Document:

Promissory Note

 Exhibit 10.34 

PROMISSORY NOTE 
  

			
	$150,000,000.00	  	San Diego, California
		  	February 15, 2007

 FOR
VALUE RECEIVED, ABW HOLDINGS LLC, a Delaware limited liability company (“Borrower”), as maker, having an address at 2375 Kuhio Avenue, Honolulu, Hawaii 96815 (and with a copy of all notices to: c/o American Assets, Inc., 11455
El Camino Real, Suite 200, San Diego, California 92130, Attention: Robert Barton and John Chamberlain) hereby unconditionally promises to pay to the order of COLUMN FINANCIAL, INC., a Delaware corporation, having an address at 11 Madison
Avenue, New York, New York 10010 (together with its successors and assigns, “Lender”), or at such other place as the holder hereof may from time to time designate in writing, the aggregate principal sum of $150,000,000.00, in
lawful money of the United States of America, with interest thereon to be computed from the date of this Note at the Applicable Interest Rate (defined below), and to be paid in installments as follows: 

ARTICLE 1: PAYMENT TERMS 

(a) A payment on the date hereof on account of all interest that will accrue on the principal amount of the Loan from and after the date
hereof through and including the last day of February, 2007; 
 (b) A payment (the “Monthly
Payment”) equal to the amount of interest which has accrued during the preceding Interest Accrual Period (defined below) computed at the Applicable Interest Rate (defined below) on the first
(1st) day of April, 2007 and on the first
(1st) day of each calendar month thereafter (each
such date to be hereinafter referred to as a “Monthly Payment Date”) up to and including the first
(1st) day of February, 2017, with each Monthly
Payment to be applied to the payment of interest which has accrued during the preceding Interest Accrual Period; 
 (c) The
principal sum of the Loan and all interest thereon shall be due and payable on March 1, 2017, (the “Maturity Date”). 

(d) Interest on the principal sum of this Note shall be calculated by multiplying the actual number of days elapsed in the period for
which interest is being calculated by a daily rate based on a 360-day year. 
 (e) As used herein, the term “Interest
Accrual Period” shall mean (i) for the first such period, the period beginning on the date hereof and ending on (but including) the last day of February, 2007 and (ii) with respect to each subsequent period beginning with the
period immediately following the period described in subsection (i) above, the period beginning on the first day of each calendar month during the term hereof and ending on (but including) the last day of such calendar month. 

 ARTICLE 2: INTEREST 

The term “Applicable Interest Rate” for the purposes hereof and each other Loan Document shall mean an interest rate
equal to 5.387% per annum. 
 ARTICLE 3: DEFAULT AND ACCELERATION 

(a) The whole of the principal sum of this Note, (b) interest, default interest, late charges and other sums, as provided in this
Note, the Security Instrument or the other Loan Documents (defined below), (c) all other monies agreed or provided to be paid by Borrower in this Note, the Security Instrument or the other Loan Documents, (d) all sums advanced pursuant to
the provisions of the Security Instrument to protect and preserve the Property (defined below) and the lien and the security interest created thereby, and (e) all reasonable sums advanced and costs and expenses incurred by Lender pursuant to
the provisions of this Note, the Security Instrument or the other Loan Documents in connection with the Debt (defined below) or any part thereof, any renewal, extension or change of or substitution for the Debt or any part thereof, or the
acquisition or perfection of the security therefor, whether made or incurred at the request of Borrower or Lender (all the sums referred to in (a) through (e) above shall collectively be referred to as the “Debt”) shall
without notice become immediately due and payable at the option of Lender if (i) any Monthly Payment is not paid within five (5) days of the date when due, (ii) any other portion of the Debt is not paid within five (5) days of
the date when due, (iii) the entire Debt is not paid on or before the Maturity Date or (iv) Borrower commits any other default, and fails to cure same prior to the expiration of any applicable notice and grace periods, herein or under the
terms of the Security Instrument or any of the other Loan Documents (collectively, an “Event of Default”). 

ARTICLE 4: DEFAULT INTEREST 

Borrower does hereby agree that upon the occurrence of an Event of Default, Lender shall be entitled to receive and Borrower shall pay
interest on the entire unpaid principal sum at a rate equal to the lesser of (a) four percent (4%) plus the Applicable Interest Rate and (b) the maximum interest rate which Borrower may by law pay (the “Default
Rate”). The Default Rate shall be computed from the occurrence of the Event of Default until the earlier of the date upon which the Event of Default is cured or waived or the date upon which the Debt is paid in full. Interest calculated at
the Default Rate shall be added to the Debt, and shall be deemed secured by the Security Instrument. This clause, however, shall not be construed as an agreement or privilege to extend the date of the payment of the Debt, nor as a waiver of any
other right or remedy accruing to Lender by reason of the occurrence of any Event of Default. Notwithstanding the foregoing, in the event Borrower becomes liable for interest at the Default Rate under this Article 4 (such interest, the
“Default Interest”) due to the occurrence of a Qualifying Non-Monetary Default (defined below), Borrower shall only be liable for such Default Interest for a period not to exceed six (6) months unless (i) Lender actively
pursues a foreclosure action (or non-judicial foreclosure) as a result of such Qualifying Non-Monetary Default (in which case, Borrower shall be liable for Default Interest for a period equal to (I) the duration of Lender’s pursuit of the
remedies described above plus (II) the first six (6) months following the occurrence of the applicable Qualifying Non-Monetary Default (less any portion of such six (6) month period occurring after Lender’s commencement of its pursuit
of the remedies 
  

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described above)) or (ii) a monetary Event of Default shall at any time exist (in which case, Borrower shall be liable for Default Interest from the date of the occurrence of the applicable
Qualifying Non-Monetary Default). As used herein and in the other Loan Documents, a “Qualifying Non-Monetary Default” shall mean a non-monetary Event of Default which (a) cannot reasonably be cured by Borrower and (b) in
Lender’s good faith, reasonable determination, (i) was not committed intentionally and knowingly by Borrower with the intention of violating the terms and conditions of the Loan Documents and (ii) does not have a Material Adverse
Effect (as defined in the Security Instrument). 
 ARTICLE 5: PREPAYMENT; DEFEASANCE 

Except as otherwise expressly permitted by this Article 5 or in the Security Instrument, no voluntary prepayments, whether in whole or in
part, of the Loan or any other amount at any time due and owing under this Note can be made by Borrower or any other Person without the express written consent of Lender. 

(a) Lockout Period. Borrower has no right to make, and Lender shall have no obligation to accept, any voluntary prepayment,
whether in whole or in part, of the Loan during the Lockout Period (defined below). Notwithstanding the foregoing, if (i) Lender, in its sole and absolute discretion, accepts a full or partial voluntary prepayment during the Lockout Period or
(ii) there is an involuntary prepayment during the Lockout Period, then, in any such case, Borrower shall, in addition to any portion of the Loan prepaid (together with all interest accrued and unpaid thereon), pay to Lender a prepayment
premium in an amount calculated in accordance with subsection (c) below. The term “Lockout Period” shall mean the period commencing on the date hereof and ending on the date occurring immediately prior to the date which is four
(4) calendar months prior to the Maturity Date. The term “Open Prepayment Date” shall mean the first Monthly Payment Date occurring after the expiration of the Lockout Period. 

(b) Defeasance. 

(i) Notwithstanding any provisions of this Article 5 to the contrary, including, without limitation, subsection
(a) of this Article 5, at any time other than during a REMIC Prohibition Period (defined below), Borrower may cause the release of the Property from the lien of the Security Instrument and the other Loan Documents and, subject to
Borrower’s satisfaction of clause (iii) under this subsection (b), a release of Borrower and Indemnitor (as defined in that certain Indemnity Agreement dated as of the date hereof among Borrower, Guarantor (as defined in the Security
Instrument) and Lender (the “Indemnity Agreement”)) from any further liability or obligation under this Note, the Security Instrument or the other Loan Documents (other than a liability or obligation in connection with a provision
of this Note, the Security Instrument or other Loan Document which expressly states that it is to survive termination, satisfaction, assignment, entry of a judgment of foreclosure, exercise of any power of sale, or delivery of a deed in lieu of
foreclosure of the Security Instrument), upon the satisfaction of the following conditions: 
 (A) no Event of
Default shall exist under any of the Loan Documents; 
  

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 (B) not less than sixty (60) (or such shorter period as may be agreed
to by Lender in its reasonable discretion) but not more than ninety (90) days prior written notice shall be given to Lender specifying a date on which the Defeasance Collateral (as hereinafter defined) is to be delivered (the “Release
Date”), such date being on a Monthly Payment Date; provided, however, that Borrower shall have the right (i) to cancel such notice by providing Lender with notice of cancellation ten (10) days prior to the scheduled Release Date,
or (ii) to extend the scheduled Release Date until the next Monthly Payment Date; provided that in each case, Borrower shall pay all of Lender’s costs and expenses incurred as a result of such cancellation or extension; 

(C) all accrued and unpaid interest and all other sums due under this Note, the Security Instrument and under the other
Loan Documents up to the Release Date, including, without limitation, all reasonable fees, costs and expenses incurred by Lender and its agents in connection with such release (including, without limitation, legal fees and expenses for the review
and preparation of the Defeasance Security Agreement (as hereinafter defined) and of the other materials described in subsection (b)(i)(D) below and any related documentation, and any servicing fees, Rating Agency (as defined in the Security
Instrument) fees or other reasonable costs related to such release), shall be paid in full on or prior to the Release Date; 

(D) Borrower shall deliver to Lender on or prior to the Release Date: 

(1) a pledge and security agreement, in form and substance satisfactory to a prudent lender, creating a first priority
security interest in favor of Lender in the Defeasance Collateral (the “Defeasance Security Agreement”), which shall provide, among other things, that any excess amounts received by Lender from the Defeasance Collateral over the
amounts payable by Borrower on a given Monthly Payment Date (or upon the Open Prepayment Date (assuming that the Debt is prepaid in whole on the Open Prepayment Date in accordance with the applicable terms and conditions hereof)), which excess
amounts are not required to cover all or any portion of amounts payable on, as applicable, a future Monthly Payment Date or upon the Open Prepayment Date (assuming that the Debt is prepaid in whole on the Open Prepayment Date in accordance with the
applicable terms and conditions hereof), shall be refunded to Borrower (or to the original Borrower hereunder provided Successor Borrower affirmatively assigns such receivable rights in writing to such original Borrower) promptly after each such
Monthly Payment Date and following payment in full of the Debt, any remaining amounts shall be disbursed to Borrower (or the original Borrower, as provided and subject to the qualification listed above); 

(2) direct non-callable obligations of the United States of America or other obligations which are “government
securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940 (to 
  

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the extent the applicable Rating Agencies rating the Securities have confirmed in writing that the same will not cause a downgrade, withdrawal or qualification of the initial, or, if higher, then
applicable ratings of the Securities) that provide for payments prior and as close as possible to (but in no event later than) all successive Monthly Payment Dates occurring after the Release Date, with each such payment being equal to or greater
than the amount of the corresponding Monthly Payment required to be paid under this Note (including all amounts due on the Open Prepayment Date (assuming that the Debt is prepaid in whole on such date in accordance with the applicable terms and
conditions hereof)) for the balance of the term hereof (the “Defeasance Collateral”), each of which shall be duly endorsed by the holder thereof as directed by Lender or accompanied by a written instrument of transfer in form and
substance wholly satisfactory to Lender in its sole discretion (including, without limitation, such certificates, documents and instruments as may be required by the depository institution holding such securities or the issuer thereof, as the case
may be, to effectuate book-entry transfers and pledges through the book-entry facilities of such institution) in order to perfect upon the delivery of the Defeasance Security Agreement the first priority security interest therein in favor of Lender
in conformity with all applicable state and federal laws governing granting of such security interests; 
 (3) a
certificate of Borrower certifying that all of the requirements set forth in this subsection (b)(i) have been satisfied; 

(4) one or more opinions of counsel for Borrower in form and substance and delivered by counsel which would be
satisfactory to a prudent lender stating, among other things, that (i) Lender has a perfected first priority security interest in the Defeasance Collateral and that the Defeasance Security Agreement is enforceable against Borrower in accordance
with its terms, (ii) in the event of a bankruptcy proceeding or similar occurrence with respect to Borrower, none of the Defeasance Collateral nor any proceeds thereof will be property of Borrower’s estate under Section 541 of the
U.S. Bankruptcy Code or any similar statute and the grant of security interest therein to Lender should not constitute an avoidable preference under Section 547 of the U.S. Bankruptcy Code or applicable state law, (iii) the release of the
lien of the Security Instrument and the pledge of Defeasance Collateral will not directly or indirectly result in or cause any “real estate mortgage investment conduit” within the meaning of Section 860D of the Internal Revenue Code
that holds the Loan (or any portion thereof or interest therein) (a “REMIC Trust”) to fail to maintain its status as a REMIC Trust and (iv) the defeasance will not cause any REMIC Trust to be an “investment company”
under the Investment Company Act of 1940; 
  

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 (5) a certificate in form and scope acceptable to Lender in its sole
discretion from an Acceptable Accountant (defined below) certifying that the Defeasance Collateral will generate amounts sufficient to make all payments of principal and interest due under this Note (including the scheduled outstanding principal
balance of the Loan due on the Open Prepayment Date (assuming that the Debt is prepaid in whole on such date in accordance with the applicable terms and conditions hereof)). The term “Acceptable Accountant” shall mean a “Big
Four” accounting firm or other independent certified public accountant acceptable to Lender; and 
 (6)
such other certificates, documents and instruments as Lender may reasonably require; and 
 (E) in the event the
Loan (or any portion thereof or interest therein) is held by a REMIC Trust, Lender has received written confirmation from each Rating Agency rating any Securities (as defined in the Security Instrument) that substitution of the Defeasance Collateral
will not result in a downgrade, withdrawal, or qualification of the ratings then assigned to any of the Securities. 

(ii) Upon compliance with the requirements of subsection (b)(i), the Property shall be released from the lien of the
Security Instrument and the other Loan Documents, and the Defeasance Collateral shall constitute the sole collateral which shall secure this Note and all other obligations under the Loan Documents. Lender will, at Borrower’s expense, execute
and deliver any agreements reasonably requested by Borrower to release the lien of the Security Instrument and the other Loan Documents from the Property and will, subject to Borrower’s satisfaction of clause (iii) under this subsection
(b), cause a release of Borrower and Indemnitor from any further liability or obligation under this Note, the Security Instrument or the other Loan Documents other than a liability or obligation in connection with a provision of this Note, the
Security Instrument or the other Loan Documents which expressly states that it is to survive termination, satisfaction, assignment, entry of a judgment of foreclosure, exercise of any power of sale, or delivery of a deed in lieu of foreclosure of
the Security Instrument. 
 (iii) Upon the release of the Property in accordance with this subsection (b),
Borrower shall assign all its obligations and rights under this Note, together with the pledged Defeasance Collateral, to a successor entity designated and approved by Lender in its reasonable discretion (“Successor Borrower”).
Successor Borrower shall execute an assignment and assumption agreement (the “Defeasance Assumption Agreement”) consistent with the provisions of the Loan Documents and in form and substance satisfactory to Lender in its sole and
absolute discretion pursuant to which it shall assume Borrower’s obligations under this Note and the Defeasance Security Agreement. As conditions to such assignment and assumption, Borrower shall (A) deliver to Lender one or more opinions
of counsel in form and substance and delivered by counsel which would be satisfactory to a prudent Lender stating, among other things, that such Defeasance Assumption Agreement is enforceable against Borrower and the Successor Borrower in accordance
with its terms and that this Note, the Defeasance Security Agreement and the other Loan Documents, as so assigned and assumed, are enforceable against the 

 

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Successor Borrower in accordance with their respective terms, and opining to such other matters relating to Successor Borrower and its organizational structure as Lender may reasonably require,
and (B) pay all fees, costs and expenses incurred by Lender or its agents in connection with such assignment and assumption (including, without limitation, legal fees and expenses and for the review of the proposed transferee and the
preparation of the assignment and assumption agreement and related certificates, documents and instruments and any fees payable to any Rating Agencies and their counsel in connection with the issuance of the confirmation referred to in subsection
(b)(i)(E) above). Upon such assignment and assumption, Borrower and Indemnitor shall be relieved of their obligations under this Note, under the other Loan Documents and under the Defeasance Security Agreement, except for any liability or obligation
in connection with a provision of this Note, the Security Instrument or any other Loan Documents which expressly states that it is to survive termination, satisfaction, assignment, entry of a judgment of foreclosure, exercise of any power of sale,
or delivery of a deed in lieu of foreclosure of the Security Instrument. 
 (iv) For purposes of this Article 5,
“REMIC Prohibition Period” means the period commencing on the date hereof and ending on the earlier to occur of (i) the first Monthly Payment Date occurring after the second anniversary of the “startup day” within the
meaning of Section 860G(a)(9) of the Code of the last REMIC Trust to hold any portion of or interest in the Loan such that all portions of and interests in the Loan are held by one or more REMIC Trusts and (ii) the first Monthly Payment
date occurring after the third anniversary of the date hereof. In no event shall Lender have any obligation to notify Borrower that a REMIC Prohibition Period is in effect with respect to the Loan, except that Lender shall notify Borrower if any
REMIC Prohibition Period is in effect with respect to the Loan after receiving any notice described in subsection (b)(i)(B); provided, however, that the failure of Lender to so notify Borrower shall not impose any liability on Lender or grant
Borrower any right to defease the Loan during any such REMIC Prohibition Period. 
 (c) Involuntary Prepayment During the
Lockout Period. During the Lockout Period, in the event of any involuntary prepayment of the Loan or any other amount under this Note, whether in whole or in part, in connection with or following Lender’s acceleration of this Note, or
otherwise, and whether the Security Instrument is satisfied or released by foreclosure (whether by power of sale or judicial proceeding), deed in lieu of foreclosure or by any other means, including, without limitation, repayment of the Loan by
Borrower or any other Person pursuant to any statutory or common law right of redemption, Borrower shall, in addition to any portion of the principal balance of the Loan prepaid (together with all interest accrued and unpaid thereon and, in the
event the prepayment is made on a date other than a Monthly Payment Date, a sum equal to the amount of interest which would have accrued under this Note on the amount of such prepayment if such prepayment had occurred on the next Monthly Payment
Date), pay to Lender a prepayment premium in an amount equal to the Yield Maintenance Premium (hereafter defined). As used herein, the term “Yield Maintenance Premium” shall mean an amount equal to the greater of (i) 1% of the
principal amount of the Loan being prepaid and (ii) an amount equal to the excess, if any, of (A) the sum of the present values of a series of payments payable at the times and in the amounts equal to the debt service payments (including,
but not limited to the principal and interest payable on the Maturity Date) which would have been scheduled to be 
  

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payable relative to the principal amount of the Loan being prepaid after the date of such tender under the Loan had the Note not been prepaid, with each such payment discounted to its present
value at the date of such tender at the rate which when compounded monthly is equivalent to the Prepayment Rate (as hereinafter defined) when compounded semi-annually, over (B) the principal amount of the Loan being prepaid. The term
“Prepayment Rate” shall mean the bond equivalent yield (in the secondary market) on the United States Treasury Security that as of the Prepayment Rate Determination Date (hereinafter defined) has a remaining term to maturity closest
to, but not exceeding, the remaining term to the Maturity Date, as most recently published in the “Treasury Bonds, Notes and Bills” section in The Wall Street Journal as of the date of the related tender of payment. If more than one issue
of United States Treasury Securities has the remaining term to the Maturity Date referred to above, the “Prepayment Rate” shall be the yield on the United States Treasury Security most recently issued as of such date. The term
“Prepayment Rate Determination Date” shall mean the date which is five (5) Business Days prior to the prepayment date. The rate so published shall control absent manifest error. If the publication of the Prepayment Rate in The
Wall Street Journal is discontinued, Lender shall determine the Prepayment Rate on the basis of “Statistical Release H.15 (519), Selected Interest Rates,” or any successor publication, published by the Board of Governors of the Federal
Reserve System, or on the basis of such other publication or statistical guide as Lender may reasonably select. 
 (d)
Insurance and Condemnation Proceeds; Excess Interest. Notwithstanding any other provision herein to the contrary, and provided no Event of Default exists, Borrower shall not be required to pay any prepayment premium in connection with any
prepayment occurring solely as a result of (i) the application of insurance proceeds or condemnation proceeds pursuant to the terms of the Loan Documents, (ii) the application of any interest in excess of the maximum rate permitted by
applicable law to the reduction of the Loan, or (iii) the exercise by Lender of any other right under the Loan Documents to apply an amount received by Lender to the principal balance of this Note, other than any exercise in connection with an
Event of Default, which shall be controlled by the preceding paragraph (c). 
 (e) After the Lockout Period. Commencing
on the day after the expiration of the Lockout Period, and upon giving Lender at least fifteen (15) days (but not more than one hundred and eighty (180) days) prior written notice, Borrower may voluntarily prepay (without premium) this
Note in whole (but not in part) on a Monthly Payment Date. Lender shall accept a prepayment pursuant to this subsection (e) on a day other than a Monthly Payment Date provided that, in addition to payment of the full outstanding principal
balance of this Note, Borrower pays to Lender a sum equal to the amount of interest which would have accrued on this Note if such prepayment occurred on the next Monthly Payment Date. 

