Document:

Amended and Restated Operating Agreement of Evergreen at Coursey Place

 EXHIBIT 10.2 
 AMENDED AND RESTATED OPERATING AGREEMENT 
 OF 

EVERGREEN AT COURSEY PLACE, SOLE MEMBER, LLC 
 THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “FEDERAL ACT”), IN RELIANCE UPON ONE (1) OR MORE
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE FEDERAL ACT. IN ADDITION, THE ISSUANCE OF THIS SECURITY HAS NOT BEEN QUALIFIED UNDER THE GEORGIA SECURITIES ACT OR ANY OTHER STATE SECURITIES LAWS (COLLECTIVELY, THE “STATE
ACTS”), IN RELIANCE UPON ONE (1) OR MORE EXEMPTIONS FROM THE REGISTRATION PROVISIONS OF THE STATE ACTS. IT IS UNLAWFUL TO CONSUMMATE A SALE OR OTHER TRANSFER OF THIS SECURITY OR ANY INTEREST THEREIN TO, OR TO RECEIVE ANY CONSIDERATION
THEREFOR FROM, ANY PERSON OR ENTITY WITHOUT THE OPINION OF COUNSEL FOR THE COMPANY THAT THE PROPOSED SALE OR OTHER TRANSFER OF THIS SECURITY DOES NOT AFFECT THE AVAILABILITY TO THE COMPANY OF SUCH EXEMPTIONS FROM REGISTRATION AND QUALIFICATION, AND
THAT SUCH PROPOSED SALE OR OTHER TRANSFER IS IN COMPLIANCE WITH ALL APPLICABLE STATE AND FEDERAL SECURITIES LAWS. THE TRANSFER OF THIS SECURITY IS FURTHER RESTRICTED UNDER THE TERMS OF THE OPERATING AGREEMENT GOVERNING THE COMPANY, A COPY OF WHICH
IS ON FILE WITH THE OPERATING MEMBER OF THE COMPANY. 

 AMENDED AND RESTATED OPERATING AGREEMENT 

OF 

EVERGREEN AT COURSEY PLACE, SOLE MEMBER, LLC 
 TABLE OF CONTENTS 
  

							
	 	  	 	  	Page	 
		
	 ARTICLE 1 FORMATION
	  	 	1	  
			
	 1.01
	  	 Formation
	  	 	1	  
	 1.02
	  	 Names and Addresses
	  	 	1	  
	 1.03
	  	 Nature of Business
	  	 	2	  
	 1.04
	  	 Term of the Company
	  	 	2	  
		
	 ARTICLE 2 MANAGEMENT OF THE COMPANY
	  	 	2	  
			
	 2.01
	  	 Management Committee
	  	 	2	  
	 2.02
	  	 Authority of the Management Committee
	  	 	5	  
	 2.03
	  	 Operating Member
	  	 	9	  
	 2.04
	  	 Annual Business Plan
	  	 	10	  
	 2.05
	  	 Operating Budget
	  	 	10	  
	 2.06
	  	 Removal of the Operating Member
	  	 	11	  
	 2.07
	  	 Liability and Indemnity
	  	 	13	  
	 2.08
	  	 Limited Liability
	  	 	14	  
	 2.09
	  	 Other Activities
	  	 	14	  
	 2.10
	  	 Brokers Indemnity
	  	 	14	  
	 2.11
	  	 Reimbursement; Compensation
	  	 	14	  
	 2.12
	  	 Property Management
	  	 	15	  
		
	 ARTICLE 3 MEMBERS’ CAPITAL CONTRIBUTIONS
	  	 	15	  
			
	 3.01
	  	 Initial Contributions of the Members
	  	 	15	  
	 3.02
	  	 Additional Contributions
	  	 	16	  
	 3.03
	  	 Remedy For Failure to Contribute Capital
	  	 	16	  
	 3.04
	  	 Debt Financing
	  	 	20	  
	 3.05
	  	 Loans from Members
	  	 	20	  
	 3.06
	  	 Capital Contributions in General
	  	 	20	  
		
	 ARTICLE 4 ALLOCATION OF PROFITS AND LOSSES
	  	 	21	  
			
	 4.01
	  	 Allocation of Net Profits and Net Losses
	  	 	21	  
	 4.02
	  	 Regulatory Allocations
	  	 	23	  
	 4.03
	  	 Special Allocation
	  	 	24	  
	 4.04
	  	 Other Allocation Rules
	  	 	24	  
		
	 ARTICLE 5 DISTRIBUTIONS
	  	 	25	  
			
	 5.01
	  	 Distribution of Ordinary Cash Flow
	  	 	25	  
	 5.02
	  	 Distribution of Extraordinary Cash Flow
	  	 	25	  

							
	 5.03
	  	 Limitations on Distributions
	  	 	26	  
	 5.04
	  	 In-Kind Distribution
	  	 	26	  
	 5.05
	  	 Right to Withhold
	  	 	26	  
		
	 ARTICLE 6 RESTRICTIONS ON TRANSFERS OF COMPANY INTERESTS
	  	 	26	  
			
	 6.01
	  	 Limitations on Transfer
	  	 	26	  
	 6.02
	  	 Permitted Transfers
	  	 	27	  
	 6.03
	  	 Admission of Substitute Members
	  	 	27	  
	 6.04
	  	 Additional Restrictions on Transfer
	  	 	28	  
	 6.05
	  	 Election; Allocations Between Transferor and Transferee
	  	 	28	  
	 6.06
	  	 Partition
	  	 	28	  
	 6.07
	  	 Waiver of Withdrawal
	  	 	29	  
		
	 ARTICLE 7 DEFAULT BUY-SELL AGREEMENT
	  	 	29	  
			
	 7.01
	  	 Default Buy-Sell Events
	  	 	29	  
	 7.02
	  	 Rights Arising From a Default Buy-Sell Event
	  	 	31	  
	 7.03
	  	 Determination of Purchase Price
	  	 	31	  
	 7.04
	  	 Member’s Option
	  	 	33	  
	 7.05
	  	 Closing of Purchase and Sale
	  	 	34	  
	 7.06
	  	 Payment of Purchase Price
	  	 	34	  
	 7.07
	  	 Release and Indemnity
	  	 	34	  
	 7.08
	  	 Repayment of Member Loans
	  	 	35	  
	 7.09
	  	 Voting Rights Following Default Buy-Sell Event
	  	 	35	  
	 7.10
	  	 Withdrawal of the Selling Member
	  	 	35	  
		
	 ARTICLE 8 DISSOLUTION AND WINDING UP OF THE COMPANY
	  	 	36	  
			
	 8.01
	  	 Events Causing Dissolution of the Company
	  	 	36	  
	 8.02
	  	 Winding Up of the Company
	  	 	36	  
	 8.03
	  	 No Negative Capital Account Restoration
	  	 	36	  
		
	 ARTICLE 9 BOOKS AND RECORDS; ACCOUNTING; TAX ELECTIONS
	  	 	37	  
			
	 9.01
	  	 Company Books
	  	 	37	  
	 9.02
	  	 Delivery of Records; Inspection
	  	 	37	  
	 9.03
	  	 Reports and Tax Information
	  	 	38	  
	 9.04
	  	 Company Tax Elections; Tax Controversies
	  	 	39	  
	 9.05
	  	 Accounting and Fiscal Year
	  	 	39	  
	 9.06
	  	 Confidentiality of Information
	  	 	40	  
		
	 ARTICLE 10 MISCELLANEOUS
	  	 	40	  
			
	 10.01
	  	 Subscription Agreement
	  	 	40	  
	 10.02
	  	 Investment Interest; Nature of Investment
	  	 	40	  
	 10.03
	  	 Appointment of Attorney-in-Fact
	  	 	41	  
	 10.04
	  	 Waiver of Conflict of Interest
	  	 	41	  
	 10.05
	  	 Amendment
	  	 	42	  
	 10.06
	  	 No Assignments; Binding Effect
	  	 	42	  
	 10.07
	  	 Further Assurances
	  	 	42	  

							
	 10.08
	  	 Notices
	  	 	42	  
	 10.09
	  	 Waivers
	  	 	44	  
	 10.10
	  	 Preservation of Intent
	  	 	44	  
	 10.11
	  	 Entire Agreement
	  	 	44	  
	 10.12
	  	 Certain Rules of Construction
	  	 	44	  
	 10.13
	  	 Counterparts
	  	 	45	  
	 10.14
	  	 Governing Law
	  	 	45	  
	 10.15
	  	 Assurances
	  	 	45	  
	 10.16
	  	 Time is of the Essence
	  	 	45	  
	 10.17
	  	 Other Matters
	  	 	45	  
	 10.18
	  	 No Dissenters’ Rights
	  	 	45	  
	 10.19
	  	 Ownership of ERES
	  	 	45	  
		
	 ARTICLE 11 DEFINITIONS
	  	 	46	  
			
	 11.01
	  	 Additional Contribution
	  	 	46	  
	 11.02
	  	 Additional Member
	  	 	46	  
	 11.03
	  	 Adjusted Capital Account
	  	 	46	  
	 11.04
	  	 Affiliate
	  	 	46	  
	 11.05
	  	 Agreement
	  	 	47	  
	 11.06
	  	 Annual Business Plan
	  	 	47	  
	 11.07
	  	 Appraised Value
	  	 	47	  
	 11.08
	  	 Business Day
	  	 	47	  
	 11.09
	  	 Buyout Purchase Price
	  	 	47	  
	 11.10
	  	 Buy-Sell Notice
	  	 	47	  
	 11.11
	  	 Capital Account
	  	 	47	  
	 11.12
	  	 Capital Contribution
	  	 	48	  
	 11.13
	  	 Capital Event
	  	 	48	  
	 11.14
	  	 Cash Flow
	  	 	48	  
	 11.15
	  	 Cash Flow Bonus Forfeiture Event
	  	 	48	  
	 11.16
	  	 Class A Capital Contribution
	  	 	48	  
	 11.17
	  	 Class B Capital Contribution
	  	 	48	  
	 11.18
	  	 Class A Distribution Percentage
	  	 	49	  
	 11.19
	  	 Code
	  	 	49	  
	 11.20
	  	 Company
	  	 	49	  
	 11.21
	  	 Company Minimum Gain
	  	 	49	  
	 11.22
	  	 Contributing Member
	  	 	49	  
	 11.23
	  	 Contribution Date
	  	 	49	  
	 11.24
	  	 Contribution Notice
	  	 	49	  
	 11.25
	  	 Contribution Percentage
	  	 	50	  
	 11.26
	  	 Default Buy-Sell Event
	  	 	50	  
	 11.27
	  	 Default Notice
	  	 	50	  
	 11.28
	  	 Defaulting Member
	  	 	50	  
	 11.29
	  	 Default Purchase Price
	  	 	50	  
	 11.30
	  	 Delinquent Contribution
	  	 	50	  
	 11.31
	  	 Dilution Percentage
	  	 	50	  

							
	 11.32
	  	 Effective Date
	  	 	50	  
	 11.33
	  	 Emergency Situations
	  	 	50	  
	 11.34
	  	 ERES
	  	 	50	  
	 11.35
	  	 Extraordinary Cash Flow
	  	 	51	  
	 11.36
	  	 Fiscal Year
	  	 	51	  
	 11.37
	  	 Georgia Act
	  	 	51	  
	 11.38
	  	 Gross Asset Value
	  	 	51	  
	 11.39
	  	 Immediate Family
	  	 	52	  
	 11.40
	  	 Indemnified Party
	  	 	52	  
	 11.41
	  	 Interest
	  	 	53	  
	 11.42
	  	 IRR
	  	 	53	  
	 11.43
	  	 Liquidation
	  	 	53	  
	 11.44
	  	 Majority of Representatives
	  	 	53	  
	 11.45
	  	 Management Committee
	  	 	53	  
	 11.46
	  	 Material Breach
	  	 	53	  
	 11.47
	  	 Member Loan
	  	 	54	  
	 11.48
	  	 Member Minimum Gain
	  	 	54	  
	 11.49
	  	 Member Nonrecourse Debt
	  	 	54	  
	 11.50
	  	 Member Nonrecourse Deductions
	  	 	54	  
	 11.51
	  	 Member(s)
	  	 	54	  
	 11.52
	  	 Mortgage Loan
	  	 	54	  
	 11.53
	  	 Net Profits and Net Losses
	  	 	54	  
	 11.54
	  	 Non-Contributing Member
	  	 	55	  
	 11.55
	  	 Nonrecourse Deductions
	  	 	55	  
	 11.56
	  	 Operating Account
	  	 	55	  
	 11.57
	  	 Operating Budget
	  	 	56	  
	 11.58
	  	 Operating Member
	  	 	56	  
	 11.59
	  	 Ordinary Cash Flow
	  	 	56	  
	 11.60
	  	 Paladin
	  	 	56	  
	 11.61
	  	 Paladin REIT
	  	 	56	  
	 11.62
	  	 Percentage Interest
	  	 	56	  
	 11.63
	  	 Permitted Transferees
	  	 	57	  
	 11.64
	  	 Person
	  	 	57	  
	 11.65
	  	 Preferred Return
	  	 	57	  
	 11.66
	  	 Price Determination Notice
	  	 	57	  
	 11.67
	  	 Project
	  	 	57	  
	 11.68
	  	 Project Shortfall
	  	 	57	  
	 11.69
	  	 Property Management Agreement
	  	 	57	  
	 11.70
	  	 Property Manager
	  	 	58	  
	 11.71
	  	 Purchasing Member
	  	 	58	  
	 11.72
	  	 Qualified Appraiser
	  	 	58	  
	 11.73
	  	 Regulatory Allocations
	  	 	58	  
	 11.74
	  	 REIT
	  	 	58	  
	 11.75
	  	 Removal Event
	  	 	58	  
	 11.76
	  	 Removal Notice
	  	 	58	  

							
	 11.77
	  	 Securities Act
	  	 	58	  
	 11.78
	  	 Seller Loan
	  	 	58	  
	 11.79
	  	 Selling Member
	  	 	58	  
	 11.80
	  	 Tax Matters Partner
	  	 	59	  
	 11.81
	  	 Third-Party Purchase Price
	  	 	59	  
	 11.82
	  	 Transfer
	  	 	59	  
	 11.83
	  	 Treasury Regulation
	  	 	59	  
	 11.84
	  	 Unanimous Written Consent
	  	 	59	  
	 11.85
	  	 Unpaid Preferred Return
	  	 	59	  
	 11.86
	  	 Unpaid Yield Maintenance Amount
	  	 	59	  
	 11.87
	  	 Unrecovered Class A Contribution Account
	  	 	59	  
	 11.88
	  	 Unrecovered Class B Contribution Account
	  	 	60	  
	 11.89
	  	 Unrecovered Contribution Account
	  	 	60	  

 Exhibit List 

 

			
	Exhibit “A”	  	Initial Capital Contributions and Capital Account Balances
	Exhibit “B”	  	Property Description for Project
	Exhibit “C”	  	Annual Operating Budget for 2011
	Exhibit “D”	  	Information Regarding ERES
	Exhibit “E”	  	xIRR Calculation

 AMENDED AND RESTATED OPERATING AGREEMENT 

OF 

EVERGREEN AT COURSEY PLACE, SOLE MEMBER, LLC 
 THIS AMENDED AND RESTATED OPERATING AGREEMENT OF EVERGREEN AT COURSEY PLACE, SOLE MEMBER, LLC (the “Company”), is entered into effective as of July 28, 2011, by and between
PRIP COURSEY, LLC, a Delaware limited liability company (“Paladin”) and ERES COURSEY LLC, a Louisiana limited liability company (“ERES”). The capitalized terms used herein and not otherwise defined
shall have the respective meanings assigned to such terms in Article 11. 
 ARTICLE 1 

FORMATION 
  

	 	1.01	Formation 

 The
Company was formed as a Georgia limited liability company pursuant to the provisions of the Georgia Act. The Company shall be operated in accordance with, and the Members shall be governed by, the terms and conditions of this Agreement. If any terms
of this Agreement are inconsistent with any terms of the Act that are not mandatory, then the terms of this Agreement shall control. In connection with the formation of the Company, a duly authorized representative of the Company has caused to be
filed with the office of the Georgia Secretary of State the duly executed Articles of Organization for the Company in accordance with the Georgia Act. A duly authorized representative also shall execute, acknowledge and verify such other documents
or instruments as may be necessary or appropriate in order to continue the existence of the Company in accordance with the provisions of the Georgia Act or to register, qualify to do business or operate its business as a foreign limited liability
company in any other state in which the Company conducts business. In connection with the formation of the Company, there was executed and delivered an Operating Agreement, dated June 1, 2008, which the parties hereto desire to amend and
restate in its entirety pursuant to this Agreement. From and after the date hereof, the Company shall be operated in accordance with, and the Members shall be governed by, the terms and conditions of this Agreement 

 

	 	1.02	Names and Addresses 

The name of the Company is Evergreen at Coursey Place, Sole Member, LLC. The registered office of the Company in the State of Georgia is
at c/o Smith, Gambrell & Russell, LLP, Suite 3100, Promenade II, 1230 Peachtree Street, N.E., Atlanta, Georgia 30309 and the name of the registered agent for the Company at such 

 
registered office is Malcom D. Young, Jr., Esq. For so long as ERES is the Operating Member, the principal office for the Company shall be maintained at 519 Harrison Avenue, Suite 512, Boston, MA
02118, or such other location at which ERES maintains an office and thereafter at such other place as the Management Committee may designate from time to time. Copies of any material notices or other matters received by the Company shall be promptly
delivered by the Operating Member to the Members. 
  

	 	1.03	Nature of Business 

The purpose for which the Company is to exist is (i) to acquire, own, manage, operate, maintain, finance, hold for investment, and
sell that certain real property more particularly described on Exhibit B attached hereto, together with existing improvements consisting of an approximately 352 unit apartment complex and related amenities and improvements located thereto
located at 13675 Coursey Boulevard, Baton Rouge, Louisiana (the “Project”); (ii) to conduct such other activities with respect to, and otherwise realize and optimize the operating cash flow distributions and economic internal
rates of return from, the Project and any and all other related assets the Company may hereinafter acquire as are appropriate to carrying out the foregoing purposes; and (iii) to do all things incidental to or in furtherance of the above
enumerated purposes. 
  

	 	1.04	Term of the Company 

The term of the Company commenced on the date the Articles of Organization were filed with the Georgia Secretary of State and shall
continue until December 31, 2051, unless otherwise dissolved pursuant to Article 8 or unless extended by the unanimous agreement of the Members. The existence of the Company as a separate legal entity shall continue until the
cancellation of the Certificate of Formation of the Company in accordance with the provisions of the Georgia Act. 
 ARTICLE 2

 MANAGEMENT OF THE COMPANY 
  

	 	2.01	Management Committee 

 (a) Management by Management Committee. Except as otherwise provided in this Agreement, all aspects of the business and affairs of the Company shall be managed, and all decisions affecting the
business and affairs of the Company (including, without limitation, investment and Project related decisions) shall be made, by the Members acting through a management committee (the “Management Committee”) composed of five
(5) representatives in accordance with the provisions contained below. The Members, exclusively through the Management Committee, shall have the right, power and authority to take any and all actions consistent with the purpose of the Company
that is permitted hereunder and under applicable law. No Member shall have any right, power or authority to act (as agent or otherwise) for, or to bind, the Company in any manner (other than as expressly provided herein) except through the
Management Committee. 

  
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 (b) Representatives. Paladin shall be entitled to select three
(3) representatives of the Management Committee, and ERES shall be entitled to select two (2) representatives of the Management Committee. Paladin hereby designates James R. Worms, William K. Dunbar, and Whitney A. Greaves as its initial
representatives on the Management Committee, and ERES hereby designates Douglas Reim and Charles Thompson as its initial representatives of the Management Committee. Paladin may appoint a replacement representative at any time and from time to time
for any one or more of the representatives it designated by giving written notice of such replacement to ERES, which replacement shall be effective upon the giving of such notice. Any change in the designation of ERES’ representatives shall be
subject to Paladin’s approval, which approval shall not be unreasonably withheld. The Members acting through the Management Committee shall have the authority to make all decisions affecting the business and affairs of the Company as fully and
completely as if the Members were themselves making such decisions. Each Member recognizes and agrees, however, that the representatives on the Management Committee are acting exclusively on behalf of the Member they represent, respectively, and
that such representatives shall not, therefore, have any personal liability by reason of serving as a representative of such Member. 
 (c) Decisions. Except as otherwise set forth in this Agreement, any actions required or permitted to be taken by the Management Committee shall be so taken only either (i) with the approval of
a Majority of Representatives at a meeting of the Management Committee or (ii) by Unanimous Written Consent without a meeting pursuant to Section 2.01(i). The Management Committee may, but shall not be required to, memorialize its
actions in the form of minutes, which minutes, when signed by at least one representative on the Management Committee appointed by each of Paladin and ERES, shall be conclusive evidence of such action and shall be incorporated into the books and
records of the Company. Notwithstanding anything contained herein to the contrary, each Member hereby agrees and covenants that it shall direct its representatives on the Management Committee to execute any minutes relating to actions that were
taken in accordance with this Section 2.01(c) regardless of whether such Member voted in favor of the action. 
 (d)
Meetings. Regular meetings of the Management Committee shall be held at the principal office of the Company (or at such other place(s) as are designated by the Management Committee) at such times as shall be designated from time to time by
the Management Committee. 
 (e) Special Meetings. Special meetings of the Management Committee may be called by or at
the request of any representative and shall be held at the principal office of the Company (or at such other place(s) as may be designated by the Management Committee). The representative calling any special meeting of the Management Committee may
designate any reasonable time for the holding of the special meeting. 
 (f) Telephonic Participation. Representatives of
the Management Committee may participate in any regularly scheduled or special meetings of the Management Committee telephonically or through other similar communications 

  
 -3-

 
equipment, as long as all of the representatives participating in the meeting can hear one another. Participation in a meeting pursuant to the preceding sentence shall constitute presence in
person at such meeting for all purposes of this Agreement. 
 (g) Notice and Attendance. Notice of any meeting of, or of
any action taken without a meeting pursuant to Section 2.01(i) by, the Management Committee shall be given as far in advance of the meeting as is reasonably practicable. Representatives, absent exigent circumstances, shall use their best
efforts to give any such notice at least forty-eight (48) hours prior to such meeting, unless otherwise agreed by the representatives, and to attend all meetings of the Management Committee. 

(h) Quorum. A quorum shall be required to conduct any business at any meeting of the Management Committee, and shall be deemed
present at any such meeting so long as at least one representative of each Member is in attendance (whether in person or otherwise); provided, however, that if written notice of any such meeting has been given at least five (5) days prior to
such meeting, then a quorum shall be deemed present at any such meeting so long as a Majority of Representatives of the Management Committee are present at such meeting. 
 (i) Actions Without Meetings. Any action required or permitted to be taken at a meeting of the Management Committee may be taken without a meeting with Unanimous Written Consent, which consent
shall set forth the actions to be so taken. Any such Unanimous Written Consent shall have the same effect as an act of a Majority of Representatives at a properly called and constituted meeting of the Management Committee. Copies of any such written
consent shall be delivered promptly to all representatives. 
 (j) Execution of Documents. Except as provided in
Section 2.03 below, all contracts, agreements and other documents or instruments affecting or relating to the business and affairs of the Company may be executed on the Company’s behalf only by the Members, or such other person(s) as may
be designated by the Management Committee and without execution by any other Member. 
 (k) Unauthorized Actions. None of
the Members or officers of the Company, without the prior consent of the Management Committee, shall take any action on behalf of or in the name of the Company, or enter into any commitment or obligation binding upon the Company, except for
(i) actions expressly authorized by this Agreement, (ii) actions by any Member (or officer) within the scope of such Member’s (or officer’s) authority expressly granted hereunder, and (iii) actions authorized by the
Management Committee in the manner set forth herein. Each Member hereby indemnifies, defends, protects and holds wholly harmless the other Members and each such other Member’s Affiliates, shareholders, officers, directors, constituent members,
Members, employees, agents, and representatives (including the representative(s) to the Management Committee appointed by such Member) from and against any and all losses, liability, damages, costs and expenses (including attorneys’ fees)
arising out of the breach of any of the foregoing provisions by such indemnifying Member, any representative of the Management Committee selected by such Member or such Member’s Affiliates,

  
 -4-

 
shareholders, officers, directors, constituent members, Members, employees, agents, or representatives. 
  

	 	2.02	Authority of the Management Committee 

 Without limiting the generality of Section 2.01, and except as otherwise provided by this Agreement, the consent of the Management Committee shall be required for the Company to undertake, and
the Management Committee shall have the right, power and authority to approve and cause the Company to undertake, all of the following actions (which actions shall be approved by a Majority of Representatives unless otherwise expressly provided
below): 
 (a) Issuance of Additional Interests. The issuance of any additional Interests in the Company
or the admission of any Additional Member into the Company; provided, however, that such a decision shall require the approval of all of the representatives present at a meeting of the Management Committee at which a quorum is present or
Unanimous Written Consent; 
 (b) Sale or Other Transfer. Except as provided in accordance with the
provisions of Article 7, the sale, lease, exchange, transfer or other disposition of all or any portion of the Project or any other assets of the Company; provided, however, that until the second anniversary of the date hereof such a
decision shall require the approval of all of the representatives present at a meeting of the Management Committee at which a quorum is present or Unanimous Written Consent; 

(c) Financing or Refinancing. Any and all financing or refinancing for the Company or the Project, the terms and
conditions thereof, or any modifications or amendments thereto; provided, however, that such a decision shall require the approval of all of the representatives present at a meeting of the Management Committee at which a quorum is present or
Unanimous Written Consent; 
 (d) Material Company Transactions. The entry into by the Company and the
taking by the Company of any and all actions permitted or required by the Company in connection with any acquisition, disposition, merger, “roll-up” consolidation, reorganization, recapitalization, restructuring, joint venture,
partnership, limited liability company, or any other material business transaction involving the Company or its assets, including, without limitation, any and all actions required or permitted in connection with any initial public offering of
ownership interests in the Company (or in connection with the merger or the transfer of the assets of the Company to any corporation or other entity that is the successor to the Company that intends to conduct an initial public offering) or any
transfer of all or any portion of the assets of the Company to a public or private market vehicle that intends to qualify as a real estate investment trust (“REIT”) under Section 856 et. seq. of the Code or to a
partnership, limited liability company or other entity whose general partner, managing member or other 

  
 -5-

 
owner, intends to qualify as a REIT or to a comparable public or private REIT vehicle; provided, however, that such a decision shall require the approval of all of the representatives
present at a meeting of the Management Committee at which a quorum is present or Unanimous Written Consent; 

(e) Plans and Budgets. The approval of each Annual Business Plan and Operating Budget for the Company prepared by
the Operating Member, and any modifications or amendments thereof; 
 (f) Expenditures Outside of Plans or
Budgets. The making of any expenditure by the Company that is not specifically included or contemplated under any applicable Annual Business Plan and Operating Budget, other than as permitted within any parameters agreed to by the Management
Committee and specified in any such plan or budget (e.g., application of line item cost savings, contingency line amounts, budget variances, etc.); 
 (g) Additional Capital Contributions. The making of any Additional Contributions to the capital of the Company pursuant to Section 3.02 required to fund unit upgrades at the Project per
the applicable Operating Budget or to fund Emergency Situations; provided, however, the making of any other Additional Contributions to the capital of the Company pursuant to Section 3.02 shall require the approval of all of the
representatives present at a meeting of the Management Committee at which a quorum is present or Unanimous Written Consent; 
 (h) Unrelated Businesses. The entry into by the Company of any business that is not related to the purpose of the Company set forth in Section 1.03; provided, however, that such
a decision shall require the approval of all of the representatives present at a meeting of the Management Committee at which a quorum is present or Unanimous Written Consent; 

(i) Liquidation of the Company. Except to the extent dissolution of the Company is permitted or required by this
Agreement or any nonwaivable provision of applicable law, the dissolution and winding up of the Company; 
 (j)
Contracts with Affiliates. Except as otherwise expressly permitted under this Agreement, the entry by the Company into any contract with, or the making of any payment to, any Member or any Affiliate of any Member and with respect to any such
contract, the making of any amendment, modification, waiver, termination, extension or rescission thereof; the declaration of any default thereunder or the exercise of any remedy thereunder; the institution, settlement or compromise of any claim
with respect thereto; the waiver of any rights of the Company against the other party(ies) thereto; or the consent to the assignment of any rights or the delegation of any duties by the other party(ies) thereto. The Members further acknowledge and
agree that, except as otherwise expressly permitted under this Agreement or as otherwise approved by the Management Committee, the fees paid in connection with any such contracts, payments, etc., made with or to any Member or any Affiliate thereof
shall in all events be 

  
 -6-

 
commensurate with fees negotiated at arm’s length and paid to independent third parties for providing similar services to projects similar in size, nature and location to the Project;

 (k) Cash Flow and Reserves. Subject to the provisions of Section 5.03, the
determination of any policies or procedures for making Cash Flow distributions by the Company including, without limitation, the establishment of any reserves with respect thereto; 

(l) Material Agreements. The execution by the Company of any material agreement in order to acquire, develop,
redevelop, renovate, operate, manage, maintain, market, lease, sell, transfer, convey, pledge or otherwise dispose of all or any portion of the Project or any other asset of the Company and any undertaking by the Company to implement the terms of
any such agreement, including the granting or withholding of approvals and consents thereunder, and any amendment or termination of any such material agreement (including, without limitation, the Property Management Agreement); 

(m) Consultants. The employment and engagement of any agents, brokers, appraisers, architects, contractors,
subcontractors, attorneys, accountants, bookkeepers, engineers, environmental consultants, real property and mortgage brokers and analysts, underwriters, escrow agents, depositories, agents for collection, banks, builders, building managers and
operators, marketing agents, property managers and any other service providers other than as permitted by the applicable Annual Business Plan or Operating Budget; 

(n) Legal Proceedings. The institution or defense of any legal proceedings (including arbitration) in the name of
the Company, the settlement of any such legal proceedings against the Company and the confession of any judgment against the Company, or any property thereof; 
 (o) Bankruptcy. Any of the following: (i) the filing of any voluntary petition in bankruptcy on behalf of the Company; (ii) the consenting to the filing of any involuntary petition and
bankruptcy against the Company; (iii) the filing on behalf of the Company of any petition seeking, or consenting to, the reorganization or relief under any applicable federal or state law relating to bankruptcy or insolvency; (iv) the
consenting to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or a substantial part of its property; (v) the making on behalf of the Company of any assignment for the benefit
of creditors; (vi) the admission in writing of the Company’s inability to pay its debts generally as they become due; or (vii) the taking of any action by the Company in furtherance of any such action; provided, however, that
such a decision shall require the approval of all of the representatives present at a meeting of the Management Committee at which a quorum is present or Unanimous Written Consent; provided, further, however, that if ERES is removed as
Operating Member of the Company pursuant to Section 2.06 (and as a result no longer has a representative on the Management 

  
 -7-

 
Committee) and the then current mortgage lender for the Project fails or refuses to release any guaranty of ERES for which it would have liability upon the occurrence of one or more of the events
specified in clauses (i) - (vii) immediately above, then for so long as ERES remains a Member of the Company the approval of ERES shall continue to be required for the Company to take any such action specified in clauses (i) - (vii) immediately
above until such guaranty is released or such mortgage loan is paid in full; 
 (p) Insurance. The entry
into by the Company of any and all contracts of insurance for the Company that the Management Committee deems necessary or proper for the protection of the Company or the Project, either for the conservation of the Company’s assets or for any
purpose convenient or beneficial to the Company; 
 (q) Tax and Accounting Elections. Any and all tax or
accounting elections permitted or required to be made by the Company; 
 (r) Actions pertaining to Paladin
REIT Status. The undertaking of any action that deemed necessary, in the sole and but reasonable discretion of the Tax Matters Partner, to maintain the status of Paladin REIT as a REIT under the Code. 

(s) Transfers from Operating Account. The drawing of any single check on, or the making of any single transfer or
expenditure of funds from, the Operating Account in excess of $25,000, or drawing of any multiple number of checks on, or the making of any multiple number of transfers or expenditures of funds from, any Operating Account which collectively total
more than $25,000 to any one Person, unless (i) such single check or transfer, or multiple checks or transfers, are drawn or made, as the case may be, pursuant to the directive of the Management Committee as contained in the Operating Budget,
and the Operating Member has confirmed, for the benefit of the Company, that any such check or transfer is in proper order for payment or (ii) such single check or transfer, or multiple checks or transfers, are drawn or made, as the case may
be, for debt service payments related to existing financing for the Project which are hereby approved; and 
 (t)
Other Actions. Any and all other actions required or permitted to be taken by the Management Committee under this Agreement and any and all other actions relating to the business and affairs of the Company or necessary to carry out the
intentions and purposes of the Company. 
 The provisions of this Section 2.02 shall not be construed as exclusive
or so as to bar the Management Committee from delegating responsibility for any of the Management Committee’s management decisions to any Member, officer, or other representative or agent of the Company. The Members also acknowledge that
signatory authority for any of the foregoing items may be delegated by the Management Committee to any Member, officer, or other representative or agent of the Company. 

  
 -8-

	 	2.03	Operating Member 

(a) Designation of Operating Member. ERES is hereby designated as the “Operating Member” of the Company (the
“Operating Member”). ERES shall serve in such capacity unless and until ERES is removed by the Management Committee in accordance with the provisions of Section 2.06. Following any removal of ERES as the Operating
Member, the Person (who may be, but need not be, a Member of the Company) selected by the Management Committee in accordance with the provisions of Section 2.06 shall serve as the replacement Operating Member or manager of the Company.

