January 2019 David Nicely, Regional President of Division I Tennessee Operations LLC 4000 Meridian Blvd. Franklin, TN 37067 Re: Proposed Acquisition of Physician Regional Medical Center Property located in Knoxville, Tennessee and PILOT Leases for Property located on Middlebrook Pike 1n Knoxville, Tennessee Dear David: This non-binding letter of 1ntent ("Letter of Inte it") will as a statement of our mutual intent with respect to a proposed transaction (the "Transaction") City of (the "City") would agree to purchase from Metro Knoxville HMA, LLC 0 ,0t af?liated entities of LLC (collectively, "Seller"), Seller?s existing medical campus known as the Physicians Regional Medical Center located at 900 E. Oak Hill Avenue 1n Knoxville, Tennessee (as more particularly described herein, the "Property"). The proposed terms of the Transactlon are as described on the Term Sheet attached as Exhibit A to this Letter of Intent. The Term Sheet 1s: mcorporated as part of this Letter of Intent. 2. Public Announcement The parties hereto acknowledge that they do not intend to issue any press release or make any public announcement of or relating to the Transact1on without ?rst obtaining the approval of the other party to this Letter of Intent. 3. Expenses. The parties hereto acknowledge that they shall each pay their own fees and expenses and those of their agents, advisers, attorneys and accountants with respect to the negotiation of this Letter of Intent and the proposed Transaction. 4. Non-Binding. This Letter of Intent is intended to be, and shall be construed only as, a non-binding letter of intent summarizing and evidencing the discussions between the City and Seller to the date hereof. Any legally binding obligation of the parties with respect to the Transaction shall exist only upon the execution and delivery of de?nitive agreements, into which this Letter of Intent and all prior discussions shall merge. Please note that the Transaction will require the approval of the City Council of the City, and the City acknowledges that the Transaction will require certain approvals of Seller?s governing body and af?liates. It is expressly understood that this Letter of Intent is not a contract to execute any de?nitive agreement or otherwise to consummate the Transaction. The parties will cooperate in negotiating de?nitive agreements providing for the transactions contemplated by this Letter of Intent, but each party reserves the right to withdraw from negotiations at any time as well as the right of ?nal approval or disapproval, for any reason, of the documentation relating to the Transaction. Please acknowledge that the terms and conditions set forth in this Letter of Intent set forth the essential terms and conditions to serve as the basis for further negotiations relating to the Transaction. Sincerely, CITY OF 7. 5 LE TENNESSEE By: Title: Acknowledged this day of 2019. ON BEHALF OF SELLER: LLC By: Title: Keg-fond President ofD1v1s1on I Operations in the State of Tennessee ,7 320m 7 II. Exhibit A Term Sheet Acquisition of Property The City will purchase, and Seller will sell, the real property and improvements located within the area as depicted on the map attached hereto as Exhibit A (the ?Property?), the boundaries of such Property being highlighted on Exhibit A in red. The City will acquire and accept such Property, AS IS, WHERE IS, without representations or warranties, excepting limited warranties of title and any representations as may be contained in the purchase and sale agreement relating to the authorization of Seller to sell and convey the Property. Seller shall retain ownership of certain propertyiti?hgat is adjacent to the Property, the boundaries of which retained property being highlighted onE "'bit A in yellow. The purchase price for the Property shall be: One dollar ,3 it?it 1n connection with the Transaction. Each party shall be responsible for the costs inc Upon request of the City, Seller shall initially pay the of a title commitment and survey of the Property, and in such case, the City shall reimburse Sell ,r the costs thereof at Closing or upon earlier termination of the contemplated agreement of purch?Se-iand sale. Conditions to Closing As a condition gto Closing, the City shall be permitted to conduct typical due diligence relating to the Property, including envrronmental assessments, structural assessments, title examinations and similar items. To a551st-zin such Seller shall provide to the City all assessments, title reports, title msuran polrcres studies and reports within its possession or control relating to the Property. The period for due diligence shall be 60 days after the date of execution of the contemplated agreement of purchase and sale, and the closing 1s intended to occur within 30 days thereafter or as otherwise agreed upon by the parties. Possession of the Property shall be owned, leased or occupied by and prior to Seller entering into the agreements contemplated for the Transaction, Seller shall have obtained fee simple ownership to the Property and all possessory rights therein upon terms and conditions acceptable to it. As a condition to closing, the City and Seller shall have entered into a management agreement pertaining to the management and maintenance of all buildings and other improvements on the Property within the