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RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:

Calderwood & Harkness LLP 425 Park Avenue New York, New York 10022

Attention: Lisa Morrow

(Space Above This Line Reserved for Recorder's Use)

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, AND SECURITY AGREEMENT

THIS MORTGAGE SECURES A LOAN IN THE ORIGINAL PRINCIPAL AMOUNT OF $240,000,000.00

This instrument was prepared by and after recording return to: Calderwood & Harkness LLP, 425 Park Avenue, New York, New York 10022, Attention: Lisa Morrow.

Property Location: ____ County, Texas

Tax Parcel Identification Number(s): ____

Note: This form of Mortgage is to be adapted for separate instruments in each of the following Texas counties for the following properties: (i) Ridgewater at Lakeline — Austin, Texas (Travis County / Williamson County); (ii) sagebrush Commons — San Antonio, Texas (Bexar County); (iii) Cypress Bend — Katy, Texas (Harris County / Fort Bend County); (iv) Willowbrook Terrace — Sugar Land, Texas (Fort Bend County); and (v) Heritage at Stonebriar — Frisco, Texas (Collin County / Denton County). A separate instrument, with an appropriate Exhibit A legal description, shall be recorded in each applicable county.

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, AND SECURITY AGREEMENT

THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, AND SECURITY AGREEMENT (this "Mortgage") is made and entered into as of __, 2025, by and between:

FAIRWATER SUN BELT [I/II/III/IV/V] LLC, a Delaware limited liability company, having its principal place of business c/o Fairwater Real Estate Investment Trust, 8400 Chesapeake Center Drive, Suite 1200, Columbia, Maryland 21044 (hereinafter referred to as "Mortgagor"),

and

CLARENDON METROPOLITAN INSURANCE COMPANY, a New York domiciled insurance company, having its principal office at 1 MetroTech Center, Brooklyn, New York 11201 (hereinafter referred to as "Mortgagee" or "Lender").

The designation "Fairwater Sun Belt [I/II/III/IV/V] LLC" shall refer to the applicable single-purpose entity borrower for the county-specific instrument in which this Mortgage is recorded, as follows:

(a) Fairwater Sun Belt I LLC — Ridgewater at Lakeline, Austin, Texas;

(b) Fairwater Sun Belt II LLC — Sagebrush Commons, San Antonio, Texas;

(d) Fairwater Sun Belt IV LLC — Willowbrook Terrace, Sugar Land, Texas; and

(e) Fairwater Sun Belt V LLC — Heritage at Stonebriar, Frisco, Texas.

RECITALS

WHEREAS, pursuant to that certain Loan Agreement dated as of __, 2025 (the "Loan Agreement"), among Fairwater Sun Belt I LLC, Fairwater Sun Belt II LLC, Fairwater Sun Belt III LLC, Fairwater Sun Belt IV LLC, Fairwater Sun Belt V LLC, Fairwater Sun Belt VI LLC, Fairwater Sun Belt VII LLC, Fairwater Sun Belt VIII LLC, Fairwater Sun Belt IX LLC, Fairwater Sun Belt X LLC, Fairwater Sun Belt XI LLC, Fairwater Sun Belt XII LLC, Fairwater Sun Belt XIII LLC, and Fairwater Sun Belt XIV LLC, each a Delaware limited liability company (collectively, the "Borrowers"), and Clarendon Metropolitan Insurance Company, a New York domiciled insurance company, as lender (the "Lender"), the Lender has agreed to make a mortgage loan (the "Loan") to the Borrowers in the original principal amount of Two Hundred Forty Million and No/100 Dollars ($240,000,000.00);

WHEREAS, the Loan is evidenced by that certain Promissory Note dated as of __, 2025 (the "Note"), executed by the Borrowers in favor of the Lender, in the original principal amount of $240,000,000.00, bearing interest at the fixed rate of 6.25% per annum, with a maturity date of approximately November 2035 (the "Maturity Date"), providing for a thirty (30)-year amortization schedule with monthly payments of principal and interest of approximately $1,477,846.00;

WHEREAS, the obligations of the Borrowers under the Loan Documents are guaranteed, in part, pursuant to that certain Non-Recourse Carve-Out Guaranty Agreement (the "Guaranty") of even date herewith, executed by Fairwater Real Estate Investment Trust, a Maryland real estate investment trust (EIN 52-2847193) (the "Guarantor"), in favor of the Lender, pursuant to which the Guarantor has agreed to guaranty certain obligations of the Borrowers as more fully set forth therein;

WHEREAS, this Mortgage is one of multiple mortgages, deeds of trust, deeds to secure debt, and security agreements securing the Loan, covering properties located in the States of Texas, Georgia, Florida, North Carolina, and Tennessee; and

WHEREAS, the Mortgagor executes and delivers this Mortgage to secure the payment and performance of all Secured Obligations (as defined herein) owing under the Loan Documents.

NOW, THEREFORE, in consideration of the Loan, the mutual covenants and agreements contained herein and in the other Loan Documents, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Mortgagor hereby agrees as follows:

ARTICLE I

DEFINITIONS

Section 1.1 — Defined Terms

As used in this Mortgage, the following terms shall have the meanings set forth below. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Loan Agreement.

"Borrower" or "Mortgagor" means Fairwater Sun Belt [_] LLC, a Delaware limited liability company, being the applicable single-purpose entity for the county-specific instrument in which this Mortgage is recorded.

"Cash Management Agreement" means that certain Cash Management Agreement of even date herewith, entered into among the Borrowers and the Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.

"Environmental Indemnity" means that certain Environmental Indemnity Agreement of even date herewith, executed by the Borrowers and the Guarantor in favor of the Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.

"Event of Default" means an "Event of Default" as such term is defined in the Loan Agreement.

"Fixtures" means all fixtures, equipment, apparatus, appliances, fittings, and other articles and property of every kind and nature whatsoever now or hereafter attached to or forming a part of the Improvements, including, without limitation, all heating, ventilation, and air conditioning systems (HVAC), plumbing systems, electrical systems, elevator systems and equipment, laundry facilities and equipment, security systems, fire suppression and detection systems, telecommunications wiring and systems, and all replacements, substitutions, and additions thereto and therefor.

"Guarantor" means Fairwater Real Estate Investment Trust, a Maryland real estate investment trust (EIN 52-2847193).

"Guaranty" means the Non-Recourse Carve-Out Guaranty Agreement of even date herewith, executed by the Guarantor in favor of the Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.

"Improvements" means all buildings, structures, and improvements of every kind and description now or hereafter erected, constructed, placed, or located on the Land, including, without limitation, all multifamily residential apartment buildings, clubhouses, amenity structures, parking facilities, pools, recreational facilities, maintenance buildings, signage, landscaping, paving, curbing, sidewalks, drainage facilities, and all other site improvements.

"Land" means the real property situated in ____ County, Texas, more particularly described in Exhibit A attached hereto and incorporated herein by reference.

"Leases" means all leases, subleases, licenses, concessions, occupancy agreements, and other agreements (whether written or oral) now or hereafter affecting, covering, or relating to the use, enjoyment, or occupancy of all or any portion of the Mortgaged Property, together with all extensions, renewals, modifications, and replacements thereof.

"Lender" or "Mortgagee" means Clarendon Metropolitan Insurance Company, a New York domiciled insurance company, and its successors and assigns.

"Loan" means the mortgage loan in the original principal amount of Two Hundred Forty Million and No/100 Dollars ($240,000,000.00) made by the Lender to the Borrowers pursuant to the Loan Agreement.

"Loan Agreement" means that certain Loan Agreement dated as of __, 2025, among the Borrowers and the Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.

"Loan Documents" means, collectively, the Loan Agreement, the Note, this Mortgage, each other mortgage, deed of trust, or deed to secure debt securing the Loan, the Guaranty, the Environmental Indemnity, the Cash Management Agreement, the Assignment of Leases, all UCC financing statements filed in connection with the Loan, and all other documents, instruments, certificates, and agreements executed and delivered in connection with the Loan, in each case as the same may be amended, restated, supplemented, or otherwise modified from time to time.

"Mortgaged Property" means, collectively, the Land, the Improvements, the Fixtures, the Personal Property, the Leases, the Rents, and all other property, rights, interests, and estates described in Article II hereof.

"Note" means that certain Promissory Note in the original principal amount of Two Hundred Forty Million and No/100 Dollars ($240,000,000.00), dated as of the date hereof, executed by the Borrowers and payable to the order of the Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.

"Operating Partnership" means Fairwater Operating Partnership, L.P., a Delaware limited partnership (EIN 52-2847201), which is the sole member of the Mortgagor.

"Permitted Encumbrances" means the exceptions to title listed on Exhibit B attached hereto and incorporated herein by reference, as the same may be amended or supplemented with the prior written consent of the Mortgagee.

"Personal Property" means all equipment, inventory, accounts, instruments, chattel paper, documents, general intangibles, letter-of-credit rights, commercial tort claims, supporting obligations, investment property, deposit accounts, and other personal property of every kind and description owned by the Mortgagor and now or hereafter located on, or used in connection with, the Mortgaged Property, or arising from any of the foregoing, together with all accessions, additions, replacements, substitutions, and proceeds thereof and therefrom.

"Property Management Agreement" means that certain property management agreement effective as of July 1, 2025, by and between the Mortgagor and the Property Manager, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the Loan Agreement.

"Property Manager" means Fairwater Residential Management LLC (EIN 52-2953810), or any successor property manager approved by the Mortgagee in accordance with the Loan Agreement.

"REIT" means Fairwater Real Estate Investment Trust, a Maryland real estate investment trust.

"Rents" means all rents, issues, profits, revenues, royalties, income, receipts, security deposits (subject to applicable law), and other benefits of every kind and nature derived from or arising out of the Mortgaged Property, whether now due, past due, or to become due, including, without limitation, all amounts payable under the Leases, parking revenues, laundry revenues, vending revenues, and all other income and receipts of every kind and nature.

"Secured Obligations" means all obligations of the Borrowers and the Guarantor to the Lender under the Loan Documents, including, without limitation, the obligation to pay all principal, interest, late charges, default interest, yield maintenance premiums (if any), and all other sums due under the Note, the Loan Agreement, and the other Loan Documents, and the obligation to perform all covenants and agreements of the Borrowers and the Guarantor contained in the Loan Documents.

"Title Insurer" means Marlowe Asset Management Title Insurance Group, Inc.