 (b) Responsibilities of Operating Member. The Operating Member shall be responsible for implementing the decisions of
the Management Committee and for regularly reporting to the Management Committee as to the status of the business and affairs of the Company. The Operating Member also shall be responsible for (i) procuring any and all financing required for
the Project as approved by the Management Committee, (ii) supervising the management, leasing and operation of the Project in accordance with a Property Management Agreement approved by the Management Committee and entered into, by and between
the Company, as owner, and either the Property Manager or such other manager as may be designated by the Management Committee, as manager, (iii) undertaking such other matters as are determined by the Management Committee,
(iv) coordinating, supervising and otherwise overseeing any sale of the Project, (v) preparing and, as and when reasonably requested by the Management Committee, updating any applicable Annual Business Plan or Operating Budget for the
Company and the Project (provided, that, for the avoidance of any doubt, the foregoing provisions are not intended to permit the Operating Member to amend, modify or deviate from any of the foregoing documents, plans or budgets without the
prior consent of the Management Committee (except as otherwise expressly provided therein), (vi) advising the Management Committee on day-to-day matters affecting the business and affairs of the Company, (vii) diligently conducting the
day-to-day operations of the Company in accordance with the Annual Business Plan and Operating Budget, (viii) performing the duties assigned to such Member under this Agreement or by the Management Committee, and (ix) diligently
endeavoring to carry out all decisions and resolutions of the Management Committee. 
 (c) Authority of Operating Member.
The Operating Member shall at all times be subject to the direction and control of the Management Committee, and shall conform to the policies and procedures established and approved by the Management Committee in conformity with this Agreement, and
the scope of the Operating Member’s authority shall be limited solely to the matters set forth above in this Section 2.03. The Operating Member shall keep the Management Committee and the Members informed as to all matters of
concern to the Management Committee, the Company and the Members. The Operating Member shall not be authorized to bind the Company without the prior written approval of the Management Committee, except for matters delegated in writing to the
Operating Member by the Management Committee or any nonmaterial agreements, contracts or other documents or instruments affecting or relating to the day-to-day business and affairs of the Company provided that any such agreement, contract or
other 

  
 -9-

 
document is within the parameters established in the applicable Annual Business Plan or Operating Budget. 
 (d) Expenditures. The Operating Member shall have the authority to incur costs and expenditures and only the costs and expenditures set forth in an approved Operating Budget (subject to the ability
to apply line item cost savings; contingency line item amounts; budget variances, etc., if any, contained in such Operating Budget) without any further approval of the Management Committee (or the Members). 

(e) Paladin REIT Status. Paladin REIT is a REIT and owns (directly or indirectly) all of the interests in Paladin. The Operating
Member shall at all times conduct the business of the Company in a manner consistent with the approved Operating Budget, which Paladin shall approve only following its conclusion that the nature of the Company’s assets and gross revenues set
forth therein will permit Paladin REIT to maintain its status as a REIT under the Code and to avoid incurring any tax on prohibited transactions under Section 857(b)(6) of the Code and any tax on redetermined rents, redetermined deductions and
excess interest under Section 857(b)(7) of the Code, and to which Paladin may require reasonable modifications in order to reach or preserve such conclusion. 
 (f) Indemnification. The Operating Member shall indemnify and hold harmless the Company and the other Member(s), their Affiliates, subsidiaries, officers, directors, employees, partners, members,
shareholders, agents and representatives to the full extent permitted by law from and against any and all losses, claims, costs, damages and expenses (including attorneys’ fees) arising from or in connection with any act or failure to act of
the Operating Member which was not in good faith, within the scope of its authority, or in accordance with the directives of the Management Committee, and (ii) or constituted fraud, willful misconduct, gross negligence, or a Material Breach.

  

	 	2.04	Annual Business Plan 

 On or before October 31 of each Fiscal Year of the Company, commencing on October 31, 2011, the Operating Member shall submit a new annual business plan for the ensuing Fiscal Year for the
review and approval of the Management Committee (the initial and each new business plan, as approved, being the “Annual Business Plan”). Each Annual Business Plan shall include, without limitation: (i) a narrative description
of the proposed objectives and goals for the Company, which shall include for such Fiscal Year (without limitation), any proposed sale or refinancing of the Project; (ii) the status of the Project; (iii) a property management and leasing
plan for the Project for such Fiscal Year; and (iv) such other items as are requested by any representative of the Management Committee or as otherwise reasonably necessary to keep the Management Committee informed as to the business and
affairs of the Company and the Project. 
  

	 	2.05	Operating Budget 

Attached hereto as Exhibit C is the annual operating budget for the Company for the remainder of the 2011 Fiscal Year. On
October 31 of each Fiscal Year 

  
 -10-

 
of the Company commencing on October 31, 2011, the Operating Member shall submit a new annual operating budget for the Company for the ensuing Fiscal Year for the review and approval of the
Management Committee (the initial and each new annual operating budget, as approved, being the “Operating Budget”). Each Operating Budget shall set forth on a detailed itemized basis: (i) all receipts projected for the period
of such Operating Budget and all expenses, by category, for the Company (including, without limitation, all repairs and capital expenditures projected to be incurred during such period), (ii) the anticipated operating reserves and working
capital projected to be required for such period, (iii) a schedule setting forth the timing and amount of any Additional Contributions projected to be required by the Members for such Fiscal Year (or other period); and (iv) a five (5)-year
projection setting forth the estimated revenues, expenses and net operating income (or loss) expected to be incurred for the next five (5) years for the Company which shall be updated to compare the actual results to the projected results set
forth in the prior Operating Budget. The Operating Budget shall also include a detailed description of such other information, contracts, agreements and other matters reasonably necessary to inform the Management Committee of all matters relevant to
the ownership, operation, management, maintenance, leasing and sale of the Project (or any portion thereof) or as may be reasonably requested by any representative of the Management Committee. Except as otherwise expressly set forth herein, the
Operating Member shall only have the authority to incur the costs and expenditures set forth in an approved Operating Budget (subject to the ability to apply line item cost savings, contingency line item amounts, budget variances, etc., if any,
contained in such Operating Budget, as and if so permitted by the parameters of such Operating Budget), without any further approval of the Management Committee (or the Members). Except as otherwise provided within any Operating Budget, the
Operating Budget may not be increased without the prior approval of the Management Committee. 
  

	 	2.06	Removal of the Operating Member 

 (a) Upon Removal Event. Upon the occurrence of a Removal Event, the Management Committee shall have the right to remove ERES as the Operating Member of the Company by delivering written notice
(“Removal Notice”) thereof at any time following the occurrence of a Removal Event in accordance with the provisions of this Section 2.06. As used herein, the term “Removal Event” means the occurrence of
any of the Buy-Sell Events set forth in Section 7.01 with respect to which the Operating Member is the Defaulting Member (regardless of whether Paladin, as the Non-Defaulting Member, exercises any of its rights under Article 7 in
connection therewith). Any removal of ERES as the Operating Member shall be effective upon the Effective Date of the Removal Notice relating to any Removal Event (or such later time as may be provided in the Removal Notice). 

(b) Effect of Removal Upon Removal Event. If ERES is removed as the Operating Member of the Company pursuant to
Section 2.06(a), then (i) a Cash Flow Bonus Forfeiture Event shall exist for purposes of Sections 5.01(d) and 5.02(h), (ii) ERES shall retain the remaining portions of its Interest in the Company (unless Paladin
purchases such Interest as a result of the exercise of the Buy-Sell provisions set forth in Article 7), (iii) neither ERES nor its Affiliates shall be entitled to receive any further fees

  
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to which they would otherwise be entitled pursuant to Section 2.12; and (iv) the Management Committee may, in its sole and absolute discretion, designate any person or entity as
a replacement Operating Member or as a manager who shall fulfill the duties and obligations of the Operating Member, that may be (but need not be) a Member of the Company (including, without limitation, Paladin (or any Affiliate thereof). From and
after any such removal: (1) the replacement Operating Member (and not ERES or its Affiliates) shall be entitled to exercise all the rights, duties and obligations, and to receive any and all fees of the Operating Member under this Agreement,
(2) ERES shall have no further obligations under Sections 2.03, 2.04 or 2.05, and (3) ERES shall no longer have any right to appoint any representative to the Management Committee and any previously appointed representatives of ERES
shall be replaced by one (1) or more representatives to be appointed by the Management Committee. In the event there is a dispute as to whether a Removal Event occurred, then ERES shall cease to be the Operating Member and shall no longer have
any right to appoint any representative to the Management Committee, and, if it shall be later determined by a court of competent jurisdiction that a Removal Event did not occur, then ERES shall be deemed to have been terminated pursuant to
Section 2.06(c). 
 (c) Other Removal. For any reason, the Management Committee may elect (in its sole and
absolute discretion) at any time, without cause and for any or no reason, to remove ERES as the Operating Member and to designate any Person as a replacement Operating Member or as a manager who shall fulfill the duties and obligations of the
Operating Member, which election may be made by written notice to ERES not less than fifteen (15) days prior to the effective date of such removal, provided that, the Management Committee agrees to meet and confer with ERES during such
fifteen (15) day period, at the request of ERES, in connection with such removal. In such event, ERES (or its Affiliates, as applicable) shall: (i) have no further obligations under Sections 2.03, 2.04 or 2.05, and
(ii) otherwise retain its Interest in the Company, including its interests in the Net Income and Net Losses or similar items of, and to receive distributions from, the Company as provided in Articles 4 and 5 of this Agreement. If ERES is
removed as Operating Member pursuant to this Section 2.06(c), then (A) any such replacement Operating Member shall not receive any additional fees or “carried interest” or other profits interest in the Company unless such
interest is paid from Paladin’s Interest in the Company and (B) ERES may elect, by written notice to Paladin within thirty (30) days after the effective date of such removal, to require Paladin to purchase 100% of ERES’ Interests
in accordance with the procedures set forth in the last two sentences of Section 7.02, and in Section 7.03(a), (b) and (d) and Section 7.05, Section 7.06, Section 7.07,
Section 7.08 and Section 7.10 as if a ERES were a Defaulting Member as a result of one of the Buy-Sell Events referenced in Section 7.01(e)-(g) and ERES were the Selling Member and Paladin the Purchasing Member
under such provisions of this Agreement (but in such case the provisions of clause (iv) of Section 7.03(a) shall not apply). If ERES fails to make such election by written notice to Paladin at or before the end of such thirty
(30) day period, then ERES shall be deemed to have waived its rights under clause (B) immediately above. In addition, if ERES is removed as Operating Member pursuant to this Section 2.06(c), then Paladin shall use its
reasonable efforts to obtain written releases of ERES (and its Affiliates) from all guarantees of liabilities of the Company previously executed by ERES (and its 

  
 -12-

 
Affiliates). To the extent such releases cannot be obtained by Paladin, Paladin shall indemnify, defend, protect and hold ERES (and such Affiliates) wholly free and harmless from and against any
and all claims, liabilities, causes of action, liens, charges, and all other matters arising from such liabilities or guarantees, arising subsequent to the Effective Date of such removal. 

(d) Contracts. If ERES is removed as the Operating Member (whether pursuant to either Section 2.06(a) or
Section 2.06(c)), then Paladin (acting alone and outside of the Management Committee), on behalf of the Company, shall also have the right to terminate the right of ERES or its Affiliates to provide the services provided for in
Section 2.12 and to terminate any other agreement between the Company and ERES or any Affiliate of ERES (including, without limitation, the Property Management Agreement described in Section 2.12), without penalty. If ERES is
removed as the Operating Member pursuant to Section 2.06(c) and Paladin elects to terminate ERES’ (or its Affiliate’s) right to provide the services provided for in Section 2.12 or to terminate any contract between
the Company and ERES or an Affiliate of ERES, then the Company shall be obligated to engage a third party other than an Affiliate of Paladin to undertake the services previously provided by ERES or the Affiliate of ERES and which were terminated. If
ERES is removed as the Operating Member pursuant to Section 2.06(a) as a result of the occurrence of a Removal Event, then the Company may engage either an Affiliate of Paladin or a third party to complete the services that were being
provided under the terminated contract or other arrangement. 
  

	 	2.07	Liability and Indemnity 

 (a) Indemnification. Except as otherwise expressly provided in this Agreement, no Member, officer of the Company, representative on the Management Committee or other authorized representative of
the Company (each, an “Indemnified Party”) shall be liable or accountable in damages or otherwise to the Company or to the other Members for any error of judgment or any mistake of fact or law or for anything that such Indemnified
Party may do or refrain from doing hereafter, except in the case of fraud, willful misconduct or gross negligence in performing or failing to perform such Indemnified Party’s duties for the Company. To the maximum extent permitted by law, the
Company hereby indemnifies, defends, protects and agrees to hold each Indemnified Party wholly harmless from and against any and all loss, expense or damage suffered by such Indemnified Party by reason of anything which such Indemnified Party may do
or refrain from doing hereafter for and on behalf of the Company and in furtherance of its interest; provided, however, (i) no Indemnified Party shall be indemnified, defended, protected or held harmless from any loss, cost, expense or
damage which such Indemnified Party may suffer as a result of such Indemnified Party’s fraud, willful misconduct or gross negligence in performing or in failing to perform such Indemnified Party’s duties for the Company, and (ii) any
such indemnity shall be recoverable only from the assets of the Company. The provisions of this Agreement, to the extent that they restrict the duties and liabilities of a Member (or representative thereof) otherwise existing at law or in equity,
are agreed by the Members to replace such duties and liabilities of such Member (or such representative). 

  
 -13-

 (b) No Third Party Beneficiaries. The provisions of this Section 2.07 are
for the benefit of the Indemnified Parties and shall not be deemed to create any rights for the benefit of any other Person. 

(c) Survival. The provisions of this Section 2.07 shall survive the termination of this Agreement. 

 

	 	2.08	Limited Liability 

Except as otherwise required hereunder or pursuant to any non-waivable provision of the Georgia Act, the debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and the Members shall not be obligated personally for any such debt, obligation or liability of the
Company solely by reason of being a Member of the Company. 
  

	 	2.09	Other Activities 

ERES, as the Operating Member, agrees to carry out the business and affairs of the Company in accordance with the terms and conditions of
this Agreement and shall devote all such time to the Company as is necessary for the efficient operation of the business and affairs of the Company. Except as otherwise provided in Section 2.11 of this Agreement or any Operating Budget,
or as otherwise approved by the Management Committee, the Operating Member shall not be paid any compensation by the Company for providing such services to the Company. No Member shall have any obligations (fiduciary or otherwise) with respect to
the Company or to the other Member insofar as making other investment opportunities available to the Company or to the other Members. Each Member may engage in whatever activity such Member may choose without having or incurring any obligation to
offer any interest in such activity to the Company or to the other Members. 
  

	 	2.10	Brokers Indemnity 

Each Member represents and warrants that it has not dealt with any broker or agent in connection with this Agreement or the relationship
contemplated hereby, and each Member hereby agrees to indemnify, defend, protect and hold the other Member and the Company wholly harmless from and against any and all liability, loss, cost, damage and expense (including without limitation,
attorneys’ fees and costs) which the other Member or the Company may suffer or incur by reason of any claim by any broker or agent for any compensation with respect to such indemnifying Member’s dealings in connection with this Agreement
or the transactions described herein. 
  

	 	2.11	Reimbursement; Compensation 

  
 -14-

 (a) Compensation. Except as otherwise expressly provided in this Agreement or as
provided in any applicable Operating Budget, no Member or any constituent partner, member, shareholder, officer, director, employee, agent, representative or Affiliate thereof shall receive any remuneration for services rendered to or in connection
with the Company or be reimbursed for general administrative and overhead expenses. 
 (b) Reimbursement of Expenses.
Notwithstanding the foregoing: (i) each Member shall be reimbursed from the initial contributions made by the Members pursuant to Section 3.01 for any and all costs (including legal fees) reasonably and actually incurred by such
Member in connection with the transactions contemplated herein (including the formation of the Company, and the negotiation and documentation of this Agreement), and (ii) each Member and its representatives shall be reimbursed for any
out-of-pocket travel and other costs and expenses reasonably and actually incurred in connection with the business and affairs of the Company, but such reimbursement shall not include any costs or charges for time expended by any Member’s
employees or other representatives or overhead costs of any Member. 
  

	 	2.12	Property Management 

Pegasus Residential, Inc. initially shall be the Property Manager of the Project and shall manage and operate the Project in accordance
with a Property Management Agreement between the Company and such Property Manager in the form approved by the Management Committee (the “Property Management Agreement”). The Property Management Agreement shall provide for
(i) an initial one year term with automatic one year renewals, (ii) termination by either the Company or the Property Manager for cause or upon a sale of the Project, and (iii) a management fee payable monthly, in arrears, to the
Property Manager with respect to the Project in an amount approved by the Management Committee. 
 ARTICLE 3 

MEMBERS’ CAPITAL CONTRIBUTIONS 
  

	 	3.01	Initial Contributions of the Members 

 (a) Initial Capital Contributions. Simultaneously with the execution of this Agreement, Paladin has contributed to the Company in cash its initial Capital Contribution as set forth on Exhibit
A hereto. ERES has contributed to the Company Class A Capital Contributions and Class B Capital Contributions as set forth on Exhibit A hereto. The initial Capital Contributions and current Capital Account balances of the Members are
identified on Exhibit A hereto. 
 (b) Credit to Capital Accounts. Any and all Capital Contributions made by
Paladin pursuant to this Section 3.01 and Sections 3.02 and 3.03 shall be credited to the Capital Account and Unrecovered Contribution Account of Paladin as of 

  
 -15-

 
the date any such Capital Contribution is made. The Class A Capital Contributions and any and all other Capital Contributions made by ERES pursuant to this Section 3.01 and
Sections 3.02 and 3.03 shall be credited to the Capital Account and Unrecovered Class A Contribution Account of ERES as of the date any such Capital Contribution is made. The Class B Capital Contributions of ERES shall be credited to the
Unrecovered Class B Contribution Account as of the date of this Agreement. 
  

	 	3.02	Additional Contributions 

 (a) Need for Contributions. Except as otherwise required by law or pursuant to this Section 3.02 or Section 3.03, no Member shall be required or permitted to make any
additional capital contributions to the Company. 
 (b) Required Additional Contributions. From time to time, the
Management Committee may require the Members to make Additional Contributions to the capital of the Company pursuant to this Section 3.02(b) in connection with the Project to fund Project Shortfalls by delivering written notice
(“Contribution Notice”) of such Additional Contribution to the Members, which Contribution Notice shall include a contribution date (“Contribution Date”) (which date shall not be less than fifteen (15) Business
Days following the Effective Date of such notice), upon which Contribution Date each Member shall be obligated to contribute to the capital of the Company its pro rata share of such Additional Contribution (measured by such Member’s
Contribution Percentage). 
  

	 	3.03	Remedy For Failure to Contribute Capital 

 (a) Failure to Contribute. If any Member (the “Non-Contributing Member”) fails timely to make all or any portion of any Additional Contribution such Member is required to
contribute pursuant to Section 3.02 (the “Delinquent Contribution”) and such failure continues for five (5) days following the Effective Date of notice thereof from the other Member, such other Member (the
“Contributing Member”), in addition to any and all other remedies available to the Contributing Member under this Agreement or otherwise at law or in equity (including, without limitation, instituting a legal proceeding to collect
the Delinquent Contribution), shall have the right, but not the obligation, to proceed in accordance with the terms and conditions set forth below in this Section 3.03 and, in addition, if ERES is the Non-Contributing Member, a Cash Flow
Bonus Forfeiture Event shall exist for purposes of Sections 5.01(d) and 5.02(h). 
 (b) Default Loan. The
Contributing Member may advance to the Company, in cash, within thirty (30) days following the Contribution Date, an amount equal to the Delinquent Contribution, and such advance by the Contributing Member shall be treated as a non-recourse
loan by the Contributing Member to the Non-Contributing Member (a “Member Loan”), bearing interest at a rate equal to the lesser of the then current prime rate as most recently reported by the Western Edition of the Wall Street
Journal, plus five percentage points, adjusted and compounded concurrently with any adjustments to such prime rate, or the maximum, nonusurious rate then permitted by applicable law for such loans. Each Member Loan shall be due and payable upon
the 

  
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earlier of six (6) months from the date such Member Loan is advanced or the dissolution of the Company. If Paladin is the Contributing Member, then both Members shall take all actions and
execute all documents (including a written promissory note evidencing the obligation of the Non-Contributing Member) necessary to ensure that the obligation meets the “straight debt safe harbor” described in Section 856(m) of the
Code. 
 As of the Effective Date of any advance of a Member Loan, the Non-Contributing Member shall be deemed to have
contributed an amount equal to the principal amount of such Member Loan to the capital of the Company, and the Capital Account and Unrecovered Contribution Account of Paladin (if Paladin is the Non-Contributing Member) or the Unrecovered
Class A Contribution Account of ERES (if ERES is the Non-Contributing Member), as applicable, shall be credited with a like amount. Notwithstanding the provisions of Articles 5 and 8, until any and all Member Loans are repaid in full,
the Non-Contributing Member shall draw no further distributions from the Company, and all cash or property otherwise distributable with respect to the Non-Contributing Member’s Interest (or fees payable to the Non-Contributing Member or any of
its Affiliates, excluding, however, any fees payable under Section 2.12) shall be distributed to the Contributing Member in repayment of the outstanding balance of the Member Loan, with such funds being applied first to reduce any and
all interest accrued on such Member Loan and then to reduce the principal amount thereof. Any amounts so applied shall be treated, for all purposes under this Agreement, as having actually been distributed to the Non-Contributing Member and applied
by the Non-Contributing Member to repay the outstanding Member Loan. 
 If, upon the maturity of a Member Loan (taking into
account any agreed upon extensions thereof), any principal thereof or accrued interest thereon remains outstanding, the Contributing Member shall elect one of the following options: (i) to renew such Member Loan (or portion thereof) pursuant to
the terms and provisions of this Section 3.03(b) for an additional term of six (6) months; (ii) to contribute all or any portion of such outstanding principal of and accrued, unpaid interest on such Member Loan (or portion
thereof) to the capital of the Company and dilute the Percentage Interest of the Non-Contributing Member in accordance with the provisions of Section 3.03(c); or (iii) elect to exercise the buy-sell provisions contained in
Article 7 in accordance with the provisions of Sections 3.03(c) and (d), in which event the Member Loan shall remain in effect until the closing of the buy-sell transaction contemplated under Article 7. The Contributing Member
may elect any of the options set forth in the immediately preceding sentence by giving written notice of such election to the Non-Contributing Member within thirty (30) days prior to such maturity date of the Member Loan. Failure of the
Contributing Member to timely give such written notice to the Non-Contributing Member shall be deemed to constitute an election to renew such Member Loan for an additional term of six (6) months on the terms set forth herein. 

(c) Dilution. The Contributing Member may contribute to the capital of the Company, in cash, within thirty (30) days
following the Contribution Date, an amount equal to the Delinquent Contribution, and the Capital Account and Unrecovered Contribution Account of the Contributing Member shall be credited with the amount so contributed. In the alternative, if the
Contributing Member elected to make a Member 

  
 -17-

 
Loan, then upon the maturity of a Member Loan that is not fully repaid on or before the maturity date thereof, the Contributing Member also may contribute to the capital of the Company, in
accordance with the provisions of Section 3.03(b) above, all or any portion of the outstanding principal of and accrued, unpaid interest on such Member Loan (or portion thereof) and (i) the amount of such outstanding principal and
interest so contributed shall be deemed repaid and satisfied, (ii) the amount of such outstanding principal and interest shall be deemed to have been distributed to the Non-Contributing Member, and debited from the Capital Account and
Unrecovered Contribution Account of the Non-Contributing Member, and (iii) the Capital Account and Unrecovered Contribution Account of the Paladin (if Paladin is the Contributing Member) or the Unrecovered Class A Contribution Account of
ERES (if ERES is the Contributing Member) shall be increased by the amount of such outstanding principal and interest so contributed. 
 Upon the contribution of any Delinquent Contribution (or the contribution of the principal and interest of any Member Loan by the Contributing Member pursuant to this Section 3.03(c)), the
Percentage Interest (but not the Contribution Percentage) of the Non-Contributing Member shall be decreased by the Dilution Percentage. The “Dilution Percentage” shall equal the amount expressed in percentage points (rounded to the
nearest one-hundredth of a percentage point) calculated based upon the following formula: 

  
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	 	  	Delinquent Contribution (or the outstanding balance of any
Member Loan (including interest)) contributed by the
Contributing Member
	Dilution Percentage = 200% x	  	  
  

		  	Aggregate amount of the balances standing in all of the Members’ respective Unrecovered Contribution Accounts (including the Additional Contribution contributed by the Contributing Member(s) and the
Delinquent Contribution or the outstanding balance of any Member Loan (including interest) contributed by the Contributing Member)

 The Percentage Interest, but not the Contribution Percentage, of the Contributing Member shall be
increased by the amount of the reduction in the Percentage Interest of the Non-Contributing Member. 
 The application of the
provisions of this Section 3.03(c) is illustrated by the following example: Assume that (i) the aggregate Unrecovered Contribution Accounts of the Members was equal to $4,000,000, (ii) an Additional Contribution of $200,000 was
required to be contributed by the Members to the capital of the Company, (iii) the Non-Contributing Member whose aggregate Percentage Interest is 48.27% failed to contribute its share of such contribution of $80,000 (i.e., 48.27% x $200,000),
and (iv) pursuant to this Section 3.03(c), the Contributing Member whose Percentage Interest is 51.73% made the Delinquent Contribution of $80,000 to the capital of the Company on behalf of such Non-Contributing Member pursuant to
this Section 3.03(c). 
 The Dilution Percentage applicable to the Non-Contributing Member would be equal to 3.81
percentage points as calculated in accordance with the following formula: 
  

							
		 		  	$     80,000	  	
		 	 3.81% = 200 %    x    
	  	$4,200,000	  	

 The Percentage Interest of the Non-Contributing Member therefore would be reduced by 3.81 percentage points from 48.27%
to 44.46%, and the Percentage Interest of the Contributing Member would be increased by a like amount of percentage points from 51.73% to 55.54%. 
 The Contribution Percentages of the Members would not be adjusted as a result of the foregoing dilution. 
 (d) Implementation of Buy-Sell. In addition to the options set forth in Sections 3.03(b) and 3.03(c) above, the Contributing Member may elect to implement the buy-sell provisions contained
in Article 7 for a Default Buy-Sell Event by delivery of written notice of such election to the Non-Contributing Member in accordance with the provisions thereof (and in which case the Non-Contributing Member shall be deemed to

  
 -19-

 
be the Defaulting Member and the Contributing Member shall be deemed to be the Non-Defaulting Member for purposes of Article 7); provided, however, that if the Contributing Member
so elects to implement the buy-sell provisions contained in Article 7 and the Contributing Member also exercises its rights under Section 3.03(c), then in computing the Dilution Percentage in Section 3.03(c) in connection
with the contribution of the Delinquent Contribution or any portion of the outstanding principal of and/or accrued, unpaid interest on any Member Loan that is the subject of the Default Buy-Sell Event, the 200% number used in the dilution formula in
Section 3.03(c) above shall be 100%. 
 (e) Application of Provisions. Any and all adjustments to the
Non-Contributing Member’s Percentage Interest shall be rounded to the nearest .01% and (except as provided otherwise in the first paragraph of Section 3.03(b)) the Contributing Member shall not succeed to all or any portion of the
Capital Account or Unrecovered Contribution Account of the Non-Contributing Member as the result of any such adjustment. In addition, notwithstanding any provision contained in this Article 3, the Non-Contributing Member’s Percentage
Interests shall in no event be reduced below .01% by operation of Section 3.03(d). As a result of any contribution to the capital of the Company pursuant to this Section 3.03, the Contributing Member shall have the right, but
not the obligation, to cause the Capital Accounts of the Members to be booked-up or booked-down in accordance with the provisions of Treasury Regulation Section l.704-l(b)(2)(iv)(f) to reflect the fair market value of the Company’s assets (as
reasonably determined by the Contributing Member) at the time of such contribution. 
  

	 	3.04	Debt Financing 

The Members acknowledge that the Management Committee may cause the Company to obtain debt financing from one or more third-party lenders
in order to fund all or any portion of any actual or projected financial requirements of the Company or in connection with other costs that may be incurred by the Company. Any such financing shall be obtained on the best available market rates and
terms, all as determined in the sole and absolute discretion of the Management Committee. In connection with obtaining any financing, it is expected that ERES and its Affiliates shall provide such repayment and “carve-out” guarantees that
are customarily requested, and on such terms and conditions as are customarily requested, by lenders with respect to similar projects of similar size, type and location. Paladin shall not be required to personally guarantee any financing obtained by
the Company. 
  

	 	3.05	Loans from Members 

The Management Committee may elect, in its discretion, to cause the Members to fund Project Shortfalls and other financial requirements of
the Company as loans to the Company in lieu of making Additional Contributions to the Company, on such terms and conditions as it shall determine from time to time. 
  

	 	3.06	Capital Contributions in General 

  
 -20-

 Except as otherwise expressly provided in this Agreement, (i) no part of the
contributions of any Member to the capital of the Company may be withdrawn by such Member, (ii) no Member shall be entitled to receive interest on such Member’s contributions to the capital of the Company, (iii) no Member shall have
the right to demand or receive property other than cash in return for such Member’s contributions to the Company, and (iv) no Member shall be required or be entitled to contribute additional capital to the Company other than as permitted
or required by this Article 3. 
 ARTICLE 4  

ALLOCATION OF PROFITS AND LOSSES 
  

	 	4.01	Allocation of Net Profits and Net Losses 

 (a) Net Profits. After application of Sections 4.02 and 4.03, Net Profits for each Fiscal Year shall be allocated among the Members in the following order and priority: 

(i) first, to the Members, in proportion to and to the extent of the amounts necessary to cause the cumulative allocations
of Net Profits to each Member under this Section 4.01(a)(i) for the current and all prior Fiscal Years to equal the cumulative allocations of Net Losses to such Member pursuant to Section 4.01(b)(iv) hereof; 

(ii) second, to the Members, in proportion to and to the extent of the amounts that would cause the balances of each of
the Members’ Capital Accounts (as of the last day of such Fiscal Year, but adjusted to reflect any Net Profits for such Fiscal Year allocated to such Member pursuant to Section 4.01(a)(i) and Section 4.02 and 4.03 hereof) to equal an
amount which, if distributed to such Members and added to all other actual distributions to the Members, would cause Paladin to receive a 15% IRR on all Capital Contributions made by Paladin and ERES to receive a 15% IRR on all Class A Capital
Contributions made by ERES; 
 (iii) third, to the Members, in proportion to and to the extent of the excess of
(A) the cumulative amounts distributed to each Member pursuant to Section 5.02(c) for the current and all prior Fiscal Years, over (B) the cumulative amounts allocated to each Member pursuant to this Section 4.01(a)(iii) for the
current and all prior Fiscal Years; 
 (iv) fourth, to ERES, until its Capital Account (as of the last day of
such Fiscal Year, but adjusted to reflect any Net Profits for such Fiscal Year allocated to ERES pursuant to Section 4.01(a)(i)-(iii) and Section 4.02 and 4.03 hereof) is equal to an amount which, if distributed to ERES and added to
all other actual distributions to ERES, would cause it to achieve a 15% IRR on all Class B Capital Contributions made by ERES; and 

  
 -21-

 (v) finally, subject to Section 4.03(b), 30% to Paladin, and 70%
to ERES. 
 For purposes of determining the amount of Net Profits to be allocated pursuant to Section 4.01(a)(ii) and (iii) for any
Fiscal Year, the Capital Account of each Member shall be increased by such Member’s share of “partnership minimum gain” as of the last day of such Fiscal Year, determined pursuant to Section 1.704-2(g)(1) of the Regulations, and
by such Member’s share of “partner nonrecourse debt minimum gain” as of the last day of such Fiscal Year, determined pursuant to Section 1.704-2(i)(5) of the Regulations. 

(b) Net Losses. After application of Sections 4.02 and 4.03, Net Losses for each Fiscal Year shall be allocated among the
Members in the following order and priority: 
 (i) first, to the Members in proportion to and to the extent of
the excess, if any, of (A) the cumulative Net Profits allocated to each Member pursuant to Section 4.01(a)(v) for all prior Fiscal Years, over (B) the cumulative distributions to such Member pursuant to
Section 5.02(e); 
 (ii) second, to ERES, in an amount equal to the excess, if any, of (A) the
cumulative Net Profits allocated to ERES pursuant to Section 4.01(a)(iv) for all prior Fiscal Years, over (B) the cumulative Net Losses allocated to ERES under this section 4.01(b)(ii) for all prior Fiscal Years; 

(iii) third, to the Members in proportion to and to the extent of their respective Capital Account balances; 

(iv) fourth, to the Members, in proportion to their Percentage Interests. 