(f) Limitation on Partial Prepayments. In no event shall Lender have any obligation to accept a partial prepayment. 

ARTICLE 6: SECURITY 

This Note is secured by the Security Instrument and the other Loan Documents. The term “Security Instrument” as used in
this Note shall mean the Mortgage, Assignment of Leases and Rents, Security Agreement, Financing Statement and Fixture Filing dated as of the 

 

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date hereof given by Borrower (among others) to Lender covering the fee simple estate of Borrower in certain premises located in the City and County of Honolulu, State of Hawaii, and other
property, as more particularly described therein (collectively, the “Property”) and intended to be duly recorded in the Bureau of Conveyances of the State of Hawaii and in the Office of the Assistant Registrar of the Land Court of
the State of Hawaii. The term “Loan Documents” as used in this Note shall mean all and any of the documents and/or instruments executed by Borrower and/or others and by or in favor of Lender in connection with the Loan. Whenever
used, the singular number shall include the plural, the plural number shall include the singular, and the words “Lender” and “Borrower” shall include their respective successors, assigns, heirs, executors and administrators.

 All of the terms, covenants and conditions contained in the Security Instrument and the other Loan Documents are hereby made
part of this Note to the same extent and with the same force as if they were fully set forth herein. 
 ARTICLE
7: SAVINGS CLAUSE 
 This Note is subject to the express condition that at no time shall Borrower be obligated or
required to pay interest on the principal balance due hereunder at a rate which could subject Lender to either civil or criminal liability as a result of being in excess of the maximum interest rate which Borrower is permitted by applicable law to
contract or agree to pay. If by the terms of this Note, Borrower is at any time required or obligated to pay interest on the principal balance due hereunder at a rate in excess of such maximum rate, the Applicable Interest Rate or the Default Rate,
as the case may be, shall be deemed to be immediately reduced to such maximum rate and all previous payments in excess of the maximum rate shall be deemed to have been payments in reduction of principal and not on account of the interest due
hereunder. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the Debt, shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Note
until payment in full so that the rate or amount of interest on account of the Debt does not exceed the maximum lawful rate of interest from time to time in effect and applicable to the Debt for so long as the Debt is outstanding. 

ARTICLE 8: LATE CHARGE 

If any monthly installment of principal or interest payable under this Note is not paid on the date on which it was due, Borrower shall
pay to Lender upon demand an amount equal to the lesser of 2.5% of the unpaid sum or the maximum amount permitted by applicable law to defray the expenses incurred by Lender in handling and processing the delinquent payment and to compensate Lender
for the loss of the use of the delinquent payment and the amount shall be secured by the Security Instrument and the other Loan Documents. 

ARTICLE 9: NO ORAL CHANGE 

This Note may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the
part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought. 

 

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 ARTICLE 10: JOINT AND SEVERAL LIABILITY 

If there is more than one Borrower, the obligations and liabilities of each such person or party shall be joint and several. 

ARTICLE 11: WAIVERS 

Except as otherwise provided herein, in the Security Instrument, or in the other Loan Documents, Borrower and all others who may become
liable for the payment of all or any part of the Debt do hereby severally waive presentment and demand for payment, notice of dishonor, protest and notice of protest and non-payment and all other notices of any kind. No release of any security for
the Debt or extension of time for payment of this Note or any installment hereof, and no alteration, amendment or waiver of any provision of this Note, the Security Instrument or the other Loan Documents made by agreement between Lender or any other
person or party shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Borrower, and any other person or entity who may become liable for the payment of all or any part of the Debt, under this Note, the
Security Instrument or the other Loan Documents. No notice to or demand on Borrower shall be deemed to be a waiver of the obligation of Borrower or of the right of Lender to take further action without further notice or demand as provided for in
this Note, the Security Instrument or the other Loan Documents. If Borrower is a partnership, the agreements herein contained shall remain in force and applicable, notwithstanding any changes in the individuals comprising the partnership. If
Borrower is a corporation, the agreements contained herein shall remain in full force and applicable notwithstanding any changes in the shareholders comprising, or the officers and directors relating to, the corporation. If Borrower is a limited
liability company, the agreements contained herein shall remain in full force and applicable notwithstanding any changes in the members comprising, or the managers, officers or agents relating to, the limited liability company. The term
“Borrower”, as used herein, shall include any alternate or successor partnership, corporation, limited liability company or other entity or person to the Borrower named herein, but any predecessor partnership (and their partners),
corporation, limited liability company, other entity or person shall not thereby be released from any liability except as otherwise provided in the Security Instrument or other Loan Documents. Nothing in this Article 11 shall be construed as a
consent to, or a waiver of, any prohibition or restriction on transfers of interests in such partnership which may be set forth in the Security Instrument or any other Loan Document. 

ARTICLE 12: DEFINITIONS 

All capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Security Instrument and the
other Loan Documents. 
 ARTICLE 13: WAIVER OF TRIAL BY JURY 

BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM,
WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THIS NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THIS NOTE, THIS NOTE, THE 

 

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SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH. 

ARTICLE 14: EXCULPATION 

(a) Notwithstanding any contrary provisions contained herein, the Security Instrument or the other Loan Documents (other than a provision
herein or therein which expressly states that it is intended to override any exculpatory provisions of this Note), Lender shall not enforce the liability and obligation of Borrower, to perform and observe the obligations contained in this Note, the
Security Instrument or the other Loan Documents by any action or proceeding wherein a money judgment shall be sought against Borrower or any partner or member of Borrower, except that Lender may bring a foreclosure action (where no deficiency
judgment is sought against Borrower or any partner or member of Borrower), an action for specific performance or any other appropriate action or proceeding to enable Lender to enforce and realize upon this Note, the Security Instrument, the other
Loan Documents, and the interests in the Property; and any other collateral given to Lender pursuant to the Security Instrument and the other Loan Documents; provided, however, that, except as specifically provided herein, any judgment in any such
action or proceeding shall not be enforceable against Borrower (or any partner or member of Borrower) except to the extent of Borrower’s interest in the Property and in any other collateral given to Lender as security, and Lender, by accepting
this Note, the Security Instrument and the other Loan Documents, agrees that it shall not sue for, seek or demand any deficiency judgment against Borrower (or any partner or member of Borrower) in any such action or proceeding, under or by reason of
or in connection with this Note, the Security Instrument or the other Loan Documents. The provisions of this paragraph shall not, however, (1) constitute a waiver, release or impairment of any obligation evidenced or secured by this Note, the
Security Instrument or the other Loan Documents; (2) impair the right of Lender to name Borrower as a party defendant in any action or suit for foreclosure and sale under the Security Instrument, where Lender is required to do so in order to
properly pursue such action (and subject to the above-described prohibition on suing for, seeking or demanding any deficiency judgment); (3) affect the validity or enforceability of any guaranty or indemnity made in connection with this Note,
the Security Instrument or the other Loan Documents; (4) impair the right of Lender to obtain the appointment of a receiver; (5) impair the enforcement of any assignment; or (6) constitute a waiver of the right of Lender to enforce
the liability and obligation of Borrower, by money judgment or otherwise, to the extent of any actual losses suffered by Lender arising out of the following: 

(i) fraud or intentional misrepresentation by Borrower in connection with this Note, the Security Instrument or the other
Loan Documents; 
 (ii) any material inaccuracy, error or omission in the rent roll of the Property certified to
by Borrower in that certain Borrower’s Certification executed in connection with the Loan; 
 (iii) the
failure of Borrower or Sponsor to remedy (after thirty (30) days notice thereof from Lender referencing this provision) any failure to provide financial information when and as required by the Security Instrument; 

 

 11 

 (iv) Willful Misconduct (as defined below) of Borrower in connection with
Borrower’s operation of the Property. As used herein, the term “Willful Misconduct” shall mean, and refer to, any affirmative act by Borrower (1) during the existence of any event which, with the passage or time, the
giving of notice, or both would constitute an Event of Default, or (2) that is the cause of such Event of Default which, in either case, is undertaken by Borrower with the express intention of causing waste or physical damage to the Property
and that actually results in physical damage or waste to the Property; 
 (v) the breach of provisions in this
Note, the Security Instrument or the other Loan Documents concerning Environmental Laws and Hazardous Substances and any indemnification of Lender with respect thereto in any document (including, without limitation, the indemnification provided in
Section 13.4 of the Security Instrument); 
 (vi) the removal or disposal of any portion of the Property by
Borrower after the occurrence and during the continuance of an Event of Default under this Note, the Security Instrument or the other Loan Documents (unless, with respect to the removal of Personal Property, such Personal Property is simultaneously
replaced with Personal Property of equal or greater value and utility); 
 (vii) the misapplication or conversion
by Borrower in violation of the terms of the Security Instrument of (A) any insurance proceeds paid by reason of any loss, damage or destruction to the Property, (B) any awards or other amounts received in connection with the condemnation
of all or a portion of the Property, or (C) any Rents after the occurrence and during the continuance of an Event of Default under this Note, the Security Instrument or the other Loan Documents; 

(viii) any security deposits collected with respect to the Property which are not delivered to Lender upon a foreclosure
of the Property or deed in lieu thereof, except to the extent any such security deposits were applied or returned to the lessee in accordance with the terms and conditions of any of the Leases prior to such foreclosure or deed in lieu thereof;

 (ix) the violation by Borrower of the representations or covenants contained in Section 4.3 of the
Security Instrument; 
 (x) the non-payment of taxes with respect to the FHB Tax Parcel (as defined in the
Security Instrument); 
 (xi) the failure of the portions of the QS Space (defined below) located in different
condominium units and/or apartments to be physically separated (which such losses shall be deemed to be the cost to effect such physical separation in accordance with applicable law and the construction standards of the remaining portion of the
Property). As used above, the term “QS Space” shall mean that portion of the Property currently leased to QS Retail, Inc. d/b/a Quiksilver; and/or 

(xii) the failure of the Master Lease Space (as defined in the Security Instrument) to be leased pursuant to a Qualifying
MLS Lease (as defined in the Security Instrument), provided, that, upon any portion of the Master Lease Space being leased pursuant to a Qualifying MLS Lease, this subsection shall be null and void and of no further force or effect with respect to
the portion of the Master Lease Space so leased. 
  

 12 

 (b) Notwithstanding anything to the contrary in this Note, the Security Instrument or the
other Loan Documents, the agreement of Lender not to pursue recourse liability as set forth in subsection (a) above SHALL BECOME NULL AND VOID and shall be of no further force and effect and the Debt shall be fully recourse to Borrower in the
event that: (A) the first full Monthly Payment is not paid when due; (B) a Prohibited Transfer (as defined in the Security Instrument) occurs in violation of Article 8 of the Security Instrument; or (C) if (I) an involuntary
petition (other than the collusive involuntary petitions described in the following clause (II)) is filed against Borrower under the U.S. Bankruptcy Code or any other federal or state bankruptcy or insolvency law (collectively, the
“Insolvency Laws”) and is not dismissed within ninety (90) days of the filing thereof, or (II) Borrower files or consents to the filing against Borrower of a petition, voluntary or involuntary, under applicable Insolvency Laws,
or any partner, member or equivalent person of Borrower, or any person acting in concert with Borrower or any of the foregoing persons, files or joins in the filing against Borrower of an involuntary petition under applicable Insolvency Laws.

 (c) Nothing herein shall be deemed to be a waiver of any right which Lender may have under Section 506(a), 506(b),
1111(b) or any other provisions of the U.S. Bankruptcy Code to file a claim for the full amount of the Debt or to require that all collateral shall continue to secure all of the Debt owing to Lender in accordance with this Note, the Security
Instrument or the other Loan Documents. 
 ARTICLE 15: AUTHORITY 

Borrower (and the undersigned representative of Borrower, if any) represents that Borrower has full power, authority and legal right to
execute and deliver this Note, the Security Instrument and the other Loan Documents and that this Note, the Security Instrument and the other Loan Documents constitute valid and binding obligations of Borrower, except as may be limited by
(i) bankruptcy, insolvency or other similar laws affecting the rights of creditors generally and (ii) general principles of equity. 

ARTICLE 16: APPLICABLE LAW 

This Note shall be deemed to be a contract entered into pursuant to the laws of the State of California and shall in all respects be
governed, construed, applied and enforced in accordance with the laws of the State of California and applicable laws of the United States of America. 

ARTICLE 17: SERVICE OF PROCESS 

Article 17 of the Security Instrument is hereby incorporated by reference as if full set forth herein. 

ARTICLE 18: COUNSEL FEES 

In the event that it should become necessary to employ counsel to collect the Debt or to protect or foreclose the security therefor,
Borrower also agrees to pay all reasonable fees and expenses of Lender, including, without limitation, reasonable attorney’s fees for the services of such counsel whether or not suit be brought. 

 

 13 

 ARTICLE 19: NOTICES 

All notices or other written communications to Borrower or Lender hereunder shall be deemed to have been properly given (i) upon
delivery, if delivered in person with receipt acknowledged by the recipient thereof, (ii) one (1) Business Day after having been deposited for overnight delivery with any nationally recognized overnight courier (such as FedEx or UPS), or
(iii) three (3) Business Days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed
to Borrower or Lender at their addresses set forth in the Security Instrument or addressed as such party may from time to time designate by written notice to the other parties. Either party by notice to the other may designate additional or
different addresses for subsequent notices or communications. 
 ARTICLE 20: MISCELLANEOUS 

Except as otherwise specifically set forth in this Note, the Security Instrument, or the other Loan Documents,
wherever pursuant to this Note (i) Lender exercises any right given to it to approve or disapprove, (ii) any arrangement or term is to be satisfactory to Lender, or (iii) any other decision or determination is to be made by Lender,
the decision of Lender to approve or disapprove, all decisions that arrangements or terms are satisfactory or not satisfactory, and all other decisions and determinations made by Lender, shall be based upon a standard of reasonability. All approvals
of or waivers by Lender in respect of any of the terms, conditions or requirements of this Note must be in writing. No waiver with respect to any condition, breach or other matter shall extend to or be taken in any manner whatsoever to affect any
other condition, breach or matter or affect Lender’s rights resulting therefrom. Notwithstanding anything to the contrary contained herein or in any other Loan Document, whenever any payment to be made hereunder or under any other Loan Document
shall be stated to be due on a day which is not a Business Day, the due date thereof shall be deemed to be the immediately succeeding Business Day, provided, however, with respect to (A) any Monthly Payment due hereunder or any grace period
granted hereunder or under the other Loan Documents with respect thereto, to the extent that such succeeding Business Day convention would cause either the due date of any Monthly Payment and/or the grace period relating thereto to extend beyond the
sixth (6th) day of any calendar month, the due date
of such Monthly Payment or the term of such grace period (as applicable) shall be deemed to be due or shall terminate (as applicable) on such sixth
(6th) day (or if such sixth
(6th) day is not a Business Day, the immediately
preceding Business Day) and (B) the balloon payment due hereunder on the Maturity Date, if the Maturity Date does not occur on a Business Day, the Maturity Date shall be deemed to occur on the immediately preceding Business Day. 

[NO FURTHER TEXT ON THIS PAGE] 
  

 14 

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

			
	ABW HOLDINGS LLC,
	a Delaware limited liability company
		
	By:	 	 /s/ Melvyn M. Wilinsky

		 	Name: Melvyn M. Wilinsky
		 	Title: Executive Vice President, Treasurer and           Chief Financial Officer

 ADDENDUM TO NOTE 

BY SIGNING BELOW, BORROWER EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS THAT, PURSUANT TO THE TERMS OF THIS NOTE, BORROWER HAS AGREED THAT IT HAS NO RIGHT TO
PREPAY THIS NOTE PRIOR TO THE MATURITY DATE (EXCEPT AS EXPRESSLY SET FORTH TO THE CONTRARY HEREIN) OR IN THE SECURITY INSTRUMENT, AND THAT IT SHALL BE LIABLE FOR THE PAYMENT OF THE PREPAYMENT PREMIUM FOR PREPAYMENT OF THIS NOTE UPON ACCELERATION OF
THIS NOTE IN ACCORDANCE WITH ITS TERMS EXCEPT AS EXPRESSLY SET FORTH IN THE HEREIN OR IN THE SECURITY INSTRUMENT. FURTHER, BY SIGNING BELOW, BORROWER WAIVES ANY RIGHTS IT MAY HAVE UNDER SECTION 2954.10 OF THE CALIFORNIA CIVIL CODE, OR ANY SUCCESSOR
STATUTE, AND EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS THAT LENDER HAS MADE THE LOAN IN RELIANCE ON THE AGREEMENTS AND WAIVER OF BORROWER AND THAT LENDER WOULD NOT HAVE MADE THE LOAN WITHOUT SUCH AGREEMENTS AND WAIVER OF BORROWER. 

[NO FURTHER TEXT ON THIS PAGE] 
  

 16 

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

			
	ABW HOLDINGS LLC,
	a Delaware limited liability company
		
	By:	 	 /s/ Melvyn M. Wilinsky

		 	Name: Melvyn M. Wilinsky
		 	Title: Executive Vice President, Treasurer and           Chief Financial Officer

 

 17Multifamily Deed of Trust, Assignment of Rents, Security Agreement

 Exhibit 10.35 

RECORDING REQUESTED BY 
 AND WHEN RECORDED MAIL
TO: 
 Michael P. Van Voorhis, Esquire 

Troutman Sanders LLP 
 1660 International Drive

 Suite 600, Tysons Corner 
 McLean,
Virginia 22102-3805 
  
  

 
 MULTIFAMILY DEED OF TRUST,

 ASSIGNMENT OF RENTS, 

SECURITY AGREEMENT AND FIXTURE FILING 

(CALIFORNIA – REVISION DATE 05-11-2004) 

ATTENTION COUNTY RECORDER: THIS INSTRUMENT IS INTENDED TO BE EFFECTIVE AS A FINANCING STATEMENT FILED AS A FIXTURE FILING PURSUANT TO SECTION 9502 OF THE
CALIFORNIA COMMERCIAL CODE. PORTIONS OF THE GOODS COMPRISING A PART OF THE MORTGAGED PROPERTY ARE OR ARE TO BECOME FIXTURES RELATED TO THE LAND DESCRIBED IN EXHIBIT A HERETO. THIS INSTRUMENT IS TO BE FILED FOR RECORD IN THE RECORDS OF THE COUNTY
WHERE DEEDS OF TRUST ON REAL PROPERTY ARE RECORDED AND SHOULD BE INDEXED AS BOTH A DEED OF TRUST AND AS A FINANCING STATEMENT COVERING FIXTURES. THE ADDRESSES OF BORROWER (DEBTOR) AND LENDER (SECURED PARTY) ARE SPECIFIED IN THE FIRST PARAGRAPH ON
PAGE 1 OF THIS INSTRUMENT. 

 FHLMC Loan No. 487794745 

Loma Palisades Apartments 

MULTIFAMILY DEED OF TRUST, 

ASSIGNMENT OF RENTS, 

SECURITY AGREEMENT AND 

FIXTURE FILING 

(CALIFORNIA – REVISION DATE 05-11-2004) 

THIS MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING (the “Instrument”) is made to
be effective as of this 30th day of June, 2008, by LOMA PALISADES, a general partnership organized and existing under the laws of California, whose address is 11455 El Camino Real, Suite 200, San Diego, California 92130, as trustor
(“Borrower”), to FIRST AMERICAN TITLE INSURANCE COMPANY, as trustee (“Trustee”), for the benefit of WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, whose address is 2010
Corporate Ridge, Suite 1000, McLean, Virginia 22102, as beneficiary (“Lender”). Borrower’s organizational identification number, if applicable, is N/A. 

Borrower, in consideration of the Indebtedness and the trust created by this Instrument, irrevocably grants, conveys and assigns to
Trustee, in trust, with power of sale, the Mortgaged Property, including the Land located in the County of San Diego, State of California and described in Exhibit A attached to this Instrument. 

TO SECURE TO LENDER the repayment of the Indebtedness evidenced by Borrower’s Multifamily Note payable to Lender, dated as of the
date of this Instrument, and maturing on July 1, 2018 (the “Maturity Date”), in the principal amount of $73,744,000.00, and all renewals, extensions and modifications of the Indebtedness, the payment of all sums advanced by or
on behalf of Lender to protect the security of this Instrument under Section 12, and the performance of the covenants and agreements of Borrower contained in the Loan Documents. 

