Preview
FILED: ORANGE COUNTY CLERK 06/10/2022 05:28 PM INDEX NO. EF005836-2021
NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 06/10/2022
LEASING AND MANAGEMENT AGREEMENT
(Office Project)
by and between
MEDICAL PROPERTIES I MIDDLETOWN, LLC
as Owner
and
REMEDY MEDICAL PROPERTIES, INC.,
as Manager
Project:
Orange Regional Medical Pavilion
75 Crystal Run Road, Middletown, NY 10941
Date: As of October 1, 2020
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TABLE OF CONTENTS
PAGE
ARTICLE I Appointment of Manager ...........................................................................................1
SECTION 1.01 Appointment...............................................................................................1
ARTICLE II Property Management Duties ...................................................................................1
SECTION 2.01 General Duties............................................................................................1
SECTION 2.02 Employment of Personnel. .........................................................................1
SECTION 2.03 Service Contracts .......................................................................................2
SECTION 2.04 Inventories and Supplies ............................................................................3
SECTION 2.05 Budgetary Limits........................................................................................3
SECTION 2.06 Maintenance. ..............................................................................................3
SECTION 2.07 Enforcement of Leases and Contracts. .......................................................4
SECTION 2.08 Compliance with Laws...............................................................................5
SECTION 2.09 Handicapped Accessibility Law Compliance ............................................5
SECTION 2.10 Hazardous Materials, Toxic Wastes and Asbestos ....................................5
SECTION 2.11 Taxes and Assessments ..............................................................................5
SECTION 2.12 Reports on Insurance Claims .....................................................................5
SECTION 2.13 Assistance with Proposed Sale, Financing, Refinancing ...........................6
SECTION 2.14 Property Transition ....................................................................................6
SECTION 2.15 Inspections .................................................................................................6
SECTION 2.16 Limitation of Authority ..............................................................................6
ARTICLE III Banking, Recordkeeping and Reporting Duties ......................................................7
SECTION 3.01 Operating Account. ....................................................................................7
SECTION 3.02 Security Deposit Account ..........................................................................8
SECTION 3.03 Books and Records.....................................................................................8
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ARTICLE/SECTION PAGE
SECTION 3.04 Reporting Requirements ............................................................................9
SECTION 3.05 Audit Rights .............................................................................................10
SECTION 3.06 Budgets.....................................................................................................10
ARTICLE IV Leasing Duties .......................................................................................................11
SECTION 4.01 Leasing Duties..........................................................................................11
SECTION 4.02 Leasing Guidelines ...................................................................................12
SECTION 4.03 Leasing Powers ........................................................................................12
SECTION 4.04 Non-Competition .....................................................................................13
ARTICLE V Insurance AND Indemnity ......................................................................................13
SECTION 5.01 Manager’s Insurance ................................................................................13
SECTION 5.02 Miscellaneous Professional Liability .......................................................14
SECTION 5.03 Owner’s Insurance ...................................................................................14
SECTION 5.04 Manager’s Indemnity ...............................................................................14
SECTION 5.05 Owner’s Indemnity ..................................................................................14
SECTION 5.06 Conditions of Indemnification .................................................................15
SECTION 5.07 Confidential Information..........................................................................15
SECTION 5.08 Contractors’ Insurance.. ...........................................................................15
ARTICLE VI Fees, Commissions and Expenses .........................................................................16
SECTION 6.01 Management Fee ......................................................................................16
SECTION 6.02 Gross Receipts..........................................................................................16
SECTION 6.03 Leasing Commissions. .............................................................................16
SECTION 6.04 Construction Management Fee. ...............................................................17
SECTION 6.05 Reimbursable Expenses ...........................................................................18
SECTION 6.06 Non-Reimbursable Expenses ...................................................................18
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ARTICLE/SECTION PAGE
ARTICLE VII Duration, Termination and Default......................................................................19
SECTION 7.01 Term ........................................................................................................19
SECTION 7.02 Sale, Demolition, Foreclosure, Condemnation or Casualty .....................19
SECTION 7.03 Termination by Owner .............................................................................19
SECTION 7.04 Intentionally Deleted ................................................................................20
SECTION 7.05 Effect of Termination. ..............................................................................20
ARTICLE VIII Assignment.........................................................................................................21
SECTION 8.01 Assignment...............................................................................................21
ARTICLE IX Notices...................................................................................................................21
SECTION 9.01 Notices .....................................................................................................21
ARTICLE X Miscellaneous .........................................................................................................22
SECTION 10.01 Qualification/Licenses ...........................................................................22
SECTION 10.02 Office Space ...........................................................................................23
SECTION 10.03 Severability ............................................................................................23
SECTION 10.04 Attorneys’ Fees ......................................................................................23
SECTION 10.05 No Waiver ..............................................................................................23
SECTION 10.06 Governing Law; Amendments ...............................................................23
SECTION 10.07 Interpretation ..........................................................................................23
SECTION 10.08 Estoppel Certificates ..............................................................................24
SECTION 10.09 Representations and Warranties by Manager.........................................24
SECTION 10.10 Representations and Warranties by Owner ............................................24
SECTION 10.11 No Partnership, Etc ................................................................................25
SECTION 10.12 Subordination .........................................................................................25
SECTION 10.13 Counterparts ...........................................................................................25
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ARTICLE/SECTION PAGE
SECTION 10.14 Additional Remedies ..............................................................................25
SECTION 10.15 Approval of Owner.. ..............................................................................26
SECTION 10.16 Limitation of Liability............................................................................26
EXHIBIT
Exhibit A - Officers
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LEASING AND MANAGEMENT AGREEMENT
THIS LEASING AND MANAGEMENT AGREEMENT (this “Agreement”), is made as of
October 1, 2020, by and between MEDICAL PROPERTIES I MIDDLETOWN, LLC (“Owner”), having
an office at 800 West Madison Street, Suite 400, Chicago, IL 60607, and REMEDY MEDICAL
PROPERTIES, INC. (“Manager”), having an office at 800 West Madison Street, Suite 400, Chicago, IL
60607.
R E C I T A L S:
A. Owner is the owner of that certain project (the “Project”) known locally as Orange
Regional Medical Pavilion, located at 75 Crystal Run Road, Middletown, NY 10941 (the “Land”). The
Project is located within the Middletown, NY area (the “Project Area”). The Project, the Land, all rights
appurtenant thereto and all personal property owned by Owner and located at the Project are collectively
referred to as the “Property”.
B. Owner desires to appoint Manager as its agent to manage, operate, maintain, repair and
lease the Project and Manager desires to accept such appointment, subject in all respects to the provisions
of this Agreement.