For purposes of determining the amount of Net Losses to be allocated pursuant to Section 4.01(b)(ii) and (iii) for any Fiscal Year, the Capital
Account of each Member shall be increased by such Member’s share of “partnership minimum gain” as of the last day of such Fiscal Year, determined pursuant to Section 1.704-2(g)(1) of the Regulations, and by such Member’s
share of “partner nonrecourse debt minimum gain” as of the last day of such Fiscal Year, determined pursuant to Section 1.704-2(i)(5) of the Regulations. 
 (c) Net Loss Limitation. Notwithstanding anything in this Agreement to the contrary, no Member shall be allocated Net Losses under Section 4.01(b) to the extent such allocation would
cause or increase an Adjusted Capital Account deficit for such Member as of the last day of the Fiscal Year to which such allocation relates. Any amounts not allocated to a Member pursuant to the limitation set forth in the preceding sentence shall
be allocated to the other Members in proportion to and to the extent that such allocations would not cause them to have, or increase their, Adjusted Capital Account deficits. Any remaining Net Losses shall be allocated among the Members in
proportion to their then-current respective Percentage Interests. This provision is 

  
 -22-

 
intended to ensure that allocations of Net Losses have economic effect pursuant to Treas. Reg. §1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. 

 

	 	4.02	Regulatory Allocations 

 Prior to making any allocations pursuant to Sections 4.01 or 4.03 hereof, the following special allocations shall be made each Fiscal Year, to the extent required, in the following order:

 (a) Minimum Gain Chargebacks. Items of Company income and gain shall be allocated for any Fiscal Year
to the extent, and in an amount sufficient to satisfy the “minimum gain chargeback” requirements of Treasury Regulation Sections 1.704-2(f) and (i)(4). 

(b) Qualified Income Offset. Items of Company income and gain shall be allocated any Fiscal Year to the extent, and
in an amount sufficient to satisfy the “qualified income offset” requirements of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(3). 
 (c) Member Nonrecourse Deductions. Member Nonrecourse Deductions shall be allocated to the Member who bears the economic risk of loss associated with such deductions, in accordance with Treasury
Regulations Section 1.704-2(i). 
 (d) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal
Year shall be allocated among the Members in accordance with their Percentage Interests. 
 (e)
Section 754 Adjustments. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Sections 734(b) or 743(b) of the Code is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m) to be
taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and
such gain or loss shall be specially allocated to the Members in accordance with the requirements of Treasury Regulation Section 1.704-1(b)(2)(iv)(m). 

(f) Curative Allocations. The allocations set forth in Section 4.01(c) and 4.02(a) through (e) (the
“Regulatory Allocations”) are intended to comply with certain requirements of Treasury Regulation Sections 1.704-1(b) and 1.704-2. The Regulatory Allocations may affect results which would be inconsistent with the manner in which
the Members intend to divide Company distributions. Accordingly, Paladin authorized to specially allocate items of income, gain, loss or deduction which otherwise would be included in the computation of Net Profits and Net Losses and other items
among the Members, to the extent that they exist, so that, to the extent possible, the cumulative net amount of allocations of 

  
 -23-

 
Company items under Sections 4.01, 4.02, and 4.03 hereof shall be equal to the net amount that would have been allocated to each Member if the Regulatory Allocations had not occurred.
Paladin will have discretion to accomplish this result in any reasonable manner that is consistent with Section 704 of the Code and the related Regulations. 
  

	 	4.03	Special Allocation 

(a) After giving effect to the allocations provided for in Section 4.02 hereof, items of gross income or gain shall be
specially allocated for each Fiscal Year to the Members in proportion to and to the extent of the excess of (A) the cumulative amounts distributed to each Member pursuant to Section 5.01 for the current and all prior Fiscal Years,
over (B) the cumulative amounts allocated to each Member pursuant to this Section 4.03(a) for all prior Fiscal Years; and 
 (b) Appropriate adjustments shall be made to the allocations provided for in Section 4.01 hereof if a Cash Flow Bonus Forfeiture Event has existed at any time during the life of the Company,
or if the Percentage Interests of the Members change pursuant to Section 3.03(c). 
  

	 	4.04	Other Allocation Rules 

 (a) Tax/Book Differences. In the event that any Company property has a book value which differs from the adjusted tax basis of such property, then allocations with respect to such property for
income tax purposes shall be made in a manner which takes into consideration differences between such book value and such adjusted tax basis in accordance with Section 704(c) of the Code, the Treasury Regulations promulgated thereunder and
Treasury Regulation Section 1.704-1(b)(2)(iv)(f)(4). Such allocations for income tax purposes shall be made using the traditional method or such other method as may be agreed to by the Members. Such tax allocations shall neither affect, nor in
any way be taken into account in computing, any Member’s Capital Account or share of Net Profits, Net Losses, other items, or distributions pursuant to any provision of this Agreement. 

(b) Variations in Interests During any Fiscal Year. For purposes of determining the Net Profits, Net Losses, or any other items
allocable to any period, Net Profits, Net Losses, and any such other items shall be determined on a daily, monthly, interim closing of the books or other basis, as determined by the Management Committee using any permissible method under
Section 706 of the Code and the regulations promulgated thereunder. 
 (c) Allocations of Items. Any allocation to a
Member of Net Profit or Net Loss shall be treated as an allocation to such Member of the same share of each item of income, gain, loss or deduction that is taken into account in computing Net Profit or Net Loss. Unless otherwise specified herein to
the contrary, any allocation to a Member of items of Company income, gain, loss, deduction or credit (or item thereof) shall be 

  
 -24-

 
treated as an allocation of a pro rata portion of each item of Company income, gain, loss, deduction or credit (or item thereof). 

ARTICLE 5  
 DISTRIBUTIONS 
  

	 	5.01	Distribution of Ordinary Cash Flow 

 Subject to the provisions of Sections 5.03, 7.04 and 8.02, Ordinary Cash Flow realized by the Company shall be distributed to the Members as soon as practicable following the Company’s receipt
thereof in the following order of priority: 
 (a) First, to Paladin until Paladin’s Unpaid Preferred Return
has been reduced to zero; 
 (b) Second, to ERES until ERES’ Unpaid Preferred Return has been reduced to
zero; and 
 (c) Thereafter, to the Members in accordance with their respective Percentage Interests. 

 

	 	5.02	Distribution of Extraordinary Cash Flow 

 Subject to the provisions of Sections 5.03, 7.04 and 8.02, Extraordinary Cash Flow realized by the Company shall be distributed to the Members as soon as practicable following the Company’s
receipt thereof in the following order of priority: 
 (a) First, to the Members pro rata in accordance with
their respective Class A Distribution Percentages until Paladin’s Unrecovered Contribution Account has been reduced to zero and ERES’ Unrecovered Class A Contribution Account has been reduced to zero; 

(b) Second, to the Members pro rata in accordance with their respective Class A Distribution Percentages, until
(i) Paladin has received aggregate distributions pursuant to Section 5.01 and this Section 5.02 which would produce a 15% IRR to Paladin on all Capital Contributions made by Paladin and (ii) ERES has received
aggregate distributions pursuant to Section 5.01 and this Section 5.02 which would produce a 15% IRR to ERES on all Class A Capital Contributions made by ERES; 

(c) Third, to the Members pro rata in accordance with their respective Class A Distribution Percentages until the
Unpaid Yield Maintenance Amount has been reduced to zero; 
 (d) Third, to ERES until ERES’ Unrecovered
Class B Contribution Account has been reduced to zero and ERES has received aggregate distributions pursuant to Section 5.01 and this Section 5.02 which would produce a 15% IRR to ERES on all Class B Capital Contributions
made by ERES; and 

  
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 (e) Thereafter, thirty percent (30%) to Paladin and seventy percent
(70%) to ERES, or if a Cash Flow Bonus Forfeiture Event exists, to the Members pro rata in accordance with their respective Percentage Interests. 
  

	 	5.03	Limitations on Distributions 

 Notwithstanding any other provision contained in this Agreement, the Company shall not make a distribution of Cash Flow (or other proceeds) to any Member if such distribution would violate any applicable
provision of the Georgia Act or other applicable law. 
  

	 	5.04	In-Kind Distribution 

 Assets of the Company (other than cash) shall not be distributed in kind to the Members without the prior written approval of the Members. 

 

	 	5.05	Right to Withhold 

The Management Committee, on behalf of the Company, shall withhold from any distribution such amounts as are required to be withheld by
the laws of any taxing jurisdiction (as determined in the sole and absolute discretion of the Management Committee). In addition, the Management Committee, on behalf of the Company shall withhold from any distribution to any Member any amounts for
which such Member (or any Affiliate thereof) may be liable or responsible to the Company, and shall apply such withheld amount to such liability or responsibility. All amounts so withheld shall be treated as amounts distributed to the respective
Member(s) on whose account the withholding was imposed. 
 ARTICLE 6  

RESTRICTIONS ON TRANSFERS OF COMPANY INTERESTS 

 

	 	6.01	Limitations on Transfer 

 Except as permitted pursuant to Section 6.02 below, no Member or assignee of a Member shall be entitled to sell, exchange, assign, transfer, convey or otherwise dispose of, pledge,
hypothecate, encumber or otherwise grant a security interest in, directly or indirectly, for value or no value, whether voluntary or involuntary (including by operation of law or other legal or equitable proceedings) (collectively,
“Transfer”), all or any part of such Member’s or assignee’s Interest, including, without limitation, Transfers of any economic interest, without the prior written consent of the other Members, which consent may be granted
or withheld in each such other Member’s sole discretion. Any attempted Transfer, or withdrawal by a Member in violation of the restrictions set forth in this Article 6 shall, unless this provision is waived by the other Members (each
acting in its sole and absolute discretion), be null and void ab initio and of no force or effect and, in addition to the other rights and remedies at law and in equity, any of the other Members shall be entitled to injunctive relief enjoining the
prohibited 

  
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action. The Members expressly agree that damages at law would be an inadequate remedy for a breach or threatened breach of the Transfer restrictions set forth in this Agreement. 

 

	 	6.02	Permitted Transfers 

Notwithstanding the foregoing, any Member may Transfer all or any portion of such Member’s Interest to any of the following
(collectively, “Permitted Transferees”) without complying with the provisions of Section 6.01: 
 (a) In the case of Transfers by Paladin, (i) any Transfer of any direct or indirect Interest in Paladin to any Affiliate of Paladin and (ii) any Transfer of a direct or indirect interest in
Paladin Realty Income Properties, L.P. or the Paladin REIT to any Person; and 
 (b) In the case of Transfers by
ERES, any Transfer of an interest in ERES to any Immediate Family Member of any individual member of ERES upon the death or disability of such member. 
 Upon receipt by the Management Committee of notice of such Transfer (along with a copy of the instrument(s) of transfer), any such Permitted Transferees shall receive and hold such Interest or portion
thereof, subject to the terms of this Agreement (including Article 4) and to the obligations hereunder of the transferor, and there shall be no further Transfer of such Interest (or economic interest) or portion thereof except to a Person to
whom such Permitted Transferee could have transferred such Interest (or economic interest) or portion thereof in accordance with this Section 6.02 had such Permitted Transferee originally been a Member or otherwise in accordance with the
terms of this Agreement. Notwithstanding any other provision contained herein, any Transfer described in this Section 6.02 shall be null and void ab initio and of no force or effect if such Transfer would otherwise violate the provisions
of Section 6.04. 
  

	 	6.03	Admission of Substitute Members 

 If any Member Transfers such Member’s Interest to a transferee in accordance with Sections 6.01 or 6.02, then such transferee shall only be entitled to be admitted into the Company as a
substitute Member if (i) the books and records of the Company are amended to reflect such admission; (ii) the Management Committee approves the admission of such transferee (but only in the event of a transfer in accordance with
Section 6.01) and approves the form and content of the instrument of transfer; (iii) the transferor and transferee named therein execute and acknowledge such other instruments as the Management Committee may deem reasonably
necessary to effectuate such admission; (iv) the transferee in writing accepts and adopts all of the terms and conditions of this Agreement, as the same may have been amended; and (v) the transferor pays, as the Management Committee may
reasonably determine, all reasonable expenses incurred in connection with such admission, including, without limitation, legal fees and costs. In the event of a Transfer in part of a Member’s Interest under Section 

  
 -27-

 
6.02 and the admission of the transferee into the Company as a member, such transferee member shall be required to act together as one Person with the Person(s) holding the remainder of the
entire Interest as of the date of this Agreement from whence such transferee member’s interest originally derived. To the fullest extent permitted by law, any transferee of an Interest who does not become a substituted Member shall have no
right to require any information or account of the Company’s transactions, to inspect the Company books, or to vote on any of the matters as to which a Member would be entitled to vote under this Agreement. Any such transferee shall only be
entitled to share, as an assignee, in such Net Profits and Net Losses, to receive such distributions, and to receive such allocations of income, gain, loss, deduction or credit or similar items to which the transferor was entitled, to the extent
assigned. A Member that Transfers its Interest shall not cease to be a member of the Company until the admission of the transferee as a substituted member of the Company and, except as provided in the preceding sentence, shall continue to be
entitled to exercise, and shall continue to be subject to, all of the rights, duties and obligations of such Member under this Agreement. 
  

	 	6.04	Additional Restrictions on Transfer 

 Notwithstanding any other provision contained herein, unless the Management Committee waives any applicable restriction set forth in this Section 6.04, any Transfer described in this
Article 6 shall be null and void ab initio and of no force or effect if: (i) such Transfer requires the registration of such Interest pursuant to, or otherwise directly or indirectly violates, any applicable federal or state securities
laws; (ii) such transfer causes or will cause the Company to become a “Publicly Traded Partnership” as such term is defined in Section 7704(b) of the Code; (iii) such Transfer results in a violation of applicable laws;
(iv) such Transfer would, in the opinion of the Company’s counsel, cause the Company to cease to be classified as a partnership for state and federal income tax purposes; (v) such Transfer is made to any Person lacking the legal power
or capacity to own any Interest; or (vi) such Transfer causes an acceleration of any loan or debt instrument to which the Company is a party. 
  

	 	6.05	Election; Allocations Between Transferor and Transferee 

 Upon the Transfer of the Interest of any Member or the distribution of any property of the Company to a Member, the Company may file, with the approval of the Management Committee, in its sole and
absolute discretion, an election in accordance with applicable Treasury Regulations, to cause the basis of the Company property to be adjusted for federal income tax purposes as provided by Sections 734 and 743 of the Code. 

 

	 	6.06	Partition 

 No
Member shall have the right to partition any assets of the Company or any interest therein, nor shall a Member make an application or proceeding for a partition thereto and, upon any breach of the provisions of this Section 6.07 by any
Member, the other Member (in addition to all rights and remedies afforded by law or equity) shall be entitled to a decree or order restraining or enjoining such application, action or 

  
 -28-

 
proceeding. Upon the Transfer of all or any part of the Interest of a Member as hereinabove provided, Net Profits and Net Losses shall be allocated between the transferor and transferee on the
basis of the computation method which with the approval of the Management Committee, in its sole and absolute discretion, is in the best interests of the Company, provided such method is in conformity with the methods prescribed by Section 706
of the Code and Treasury Regulation Section 1.706-1(c)(2)(ii). 
  

	 	6.07	Waiver of Withdrawal 

 No Member may voluntarily withdraw, resign or retire from the Company without the prior written consent of the Members, which consent may be granted or withheld in each such Member’s sole and
absolute discretion. Each Member hereby waives any and all rights such Member may have to withdraw or resign from the Company pursuant to the Georgia Act or otherwise and hereby waives any and all rights such Member may have to receive the fair
value of such Member’s Interest in the Company upon such withdrawal, resignation or retirement pursuant to the Georgia Act. No admission or withdrawal of a Member, whether in accordance with this Agreement or otherwise, shall cause the
dissolution of the Company except as otherwise provided in Section 8.01. Any purported admission, withdrawal or removal which is not in accordance with this Agreement shall be null and void and, in addition to other rights and remedies
at law and in equity, the other Member(s) shall be entitled to injunctive relief enjoining the prohibited action. The Members expressly acknowledge that damages at law would be an inadequate remedy for a breach or threatened breach of the foregoing
restrictions. 
 ARTICLE 7  
 DEFAULT BUY-SELL AGREEMENT 
  

	 	7.01	Default Buy-Sell Events 

 For purposes of this Article 7, the following shall constitute “Default Buy-Sell Events”: 
 (a) Prohibited Withdrawal or Retirement. The withdrawal, retirement, or other cessation to serve as a Member of the Company by any Member in violation of the terms of this Agreement; 

(b) Default by the Operating Member. The fraud, willful misconduct, gross negligence or Material Breach (which
shall include the notice and cure provisions to the extent provided in the definition of Material Breach) by the Operating Member (or its representatives) in performing or failing to perform the Operating Member’s duties and obligations under
this Agreement; 

  
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 (c) Prohibited Transfer or Encumbrance. Any Transfer or encumbrance
or attempted Transfer or encumbrance by any Member of such Member’s Interest contrary to the provisions of Article 6; 
 (d) Breach of Agreement. Any Material Breach (which shall include the notice and cure provisions to the extent provided in the definition of Material Breach) by any Member (except for the failure
of any Member to make an Additional Contribution required hereunder); 
 (e) Bankruptcy or Insolvency. The
rendering, by a court with appropriate jurisdiction, of a decree or order (i) adjudging a Member bankrupt or insolvent; or (ii) approving as properly filed a petition seeking reorganization, readjustment, arrangement, composition, or
similar relief for a Member under the federal bankruptcy laws or any other similar applicable law or practice, and if such decree or order referred to in this Section 7.01(e) shall have continued undischarged and unstayed for a period of
sixty (60) days; 
 (f) Appointment of Receiver. The rendering, by a court with appropriate
jurisdiction, of a decree or order (i) for the appointment of a receiver, a liquidator, or a trustee or assignee in bankruptcy or insolvency of a Member, or for the winding up and liquidation of a Member’s affairs, provided that such
decree or order shall have remained in force undischarged and unstayed for a period of ninety (90) days, or (ii) for the sequestration or attachment of any property of a Member without its return to the possession of such Member or its
release from such sequestration or attachment within ninety (90) days thereafter; and 
 (g) Bankruptcy
Proceedings. A Member (i) institutes proceedings to be adjudicated a voluntary bankrupt or an insolvent, (ii) consents to the filing of a bankruptcy proceeding against such Member, (iii) is unable to or admits in writing such
Member’s inability to pay such Member’s debts generally as they become due, or (iv) files a petition or answer or consent seeking reorganization, readjustment, arrangement, composition, or similar relief for such Member under the
federal bankruptcy laws or any other similar applicable law or practice, (iv) consents to the filing of any such petition, or to the appointment of a receiver, a liquidator, or a trustee or assignee in bankruptcy or insolvency for such Member
or a substantial part of such Member’s property, (v) makes an assignment for the benefit of such Member’s creditors, or (vi) takes any action in furtherance of any of the aforesaid purposes. 

For the purposes of implementing the provisions contained in this Article 7 and otherwise for purposes of this Agreement,
(A) each of the events set forth in Sections 7.01(a)-(g) shall constitute a “Default Buy-Sell Event”; (B) the “Defaulting Member” shall be (i) in the case of the occurrence of the event
referenced in Section 7.01(a), the Member that has withdrawn, retired or ceased to serve as a Member of the Company in violation of the terms of this Agreement; (ii) in the case of the occurrence of the event referenced in
Section 7.01(b), the Operating Member; (iii) in the case of the 

  
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occurrence of the event referenced in Section 7.01(c), the Member that purports to undertake a Transfer of such Member’s rights or interests contrary to the provisions of
Article 6; (iv) in the case of the occurrence of the event referenced in Section 7.01(d), the Member that has breached any material covenant, duty or obligation under this Agreement; and (v) in the case of any of the
events referenced in Section 7.01(e), (f), or (g), the Member who is the subject of such court decree or order or has instituted such proceedings or filed such petitions or who is insolvent, etc; and (C) the “Non-Defaulting
Member” is the Member that is not the Defaulting Member. 
  

	 	7.02	Rights Arising From a Default Buy-Sell Event 

 At any time following the occurrence of a Default Buy-Sell Event, the Non-Defaulting Member shall have the right (but shall not be obligated to) either to (i) cause the sale of the Company or its
assets to any unaffiliated third party for a purchase price based upon the sole and absolute judgment of the Non-Defaulting Member (“Third-Party Purchase Price,” as further set forth in Section 7.03(c)), and such other terms
and conditions as are determined in the sole discretion of the Non-Defaulting Member or (ii) purchase the Interest of the Defaulting Member in accordance with the terms and conditions set forth in this Article 7, in either case, by
delivering written notice (“Default Notice”) thereof to the Defaulting Member, or (iii) exercise any other rights or remedies available to the Non-Defaulting Member under this Agreement or at law or in equity as a result of
such Default Buy-Sell Event; provided, however, that the failure of the Non-Defaulting Member to exercise any of the foregoing rights shall not be deemed to constitute a waiver of any Default Buy-Sell Event or any rights and remedies (and the
provisions of Section 7.09 shall apply to the Defaulting Member). For a period of fifteen (15) days following the Effective Date of any Default Notice, the Members shall attempt to agree upon a purchase price for the Defaulting
Member’s Interest (the “Buyout Purchase Price”) in the event the Non-Defaulting Member desires to purchase the Interest of the Defaulting Member. If the Members are unable to agree on a Buyout Purchase Price, then the Default
Purchase Price shall be determined in accordance with the provisions of Section 7.03(a) based on the Appraised Value as determined pursuant to Section 7.03(b). 

 

	 	7.03	Determination of Purchase Price 

 (a) Member Buyout. Within thirty (30) days after the determination of the Buyout Purchase Price or, in the absence thereof, the determination of the Appraised Value of the Company pursuant to
Section 7.03(b), the accountants regularly employed by the Company shall determine the amount of cash which would be distributed to each Member pursuant to Section 5.02 if (i) the Company (including all of its assets)
were sold (as applicable) for the Buyout Purchase Price or Appraised Value thereof (as applicable) as of the Effective Date of the Default Notice (after deducting therefrom an amount equal to reasonable and customary closing costs); (ii) the
remaining liabilities of the Company were liquidated pursuant to Section 8.02(a); (iii) reasonable reserves were established for any contingent, conditional or unmatured liabilities or obligations of the Company

  
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pursuant to Section 8.02(b); (iv) if (and only if) the Defaulting Member is ERES, a Cash Flow Bonus Forfeiture Event existed for purposes of Sections 5.01(d) and 5.02(h);
and (v) the Company distributed any remaining amounts to the Members in accordance with the provisions of Section 5.02. Upon such determination, the accountants regularly employed by the Company shall give each Member a notice
thereof (the “Price Determination Notice”). The determination by the accountants of such amounts, including all components thereof, shall be deemed conclusive absent any material computational error. If the Non-Defaulting Member
purchases the Interest of the Defaulting Member, ninety percent (90%) of the amount that would be distributed to the Defaulting Member pursuant to clause (v) above shall be deemed to be the “Default Purchase Price” for
purposes of this Article 7; provided, however, that if the Buy-Sell Event applicable to the Defaulting Member is not one of the Buy-Sell Events referenced in Sections 7.01(a), (b), (c) or (d), then one hundred percent
(100%) of the amount that would be distributed to the Defaulting Member pursuant to clause (v) above shall be deemed to be the “Default Purchase Price” for purposes of this Article 7. 

(b) Determination of Appraised Value. For purposes of this Article 7 and Section 6.05, the appraised value
(“Appraised Value”) of the assets of the Company shall be determined by one (1) or more independent Qualified Appraisers. The Non-Defaulting Member shall select one (1) Qualified Appraiser and shall include such selection
in the Default Notice. Within fifteen (15) days following the Effective Date of the Default Notice, the Defaulting Member shall either agree to the Qualified Appraiser selected by the Non-Defaulting Member or select a second
(2nd) Qualified Appraiser and give written notice to the Non-Defaulting Member of the person so selected. If either the Non-Defaulting Member or the Defaulting Member fails to appoint a Qualified Appraiser within the time period specified and
after the expiration of five (5) days following the Effective Date of written demand that a Qualified Appraiser be appointed, the Qualified Appraiser duly appointed by the Member making such demand to appoint such Qualified Appraiser shall
proceed to make the appraisal as herein set forth, and the determination thereof shall be conclusive on all the Members. 
 (1) The Qualified Appraiser or two (2) Qualified Appraisers, as the case may be, shall promptly fix a time for the completion of the appraisal, which shall not be later than thirty (30) days
from the Effective Date of the appointment of the last Qualified Appraiser. 
 (2) The Qualified Appraiser(s)
shall determine the Appraised Value by determining the fair market value of the assets of the Company, such being the fairest price estimated in the terms of money which the Company could obtain if the assets of the Company were sold, for all cash,
in the open market allowing a reasonable time to find a purchaser. 
 (3) Upon submission of the appraisals
setting forth the opinions as to the Appraised Value of the assets of the Company, the average of the two (2) appraisals shall constitute the Appraised Value of the assets of the Company for purposes of this Article 7. 

  
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 (c) Sale to Third Party. Within ten (10) days after the closing of any sale of
the Company or its assets to any third party pursuant to clause (i) of Section 7.02, the accountants regularly employed by the Company shall determine the amount of cash which would be distributed to each Member pursuant to
Section 5.02 after (i) the sale of the Company (including all of its assets) to the third party for the Third-Party Purchase Price as of the closing of the sale of the Company or its assets (after deducting therefrom an amount equal
to reasonable and customary closing costs and any prepayment fees on any indebtedness that would be payable in connection with any such sale); (ii) the liquidation of the remaining liabilities of the Company pursuant to
Section 8.02(a); (iii) the establishment of reserves in an amount reasonably determined by the Non-Defaulting Member for any contingent, conditional or unmatured liabilities or obligations of the Company pursuant to
Section 8.02(b); (iv) if ERES is the Defaulting Member, the existence of a Cash Flow Bonus Forfeiture Event for purposes of Sections 5.01(d) and 5.02(h); and (v) the distribution by the Company of any remaining amounts
to the Members in accordance with the provisions of Section 5.02. Upon such determination, the accountants regularly employed by the Company shall give each Member a Price Determination Notice thereof. The determination by the
accountants of such amounts, including all components thereof, shall be deemed conclusive absent any material computational error. In the event of any such third party sale, ninety percent (90%) of the amount that would be distributed to the
Defaulting Member pursuant to clause (v) above shall be deemed to be the “Default Purchase Price” for purposes of this Article 7. 

(d) Payment of Costs. The Non-Defaulting Member shall pay for the services of the Qualified Appraiser
appointed by such Member, and the Defaulting Member shall pay for the services of the Qualified Appraiser appointed by such Member. The cost of the services of the third (3rd) Qualified Appraiser, if any, shall be paid one-half ( 1/2) by the Non-Defaulting Member and one-half ( 1/2) by the Defaulting Member. The costs of the services of the
accountants and, in the event only one (1) Qualified Appraiser is required, the cost of the services of such Qualified Appraiser, shall be paid one-half
( 1/2) by the Non-Defaulting Member and one-half ( 1/2) by the Defaulting Member.

  

	 	7.04	Member’s Option 

 For a period of ninety (90) days following the determination of the Default Purchase Price pursuant to Section 7.03(a), the Non-Defaulting Member shall have the right, but not the
obligation, to (i) purchase the entire Defaulting Member’s Interest for the Default Purchase Price thereof (as determined pursuant to Section 7.03(a)), and on the terms and conditions set forth in this Article 7,
(ii) elect to sell the Company or cause the Company to sell its assets to a third party in accordance with the provisions set forth above in this Article 7 or (iii) waive the right to purchase the Defaulting Member’s Interest
or cause such third party sale with respect to the particular Default Buy-Sell Event, in each case by delivering written notice thereof to the Defaulting Member within such thirty (30)-day period. The failure of the Non-Defaulting Member to timely
give any such written notice pursuant to this Section 7.04 shall be deemed an election by such Member to waive such rights with respect to the particular Buy-Sell Event that resulted in the implementation of the provisions of this
Article 7. If the Non-Defaulting Member 

  
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elects to sell the Company or cause the Company to sell its assets to a third party in accordance with the provisions set forth above in this Article 7, then, in lieu of electing to
purchase the Defaulting Member’s Interest, at the Non-Defaulting Member’s option, the Non-Defaulting Member may cause the sale to such third party to occur. If the Non-Defaulting Member causes the sale to such third party to occur, then,
notwithstanding the provisions of Articles 5 and 8 (and any other provision contained in this Agreement), the aggregate amount of Cash Flow to be distributed to the Defaulting Member from such sale shall be equal to the Default
Purchase Price for the Defaulting Member’s Interest determined in accordance with the provisions of Section 7.03(c) and the balance of such proceeds shall be distributed to the Non-Defaulting Member. 

 

	 	7.05	Closing of Purchase and Sale 

 The closing of any purchase and sale of the Interest of any Member selling its Interest (the “Selling Member”) pursuant to this Article 7 shall be held at the principal office of
the Member that is purchasing the Interest of the Selling Member (the “Purchasing Member”) Member (or its counsel) on or before the forty-fifth (45th) day after the expiration of the applicable thirty (30)-day period set forth
in Section 7.04 (if applicable), or, if earlier, the forty-fifth (45th) day after the Effective Date of the Default Notice or Buy-Sell Notice, as applicable). The Selling Member shall transfer to the Purchasing Member (or such
Member’s nominee(s)) the entire Interest of the Selling Member free and clear of all liens, security interests, and competing claims and shall deliver to the Purchasing Member (or such Member’s nominee(s)) such instruments of transfer and
such evidence of due authorization, execution, and delivery, and of the absence of any such liens, security interests, or competing claims as such Purchasing Member (or such Member’s nominee(s)) shall reasonably request. 

 

	 	7.06	Payment of Purchase Price 

 The Purchase Price for the purchase of the Selling Member’s Interest shall be paid by the Purchasing Member (or such Member’s nominee(s)) at the closing, in cash or one (1) or more
certified or bank cashier’s checks drawn and made payable to the order of the Selling Member. If the Company or its assets are sold to a third party pursuant to this Article 7, then the entire Third Party Purchase Price shall be paid
concurrently with such closing. 
  

	 	7.07	Release and Indemnity 

 On or before the closing of a purchase held pursuant to this Article 7, the Purchasing Member shall use such Member’s reasonable efforts to obtain written releases of the Selling Member (and
such Member’s Affiliates) from all liabilities of the Company and from all guarantees of such liabilities of the Company previously executed by the Selling Member (and its Affiliates). To the extent such releases cannot be obtained by the
Purchasing Member, the Purchasing Member shall indemnify, defend, protect and hold the Selling Member (and such Affiliates) wholly free and harmless from and against any and all claims, liabilities, causes of action, liens, charges, and all other
matters arising 

  
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from such liabilities or guarantees, arising subsequent to the Effective Date of such closing. 
  

	 	7.08	Repayment of Member Loans 

 The Purchase Price to be paid by the Purchasing Member for the Interest of the Selling Member shall be offset at the closing of such purchase by the then outstanding principal balance (together with all
accrued, unpaid interest thereon) of any and all (i) Member Loans made by the Purchasing Member to the Selling Member and (ii) loans or advances of funds made by the Company to the Selling Member (each a “Seller Loan”).
Such Member Loans and Seller Loans (together with all accrued, unpaid interest thereon) shall be deemed paid to the extent of such offset, with such deemed payment to be applied first to the accrued interest thereon and thereafter to the payment of
the outstanding principal amount thereof. If the Purchase Price for the Defaulting Member’s Interest is insufficient to fully offset the then unpaid principal balance of any and all Member Loans and Seller Loans (together with all accrued,
unpaid interest thereon), then the portion of any such Member Loans and Seller Loans (and accrued, unpaid interest thereon) that remains outstanding following such offset shall be due and payable in full at the closing of the purchase of the Selling
Member’s Interest pursuant to this Article 7. Also, notwithstanding any other provision contained in this Agreement, the unpaid principal balance of any and all Member Loans and Seller Loans (together with all accrued, unpaid interest
thereon) shall be due and payable in full at the closing of the purchase of the Selling Member’s Interest pursuant to this Article 7. 
  

	 	7.09	Voting Rights Following Default Buy-Sell Event 

 From and after the occurrence of a Default Buy-Sell Event (unless and until the Non-Defaulting Member waives in writing any Default Buy-Sell Event or fails to timely consummate the closing of any
applicable transaction described in this Article 7 pursuant to Section 7.05), (i) the Defaulting Member shall not be entitled to participate in the management of, or otherwise vote upon, any matter affecting the business and
affairs of, the Company or any matter that such Member is entitled to vote upon under this Agreement, (ii) the Defaulting Member shall no longer have any right to appoint any representative to the Management Committee and any previously
appointed representatives of the Defaulting Member shall be replaced by one (1) or more representatives to be appointed by the Non-Defaulting Member, and (iii) the rights of the Defaulting Member shall be limited solely to those of an
assignee. 
  

	 	7.10	Withdrawal of the Selling Member 

 If the Interest of the Selling Member is purchased by the Purchasing Member pursuant to this Article 7, then, effective as of the closing for such purchase, (i) the Selling Member shall
withdraw as a Member of the Company, and (ii) if the Selling Member is ERES, then ERES shall be automatically removed as the Operating Member of the Company. In connection with any such withdrawal of the Selling Member, the Purchasing Member
may cause any nominee designated in the sole and absolute 

  
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discretion of the Purchasing Member to be admitted as a substitute partner of the Company. 
 ARTICLE 8  
 DISSOLUTION AND WINDING UP OF THE COMPANY

  

	 	8.01	Events Causing Dissolution of the Company 

 Upon any Member’s bankruptcy, retirement, resignation, expulsion or other cessation to serve, or the admission or substitution of a new Member, the Company shall not be dissolved but its business
shall continue without interruption or break in continuity. Upon the bankruptcy, retirement, resignation, expulsion or other cessation to serve of any Member, the other Member shall continue to serve as a Member of the Company in accordance with the
provisions of this Agreement. The Company shall be dissolved upon the first to occur of: (a) the expiration of the term of the Company, unless such term has been extended by the unanimous agreement of the Members; (b) the sale, transfer or
other disposition by the Company of all or substantially all of its assets and the collection by the Company of its distributive share of any and all cash proceeds delivered therefrom; or (c) the affirmative election of the Management Committee
to dissolve the Company. Except as may be permitted in accordance with this Section 8.01 or other terms of this Agreement, no Member shall have the right to, and each Member hereby agrees that it shall not, seek to dissolve or cause the
dissolution of the Company or seek to cause a partial or whole distribution or sale of Company assets whether by court action or otherwise, it being agreed that any actual or attempted dissolution, distribution or sale would cause a substantial
hardship to the Company and the remaining Members. 
  