Borrower represents and warrants that Borrower is lawfully seized of the Mortgaged Property and has the right, power and authority to
grant, convey and assign the Mortgaged Property, and that the Mortgaged Property is unencumbered, except as shown on the schedule of exceptions to coverage in the title policy issued to and accepted by Lender contemporaneously with the execution and
recordation of this Instrument and insuring Lender’s interest in the Mortgaged Property (the “Schedule of Title Exceptions”). Borrower covenants that Borrower will warrant and defend generally the title to the Mortgaged
Property against all claims and demands, subject to any easements and restrictions listed in the Schedule of Title Exceptions. 

UNIFORM COVENANTS 

REVISION DATE 02-15-2008 

Covenants. In consideration of the mutual promises set forth in this Instrument, Borrower and Lender covenant and agree as follows: 

1. DEFINITIONS. The following terms, when used in this Instrument (including when used in the above recitals), shall have the
following meanings: 
 (a) “Attorneys’ Fees and Costs” means (i) fees and out-of-pocket costs of
Lender’s and Loan Servicer’s attorneys, as applicable, including costs of Lender’s and Loan Servicer’s in-house 

 

  

PAGE 1 

 
counsel, support staff costs, costs of preparing for litigation, computerized research, telephone and facsimile transmission expenses, mileage, deposition costs, postage, duplicating, process
service, videotaping and similar costs and expenses; (ii) costs and fees of expert witnesses, including appraisers; and (iii) investigatory fees.

(b) “Borrower” means all persons or entities identified as “Borrower” in the first paragraph of this
Instrument, together with their successors and assigns. 
 (c) “Business Day” means any day other than a
Saturday, a Sunday or any other day on which Lender or the national banking associations are not open for business. 
 (d)
“Collateral Agreement” means any separate agreement between Borrower and Lender for the purpose of establishing replacement reserves for the Mortgaged Property, establishing a fund to assure the completion of repairs or improvements
specified in that agreement, or assuring reduction of the outstanding principal balance of the Indebtedness if the occupancy of or income from the Mortgaged Property does not increase to a level specified in that agreement, or any other agreement or
agreements between Borrower and Lender which provide for the establishment of any other fund, reserve or account. 
 (e)
“Controlling Entity” means an entity which owns, directly or indirectly through one or more intermediaries, (i) a general partnership interest or a Controlling Interest of the limited partnership interests in Borrower (if
Borrower is a partnership or joint venture), (ii) a manager’s interest in Borrower or a Controlling Interest of the ownership or membership interests in Borrower (if Borrower is a limited liability company), (iii) a Controlling
Interest of any class of voting stock of Borrower (if Borrower is a corporation), (iv) a trustee’s interest or a Controlling Interest of the beneficial interests in Borrower (if Borrower is a trust), or (v) a managing partner’s
interest or a Controlling Interest of the partnership interests in Borrower (if Borrower is a limited liability partnership). 

(f) “Controlling Interest” means (i) 51 percent or more of the ownership interests in an entity, or
(ii) a percentage ownership interest in an entity of less than 51 percent, if the owner(s) of that interest actually direct(s) the business and affairs of the entity without the requirement of consent of any other party. The
Controlling Interest shall be deemed to be 51 percent unless otherwise stated in Exhibit B. 
 (g) “Environmental
Permit” means any permit, license, or other authorization issued under any Hazardous Materials Law with respect to any activities or businesses conducted on or in relation to the Mortgaged Property. 

(h) “Event of Default” means the occurrence of any event listed in Section 22. 

(i) “Fixtures” means all property owned by Borrower which is so attached to the Land or the Improvements as to
constitute a fixture under applicable law, including: machinery, equipment, engines, boilers, incinerators, installed building materials; systems and equipment for the purpose of supplying or distributing heating, cooling, electricity, gas, water,
air, or light; antennas, cable, wiring and conduits used in connection with radio, television, security, fire prevention, or fire detection or otherwise used to carry electronic signals; telephone systems and equipment; elevators and related
machinery and equipment; fire detection, prevention and extinguishing systems and apparatus; security and access control systems and apparatus; plumbing systems; water heaters, ranges, stoves, microwave ovens, refrigerators, dishwashers, garbage
disposers, washers, dryers and other appliances; light fixtures, awnings, storm windows and storm doors; pictures, screens, blinds, shades, curtains and curtain rods; mirrors; cabinets, paneling, rugs and floor and wall coverings; fences, trees and
plants; swimming pools; and exercise equipment. 
  

  

PAGE 2 

 (j) “Governmental Authority” means any board, commission, department or
body of any municipal, county, state or federal governmental unit, or any subdivision of any of them, that has or acquires jurisdiction over the Mortgaged Property or the use, operation or improvement of the Mortgaged Property or over the Borrower.

 (k) “Hazard Insurance” is defined in Section 19. 

(l) “Hazardous Materials” means petroleum and petroleum products and compounds containing them, including gasoline,
diesel fuel and oil; explosives; flammable materials; radioactive materials; polychlorinated biphenyls (“PCBs”) and compounds containing them; lead and lead-based paint; asbestos or asbestos-containing materials in any form that is or
could become friable; underground or above-ground storage tanks, whether empty or containing any substance; any substance the presence of which on the Mortgaged Property is prohibited by any federal, state or local authority; any substance that
requires special handling and any other material or substance now or in the future that (i) is defined as a “hazardous substance,” “hazardous material,” “hazardous waste,” “toxic substance,” “toxic
pollutant,” “contaminant,” or “pollutant” by or within the meaning of any Hazardous Materials Law, or (ii) is regulated in any way by or within the meaning of any Hazardous Materials Law. 

(m) “Hazardous Materials Laws” means all federal, state, and local laws, ordinances and regulations and standards,
rules, policies and other governmental requirements, administrative rulings and court judgments and decrees in effect now or in the future and including all amendments, that relate to Hazardous Materials or the protection of human health or the
environment and apply to Borrower or to the Mortgaged Property. Hazardous Materials Laws include, but are not limited to, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601, et seq., the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901, et seq., the Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq., the Clean Water Act, 33 U.S.C. Section 1251, et seq., and the
Hazardous Materials Transportation Act, 49 U.S.C. Section 5101 et seq., and their state analogs. 
 (n)
“Impositions” and “Imposition Deposits” are defined in Section 7(a). 
 (o)
“Improvements” means the buildings, structures, improvements, and alterations now constructed or at any time in the future constructed or placed upon the Land, including any future replacements and additions. 

(p) “Indebtedness” means the principal of, interest at the fixed or variable rate set forth in the Note on, and all
other amounts due at any time under, the Note, this Instrument or any other Loan Document, including prepayment premiums, late charges, default interest, and advances as provided in Section 12 to protect the security of this Instrument.

 (q) “Initial Owners” means, with respect to Borrower or any other entity, the persons or entities that
(i) on the date of the Note, or (ii) on the date of a Transfer to which Lender has consented, own in the aggregate 100 percent of the ownership interests in Borrower or that entity. 

(r) “Land” means the land described in Exhibit A. 

 

  

PAGE 3 

 (s) “Leases” means all present and future leases, subleases, licenses,
concessions or grants or other possessory interests now or hereafter in force, whether oral or written, covering or affecting the Mortgaged Property, or any portion of the Mortgaged Property (including proprietary leases or occupancy agreements if
Borrower is a cooperative housing corporation), and all modifications, extensions or renewals. 
 (t) “Lender”
means the entity identified as “Lender” in the first paragraph of this Instrument, or any subsequent holder of the Note. 

(u) “Loan Documents” means the Note, this Instrument, all guaranties, all indemnity agreements, all Collateral
Agreements, O&M Programs, the MMP and any other documents now or in the future executed by Borrower, any guarantor or any other person in connection with the loan evidenced by the Note, as such documents may be amended from time to time.

 (v) “Loan Servicer” means the entity that from time to time is designated by Lender to collect payments and
deposits and receive Notices under the Note, this Instrument and any other Loan Document, and otherwise to service the loan evidenced by the Note for the benefit of Lender. Unless Borrower receives Notice to the contrary, the Loan Servicer is the
entity identified as “Lender” in the first paragraph of this Instrument. 
 (w) “MMP” means a
moisture management plan to control water intrusion and prevent the development of Mold or moisture at the Mortgaged Property throughout the term of this Instrument. At a minimum, the MMP must contain a provision for (i) staff training,
(ii) information to be provided to tenants, (iii) documentation of the plan, (iv) the appropriate protocol for incident response and remediation and (v) routine, scheduled inspections of common space and unit interiors.

 (x) “Mold” means mold, fungus, microbial contamination or pathogenic organisms. 

(y) “Mortgaged Property” means all of Borrower’s present and future right, title and interest in and to all of the
following: 
  

	 	(i)	the Land; 

  

	 	(ii)	the Improvements; 

  

	 	(iii)	the Fixtures; 

  

	 	(iv)	the Personalty; 

  

	 	(v)	all current and future rights, including air rights, development rights, zoning rights and other similar rights or interests, easements, tenements, rights-of-way,
strips and gores of land, streets, alleys, roads, sewer rights, waters, watercourses, and appurtenances related to or benefiting the Land or the Improvements, or both, and all rights-of-way, streets, alleys and roads which may have been or may in
the future be vacated; 

  

	 	(vi)	all proceeds paid or to be paid by any insurer of the Land, the Improvements, the Fixtures, the Personalty or any other part of the Mortgaged Property, whether or not
Borrower obtained the insurance pursuant to Lender’s requirement; 

  

  

PAGE 4 

	 	(vii)	all awards, payments and other compensation made or to be made by any municipal, state or federal authority with respect to the Land, the Improvements, the Fixtures,
the Personalty or any other part of the Mortgaged Property, including any awards or settlements resulting from condemnation proceedings or the total or partial taking of the Land, the Improvements, the Fixtures, the Personalty or any other part of
the Mortgaged Property under the power of eminent domain or otherwise and including any conveyance in lieu thereof; 

  

	 	(viii)	all contracts, options and other agreements for the sale of the Land, the Improvements, the Fixtures, the Personalty or any other part of the Mortgaged Property entered
into by Borrower now or in the future, including cash or securities deposited to secure performance by parties of their obligations; 

  

	 	(ix)	all proceeds from the conversion, voluntary or involuntary, of any of the above into cash or liquidated claims, and the right to collect such proceeds;

  

	 	(x)	all Rents and Leases; 

  

	 	(xi)	all earnings, royalties, accounts receivable, issues and profits from the Land, the Improvements or any other part of the Mortgaged Property, and all undisbursed
proceeds of the loan secured by this Instrument; 

  

	 	(xii)	all Imposition Deposits; 

  

	 	(xiii)	all refunds or rebates of Impositions by any municipal, state or federal authority or insurance company (other than refunds applicable to periods before the real
property tax year in which this Instrument is dated); 

  

	 	(xiv)	all tenant security deposits which have not been forfeited by any tenant under any Lease and any bond or other security in lieu of such deposits; and

  

	 	(xv)	all names under or by which any of the above Mortgaged Property may be operated or known, and all trademarks, trade names, and goodwill relating to any of the Mortgaged
Property. 

 (z) “Note” means the Multifamily Note described on page 1 of this Instrument,
including all schedules, riders, allonges and addenda, as such Multifamily Note may be amended from time to time. 
 (aa)
“O&M Program” is defined in Section 18(d). 
 (bb) “Personalty” means all:

  

	 	(i)	accounts (including deposit accounts) of Borrower related to the Mortgaged Property; 

 

	 	(ii)	 equipment and inventory owned by Borrower, which are used now or in the future in connection with the ownership, management or operation of

  

  

PAGE 5 

	 	 
the Land or Improvements or are located on the Land or Improvements, including furniture, furnishings, machinery, building materials, goods, supplies, tools, books, records (whether in written or
electronic form), and computer equipment (hardware and software); 

  

	 	(iii)	other tangible personal property owned by Borrower which is used now or in the future in connection with the ownership, management or operation of the Land or
Improvements or is located on the Land or in the Improvements, including ranges, stoves, microwave ovens, refrigerators, dishwashers, garbage disposers, washers, dryers and other appliances (other than Fixtures); 

 

	 	(iv)	any operating agreements relating to the Land or the Improvements; 

  

	 	(v)	any surveys, plans and specifications and contracts for architectural, engineering and construction services relating to the Land or the Improvements;

  

	 	(vi)	all other intangible property, general intangibles and rights relating to the operation of, or used in connection with, the Land or the Improvements, including all
governmental permits relating to any activities on the Land and including subsidy or similar payments received from any sources, including a governmental authority; and 

 

	 	(vii)	any rights of Borrower in or under letters of credit. 

(cc) “Property Jurisdiction” is defined in Section 30(a). 

(dd) “Rents” means all rents (whether from residential or non-residential space), revenues and other income of the Land
or the Improvements, parking fees, laundry and vending machine income and fees and charges for food, health care and other services provided at the Mortgaged Property, whether now due, past due, or to become due, and deposits forfeited by tenants,
and, if Borrower is a cooperative housing corporation or association, maintenance fees, charges or assessments payable by shareholders or residents under proprietary leases or occupancy agreements, whether now due, past due, or to become due.

 (ee) “Taxes” means all taxes, assessments, vault rentals and other charges, if any, whether general, special
or otherwise, including all assessments for schools, public betterments and general or local improvements, which are levied, assessed or imposed by any public authority or quasi-public authority, and which, if not paid, will become a lien on the
Land or the Improvements. 
 (ff) “Transfer” is defined in Section 21. 

2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. 

(a) This Instrument is also a security agreement under the Uniform Commercial Code for any of the Mortgaged Property which, under
applicable law, may be subjected to a security interest under the Uniform Commercial Code, whether such Mortgaged Property is owned now or acquired in the future, and all products and cash and non-cash proceeds thereof (collectively, “UCC
Collateral”), and Borrower hereby grants to Lender a security interest in the UCC Collateral. Borrower hereby authorizes Lender to prepare and file financing statements, 

 

  

PAGE 6 

 
continuation statements and financing statement amendments in such form as Lender may require to perfect or continue the perfection of this security interest and Borrower agrees, if Lender so
requests, to execute and deliver to Lender such financing statements, continuation statements and amendments. Borrower shall pay all filing costs and all costs and expenses of any record searches for financing statements and/or amendments that
Lender may require. Without the prior written consent of Lender, Borrower shall not create or permit to exist any other lien or security interest in any of the UCC Collateral. 

(b) Unless Borrower gives Notice to Lender within 30 days after the occurrence of any of the following, and executes and delivers to
Lender modifications or supplements of this Instrument (and any financing statement which may be filed in connection with this Instrument) as Lender may require, Borrower shall not (i) change its name, identity, structure or jurisdiction of
organization; (ii) change the location of its place of business (or chief executive office if more than one place of business); or (iii) add to or change any location at which any of the Mortgaged Property is stored, held or located.

 (c) If an Event of Default has occurred and is continuing, Lender shall have the remedies of a secured party under the
Uniform Commercial Code, in addition to all remedies provided by this Instrument or existing under applicable law. In exercising any remedies, Lender may exercise its remedies against the UCC Collateral separately or together, and in any order,
without in any way affecting the availability of Lender’s other remedies. 
 (d) This Instrument constitutes a financing
statement with respect to any part of the Mortgaged Property that is or may become a Fixture, if permitted by applicable law. 

3. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION. 

(a) As part of the consideration for the Indebtedness, Borrower absolutely and unconditionally assigns and transfers to Lender all Rents.
It is the intention of Borrower to establish a present, absolute and irrevocable transfer and assignment to Lender of all Rents and to authorize and empower Lender to collect and receive all Rents without the necessity of further action on the part
of Borrower. Promptly upon request by Lender, Borrower agrees to execute and deliver such further assignments as Lender may from time to time require. Borrower and Lender intend this assignment of Rents to be immediately effective and to constitute
an absolute present assignment and not an assignment for additional security only. For purposes of giving effect to this absolute assignment of Rents, and for no other purpose, Rents shall not be deemed to be a part of the Mortgaged Property.
However, if this present, absolute and unconditional assignment of Rents is not enforceable by its terms under the laws of the Property Jurisdiction, then the Rents shall be included as a part of the Mortgaged Property and it is the intention of the
Borrower that in this circumstance this Instrument create and perfect a lien on Rents in favor of Lender, which lien shall be effective as of the date of this Instrument. 

(b) After the occurrence of an Event of Default, Borrower authorizes Lender to collect, sue for and compromise Rents and directs each
tenant of the Mortgaged Property to pay all Rents to, or as directed by, Lender. However, until the occurrence of an Event of Default, Lender hereby grants to Borrower a revocable license to collect and receive all Rents, to hold all Rents in trust
for the benefit of Lender and to apply all Rents to pay the installments of interest and principal then due and payable under the Note and the other amounts then due and payable under the other Loan Documents, including Imposition Deposits, and to
pay the current costs and expenses of managing, operating and maintaining the Mortgaged Property, including utilities, Taxes and insurance premiums (to the extent not included in Imposition Deposits), tenant

  

  

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improvements and other capital expenditures. So long as no Event of Default has occurred and is continuing, the Rents remaining after application pursuant to the preceding sentence may be
retained by Borrower free and clear of, and released from, Lender’s rights with respect to Rents under this Instrument. From and after the occurrence of an Event of Default, and without the necessity of Lender entering upon and taking and
maintaining control of the Mortgaged Property directly, or by a receiver, Borrower’s license to collect Rents shall automatically terminate and Lender shall without Notice be entitled to all Rents as they become due and payable, including Rents
then due and unpaid. Borrower shall pay to Lender upon demand all Rents to which Lender is entitled. At any time on or after the date of Lender’s demand for Rents, (i) Lender may give, and Borrower hereby irrevocably authorizes Lender to
give, notice to all tenants of the Mortgaged Property instructing them to pay all Rents to Lender, (ii) no tenant shall be obligated to inquire further as to the occurrence or continuance of an Event of Default, and (iii) no tenant shall
be obligated to pay to Borrower any amounts which are actually paid to Lender in response to such a notice. Any such notice by Lender shall be delivered to each tenant personally, by mail or by delivering such demand to each rental unit. Borrower
shall not interfere with and shall cooperate with Lender’s collection of such Rents. 
 (c) Borrower represents and
warrants to Lender that Borrower has not executed any prior assignment of Rents (other than an assignment of Rents securing any prior indebtedness that is being assigned to Lender, or paid off and discharged with the proceeds of the loan evidenced
by the Note), that Borrower has not performed, and Borrower covenants and agrees that it will not perform, any acts and has not executed, and shall not execute, any instrument which would prevent Lender from exercising its rights under this
Section 3, and that at the time of execution of this Instrument there has been no anticipation or prepayment of any Rents for more than two months prior to the due dates of such Rents. Borrower shall not collect or accept payment of any Rents
more than two months prior to the due dates of such Rents. 
 (d) If an Event of Default has occurred and is continuing, Lender
may, regardless of the adequacy of Lender’s security or the solvency of Borrower and even in the absence of waste, enter upon and take and maintain full control of the Mortgaged Property in order to perform all acts that Lender in its
discretion determines to be necessary or desirable for the operation and maintenance of the Mortgaged Property, including the execution, cancellation or modification of Leases, the collection of all Rents, the making of repairs to the Mortgaged
Property and the execution or termination of contracts providing for the management, operation or maintenance of the Mortgaged Property, for the purposes of enforcing the assignment of Rents pursuant to Section 3(a), protecting the Mortgaged
Property or the security of this Instrument, or for such other purposes as Lender in its discretion may deem necessary or desirable. Alternatively, if an Event of Default has occurred and is continuing, regardless of the adequacy of Lender’s
security, without regard to Borrower’s solvency and without the necessity of giving prior notice (oral or written) to Borrower, Lender may apply to any court having jurisdiction for the appointment of a receiver for the Mortgaged Property
to take any or all of the actions set forth in the preceding sentence. If Lender elects to seek the appointment of a receiver for the Mortgaged Property at any time after an Event of Default has occurred and is continuing, Borrower, by its execution
of this Instrument, expressly consents to the appointment of such receiver, including the appointment of a receiver ex parte if permitted by applicable law. If Borrower is a housing cooperative corporation or association, Borrower hereby
agrees that if a receiver is appointed, the order appointing the receiver may contain a provision requiring the receiver to pay the installments of interest and principal then due and payable under the Note and the other amounts then due and payable
under the other Loan Documents, including Imposition Deposits, it being acknowledged and agreed that the Indebtedness is an obligation of the Borrower and must be paid out of maintenance charges payable by the Borrower’s tenant shareholders
under their proprietary leases or occupancy agreements. Lender or the receiver, as the case may be, shall be 
  

  

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entitled to receive a reasonable fee for managing the Mortgaged Property. Immediately upon appointment of a receiver or immediately upon the Lender’s entering upon and taking possession and
control of the Mortgaged Property, Borrower shall surrender possession of the Mortgaged Property to Lender or the receiver, as the case may be, and shall deliver to Lender or the receiver, as the case may be, all documents, records (including
records on electronic or magnetic media), accounts, surveys, plans, and specifications relating to the Mortgaged Property and all security deposits and prepaid Rents. In the event Lender takes possession and control of the Mortgaged Property, Lender
may exclude Borrower and its representatives from the Mortgaged Property. Borrower acknowledges and agrees that the exercise by Lender of any of the rights conferred under this Section 3 shall not be construed to make Lender a
mortgagee-in-possession of the Mortgaged Property so long as Lender has not itself entered into actual possession of the Land and Improvements. 