NOW, THEREFORE, for and in consideration of the covenants herein contained and other good
and valuable consideration, the receipt and sufficiency of which is hereby acknowledged and confessed,
the parties hereto agree as follows:
ARTICLE I
APPOINTMENT OF MANAGER
SECTION 1.01 Appointment. Owner hereby appoints Manager as its agent to (a) manage,
operate, maintain and repair the Project and (b) to lease the office space in the Project, on an
exclusive basis, and hereby authorizes Manager to exercise such powers with respect to the Project
as may be necessary for the performance of Manager’s obligations under this Agreement, and
Manager accepts such appointment on the terms and conditions hereinafter set forth. Manager
shall have no right or authority, express or implied, to commit or otherwise obligate Owner in any
manner whatsoever except to the extent specifically provided herein.
ARTICLE II
PROPERTY MANAGEMENT DUTIES
SECTION 2.01 General Duties. Manager shall perform to the best of its ability, conforming with
the professional standards of office buildings of similar size, age and construction in the Project
Area, all duties pertaining to the management, operation, maintenance and repair of the Project.
Manager, on behalf of Owner, shall implement, or cause to be implemented, the reasonable
decisions of Owner and shall otherwise manage, operate, maintain and repair the Project, subject
to the terms of this Agreement.
SECTION 2.03 Employment of Personnel.
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(a) Except for personnel employed by independent contractors engaged by Manager pursuant
to Section 2.03 below, Manager shall investigate, select, train, hire, employ, pay, supervise, direct and
discharge all personnel necessary for the leasing, management, operation and maintenance of the Project.
Such personnel shall in every instance be deemed employees of Manager and shall be employed solely at
the expense of Manager, subject to reimbursement for those expenses set forth in the Approved Budget (as
hereinafter defined) then in effect. Manager shall be responsible for the compensation and fringe benefits
of such employees and for all payroll taxes, FICA and similar items with respect to such employees. To the
extent that an employee of Manager is assigned to other properties, Manager will allocate the costs of such
employees to the Project based on the amount of time committed to the Project, and such proposed
allocation shall be subject to written approval of Owner, and shall be included in the Approved Budget.
Notwithstanding anything to the contrary in this Agreement, Manager shall use due care in the selection,
supervision, retention and discharge, as necessary, of personnel or independent contractors employed in the
operation and maintenance of the Project, and of each person in the general employ of Manager to whom
said duties are delegated. Any person employed by Manager shall be deemed an independent contractor or
employee of Manager and not an independent contractor, employee or agent of Owner. At Manager’s sole
cost, Manager shall also be required to train and supervise all on-site personnel in the operation,
maintenance and leasing of the Project, as may be applicable.
(b) Manager shall fully comply with all applicable laws and regulations having to do with
worker’s compensation, social security, unemployment insurance, hours of labor, wages, pension plans,
working conditions, employment discrimination, handicapped accessibility and other employer-employee
related subjects in connection with the Project. In selecting and hiring, promoting and/or dismissing
employees, Manager shall comply with all laws and regulations relating to equal opportunity employment.
Manager shall file all local, state and federal labor payroll tax reports and other similar reports, and shall
timely make payments of all withholding and other payroll taxes with respect to such persons and shall,
upon request, provide Owner with a copy of all such filings. Manager shall comply with all collective
bargaining agreements (if any) affecting the Manager.
(c) Manager shall keep adequate payroll records bearing titles and job descriptions, which
payroll records shall be available for inspection by Owner or its authorized representatives, and Manager
shall deliver copies thereof to Owner upon request.
SECTION 2.04 Service Contracts. To the extent not handled by Manager (or its employees), Manager
shall contract, in the name and at the expense of Owner with qualified independent contractors and in
accordance with the Approved Budget, for gas, electricity, water, landscape maintenance, security services,
vending, telephone, trash removal, extermination, and such other services as are necessary to own, operate
and maintain the Project. All service contracts shall have a thirty (30) day termination clause, unless
otherwise approved by Owner. Manager may delegate or subcontract property management duties to
another reputable company that has experience in managing first-class commercial office buildings in the
Project Area, provided Manager obtains Owner’s prior written consent (not to be unreasonably withheld,
delayed or qualified). Manager shall have the right, without the prior written consent of Owner, to execute
any contracts that (i) are in compliance with the guidelines set forth in the then applicable Approved Budget,
(ii) routinely required for the management, operation or maintenance of the Project and/or which relate to
the provision of utility, maintenance or other services to tenants, or (iii) permit Owner to terminate same
upon the sale of all or any portion of the Project and is terminable on not more than thirty (30) days’ notice
by Owner without penalty or additional payments (except waste management and elevator contracts).
Manager shall not enter into any other service contract without Owner’s prior written approval (which may
be withheld in Owner’s sole and absolute discretion). Manager shall not borrow any money or enter into
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any lease as lessee for or on behalf of Owner without Owner’s prior written consent (not to be unreasonably
withheld, delayed or qualified). Manager shall deliver to Owner a true, correct, complete and executed
copy, including any exhibits and schedules, of each such service contracts within three (3) days upon
request.
SECTION 2.05 Inventories and Supplies. Manager shall supervise and purchase or arrange for the
purchase in an economical manner all inventories, provisions, supplies and operating equipment which, in
the normal course of business, are necessary and proper to maintain and operate the Project in a manner
and in accordance first class standards consistent with the express plan of Owner and the then applicable
Approved Budget. Manager shall use its good faith reasonable efforts to qualify for any cash and trade
discounts, refunds, credits, concessions or other incentives available, and such discounts, refunds, credits,
concessions or other incentives shall inure to and belong to Owner and Owner shall receive the benefit
thereof.
SECTION 2.06 Budgetary Limits. Manager shall not enter into any agreement or arrangement for the
furnishing to or by Owner of goods or services (including employment) unless the price, compensation or
other consideration paid for any such goods or services shall not exceed expenditures authorized pursuant
to an Approved Budget.
SECTION 2.07 Maintenance.
(a) General Standards. Manager shall (i) provide regular, systematic inspections of buildings
and grounds in order to comply with any agreement affecting the Property or Project including, without
limitation, any and all mortgages and reciprocal easement agreements affecting the Property (provided
Owner shall have provided Manager with copies of such agreements); and (ii) use commercially reasonable
efforts to cause and ensure that each of the tenants of the Project comply with the provisions and obligations
of their respective leases. Manager shall use commercially reasonable efforts to keep the Project in a clean
and sightly condition, recommend and make all repairs and changes, arrange for all decorating, and
purchase all supplies, necessary for the proper operation of the Project and maintain or cause the Project to
be maintained, including without limitation thereof: (iii) interior cleaning and janitorial service and routine
maintenance of plumbing, carpentry, roof, parking areas, heating and air conditioning systems and restroom
supplies; (iv) repairs to improvements and common areas and other preventative maintenance; (v)
enforcement of construction warranties, (vi) maintenance of electrical and mechanical systems and
equipment; and (vii) safety and security of tenants and the property of both Owner and the tenants and such
other normal maintenance, alteration and repair work as may be reasonably advisable or necessary to
maintain the Project in a manner consistent with maintenance of commercial office buildings of similar
size, age and construction in the Project Area.
