f_001) |
| Consolidated Financial Statements |  |
| &nbsp;&nbsp;&nbsp;&nbsp;[Consolidated Balance Sheets](#f_002) | [F-3](#f_002) |
| &nbsp;&nbsp;&nbsp;&nbsp;[Consolidated Statements of Operations](#f_003) | [F-4](#f_003) |
| &nbsp;&nbsp;&nbsp;&nbsp;[Consolidated Statements of Members' Deficit](#f_004) | [F-5](#f_004) |
| &nbsp;&nbsp;&nbsp;&nbsp;[Consolidated Statements of Cash Flows](#f_005) | [F-6 – F-7](#f_005) |
| &nbsp;&nbsp;&nbsp;&nbsp;[Notes to Consolidated Financial Statements](#f_006) | [F-8 – F-29](#f_006) |

---

**GK Investment Property Holdings II, LLC**

**Report of Independent Registered Public Accounting Firm**

To the Members

GK Investment Property Holdings II, LLC

Barrington, Illinois

**Opinion on the Consolidated Financial Statements**

We have audited the accompanying consolidated balance sheets of GK Investment Property Holdings II, LLC and its Subsidiary (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of operations, members' deficit, and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

**Substantial Doubt about the Company's Ability to Continue as a Going Concern**

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company does not have sufficient working capital to repay its remaining Series D and E Bonds in full totaling $4,575,000 and $1,988,000, respectively upon maturity, which is within one year from the date of issuance of the consolidated financial statements. This raises substantial doubt about the Company's ability to continue as a going concern. Management's evaluation of the events and conditions and management's plans regarding those matters are further described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

**Basis for Opinion**

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the auditing standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

*/s/ Cherry Bekaert LLP*

We have served as the Company's auditor since 2019.

Richmond, Virginia

June 12, 2026

**GK Investment Property Holdings II, LLC**

**Consolidated Balance Sheets**

**December 31, 2025 and 2024** 

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| **ASSETS** |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $249129 | $1122619 |
| &nbsp;&nbsp;&nbsp;Other assets | 63884 | 5578 |
| &nbsp;&nbsp;&nbsp;Accrued investment income | 80826 |  |
| &nbsp;&nbsp;&nbsp;Interest receivable | 539738 | 204124 |
| &nbsp;&nbsp;&nbsp;Investment in beneficial interests in Delaware statutory trust |  | 754047 |
| &nbsp;&nbsp;&nbsp;Investment in rental real estate property | 2000000 |  |
| &nbsp;&nbsp;&nbsp;Notes receivable | 8386458 | 13116503 |
| &nbsp;&nbsp;&nbsp;Restricted cash - funded reserves | 136888 | 136888 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total assets** | $**11456923** | $**15339759** |
| **LIABILITIES AND MEMBERS' DEFICIT** |  |  |
| **LIABILITIES** |  |  |
| &nbsp;&nbsp;&nbsp;Bonds payable - net | $10612148 | $15574634 |
| &nbsp;&nbsp;&nbsp;Note payable | 1023000 |  |
| &nbsp;&nbsp;&nbsp;Accrued interest | 505851 | 639861 |
| &nbsp;&nbsp;&nbsp;Other accrued liabilities | 250 |  |
| &nbsp;&nbsp;&nbsp;Other liabilities | 74593 | 74593 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities** | 12215842 | 16289088 |
| **MEMBERS' DEFICIT** |  |  |
| &nbsp;&nbsp;&nbsp;Members' deficit | (758919) | (949329) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities and members' deficit** | $**11456923** | $**15339759** |

---

See Notes to Consolidated Financial Statements

**GK Investment Property Holdings II, LLC**

**Consolidated Statements of Operations**

**Years Ended December 31, 2025 and 2024** 

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| **Rental Revenue** | $**-** | $**-** |
| **Operating Expenses** |  |  |
| &nbsp;&nbsp;&nbsp;Operating expenses | 24990 | 25201 |
| &nbsp;&nbsp;&nbsp;Professional fees | 70048 | 91629 |
|  | **95038** | **116830** |
| **Operating Loss** | **(95038)** | **(116830)** |
| **Other (Expense) and Income** |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense | (1479760) | (1797036) |
| &nbsp;&nbsp;&nbsp;Interest income | 1587699 | 1462675 |
| &nbsp;&nbsp;&nbsp;Miscellaneous income | 3389 |  |
| &nbsp;&nbsp;&nbsp;Income tax expense |  | (28666) |
| &nbsp;&nbsp;&nbsp;Income from investment in rental real estate property | 164049 |  |
| &nbsp;&nbsp;&nbsp;Investment income from beneficial interests in Delaware statutory trust | 10071 | 75613 |
|  | **285448** | **(287414)** |
| **Consolidated Net Income (Loss)** | $**190410** | $**(404244)** |

---

See Notes to Consolidated Financial Statements

**GK Investment Property Holdings II, LLC**

**Consolidated Statements of Members' Deficit**

**Years Ended December 31, 2025 and 2024** 

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| **Balance - Beginning of Year** | $**(949329)** | $**(545085)** |
| Consolidated Net Income (Loss) | 190410 | (404244) |
| **Balance - End of Year** | $**(758919)** | $**(949329)** |

---

See Notes to Consolidated Financial Statements

**GK Investment Property Holdings II, LLC**

**Consolidated Statements of Cash Flows**

**Years Ended December 31, 2025 and 2024** 

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| **Cash Flows from Operating Activities** |  |  |
| &nbsp;&nbsp;&nbsp;Consolidated Net Income (Loss) | $190410 | $(404244) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile consolidated Net Income (Loss) to net cash flows from operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of bond issuance costs and bond discount | 411514 | 503664 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest receivable | (335614) | (71688) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets | 5578 | 1264 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued investment income | (80826) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued interest payable | (134010) | 161683 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other accrued liabilities | 250 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | - | (5000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash flows from operating activities | 57302 | 185679 |
| **Cash Flows from Investing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issuance of notes receivable | (125000) | (6924774) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments of notes receivable | 2855045 | 44438 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Redemptions of beneficial interests in Delaware statutory trust | 690163 | 795162 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash flows from investing activities | 3420208 | (6085174) |

---

See Notes to Consolidated Financial Statements

**GK Investment Property Holdings II, LLC**

**Consolidated Statements of Cash Flows**

**Years Ended December 31, 2025 and 2024** 

---

| | | |
|:---|:---|:---|
|  | **(Continued)**<br>**2025** | **(Continued)**<br>**2024** |
| **Cash Flows from Financing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from notes payable | $1023000 | $- |
| &nbsp;&nbsp;&nbsp;Redemption of bonds payable | (5374000) | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash flows from financing activities | (4351000) | - |
| **Net decrease in Cash and restricted cash** | **(873490)** | **(5899495)** |
| **Cash and restricted cash** - Beginning of year | **1259507** | **7159002** |
| **Cash and restricted cash** - End of year | $**386017** | $**1259507** |
| **Classification of Cash and Restricted Cash** |  |  |
| &nbsp;&nbsp;&nbsp;Cash | $249129 | $1122619 |
| &nbsp;&nbsp;&nbsp;Restricted cash - funded reserves | 136888 | 136888 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Cash and restricted cash** | $**386017** | $**1259507** |
| **Supplemental Disclosure of Cash Flow Information** |  |  |
| &nbsp;&nbsp;&nbsp;Cash paid for interest | $**1202256** | $**1131690** |
| **Supplemental disclosure of non-cash financing and investing activity:** |  |  |
| &nbsp;&nbsp;&nbsp;Redemption of beneficial interests in Delaware statutory trust | $**63884** | $**96931** |
| &nbsp;&nbsp;&nbsp;Conversion of note receivable to investment in real estate | $**2000000** | $**-** |

---

See Notes to Consolidated Financial Statements

**GK Investment Property Holdings II, LLC**

**Note 1 – Organization and Summary of Significant Accounting Policies**

**Description of Business** – GK Investment Property Holdings II, LLC, ("GKIPH II" and/or the "Company"), was formed on July 11, 2019 with the intent to acquire and lend on existing income producing commercial properties for the purpose of financing, holding and operating such properties, and if the need arises, to redevelop the properties for an alternative use other than intended when originally acquired. However, GKIPH II is permitted to transact in any lawful business in addition to that stated above. GKIPH II anticipates funding loans and acquisitions in part, by offering investors the opportunity to purchase up to a maximum of $50,000,000 of bonds (the Bonds). The company has sold $16,538,000 in Bonds and has redeemed $5,745,000 and $371,000 of Bonds as of December 31, 2025 and 2024, respectively. The Company has $10,793,000 and $16,167,000 in Bonds outstanding as of December 31, 2025 and 2024, respectively. The Bonds are unsecured indebtedness of GKIPH II.

The Company has one class of units, Class A units. Nine individuals, or Class A Members, hold all of the Class A Units or 100% ownership interest in the Company. The members of the Company have limited liability. Pursuant to the terms of the Limited Liability Company Operating Agreement (the "Agreement"), the Company will exist in perpetuity unless terminated as defined in the Agreement. The Company is managed by GK Development, Inc. (the "Manager" and "Sponsor of the bonds"), an affiliate under common control of the members of GKIPH II.

On May 12, 2020, the Company formed RF Grocery, LLC, an Illinois limited liability company, for the purpose of acquiring real property located in 7501 North Avenue, River Forest, Illinois (the "Property").

The Company owns 100% of the "Ordinary" Member Class interests, and an individual related to the Manager owns 100% of the "Preferred" Member Class interests, as defined in the Operating Agreement of RF Grocery, LLC. The Preferred Member interests are entitled to a cumulative return equal to 12% per annum and is entitled, at the Preferred Member's direction, prior to any distributions to the Ordinary Member, to have a preferred return of their original capital contribution. On December 10, 2020, the Preferred Member's interest was redeemed, and a cumulative preferred return was paid in the amount of $108,000.

On June 25, 2021, RF Grocery, LLC, agreed to sell the Property at arms-length to a Delaware Statutory Trust (the "Trust") in exchange for 100% of the initial beneficial interests of the Trust. On July 21, 2021, the Property was sold to the Trust at an aggregate value of $10,778,490 (the "Transaction Value"). The Transaction Value is comprised of an equity portion of $5,588,490, which represents RF Grocery's capital contribution to the Trust, in addition to the assumed Loan principal of $5,190,000. River Forest Grocery – GK Services LLC, which is 100% owned by the Manager, serves as the Trustee of the Trust. While the Trustee manages the Trust's operations, the Trustee's control is governed and limited by the Trust's operating agreement and trust agreement. The Company does not have a controlling financial interest in the Trust, nor does it have the power to direct the activities of the Trust.

**GK Investment Property Holdings II, LLC**

**Note 1 – Organization and Summary of Significant Accounting Policies (Continued)**

Pursuant to the terms of the trust agreement of the Trust, dated as of June 10, 2021 (the "Trust Agreement"), each sale of the Unsold Interests will reduce the Company's ownership in the Trust by a proportionate amount, and the proceeds from the Trust's capital raise will be used by the signatory trustee of the Trust, in part, to redeem the beneficial interests held by the Company. The Company will remain a beneficial interest holder of the Trust and be bound by the terms of the Trust Agreement until the Trust redeems all of the Unsold Interests held by the Company. As a beneficial interest holder of the Trust, the Company is a passive owner of the Property without the power to direct the Trust in any way.

**Allocation of Profits and Losses** - Profits or losses from operations of the Company are allocated to the members of GKIPH II in their ownership percentages. Gains and losses from the sale, exchange, or other disposition of Company property are allocated to the members of GKIPH II in their ownership percentages.

**Principles of Consolidation** - The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant material intercompany accounts and transactions have been eliminated in the consolidation. A variable interest entity ("VIE") is an entity in which a controlling financial interest may be achieved through arrangements that do not involve voting interests. The Company has identified several VIEs, but it determined that the Company did not need to consolidate the VIEs for purposes of financial reporting. The Company is not the primary beneficiary of the VIEs nor does it have significant influence through voting or similar rights to direct operations of the VIEs.

**Basis of Accounting**- The Company maintains its accounting records and prepares its consolidated financial statements on an accrual basis, which is in accordance with accounting principles generally accepted in the United States of America ("GAAP").

**Classification of Assets and Liabilities**- The financial affairs of the Company generally do not involve a business cycle since the realization of assets and the liquidation of liabilities are usually dependent on the Company's circumstances. Accordingly, the classification of current assets and current liabilities is not considered appropriate and has been omitted from the consolidated balance sheets.

**Estimates**- The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

**Fair Value of Financial Instruments** - Our financial instruments consist of cash, funded reserves, note receivable and bonds payable. The carrying values of cash and funded reserves approximate their fair value due to their short-term maturities. The note receivable carrying value approximates the face value of the loans and any accretive interest earned to date. The carrying value of the bonds payable approximates their fair value based on interest rates currently obtainable.

**GK Investment Property Holdings II, LLC**

**Note 1 – Organization and Summary of Significant Accounting Policies (Continued)**

**Cash and Cash Equivalents**- For purposes of reporting cash flows, all highly liquid investments with a purchased maturity of three months or less are considered to be cash equivalents. The Company maintains cash and restricted cash balances in federally insured financial institutions that, from time to time, exceed the Federal Deposit Insurance Corporation ("FDIC") limits of $250,000. The Company believes that they are not exposed to any significant credit risk on its cash and restricted cash. As of December 31, 2025 and 2024, the Company had cash balances that exceeded the FDIC limits by $0 and $44,165, respectively.

**Restricted Cash – Funded Reserves** - Funded reserves consist of bond service reserves to be maintained under the bond indenture agreement for a period of twelve months commencing from the first bond closing date of each bond series.

**Investment in beneficial interests in Delaware statutory trust –** Investment transactions are accounted for on the trade date. Investment income is recorded by the Company on an accrual basis factoring in the Company's percent ownership of the beneficial interest in the Trust. The Investment income is calculated monthly based on the rent received by the Trust net of (i) any reserves, and (ii) payment of expenses and fees incurred by the Trust during that month on a cash basis. This method of investment income recognition approximates to the effective yield to be expected maturity utilizing assumed cash flows in accordance with Accounting Standards Codification ("ASC") ASC 325-40-35, Beneficial Interests in Securitized Financial Assets ("ASC 325-40-35") as each month's net cash flows are expected to be consistent and comparable over the life of the investment. The Company monitors the expected cash flows from its beneficial interest investment in the Trust, including the expected principal repayments in the form of redemptions. In accordance with ASC 325-40, the investment is periodically assessed for other-than-temporary impairment ("OTTI"). If the Company determines that the investment has OTTI, the amortized cost basis of the Trust is written down as of the date of the determination based on events and information evaluated and that write-down is recognized as a realized loss. There were no such write-offs during 2025 and 2024.

**Notes Receivable** – Notes receivable are stated at the outstanding principal amount, net of an allowance for credit losses. The Company provides an allowance for credit losses, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Outstanding notes accrue interest based on the terms of the respective note agreements. A note is considered delinquent when the debtor has missed defined payments. At that time, the note is placed on nonaccrual status and interest accrual ceases and does not resume until the note is no longer classified as delinquent. Delinquent notes are written off based on defined metrics used to assess delinquency and write-off amount. The notes receivable are current as of December 31, 2025 and 2024. No portion of the Note was written off during the years ended December 31, 2025 and 2024. For both years ended December 31, 2025 and 2024, the allowance for credit losses was $0.

**GK Investment Property Holdings II, LLC**

**Note 1 – Organization and Summary of Significant Accounting Policies (Continued)**

**Impairment of Assets** - The Company reviews the recoverability of long-lived assets including buildings, equipment, and other intangible assets, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on the ability to recover the carrying value of the asset from the expected future pretax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such assets, an impairment loss is recognized for the difference between the estimated fair value and the carrying value. The measurement of impairment requires management to make estimates of these cash flows related to long lived assets, as well as other fair value determinations.

**Investment in Rental Real Estate Property –** On May 1, 2025, the Company converted their note receivable balance of $2,000,000 with Station Plaza Self-Storage, LLC into a $37.21% preferred equity investment with SPSS Developer, LLC, the parent company of the original borrower, Station Plaza Self-Storage, LLC. SPSS Developer, LLC, and the Company are affiliates of one another, and as such, they are related parties. There is no indication of impairment of investment or gains (loss) due to observable price changes for the year ended December 31, 2025.

The Company has elected to measure all investments without readily determinable fair values using the measurement in Accounting Standards Update ("ASU") 2016-01. The investment is carried at cost, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investment. The carrying value of the investment is adjusted on the date of an observable transaction. Nonmarketable investments under the measurement alternative are also assessed for impairment. Impairment indicators that are considered include, but are not limited to, (a) a significant deterioration in the earnings performance, credit rating, asset quality or business prospects of the investee, (b) a significant adverse change in the regulatory, economic or technological environment of the investment, (c) a significant adverse change in the general market condition of either the geographical area or the industry in which the investee operate, and (d) factors that raise significant concerns about investee's ability to continue as a going concern. When the qualitative assessment indicates that impairment exists, the investment is written down, with impairment recognized in earnings.

**GK Investment Property Holdings II, LLC**

**Note 1 – Organization and Summary of Significant Accounting Policies (Continued)**

**Bond Issuance Costs and Bond Discounts** – Bond issuance costs represent underwriting compensation and offering costs and expenses associated with selling the bonds. Bond discounts are a volume-weighted discount dependent on how many bonds are purchased. Both of these costs are amortized on a straight-line basis, which approximates the effective interest method, over the term of the bonds. Bond issuance and bond discount costs are presented on the consolidated balance sheets as a direct reduction from the carrying amount of the bond liability. Unamortized bond issue and bond discount costs will be expensed if the bonds are repaid before maturity. Amortization expense is included in interest expense on the accompanying consolidated statements of operations.

**Income Taxes** – The Company's wholly owned subsidiaries are treated as disregarded entities and are treated as a component of GKIPH II for federal income tax reporting purposes. GKIPH II is treated as a partnership for federal income tax purposes and consequently, federal income taxes are not payable or provided for by the Company. The members of GKIPH II are taxed individually on their pro-rata ownership share of the Company's earnings. The Company does pay income taxes at the state level which is included in income tax expense on the accompanying consolidated income statements for the years ended December 31, 2025 and 2024.

GAAP basis of accounting requires management to evaluate tax positions taken by the Company and to disclose a tax liability (or asset) if the Company has taken uncertain positions that more than likely than not would not be sustained upon examination by the Internal Revenue Service or other tax authorities. Management has analyzed the tax positions taken by the Company and has concluded that as of December 31, 2025 and 2024, there were no uncertain tax positions taken or expected to be taken that would require disclosure in the consolidated financial statements.

**Segment Reporting –** The Company indirectly invests in entities that owns, operates, develops, redevelops, and lends on primarily grocery-anchored shopping centers, street retail-based properties, and mixed-use assets. The Company has aggregated all of its investments into one reportable segment due to their similarities with regard to the nature, location and economics of the properties and operational process. The Company is managed as one reporting unit, rather than multiple reporting units, for internal reporting purposes and for internal decision-making by the Company's management, including the chief operating decision maker ("CODM"). Therefore, the Company discloses its operating results in a single reportable segment.

**Variable Interest Entity –** A variable interest entity ("VIE") is an entity in which a controlling financial interest may be achieved through arrangements that do not involve voting interest. The Company has identified the notes receivable and investment in rental real estate property as VIEs, but it was determined that the Company did not need to consolidate these VIEs for purposes of financial reporting. The Company is not the primary beneficiary of the VIEs, nor does it have significant influence through voting or similar rights to direct operations of the VIE.

**GK Investment Property Holdings II, LLC**

**Note 1 – Organization and Summary of Significant Accounting Policies (Continued)**

**Reporting Standards and Disclosure Requirements** – The Company has adopted reporting standards and disclosure requirements as a "smaller reporting company" as defined in Rule 405 of the Securities Act, Rule 12b-2 of the Securities Exchange Act of 1934 and item 10(f) of Regulation S-K, as amended. These rules provide scaled disclosure accommodations, the purpose of which is to provide general regulatory relief to qualifying entities. For each of the accounting pronouncements that affect the Company, the Company has elected plans to elect to follow the rule that allows companies engaging in an initial Regulation A offering to follow private company implementation dates.

**Previously Adopted Accounting Pronouncements** *-* In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures, which requires entities to provide disclosures of significant segment expenses and other significant segment items, as well as provide in interim periods all disclosures about a reportable segment' profit or loss and assets that are currently required annually. Additionally, entities with a single reportable segment have to provide all of the disclosures required by ASC 280, including the significant segment expense disclosures. The ASU is applied retrospectively to all periods presented in the consolidated financial statements unless it is impracticable. This ASU is effective for the Company for fiscal years beginning after December 15, 2023, and for interim periods beginning after December 15, 2024, with early adoption permitted. The Company adopted this guidance in its consolidated financial statements, which includes the additional disclosures required for our single operating and reportable segment, for the years ended December 31, 2025 and 2024. See Note 11 for more information.

Other accounting standards that have been issued or proposed by the FASB or other standard-setting bodies are not currently applicable to the Company or are not expected to have a significant impact on the Company's financial position, results of operations and cash flows.