	 	8.02	Winding Up of the Company 

 Upon the Liquidation of the Company caused by other than the termination of the Company under Section 708(b)(1)(B) of the Code (in which latter case the Company shall remain in existence in
accordance with the provisions of such Section of the Code), the Members shall proceed to the winding up of the affairs of the Company. During such winding up process, the Net Profits, Net Losses and Cash Flow distributions shall continue to be
shared by the Members in accordance with this Agreement. The assets shall be liquidated as promptly as consistent with obtaining a fair value therefor, and the proceeds therefrom, to the extent available, shall be applied and distributed by the
Company on or before the end of the taxable year of such Liquidation or, if later, within ninety (90) days after such Liquidation, in the following order: (a) first, to creditors of the Company (including Members who are creditors), in the
order of priority as provided by law, (b) second, to the setting up of any reasonable reserves which the Management Committee deems reasonably necessary for any contingent, conditional or unmatured liabilities or obligations of the Company
(which shall be distributed as soon as reasonably practicable to the Members in proportion to their respective positive Capital Account balances), and (c) thereafter, to the Members in accordance with Section 5.02 hereof.

  

	 	8.03	No Negative Capital Account Restoration 

  
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 No Member shall have any obligation whatsoever upon the Liquidation of such Member’s
Interest, the Liquidation of the Company or in any other event, to contribute all or any portion of any negative balance standing in such Member’s Capital Account to the Company, to any other Member or to any other Person. 

ARTICLE 9 

BOOKS AND RECORDS;  
 ACCOUNTING; TAX ELECTIONS 
  

	 	9.01	Company Books 

 The
Operating Member shall cause to be kept, at the principal office of the Company, or at such other location as the Management Committee shall reasonably deem appropriate, full and proper ledgers, other books of account, and records of all receipts
and disbursements, other financial activities, and the internal affairs of the Company for at least the current and past four (4) Fiscal Years. 
  

	 	9.02	Delivery of Records; Inspection 

 The Operating Member, subject to such reasonable standards as may be established from time to time by the Management Committee, shall deliver to any Member (or, to the extent so directed, to its agent or
attorney) a copy of the following information at any time if requested in writing: 
 (a) Financial
Reports. True and full information regarding the status of the business and financial condition of the Company (including, without limitation, the annual financial reports and all supporting calculations and information for such reports),
including (without limitation,) the information required by Section 9.03(c); 
 (b) Tax
Returns. Promptly after becoming available, copies of the Company’s federal, state and local income or information tax returns for the year; 
 (c) Names and Addresses. A current list of the name and last known-business, residence or mailing address of each Member and the date on which each became a Member; 

(d) Formation Documents. A copy of this Agreement, as amended, and any other formation documents for the Company,
together with executed copies of any written powers of attorney pursuant to which this Agreement, as amended, and any other formation documents have been executed; and 

(e) Contribution Information. True and full information regarding the amount of cash and a description and
statement of the agreed value of any other property or services contributed by each Member and which each Member has agreed to contribute in the future. 

  
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 Any Member (personally or through an authorized representative) may, for any purpose
reasonably related to such Member’s Interest, inspect and copy (at its own cost and expense) the books and records of the Company at all reasonable business hours. 

 

	 	9.03	Reports and Tax Information 

 (a) General. The Operating Member shall cause to be prepared, at the cost and expense of the Company, and delivered to each Member at such times as are determined by the Management Committee (or
otherwise in accordance with the terms of this Agreement), the Annual Business Plans, the Operating Budgets, any and all periodic operating reports, and any and all other financial statements or reports requested from time to time by any
representative of the Management Committee. In addition, the Operating Member shall cause to be prepared, at the cost and expense of the Company, and delivered to each Member, within ninety (90) days after the end of each tax year, the
information necessary for such Member to complete its federal, state and local income tax or information returns. 
 (b) Tax
Returns. The Operating Member shall cause to be prepared by a reputable accounting firm approved by the Management Committee and delivered to each Member, within ninety (90) days from and after the final day of each tax year, the
Company’s federal, state and local income or information tax returns for the year, as well as any additional information necessary for such Member to complete its federal, state and local income tax or information returns. In addition, upon the
request of any Member, the Operating Member shall prepare estimates of the projected federal, state and local taxable income of the Company, and the portion thereof allocable to each Member, within a reasonable time period specified by the Member
prior to the end of each tax year. 
 (c) Periodic Financial Statements. The Operating Member shall furnish quarterly
financial statements, including a balance sheet, income statement, statement of Members’ capital, statement of cash flows and notes thereon, that are prepared on a historical cost basis in accordance with generally accepted accounting
principles within fifteen (15) calendar days following the close of a given quarter. 
 (d) Audited Financial
Statements. If required by Paladin, the Operating Member shall prepare, at the expense of the Company, and furnish the following information to each Member within sixty (60) calendar days after the end of each Fiscal Year (with a final
reviewable draft thereof to be furnished to each Member within forty-five (45) days after the end of each Fiscal Year): (i) an audited balance sheet of the Company dated as of the end of such Fiscal Year, (ii) an audited related
income statement of the Company for such Fiscal Year, (iii) an audited statement of cash flows for such Fiscal Year, (iv) an audited statement of each Member’s Capital Account for such Fiscal Year, and (v) notes thereon, prepared
on a historical cost basis in accordance with generally accepted accounting principles, all of which shall be certified by the Operating Member as being, to the best of its knowledge, true and correct and all of which shall be certified in the
customary manner by a reputable accounting firm 

  
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approved by the Management Committee (which firm shall provide such balance sheet, income statement and statement of Capital Account in draft form within forty (40) calendar days after the
end of each Fiscal Year, to the Members for review prior to finalization and certification thereof). 
 (e) Securities
Exchange Act. The Operating Member acknowledges that the financial statements of the Company will be consolidated with those of the Paladin REIT and that the Paladin REIT is subject to the reporting requirements of the Securities Exchange Act of
1934, as amended. The Operating Member shall permit the officers, agents and representatives of the Paladin REIT (including its attorneys and accountants) to have unfettered access to such financial and other information for the Company at such
times as such officer, agent or representatives may reasonably request to enable the Paladin REIT to obtain the information required in order to timely comply with such reporting requirements. The Operating Member, at its expense, shall employ, or
contract with, such individuals and implement such accounting practices and procedures as are necessary for the provision of a reasonably professional level of accounting, reporting and internal controls for the Company, including (without
limitation) the provision of the following: (i) documentation of property level and corporate accounting and financial reporting policies and procedures; (ii) documentation of Information Technology (IT) policies and procedures, and
disaster recovery plan; (iii) “sign off” by ERES’ property, accounting and supervisory/review personnel after their preparation, review and/or approval of accounting transactions and workpapers, and (iv) preparation of
written variance analysis of significant accounts quarterly and year-to-date, as compared to the prior year period. In addition, the Operating Member shall institute such additional reasonable internal accounting controls as may be requested
by the Paladin REIT, including, without limitation, those which are necessitated for compliance with the Sarbanes-Oxley Act of 2002, as amended. 
  

	 	9.04	Company Tax Elections; Tax Controversies 

 The Management Committee shall have the right in its sole and absolute discretion to make elections for the Company provided for in the Code including, without limitation, the elections provided for in
Section 754 of the Code. Additionally, the Management Committee shall have the right to seek to revoke any such election (including without limitation, any election under Section 754 of the Code) upon the Management Committee’s
determination that such revocation is in the best interests of the Company or its Members. Paladin is hereby designated as the “Tax Matters Partner” pursuant to the requirements of Section 6231(a)(7) of the Code, and in such capacity
shall represent the Company in any disputes, controversies or proceedings with the Internal Revenue Service. 
  

	 	9.05	Accounting and Fiscal Year 

 Subject to Section 448 of the Code, the books of the Company shall be kept on such method of accounting for tax and financial reporting purposes as may be determined by the Management Committee. The
Fiscal Year of the Company shall be the calendar year. 

  
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	 	9.06	Confidentiality of Information 

 Each party hereto agrees that the provisions of this Agreement, all understandings, agreements and other arrangements between and among the parties, and all other non-public information received from or
otherwise relating to the Company, shall be confidential and shall not be disclosed or otherwise released to any other person or entity (other than another party hereto) without the written consent of the Management Committee. Notwithstanding the
foregoing, confidential information may be disclosed by a party if such party is required to do so: (i) by operation of law, rule or regulation; (ii) pursuant to applicable legal process; (iii) by the commercial lenders to the
Company; (iv) by the title insurer to the Company or Project lender; (v) to any proposed transferee of an Interest; or (vi) to prosecute any claim or defend any action between the Members relating to the Company, without the written
consent of the Management Committee. Accordingly, each party hereto shall, and shall cause its agents and attorneys to, hold in confidence all such information. 
 ARTICLE 10  
 MISCELLANEOUS 

 

	 	10.01	Subscription Agreement 

 As a condition to its admission to the Company, each Member may be required by the Management Committee to execute a subscription agreement in a form satisfactory to the Management Committee, which
subscription agreement shall contain certain representations made by each such Member. 
  

	 	10.02	Investment Interest; Nature of Investment 

 Each Member hereby represents and warrants to the Company and to each other Member that such Member is acquiring its Interest in the Company for its own account and not with a view to, or for resale in
connection with, any distribution thereof in violation of the Securities Act of 1933, as amended (the “Securities Act”), or any applicable state securities laws. Such Member possesses experience and sophistication as an investor
adequate for the evaluation of the merits and risks of such Member’s investment in the Company, has investigated the Company and its business, and the Company has made available to such Member all information necessary for such Member to make
an informed decision to acquire an Interest in the Company. Such Member also understands that its Company Interest may not be transferred absent compliance with the registration requirements of the Securities Act and applicable state securities laws
or pursuant to an exemption therefrom and otherwise in compliance with the terms of this Agreement. Each Member understands the meaning and consequences of the representations, warranties and covenants made by such Member set forth herein and that
the Company has relied upon such representations, warranties and covenants. Each Member hereby indemnifies, defends, protects and holds wholly free and harmless the Company from and against any and all losses, damages, expenses or liabilities
arising out of the breach or inaccuracy of any such representation, warranty or covenant. All 

  
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representations, warranties and covenants contained herein shall survive the execution of this Agreement, the formation of the Company, and the liquidation of the Company. 

 

	 	10.03	Appointment of Attorney-in-Fact 

 Each of the Members by its execution of this Agreement, irrevocably constitutes and appoints any Member(s), agent or other representative as is designated by the Management Committee as such Member’s
true and lawful attorney-in-fact with full power and authority in its name, place and stead to execute, acknowledge, deliver, swear to, file and record at the appropriate public offices such documents as may be necessary or appropriate to carry out
the provisions of this Agreement including, without limitation: 
 (a) Formation Documents. All formation
documents and other instruments (including counterparts of this Agreement), and all amendments thereto, which the Management Committee deems appropriate to form, qualify, continue or otherwise operate the Company as a limited liability company, in
the jurisdictions in which the Company may conduct business. 
 (b) Amendments. All amendments to this
Agreement adopted in accordance with the terms of this Agreement, and all instruments which the Management Committee deems appropriate to reflect a change or modification of the Company in accordance with the terms of this Agreement. 

(c) Conveyance Documents. All conveyances of Company assets in accordance with the terms of this Agreement, and
other instruments which the Management Committee reasonably deems necessary in order to complete a dissolution and liquidation of the Company in accordance with the terms of this Agreement. 

The foregoing appointment shall be deemed to be a power coupled with an interest, in recognition that each of the Members under this
Agreement will be relying upon the power of the Management Committee to act as contemplated by this Agreement in any filing and other action by it on behalf of the Company, shall survive the bankruptcy or other incapacity of any Member hereby giving
such power, and the transfer or assignment of all or any portion of the Interest of such Member in the Company, and shall not be affected by the subsequent bankruptcy or other incapacity of such Member. If any Member assigns all or any portion of
its Interest in the Company, then the foregoing power of attorney shall survive such assignment. 
  

	 	10.04	Waiver of Conflict of Interest 

 The Company and each Member are not represented by separate counsel; provided, however, in connection with the formation of the Company and the drafting and negotiation of this Agreement,
(i) Paladin (and not the Company or ERES) has been represented separately by King & Spalding LLP and (ii) ERES (and not the Company or Paladin) has been represented separately by Brick Gentry, P.C. The attorneys, accountants and
other experts who perform services for any Member may also perform 

  
 -41-

 
services for the Company. To the extent that the foregoing representation constitutes a conflict of interest, the Company and each Member hereby expressly waive any such conflict of interest.

  

	 	10.05	Amendment 

 The
written consent of each Member shall be required to amend any provision of this Agreement, which consent may be given, withheld or made subject to such conditions as are determined by each such Member in such Member’s sole and absolute
discretion. No provision of this Agreement may be amended except in a writing signed by all Members and expressly stating (i) that it is an amendment of this Agreement and (ii) the provisions of this Agreement being amended and how it is
being amended. Notwithstanding the foregoing provisions of this Section 10.05 to the contrary, this Agreement may be amended by Paladin, by executing an instrument of amendment and giving each Member notice thereof, without the consent
of any of the other Members, to effect or implement actions approved by the Management Committee if the Operating Member fails to take action to effect or implement such actions. 

 

	 	10.06	No Assignments; Binding Effect 

 This Agreement shall not be assigned or otherwise transferred (by operation of law or otherwise) by any Member except as is otherwise permitted hereby. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and assigns permitted in accordance with this Agreement and the Georgia Act. 

 

	 	10.07	Further Assurances 

Each of the parties hereto hereby covenants and agrees on behalf of itself, its successors, and its assigns, without further
consideration, to prepare, execute, acknowledge, verify, file, record, publish and deliver such other instruments, documents and statements, and to take such other action as may be required by law or reasonably necessary to effectively carry out the
purposes of this Agreement. 
  

	 	10.08	Notices 

 Any
notice, approval, consent, payment, demand or communication required or permitted to be given to any Member under this Agreement shall be in writing and shall be deemed to have been duly given or made as of the date (the “Effective
Date”) set forth below: (i) if delivered personally by courier or otherwise, then as of the date delivered or if delivery is refused, then as of the date presented; (ii) if sent or mailed by Federal Express, Express Mail, or other
nationally recognized overnight mail service which maintains evidence of delivery and receipt, to the Company at its principal office and to each Member at its address appearing in the current records of the Company, then as of the date received;
(iii) if sent or mailed by certified U.S. Mail, return receipt requested, to the Company at its principal office and to each Member at its address appearing in the current records of the Company, then as of the third Business Day after

  
 -42-

 
the date so mailed; or (iv) if sent by facsimile to the Company at its facsimile telephone number or to any Member at its facsimile telephone appearing in the current records of the Company,
then either (A) as of the date on which the appropriate electronic confirmation of receipt is received by the sending party at or before 5:00 p.m. (receiver’s time) on any Business Day, or (B) as of the next Business Day if the time
of the appropriate electronic confirmation of receipt is received by the sending party after 5:00 p.m. (receiver’s time). Notices to each Member shall be addressed as follows (which address(es) may be changed by the Member from time to time by
written notice to the Members). 
  

			
	 To Paladin:
	  	c/o Paladin Realty Partners, LLC
		  	10880 Wilshire Boulevard, Suite 1400
		  	Los Angeles, California 90024
		  	Attention: William K. Dunbar
		  	Fax: (310) 996-8708
		  	Telephone: (310) 996-8754
		
		  	King & Spalding LLP
		  	1185 Avenue of the Americas
		  	New York, New York 10036
		  	Attention: Timothy N. Tucker, Esq.
		  	Fax: (212) 556-2236
		  	Telephone: (212) 556-2222
		
	 To ERES:
	  	 c/o Evergreen Residential, Inc.
 519 Harrison Avenue, Suite 512

		  	Boston, MA USA 02118
		  	Attention: Charles M. Thompson
		  	Telephone: 617-216-1908
		  	Fax: 617-812-5815
		
	 With a copies to:
	  	Northview Realty Group, Inc.
		  	550 Sherbrook, Suite 1480
		  	Montreal QC Canada H3A 1B9
		  	Attention: Doug Reim
		  	Telephone: (514)904-0124
		  	Fax: (514)987-9500
		
		  	and
		
		  	Brick Gentry, P.C.
		  	6701 Westown Parkway, Suite 100
		  	West Des Moines, Iowa 50266
		  	Attention: Amy S. Beattie, Esq.
		  	Telephone: (515)274-1450
		  	Fax: (515)274-1488

  
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	 	10.09	Waivers 

 No waiver
by any Member of any default with respect to any provision, condition or requirement hereof shall be deemed to be a waiver of any other provision, condition or requirement hereof; nor shall any delay or omission of any Member to exercise any right
hereunder in any manner impair the exercise of any such right accruing to it hereafter. 
  

	 	10.10	Preservation of Intent 

 If any provision of this Agreement is determined by an arbitrator or any court having jurisdiction to be illegal or in conflict with any laws of any state or jurisdiction, then the Members agree that such
provision shall be modified to the extent legally possible so that the intent of this Agreement may be legally carried out. If any one (1) or more of the provisions contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect or for any reason, then the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected, it
being intended that all of the Members’ rights and privileges shall be enforceable to the fullest extent permitted by law. 
  

	 	10.11	Entire Agreement 

This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereto and fully supersedes
any and all prior or contemporaneous agreements or understandings between the parties thereto pertaining to the subject matter hereof. 
  

	 	10.12	Certain Rules of Construction 

 Any ambiguities shall be resolved without reference to which party may have drafted this Agreement. All Article or Section titles or other captions in this Agreement are for convenience only, and they
shall not be deemed part of this Agreement and in no way define, limit, extend or describe the scope or intent of any provisions hereof. Unless the context otherwise requires: (i) a term has the meaning assigned to it; (ii) an accounting
term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles; (iii) “or” is not exclusive; (iv) words in the singular include the plural, and words in the plural include
the singular; (v) provisions apply to successive events and transactions; (vi) “herein,” “hereof” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other
subdivision; (vii) all references to “clauses,” “Sections” or “Articles” refer to clauses, Sections or Articles of this Agreement; and (viii) any pronoun used in this Agreement shall include the corresponding
masculine, feminine or neuter forms. 

  
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	 	10.13	Counterparts 

 This
Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which, taken together, shall constitute one (1) and the same instrument. 

 

	 	10.14	Governing Law 

This Agreement, including its existence, validity, construction, and operating effect, and the rights of each of the Members hereto, shall
be governed by and construed in accordance with the laws of the State of Georgia without regard to any otherwise governing principles of conflicts of law. 
  

	 	10.15	Assurances 

 Each
of the Members shall hereafter execute and deliver such further instruments and do such further acts and things as may be reasonably required or useful to carry out the intent and purpose of this Agreement and as are not inconsistent with the terms
hereof. 
  

	 	10.16	Time is of the Essence 

 Time is of the essence hereof in connection with all obligations of the parties hereunder. 
  

	 	10.17	Other Matters 

 If
any proceeding is brought by any Member or the Company against any other Member or the Company that arises out of, or is connected with, this Agreement, then the prevailing party in such proceeding shall be entitled to recover reasonable
attorneys’ fees and costs. Any agreement to pay any amount and any assumption of liability herein contained, express or implied, shall be only for the benefit of the Members and their respective successors and assigns, and such agreements and
assumptions shall not inure to the benefit of the obligees of any indebtedness or any other party, whomsoever, deemed to be a third-party beneficiary of this Agreement. 

 

	 	10.18	No Dissenters’ Rights 

 No Member shall have any of the rights to dissent set forth in Article 10 of the Georgia Act. 
  

	 	10.19	Ownership of ERES 

ERES represents and warrants that ERES is a limited liability company duly organized under the laws of the State of Louisiana and
Exhibit D sets forth the following information with respect to the ownership and structure of ERES and each Person that owns any direct or indirect interest therein: 

  
 -45-

 (a) The name, type and percentage ownership interest of each such Person;
and 
 (b) The name of each officer, if any, and the title thereof, in any corporate entity, the name of each
partner in any partnership entity, and the name of each member and the name of each manager in any limited liability company. 

ERES represents that there are no commitments, options, warrants or rights of any kind which evidence a right to acquire or receive any
ownership interest in ERES. 
 ARTICLE 11  
 DEFINITIONS 
  

	 	11.01	Additional Contribution 

 The term “Additional Contribution” means any and all additional contributions approved in writing by the Management Committee and made by any Member to the capital of the Company pursuant
to Section 3.02. 
  

	 	11.02	Additional Member 

The term “Additional Member” means any Person that has been admitted to the Company as a Member pursuant to this
Agreement by virtue of such Person receiving its Interest in the Company from the Company and not from another Member or an assignee. 
  

	 	11.03	Adjusted Capital Account 

 The term “Adjusted Capital Account” means, with respect to any Member, the deficit balance, if any, in such Member’s Capital Account (a) increased for any amount which the
Member is deemed to be obligated to restore with respect to any negative balance in the Member’s Capital Account pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(c) or pursuant to the penultimate sentence of Treasury Regulation
Section 1.704-2(g)(1) or 1.704-2(i)(5); and (b) decreased by any items described in Treasury Regulation Sections 1.704-1(b)(2)(d)(4), (5) or (6). 
  

	 	11.04	Affiliate 

 The
term “Affiliate” means, with reference to a specified Person, any other Person that, directly or indirectly through one or more intermediaries or otherwise, controls, is controlled by or is under common control with the specified
Person. As used in this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person (whether through ownership of securities of that Person, by
contract, relationship or otherwise) and 

  
 -46-

 
includes, in any event, the ownership of twenty-five percent (25%) or more of the outstanding voting interests of such Person. 

 

	 	11.05	Agreement 

 The
term “Agreement” means this Operating Agreement of Evergreen at Coursey Place, LLC, as it may be further amended. 
  

	 	11.06	Annual Business Plan 

 The term “Annual Business Plan” is defined in Section 2.04. 
  

	 	11.07	Appraised Value 

The term “Appraised Value” is defined in Section 7.03(b). 

 

	 	11.08	Business Day 

 The
term “Business Day” means any weekday excluding any legal holiday observed pursuant to United States federal law or California state law or regulation. 

 

	 	11.09	Buyout Purchase Price 

 The term “Buyout Purchase Price” is defined in Section 7.02. 
  

	 	11.10	Buy-Sell Notice 

The term “Buy-Sell Notice” is defined in Section 7.02. 

 

	 	11.11	Capital Account 

The term “Capital Account” means with respect to each Member the amount of money contributed by such Member to the
capital of the Company, increased by the aggregate Gross Asset Value at the time of contribution (as determined by the Members) of all property contributed by such Member to the capital of the Company (net of liabilities secured by such
contributed property that the Company is considered to assume or take subject to under Section 752 of the Code), the aggregate amount of all Net Profits allocated to such Member, and any and all items of gross income or gain specially allocated
to such Member pursuant to Sections 4.02 and 4.03, and decreased by the amount of money distributed to such Member by the Company (exclusive of any guaranteed payment within the meaning of Section 707(c) of the Code paid to such
Member), the aggregate fair market value at the time of distribution (as determined by the Members) of all property distributed to such Member by the Company (net of liabilities secured by such distributed property that such Member is considered to
assume or take subject to under Section 752 of the Code), the amount of any Net Losses charged to such Member, and any items of loss or deduction specially allocated to such Member pursuant

  
 -47-

 
to Sections 4.02 and 4.03. The provisions hereof governing the maintenance of Capital Accounts are intended to satisfy the requirements of Treasury Regulation
Section 1.704-1(b)(2)(iv) and shall be interpreted and applied in a manner consistent therewith. 
  

	 	11.12	Capital Contribution 

 The term “Capital Contribution” means (i) with respect to Paladin, the aggregate amount of any and all amounts credited to Paladin’s Unrecovered Contribution Account in
accordance with the terms of this Agreement and (ii) with respect to ERES, the aggregate amount of any and all amounts credited to ERES’ Unrecovered Class A Contribution Account and Unrecovered Class B Contribution Account in
accordance with the terms of this Agreement. 
  

	 	11.13	Capital Event 

 The
term “Capital Event” means and includes: (i) any transaction involving the sale, exchange or other disposition of the Project or the Company (but excluding any incidental sales or exchanges of tangible personal property and
fixtures), (ii) any financing, refinancing or borrowing secured by the Project or the Company, and (iii) any condemnation or recovery of damage awards and property insurance proceeds (excluding proceeds from any rent or business
interruption insurance). 
  

	 	11.14	Cash Flow 

 The
term “Cash Flow” means the sum of any and all Ordinary Cash Flow and Extraordinary Cash Flow. 
  

	 	11.15	Cash Flow Bonus Forfeiture Event 

 The term “Cash Flow Bonus Forfeiture Event” shall mean any of the following: (i) the failure of ERES to make all or any portion of any Additional Contribution ERES is required to
contribute pursuant to Section 3.02, (ii) the removal of ERES as Operating Member pursuant to Section 2.06(a) or (iii) the existence of Default Buy-Sell Event and ERES is the Defaulting Member. 

 

	 	11.16	Class A Capital Contribution 

 The term “Class A Capital Contribution” means with respect to ERES, the aggregate amount of any and all amounts credited to ERES’ Unrecovered Class A Contribution Account in
accordance with the terms of this Agreement. Any Class A Capital Contributions made at any time during throughout the term hereof shall be deemed made on the date contributed. 

 

	 	11.17	Class B Capital Contribution 

  
 -48-

 The term “Class B Capital Contribution” means with respect to ERES, the
aggregate amount of any and all amounts credited to such Member’s Class B Unrecovered Contribution Account in accordance with the terms of this Agreement. The Class B Capital Contributions shall be deemed made on the date of this Agreement.

  

	 	11.18	Class A Distribution Percentage 

 The term “Class A Distribution Percentage” means, at any given time, an amount expressed in percentage points (rounded to the nearest one-hundredth of a percentage point) equal to
(i) with respect to Paladin, the aggregate amount of Capital Contributions that have been made by Paladin to the Company divided by the total of the aggregate amount of Capital Contributions that have been made by Paladin to the Company, plus
the aggregate amount of Class A Capital Contributions that have been made by ERES to the Company, and (ii) with respect to ERES, the aggregate amount of Class A Capital Contributions that have been made by ERES to the Company divided
by the total of the aggregate amount of Capital Contributions that have been made by Paladin to the Company, plus the aggregate amount of Class A Capital Contributions that have been made by ERES to the Company. 

 

	 	11.19	Code 

 The term
“Code” means the Internal Revenue Code of 1986, as heretofore and hereafter amended from time to time (or any corresponding provision of any superseding revenue law). 

 

	 	11.20	Company 

 The term
“Company” means the limited liability company governed by this Agreement and created upon the filing of the Certificate of Formation with the Georgia Secretary of State in accordance with the provisions of the Georgia Act, which
limited liability company is referenced in the first paragraph of this Agreement. 
  

	 	11.21	Company Minimum Gain 

 The term “Company Minimum Gain” has the meaning set forth in Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d)(1) for the phrase “partnership minimum gain.” 

 

	 	11.22	Contributing Member 

The term “Contributing Member” is defined in Section 3.03(a). 

 

	 	11.23	Contribution Date 

The term “Contribution Date” is defined in Section 3.02(b). 

 

	 	11.24	Contribution Notice 

  
 -49-

 The term “Contribution Notice” is defined in Section 3.02(b).

  

	 	11.25	Contribution Percentage 

 The term “Contribution Percentage” means, with respect to each Member, the percentage set forth opposite such Member’s name on Exhibit A attached hereto under the column
labeled “Contribution Percentage.” 
  

	 	11.26	Default Buy-Sell Event 

 The term “Default Buy-Sell Event” is defined in Section 7.01. 
  

	 	11.27	Default Notice 

The term “Default Notice” is defined in Section 7.02. 

 

	 	11.28	Defaulting Member 

The term “Defaulting Member” is defined in Section 7.01. 

 

	 	11.29	Default Purchase Price 

 The term “Default Purchase Price” is defined in Section 7.03(a). 
  

	 	11.30	Delinquent Contribution 

 The term “Delinquent Contribution” is defined in Section 3.03(a). 
  

	 	11.31	Dilution Percentage 

The term “Dilution Percentage” is defined in Section 3.03(c). 

 

	 	11.32	Effective Date 

The term “Effective Date” is defined in Section 10.08. 

 

	 	11.33	Emergency Situations 

 The term “Emergency Situations” means any emergency affecting the safety of persons, or which is likely to result in substantial injury, damage or financial loss to the Project or
Company. 
  

	 	11.34	ERES  

 The term
“ERES” means ERES Coursey LLC, a Louisiana limited liability company. 

  
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	 	11.35	Extraordinary Cash Flow 

 The term “Extraordinary Cash Flow” means the cash proceeds (including, without limitation, any insurance proceeds, recoveries, damages and awards, but excluding the proceeds of any rent
insurance or business interruption insurance) realized by the Company, directly or indirectly, as a result of the occurrence of a Capital Event, plus cash interest payments received with respect to such proceeds, decreased by the sum of
(i) the amount of such proceeds applied by the Company to pay debts and liabilities of the Company which are then due and payable (inclusive of any guaranteed payment within the meaning of Section 707(c) of the Code paid to any Member);
(ii) the amount of such proceeds used, set aside or committed by the Company or required to be used by any secured lender for the Project for restoration and repair of any property in the event of damage or destruction to the Project;
(iii) any incidental or ancillary expenses, costs or liabilities incurred by the Company in effecting or obtaining any such Capital Event, or the proceeds thereof (including, without limitation, attorneys’ fees, expert witness’ fees,
accountants’ fees, court costs, recording fees, transfer taxes and fees, appraisal costs and the like) all of which expenses, costs and liabilities shall be paid from the gross amount of such cash proceeds to the extent thereof; (iv) the
payment of such other Company debts and liabilities as are determined in the reasonable discretion of the Management Committee; and (v) a reserve, established in the reasonable discretion of the Management Committee, for anticipated cash
disbursements that will have to be made before additional cash receipts from third parties will provide funds therefore. 
  

	 	11.36	Fiscal Year 

 The
term “Fiscal Year” means, except as otherwise provided in this definition, the twelve (12) month period commencing on January 1 of each calendar year and ending on December 31 of each calendar year, with the first
Fiscal Year commencing on the date hereof and ending on December 31, 2011 and the last Fiscal Year being the period beginning on January 1 of the year in which the final liquidation and termination of the Company is completed and ending on
the date such final liquidation and termination is completed. To the extent any computation or other provision hereof provides for an action to be taken on the basis of a Fiscal Year, an appropriate proration or other adjustment shall be made in
respect of the initial and final Fiscal Years to reflect that such periods are less than twelve (12) month periods. 
  

	 	11.37	Georgia Act 

 The
term “Georgia Act” means the Georgia Limited Liability Company Act (Official Code of Georgia Annotated § 14-11-100, et seq.), as hereafter amended from time to time. 

 

	 	11.38	Gross Asset Value 

The term “Gross Asset Value” shall mean, except as set forth below, such asset’s adjusted basis for federal income
tax purposes: 

  
 -51-

 (i) The initial Gross Asset Value of any asset contributed by a Member to
the Company shall be the gross fair market value of such asset, as determined by the contributing Member and the Company. 
 (ii) The Gross Asset Value of all Company assets shall be adjusted to equal their respective gross fair market values, as determined by the Members as of the following times: (A) the acquisition of
an additional interest in the Company by any new or existing Members in exchange for more than a de minimis Capital Contribution if the Members reasonably determine that such adjustment is necessary or appropriate to reflect the relative
economic interests of the Members in the Company; (B) the distribution by the Company to a Member of more than a de minimis amount of Company property as consideration for an interest in the Company if the Members reasonably determine
that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company; and (C) the liquidation of the Company within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g).

 (iii) The Gross Asset Value of any Company asset distributed to any Member shall be the gross fair market
value of such asset on the date of distribution; and 
 (iv) The Gross Asset Values of Company assets shall be
increased or decreased to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Treasury Regulations; provided, however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (iv) to the extent the Members determine that an
adjustment pursuant to subparagraph (ii) hereof is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (iv). 

If the Gross Asset Value of an asset has been determined or adjusted pursuant to subparagraphs (i), (ii) or (iv) of this
provision, such Gross Asset Value shall thereafter be computed in accordance with Section 1.704-1(b)(2)(iv)(g) of the Treasury Regulations. 
  

	 	11.39	Immediate Family 

The term “Immediate Family” means an individual Person’s current spouse, parents, grandparents, siblings, children,
children’s spouses, grandchildren or grandchildren’s spouses or any trusts or estates (or other estate-planning vehicles) for the exclusive benefit of any one or more of the foregoing that is controlled by such individual Person.