(b) Emergencies. In the event of an emergency for which repairs are immediately necessary
for the preservation and safety of the Project or to avoid the suspension of any essential services to the
Project or to avoid danger to life or property (each of which shall constitute an “emergency”), such
emergency repairs may and shall be made by Manager on behalf of Owner at Owner’s cost. Manager shall
promptly and in no event later than twenty-four (24) hours from the time Manager learns of any such
emergency, provide Owner with notice in reasonable detail of such emergency.
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(c) Compliance. Manager shall use commercially reasonable efforts to cause all things to be
done with respect to the Project which are necessary and/or desirable to comply with any and all regulations
of any governmental authority having jurisdiction over the Project.
SECTION 2.08 Enforcement of Leases and Contracts.
(a) Enforcement. Manager shall, subject to being reimbursed by Owner for out-of-pocket
expenses approved in advance by Owner, take all proper and necessary action to enforce the terms of all
leases and contracts and to collect and account for all revenue, rent and other charges including, without
limitation, additional rent as and when due from or payable by such tenants and others. Owner authorizes
Manager, subject to being reimbursed by Owner for out-of-pocket expenses approved in advance by Owner,
to request, collect and receipt for all such rent and other charges. Manager may, subject to being reimbursed
by Owner for out-of-pocket expenses approved in advance by Owner, retain counsel, collection agencies
and such other persons and firms as Manager shall deem appropriate or advisable to enforce the rights and
remedies of Owner against any tenant in default in the performance of its obligations under its lease by such
actions as are directed or approved by Owner. Notwithstanding any provision of this Agreement to the
contrary, Owner shall have the sole right at all times to control or direct its representation in any such legal
action and to determine whether to terminate the lease of a tenant in default.
(b) Tenant Supervision. Manager shall supervise all dealings with tenants of the Project on
behalf of Owner and receive and consider service requests; receive and use best efforts to resolve any
complaints, disputes or disagreements among tenants; monitor the activities of tenants to ensure their
compliance with terms and conditions of their respective leases and notify the respective tenants and Owner
of any non-compliance with such leases of which Manager has knowledge; supervise the moving in and
out of all tenants of the Project and to arrange the dates thereof so that there shall be a minimum of
disturbance to the operation of the Project and of inconvenience to the other tenants.
(c) Notices. Manager shall be responsible for the giving of all notices and statements required
to be given to tenants of the Project under the terms of the respective tenants’ leases and for the giving of
all other notices necessary to accomplish efficient management of the Project.
(d) Rules and Regulations. Manager shall consider and advise Owner from time to time as to
appropriate or desirable rules and regulations or any additional rules and regulations required to be made
under the leases with tenants of the Project or for the better or more efficient operation of the Project.
Manager shall see that all tenants of the Project are informed with respect to such rules, regulations and
notices as may be promulgated by Owner or Manager.
(e) Security. Manager shall place and maintain a contract or contracts to provide security for
the physical protection of the Property.
(f) Compliance. Except to the extent that Owner may otherwise direct Manager, Manager,
subject to being reimbursed by Owner for out-of-pocket expenses approved in advance by Owner, (i) shall
use its commercially reasonable efforts to secure compliance by the other party or parties, if any, to each
agreement, mortgage, lease, reciprocal easement agreement, operating agreement, rule, regulation and other
instrument to which Owner is or shall hereafter become a party provided Owner shall have provided
Manager with copies of such agreements; and (ii) shall use commercially reasonable efforts to cause the
obligations of Owner under such agreements, mortgages, leases, reciprocal easement agreements, operating
agreements, rules, regulations and other instruments to be performed in all material respects in accordance
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with the terms thereof (including, without limitation, such obligations of Owner to deliver notifications of
events and to respond to notices received).
(g) Additional Duties. Manager shall undertake such additional duties as Owner may
reasonably request from time to time and as are usual and customary for managers of first class office
buildings in the Project Area similar to the Project and are consistent with Manager’s employment to
manage and operate the Project under the terms and provisions of this Agreement.
SECTION 2.09 Compliance with Laws. Insofar as any of the following enumerated matters relate to
or affect the condition, use or occupancy of the Project, unless Owner has affirmed its intention to contest
the same (in which event Manager, at Owner’s sole cost and expense, shall participate in such contest to
the extent requested by Owner), Manager shall use commercially reasonable efforts to comply with and
cause the Project to be kept, maintained, used and occupied in compliance with the following as now in
effect or as may be hereafter in effect: (a) all applicable laws, statutes and ordinances; (b) all applicable
rules, regulations and orders of any governmental authority (specifically including, but not by way of
limitation, building codes, fire regulations and environmental rules and regulations); and (c) any direction
or occupancy or use certificate issued pursuant to any law, regulation or rule by any public officer. Promptly
upon receipt thereof, Manager shall submit to Owner a copy of each notice or statement received from any
governmental agency together with any other notices or statements received by Manager which threaten or
might have an effect upon the Project in more than a di minimis manner. All of the provisions of this
Section shall be further subject to the limitations and restrictions on the authority of Manager set forth in
this Agreement.
SECTION 2.10 Handicapped Accessibility Law Compliance. Upon request by Owner, Manager
shall contract with a qualified independent contractor to prepare an inspection report on behalf of Owner,
at Owner’s expense, to determine whether the Project is in compliance with the Americans with Disabilities
Act of 1990, and any other applicable federal, state or local laws, rules and regulations applicable to the
Project and pertaining to handicapped accessibility. If the Project is not in compliance, then Manager, with
such independent contractor, shall propose a plan and budget in order to attain such compliance.
SECTION 2.11 Hazardous Materials, Toxic Wastes and Asbestos. If during the term of this
Agreement, Manager becomes aware of the existence of hazardous materials or wastes, toxic substances or
wastes, asbestos or asbestos-bearing materials and the like at, in, on or under the Project, Manager shall
immediately notify Owner of the condition, both orally and in writing. Owner shall exclusively determine
such further course of action with respect to such hazardous condition. Manager shall not supervise or
oversee any work involving remediation of any hazardous or potentially hazardous wastes or conditions
unless specifically hired by Owner to do so pursuant to a separate agreement between Owner and Manager.
SECTION 2.12 Taxes and Assessments. Manager, at Owner’s request, shall annually review and
submit to Owner a written report on all real estate and personal property taxes and assessments affecting
the Project. In addition, if so requested, Manager shall advise Owner as to the use and selection of third
party tax consultants. Manager shall not be required to prepare on behalf of Owner any state or federal tax
return relating to the Project. Manager shall promptly furnish Owner with copies of all real estate and
personal property tax and assessment notices received by Manager.