**GK Investment Property Holdings II, LLC**

**Note 2 – Going Concern**

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern within one year after the date the consolidated financial statements are available to be issued. The Company does not have sufficient working capital to repay its remaining Series D and E Bonds in full totaling $4,575,000 and $1,988,000, respectively upon maturity as disclosed in Note 4. This condition raises substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements do not include any adjustments related to the recovery and classification of recorded asset amounts or the amounts and classification of liabilities which may be necessary should the Company be unable to continue as a going concern. Management is trying to overcome this issue by liquidating its assets.

**Note 3 – Restricted Cash - Funded Reserves**

Funded reserves are as follows:

**<u>GK Investment Property Holdings II, LLC:</u>**

**Bond service reserves**: These bond service reserves (at the bond series level) are required pursuant to the Bond Indenture Agreement, which requires that 7% of the gross bond proceeds per series be placed into a reserve account held by the bond trustee. The bond service reserves may be used to pay the Company's bond service obligations and any funds remaining in the bond service reserve on the first anniversary of each bond series closing date (February 26, 2020 through February 28, 2022, for Series A through Series E, respectively), will be released to the Company.

Restricted cash - funded reserves consisted of:

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Bond service reserve - Series A | $- | $- |
| Bond service reserve - Series B |  |  |
| Bond service reserve - Series C |  |  |
| Bond service reserve - Series D |  |  |
| Bond service reserve - Series E | 136888 | 136888 |
|  | $136888 | $136888 |

---

**GK Investment Property Holdings II, LLC**

**Note 4 – Bonds Payable**

On January 28, 2020, the Company submitted its initial offering of up to $50,000,000 in the aggregate of 7% unsecured bonds at a purchase price of $1,000 per bond, with a minimum purchase amount of $5,000 (the "Bonds"). The Bonds will mature on various dates ranging from February 28, 2025 to August 31, 2027. The Bonds are offered in six series, Series A, Series B, Series C, Series D, Series E and Series F, with the sole difference between the series being their respective maturity dates ranging from February 28, 2025 to February 28, 2027. As of December 31, 2025 and 2024, the Company has issued and outstanding $10,793,000 and $16,167,000 in Bonds, respectively.

Series A of the Bonds issued and payable matured on February 28, 2025. On February 27, 2025, the Company redeemed the Series A Bondholders for a total amount of $2,633,496. The redemption amount paid included $2,505,000 of Bond principal, current interest due of $6,332 and accrued interest due of $122,164.

Series B of the Bonds issued and payable matured on August 31, 2025. On September 2, 2025, the Company partially redeemed the Series B Bondholders for a total amount of $2,018,581. The partial redemption amount paid included $1,869,000 of Bond principal, current interest due of $8,926 and accrued interest due of $140,656. On September 25, 2025, the Company redeemed the remainder to the Series B Bondholders for a total amount of $1,005,556. The remaining redemption amount paid included $1,000,000 of Bond principal, current interest due of $4,862 and accrued interest due of $694.

The remaining Bonds will mature on the following dates with the following amount;

---

| | |
|:---|:---|
| Bonds maturing on 2/28/2026 - Series C | $4230000 |
| Bonds maturing on 8/31/2026 - Series D | 4575000 |
| Bonds maturing on 2/28/2027 - Series E | 1988000 |
|  | $10793000 |

---

**GK Investment Property Holdings II, LLC**

**Note 4 – Bonds Payable (continued)**

The Bonds may be redeemed at the Company's option, in whole or in part at any time after their issuance. If the option of early redemption is exercised, the redemption price shall equal: (i) $1,020 per Bond if redeemed on or before the third anniversary of the initial issuance of Bonds of the series being prepaid; (ii) $1,015 per Bond if redeemed after the third anniversary and on or before the fourth anniversary of the initial issuance of Bonds of the series being prepaid; and (iii) $1,010 per Bond if redeemed after the fourth anniversary of the initial issuance of Bonds of the series being prepaid. In addition, any accrued and unpaid interest on the Bonds to be redeemed up to but not including the redemption date, including any deferred interest payment on the Bonds to be redeemed, or the Company redemption price. The Company shall give notice of redemption not less than 30 days nor more than 60 days prior to any redemption date. Our obligation to redeem Bonds with respect to Notices of Redemption received in any given redemption period is limited to an aggregate principal amount of the Bonds equal to 3.75% of the aggregate principal of the Bonds under the Indenture as of the close of business on the last business day of the preceding redemption period. See Note 6 for specific amounts payable to the Manager, a related party, as sponsor of the Bonds.

The Company offers a volume-weighted discount on the Bond's price to the public for certain purchases of the Bonds. The company may terminate application of discount at any time in its sole discretion by filing a supplement to its Offering Circular with the SEC at least thirty (30) calendar days prior to the termination date of discount announcing such termination date. The discount ranges from three to five percent depending on the volume of the Bonds. The Bonds shall continue to be denominated in $1,000 increments. Any discounts applied will reduce net proceeds to the Company. In the event of death or disability of a bondholder, all, or a portion (consisting of at least 50%), of the Bonds beneficially held by a bondholder may be submitted to the Company for repurchase at any time in accordance with the procedures outlined by the Company, which may be subject to conditions and limitations. If the repurchase is being made from the original purchaser of a Bond(s), the repurchase price will equal the price paid per Bond. The repurchase amount for the Bonds for all other persons will equal $1,000 per Bond being repurchased. Our obligation to repurchase Bonds and the cash available for the death and disability Redemption are subject to certain conditions and limitations.

The Indenture Trust Agreement places certain financial covenants on the Company. Beside the Bond service reserves for series B, C, D & E being met (Note 3 – Restricted Cash – Funded Reserves), the Company must also maintain and Equity-Bond Ratio whereas the property equity values, Face amount of notes receivable and cash balances in total must be at or greater than 70% of the outstanding Bonds payable. The Company must also maintain cash balances in an amount not less than 120% of the forward-looking 3-month Bond payment amounts. The Company was in compliance with the Bond covenants for the years ending December 31, 2025 and 2024.

**GK Investment Property Holdings II, LLC**

**Note 4 – Bonds Payable (continued)**

Bonds payable are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Bonds Payable | $10793000 | $16167000 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Basis of <br> Amortization** | | |
|  | Straight-line |  |  |
| Bond issuance costs | over | $1758593 | $1758593 |
| Bond discount | bond terms | 687360 | 687360 |
| &nbsp;&nbsp;&nbsp;Subtotal |  | 2445953 | 2445953 |
| &nbsp;&nbsp;&nbsp;Less: Accumulated amortization |  | 2265101 | 1853587 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred bond issuance costs - net |  | 180852 | 592366 |
| Bonds payable - net |  | $10612148 | $15574634 |

---

Total amortization expense of bond issuance costs and bond discount charged to operations amounted to $411,514 and $503,664 for the years ended December 31, 2025 and 2024, respectively. Such amounts have been included in interest expense on the accompanying consolidated statements of operations. Bond interest expense was $1,057,748 and $1,293,372 for the years ended December 31, 2025 and 2024, respectively, of which $495,353 and $639,861 was incurred but not paid for the years ended December 31, 2025 and 2024, respectively.

**Note 5 - Note Payable**

**<u>GK Preferred Income Investments I (Lakeview Square)</u>**

On September 29, 2025, the Company entered into a Loan Agreement ("Loan 1") with GK Preferred Income Investments I (Lakeview Square), LLC ("GKPI I"), to borrow $1,023,000. Under the Loan Agreement, the interest rate is calculated using the 30 day Secured Overnight Financing Rate ("SOFR') average. As of December 31, 2025, this rate was 3.79%. The Company makes interest-only monthly payments on Loan 1 to GKPI I. Loan 1 may be entirely prepaid without a prepayment penalty. Loan 1 has a maturity date of September 29, 2030. GKPI I is a related party of the Company.

**GK Investment Property Holdings II, LLC**

**Note 5 - Note Payable (continued)**

The Company did not pay any financing fees while incurring the related party debt. Loan 1 interest expense was $10,498 for the year ended December 31, 2025, all of which was incurred but not paid for the year ended December 31, 2025 and is included in Accrued Interest on the accompanying consolidated balance sheets.

**Note 6 - Related Party Transactions**

The Manager is responsible for promoting the sale of the bonds and is entitled to receive a fee equal to 2.5% of the $50,000,000 gross bond proceeds received up to $1,250,000. For the years ended December 31, 2025 and 2024, the Manager had received $0 in promotional fees, which are included in bond issuance costs on the consolidated balance sheets.

With respect to related parties, amounts incurred consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Reimbursed expenses | $21151 | $25516 |
| &nbsp;&nbsp;&nbsp;Total | $21151 | $25516 |

---

**GK Investment Property Holdings II, LLC**

**Note 6 - Related Party Transactions (continued)**

As of December 31, 2025 and 2024, $74,593 was owed to the Manager, and is included in other liabilities on the accompanying consolidated balance sheets, related to management fees and reimbursements due to the Manager.

River Forest Grocery – GK Services LLC, which is 100% owned by the Manager, serves as the Trustee of the Trust. While the Trustee manages the Trust's operations, the Trustee's control is governed and limited by the Trust's operating agreement and trust agreement. The Company does not have a controlling financial interest in the Trust, nor does it have the power to direct the activities of the Trust.

**Note 7 – Investment in Beneficial Interests of Rental Property**

On July 21, 2021, the Property was sold to the Trust at an aggregate value of $10,778,490. The Transaction Value is comprised of the assumed Loan principal of $5,190,000 and of an equity portion of $5,588,490, which represents RF Grocery's capital contribution to the Trust, for 100% of the beneficial interests in the Delaware statutory trust.

The Company sold the remaining 12.19% of the beneficial interests in the Delaware statutory trust for an aggregate value of $754,047.

As of December 31, 2025 and 2024, RF Grocery owns 0% and 12.19%, respectively, of the beneficial interests in the Trust.

The following table summarizes the Company's Investment in the Beneficial Interests of the Delaware statutory trust for the years ended December 31, 2025 and 2024:

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Investment in Beneficial Interests of Rental Property | $754047 | $1549209 |
| less; |  |  |
| &nbsp;&nbsp;&nbsp;Redemption of beneficial interests of rental property | 754047 | 795162 |
| &nbsp;&nbsp;&nbsp;Net Investment in Beneficial Interests of the Delaware statutory trust | $- | $754047 |

---

**GK Investment Property Holdings II, LLC**

**Note 7 – Investment in Beneficial Interests of Rental Property (continued)**

Investment Income from the beneficial interests of the Trust for the years ended December 31, 2025 and 2024, was $10,071 and $75,613, respectively, which is included as other income in the consolidated statement of operations. As of December 31, 2025, $63,884 is due from the Delaware statutory trust and is included as other assets in the consolidated balance sheets.

**Note 8 - Notes receivable**

**RIDGMAR** - The Company has entered into a note receivable and loan agreement ("Note 1") effective July 30, 2021, in favor of GK Preferred Income II (Ridgmar), LLC ("GKPI II") and 1551 Kingsbury Partners SPE, LLC ("Kingsbury" and, together with GKPI II, the "Borrowers"). The Company and the Borrowers are affiliates of one another, and as such, Note 1 is a related party transaction.

Pursuant to the terms of Note 1, the Company initially advanced $3,500,000 to the Borrowers for a term of three (3) months, maturing on October 31, 2021. Note 1 is collateralized by a senior secured participatory mortgage loan on the rental property, Ridgmar Mall. On October 15, 2021, the Company advanced an additional $200,000 to the Borrowers and simultaneously extended the maturity of Note 1 until November 30, 2021. On December 1, 2021, the Company advanced an additional $2,500,000 to the Borrowers increasing the balance of Note 1 to $6,200,000 and extended the maturity of Note 1 until December 31, 2021. On January 1, 2022, the Company was repaid $100,000 of the outstanding principal balance of Note 1 and further extended the maturity of Note 1 until September 30, 2022, when remaining principal and any accrued and unpaid interest is due in full. The interest rate was reduced to 8% per annum, with the principal being repaid during the term of the extension based on a 25-year amortization rate. On September 1, 2022, Note 1 maturity was further extended until December 31, 2023. Note 1 originally bore interest at 20% per annum, payable 12% monthly and 8% deferred and due upon maturity of the note. On December 31, 2023, Note 1 maturity was further extended until December 31, 2024. Note 1 bears interest at 12.22% paid currently until maturity. The current rate was charged retroactively to January 1, 2022. During the year ended December 31, 2025, the Company advanced an additional $125,000 in proceeds to the Borrowers and also received $55,045 in repayments from the Borrowers. As of December 31, 2025 and 2024, the Note 1 balances were $6,886,685 and $6,816,729, respectively. On December 31, 2025, the Note 1 maturity was further extended until December 31, 2026.

**GK Investment Property Holdings II, LLC**

**Note 8 - Notes receivable (continued)**

In the case of any event of default under Note 1, the Company will be entitled to an additional five percent (5%) interest on Note 1 until such event of default is cured. Note 1 is secured by a first priority lien on the Borrowers' commercial property, the regional mall ("Ridgmar Mall") located in Ft. Worth, Texas.

Concurrently with Note 1, GK Investment Holdings, LLC ("GKIH") and GK Secured Income V, LLC ("GKSI V") loaned $1,100,000 and $750,000, respectively, to the Borrowers on terms substantially similar to the terms of the Loan for an aggregate loan amount of $7,950,000 (the "Aggregate Loan"). On July 30, 2021, the Company entered into an intercreditor agreement (the "Intercreditor Agreement"), dated as of July 30, 2021, by and among the Company, GKIH and GKSI V (collectively, "the Lenders") in order to establish and acknowledge the *pari passu* ranking of the Lenders' respective loans to the Borrowers and certain other matters. Pursuant to the terms of the Intercreditor Agreement, the Lenders acknowledge that the security interest held by each of the Lenders ranks equally and ratably without priority over one another and that any and all payments under the respective loans as between all Lenders will be paid equally and ratably.

The Company, the Borrowers, GKIH and GKSI V are each affiliates of one another, and the Loan and each of the GKIH and GKSI V loans are related party transactions.

Interest income for the years ended December 31, 2025 and 2024, was $1,239,768 and $800,239, respectively, including $523,956 and $137,917, of which was unpaid and is included in interest receivable as of December 31, 2025 and 2024, respectively. Included in interest income for the year ended December 31, 2025, was accretive interest of $384,675.

**STATION PLAZA** - The Company has entered into a note receivable and loan agreement ("Note 2") effective January 10, 2024, in favor of Station Plaza Self-Storage, LLC ("Station Plaza"). The Company and Station Plaza are affiliates of one another, and as such, Note 2 is a related party transaction.

Pursuant to the terms of Note 2, the Company advanced $2,000,000 to Station Plaza for a term of twelve (12) months, maturing on December 31, 2024. Note 2 is secured by a certain Collateral Assignment, Pledge and Security Agreement with Station Plaza. The interest rate is 12.22% per annum and is non-amortizing with only interest due on a monthly basis. The entire principal and any accrued interest are due at maturity. On December 31, 2024, the Note maturity was further extended until December 31, 2025.

In the case of any event of default under Note 2, the Company will be entitled to an additional five percent (5%) interest on Note 2 until such event of default is cured.

**GK Investment Property Holdings II, LLC**

**Note 8 - Notes receivable (continued)**

Interest income for the years ended December 31, 2025 and 2024, was $81,467 and $242,363, respectively, including $0 and $21,046 of which was unpaid and is included in interest receivable as of December 31, 2025 and 2024, respectively.

On May 1, 2025, the Note 2 balance of $2,000,000 was converted into a 37.21% preferred equity investment with SPSS Developer, LLC ("SPSS Developer'), the parent company of the original borrower, Station Plaza Self-Storage LLC. SPSS Developer and the Company are affiliates of one another, and as such, they are related parties. The preferred equity position require SPSS Developer to pay a 12.22% preferred capital return to the Company (See Note 9).

**DEMARCAY DEVELOPMENT** - The Company has entered into a note receivable and non-revolving Line of Credit loan agreement ("Note 3") effective April 29, 2024, in favor of DeMarcay Development Mezz Partners, LLC ("DeMarcay"). The Company and DeMarcay are affiliates of one another, and as such, Note 3 is a related party transaction.

Pursuant to the terms of Note 3, the Company advanced $523,774 to DeMarcay for a term of eighteen (18) months, maturing on December 31, 2025. Note 3 is unsecured. The interest rate is 12.22% per annum and is non-amortizing with only interest due on a monthly basis. The entire principal and any accrued interest are due at maturity. On January 1, 2026, the Note 3 maturity was extended until December 31, 2026.

In the case of any event of default under Note 3, the Company will be entitled to an additional five percent (5%) interest on Note 3 until such event of default is cured.

Interest income for the years ended December 31, 2025 and 2024, was $64,894 and $39,154, respectively, including $5,512 of which was unpaid and is included in interest receivable as of December 31, 2025 and 2024.

**GK FESTIVAL** - The Company has entered into a note receivable and loan agreement ("Note 4") effective May 8, 2024, in favor of GK Festival, LLC ("Festival"). The Company and Festival are affiliates of one another, and as such, Note 4 is a related party transaction.

Pursuant to the terms of Note 4, the Company initially advanced $3,751,000 to Festival for a term of twenty-one months (21) months, maturing on June 30, 2026. Note 4 is secured by a certain Mortgage and Security Agreement with Festival. The interest rate is 12.22% per annum and is non-amortizing with only interest due on a monthly basis. The entire principal and any accrued interest are due at maturity. The Company advanced an additional $25,000 on December 11, 2024, to Festival. The total amount the Company advanced to Festival of $3,776,000 is represented in a substitute promissory note dated December 11, 2024.

**GK Investment Property Holdings II, LLC**

**Note 8 - Notes receivable (continued)**

On February 21, 2025, Festival refinanced its rental property and paid down $2,800,000 of the principal amount owed to the Company for Note 4. The outstanding balance of Note 4 was reduced to $976,000.

In the case of any event of default under Note 4, the Company will be entitled to an additional five percent (5%) interest until such event of default is cured.

Interest income for the years ended December 31, 2025 and 2024, was $170,211 and $269,858, respectively, including $10,270 and $39,649 of which was unpaid and is included in interest receivable as of December 31, 2025 and 2024, respectively.

**Note 9 – Investment in rental real estate**

The preferred equity investment requires SPSS Developer to pay a 12.22% preferred capital return to the Company. Of the aggregate preferred capital return, seven percent (7%) is paid monthly if there is available cash. The remaining portion of the preferred capital return is expected to accrue and remain unpaid until the preferred capital contribution is repaid in full.

The Company earned $164,049 in preferred capital return for the year ended December 31, 2025. As of December 31, 2025, the Company was owed unpaid preferred capital return of $80,826, which has been included as accrued investment income on the accompanying consolidated balance sheets.

SPSS Developer is considered to be a variable interest entity because it does not have sufficient equity to conduct its principal activities without subordinated financial support provided by investment from the Company.

**GK Investment Property Holdings II, LLC**

**Note 10 – Information about variable interest entities**

As described in Note 8, the Company issued a note receivable to GK Preferred Income II (Ridgmar), LLC and 1551 Kingsbury Partners SPE, LLC ("Kingsbury" and, together with GKPI II, the "Ridgmar") on July 30, 2021. The activities that most significantly impact Ridgmar's economic performance are from owning and operating real estate. This entity is considered to be a variable interest entity because it does not have sufficient equity to conduct its principal activities without the subordinated financial support provided by the loans from the Company. The Company determined that it is not the primary beneficiary of Ridgmar because it does not have the power through voting or similar rights to direct rental operations of Ridgmar, which represent its most significant activities. The Company does not have equity investments in Ridgmar.

As of December 31, 2025 and 2024, the Company's maximum exposure to loss as a result of its involvement with Ridgmar is approximately $7,411,000 and $6,955,000, respectively, which represents the outstanding balance of the notes receivable and accrued interest receivable.

The following is a summary of the income tax basis financial position and results of operations of Ridgmar as of and for the years ended December 31, 2025 and 2024:

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Total Assets | $14780433 | $15479913 |
| Total Liabilities | $8550720 | $8220422 |
| Total Members' Equity | 6229713 | 7259491 |
| Total Liabilities and Equity | $14780433 | $15479913 |
| Revenue | $2501269 | $2959493 |
| Expenses | (2957638) | (3534709) |
| Net loss prior to noncash items | (456369) | (575216) |
| Depreciation and Amortization | (536409) | (543101) |
| Net loss | $(992778) | $(1118317) |

---

**GK Investment Property Holdings II, LLC**

**Note 10 – Information about variable interest entities (continued)**

As described in Note 8, the Company issued a note receivable to Station Plaza Self-Storage (Station Plaza), LLC on January 10, 2024. The activities that most significantly impact Station Plaza's economic performance are from owning, developing, and operating real estate. This entity is considered to be a variable interest entity because it does not have sufficient equity to conduct its principal activities without the subordinated financial support provided by the loan from the Company. The Company determined that it is not the primary beneficiary of Station Plaza because it does not have the power through voting or similar rights to direct development and rental operations of Station Plaza, which represent its most significant activities. The Company does not have equity investments in Station Plaza.

On May 1, 2025, the Company converted the Note 2 balance of $2,000,000 into a 37.21% preferred equity investment with SPSS Developer, the parent company of the original borrower, Station Plaza Self-Storage LLC. SPSS Developer and the Company are affiliates of one another, and as such, they are related parties.