Section 1.2 — Rules of Construction

Unless the context otherwise requires: (a) terms not defined herein shall have the meanings ascribed to them in the Loan Agreement; (b) all references to "this Mortgage" shall include all amendments, restatements, supplements, and modifications hereof; (c) the singular shall include the plural and vice versa, and each gender shall include every other gender; (d) the words "include," "includes," and "including" shall be deemed to be followed by the words "without limitation"; (e) references to articles, sections, and exhibits are to articles, sections, and exhibits of this Mortgage unless otherwise specified; (f) the headings and captions contained herein are for convenience of reference only and shall not be considered in the interpretation or construction of this Mortgage; (g) references to any statute, law, regulation, or code shall be deemed to include any successor statute, law, regulation, or code; and (h) this Mortgage shall be interpreted in accordance with the laws of the State of Texas, as provided in Section 9.1 hereof. In the event of any ambiguity, this Mortgage shall not be construed against the drafter but shall be construed in a manner that effectuates the intent of the parties to create a valid, enforceable, and first-priority lien on the Mortgaged Property.

ARTICLE II

GRANTING CLAUSES

Section 2.1 — Grant of Mortgage Lien

For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to secure the payment and performance of the Secured Obligations, the Mortgagor hereby irrevocably GRANTS, BARGAINS, SELLS, CONVEYS, ASSIGNS, TRANSFERS, MORTGAGES, PLEDGES, SETS OVER, and HYPOTHECATES to the Mortgagee, and its successors and assigns forever, the following described property, rights, interests, and estates (collectively, the "Mortgaged Property"):

(a) The Land. All that certain tract or parcel of land situated in ____ County, Texas, more particularly described in Exhibit A attached hereto and incorporated herein by reference, together with all right, title, and interest of the Mortgagor in and to any land lying within the right-of-way of any street, road, or avenue, open or proposed, in front of, behind, or adjacent to the Land, and all right, title, and interest of the Mortgagor in and to any and all sidewalks and alleys adjacent to or used in connection with the Land.

(b) The Improvements. All buildings, structures, and improvements of every kind and description now or hereafter erected, constructed, placed, or located on the Land, including, without limitation, all multifamily residential apartment buildings and units, clubhouses, leasing offices, fitness centers, business centers, amenity structures, parking garages and surface parking facilities, swimming pools and pool houses, recreational facilities, maintenance buildings, storage buildings, signage, landscaping, paving, curbing, sidewalks, walkways, fences, walls, drainage facilities, retention ponds, utility connections and infrastructure, and all other structures and site improvements of every kind and nature, together with all additions, alterations, betterments, and replacements thereof.

(c) The Fixtures. All fixtures, equipment, apparatus, machinery, appliances, fittings, and other articles and property of every kind and nature whatsoever now or hereafter owned by the Mortgagor and attached to, installed in, or used in connection with the Land or the Improvements, or placed on any part thereof though not attached thereto, including, without limitation, all heating, ventilation, and air conditioning systems (HVAC), boilers, furnaces, hot water heaters, plumbing systems and equipment, electrical systems and equipment, lighting fixtures and systems, elevator systems and equipment, laundry facilities and equipment, kitchen appliances (including ranges, refrigerators, dishwashers, garbage disposals, and microwave ovens), window coverings (including blinds and drapes), carpeting and floor coverings, security and access control systems, fire suppression and detection systems (including sprinkler systems and smoke detectors), telecommunications wiring, cabling, and systems, cable and internet infrastructure, solar panels and associated equipment (if any), generators and emergency power systems, water treatment systems, irrigation systems, and all replacements, substitutions, additions thereto, and proceeds thereof. THIS MORTGAGE CONSTITUTES A FIXTURE FILING UNDER THE TEXAS BUSINESS AND COMMERCE CODE, AND IS TO BE FILED FOR RECORD IN THE REAL PROPERTY RECORDS OF ____________ COUNTY, TEXAS. THE INFORMATION REQUIRED BY SECTION 9.502 OF THE TEXAS BUSINESS AND COMMERCE CODE IS SET FORTH IN EXHIBIT D ATTACHED HERETO.

(d) Easements and Appurtenances. All easements, rights-of-way, strips and gores of land, streets, alleys, passages, sewer rights, water rights, mineral rights (to the extent owned by the Mortgagor), air rights, development rights, and all appurtenances, privileges, tenements, hereditaments, and other rights and benefits belonging or in any way appertaining to the Land or the Improvements, including, without limitation, all of the Mortgagor's right, title, and interest in and to any streets, roads, and public places, open or proposed, adjacent to or abutting the Land, and all of the Mortgagor's rights and interests in and to any award for damage thereto by reason of any change of grade, closing, or other action with respect thereto.

(e) Personal Property. All Personal Property, as defined in Section 1.1 hereof, including, without limitation, all tangible and intangible personal property owned by the Mortgagor and now or hereafter located on, or used in connection with, the Mortgaged Property, including all equipment, inventory, accounts, accounts receivable, instruments, chattel paper, documents, general intangibles, letter-of-credit rights, deposit accounts, investment property, commercial tort claims, goods, furniture, furnishings, supplies, building materials, and all other personal property of every kind and nature, together with all accessions, additions, replacements, substitutions, and proceeds thereof and therefrom.

(f) Leases and Rents. All Leases and Rents as more fully described in Article IV hereof, including, without limitation, all of the Mortgagor's right, title, and interest as landlord under all Leases now or hereafter affecting the Mortgaged Property, together with all security deposits and prepaid rents held by the Mortgagor in connection with such Leases, and all Rents, income, receipts, revenues, issues, profits, and other benefits of every kind and nature derived from or arising out of the Mortgaged Property or any portion thereof.

(g) Condemnation and Insurance Proceeds. All awards, payments, proceeds, and compensation heretofore made or hereafter to be made with respect to the Mortgaged Property, including, without limitation, (i) all awards and payments arising from any taking, condemnation, or exercise of the power of eminent domain (whether temporary or permanent, partial or complete) with respect to the Mortgaged Property or any portion thereof, (ii) all insurance proceeds payable on account of any casualty, damage, destruction, or other loss with respect to the Mortgaged Property, and (iii) all other payments, awards, or proceeds of any kind and nature (whether or not arising from the foregoing).

(h) Agreements and Contracts. All contracts, agreements, permits, licenses, approvals, authorizations, consents, variances, entitlements, franchises, certificates of occupancy, and other rights relating to the ownership, use, occupancy, operation, management, construction, maintenance, or development of the Mortgaged Property, including, without limitation, the Property Management Agreement, all construction contracts, architectural and engineering contracts, service contracts, equipment leases, maintenance agreements, utility agreements, and all warranties and guaranties relating to the Improvements or any equipment or fixtures forming a part thereof.

(i) Accounts and Reserves. All deposit accounts, reserve accounts, escrow accounts, lockbox accounts, operating accounts, and other accounts of every kind and nature established or maintained by or on behalf of the Mortgagor pursuant to the Cash Management Agreement, the Loan Agreement, or otherwise in connection with the ownership and operation of the Mortgaged Property, together with all funds, cash, and other amounts now or hereafter deposited therein and all interest and earnings thereon.

(j) Proceeds. All proceeds (as such term is defined in Article 9 of the Texas Business and Commerce Code) of any and all of the foregoing, including, without limitation, all cash and non-cash proceeds, insurance proceeds, condemnation proceeds, and all claims for damages or injury to or diminution in value of any of the foregoing.

Section 2.2 — Habendum

TO HAVE AND TO HOLD the Mortgaged Property, together with all rights, privileges, appurtenances, and immunities thereunto belonging or in any way appertaining, unto the Mortgagee, its successors and assigns, forever, subject to the terms and conditions of this Mortgage and the other Loan Documents; provided, however, that if the Mortgagor shall pay and perform all of the Secured Obligations in full when due in accordance with the terms of the Loan Documents, and shall otherwise comply with all of the terms, covenants, and conditions of this Mortgage and the other Loan Documents, then this Mortgage and the estate hereby granted shall cease, terminate, and become void, and the Mortgagee shall, at the Mortgagor's expense, execute and deliver to the Mortgagor such instruments of release and satisfaction as may be necessary to release the lien of this Mortgage of record.

Section 2.3 — Security Interest Under Texas Uniform Commercial Code

In addition to the mortgage lien created hereby, the Mortgagor hereby grants to the Mortgagee a continuing first-priority security interest under the Texas Business and Commerce Code (the "Texas UCC") in and to all Personal Property, Fixtures, Leases, Rents, accounts, deposit accounts, general intangibles, chattel paper, instruments, investment property, and all other collateral constituting personal property in which a security interest may be granted under the Texas UCC, whether now owned or hereafter acquired, together with all proceeds and products thereof (collectively, the "UCC Collateral"). The Mortgagor hereby authorizes the Mortgagee to file one or more UCC financing statements (including fixture filings and continuation statements) in the real property records of ____ County, Texas, and with the Secretary of State of the State of Delaware (the Mortgagor's state of organization), and in any other jurisdiction as the Mortgagee may deem necessary or appropriate, to perfect the security interest granted hereunder, without the signature of the Mortgagor where permitted by law. The Mortgagor agrees that a carbon, photographic, facsimile, or other reproduction of this Mortgage or of any financing statement filed in connection herewith shall be sufficient as a financing statement and may be filed in any appropriate office in lieu thereof. This instrument constitutes and shall serve as a financing statement for purposes of Texas Business and Commerce Code Section 9.502 and is being filed as a fixture filing in the real property records of the county in which the Mortgaged Property is located. The information required for such fixture filing is set forth in Exhibit D attached hereto.

Section 2.4 — Secured Obligations

This Mortgage and the lien, security interest, and assignment created hereunder secure the full and timely payment and performance of all Secured Obligations, including, without limitation: (a) all principal of the Loan in the original principal amount of Two Hundred Forty Million and No/100 Dollars ($240,000,000.00); (b) all interest thereon at the fixed rate of 6.25% per annum (and at the default rate of interest specified in the Note during any period in which such default rate is applicable); (c) all late charges, prepayment premiums, yield maintenance amounts, and other charges payable under the Note and the Loan Agreement; (d) all costs and expenses of collection and enforcement, including reasonable attorneys' fees and expenses; (e) all protective advances made by the Mortgagee pursuant to this Mortgage, the Loan Agreement, or applicable law, including advances for taxes, assessments, insurance premiums, repairs, and preservation of the Mortgaged Property; (f) all escrow and reserve deposits required under the Loan Agreement and the Cash Management Agreement; and (g) all other sums, costs, expenses, liabilities, and obligations now or hereafter due and owing under the Note, this Mortgage, the Loan Agreement, and the other Loan Documents.

ARTICLE III

REPRESENTATIONS, WARRANTIES, AND COVENANTS OF MORTGAGOR

Section 3.1 — Title and Authority

The Mortgagor represents, warrants, and covenants to the Mortgagee as follows:

(a) The Mortgagor is a Delaware limited liability company, duly organized, validly existing, and in good standing under the laws of the State of Delaware, and is duly qualified to transact business and is in good standing in the State of Texas. The Mortgagor's sole member is Fairwater Operating Partnership, L.P., a Delaware limited partnership, whose general partner is Fairwater Real Estate Investment Trust, a Maryland real estate investment trust.