SECTION 2.13 Reports on Insurance Claims and Litigation. Manager shall promptly (within 24
hours, and if not possible, within three (3) business days) notify Owner in writing of any casualty, personal
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injury (including death), accidents, claims for damage relating to the ownership, operation and maintenance
of the Project, any damage or destruction to the Project or any other claims made against Owner, Manager
or any Manager personnel with respect to the Project and the estimated cost of repair thereof and promptly
investigate and make (subject to Owner’s approval) a complete and timely written report required by the
appropriate insurance company in connection therewith. All such reports shall be timely filed with the
insurance company as required under the terms of the insurance policy involved and a final copy of such
report shall be furnished to Owner. Manager shall cooperate, and at Owner’s sole cost and expense, shall
cause its employees to cooperate, in instituting, filing and pursuing any insurance claim, including, without
limitation, providing the agents and representatives of each insurance carrier with reasonable access to the
Property, making any Manager’s employees reasonably available to such agents and representatives and
providing such agents and representatives with copies of all documents of books and records related to such
claim. Notwithstanding any provision of this Agreement to the contrary, Manager shall not settle any claim
against insurance companies without the prior approval of Owner (not to be unreasonably withheld, delayed
or qualified). In addition, Manager shall provide Owner with a detailed written incident report setting forth
the details of any accidents or incidents at the Property that, in Manager’s reasonable determination, could
give rise to a claim or litigation against Owner, Manager and/or the Property, which report shall be provided
to Owner within three (3) business days of the incident in question.
SECTION 2.14 Assistance with Proposed Sale, Financing, Refinancing. Manager shall cooperate
with and assist Owner from time to time in any attempt(s) by Owner to sell, finance or refinance the Project.
Such cooperation shall include, without limitation, answering prospective purchasers’ and lenders’
questions about the Project, preparing rent rolls, notifying tenants about the sale of the Project and using its
commercially reasonable efforts to obtain estoppel certificates and other documents from all tenants of the
Project in the form required by the prospective purchaser or lender.
SECTION 2.15 Property Transition. Manager shall use good faith efforts in assisting Owner in
coordinating with any prior manager of the Project to ensure a smooth transition from such prior manager
to Manager. Such transition responsibilities will include, without limitation, assistance in transferring of
bank accounts and security deposits, obtaining all files and personal property with respect to management
of the Project, notifying tenants and other interested parties, and collecting such other information required
by Owner and imputing the same into a software program designated by Owner. In addition, upon
termination of this Agreement, Manager shall assist Owner in coordinating with any successor manager of
the Project to ensure a smooth transition from Manager to such successor property manager.
SECTION 2.16 Inspections. Manager acknowledges that during the term of this Agreement, designated
representatives of firms other than Owner or affiliated companies, may have reason to review and examine
during normal business hours the accounting books and records, the lease files, revenue, operating
expenses, tenant sales information, and other property data that is under the control of Manager and is
maintained at Manager’s on-site office facilities,regional and/or principal offices, and Manager will
cooperate with these designated representatives. Manager further acknowledges that these services are
included within the scope of this Agreement and that no additional fees are required over and above the
basic management fee contained within this Agreement. In addition, Owner and its duly appointed agents
and representatives shall have access to the Project at all times for the purpose of inspecting the same and
for any other purposes.
SECTION 2.17 Limitation of Authority. Notwithstanding any provision of this Agreement to the
contrary, Manager shall not, without prior approval by Owner: (a) convey or otherwise transfer or pledge
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or encumber any property or other asset of Owner; (b) retain counsel, institute, defend, settle, compromise
or withdrawal lawsuits or other legal proceedings on behalf of Owner or with respect to the Property;
(c) enter into any dealings concerning the Project or with tenants of space in the Project for Manager’s own
account; (d) pledge the credit of Owner, except for purchases made in the ordinary course of business of
operating the Project or as otherwise contemplated pursuant to this Agreement in conformity with an
Approved Budget; (e) borrow money or execute any promissory note or other obligation or mortgage,
security agreement or other encumbrance in the name of or on behalf of Owner; (f) execute any contracts
for construction, remodeling, rehabilitation, landscaping or other work to be done on Property unless
previously approved by Owner in conformity with an Approved Budget. The limitations set forth in this
Section 2.16 shall be in addition to all other restrictions on the authority of Manager set forth in this
Agreement.
ARTICLE III
BANKING, RECORDKEEPING AND REPORTING DUTIES
SECTION 3.01 Operating Account.
(a) General. Owner shall establish an account (the “Operating Account”) with a bank having
an office in Chicago, Illinois or such other jurisdiction(s) as Owner may designate from time to time (the
“Bank”), which shall be used exclusively for the collection and payment of funds for the management and
operation of the Project. Manager shall not commingle such monies with funds of Manager or with funds
received from the operation of any other property and Manager shall deposit promptly after receipt all
monies received from the operation of the Project in the Operating Account. Manager shall act in a
fiduciary capacity with respect to the cash and cash equivalent assets of Owner which are within the custody
or control of Manager. Manager shall, subject to Section 3.01(b), use funds deposited in the Operating
Account to pay operating expenses for the Project to the extent authorized in the Approved Budget. The
Operating Account shall have a representative from Manager approved by Owner as a signatory on the
account along with Owner as well as the officers of Kayne Anderson Real Estate Advisors, LLC listed on
Exhibit A attached hereto and made a part hereof. Manager agrees that upon termination of this Agreement,
Medical Properties I Member, LLC shall have the right to remove any employee or other person designated
by Manager as a signatory on the Operating Account. If Owner desires, Owner shall establish and maintain
such other accounts for tax escrows, capital reserves or other reserves as Owner may designate. To the
extent authorized by the Approved Budget, and subject to Owner’s right at any time to instruct Manager
not to pay any bill otherwise payable hereunder, Manager shall pay from the Operating Account to the
extent available, in a timely manner so that late charges are not incurred or default notices issued. Should
Manager’s failure to pay any expenditure result in any fine, penalty, or requirement for additional payment,
such additional sum shall be the sole responsibility of the Manager, provided Manager’s failure to pay such
expenditure was not caused by Owner. Manager acknowledges that the Operating Account will be pledged
at all times by Owner to a mortgage lender or lenders (“Lender”) as additional security for a loan or loans
by such Lender and that Owner’s rights with respect to the Operating Account shall be subject to any pledge
or other collateral agreements executed between Owner and Lender. Manager hereby acknowledges and
agrees that any rights of Manager in or to