(e) If Lender enters the Mortgaged Property, Lender shall be liable to account only to Borrower and only for those Rents actually
received. Except to the extent of Lender’s gross negligence or willful misconduct, Lender shall not be liable to Borrower, anyone claiming under or through Borrower or anyone having an interest in the Mortgaged Property, by reason of any act or
omission of Lender under Section 3(d), and Borrower hereby releases and discharges Lender from any such liability to the fullest extent permitted by law. 

(f) If the Rents are not sufficient to meet the costs of taking control of and managing the Mortgaged Property and collecting the Rents,
any funds expended by Lender for such purposes shall become an additional part of the Indebtedness as provided in Section 12. 

(g) Any entering upon and taking of control of the Mortgaged Property by Lender or the receiver, as the case may be, and any application
of Rents as provided in this Instrument shall not cure or waive any Event of Default or invalidate any other right or remedy of Lender under applicable law or provided for in this Instrument. 

4. ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY. 

(a) As part of the consideration for the Indebtedness, Borrower absolutely and unconditionally assigns and transfers to Lender all of
Borrower’s right, title and interest in, to and under the Leases, including Borrower’s right, power and authority to modify the terms of any such Lease, or extend or terminate any such Lease. It is the intention of Borrower to establish a
present, absolute and irrevocable transfer and assignment to Lender of all of Borrower’s right, title and interest in, to and under the Leases. Borrower and Lender intend this assignment of the Leases to be immediately effective and to
constitute an absolute present assignment and not an assignment for additional security only. For purposes of giving effect to this absolute assignment of the Leases, and for no other purpose, the Leases shall not be deemed to be a part of the
Mortgaged Property. However, if this present, absolute and unconditional assignment of the Leases is not enforceable by its terms under the laws of the Property Jurisdiction, then the Leases shall be included as a part of the Mortgaged Property and
it is the intention of the Borrower that in this circumstance this Instrument create and perfect a lien on the Leases in favor of Lender, which lien shall be effective as of the date of this Instrument. 

(b) Until Lender gives Notice to Borrower of Lender’s exercise of its rights under this Section 4, Borrower shall have all
rights, power and authority granted to Borrower under any Lease (except as otherwise limited by this Section or any other provision of this Instrument), including the right, power and authority to modify the terms of any Lease or extend or
terminate any Lease. Upon the occurrence of an Event of Default, the permission given to Borrower 
  

  

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pursuant to the preceding sentence to exercise all rights, power and authority under Leases shall automatically terminate. Borrower shall comply with and observe Borrower’s obligations under
all Leases, including Borrower’s obligations pertaining to the maintenance and disposition of tenant security deposits. 

(c) Borrower acknowledges and agrees that the exercise by Lender, either directly or by a receiver, of any of the rights conferred under
this Section 4 shall not be construed to make Lender a mortgagee-in-possession of the Mortgaged Property so long as Lender has not itself entered into actual possession of the Land and the Improvements. The acceptance by Lender of the
assignment of the Leases pursuant to Section 4(a) shall not at any time or in any event obligate Lender to take any action under this Instrument or to expend any money or to incur any expenses. Except to the extent of Lender’s gross
negligence or willful misconduct, Lender shall not be liable in any way for any injury or damage to person or property sustained by any person or persons, firm or corporation in or about the Mortgaged Property. Prior to Lender’s actual entry
into and taking possession of the Mortgaged Property, Lender shall not (i) be obligated to perform any of the terms, covenants and conditions contained in any Lease (or otherwise have any obligation with respect to any Lease); (ii) be
obligated to appear in or defend any action or proceeding relating to the Lease or the Mortgaged Property; or (iii) be responsible for the operation, control, care, management or repair of the Mortgaged Property or any portion of the Mortgaged
Property. The execution of this Instrument by Borrower shall constitute conclusive evidence that all responsibility for the operation, control, care, management and repair of the Mortgaged Property is and shall be that of Borrower, prior to such
actual entry and taking of possession. 
 (d) Upon delivery of Notice by Lender to Borrower of Lender’s exercise of
Lender’s rights under this Section 4 at any time after the occurrence of an Event of Default, and without the necessity of Lender entering upon and taking and maintaining control of the Mortgaged Property directly, by a receiver, or by any
other manner or proceeding permitted by the laws of the Property Jurisdiction, Lender immediately shall have all rights, powers and authority granted to Borrower under any Lease, including the right, power and authority to modify the terms of any
such Lease, or extend or terminate any such Lease. 
 (e) Borrower shall, promptly upon Lender’s request, deliver to Lender
an executed copy of each residential Lease then in effect. All Leases for residential dwelling units shall be on forms approved by Lender, shall be for initial terms of at least six months and not more than two years, and shall not include options
to purchase. 
 (f) Borrower shall not lease any portion of the Mortgaged Property for non-residential use except with the prior
written consent of Lender and Lender’s prior written approval of the Lease agreement. Borrower shall not modify the terms of, or extend or terminate, any Lease for non-residential use (including any Lease in existence on the date of this
Instrument) without the prior written consent of Lender. However, Lender’s consent shall not be required for the modification or extension of a non-residential Lease if such modification or extension is on terms at least as favorable to
Borrower as those customary at that time in the applicable market and the income from the extended or modified Lease will not be less than the income received from the Lease as of the date of this Instrument. Borrower shall, without request by
Lender, deliver an executed copy of each non-residential Lease to Lender promptly after such Lease is signed. All non-residential Leases, including renewals or extensions of existing Leases, shall specifically provide that (i) such Leases are
subordinate to the lien of this Instrument; (ii) the tenant shall attorn to Lender and any purchaser at a foreclosure sale, such attornment to be self-executing and effective upon acquisition of title to the Mortgaged Property by any purchaser
at a foreclosure sale or by Lender in any manner; (iii) the tenant agrees to 
  

  

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execute such further evidences of attornment as Lender or any purchaser at a foreclosure sale may from time to time request; (iv) the Lease shall not be terminated by foreclosure or any
other transfer of the Mortgaged Property; (v) after a foreclosure sale of the Mortgaged Property, Lender or any other purchaser at such foreclosure sale may, at Lender’s or such purchaser’s option, accept or terminate such Lease; and
(vi) the tenant shall, upon receipt after the occurrence of an Event of Default of a written request from Lender, pay all Rents payable under the Lease to Lender. 

(g) Borrower shall not receive or accept Rent under any Lease (whether residential or non-residential) for more than two months in
advance. 
 (h) If Borrower is a cooperative housing corporation or association, notwithstanding anything to the contrary
contained in this subsection or in Section 21, so long as Borrower remains a cooperative housing corporation or association and is not in breach of any covenant of this Instrument, Lender hereby consents to: 

 

	 	(i)	the execution of leases of apartments for a term in excess of two years from Borrower to a tenant shareholder of Borrower, so long as such leases, including proprietary
leases, are and will remain subordinate to the lien of this Instrument; and 

  

	 	(ii)	the surrender or termination of such leases of apartments where the surrendered or terminated lease is immediately replaced or where the Borrower makes its best efforts
to secure such immediate replacement by a newly executed lease of the same apartment to a tenant shareholder of the Borrower. However, no consent is hereby given by Lender to any execution, surrender, termination or assignment of a lease under terms
that would waive or reduce the obligation of the resulting tenant shareholder under such lease to pay cooperative assessments in full when due or the obligation of the former tenant shareholder to pay any unpaid portion of such assessments.

 5. PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS; PREPAYMENT PREMIUM. Borrower shall pay the
Indebtedness when due in accordance with the terms of the Note and the other Loan Documents and shall perform, observe and comply with all other provisions of the Note and the other Loan Documents. Borrower shall pay a prepayment premium in
connection with certain prepayments of the Indebtedness, including a payment made after Lender’s exercise of any right of acceleration of the Indebtedness, as provided in the Note. 

6. EXCULPATION. Borrower’s personal liability for payment of the Indebtedness and for performance of the other obligations to
be performed by it under this Instrument is limited in the manner, and to the extent, provided in the Note. 
 7. DEPOSITS
FOR TAXES, INSURANCE AND OTHER CHARGES. 
 (a) Unless this requirement is waived in writing by Lender, which waiver may be
contained in this Section 7(a), Borrower shall deposit with Lender on the day monthly installments of principal or interest, or both, are due under the Note (or on another day designated in writing by Lender), until the Indebtedness is paid in
full, an additional amount sufficient to accumulate with Lender the entire sum required to pay, when due, the items marked “Collect” below. Lender will not require the Borrower to make Imposition Deposits with respect to the items marked
“Deferred” below. 
  

  

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	[Deferred]	  	Hazard Insurance premiums or other insurance premiums required by Lender under Section 19,
	[Collect]	  	Taxes,
	[Deferred]	  	water and sewer charges (that could become a lien on the Mortgaged Property),
	[N/A]	  	ground rents,
	[Deferred]	  	assessments or other charges (that could become a lien on the Mortgaged Property)

The amounts deposited under the preceding sentence are collectively referred to in this Instrument as the “Imposition Deposits.” The
obligations of Borrower for which the Imposition Deposits are required are collectively referred to in this Instrument as “Impositions.” The amount of the Imposition Deposits shall be sufficient to enable Lender to pay each
Imposition before the last date upon which such payment may be made without any penalty or interest charge being added. Lender shall maintain records indicating how much of the monthly Imposition Deposits and how much of the aggregate Imposition
Deposits held by Lender are held for the purpose of paying Taxes, insurance premiums and each other Imposition. 
 (b)
Imposition Deposits shall be held in an institution (which may be Lender, if Lender is such an institution) whose deposits or accounts are insured or guaranteed by a federal agency. Lender shall not be obligated to open additional accounts or
deposit Imposition Deposits in additional institutions when the amount of the Imposition Deposits exceeds the maximum amount of the federal deposit insurance or guaranty. Lender shall apply the Imposition Deposits to pay Impositions so long as no
Event of Default has occurred and is continuing. Unless applicable law requires, Lender shall not be required to pay Borrower any interest, earnings or profits on the Imposition Deposits. As additional security for all of Borrower’s obligations
under this Instrument and the other Loan Documents, Borrower hereby pledges and grants to Lender a security interest in the Imposition Deposits and all proceeds of, and all interest and dividends on, the Imposition Deposits. Any amounts deposited
with Lender under this Section 7 shall not be trust funds, nor shall they operate to reduce the Indebtedness, unless applied by Lender for that purpose under Section 7(e). 

(c) If Lender receives a bill or invoice for an Imposition, Lender shall pay the Imposition from the Imposition Deposits held by Lender.
Lender shall have no obligation to pay any Imposition to the extent it exceeds Imposition Deposits then held by Lender. Lender may pay an Imposition according to any bill, statement or estimate from the appropriate public office or insurance company
without inquiring into the accuracy of the bill, statement or estimate or into the validity of the Imposition. 
 (d) If at any
time the amount of the Imposition Deposits held by Lender for payment of a specific Imposition exceeds the amount reasonably deemed necessary by Lender, the excess shall be credited against future installments of Imposition Deposits. If at any time
the amount of the Imposition Deposits held by Lender for payment of a specific Imposition is less than the amount reasonably estimated by Lender to be necessary, Borrower shall pay to Lender the amount of the deficiency within 15 days after Notice
from Lender. 
 (e) If an Event of Default has occurred and is continuing, Lender may apply any Imposition Deposits, in any
amounts and in any order as Lender determines, in Lender’s discretion, to pay any Impositions or as a credit against the Indebtedness. Upon payment in full of the Indebtedness, Lender shall refund to Borrower any Imposition Deposits held by
Lender. 
  

  

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 (f) If Lender does not collect an Imposition Deposit with respect to an Imposition either
marked “Deferred” in Section 7(a) or pursuant to a separate written waiver by Lender, then on or before the date each such Imposition is due, or on the date this Instrument requires each such Imposition to be paid, Borrower must
provide Lender with proof of payment of each such Imposition for which Lender does not require collection of Imposition Deposits. Lender may revoke its deferral or waiver and require Borrower to deposit with Lender any or all of the Imposition
Deposits listed in Section 7(a), regardless of whether any such item is marked “Deferred” in such section, upon Notice to Borrower, (i) if Borrower does not timely pay any of the Impositions, (ii) if Borrower fails to
provide timely proof to Lender of such payment, or (iii) at any time during the existence of an Event of Default. 
 (g) In
the event of a Transfer prohibited by or requiring Lender’s approval under Section 21, Lender’s waiver of the collection of any Imposition Deposit in this Section 7 may be modified or rendered void by Lender at Lender’s
option by Notice to Borrower and the transferee(s) as a condition of Lender’s approval of such Transfer. 
 8.
COLLATERAL AGREEMENTS. Borrower shall deposit with Lender such amounts as may be required by any Collateral Agreement and shall perform all other obligations of Borrower under each Collateral Agreement. 

9. APPLICATION OF PAYMENTS. If at any time Lender receives, from Borrower or otherwise, any amount applicable to the Indebtedness
which is less than all amounts due and payable at such time, then Lender may apply that payment to amounts then due and payable in any manner and in any order determined by Lender, in Lender’s discretion. Neither Lender’s acceptance of an
amount that is less than all amounts then due and payable nor Lender’s application of such payment in the manner authorized shall constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction.
Notwithstanding the application of any such amount to the Indebtedness, Borrower’s obligations under this Instrument and the Note shall remain unchanged. 

10. COMPLIANCE WITH LAWS AND ORGANIZATIONAL DOCUMENTS. 

(a) Borrower shall comply with all laws, ordinances, regulations and requirements of any Governmental Authority and all recorded lawful
covenants and agreements relating to or affecting the Mortgaged Property, including all laws, ordinances, regulations, requirements and covenants pertaining to health and safety, construction of improvements on the Mortgaged Property, fair housing,
disability accommodation, zoning and land use, and Leases. Borrower also shall comply with all applicable laws that pertain to the maintenance and disposition of tenant security deposits. 

(b) Borrower shall at all times maintain records sufficient to demonstrate compliance with the provisions of this Section 10.

 (c) Borrower shall take appropriate measures to prevent, and shall not engage in or knowingly permit, any illegal activities
at the Mortgaged Property that could endanger tenants or visitors, result in damage to the Mortgaged Property, result in forfeiture of the Mortgaged Property, or otherwise materially impair the lien created by this Instrument or Lender’s
interest in the Mortgaged Property. Borrower represents and warrants to Lender that no portion of the Mortgaged Property has been or will be purchased with the proceeds of any illegal activity. 

 

  

PAGE 13 

 (d) Borrower shall at all times comply with all laws, regulations and requirements of any
Governmental Authority relating to Borrower’s formation, continued existence and good standing in the Property Jurisdiction. Borrower shall at all times comply with its organizational documents, including but not limited to its partnership
agreement (if Borrower is a partnership), its by-laws (if Borrower is a corporation or housing cooperative corporation or association) or its operating agreement (if Borrower is an limited liability company, joint venture or tenancy-in-common). If
Borrower is a housing cooperative corporation or association, Borrower shall at all times maintain its status as a “cooperative housing corporation” as such term is defined in Section 216(b) of the Internal revenue Code of 1986, as
amended, or any successor statute thereto. 
 11. USE OF PROPERTY. Unless required by applicable law, Borrower shall not
(a) allow changes in the use for which all or any part of the Mortgaged Property is being used at the time this Instrument was executed, except for any change in use approved by Lender, (b) convert any individual dwelling units or common
areas to commercial use, (c) initiate a change in the zoning classification of the Mortgaged Property or acquiesce without Notice to and consent of Lender in a change in the zoning classification of the Mortgaged Property, (d) establish
any condominium or cooperative regime with respect to the Mortgaged Property, (e) combine all or any part of the Mortgaged Property with all or any part of a tax parcel which is not part of the Mortgaged Property, or (f) subdivide or
otherwise split any tax parcel constituting all or any part of the Mortgaged Property without the prior consent of Lender. Notwithstanding anything contained in this Section to the contrary, if Borrower is a housing cooperative corporation or
association, Lender acknowledges and consents to Borrower’s use of the Mortgaged Property as a housing cooperative. 

12. PROTECTION OF LENDER’S SECURITY; INSTRUMENT SECURES FUTURE ADVANCES. 

(a) If Borrower fails to perform any of its obligations under this Instrument or any other Loan Document, or if any action or proceeding
is commenced which purports to affect the Mortgaged Property, Lender’s security or Lender’s rights under this Instrument, including eminent domain, insolvency, code enforcement, civil or criminal forfeiture, enforcement of Hazardous
Materials Laws, fraudulent conveyance or reorganizations or proceedings involving a bankrupt or decedent, then Lender at Lender’s option may make such appearances, file such documents, disburse such sums and take such actions as Lender
reasonably deems necessary to perform such obligations of Borrower and to protect Lender’s interest, including (i) payment of Attorneys’ Fees and Costs, (ii) payment of fees and out-of-pocket expenses of accountants, inspectors
and consultants, (iii) entry upon the Mortgaged Property to make repairs or secure the Mortgaged Property, (iv) procurement of the insurance required by Section 19, (v) payment of amounts which Borrower has failed to pay under
Sections 15 and 17, and (vi) advances made by Lender to pay, satisfy or discharge any obligation of Borrower for the payment of money that is secured by a pre-existing mortgage, deed of trust or other lien encumbering the Mortgaged
Property (a “Prior Lien”). 
 (b) Any amounts disbursed by Lender under this Section 12, or under any
other provision of this Instrument that treats such disbursement as being made under this Section 12, shall be secured by this Instrument, shall be added to, and become part of, the principal component of the Indebtedness, shall be immediately
due and payable and shall bear interest from the date of disbursement until paid at the “Default Rate,” as defined in the Note. 

(c) Nothing in this Section 12 shall require Lender to incur any expense or take any action. 

 

  

PAGE 14 

 13. INSPECTION. 

(a) Lender, its agents, representatives, and designees may make or cause to be made entries upon and inspections of the Mortgaged
Property (including environmental inspections and tests) during normal business hours, or at any other reasonable time, upon reasonable notice to Borrower if the inspection is to include occupied residential units (which notice need not be in
writing). Notice to Borrower shall not be required in the case of an emergency, as determined in Lender’s discretion, or when an Event of Default has occurred and is continuing. 

(b) If Lender determines that Mold has developed as a result of a water intrusion event or leak, Lender, at Lender’s discretion, may
require that a professional inspector inspect the Mortgaged Property as frequently as Lender determines is necessary until any issue with Mold and its cause(s) are resolved to Lender’s satisfaction. Such inspection shall be limited to a visual
and olfactory inspection of the area that has experienced the Mold, water intrusion event or leak. Borrower shall be responsible for the cost of such professional inspection and any remediation deemed to be necessary as a result of the professional
inspection. After any issue with Mold, water intrusion or leaks is remedied to Lender’s satisfaction, Lender shall not require a professional inspection any more frequently than once every three years unless Lender is otherwise aware of Mold as
a result of a subsequent water intrusion event or leak. 
 (c) If Lender or Loan Servicer determines not to conduct an annual
inspection of the Mortgaged Property, and in lieu thereof Lender requests a certification, Borrower shall be prepared to provide and must actually provide to Lender a factually correct certification each year that the annual inspection is waived to
the following effect: 
 Borrower has not received any written complaint, notice, letter or other written communication from
tenants, management agent or governmental authorities regarding mold, fungus, microbial contamination or pathogenic organisms (“Mold”) or any activity, condition, event or omission that causes or facilitates the growth of Mold on or
in any part of the Mortgaged Property or if Borrower has received any such written complaint, notice, letter or other written communication that Borrower has investigated and determined that no Mold activity, condition or event exists or
alternatively has fully and properly remediated such activity, condition, event or omission in compliance with the Moisture Management Plan for the Mortgaged Property. 

If Borrower is unwilling or unable to provide such certification, Lender may require a professional inspection of the Mortgaged Property
at Borrower’s expense. 
 14. BOOKS AND RECORDS; FINANCIAL REPORTING. 