(b) The Mortgagor has good and indefeasible title to the Mortgaged Property, in fee simple, free and clear of all liens, charges, encumbrances, security interests, and adverse claims of every kind and nature, subject only to the Permitted Encumbrances set forth on Exhibit B hereto.

(c) The Mortgagor has full right, power, authority, and legal capacity to execute, deliver, and perform this Mortgage and to grant, convey, mortgage, pledge, assign, and create a security interest in the Mortgaged Property as provided herein. The execution, delivery, and performance of this Mortgage have been duly authorized by all necessary action on the part of the Mortgagor, including authorization by Fairwater Operating Partnership, L.P. as its sole member, and do not and will not violate or conflict with the Amended and Restated Limited Liability Company Agreement of the Mortgagor or any applicable law, regulation, order, judgment, decree, or agreement binding on the Mortgagor.

(d) This Mortgage constitutes a legal, valid, and binding obligation of the Mortgagor, enforceable against the Mortgagor in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and other laws affecting creditors' rights generally and to general principles of equity.

Section 3.2 — Single-Purpose Entity Covenants

(a) The Mortgagor is a single-purpose entity formed for the sole purpose of owning, holding, and operating the Mortgaged Property, and the Mortgagor has not engaged and shall not engage in any business or activity other than the ownership, operation, management, leasing, and maintenance of the Mortgaged Property and activities incidental thereto.

(b) The Mortgagor shall at all times comply with all single-purpose entity covenants set forth in the Loan Agreement and in its Amended and Restated Limited Liability Company Agreement, including, without limitation: (i) maintaining its existence as a separate legal entity; (ii) not commingling its assets with the assets of any other person or entity; (iii) maintaining its own separate books and records, bank accounts, and financial statements; (iv) not incurring any indebtedness other than the Loan and trade payables incurred in the ordinary course of operating the Mortgaged Property; (v) holding itself out to the public as a legal entity separate and distinct from any other person or entity, including its members, partners, and affiliates; (vi) maintaining at least one (1) independent director or manager (as applicable) whose consent is required for the filing of any voluntary petition for bankruptcy, insolvency, dissolution, liquidation, or reorganization; (vii) paying its own liabilities from its own assets; (viii) not guaranteeing or becoming obligated for the debts of any other person or entity; (ix) not acquiring obligations or securities of its members, partners, or affiliates; and (x) operating as a distinct entity from its affiliates and observing all necessary organizational formalities.

(c) Notwithstanding the foregoing, the Mortgagor shall be permitted to make distributions to the Operating Partnership and, indirectly, to the Guarantor, to the extent necessary for the Guarantor to maintain its status as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. In connection therewith, the Guarantor is required to distribute at least ninety percent (90%) of its taxable income to its shareholders in each taxable year in order to maintain its election as a REIT for federal income tax purposes, and the Mortgagor acknowledges that distributions necessary to satisfy such requirement shall be permitted, subject to the terms and conditions of the Loan Agreement.

Section 3.3 — Payment of Secured Obligations

The Mortgagor shall timely pay, or cause to be paid, all amounts due under the Note, the Loan Agreement, and the other Loan Documents in accordance with the terms thereof, including, without limitation, all monthly installments of principal and interest (currently approximately $1,477,846.00 per month, based on the thirty (30)-year amortization schedule at the fixed rate of 6.25% per annum), all reserve and escrow deposits, all late charges, all default interest, and all other sums payable under the Loan Documents.

Section 3.4 — Maintenance and Repair

(a) The Mortgagor shall keep and maintain the Mortgaged Property in good order, condition, and repair, shall make all necessary repairs and replacements thereto (structural and non-structural, ordinary and extraordinary, foreseen and unforeseen), and shall not commit or suffer to be committed any waste of the Mortgaged Property. The Mortgagor shall not remove, demolish, materially alter, or materially modify any Improvement forming part of the Mortgaged Property without the prior written consent of the Mortgagee, except for tenant improvements and modifications made in the ordinary course of multifamily property management that do not materially affect the structure, value, or use of the Improvements.

(b) The Mortgagor shall not initiate, join in, or consent to any change in any private restrictive covenant, zoning classification, or other public or private restriction limiting or affecting the uses that may be made of the Mortgaged Property or any part thereof, without the prior written consent of the Mortgagee.

(c) The Mortgagor shall comply with all applicable federal, state, and local laws, ordinances, rules, regulations, codes, and requirements affecting the Mortgaged Property, including, without limitation, all building codes, zoning ordinances, health and safety regulations, and environmental laws.

Section 3.5 — Insurance

(a) The Mortgagor shall obtain and maintain, at its sole cost and expense, such insurance coverages as are required by the Loan Agreement, including, without limitation: (i) property/casualty insurance (on an "all risk" or "special form" basis) covering the Improvements and Personal Property in an amount not less than the full replacement cost of the Improvements; (ii) commercial general liability insurance with minimum combined single limits as specified in the Loan Agreement; (iii) flood insurance, if any portion of the Mortgaged Property is located within a Special Flood Hazard Area as designated by the Federal Emergency Management Agency; (iv) business income/loss of rents insurance covering not less than twelve (12) months of projected rental income; (v) workers' compensation insurance as required by applicable Texas law; and (vi) such other coverages as the Mortgagee may reasonably require from time to time.

(b) All property insurance policies shall name the Mortgagee as mortgagee and loss payee pursuant to a standard mortgagee clause. All liability insurance policies shall name the Mortgagee as an additional insured. All policies shall be issued by insurers authorized to do business in the State of Texas with an A.M. Best rating of not less than "A-" with a financial size category of not less than "VIII," or as otherwise approved by the Mortgagee. All policies shall be subject to the Mortgagee's approval as to form, amount, and insurer.

(c) The Mortgagor shall deliver to the Mortgagee evidence of insurance (including certificates of insurance and, upon request, certified copies of policies) on or before the date hereof and at least thirty (30) days prior to the expiration of any existing policy. Each insurance policy shall provide that it may not be cancelled or materially modified without at least thirty (30) days' prior written notice to the Mortgagee.

Section 3.6 — Payment of Taxes and Impositions

(a) The Mortgagor shall pay, or cause to be paid, all real property taxes, personal property taxes, assessments (general and special), water and sewer charges, utility charges, and all other taxes, charges, levies, and impositions of every kind and nature (collectively, "Impositions") now or hereafter assessed, levied, confirmed, or imposed against the Mortgaged Property or any part thereof before any such Imposition becomes delinquent or a lien on the Mortgaged Property.

(b) The Mortgagor shall promptly deliver to the Mortgagee, upon request, receipts or other evidence satisfactory to the Mortgagee demonstrating the timely payment of all Impositions.

(c) To the extent required by the Loan Agreement, the Mortgagor shall make monthly deposits with the Mortgagee (or such other party as the Mortgagee may designate) for the payment of Impositions in such amounts as the Mortgagee may estimate to be necessary to accumulate sufficient funds to pay all Impositions at least thirty (30) days prior to their respective due dates. Such tax escrow deposits shall be held and applied in accordance with the terms of the Loan Agreement.

(d) The Mortgagor may, in good faith and at its sole expense, contest the validity or amount of any Imposition by appropriate legal proceedings, provided that: (i) the Mortgagor shall have given prior written notice to the Mortgagee of its intention to contest such Imposition; (ii) no Event of Default shall exist; (iii) such contest shall not subject the Mortgaged Property to any risk of forfeiture, sale, or loss of the lien of this Mortgage; and (iv) the Mortgagor shall have posted such security or deposited such reserve as the Mortgagee may reasonably require.

Section 3.7 — Compliance with Laws

The Mortgagor shall promptly comply with, and shall cause the Mortgaged Property to comply with, all federal, state, and local laws, statutes, rules, regulations, codes, ordinances, orders, directives, and requirements applicable to the Mortgaged Property or any part thereof or to the ownership, use, occupancy, operation, management, maintenance, or condition of the Mortgaged Property, including, without limitation, all zoning ordinances, building codes, fire codes, health and safety regulations, the Americans with Disabilities Act of 1990, as amended, and the Fair Housing Act, as amended, and all applicable environmental laws and regulations. The Mortgagor shall not use or permit the use of the Mortgaged Property for any purpose that would violate any applicable law, ordinance, or regulation or that would impair or tend to impair the value or security of the Mortgaged Property.

Section 3.8 — Environmental Matters

(a) The Mortgagor represents and warrants that, to its knowledge after due inquiry and investigation (including the review of Phase I Environmental Site Assessments prepared in connection with the closing of the Loan), no hazardous substances, hazardous materials, toxic substances, pollutants, contaminants, petroleum products, asbestos-containing materials, polychlorinated biphenyls, or other regulated substances (collectively, "Hazardous Substances") exist on, under, at, or about the Mortgaged Property in violation of, or in concentrations or quantities exceeding the levels permitted by, applicable environmental laws, rules, and regulations.

(b) The Mortgagor shall not cause or permit the presence, use, generation, release, discharge, storage, disposal, or transportation of any Hazardous Substances on, under, at, about, or from the Mortgaged Property, except for commercially reasonable quantities of cleaning supplies, maintenance materials, and similar products used in the ordinary course of operating a multifamily residential property, provided that such use is in compliance with all applicable environmental laws.

(c) The obligations of the Mortgagor and the Guarantor with respect to environmental matters are further set forth in the Environmental Indemnity Agreement of even date herewith, which is incorporated herein by reference.

Section 3.9 — No Liens or Encumbrances

(a) The Mortgagor shall not create, incur, assume, suffer, or permit to exist any lien, encumbrance, charge, or claim against or on the Mortgaged Property or any part thereof, other than the Permitted Encumbrances and the lien and security interest created by this Mortgage and the other Loan Documents.

(b) The Mortgagor shall promptly discharge or bond over (in accordance with applicable Texas law) any mechanic's lien, materialman's lien, judgment lien, tax lien, or other involuntary lien or encumbrance filed or asserted against the Mortgaged Property within thirty (30) days after the Mortgagor receives notice of the filing thereof, or within such longer period as may be permitted under the Loan Agreement provided that the Mortgagor is diligently contesting such lien in good faith by appropriate proceedings and has posted adequate security.

Section 3.10 — Transfer Restrictions

(a) The Mortgagor shall not, without the prior written consent of the Mortgagee, sell, convey, transfer, assign, pledge, encumber, or otherwise dispose of the Mortgaged Property or any part thereof or any interest therein (whether legal or equitable), or permit any change in the ownership or control of the Mortgagor or any direct or indirect equity interest therein, except as expressly permitted under the Loan Agreement.