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FILED: ORANGE COUNTY CLERK 06/10/2022 05:28 PM INDEX NO. EF005836-2021 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 06/10/2022 LEASING AND MANAGEMENT AGREEMENT (Office Project) by and between MEDICAL PROPERTIES I MIDDLETOWN, LLC as Owner and REMEDY MEDICAL PROPERTIES, INC., as Manager Project: Orange Regional Medical Pavilion 75 Crystal Run Road, Middletown, NY 10941 Date: As of October 1, 2020 FILED: ORANGE COUNTY CLERK 06/10/2022 05:28 PM INDEX NO. EF005836-2021 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 06/10/2022 TABLE OF CONTENTS PAGE ARTICLE I Appointment of Manager ...........................................................................................1 SECTION 1.01 Appointment...............................................................................................1 ARTICLE II Property Management Duties ...................................................................................1 SECTION 2.01 General Duties............................................................................................1 SECTION 2.02 Employment of Personnel. .........................................................................1 SECTION 2.03 Service Contracts .......................................................................................2 SECTION 2.04 Inventories and Supplies ............................................................................3 SECTION 2.05 Budgetary Limits........................................................................................3 SECTION 2.06 Maintenance. ..............................................................................................3 SECTION 2.07 Enforcement of Leases and Contracts. .......................................................4 SECTION 2.08 Compliance with Laws...............................................................................5 SECTION 2.09 Handicapped Accessibility Law Compliance ............................................5 SECTION 2.10 Hazardous Materials, Toxic Wastes and Asbestos ....................................5 SECTION 2.11 Taxes and Assessments ..............................................................................5 SECTION 2.12 Reports on Insurance Claims .....................................................................5 SECTION 2.13 Assistance with Proposed Sale, Financing, Refinancing ...........................6 SECTION 2.14 Property Transition ....................................................................................6 SECTION 2.15 Inspections .................................................................................................6 SECTION 2.16 Limitation of Authority ..............................................................................6 ARTICLE III Banking, Recordkeeping and Reporting Duties ......................................................7 SECTION 3.01 Operating Account. ....................................................................................7 SECTION 3.02 Security Deposit Account ..........................................................................8 SECTION 3.03 Books and Records.....................................................................................8 i FILED: ORANGE COUNTY CLERK 06/10/2022 05:28 PM INDEX NO. 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NO. 27 RECEIVED NYSCEF: 06/10/2022 ARTICLE/SECTION PAGE SECTION 3.04 Reporting Requirements ............................................................................9 SECTION 3.05 Audit Rights .............................................................................................10 SECTION 3.06 Budgets.....................................................................................................10 ARTICLE IV Leasing Duties .......................................................................................................11 SECTION 4.01 Leasing Duties..........................................................................................11 SECTION 4.02 Leasing Guidelines ...................................................................................12 SECTION 4.03 Leasing Powers ........................................................................................12 SECTION 4.04 Non-Competition .....................................................................................13 ARTICLE V Insurance AND Indemnity ......................................................................................13 SECTION 5.01 Manager’s Insurance ................................................................................13 SECTION 5.02 Miscellaneous Professional Liability .......................................................14 SECTION 5.03 Owner’s Insurance ...................................................................................14 SECTION 5.04 Manager’s Indemnity ...............................................................................14 SECTION 5.05 Owner’s Indemnity ..................................................................................14 SECTION 5.06 Conditions of Indemnification .................................................................15 SECTION 5.07 Confidential Information..........................................................................15 SECTION 5.08 Contractors’ Insurance.. ...........................................................................15 ARTICLE VI Fees, Commissions and Expenses .........................................................................16 SECTION 6.01 Management Fee ......................................................................................16 SECTION 6.02 Gross Receipts..........................................................................................16 SECTION 6.03 Leasing Commissions. .............................................................................16 SECTION 6.04 Construction Management Fee. ...............................................................17 SECTION 6.05 Reimbursable Expenses ...........................................................................18 SECTION 6.06 Non-Reimbursable Expenses ...................................................................18 ii FILED: ORANGE COUNTY CLERK 06/10/2022 05:28 PM INDEX NO. 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NO. 27 RECEIVED NYSCEF: 06/10/2022 ARTICLE/SECTION PAGE ARTICLE VII Duration, Termination and Default......................................................................19 SECTION 7.01 Term ........................................................................................................19 SECTION 7.02 Sale, Demolition, Foreclosure, Condemnation or Casualty .....................19 SECTION 7.03 Termination by Owner .............................................................................19 SECTION 7.04 Intentionally Deleted ................................................................................20 SECTION 7.05 Effect of Termination. ..............................................................................20 ARTICLE VIII Assignment.........................................................................................................21 SECTION 8.01 Assignment...............................................................................................21 ARTICLE IX Notices...................................................................................................................21 SECTION 9.01 Notices .....................................................................................................21 ARTICLE X Miscellaneous .........................................................................................................22 SECTION 10.01 Qualification/Licenses ...........................................................................22 SECTION 10.02 Office Space ...........................................................................................23 SECTION 10.03 Severability ............................................................................................23 SECTION 10.04 Attorneys’ Fees ......................................................................................23 SECTION 10.05 No Waiver ..............................................................................................23 SECTION 10.06 Governing Law; Amendments ...............................................................23 SECTION 10.07 Interpretation ..........................................................................................23 SECTION 10.08 Estoppel Certificates ..............................................................................24 SECTION 10.09 Representations and Warranties by Manager.........................................24 SECTION 10.10 Representations and Warranties by Owner ............................................24 SECTION 10.11 No Partnership, Etc ................................................................................25 SECTION 10.12 Subordination .........................................................................................25 SECTION 10.13 Counterparts ...........................................................................................25 iii FILED: ORANGE COUNTY CLERK 06/10/2022 05:28 PM INDEX NO. EF005836-2021 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 06/10/2022 ARTICLE/SECTION PAGE SECTION 10.14 Additional Remedies ..............................................................................25 SECTION 10.15 Approval of Owner.. ..............................................................................26 SECTION 10.16 Limitation of Liability............................................................................26 EXHIBIT Exhibit A - Officers iv FILED: ORANGE COUNTY CLERK 06/10/2022 05:28 PM INDEX NO. EF005836-2021 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 06/10/2022 LEASING