As of December 31, 2025 and 2024, the Company's maximum exposure to loss as a result of its involvement with SPSS Developer/Station Plaza is approximately $2,080,826 and $2,021,000, respectively, which represents the outstanding balance of the investment and accrued investment income in 2025 and the note receivable and interest receivable in 2024.

**GK Investment Property Holdings II, LLC**

**Note 10 – Information about variable interest entities (continued)**

The following is a summary of the income tax basis financial position and results of operations of SPSS Developer as of and for the year ended December 31, 2025, and Station Plaza as of and for the year ended December 31, 2024:

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Total Assets | $4873896 | $7327861 |
| Total Liabilities | $- | $3907551 |
| Total Members' Equity | 4873896 | 3420310 |
| Total Liabilities and Equity | $4873896 | $7327861 |
| Revenue | $- | $- |
| Expenses | 565645 | - |
| Net loss prior to noncash items | 565645 |  |
| Depreciation and Amortization | - | - |
| Net loss | $565645 | $- |

---

As described in Note 8, the Company issued a note receivable to GK Festival (Festival), LLC on May 8, 2024. The activities that most significantly impact Festival's economic performance are from owning and operating estate. This entity is considered to be a variable interest entity because it does not have sufficient equity to conduct its principal activities without the subordinated financial support provided by the loan from the Company. The Company determined that it is not the primary beneficiary of Festival because it does not have the power through voting or similar rights to direct rental operations of Festival, which represent its most significant activities. The Company does not have equity investments in Festival.

On February 21, 2025, Festival refinanced its rental property and paid down $2,800,000 of the principal amount owed to the Company for Note 4. The outstanding balance of Note 4 was reduced to $976,000

As of December 31, 2025 and 2024, the Company's maximum exposure to loss as a result of its involvement with Festival is approximately $986,000 and $3,816,000, respectively, which represents the outstanding balance of the note receivable and accrued interest receivable.

**GK Investment Property Holdings II, LLC**

**Note 10 – Information about variable interest entities (continued)**

The following is a summary of the income tax basis financial position and results of operations of Festival as of and for the years ended December 31, 2025 and 2024:

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Total Assets | $3768602 | $3763793 |
| Total Liabilities | $4042723 | $3858704 |
| Total Members' Equity | (274120) | (95911) |
| Total Liabilities and Equity | $3768603 | $3762793 |
| Revenue | $591731 | $358591 |
| Expenses | (636923) | (496037) |
| Net loss prior to noncash items | (45192) | (137446) |
| Depreciation and Amortization | (132883) | (114275) |
| Net loss | $(178075) | $(251721) |

---

As described in Note 8, the Company issued a note receivable to DeMarcay Development Mezz Partners (DeMarcay), LLC on April 29, 2024. The activities that most significantly impact DeMarcay's economic performance are from owning and operating estate. This entity is considered to be a variable interest entity because it does not have sufficient equity to conduct its principal activities without the subordinated financial support provided by the loan from the Company. The Company determined that it is not the primary beneficiary of DeMarcay because it does not have the power through voting or similar rights to direct rental operations of DeMarcay, which represent its most significant activities. The Company does not have equity investments in DeMarcay.

As of December 31, 2025 and 2024, the Company's maximum exposure to loss as a result of its involvement with DeMarcay Festival is approximately $529,000, which represents the outstanding balance of the note receivable and accrued interest receivable.

**GK Investment Property Holdings II, LLC**

**Note 10 – Information about variable interest entities (continued)**

The following is a summary of the income tax basis financial position and results of operations of DeMarcay as of and for the years ended December 31, 2025 and 2024:

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Total Assets | $5516947 | $7010242 |
| Total Liabilities | $2515947 | $4010242 |
| Total Members' Equity | 3001000 | 3000000 |
| Total Liabilities and Equity | $5516947 | $7010242 |
| Revenue | $408374 | $217174 |
| Expenses | (255291) | (83868) |
| Net income | $153083 | $133306 |

---

**Note 11 – Segment reporting**

ASC Topic 280 "Segment Reporting" establishes standards for companies to report in their financial statement information about operating segments, services, geographic area, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company's chief operating decision maker ("CODM"), or group in deciding how to allocate resources and assess performance.

The Company's CODM has been identified as the Chief Executive Officer, who reviews the operating results for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that the Company has only one operating segment.

The CODM assesses performance for the single segment and decides how to allocate resources based on net income or loss reported on the consolidated statements of operations. The key measures of segment profit or loss reviewed by the CODM are interest income and interest expense, as reported on the consolidated statements of operations. Interest income and interest expense are reviewed and monitored by the CODM to manage and forecast cash to ensure that enough capital is available to maintain and enforce all contractual agreements. The measure of segment assets is the total assets as reported on the consolidated balance sheets. The accounting policies of this segment are the same as those described in the significant accounting policies in Note 1.

**GK Investment Property Holdings II, LLC**

**Note 12 – Subsequent Events**

On January 11, 2026, the Note 3 with DeMarcay was extended until December 31, 2026.

On January 30, 2026, the Note 1 with the Ridgmar Mall borrowers paid in full, including principal of $6,883,050, accrued current interest of $10,270, and accretive interest due of $769,350.

On January 30, 2026, the Loan 1 with GK Preferred Income I (Lakeview Square), LLC, was paid in full by the Company, including principal of $1,023,000, accrued current interest of $13,836.

Series C of the Bonds issued and payable matured on February 28, 2026. On February 26, 2026, the Company redeemed the Series C Bondholders for a total amount of $4,446,437. The redemption amount paid included $4,230,000 of Bond principal, current interest due of $10,692 and accrued interest due of $205,745.

The consolidated financial statements and related disclosures include evaluation of events up through and including June 12, 2026, which is the date the consolidated financial statements were available to be issued.

**Item 8. Exhibits**

---

| | |
|:---|:---|
| **Exhibit**<br> **Number** | **Exhibit Description** |
| [(2)(a)](http://www.sec.gov/Archives/edgar/data/1788427/000165495419010788/gkih_ex2a.htm) | [Certificate of Formation of the Company, incorporated by reference to Exhibit (2)(a) to the Company's Offering Statement on Form 1-A filed on September 17, 2019.](http://www.sec.gov/Archives/edgar/data/1788427/000165495419010788/gkih_ex2a.htm) |
| [(2)(b)](http://www.sec.gov/Archives/edgar/data/1788427/000165495419010788/gkih_ex2b.htm) | [Limited Liability Company Agreement of the Company, incorporated by reference to Exhibit (2)(b) to the Company's Offering Statement on Form 1-A filed on September 17, 2019.](http://www.sec.gov/Archives/edgar/data/1788427/000165495419010788/gkih_ex2b.htm) |
| [(2)(c)](https://www.sec.gov/Archives/edgar/data/1788427/000165495422002664/gkiph_ex2c.htm) | [First Amendment to Limited Liability Company Agreement of the Company, dated as of January 1, 2021, incorporated by reference to Exhibit 2.1 of the Company's Form 1-U filed on March 8, 2022.](https://www.sec.gov/Archives/edgar/data/1788427/000165495422002664/gkiph_ex2c.htm) |
| [(2)(d)](https://www.sec.gov/Archives/edgar/data/1788427/000165495420007949/gkiph_ex21.htm) | [Amended and Restated Limited Liability Company Agreement of RF Grocery, LLC, dated as of July 23, 2020, incorporated by reference to Exhibit 2.1 of the Company's Form 1-U filed on July 23, 2020.](https://www.sec.gov/Archives/edgar/data/1788427/000165495420007949/gkiph_ex21.htm) |
| [(2)(e)](http://www.sec.gov/Archives/edgar/data/1788427/000165495421000892/gkiphii_ex2d.htm) | [Amendment No. 1 to Operating Agreement of RF Grocery, LLC, dated as of December 17, 2020, incorporated by reference to Exhibit 2(d) of the Company's Form 1-A filed on January 28, 2021.](http://www.sec.gov/Archives/edgar/data/1788427/000165495421000892/gkiphii_ex2d.htm) |
| [(3)(a)](http://www.sec.gov/Archives/edgar/data/1788427/000165495420000422/gkih_ex3a.htm) | [Indenture between our company and the trustee, incorporated by reference to Exhibit 3(a) to the Company's Third Pre-Qualification Amendment to its Offering Statement on Form 1-A filed on January 14, 2020.](http://www.sec.gov/Archives/edgar/data/1788427/000165495420000422/gkih_ex3a.htm) |
| [(3)(b)](http://www.sec.gov/Archives/edgar/data/1788427/000165495420000422/gkih_ex3b.htm) | [Form of Unsecured Bond, incorporated by reference to Exhibit (3)(b) to the Company's Third Pre-Qualification Amendment to its Offering Statement on Form 1-A filed on January 14, 2020.](http://www.sec.gov/Archives/edgar/data/1788427/000165495420000422/gkih_ex3b.htm) |
| [(3)(c)](http://www.sec.gov/Archives/edgar/data/1788427/000165495420009237/gkinv_ex31.htm) | [First Supplemental Indenture between GK Investment Property Holdings II, LLC and UMB Bank, N.A., as trustee, dated as of August 13, 2020, incorporated by reference to Exhibit 3.1 of the Company's Form 1-U filed on August 17, 2020.](http://www.sec.gov/Archives/edgar/data/1788427/000165495420009237/gkinv_ex31.htm) |
| [(3)(d)](http://www.sec.gov/Archives/edgar/data/1788427/000165495422001680/gkiph_ex31.htm) | [Second Supplemental Indenture between GK Investment Property Holdings II, LLC and UMB Bank, N.A., as trustee, dated as of February 14, 2022, incorporated by reference to Exhibit 3.1 of the Company's Form 1-U filed on February 15, 2022.](http://www.sec.gov/Archives/edgar/data/1788427/000165495422001680/gkiph_ex31.htm) |
| [(4)](http://www.sec.gov/Archives/edgar/data/1788427/000165495419010788/gkih_ex-4.htm) | [Form of Subscription Agreement, incorporated by reference to Exhibit (4) to the Company's Offering Statement on Form 1-A filed on September 17, 2019.](http://www.sec.gov/Archives/edgar/data/1788427/000165495419010788/gkih_ex-4.htm) |
| [(6)(a)](http://www.sec.gov/Archives/edgar/data/1788427/000165495420006233/gkiph_ex61.htm) | [Purchase and Sale Agreement by and between 7501 W. North Avenue, LLC and RF Grocery LLC, dated as of May 27, 2020, incorporated by reference to Exhibit 6.1 of the Company's Form 1-U filed on June 2, 2020.](http://www.sec.gov/Archives/edgar/data/1788427/000165495420006233/gkiph_ex61.htm) |
| [(6)(b)](http://www.sec.gov/Archives/edgar/data/1788427/000165495421001984/gkii_ex6b.htm) | [Lease by and between Lakes Venture, LLC and 7501 W. North Avenue, LLC, dated as of November 14, 2014, incorporated by reference to Exhibit 6(b) of the Company's Form 1-A filed on February 23, 2021.](http://www.sec.gov/Archives/edgar/data/1788427/000165495421001984/gkii_ex6b.htm) |
| [(6)(c)](http://www.sec.gov/Archives/edgar/data/1788427/000165495421001984/gkii_ex6c.htm) | [Commencement Date Agreement by and between Lakes Venture, LLC and 7501 W. North Avenue LLC, dated as of June 6, 2017, incorporated by reference to Exhibit 6(c) of the Company's Form 1-A filed on February 23, 2021.](http://www.sec.gov/Archives/edgar/data/1788427/000165495421001984/gkii_ex6c.htm) |

---

---

| | |
|:---|:---|
| [(6)(d)](http://www.sec.gov/Archives/edgar/data/1788427/000165495421001984/gkii_ex6d.htm) | [Assignment and Assumption of Leases by and between 7501 W. North Avenue, LLC and RF Grocery, LLC, dated as of July 17, 2020, incorporated by reference to Exhibit 6(d) of the Company's Form 1-A filed on February 23, 2021.](http://www.sec.gov/Archives/edgar/data/1788427/000165495421001984/gkii_ex6d.htm) |
| [(6)(e)](http://www.sec.gov/Archives/edgar/data/1788427/000165495421010461/gkii_ex6e.htm) | [Promissory Note by GK Preferred Income II (Ridgmar) SPE, LLC and 1551 Kingsbury Partners SPE, LLC, as Borrowers, in favor of GK Investment Property Holdings II, LLC, as Lender, dated as of July 30, 2021, incorporated by reference to Exhibit 6(e) of the Company's Form 1-SA filed on September 28, 2021.](http://www.sec.gov/Archives/edgar/data/1788427/000165495421010461/gkii_ex6e.htm) |
| [(6)(f)](http://www.sec.gov/Archives/edgar/data/1788427/000165495421010461/gkii_ex6f.htm) | [Deed of Trust, Assignment of Leases and Rents and Security Agreement by and among GK Preferred Income II (Ridgmar) SPE, LLC and 1551 Kingsbury Partners SPE, LLC, as Trustors, and Rebecca S. Conrad, as Trustee, for the benefit of GK Investment Property Holdings II, LLC, as Beneficiary, dated as of August 16, 2021, incorporated by reference to Exhibit 6(f) of the Company's Form 1-SA filed on September 28, 2021.](http://www.sec.gov/Archives/edgar/data/1788427/000165495421010461/gkii_ex6f.htm) |
| [(6)(g)](http://www.sec.gov/Archives/edgar/data/1788427/000165495421010461/gkii_ex6g.htm) | [Intercreditor Agreement by and among GK Investment Holdings, LLC, GK Investment Property Holdings II, LLC and GK Secured Income V, LLC, dated as of July 30, 2021, incorporated by reference to Exhibit 6(g) of the Company's Form 1-SA filed on September 28, 2021.](http://www.sec.gov/Archives/edgar/data/1788427/000165495421010461/gkii_ex6g.htm) |
| [(6)(h)](http://www.sec.gov/Archives/edgar/data/1788427/000165495421010461/gkii_ex6h.htm) | [Contribution Agreement by and between RF Grocery, LLC and GK DST - River Forest Grocery, dated as of June 25, 2021, incorporated by reference to Exhibit 6(h) of the Company's Form 1-SA filed on September 28, 2021.](http://www.sec.gov/Archives/edgar/data/1788427/000165495421010461/gkii_ex6h.htm) |
| [(6)(i)](http://www.sec.gov/Archives/edgar/data/1788427/000165495421010461/gkii_ex6i.htm) | [Loan Modification Agreement, by and among Barrington Bank & Trust Company, N.A., RF Grocery, LLC, GK DST - River Forest Grocery and GK Development, Inc. d/b/a GK Real Estate, dated as of July 21, 2021, incorporated by reference to Exhibit 6(i) of the Company's Form 1-SA filed on September 28, 2021.](http://www.sec.gov/Archives/edgar/data/1788427/000165495421010461/gkii_ex6i.htm) |
| [(6)(j)](http://www.sec.gov/Archives/edgar/data/1788427/000165495421010461/gkii_ex6j.htm) | [Amended and Restated Note, made by GK DST - River Forest Grocery payable to Barrington Bank & Trust Company, N.A., dated as of July 21, 2021, incorporated by reference to Exhibit 6(j) of the Company's Form 1-SA filed on September 28, 2021.](http://www.sec.gov/Archives/edgar/data/1788427/000165495421010461/gkii_ex6j.htm) |
| [(6)(k)](http://www.sec.gov/Archives/edgar/data/1788427/000165495421010461/gkii_ex6k.htm) | [Trust Agreement of GK DST - River Forest Grocery by and between Sorensen Entity Services LLC, River Forest Grocery - GK Services LLC and RF Grocery, LLC dated as of June 10, 2021, incorporated by reference to Exhibit 6(k) of the Company's Form 1-SA filed on September 28, 2021.](http://www.sec.gov/Archives/edgar/data/1788427/000165495421010461/gkii_ex6k.htm) |
| [(6)(l)](https://www.sec.gov/Archives/edgar/data/1788427/000165495422002664/gkiph_ex6l.htm) | [Substitute Promissory Note by GK Preferred Income II (Ridgmar) SPE, LLC and 1551 Kingsbury Partners SPE, LLC, as Borrowers, in favor of GK Investment Property Holdings II, LLC, as Lender, dated as of October 15, 2021, incorporated by reference to Exhibit (6)(l) to the Company 1-A POS filed March 8, 2022.](https://www.sec.gov/Archives/edgar/data/1788427/000165495422002664/gkiph_ex6l.htm) |
| [(6)(m)](https://www.sec.gov/Archives/edgar/data/1788427/000165495422002664/gkiph_ex6m.htm) | [Extension Letter by GK Preferred Income II (Ridgmar) SPE, LLC and 1551 Kingsbury Partners SPE, LLC, as Borrowers, dated as of October 25, 2021, incorporated by reference to Exhibit (6)(m) to the Company 1-A POS filed March 8, 2022.](https://www.sec.gov/Archives/edgar/data/1788427/000165495422002664/gkiph_ex6m.htm) |

---

---

| | |
|:---|:---|
| [(6)(n)](https://www.sec.gov/Archives/edgar/data/1788427/000165495422002664/gkiph_ex6n.htm) | [Substitute Promissory Note by GK Preferred Income II (Ridgmar) SPE, LLC and 1551 Kingsbury Partners SPE, LLC, as Borrowers, in favor of GK Investment Property Holdings II, LLC, as Lender, dated as of December 1, 2021, incorporated by reference to Exhibit (6)(n) to the Company 1-A POS filed March 8, 2022.](https://www.sec.gov/Archives/edgar/data/1788427/000165495422002664/gkiph_ex6n.htm) |
| [(6)(o)](https://www.sec.gov/Archives/edgar/data/1788427/000165495422002664/gkiph_ex6o.htm) | [Substitute Promissory Note by GK Preferred Income II (Ridgmar) SPE, LLC and 1551 Kingsbury Partners SPE, LLC, as Borrowers, in favor of GK Investment Property Holdings II, LLC, as Lender, dated as of January 1, 2022, incorporated by reference to Exhibit (6)(o) to the Company 1-A POS filed March 8, 2022.](https://www.sec.gov/Archives/edgar/data/1788427/000165495422002664/gkiph_ex6o.htm) |
| [(6)(p)](https://www.sec.gov/Archives/edgar/data/1788427/000165495422002664/gkiph_ex6p.htm) | [First Amendment to Deed of Trust, Assignment of Leases and Rents and Security Agreement by and among GK Preferred Income II (Ridgmar) SPE, LLC and 1551 Kingsbury Partners SPE, LLC, as Trustors, and Rebecca S. Conrad, as Trustee, for the benefit of GK Investment Property Holdings II, LLC, as Beneficiary, dated as of December 1, 2021, incorporated by reference to Exhibit (6)(p) to the Company 1-A POS filed March 8, 2022.](https://www.sec.gov/Archives/edgar/data/1788427/000165495422002664/gkiph_ex6p.htm) |
| [(6)(q)](https://www.sec.gov/Archives/edgar/data/1788427/000165495422002664/gkiph_ex6q.htm) | [Second Amendment to Deed of Trust, Assignment of Leases and Rents and Security Agreement by and among GK Preferred Income II (Ridgmar) SPE, LLC and 1551 Kingsbury Partners SPE, LLC, as Trustors, and Rebecca S. Conrad, as Trustee, for the benefit of GK Investment Property Holdings II, LLC, as Beneficiary, dated as of January 1, 2022, incorporated by reference to Exhibit (6)(q) to the Company 1-A POS filed March 8, 2022.](https://www.sec.gov/Archives/edgar/data/1788427/000165495422002664/gkiph_ex6q.htm) |
| [(6)(r)](https://www.sec.gov/Archives/edgar/data/1788427/000165495422002664/gkiph_ex6r.htm) | [Amended and Restated Intercreditor Agreement by and among GK Investment Holdings, LLC, GK Investment Property Holdings II, LLC and GK Secured Income V, LLC, dated as of October 15, 2021, incorporated by reference to Exhibit (6)(r) to the Company 1-A POS filed March 8, 2022.](https://www.sec.gov/Archives/edgar/data/1788427/000165495422002664/gkiph_ex6r.htm) |
| [(6)(s)](https://www.sec.gov/Archives/edgar/data/1788427/000165495422002664/gkiph_ex6s.htm) | [Second Amended and Restated Intercreditor Agreement by and among GK Investment Holdings, LLC, GK Investment Property Holdings II, LLC and GK Secured Income V, LLC, dated as of December 1, 2021, incorporated by reference to Exhibit (6)(s) to the Company 1-A POS filed March 8, 2022.](https://www.sec.gov/Archives/edgar/data/1788427/000165495422002664/gkiph_ex6s.htm) |
| [(6)(t)](https://www.sec.gov/Archives/edgar/data/1788427/000165495422002664/gkiph_ex6t.htm) | [Third Amended and Restated Intercreditor Agreement by and among GK Investment Holdings, LLC, GK Investment Property Holdings II, LLC and GK Secured Income V, LLC, dated as of January 1, 2022, incorporated by reference to Exhibit (6)(t) to the Company 1-A POS filed March 8, 2022.](https://www.sec.gov/Archives/edgar/data/1788427/000165495422002664/gkiph_ex6t.htm) |
| [(6)(u)](https://www.sec.gov/Archives/edgar/data/1788427/000110465923104804/tm2327056d1_ex6u.htm) | [Promissory Note by Station Plaza Self-Storage LLC, as borrower, in favor of GK Investment Property Holdings II, LLC, as Lender, dated January 10, 2024 incorporated by reference to Exhibit 6(u) of the Company's Form 1-SA filed on September 28, 2023.](https://www.sec.gov/Archives/edgar/data/1788427/000110465923104804/tm2327056d1_ex6u.htm) |
| [(6)(v)](https://www.sec.gov/Archives/edgar/data/1788427/000110465924055799/tm2413160d1_ex-6v.htm) | [Collateral Assignment, Pledge and Security agreement by SPSS Developer LLC and GK Station Plaza Self-Storage LLC to and in favor of GK Investment Property Holdings II, LLC dated January 10, 2024, incorporated by reference to Exhibit 6(v) of the Company's Form 1-SA filed on May 1, 2024.](https://www.sec.gov/Archives/edgar/data/1788427/000110465924055799/tm2413160d1_ex-6v.htm) |
| [(6)(w)](https://www.sec.gov/Archives/edgar/data/1788427/000110465923104804/tm2327056d1_ex6w.htm) | [Intercreditor Agreement dated as of June 21, 2022, is made by and among GK Investment Property Holdings II, LLC, as Lender 1 and GK Holiday Village, LLC, as Lender 2, incorporated by reference to Exhibit 6(w) of the Company's Form 1-SA filed on September 28, 2023.](https://www.sec.gov/Archives/edgar/data/1788427/000110465923104804/tm2327056d1_ex6w.htm) |
| [(6)(x)](https://www.sec.gov/Archives/edgar/data/1788427/000110465924104474/tm2425253d1_ex6x.htm) | [Promissory Note dated as of January 10, 2024 in the principal amount of $2,000,000 made by GK Investment Property Holdings II, LLC, as Lender, and Station Plaza Self-Storage LLC, as Borrower, incorporated by reference to Exhibit 6(x) of the Company's Form 1-SA filed on September 28, 2024.](https://www.sec.gov/Archives/edgar/data/1788427/000110465924104474/tm2425253d1_ex6x.htm) |
| [(6)(y)](https://www.sec.gov/Archives/edgar/data/1788427/000110465924104474/tm2425253d1_ex6y.htm) | [Promissory Note dated as of April 29, 2024 in the principal amount of $503,774 by DeMarcay Development Mezz Partners LLC, as Maker, and GK Investment Property Holdings II, LLC, as Holder, incorporated by reference to Exhibit 6(y) of the Company's Form 1-SA filed on September 28, 2024.](https://www.sec.gov/Archives/edgar/data/1788427/000110465924104474/tm2425253d1_ex6y.htm) |
| [(6)(z)](https://www.sec.gov/Archives/edgar/data/1788427/000110465924104474/tm2425253d1_ex6z.htm) | [Promissory Note dated as of May 8, 2024 in the principal amount of $3,751,000 by GK Festival LLC, as Borrower, and GK Investment Property Holdings II, LLC, as Lender, incorporated by reference to Exhibit 6(z) of the Company's Form 1-SA filed on September 28, 2024.](https://www.sec.gov/Archives/edgar/data/1788427/000110465924104474/tm2425253d1_ex6z.htm) |