(b) Without limiting the generality of the foregoing, no direct or indirect transfer of any ownership interest in the Mortgagor shall be permitted without the prior written consent of the Mortgagee, except for (i) permitted intra-REIT transfers (i.e., transfers within the organizational structure of Fairwater Real Estate Investment Trust and its controlled affiliates) as specifically provided in the Loan Agreement, (ii) transfers of limited partnership interests in the Operating Partnership not resulting in a change of control, and (iii) transfers of shares or units of the REIT that are publicly traded on a national securities exchange, in each case subject to the conditions and limitations set forth in the Loan Agreement.

(c) Any transfer or disposition made in violation of this Section 3.10 shall constitute an Event of Default hereunder and under the Loan Agreement.

Section 3.11 — Property Management

(a) The Mortgaged Property shall at all times be managed and operated by Fairwater Residential Management LLC (EIN 52-2953810) pursuant to the Property Management Agreement effective as of July 1, 2025, or by such replacement property manager as may be approved in writing by the Mortgagee in accordance with the Loan Agreement.

(b) The Mortgagor shall not terminate, amend, modify, or waive any material provision of the Property Management Agreement, or replace the Property Manager, without the prior written consent of the Mortgagee. Any replacement property manager must be a reputable, experienced, and qualified manager of multifamily residential properties, must be approved by the Mortgagee, and must enter into a new property management agreement in form and substance acceptable to the Mortgagee.

(c) The Mortgagor shall cause the Property Manager to manage and operate the Mortgaged Property in a first-class manner consistent with the management and operation of comparable multifamily residential properties in the applicable metropolitan market area.

Section 3.12 — Further Assurances

The Mortgagor shall, at its sole cost and expense, execute and deliver, or cause to be executed and delivered, to the Mortgagee such further instruments, documents, certificates, and agreements as the Mortgagee may from time to time reasonably request to perfect, protect, and maintain the first-priority lien and security interest of this Mortgage, including, without limitation, any UCC financing statements, continuation statements, fixture filings, amendments, and other documents necessary to maintain the perfection and priority of the security interest granted hereunder. The Mortgagor shall also take such actions and provide such information as the Mortgagee may reasonably request in connection with the securitization of the Loan.

Section 3.13 — Reserves

The Mortgagor shall fund and maintain such reserve accounts as are required under the Loan Agreement and the Cash Management Agreement, including, without limitation, reserves for (a) real property taxes and assessments, (b) insurance premiums, (c) capital expenditures and replacements, (d) leasing commissions, and (e) such other purposes as may be required by the Loan Agreement. All reserve deposits shall be held and applied in accordance with the terms and conditions of the Loan Agreement and the Cash Management Agreement.

Section 3.14 — Estoppel Certificates

The Mortgagor shall, within ten (10) business days after written request by the Mortgagee (or within such other period as may be specified in the Loan Agreement), execute and deliver to the Mortgagee, or to any person or entity designated by the Mortgagee, a written estoppel certificate in the form required by the Loan Agreement, confirming (a) the outstanding principal balance of the Loan, (b) the interest rate applicable thereto, (c) the date through which interest has been paid, (d) whether any Event of Default or event that, with the giving of notice or the passage of time or both, would constitute an Event of Default then exists (and, if so, specifying the nature thereof), and (e) such other matters as the Mortgagee may reasonably request. The Mortgagor acknowledges that such estoppel certificates may be relied upon by the Mortgagee, its successors and assigns, and any prospective purchaser or assignee of the Loan, including, without limitation, any CMBS trust or special purpose vehicle established in connection with any securitization of the Loan.

ARTICLE IV

ASSIGNMENT OF LEASES AND RENTS

Section 4.1 — Assignment

As additional security for the Secured Obligations, the Mortgagor hereby absolutely and unconditionally assigns, transfers, sets over, and conveys to the Mortgagee all of the Mortgagor's right, title, and interest in, to, and under (a) all Leases now existing or hereafter entered into with respect to the Mortgaged Property or any part thereof, together with all extensions, renewals, modifications, and replacements thereof, (b) all Rents, income, receipts, revenues, issues, profits, and other benefits of every kind and nature now due, past due, or to become due under or by virtue of any Lease or otherwise arising from the Mortgaged Property, (c) all guaranties of tenants' obligations under any Lease, and (d) all security deposits, prepaid rents, and other sums held by the Mortgagor in connection with any Lease (collectively, the "Assigned Interests"). This assignment is a present, absolute, and unconditional assignment of the Leases and Rents and is not merely an assignment for additional security or a pledge thereof. The foregoing assignment shall be fully operative without any further action on the part of either party, and, specifically, the Mortgagee shall be entitled, subject to the terms hereof, to all Rents from the Mortgaged Property whether or not the Mortgagee takes possession of the Mortgaged Property.

Section 4.2 — Revocable License to Collect Rents

Notwithstanding the absolute assignment of Leases and Rents set forth in Section 4.1 above, the Mortgagee hereby grants to the Mortgagor a revocable license to collect, receive, use, and enjoy the Rents from the Mortgaged Property, subject to the terms and conditions of the Cash Management Agreement and the other Loan Documents. The license granted herein shall be revocable at the election of the Mortgagee and shall be automatically and immediately revoked, without the necessity of any notice, demand, or other action by the Mortgagee, upon the occurrence and during the continuance of any Event of Default, or upon the commencement of a Cash Management Period (as defined in the Cash Management Agreement). The Cash Management Period shall be triggered upon, among other things, the occurrence of an Event of Default or the Debt Service Coverage Ratio (as defined in the Loan Agreement) for the Mortgaged Property (or the portfolio of properties, as applicable) falling below the threshold specified in the Cash Management Agreement, constituting a springing lockbox arrangement. Upon the revocation of such license, the Mortgagor shall immediately deliver to the Mortgagee or its designee all Rents and other sums collected or received by the Mortgagor with respect to the Mortgaged Property.

Section 4.3 — Lease Covenants

(a) The Mortgagor shall not, without the prior written consent of the Mortgagee (which consent shall not be unreasonably withheld, conditioned, or delayed with respect to residential leases entered into in the ordinary course of business):

(i) enter into any lease, sublease, license, concession, or other occupancy agreement, or any material amendment, modification, extension, or renewal of any existing Lease, other than residential apartment leases entered into in the ordinary course of multifamily property management on then-current market terms and conditions for the applicable submarket;

(ii) accept prepayment of rent or other charges under any Lease for more than one (1) month in advance;

(iii) cancel, terminate, accept any surrender of, or consent to any assignment of, any Lease except in the ordinary course of multifamily property management and in accordance with the terms of such Lease; or

(iv) consent to any subordination of any Lease to any lien or encumbrance other than the lien of this Mortgage.

(b) All Leases entered into after the date hereof shall be subordinate to the lien of this Mortgage unless the Mortgagee shall elect otherwise in writing. Each such Lease shall contain such provisions as the Mortgagee may reasonably require, including, without limitation, provisions for tenant attornment and non-disturbance in a form acceptable to the Mortgagee.

(c) The Mortgagor shall faithfully perform all of the obligations of the landlord under each Lease and shall enforce all of the obligations of the tenants thereunder. The Mortgagor shall promptly deliver to the Mortgagee copies of any notices of default received from or sent to tenants, and copies of any Lease or amendment thereto that is not a residential lease entered into in the ordinary course.

Section 4.4 — Mortgagee's Rights Upon Default

(a) Upon the occurrence and during the continuance of an Event of Default, and without limiting any other rights or remedies of the Mortgagee hereunder, under the other Loan Documents, at law, or in equity, the Mortgagee may, at its option, without notice to or demand upon the Mortgagor (except as required by applicable law):

(i) enter upon and take possession of the Mortgaged Property, manage and operate the same, and collect all Rents directly from the tenants and other occupants thereof;

(ii) apply all Rents so collected to the payment of the Secured Obligations in such order and manner as the Mortgagee shall determine in its sole discretion, after deducting therefrom all costs and expenses of collection and management, including reasonable property management fees and reasonable attorneys' fees;

(iii) exercise all rights of the landlord under the Leases, including the right to enforce the Leases and to exercise any option or right of the landlord thereunder;

(iv) modify, extend, or renew any Lease on such terms as the Mortgagee shall deem advisable; and

(v) enter into new leases of the Mortgaged Property on such terms as the Mortgagee shall deem advisable.

(b) Each tenant and occupant of the Mortgaged Property is hereby authorized and directed, upon receipt of written notice from the Mortgagee stating that an Event of Default has occurred and is continuing and directing such tenant or occupant to pay all Rents to the Mortgagee, to pay all Rents directly to the Mortgagee without any obligation to inquire as to whether an Event of Default has in fact occurred or is continuing, and notwithstanding any contrary instruction, direction, or assertion of the Mortgagor. The Mortgagor agrees that any such tenant or occupant shall have the right to rely on any such notice from the Mortgagee and shall pay all Rents to the Mortgagee without any liability to the Mortgagor.

(c) The exercise by the Mortgagee of any rights under this Section 4.4 shall not be deemed to make the Mortgagee a "mortgagee in possession" or otherwise impose on the Mortgagee any obligation or liability for the management or operation of the Mortgaged Property.

Section 4.5 — Subordination, Non-Disturbance, and Attornment

The Mortgagee agrees to enter into subordination, non-disturbance, and attornment agreements ("SNDA Agreements") with tenants under commercial leases (if any) at the Mortgaged Property, on such terms and in such form as the Mortgagee may require, upon the reasonable request of the Mortgagor or such tenants. With respect to residential apartment leases, the Mortgagee acknowledges that the tenants' rights under such leases shall be subject to the provisions of applicable Texas law governing the rights of residential tenants upon foreclosure.

ARTICLE V

CASH MANAGEMENT

Section 5.1 — Cash Management Agreement

This Article V is subject to, and shall be interpreted in accordance with, the Cash Management Agreement of even date herewith, which sets forth the detailed terms and conditions governing the collection, deposit, and application of Rents and other revenues from the Mortgaged Property. To the extent of any conflict between this Article V and the Cash Management Agreement, the Cash Management Agreement shall control. All Rents and other revenues from the Mortgaged Property shall be deposited into lockbox accounts and other accounts as provided in the Cash Management Agreement. Prior to the commencement of a Cash Management Period (as defined in the Cash Management Agreement), the Mortgagor shall retain control of Rents, subject to the obligations and covenants set forth in the Loan Agreement and this Mortgage, provided that the Mortgagor shall at all times deposit Rents into the accounts designated in the Cash Management Agreement. The springing lockbox arrangement set forth in the Cash Management Agreement provides that active cash management (i.e., the Mortgagee's direct control over the application of Rents) shall be triggered upon the commencement of a Cash Management Period, which may occur upon the occurrence of an Event of Default, the failure to maintain a minimum Debt Service Coverage Ratio, or such other triggering events as are specified in the Cash Management Agreement.