(a) Borrower shall keep and maintain at all times at the Mortgaged Property or the management agent’s office, and upon Lender’s
request shall make available at the Mortgaged Property (or, at Borrower’s option, at the management agent’s office), complete and accurate books of account and records (including copies of supporting bills and invoices) adequate to
reflect correctly the operation of the Mortgaged Property, and copies of all written contracts, Leases, and other instruments which affect the Mortgaged Property. The books, records, contracts, Leases and other instruments shall be subject to
examination and inspection by Lender at any reasonable time. 
  

  

PAGE 15 

 (b) Within 120 days after the end of each fiscal year of Borrower, Borrower shall furnish to
Lender a statement of income and expenses for Borrower’s operation of the Mortgaged Property for that fiscal year, a statement of changes in financial position of Borrower relating to the Mortgaged Property for that fiscal year and, when
requested by Lender, a balance sheet showing all assets and liabilities of Borrower relating to the Mortgaged Property as of the end of that fiscal year. If Borrower’s fiscal year is other than the calendar year, Borrower must also submit to
Lender a year-end statement of income and expenses within 120 days after the end of the calendar year. 
 (c) Within 120 days
after the end of each calendar year, and at any other time, upon Lender’s request, Borrower shall furnish to Lender each of the following. However, Lender shall not require any of the following more frequently than quarterly except when there
has been an Event of Default and such Event of Default is continuing, in which case Lender may, upon written request to Borrower, require Borrower to furnish any of the following more frequently: 

 

	 	(i)	a rent schedule for the Mortgaged Property showing the name of each tenant, and for each tenant, the space occupied, the lease expiration date, the rent payable for the
current month, the date through which rent has been paid, and any related information requested by Lender; 

  

	 	(ii)	an accounting of all security deposits held pursuant to all Leases, including the name of the institution (if any) and the names and identification numbers of the
accounts (if any) in which such security deposits are held and the name of the person to contact at such financial institution, along with any authority or release necessary for Lender to access information regarding such accounts; and

  

	 	(iii)	a statement that identifies all owners of any interest in Borrower and any Controlling Entity and the interest held by each (unless Borrower or any Controlling Entity
is a publicly-traded entity in which case such statement of ownership shall not be required), if Borrower or a Controlling Entity is a corporation, all officers and directors of Borrower and the Controlling Entity, and if Borrower or a Controlling
Entity is a limited liability company, all managers who are not members. 

 (d) At any time upon Lender’s
request, Borrower shall furnish to Lender each of the following. However, Lender shall not require any of the following more frequently than quarterly except when there has been an Event of Default and such Event of Default is continuing, in which
case Lender may require Borrower to furnish any of the following more frequently: 
  

	 	(i)	a balance sheet, a statement of income and expenses for Borrower and a statement of changes in financial position of Borrower for Borrower’s most recent fiscal
year; 

  

	 	(ii)	a quarterly or year-to-date income and expense statement for the Mortgaged Property; and 

 

	 	(iii)	a monthly property management report for the Mortgaged Property, showing the number of inquiries made and rental applications received from tenants or prospective
tenants and deposits received from tenants and any other information requested by Lender. 

  

  

PAGE 16 

 (e) Upon Lender’s request at any time when an Event of Default has occurred and is
continuing, Borrower shall furnish to Lender monthly income and expense statements and rent schedules for the Mortgaged Property. 

(f) An individual having authority to bind Borrower shall certify each of the statements, schedules and reports required by
Sections 14(b) through 14(e) to be complete and accurate. Each of the statements, schedules and reports required by Sections 14(b) through 14(e) shall be in such form and contain such detail as Lender may reasonably
require. Lender also may require that any of the statements, schedules or reports listed in Section 14(b) and 14(c)(i) and (ii) be audited at Borrower’s expense by independent certified public accountants acceptable to
Lender, at any time when an Event of Default has occurred and is continuing or at any time that Lender, in its reasonable judgment, determines that audited financial statements are required for an accurate assessment of the financial condition of
Borrower or of the Mortgaged Property. 
 (g) If Borrower fails to provide in a timely manner the statements, schedules and
reports required by Sections 14(b) through (e), Lender shall give Borrower Notice specifying the statements, schedules and reports required by Section 14(b) through (e) that Borrower has failed to provide. If Borrower has
not provided the required statements, schedules and reports within 10 Business Days following such Notice, then Lender shall have the right to have Borrower’s books and records audited, at Borrower’s expense, by independent certified
public accountants selected by Lender in order to obtain such statements, schedules and reports, and all related costs and expenses of Lender shall become immediately due and payable and shall become an additional part of the Indebtedness as
provided in Section 12. Notice to Borrower shall not be required in the case of an emergency, as determined in Lender’s discretion, or when an Event of Default has occurred and is continuing. 

(h) If an Event of Default has occurred and is continuing, Borrower shall deliver to Lender upon written demand all books and records
relating to the Mortgaged Property or its operation. 
 (i) Borrower authorizes Lender to obtain a credit report on Borrower at
any time. 
 15. TAXES; OPERATING EXPENSES. 

(a) Subject to the provisions of Section 15(c) and Section 15(d), Borrower shall pay, or cause to be paid, all Taxes when
due and before the addition of any interest, fine, penalty or cost for nonpayment. 
 (b) Subject to the provisions of
Section 15(c), Borrower shall (i) pay the expenses of operating, managing, maintaining and repairing the Mortgaged Property (including utilities, repairs and replacements) before the last date upon which each such payment may be made
without any penalty or interest charge being added, and (ii) pay insurance premiums at least 30 days prior to the expiration date of each policy of insurance, unless applicable law specifies some lesser period. 

(c) If Lender is collecting Imposition Deposits, to the extent that Lender holds sufficient Imposition Deposits for the purpose of paying
a specific Imposition, then Borrower shall not be obligated to pay such Imposition, so long as no Event of Default exists and Borrower has timely delivered to Lender any bills or premium notices that it has received. If an Event of Default exists,
Lender may exercise any rights Lender may have with respect to Imposition Deposits without regard to whether Impositions are then due and payable. Lender shall have no 

 

  

PAGE 17 

 
liability to Borrower for failing to pay any Impositions to the extent that (i) any Event of Default has occurred and is continuing, (ii) insufficient Imposition Deposits are held by
Lender at the time an Imposition becomes due and payable or (iii) Borrower has failed to provide Lender with bills and premium notices as provided above. 

(d) Borrower, at its own expense, may contest by appropriate legal proceedings, conducted diligently and in good faith, the amount or
validity of any Imposition other than insurance premiums, if (i) Borrower notifies Lender of the commencement or expected commencement of such proceedings, (ii) the Mortgaged Property is not in danger of being sold or forfeited,
(iii) if Borrower has not already paid the Imposition, Borrower deposits with Lender reserves sufficient to pay the contested Imposition, if requested by Lender, and (iv) Borrower furnishes whatever additional security is required in the
proceedings or is reasonably requested by Lender. 
 (e) Borrower shall promptly deliver to Lender a copy of all notices of, and
invoices for, Impositions, and if Borrower pays any Imposition directly, Borrower shall furnish to Lender on or before the date this Instrument requires such Impositions to be paid, receipts evidencing that such payments were made. 

16. LIENS; ENCUMBRANCES. Borrower acknowledges that, to the extent provided in Section 21, the grant, creation or existence
of any mortgage, deed of trust, deed to secure debt, security interest or other lien or encumbrance (a “Lien”) on the Mortgaged Property (other than the lien of this Instrument) or on certain ownership interests in
Borrower, whether voluntary, involuntary or by operation of law, and whether or not such Lien has priority over the lien of this Instrument, is a “Transfer” which constitutes an Event of Default and subjects Borrower to personal
liability under the Note. 
 17. PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY. 

(a) Borrower shall not commit waste or permit impairment or deterioration of the Mortgaged Property. 

(b) Borrower shall not abandon the Mortgaged Property. 

(c) Borrower shall restore or repair promptly, in a good and workmanlike manner, any damaged part of the Mortgaged Property to the
equivalent of its original condition, or such other condition as Lender may approve in writing, whether or not insurance proceeds or condemnation awards are available to cover any costs of such restoration or repair; however, Borrower shall not be
obligated to perform such restoration or repair if (i) no Event of Default has occurred and is continuing, and (ii) Lender has elected to apply any available insurance proceeds and/or condemnation awards to the payment of Indebtedness
pursuant to Section 19(h)(ii), (iii), (iv) or (v), or pursuant to Section 20. 
 (d) Borrower shall keep the
Mortgaged Property in good repair, including the replacement of Personalty and Fixtures with items of equal or better function and quality. 

(e) Borrower shall provide for professional management of the Mortgaged Property by a residential rental property manager satisfactory to
Lender at all times under a contract approved by Lender in writing, which contract must be terminable upon not more than 30 days notice without the necessity of establishing cause and without payment of a penalty or termination fee by Borrower
or its successors. 
  

  

PAGE 18 

 (f) Borrower shall give Notice to Lender of and, unless otherwise directed in writing by
Lender, shall appear in and defend any action or proceeding purporting to affect the Mortgaged Property, Lender’s security or Lender’s rights under this Instrument. Borrower shall not (and shall not permit any tenant or other person
to) remove, demolish or alter the Mortgaged Property or any part of the Mortgaged Property, including any removal, demolition or alteration occurring in connection with a rehabilitation of all or part of the Mortgaged Property, except
(i) in connection with the replacement of tangible Personalty, (ii) if Borrower is a cooperative housing corporation or association, to the extent permitted with respect to individual dwelling units under the form of proprietary lease or
occupancy agreement and (iii) repairs and replacements in connection with making an individual unit ready for a new occupant. 

(g) Unless otherwise waived by Lender in writing, Borrower must have or must establish and must adhere to the MMP. If the Borrower is
required to have an MMP, the Borrower must keep all MMP documentation at the Mortgaged Property or at the management agent’s office and available for the Lender or the Loan Servicer to review during any annual assessment or other inspection of
the Mortgaged Property that is required by Lender. 
 (h) If Borrower is a housing cooperative corporation or association, until
the Indebtedness is paid in full Borrower shall not reduce the maintenance fees, charges or assessments payable by shareholders or residents under proprietary leases or occupancy agreements below a level which is sufficient to pay all expenses of
the Borrower, including, without limitation, all operating and other expenses for the Mortgaged Property and all payments due pursuant to the terms of the Note and any Loan Documents. 

18. ENVIRONMENTAL HAZARDS. 

(a) Except for matters described in Section 18(b), Borrower shall not cause or permit any of the following: 

 

	 	(i)	the presence, use, generation, release, treatment, processing, storage (including storage in above ground and underground storage tanks), handling, or disposal of any
Hazardous Materials on or under the Mortgaged Property or any other property of Borrower that is adjacent to the Mortgaged Property; 

  

	 	(ii)	the transportation of any Hazardous Materials to, from, or across the Mortgaged Property; 

 

	 	(iii)	any occurrence or condition on the Mortgaged Property or any other property of Borrower that is adjacent to the Mortgaged Property, which occurrence or condition is or
may be in violation of Hazardous Materials Laws; 

  

	 	(iv)	any violation of or noncompliance with the terms of any Environmental Permit with respect to the Mortgaged Property or any property of Borrower that is adjacent to the
Mortgaged Property; or 

  

	 	(v)	any violation or noncompliance with the terms of any O&M Program as defined in subsection (d). 

 

  

PAGE 19 

 The matters described in clauses (i) through (v) above, except as otherwise provided in
Section 18(b), are referred to collectively in this Section 18 as “Prohibited Activities or Conditions.” 

(b) Prohibited Activities or Conditions shall not include lawful conditions permitted by an O&M Program or the safe and lawful use
and storage of quantities of (i) pre-packaged supplies, cleaning materials and petroleum products customarily used in the operation and maintenance of comparable multifamily properties, (ii) cleaning materials, personal grooming items and
other items sold in pre-packaged containers for consumer use and used by tenants and occupants of residential dwelling units in the Mortgaged Property; and (iii) petroleum products used in the operation and maintenance of motor vehicles from
time to time located on the Mortgaged Property’s parking areas, so long as all of the foregoing are used, stored, handled, transported and disposed of in compliance with Hazardous Materials Laws. 

(c) Borrower shall take all commercially reasonable actions (including the inclusion of appropriate provisions in any Leases executed
after the date of this Instrument) to prevent its employees, agents, and contractors, and all tenants and other occupants from causing or permitting any Prohibited Activities or Conditions. Borrower shall not lease or allow the sublease or use
of all or any portion of the Mortgaged Property to any tenant or subtenant for nonresidential use by any user that, in the ordinary course of its business, would cause or permit any Prohibited Activity or Condition. 

(d) As required by Lender, Borrower shall also have established a written operations and maintenance program with respect to certain
Hazardous Materials. Each such operations and maintenance program and any additional or revised operations and maintenance programs established for the Mortgaged Property pursuant to this Section 18 must be approved by Lender and shall be
referred to herein as an “O&M Program.” Borrower shall comply in a timely manner with, and cause all employees, agents, and contractors of Borrower and any other persons present on the Mortgaged Property to comply with each
O&M Program. Borrower shall pay all costs of performance of Borrower’s obligations under any O&M Program, and Lender’s out-of-pocket costs incurred in connection with the monitoring and review of each O&M Program and
Borrower’s performance shall be paid by Borrower upon demand by Lender. Any such out-of-pocket costs of Lender that Borrower fails to pay promptly shall become an additional part of the Indebtedness as provided in Section 12. 

(e) Borrower represents and warrants to Lender that, except as previously disclosed by Borrower to Lender in writing (which written
disclosure may be in certain environmental assessments and other written reports accepted by Lender in connection with the funding of the Indebtedness and dated prior to the date of this Instrument): 

 

	 	(i)	Borrower has not at any time engaged in, caused or permitted any Prohibited Activities or Conditions on the Mortgaged Property; 

 

	 	(ii)	to the best of Borrower’s knowledge after reasonable and diligent inquiry, no Prohibited Activities or Conditions exist or have existed on the Mortgaged Property;

  

	 	(iii)	the Mortgaged Property does not now contain any underground storage tanks, and, to the best of Borrower’s knowledge after reasonable and diligent inquiry, the
Mortgaged Property has not contained any underground storage tanks in the past. If there is an underground storage tank located on the Mortgaged Property that has been previously disclosed by Borrower to Lender in writing, that tank complies with
all requirements of Hazardous Materials Laws; 

  

  

PAGE 20 

	 	(iv)	to the best of Borrower’s knowledge after reasonable and diligent inquiry, Borrower has complied with all Hazardous Materials Laws, including all requirements for
notification regarding releases of Hazardous Materials. Without limiting the generality of the foregoing, Borrower has obtained all Environmental Permits required for the operation of the Mortgaged Property in accordance with Hazardous Materials
Laws now in effect and all such Environmental Permits are in full force and effect; 

  

	 	(v)	to the best of Borrower’s knowledge after reasonable and diligent inquiry, no event has occurred with respect to the Mortgaged Property that constitutes, or with
the passing of time or the giving of notice would constitute, noncompliance with the terms of any Environmental Permit; 

  

	 	(vi)	there are no actions, suits, claims or proceedings pending or, to the best of Borrower’s knowledge after reasonable and diligent inquiry, threatened that involve
the Mortgaged Property and allege, arise out of, or relate to any Prohibited Activity or Condition; and 

  

	 	(vii)	Borrower has not received any written complaint, order, notice of violation or other communication from any Governmental Authority with regard to air emissions, water
discharges, noise emissions or Hazardous Materials, or any other environmental, health or safety matters affecting the Mortgaged Property or any other property of Borrower that is adjacent to the Mortgaged Property. 

(f) Borrower shall promptly notify Lender in writing upon the occurrence of any of the following events: 

 

	 	(i)	Borrower’s discovery of any Prohibited Activity or Condition; 

  

	 	(ii)	Borrower’s receipt of or knowledge of any written complaint, order, notice of violation or other communication from any tenant, management agent, Governmental
Authority or other person with regard to present or future alleged Prohibited Activities or Conditions, or any other environmental, health or safety matters affecting the Mortgaged Property or any other property of Borrower that is adjacent to the
Mortgaged Property; or 

  

	 	(iii)	Borrower’s breach of any of its obligations under this Section 18. 

Any such notice given by Borrower shall not relieve Borrower of, or result in a waiver of, any obligation under this Instrument, the Note, or any other
Loan Document. 
 (g) Borrower shall pay promptly the costs of any environmental inspections, tests or audits, a purpose of
which is to identify the extent or cause of or potential for a Prohibited Activity or Condition (“Environmental Inspections”), required by Lender in connection with any foreclosure or deed in lieu of foreclosure, or as a
condition of Lender’s consent to any Transfer under Section 21, or required by Lender following a reasonable determination by Lender that Prohibited Activities or Conditions may exist. Any such costs incurred by Lender (including
Attorneys’ Fees and Costs and the costs of technical consultants whether incurred in 
  

  

PAGE 21 

 
connection with any judicial or administrative process or otherwise) that Borrower fails to pay promptly shall become an additional part of the Indebtedness as provided in Section 12.
As long as (i) no Event of Default has occurred and is continuing, (ii) Borrower has actually paid for or reimbursed Lender for all costs of any such Environmental Inspections performed or required by Lender, and (iii) Lender is not
prohibited by law, contract or otherwise from doing so, Lender shall make available to Borrower, without representation of any kind, copies of Environmental Inspections prepared by third parties and delivered to Lender. Lender hereby reserves the
right, and Borrower hereby expressly authorizes Lender, to make available to any party, including any prospective bidder at a foreclosure sale of the Mortgaged Property, the results of any Environmental Inspections made by or for Lender with respect
to the Mortgaged Property. Borrower consents to Lender notifying any party (either as part of a notice of sale or otherwise) of the results of any Environmental Inspections made by or for Lender. Borrower acknowledges that Lender cannot control
or otherwise assure the truthfulness or accuracy of the results of any Environmental Inspections and that the release of such results to prospective bidders at a foreclosure sale of the Mortgaged Property may have a material and adverse effect upon
the amount that a party may bid at such sale. Borrower agrees that Lender shall have no liability whatsoever as a result of delivering the results to any third party of any Environmental Inspections made by or for Lender, and Borrower hereby
releases and forever discharges Lender from any and all claims, damages, or causes of action, arising out of, connected with or incidental to the results of, the delivery of any of Environmental Inspections made by or for Lender. 

(h) If any investigation, site monitoring, containment, clean-up, restoration or other remedial work (“Remedial
Work”) is necessary to comply with any Hazardous Materials Law or order of any Governmental Authority that has or acquires jurisdiction over the Mortgaged Property or the use, operation or improvement of the Mortgaged Property, or is
otherwise required by Lender as a consequence of any Prohibited Activity or Condition or to prevent the occurrence of a Prohibited Activity or Condition, Borrower shall, by the earlier of (i) the applicable deadline required by Hazardous
Materials Law or (ii) 30 days after Notice from Lender demanding such action, begin performing the Remedial Work, and thereafter diligently prosecute it to completion, and shall in any event complete the work by the time required by applicable
Hazardous Materials Law. If Borrower fails to begin on a timely basis or diligently prosecute any required Remedial Work, Lender may, at its option, cause the Remedial Work to be completed, in which case Borrower shall reimburse Lender on demand for
the cost of doing so. Any reimbursement due from Borrower to Lender shall become part of the Indebtedness as provided in Section 12. 

(i) Borrower shall comply with all Hazardous Materials Laws applicable to the Mortgaged Property. Without limiting the generality of the
previous sentence, Borrower shall (i) obtain and maintain all Environmental Permits required by Hazardous Materials Laws and comply with all conditions of such Environmental Permits; (ii) cooperate with any inquiry by any Governmental
Authority; and (iii) comply with any governmental or judicial order that arises from any alleged Prohibited Activity or Condition. 

(j) Borrower shall indemnify, hold harmless and defend (i) Lender, (ii) any prior owner or holder of the Note, (iii) the
Loan Servicer, (iv) any prior Loan Servicer, (v) the officers, directors, shareholders, partners, employees and trustees of any of the foregoing, and (vi) the heirs, legal representatives, successors and assigns of each of the
foregoing (collectively, the “Indemnitees”) from and against all proceedings, claims, damages, penalties and costs (whether initiated or sought by Governmental Authorities or private parties), including Attorneys’ Fees and
Costs and remediation costs, whether incurred in connection with any judicial or administrative process or otherwise, arising directly or indirectly from any of the following: 

 

	 	(i)	any breach of any representation or warranty of Borrower in this Section 18; 

 

  

PAGE 22 

	 	(ii)	any failure by Borrower to perform any of its obligations under this Section 18; 

 

	 	(iii)	the existence or alleged existence of any Prohibited Activity or Condition; 

 

	 	(iv)	the presence or alleged presence of Hazardous Materials on or under the Mortgaged Property or in any of the Improvements or on or under any property of Borrower that is
adjacent to the Mortgaged Property; and 

  

	 	(v)	the actual or alleged violation of any Hazardous Materials Law. 

