Contract analysis

Section 1.1 — Defined Terms As used in this Agreement, the following terms shall have the meanings set forth below: "Affiliate" means, with respect to any specified Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the specified Person. For purposes of this definition, "control" means the possession, directly or indir

Section 1.2 — Rules of Construction Unless the context otherwise requires: (a) words importing the singular number shall include the plural number and vice versa; (b) words importing the masculine gender shall include the feminine and neuter genders and vice versa; (c) references to "Articles," "Sections," "Schedules," and "Exhibits" are to the articles, sections, schedules, and exhibits of this Agreement unless othe

ARTICLE II — FORMATION AND ORGANIZATION

Section 2.1 — Name The name of the Company is Fairwater Sun Belt [●] LLC. The business of the Company shall be conducted solely under such name, and the Company shall not adopt, use, or conduct business under any other name without the prior written consent of Lender (so long as the Loan is outstanding). All business, correspondence, and other communications of the Company shall be conducted in the name of the Compan

Section 2.2 — Formation The Company was formed as a Delaware limited liability company pursuant to the DLLCA by the filing of the Certificate of Formation with the Secretary of State of the State of Delaware. A copy of the Certificate of Formation as filed is attached hereto as Exhibit A. The rights, powers, duties, obligations, and liabilities of the Sole Member shall be determined pursuant to the DLLCA and this Agr

Section 2.3 — Purpose (a) Single Purpose. The sole purpose of the Company is to: (i) acquire, own, hold, manage, lease, operate, maintain, repair, improve, and dispose of the Mortgaged Property; (ii) enter into and perform its obligations under the Loan Documents; (iii) enter into and perform its obligations under the Property Management Agreement, tenant leases, and other agreements relating to the ownership, operat

Section 2.4 — Registered Office and Registered Agent The registered office of the Company in the State of Delaware shall be located at the office of its registered agent at Pemberton Industries, 251 Little Falls Drive, Wilmington, New Castle County, Delaware 19808, or at such other location as the Sole Member may from time to time determine in compliance with the DLLCA. The registered agent of the Company at such add

Section 2.5 — Principal Office The principal office of the Company shall be at the address of the Mortgaged Property, or at such other address as may be determined by the Sole Member from time to time with written notice to Lender. The mailing address for the Sole Member is: c/o Fairwater Real Estate Investment Trust, 8400 Chesapeake Center Drive, Suite 1200, Columbia, MD 21044. All correspondence, notices, and commu

Section 2.6 — Term The Company shall have perpetual existence, commencing on the date of the filing of the Certificate of Formation with the Secretary of State of the State of Delaware, and continuing until dissolved in accordance with the provisions of this Agreement and the DLLCA. Notwithstanding any other provision of this Agreement or the DLLCA, the Company shall not be dissolved, and no event shall cause the dis

Section 2.7 — Foreign Qualification The Company shall qualify to do business as a foreign limited liability company in each state, territory, or jurisdiction in which the Mortgaged Property is located or in which such qualification is required by applicable law. As of the Effective Date, the Company is or shall become qualified to do business in the applicable jurisdiction(s) where the Mortgaged Property is situated,

Section 3.1 — Sole Member The sole member of the Company is Fairwater Operating Partnership, L.P. (EIN 52-2847201), a Delaware limited partnership, having its principal office at c/o Fairwater Real Estate Investment Trust, 8400 Chesapeake Center Drive, Suite 1200, Columbia, MD 21044. The Sole Member holds a one hundred percent (100%) membership interest in the Company and is entitled to all of the economic and govern

Section 3.2 — Admission of Additional Members No additional members shall be admitted to the Company without the prior written consent of Lender (so long as the Loan or any portion thereof remains outstanding) and the prior written consent of the Independent Director. Any purported admission of an additional member in violation of this Section 3.2 shall be null and void and of no force or effect. In the event that an

Section 3.3 — Withdrawal The Sole Member shall not resign, withdraw, or dissociate from the Company so long as the Loan or any portion thereof remains outstanding, without the prior written consent of Lender. Any purported resignation, withdrawal, or dissociation in violation of this Section 3.3 shall be null and void and of no force or effect. The resignation, withdrawal, or dissociation of the Sole Member shall not

Section 3.4 — No Personal Liability of Member The Sole Member shall not be personally liable for the debts, obligations, or liabilities of the Company, whether arising in contract, tort, or otherwise, solely by reason of being a member of the Company. The foregoing shall not limit or affect any obligation or liability of the Sole Member, FREIT, or any other Person under the Loan Documents (including, without limitati