  

	 	11.40	Indemnified Party 

  
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 The term “Indemnified Party” is defined in Section 2.07(a).

  

	 	11.41	Interest 

 The term
“Interest” means in respect to any Member, all of such Member’s right, title and interest in and to the Net Profits, Net Losses, Cash Flow, distributions and capital of the Company, and any and all other interests therein in
accordance with the provisions of this Agreement and the Georgia Act. 
  

	 	11.42	IRR 

 The term
“IRR” means, with respect to any Member, the annual discount rate, determined by iterative process, which results in a net present value approximating zero (0) when such discount rate is applied to the applicable Capital
Contributions made by such Member from time to time and distributions made to such Member from time to time (except for Section 707(c) payments), and calculated using Microsoft Office Excel, xIRR function in accordance with the formula attached
hereto as Exhibit E. 
  

	 	11.43	Liquidation 

 The
term “Liquidation” means, (i) in respect to the Company, the earlier of the date upon which the Company is terminated under Section 708(b)(1) (except for any deemed liquidation under Section 708(b)(1)(B) of the Code)
or the date upon which the Company ceases to be a going concern (even though it may continue in existence for the purpose of winding up its affairs, paying its debts and distributing any remaining balance to its Members), and (ii) in respect to
a Member wherein the Company is not in Liquidation, the liquidation of a Member’s interest in the Company under Treasury Regulation Section 1.761-1(d). 
  

	 	11.44	Majority of Representatives 

 The term “Majority of Representatives” means a majority (in number) of the representatives on the Management Committee, provided that, at any meeting of the Management Committee,
all of the representatives collectively shall have a number of votes equal to the representatives that Paladin or ERES, as the case may be, is entitled to elect, and such votes shall be cast (whether by one or more of such representatives) as a
block, with a majority of such votes constituting a “Majority of Representatives.” 
  

	 	11.45	Management Committee 

 The term “Management Committee” is defined in Section 2.01(a). 
  

	 	11.46	Material Breach 

The term “Material Breach” means any material breach or default by a Member of any material covenant, duty or obligation
under this Agreement or any 

  
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Exhibits hereto (including, without limitation, the failure of any Member to contribute any Additional Contribution to the extent required to be made pursuant to Section 3.02 and
Section 3.03), provided that in any such instance: (i) such Member shall have received written notice from the other Member of such breach or default, and (ii) if curable, such Member shall have failed to cure or remedy
such breach or default within ten (10) days following the Effective Date of such notice (except that no such notice shall be required in the case of the failure of any Member to contribute any Additional Contribution pursuant to
Section 3.02 and Section 3.03) or, if such breach or default is not curable within such 10-day period, such Member shall have failed to diligently and continuously pursue such a cure or remedy and in any event fully cure or
remedy such breach or default within thirty (30) days of the Effective Date of such notice. 
  

	 	11.47	Member Loan 

 The
term “Member Loan” is defined in Section. 3.03(b). 
  

	 	11.48	Member Minimum Gain 

The term “Member Minimum Gain” means minimum gain attributable to a Member Nonrecourse Debt determined in accordance with
Treasury Regulation Section 1.704-2(i) for the phrase “partner minimum gain.” 
  

	 	11.49	Member Nonrecourse Debt 

 The term “Member Nonrecourse Debt” has the meaning set forth in Treasury Regulation Section 1.704-2(b)(4) for the phrase “partner nonrecourse debt.” 

 

	 	11.50	Member Nonrecourse Deductions 

 “Member Nonrecourse Deductions” has the meaning set forth in Treasury Regulation Section 1.704-2(i) for the phrase “partner nonrecourse deductions.” 

 

	 	11.51	Member(s) 

 The
term “Members” means Paladin and ERES, collectively; the term “Member” means any one of the Members. 
  

	 	11.52	Mortgage Loan 

 The
term “Mortgage Loan” is defined in Section 1.05. 
  

	 	11.53	Net Profits and Net Losses 

 The term “Net Profits” or “Net Losses” shall mean, for each Fiscal Year or other period, an amount equal to the Company’s taxable income or loss for such year or
period, determined in accordance with Code Section 703(a) (for this purpose, all items of 

  
 -54-

 
income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments: 

(i) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Net
Profits and Net Losses pursuant to this subparagraph (i) shall be added to such taxable income or loss; 

(ii) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code
Section 705(a)(2)(B) expenditures pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(1), and not otherwise taken into account in computing Net Profits or Net Losses pursuant to this provision shall be subtracted from such taxable
income or loss; 
 (iii) In the event of the Gross Asset Value of any Company property is adjusted pursuant to
subparagraphs (ii) or (iii) of the definition of Gross Asset Value, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Profits or Net Losses;

 (iv) Gain or loss resulting from any disposition of Company property with respect to which gain or loss is
recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value; 

(v) In lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such
taxable income or loss, there shall be taken into account depreciation computed in accordance with Section 1.704-1(b)(2)(iv)(2) of the Treasury Regulations for such Fiscal Year or other period; and 

(vi) Notwithstanding anything contained herein to the contrary, any items which are specially allocated pursuant to
Article 4 hereof shall not be taken into account in computing Net Profits or Net Losses. 
  

	 	11.54	Non-Contributing Member 

 The term “Non-Contributing Member” is defined in Section 3.03(a). 
  

	 	11.55	Nonrecourse Deductions 

 The term “Nonrecourse Deductions” means deductions as described in Treasury Regulation Section 1.704-2(b)(l). 

 

	 	11.56	Operating Account 

  
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 The term “Operating Account” means an account of the Company at a financial
institution approved by the Management Committee and into which all Capital Contributions and other funds for and from the ownership and operation of the Project by the Company shall be deposited and held until properly disbursed and on which at
least one of the representatives of Paladin on the Management Committee shall be a signatory. 
  

	 	11.57	Operating Budget 

The term “Operating Budget” is defined in Section 2.05. 

 

	 	11.58	Operating Member 

The term “Operating Member” is defined in Section 2.03(a). 

 

	 	11.59	Ordinary Cash Flow 

The term “Ordinary Cash Flow” means the amount, if any, of all cash receipts of the Company as of any applicable
determination date (including, without limitation, any cash receipts realized from operations of the Company but excluding any cash receipts or proceeds from a Capital Event), in excess of the sum of (i) all cash disbursements (inclusive of any
reimbursements and guaranteed payments made to any Member, but exclusive of disbursements made from the proceeds of a Capital Event and distributions to the Members in their capacities as such) of the Company prior to that date, plus (ii) any
reserve, determined in the sole and absolute discretion of the Management Committee, for anticipated cash disbursements that will have to be made before additional cash receipts from third parties will provide the funds therefor. Ordinary Cash Flow
shall be determined and distributed no more frequently than monthly and no less frequently than on a quarterly basis or at such other times as the Management Committee determines that funds are available therefor, taking into account the reasonable
business needs of the Company. 
  

	 	11.60	Paladin 

 The term
“Paladin” means PRIP Coursey, LCC, a Delaware limited liability company. 
  

	 	11.61	Paladin REIT 

 The
term “Paladin REIT” means Paladin Realty Income Properties, Inc. a Maryland corporation, or any successor thereto. 
  

	 	11.62	Percentage Interest 

The term “Percentage Interest” means, with respect to each Member, the percentage set forth opposite such Member’s
name on Exhibit A attached hereto under the column labeled “Percentage Interest,” as such percentage shall be modified from time 

  
 -56-

 
to time in accordance with this Agreement. The initial Percentage Interests of the Members shall be as follows: 
  

					
	 Paladin:
	  	 	51.73	% 
	 ERES:
	  	 	48.27	% 

  

	 	11.63	Permitted Transferees 

 The term “Permitted Transferees” is defined in Section 6.02. 
  

	 	11.64	Person 

 The term
“Person” means and includes an individual, a corporation, a partnership, a limited liability company, a joint venture, a trust, an unincorporated organization and a government or any department or agency thereof, or any entity
similar to any of the foregoing. 
  

	 	11.65	Preferred Return 

The term “Preferred Return” means, with respect to each Member, an amount calculated like interest and accrued on the
balance standing from time to time in such Member’s Unrecovered Contribution Account at a simple interest rate equal to ten percent (10%) per annum, non-compounded, and determined on a cumulative basis each calendar year. For financial and
income tax reporting purposes, neither accrual nor payment of the Preferred Return shall be an expense of the Company nor be treated as a guaranteed payment under Section 707(c) of the Code. 

 

	 	11.66	Price Determination Notice 

 The term “Price Determination Notice” is defined in Section 7.03(a). 
  

	 	11.67	Project 

 The term
“Project” is defined in Section 1.03. 
  

	 	11.68	Project Shortfall 

The term “Project Shortfall” means any means any and all cash required to satisfy any actual or projected financial
requirements of the Company (not including, however, payment of Unpaid Preferred Return or any other obligations of the Company to the Members), as determined by the Management Committee. 

 

	 	11.69	Property Management Agreement 

 The term “Property Management Agreement” is defined in Section 2.12. 

  
 -57-

	 	11.70	Property Manager 

The term “Property Manager” means the Person engaged or designated by the Company from time to time to manage and operate
the Project. 
  

	 	11.71	Purchasing Member 

The term “Purchasing Member” is defined in Section 7.05. 

 

	 	11.72	Qualified Appraiser 

The term “Qualified Appraiser” means an appraiser who is not an Affiliate or Related Party of any Member and has not been
an employee of any Member or any Affiliate or Related Party of the Member at any time, who is qualified to appraise assets of the same type owned by the Company and is a member of the Appraisal Institute (or any successor association or body of
comparable standing if such Institute is not then in existence), and who has held his or her certificate as an M.A.I. or its equivalent for a period of not fewer than ten (10) years, and has been actively engaged in the appraisal of such
projects immediately preceding his or her appointment under this Agreement. 
  

	 	11.73	Regulatory Allocations 

 The term “Regulatory Allocations” is defined in Section 4.02(f). 
  

	 	11.74	REIT 

 The term
“REIT” is defined in Section 2.02(d). 
  

	 	11.75	Removal Event 

 The
term “Removal Event” is defined in Section 2.06(a). 
  

	 	11.76	Removal Notice 

The term “Removal Notice” is defined in Section 2.06(a). 

 

	 	11.77	Securities Act 

The term “Securities Act” is defined in Section 10.02. 

 

	 	11.78	Seller Loan 

 The
term “Seller Loan” is defined in Section 7.08. 
  

	 	11.79	Selling Member 

The term “Selling Member” is defined in Section 7.05 

  
 -58-

	 	11.80	Tax Matters Partner 

The term “Tax Matters Partner” is defined in Section 9.04. 

 

	 	11.81	Third-Party Purchase Price 

 The term “Third-Party Purchase Price” is defined in Section 7.02. 
  

	 	11.82	Transfer 

 The term
“Transfer” is defined in Section 6.01. 
  

	 	11.83	Treasury Regulation 

The term “Treasury Regulation” means any proposed, temporary, or final federal income tax regulation promulgated by the
United States Department of the Treasury as heretofore and hereafter amended from time to time (or any corresponding provisions of any superseding revenue law or regulation). 

 

	 	11.84	Unanimous Written Consent 

 The term “Unanimous Written Consent” means a written consent executed by at least one representative of each Member. 

 

	 	11.85	Unpaid Preferred Return 

 The term “Unpaid Preferred Return” means, (i) with respect to Paladin and as of any specified date, the Preferred Return accrued through such date, decreased by the amount of money
and the agreed upon net fair market value of any property distributed by the Company to Paladin pursuant to Section 5.01(a) and (ii) with respect to ERES as of any specified date, the Preferred Return accrued through such date,
decreased by the amount of money and the agreed upon net fair market value of any property distributed by the Company to such ERES Member pursuant to Sections 5.01(b). 

 

	 	11.86	Unpaid Yield Maintenance Amount 

 The term “Unpaid Yield Maintenance Amount” means (i) the amount of Four Million Eleven Thousand Six Hundred Twenty-Eight and 59/100 Dollars ($4,011,628.59), plus (ii) an
additional amount, calculated with respect to each Additional Contribution, equal to the product obtained by multiplying fifteen percent (15%) of the amount of each such Additional Contribution times four (4), decreased by the amount of
money and the agreed upon net fair market value of any property distributed by the Company to the Members pursuant to Section 5.01 and pursuant to Section 5.02(b). 

 

	 	11.87	Unrecovered Class A Contribution Account 

  
 -59-

 The term “Unrecovered Class A Contribution Account” means, with
respect to ERES, the amount of money or the agreed upon fair market value of any property contributed (or deemed contributed) by ERES to the capital of the Company as Class A Capital Contribution pursuant to Section 3.01 (net of
liabilities secured by such contributed property that the Company is considered to assume or take subject to pursuant to Section 752 of the Code), and decreased by the amount of money and the agreed upon fair market value of any property
(net of liabilities secured by such distributed property that ERES is considered to assume or take subject to under Section 752 of the Code) distributed (or deemed distributed) by the Company to ERES pursuant to Section 5.02(a).

  

	 	11.88	Unrecovered Class B Contribution Account 

 The term “Unrecovered Class B Contribution Account” means, with respect to ERES, the amount of money or the agreed upon fair market value of any property contributed (or deemed
contributed) by ERES to the capital of the Company as Class B Capital Contributions pursuant to Section 3.01 and otherwise pursuant to Section 3.02 and Section 3.03 (net of liabilities secured by such contributed
property that the Company is considered to assume or take subject to pursuant to Section 752 of the Code), and decreased by the amount of money and the agreed upon fair market value of any property (net of liabilities secured by such
distributed property that ERES is considered to assume or take subject to under Section 752 of the Code) distributed (or deemed distributed) by the Company to ERES pursuant to Section 5.02(c) 

 

	 	11.89	Unrecovered Contribution Account 

 The term “Unrecovered Contribution Account” means, (i) with respect to Paladin, the amount of money or the agreed upon fair market value of any property contributed (or deemed
contributed) by Paladin to the capital of the Company pursuant to Section 3.01, Section 3.02 and Section 3.03, as the case may be (net of liabilities secured by such contributed property that the Company is
considered to assume or take subject to pursuant to Section 752 of the Code), and decreased by the amount of money and the agreed upon fair market value of any property (net of liabilities secured by such distributed property that
Paladin is considered to assume or take subject to under Section 752 of the Code) distributed by the Company to Paladin pursuant to Section 5.02(a), and (ii) with respect to ERES, the aggregate amount of its Unrecovered
Class A Contribution Account and Unrecovered Class B Contribution Account. 
 [Signatures Commence on Next Page] 

  
 -60-

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of
the day and year first above written. 
  

							
	“Paladin”
	
	PRIP COURSEY, LLC, a Delaware limited liability company
		
	By:	 	Paladin Realty Income Properties, L.P., a Delaware limited partnership
			
		 	By:	 	Paladin Realty Income Properties, Inc., a Maryland corporation, its general partner
				
		 		 	By:	 	 /s/ William K. Dunbar

		 		 		 	William K. Dunbar
		 		 		 	Chief Investment Officer

 [Signatures Continue on Next Page] 

  
 -61-

 [Signatures Continued From Previous Page] 

 

			
	“ERES”
	
	ERES COURSEY LLC, a Louisiana limited liability company
		
	By:	 	 /s/ Charles M. Thompson

		 	Charles M. Thompson, its manager

  
 -62-Multifamily Mortgage

 EXHIBIT 10.3 
 Prepared by, and after recording 
 return to: 

Christopher J. McCarty, Esquire 

HOLLAND & KNIGHT LLP 
 10 St. James
Avenue 
 Boston, Massachusetts 02116 
 MULTIFAMILY MORTGAGE, 
 ASSIGNMENT OF RENTS 

AND SECURITY AGREEMENT 
 (LOUISIANA – REVISION DATE 03-31-2008) 
  

 

 (LOUISIANA – REVISION DATE 03-31-2008) 

BE IT KNOWN on this 28th day of July, 2011, before me the undersigned Notary Public, and in the presence of the
undersigned competent witnesses, personally came and appeared: EVERGREEN AT COURSEY PLACE, LLC, a Delaware limited liability company (Taxpayer Identification No. XX-XXX9582) (“Borrower”), whose permanent mailing
address is 519 Harrison Avenue, Suite 512, Boston, Massachusetts 02118, Attention Charles M. Thompson, who by me duly sworn did declare and acknowledge that Borrower is indebted in favor of DEUTSCHE BANK BERKSHIRE MORTGAGE, INC., a
corporation organized and existing under the laws of the State of Delaware, and whose permanent mailing address is One Beacon Street, 14th Floor, Boston, Massachusetts 02108 (together with its successors and assigns and any subsequent holders,
“Lender”), under Borrower’s Multifamily Note, dated as of the date of this Instrument, in the principal amount of Twenty-Eight Million Five Hundred Thousand and 00/100 Dollars ($28,500,000.00), which Note is payable to
the order of the above-named Lender, has a stated maturity date of August 1, 2021 (the “Maturity Date”), and, together with and as a part of the Indebtedness, is secured by this Multifamily Mortgage, Assignment of Rents
and Security Agreement (the “Instrument”). Borrower’s organizational identification number, if applicable, is 5007994. 
 TO SECURE TO LENDER the repayment of the Indebtedness (including the payment of attorneys fees), and all renewals, extensions, modifications and refinancings of the Indebtedness, and the
performance of the covenants and agreements of Borrower contained in the Loan Documents, Borrower hereby mortgages, hypothecates and assigns to Lender the Mortgaged Property, including the Land located in the Parish of East Baton Rouge, State of
Louisiana and described in Exhibit A attached to this Instrument. The maximum amount of the Indebtedness outstanding at any time and from time to time that is secured by this Instrument shall be limited to an amount equal to the original principal
balance of the Note multiplied by three, inclusive of principal, interest, late charges, default interest, prepayment premiums, additional advances pursuant to this Instrument, costs, expenses and attorneys’ fees. 

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 – CME 
 (Revised 2-15-2011) 
 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)	“Affiliate” of any Person means (i) any other Person which, directly or indirectly, is in Control of, is Controlled by or is under common Control
with, such Person; (ii) any other Person who is a director or officer of (A) such Person, (B) any subsidiary of such Person, or (C) any Person described in clause (i) above; or (iii) any corporation, limited liability
company or partnership which has as a director any Person described in Subsection (ii) above. 

  

	 	(b)	“Approved Seller/Servicer” is defined in Section 43(b). 

 

	 	(c)	“Assignment of Management Agreement” means Assignment of Management Agreement and Subordination of Management Fee of even date herewith among Borrower,
Lender and Property Manager, including all schedules, riders, allonges and addenda, as such Assignment of Management Agreement may be amended from time to time. 

 

	 	(d)	“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 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; (iii) investigatory fees; and (iv) the costs for any opinion required by Lender pursuant to the
terms of the Loan Documents. 

  

	 	(e)	“Borrower” means all entities identified as “Borrower” in the first paragraph of this Instrument, together with their successors and assigns.

  

	 	(f)	“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. 

  

	 	(g)	“Claim” is defined in Section 18(l). 

  

	 	(h)	“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. 

 

	 	(i)	“Condemnation” is defined in Section 20(a). 

  

	 	(j)	 “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies
of a Person whether through 

  
 Page 2

	 	
ownership of voting securities, beneficial interests, by contract or otherwise. The definition is to be construed to apply equally to variations of the word “Control,” including
“Controlled,” “Controlling” or “Controlled by.” 

  

	 	(k)	“Controlling Entity” means an entity which, directly or indirectly through one or more intermediaries, (i) owns or Controls a general partnership
interest or a Controlling Interest of the limited partnership interests in Borrower (if Borrower is a partnership), (ii) is a Manager of Borrower or owns a Controlling Interest in a manager of Borrower or a Controlling Interest of the ownership
or membership interests in Borrower (if Borrower is a limited liability company), or (iii) owns or Controls a Controlling Interest of any class of voting stock of Borrower (if Borrower is a corporation). The SPE Equity Owner, if applicable,
shall be considered a Controlling Entity for purposes of this definition. 

  

	 	(l)	“Controlling Interest” means (i) 50% or more of the direct or indirect ownership interests in an entity, or (ii) a percentage ownership
interest in an entity of less than 50%, if the owner(s) of that interest actually Control(s) the business and affairs of the entity without the requirement of consent of any other party. 

 

	 	(m)	“Cut-off Date” is defined in the Note. 

  

	 	(n)	“Defeasance” is defined in Section 44. 

  

	 	(o)	“Defeasance Closing Date” is defined in Section 44(b). 

 

	 	(p)	“Defeasance Collateral” means (i) a Freddie Mac Debt Security, (ii) a Fannie Mae Debt Security, (iii) U.S. Treasury Obligations, or
(iv) FHLB Obligations. 

  

	 	(q)	 “Defeasance Date” means the second (2nd) anniversary of the “startup date” of the last REMIC within the meaning of Section 860G(a)(9) of
the Tax Code which holds all or any portion of the Loan. 

  

	 	(r)	“Defeasance Fee” is defined in Section 44(c). 

  

	 	(s)	“Defeasance Notice” is defined in Section 44(b). 

  

	 	(t)	“Defeasance Period” is defined in the Note. 

  

	 	(u)	“Disclosure Document” is defined in Section 39. 

  

	 	(v)	 “Eligible Account” means an identifiable account which is separate from all other funds held by the holding institution that is either
(i) an account or accounts maintained with the corporate trust department of a federal or state-chartered depository institution or trust company which complies with the definition of Eligible Institution or (ii) a segregated trust account
or accounts maintained with the corporate trust department of a federal or state chartered depository institution 

  
 Page 3

	 	
or trust company acting in its fiduciary capacity which, in the case of a state chartered depository institution or trust company is subject to regulations substantially similar to 12 C.F.R.
§9.10(b), having in either case a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by federal and state authority. An Eligible Account will not be evidenced by a certificate of deposit, passbook or
other instrument. 

  

	 	(w)	“Eligible Institution” means a federal or state chartered depository institution or trust company insured by the Federal Deposit Insurance Corporation,
the short term unsecured debt obligations or commercial paper of which are rated at least A-3 by Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., P-3 by Moody’s Investors Service, Inc. and F-3 by
Fitch, Inc. in the case of accounts in which funds are held for thirty (30) days or less or, in the case of letters of credit or accounts in which funds are held for more than thirty (30) days, the long term unsecured debt obligations of
which are rated at least “A” by Fitch, Inc. and Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and “A2” by Moody’s Investors Service, Inc. If at any time an Eligible
Institution does not meet the required rating, the Loan Servicer must move the Eligible Account within thirty (30) days of such event to an appropriately rated Eligible Institution. 

 

	 	(x)	“Environmental Inspections” is defined in Section 18(g). 

 

	 	(y)	“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. 

  

	 	(z)	“ERISA” is defined in Section 48(d). 

  

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

 

	 	(bb)	“Fannie Mae Debt Security” means any non-callable bond, debenture, note, or other similar debt obligation issued by Federal National Mortgage
Association. 

  

	 	(cc)	“FHLB Obligations” mean direct, non-callable and non-redeemable securities issued, or fully insured as to payment, by any consolidated bank that is a
member of the Federal Home Loan Banks. 

  

	 	(dd)	“First Mortgage” is defined in Section 43(b). 

  

	 	(ee)	 “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 

  
 Page 4

	 	
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. 

 

	 	(ff)	“Freddie Mac” is defined in Section 43(a). 

  

	 	(gg)	“Freddie Mac Debt Security” means any non-callable bond, debenture, note, or other similar debt obligation issued by Freddie Mac.

  

	 	(hh)	“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. 

 

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

  

	 	(jj)	“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. 

 

	 	(kk)	 “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 

  
 Page 5

	 	
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. 

  

	 	(ll)	“Impositions” and “Imposition Deposits” are defined in Section 7(a). 

 

	 	(mm)	“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. 

  

	 	(nn)	“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. 

 

	 	(oo)	“Indemnitees” is defined in Section 18(j). 

  

	 	(pp)	“Initial Owners” means, with respect to Borrower or any other entity, the Persons 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% of the ownership interests in Borrower or that entity. 

  

	 	(qq)	“Intercreditor Agreement” is defined in Section 43(b). 

 

	 	(rr)	“Issuer Group” is defined in Section 47. 

  

	 	(ss)	“Issuer Person” is defined in Section 47. 

  

	 	(tt)	“Junior Lender” is defined in Section 43(e). 

  

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

  

	 	(vv)	“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. 

  

	 	(ww)	“Lender” means the entity identified as “Lender” in the first paragraph of this Instrument, or any subsequent holder of the Note.

  

	 	(xx)	“Lien” is defined in Section 16. 

  

	 	(yy)	“Loan” means the loan evidenced by the Note. 

  
 Page 6

	 	(zz)	“Loan Documents” means the Note, this Instrument, the Assignment of Management Agreement, 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.

  

	 	(aaa)	“Loan Servicer” means the entity that from time to time is designated by Lender or its designee 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. 

  

	 	(bbb)	“Lockout Period” is defined in the Note. 

  

	 	(ccc)	“Manager” or “Managers” means a Person who is named or designated as a manager or managing member or otherwise acts in the capacity of
a manager or managing member of a limited liability company in a limited liability company agreement or similar instrument under which the limited liability company is formed or operated. 

 

	 	(ddd)	“Material Adverse Effect” is defined in Section 48(f). 

 

	 	(eee)	“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. 

  

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

 

	 	(ggg)	“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; 

  
 Page 7

	 	(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; 

  

	 	(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

  
 Page 8

	 	(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. 

  

	 	(hhh)	“New Non-Residential Lease” is defined in Section 4(f). 

 

	 	(iii)	“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. 

  

	 	(jjj)	“Notice” is defined in Section 31(a). 

  

	 	(kkk)	“O&M Program” is defined in Section 18(d). 

  

	 	(lll)	“Person” means any natural person, sole proprietorship, corporation, general partnership, limited partnership, limited liability company, limited
liability limited partnership, joint venture, association, joint stock company, bank, trust, estate, unincorporated organization, any federal, state, county or municipal government (or any agency or political subdivision thereof), endowment fund or
any other form of entity. 

  

	 	(mmm)	“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 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;

  
 Page 9

	 	(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. 

  

	 	(nnn)	“Pledge Agreement” is defined in Section 44(f). 

  

	 	(ooo)	“Preapproved Intrafamily Transfer” is defined in Section 21(c). 

 

	 	(ppp)	“Prior Lien” is defined in Section 12. 

  

	 	(qqq)	“Proceeding” means, whether voluntary or involuntary, any case, proceeding or other action against Borrower or any SPE Equity Owner under any existing
or future law of any jurisdiction relating to bankruptcy, insolvency, reorganization or relief of debtors. 

  

	 	(rrr)	“Prohibited Activities or Conditions” is defined in Section 18(a). 

 

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

 

	 	(ttt)	“Property Manager” means Pegasus Residential LLC, a Georgia limited liability company. 

 

	 	(uuu)	“Rating Agencies” means (i) prior to a Securitization, each of Fitch, Inc., Moody’s Investors Service, Inc., or Standard &
Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., or any successor entity of the foregoing, or any other nationally recognized statistical rating organization which has been approved by Lender and (ii) after a
Securitization has occurred, each of the foregoing Rating Agencies which has rated the securities in the Securitization. 

  

	 	(vvv)	“Release Instruments” is defined in Section 44(f). 

  

	 	(www)	“Remedial Work” is defined in Section 18(h). 

  

	 	(xxx)	“Rent Schedule” means a written 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. 

  

	 	(yyy)	 “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

  
 Page 10

	 	
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. 

  

	 	(zzz)	“Required DSCR” is defined in Section 43(b). 

  

	 	(aaaa)	“Required LTV” is defined in Section 43(b). 

  

	 	(bbbb)	“Restoration” is defined in Section 19(f). 

  

	 	(cccc)	“Scheduled Debt Payments” is defined in Section 44(g). 

 

	 	(dddd)	“Secondary Market Transaction” means (a) any sale or assignment of this Instrument, the Note and the other Loan Documents to one or more investors
as a whole loan; (b) a participation of the Loan to one or more investors; (c) any deposit of this Instrument, the Note and the other Loan Documents with a trust or other entity which may sell certificates or other instruments to investors
evidencing an ownership interest in the assets of such trust or other entity; or (d) any other sale, assignment or transfer of the Loan or any interest therein to one or more investors. 

 

	 	(eeee)	“Securities Liabilities” is defined in Section 47. 

  

	 	(ffff)	“Securitization” means when the Note or any portion of the Note is assigned to a REMIC trust. 

 

	 	(gggg)	“Servicing Arrangement” is defined in Section 36(b). 

 

	 	(hhhh)	“Single Purpose Entity” is defined in Section 33(b). 

 

	 	(iiii)	“SPE Equity Owner” is NOT APPLICABLE-Borrower shall not be required to maintain an SPE Equity Owner in its organizational structure during the term of
the Loan and all references to SPE Equity Owner in this Instrument and in the Note shall be of no force or effect. 

  

	 	(jjjj)	“Successor Borrower” is defined in Section 44(h). 

  

	 	(kkkk)	“Supplemental Mortgage” is defined in Section 43(b). 

 

	 	(llll)	“Supplemental Mortgage Product” is defined in Section 43(a). 

 

	 	(mmmm)	“Tax Code” means the Internal Revenue Code of the United States. 

 

	 	(nnnn)	 “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 

  
 Page 11

	 	
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. 

 

	 	(oooo)	“Third Party Information” is defined in Section 47. 

  

	 	(pppp)	“Transfer” is defined in Section 21. 

  

	 	(qqqq)	“Transfer and Assumption Agreement” is defined in Section 44(f). 

 

	 	(rrrr)	“UCC Collateral” is defined in Section 2. 

  

	 	(ssss)	“Underwriter Group” is defined in Section 47. 

  

	 	(tttt)	“U.S. Treasury Obligations” means direct, non-callable and non-redeemable securities issued, or fully insured as to payment, by the United States of
America. 

  

	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, 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 

  
 Page 12

	 	
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, and during the continuance of such 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
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 during the 

  
 Page 13

	 	
continuance of such 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

  
 Page 14

	 	
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 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. 

  
 Page 15

	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 and during the continuance of such Event of Default, the permission given to Borrower 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 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, 

  
 Page 16

	 	
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 during the continuance of such 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 (i) enter into any Lease for any portion of the Mortgaged Property for non-residential use (“Non-Residential Lease”) which is
not in existence as of the date of this Instrument (“New Non-Residential Lease”) or (ii) modify the terms of or extend any Non-Residential Lease (including any Non-Residential Lease in existence on the date of this Instrument)
(“Modified Non-Residential Lease”) except as set forth below without the prior written consent of Lender; provided, however, Lender’s consent shall not be required for Borrower to enter into a New Non-Residential Lease or a
Modified Non-Residential Lease, provided that such New Non-Residential Lease or Modified Non-Residential Lease satisfies the following requirements: 

  

	 	(i)	the tenant under the New Non-Residential Lease is not an Affiliate of the Borrower or any guarantor; 

 

	 	(ii)	the terms of the New Non-Residential Lease or Modified Non-Residential Lease are at least as favorable to Borrower as those customary in the applicable market on the
date Borrower enters into such Lease; 

  
 Page 17

	 	(iii)	the rents paid to the Borrower pursuant to the New Non-Residential Lease or Modified Non-Residential Lease are not less than 90% of the rents paid to Borrower pursuant
to the Non-Residential Lease for that portion of the Mortgaged Property which was in effect prior to the New Non-Residential Lease or Modified Non-Residential Lease; 

 

	 	(iv)	the term of the New Non-Residential Lease or Modified Non-Residential Lease, including any option to extend, is 10 years or less; 

 

	 	(v)	the New Non-Residential Lease or Modified Non-Residential Lease must provide that the space may not be used or operated, in whole or in part, for any of the following:
(1) the operation of a so-called “head shop” or other business devoted to the sale of articles or merchandise normally used or associated with illegal or unlawful activities such as, but not limited to, the sale of paraphernalia used
in connection with marijuana or controlled drugs or substances, (2) a gun shop, shooting gallery or firearms range, (3) a so-called massage parlor or any business which sells, rents or permits the viewing of so-called “adult” or
pornographic materials such as, but not limited to, adult magazines, books, movies, photographs, sexual aids, sexual articles and sex paraphernalia, (4) any use involving the sale or distribution of any flammable liquids, gases or other
Hazardous Materials as defined under this Instrument, (5) an off-track betting parlor or arcade, (6) a liquor store or other business whose primary business is the sale of alcoholic beverages for off-site consumption, (7) a burlesque
or strip club, or (8) any other illegal activity; and 

  

	 	(vi)	the aggregate of the income derived from the space leased pursuant to the New Non-Residential Lease accounts for less than 20% of the gross income of the Mortgaged
Property on the date which Borrower enters into the New Non-Residential Lease. 

  

	 	(g)	Borrower shall, without request by Lender, deliver a fully executed copy of each Non-Residential Lease to Lender promptly after such Lease is signed.

  

	 	(h)	All Non-Residential Leases regardless of whether Lender’s consent or approval is required, 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; 

  
 Page 18

	 	(iii)	the tenant agrees to execute such further evidences of attornment as Lender or any purchaser at a foreclosure sale may from time to time request;

  

	 	(iv)	such Lease shall not be terminated by foreclosure or any other Transfer of the Mortgaged Property unless, subject to any Subordination, Non-Disturbance and Attornment
Agreement, Lender affirmatively elects to terminate such Lease; and 

  

	 	(v)	the tenant shall, upon receipt of a written request from Lender after the occurrence of an Event of Default, pay all Rents payable under such Lease to Lender.