---

---

| | |
|:---|:---|
| [(6)(aa)](https://www.sec.gov/Archives/edgar/data/1788427/000110465926068114/tm2615896d1_ex-6aa.htm) | [Substitute Promissory Note in the principal amount of $6,816,728 by GK Preferred Income II (Ridgmar) SPE, LLC and 1551 Kingsbury Partners SPE, LLC, as Borrowers, in favor of GK Investment Property Holdings II, LLC, as Lender, dated as of January 1, 2025, incorporated by reference to Exhibit (6)(aa) of the Company's Form 1-K filed on April 13, 2026.](https://www.sec.gov/Archives/edgar/data/1788427/000110465926068114/tm2615896d1_ex-6aa.htm) |
| [(6)(bb)](https://www.sec.gov/Archives/edgar/data/1788427/000110465926068114/tm2615896d1_ex-6bb.htm) | [Sixth Amended and Restated Intercreditor Agreement by and among GK Investment Holdings, LLC, GK Investment Property Holdings II, LLC and GK Secured Income V, LLC, dated as of January 1, 2025 incorporated by reference to Exhibit (6)(bb) of the Company's Form 1-K filed on April 13, 2026.](https://www.sec.gov/Archives/edgar/data/1788427/000110465926068114/tm2615896d1_ex-6bb.htm) |
| [(6)(cc)](https://www.sec.gov/Archives/edgar/data/1788427/000110465926068114/tm2615896d1_ex-6cc.htm) | [Fifth Amendment to Deed of Trust, Assignment of Leases and Rents and Security Agreement by and among GK Preferred Income II (Ridgmar) SPE, LLC and 1551 Kingsbury Partners SPE, LLC, as Trustors, and Rebecca S. Conrad, as Trustee, for the benefit of GK Investment Property Holdings II, LLC, as Beneficiary, dated as of January 1, 2025 incorporated by reference to Exhibit (6)(cc) of the Company's Form 1-K filed on April 13, 2026.](https://www.sec.gov/Archives/edgar/data/1788427/000110465926068114/tm2615896d1_ex-6cc.htm) |
| [(6)(dd)](tm2617387d1_ex-6dd.htm) | [Substitute Promissory Note in the principal amount of $7,656,034.09 by GK Preferred Income II (Ridgmar) SPE, LLC and 1551 Kingsbury Partners SPE, LLC, as Borrowers, in favor of GK Investment Property Holdings II, LLC, as Lender, dated as of January 1, 2025.](tm2617387d1_ex-6dd.htm) |
| [(6)(ee)](https://www.sec.gov/Archives/edgar/data/1788427/000110465926068114/tm2615896d1_ex-6ee.htm) | [Seventh Amended and Restated Intercreditor Agreement by and among GK Investment Holdings, LLC, GK Investment Property Holdings II, LLC and GK Secured Income V, LLC, dated as of January 1, 2026, incorporated by reference to Exhibit (6)(ee) of the Company's Form 1-K filed on April 13, 2026.](https://www.sec.gov/Archives/edgar/data/1788427/000110465926068114/tm2615896d1_ex-6ee.htm) |
| [(6)(ff)](https://www.sec.gov/Archives/edgar/data/1788427/000110465926068114/tm2615896d1_ex-6ff.htm) | [Fifth Amendment to Deed of Trust, Assignment of Leases and Rents and Security Agreement by and among GK Preferred Income II (Ridgmar) SPE, LLC and 1551 Kingsbury Partners SPE, LLC, as Trustors, and Rebecca S. Conrad, as Trustee, for the benefit of GK Investment Property Holdings II, LLC, as Beneficiary, dated as of January 1, 2026, incorporated by reference to Exhibit (6)(ff) of the Company's Form 1-K filed on April 13, 2026.](https://www.sec.gov/Archives/edgar/data/1788427/000110465926068114/tm2615896d1_ex-6ff.htm) |
| [(6)(gg)](https://www.sec.gov/Archives/edgar/data/1788427/000110465926068114/tm2615896d1_ex-6gg.htm) | [Substitute Promissory Note dated as of January 1, 2025 in the principal amount of $2,000,000 made by GK Investment Property Holdings II, LLC, as Lender, and Station Plaza Self-Storage LLC, as Borrower, incorporated by reference to Exhibit (6)(gg) of the Company's Form 1-K filed on April 13, 2026.](https://www.sec.gov/Archives/edgar/data/1788427/000110465926068114/tm2615896d1_ex-6gg.htm) |
| [(6)(hh)](https://www.sec.gov/Archives/edgar/data/1788427/000110465926068114/tm2615896d1_ex-6hh.htm) | [Debt Conversion Agreement dated January 1, 2025 by and among Station Plaza Self-Storage LLC, SPSS Developer LLC and GK Investment Property Holdings II, LLC, as lender, incorporated by reference to Exhibit (6)(hh) of the Company's Form 1-K filed on April 13, 2026.](https://www.sec.gov/Archives/edgar/data/1788427/000110465926068114/tm2615896d1_ex-6hh.htm) |
| [(6)(ii)](tm2617387d1_ex-6ii.htm) | [Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing by GK Festival LLC to and for the benefit of GK Investment Property Holdings II, LLC dated June 6, 2024.](tm2617387d1_ex-6ii.htm) |
| [(8)](http://www.sec.gov/Archives/edgar/data/1788427/000165495419012689/gkih_ex8.htm) | [Form of Subscription Escrow Agreement among our company, JCC Advisors, LLC and UMB Bank, National Association, incorporated by reference to Exhibit (8) to the Company's First Pre-Qualification Amendment to its Offering Statement on Form 1-A filed on November 12, 2019.](http://www.sec.gov/Archives/edgar/data/1788427/000165495419012689/gkih_ex8.htm) |

---

**SIGNATURES**

Pursuant to the requirements of Regulation A, the issuer has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | **GK Investment Property Holdings II, LLC,**<br> a Delaware limited liability company | **GK Investment Property Holdings II, LLC,**<br> a Delaware limited liability company |
|  | By: | **GK Development, Inc. dba GK Real Estate** |
|  |  | an Illinois corporation, Manager |
| Date: June 12, 2026 | By: | /s/ *Garo Kholamian* |
|  | Name: | Garo Kholamian |
|  | Title: | Sole Director |

---

Pursuant to the requirements of Regulation A, this report has been signed below by the following persons on behalf of the issuer and in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| Date: June 12, 2026 | By: | /s/ *Garo Kholamian* |
|  |  | Garo Kholamian |
|  |  | President of our manager (Principal Executive Officer) |

---

---

| | | |
|:---|:---|:---|
| Date: June 12, 2026 | By: | /s/ *Steven P. Higdon* |
|  |  | Steven P. Higdon |
|  |  | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |

---

## Ex1K-6

**Exhibit (6)(dd)**

**SUBSTITUTE PROMISSORY NOTE**

---

| | |
|:---|:---|
| $7656034.09 | Date: January 1, 2025 |
|  | Maturity Date: December 31, 2026 |

---

FOR VALUE RECEIVED, GK PREFERRED INCOME II (RIDGMAR) SPE, LLC, a Delaware limited liability company <u>("GK Borrower")</u> and 1551 KINGSBURY PARTNERS SPE, LLC, a Delaware limited liability company <u>("Kingsbury Borrower";</u> and together with GK Borrower, individually or collectively, as the context requires, <u>"Borrower"),</u> jointly and severally, hereby promise to pay to the order of GK INVESTMENT PROPERTY HOLDINGS II, LLC, a Delaware limited liability company <u>("Lender")</u> the principal sum of SEVEN MILLION SIX HUNDRED FIFTY-SIX THOUSAND THIRTY- FOUR AND 09/100 DOLLARS ($7,656,034.09), or such lesser amount as may be advanced to Borrower by Lender with interest thereon, according to the terms of this Substitute Promissory Note (this <u>"Note")</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. **Interest Rate.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 The unpaid principal balance of this Note shall bear interest from the date of this Note through the Maturity Date at a rate equal to twelve and twenty-two hundredths percent (12.22%) per annum· (the <u>"Interest Rate")</u>. Interest shall be calculated on the basis of a 360-day year and the actual number of days elapsed in any portion of a month in which interest is due.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 From and after the Maturity Date or upon the occurrence and during the continuance of an Event of Default (as defined below) interest shall accrue on the unpaid principal balance of this Note until paid at a rate equal to five percent (5.00%) per annum in excess of the Interest Rate (the "Default Interest <u>Rate")</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3 No clause or provision in this Note shall be construed or shall so operate (a) to raise the Interest Rate set forth in this Note above the lawful maximum, if any, in effect from time to time in the applicable jurisdiction for loans to borrowers of the type, in the amount, for the purposes, and otherwise of the kind contemplated, or (b) to require the payment or the doing of any act contrary to law, but if any clause or provision contained shall otherwise so operate this Note, in whole or in part, then (i) such clauses or provisions shall be deemed modified to the extent necessary to be in compliance with the law, or (ii) to the extent not possible, shall be deemed void as though not contained and the remainder of this Note shall remain operative and in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. **Payments.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 Payments under this Note, if not sooner paid or declared to be due in accordance with the terms hereof, shall be made as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Commencing on January 1, 2025, and continuing on the first day of each month thereafter through and including the month in which the Maturity Date occurs, Borrower shall make monthly payments of principal and interest in the amount of $76,101.99 each, which monthly payment shall be calculated based upon a twenty-five (25) year amortization period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The unpaid principal balance of this Note, if not sooner paid or declared to be due in accordance with the terms hereof, together with all accrued and unpaid interest thereon and any other amounts due and payable hereunder, shall be due and payable in full on the Maturity Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 Borrower may prepay this Note, in whole or in part, at any time without prepayment penalty or premium. Prepayments shall be allocated among principal, interest and fees at the sole discretion of the Lender unless otherwise agreed or required by applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 Borrower will pay the obligations due under this Note to Lender at 257 East Main Street, Suite 200, Barrington, Illinois 60010, or at such other place as the Lender may designate from time to time in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4 Borrower agrees that to the extent any payment is received by Lender in connection with this Note, and all or any part of such payment is subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid by Lender or paid over to a trustee, receiver or any other entity, whether under any bankruptcy act or otherwise (any such payment is hereinafter referred to as a <u>"Preferential Payment"),</u> then this Note shall continue to be effective or shall be reinstated, as the case may be, and whether or not Lender is in possession of this Note, and, to the extent of such payment or repayment by Lender intended to be satisfied by such Preferential Payment shall be revived and continued in full force and effect as if said Preferential Payment had not been made.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5 Borrower hereby acknowledges and agrees that the payment obligations due under this Note are subject to that certain Amended and Restated Intercreditor Agreement dated as of December 1, 2021, as amended from time to time, by and among, Lender, GK Investment Holdings, LLC, a Delaware limited liability company and GK Secured Income V, LLC, a Delaware limited liability company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. **Security.** The payment and performance of all of the obligations represented by this Note are evidenced and/or secured by, among other things, (i) that certain Deed of Trust, Assignment of Leases and Rents and Security Agreement dated as of August 16, 2021 and recorded by the Tarrant County Clerk on August 19, 2021 as Document D221240551, as amended from time to time (the <u>"Deed of Trust"),</u> granting a first priority lien, mortgage and security interest to the Lender in the real property commonly known as 1888 Green Oaks Road, Fort Worth, Tarrant County, Texas (the <u>"Property");</u> and (ii) such other documents given to evidence or secure payment of this Note (collectively, the <u>"Loan Documents").</u> Reference is hereby made to the Loan Documents, which are incorporated herein by reference, for a statement of the covenants and agreements contained therein, a statement of the rights, remedies and security afforded thereby, and all matters contained therein. Contemporaneously with the execution and delivery ofthis Substitute Note, Borrower shall execute and deliver to Lender a certain Sixth Amendment to Deed of Trust to reflect the current principal balance of this Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. **Default.** The occurrence and continuance of any one or more of the following events shall be considered an "E_v�nt of Default":

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 Borrower fails to pay when due any amount payable under this Note, within five (5) days of the due date for such payment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 The commencement of any proceeding in bankruptcy by or against Borrower or alleging that Borrower is insolvent or unable to pay its debts as they mature, or for the readjustment of Borrower's debts, whether under the United States Bankruptcy Code or under any other law, whether state or federal, now or hereafter existing, for the relief of debtors, or the commencement of any analogous statutory or non-statutory proceeding involving Borrower; provided, however, that if such commencement of proceedings against Borrower is involuntary, such action shall not constitute an Event of Default unless such appointment is not revoked or such proceeding is not dismissed within sixty (60) days after the commencement of such proceedings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. **Remedies.** At the election of Lender, and without notice, the principal balance remaining unpaid under this Note and all accrued and unpaid interest thereon and any other amounts due hereunder, shall be and become immediately due and payable in full upon the occurrence of an Event of Default. Failure to exercise this option shall not constitute a waiver of the right to exercise same in the event of any subsequent Event of Default. Upon an Event of Default, Lender may proceed under any remedy permitted herein, or pursuant to law or equity. No holder hereof shall, by any act of omission or commission, be deemed to waive any of its rights, remedies or powers hereunder unless such waiver is in writing and signed by the holder hereof, and then only to the extent specifically set forth therein. The rights, remedies and powers of the holder hereof, as provided in this Note are cumulative and concurrent and may be pursued singly, successively or together against Borrower and any security given at any time to secure repayment hereof, all at the sole discretion of the holder hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. **Financial Statements.** Promptly when available, and in any event, within ten (10) days following the end of each calendar month during the term of this Note, Borrower shall deliver to Lender a copy of the unaudited financial statements of Borrower regarding such month then ended, together with such other documentation and information as Lender may reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. **Miscellaneous.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 This Note, together with the Loan Documents, constitutes the entire agreement among Borrower and Lender and contains all of the agreements with respect to the subject matter hereof, and

&nbsp;&nbsp;&nbsp;&nbsp;• supersedes any prior understandings, agreements, or representations by or among Borrower and Lender,
whether written or oral, to the extent they relate in any way to the subject matter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2 Lender may at any time assign its rights in this Note. This Note shall inure to the benefit of and may be enforced by Lender and its successor and assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3 No amendment, modification or waiver of any provision of this Note shall be valid unless the same shall be in writing and signed by Borrower and Lender. No waiver by any party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.4 The section headings contained in this Note are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.5 This Note is the result of arm's length negotiations conducted by and among Borrower and Lender and, therefore, the usual rules of construction requiring that ambiguities are to be resolved against a particular party shall not be applicable in the construction of this Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.6 If at any time or times hereafter following an Event of Default Lender employs counsel (whether or not there is a lawsuit) to enforce any rights of Lender against Borrower under this Note or any of the other Loan Documents, or attempts to or enforces any of Lender's rights or remedies under this Note, the costs and expenses incurred by Lender in any manner or way with respect to the foregoing, including, without limitation, attorneys' fees and costs through appeal and in post-judgment proceedings, shall be part of the obligations owing under this Note, payable by Borrower to Lender on demand.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.7 Whenever possible each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Note shall be prohibited or invalid under such law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of said documents. As used in this Note, the singular shall include the plural, and masculine, feminine and neuter pronouns shall be fully interchangeable, where the context so requires.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.8 If this Note is executed by more than one party, the obligations and liabilities of each Borrower hereunder shall be joint and several and shall be binding and enforceable against each Borrower and their respective successors and permitted assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.9 BORROWER WAIVES, TO THE **MAXIMUM** EXTENT NOT PROHIBITED BYLAW, ANY RIGHT BORROWER MAY HAVE TO CLAIM OR RECOVER FROM LENDER IN ANY LEGAL ACTION OR PROCEEDING ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.10 THE VALIDITY OF THIS NOTE, ITS CONSTRUCTION, INTERPRETATION AND ENFORCEMENT, AND THE RIGHTS OF BORROWER AND LENDER SHALL BE DETERMINED UNDER, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.11 <u>**JURY WAIVER.**</u> LENDER AND BORROWER, EACH HAVING BEEN REPRESENTED BY COUNSEL OR HAVING THE OPPORTUNITY TO BE REPRESENTED BY COUNSEL, EACH KNOWINGLY AND VOLUNTARILY, TO THE MAXIMUM EXTENT PERMITTED BYLAW, EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY ACTION, CAUSE OF ACTION, CLAIM, DEMAND OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS NOTE OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. TO THE MAXIMUM EXTENT PERMITTED BY LAW, BORROWER HEREBY AGREES THAT ANY SUCH ACTION, CAUSE OF ACTION, CLAIM, DEMAND OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT LENDER MAY FILE A COPY OF THIS NOTE WITH ANY COURT OR OTHER TRIBUNAL AS WRITTEN EVIDENCE OF THE CONSENT OF BORROWER TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.12 <u>**PRIOR NOTES.**</u> This Note is given in substitution for, and not in payment of the following (collectively, the <u>"Prior Notes"):</u> that certain Promissory Note dated July 30, 2021 made by Borrower in the original principal sum of$3,500,000.00; as amended by that certain Substitute Promissory Note dated October 15, 2021 made by Borrower in the original principal sum of $3,700,000.00; as further amended by that certain Substitute Promissory Note dated December 1, 2021 made by Borrower in the original principal sum of $6,200,000.00; as further amended by that certain Substitute Promissory Note dated January 1, 2022 made by Borrower in the original principal sum of $6,100,000.00; as further amended by that certain Substitute Promissory Note dated September 1, 2022 made by Borrower in the original principal sum of $6,047,931.05; as further amended by that certain Substitute Promissory Note dated November 1, 2022 made by Borrower in the original principal sum of $6,292,065.23; and as further amended by that certain Substitute Promissory Note dated January 1, 2024 made by Borrower in the original principal sum of $6,236,166.50; that certain Promissory Note dated January 31, 2024 made by Borrower in the original principal sum of $155,000.00; that certain Promissory Note dated April 19, 2024 made by Borrower in the original principal sum of$85,000.00; that certain Promissory Note dated October 16, 2024 made by Borrower in the original principal sum of $110,000.00; that certain Promissory Note dated December 11, 2024 in the original principal sum of $175,000.00; and that certain Promissory Note dated December 17, 2024 in the original principal sum of$100,000.00.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, Borrower has duly executed this Substitute Promissory Note as of the day and year first written above.