area the boundaries of which are highlighted in red on Exhibit attached. The term of the management agreement shall be for a period of one year from the closing of the purchase of the Property by the City. The management agreement shall provide that the City may terminate the management agreement relating to any structures or other improvements covered by the management agreement and, at the City?s option, for the demolition of any such improvements. The management agreement shall contain such other terms and conditions as the parties shall agree upon prior to execution of the contemplated agreement of purchase and sale. As a condition to closing, the City shall have delegated to The Industrial Development Board of the City of Knoxville, Tennessee (the the authority to negotiate two (2) PILOT Leases (the Leases?) relating to payments in lieu of taxes with respect to two (2) parcels to be selected and subdivided by Seller from the property presently owned by Seller located on Middlebrook Pike in Knoxville, Tennessee, which property is generally shown on Exhibit attached hereto (the ?Middlebrook Property?). The parties acknowledge that the parcels have not been subdivided, and prior to the execution of each PILOT Lease, Seller shall cause the subdivision of such parcels from the Middlebrook Property. The City agrees to assist and cooperate, at no expense to it, with the efforts of Seller to subdivide the Middlebrook Property. Seller shall retain the right in each PILOT Lease, during the Construction Period (as de?ned below) to make such changes to the boundaries of such parcels as may be deemed necessary to facilitate the development of the parcels as described herein and in the terms of the PILOT Leases to be approved/by the City. Seller has informed the City that Seller intends to cause the construction of health/care/facilities on such parcels, some of which will provide for services presently provided on the Preperty, and Seller will agree in each PILOT Lease to cause the construction of health care/facilities on the applicable parcel within three (3) years a?er the execution of the Agreement. Lease shall provide that Seller shall make payments in lieu of taxes for the term cf the with respect to the property that IS the subject of the PILOT Lease 1n any tax year of an ambunt equal to the taxes presently being paid to the City and Knox County (the ?County?) for tax yea?IxZOI 8 based upon an amount of the 2018 taxes to be agreed upon by the\parties as is reasonably allo?eable to the parcels subj ect to the PILOT Lease as if such parcel had been separately subdivided 1n The term of each PILOT Lease shall not exceed 15 years plus a constructlon period (the ?Construction Period?) of the lesser of three (3) years or the aetual period of Construction. Seller shall agree in each PILOT Lease than no portion of the property that 1s the subj ect\of the PILOT Lease shall be used for retail purposes without ?rst receiving the preper consent of the City. Under the PILOT Leases, the aggregate amount that Seller shall be entitled to receive as anxeff?ective reduction 1n ad valorem real property taxes with respect 0 all property subject>to the PILOT Leas es shall be $16,000,000, to be allocated between the PILOT Leases by?Seller/as reasonably (acceptable to the City. If Seller has received the 11'1axinjum aggregate bene?t of suchan effectivexreduction in real property taxes under the PILOT Leases prior to the eXpiration thereof, Seller shall thereafter make payments in lieu of taxes to the City and the Countyin amounts equal to the real property taxes that otherwise would have been payable with respect to the property that 15 the subject of the PILOT Agreement. The parties acknowledge that the plans and costs for the development and construction of improvements upon each parce1 will likely/mot he completed at the time of execution of each PILOT Lease, and in stich event, the applicable PILOT Lease shall provide for amendment thereof to effectuate the terms or this Agreement and to cemply, to the extent necessary, with applicable laws. Seller shall be permitted to assign each PILOT Lease in whole or in part to af?liates of Seller, a tum-key developer or any other entities that have an interest in the property that 13 the subject of the PILOT Lease (the ?Assignees?) so that such parties may receive the bene?t of the PILOT Lease provided that if the assignment is to an unrelated party, Seller shall demonstrate to the satisfaction of the City that Seller will initially have an active involvement 1n the operation of the property either through a lease, a management contract, ownership interest or other comparable arrangement. The form of the PILOT Leases shall be an exhibit to the de?nitive purchase and sale agreement pursuant to which the City agrees to purchase the Property from Seller, and the approval and authorization of each PEOT Lease by the and execution of each PILOT Lease, in such form with such revisions as are acceptable to Seller and the City, shall be a condition of the closing of the Property. Physicians Regional Medical Center - 900 Oak Hill Ave Exhibit Induced - Excluded u-r-rrPhysicians Regional Medical Center - 900 Oak Hill Ave Exhibit Middlebrook Land - Tennova Exhibit - .. . . 1 .- . - p. AL COMBINED AREA: 109.54 Ar. TOTAL USABLE AREA257009628