  

	 	(i)	Borrower shall not receive or accept Rent under any Lease (whether residential or Non-Residential) for more than two months in advance. 

 

	 	(j)	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. 

  
 Page 19

	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. 

 

			
	[Collect]	  	Hazard Insurance premiums or other insurance premiums required by Lender under Section 19
	[Collect]	  	Taxes or payments in lieu of taxes (PILOT)
	[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 deposited in an Eligible Account at an Eligible Institution (which may be Lender, if Lender is such an institution) and
shall be invested in “permitted investments” as then defined and required by the Rating Agencies. 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 

  
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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. 

 

	 	(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 

  
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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. 

  

	 	(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 

  
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agreement (if Borrower is an limited liability company 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. 

 

	 	(e)	Borrower represents and warrants that Borrower, any commercial tenant of the Mortgaged Property and/or any operator of the Mortgaged Property were in possession of all
material licenses, permits and authorizations required for use of the Mortgaged Property which were valid and in full force and effect as of the date of this Instrument. Borrower warrants that it, any commercial tenant of the Mortgaged Property
and/or any operator of the Mortgaged Property shall remain in material compliance with all material licenses, permits and other legal requirements necessary and required to conduct its business. 

 

	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. The Mortgaged Property
(x) permits ingress and egress, (y) is served by public utilities and services generally available in the surrounding community or otherwise appropriate for the use in which the Mortgaged Property is currently being utilized, and
(z) constitutes one or more separate tax parcels or the Lender’s title policy contains one or more endorsements with respect to the matters described in (x) or (z). 

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. 

  
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	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. 

 

	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

  
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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, in accordance with GAAP consistently applied (or such other method which is reasonably acceptable to Lender), and copies of all written contracts, Leases, and other instruments which affect the Mortgaged Property.

  
 Page 25

 The books, records, contracts, Leases and other instruments shall be subject to examination
and inspection by Lender at any reasonable time. 
  

	 	(b)	Borrower shall furnish to Lender each of the following within twenty-five (25) days after the end of each calendar quarter prior to Securitization and within
thirty-five (35) days after the end of each calendar quarter after Securitization: 

  

	 	(i)	a Rent Schedule dated no earlier than the date which is five (5) days prior to the end of such quarter; and 

 

	 	(ii)	a statement of income and expenses for Borrower’s operation of the Mortgaged Property either 

 

	 	(A)	for the twelve (12) month period ending upon the last day of such quarter, or 

 

	 	(B)	if at the end of such quarter Borrower and any Affiliate of Borrower have owner the Mortgaged Property for less than twelve (12) months, for the period commencing
with the acquisition of the Mortgaged Property by Borrower or its Affiliates, and ending upon the last day of such quarter. 

  

	 	(c)	Within ninety (90) days after the end of each fiscal year of Borrower, Borrower shall furnish to Lender each of the following: 

 

	 	(i)	an annual statement of income and expenses for Borrower’s operation of the Mortgaged Property for that fiscal year; 

 

	 	(ii)	a statement of changes in financial position of Borrower relating to the Mortgaged Property for that fiscal year; 

 

	 	(iii)	a balance sheet showing all assets and liabilities of Borrower relating to the Mortgaged Property as of the end of that fiscal year and a profit and loss statement for
Borrower; and 

  

	 	(iv)	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.

  

	 	(d)	Borrower shall furnish to Lender each of the following: 

  

	 	(i)	 in addition to the requirements of Section 14(b), upon Lender’s request prior to a Securitization, and thereafter upon Lender’s
reasonable request, in each 

  
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case within twenty-five (25) days after the end of each month, a monthly Rent Schedule and a monthly statement of income and expenses for Borrower’s operation of the Mortgaged Property;

  

	 	(ii)	upon Lender’s request prior to a Securitization, and thereafter upon Lender’s reasonable request, in each case within ten (10) days after such request, 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), and 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;

  

	 	(iii)	copies of all tax returns filed by Borrower, within thirty (30) days after the date of filing; and 

 

	 	(iv)	such other financial information or property management information (including, without limitation, information on tenants under Leases to the extent such information
is available to Borrower, copies of bank account statements from financial institutions where funds owned or controlled by Borrower are maintained, and an accounting of security deposits) as may be required by Lender from time to time.

  

	 	(e)	At any time upon Lender’s request, Borrower shall furnish to Lender 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. However, Lender shall not require the foregoing 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 the foregoing more frequently. 

 

	 	(f)	A natural person having authority to bind Borrower (or the SPE Equity Owner or guarantor, as applicable) shall certify each of the statements, schedules and reports
required by Sections 14(b) through 14(e) and 14(h) to be complete and accurate. Each of the statements, schedules and reports required by Sections 14(b) through 14(e) and 14(h) 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), 14(c) and Section 14(d)(i) and (iv) 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. 

  
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	 	(g)	If Borrower fails to provide in a timely manner the statements, schedules and reports required by Sections 14(b) through 14(e) and 14(h), Lender shall give Borrower
Notice specifying the statements, schedules and reports required by Section 14(b) through 14(e) and 14(h) 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)	Borrower shall cause each guarantor and, at Lender’s request, any SPE Equity Owner, to provide to Lender (i) within ninety (90) days after the close of
such party’s fiscal year, such party’s balance sheet and profit and loss statement (or if such party is a natural person, within ninety (90) days after the close of each calendar year, such party’s personal financial statements)
in form reasonably satisfactory to Lender and certified by such party to be accurate and complete; and (ii) such additional financial information (including, without limitation, copies of state and federal tax returns with respect to any SPE
Equity Owner but Lender shall only require copies of such tax returns with respect to each guarantor if an Event of Default has occurred and is continuing) as Lender may reasonably require from time to time and in such detail as reasonably required
by Lender. 

  

	 	(i)	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. 

  

	 	(j)	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. 

  
 Page 28

	 	(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 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 

  
 Page 29

	 	
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) through (viii), or pursuant to Section 20(d)(ii) through (viii). 

  

	 	(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 the Property Manager or by a residential rental property manager satisfactory to Lender
at all times under a property management agreement approved by Lender in writing. Borrower shall not surrender, terminate, cancel, modify, renew or extend its property management agreement, or enter into any other agreement relating to the
management or operation of the Property with Property Manager or any other Person, or consent to the assignment by the Property Manager of its interest under such property management agreement, in each case without the consent of Lender, which
consent shall not be unreasonably withheld.; If at any time Lender consents to the appointment of a new property manager, such new property manager and Borrower shall, as a condition of Lender’s consent, execute an assignment of management
agreement in a form acceptable to Lender. If any such replacement property manager is an Affiliate of Borrower, and if a nonconsolidation opinion was delivered at the origination of the Loan, Borrower shall deliver to Lender an updated
nonconsolidation opinion in form and substance satisfactory to any Rating Agencies then providing ongoing ratings with respect to any Securitization (unless waived by such Rating Agencies) with regard to nonconsolidation. 

 

	 	(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. 

  
 Page 30

	 	(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; 

  

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

 

	 	(iii)	any occurrence or condition on 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 

 

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

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 

  
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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

  
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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; 

  

	 	(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. 

  

	 	(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 

 

	 	(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. 

  
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	 	(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 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 

  
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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, including any custodian, trustee and any other fiduciaries who hold or have held a full or partial
interest in the Loan for the benefit of third parties, (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; 

 

	 	(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; 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 

  
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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; 

 

	 	(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

  
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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, the obligation of those Persons 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)	At all times during the term hereof, Borrower shall maintain, at its sole cost and expense, for the mutual benefit of Borrower and Lender, the following policies of
insurance: 

  

	 	(i)	 Insurance against any peril included within the classification “All Risks of Physical Loss” with extended coverage in amounts at all times
sufficient to prevent Borrower from becoming a co-insurer within the terms of the applicable policies, but in any event such insurance shall be maintained in an amount equal to the full insurable value of the Mortgaged Property. The policy referred
to in this Section 19 shall contain a replacement cost endorsement and a waiver of depreciation. As used in this Instrument, “full insurable value” means the actual replacement cost of the Improvements and Personalty (without taking
into account any 

  
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depreciation), determined annually by an insurer or by Borrower or, at the request of Lender, by an insurance broker (subject to Lender’s reasonable approval). In all cases where any of the
Improvements or the use of the Mortgaged Property shall at any time constitute legal non-conforming structures or uses under applicable legal requirements of any Governmental Authority, the policy referred to in this Section 19 must include
“Ordinance and Law Coverage,” with “Time Element,” “Loss to the Undamaged Portion of the Building,” “Demolition Cost” and “Increased Cost of Construction” endorsements, in the amount of coverage
required by Lender; 

  

	 	(ii)	Commercial general liability insurance, including contractual injury, bodily injury, broad form death and property damage liability against any and all claims,
including all legal liability to the extent insurable imposed upon Borrower and all Attorneys’ Fees and Costs, arising out of or connected with the possession, use, leasing, operation, maintenance or condition of the Mortgaged Property with a
combined limit of not less than $2,000,000 in the aggregate and $1,000,000 per occurrence, plus umbrella or excess liability coverage with minimum limits in the aggregate and per occurrence of $1,000,000 for Improvements that have 1 to 3 stories and
an additional $2,000,000 in coverage for each additional story with maximum required coverage of $10,000,000, plus motor vehicle liability coverage for all owned and non-owned vehicles (including, without limitation, rented and leased vehicles)
containing minimum limits per occurrence, including umbrella coverage, of $1,000,000; 

  

	 	(iii)	Statutory workers’ compensation insurance; 

  

	 	(iv)	Business interruption including loss of rental value insurance for the Mortgaged Property in an amount equal to not less than twelve (12) months’ estimated
gross Rents attributable to the Mortgaged Property and based on gross Rents for the immediately preceding year and otherwise sufficient to avoid any co-insurance penalty with a 90 day extended period of indemnity (but a minimum of eighteen
(18) months’ estimated gross Rents attributable to the Mortgaged Property and based on gross Rents for the immediately preceding year and otherwise sufficient to avoid any co-insurance penalty with a 90 day extended period of indemnity
when (A) the Improvements have 5 or more stories or (B) at all times during which the Indebtedness is equal to or greater than $50,000,000); 

  

	 	(v)	 If any portion of the Improvements are located within a federally designated flood hazard zone, flood insurance in an amount equal to the full
insurable value of the portion of such Improvements within such flood hazard zone. Such coverage may need to be purchased through excess 

  
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carriers if the required coverage exceeds the maximum insurance allowed under the federal flood insurance program; 

 

	 	(vi)	Insurance against loss or damage from (A) leakage of sprinkler systems and (B) explosion of steam boilers, air conditioning equipment, pressure vessels or
similar apparatus now or hereafter installed at the Mortgaged Property, in such amounts as Lender may from time to time reasonably require and which are customarily required by institutional lenders with respect to similar properties similarly
situated; 

  

	 	(vii)	The insurance required under clauses (i) and (iv) above shall cover perils of terrorism and acts of terrorism and Borrower shall maintain commercial property
insurance for loss resulting from perils and acts of terrorism on terms (including amounts) consistent with those required under clauses (i) and (iv) above at all times during the term of the Loan evidenced by the Note;

  

	 	(viii)	During any period of Restoration, builder’s “all risk” insurance in an amount equal to not less than the full insurable value of the Property against
such risks (including fire and extended coverage and collapse of the Improvements to agreed limits) as Lender may request, in form and substance acceptable to Lender; and 

 

	 	(ix)	Such other insurance with respect to the Improvements and Personalty located on the Property against loss or damage as required by Lender (including, without
limitation, liquor/dramshop, Mold, hurricane, windstorm and earthquake insurance) provided such insurance is of the kind for risks from time to time customarily insured against and in such minimum coverage amounts and maximum deductibles as are
generally required by institutional lenders for properties comparable to the Mortgaged Property or which Lender may deem necessary in its reasonable discretion; provided, however, if Lender requires earthquake insurance, the amount of coverage must
be equal to 150% of the probable maximum loss for the Mortgaged Property but Lender shall not require earthquake insurance if the probable maximum loss for the Mortgaged Property is less than 20%. 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, Borrower shall pay for all such documentation at its sole cost and expense. 

All insurance required pursuant to Subsections (i) and Subsections (iv) through (ix) shall be referred to as
“Hazard Insurance”. 
  

	 	(b)	 All premiums on insurance policies required under Section 19(a) shall be paid in the manner provided in Section 7, unless Lender has
designated in writing another 

  
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method of payment. All such policies shall also be in a form approved by Lender. All policies of Hazard Insurance must include a non-contributing, non-reporting mortgagee clause in favor of, and
in a form approved by, Lender. All policies for general liability insurance must contain a standard additional insured provision, in favor of, and 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 30 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, no later than the earlier of (i) the date that is 60 days after the expiration date of the original
policy, or (ii) the date of any notice to Lender under Subsection (f) below. 

  

	 	(c)	Borrower will maintain the insurance coverage described in this Section 19 with companies acceptable to Lender and with a rated claims paying ability of at least
(i) “A-” or its equivalent by Fitch, Inc., (ii) “A-” or its equivalent by Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., (iii) “A3” or its equivalent by
Moody’s Investors Service, Inc. or (iv) “A” for financial strength and “VIII” for financial size, or their equivalents, by A.M. Best Company. All insurers providing insurance required by this Instrument must be
authorized to issue insurance in the Property Jurisdiction. 

  

	 	(d)	All insurance policies and renewals of insurance policies required by this Section 19 shall be for such periods as Lender may from time to time require.

  

	 	(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, to hold 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 

  
 Page 40

	 	
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. 

  

	 	(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 $142,500.00 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 $142,500.00 but less than $570,000.00 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; 

  
 Page 41

	 	(iv)	Lender determines, in its discretion, that the Restoration will not be completed by the earlier of (A) 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 (B) the expiration of the business interruption coverage; 

 

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

 

	 	(vi)	the casualty involved an actual or constructive loss of more than 30% of the fair market value of the Mortgaged Property, and rendered untenantable more than 30% of the
residential units of the Mortgaged Property; 

  

	 	(vii)	after Restoration the fair market value of the Mortgaged Property is expected to be less than the fair market value of the Mortgaged Property immediately prior to such
casualty (assuming the affected portion of the Mortgaged Property is relet within a reasonable period after the date of such casualty); or 

  

	 	(viii)	during and after the completion of the Restoration less than 35% of the Leases covering the residential units of the Mortgaged Property will remain in full force and
effect. 

  

	 	(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. 

 

	 	(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 

  
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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 hold such awards or proceeds and 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. 

  

	 	(c)	Notwithstanding any provision to the contrary in this Section 20, but subject to Section 20(e) below, in the event of a partial Condemnation of the Mortgaged
Property, 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, in the event of a partial Condemnation resulting in
proceeds or awards in the amount of less than $100,000, 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 proceeds or awards are used solely for the Restoration of the Mortgaged Property. 

  

	 	(d)	In the event of a partial Condemnation of the Mortgaged Property resulting in proceeds or awards in the amount of $100,000 or more and subject to Section 20(e)
below, Lender will have the right to exercise its option to apply Condemnation proceeds to the payment of the Indebtedness only if Lender determines that at least one of the following conditions is met: 

  
 Page 43

	 	(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 Condemnation 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); 

  

	 	(v)	Lender determines that the Restoration will not be completed within one year after the date of the Condemnation; 

 

	 	(vi)	the Condemnation involved an actual or constructive loss of more than 15% of the fair market value of the Mortgaged Property, and rendered untenantable more than 25% of
the residential units of the Mortgaged Property; 

  

	 	(vii)	after Restoration the fair market value of the Mortgaged Property is expected to be less than the fair market value of the Mortgaged Property immediately prior to the
Condemnation (assuming the affected portion of the Mortgaged Property is relet within a reasonable period after the date of the Condemnation); or 

  

	 	(viii)	during and after the completion of the Restoration less than 35% of the Leases covering the residential units of the Mortgaged Property will remain in full force and
effect. 

  

	 	(e)	 Notwithstanding anything to the contrary set forth in this Instrument, including this Section 20, during any period that the Loan or any portion
of the Loan is included in a Securitization, if any portion of the Mortgaged Property is released from the lien of the Loan in connection with a Condemnation and if the ratio of (i) the unpaid principal balance of the Loan to (ii) the
value of the remaining Mortgaged Property, as determined by Lender in its sole discretion based on a commercially reasonable valuation method, is greater than 125% immediately after such release and before any restoration or repair of the Mortgaged
Property 

  
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(but taking into account any planned restoration or repair of the Mortgaged Property as if such planned restoration or repair were completed), the principal balance of the Loan must be paid down
by the least of the following amounts: (i) the net proceeds or awards from such Condemnation, (ii) the fair market value of the released portion of the Mortgaged Property at the time of the release, or (iii) an amount such that the
loan-to-value ratio of the Loan (as determined by Lender in its sole discretion) does not increase after the release, unless Lender shall have received an opinion of counsel, satisfactory to Lender, that a different application of such net proceeds
or awards will not cause such Securitization to fail to maintain its status as a REMIC as a result of such release and application. 

  

	 	(f)	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 Condemnation proceeds and awards prior to such sale or acquisition. 

  

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

 

	21.	TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER. [RIGHT TO UNLIMITED TRANSFERS — WITH LENDER APPROVAL]. Notwithstanding anything to the
contrary in this Section 21, no Transfer will be permitted under this Section 21 unless the provisions of Section 33 are satisfied. 

  

	 	(a)	“Transfer” means 

  

	 	(i)	a sale, assignment, transfer or other disposition or divestment of any interest therein (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;

  

	 	(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, and a joint venture, and the term “partner” shall mean a general partner, a limited partner and a joint venturer. 

  
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	 	(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; provided, however, if Borrower is diligently prosecuting such release or other remedy and advises Lender that such release or remedy cannot be consummated with such 60-day period,
Borrower will have an additional period of time (not exceeding 120 days from the date of creation or such earlier time as may be required by applicable law in which the lienor must act to enforce the lien) within which to obtain such release of
record or consummate such other remedy; 

  

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

  

	 	(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 (E) below (a “Preapproved  

  
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Intrafamily Transfer”), under the terms and conditions listed as items (1) through (9) below: 

 

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

 

	 	(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;

  

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

 

	 	(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. 

 

	 	(1)	Borrower shall provide Lender with prior written Notice of the proposed Preapproved Intrafamily Transfer, which Notice must be accompanied by a non-refundable review
fee in the amount of $5,000. 

  

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

  

	 	(3)	Either directly or indirectly, Charles M. Thompson shall retain at all times a Controlling Interest in the Borrower and manage the day-to-day operations of the
Borrower. 

  

	 	(4)	At the time of the proposed Preapproved Intrafamily 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 Intrafamily Transfers. 

  
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	 	(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. 

  

	 	(8)	If a nonconsolidation opinion was delivered at origination of the Loan and if, after giving effect to all Preapproved Intrafamily Transfers and all prior Transfers, 50%
or more in the aggregate of direct or indirect interests in Borrower are owned by any Person and its Affiliates that owned less than a 50% direct or indirect interest in Borrower as of the origination of the Loan, an opinion of counsel for Borrower,
in form and substance satisfactory to Lender and to any Rating Agencies then providing ongoing ratings with respect to any Securitization, with regard to nonconsolidation. 

 

	 	(9)	Confirmation acceptable to Lender that Section 33 continues to be satisfied; 

 

	 	(viii)	if a Controlling Entity is a publicly held real estate investment trust or a fund, the public issuance of common stock, convertible debt, equity or other similar
securities (“Securities”) and the subsequent Transfer of such Securities; provided that no Securities holder may acquire an ownership percentage of 10% or more unless otherwise approved by Lender; and 

 

	 	(ix)	a Supplemental Mortgage that complies with Section 43 or Defeasance that complies with Section 44. 

 

	 	(d)	The occurrence of any of the following Transfers shall not constitute an Event of Default under this Instrument: 

 

	 	(i)	a Transfer that occurs by devise, descent, or by operation of law upon the death of a natural person to one or more members of the immediate family of such natural
person or to a trust or family conservatorship established for the benefit of such immediate family member or members, provided that: 

  

	 	(A)	The Property Manager (or a replacement property manager approved by Lender), if applicable, continues to be responsible for the management of the Mortgaged Property,
and such Transfer shall not result in a change in the day-to-day operations of the Mortgaged Property; 

  
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	 	(B)	those persons responsible for the management and control of Borrower remain unchanged as a result of such Transfer, or any replacement management is approved by Lender;

  

	 	(C)	Lender receives confirmation acceptable to Lender that Section 33 continues to be satisfied; 

 

	 	(D)	each guarantor executes such documents and agreements as Lender shall reasonably require to evidence and effectuate the ratification of each guaranty and indemnity
agreement, or in the event of the death of any guarantor, the Borrower causes (1) one or more natural persons or entities acceptable to Lender to execute and deliver to Lender a guaranty in a form acceptable to Lender, without any cost or
expense to Lender or (2) the estate of the deceased guarantor to ratify immediately the guaranty and within 6 months after the date of the death of the deceased guarantor one or more Persons acceptable to Lender in Lender’s discretion must
execute and deliver to Lender a guaranty in a form acceptable to Lender and in the same form as the guaranty executed on the date of this Instrument, without any cost or expense to Lender; 

 

	 	(E)	Borrower shall give Lender Notice of such Transfer together with copies of all documents effecting such Transfer not more than thirty (30) calendar days after the
date of such Transfer, and contemporaneously therewith, shall (1) reaffirm the warranties and representations under Section 10 and Section 48 of this Instrument and (2) satisfy Lender, in its discretion, that such
Transferee’s organization, credit and experience in the management of similar properties are deemed to be appropriate to the overall structure and documentation of the existing financing; 

 

	 	(F)	such legal opinions from Transferee’s counsel as Lender deems necessary, including an opinion that the Transferee and any SPE Equity Owner is in compliance with
Section 33 of this Instrument, a nonconsolidation opinion (if a nonconsolidation opinion was delivered at origination of the Loan and if required by Lender), an opinion that the ratification of the Loan Documents and guaranty, if applicable,
has been duly authorized, executed, and delivered and that the ratification documents and guaranty, if applicable, are enforceable as the obligation of the Transferee; and 

 

	 	(G)	Borrower shall pay or reimburse Lender for all costs and expenses incurred by Lender in connection with such Transfer (including all Attorneys’ Fees and Costs);
and 

  
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	 	(ii)	the grant of an easement, if 

  

	 	(A)	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; 

  

	 	(B)	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; and 

  

	 	(C)	if the Note is held by a REMIC trust and if required by Lender, an opinion of counsel for Borrower, in form and substance satisfactory to Lender, to the effect that

  

	 	(1)	the grant of such easement has been effected in accordance with the requirements of Treasury Regulation Section 1.860G-2(a)(8) (as such regulation may be modified,
amended or replaced from time to time), 

  

	 	(2)	the qualification and status of the REMIC trust as a REMIC will not be adversely affected or impaired as a result of such grant, and 

 

	 	(3)	the REMIC trust will not incur a tax under Section 860G(d) of the Tax Code as a result of such grant. 

 

	 	(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 50% of all limited partnership interests in Borrower; 

  

	 	(iii)	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 50% of all
the membership interests in Borrower or (B) a Transfer that results in a change of Manager; 

  

	 	(iv)	 if Borrower is a corporation (A) the Transfer of any voting stock in Borrower which would cause the Initial Owners to own less than 50% 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 

  
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Transfers by a single transferor within a 12-month period affecting an aggregate of 10% or more of that stock; and 

 

	 	(v)	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 (iv) 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 (the “Transferee”) meets Lender’s eligibility, credit, management and other standards satisfactory to Lender in its sole
discretion; 

  

	 	(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 will be managed by a property manager meeting the requirements of Section 17(e); 

 

	 	(vi)	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 satisfactory to Lender in its sole discretion; 

  

	 	(vii)	 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 natural persons or entities

  
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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;

  

	 	(viii)	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 natural persons or entities acceptable to Lender to execute and deliver to Lender a guaranty in a form acceptable to Lender; 

 

	 	(ix)	if a Supplemental Mortgage is outstanding, the Borrower obtains the consent of the lender for the Supplemental Mortgage; 

 

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

  

	 	(A)	a review fee in the amount of $5,000.00; 

  

	 	(B)	a transfer fee in an amount equal to 1% 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 and any fees charged by
the Rating Agencies; 

  

	 	(xi)	evidence satisfactory to Lender that the Transferee and any SPE Equity Owner of such Transferee meet the requirements of Section 33; and 

 

	 	(xii)	such legal opinions from Transferee’s counsel as Lender deems necessary, including an opinion that the Transferee and any SPE Equity Owner is in compliance with
Section 33 of this Instrument, a nonconsolidation opinion (if a nonconsolidation opinion was delivered at origination of the Loan and if required by Lender), an opinion that the assignment and assumption of the Loan Documents has been duly
authorized, executed, and delivered and that the assignment documents and the Loan Documents are enforceable as the obligation of the Transferee. 

  

	 	(g)	The occurrence of any of the Transfers set forth in the Rider(s) attached to this Instrument, if any, shall not constitute an Event of Default under this Instrument if
all of the conditions set forth in such Rider(s) are met. All such Riders providing for Transfers shall be deemed a part of this Section 21(g) and, if more than one, shall be deemed sequentially numbered subsections hereof.

  

	22.	EVENTS OF DEFAULT. The occurrence of any one or more of the following shall constitute an Event of Default under this Instrument: 

  
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	 	(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 or any SPE Equity Owner to comply with the provisions of Section 33 or if any of the assumptions contained in any nonconsolidation opinions
delivered to Lender at any time is or shall become untrue in any material respect; 

  

	 	(d)	fraud or material misrepresentation or material omission by Borrower, any of its officers, directors, trustees, general partners or managers, any SPE Equity Owner 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; 

  

	 	(f)	any Event of Default under Section 21; 

  

	 	(g)	the commencement of a forfeiture action or proceeding, whether civil or criminal, which 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; 

  
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	 	(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)	if (i) Borrower or any SPE Equity Owner shall commence any case, Proceeding or other action under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or relief of debtors (A) seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debt, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for
it or for all or any substantial part of its assets; or (ii) there shall be commenced against Borrower or any SPE Equity Owner any case, Proceeding, or other action of a nature referred to in clause (i) above by any party other than Lender
which (A) results in the entry of an order for relief or any such adjudication or appointment, or (B) remains undismissed, undischarged or unbonded for a period of ninety (90) days; or (iii) there shall be commenced against
Borrower or any SPE Equity Owner any case, Proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of any order by a
court of competent jurisdiction for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within ninety (90) days from the entry thereof; or (iv) Borrower or any SPE Equity Owner shall take any
action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii) or (iii) above; and 

 

	 	(l)	any representations and warranties by Borrower or any SPE Equity Owner in this Instrument that are false or misleading in any material respect.

  

	23.	REMEDIES CUMULATIVE; REMEDIES OF BORROWER. 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. In the event that a claim or adjudication is made that Lender has acted
unreasonably or unreasonably delayed acting in any case where, by law or under this Instrument or the other Loan Documents, Lender has an obligation to act reasonably or promptly, Lender shall not be liable for any monetary damages, and
Borrower’s sole remedy shall be limited to commencing an action seeking injunctive relief or declaratory judgment. Any action or proceeding to determine whether Lender has acted reasonably shall be determined by an action seeking declaratory
judgment. 

  

	24.	FORBEARANCE. 

  
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	 	(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 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, OFFSETS, AND COUNTERCLAIMS. Borrower hereby waives the right to assert any statute of

  
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limitations as a bar to the enforcement of the lien of this Instrument or to any action brought to enforce any Loan Document. Borrower hereby waives the right to assert a counterclaim, other than
a compulsory counterclaim, in any action or proceeding brought against it by Lender or otherwise to offset any obligations to make the payments required by the Loan Documents. No failure by Lender to perform any of its obligations hereunder shall be
a valid defense to, or result in any offset against, any payments that Borrower is obligated to make under any of the Loan Documents. 

  

	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; LENDER’S EXPENSES. 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. Borrower acknowledges and agrees that, in connection with each request by Borrower under this Instrument or any Loan Document, Borrower shall pay all reasonable Attorneys’ Fees and Costs
and expenses incurred by Lender, including any fees charged by the Rating Agencies, regardless of whether the matter is approved, denied or withdrawn. Any amounts payable by Borrower hereunder shall be deemed a part of the Indebtedness, shall be
secured by this Instrument and shall bear interest at the Default Rate if not fully paid within ten (10) days of written demand for payment. 

  

	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 

  
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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. 

  

	 	(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.

  
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	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 PURPOSE ENTITY. 

  

	 	(a)	Until the Indebtedness is paid in full, each Borrower and SPE Equity Owner shall remain a Single Purpose Entity. 

 

	 	(b)	A “Single Purpose Entity” means a corporation, limited partnership, or limited liability company which, at all times since its formation and
thereafter: 

  

	 	(i)	shall not engage in any business or activity, other than the ownership, operation and maintenance of the Mortgaged Property and activities incidental thereto;

  

	 	(ii)	shall not acquire, own, hold, lease, operate, manage, maintain, develop or improve any assets other than the Mortgaged Property and such Personalty as may be necessary
for the operation of the Mortgaged Property and shall conduct and operate its business as presently conducted and operated; 

  

	 	(iii)	shall preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the laws of the jurisdiction of its formation or
organization and shall do all things necessary to observe organizational formalities; 

  

	 	(iv)	shall not merge or consolidate with any other Person; 

  

	 	(v)	shall not take any action to dissolve, wind-up, terminate or liquidate in whole or in part; to sell, transfer or otherwise dispose of all or substantially all of its
assets; to change its legal structure; transfer or permit the direct or indirect transfer of any partnership, membership or other equity interests, as applicable, other than Transfers permitted hereunder; issue additional partnership, membership or
other equity interests, as applicable; or seek to accomplish any of the foregoing; 

  
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	 	(vi)	shall not, without the prior unanimous written consent of all of the Borrower’s partners, members, or shareholders, as applicable, and, if applicable, the prior
unanimous written consent of 100% of the members of the board of directors or of the board of managers of the Borrower or the SPE Equity Owner: (A) file any insolvency, or reorganization case or proceeding, to institute proceedings to have the
Borrower or any SPE Equity Owner be adjudicated bankrupt or insolvent, (B) institute proceedings under any applicable insolvency law, (C) seek any relief under any law relating to relief from debts or the protection of debtors,
(D) consent to the filing or institution of bankruptcy or insolvency proceedings against the Borrower or any SPE Equity Owner, (E) file a petition seeking, or consent to, reorganization or relief with respect to the Borrower or any SPE
Equity Owner under any applicable federal or state law relating to bankruptcy or insolvency, (F) seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official for the Borrower
or a substantial part of its property or for any SPE Equity Owner or a substantial part of its property, (G) make any assignment for the benefit of creditors of the Borrower or any SPE Equity Owner, (H) admit in writing the Borrower’s
or any SPE Equity Owner’s inability to pay its debts generally as they become due, or (I) take action in furtherance of any of the foregoing; 

  

	 	(vii)	shall not amend or restate its organizational documents if such change would modify the requirements set forth in this Section 33; 

 

	 	(viii)	shall not own any subsidiary or make any investment in, any other Person; 

  

	 	(ix)	shall not commingle its assets with the assets of any other Person and shall hold all of its assets in its own name; 

 

	 	(x)	shall not incur any debt, secured or unsecured, direct or contingent (including, without limitation, guaranteeing any obligation), other than, (A) the Indebtedness
(and any further indebtedness as described in Section 43 with regard to Supplemental Mortgages) and (B) customary unsecured trade payables incurred in the ordinary course of owning and operating the Mortgaged Property provided the same are
not evidenced by a promissory note, do not exceed, in the aggregate, at any time a maximum amount of 2% of the original principal amount of the Indebtedness and are paid within 60 days of the date incurred; 

 

	 	(xi)	 shall maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart
from those of any other Person and shall not list its assets as assets on the financial statement of any other Person; provided, however, that the Borrower’s assets may be included in a consolidated financial statement of

  
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its Affiliate provided that (A) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Borrower from such Affiliate and to indicate
that the Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person and (B) such assets shall also be listed on the Borrower’s own separate balance sheet;

  

	 	(xii)	except for capital contributions or capital distributions permitted under the terms and conditions of its organizational documents, shall only enter into any contract
or agreement with any general partner, member, shareholder, principal or Affiliate of Borrower or any guarantor, or any general partner, member, principal or Affiliate thereof, upon terms and conditions that are commercially reasonable and
substantially similar to those that would be available on an arm’s-length basis with third parties; 

  

	 	(xiii)	shall not maintain its assets in such a manner that will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other
Person; 

  

	 	(xiv)	shall not assume or guaranty (excluding any guaranty that has been executed and delivered in connection with the Note) the debts or obligations of any other Person,
hold itself out to be responsible for the debts of another Person, pledge its assets to secure the obligations of any other Person or otherwise pledge its assets for the benefit of any other Person, or hold out its credit as being available to
satisfy the obligations of any other Person; 

  

	 	(xv)	shall not make or permit to remain outstanding any loans or advances to any other Person except for those investments permitted under the Loan Documents and shall not
buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities); 

  

	 	(xvi)	shall file its own tax returns separate from those of any other Person, except to the extent that the Borrower is treated as a “disregarded entity” for tax
purposes and is not required to file tax returns under applicable law, and shall pay any taxes required to be paid under applicable law; 

  

	 	(xvii)	shall hold itself out to the public as a legal entity separate and distinct from any other Person and conduct its business solely in its own name, shall correct any
known misunderstanding regarding its separate identity and shall not identify itself or any of its Affiliates as a division or department of any other Person; 

 

	 	(xviii)	 shall maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its

  
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contemplated business operations and shall pay its debts and liabilities from its own assets as the same shall become due; 

 

	 	(xix)	shall allocate fairly and reasonably shared expenses with Affiliates (including, without limitation, shared office space) and use separate stationery, invoices and
checks bearing its own name; 

  

	 	(xx)	shall pay (or cause the Property Manager to pay on behalf of the Borrower from the Borrower’s funds) its own liabilities (including, without limitation, salaries
of its own employees) from its own funds; 

  

	 	(xxi)	shall not acquire obligations or securities of its partners, members, shareholders, or Affiliates, as applicable; 

 

	 	(xxii)	except as contemplated or permitted by the property management agreement with respect to the Property Manager, shall not permit any Affiliate or constituent party
independent access to its bank accounts; 

  

	 	(xxiii)	shall maintain a sufficient number of employees (if any) in light of its contemplated business operations and pay the salaries of its own employees, if any, only from
its own funds; 

  

	 	(xxiv)	if such entity is a single member limited liability company, such entity shall (A) be formed and organized under Delaware law, (B) have either (1) one
springing member that is a corporation whose stock is 100% owned by the sole member of Borrower and that satisfies the requirements for a corporate springing member set forth below in this Subsection or (2) two springing members who are natural
persons and (C) otherwise comply with all Rating Agencies criteria for single member limited liability companies (including, without limitation, the delivery of Delaware single member limited liability company opinions acceptable in all
respects to Lender and to any Rating Agencies then providing ongoing ratings with respect to any Securitization). If the springing member is a corporation, such springing member shall at all times comply, and will cause Borrower to comply, with each
of the representations, warranties and covenants contained in this Section 33 as if such representation, warranty or covenant were made directly by such corporation. If there is more than one springing member, only one springing member shall be
the sole member of Borrower at any one time, and the second springing member shall become the sole member only upon the first springing member ceasing to be a member, so that at all times Borrower has one and only one member;

  

	 	(xxv)	 if such entity is a single member limited liability company that is board-managed, such entity shall have a board of managers separate from that of
guarantor and any other Person and shall cause its board of managers to 

  
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keep minutes of board meetings and actions and observe all other Delaware limited liability company required formalities; and 

 

	 	(xxvi)	if a SPE Equity Owner is required pursuant to Section 1(jjjj) of this Instrument, if the Borrower is (A) a limited liability company with more than one
member, then the Borrower has and shall have at least one (1) member that is an SPE Equity Owner that has satisfied and shall satisfy the requirements of Section 33(c) below and such member is its managing member, or (B) a limited
partnership, then all of its general partners are SPE Equity Owners that have satisfied and shall satisfy the requirements of Section 33(c) below. 