---

| | |
|:---|:---|
| **BORROWER:** | **BORROWER:** |
| GK PREFERRED INCOME II (RIDGMAR) | GK PREFERRED INCOME II (RIDGMAR) |
| SPE, LLC, a Delaware limited liability company | SPE, LLC, a Delaware limited liability company |
| GK Development, Inc., | GK Development, Inc., |
| an Illinois corporation, its Manager | an Illinois corporation, its Manager |
| By: | /s/ Garo Kholamian |
|  | Name: Garo Kholamian |
|  | Title: President |
| **BORROWER:** | **BORROWER:** |
| 1551 KINGSBURY PARTNERS SPE, LLC, a | 1551 KINGSBURY PARTNERS SPE, LLC, a |
| Delaware limited liability company | Delaware limited liability company |
| GK Development, Inc., | GK Development, Inc., |
| an Illinois corporation, its Manager | an Illinois corporation, its Manager |
| By: | /s/ Garo Kholamian |
|  | Name: Garo Kholamian |
|  | Title: President |

---

## Ex1K-6

**Exhibit 6(ii)**

State of AL Montgomery Co.

I Certify this Instrument was Filed As<br> REAL Book:06140 Page:198<br> Inst Num: 32014695090

On 06-12-2024 02:30:41 PM

JC Love, III <br> Judge of Probate <br> Total Fees:$91.00 <br> Total Tax:$5,626.50 <br> Total:$5,717.50

**THIS DOCUMENT PREPARED BY<br> AND AFTER RECORDING RETURN TO:**

GK Festival LLC

c/o GK Development, Inc. <br> 257 E. Main Street, Suite 200

Barrington, IL 60010<br> Attn: Corporate Counsel

**AL2210289RC**

**Above Space for Recorder's Use Only**

**MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, AND FIXTURE FILING**

**by**

**GK FESTIVAL LLC,**

an Alabama limited liability company

to and for the benefit of

**GK INVESTMENT PROPERTY HOLDINGS** II, **LLC,**

a Delaware limited liability company

**MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND** 

**<u>RENTS, AND FIXTURE FILING</u>**

**THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, AND FIXTURE FILING** <u>("Mortgage")</u> is made as of June 6, 2024, by GK FESTIVAL LLC, an Alabama limited liability company <u>("Mortgagor")</u>, to and for the benefit of GK INVESTMENT PROPERTY HOLDINGS II, LLC, a Delaware limited liability company, its successors and assigns <u>("Mortgagee")</u>.

**<u>RECITALS:</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Mortgagee has agreed to make a loan (the "Loan") to the Mortgagor in the amount of THREE MILLION SEVEN HUNDRED FIFTY-ONE THOUSAND AND 00/100 DOLLARS ($3,751,000.00). In return, Mortgagor has agreed to execute a certain Promissory Note as of even date herewith (as amended, restated or replaced from time to time, the <u>"Note")</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. A condition precedent to Mortgagee's extension of the Loan to the Mortgagor is the execution and delivery by Mortgagor of this Mortgage.

**NOW, THEREFORE,** for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Mortgagor agrees as follows:

Mortgagor hereby mortgages, grants, assigns, remises, releases, warrants and conveys to Mortgagee, its successors and assigns, and grant a security interest in, the following described property, rights and interests (referred to collectively herein as <u>"Premises"),</u> all of which property, rights and interests are hereby pledged primarily and on a parity with the Real Estate (as defined below) and not secondarily:

**THE REAL ESTATE** located at 7915-7959 Vaughn Road, Montgomery, Alabama 36116 and legally described on <u>Exhibit A</u> attached hereto and made a part hereof <u>("Real Estate");</u>

**TOGETHER WITH** all improvements of every nature whatsoever now or hereafter situated on the Real Estate and all fixtures and personal property of every nature whatsoever now or hereafter owned by Mortgagor and on, or used in connection with the Real Estate or the improvements thereon, or in connection with any construction thereon, including all extensions, additions, improvements, betterments, renewals, substitutions and replacements to any of the foregoing and all of the right, title and interest of Mortgagor in and to any such personal property or fixtures together with the benefit of any deposits or payments now or hereafter made on such personal property or fixtures by Mortgagor or on their behalf <u>("Improvements")</u>;

**TOGETHER WITH** all easements, rights of way, gores of real estate, streets, ways, alleys, passages, sewer rights, waters, water courses, water rights and powers, and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments and appurtenances whatsoever, in any way now or hereafter belonging, relating or appertaining to the Real Estate, and the reversions, remainders, rents, issues and profits thereof, and all the estate, right, title, interest, property, possession, claim and demand whatsoever, at law as well as in equity, of Mortgagor of, in and to the same;

**TOGETHER WITH** all rents, revenues, issues, profits, proceeds, income, royalties, accounts, accounts receivable, escrows, security deposits, impounds, reserves, tax refunds and other rights to monies from the Premises and/or the businesses and operations conducted by • Mortgagor thereon, to be applied against the Indebtedness (hereinafter defined); provided, however, that Mortgagor, so long as no Event of Default (as hereinafter defined) has occurred hereunder, may collect rent as it becomes due, but not more than one (1) month in advance thereof;

**TOGETHER WITH** all interest of Mortgagor in all leases now or hereafter on the Premises, whether written or oral <u>('Leases"),</u> together with all security therefore and all monies payable thereunder, subject, however, to the conditional permission hereinabove given to Mortgagor to collect the rentals under any such Lease;

**TOGETHER WITH** all fixtures and articles of personal property now or hereafter owned by Mortgagor and forming a part of or used in connection with the Real Estate or the Improvements, including, but without limitation, any and all air conditioners, antennae, appliances, apparatus, awnings, basins, bathtubs, bidets, boilers, bookcases, cabinets, carpets, coolers, curtains, dehumidifiers, disposals, doors, drapes, dryers, ducts, dynamos, elevators, engines, equipment, escalators, exercise equipment, fans, fittings, floor coverings, furnaces, furnishings, furniture, hardware, heaters, humidifiers, incinerators, lighting, machinery, motors, ovens, pipes, plumbing, pumps, radiators, ranges, recreational facilities, refrigerators, screens, security systems, shades, shelving, sinks, sprinklers, stokers, stoves, toilets, ventilators, wall coverings, washers, windows, window coverings, wiring, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Real Estate or the Improvements in any manner; it being mutually agreed that all of the aforesaid property owned by Mortgagor and placed on the Real Estate or the Improvements, so far as permitted by law, shall be deemed to be fixtures, a part of the realty, and security for the Indebtedness (as hereinafter defined); notwithstanding the agreement hereinabove expressed that certain articles of property form a part of the realty covered by this Mortgage and be appropriated to its use and deemed to be realty, to the extent that such agreement and declaration may not be effective and that any of said articles may constitute goods (as said term is used in the Uniform Commercial Code of the State of Alabama, as now in effect on the date hereof or as the same may be amended or supplemented from time to time <u>("Code")),</u> this instrument shall constitute a security agreement, creating a security interest in such goods, as collateral, m Mortgagee, as a secured party, and Mortgagor, as debtors, all in accordance with the Code;

**TOGETHER WITH** all (i) coal, oil, gas and other hydrocarbons, minerals, graphite, rock, sand, stone, limestone, granite, aggregate, gravel and clay in, upon and under, and whether or not extracted from, the Land, and whether or not produced or processed, (ii) all fee interests, mineral interests, production payments, net profits interests with respect to the items described in (i), and (iii) any other non-cost bearing oil, gas, coal, graphite or other mineral assets, including without limitation, lignite, liquid and solid hydrocarbons, gas and their respective constituent products, and any other minerals, including without limitation, sulfur and coal seam gas, carbon dioxide, helium and other gasses (whether or not produced in association with oil and gas), industrial minerals, graphite, lead, zinc, (regardless of the method used to mine and remove the same and regardless of the effect of such mining and removal upon the surface estate), iron ore, phosphate, bauxite, limestone, granite, sand, clay, rock, stone, gravel, aggregate and other stone, bedrock and other rock materials (regardless of whether quarried, mined or removed or the method used to quarry, mine or remove same), geothermal energy (including entrained methane, hydrostatic pressure and thermal energy) and all other substances and ore deposits of any kind or character, whether solid, liquid or gaseous (all substances, materials, rights and interests described in this paragraph (b) are referred to sometimes herein as the <u>"Minerals");</u>

**TOGETHER WITH** all of Mortgagor's interests in "general intangibles", including "payment intangibles" and "software" (each as defined in the Code) now owned or hereafter acquired and related to the Premises, including, without limitation, all of Mortgagor's rights, title and interest in and to:·(i) all agreements, warranties, guarantees, licenses, permits and contracts to which Mortgagor is or may become a party and which relate to the Premises; (ii) all obligations and indebtedness owed to Mortgagor thereunder; (iii) all intellectual property related to the Premises; and (iv) all chooses in action and causes of action relating to the Premises; and

**TOGETHER WITH** all proceeds of the foregoing, including, without limitation, all judgments, awards of damages and settlements hereafter made resulting from condemnation proceeds or the taking of the Premises or any portion thereof under the power of eminent domain, any proceeds of any policies of insurance, maintained with respect to the Premises or proceeds of any sale, option or contract to sell the Premises or any portion thereof.

**TO HAVE AND TO HOLD** the Premises, unto Mortgagee, its successors and assigns, forever, for the purposes and upon the uses herein set forth together with all right to possession of the Premises after the occurrence of any Event of Default; Mortgagor hereby RELEASES AND WAIVES all rights under and by virtue of the homestead exemption laws of the State of Alabama.

**FOR THE PURPOSE OF SECURING:** (i) the payment of the Loan and all interest, late charges, prepayment premium (if any), interest rate swap or hedge expenses (if any), reimbursement obligations, fees and expenses for letters of credit issued by Mortgagee for the benefit of Mortgagor, if any, and other indebtedness evidenced by or owing under the Note, any of the other Loan Documents, any interest rate swap or hedge agreement now or hereafter entered into between Mortgagor and Mortgagee and any application for letters of credit and master letter of credit agreement, together with any extensions, modifications, renewals or re-financings of any of the foregoing; (ii) the performance and observance of the covenants, conditions, agreements, representations, warranties and other liabilities and obligations of the Mortgagor or any other obligor to or benefiting Mortgagee which are evidenced or secured by or otherwise provided in the Note, this Mortgage or any of the other Loan Documents; and (iii) the reimbursement to Mortgagee of any and all sums incurred, expended or advanced by Mortgagee pursuant to any term or provision of or constituting additional indebtedness under or secured by this Mortgage, any of the other Loan Documents, any interest rate swap or hedge agreement or any application for letters of credit and master letter of credit agreement, with interest thereon as provided herein or therein, (collectively, <u>"Indebtedness")</u>.