Section 5.2 — Application of Rents During Cash Management Period

During any Cash Management Period, all Rents and other revenues from the Mortgaged Property shall be collected and applied in accordance with the waterfall order of priority set forth in the Cash Management Agreement, which generally provides for application in the following order: (a) first, to the payment of monthly debt service on the Loan (principal and interest); (b) second, to the funding of all required reserve accounts (including tax reserves, insurance reserves, capital expenditure reserves, and leasing commission reserves); (c) third, to the payment of budgeted operating expenses of the Mortgaged Property approved by the Mortgagee; and (d) fourth, all remaining excess cash flow to be deposited into a Mortgagee-controlled excess cash flow account, to be held as additional security for the Secured Obligations. The specific terms, conditions, thresholds, and mechanics of such waterfall are set forth in detail in the Cash Management Agreement.

ARTICLE VI

CASUALTY AND CONDEMNATION

Section 6.1 — Casualty

(a) Notice. The Mortgagor shall promptly notify the Mortgagee in writing of any fire, casualty, or other damage or destruction affecting the Mortgaged Property or any material portion thereof, and shall provide such information and documentation regarding the casualty as the Mortgagee may reasonably request.

(b) Insurance Proceeds. All insurance proceeds received or receivable on account of any casualty, damage, or destruction affecting the Mortgaged Property (other than liability insurance proceeds and workers' compensation insurance proceeds) shall be paid to the Mortgagee and held by the Mortgagee as additional security for the Secured Obligations, to be applied either to the restoration of the Mortgaged Property or to the reduction of the Secured Obligations, as determined by the Mortgagee in accordance with the terms of the Loan Agreement.

(c) Restoration. The Mortgagor shall be entitled to use insurance proceeds for the restoration of the Mortgaged Property, provided that all of the following conditions are satisfied: (i) no Event of Default shall exist at the time of the casualty or at any time during the restoration; (ii) the insurance proceeds, together with any additional funds deposited by the Mortgagor, are sufficient to complete the restoration in full; (iii) in the reasonable judgment of the Mortgagee, the restoration can be completed in a good and workmanlike manner and in accordance with all applicable laws, codes, and regulations; (iv) the restoration can be completed at least six (6) months prior to the Maturity Date; (v) the estimated restoration period does not exceed twelve (12) months; and (vi) such other conditions as may be specified in the Loan Agreement are satisfied. Insurance proceeds for restoration shall be disbursed in accordance with the disbursement procedures set forth in the Loan Agreement.

(d) Self-Managed Restoration. If the total cost of restoration is less than Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) (or such other threshold amount as may be specified in the Loan Agreement), and no Event of Default then exists, the Mortgagor may undertake restoration without Mortgagee consent and may receive insurance proceeds directly, provided that the Mortgagor completes such restoration in a good and workmanlike manner and in accordance with applicable law.

(e) Application to Indebtedness. If the conditions for restoration set forth in Section 6.1(c) above are not satisfied, or if the Mortgagor fails to commence or complete restoration within the time periods specified in the Loan Agreement, the Mortgagee may apply all or any portion of the insurance proceeds to the reduction of the Secured Obligations in such order and manner as the Mortgagee shall determine.

Section 6.2 — Condemnation

(a) Notice. The Mortgagor shall promptly notify the Mortgagee in writing of any actual, threatened, or contemplated taking, condemnation, or exercise of the power of eminent domain (whether temporary or permanent, partial or complete) affecting the Mortgaged Property or any portion thereof, and of the institution of any proceedings therefor, and shall deliver to the Mortgagee copies of all notices, pleadings, and other documents received by the Mortgagor in connection therewith.

(b) Participation. The Mortgagee shall have the right to participate in, and to approve the settlement of, any condemnation or eminent domain proceedings affecting the Mortgaged Property. The Mortgagor shall not, without the prior written consent of the Mortgagee, settle, compromise, agree to, or otherwise dispose of any claim or award in any condemnation proceedings.

(c) Application of Awards. All awards, payments, and compensation received or receivable in connection with any condemnation or taking affecting the Mortgaged Property shall be paid to the Mortgagee and held by the Mortgagee. Condemnation awards in excess of Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) (or such other threshold as may be specified in the Loan Agreement) shall be applied, at the Mortgagee's option, either to the restoration of the Mortgaged Property (subject to the conditions set forth in Section 6.1(c) above, applied mutatis mutandis) or to the reduction of the Secured Obligations.

(d) Partial Taking. In the event of a partial taking that does not render the remaining Mortgaged Property unsuitable for its intended use (as reasonably determined by the Mortgagee), the Mortgagee may permit the Mortgagor to use the condemnation proceeds to restore the remaining Mortgaged Property, subject to the conditions and procedures set forth in the Loan Agreement.

Section 6.3 — Application of Proceeds

(a) All insurance proceeds and condemnation awards held by the Mortgagee shall be invested in such investments as the Mortgagee may approve and shall be disbursed, to the extent applied to restoration, in accordance with the disbursement procedures set forth in the Loan Agreement.

(b) To the extent that insurance proceeds or condemnation awards are applied to the reduction of the Secured Obligations, such amounts shall be applied in inverse order of maturity (i.e., to the last maturing installments of principal), unless the Loan Agreement provides otherwise.

(c) The application of insurance proceeds or condemnation awards to the Secured Obligations shall not cure or waive any Event of Default or notice of default hereunder, and shall not postpone the due date of any monthly installment of principal and interest.

ARTICLE VII

EVENTS OF DEFAULT AND REMEDIES

Section 7.1 — Events of Default

Each of the following shall constitute an "Event of Default" hereunder: (a) any "Event of Default" as defined in the Loan Agreement; and (b) without limiting the generality of the foregoing, the following Texas-law specific defaults: (i) failure of the Mortgagor to pay any real property taxes, assessments, or other Impositions prior to such taxes or assessments becoming delinquent, resulting in a tax lien that is or may become prior to the lien of this Mortgage; (ii) the commission or permitting of waste on or to the Mortgaged Property; and (iii) any sale, conveyance, transfer, assignment, pledge, encumbrance, or other disposition of the Mortgaged Property or any interest therein in violation of Section 3.10 hereof.

Section 7.2 — Acceleration

Upon the occurrence and during the continuance of an Event of Default, the Mortgagee may, at its option, by written notice to the Mortgagor, declare all Secured Obligations to be immediately due and payable, without presentment, demand, protest, notice of intent to accelerate, notice of acceleration, or other notice of any kind (all of which are hereby expressly waived by the Mortgagor to the extent permitted by applicable law), and thereupon all Secured Obligations shall become and be immediately due and payable.

Section 7.3 — Foreclosure

(a) Generally. Upon the occurrence and during the continuance of an Event of Default, the Mortgagee may institute proceedings to foreclose this Mortgage pursuant to the laws of the State of Texas, including, at the Mortgagee's

RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:
Calderwood & Harkness LLP 425 Park Avenue New York, New York 10022
Attention: Lisa Morrow
(Space Above This Line Reserved for Recorder's Use)
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, AND SECURITY AGREEMENT
THIS MORTGAGE SECURES A LOAN IN THE ORIGINAL PRINCIPAL AMOUNT OF $240,000,000.00
This instrument was prepared by and after recording return to: Calderwood & Harkness LLP, 425 Park Avenue, New York, New York 10022, Attention: Lisa Morrow.
Property Location: ____ County, Texas
Tax Parcel Identification Number(s): ____
Note: This form of Mortgage is to be adapted for separate instruments in each of the following Texas counties for the following properties: (i) Ridgewater at Lakeline — Austin, Texas (Travis County / Williamson County); (ii) sagebrush Commons — San Antonio, Texas (Bexar County); (iii) Cypress Bend — Katy, Texas (Harris County / Fort Bend County); (iv) Willowbrook Terrace — Sugar Land, Texas (Fort Bend County); and (v) Heritage at Stonebriar — Frisco, Texas (Collin County / Denton County). A separate instrument, with an appropriate Exhibit A legal description, shall be recorded in each applicable county.
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, AND SECURITY AGREEMENT
THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, AND SECURITY AGREEMENT (this "Mortgage") is made and entered into as of __, 2025, by and between:
FAIRWATER SUN BELT [I/II/III/IV/V] LLC, a Delaware limited liability company, having its principal place of business c/o Fairwater Real Estate Investment Trust, 8400 Chesapeake Center Drive, Suite 1200, Columbia, Maryland 21044 (hereinafter referred to as "Mortgagor"),
and
CLARENDON METROPOLITAN INSURANCE COMPANY, a New York domiciled insurance company, having its principal office at 1 MetroTech Center, Brooklyn, New York 11201 (hereinafter referred to as "Mortgagee" or "Lender").
The designation "Fairwater Sun Belt [I/II/III/IV/V] LLC" shall refer to the applicable single-purpose entity borrower for the county-specific instrument in which this Mortgage is recorded, as follows:
(a) Fairwater Sun Belt I LLC — Ridgewater at Lakeline, Austin, Texas;
(b) Fairwater Sun Belt II LLC — Sagebrush Commons, San Antonio, Texas;
(c) Fairwater Sun Belt III LLC — Cypress Bend, Katy, Texas;
(d) Fairwater Sun Belt IV LLC — Willowbrook Terrace, Sugar Land, Texas; and
(e) Fairwater Sun Belt V LLC — Heritage at Stonebriar, Frisco, Texas.
RECITALS
WHEREAS, pursuant to that certain Loan Agreement dated as of __, 2025 (the "Loan Agreement"), among Fairwater Sun Belt I LLC, Fairwater Sun Belt II LLC, Fairwater Sun Belt III LLC, Fairwater Sun Belt IV LLC, Fairwater Sun Belt V LLC, Fairwater Sun Belt VI LLC, Fairwater Sun Belt VII LLC, Fairwater Sun Belt VIII LLC, Fairwater Sun Belt IX LLC, Fairwater Sun Belt X LLC, Fairwater Sun Belt XI LLC, Fairwater Sun Belt XII LLC, Fairwater Sun Belt XIII LLC, and Fairwater Sun Belt XIV LLC, each a Delaware limited liability company (collectively, the "Borrowers"), and Clarendon Metropolitan Insurance Company, a New York domiciled insurance company, as lender (the "Lender"), the Lender has agreed to make a mortgage loan (the "Loan") to the Borrowers in the original principal amount of Two Hundred Forty Million and No/100 Dollars ($240,000,000.00);
WHEREAS, the Loan is evidenced by that certain Promissory Note dated as of __, 2025 (the "Note"), executed by the Borrowers in favor of the Lender, in the original principal amount of $240,000,000.00, bearing interest at the fixed rate of 6.25% per annum, with a maturity date of approximately November 2035 (the "Maturity Date"), providing for a thirty (30)-year amortization schedule with monthly payments of principal and interest of approximately $1,477,846.00;
WHEREAS, the obligations of the Borrowers under the Loan Documents are guaranteed, in part, pursuant to that certain Non-Recourse Carve-Out Guaranty Agreement (the "Guaranty") of even date herewith, executed by Fairwater Real Estate Investment Trust, a Maryland real estate investment trust (EIN 52-2847193) (the "Guarantor"), in favor of the Lender, pursuant to which the Guarantor has agreed to guaranty certain obligations of the Borrowers as more fully set forth therein;
WHEREAS, this Mortgage is one of multiple mortgages, deeds of trust, deeds to secure debt, and security agreements securing the Loan, covering properties located in the States of Texas, Georgia, Florida, North Carolina, and Tennessee; and
WHEREAS, the Mortgagor executes and delivers this Mortgage to secure the payment and performance of all Secured Obligations (as defined herein) owing under the Loan Documents.
NOW, THEREFORE, in consideration of the Loan, the mutual covenants and agreements contained herein and in the other Loan Documents, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Mortgagor hereby agrees as follows:
ARTICLE I
DEFINITIONS
Section 1.1 — Defined Terms
As used in this Mortgage, the following terms shall have the meanings set forth below. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Loan Agreement.
"Borrower" or "Mortgagor" means Fairwater Sun Belt [_] LLC, a Delaware limited liability company, being the applicable single-purpose entity for the county-specific instrument in which this Mortgage is recorded.
"Cash Management Agreement" means that certain Cash Management Agreement of even date herewith, entered into among the Borrowers and the Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Environmental Indemnity" means that certain Environmental Indemnity Agreement of even date herewith, executed by the Borrowers and the Guarantor in favor of the Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Event of Default" means an "Event of Default" as such term is defined in the Loan Agreement.
"Fixtures" means all fixtures, equipment, apparatus, appliances, fittings, and other articles and property of every kind and nature whatsoever now or hereafter attached to or forming a part of the Improvements, including, without limitation, all heating, ventilation, and air conditioning systems (HVAC), plumbing systems, electrical systems, elevator systems and equipment, laundry facilities and equipment, security systems, fire suppression and detection systems, telecommunications wiring and systems, and all replacements, substitutions, and additions thereto and therefor.
"Guarantor" means Fairwater Real Estate Investment Trust, a Maryland real estate investment trust (EIN 52-2847193).
"Guaranty" means the Non-Recourse Carve-Out Guaranty Agreement of even date herewith, executed by the Guarantor in favor of the Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Improvements" means all buildings, structures, and improvements of every kind and description now or hereafter erected, constructed, placed, or located on the Land, including, without limitation, all multifamily residential apartment buildings, clubhouses, amenity structures, parking facilities, pools, recreational facilities, maintenance buildings, signage, landscaping, paving, curbing, sidewalks, drainage facilities, and all other site improvements.
"Land" means the real property situated in ____ County, Texas, more particularly described in Exhibit A attached hereto and incorporated herein by reference.
"Leases" means all leases, subleases, licenses, concessions, occupancy agreements, and other agreements (whether written or oral) now or hereafter affecting, covering, or relating to the use, enjoyment, or occupancy of all or any portion of the Mortgaged Property, together with all extensions, renewals, modifications, and replacements thereof.
"Lender" or "Mortgagee" means Clarendon Metropolitan Insurance Company, a New York domiciled insurance company, and its successors and assigns.
"Loan" means the mortgage loan in the original principal amount of Two Hundred Forty Million and No/100 Dollars ($240,000,000.00) made by the Lender to the Borrowers pursuant to the Loan Agreement.
"Loan Agreement" means that certain Loan Agreement dated as of __, 2025, among the Borrowers and the Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Loan Documents" means, collectively, the Loan Agreement, the Note, this Mortgage, each other mortgage, deed of trust, or deed to secure debt securing the Loan, the Guaranty, the Environmental Indemnity, the Cash Management Agreement, the Assignment of Leases, all UCC financing statements filed in connection with the Loan, and all other documents, instruments, certificates, and agreements executed and delivered in connection with the Loan, in each case as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Mortgaged Property" means, collectively, the Land, the Improvements, the Fixtures, the Personal Property, the Leases, the Rents, and all other property, rights, interests, and estates described in Article II hereof.
"Note" means that certain Promissory Note in the original principal amount of Two Hundred Forty Million and No/100 Dollars ($240,000,000.00), dated as of the date hereof, executed by the Borrowers and payable to the order of the Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Operating Partnership" means Fairwater Operating Partnership, L.P., a Delaware limited partnership (EIN 52-2847201), which is the sole member of the Mortgagor.
"Permitted Encumbrances" means the exceptions to title listed on Exhibit B attached hereto and incorporated herein by reference, as the same may be amended or supplemented with the prior written consent of the Mortgagee.
"Personal Property" means all equipment, inventory, accounts, instruments, chattel paper, documents, general intangibles, letter-of-credit rights, commercial tort claims, supporting obligations, investment property, deposit accounts, and other personal property of every kind and description owned by the Mortgagor and now or hereafter located on, or used in connection with, the Mortgaged Property, or arising from any of the foregoing, together with all accessions, additions, replacements, substitutions, and proceeds thereof and therefrom.
"Property Management Agreement" means that certain property management agreement effective as of July 1, 2025, by and between the Mortgagor and the Property Manager, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the Loan Agreement.
"Property Manager" means Fairwater Residential Management LLC (EIN 52-2953810), or any successor property manager approved by the Mortgagee in accordance with the Loan Agreement.
"REIT" means Fairwater Real Estate Investment Trust, a Maryland real estate investment trust.
"Rents" means all rents, issues, profits, revenues, royalties, income, receipts, security deposits (subject to applicable law), and other benefits of every kind and nature derived from or arising out of the Mortgaged Property, whether now due, past due, or to become due, including, without limitation, all amounts payable under the Leases, parking revenues, laundry revenues, vending revenues, and all other income and receipts of every kind and nature.
"Secured Obligations" means all obligations of the Borrowers and the Guarantor to the Lender under the Loan Documents, including, without limitation, the obligation to pay all principal, interest, late charges, default interest, yield maintenance premiums (if any), and all other sums due under the Note, the Loan Agreement, and the other Loan Documents, and the obligation to perform all covenants and agreements of the Borrowers and the Guarantor contained in the Loan Documents.
"Title Insurer" means Marlowe Asset Management Title Insurance Group, Inc.
Section 1.2 — Rules of Construction
Unless the context otherwise requires: (a) terms not defined herein shall have the meanings ascribed to them in the Loan Agreement; (b) all references to "this Mortgage" shall include all amendments, restatements, supplements, and modifications hereof; (c) the singular shall include the plural and vice versa, and each gender shall include every other gender; (d) the words "include," "includes," and "including" shall be deemed to be followed by the words "without limitation"; (e) references to articles, sections, and exhibits are to articles, sections, and exhibits of this Mortgage unless otherwise specified; (f) the headings and captions contained herein are for convenience of reference only and shall not be considered in the interpretation or construction of this Mortgage; (g) references to any statute, law, regulation, or code shall be deemed to include any successor statute, law, regulation, or code; and (h) this Mortgage shall be interpreted in accordance with the laws of the State of Texas, as provided in Section 9.1 hereof. In the event of any ambiguity, this Mortgage shall not be construed against the drafter but shall be construed in a manner that effectuates the intent of the parties to create a valid, enforceable, and first-priority lien on the Mortgaged Property.
ARTICLE II
GRANTING CLAUSES
Section 2.1 — Grant of Mortgage Lien
For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to secure the payment and performance of the Secured Obligations, the Mortgagor hereby irrevocably GRANTS, BARGAINS, SELLS, CONVEYS, ASSIGNS, TRANSFERS, MORTGAGES, PLEDGES, SETS OVER, and HYPOTHECATES to the Mortgagee, and its successors and assigns forever, the following described property, rights, interests, and estates (collectively, the "Mortgaged Property"):
(a) The Land. All that certain tract or parcel of land situated in ____ County, Texas, more particularly described in Exhibit A attached hereto and incorporated herein by reference, together with all right, title, and interest of the Mortgagor in and to any land lying within the right-of-way of any street, road, or avenue, open or proposed, in front of, behind, or adjacent to the Land, and all right, title, and interest of the Mortgagor in and to any and all sidewalks and alleys adjacent to or used in connection with the Land.
(b) The Improvements. All buildings, structures, and improvements of every kind and description now or hereafter erected, constructed, placed, or located on the Land, including, without limitation, all multifamily residential apartment buildings and units, clubhouses, leasing offices, fitness centers, business centers, amenity structures, parking garages and surface parking facilities, swimming pools and pool houses, recreational facilities, maintenance buildings, storage buildings, signage, landscaping, paving, curbing, sidewalks, walkways, fences, walls, drainage facilities, retention ponds, utility connections and infrastructure, and all other structures and site improvements of every kind and nature, together with all additions, alterations, betterments, and replacements thereof.