ARTICLE IV — CAPITAL CONTRIBUTIONS

Section 4.1 — Initial Capital Contribution The Sole Member has made initial capital contributions to the Company in connection with the formation of the Company and the acquisition of the Mortgaged Property as part of the Sun Belt Portfolio acquisition from Meridian Sunstone Holdings LLC, which acquisition closed on or about June 30, 2025. The total acquisition price for the fourteen-property Sun Belt Portfolio was T

Section 4.2 — Additional Capital Contributions The Sole Member may, but shall not be required to, make additional capital contributions to the Company from time to time as the Sole Member may determine in its sole discretion. No additional capital contributions shall be made or accepted if such contribution would violate the Separateness Covenants, the Loan Documents, or any other provision of this Agreement. The amo

Section 4.3 — Capital Accounts A capital account shall be established and maintained for the Sole Member in accordance with Section 704(b) of the Code and the applicable provisions of the Treasury Regulations promulgated thereunder, including Treasury Regulation Section 1.704-1(b)(2)(iv). The capital account of the Sole Member shall be increased by (a) the amount of cash contributed by the Sole Member to the Company,

Section 4.4 — No Interest on Capital No interest shall accrue or be payable on the capital contributions of the Sole Member or on any amount credited to the capital account of the Sole Member.

ARTICLE V — ALLOCATIONS AND DISTRIBUTIONS

Section 5.1 — Allocations For each fiscal year (or portion thereof) of the Company, all items of income, gain, loss, deduction, and credit of the Company shall be allocated to the Sole Member as the holder of a one hundred percent (100%) membership interest in the Company. Such allocations shall be reflected on the books and records of the Company and on the applicable tax returns filed by the Company.

Section 5.2 — Distributions; Permitted Distributions and REIT Distribution Carve-Out (a) General. Subject to the terms and conditions of the Loan Documents and the Cash Management Agreement, the Company may make distributions to the Sole Member from legally available funds of the Company at such times and in such amounts as the Sole Member may determine, provided that any such distribution shall comply with the Separ

Section 5.3 — No Distributions in Kind The Company shall not make distributions in kind to the Sole Member without the prior written consent of Lender. Any distribution of the Mortgaged Property or any interest therein shall be subject to the transfer restrictions set forth in the Loan Documents and Article IX of this Agreement.

ARTICLE VI — MANAGEMENT AND AUTHORITY

Section 6.1 — Member-Managed Company The Company shall be a member-managed limited liability company. The Sole Member shall have the full and exclusive right, power, and authority to manage the business and affairs of the Company and to take all actions on behalf of the Company, subject in all cases to the Excluded Actions requiring the consent of the Independent Director under Section 7.3 of this Agreement, the rest

Section 6.2 — Officers (a) Designation. The Sole Member may from time to time designate one or more natural persons to serve as officers of the Company, including, without limitation, a President, one or more Vice Presidents, a Secretary, a Treasurer, and such other officers as the Sole Member may deem necessary or appropriate. Officers shall serve at the pleasure of the Sole Member and may be removed with or without

Section 6.3 — Limitation on Authority Notwithstanding any other provision of this Agreement, no Member, officer, agent, employee, or other representative of the Company shall have the authority to: (a) File or consent to the filing of any voluntary petition for relief under the Bankruptcy Code or any analogous provision of state or federal law, or consent to the institution of any involuntary bankruptcy or insolvency

Section 6.4 — Actions Requiring Lender Consent In addition to the Excluded Actions set forth in Section 7.3 and the other restrictions set forth in this Agreement, the following actions shall require the prior written consent of Lender so long as the Loan or any portion thereof remains outstanding: (a) Any sale, transfer, conveyance, assignment, encumbrance, or other disposition of the Mortgaged Property or any inter

ARTICLE VII — INDEPENDENT DIRECTOR/MANAGER

Section 7.1 — Appointment of Independent Director The Company shall at all times have at least one (1) natural person serving as an Independent Director (also referred to herein as an "Independent Manager" or "Special Member"). The initial Independent Director shall be a person designated and provided by a nationally recognized independent director service provider, as identified in Schedule B attached hereto. The In