IT **IS FURTHER UNDERSTOOD AND AGREED THAT:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>**Representations and Warranties.**</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Mortgagor represents, warrants and covenants that (a) Mortgagor is the holder of the fee simple title to the Premises, free and clear of all liens and encumbrances, except those liens and encumbrances in favor of Mortgagee and as otherwise described on <u>Exhibit B</u> attached hereto <u>("Permitted Exceptions");</u> and (b) Mortgagor has legal power and authority to mortgage and convey the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Mortgagor has full power and authority to conduct its business as presently conducted, to enter into this Mortgage and to perform all of its duties and obligations under this Mortgage and under the Loan Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) This Mortgage, the Note, and any other documents and instruments required to be executed and delivered by Mortgagor in connection with the Loan, when executed and delivered, will constitute the duly authorized, valid and legally binding obligations of the party required to execute the same and will be enforceable 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); and enforcement of this Mortgage and the Loan Documents is subject to no defenses of any kind.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The execution, delivery and performance of this Mortgage, the Note and any other Loan Documents or instruments to be executed and delivered by Mortgagor pursuant to this Mortgage or in connection with the Loan and the occupancy and use of the Real Estate will not: (i) violate any provisions of law or any applicable regulation, order, writ, injunction or decree of any court or governmental authority, or (ii) conflict with, be inconsistent with, or result in any breach or default of any of the terms, covenants, conditions or provisions of any indenture, mortgage, deed of , instrument, document, agreement or contract of any kind to which Mortgagor is a party or by which Mortgagor may be bound. Mortgagor is not in default (without regard to grace or cure periods) under any contract or agreement to which it is a party, the effect of which default will materially adversely affect the performance by Mortgagor of its respective obligations pursuant to and as contemplated by the terms and provisions of this Mortgage.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) To the best of Mortgagor's knowledge, no condition, circumstance, event, agreement, document, instrument, restriction, litigation or proceeding (or threatened litigation or proceeding or basis therefor) exists which could adversely affect the validity or priority of the liens and security interests granted Mortgagee under the Loan Documents, which could materially adversely affect the ability of Mortgagor to develop or sell the Real Estate (or applicable portion thereof) or which could materially adversely affect the ability of Mortgagor to perform their obligations under the Loan Documents, which could constitute an Event of Default under any of the Loan Documents or which would constitute such an Event of Default with the giving of notice or lapse of time, or both.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Real Estate and the present use and occupancy of the Real Estate does not violate or conflict with any applicable law, statute, ordinance, rule, regulation or order of any kind, including, without limitation, Environmental Laws, zoning, building, land use, noise abatement, occupational health and safety or other laws, any building permit or any condition, grant, easement, covenant, condition or restriction, whether recorded or not and if a third-party is required under any covenants, conditions and restrictions of record or any other agreement to consent to the present use or occupancy of the Real Estate and the development thereof, Mortgagor has obtained such approval from such party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) To the best of Mortgagor's knowledge, the Real Estate has never been used and the Real Estate will not be used, for any activities which, directly or indirectly, involve the use, generation, treatment, storage, transportation or disposal of any Hazardous Materials, except to the extent necessary for the operation of Mortgagor's business which shall be conducted in compliance with all applicable Environmental Laws, and no Hazardous Materials exist now, and no Hazardous Materials will hereafter exist, on or under the Real Estate or in any surface waters or groundwaters on or under the Real Estate and the Real Estate and to the best of each Mortgagor's knowledge, its existing and prior uses have at all times complied with and will comply with all Environmental Laws, and Mortgagor has not violated, and will not violate, any Environmental Laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) To the best of each Mortgagor's knowledge, there are no facilities on the Real Estate which are 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 and the Real Estate does not contain any underground storage tanks.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) All financial statements submitted by Mortgagor to Mortgagee in connection with the Loan are true and correct in all material respects, and fairly present the Mortgagor's financial condition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G) This Mortgage and any other materials submitted to Mortgagee in connection with or in furtherance of this Mortgage by or on behalf of Mortgagor fully and fairly state the matters with which they purport to deal, and neither misstate any material fact nor, separately or in the aggregate, fail to state any material fact necessary to make the statements made not misleading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) All utility and municipal services required for the occupancy and operation of the Premises, including, but not limited to, water supply, storm and sanitary sewage disposal systems, cable services, gas, electric and telephone facilities are available for use and tap-on at the boundaries of the Real Estate, and written permission has been obtained from the applicable utility companies or municipalities to connect the Real Estate into each of said services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) All governmental permits and licenses required by applicable law to occupy the Real Estate have been validly issued and are in full force.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) The storm and sanitary sewage disposal system, water system, drainage system and all mechanical systems with respect to the Real Estate do comply with all applicable laws, statutes, ordinances, rules and regulations, including, without limitation, all Environmental Laws and the applicable environmental protection agency, pollution control board and/or other governmental agencies having jurisdiction of the Real Estate have issued their permits for the construction, tap-on and operation of those systems.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) All utility, parking, access (including curb cuts and highway access), recreational and other permits and easements required for the operation of the Real Estate have been granted and issued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) The Loan, including interest rate, fees and charges as contemplated hereby, is a business loan; the Loan is an exempted transaction under the Truth In Lending Act, 12 U.S.C. 1601 <u>et</u> �-; and the Loan does not, and when disbursed will not, violate the provisions of the usury laws of the State, any consumer credit laws or the usury laws of any state which may have jurisdiction over this transaction, Mortgagor or any property securing the Loan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) Mortgagor has not received any notice from any insurance company of any defects or inadequacies in the Real Estate which would adversely affect the insurability of the Real Estate or which would materially increase the cost of insuring the Real Estate beyond that which is customarily charged for a similar property in the vicinity of the Premises and the Improvements used for a similar purpose.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) No condemnation of any portion of the Real Estate or any roadways abutting the Real Estate has commenced or been threatened, no denial of access to the Real Estate from any point of access to the Real Estate has commenced, nor, to the best of each Mortgagor's knowledge, is any of the foregoing contemplated by any governmental authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) Mortgagor has filed all required federal, state and local tax returns and paid all taxes due pursuant to said returns or any assessments against the Mortgagor or the Real Estate, there is no ongoing audit or other governmental investigation of the tax liability of Mortgagor and there is no unresolved claim by a taxing authority concerning any tax liability for any period for which returns have been filed or were due.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) No Event of Default exists hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) Other than as set forth in the Reports (as defined in the Indemnity), Mortgagor (i) has not received any notice to the effect that its operations are in material violation of any of the requirements of applicable statutes, laws, ordinances, regulations or licenses (including, without limitation, Environmental Laws, health and safety statutes, regulations and licenses); (ii) has not materially violated any of applicable statutes, laws, ordinances, regulations or licenses (including, without limitation, Environmental Laws, health and safety statutes, regulations and licenses) and (iii) are not the subject of any governmental investigation evaluating whether any remedial action is needed to respond to a release of any toxic or Hazardous Materials or substance into the environment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) Mortgagor is solvent and generally paying its debts as they mature and now own property which, at a fair valuation, is greater than the sum of their debts and has capital sufficient to carry on its business and transactions and all businesses and transactions in which they are about to engage.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Except for liens which shall be released at the time of the execution of this Mortgage, or Liens which are Permitted Exceptions, the Real Estate and the personal property owned by the Mortgagor which is used in connection with the Real Estate are free from any lien, security interest (other than the security interest granted herein), claim or encumbrance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) Mortgagor has not entered into any sale agreements for the Real Estate or the Improvements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) there is no litigation or proceeding pending or to each Mortgagor's knowledge threatened against or affecting the Mortgagor or the Real Estate, or any circumstances existing which would in any manner adversely affect the Real Estate or the financial condition of the Mortgagor, the priority or enforceability of the Loan Documents, or the ability of the Mortgagor to perform its obligations under the Loan Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) Except as disclosed in the financial statements of the Mortgagor most recently delivered to the Mortgagee pursuant to or in connection with this Mortgage, the Mortgagor has no indebtedness or other liabilities that materially adversely affect their financial condition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>**Maintenance,**</u> **<u>Repair,</u> <u>Restoration,</u> <u>Prior Liens, Parking.</u>** Mortgagor covenants that, so long as any portion of the Indebtedness remains unpaid, Mortgagor will:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) promptly repair, restore or rebuild any Improvements now or hereafter on the Premises which may become damaged or be destroyed to a condition substantially similar to the condition immediately prior to such damage or destruction, whether or not proceeds of insurance are available or sufficient for the purpose;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) keep the Premises in good condition and repair, without waste, and free from mechanics', materialmens or like liens or claims or other liens or claims for lien (subject to Mortgagor's rights to contest liens as permitted by the terms of Section 26 hereof);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) pay the indebtedness when due and duly perform and observe all of the terms, covenants and conditions to be observed and performed by Mortgagor under this Mortgage and other Loan Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) pay when due any indebtedness which may be secured by a permitted lien or charge on the Premises on a parity with, superior to or inferior to the lien hereof, and upon request exhibit satisfactory evidence of the discharge of such lien to the Mortgagee (subject to Mortgagor's right to contest liens as permitted by the terms of Section 26 hereof);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) complete within a reasonable time any Improvements now or at any time in the process of erection upon the Premises;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) comply with all requirements of law, municipal ordinances or restrictions and covenants of record with respect to the Premises and the use thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) obtain and maintain in full force and effect, and abide by and satisfy the material terms and conditions of, all material permits, licenses, registrations and other authorizations with or granted by any governmental authorities that may be required from time to time with respect to the performance of its obligations under this Mortgage;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) make no material alterations in the Premises or demolish any portion of the Premises without Mortgagee's prior written consent, except as required by law or municipal ordinance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) suffer or permit no change in the use or general nature of the occupancy of the Premises, without the Mortgagee's prior written consent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G) pay when due all operating costs of the Premises;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) not initiate or acquiesce in any zoning reclassification with respect to the Premises, without Mortgagee's prior written consent, which will not be unreasonably withheld or delayed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) provide and thereafter maintain adequate parking areas within the Premises as may be required by law, ordinance or regulation (whichever may be greater), together with any sidewalks, aisles, streets, driveways and sidewalk cuts and sufficient paved areas for ingress, egress and right-of-way to and from the adjacent public thoroughfares necessary or desirable for the use thereof; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) cause the Premises at all times to be operated in compliance with all federal, state, local and municipal environmental, health and safety laws, statutes, ordinances, rules and regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>**Payment of Taxes and Assessments; Tax Deposits.**</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Mortgagor will pay when due and before any penalty attaches, all general and special taxes, assessments, water charges, sewer charges, and other fees, taxes, charges and assessments of every kind and nature whatsoever (all herein generally called <u>"Taxes"),</u> whether or not assessed against Mortgagor, if applicable to the Premises or any interest therein, or the Indebtedness, or any obligation or agreement secured hereby, subject to Mortgagor's right to contest the same, as provided by the terms hereof; and Mortgagor will, upon written request, furnish to the Mortgagee duplicate receipts therefor within ten (10) days after Mortgagee's request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) At Mortgagee's option, Mortgagor shall deposit with Mortgagee, on the first day of each month until the Indebtedness is fully paid, a sum equal to one-twelfth (1112th) of 105% of the most recent ascertainable annual Taxes on the Premises. If requested by Mortgagee, Mortgagor shall also deposit with Mortgagee an amount of money which, together with the aggregate of the monthly deposits to be made pursuant to the preceding sentence as of one month prior to the date on which the next installment of annual Taxes for the current calendar year become due, shall be sufficient to pay in full such installment of annual Taxes, as estimated by Mortgagee. Such deposits are to be held without any allowance of interest and are to be used for the payment of Taxes next due and payable when they become due. So long as no Event of Default shall exist, Mortgagee shall, at its option, pay such Taxes when the same become due and payable (upon submission of appropriate bills therefor from Mortgagor) or shall release sufficient funds to Mortgagor for the payment thereof. If the funds so deposited are insufficient to pay any such Taxes for any year (or installments thereof, as applicable) when the same shall become due and payable, Mortgagor shall, within ten (10) days after receipt of written demand therefor, deposit additional funds as may be necessary to pay such Taxes in full. If the funds so deposited exceed the amount required to pay such Taxes for any year, the excess shall be applied toward subsequent deposits. Said deposits need not be kept separate and apart from any other funds of Mortgagee. Mortgagee, in making any payment hereby authorized relating to Taxes, may do so according to any bill, statement or estimate procured from the appropriate public office without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien or title or claim thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>**Insurance.**</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Mortgagor shall at all times keep all buildings, improvements, fixtures and articles of personal property now or hereafter situated on the Premises insured against loss or damage by fire and such other hazards as may reasonably be required by Mortgagee, and such other insurance as Mortgagee may from time to time reasonably require. Unless Mortgagor provides Mortgagee evidence of the insurance coverages required hereunder, Mortgagee may purchase insurance at the expense of Mortgagor to cover Mortgagee's interest in the Premises. The insurance may, but need not, protect Mortgagor's interest. The coverages that Mortgagee purchases may not pay any claim that Mortgagor make or any claim that is made against Mortgagor in connection with the Premises. Mortgagor may later cancel any insurance purchased by Mortgagee, but only after providing Mortgagee with evidence that Mortgagor has obtained insurance as required by this Mortgage. If Mortgagee purchases insurance for the Premises, Mortgagor will be responsible for the costs of such insurance, including, without limitation, interest and any other charges which Mortgagee may impose in connection with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance. The costs of the insurance may be added to the Indebtedness. The cost of the insurance may be more than the cost of insurance Mortgagor may be able to obtain on their own.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Mortgagor shall not take out separate insurance concurrent in form or contributing in the event of loss with that required to be maintained hereunder unless Mortgagee is included thereon as the loss payee or an additional insured as applicable, under a standard mortgage clause acceptable to Mortgagee and such separate insurance is otherwise acceptable to Mortgagee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In the event of loss, Mortgagor shall give prompt notice thereof to Mortgagee, who, if such loss exceeds the lesser of ten percent (10%) of the Indebtedness or Twenty-Five Thousand Dollars ($25,000) <u>("Threshold")</u>, shall have the sole and absolute right to make proof of loss. If such loss exceeds the Threshold or if such loss is equal to or less than the Threshold and the conditions set forth in clauses (i), (ii) and (iii) of the immediately succeeding sentence are not satisfied, then Mortgagee, solely and directly shall receive such payment for loss from each insurance company concerned. If and only if (i) such loss is equal to or less than the Threshold, (ii) no Event of Default or event that with the passage of time, the giving of notice or both would constitute an Event of Default then exists, and (iii) Mortgagee reasonably determines that the work required to complete the repair or restoration of the Premises necessitated by such loss can be completed no later than three (3) months prior to the Maturity Date, then Mortgagee shall endorse to Mortgagor any such payment and Mortgagor may collect such payment directly and complete such repair or restoration. Except as expressly provided herein, Mortgagee shall have the right, at its option and in its sole discretion, to apply any insurance proceeds received by Mortgagee pursuant to the terms of this paragraph (c), after the payment of all of Mortgagee's expenses, either (i) on account of the Indebtedness, irrespective of whether such principal balance is then due and payable, whereupon Mortgagee may declare the whole of the balance of Indebtedness to be due and payable, or (ii) to the restoration or repair of the property damaged as provided in subparagraph (d) below; provided, however, that Mortgagee hereby agrees to permit the application of such proceeds to the restoration or repair of the damaged property, subject to the provisions of subparagraph (d) below, if (i) Mortgagee has received satisfactory evidence that such restoration or repair shall be completed no later than the date that is three (3) months prior to the Maturity Date and (ii) no Event of Default, or event that with the passage of time, the giving of notice or both would constitute an Event of Default, then exists. If insurance proceeds are made available to Mortgagor by Mortgagee as hereinafter provided, Mortgagor shall (i) repair, restore or rebuild the damaged or destroyed portion of the Premises so that the condition and value of the Premises are substantially the same as the condition and value of the Premises prior to being damaged or destroyed, and (ii) obtain, on Lender's behalf and at Mortgagor's sole expense, title insurance against any actual or potential mechanic's liens relating to such repairs, restoration and rebuilding. In the event of foreclosure of this Mortgage, all right, title and interest of Mortgagor in and to any insurance policies then in force shall pass to the purchaser at the foreclosure sale.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If insurance proceeds are made available by Mortgagee to Mortgagor, Mortgagor shall comply with the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Before commencing to repair, restore or rebuild following damage to, or destruction of, all or a portion of the Premises, whether by fire or other casualty, Mortgagor shall obtain from Mortgagee its approval of all site and building plans and specifications pertaining to such repair, restoration or rebuilding, which shall not be unreasonably withheld or delayed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Prior to each payment or application of any insurance proceeds to the repair or restoration of the improvements upon the Premises to the extent permitted in subparagraph (c) above (which payment or application may be made, at Mortgagee's option, through an escrow, the terms and conditions of which are reasonably satisfactory to Mortgagee and the cost of which is to be borne by Mortgagor), Mortgagee shall be satisfied as to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) no Event of Default or any event which, with the passage of time or giving of notice would constitute an Event of Default, has occurred;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) either such Improvements have been fully restored, or the expenditure of money as may be received from such insurance proceeds will be sufficient to repair, restore or rebuild the Premises, free and clear of all liens, claims and encumbrances, except the lien of this Mortgage and the Permitted Exceptions, or, if such insurance proceeds shall be insufficient to repair, restore and rebuild the Premises, Mortgagor has deposited with Mortgagee such amount of money which, together with the insurance proceeds shall be sufficient to restore, repair and rebuild the Premises; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) prior to each disbursement of any such proceeds, Mortgagee shall be furnished with a statement of Mortgagee's architect (the cost of which shall be home by Mortgagor), certifying the extent of the repair and restoration completed to the date thereof, and that such repairs, restoration, and rebuilding have been performed to date in conformity with the plans and specifications approved by Mortgagee and with all statutes, regulations or ordinances (including building and zoning ordinances) affecting the Premises; and Mortgagee shall be furnished with appropriate evidence of payment for labor or materials furnished to the Premises, and total or partial lien waivers substantiating such payments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) If Mortgagor shall fail to restore, repair or rebuild the Improvements within a time deemed satisfactory by Mortgagee, then Mortgagee, at its option, may (a) commence and perform all necessary acts to restore, repair or rebuild the said Improvements for or on behalf of Mortgagor, or (b) declare an Event of Default. If insurance proceeds shall exceed the amount necessary to complete the repair, restoration or rebuilding of the Improvements, such excess shall be applied on account of the Indebtedness irrespective of whether such indebtedness is then due and payable without payment of any premium or penalty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>**Condemnation.**</u> If all or any part of the Premises are damaged, taken or acquired, either temporarily or permanently, in any condemnation proceeding, or by exercise of the right of eminent domain, the amount of any award or other payment for such taking or damages made in consideration thereof, to the extent of the full amount of the remaining unpaid Indebtedness, is hereby assigned to Mortgagee, who is empowered to collect and receive the same and to give proper receipts therefor in the name of Mortgagor and the same shall be paid forthwith to Mortgagee. Such award or monies shall be applied on account of the Indebtedness, irrespective of whether such Indebtedness is then due and payable and, at any time from and after the taking Mortgagee may declare the whole of the balance of the Indebtedness to be due and payable. Notwithstanding the provisions of this Section 5 to the contrary, if any condemnation or taking of less than the entire Premises occurs and provided that no Event of Default and no event or circumstance which with the passage of time, the giving of notice or both would constitute an Event of Default then exists, and if such partial condemnation, in the reasonable discretion of Mortgagee, has no material adverse effect on the operation or value of the Premises, then the award or payment for such taking or consideration for damages resulting therefrom may be collected and received by Mortgagor, and Mortgagee hereby agrees that in such event it shall not declare the Indebtedness to be due and payable, if it is not otherwise then due and payable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>**Stamp Tax.**</u> If, by the laws of the United States of America, or of any state or political subdivision having jurisdiction over Mortgagor, any tax is due or becomes due in respect of the execution and delivery of this Mortgage, the Note, or any of the other Loan Documents, Mortgagor shall pay such tax in the manner required by any such law. Mortgagor further agrees to reimburse Mortgagee for any sums which Mortgagee may expend by reason of the imposition of any such tax. Notwithstanding the foregoing, Mortgagor shall not be required to pay any income or franchise taxes of Mortgagee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>**Lease Assignment.**</u> As further security, Mortgagor grants a continuing security interest in, pledges, assigns, transfers, delivers and grants to Mortgagee all now existing and hereafter arising leases, licenses, occupancy agreements, concessions or other arrangements, whether written or oral, whereby any person or entity agrees to pay money or other consideration for the use, possession or occupancy of, or any estate in, the Premises or any part thereof (collectively referred to as the <u>"Leases")</u> and all now existing and hereafter arising rents, issues, profits, royalties, avails, income and other benefits derived or owned by Mortgagor directly or indirectly from the Premises (collectively, the <u>"Rents"),</u> it being the intention hereby to establish an absolute transfer and assignment of all such Leases and Rents. Mortgagor hereby irrevocably appoints Mortgagee its attorney-in-fact (this power of attorney and any other powers of attorney granted herein are powers coupled with an interest and cannot be revoked, modified or altered without the written consent of Mortgagee) with or without taking possession of the Premises as provided in this Mortgage, to lease any portion of the Premises to any party on such terms as Mortgagee shall determine, and to collect all rents due with the same rights and powers and subject to the same immunities as Mortgagee would have upon taking possession pursuant to the terms of this Mortgage. Mortgagor represents that no rent has been or will be paid by any person or entity in possession of any portion of the Premises for more than one (1) installment in advance and that payment of none of the Rents for any portion of the Premises has been or will be waived, reduced or otherwise discharged or compromised by Mortgagor. Mortgagor waives any right of set off against any person in possession of any portion of the Premises. Mortgagor agrees that Mortgagor will not assign any of the rents or profits of the Premises, except to a purchaser or grantee of the Premises. Nothing contained in this Mortgage shall be construed as constituting Mortgagee a mortgagee-in-possession in the absence of the taking of the actual possession of the Premises pursuant to this Mortgage. Mortgagor hereby expressly waives all liability of Mortgagee in the exercise of the powers granted to Mortgagee pursuant to this Mortgage. Mortgagor shall assign to Mortgagee all future leases on any part of the Premises and shall execute and deliver to Mortgagee, upon request by Mortgagee, all such further assurances and assignments as Mortgagee may require. Although the assignment herein is a present assignment, Mortgagee shall not exercise any of the rights or powers conferred upon Mortgagee pursuant to this Section 7 until an Event of Default (defined below) occurs or exists pursuant to the terms of this Mortgage. This Mortgage shall not obligate Mortgagee with any of the duties or obligations of a lessor of the Premises as set forth in any lease of any portion of the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8. <u>Effect of Extensions of Time and Other Changes.</u>** If the payment of the Indebtedness or any part thereof is extended or varied, if any part of any security for the payment of the Indebtedness is released, if the rate of interest charged under the Note is changed or if the time for payment thereof is extended or varied, all persons now or at any time hereafter liable therefor, or interested in the Premises or having an interest in Mortgagor, shall be held to assent to such extension, variation, release or change and its liability and the lien and all of the provisions hereof shall continue in full force, any right of recourse against all such persons being expressly reserved by Mortgagee, notwithstanding such extension, variation, release or change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>**Effect of Changes in Laws Regarding Taxation.**</u> If any law is enacted after the date hereof requiring (a) the deduction of any lien on the Premises from the value thereof for the purpose of taxation or (b) the imposition upon Mortgagee of the payment of the whole or any part of the Taxes, charges or liens herein required to be paid by Mortgagor, or (c) a change in the method of taxation of mortgages or debts secured by mortgages or Mortgagee's interest in the Premises, or the manner of collection of taxes, so as to affect this Mortgage or the Indebtedness or the holders thereof, then Mortgagor, upon demand by Mortgagee, shall pay such Taxes or charges, or reimburse Mortgagee therefor; provided, however, that Mortgagor shall not be deemed to be required to pay any income or franchise taxes of Mortgagee. Notwithstanding the foregoing, if in the opinion of counsel for Mortgagee it is or may be unlawful to require Mortgagor to make such payment or the making of such payment might result in the imposition of interest beyond the maximum amount permitted by law, then Mortgagee may declare all of the Indebtedness to be due and payable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. <u>**Mortgagee's Performance of Defaulted Acts and Expenses Incurred by Mortgagee.**</u> If an Event of Default has occurred, Mortgagee may, but need not, make any payment or perform any act herein required of Mortgagor in any form and manner deemed expedient by Mortgagee, and may, but need not, make full or partial payments of principal or interest on prior encumbrances, if any, and purchase, discharge, compromise or settle any tax lien or other prior lien or title or claim thereof, or redeem from any tax sale or forfeiture affecting the Premises or consent to any tax or assessment or cure any default of Mortgagor in any lease of the Premises. All monies paid for any of the purposes herein authorized and all expenses paid or incurred in connection therewith, including reasonable attorneys' fees, and any other monies advanced by Mortgagee in regard to any tax referred to in Section 6 above or to protect the Premises or the lien hereof, shall be so much additional Indebtedness, and shall become immediately due and payable by Mortgagor to Mortgagee, upon demand, and with interest thereon accruing from the date of such demand until paid at the Default Rate (as defined in the Note) then in effect. In addition to the foregoing, any costs, expenses and fees, including reasonable attorneys' fees, incurred by Mortgagee in connection with (a) sustaining the lien of this Mortgage or its priority, (b) protecting or enforcing any of Mortgagee's rights hereunder, (c) recovering any Indebtedness, (d) any litigation or proceedings affecting the Note, this Mortgage, any of the other Loan Documents or the Premises, including without limitation, bankruptcy and probate proceedings, or (e) preparing for the commencement, defense or participation in any threatened litigation or proceedings affecting the Note, this Mortgage, any of the other Loan Documents or the Premises, shall be so much additional Indebtedness, and shall become immediately due and payable by Mortgagor to Mortgagee, upon demand, and with interest thereon accruing from the date of such demand until paid at the Default Rate. The interest accruing under this Section 10 shall be immediately due and payable by Mortgagor to Mortgagee, and shall be additional Indebtedness evidenced by the Note and secured by this Mortgage. Mortgagee's failure to act shall never be considered as a waiver of any right accruing to Mortgagee on account of any Event of Default. Should any amount paid out or advanced by Mortgagee hereunder, or pursuant to any agreement executed by Mortgagor in connection with the Loan, be used directly or indirectly to pay off, discharge or satisfy, in whole or in part, any lien or encumbrance upon the Premises or any part thereof, then Mortgagee shall be subrogated to any and all rights, equal or superior titles, liens and equities, owned or claimed by any owner or holder of said outstanding liens, charges and indebtedness, regardless of whether said liens, charges and indebtedness are acquired by assignment or have been released of record by the holder thereof upon payment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. **<u>Security Agreement.</u>** Mortgagor and Mortgagee agree that this Mortgage shall constitute a Security Agreement within the meaning of the Code with respect to (a) all sums at any time on deposit for the benefit of Mortgagor held by the Mortgagee from time to time (whether deposited by or on behalf of Mortgagor or anyone else), and (b) with respect to any personal property included in the granting clauses of this Mortgage, which personal property may not be deemed to be affixed to the Premises or may not constitute a "fixture" (within the meaning of Section 9.1-102(41) of the Code) (which property is hereinafter referred to as <u>Personal Property"),</u> and all replacements of, substitutions for, additions to, and the proceeds thereof (all of said Personal Property and the replacements, substitutions and additions thereto and the proceeds thereof being sometimes hereinafter collectively referred to as <u>"Collateral")</u>, and that a security interest in and to the Collateral is hereby granted to the Mortgagee, and the Collateral and all of Mortgagor's rights, title and interest therein are hereby assigned to Mortgagee, all to secure payment of the Indebtedness. All of the provisions contained in this Mortgage pertain and apply to the Collateral as fully and to the same extent as to any other property comprising the Premises; and the following provisions of this Section 11 shall not limit the applicability of any other provision of this Mortgage but shall be in addition thereto:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Mortgagor (being the Debtors as that term is used in the Code) are and will be the true and lawful owner of the Collateral, subject to no liens, charges or encumbrances other than the lien hereof, other liens and encumbrances benefiting Mortgagee and no other party, and liens and encumbrances, if any, expressly permitted by this Mortgage or the other Loan Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Collateral is to be used by Mortgagor solely for business purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Collateral will be kept at the Real Estate and, except for Obsolete Collateral (as hereinafter defined), will not be removed therefrom without the consent of Mortgagee (being the Secured Party as that term is used in the Code). The Collateral may be affixed to the Real Estate but will not be affixed to any other real estate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The only persons having any interest in the Premises are Mortgagor, Mortgagee and holders of interests, if any, expressly permitted hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) No Financing Statement (other than Financing Statements showing Mortgagee as the sole secured party, or with respect to liens or encumbrances, if any, expressly permitted hereby) covering any of the Collateral or any proceeds thereof is on file in any public office except pursuant hereto; and Mortgagor, at the cost and expense of the Mortgagor, upon demand, will furnish to Mortgagee such further information and will execute and deliver to Mortgagee such financing statements and other documents in form satisfactory to Mortgagee and will do all such acts as Mortgagee may request at any time or from time to time or as may be necessary or appropriate to establish and maintain a perfected security interest in the Collateral as security for the Indebtedness, subject to no other liens or encumbrances, other than liens or encumbrances benefiting Mortgagee and no other party and liens and encumbrances (if any) expressly permitted hereby; and Mortgagor will pay the cost of filing or recording such financing statements or other documents, and this instrument, in all public offices wherever filing or recording is deemed by Mortgagee to be desirable. Mortgagor hereby irrevocably authorizes Mortgagee at any time, and from time to time, to file in any jurisdiction any initial financing statements and amendments thereto that (i) indicate the Collateral as all assets of Mortgagor (or words of similar effect), regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9.1 of the Code, or as being of an equal or lesser scope or within greater detail, and (ii) contain any other information required by Section 5 of Article 9.1 of the Code of the regarding the sufficiency or filing office acceptance of any financing statement or amendment, and in the case of a financing statement filed as a fixture filing, a sufficient description of real property to which the Collateral relates. Mortgagor agrees to furnish any such information to Mortgagee promptly upon request. Mortgagor further ratifies and affirms its authorization for any financing statements and/or amendments thereto, executed and filed by Mortgagee in any jurisdiction prior to the date of this Mortgage.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Upon an Event of Default hereunder, Mortgagee shall have the remedies of a secured party under the Code, including, without limitation, the right to take immediate and exclusive possession of the Collateral, or any part thereof, and for that purpose, so far as Mortgagor can give authority therefor, with or without judicial process, may enter (if this can be done without breach of the peace) upon any place which the Collateral or any part thereof may be situated and remove the same therefrom (provided that if the Collateral is affixed to real estate, such removal shall be subject to the conditions stated in the Code); and Mortgagee shall be entitled to hold, maintain, preserve and prepare the Collateral for sale, until disposed of, or may propose to retain the Collateral subject to Mortgagor's rights of redemption in satisfaction of Mortgagor's obligations, as provided in the Code. Mortgagee may render the Collateral unusable without removal and may dispose of the Collateral on the Premises. Mortgagee may require Mortgagor to assemble the Collateral and make it available to Mortgagee for its possession at a place to be designated by Mortgagee which is reasonably convenient to both parties. Mortgagee will give Mortgagor at least ten (10) days' notice of the time and place of any public sale of the Collateral or of the time after which any private sale or any other intended disposition thereof is made. The requirements of reasonable notice shall be met if such notice is mailed, by certified United States mail or equivalent, postage prepaid, to the address of Mortgagor hereinafter set forth at least ten (10) days before the time of the sale or disposition. Mortgagee may buy at any public sale. Mortgagee may buy at private sale if the Collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations. Any such sale may be held in conjunction with any foreclosure sale of the Premises. If Mortgagee so elects, the Premises and the Collateral may be sold as one lot. The net proceeds realized upon any such disposition, after deduction for the expenses of retaking, holding, preparing for sale, selling and the reasonable attorneys' fees and legal expenses incurred by Mortgagee, shall be applied against the Indebtedness in such order or manner as Mortgagee shall select. Mortgagee will account to Mortgagor for any surplus realized on such disposition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The terms and provisions contained in this Section 11, unless the context otherwise requires, shall have the meanings and be construed as provided in the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) This Mortgage is intended to be a financing statement within the purview of Section 9.l-502(b) of the Code (or any successor provision at such time the Code is amended) with respect to the Collateral and the goods described herein, which goods are or may become fixtures relating to the Premises. The address of Mortgagor (Debtors) and Mortgagee (Secured Party) are hereinbelow set forth. This Mortgage is to be filed for recording with the Recorder of Deeds of the county or counties where the Premises are located. Mortgagor is the record owner of the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) To the extent permitted by applicable law, the security interest created hereby is specifically intended to cover all Leases between Mortgagor or their agents as lessors, and various tenants named therein, as lessees, including all extended terms and all extensions and renewals of the terms thereof, as well as any amendments to or replacement of said Leases, together with all of the right, title and interest of Mortgagor, as lessors thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G) The security interest created hereby is specifically intended to cover Mortgagee's obligations to the Bank under the Note and any amendments thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) Mortgagor represents and warrants that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Mortgagor is the record owner of the Premises; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Mortgagor's exact legal names is as set forth in the first paragraph of this Mortgage.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. <u>**Restrictions on Transfer.**</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Mortgagor, without the prior written consent of Mortgagee, shall not effect, suffer or permit any Prohibited Transfer (as defined herein). Any conveyance, sale, assignment, transfer, lien, pledge, mortgage, security interest or other encumbrance or alienation (or any agreement to do any of the foregoing) of any of the following properties or interests shall constitute a <u>"Prohibited Transfer":</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Premises or any part thereof or interest therein, excepting only sales or other dispositions of Collateral (herein called <u>"Obsolete Collateral")</u> no longer useful in connection with the operation of the Premises, provided that prior to the sale or other disposition thereof, such Obsolete Collateral has been replaced by Collateral of at least equal value and utility which is subject to the lien hereof with the same priority as with respect to the Obsolete Collateral;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Any shares of capital stock of a corporate Mortgagor, a corporation which is a general partner or managing member/manager in a partnership or limited liability company Mortgagor, or a corporation which is the owner of substantially all of the capital stock of any corporation described in this subparagraph (other than the shares of capital stock of a corporate trustee or a corporation whose stock is publicly traded on a national securities exchange or on the National Association of Securities Dealers' Automated Quotation System);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) All or any part of the managing member or manager interest, as the case may be, in a limited liability company Mortgagor or a limited liability company which is a general partner of a partnership Mortgagor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) All or any part of the general partner or joint venture interest, as the case may be, of a partnership Mortgagor or a partnership which is a manager of a limited liability company Mortgagor **or** the conversion of a partnership Mortgagor to a corporation or limited liability company; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) If there shall be any change in control (by way of transfers of stock, partnership or member interests or otherwise) in any partner, member, manager or shareholder, as applicable, which directly or indirectly controls the day to day operations and management of Mortgagor and/or owns a controlling interest in Mortgagor or if Kenneth Tyrrell shall die or no longer own at least seventy-five percent (75%) of the ownership interests in Mortgagor or its general partner or managing member/manager, as applicable;