(k) Counsel selected by Borrower to defend Indemnitees shall be subject to the approval of those Indemnitees. In any circumstances in
which the indemnity under this Section 18 applies, Lender may employ its own legal counsel and consultants to prosecute, defend or negotiate any claim or legal or administrative proceeding and Lender, with the prior written consent of Borrower
(which shall not be unreasonably withheld, delayed or conditioned) may settle or compromise any action or legal or administrative proceeding. However, unless an Event of Default has occurred and is continuing, or the interests of Borrower and
Lender are in conflict, as determined by Lender in its discretion, Lender shall permit Borrower to undertake the actions referenced in this Section 18 in accordance with this Section 18(k) and Section 18(l) so long as Lender
approves such action, which approval shall not be unreasonably withheld or delayed. Borrower shall reimburse Lender upon demand for all costs and expenses incurred by Lender, including all costs of settlements entered into in good faith,
consultants’ fees and Attorneys’ Fees and Costs. 
 (l) Borrower shall not, without the prior written consent of those
Indemnitees who are named as parties to a claim or legal or administrative proceeding (a “Claim”), settle or compromise the Claim if the settlement (i) results in the entry of any judgment that does not include as an
unconditional term the delivery by the claimant or plaintiff to Lender of a written release of those Indemnitees, satisfactory in form and substance to Lender; or (ii) may materially and adversely affect Lender, as determined by Lender in its
discretion. 
 (m) Borrower’s obligation to indemnify the Indemnitees shall not be limited or impaired by any of the
following, or by any failure of Borrower or any guarantor to receive notice of or consideration for any of the following: 
  

	 	(i)	any amendment or modification of any Loan Document; 

  

	 	(ii)	any extensions of time for performance required by any Loan Document; 

  

	 	(iii)	any provision in any of the Loan Documents limiting Lender’s recourse to property securing the Indebtedness, or limiting the personal liability of Borrower or any
other party for payment of all or any part of the Indebtedness; 

  

	 	(iv)	the accuracy or inaccuracy of any representations and warranties made by Borrower under this Instrument or any other Loan Document; 

 

  

PAGE 23 

	 	(v)	the release of Borrower or any other person, by Lender or by operation of law, from performance of any obligation under any Loan Document; 

 

	 	(vi)	the release or substitution in whole or in part of any security for the Indebtedness; and 

 

	 	(vii)	Lender’s failure to properly perfect any lien or security interest given as security for the Indebtedness. 

(n) Borrower shall, at its own cost and expense, do all of the following: 

 

	 	(i)	pay or satisfy any judgment or decree that may be entered against any Indemnitee or Indemnitees in any legal or administrative proceeding incident to any matters
against which Indemnitees are entitled to be indemnified under this Section 18; 

  

	 	(ii)	reimburse Indemnitees for any expenses paid or incurred in connection with any matters against which Indemnitees are entitled to be indemnified under this
Section 18; and 

  

	 	(iii)	reimburse Indemnitees for any and all expenses, including Attorneys’ Fees and Costs, paid or incurred in connection with the enforcement by Indemnitees of their
rights under this Section 18, or in monitoring and participating in any legal or administrative proceeding. 

(o) The provisions of this Section 18 shall be in addition to any and all other obligations and liabilities that Borrower may have
under applicable law or under other Loan Documents, and each Indemnitee shall be entitled to indemnification under this Section 18 without regard to whether Lender or that Indemnitee has exercised any rights against the Mortgaged Property or
any other security, pursued any rights against any guarantor, or pursued any other rights available under the Loan Documents or applicable law. If Borrower consists of more than one person or entity, the obligation of those persons or entities to
indemnify the Indemnitees under this Section 18 shall be joint and several. The obligation of Borrower to indemnify the Indemnitees under this Section 18 shall survive any repayment or discharge of the Indebtedness, any foreclosure
proceeding, any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of record of the lien of this Instrument. Notwithstanding the foregoing, if Lender has never been a mortgagee-in-possession of, or held title to, the
Mortgaged Property, Borrower shall have no obligation to indemnify the Indemnitees under this Section 18 after the date of the release of record of the lien of this Instrument by payment in full at the Maturity Date or by voluntary prepayment
in full. 
 19. PROPERTY AND LIABILITY INSURANCE. 

(a) Borrower shall keep the Improvements insured at all times against such hazards as Lender may from time to time require, which
insurance shall include but not be limited to coverage against loss by fire, windstorm and allied perils, general boiler and machinery coverage, and business interruption including loss of rental value insurance for the Mortgaged Property with extra
expense insurance. If Lender so requires, such insurance shall also include sinkhole insurance, mine subsidence insurance, earthquake insurance, and, if the Mortgaged Property does not conform to applicable zoning or land use laws, building
ordinance or law coverage. In the event any updated reports or other documentation are reasonably required by Lender in order to determine whether such additional insurance is necessary or prudent,

  

  

PAGE 24 

 
Borrower shall pay for all such documentation at its sole cost and expense. Borrower acknowledges and agrees that Lender’s insurance requirements may change from time to time throughout the
term of the Indebtedness. If any of the Improvements is located in an area identified by the Federal Emergency Management Agency (or any successor to that agency) as an area having special flood hazards, Borrower shall insure such Improvements
against loss by flood. All insurance required pursuant to this Section 19(a) shall be referred to as “Hazard Insurance.” All policies of Hazard Insurance must include a non-contributing, non-reporting mortgagee clause in favor
of, and in a form approved by, Lender. 
 (b) All premiums on insurance policies required under this Section 19 shall be
paid in the manner provided in Section 7, unless Lender has designated in writing another method of payment. All such policies shall also be in a form approved by Lender. Borrower shall deliver to Lender a legible copy of each insurance policy
(or duplicate original) and Borrower shall promptly deliver to Lender a copy of all renewal and other notices received by Borrower with respect to the policies and all receipts for paid premiums. At least 5 days prior to the expiration date of any
insurance policy, Borrower shall deliver to Lender evidence acceptable to Lender that the policy has been renewed. If Borrower has not delivered a legible copy of each renewal policy (or a duplicate original) prior to the expiration date of any
insurance policy, Borrower shall deliver a legible copy of each renewal policy (or a duplicate original) in a form satisfactory to Lender within 120 days after the expiration date of the original policy. 

(c) Borrower shall maintain at all times commercial general liability insurance, workers’ compensation insurance and such other
liability, errors and omissions and fidelity insurance coverages as Lender may from time to time require. All policies for general liability insurance must contain a standard additional insured provision, in favor of, and in a form approved by,
Lender. 
 (d) All insurance policies and renewals of insurance policies required by this Section 19 shall be in such
amounts and for such periods as Lender may from time to time require, and shall be issued by insurance companies satisfactory to Lender. 

(e) Borrower shall comply with all insurance requirements and shall not permit any condition to exist on the Mortgaged Property that
would invalidate any part of any insurance coverage that this Instrument requires Borrower to maintain. 
 (f) In the event of
loss, Borrower shall give immediate written notice to the insurance carrier and to Lender. Borrower hereby authorizes and appoints Lender as attorney-in-fact for Borrower to make proof of loss, to adjust and compromise any claims under policies of
Hazard Insurance, to appear in and prosecute any action arising from such Hazard Insurance policies, to collect and receive the proceeds of Hazard Insurance, and to deduct from such proceeds Lender’s expenses incurred in the collection of such
proceeds. This power of attorney is coupled with an interest and therefore is irrevocable. However, nothing contained in this Section 19 shall require Lender to incur any expense or take any action. Lender may, at Lender’s option,
(i) require a “repair or replacement” settlement, in which case the proceeds will be used to reimburse Borrower for the cost of restoring and repairing the Mortgaged Property to the equivalent of its original condition or to a
condition approved by Lender (the “Restoration”), or (ii) require an “actual cash value” settlement in which case the proceeds may be applied to the payment of the Indebtedness, whether or not then due. To the extent
Lender determines to require a repair or replacement settlement and apply insurance proceeds to Restoration, Lender shall apply the proceeds in accordance with Lender’s then-current policies relating to the restoration of casualty damage on
similar multifamily properties. 
  

  

PAGE 25 

 (g) Notwithstanding any provision to the contrary in this Section 19, as long as no
Event of Default, or any event which, with the giving of Notice or the passage of time, or both, would constitute an Event of Default, has occurred and is continuing, 
  

	 	(i)	in the event of a casualty resulting in damage to the Mortgaged Property which will cost $10,000 or less to repair, the Borrower shall have the sole right to make proof
of loss, adjust and compromise the claim and collect and receive any proceeds directly without the approval or prior consent of the Lender so long as the insurance proceeds are used solely for the Restoration of the Mortgaged Property; and

  

	 	(ii)	in the event of a casualty resulting in damage to the Mortgaged Property which will cost more than $10,000 but less than $50,000 to repair, the Borrower is authorized
to make proof of loss and adjust and compromise the claim without the prior consent of Lender, and Lender shall hold the applicable insurance proceeds to be used to reimburse Borrower for the cost of Restoration of the Mortgaged Property and shall
not apply such proceeds to the payment of sums due under this Instrument. 

 (h) Lender will have the right to
exercise its option to apply insurance proceeds to the payment of the Indebtedness only if Lender determines that at least one of the following conditions is met: 
  

	 	(i)	an Event of Default (or any event, which, with the giving of Notice or the passage of time, or both, would constitute an Event of Default) has occurred and is
continuing; 

  

	 	(ii)	Lender determines, in its discretion, that there will not be sufficient funds from insurance proceeds, anticipated contributions of Borrower of its own funds or other
sources acceptable to Lender to complete the Restoration; 

  

	 	(iii)	Lender determines, in its discretion, that the rental income from the Mortgaged Property after completion of the Restoration will not be sufficient to meet all
operating costs and other expenses, Imposition Deposits, deposits to reserves and loan repayment obligations relating to the Mortgaged Property; 

  

	 	(iv)	Lender determines, in its discretion, that the Restoration will not be completed at least one year before the Maturity Date (or six months before the Maturity Date
if Lender determines in its discretion that re-leasing of the Mortgaged Property will be completed within such six-month period); or 

  

	 	(v)	Lender determines that the Restoration will not be completed within one year after the date of the loss or casualty. 

(i) If the Mortgaged Property is sold at a foreclosure sale or Lender acquires title to the Mortgaged Property, Lender shall
automatically succeed to all rights of Borrower in and to any insurance policies and unearned insurance premiums and in and to the proceeds resulting from any damage to the Mortgaged Property prior to such sale or acquisition. 

 

  

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 (j) Unless Lender otherwise agrees in writing, any application of any insurance proceeds to
the Indebtedness shall not extend or postpone the due date of any monthly installments referred to in the Note, Section 7 of this Instrument or any Collateral Agreement, or change the amount of such installments. 

(k) Borrower agrees to execute such further evidence of assignment of any insurance proceeds as Lender may require. 

20. CONDEMNATION. 

(a) Borrower shall promptly notify Lender in writing of any action or proceeding or notice relating to any proposed or actual
condemnation or other taking, or conveyance in lieu thereof, of all or any part of the Mortgaged Property, whether direct or indirect (a “Condemnation”). Borrower shall appear in and prosecute or defend any action or proceeding
relating to any Condemnation unless otherwise directed by Lender in writing. Borrower authorizes and appoints Lender as attorney-in-fact for Borrower to commence, appear in and prosecute, in Lender’s or Borrower’s name, any action or
proceeding relating to any Condemnation and to settle or compromise any claim in connection with any Condemnation, after consultation with Borrower and consistent with commercially reasonable standards of a prudent lender. This power of attorney is
coupled with an interest and therefore is irrevocable. However, nothing contained in this Section 20 shall require Lender to incur any expense or take any action. Borrower hereby transfers and assigns to Lender all right, title and interest of
Borrower in and to any award or payment with respect to (i) any Condemnation, or any conveyance in lieu of Condemnation, and (ii) any damage to the Mortgaged Property caused by governmental action that does not result in a Condemnation.

 (b) Lender may apply such awards or proceeds, after the deduction of Lender’s expenses incurred in the collection of
such amounts (including Attorneys’ Fees and Costs) at Lender’s option, to the restoration or repair of the Mortgaged Property or to the payment of the Indebtedness, with the balance, if any, to Borrower. Unless Lender otherwise agrees
in writing, any application of any awards or proceeds to the Indebtedness shall not extend or postpone the due date of any monthly installments referred to in the Note, Section 7 of this Instrument or any Collateral Agreement, or change the
amount of such installments. Borrower agrees to execute such further evidence of assignment of any awards or proceeds as Lender may require. 

21. TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER. [RIGHT TO UNLIMITED TRANSFERS — WITH LENDER APPROVAL]. 

 (a) “Transfer” means 
  

	 	(i)	a sale, assignment, transfer or other disposition (whether voluntary, involuntary or by operation of law); 

 

	 	(ii)	the granting, creating or attachment of a lien, encumbrance or security interest (whether voluntary, involuntary or by operation of law); 

 

	 	(iii)	the issuance or other creation of an ownership interest in a legal entity, including a partnership interest, interest in a limited liability company or corporate stock;

  

  

PAGE 27 

	 	(iv)	the withdrawal, retirement, removal or involuntary resignation of a partner in a partnership or a member or manager in a limited liability company; or

  

	 	(v)	the merger, dissolution, liquidation, or consolidation of a legal entity or the reconstitution of one type of legal entity into another type of legal entity.

 For purposes of defining the term “Transfer,” the term “partnership” shall mean a general partnership, a
limited partnership, a joint venture and a limited liability partnership, and the term “partner” shall mean a general partner, a limited partner and a joint venturer. 

(b) “Transfer” does not include 
  

	 	(i)	a conveyance of the Mortgaged Property at a judicial or non-judicial foreclosure sale under this Instrument, 

 

	 	(ii)	the Mortgaged Property becoming part of a bankruptcy estate by operation of law under the United States Bankruptcy Code, or 

 

	 	(iii)	a lien against the Mortgaged Property for local taxes and/or assessments not then due and payable. 

(c) The occurrence of any of the following Transfers shall not constitute an Event of Default under this Instrument, notwithstanding any
provision of Section 21(e) to the contrary: 
  

	 	(i)	a Transfer to which Lender has consented; 

  

	 	(ii)	a Transfer that occurs in accordance with Section 21(d); 

  

	 	(iii)	the grant of a leasehold interest in an individual dwelling unit for a term of two years or less not containing an option to purchase; 

 

	 	(iv)	a Transfer of obsolete or worn out Personalty or Fixtures that are contemporaneously replaced by items of equal or better function and quality, which are free of liens,
encumbrances and security interests other than those created by the Loan Documents or consented to by Lender; 

  

	 	(v)	the creation of a mechanic’s, materialman’s, or judgment lien against the Mortgaged Property, which is released of record or otherwise remedied to
Lender’s satisfaction within 60 days of the date of creation; 

  

	 	(vi)	if Borrower is a housing cooperative corporation or association, the Transfer of more than 49 percent of the shares in the housing cooperative or the assignment of more
than 49 percent of the occupancy agreements or leases relating thereto by tenant shareholders of the housing cooperative or association to other tenant shareholders; and 

 

	 	(vii)	any Transfer of an interest in Borrower or any interest in a Controlling Entity (which, if such Controlling Entity were Borrower, would result in an Event of
Default) listed in (A) through (F) below (a “Preapproved Transfer”), under the terms and conditions listed as items (1) through (7) below: 

 

	 	(A)	a sale or transfer to one or more of the transferor’s immediate family members; or 

 

  

PAGE 28 

	 	(B)	a sale or transfer to any trust having as its sole beneficiaries the transferor and/or one or more of the transferor’s immediate family members; or

  

	 	(C)	a sale or transfer from a trust to any one or more of its beneficiaries who are immediate family members of the transferor ; or 

 

	 	(D)	the substitution or replacement of the trustee of any trust with a trustee who is an immediate family member of the transferor; or 

 

	 	(E)	a sale or transfer to an entity owned and controlled by the transferor or the transferor’s immediate family members; or 

 

	 	(F)	a sale or transfer to an individual or entity that has an existing interest in the Borrower or in a Controlling Entity. 

 

	 	(1)	Borrower shall provide Lender with prior written Notice of the proposed Preapproved Transfer, which Notice must be accompanied by a non-refundable review fee in the
amount of $3,000.00. 

  

	 	(2)	For the purposes of these Preapproved Transfers, a transferor’s immediate family members will be deemed to include a spouse, parent, child or grandchild of such
transferor. 

  

	 	(3)	Either directly or indirectly, American Assets, Inc. and Foster Investment Corporation shall retain at all times a managing interest in the Borrower.

  

	 	(4)	At the time of the proposed Preapproved Transfer, no Event of Default shall have occurred and be continuing and no event or condition shall have occurred and be
continuing that, with the giving of Notice or the passage of time, or both, would become an Event of Default. 

  

	 	(5)	Lender shall be entitled to collect all costs, including the cost of all title searches, title insurance and recording costs, and all Attorneys’ Fees and Costs.

  

	 	(6)	Lender shall not be entitled to collect a transfer fee as a result of these Preapproved Transfers. 

 

	 	(7)	In the event of a Transfer prohibited by or requiring Lender’s approval under this Section 21, this Section (c)(vii) may be modified or rendered
void by Lender at Lender’s option by Notice to Borrower and the transferee(s), as a condition of Lender’s consent. 

  

  

PAGE 29 

 (d) The occurrence of any of the following Transfers shall not constitute an Event of
Default under this Instrument, provided that Borrower has notified Lender in writing within 30 days following the occurrence of any of the following, and such Transfer does not constitute an Event of Default under any other Section of this
Instrument: 
  

	 	(i)	a change of the Borrower’s name, provided that UCC financing statements and/or amendments sufficient to continue the perfection of Lender’s security
interest have been properly filed and copies have been delivered to Lender; 

  

	 	(ii)	a change of the form of the Borrower not involving a transfer of the Borrower’s assets and not resulting in any change in liability of any Initial Owner, provided
that UCC financing statements and/or amendments sufficient to continue the perfection of Lender’s security interest have been properly filed and copies have been delivered to Lender; 

 

	 	(iii)	the merger of the Borrower with another entity when the Borrower is the surviving entity; 

 

	 	(iv)	a Transfer that occurs by devise, descent, or by operation of law upon the death of a natural person; and 

 

	 	(v)	the grant of an easement, if before the grant Lender determines that the easement will not materially affect the operation or value of the Mortgaged Property or
Lender’s interest in the Mortgaged Property, and Borrower pays to Lender, upon demand, all costs and expenses, including Attorneys’ Fees and Costs, incurred by Lender in connection with reviewing Borrower’s request.

 (e) The occurrence of any of the following Transfers shall constitute an Event of Default under this
Instrument: 
  

	 	(i)	a Transfer of all or any part of the Mortgaged Property or any interest in the Mortgaged Property; 

 

	 	(ii)	if Borrower is a limited partnership, a Transfer of (A) any general partnership interest, or (B) limited partnership interests in Borrower that would cause
the Initial Owners of Borrower to own less than a Controlling Interest of all limited partnership interests in Borrower; 

  

	 	(iii)	if Borrower is a general partnership or a joint venture, a Transfer of any general partnership or joint venture interest in Borrower; 

 

	 	(iv)	if Borrower is a limited liability company, (A) a Transfer of any membership interest in Borrower which would cause the Initial Owners to own less than a
Controlling Interest of all the membership interests in Borrower, (B) a Transfer of any membership or other interest of a manager in Borrower that results in a change of manager or (C) a change in a nonmember manager;

  

	 	(v)	 if Borrower is a corporation (A) the Transfer of any voting stock in Borrower which would cause the Initial Owners to own less than a

  

  

PAGE 30 

	 	 
Controlling Interest of any class of voting stock in Borrower or (B) if the outstanding voting stock in Borrower is held by 100 or more shareholders, one or more Transfers by a single
transferor within a 12-month period affecting an aggregate of 5 percent or more of that stock; 

  

	 	(vi)	if Borrower is a trust, (A) a Transfer of any beneficial interest in Borrower which would cause the Initial Owners to own less than a Controlling Interest of all
the beneficial interests in Borrower, (B) the termination or revocation of the trust, or (C) the removal, appointment or substitution of a trustee of Borrower; 

 

	 	(vii)	if Borrower is a limited liability partnership, (A) a Transfer of any partnership interest in Borrower which would cause the Initial Owners to own less than a
Controlling Interest of all partnership interests in Borrower, or (B) a transfer of any partnership or other interest of a managing partner in Borrower that results in a change of manager; and 

 

	 	(viii)	a Transfer of any interest in a Controlling Entity which, if such Controlling Entity were Borrower, would result in an Event of Default under any of
Sections 21(e)(i) through (vii) above. 

 Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default in order to exercise any of its remedies with respect to an Event of Default under this Section 21. 