  

	 	(c)	With respect to each SPE Equity Owner, if applicable, a “Single Purpose Entity” means a corporation or a Delaware single member limited liability
company which, at all times since its formation and thereafter complies in its own right (subject to the modifications set forth below), and shall cause Borrower to comply, with each of the requirements contained in Section 33(b). Upon the
withdrawal or the disassociation of an SPE Equity Owner from Borrower, Borrower shall immediately appoint a new SPE Equity Owner, whose organizational documents are substantially similar to those of the withdrawn or disassociated SPE Equity Owner,
and deliver a new nonconsolidation opinion to any Rating Agencies then providing ongoing ratings with respect to any Securitization and Lender in form and substance satisfactory to Lender and to such Rating Agencies (unless the opinion is waived by
such Rating Agencies), with regard to nonconsolidation by a bankruptcy court of the assets of each of the Borrower and SPE Equity Owner with those of its Affiliates. 

 

	 	(i)	With respect to Sections 33(b)(i) and 33(b)(x) the SPE Equity Owner shall not engage in any business or activity other than being the sole managing member or general
partner, as the case may be, of the Borrower and owning at least a 0.5% equity interest in Borrower; 

  

	 	(ii)	With respect to Section 33(b)(ii), the SPE Equity Owner has not and shall not acquire or own any assets other than its equity interest in the Borrower and personal
property related thereto; 

  

	 	(iii)	With respect to Section 33(b)(viii), the SPE Equity Owner shall not own any subsidiary or make any investment in any other Person, except for Borrower;

  

	 	(iv)	 With respect to Section 33(b)(xiv), the SPE Equity Owner shall not assume or guaranty the debts or obligations of any other Person, hold itself
out to be responsible for the debts of another Person, pledge its assets to secure the obligations of any other Person or otherwise pledge its assets for the benefit of any other Person, or hold out its credit as being available

  
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to satisfy the obligations of any other Person, except for in its capacity as general partner of the Borrower (if applicable); and 

 

	 	(v)	With respect to Section 33(b)(x), the SPE Equity Owner has not and shall not incur any debt, secured or unsecured, direct or contingent (including, without
limitation, guaranteeing any obligation), other than (A) customary unsecured payables incurred in the ordinary course of owning the Borrower provided the same are not evidenced by a promissory note, do not exceed, in the aggregate, at any time
a maximum amount of $10,000 and are paid within sixty (60) days of the date incurred and (B) except in its capacity as general partner of the Borrower (if applicable). 

 

	 	(d)	[INTENTIONALLY DELETED] 

  

	 	(e)	Notwithstanding anything to the contrary in this Instrument, no Transfer will be permitted under Sections 21(c), (d), (e) or (f) unless the provisions of this
Section 33 are satisfied at all times. 

  

	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 signs this Instrument as Borrower, the obligations of such Persons 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

  
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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). 

  

	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.	DISSEMINATION OF INFORMATION. Borrower acknowledges that Lender may provide to third parties with an existing or prospective interest in the servicing,
enforcement, evaluation, performance, ownership, purchase, participation or Securitization of the Loan, including, without limitation, any of the Rating Agencies, any entity maintaining databases on the underwriting and performance of commercial
mortgage loans, as well as governmental regulatory agencies having regulatory authority over Lender, any and all information which Lender now has or may hereafter acquire relating to the Loan, the Mortgaged Property, Borrower, any SPE Equity Owner
or any guarantor, as Lender determines necessary or desirable and that such information may be included in disclosure documents in connection with a Securitization or syndication of participation interests, including, without limitation, a
prospectus, prospectus supplement, offering memorandum, private placement memorandum or similar document (each, a “Disclosure Document”) and also may be included in any filing with the Securities and Exchange Commission pursuant to
the Securities Act or the Securities Exchange Act. To the fullest extent permitted under applicable law, Borrower irrevocably waives all rights, if any, to prohibit such disclosure, including, without limitation, 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 

  
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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.	[INTENTIONALLY DELETED] 

  

	43.	SUPPLEMENTAL FINANCING. 

  

	 	(a)	This Section shall apply only if at the time of any application referred to below, the Federal Home Loan Mortgage Corporation (“Freddie Mac”) has in
effect a product described in its Multifamily Seller/Servicer Guide under which it purchases supplemental mortgages on multifamily properties that meet specified criteria (a “Supplemental Mortgage Product”).

  

	 	(b)	After the first anniversary of the date of this Instrument (the “First Mortgage”), Freddie Mac will consider an application from an originating lender
that is generally approved by Freddie Mac to sell mortgages to Freddie Mac under the Supplemental Mortgage Product (an “Approved Seller/Servicer”) for the purchase by Freddie Mac of a proposed indebtedness of Borrower to the
Approved Seller/Servicer to be secured by one or more supplemental mortgages on the Mortgaged Property (such indebtedness and supplemental mortgages being referred to together as a “Supplemental Mortgage”). Freddie Mac will purchase
each Supplemental Mortgage secured by the Mortgaged Property if the following conditions are satisfied: 

  

	 	(i)	At the time of the proposed Supplemental Mortgage, 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; 

  

	 	(ii)	Borrower, the Mortgaged Property and the proposed Supplemental Mortgage must be acceptable to Freddie Mac under its then-current Supplemental Mortgage Product;

  

	 	(iii)	New loan documents must be entered into to reflect each Supplemental Mortgage, such documents to be acceptable to Freddie Mac in its sole discretion;

  

	 	(iv)	 Each Supplemental Mortgage will not cause the combined debt service coverage ratio of the Mortgaged Property after each Supplemental Mortgage to be
less than 1.25:1, subject to increase in accordance with Freddie Mac’s then-current policies (“Required DSCR”), as determined by Freddie Mac. As used in this Section, the term “combined debt service coverage ratio”
means, with respect to the Mortgaged Property, the ratio of (A) the annual net operating income from the operations of the Mortgaged Property at the time of the proposed Supplemental Mortgage to

  
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(B) the aggregate of the annual principal and interest payable on (I) the Indebtedness under this Instrument (using a 30-year amortization schedule), (II) any “Indebtedness” as
defined in any security instruments recorded against the Mortgaged Property (using a 30-year amortization schedule for any Supplemental Mortgages) and (III) the proposed “Indebtedness” for any Supplemental Mortgage (using a 30-year
amortization schedule). The annual net operating income of the Mortgaged Property will be as determined by Freddie Mac in its sole discretion considering factors such as income in place at the time of the proposed Supplemental Mortgage and income
during the preceding twelve (12) months, and actual, historical and anticipated operating expenses. Freddie Mac shall determine the combined debt service coverage ratio of the Mortgaged Property based on its underwriting. Borrower shall provide
Freddie Mac such financial statements and other information Freddie Mac may require to make these determinations; 

  

	 	(v)	Each Supplemental Mortgage will not cause the combined loan to value ratio of the Mortgaged Property after each Supplemental Mortgage to exceed seventy-seven percent
(77%), subject to decrease in accordance with Freddie Mac’s then-current policies (“Required LTV”), as determined by Freddie Mac. As used in this Section, “combined loan to value ratio” means, with respect to the
Mortgaged Property, the ratio, expressed as a percentage, of (A) the aggregate outstanding principal balances of (I) the Indebtedness under this Instrument, (II) any “Indebtedness” as defined in any security instruments recorded
against the Mortgaged Property and (III) the proposed “Indebtedness” for any Supplemental Mortgage, to (B) the value of the Mortgaged Property. Freddie Mac shall determine the combined loan to value ratio of the Mortgaged Property
based on its underwriting. Borrower shall provide Freddie Mac such financial statements and other information Freddie Mac may require to make these determinations. In addition, Freddie Mac, at Borrower’s expense, may obtain MAI appraisals of
the Mortgaged Property in order to assist Freddie Mac in making the determinations hereunder. If Freddie Mac requires an appraisal, then the value of the Mortgaged Property that will be used to determine whether the Required LTV has been met shall
be the lesser of (A) the appraised value set forth in such appraisal or (B) the value of the Mortgaged Property as determined by Freddie Mac; 

  

	 	(vi)	The Borrower’s organizational documents are amended to permit the Borrower to incur additional debt in the form of Supplemental Mortgages (Lender shall consent to
such amendment(s)); 

  

	 	(vii)	 One or more natural persons or entities acceptable to Freddie Mac executes and delivers to the Approved Seller/Servicer a guaranty in a form

  
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acceptable to Freddie Mac with respect to the exceptions to non-recourse liability described in Freddie Mac’s form promissory note, unless Freddie Mac has elected to waive its requirement
for a guaranty; 

  

	 	(viii)	The loan term of each Supplemental Mortgage shall be coterminous with the First Mortgage or longer than the First Mortgage, including any “Extension Period”
described in the Note secured by the First Mortgage, at Freddie Mac’s discretion; 

  

	 	(ix)	The Prepayment Premium Period (as defined in the Note) of each Supplemental Mortgage shall be coterminous with the Prepayment Premium Period or the combined Lockout
Period and Defeasance Period (all, as defined in the Note), as applicable, of the First Mortgage; 

  

	 	(x)	The interest rate of each Supplemental Mortgage will be determined by Freddie Mac in its sole and absolute discretion; 

 

	 	(xi)	The Lender enters into an intercreditor agreement (“Intercreditor Agreement”) acceptable to Freddie Mac and to Lender for each Supplemental Mortgage;

  

	 	(xii)	Borrower’s payment of fees and other expenses charged by Lender, Freddie Mac, the Approved Seller/Servicer, and the Rating Agencies (including reasonable
Attorneys’ Fees and Costs) in connection with reviewing and originating each Supplemental Mortgage; 

  

	 	(xiii)	Notwithstanding anything to the contrary in Section 7 of this Instrument, Borrower shall make deposits under this First Mortgage for the payment of any
Impositions, so long as a Supplemental Mortgage is outstanding, and such deposits shall be credited to the payment of such Impositions under any Supplemental Mortgage; and 

 

	 	(xiv)	All other requirements of the Supplemental Mortgage Product must be met, unless Freddie Mac has elected to waive one or more of its requirements.

  

	 	(c)	No later than 5 Business Days after Lender’s receipt of a written request from Borrower, Lender shall provide the following information to an Approved
Seller/Servicer upon Borrower’s written request. Lender shall only be obligated to provide this information in connection with Borrower’s request for a Supplemental Mortgage from an Approved Seller/Servicer; provided, however, if Freddie
Mac is the owner of the Note, Lender shall not be obligated to provide such information: 

  

	 	(i)	the then-current outstanding principal balance of the First Mortgage; 

  
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	 	(ii)	payment history of the First Mortgage; 

  

	 	(iii)	whether taxes, insurance, ground rents, replacement reserves, repair escrows, or other escrows are being collected on the First Mortgage and the amount of each such
escrow as of the date of the request; 

  

	 	(iv)	whether any repairs, capital replacements or improvements or rental achievement or burn-off guaranty requirements are existing or outstanding under the terms of the
First Mortgage; 

  

	 	(v)	a copy of the most recent inspection report for the Mortgaged Property; 

  

	 	(vi)	whether any modifications or amendments have been made to the Loan Documents for the First Mortgage since origination of the First Mortgage and, if applicable, a copy
of such modifications and amendments; and 

  

	 	(vii)	whether to Lender’s knowledge any Event of Default exists under the First Mortgage. 

 

	 	(d)	Lender shall have no obligation to consent to any mortgage or lien on the Mortgaged Property that secures any indebtedness other than the Indebtedness, except as set
forth herein. 

  

	 	(e)	If a Supplemental Mortgage is made to Borrower, Borrower agrees that the terms of the Intercreditor Agreement shall govern with respect to any distributions of excess
proceeds by Lender to the Approved Seller/Servicer, Freddie Mac or their successors and/or assigns (collectively, the “Junior Lender”), and Borrower agrees that Lender may distribute any excess proceeds received by Lender pursuant
to the Loan Documents to Junior Lender pursuant to the Intercreditor Agreement. 

  

	44.	DEFEASANCE (Section Applies if Loan is Assigned to REMIC Trust Prior to the Cut-off Date). This Section 44 shall apply in the event the Note is assigned to
a REMIC trust prior to the Cut-off Date, and, subject to Section 44(a) and (c) below, Borrower shall have the right to defease the Loan in whole (“Defeasance”) and obtain the release of the Mortgaged Property from the lien
of this Instrument upon the satisfaction of the following conditions: 

  

	 	(a)	Borrower shall not have the right to obtain Defeasance at any of the following times: 

 

	 	(i)	if the Loan is not assigned to a REMIC trust; 

  

	 	(ii)	during the Lockout Period (as defined in the Note); 

  

	 	(iii)	after the expiration of the Defeasance Period (as defined in the Note); or 

  
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	 	(iv)	after Lender has accelerated the maturity of the unpaid principal balance of, accrued interest on, and other amounts payable under, the Note pursuant to Section 6
of the Note. 

  

	 	(b)	Borrower shall give Lender Notice (the “Defeasance Notice”) specifying a Business Day (the “Defeasance Closing Date”) on which
Borrower desires to close the Defeasance. The Defeasance Closing Date specified by Borrower may not be more than 60 calendar days, nor less than 30 calendar days, after the date on which the Defeasance Notice is received by Lender. Lender will
acknowledge receipt of the Defeasance Notice and will state in such receipt whether Lender will designate the Successor Borrower or will permit Borrower to designate the Successor Borrower. 

 

	 	(c)	The Defeasance Notice must be accompanied by a $10,000 non-refundable fee (the “Defeasance Fee”). If Lender does not receive the Defeasance Fee, then
Borrower’s right to obtain Defeasance pursuant to that Defeasance Notice shall terminate. 

  

					
	(d)	 	   (i)	  	If Borrower timely pays the Defeasance Fee, but Borrower fails to perform its other obligations hereunder, Lender shall have the right to retain the Defeasance Fee as liquidated
damages for Borrower’s default and, except as provided in Section 44(d)(ii), Borrower shall be released from all further obligations under this Section 44. Borrower acknowledges that Lender will incur financing costs in arranging and
preparing for the release of the Mortgaged Property from the lien of this Instrument in reliance on the executed Defeasance Notice. Borrower agrees that the Defeasance Fee represents a fair and reasonable estimate, taking into account all
circumstances existing on the date of this Instrument, of the damages Lender will incur by reason of Borrower’s default.

  

	 	(ii)	In the event that the Defeasance is not consummated on the Defeasance Closing Date for any reason, Borrower agrees to reimburse Lender for all third party costs and
expenses (other than financing costs covered by Section 44(d)(i) above) incurred by Lender in reliance on the executed Defeasance Notice, within 5 Business Days after Borrower receives a written demand for payment, accompanied by a statement,
in reasonable detail, of Lender’s third party costs and expenses. 

  

	 	(iii)	All payments required to be made by Borrower to Lender pursuant to this Section 44 shall be made by wire transfer of immediately available funds to the account(s)
designated by Lender in its acknowledgement of the Defeasance Notice. 

  

	 	(e)	No Event of Default has occurred and is continuing. 

  
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	 	(f)	The documents required to be delivered to Lender on or prior to the Defeasance Closing Date are: 

 

	 	(i)	an opinion of counsel for Borrower, in form and substance satisfactory to Lender, to the effect that Lender has a valid and perfected lien and security interest of
first priority in the Defeasance Collateral and the proceeds thereof; 

  

	 	(ii)	an opinion of counsel for Borrower, in form and substance satisfactory to Lender, to the effect that the Pledge Agreement is duly authorized, executed, delivered and
enforceable against Borrower in accordance with the respective terms; 

  

	 	(iii)	unless waived by Lender or unless Lender designates the Successor Borrower, an opinion of counsel for Successor Borrower, in form and substance satisfactory to Lender,
to the effect that the Transfer and Assumption Agreement is duly authorized, executed, delivered and enforceable against Successor Borrower in accordance with the respective terms; 

 

	 	(iv)	unless waived by Lender or unless Lender designates the Successor Borrower, an opinion of counsel for Successor Borrower, in form and substance satisfactory to Lender,
to the effect that the Successor Borrower has been validly created; 

  

	 	(v)	if Borrower designates the Successor Borrower, an opinion of counsel for Successor Borrower, in form and substance satisfactory to Lender and to any Rating Agencies
then providing ongoing ratings with respect to any Securitization, with regard to nonconsolidation of the assets of the Successor Borrower with those of its Affiliates by a bankruptcy court; 

 

	 	(vi)	unless waived by Lender, an opinion of counsel for Borrower, in form and substance satisfactory to Lender, to the effect that: 

 

	 	(A)	if, as of the Defeasance Closing Date, the Note is held by a REMIC trust, (1) the Defeasance has been effected in accordance with the requirements of Treasury
Regulation Section 1.860G-2(a)(8) (as such regulation may be modified, amended or replaced from time to time), (2) the qualification and status of the REMIC trust as a REMIC will not be adversely affected or impaired as a result of the
Defeasance, and (3) the REMIC trust will not incur a tax under Section 860G(d) of the Tax Code as a result of the Defeasance, and 

  
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	 	(B)	the Defeasance will not result in a “sale or exchange” of the Note within the meaning of Section 1001(c) of the Tax Code and the temporary and final
regulations promulgated thereunder; 

  

	 	(vii)	unless waived by Lender, a written certificate from an independent certified public accounting firm (reasonably acceptable to Lender), confirming that the Defeasance
Collateral will generate cash sufficient to make all Scheduled Debt Payments as they fall due under the Note, including full payment due on the Note on the Maturity Date; 

 

	 	(viii)	Lender’s form of a pledge and security agreement (“Pledge Agreement”) and financing statements which pledge and create a first priority security
interest in the Defeasance Collateral in favor of Lender; 

  

	 	(ix)	Lender’s form of a transfer and assumption agreement (“Transfer and Assumption Agreement”), whereupon Borrower and any guarantor (in each case,
subject to satisfaction of all requirements hereunder) shall be relieved from liability in connection with the Loan (other than any liability under Section 18 of this Instrument for events that occur prior to the Defeasance Closing Date,
whether discovered before or after the Defeasance Closing Date) and Successor Borrower shall assume all remaining obligations; 

  

	 	(x)	Forms of all documents necessary to release the Mortgaged Property from the liens created by this Instrument and related UCC financing statements (collectively,
“Release Instruments”), each in appropriate form required by the state in which the Property is located; and 

  

	 	(xi)	such other opinions, certificates, documents or instruments as Lender may reasonably request. 

 

	 	(g)	Borrower shall deliver to Lender on or prior to the Defeasance Closing Date: 

 

	 	(i)	The Defeasance Collateral which meets all requirements of Section 44(g)(ii) below and is owned by Borrower, free and clear of all liens and claims of
third-parties; 

  

	 	(ii)	 The Defeasance Collateral must be in an amount to provide for (A) redemption payments to occur prior, but as close as possible, to all successive
Installment Due Dates occurring under the Note after the Defeasance Closing Date and (B) deliver redemption proceeds at least equal to the amount of principal and interest due on the Note on each Installment Due Date including full payment due
on the Note on the Maturity Date (“Scheduled Debt Payments”). The Defeasance Collateral shall be arranged such that redemption payments received from the Defeasance Collateral are paid directly to Lender to be applied on account

  
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of the Scheduled Debt Payments. Unless otherwise agreed in writing by Lender, the pledge of the Defeasance Collateral shall be effectuated through the book-entry facilities of a qualified
securities intermediary designated by Lender in conformity with all applicable laws; and 

  

	 	(iii)	All accrued and unpaid interest and all other sums due under the Note, this Instrument and under the other Loan Documents, including, without limitation, all amounts
due under Section 44(i) below, up to the Defeasance Closing Date shall be paid in full on or prior to the Defeasance Closing Date. 

  

	 	(h)	If Lender permits Borrower to designate the Successor Borrower, then Borrower shall, at Borrower’s expense, designate or establish an accommodation borrower
(“Successor Borrower”) satisfactory to Lender (or Lender, at its option, may designate the Successor Borrower) which satisfies Lender’s then current requirements for a “Single Purpose Entity” to assume at the time of
Defeasance ownership of the Defeasance Collateral and liability for all of Borrower’s obligations under the Pledge Agreement and the Loan Documents (to the extent that liability thereunder survives release of this Instrument). Borrower shall
pay to Successor Borrower a fee of $1,000.00 as consideration of Successor Borrower’s assumption of Borrower’s obligations under the Loan Documents. Notwithstanding any contrary provision hereunder, no Transfer fee is payable to Lender
upon a Transfer of the Loan in accordance with this Section. 

  

	 	(i)	Borrower shall pay all reasonable costs and expenses incurred by Lender in connection with the Defeasance in full on or prior to the Defeasance Closing Date, which
payment is required prior to Lender’s issuance of the Release Instruments and whether or not Defeasance is completed. Such expenses include, without limitation, all fees, costs and expenses incurred by Lender and its agents in connection with
the Defeasance (including, without limitation, reasonable Attorneys’ Fees and Costs for the review and preparation of the Pledge Agreement and of the other materials described herein and any related documentation, and any servicing fees, Rating
Agencies’ fees or other costs related to the Defeasance); reasonable Attorneys’ Fees and Costs; and a processing fee to cover Lender’s administrative costs to process Borrower’s Defeasance request. Lender reserves the right to
require that Borrower post a deposit to cover costs which Lender reasonably anticipates will be incurred. 

  

	45.	INTENTIONALLY DELETED. 

  

	46.	 LENDER’S RIGHTS TO SELL OR SECURITIZE. Borrower acknowledges that Lender, and each successor to Lender’s interest, may (without prior
Notice to Borrower or Borrower’s prior consent), sell or grant participations in the Loan (or any part thereof), sell or subcontract the servicing rights related to the Loan, securitize the Loan or include the Loan as part of a trust. Borrower,
at its expense, agrees to cooperate with all 

  
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reasonable requests of Lender in connection with any of the foregoing including, without limitation, executing any financing statements or other documents deemed necessary by Lender or its
transferee to create, perfect or preserve the rights and interest to be acquired by such transferee, providing any updated financial information with appropriate verification through auditors letters, delivering revised organizational documents and
counsel opinions satisfactory to the Rating Agencies, executed amendments to the Loan Documents, and review information contained in a preliminary or final private placement memorandum, prospectus, prospectus supplements or other Disclosure
Document, and providing a mortgagor estoppel certificate and such other information about Borrower, any SPE Equity Owner, any guarantor, any Property Manager or the Mortgaged Property as Lender may require for Lender’s offering materials.

  

	47.	SECURITIZATION INDEMNIFICATION. 

  

	 	(a)	Borrower and each guarantor agree, in connection with each Disclosure Document, to provide an indemnification certificate, as set forth below, indemnifying Lender, any
Issuer Person, the Issuer Group and/or the Underwriter Group (as those terms are defined below; each an “Indemnified Party” and collectively the “Indemnified Parties”) for any losses to which any Indemnified Party
may become subject under the conditions set forth below. 

  

	 	(b)	The indemnification certificate will provide that 

  

	 	(i)	Borrower and each guarantor have carefully examined those sections of the Disclosure Documents relating to the following: 

 

	 	(A)	Borrower, any SPE Equity Owner, any guarantor, any Property Manager, their respective Affiliates, the Loan and the Mortgaged Property (the “Borrower
Information”); and 

  

	 	(B)	the sections entitled “Special Considerations,” and/or “Risk Factors,” and “Certain Legal Aspects of the Mortgage Loan,” or similar
sections but only to the extent such sections specifically refer to the Borrower Information (the “Borrower Information Sections”). 

  

	 	(ii)	To the best of such indemnitor’s knowledge, with regard to the Borrower Information, the Borrower Information Sections do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading. 

Notwithstanding the foregoing, any indemnification certificate may expressly exclude any information contained in third party reports
prepared by parties that are not Affiliates of Borrower or any guarantor (“Third Party Information”), 

  
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and the obligations and liability of Borrower and any guarantor pursuant to this Section shall not extend to the Third Party Information. 

 

	 	(c)	Borrower’s and each guarantor’s agreement to indemnify the Indemnified Parties for any losses to which any Indemnified Party may become subject will extend
only to such losses that arise out of or are based upon any untrue statement of any material fact contained in the Borrower Information or the Borrower Information Sections of the Disclosure Documents or arise out of or are based upon the omission
to state in the Borrower Information or the Borrower Information Sections of the Disclosure Documents a material fact required to be stated in such sections necessary in order to make the statements in such sections or in light of the circumstances
under which they were made, not misleading (collectively, “Securities Liabilities”). 

  

	 	(d)	Borrower and each guarantor agrees to reimburse any Indemnified Party for any legal or other expenses reasonably incurred by such Indemnified Party in investigating or
defending the Securities Liabilities. 

  

	 	(e)	The indemnitors will be liable under clauses (b), (c) and (d) above only to the extent that such Securities Liabilities arise out of, or are based upon, any
such untrue statement or omission made in the Disclosure Documents in reliance upon, and in conformity with, Borrower Information furnished to any Indemnified Party by or on behalf of Borrower or a guarantor in connection with the preparation of the
Disclosure Documents or in connection with the underwriting of the Loan, including, without limitation, financial statements of Borrower, any SPE Equity Owner or any guarantor, and operating statements and rent rolls with respect to the Mortgaged
Property. 

  

	 	(f)	This indemnity is in addition to any liability which Borrower may otherwise have and shall be effective whether or not an indemnification certificate described above is
provided and shall be applicable based on information previously provided by or on behalf of Borrower or a guarantor if the indemnification certificate is not provided. 

 

	 	(g)	For purposes of this Section: 

  

	 	(i)	The term “Lender” shall include its officers and directors. 

 

	 	(ii)	An “Issuer Person” shall include: 

  

	 	(A)	any Affiliate of Lender that has filed the registration statement, if any, relating to the Securitization; and 

  
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	 	(B)	any Affiliate of Lender which is acting as issuer, depositor, sponsor and/or in a similar capacity with respect to the Securitization. 

 

	 	(iii)	The “Issuer Group” shall include: 

  

	 	(A)	each director and officer of any Issuer Person; and 

  

	 	(B)	each entity that Controls any Issuer Person within the meaning of Section 15 of the Securities Act or Section 20 of the Securities Exchange Act.

  

	 	(iv)	The “Underwriter Group” shall include: 

  

	 	(A)	each entity which is acting as an underwriter, manager, placement agent, initial purchaser or in a similar capacity with respect to the Securitization;

  

	 	(B)	each of its directors and officers; 

  

	 	(C)	each entity that Controls any such entity within the meaning of Section 15 of the Securities Act or Section 20 of the Securities Exchange Act and is acting as
an underwriter, manager, placement agent, initial purchaser or in a similar capacity with respect to the Securitization; and 

  

	 	(D)	the directors and officers of such entity described in Subsection (iv)(C) above. 

 

	48.	WARRANTIES OF BORROWER. Borrower, for itself and its successors and assigns, does hereby represent, warrant and covenant to and with Lender, its successors and
assigns, that: 

  

	 	(a)	The representations, warranties and covenants contained in this Instrument survive for as long as any Indebtedness remains outstanding. 

 

	 	(b)	None of the items shown in the Schedule of Title Exceptions will materially or adversely affect (i) the ability of the Borrower to pay the Loan in full,
(ii) the use for which all or any part of the Mortgaged Property is being used at the time this Instrument was executed, except as set forth in Section 11 of this Instrument, (iii) the operation of the Mortgaged Property or
(iv) the value of the Mortgaged Property. 

  
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	 	(c)	Borrower is not an “investment company”, or a company Controlled by an “investment company,” as such terms are defined in the Investment Company Act
of 1940, as amended. 

  

	 	(d)	Borrower is not an “employee benefit plan,” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), which is subject to Title I of ERISA and the assets of Borrower do not constitute “plan assets” of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101. 

 

	 	(e)	Borrower will give prompt written Notice to Lender of any litigation or governmental proceedings pending or, to the best of Borrower’s knowledge, threatened (in
writing) against Borrower which might have a Material Adverse Effect as defined below. 

  

	 	(f)	There are no judicial, administrative, mediation or arbitration actions, suits or proceedings pending or, to the best of Borrower’s knowledge, threatened (in
writing) against or affecting Borrower (and, if Borrower is a limited partnership, any of its general partners or if Borrower is a limited liability company, any member of Borrower) or the Mortgaged Property which, if adversely determined, would
have a material adverse effect on (i) the Mortgaged Property, (ii) the business, prospects, profits, operations or condition (financial or otherwise) of Borrower, (iii) the enforceability, validity, perfection or priority of the lien
of any Loan Document, or (iv) the ability of Borrower to perform any obligations under any Loan Document (collectively, a “Material Adverse Effect”). 

 

	 	(g)	With regard to ERISA: 

  

	 	(i)	Borrower shall not engage in any transaction which would cause an obligation, or action taken or to be taken, hereunder (or the exercise by Lender of any of its rights
under the Note, this Instrument or any of the other Loan Documents) to be a non-exempt (under a statutory or administrative class exemption) prohibited transaction under ERISA. 

 

	 	(ii)	Borrower further covenants and agrees to deliver to Lender such certifications or other evidence from time to time throughout the term of this Instrument, as requested
by Lender in its sole discretion, that (A) Borrower is not an “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, or a “governmental plan” within the meaning of
Section 3(32) of ERISA; (B) Borrower is not subject to state statutes regulating investments and fiduciary obligations with respect to governmental plans; and (C) one or more of the following circumstances is true:

  
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	 	(A)	Equity interests in Borrower are publicly offered securities within the meaning of 29 C.F.R. Section 2510.3-101(b)(2), as amended from time to time or any
successor provision; 

  

	 	(B)	Less than 25% of each outstanding class of equity interests in Borrower are held by “benefit plan investors” within the meaning of Section 3(42) of
ERISA, as amended from time to time or any successor provision; or 

  

	 	(C)	Borrower qualifies as an “operating company” or a “real estate operating company” within the meaning of 29 C.F.R. Section 2510.3-101(c), as
amended from time to time or any successor provision, or within the meaning of 29 C.F.R. Section 2510.3-101(e) as an investment company registered under the Investment Company Act of 1940. 

 

	 	(iii)	BORROWER SHALL INDEMNIFY LENDER AND DEFEND AND HOLD LENDER HARMLESS FROM AND AGAINST ALL CIVIL PENALTIES, EXCISE TAXES, OR OTHER LOSS, COST, DAMAGE AND EXPENSE
(INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES AND COSTS INCURRED IN THE INVESTIGATION, DEFENSE AND SETTLEMENT OF CLAIMS AND LOSSES INCURRED IN CORRECTING ANY PROHIBITED TRANSACTION OR IN THE SALE OF A PROHIBITED LOAN, AND IN
OBTAINING ANY INDIVIDUAL PROHIBITED TRANSACTION EXEMPTION UNDER ERISA THAT MAY BE REQUIRED, IN LENDER’S SOLE DISCRETION) THAT LENDER MAY INCUR, DIRECTLY OR INDIRECTLY, AS A RESULT OF DEFAULT UNDER THIS SECTION 48. THIS INDEMNITY SHALL SURVIVE
ANY TERMINATION, SATISFACTION OR FORECLOSURE OF THIS INSTRUMENT. 