in each case whether any such conveyance, sale, assignment, transfer, lien, pledge, mortgage, security interest, encumbrance or alienation is effected directly, indirectly, voluntarily or involuntarily, by operation of law or otherwise; provided, however, that the foregoing provisions of this Section 12 shall not apply (i) to liens securing the Indebtedness, (ii) to the lien of current taxes and assessments not in default or (iii) to leases permitted by the terms of the Loan Documents, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In determining whether or not to make the Loan, Mortgagee evaluated the background and experience of Mortgagor in owning and operating property such as the Premises, found it acceptable and relied and continues to rely upon same as the means of maintaining the value of the Premises which is part of Mortgagee's security for the Note. Mortgagor is well experienced in borrowing money and owning and operating property such as the Premises, is ably represented by a licensed attorney at law in the negotiation and documentation of the Loan and this Mortgage and bargained at arm's length and without duress of any kind for all of the terms and conditions of the Loan, including this provision. Mortgagor recognizes that Mortgagee is entitled to keep its loan portfolio at current interest rates by making new loans at such rates or collecting assumption fees and/or increasing the interest rate on a loan, the security for which is purchased by a party other than the original Mortgagor. Mortgagor further recognizes that any secondary junior financing placed upon the Premises (a) may divert funds which would otherwise be used to pay the Note; (b) could result in acceleration and foreclosure by any such junior encumbrancer which would force Mortgagee to take measures and incur expenses to protect its security; (c) would detract from the value of the Premises should Mortgagee come into possession thereof with the intention of selling same; and (d) would impair Mortgagee's right to accept a deed in lieu of foreclosure, as a foreclosure by Mortgagee would be necessary to clear the title to the Premises. In accordance with the foregoing and for the purposes of (i) protecting Mortgagee's security, both of repayment and of value of the Premises; (ii) giving Mortgagee the full benefit of its bargain and contract with Mortgagor; (iii) allowing Mortgagee to raise the interest rate and collect assumption fees; and (iv) keeping the Premises free of subordinate financing liens, Mortgagor agrees that if this Section 12 is deemed a restraint on alienation, that it is a reasonable one.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. <u>**Events of Default; Acceleration.**</u> Each of the following shall constitute an <u>"Event of Default"</u> for purposes of this Mortgage:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Mortgagor fails to pay (i) any installment of principal or interest payable pursuant to the Note when due, or (ii) any other amount payable to Mortgagee under the Note, this Mortgage or any of the other Loan Documents within fifteen (15) days after the date when any such payment is due in accordance with the terms hereof or thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the existence of any inaccuracy or untruth in any material respect in any representation or warranty contained in this Mortgage or any of the other Loan Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Mortgagor e files a voluntary petition in bankruptcy or is adjudicated a bankrupt or insolvent or files any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future federal, state, or other statute or law, or seeks or consents to or acquiesces in the appointment of any trustee, receiver or similar officer of all or any substantial part of the property of Mortgagor or any of the Premises or all or a substantial part of the assets of Mortgagor are attached, seized, subjected to a writ or distress warrant or are levied upon unless the same is released or located within thirty (30) days, provided that a voluntary petition in bankruptcy shall constitute an immediate Event of Default and shall not be subject to any cure period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The commencement of any involuntary petition in bankruptcy against Mortgagor or the institution against Mortgagor of any reorganization, arrangement, composition, readjustment, dissolution, liquidation or similar proceedings under any present or future federal, state or other statute or law, or the appointment of a receiver, trustee or similar officer for all or any substantial part of the property of Mortgagor which shall remain undismissed or undischarged for a period of sixty (60) days;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) the dissolution, termination or merger of Mortgagor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) the occurrence of a Prohibited Transfer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) the occurrence of any default or event of default, after the expiration of any applicable periods of notice or cure, under any of the Loan Documents or any other document or agreement evidencing or securing any other obligation or indebtedness of Mortgagor to Mortgagee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the creation of any encumbrance upon the Real Estate or Mortgagor or making of any levy, judicial seizure or attachment thereof or thereon;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G) any taking of the Real Estate under the power of eminent domain or other material injury or damage to or material decrease in value of the Real Estate by any public or quasi-public authority or corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) any material loss, theft, damage or destruction of the Real Estate not adequately insured; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) any Material Adverse Change in the financial condition of the Borrower or the Premises. <u>"Material Adverse Change"</u> means that, in Mortgagee's reasonable discretion, the business or financial condition of Borrower or the Premises has changed in a manner which would reasonably be expected to materially impair the value of Mortgagee's security for the Loan, prevent timely repayment of the Loan or otherwise prevent the applicable party from timely performing any of its material obligations under the Loan Documents.

If an Event of Default occurs, Mortgagee may, at its option, declare the whole of the Indebtedness to be immediately due and payable without further notice to Mortgagor with interest thereon accruing from the date of such Event of Default until paid at the Default Rate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. <u>**Foreclosure; Expense of Litigation.**</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) When all or any part of the Indebtedness shall become due, whether by acceleration or otherwise, Mortgagee shall have the right and power to foreclose the lien hereof for such Indebtedness or part thereof, and sell the Premises, and/or exercise any right, power or remedy provided in this Mortgage or any of the other Loan Documents in accordance with the applicable Alabama foreclosure law (AL Code Section 35-10 *et al.,* as may be amended from time to time, the <u>"Alabama Foreclosure Law").</u> Any such say made be at the courthouse door of the county wherein the Premises is situated, for cash to the highest bidder, after 30 days' notice of the time, lace and terms of sale by publishing such notice once a week for four (4) consecutive seeks in a newspaper published in the county where the Premises is situated, and otherwise in accordance with the Alabama Foreclosure Law. In the event of a foreclosure sale, Mortgagee is hereby authorized, without the consent of Mortgagor, to assign any and all insurance policies to the purchaser at such sale or to take such other steps as Mortgagee may deem advisable to cause the interest of such purchaser to be protected by any of such insurance policies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In any suit to foreclose the lien hereof, there shall be allowed and included as additional indebtedness in the decree for sale all reasonable expenditures and expenses which may be paid or incurred by or on behalf of Mortgagee for reasonable attorneys fees, appraisers' fees, outlays for documentary and expert evidence, stenographers' charges, publication costs, and costs (which may be estimated as to items to be expended after entry of the decree) of procuring all such abstracts of title, title searches and examinations, title insurance policies, and similar data and assurances with respect to the title as Mortgagee may deem reasonably necessary either to prosecute such suit or to evidence to bidders at any sale which may be had pursuant to such decree the true condition of the title to or the value of the Premises. All expenditures and expenses of the nature mentioned in this Section 14 and such other expenses and fees as may be incurred in the enforcement of Mortgagor's obligations hereunder, the protection of said Premises and the maintenance of the lien of this Mortgage, including the reasonable fees of any attorney employed by Mortgagee in any litigation or proceeding affecting this Mortgage, the Note, any other Loan Document, or the Premises, including probate and bankruptcy proceedings, or in preparations for the commencement or defense of any proceeding or threatened suit or proceeding shall be immediately due and payable by the Mortgagor, with interest thereon until paid at the Default Rate and shall be secured by this Mortgage.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. <u>**Application of Proceeds of Foreclosure Sale.**</u> The proceeds of any foreclosure sale of the Premises shall be distributed and applied in accordance with the Alabama Foreclosure Law and, unless otherwise specified therein, in such order as Mortgagee may determine in its sole and absolute discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. <u>**Appointment of Receiver.**</u> Upon or at any time after the filing of a complaint to foreclose this Mortgage, the court in which such complaint is filed shall, upon petition by Mortgagee, appoint a receiver for the Premises in accordance with the Alabama Foreclosure Law. Such appointment may be made either before or after sale, without notice, without regard to the solvency or insolvency of Mortgagor at the time of application for such receiver and without regard to the value of the Premises or whether the same shall be then occupied as a homestead or not and Mortgagee hereunder or any other holder of the Revolving Note may be appointed as such receiver. Such receiver shall have power to collect the rents, issues and profits of the Premises (i) during the pendency of such foreclosure suit, (ii) in case of a sale and a deficiency, during the full statutory period of redemption, whether there be redemption or not, and (iii) during any further times when Mortgagor, but for the intervention of such receiver, would be entitled to collect such rents, issues and profits. Such receiver also shall have all other powers and rights that may be necessary or are usual in such cases for the protection, possession, control, management and operation of the Premises during said period, including, to the extent permitted by law, the right to lease all or any portion of the Premises for a term that extends beyond the time of such receiver's possession without obtaining prior court approval of such lease. The court from time to time may authorize the application of the net income received by the receiver in payment of (a) the Indebtedness, or by any decree foreclosing this Mortgage, or any tax, special assessment or other lien which may be or become superior to the lien hereof or of such decree, provided such application is made prior to foreclosure sale, and (b) any deficiency upon a sale and deficiency.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17. <u>**Mortgagee's Right of Possession in Case of Default.**</u> At any time after an Event of Default has occurred, Mortgagor shall, upon demand of Mortgagee, surrender to Mortgagee possession of the Premises. Mortgagee, in its discretion, may, with process of law, enter upon and take and maintain possession of all or any part of the Premises, together with all documents, books, records, papers and accounts relating thereto, and may exclude Mortgagor therefrom, and Mortgagee may then hold, operate, manage and control the Premises, either personally or by its agents. Mortgagee shall have full power to use such measures, legal or equitable, as in its discretion may be deemed proper or necessary to enforce the payment or security of the avails, rents, issues, and profits of the Premises, including actions for the recovery of rent, actions in forcible detainer and actions in distress for rent. Without limiting the generality of the foregoing, Mortgagee shall have full power to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) cancel or terminate any lease or sublease for any cause or on any ground which would entitle Mortgagor to cancel the same;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b) elect to disaffirm any lease or sublease which is then subordinate to the lien hereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) extend or modify any then existing leases and to enter into new leases, which extensions, modifications and leases may provide for terms to expire, or for options to lessees to extend or renew terms to expire, beyond the Maturity Date and beyond the date of the issuance of a deed or deeds to a purchaser or purchasers at a foreclosure sale, it being understood and agreed that any such leases, and the options or other such provisions to be contained therein, shall be binding upon Mortgagor and all persons whose interests in the Premises are subject to the lien hereof and upon the purchaser or purchasers at any foreclosure sale, notwithstanding any redemption from sale, discharge of the Indebtedness, satisfaction of any foreclosure judgment, or issuance of any certificate of sale or deed to any purchaser;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) make any repairs, renewals, replacements, alterations, additions, betterments and improvements to the Premises as Mortgagee deems are necessary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) insure and reinsure the Premises and all risks incidental to Mortgagee's possession, operation and management thereof; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) receive all of such avails, rents, issues and profits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18. **<u>Application of Income Received by Mortgagee.</u>** Mortgagee, in the exercise of the rights and powers herein above conferred upon it, shall have full power to use and apply the avails, rents, issues and profits of the Premises to the payment of or on account of the following, in such order as Mortgagee may determine:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) to the payment of the operating expenses of the Premises, including cost of management and leasing thereof (which shall include compensation to Mortgagee and its agent or agents, if management be delegated to an agent or agents, and shall also include lease commissions and other compensation and expenses of seeking and procuring tenants and entering into leases), established claims for damages, if any, and premiums on insurance hereinabove authorized;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) to the payment of taxes and special assessments now due or which may hereafter become due on the Premises; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) to the payment of any Indebtedness, including any deficiency which may result from any foreclosure sale.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19. <u>**Single Asset Entity.**</u> Mortgagor shall not hold or acquire, directly or indirectly, any ownership interest (legal or equitable) in any real or personal property other than the Premises, or become a shareholder of or a member or partner in any entity which acquires any property other than the Premises, until such time as the Indebtedness has been fully repaid. Mortgagor's articles of incorporation, partnership agreement or operating agreement, as applicable, shall limit its purpose to the acquisition, operation, management and disposition of the Premises, and such purposes shall not be amended without the prior written consent of Mortgagee. Mortgagor covenants:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) To maintain its assets, accounts, books, records, financial statements, stationery, invoices, and checks separate from and not commingled with any of those of any other person or entity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) To conduct its own business in its own name, pay its own liabilities out of its own funds, allocate fairly and reasonably any overhead for shared employees and office space, and to maintain an arm's length relationship with its affiliates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) To hold itself out as a separate entity, correct any known misunderstanding regarding its separate identity, maintain adequate capital in light of its contemplated business operations, and observe all organizational formalities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Not to guarantee or become obligated for the debts of any other entity or person or hold out its credits as being available to satisfy the obligations of others, including not acquiring obligations or securities of its partners, members or shareholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Not to pledge its assets for the benefit of any other entity or person or make any loans or advances to any person or entity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Not to enter into any contract or agreement with any party which is directly or indirectly controlling, controlled by or under common control with Mortgagor (an <u>"Affiliate"),</u> except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arms-length basis with third parties other than any Affiliate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Neither Mortgagor nor any constituent party of Mortgagor will seek the dissolution or winding up, in whole or in part, of Mortgagor, nor will Mortgagor merge with or be consolidated into any other entity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Mortgagor has and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any constituent party of Mortgagor, Affiliate, or any other person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Mortgagor now has and will hereafter have no debts or obligations other than normal accounts payable in the ordinary course of business, this Mortgage, and the Loan; and any other indebtedness or other obligation of Mortgagor has been paid in full prior to or through application of proceeds from the funding of the Loan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20. <u>**Compliance with Alabama Mortgage Foreclosure Law**</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If any provision in this Mortgage shall be inconsistent with any provision of the Alabama Foreclosure Law, provisions of the Alabama Foreclosure Law shall take precedence over the provisions of this Mortgage, but shall not invalidate or render unenforceable any other provision of this Mortgage that can be construed in a manner consistent with the Alabama Foreclosure Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If any provision of this Mortgage shall grant to Mortgagee (including Mortgagee acting as a mortgagee-in-possession) or a receiver appointed pursuant to the prov1s10ns of Section 16 of this Mortgage any powers, rights or remedies prior to, upon or following the occurrence of an Event of Default which are more limited than the powers, rights or remedies that would otherwise be vested in Mortgagee or in such receiver under the Alabama Foreclosure Law in the absence of said provision, Mortgagee and such receiver shall be vested with the powers, rights and remedies granted in the Alabama Foreclosure Law to the full extent permitted by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Without limiting the generality of the foregoing, all expenses incurred by Mortgagee which are of the type referred to in the Alabama Foreclosure Law, whether incurred before or after any decree or judgment of foreclosure, and whether or not enumerated in Paragraphs 10 or 14 of this Mortgage, shall be added to the Indebtedness and/or by the judgment of foreclosure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21. <u>**Rights Cumulative.**</u> Each right, power and remedy herein conferred upon Mortgagee is cumulative and in addition to every other right, power or remedy, express or implied, given now or hereafter existing under any of the Loan Documents or at law or in equity, and each and every right, power and remedy herein set forth or otherwise so existing may be exercised from time to time as often and in such order as may be deemed expedient by Mortgagee, and the exercise or the beginning of the exercise of one right, power or remedy shall not be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy, and no delay or omission of Mortgagee in the exercise of any right, power or remedy accruing hereunder or arising otherwise shall impair any such right, power or remedy, or be construed to be a waiver of any Event of Default or acquiescence therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22. <u>**Mortgagee's Right of Inspection.**</u> Mortgagee and its representatives shall have the right to inspect the Premises and the books and records with respect thereto at all reasonable times upon not less than twenty-four (24) hours prior notice to Mortgagor, and access thereto, subject to the rights of tenants in possession, shall be permitted for that purpose.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23. <u>**Release Upon Payment and Discharge of Mortgagor's Obligations.**</u> Mortgagee shall release this Mortgage and the lien hereof by proper instrument upon payment and discharge of all Indebtedness, including payment of all reasonable expenses incurred by Mortgagee in connection with the execution of such release.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;24. <u>**Notices.**</u> Any notices, communications and waivers under this Mortgage shall be in writing and shall be (i) delivered in person, (ii) mailed, postage prepaid, either by registered or certified mail, return receipt requested, or (iii) by overnight express carrier, addressed in each case as follows:

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To Mortgagor: | GK Festival LLC |
|  | c/o GK Development, Inc. |
|  | 257 E. Main Street, Suite 200 |
|  | Barrington, IL 60010 |
|  | Attn: Garo Kholamian |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To Mortgagee: | GK Investment Property Holdings II, LLC |
|  | c/o GK Development, Inc. |
|  | 257 E. Main Street, Suite 200 |
|  | Barrington, IL 60010 |
|  | Attn: Garo Kholamian |

---

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. AU notices sent pursuant to the terms of this Section 24 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 federal banking day immediately following the day sent, or (iii) if sent by registered or certified mail, then on the earlier of the third federal banking day following the day sent or when actually received.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25. <u>**Waiver of Rights.**</u> The Mortgagor hereby covenants and agrees that they will not at any time insist upon or plead, or in any manner claim or take any advantage of, any stay, exemption or extension law or any so-called <u>"Moratorium Law"</u> now or at any time hereafter in force providing for the valuation or appraisement of the Premises, or any part thereof, prior to any sale or sales thereof to be made pursuant to any provisions herein contained, or to decree, judgment or order of any court of competent jurisdiction; or, after such sale or sales, claim or exercise any rights under any statute now or hereafter in force to redeem the property so sold, or any part thereof, or relating to the marshalling thereof, upon foreclosure sale or other enforcement hereof; and without limiting the foregoing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Mortgagor hereby expressly waives any and all rights of reinstatement and redemption, if any, under any order or decree of foreclosure of this Mortgage, on its own behalf and on behalf of each and every person, it being the intent hereof that any and all such rights of reinstatement and redemption of the Mortgagor and of all other persons are and shaU be deemed to be hereby waived to the full extent permitted by applicable law; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Mortgagor will not invoke or utilize any such law or laws or otherwise hinder, delay or impede the execution of any right, power remedy herein or otherwise granted or delegated to the Mortgagee but will suffer and permit the execution of every such right, power and remedy as though no such law or laws had been made or enacted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;26. <u>**Contests.**</u> Notwithstanding anything to the contrary herein contained, Mortgagor shall have the right to contest by appropriate legal proceedings diligently prosecuted any Taxes imposed or assessed upon the Premises or which may be or become a lien thereon and any mechanics', materialmen's or other liens or claims for lien upon the Premises (all herein called <u>"Contested Liens"),</u> and no Contested Liens shall constitute an Event of Default hereunder, if, but only if:

(a) Mortgagor shall forthwith give notice of any Contested Lien to Mortgagee at the time the same shall be asserted;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Mortgagor shall either pay under protest or deposit with Mortgagee the full amount (herein called <u>"Lien Amount")</u> of such Contested Lien, together with such amount as Mortgagee may reasonably estimate as interest or penalties which might arise during the period of contest; provided that in lieu of such payment Mortgagor may furnish to Mortgagee a bond or title indemnity in such amount and form, and issued by a bond or title insuring company, as may be satisfactory to Mortgagee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Mortgagor shall diligently prosecute the contest of any Contested Lien by appropriate legal proceedings having the effect of staying the foreclosure or forfeiture of the Premises, and shall permit Mortgagee to be represented in any such contest and shall pay all expenses incurred, in so doing, including fees and expenses of Mortgagee's counsel (all of which shall constitute so much additional Indebtedness bearing interest at the Default Rate until paid, and payable upon demand);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Mortgagor shall pay such Contested Lien and all Lien Amounts together with interest and penalties thereon (i) if and to the extent that any such Contested Lien shall be determined adverse to Mortgagor, or (ii) forthwith upon demand by Mortgagee if, in the opinion of Mortgagee, and notwithstanding any such contest, the Premises shall be in jeopardy or in danger of being forfeited or foreclosed; provided that if Mortgagor shall fail so to do, Mortgagee may, but shall not be required to, pay all such Contested Liens and Lien Amounts and interest and penalties thereon and such other sums as may be necessary in the judgment of the Mortgagee to obtain the release and discharge of such liens; and any amount expended by Mortgagee in so doing shall be so much additional Indebtedness bearing interest at the Default Rate until paid, and payable upon demand; and provided further that Mortgagee may in such case use and apply monies deposited as provided in subsection (b) above and may demand payment upon any bond or title indemnity furnished as aforesaid.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27. <u>**Expenses Relating to Note, Mortgage and Other Loan Documents.**</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Mortgagor will pay all expenses, charges, costs and fees relating to the Loan or necessitated by the terms of the Note, this Mortgage, or any of the other Loan Documents, including without limitation, Mortgagee's reasonable attorneys' fees in connection with the negotiation, documentation, administration, servicing and enforcement of the Note, this Mortgage, and the other Loan Documents, all filing, registration and recording fees, all other expenses incident to the execution and acknowledgment of this Mortgage and all federal, state, county and municipal taxes, and other taxes (provided Mortgagor shall not be required to pay any income or franchise taxes of Mortgagee), duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of the Note and this Mortgage.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Mortgagor recognizes that, during the term of this Mortgage, Mortgagee:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) May be involved in court or administrative proceedings, including, without restricting the foregoing, foreclosure, probate, bankruptcy, creditors' arrangements, insolvency, housing authority and pollution control proceedings of any kind, to which Mortgagee shall be a party by reason of the Loan Documents or in which the Loan Documents or the Premises are involved directly or indirectly;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) May make preparations following the occurrence of an Event of Default hereunder for the commencement of any suit for the foreclosure hereof, which may or may not be actually commenced;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) May make preparations following the occurrence of an Event of Default hereunder for, and do work in connection with, Mortgagee's taking possession of and managing the Premises, which event may or may not actually occur;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) ay make preparations for and commence other private or public actions to remedy an Event of Default hereunder, which other actions may or may not be actually commenced;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) May enter into negotiations with Mortgagor or any of their agents, employees or attorneys in connection with the existence or curing of any Event of Default hereunder, the sale of the Premises, the assumption of liability for any of the Indebtedness or the transfer of the Premises in lieu of foreclosure; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) May enter into negotiations with Mortgagor or any of their agents, employees or attorneys pertaining to Mortgagee's approval of actions taken or proposed to be taken by Mortgagor which approval is required by the terms of this Mortgage.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) All expenses, charges, costs and fees described in this Section 27 shall be so much additional Indebtedness, shall bear interest from the date so incurred until paid at the Default Rate and shall be paid, together with said interest, by Mortgagor forthwith upon demand.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;28. <u>**Statement of Indebtedness.**</u> Mortgagor, within seven (7) days after being so requested by Mortgagee, shall furnish a duly acknowledged written statement setting forth the amount of the debt secured by this Mortgage, the date to which interest has been paid and stating either that no offsets or defenses exist against such debt or, if such offsets or defenses are alleged to exist, the nature thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;29. <u>**Further Instruments.**</u> Upon request of Mortgagee, Mortgagor shall execute, acknowledge and deliver all such additional instruments and further assurances of title and shall do or cause to be done all such further acts and things as may reasonably be necessary fully to effectuate the intent of this Mortgage and of the other Loan Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;30. <u>**Additional Indebtedness Secured.**</u> All persons and entities with any interest in the Premises or about to acquire any such interest should be aware that this Mortgage secures more than the stated principal amount of the Note and interest thereon; this Mortgage secures any and all other amounts which may become due under the Note or any other document or instrument evidencing, securing or otherwise affecting the Indebtedness, including, without limitation, any and all amounts expended by Mortgagee to operate, manage or maintain the Premises or to otherwise protect the Premises or the lien of this Mortgage.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;31. <u>**Indemnity.**</u> Mortgagor hereby covenants and agrees that no liability shall be asserted or enforced against Mortgagee in the exercise of the rights and powers granted to Mortgagee in this Mortgage, and Mortgagor hereby expressly waives and releases any such liability. Mortgagor shall indemnify and save Mortgagee harmless from and against any and all liabilities, obligations, losses, damages, claims, costs and expenses (including reasonable attorneys' fees and court costs) (collectively, <u>"Claims")</u> of whatever kind or nature which may be imposed on, incurred by or asserted against Mortgagee at any time by any third party which relate to or arise from: (a) any suit or proceeding (including probate and bankruptcy proceedings), or the threat thereof, in or to which Mortgagee may or does become a party, either as plaintiff or as a defendant, by reason of this Mortgage or for the purpose of protecting the lien of this Mortgage; (b) the offer for sale or sale of all or any portion of the Premises; and (c) the ownership, leasing, use, operation or maintenance of the Premises, if such Claims relate to or arise from actions taken prior to the surrender of possession of the Premises to Mortgagee in accordance with the terms of this Mortgage; provided, however, that Mortgagor shall not be obligated to indemnify or hold Mortgagee harmless from and against any Claims directly arising from the gross negligence or willful misconduct of Mortgagee. All costs provided for herein and paid for by Mortgagee shall be so much additional Indebtedness and shall become immediately due and payable upon demand by Mortgagee and with interest thereon from the date incurred by Mortgagee until paid at the Default Rate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;32. <u>**Subordination of Property Manager's Lien.**</u> Any property management agreement for the Premises entered into hereafter with a property manager shall contain a provision whereby the property manager agrees that any and all mechanics' lien rights that the property manager or anyone claiming by, through or under the property manager may have in the Premises shall be subject and subordinate to the lien of this Mortgage and shall provide that Mortgagee may terminate such agreement at any time after the occurrence of an Event of Default hereunder. Such property management agreement or a short form thereof, at Mortgagee's request, shall be recorded with the Recorder of Deeds of the county where the Premises are located. In addition, if the property management agreement in existence as of the date hereof does not contain a subordination provision, Mortgagor shall cause the property manager under such agreement to enter into a subordination of the management agreement with Mortgagee, in recordable form, whereby such property manager subordinates present and future lien rights and those of any party claiming by, through or under such property manager to the lien of this Mortgage.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;33. <u>**Miscellaneous.**</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>**Successors and Assigns.**</u> This Mortgage and all provisions hereof shall be binding upon and enforceable against Mortgagor and their assigns and other successors. This Mortgage and all provisions hereof shall inure to the benefit of Mortgagee, its successors and assigns and any holder or holders, from time to time, of the Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>**Invalidity of Provisions; Governing Law.**</u> In the event that any provision of this Mortgage is deemed to be invalid by reason of the operation of law, or by reason of the interpretation placed thereon by any administrative agency or any court, Mortgagor and Mortgagee shall negotiate an equitable adjustment in the provisions of the same in order to effect, to the maximum extent permitted by law, the purpose of this Mortgage and the validity and enforceability of the remaining provisions, or portions or applications thereof, shall not be affected thereby and shall remain in full force and effect. This Mortgage is to be construed in accordance with and governed by the internal laws of the State of Alabama (without regard to Alabama conflict of law principles).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>**Municipal Requirements.**</u> Mortgagor shall not by act or omission permit any building or other improvement on premises not subject to the lien of this Mortgage to rely on the Premises or any part thereof or any interest therein to fulfill any municipal or governmental requirement, and Mortgagor hereby assigns to Mortgagee any and all rights to give consent for all or any portion of the Premises or any interest therein to be so used. Similarly, no building or other improvement on the Premises shall rely on any premises not subject to the lien of this Mortgage or any interest therein to fulfill any governmental or municipal requirement. Any act or omission by Mortgagor which would result in a violation of any of the provisions of this subparagraph (c) shall be void.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>**Rights of Tenants.**</u> Mortgagee shall have the right and option to commence a civil action to foreclose this Mortgage and to obtain a decree of foreclosure and sale subject to the rights of any tenant or tenants of the Premises having an interest in the Premises prior to that of Mortgagee. The failure to join any such tenant or tenants of the Premises as party defendant or defendants in any such civil action or the failure of any decree of foreclosure and sale to foreclose its rights shall not be asserted by Mortgagor as a defense in any civil action instituted to collect the Indebtedness, or any part thereof or any deficiency remaining unpaid after foreclosure and sale of the Premises, any statute or rule of law at any time existing to the contrary notwithstanding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>**Option of Mortgagee to Subordinate.**</u> At the option of Mortgagee, this Mortgage shall become subject and subordinate, in whole or in part (but not with respect to priority of entitlement to insurance proceeds or any condemnation or eminent domain award) to any and all leases of all or any part of the Premises upon the execution by Mortgagee of a unilateral declaration to that effect and the recording thereof in the Office of the Recorder of Deeds in and for the county wherein the Premises are situated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>**Mortgagee in Possession.**</u> Nothing herein contained shall be construed as constituting Mortgagee a mortgagee in possession in the absence of the actual taking of possession of the Premises by Mortgagee pursuant to this Mortgage.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>**Relationship of Mortgagee and Mortgagor.**</u> Mortgagee shall in no event be construed for any purpose to be a partner, joint venturer, agent or associate of Mortgagor or of any lessee, operator, concessionaire or licensee of Mortgagor in the conduct of their business, and, without limiting the foregoing, Mortgagee shall not be deemed to be such partner, joint venturer, agent or associate on account of Mortgagee becoming a mortgagee in possession or exercising any rights pursuant to this Mortgage, any of the other Loan Documents, or otherwise. The relationship of Mortgagor and Mortgagee hereunder is solely that of debtors/creditor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>**Time of the Essence.**</u> Time is of the essence of the payment by Mortgagor of all amounts due and owing to Mortgagee under the Note and the other Loan Documents and the performance and observance by Mortgagor of all terms, conditions, obligations and agreements contained in this Mortgage and the other Loan Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>**No Merger.**</u> The parties hereto intend that the Mortgage and the lien hereof shall not merge in fee simple title to the Premises, and if Mortgagee acquires any additional or other interest in or to the Premises or the ownership thereof, then, unless a contrary intent is manifested by Mortgagee as evidenced by an express statement to that effect in an appropriate document duly recorded, this Mortgage and the lien hereof shall not merge in the fee simple title and this Mortgage may be foreclosed as if owned by a stranger to the fee simple title.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G) <u>**Maximum Indebtedness.**</u> In no event shall Mortgagee be obligated to advance funds to Mortgagor in excess of the face amount of the Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>**Consent to Jurisdiction**</u> **TO INDUCE MORTGAGEE TO ACCEPT THE NOTE, MORTGAGOR IRREVOCABLY AGREES THAT, SUBJECT TO MORTGAGEE'S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS** IN **ANY WAY ARISING OUT OF OR RELATED TO THE NOTE AND THIS MORTGAGE WILL BE LITIGATED** IN **COURTS HAVING SITUS** IN **MONTGOMERY, ALABAMA. MORTGAGOR HEREBY CONSENTS AND SUB:MITS TO THE JURISDICTION OF ANY COURT HAVING JURISDICTION OVER MONTGOMERY, ALABAMA, WAIVES PERSONAL SERVICE OF PROCESS UPON MORTGAGOR, AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL, RETURN RECEIPT REQUESTED, WITH A COPY SENT THROUGH REGULAR MAIL, DELIVERY LIMITED TO ADDRESSEE, DIRECTED TO MORTGAGOR AT THE ADDRESS STATED HEREIN AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) <u>**Waiver of *Jury* Trial.**</u> **MORTGAGOR AND MORTGAGEE (BY ACCEPTANCE HEREOF), HAVING BEEN REPRESENTED BY COUNSEL EACH KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (a) UNDER TIDS MORTGAGE OR ANY RELATED AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH TIDS MORTGAGE OR (b) ARISING FROM ANY BANKING RELATIONSIDP EXISTING IN CONNECTION WITH THIS MORTGAGE, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. MORTGAGOR AGREES THAT IT WILL NOT ASSERT ANY CLAIM AGAINST MORTGAGEE OR ANY OTHER PERSON INDEMNIFIED UNDER TIDS MORTGAGE ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) <u>**Complete Agreement.**</u> This Mortgage constitutes the complete agreement between the parties with respect to the subject matter hereof and this Mortgage may not be modified, altered or amended except by an agreement in writing signed by both Mortgagor and Mortgagee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) <u>**Incorporation of Recitals/Defined Terms.**</u> The recitals set forth are hereby incorporated by this reference. Capitalized terms not otherwise defined herein shall have the meaning given to them in the Note.

[Signature Page Follows]

IN **WITNESS WHEREOF,** Mortgagor has executed and delivered this Mortgage the day and year first above written.

---

| | |
|:---|:---|
| **MORTGAGOR:** | **MORTGAGOR:** |
| GK FESTIVAL LLC, | GK FESTIVAL LLC, |
| an Alabama limited liability company | an Alabama limited liability company |
| GK Development, Inc., | GK Development, Inc., |
| an Illinois corporation, its Manager | an Illinois corporation, its Manager |
| By: | /s/ Garo Kholamian |
| Name: | Garo Kholamian |
| Title: | President |

---

**STATE OF ILLINOIS**) ss.

**COUNTY OF COOK**

I, Ryan Daly, a Notary Public in and for said County, in the State aforesaid, <u>do hereby</u> certify that Garo Kholamian, as President of GK Development, Inc., an Illinois corporation, Manager of GK Festival LLC, an Alabama limited liability company, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument as such Manager, appeared before me this day in person and acknowledged that he signed and delivered the said instrument as his own free and voluntary act and as the free and voluntary act of said entity, for the uses and purposes therein set forth.

GIVEN under my hand and notarial seal, this <u>4th</u> day of June, 2024.

---

| | |
|:---|:---|
| (SEAL)<br> ![](tm2617387d1_ex-6xiiimg001.jpg)  |  |
| (SEAL)<br> ![](tm2617387d1_ex-6xiiimg001.jpg)  |  |
| (SEAL)<br> ![](tm2617387d1_ex-6xiiimg001.jpg)  | /s/Ryan Daly |
| (SEAL)<br> ![](tm2617387d1_ex-6xiiimg001.jpg)  | Notary Public |

---

<u>**EXHIBIT** A</u>

**Legal Description of the Premises**

**APN/PARCEL ID: 09-09-29-1-000-002.002**

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF MONTGOMERY, STATE OF ALABAMA AND IS DESCRIBED AS FOLLOWS:

LOT 1, ACCORDING TO THE MAP OF FESTIVAL PLAZA PLAT NO. 2, AS THE SAME APPEARS OF RECORD IN THE OFFICE OF THE JUDGE OF PROBATE OF MONTGOMERY COUNTY, ALABAMA INPLATBOOK 48, AT PAGE 175.

TOGETHER WITH THE EASEMENTS APPURTENANT THERETO AS SET FORTH IN (A) THAT CERTAIN DECLARATION OF RESTRICTIONS AND EASEMENTS DATED APRIL 19, 2000, RECORDED IN THE OFFICE OF THE JUDGE OF PROBATE OF MONTGOMERY COUNTY, ALABAMA, IN REAL PROPERTY-BOOK 2104, AT PAGE 0532, AS AMENDED BY THAT CERTAIN AMENDED AND RESTATED AMENDMENT TO DECLARATION OF RESTRICTIONS AND EASEMENTS DATED OCTOBER *9,* 2003, RECORDED IN SAID PROBATE OFFICE IN REAL PROPERTY BOOK 2768, AT PAGE 128, (B) THAT CERTAIN DECLARATION OF RESTRICTIONS AND EASEMENTS DATED TTJNE 14, 2002, RECORDED IN THE OFFICE OF THE JUDGE OF PROBATE OF MONTGOMERY COUNTY, ALABAMA, IN REAL PROPERTY BOOK 2432, AT PAGE 14, (C) THAT CERTAIN RECIPROCAL AGREEMENT DATED FEBRUARY 20, 1997, RECORDED IN THE OFFICE OF THE JUDGE OF PROBATE OF MONTGOMERY COUNTY, ALABAMA, IN REAL PROPERTY BOOK 1732, AT PAGE 0838, (D) THAT CERTAIN RECIPROCAL AGREEMENT DATED JULY 15, 1998, RECORDED IN THE OFFICE OF THE JUDGE OF PROBATE OF MONTGOMERY COUNTY, ALABAMA, IN REAL PROPERTY BOOK 1884, AT PAGE 16, (E) THAT CERTAIN DECLARATION OF RESTRICTIONS DATED MAY 22, 1995, RECORDED IN THE OFFICE OF THE JUDGE OF PROBATE OF MONTGOMERY COUNTY, ALABAMA, IN REAL PROPERTY BOOK 1566, AT PAGE 298, (F) THAT CERTAIN EASEMENT FOR FIRE PROTECTION BY AND BETWEEN SOUTHERN GUARANTY INSURANCE COMPANY, AN ALABAMA CORPORATION AND CITY OF MONTGOMERY, A MUNICIPAL CORPORATION DATED JUNE 14, 2002 AND RECORDED JULY 29, 2002 IN BOOK 2451, PAGE 875, (G) RECIPROCAL PERMANENT SPILLAGE AGREEMENT DATED MARCH 31, 1990, RECORDED IN THE OFFICE OF THE JUDGE OF PROBATE OF MONTGOMERY COUNTY, ALABAMA, IN REAL PROPERTY BOOK 0976, AT PAGE 0553, AFORESAID RECORDS, AS MODIFIED BY AGREEMENT BY AND BETWEEN SOUTHTRUST BANK, NATIONAL ASSOCIATION, SOUTHERN GUARANTY INSURANCE COMPANY, LUTHER HILL WALLER, JR., WILLIAM CHAMBERS WALLER AND BOGUE MAULTSBY WALLER DATED NOVEMBER 22, 1991, RECORDED, IN REAL PROPERTY BOOK 1205, AT PAGE 0371, AFORESAID RECORDS, AND (H) HOLD HARMLESS AGREEMENT IN FAVOR OF THE WATER WORKS AND SANITARY SEWER BOARD OF THE CITY OF MONTGOMERY RECORDED IN SAID PROBATE OFFICE IN REAL PROPERTY BOOK 2194, AT PAGE 119, AS SHOWN ON SURVEY PREPARED BY MARTIN T. BLETHEN, PLS, ALA. REG. NO. 14728, DESIGNATED JOB NO. 03-392, DATED DECEMBER 3, 2013, LAST REVISED DECEMBER 23, 2013.

<u>**EXHIBITB**</u>

**Permitted Exceptions**

(1) Real Estate Taxes not yet due and payable for the year 2024 and subsequent years; and

(2) Such other exceptions as permitted by Lender in writing.

## Form 1-K Filing Summary

### Filer Information

**Issuer CIK:** 0001788427

**Issuer CCC:** XXXXXXXX

**Is filer a shell company?:** No

**Is this filing by a successor company?:** No

### Submission Contact Information

**Is this a LIVE or TEST Filing?:** LIVE

**Period:** 12-31-2025

### Item 1: Issuer Information (Tab 1 Notification)

**Type of Report:** Annual Report

**Fiscal Year End:** 12-31-2025

**Exact Name of Issuer:** GK Investment Property Holdings II, LLC

**CIK:** 0001788427

**Jurisdiction of Incorporation:** DE

**IRS Number:** 84-3013125

**Address:** 257 East Main Street, Suite 200, Barrington, IL 60010

**Issuer Phone Number:** 847-277-9930

**Title of each class of securities issued pursuant to Regulation A:** 7% Bonds

### Item 2: Ongoing Reporting Requirements

**Is the issuer relying on the relief provided by Rule 257(d) for this filing?** Yes