AND MANAGEMENT AGREEMENT THIS LEASING AND MANAGEMENT AGREEMENT (this “Agreement”), is made as of October 1, 2020, by and between MEDICAL PROPERTIES I MIDDLETOWN, LLC (“Owner”), having an office at 800 West Madison Street, Suite 400, Chicago, IL 60607, and REMEDY MEDICAL PROPERTIES, INC. (“Manager”), having an office at 800 West Madison Street, Suite 400, Chicago, IL 60607. R E C I T A L S: A. Owner is the owner of that certain project (the “Project”) known locally as Orange Regional Medical Pavilion, located at 75 Crystal Run Road, Middletown, NY 10941 (the “Land”). The Project is located within the Middletown, NY area (the “Project Area”). The Project, the Land, all rights appurtenant thereto and all personal property owned by Owner and located at the Project are collectively referred to as the “Property”. B. Owner desires to appoint Manager as its agent to manage, operate, maintain, repair and lease the Project and Manager desires to accept such appointment, subject in all respects to the provisions of this Agreement. NOW, THEREFORE, for and in consideration of the covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged and confessed, the parties hereto agree as follows: ARTICLE I APPOINTMENT OF MANAGER SECTION 1.01 Appointment. Owner hereby appoints Manager as its agent to (a) manage, operate, maintain and repair the Project and (b) to lease the office space in the Project, on an exclusive basis, and hereby authorizes Manager to exercise such powers with respect to the Project as may be necessary for the performance of Manager’s obligations under this Agreement, and Manager accepts such appointment on the terms and conditions hereinafter set forth. Manager shall have no right or authority, express or implied, to commit or otherwise obligate Owner in any manner whatsoever except to the extent specifically provided herein. ARTICLE II PROPERTY MANAGEMENT DUTIES SECTION 2.01 General Duties. Manager shall perform to the best of its ability, conforming with the professional standards of office buildings of similar size, age and construction in the Project Area, all duties pertaining to the management, operation, maintenance and repair of the Project. Manager, on behalf of Owner, shall implement, or cause to be implemented, the reasonable decisions of Owner and shall otherwise manage, operate, maintain and repair the Project, subject to the terms of this Agreement. SECTION 2.03 Employment of Personnel. 1 FILED: ORANGE COUNTY CLERK 06/10/2022 05:28 PM INDEX NO. EF005836-2021 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 06/10/2022 (a) Except for personnel employed by independent contractors engaged by Manager pursuant to Section 2.03 below, Manager shall investigate, select, train, hire, employ, pay, supervise, direct and discharge all personnel necessary for the leasing, management, operation and maintenance of the Project. Such personnel shall in every instance be deemed employees of Manager and shall be employed solely at the expense of Manager, subject to reimbursement for those expenses set forth in the Approved Budget (as hereinafter defined) then in effect. Manager shall be responsible for the compensation and fringe benefits of such employees and for all payroll taxes, FICA and similar items with respect to such employees. To the extent that an employee of Manager is assigned to other properties, Manager will allocate the costs of such employees to the Project based on the amount of time committed to the Project, and such proposed allocation shall be subject to written approval of Owner, and shall be included in the Approved Budget. Notwithstanding anything to the contrary in this Agreement, Manager shall use due care in the selection, supervision, retention and discharge, as necessary, of personnel or independent contractors employed in the operation and maintenance of the Project, and of each person in the general employ of Manager to whom said duties are delegated. Any person employed by Manager shall be deemed an independent contractor or employee of Manager and not an independent contractor, employee or agent of Owner. At Manager’s sole cost, Manager shall also be required to train and supervise all on-site personnel in the operation, maintenance and leasing of the Project, as may be applicable. (b) Manager shall fully comply with all applicable laws and regulations having to do with worker’s compensation, social security, unemployment insurance, hours of labor, wages, pension plans, working conditions, employment discrimination, handicapped accessibility and other employer-employee related subjects in connection with the Project. In selecting and hiring, promoting and/or dismissing employees, Manager shall comply with all laws and regulations relating to equal opportunity employment. Manager shall file all local, state and federal labor payroll tax reports and other similar reports, and shall timely make payments of all withholding and other payroll taxes with respect to such persons and shall, upon request, provide Owner with a copy of all such filings. Manager shall comply with all collective bargaining agreements (if any) affecting the Manager. (c) Manager shall keep adequate payroll records bearing titles and job descriptions, which payroll records shall be available for inspection by Owner or its authorized representatives, and Manager shall deliver copies thereof to Owner upon request. SECTION 2.04 Service Contracts. To the extent not handled by Manager (or its employees), Manager shall contract, in the name and at the expense of Owner with qualified independent contractors and in accordance with the Approved Budget, for gas, electricity, water, landscape maintenance, security services, vending, telephone, trash removal, extermination, and such other services as are necessary to own, operate and maintain the Project. All service contracts shall have a thirty (30) day termination clause, unless otherwise approved by Owner. Manager may delegate or subcontract property management duties to another reputable company that has experience in managing first-class commercial office buildings in the Project Area, provided Manager obtains Owner’s prior written consent (not to be unreasonably withheld, delayed or qualified). Manager shall have the right, without the prior written consent of Owner, to execute any contracts that (i) are in compliance with the guidelines set forth in the then applicable Approved Budget, (ii) routinely required for the management, operation or maintenance of the Project and/or which relate to the provision of utility, maintenance or other services to tenants, or (iii) permit Owner to terminate same upon the sale of all or any portion of the Project and is terminable on not more than thirty (30) days’ notice by Owner without penalty or additional payments (except waste management and elevator contracts). Manager shall not enter into any other service contract without Owner’s prior written approval (which may be withheld in Owner’s sole and absolute discretion). Manager shall not borrow any money or enter into FILED: ORANGE COUNTY CLERK 06/10/2022 05:28 PM INDEX NO. EF005836-2021 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 06/10/2022 any lease as lessee for or on behalf of Owner without Owner’s prior written consent (not to be unreasonably withheld, delayed or qualified). Manager shall deliver to Owner a true, correct, complete and executed copy, including any exhibits and schedules, of each such service contracts within three (3) days upon request. SECTION 2.05 Inventories and Supplies. Manager shall supervise and purchase or arrange for the purchase in an economical manner all inventories, provisions, supplies and operating equipment which, in the normal course of business, are necessary and proper to maintain and operate the Project in a manner and in accordance first class standards consistent with the express plan of Owner and the then applicable Approved Budget. Manager shall use its good faith reasonable efforts to qualify for any cash and trade discounts, refunds, credits, concessions or other incentives available, and such discounts, refunds, credits, concessions or other incentives shall inure to and belong to Owner and Owner shall receive the benefit thereof. SECTION 2.06 Budgetary Limits. Manager shall not enter into any agreement or arrangement for the furnishing to or by Owner of goods or services (including employment) unless the price, compensation or other consideration paid for any such goods or services shall not exceed expenditures authorized pursuant to an Approved Budget. SECTION 2.07 Maintenance. (a) General Standards. Manager shall (i) provide regular, systematic inspections of buildings and grounds in order to comply with any agreement affecting the Property or Project including, without limitation, any and all mortgages and reciprocal easement agreements affecting the Property (provided Owner shall have provided Manager with copies of such agreements); and (ii) use commercially reasonable efforts to cause and ensure that each of the tenants of the