  

	49.	COOPERATION WITH RATING AGENCIES AND INVESTORS. Borrower covenants and agrees that in the event Lender decides to include the Loan as an asset of a Secondary
Market Transaction, Borrower shall (a) at Lender’s request, meet with representatives of the Rating Agencies and/or investors to discuss the business and operations of the Mortgaged Property, and (b) permit Lender or its
representatives to provide related information to the Rating Agencies and/or investors, and (c) cooperate with the reasonable requests of the Rating Agencies and/or investors in connection with all of the foregoing. 

[SECTIONS 50 THROUGH 59 ARE RESERVED] 

  
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 60. ACCELERATION; FORECLOSURE; CONFESSION OF JUDGMENT. At any time during the
existence of an Event of Default, Lender, at Lender’s option, may accelerate the maturity of and declare the Indebtedness to be immediately due and payable, and may cause the Mortgaged Property and UCC Collateral to be immediately seized and
sold, in whole, in part, or separately, whether in term of court or in vacation, under ordinary or executory process, in accordance with applicable Louisiana law, to the highest bidder for cash, with or without appraisement, and without the
necessity of making additional demand upon or notifying Borrower or placing Borrower in default, all of which are expressly waived. For purposes of foreclosure under the Louisiana executory process procedures, Borrower confesses judgment and
acknowledges to be indebted to and in favor of Lender up to the full amount of the Indebtedness, including principal, interest, prepayment premiums, late charges, default interest, costs, expenses, collection attorneys’ fees, and any additional
sums that Lender may advance as provided under this Instrument. To the extent permitted under applicable Louisiana law, Borrower additionally waives: (a) the benefit of appraisal as provided in Articles 2332, 2336, 2723 and 2724 of the
Louisiana Code of Civil Procedure, and all other laws with regard to appraisal upon judicial sale; (b)the demand and three (3) days’ delay as provided under Articles 2639 and 2721 of the Louisiana Code of Civil Procedure; (c) the
notice of seizure as provided under Articles 2293 and 2721 of the Louisiana Code of Civil Procedure; (d) the three (3) days’ delay provided under Articles 2331 and 2722 of the Louisiana Code of Civil Procedure; and (e) all other
benefits provided under Articles 2331, 2722 and 2723 of the Louisiana Code of Civil Procedure and all other articles not specifically mentioned above. Borrower agrees that Lender shall have all of the additional enforcement rights and remedies of a
secured party under the Louisiana Commercial Laws (Louisiana Revised Statutes, Title 10) and under the Uniform Commercial Code of any applicable state with respect to the UCC Collateral wherever located. Borrower further agrees that any declarations
of fact made under an authentic act before a Notary Public in the presence of two witnesses, by a person declaring such facts to lie within his or her knowledge, shall constitute authentic evidence for purposes of executory process and also for
purposes of Louisiana Revised Statutes, Title 9, Sections 3509.1 and 3504(b)(6), and Title 10, Section 9-508. 
 61.
RELEASE. Upon payment of the Indebtedness in full, Borrower may request Lender in writing to provide Borrower with the Note marked “Canceled,” or alternatively, at Lender’s option, with a certificate sufficient to permit Borrower
to cancel this Instrument from the public records. Borrower agrees that Lender may delay providing the foregoing to Borrower for up to 30 days following receipt of Borrower’s written request. If Borrower requests Lender to perform the necessary
services to cancel this Instrument from the public records, Borrower agrees to pay Lender’s reasonable costs incurred in connection with such cancellation. 
 62. WAIVER OF HOMESTEAD. Borrower and Borrower’s spouse, if any, waive all homestead and other exemptions from seizure with respect to the Mortgaged Property and the UCC Collateral.

 63. VENDOR’S LIEN MORTGAGE. If Lender is a savings and loan association, the Note and the other amounts secured
by this Instrument shall be secured by a vendor’s lien and 

  
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privilege on and against the Mortgaged Property pursuant to the provisions of Louisiana Revised Statutes, Title 6, Section 833. 

64. ATTORNEYS’ FEES. Whenever referred to in this Instrument, other than in the Section titled Acceleration; Foreclosure;
Confession of Judgment above, “attorneys’ fees” shall mean a reasonable fee. 
 65. MORTGAGE AND CONVEYANCE
CERTIFICATES. The production of Mortgage and conveyance certificates is waived by Lender and Borrower, who release me, Notary, from all liability for nonproduction. 
 66. LATE CHARGE. Borrower shall pay to Lender a late charge of five percent (5%) of any monthly installment of principal and interest as provided in the Note not received by Lender within ten
(10) days after that installment is due. 
 67. KEEPER OF MORTGAGED PROPERTY. Pursuant to the provisions of
Louisiana Revised Statutes, Title 9, Section 5136, Borrower and Lender covenant and agree that Lender shall have the right to designate a keeper of the Mortgaged Property at the time any seizure of the Mortgaged Property is effected and that
Lender may designate itself or its employees, agents or independent contractors as such keeper. Borrower agrees that the reasonable fees of such a keeper shall be treated as a disbursement made under Section 12 and shall be secured by this
Instrument. At no time has or will Borrower occupy the Mortgaged Property, or any portion of the Mortgaged Property, as its home. 
 68. 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. 

(Remainder of this page intentionally left blank.) 

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

  

					
	x	  	Exhibit A	  	Description of the Land (required).
			
	x	  	Exhibit B-1	  	Modifications to Instrument (Rider to Security Instrument -CME Additional Provisions For Loans Equal To Or Greater than $25,000,000)
			
	x	  	Exhibit B-2	  	Modifications to Instrument Modifications to Instrument (Rider to Security Instrument -CME Additional Provisions For Loans Originated on or after
July 1, 2011)

 (Remainder of this page intentionally left blank.) 

  
 Page 80

 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. 
 THUS DONE AND PASSED in my office in the
Commonwealth of Massachusetts on the      day of July, 2011, in the presence of the undersigned competent witnesses, who hereunto sign their names with me, Notary, after reading of the whole, to be effective as of the 28th, day
of July, 2011. 
  

									
		 		 	BORROWER:
			
	WITNESSES:	 		 	EVERGREEN AT COURSEY PLACE, LLC,
		 		 	a Delaware limited liability company
				
	 /s/ Vincent S. Durant
	 		 	By:	 	Evergreen at Coursey Place, Sole Member,
	Vincent S. Durant	 		 		 	LLC, a Georgia limited liability company, its sole member
					
		 		 		 	By:	 	ERES Coursey LLC, a Louisiana limited
		 		 		 		 	Liability company, its Operating Member
					
	 /s/ James M. Hooper
	 		 		 		 	
	James M. Hooper	 		 		 	By:	 	 /s/ Charles M. Thompson

					
		 		 		 		 	Name: Charles M. Thompson
		 		 		 		 	Title: Manager
			
		 		 	 /s/ George Eugene Moore

		 		 	 George Eugene Moore

Notary Public
 My Commission Expires: February
18, 2016

  
 Page 81

 EXHIBIT A 
 [DESCRIPTION OF THE LAND] 

  
  

PAGE A-1 

 EXHIBIT B-1 
 MODIFICATIONS TO INSTRUMENT 
 RIDER TO SECURITY INSTRUMENT – CME

 ADDITIONAL PROVISIONS FOR 
 LOANS EQUAL TO OR GREATER THAN $25,000,000 
 (Revised 2-15-2011)

 The following modifications are made to the Instrument which precedes this Rider: 

 

	1.	The first sentence in Section 19(c) is deleted and replaced with the following: 

Borrower will maintain the insurance coverage described in this Section 19 with companies acceptable to Lender and with a claims
paying ability of a minimum of any of the following (i) “A-” or its equivalent by Fitch, Inc., (ii) “A-” or its equivalent by Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies,
Inc., or (iii) “A3” or its equivalent by Moody’s Investors Service, Inc. All insurers providing insurance required by this Instrument must be authorized to issue insurance in the Property Jurisdiction. 

 

	2.	The following Section 45 is added as follows: 

 SPLITTING THE NOTE. 
  

	 	(a)	Lender has the right from time to time to sever the Note into one or more separate promissory notes in such denominations as Lender determines in its sole discretion,
which promissory notes may be included in separate sales or Securitizations undertaken by Lender. In conjunction with any such action, Lender may redefine the interest rate and amortization schedule; provided however 

 

	 	(i)	if Lender redefines the interest rate, the weighted average of the interest rates contained in the severed promissory notes taken in the aggregate shall equal the Fixed
Interest Rate (as defined in the Note), and 

  

	 	(ii)	if Lender redefines the amortization schedule, the amortization of the severed promissory notes taken in the aggregate shall require no more amortization to be paid
under the Loan than as required under this Instrument and the Note at the time such action was taken by Lender and such redefined amortization shall not result in a change in the amount of the monthly payment due under the Note.

  
 PAGE B-1-1

	 	(b)	Borrower shall only be required to make one payment under such separate promissory notes. Subject to the foregoing, each severed promissory note, and the Loan evidenced
thereby, shall be upon all of the terms and provisions contained in this Instrument and the Loan Documents which continue in full force and effect, except that Lender may allocate specific collateral given for the Loan as security for performance of
specific promissory notes, in each case with or without cross default provisions. 

  

	 	(c)	Borrower, at Borrower’s expense, agrees to cooperate with all reasonable requests of Lender to accomplish the foregoing, including, without limitation, execution
and prompt delivery to Lender of a severance agreement and such other documents as Lender shall reasonable require. 

  

	 	(d)	Borrower hereby appoints Lender its attorney-in-fact with full power of substitution (which appointment shall be deemed to be coupled with an interest and irrevocable
until the Loan is paid and this Instrument is discharged of record, with Borrower hereby ratifying all that its said attorney shall do by virtue thereof) to make and execute all documents necessary or desirable to effect the aforesaid severance;
provided however, Lender shall not make or execute any such documents under such power until 10 Business Days after Lender has given Borrower Notice of Lender’s intent to exercise its rights under such power. 

 

	 	(e)	Borrower’s failure to deliver any of the documents requested by Lender hereunder for a period of 10 Business Days after such Notice by Lender shall, at
Lender’s option, constitute an Event of Default hereunder. 

  

	3.	Section 49 of this Instrument is deleted and replaced with the following: 

 SALE OF NOTE AND SECURITIZATION. At the request of the Lender and, to the extent not already required to be provided by Borrower under this Instrument, Borrower must use reasonable efforts to
satisfy the market standards to which the Lender customarily adheres or which may be reasonably required in the marketplace or by the Rating Agencies in connection with any Secondary Market Transaction of rated single or multi-class securities (the
“Securities”) secured by or evidencing ownership interests in the Note and this Instrument, including, without limitation, to: 
  

	 	(a)	provide financial and other information with respect to the Mortgaged Property, the Borrower and the Property Manager; 

 

	 	(b)	perform or permit or cause to be performed or permitted such site inspections, appraisals, market studies, environmental reviews and reports (Phase I’ and, if
appropriate, Phase II), engineering reports and other due diligence investigations of the Mortgaged Property, as may be reasonably requested by the Lender or the Rating Agencies or as may be necessary or appropriate in connection with the Secondary
Market Transaction; 

  
 PAGE B-1-2

	 	(c)	make such representations and warranties as of the closing date of the Secondary Market Transaction with respect to the Mortgaged Property, Borrower and the Loan
Documents as are customarily provided in securitization transactions and as may be reasonably requested by the Lender or by the Rating Agencies and consistent with the facts covered by such representations and warranties as they exist on the date
thereof, including the representations and warranties made in the Loan Documents (collectively, the “Provided Information”), together, if customary, with appropriate verification of and/or consents to the Provided Information
through letters of auditors or opinions of counsel of independent attorneys acceptable to the Lender and to the Rating Agencies; 

  

	 	(d)	at Borrower’s expense, cause its counsel to render opinions, which may be relied upon by the Lender, the Rating Agencies and their respective counsel, agents and
representatives, as to nonconsolidation, fraudulent conveyance, and true sale or any other opinion customary in securitization transactions with respect to the Mortgaged Property and Borrower and its Affiliates, which counsel and opinions shall be
reasonably satisfactory to the Lender and to the Rating Agencies; 

  

	 	(e)	execute such amendments to the Loan Documents and organizational documents, establish and fund the Replacement Reserve Fund (as defined in the Replacement Reserve
Agreement), if any, and complete any Repairs (as defined in the Repair Agreement), if any, as may be requested by the Lender or by the Rating Agencies or otherwise to effect the Secondary Market Transaction; provided, however, that the Borrower
shall not be required to modify or amend any Loan Document if such modification or amendment would (i) change the interest rate, the stated maturity or the amortization of principal set forth in the Note, or (ii) modify or amend any other
material economic term of the Loan; and 

  

	 	(f)	pay all reasonable third party costs and expenses incurred by Lender in connection with Borrower’s complying with requests made under this Section.

  
 PAGE B-1-3

 EXHIBIT B-2 
 RIDER TO SECURITY INSTRUMENT – CME 
 ADDITIONAL PROVISIONS FOR

 LOANS ORIGINATED ON OR AFTER JULY 1, 2011 
 (Revised 6-30-2011) 
 The following changes are made to the Instrument which precedes this
Rider: 
  

	A.	The following definition is deleted from Section 1: 

 “Restoration” 
  

	B.	The following definitions are added to Section 1: 

 “Aggregate Carrier Exposure” means: 
  

	 	(i)	For each individual carrier providing Hazard Insurance, one of the following: 

 

	 	(A)	The sum of the required building coverage limits and required business income/rental value Insurance if such coverage is provided by specific Insurance or a policy
covering only the Mortgaged Property. 

  

	 	(B)	The blanket Insurance or master program limit if such coverage is provided by a Blanket Insurance Policy or master program from a single carrier.

  

	 	(C)	The total limit provided by the carrier in all layers in which the carrier participates if such coverage is provided by a Blanket Insurance Policy or master program
with more than one carrier participating with layered limits. 

  

	 	(ii)	For each individual carrier providing liability Insurance pursuant to Section 19(a)(ii) or as otherwise required by Lender, one of the following:

  

	 	(A)	The total aggregate limits (general liability plus excess/umbrella) if such coverage is provided by specific Insurance or a policy covering only the Mortgaged Property.

  

	 	(B)	The total aggregate limits (general liability plus excess/umbrella) if such coverage is provided by liability Insurance for multiple properties or a master program from
a single carrier. 

  

	 	(C)	 The total limit provided by the carrier in all layers in which the carrier participates if such coverage is provided by an individual policy, liability
Insurance policy for multiple properties or a master program with more than one carrier participating with layered 

  
 PAGE B-2-1

	 	
limits Blanket Insurance Policy or master program with more than one carrier participating with layered limits. 

“Blanket Insurance Policy” is defined in Section 19(h). 

“HVAC System” is defined in Section 19(a)(v). 

“Insurance” means Hazard Insurance, liability insurance and all other insurance that Lender requires Borrower to maintain
pursuant to this Instrument. 
 “Lender’s Discretion” means Lender’s reasonable discretion unless
otherwise set forth in this Instrument. 
 “NFIP” is defined in Section 19(a)(iv). 

“Replacement Cost” means the estimated replacement cost of the Improvements, Fixtures, and Personalty (or, when used in
reference to a property that is not the Mortgaged Property, all improvements, fixtures, and personalty located on such property), excluding any deduction for depreciation, all as determined annually by Borrower using customary methodology and
sources of information acceptable to Lender in Lender’s Discretion. Replacement Cost will not include the cost to reconstruct foundations or site improvements, such as driveways, parking lots, sidewalks, and landscaping. 

“Restoration” is defined in Section 19(i). 
 “SFHA” is defined in Section 19(a)(iv). 
 “Windstorm
Coverage” is defined in Section 19(a)(ix). 
  

	C.	Section 19 is deleted in its entirety and replaced with the following: 

 

	 	19.	PROPERTY AND LIABILITY INSURANCE. 

  

	 	(a)	Hazard and Other Insurance. At all times during the term of this Instrument, Borrower will maintain, at its sole cost and expense, for the mutual benefit of Borrower
and Lender, the following Insurance coverages: 

  

	 	(i)	 All-Risks of Physical Loss. Insurance against any peril included within the classification “All Risks of Physical Loss” in amounts not less
than the Replacement Cost of the Mortgaged Property. In all cases where any of the Improvements or the use of the Mortgaged Property will at any time constitute legal non-conforming structures or uses under applicable legal requirements of any
Governmental Authority, the policy referred to in this Section 19 will include “Ordinance and Law Coverage,” with “Loss to the Undamaged Portion of the Building,” “Demolition Cost” and “Increased Cost of
Construction” endorsements, in the amount of coverage required 

  
 Page B-2-2

	 	
by Lender and will either include a “Time Element” endorsement or the business income/rental value Insurance for the Mortgaged Property will be endorsed to cover income/rent loss
arising out of any increased time necessary to repair or rebuild the Mortgaged Property due to the enforcement of any zoning laws. 

  

	 	(ii)	Commercial General Liability. Commercial general liability Insurance on an occurrence-based policy form that insures against legal liability resulting from bodily
injury, property damage, personal injury and advertising injury, and includes contractual liability coverage and any and all claims, including all legal liability (to the extent insurable) imposed upon Borrower and all Attorneys’ Fees and Costs
arising out of or connected with the possession, use, leasing, operation, maintenance or condition of the Mortgaged Property with a combined limit of not less than $2,000,000 in the aggregate and $1,000,000 per occurrence; umbrella or excess
liability coverage with minimum limits in the aggregate and per occurrence of $1,000,000 in coverage for each story of the Improvements with a maximum required coverage of $8,000,000 (provided, however, that if the Indebtedness is $3,000,000 or less
and the Improvements have 3 stories or fewer, then no umbrella or excess liability coverage is required); and if the Borrower owns, leases, hires, rents, borrowers, uses, or has another use on its behalf a vehicle in conjunction with the operation
of the Mortgaged Property, vehicle liability Insurance of not less than $1,000,000 per occurrence. The maximum per occurrence deductible or self-insured retention, or combined deductible or self-insured retention, for all coverage required under
this Section 19 (a)(ii), will not exceed $35,000. 

  

	 	(iii)	Business Income/Rental Value. Business income/rental value Insurance for the Mortgaged Property in an amount equal to at least the estimated gross Rents attributable to
the Mortgaged Property for 12 months (18 months when (A) the Improvements have 5 or more stories, or (B) at all times during which the Indebtedness is equal to or greater than $50,000,000) based on gross Rents for the immediately preceding
year and otherwise sufficient to avoid any co-insurance penalty; coverage will include a 90-day extended period of indemnity if (X) the Improvements have 5 or more stories, or (Y) the Indebtedness is equal to or greater than $25,000,000.
The waiting period for this coverage will not exceed 72 hours. 

  

	 	(iv)	Flood. If any portion of the Improvements is located within an area identified by the Federal Emergency Management Agency (or any successor) as a special flood hazard
area (“SFHA”), flood Insurance in an amount equal to the greater of the following: 

  

	 	(A)	The maximum flood Insurance available under the National Flood Insurance Program (“NFIP”) for each building within a SFHA. 

  
 Page B-2-3

	 	(B)	The sum of the following for each building within a SFHA being insured: 

  

	 	(1)	The Replacement Cost of all areas of the Improvements below grade. 

  

	 	(2)	The Replacement Cost of the bottom two stories (above grade) of the Improvements. 

 

	 	(3)	Any additional coverage dictated by the nature of the Mortgaged Property as determined by Lender in Lender’s Discretion. 

Such coverage may be purchased through excess carriers if the required coverage exceeds the maximum Insurance available under the NFIP.

  

	 	(v)	Boiler and Machinery. If the Mortgaged Property contains a central heating, ventilation and cooling system (“HVAC System”) where steam boilers and/or
other pressurized systems are in operation and are regulated by the Property Jurisdiction, Insurance providing coverage for damage to the HVAC System or other portions of the Mortgaged Property, if the damage is the result of an explosion of steam
boilers, pressure vessels or similar apparatus now or hereafter installed at the Mortgaged Property, with minimum limits at least equal to the Replacement Cost of the building housing the HVAC System, including the Replacement Cost of the HVAC
System. 

  

	 	(vi)	Terrorism. Insurance coverage required under Section 19(a)(i) through (iii) will cover perils of terrorism and acts of terrorism. Such coverage may be
provided through one or more separate policies, which will be on terms (including amounts) consistent with those required under Section 19(a)(i) through (iii). 

 

	 	(vii)	Builder’s All Risk. During any period of Restoration, builder’s “All Risk” Insurance (including fire and other perils within the scope of a policy
known as a “Causes of Less – Special Form” or “All Risk” policy) in an amount at least equal to 100% of the sum of the contract or contracts and all materials to complete the Restoration (as determined by Lender in
Lender’s Discretion). 

  

	 	(viii)	Earthquake. If Lender requires earthquake Insurance, the amount of coverage will be equal to the greater of the following: 

 

	 	(A)	$1,000,000. 

  

	 	(B)	150% of the difference between the following items: 

  
 Page B-2-4

	 	(1)	The Replacement Cost of the Mortgaged Property multiplied by the probable maximum loss for the Mortgaged Property, as determined by a Site Specific Seismic Report.

  

	 	(2)	The Replacement Cost of the Mortgaged Property multiplied by the projected loss with a 20% probable maximum loss. 

Lender will not require earthquake Insurance if the probable maximum loss for the Mortgaged Property is less than 20%. If any updated
reports or other documentation are reasonably required by Lender in order to determine whether such additional Insurance is necessary or prudent, Borrower will pay for all such documentation at its sole cost and expense. 

 

	 	(ix)	Windstorm. If windstorm and/or windstorm related perils and/or “named storms” (“Windstorm Coverage”) are excluded from the “All
Risks” policy required under Section 19(a)(i), Borrower will obtain separate coverage for such risks, either through an endorsement or a separate policy. Windstorm Coverage will be written in an amount equal to 100% of the Replacement
Cost. Business income/rental value Insurance required under Section 19 (a)(iii) will be in force for all losses covered by Windstorm Coverage. 

  

	 	(x)	Other. Such other Insurance against loss or damage with respect to the Improvements and Personalty located on the Mortgaged Property as required by Lender (including
liquor/dramshop and Mold Insurance) provided such Insurance is of the kind for risks from time to time customarily insured against and in such minimum coverage amounts and maximum deductibles as are generally required by institutional lenders for
properties comparable to the Mortgaged Property or which Lender may deem necessary in Lender’s Discretion. 

All Insurance required pursuant to Section 19(a)(i) and Section 19(a)(iii) through (x) will be referred to as
“Hazard Insurance.” 
  

	 	(b)	Deductibles. The Insurance required pursuant to Section 19(a)(i), (v), (vi), (vii) and (ix) will have a per occurrence deductible meeting the following
requirements: 

  

	 	(i)	The deductible will not exceed $50,000 if the Replacement Cost of the Mortgaged Property is less than $10,000,000. 

 

	 	(ii)	The deductible will not exceed $75,000 if the Replacement Cost of the Mortgaged Property is equal to or greater than $10,000,000. 

 

	 	(iii)	For Windstorm Coverage the deductible will not exceed 5% of the Replacement Cost if the Mortgaged Property is located (1) in Florida, or (2) within 50 miles
of the coast of any East Coast or Gulf Coast state. 

  
 Page B-2-5

	 	(iv)	For flood Insurance provided under the NFIP, the deductible will comply with the NFIP deductible for the type of improvement insured. 

 

	 	(c)	Payment of Premiums. All Hazard Insurance premiums or premiums for other Insurance required by Lender under Section 19 will be paid in the manner provided in
Section 7, unless Lender has designated in writing another method of payment. 

  

	 	(d)	Policy Requirements. All policies will be in a form approved by Lender. All policies of Hazard Insurance will include a standard non-contributing, non-reporting
mortgagee clause in favor of, and in a form approved by, Lender. All policies for general liability Insurance will contain a standard additional insured provision, in favor of, and in a form approved by Lender. If any policy referred to in this
Section 19 contains a coinsurance clause, such coinsurance clause will be offset by an agreed amount endorsement in an amount not less than the Replacement Cost. All Insurance policies and renewals of Insurance policies required by this
Section 19 will be for such periods as Lender may from time to time require. Unless required otherwise by state law, all policies of Hazard Insurance will provide that the insurer will notify the named mortgagee in writing at least 10 days
before the cancelation of the policy for nonpayment of the premium or nonrenewal and at least 30 days before cancelation for any other reason. 

  

	 	(e)	Evidence of Insurance; Renewals. Borrower will deliver to Lender a legible copy of each Insurance policy (or duplicate original), and Borrower will promptly deliver to
Lender a copy of all renewal and other notices received by Borrower with respect to the policies. Borrower will ensure that the Mortgaged Property is continuously covered by the required Insurance policies and will deliver to Lender evidence
acceptable to Lender in Lender’s Discretion that the policy has been renewed not less than 15 days prior the expiration date of any Insurance policy. If the evidence of renewal does not include a legible copy of the renewal policy (or duplicate
original), Borrower will deliver a legible copy of each renewal policy (or duplicate original) in a form satisfactory to Lender in Lender’s Discretion no later than the earlier of (i) 60 days after the expiration date of the original
policy, or (ii) the date of any Notice to Lender under Section 19(i). 

  

	 	(f)	Insurance Company Rating Requirements. Borrower will maintain the Insurance coverage described in this Section 19 with companies acceptable to Lender having the
following ratings: 

  

	 	(i)	A rated claims paying ability rating of at least “A-” for financial strength or its equivalent by A.M. Best Company. 

 

	 	(ii)	A financial size rating or its equivalent by A.M. Best Company of at least one of the following: 

  
 Page B-2-6

	 	(A)	“VII” for companies with an Aggregate Carrier Exposure of $5,000,000 or less. 

 

	 	(B)	“VIII” for companies with an Aggregate Carrier Exposure greater than $5,000,000 and less than or equal to $25,000,000. 

 

	 	(C)	“IX” for companies with an Aggregate Carrier Exposure greater than $25,000,000 and a rated claims paying ability of at least one of the following:

  

	 	(1)	“A-” or its equivalent by Fitch, Inc. 

  

	 	(2)	“A-” or its equivalent by Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. 

 

	 	(3)	“A3” or its equivalent by Moody’s Investors Service, Inc. 

 All insurers providing Insurance required by this Instrument will be authorized to issue Insurance in the Property Jurisdiction. 

 

	 	(g)	Compliance With Insurance Requirements. Borrower will comply with all Insurance requirements and will not permit any condition to exist on the Mortgaged Property that
would invalidate any part of any Insurance coverage required under this Instrument. 

  

	 	(h)	Blanket Insurance; Master Program. Borrower may provide Insurance coverage described in this Section 19 under a blanket insurance policy or master program which
provides one “per occurrence” (per peril) limit of coverage for two or more properties (“Blanket Insurance Policy”) provided that each of the following conditions is met: 

 

	 	(i)	The Blanket Insurance Policy is acceptable to Lender in Lender’s Discretion. 

 

	 	(ii)	The coverages under the Blanket Insurance Policy meet the requirements of this Section 19. 

 

	 	(iii)	Borrower will provide evidence acceptable to Lender in Lender’s Discretion that the per occurrence limit of the Insurance coverages provided by the Blanket
Insurance Policy will be no less than the Replacement Cost of the property with the largest replacement cost exposure covered by the Blanket Insurance Policy unless a higher amount is required by Lender in Lender’s Discretion.

  

	 	(iv)	The maximum per occurrence deductible for the Blanket Insurance Policy providing property damage coverage and/or Windstorm Coverage is as follows:

  
 Page B-2-7

					
	 Aggregate Replacement Cost of the covered properties
	  	Maximum per occurrence deductible	 
	 $5,000,000 or less
	  	$	50,000	  
	 Greater than $5,000,000 but less than or equal to $7,500,000
	  	$	75,000	  
	 Greater than $7,500,000
	  	 
 
 	1% of the Replacement Cost
of the covered properties (to
a maximum of $250,000)	  
  
  

 However, if the Blanket Insurance Policy provides Windstorm Coverage and the Mortgaged Property is
located (A) in Florida, or (B) within 50 miles of the coast of any East Coast or Gulf Coast state, then the maximum per occurrence deductible for Windstorm Coverage will not exceed 5% of the aggregate Replacement Cost of the covered
properties. 
  

	 	(v)	The minimum umbrella or excess liability coverage required if the Blanket Insurance Policy provides commercial general liability Insurance is as follows:

  

							
	 Number of properties covered by the policy
	  	
Number of stories in any of
 the covered properties
	  	Minimum umbrella or
excess
liability	 
	2 to 3	  	3 or fewer	  	$	3,000,000	  
	2 to 3	  	More than 3	  	$	10,000,000	  
	4 to 5	  	3 or fewer	  	$	5,000,000	  
	4 to 5	  	More than 3	  	$	12,000,000	  
	6 to 10	  	3 or fewer	  	$	7,000,000	  
	6 to 10	  	More than 3	  	$	15,000,000	  
	11 to 19	  	3 or fewer	  	$	9,000,000	  
	11 to 19	  	More than 3	  	$	20,000,000	  
	20 or more	  	3 or fewer	  	$	15,000,000	  
	20 or more	  	More than 3	  	$	30,000,000	  

  

	 	(i)	Obligations Upon Casualty; Proof of Loss. 

  

	 	(i)	In the event of loss, Borrower will give immediate written notice to the Insurance carrier and to Lender. 

 

	 	(ii)	 Borrower authorizes and appoints Lender as attorney in fact for Borrower to make proof of loss, to adjust and compromise any claims under policies

  
 Page B-2-8

	 	
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, to hold 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 will
require Lender to incur any expense or take any action. Lender may, at Lender’s option, take one of the following actions: 

  

	 	(A)	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 (“Restoration”). If Lender determines to require a repair or replacement settlement and to apply Insurance proceeds to Restoration,
Lender will apply the proceeds in accordance with Lender’s then-current policies relating to the Restoration of casualty damage on similar multifamily properties. 

 

	 	(B)	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.

  

	 	(iii)	Subject to Section 19(j), Borrower may take the following actions: 

  

	 	(A)	If a casualty results in damage to the Mortgaged Property for which the cost of Repairs will be $142,500.00 or less, Borrower will 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 Lender so long as the Insurance proceeds are used solely for the Restoration of the Mortgaged Property.

  

	 	(B)	If a casualty results in damage to the Mortgaged Property for which the cost of Repairs will be more than $142,500.00 but less than $570,000.00, Borrower is authorized
to make proof of loss and adjust and compromise the claim without the prior consent of Lender, and Lender will hold the applicable Insurance proceeds to be used to reimburse Borrower for the cost of Restoration of the Mortgaged Property and will not
apply such proceeds to the payment of the Indebtedness. 

  

	 	(j)	Right to Apply Insurance Proceeds to Indebtedness. Lender will have the right to apply Insurance proceeds to the payment of the Indebtedness if Lender determines, in
Lender’s Discretion, that any of the following conditions are met: 

  
 Page B-2-9

	 	(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)	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)	The rental income from the Mortgaged Property after completion of the Restoration will not be sufficient to meet all operating costs and other expenses, deposits to
reserves and Loan repayment obligations relating to the Mortgaged Property. 

  

	 	(iv)	The Restoration will not be completed by the earlier of (A) at least one year before the Maturity Date (or 6 months before the Maturity Date if re-leasing of the
Mortgaged Property will be completed within such 6 month period) or (B) the expiration of the business interruption coverage. 

  

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

 

	 	(vi)	The casualty involved an actual or constructive loss of more than 30% of the fair market value of the Mortgaged Property, and rendered untenantable more than 30% of the
residential units of the Mortgaged Property. 

  

	 	(vii)	After completion of the Restoration the fair market value of the Mortgaged Property is expected to be less than the fair market value of the Mortgaged Property
immediately prior to such casualty (assuming the affected portion of the Mortgaged Property is relet within a reasonable period after the date of such casualty). 

 

	 	(viii)	Leases covering less than 35% of the residential units of the Mortgaged Property will remain in full force and effect during and after the completion of Restoration.

  

	 	(k)	Succession to Insurance Policies. If the Mortgaged Property is sold at a foreclosure sale or Lender acquires title to the Mortgaged Property, Lender will 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. 

 

	 	(l)	Payment of Premiums After Application of Insurance Proceeds. Unless Lender otherwise agrees in writing, any application of any Insurance proceeds to the Indebtedness
will not extend or postpone the due date of any monthly installments referred to in the Note, Section 7 of this Instrument or change the amount of such installments. 

  
 Page B-2-10

	 	(m)	Assignment of Insurance Proceeds. Borrower agrees to execute such further evidence of assignment of any Insurance proceeds as Lender may require.

  

	D.	Loans Equal to or Greater than $25,000,000. If the Rider to Security Instrument (CME) – Additional Provisions for Loans Equal to or Greater than $25,000,000 (the
“$25MM Rider”) is attached to the Instrument, then Item 1 of the $25MM Rider is hereby deleted and replaced with the following: 

  

	 	1.	INTENTIONALLY DELETED. 

  
 Page B-2-11

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