(f) Lender shall consent, without any adjustment to the rate at which the Indebtedness secured by this Instrument bears interest or to
any other economic terms of the Indebtedness set forth in the Note, to a Transfer that would otherwise violate this Section 21 if, prior to the Transfer, Borrower has satisfied each of the following requirements: 

 

	 	(i)	the submission to Lender of all information required by Lender to make the determination required by this Section 21(f); 

 

	 	(ii)	the absence of any Event of Default; 

  

	 	(iii)	the transferee meets all of the eligibility, credit, management and other standards (including but not limited to any standards with respect to previous relationships
between Lender and the transferee) customarily applied by Lender at the time of the proposed Transfer to the approval of borrowers in connection with the origination or purchase of similar mortgages on multifamily properties;

  

	 	(iv)	the transferee’s organization, credit and experience in the management of similar properties are deemed by the Lender, in its discretion, to be appropriate to the
overall structure and documentation of the existing financing; 

  

	 	(v)	the Mortgaged Property, at the time of the proposed Transfer, meets all standards as to its physical condition, occupancy, net operating income and the collection of
reserves that are customarily applied by Lender at the time of the proposed Transfer to the approval of properties in connection with the origination or purchase of similar mortgages on multifamily properties; 

 

  

PAGE 31 

	 	(vi)	in the case of a Transfer of all or any part of the Mortgaged Property, (A) the execution by the transferee of Lender’s then-standard assumption agreement
that, among other things, requires the transferee to perform all obligations of Borrower set forth in the Note, this Instrument and any other Loan Documents, and may require that the transferee comply with any provisions of this Instrument or any
other Loan Document which previously may have been waived or modified by Lender, (B) if Lender requires, the transferee causes one or more individuals or entities acceptable to Lender to execute and deliver to Lender a guaranty in a form
acceptable to Lender, and (C) the transferee executes such additional Collateral Agreements as Lender may require; 

  

	 	(vii)	in the case of a Transfer of any interest in a Controlling Entity, if a guaranty has been executed and delivered in connection with the Note, this Instrument or any of
the other Loan Documents, the Borrower causes one or more individuals or entities acceptable to Lender to execute and deliver to Lender a guaranty in a form acceptable to Lender; and 

 

	 	(viii)	Lender’s receipt of all of the following: 

  

	 	(A)	a review fee in the amount of $3,000.00; 

  

	 	(B)	a transfer fee in an amount equal to one (1) percent of the unpaid principal balance of the Indebtedness immediately before the applicable Transfer; and

  

	 	(C)	the amount of Lender’s out-of-pocket costs (including reasonable Attorneys’ Fees and Costs) incurred in reviewing the Transfer request.

 22. EVENTS OF DEFAULT. The occurrence of any one or more of the following shall constitute an Event of
Default under this Instrument: 
 (a) any failure by Borrower to pay or deposit when due any amount required by the Note, this
Instrument or any other Loan Document; 
 (b) any failure by Borrower to maintain the insurance coverage required by
Section 19; 
 (c) any failure by Borrower to comply with the provisions of Section 33; 

(d) fraud or material misrepresentation or material omission by Borrower, any of its officers, directors, trustees, general partners or
managers or any guarantor in connection with (i) the application for or creation of the Indebtedness, (ii) any financial statement, rent schedule, or other report or information provided to Lender during the term of the Indebtedness, or
(iii) any request for Lender’s consent to any proposed action, including a request for disbursement of funds under any Collateral Agreement; 

(e) any failure by Borrower to comply with the provisions of Section 20; 

 

  

PAGE 32 

 (f) any Event of Default under Section 21; 

(g) the commencement of a forfeiture action or proceeding, whether civil or criminal, which, in Lender’s reasonable judgment, could
result in a forfeiture of the Mortgaged Property or otherwise materially impair the lien created by this Instrument or Lender’s interest in the Mortgaged Property; 

(h) any failure by Borrower to perform any of its obligations under this Instrument (other than those specified in
Sections 22(a) through (g)), as and when required, which continues for a period of 30 days after Notice of such failure by Lender to Borrower. However, if Borrower’s failure to perform its obligations as described in this
Section 22(h) is of the nature that it cannot be cured within the 30 day grace period but reasonably could be cured within 90 days, then Borrower shall have additional time as determined by Lender in its discretion, not to exceed an
additional 60 days, in which to cure such default, provided that Borrower has diligently commenced to cure such default during the 30-day grace period and diligently pursues the cure of such default. However, no such Notice or grace periods
shall apply in the case of any such failure which could, in Lender’s judgment, absent immediate exercise by Lender of a right or remedy under this Instrument, result in harm to Lender, impairment of the Note or this Instrument or any other
security given under any other Loan Document; 
 (i) any failure by Borrower to perform any of its obligations as and when
required under any Loan Document other than this Instrument which continues beyond the applicable cure period, if any, specified in that Loan Document; 

(j) any exercise by the holder of any other debt instrument secured by a mortgage, deed of trust or deed to secure debt on the Mortgaged
Property of a right to declare all amounts due under that debt instrument immediately due and payable; 
 (k) any voluntary
filing by Borrower for bankruptcy protection under the United States Bankruptcy Code or any reorganization, receivership, insolvency proceeding or other similar proceeding pursuant to any other federal or state law affecting debtor and creditor
rights to which Borrower voluntarily becomes subject, or the commencement of any involuntary case against Borrower by any creditor (other than Lender) of Borrower pursuant to the United States Bankruptcy Code or other federal or state law
affecting debtor and creditor rights which case is not dismissed or discharged within 90 days after filing; and 
 (l) any
representations and warranties by Borrower in this Instrument which is false or misleading in any material respect. 
 23.
REMEDIES CUMULATIVE. Each right and remedy provided in this Instrument is distinct from all other rights or remedies under this Instrument or any other Loan Document or afforded by applicable law, and each shall be cumulative and may be
exercised concurrently, independently, or successively, in any order. 
 24. FORBEARANCE. 

(a) Lender may (but shall not be obligated to) agree with Borrower, from time to time, and without giving notice to, or obtaining
the consent of, or having any effect upon the obligations of, any guarantor or other third party obligor, to take any of the following actions: extend the time for payment of all or any part of the Indebtedness; reduce the payments due under this
Instrument, the Note, or any other Loan Document; release anyone liable for the payment of any amounts under this Instrument, the Note, or any other Loan Document; accept a 

 

  

PAGE 33 

 
renewal of the Note; modify the terms and time of payment of the Indebtedness; join in any extension or subordination agreement; release any Mortgaged Property; take or release other or
additional security; modify the rate of interest or period of amortization of the Note or change the amount of the monthly installments payable under the Note; and otherwise modify this Instrument, the Note, or any other Loan Document. 

(b) Any forbearance by Lender in exercising any right or remedy under the Note, this Instrument, or any other Loan Document or otherwise
afforded by applicable law, shall not be a waiver of or preclude the exercise of any other right or remedy, or the subsequent exercise of any right or remedy. The acceptance by Lender of payment of all or any part of the Indebtedness after the due
date of such payment, or in an amount which is less than the required payment, shall not be a waiver of Lender’s right to require prompt payment when due of all other payments on account of the Indebtedness or to exercise any remedies for any
failure to make prompt payment. Enforcement by Lender of any security for the Indebtedness shall not constitute an election by Lender of remedies so as to preclude the exercise of any other right available to Lender. Lender’s receipt of any
awards or proceeds under Sections 19 and 20 shall not operate to cure or waive any Event of Default. 
 25. LOAN
CHARGES. If any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower is interpreted so that any charge provided for in any Loan Document, whether considered separately or together with other
charges levied in connection with any other Loan Document, violates that law, and Borrower is entitled to the benefit of that law, that charge is hereby reduced to the extent necessary to eliminate that violation. The amounts, if any, previously
paid to Lender in excess of the permitted amounts shall be applied by Lender to reduce the principal of the Indebtedness. For the purpose of determining whether any applicable law limiting the amount of interest or other charges permitted to be
collected from Borrower has been violated, all Indebtedness which constitutes interest, as well as all other charges levied in connection with the Indebtedness which constitute interest, shall be deemed to be allocated and spread over the stated
term of the Note. Unless otherwise required by applicable law, such allocation and spreading shall be effected in such a manner that the rate of interest so computed is uniform throughout the stated term of the Note. 

26. WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby waives the right to assert any statute of limitations as a bar to the
enforcement of the lien of this Instrument or to any action brought to enforce any Loan Document. 
 27. WAIVER OF
MARSHALLING. Notwithstanding the existence of any other security interests in the Mortgaged Property held by Lender or by any other party, Lender shall have the right to determine the order in which any or all of the Mortgaged Property shall be
subjected to the remedies provided in this Instrument, the Note, any other Loan Document or applicable law. Lender shall have the right to determine the order in which any or all portions of the Indebtedness are satisfied from the proceeds realized
upon the exercise of such remedies. Borrower and any party who now or in the future acquires a security interest in the Mortgaged Property and who has actual or constructive notice of this Instrument waives any and all right to require the
marshalling of assets or to require that any of the Mortgaged Property be sold in the inverse order of alienation or that any of the Mortgaged Property be sold in parcels or as an entirety in connection with the exercise of any of the remedies
permitted by applicable law or provided in this Instrument. 
 28. FURTHER ASSURANCES. Borrower shall execute,
acknowledge, and deliver, at its sole cost and expense, all further acts, deeds, conveyances, assignments, estoppel certificates, financing statements or amendments, transfers and assurances as Lender may require from time to time in order to better
assure, grant, and convey to Lender the rights intended to be granted, now or in the future, to Lender under this Instrument and the Loan Documents. 
  

  

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 29. ESTOPPEL CERTIFICATE. Within 10 days after a request from Lender, Borrower shall
deliver to Lender a written statement, signed and acknowledged by Borrower, certifying to Lender or any person designated by Lender, as of the date of such statement, (i) that the Loan Documents are unmodified and in full force and effect (or,
if there have been modifications, that the Loan Documents are in full force and effect as modified and setting forth such modifications); (ii) the unpaid principal balance of the Note; (iii) the date to which interest under the Note has
been paid; (iv) that Borrower is not in default in paying the Indebtedness or in performing or observing any of the covenants or agreements contained in this Instrument or any of the other Loan Documents (or, if the Borrower is in default,
describing such default in reasonable detail); (v) whether or not there are then existing any setoffs or defenses known to Borrower against the enforcement of any right or remedy of Lender under the Loan Documents; and (vi) any additional
facts requested by Lender. 
 30. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE. 

(a) This Instrument, and any Loan Document which does not itself expressly identify the law that is to apply to it, shall be governed by
the laws of the jurisdiction in which the Land is located (the “Property Jurisdiction”). 
 (b) Borrower agrees
that any controversy arising under or in relation to the Note, this Instrument, or any other Loan Document may be litigated in the Property Jurisdiction. The state and federal courts and authorities with jurisdiction in the Property Jurisdiction
shall have jurisdiction over all controversies that shall arise under or in relation to the Note, any security for the Indebtedness, or any other Loan Document. Borrower irrevocably consents to service, jurisdiction, and venue of such courts for any
such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise. However, nothing in this Section 30 is intended to limit Lender’s right to bring any suit, action or
proceeding relating to matters under this Instrument in any court of any other jurisdiction. 
 31. NOTICE. 

(a) All Notices, demands and other communications (“Notice”) under or concerning this Instrument shall be in
writing. Each Notice shall be addressed to the intended recipient at its address set forth in this Instrument, and shall be deemed given on the earliest to occur of (i) the date when the Notice is received by the addressee; (ii) the first
Business Day after the Notice is delivered to a recognized overnight courier service, with arrangements made for payment of charges for next Business Day delivery; or (iii) the third Business Day after the Notice is deposited in the United
States mail with postage prepaid, certified mail, return receipt requested. 
 (b) Any party to this Instrument may change the
address to which Notices intended for it are to be directed by means of Notice given to the other party in accordance with this Section 31. Each party agrees that it will not refuse or reject delivery of any Notice given in accordance with this
Section 31, that it will acknowledge, in writing, the receipt of any Notice upon request by the other party and that any Notice rejected or refused by it shall be deemed for purposes of this Section 31 to have been received by the
rejecting party on the date so refused or rejected, as conclusively established by the records of the U.S. Postal Service or the courier service. 
  

  

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 (c) Any Notice under the Note and any other Loan Document that does not specify how Notices
are to be given shall be given in accordance with this Section 31. 
 32. SALE OF NOTE; CHANGE IN SERVICER; LOAN
SERVICING. The Note or a partial interest in the Note (together with this Instrument and the other Loan Documents) may be sold one or more times without prior Notice to Borrower. A sale may result in a change of the Loan Servicer. There
also may be one or more changes of the Loan Servicer unrelated to a sale of the Note. If there is a change of the Loan Servicer, Borrower will be given Notice of the change. All actions regarding the servicing of the loan evidenced by the Note,
including the collection of payments, the giving and receipt of Notice, inspections of the Mortgaged Property, inspections of books and records, and the granting of consents and approvals, may be taken by the Loan Servicer unless Borrower receives
Notice to the contrary. If Borrower receives conflicting Notices regarding the identity of the Loan Servicer or any other subject, any such Notice from Lender shall govern. 

33. SINGLE ASSET BORROWER. Until the Indebtedness is paid in full, Borrower (a) shall not own any real or personal property
other than the Mortgaged Property and personal property related to the operation and maintenance of the Mortgaged Property; (b) shall not operate any business other than the management and operation of the Mortgaged Property; and (c) shall
not maintain its assets in a way difficult to segregate and identify. 
 34. SUCCESSORS AND ASSIGNS BOUND. This
Instrument shall bind, and the rights granted by this Instrument shall inure to, the respective successors and assigns of Lender and Borrower. However, a Transfer not permitted by Section 21 shall be an Event of Default. 

35. JOINT AND SEVERAL LIABILITY. If more than one person or entity signs this Instrument as Borrower, the obligations of such
persons and entities shall be joint and several. 
 36. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY. 

(a) The relationship between Lender and Borrower shall be solely that of creditor and debtor, respectively, and nothing contained in this
Instrument shall create any other relationship between Lender and Borrower. 
 (b) No creditor of any party to this Instrument
and no other person shall be a third party beneficiary of this Instrument or any other Loan Document. Without limiting the generality of the preceding sentence, (i) any arrangement (a “Servicing Arrangement”) between the
Lender and any Loan Servicer for loss sharing or interim advancement of funds shall constitute a contractual obligation of such Loan Servicer that is independent of the obligation of Borrower for the payment of the Indebtedness, (ii) Borrower
shall not be a third party beneficiary of any Servicing Arrangement, and (iii) no payment by the Loan Servicer under any Servicing Arrangement will reduce the amount of the Indebtedness. 

37. SEVERABILITY; AMENDMENTS. The invalidity or unenforceability of any provision of this Instrument shall not affect the validity
or enforceability of any other provision, and all other provisions shall remain in full force and effect. This Instrument contains the entire agreement among the parties as to the rights granted and the obligations assumed in this Instrument. This
Instrument may not be amended or modified except by a writing signed by the party against whom enforcement is sought; provided, however, that in the event of a Transfer prohibited by or requiring Lender’s approval under Section 21, any or
some or all of the Modifications to Instrument set forth in Exhibit B (if any) may be modified or rendered void by Lender at Lender’s option by Notice to Borrower and the transferee(s). 

 

  

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 38. CONSTRUCTION. The captions and headings of the Sections of this Instrument
are for convenience only and shall be disregarded in construing this Instrument. Any reference in this Instrument to an “Exhibit” or a “Section” shall, unless otherwise explicitly provided, be construed as referring,
respectively, to an Exhibit attached to this Instrument or to a Section of this Instrument. All Exhibits attached to or referred to in this Instrument are incorporated by reference into this Instrument. Any reference in this Instrument to a
statute or regulation shall be construed as referring to that statute or regulation as amended from time to time. Use of the singular in this Agreement includes the plural and use of the plural includes the singular. As used in this Instrument, the
term “including” means “including, but not limited to.” 
 39. DISCLOSURE OF INFORMATION. Lender may
furnish information regarding Borrower or the Mortgaged Property to third parties with an existing or prospective interest in the servicing, enforcement, evaluation, performance, purchase or securitization of the Indebtedness, including but not
limited to trustees, master servicers, special servicers, rating agencies, and organizations maintaining databases on the underwriting and performance of multifamily mortgage loans, as well as governmental regulatory agencies having regulatory
authority over Lender. Borrower irrevocably waives any and all rights it may have under applicable law to prohibit such disclosure, including but not limited to any right of privacy. 

40. NO CHANGE IN FACTS OR CIRCUMSTANCES. Borrower warrants that (a) all information in the application for the loan submitted
to Lender (the “Loan Application”) and in all financial statements, rent schedules, reports, certificates and other documents submitted in connection with the Loan Application are complete and accurate in all material respects;
and (b) there has been no material adverse change in any fact or circumstance that would make any such information incomplete or inaccurate. 

41. SUBROGATION. If, and to the extent that, the proceeds of the loan evidenced by the Note, or subsequent advances under
Section 12, are used to pay, satisfy or discharge a Prior Lien, such loan proceeds or advances shall be deemed to have been advanced by Lender at Borrower’s request, and Lender shall automatically, and without further action on its part,
be subrogated to the rights, including lien priority, of the owner or holder of the obligation secured by the Prior Lien, whether or not the Prior Lien is released. 

42. ADJUSTABLE RATE MORTGAGE - THIRD PARTY CAP AGREEMENT “CAP COLLATERAL.” 

(a) If the Note provides for interest to accrue at an adjustable or variable interest rate (other than during the “Extension
Period,” as defined in the Note, if applicable), then the definition of “Mortgaged Property” shall include the “Cap Collateral.” The “Cap Collateral” shall mean 

 

	 	(i)	any interest rate cap agreement, interest rate swap agreement, or other interest rate-hedging contract or agreement obtained by Borrower as a requirement of any Loan
Document or as a condition of Lender’s making the Loan (a “Cap Agreement”); 

  

	 	(ii)	any and all moneys (collectively, “Cap Payments”) payable pursuant to any Cap Agreement by the interest rate cap provider or other counterparty to a
Cap Agreement or any guarantor of the obligations of any such cap provider or counterparty (a “Cap Provider”); 

  

  

PAGE 37 

	 	(iii)	all rights of Borrower under any Cap Agreement and all rights of Borrower to all Cap Payments, including contract rights and general intangibles, whether existing now
or arising after the date of this Instrument; 

  

	 	(iv)	all rights, liens and security interests or guaranties granted by a Cap Provider or any other person to secure or guaranty payment of any Cap Payment whether existing
now or granted after the date of this Instrument; 

  

	 	(v)	all documents, writings, books, files, records and other documents arising from or relating to any of the foregoing, whether existing now or created after the date of
this Instrument; and 

  

	 	(vi)	all cash and non-cash proceeds and products of (ii) – (v) above. 

(b) As additional security for Borrower’s obligation under the Loan Documents, Borrower hereby assigns and pledges to Lender all of
Borrower’s right, title and interest in and to the Cap Collateral. Borrower has instructed and will instruct each Cap Provider and any guarantor of a Cap Provider’s obligations to make Cap Payments directly to Lender or to Loan Servicer
on behalf of Lender. 
 (c) So long as there is no Event of Default, Lender or Loan Servicer will remit to Borrower each Cap
Payment received by Lender or Loan Servicer with respect to any month for which Borrower has paid in full the monthly installment of principal and interest or interest only, as applicable, due under the Note. Alternatively, at Lender’s option
so long as there is no Event of Default, Lender may apply a Cap Payment received by Lender or Loan Servicer with respect to any month to the applicable monthly payment of accrued interest due under the Note if Borrower has paid in full the remaining
portion of such monthly payment of principal and interest or interest only, as applicable. 
 (d) Following an Event of Default,
in addition to any other rights and remedies Lender may have, Lender may retain any Cap Payments and apply them to the Indebtedness in such order and amounts as Lender determines. Neither the existence of a Cap Agreement nor anything in this
Instrument shall relieve Borrower of its primary obligation to timely pay in full all amounts due under the Note and otherwise due on account of the Indebtedness. 

(e) If the Note does not provide for interest to accrue at an adjustable or variable interest rate (other than during the Extension
Period) then this Section 42 shall be of no force or effect. 
 43. ACCELERATION; REMEDIES. If an Event of Default
has occurred and is continuing, Lender, at Lender’s option, may declare the Indebtedness to be immediately due and payable without further demand, and may invoke the power of sale and any other remedies permitted by California law or provided
in this Instrument or in any other Loan Document. Borrower acknowledges that the power of sale granted in this Instrument may be exercised by Lender without prior judicial hearing. Lender shall be entitled to collect all costs and expenses incurred
in pursuing such remedies, including attorneys’ fees, costs of documentary evidence, abstracts and title reports. 
  