(c) The Fixtures. All fixtures, equipment, apparatus, machinery, appliances, fittings, and other articles and property of every kind and nature whatsoever now or hereafter owned by the Mortgagor and attached to, installed in, or used in connection with the Land or the Improvements, or placed on any part thereof though not attached thereto, including, without limitation, all heating, ventilation, and air conditioning systems (HVAC), boilers, furnaces, hot water heaters, plumbing systems and equipment, electrical systems and equipment, lighting fixtures and systems, elevator systems and equipment, laundry facilities and equipment, kitchen appliances (including ranges, refrigerators, dishwashers, garbage disposals, and microwave ovens), window coverings (including blinds and drapes), carpeting and floor coverings, security and access control systems, fire suppression and detection systems (including sprinkler systems and smoke detectors), telecommunications wiring, cabling, and systems, cable and internet infrastructure, solar panels and associated equipment (if any), generators and emergency power systems, water treatment systems, irrigation systems, and all replacements, substitutions, additions thereto, and proceeds thereof. THIS MORTGAGE CONSTITUTES A FIXTURE FILING UNDER THE TEXAS BUSINESS AND COMMERCE CODE, AND IS TO BE FILED FOR RECORD IN THE REAL PROPERTY RECORDS OF ____________ COUNTY, TEXAS. THE INFORMATION REQUIRED BY SECTION 9.502 OF THE TEXAS BUSINESS AND COMMERCE CODE IS SET FORTH IN EXHIBIT D ATTACHED HERETO.
(d) Easements and Appurtenances. All easements, rights-of-way, strips and gores of land, streets, alleys, passages, sewer rights, water rights, mineral rights (to the extent owned by the Mortgagor), air rights, development rights, and all appurtenances, privileges, tenements, hereditaments, and other rights and benefits belonging or in any way appertaining to the Land or the Improvements, including, without limitation, all of the Mortgagor's right, title, and interest in and to any streets, roads, and public places, open or proposed, adjacent to or abutting the Land, and all of the Mortgagor's rights and interests in and to any award for damage thereto by reason of any change of grade, closing, or other action with respect thereto.
(e) Personal Property. All Personal Property, as defined in Section 1.1 hereof, including, without limitation, all tangible and intangible personal property owned by the Mortgagor and now or hereafter located on, or used in connection with, the Mortgaged Property, including all equipment, inventory, accounts, accounts receivable, instruments, chattel paper, documents, general intangibles, letter-of-credit rights, deposit accounts, investment property, commercial tort claims, goods, furniture, furnishings, supplies, building materials, and all other personal property of every kind and nature, together with all accessions, additions, replacements, substitutions, and proceeds thereof and therefrom.
(f) Leases and Rents. All Leases and Rents as more fully described in Article IV hereof, including, without limitation, all of the Mortgagor's right, title, and interest as landlord under all Leases now or hereafter affecting the Mortgaged Property, together with all security deposits and prepaid rents held by the Mortgagor in connection with such Leases, and all Rents, income, receipts, revenues, issues, profits, and other benefits of every kind and nature derived from or arising out of the Mortgaged Property or any portion thereof.
(g) Condemnation and Insurance Proceeds. All awards, payments, proceeds, and compensation heretofore made or hereafter to be made with respect to the Mortgaged Property, including, without limitation, (i) all awards and payments arising from any taking, condemnation, or exercise of the power of eminent domain (whether temporary or permanent, partial or complete) with respect to the Mortgaged Property or any portion thereof, (ii) all insurance proceeds payable on account of any casualty, damage, destruction, or other loss with respect to the Mortgaged Property, and (iii) all other payments, awards, or proceeds of any kind and nature (whether or not arising from the foregoing).
(h) Agreements and Contracts. All contracts, agreements, permits, licenses, approvals, authorizations, consents, variances, entitlements, franchises, certificates of occupancy, and other rights relating to the ownership, use, occupancy, operation, management, construction, maintenance, or development of the Mortgaged Property, including, without limitation, the Property Management Agreement, all construction contracts, architectural and engineering contracts, service contracts, equipment leases, maintenance agreements, utility agreements, and all warranties and guaranties relating to the Improvements or any equipment or fixtures forming a part thereof.
(i) Accounts and Reserves. All deposit accounts, reserve accounts, escrow accounts, lockbox accounts, operating accounts, and other accounts of every kind and nature established or maintained by or on behalf of the Mortgagor pursuant to the Cash Management Agreement, the Loan Agreement, or otherwise in connection with the ownership and operation of the Mortgaged Property, together with all funds, cash, and other amounts now or hereafter deposited therein and all interest and earnings thereon.
(j) Proceeds. All proceeds (as such term is defined in Article 9 of the Texas Business and Commerce Code) of any and all of the foregoing, including, without limitation, all cash and non-cash proceeds, insurance proceeds, condemnation proceeds, and all claims for damages or injury to or diminution in value of any of the foregoing.
Section 2.2 — Habendum
TO HAVE AND TO HOLD the Mortgaged Property, together with all rights, privileges, appurtenances, and immunities thereunto belonging or in any way appertaining, unto the Mortgagee, its successors and assigns, forever, subject to the terms and conditions of this Mortgage and the other Loan Documents; provided, however, that if the Mortgagor shall pay and perform all of the Secured Obligations in full when due in accordance with the terms of the Loan Documents, and shall otherwise comply with all of the terms, covenants, and conditions of this Mortgage and the other Loan Documents, then this Mortgage and the estate hereby granted shall cease, terminate, and become void, and the Mortgagee shall, at the Mortgagor's expense, execute and deliver to the Mortgagor such instruments of release and satisfaction as may be necessary to release the lien of this Mortgage of record.
Section 2.3 — Security Interest Under Texas Uniform Commercial Code
In addition to the mortgage lien created hereby, the Mortgagor hereby grants to the Mortgagee a continuing first-priority security interest under the Texas Business and Commerce Code (the "Texas UCC") in and to all Personal Property, Fixtures, Leases, Rents, accounts, deposit accounts, general intangibles, chattel paper, instruments, investment property, and all other collateral constituting personal property in which a security interest may be granted under the Texas UCC, whether now owned or hereafter acquired, together with all proceeds and products thereof (collectively, the "UCC Collateral"). The Mortgagor hereby authorizes the Mortgagee to file one or more UCC financing statements (including fixture filings and continuation statements) in the real property records of ____ County, Texas, and with the Secretary of State of the State of Delaware (the Mortgagor's state of organization), and in any other jurisdiction as the Mortgagee may deem necessary or appropriate, to perfect the security interest granted hereunder, without the signature of the Mortgagor where permitted by law. The Mortgagor agrees that a carbon, photographic, facsimile, or other reproduction of this Mortgage or of any financing statement filed in connection herewith shall be sufficient as a financing statement and may be filed in any appropriate office in lieu thereof. This instrument constitutes and shall serve as a financing statement for purposes of Texas Business and Commerce Code Section 9.502 and is being filed as a fixture filing in the real property records of the county in which the Mortgaged Property is located. The information required for such fixture filing is set forth in Exhibit D attached hereto.
Section 2.4 — Secured Obligations
This Mortgage and the lien, security interest, and assignment created hereunder secure the full and timely payment and performance of all Secured Obligations, including, without limitation: (a) all principal of the Loan in the original principal amount of Two Hundred Forty Million and No/100 Dollars ($240,000,000.00); (b) all interest thereon at the fixed rate of 6.25% per annum (and at the default rate of interest specified in the Note during any period in which such default rate is applicable); (c) all late charges, prepayment premiums, yield maintenance amounts, and other charges payable under the Note and the Loan Agreement; (d) all costs and expenses of collection and enforcement, including reasonable attorneys' fees and expenses; (e) all protective advances made by the Mortgagee pursuant to this Mortgage, the Loan Agreement, or applicable law, including advances for taxes, assessments, insurance premiums, repairs, and preservation of the Mortgaged Property; (f) all escrow and reserve deposits required under the Loan Agreement and the Cash Management Agreement; and (g) all other sums, costs, expenses, liabilities, and obligations now or hereafter due and owing under the Note, this Mortgage, the Loan Agreement, and the other Loan Documents.
ARTICLE III
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF MORTGAGOR
Section 3.1 — Title and Authority
The Mortgagor represents, warrants, and covenants to the Mortgagee as follows:
(a) The Mortgagor is a Delaware limited liability company, duly organized, validly existing, and in good standing under the laws of the State of Delaware, and is duly qualified to transact business and is in good standing in the State of Texas. The Mortgagor's sole member is Fairwater Operating Partnership, L.P., a Delaware limited partnership, whose general partner is Fairwater Real Estate Investment Trust, a Maryland real estate investment trust.
(b) The Mortgagor has good and indefeasible title to the Mortgaged Property, in fee simple, free and clear of all liens, charges, encumbrances, security interests, and adverse claims of every kind and nature, subject only to the Permitted Encumbrances set forth on Exhibit B hereto.
(c) The Mortgagor has full right, power, authority, and legal capacity to execute, deliver, and perform this Mortgage and to grant, convey, mortgage, pledge, assign, and create a security interest in the Mortgaged Property as provided herein. The execution, delivery, and performance of this Mortgage have been duly authorized by all necessary action on the part of the Mortgagor, including authorization by Fairwater Operating Partnership, L.P. as its sole member, and do not and will not violate or conflict with the Amended and Restated Limited Liability Company Agreement of the Mortgagor or any applicable law, regulation, order, judgment, decree, or agreement binding on the Mortgagor.
(d) This Mortgage constitutes a legal, valid, and binding obligation of the Mortgagor, enforceable against the Mortgagor in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and other laws affecting creditors' rights generally and to general principles of equity.
Section 3.2 — Single-Purpose Entity Covenants
(a) The Mortgagor is a single-purpose entity formed for the sole purpose of owning, holding, and operating the Mortgaged Property, and the Mortgagor has not engaged and shall not engage in any business or activity other than the ownership, operation, management, leasing, and maintenance of the Mortgaged Property and activities incidental thereto.
(b) The Mortgagor shall at all times comply with all single-purpose entity covenants set forth in the Loan Agreement and in its Amended and Restated Limited Liability Company Agreement, including, without limitation: (i) maintaining its existence as a separate legal entity; (ii) not commingling its assets with the assets of any other person or entity; (iii) maintaining its own separate books and records, bank accounts, and financial statements; (iv) not incurring any indebtedness other than the Loan and trade payables incurred in the ordinary course of operating the Mortgaged Property; (v) holding itself out to the public as a legal entity separate and distinct from any other person or entity, including its members, partners, and affiliates; (vi) maintaining at least one (1) independent director or manager (as applicable) whose consent is required for the filing of any voluntary petition for bankruptcy, insolvency, dissolution, liquidation, or reorganization; (vii) paying its own liabilities from its own assets; (viii) not guaranteeing or becoming obligated for the debts of any other person or entity; (ix) not acquiring obligations or securities of its members, partners, or affiliates; and (x) operating as a distinct entity from its affiliates and observing all necessary organizational formalities.
(c) Notwithstanding the foregoing, the Mortgagor shall be permitted to make distributions to the Operating Partnership and, indirectly, to the Guarantor, to the extent necessary for the Guarantor to maintain its status as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. In connection therewith, the Guarantor is required to distribute at least ninety percent (90%) of its taxable income to its shareholders in each taxable year in order to maintain its election as a REIT for federal income tax purposes, and the Mortgagor acknowledges that distributions necessary to satisfy such requirement shall be permitted, subject to the terms and conditions of the Loan Agreement.
Section 3.3 — Payment of Secured Obligations