Project comply with the provisions and obligations of their respective leases. Manager shall use commercially reasonable efforts to keep the Project in a clean and sightly condition, recommend and make all repairs and changes, arrange for all decorating, and purchase all supplies, necessary for the proper operation of the Project and maintain or cause the Project to be maintained, including without limitation thereof: (iii) interior cleaning and janitorial service and routine maintenance of plumbing, carpentry, roof, parking areas, heating and air conditioning systems and restroom supplies; (iv) repairs to improvements and common areas and other preventative maintenance; (v) enforcement of construction warranties, (vi) maintenance of electrical and mechanical systems and equipment; and (vii) safety and security of tenants and the property of both Owner and the tenants and such other normal maintenance, alteration and repair work as may be reasonably advisable or necessary to maintain the Project in a manner consistent with maintenance of commercial office buildings of similar size, age and construction in the Project Area. (b) Emergencies. In the event of an emergency for which repairs are immediately necessary for the preservation and safety of the Project or to avoid the suspension of any essential services to the Project or to avoid danger to life or property (each of which shall constitute an “emergency”), such emergency repairs may and shall be made by Manager on behalf of Owner at Owner’s cost. Manager shall promptly and in no event later than twenty-four (24) hours from the time Manager learns of any such emergency, provide Owner with notice in reasonable detail of such emergency. FILED: ORANGE COUNTY CLERK 06/10/2022 05:28 PM INDEX NO. EF005836-2021 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 06/10/2022 (c) Compliance. Manager shall use commercially reasonable efforts to cause all things to be done with respect to the Project which are necessary and/or desirable to comply with any and all regulations of any governmental authority having jurisdiction over the Project. SECTION 2.08 Enforcement of Leases and Contracts. (a) Enforcement. Manager shall, subject to being reimbursed by Owner for out-of-pocket expenses approved in advance by Owner, take all proper and necessary action to enforce the terms of all leases and contracts and to collect and account for all revenue, rent and other charges including, without limitation, additional rent as and when due from or payable by such tenants and others. Owner authorizes Manager, subject to being reimbursed by Owner for out-of-pocket expenses approved in advance by Owner, to request, collect and receipt for all such rent and other charges. Manager may, subject to being reimbursed by Owner for out-of-pocket expenses approved in advance by Owner, retain counsel, collection agencies and such other persons and firms as Manager shall deem appropriate or advisable to enforce the rights and remedies of Owner against any tenant in default in the performance of its obligations under its lease by such actions as are directed or approved by Owner. Notwithstanding any provision of this Agreement to the contrary, Owner shall have the sole right at all times to control or direct its representation in any such legal action and to determine whether to terminate the lease of a tenant in default. (b) Tenant Supervision. Manager shall supervise all dealings with tenants of the Project on behalf of Owner and receive and consider service requests; receive and use best efforts to resolve any complaints, disputes or disagreements among tenants; monitor the activities of tenants to ensure their compliance with terms and conditions of their respective leases and notify the respective tenants and Owner of any non-compliance with such leases of which Manager has knowledge; supervise the moving in and out of all tenants of the Project and to arrange the dates thereof so that there shall be a minimum of disturbance to the operation of the Project and of inconvenience to the other tenants. (c) Notices. Manager shall be responsible for the giving of all notices and statements required to be given to tenants of the Project under the terms of the respective tenants’ leases and for the giving of all other notices necessary to accomplish efficient management of the Project. (d) Rules and Regulations. Manager shall consider and advise Owner from time to time as to appropriate or desirable rules and regulations or any additional rules and regulations required to be made under the leases with tenants of the Project or for the better or more efficient operation of the Project. Manager shall see that all tenants of the Project are informed with respect to such rules, regulations and notices as may be promulgated by Owner or Manager. (e) Security. Manager shall place and maintain a contract or contracts to provide security for the physical protection of the Property. (f) Compliance. Except to the extent that Owner may otherwise direct Manager, Manager, subject to being reimbursed by Owner for out-of-pocket expenses approved in advance by Owner, (i) shall use its commercially reasonable efforts to secure compliance by the other party or parties, if any, to each agreement, mortgage, lease, reciprocal easement agreement, operating agreement, rule, regulation and other instrument to which Owner is or shall hereafter become a party provided Owner shall have provided Manager with copies of such agreements; and (ii) shall use commercially reasonable efforts to cause the obligations of Owner under such agreements, mortgages, leases, reciprocal easement agreements, operating agreements, rules, regulations and other instruments to be performed in all material respects in accordance FILED: ORANGE COUNTY CLERK 06/10/2022 05:28 PM INDEX NO. EF005836-2021 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 06/10/2022 with the terms thereof (including, without limitation, such obligations of Owner to deliver notifications of events and to respond to notices received). (g) Additional Duties. Manager shall undertake such additional duties as Owner may reasonably request from time to time and as are usual and customary for managers of first class office buildings in the Project Area similar to the Project and are consistent with Manager’s employment to manage and operate the Project under the terms and provisions of this Agreement. SECTION 2.09 Compliance with Laws. Insofar as any of the following enumerated matters relate to or affect the condition, use or occupancy of the Project, unless Owner has affirmed its intention to contest the same (in which event Manager, at Owner’s sole cost and expense, shall participate in such contest to the extent requested by Owner), Manager shall use commercially reasonable efforts to comply with and cause the Project to be kept, maintained, used and occupied in compliance with the following as now in effect or as may be hereafter in effect: (a) all applicable laws, statutes and ordinances; (b) all applicable rules, regulations and orders of any governmental authority (specifically including, but not by way of limitation, building codes, fire regulations and environmental rules and regulations); and (c) any direction or occupancy or use certificate issued pursuant to any law, regulation or rule by any public officer. Promptly upon receipt thereof, Manager shall submit to Owner a copy of each notice or statement received from any governmental agency together with any other notices or statements received by Manager which threaten or might have an effect upon the Project in more than a di minimis manner. All of the provisions of this Section shall be further subject to the limitations and restrictions on the authority of Manager set forth in this Agreement. SECTION 2.10 Handicapped Accessibility Law Compliance. Upon request by Owner, Manager shall contract with a qualified independent contractor to prepare an inspection report on behalf of Owner, at Owner’s expense, to determine whether the Project is in compliance with the Americans with Disabilities Act of 1990, and any other applicable federal, state or local laws, rules and regulations applicable to the Project and pertaining to handicapped accessibility. If the Project is not in compliance, then Manager, with such independent contractor, shall propose a plan and budget in order to attain such compliance. SECTION 2.11 Hazardous Materials, Toxic Wastes and Asbestos. If during the term of this Agreement, Manager becomes aware of the existence of hazardous materials or wastes, toxic substances or wastes, asbestos or asbestos-bearing materials and the like at, in, on or under the Project, Manager shall immediately notify Owner of the condition, both orally and in writing. Owner shall exclusively determine such further course of action with respect to such hazardous condition. Manager shall not supervise or oversee any work involving remediation of any hazardous or potentially hazardous wastes or conditions unless specifically hired by Owner to do so