Section 7.2 — Qualifications of Independent Director An "Independent Director" must be a natural person who, at the time of appointment and at all times while serving in such capacity: (a) Is not, and has not been at any time during the preceding five (5) years, a member, manager, officer, director, employee, partner, shareholder, or Affiliate of the Company, the Sole Member, FREIT, Fairwater Operating Partnership, L

Section 7.3 — Excluded Actions; Matters Requiring Independent Director Consent The following actions (collectively, the "Excluded Actions") shall not be taken by the Company, and no Member, officer, agent, or representative of the Company shall take or authorize any such action, without the prior unanimous affirmative written consent of the Independent Director: (a) Filing a voluntary petition or otherwise initiating

Section 7.4 — Removal and Replacement (a) Removal. The Independent Director may be removed only for cause (which shall include fraud, willful misconduct, gross negligence, or incapacity) by the Sole Member, with the prior written consent of Lender (so long as the Loan is outstanding). Any removal of the Independent Director without the prior written consent of Lender shall be null and void. (b) Vacancy. In the event

Section 7.5 — Compensation and Indemnification of Independent Director (a) Compensation. The Independent Director shall be entitled to reasonable compensation for services rendered in such capacity, in an amount consistent with customary market rates for independent directors or independent managers of special purpose entities in comparable commercial real estate finance transactions. Such compensation shall be payab

ARTICLE VIII — SINGLE PURPOSE ENTITY / SEPARATENESS COVENANTS

Section 8.1 — Separateness Covenants So long as the Loan or any portion thereof remains outstanding, the Company covenants and agrees that it shall comply with each of the following covenants (collectively, the "Separateness Covenants"): (a) Separate Existence. The Company shall maintain its existence as a limited liability company duly organized and in good standing under the laws of the State of Delaware in complia

Section 8.2 — Third-Party Beneficiary Lender (Clarendon Metropolitan Insurance Company) and its successors and assigns under the Loan Documents (including, without limitation, any master servicer, special servicer, trustee, certificate holder, or other party under any CMBS Securitization, including the anticipated CLRN 2025-C14 trust, or any successor or replacement securitization vehicle) are intended third-party be

Section 8.3 — Non-Consolidation Intent The Separateness Covenants set forth in Section 8.1 and the Independent Director provisions set forth in Article VII of this Agreement are adopted with the express intent and purpose that, in the event of a Bankruptcy or insolvency of the Sole Member, FREIT, Fairwater Operating Partnership, L.P., or any other Affiliate of the Company, the assets and liabilities of the Company wi

ARTICLE IX — TRANSFER RESTRICTIONS

Section 9.1 — Restrictions on Transfer of Membership Interests So long as the Loan or any portion thereof remains outstanding, the Sole Member shall not, directly or indirectly, sell, transfer, assign, pledge, hypothecate, encumber, or otherwise dispose of all or any portion of its membership interest in the Company (whether voluntarily, involuntarily, by operation of law, or otherwise) without the prior written cons

Section 9.2 — Restrictions on Transfer of Mortgaged Property No sale, transfer, conveyance, assignment, encumbrance, or other disposition of the Mortgaged Property or any interest therein (whether by deed, ground lease, easement, or otherwise) shall be made without the prior written consent of Lender in accordance with the Loan Documents. Any transfer or encumbrance in violation of this Section 9.2 shall constitute a

Section 9.3 — Deemed Transfers A change in control of the Sole Member, FREIT, or any intermediate entity holding a direct or indirect interest in the Company (whether by merger, consolidation, sale of equity interests, or otherwise) may constitute a deemed transfer of the Mortgaged Property or of a membership interest in the Company under the Loan Documents. The applicable thresholds, exceptions, and conditions for d

ARTICLE X — DISSOLUTION AND WINDING UP

Section 10.1 — Events of Dissolution The Company shall be dissolved only upon the occurrence of one or more of the following events: (a) The written consent of the Sole Member and the affirmative written consent of the Independent Director, together with the prior written consent of Lender (so long as the Loan or any portion thereof remains outstanding); (b) The entry of a decree of judicial dissolution under Section

Section 10.2 — Winding Up and Liquidation Upon the dissolution of the Company in accordance with Section 10.1, the affairs of the Company shall be wound up and its assets liquidated in an orderly manner in accordance with the DLLCA and this Agreement. The Sole Member (or, if the Sole Member is unable or unwilling to act, a liquidating agent or trustee appointed in accordance with the DLLCA) shall serve as the liquida