  

PAGE 38 

 If the power of sale is invoked, Lender shall execute a written notice of the occurrence of
an Event of Default and of Lender’s election to cause the Mortgaged Property to be sold and shall cause the notice to be recorded in each county in which the Mortgaged Property or some part of the Mortgaged Property is located. Trustee shall
give notice of default and notice of sale and shall sell the Mortgaged Property according to California law. Trustee may sell the Mortgaged Property at the time and place and under the terms designated in the notice of sale in one or more parcels
and in such order as Trustee may determine. Trustee may postpone the sale of all or any part of the Mortgaged Property by public announcement at the time and place of any previously scheduled sale. Lender or Lender’s designee may purchase the
Mortgaged Property at any sale. 
 Trustee shall deliver to the purchaser at the sale, within a reasonable time after the sale,
a deed conveying the Mortgaged Property so sold without any express or implied covenant or warranty. The recitals in Trustee’s deed shall be prima facie evidence of the truth of the statements made in those recitals. Trustee shall apply the
proceeds of the sale in the following order: (a) to all costs and expenses of the sale, including Trustee’s fees not to exceed 5% of the gross sales price, attorneys’ fees and costs of title evidence; (b) to the Indebtedness in
such order as Lender, in Lender’s discretion, directs; and (c) the excess, if any, to the person or persons legally entitled to the excess. 

44. RECONVEYANCE. Upon payment of the Indebtedness, Lender shall request Trustee to reconvey the Mortgaged Property and shall
surrender this Instrument and the Note to Trustee. Trustee shall reconvey the Mortgaged Property without warranty to the person or persons legally entitled to the Mortgaged Property. Such person or persons shall pay Trustee’s reasonable costs
incurred in so reconveying the Mortgaged Property. 
 45. SUBSTITUTE TRUSTEE. Lender, at Lender’s option, may
from time to time, by a written instrument, appoint a successor trustee, which instrument, when executed and acknowledged by Lender and recorded in the office of the Recorder of the county or counties where the Mortgaged Property is situated, shall
be conclusive proof of proper substitution of the successor trustee. The successor trustee shall, without conveyance of the Mortgaged Property, succeed to all the title, power and duties conferred upon the Trustee in this Instrument and by
California law. The instrument of substitution shall contain the name of the original Lender, Trustee and Borrower under this Instrument, the book and page where this Instrument is recorded, and the name and address of the successor trustee. If
notice of default has been recorded, this power of substitution cannot be exercised until after the costs, fees and expenses of the then acting Trustee have been paid to such Trustee, who shall endorse receipt of those costs, fees and expenses upon
the instrument of substitution. The procedure provided for substitution of trustee in this Instrument shall govern to the exclusion of all other provisions for substitution, statutory or otherwise.  

46. STATEMENT OF OBLIGATION. Lender may collect a fee not to exceed the maximum allowed by applicable law for furnishing the
statement of obligation as provided in Section 2943 of the Civil Code of California. 
 47. SPOUSE’S
SEPARATE PROPERTY. Each Borrower who is a married person expressly agrees that recourse may be had against his or her separate property. 

48. FIXTURE FILING. This Instrument is also a fixture filing under the Uniform Commercial Code of California. 

 

  

PAGE 39 

 49. ADDITIONAL PROVISION REGARDING APPLICATION OF PAYMENTS. In addition to the
provisions of Section 9, Borrower further agrees that, if Lender accepts a guaranty of only a portion of the Indebtedness, Borrower waives its right under California Civil Code Section 2822(a), to designate the portion of the Indebtedness
which shall be satisfied by a guarantor’s partial payment. 
 50. WAIVER OF MARSHALLING; OTHER WAIVERS. To
the extent permitted by law, Borrower waives (i) the benefit of all present or future laws providing for any appraisement before sale of any portion of the Mortgaged Property, (ii) all rights of redemption, valuation, appraisement, stay of
execution, notice of election to mature or declare due the whole of the Indebtedness and marshalling in the event of foreclosure of the lien created by this Instrument, (iii) all rights and remedies which Borrower may have or be able to assert
by reason of the laws of the State of California pertaining to the rights and remedies of sureties, (iv) the right to assert any statute of limitations as a bar to the enforcement of the lien of this Instrument or to any action brought to
enforce the Note or any other obligation secured by this Instrument, and (v) any rights, legal or equitable, to require marshalling of assets or to require upon foreclosure sales in a particular order, including any rights under California
Civil Code Sections 2899 and 3433. Lender shall have the right to determine the order in which any or all of the Mortgaged Property shall be subjected to the remedies provided by this Instrument. Lender shall have the right to determine the order in
which any or all portions of the Indebtedness are satisfied from the proceeds realized upon the exercise of the remedies provided by this Instrument. By signing this Instrument, Borrower does not waive its rights under Section 2924c of the
California Civil Code. 
 51. ADDITIONAL PROVISIONS CONCERNING ENVIRONMENTAL HAZARDS. In addition to the
provisions of Section 18: 
 (a) Except for matters covered by an O&M Program or matters described in
Section 18(b), Borrower shall not cause or permit any lien (whether or not such lien has priority over the lien created by this Instrument) upon the Mortgaged Property imposed pursuant to any Hazardous Materials Laws. Any such lien shall be
considered a Prohibited Activity or Condition. 
 (b) Borrower represents and warrants to Lender that, except as previously
disclosed by Borrower to Lender in writing: 
  

	 	(1)	at the time of acquiring the Mortgaged Property, Borrower undertook all appropriate inquiry into the previous ownership and uses of the Mortgaged Property consistent
with good commercial or customary practice and no evidence or indication came to light which would suggest that the Mortgaged Property has been or is now being used for any Prohibited Activities or Conditions; and 

 

	 	(2)	the Mortgaged Property has not been designated as “hazardous waste property” or “border zone property” pursuant to Section 25220, et
seq., of the California Health and Safety Code. 

 The representations and warranties in this
Section 51(b) shall be continuing representations and warranties that shall be deemed to be made by Borrower throughout the term of the loan evidenced by the Note, until the Indebtedness has been paid in full. 

 

  

PAGE 40 

 (c) Without limiting any of the remedies provided in this Instrument, Borrower acknowledges
and agrees that each of the provisions in Section 18 and in this Section 51 is an environmental provision (as defined in Section 736(f)(2) of the California Code of Civil Procedure) made by Borrower relating to the real property
security (the “Environmental Provisions”), and that Borrower’s failure to comply with any of the Environmental Provisions will be a breach of contract that will entitle Lender to pursue the remedies provided by Section 736
of the California Code of Civil Procedure (“Section 736”) for the recovery of damages and for the enforcement of the Environmental Provisions. Pursuant to Section 736, Lender’s action for recovery of damages or enforcement
of the Environmental Provisions shall not constitute an action within the meaning of Section 726(a) of the California Code of Civil Procedure or constitute a money judgment for a deficiency or a deficiency judgment within the meaning of
Sections 580a, 580b, 580d, or 726(b) of the California Code of Civil Procedure. 
 (d) Any reference in this Instrument or in
any other Loan Document to Section 18 of this Instrument shall be construed as referring together to Section 18 and this Section 51. 

52. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT
TO ANY ISSUE ARISING OUT OF THIS INSTRUMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT
EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL. 

ATTACHED EXHIBITS. The following Exhibits are attached to this Instrument: 

 

					
	x	  	Exhibit A	  	Description of the Land (required).
			
	x	  	Exhibit B	  	Modifications to Instrument

 IN WITNESS
WHEREOF, Borrower has signed and delivered this Instrument or has caused this Instrument to be signed and delivered by its duly authorized representative. 
  

  

PAGE 41 

							
	 LOMA PALISADES, a California general partnership

		
	By:	 	San Diego Loma Palisades, L.P., a California limited partnership, its general partner
			
		 	By:	 	 American Assets, Inc., a California corporation, its general partner

				
		 		 	By:	 	 /s/ Ernest Rady

		 		 		 	Ernest Rady
		 		 		 	President
				
		 		 	By:	 	 /s/ Robert F. Barton

		 		 		 	Robert F. Barton
		 		 		 	Chief Financial Officer
		
	By:	 	Foster Palisades, LLC, a California limited liability company, its general partner
			
		 	By:	 	Foster Investment Corporation, a California corporation, its sole member
				
		 		 	 By:
	 	 /s/ John C. Harris

		 		 		 	John C. Harris
		 		 		 	Chief Financial Officer

  

  

PAGE 42 

 EXHIBIT A 

[DESCRIPTION OF THE LAND] 

EXHIBIT A 
 LEGAL
DESCRIPTION 
 Real property in the City of San Diego, County of San Diego, State of California, described as follows: 

PARCEL A: 
 LOT 1 OF LOMA PALISADES UNIT NO, 1,
IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 3724, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, OCTOBER 1, 1957. 

EXCEPTING THEREFROM, THAT PORTION OF BOB STREET, BARNARD STREET AND WORDEN STREET, DEDICATED TO PUBLIC USE ON MAP NO. 3724, BEING DEPICTED AS
“RESERVED FOR FUTURE STREETS”, AND ACCEPTED AND DEDICATED TO PUBLIC USE BY RESOLUTION NO. 162562; A CERTIFIED COPY OF SAID RESOLUTION WAS RECORDED OCTOBER 10, 1960 AS INSTRUMENT NO. 201986 OF OFFICIAL RECORDS. 

PARCEL B: 
 LOTS 2 AND 3 OF LOMA PALISADES UNIT
NO. 2, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 3768 FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, DECEMBER 18, 1957. 

EXCEPTING THEREFROM, THAT PORTION OF BOB STREET, WORDEN STREET, POLACK STREET, ADRIAN STREET AND ALLEY, DEDICATED TO PUBLIC USE ON MAP NO. 3768, BEING
DEPICTED AS “RESERVED FOR FUTURE STREET” AND “RESERVED FOR FUTURE ALLEY”, AND ACCEPTED AND DEDICATED TO PUBLIC USE BY RESOLUTION NO, 162563; A CERTIFIED COPY OF SAID RESOLUTION WAS RECORDED OCTOBER 10, 1960 AS INSTRUMENT NO.
201987 OF OFFICIAL RECORDS. 
 PARCEL C: 

LOTS 4 AND 5 OF LOMA PALISADES UNIT NO. 3, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 3798 FILED IN
THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, FEBRUARY 5, 1958. 
 EXCEPTING THEREFROM, THAT PORTION OF BOB STREET AND ADRIAN STREET,
DEDICATED TO PUBLIC USE ON MAP NO. 3798, BEING DEPICTED AS “RESERVED FOR FUTURE STREETS”, AND ACCEPTED AND DEDICATED TO PUBLIC USE BY RESOLUTION NO. 162564; A CERTIFIED COPY OF SAID RESOLUTION WAS RECORDED OCTOBER 10, 1960 AS INSTRUMENT
NO. 201988 OF OFFICIAL RECORDS. 
  

  

PAGE A-1 

 PARCEL D: 

LOTS 8 AND 9 OF LOMA PALISADES UNIT NO. 4, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 3837 FILED IN
THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY ON MARCH 14, 1958. 
 EXCEPTING THEREFROM, THAT PORTION OF WORDEN STREET, LELAND STREET,
NIPOMA PLACE AND ALLEY, DEDICATED TO PUBLIC USE ON MAP NO. 3837, BEING DEPICTED AS “RESERVED FOR FUTURE STREETS” AND “RESERVED FOR FUTURE ALLEY”, AND ACCEPTED AND DEDICATED TO PUBLIC USE BY RESOLUTION NO. 162565; A CERTIFIED COPY
OF SAID RESOLUTION WAS RECORDED OCTOBER 10, 1960 AS INSTRUMENT NO. 201989 OF OFFICIAL RECORDS. 
 PARCEL E: 

LOT 10 OF LOMA PALISADES UNIT NO. 5, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 3851 FILED MARCH 31,
1958 IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY. 
 EXCEPTING THEREFROM, THAT PORTION OF WORDEN STREET, DEDICATED TO PUBLIC USE ON
MAP NO. 3851, BEING DEPICTED AS “RESERVED FOR FUTURE STREETS”, AND ACCEPTED AND DEDICATED TO PUBLIC USE BY RESOLUTION NO. 162566; A CERTIFIED COPY OF SAID RESOLUTION WAS RECORDED OCTOBER 10, 1960 AS INSTRUMENT NO. 201990 OF OFFICIAL
RECORDS. 
 ALSO EXCEPTING THAT PORTION DESCRIBED AS FOLLOWS: 

BEGINNING AT THE MOST NORTHERLY CORNER OF LOT 37 OF PACIFIC WESTERN HILLS, ACCORDING TO MAP THEREOF NO. 5058 FILED IN THE OFFICE OF THE COUNTY RECORDER
OF SAN DIEGO COUNTY; THENCE ALONG THE NORTHEASTERLY LINE THEREOF SOUTH 53 DEG. 54’17” EAST (RECORD SOUTH 53 DEG. 56’ EAST) 1.00 FOOT TO AN ANGLE POINT IN THE BOUNDARY OF SAID LOT 10; THENCE ALONG SAID BOUNDARY NORTH 36 DEG.
10’13” EAST (RECORD NORTH 36 DEG. 08’30” EAST) 166.18 FEET TO AN ANGLE POINT THEREIN; THENCE ALONG THE PROLONGATION OF SAID BOUNDARY NORTH 53 DEG. 55’17” WEST (RECORD NORTH 53 DEG. 57’ WEST) 35.80 FEET; THENCE
NORTH 77 DEG. 10’13” WEST 37.12 FEET TO THE BOUNDARY OF WORDEN STREET, AS RESERVED ON SAID MAP NO. 3851 AND DEDICATED ON RESOLUTION NO, 162566, RECORDED OCTOBER 10, 1960 AS INSTRUMENT NO. 201990 OF OFFICIAL RECORDS; THENCE ALONG SAID
BOUNDARY SOUTH 12 DEG. 49’47” EAST (RECORD SOUTH 12 DEG. 51’30” EAST) 14.33 FEET TO A TANGENT 140 FOOT RADIUS CURVE, CONCAVE WESTERLY; THENCE SOUTHERLY ALONG SAID CURVE, 119.55 FEET THROUGH AN ANGLE OF 48 DEG.
55’30”, AND TANGENT TO SAID CURVE, SOUTH 36 DEG. 05’43” WEST (RECORD SOUTH 36 DEG. 04’ WEST) 22.95 FEET TO THE POINT OF BEGINNING. 

PARCEL F: 
 PARCEL 3 OF RECORD OF SURVEY MAP NO.
5874, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, JUNE 15, 1961 AS INSTRUMENT NO. 103076 OF OFFICIAL RECORDS. 

 

  

PAGE A-2 

 INCLUDING THAT PORTION OF PARCEL 2 OF SAID RECORD OF SURVEY MAP NO. 5874, DESCRIBED AS FOLLOWS: 

BEGINNING AT THE SOUTHEASTERLY CORNER OF SAID PARCEL 2, SAID POINT ALSO BEING A COMMON CORNER WITH PARCEL 3 OF SAID MAP; THENCE ALONG THE COMMON LINE OF
SAID PARCEL 2 AND PARCEL 3 SOUTH 76 DEG. 15’09” WEST, A DISTANCE OF 53.38 FEET; THENCE CONTINUING ALONG SAID LINE THENCE SOUTH 36 DEG. 09’50” WEST, A DISTANCE OF 353.25 FEET TO THE TRUE POINT OF BEGINNING; THENCE SOUTH 53 DEG.
50’10” EAST, A DISTANCE OF 61.50 FEET; THENCE SOUTH 36 DEG. 09’50” WEST, A DISTANCE OF 97.00 FEET; THENCE NORTH 53 DEG. 50’10” WEST, A DISTANCE OF 61.50 FEET; THENCE NORTH 36 DEG. 09’50” EAST, A DISTANCE
OF 97.00 FEET TO THE TRUE POINT OF BEGINNING. 
 NOTE: A CERTIFICATE OF COMPLIANCE AFFECTING THIS PARCEL WAS ISSUED AND RECORDED BY THE CITY OF
SAN DIEGO ON NOVEMBER 17, 2000 AS INSTRUMENT NO. 2000-0628734 OF OFFICIAL RECORDS. 
  

  

PAGE A-3 

 EXHIBIT B 

MODIFICATIONS TO INSTRUMENT 

The following modifications are made to the text of the Instrument that precedes this Exhibit: 

 

	1.	Section 3(b) is modified by: 

inserting the words “and prior to the date such Event of Default is cured to Lender’s satisfaction” after the words
“Event of Default” in the first sentence 
 and 

inserting the words “and prior to the date such Event of Default is cured to Lender’s satisfaction” after the words
“Event of Default” in the fourth sentence. 
  

	2.	Section 3(c) is modified by inserting “(except for the collection of normal security deposits and first and last month’s rents)” before the period
at the end of the last sentence. 

  

	3.	Section 4(b) is modified by: 

inserting “after the occurrence of an Event of Default” after “Section 4” in the first sentence; 

and 
 inserting
“and only for so long as such Event of Default is continuing” after “Event of Default” in the second sentence. 
  

	4.	Section 4(d) is modified by inserting the words “and prior to the date such Event of Default is cured to Lender’s satisfaction” after the words
“after the occurrence of an Event of Default” in the first sentence. 

  

	5.	Section 4(g) is modified by inserting “(except for the collection of normal security deposits and first and last month’s rents)” before the period
at the end of the Section. 

  

	6.	Section 7(f) is modified by deleting the last sentence of the Section and replacing it with the following: 

“Lender may revoke its deferral or waiver and require Borrower to deposit with Lender any or all of the Imposition Deposits listed in
Section 7(a), regardless of whether any such item is marked “Deferred” in such section, upon Notice to Borrower, at any time during the existence of an Event of Default.” 

 

	7.	Section 18(o) is modified by inserting the following at the end of the Section: 

“The foregoing obligation of Borrower to indemnify the Indemnitees shall specifically not include any costs relating to Hazardous
Materials which are initially placed on, in or under the Mortgaged Property by Lender after foreclosure or other taking of title to the Mortgaged Property by Lender or its successors or assigns.” 

 

  

PAGE B-1 

	8.	Section 19(g)(i) is modified by replacing “$10,000” with “$100,000”. 

 

	9.	Section 19(g)(ii) is modified by replacing “$10,000” with “$100,000”, and by replacing “$50,000” with “$250,000”.

  

	10.	Section 19(h)(iv) is modified by replacing “one year” with “six months”. 

 

	11.	Section 20 of the Security Instrument is modified by adding the following as subsection (c); 

 

	 	“(c)	Lender shall not exercise its option to apply Condemnation proceeds to the payment of the Indebtedness if all of the following conditions are met: (1) no Event of
Default (or any event which, with the giving of notice or the passage of time, or both, would constitute an Event of Default) has occurred and is continuing; (2) Lender determines, in its discretion, that the Condemnation does not materially
adversely affect the use of the Mortgaged Property; (3) Lender determines, in its discretion, that there will be sufficient funds to complete the repair or restoration of the Mortgaged Property; (4) Lender determines, in its discretion,
that the rental income from the Mortgaged Property after completion of the repair and restoration will be sufficient to meet all operating costs and other expenses, Imposition Deposits, deposits to reserves and loan repayment obligations relating to
the Mortgaged Property; and (5) Lender determines, in its discretion, that the repair and restoration of the Mortgaged Property will be completed and the restored units are leased and occupied before the earlier of (A) one year before the
maturity date of the Note or (B) six months after the date of the taking. If Lender applies awards or proceeds to the restoration and repair of the Mortgaged Property, any excess sums remaining after completion of the restoration and repair, at
Lender’s discretion, may be applied to the Indebtedness.” 

  

	12.	Section 21(c)(vii)is revised to read as follows: 

  

	 	“(vii)	A Transfer of direct or indirect interests in Borrower or a Controlling Entity so long as following any such Transfer either Ernest Rady or members of his immediate
family, or Pauline Foster or members of her immediate family, directly or indirectly retain the managing interest in Borrower. Immediate family members will be deemed to include a spouse, parent, child or grandchild and trusts for any such
persons.” 

  

	13.	Section 21(f)(ii) is revised by inserting “uncured” before the words “Event of Default”. 

 

	14.	Section 21(f)(viii)(A) is revised to replace “$3,000.00” with “$1,500.00, the entire portion of which, as between Lender and Loan Servicer, shall be
retained by Lender”. 

  

	15.	Section 22(a) is revised to insert the following before the semicolon “and, unless the failure is with respect to the payment of a monthly installment of
interest due under the Note, such failure continues for a period of five (5) days following Notice of the failure from Lender to Borrower”. 

  

	16.	Clause (c) of Section 33 is revised to read as follows “(c) shall not maintain its assets in a way difficult to segregate from the assets owned by any
other person or entity, or in such a way as to make it difficult to identify assets as owned by Borrower”. 

  

  

PAGE B-2

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