pursuant to a separate agreement between Owner and Manager. SECTION 2.12 Taxes and Assessments. Manager, at Owner’s request, shall annually review and submit to Owner a written report on all real estate and personal property taxes and assessments affecting the Project. In addition, if so requested, Manager shall advise Owner as to the use and selection of third party tax consultants. Manager shall not be required to prepare on behalf of Owner any state or federal tax return relating to the Project. Manager shall promptly furnish Owner with copies of all real estate and personal property tax and assessment notices received by Manager. SECTION 2.13 Reports on Insurance Claims and Litigation. Manager shall promptly (within 24 hours, and if not possible, within three (3) business days) notify Owner in writing of any casualty, personal FILED: ORANGE COUNTY CLERK 06/10/2022 05:28 PM INDEX NO. EF005836-2021 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 06/10/2022 injury (including death), accidents, claims for damage relating to the ownership, operation and maintenance of the Project, any damage or destruction to the Project or any other claims made against Owner, Manager or any Manager personnel with respect to the Project and the estimated cost of repair thereof and promptly investigate and make (subject to Owner’s approval) a complete and timely written report required by the appropriate insurance company in connection therewith. All such reports shall be timely filed with the insurance company as required under the terms of the insurance policy involved and a final copy of such report shall be furnished to Owner. Manager shall cooperate, and at Owner’s sole cost and expense, shall cause its employees to cooperate, in instituting, filing and pursuing any insurance claim, including, without limitation, providing the agents and representatives of each insurance carrier with reasonable access to the Property, making any Manager’s employees reasonably available to such agents and representatives and providing such agents and representatives with copies of all documents of books and records related to such claim. Notwithstanding any provision of this Agreement to the contrary, Manager shall not settle any claim against insurance companies without the prior approval of Owner (not to be unreasonably withheld, delayed or qualified). In addition, Manager shall provide Owner with a detailed written incident report setting forth the details of any accidents or incidents at the Property that, in Manager’s reasonable determination, could give rise to a claim or litigation against Owner, Manager and/or the Property, which report shall be provided to Owner within three (3) business days of the incident in question. SECTION 2.14 Assistance with Proposed Sale, Financing, Refinancing. Manager shall cooperate with and assist Owner from time to time in any attempt(s) by Owner to sell, finance or refinance the Project. Such cooperation shall include, without limitation, answering prospective purchasers’ and lenders’ questions about the Project, preparing rent rolls, notifying tenants about the sale of the Project and using its commercially reasonable efforts to obtain estoppel certificates and other documents from all tenants of the Project in the form required by the prospective purchaser or lender. SECTION 2.15 Property Transition. Manager shall use good faith efforts in assisting Owner in coordinating with any prior manager of the Project to ensure a smooth transition from such prior manager to Manager. Such transition responsibilities will include, without limitation, assistance in transferring of bank accounts and security deposits, obtaining all files and personal property with respect to management of the Project, notifying tenants and other interested parties, and collecting such other information required by Owner and imputing the same into a software program designated by Owner. In addition, upon termination of this Agreement, Manager shall assist Owner in coordinating with any successor manager of the Project to ensure a smooth transition from Manager to such successor property manager. SECTION 2.16 Inspections. Manager acknowledges that during the term of this Agreement, designated representatives of firms other than Owner or affiliated companies, may have reason to review and examine during normal business hours the accounting books and records, the lease files, revenue, operating expenses, tenant sales information, and other property data that is under the control of Manager and is maintained at Manager’s on-site office facilities,regional and/or principal offices, and Manager will cooperate with these designated representatives. Manager further acknowledges that these services are included within the scope of this Agreement and that no additional fees are required over and above the basic management fee contained within this Agreement. In addition, Owner and its duly appointed agents and representatives shall have access to the Project at all times for the purpose of inspecting the same and for any other purposes. SECTION 2.17 Limitation of Authority. Notwithstanding any provision of this Agreement to the contrary, Manager shall not, without prior approval by Owner: (a) convey or otherwise transfer or pledge FILED: ORANGE COUNTY CLERK 06/10/2022 05:28 PM INDEX NO. EF005836-2021 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 06/10/2022 or encumber any property or other asset of Owner; (b) retain counsel, institute, defend, settle, compromise or withdrawal lawsuits or other legal proceedings on behalf of Owner or with respect to the Property; (c) enter into any dealings concerning the Project or with tenants of space in the Project for Manager’s own account; (d) pledge the credit of Owner, except for purchases made in the ordinary course of business of operating the Project or as otherwise contemplated pursuant to this Agreement in conformity with an Approved Budget; (e) borrow money or execute any promissory note or other obligation or mortgage, security agreement or other encumbrance in the name of or on behalf of Owner; (f) execute any contracts for construction, remodeling, rehabilitation, landscaping or other work to be done on Property unless previously approved by Owner in conformity with an Approved Budget. The limitations set forth in this Section 2.16 shall be in addition to all other restrictions on the authority of Manager set forth in this Agreement. ARTICLE III BANKING, RECORDKEEPING AND REPORTING DUTIES SECTION 3.01 Operating Account. (a) General. Owner shall establish an account (the “Operating Account”) with a bank having an office in Chicago, Illinois or such other jurisdiction(s) as Owner may designate from time to time (the “Bank”), which shall be used exclusively for the collection and payment of funds for the management and operation of the Project. Manager shall not commingle such monies with funds of Manager or with funds received from the operation of any other property and Manager shall deposit promptly after receipt all monies received from the operation of the Project in the Operating Account. Manager shall act in a fiduciary capacity with respect to the cash and cash equivalent assets of Owner which are within the custody or control of Manager. Manager shall, subject to Section 3.01(b), use funds deposited in the Operating Account to pay operating expenses for the Project to the extent authorized in the Approved Budget. The Operating Account shall have a representative from Manager approved by Owner as a signatory on the account along with Owner as well as the officers of Kayne Anderson Real Estate Advisors, LLC listed on Exhibit A attached hereto and made a part hereof. Manager agrees that upon termination of this Agreement, Medical Properties I Member, LLC shall have the right to remove any employee or other person designated by Manager as a signatory on the Operating Account. If Owner desires, Owner shall establish and maintain such other accounts for tax escrows, capital reserves or other reserves as Owner may designate. To the extent authorized by the Approved Budget, and subject to Owner’s right at any time to instruct Manager not to pay any bill otherwise payable hereunder, Manager shall pay from the Operating Account to the extent available, in a timely manner so that late charges are not incurred or default notices issued. Should Manager’s failure to pay any expenditure result in any fine, penalty, or requirement for additional payment, such additional sum shall be the sole responsibility of the Manager, provided Manager’s failure to pay such expenditure was not caused by Owner. Manager acknowledges that the Operating Account will be pledged at all times by Owner to a mortgage lender or lenders (“Lender”) as additional security for a loan or loans by such Lender and that Owner’s rights with respect to the Operating Account shall be subject to any pledge or other collateral agreements executed between Owner and Lender. Manager hereby acknowledges and agrees that any rights of Manager in or to