The Mortgagor shall timely pay, or cause to be paid, all amounts due under the Note, the Loan Agreement, and the other Loan Documents in accordance with the terms thereof, including, without limitation, all monthly installments of principal and interest (currently approximately $1,477,846.00 per month, based on the thirty (30)-year amortization schedule at the fixed rate of 6.25% per annum), all reserve and escrow deposits, all late charges, all default interest, and all other sums payable under the Loan Documents.
Section 3.4 — Maintenance and Repair
(a) The Mortgagor shall keep and maintain the Mortgaged Property in good order, condition, and repair, shall make all necessary repairs and replacements thereto (structural and non-structural, ordinary and extraordinary, foreseen and unforeseen), and shall not commit or suffer to be committed any waste of the Mortgaged Property. The Mortgagor shall not remove, demolish, materially alter, or materially modify any Improvement forming part of the Mortgaged Property without the prior written consent of the Mortgagee, except for tenant improvements and modifications made in the ordinary course of multifamily property management that do not materially affect the structure, value, or use of the Improvements.
(b) The Mortgagor shall not initiate, join in, or consent to any change in any private restrictive covenant, zoning classification, or other public or private restriction limiting or affecting the uses that may be made of the Mortgaged Property or any part thereof, without the prior written consent of the Mortgagee.
(c) The Mortgagor shall comply with all applicable federal, state, and local laws, ordinances, rules, regulations, codes, and requirements affecting the Mortgaged Property, including, without limitation, all building codes, zoning ordinances, health and safety regulations, and environmental laws.
Section 3.5 — Insurance
(a) The Mortgagor shall obtain and maintain, at its sole cost and expense, such insurance coverages as are required by the Loan Agreement, including, without limitation: (i) property/casualty insurance (on an "all risk" or "special form" basis) covering the Improvements and Personal Property in an amount not less than the full replacement cost of the Improvements; (ii) commercial general liability insurance with minimum combined single limits as specified in the Loan Agreement; (iii) flood insurance, if any portion of the Mortgaged Property is located within a Special Flood Hazard Area as designated by the Federal Emergency Management Agency; (iv) business income/loss of rents insurance covering not less than twelve (12) months of projected rental income; (v) workers' compensation insurance as required by applicable Texas law; and (vi) such other coverages as the Mortgagee may reasonably require from time to time.
(b) All property insurance policies shall name the Mortgagee as mortgagee and loss payee pursuant to a standard mortgagee clause. All liability insurance policies shall name the Mortgagee as an additional insured. All policies shall be issued by insurers authorized to do business in the State of Texas with an A.M. Best rating of not less than "A-" with a financial size category of not less than "VIII," or as otherwise approved by the Mortgagee. All policies shall be subject to the Mortgagee's approval as to form, amount, and insurer.
(c) The Mortgagor shall deliver to the Mortgagee evidence of insurance (including certificates of insurance and, upon request, certified copies of policies) on or before the date hereof and at least thirty (30) days prior to the expiration of any existing policy. Each insurance policy shall provide that it may not be cancelled or materially modified without at least thirty (30) days' prior written notice to the Mortgagee.
Section 3.6 — Payment of Taxes and Impositions
(a) The Mortgagor shall pay, or cause to be paid, all real property taxes, personal property taxes, assessments (general and special), water and sewer charges, utility charges, and all other taxes, charges, levies, and impositions of every kind and nature (collectively, "Impositions") now or hereafter assessed, levied, confirmed, or imposed against the Mortgaged Property or any part thereof before any such Imposition becomes delinquent or a lien on the Mortgaged Property.
(b) The Mortgagor shall promptly deliver to the Mortgagee, upon request, receipts or other evidence satisfactory to the Mortgagee demonstrating the timely payment of all Impositions.
(c) To the extent required by the Loan Agreement, the Mortgagor shall make monthly deposits with the Mortgagee (or such other party as the Mortgagee may designate) for the payment of Impositions in such amounts as the Mortgagee may estimate to be necessary to accumulate sufficient funds to pay all Impositions at least thirty (30) days prior to their respective due dates. Such tax escrow deposits shall be held and applied in accordance with the terms of the Loan Agreement.
(d) The Mortgagor may, in good faith and at its sole expense, contest the validity or amount of any Imposition by appropriate legal proceedings, provided that: (i) the Mortgagor shall have given prior written notice to the Mortgagee of its intention to contest such Imposition; (ii) no Event of Default shall exist; (iii) such contest shall not subject the Mortgaged Property to any risk of forfeiture, sale, or loss of the lien of this Mortgage; and (iv) the Mortgagor shall have posted such security or deposited such reserve as the Mortgagee may reasonably require.
Section 3.7 — Compliance with Laws
The Mortgagor shall promptly comply with, and shall cause the Mortgaged Property to comply with, all federal, state, and local laws, statutes, rules, regulations, codes, ordinances, orders, directives, and requirements applicable to the Mortgaged Property or any part thereof or to the ownership, use, occupancy, operation, management, maintenance, or condition of the Mortgaged Property, including, without limitation, all zoning ordinances, building codes, fire codes, health and safety regulations, the Americans with Disabilities Act of 1990, as amended, and the Fair Housing Act, as amended, and all applicable environmental laws and regulations. The Mortgagor shall not use or permit the use of the Mortgaged Property for any purpose that would violate any applicable law, ordinance, or regulation or that would impair or tend to impair the value or security of the Mortgaged Property.
Section 3.8 — Environmental Matters
(a) The Mortgagor represents and warrants that, to its knowledge after due inquiry and investigation (including the review of Phase I Environmental Site Assessments prepared in connection with the closing of the Loan), no hazardous substances, hazardous materials, toxic substances, pollutants, contaminants, petroleum products, asbestos-containing materials, polychlorinated biphenyls, or other regulated substances (collectively, "Hazardous Substances") exist on, under, at, or about the Mortgaged Property in violation of, or in concentrations or quantities exceeding the levels permitted by, applicable environmental laws, rules, and regulations.
(b) The Mortgagor shall not cause or permit the presence, use, generation, release, discharge, storage, disposal, or transportation of any Hazardous Substances on, under, at, about, or from the Mortgaged Property, except for commercially reasonable quantities of cleaning supplies, maintenance materials, and similar products used in the ordinary course of operating a multifamily residential property, provided that such use is in compliance with all applicable environmental laws.
(c) The obligations of the Mortgagor and the Guarantor with respect to environmental matters are further set forth in the Environmental Indemnity Agreement of even date herewith, which is incorporated herein by reference.
Section 3.9 — No Liens or Encumbrances
(a) The Mortgagor shall not create, incur, assume, suffer, or permit to exist any lien, encumbrance, charge, or claim against or on the Mortgaged Property or any part thereof, other than the Permitted Encumbrances and the lien and security interest created by this Mortgage and the other Loan Documents.
(b) The Mortgagor shall promptly discharge or bond over (in accordance with applicable Texas law) any mechanic's lien, materialman's lien, judgment lien, tax lien, or other involuntary lien or encumbrance filed or asserted against the Mortgaged Property within thirty (30) days after the Mortgagor receives notice of the filing thereof, or within such longer period as may be permitted under the Loan Agreement provided that the Mortgagor is diligently contesting such lien in good faith by appropriate proceedings and has posted adequate security.
Section 3.10 — Transfer Restrictions
(a) The Mortgagor shall not, without the prior written consent of the Mortgagee, sell, convey, transfer, assign, pledge, encumber, or otherwise dispose of the Mortgaged Property or any part thereof or any interest therein (whether legal or equitable), or permit any change in the ownership or control of the Mortgagor or any direct or indirect equity interest therein, except as expressly permitted under the Loan Agreement.
(b) Without limiting the generality of the foregoing, no direct or indirect transfer of any ownership interest in the Mortgagor shall be permitted without the prior written consent of the Mortgagee, except for (i) permitted intra-REIT transfers (i.e., transfers within the organizational structure of Fairwater Real Estate Investment Trust and its controlled affiliates) as specifically provided in the Loan Agreement, (ii) transfers of limited partnership interests in the Operating Partnership not resulting in a change of control, and (iii) transfers of shares or units of the REIT that are publicly traded on a national securities exchange, in each case subject to the conditions and limitations set forth in the Loan Agreement.
(c) Any transfer or disposition made in violation of this Section 3.10 shall constitute an Event of Default hereunder and under the Loan Agreement.
Section 3.11 — Property Management
(a) The Mortgaged Property shall at all times be managed and operated by Fairwater Residential Management LLC (EIN 52-2953810) pursuant to the Property Management Agreement effective as of July 1, 2025, or by such replacement property manager as may be approved in writing by the Mortgagee in accordance with the Loan Agreement.
(b) The Mortgagor shall not terminate, amend, modify, or waive any material provision of the Property Management Agreement, or replace the Property Manager, without the prior written consent of the Mortgagee. Any replacement property manager must be a reputable, experienced, and qualified manager of multifamily residential properties, must be approved by the Mortgagee, and must enter into a new property management agreement in form and substance acceptable to the Mortgagee.
(c) The Mortgagor shall cause the Property Manager to manage and operate the Mortgaged Property in a first-class manner consistent with the management and operation of comparable multifamily residential properties in the applicable metropolitan market area.
Section 3.12 — Further Assurances
The Mortgagor shall, at its sole cost and expense, execute and deliver, or cause to be executed and delivered, to the Mortgagee such further instruments, documents, certificates, and agreements as the Mortgagee may from time to time reasonably request to perfect, protect, and maintain the first-priority lien and security interest of this Mortgage, including, without limitation, any UCC financing statements, continuation statements, fixture filings, amendments, and other documents necessary to maintain the perfection and priority of the security interest granted hereunder. The Mortgagor shall also take such actions and provide such information as the Mortgagee may reasonably request in connection with the securitization of the Loan.
Section 3.13 — Reserves
The Mortgagor shall fund and maintain such reserve accounts as are required under the Loan Agreement and the Cash Management Agreement, including, without limitation, reserves for (a) real property taxes and assessments, (b) insurance premiums, (c) capital expenditures and replacements, (d) leasing commissions, and (e) such other purposes as may be required by the Loan Agreement. All reserve deposits shall be held and applied in accordance with the terms and conditions of the Loan Agreement and the Cash Management Agreement.
Section 3.14 — Estoppel Certificates
The Mortgagor shall, within ten (10) business days after written request by the Mortgagee (or within such other period as may be specified in the Loan Agreement), execute and deliver to the Mortgagee, or to any person or entity designated by the Mortgagee, a written estoppel certificate in the form required by the Loan Agreement, confirming (a) the outstanding principal balance of the Loan, (b) the interest rate applicable thereto, (c) the date through which interest has been paid, (d) whether any Event of Default or event that, with the giving of notice or the passage of time or both, would constitute an Event of Default then exists (and, if so, specifying the nature thereof), and (e) such other matters as the Mortgagee may reasonably request. The Mortgagor acknowledges that such estoppel certificates may be relied upon by the Mortgagee, its successors and assigns, and any prospective purchaser or assignee of the Loan, including, without limitation, any CMBS trust or special purpose vehicle established in connection with any securitization of the Loan.
ARTICLE IV
ASSIGNMENT OF LEASES AND RENTS
Section 4.1 — Assignment
As additional security for the Secured Obligations, the Mortgagor hereby absolutely and unconditionally assigns, transfers, sets over, and conveys to the Mortgagee all of the Mortgagor's right, title, and interest in, to, and under (a) all Leases now existing or hereafter entered into with respect to the Mortgaged Property or any part thereof, together with all extensions, renewals, modifications, and replacements thereof, (b) all Rents, income, receipts, revenues, issues, profits, and other benefits of every kind and nature now due, past due, or to become due under or by virtue of any Lease or otherwise arising from the Mortgaged Property, (c) all guaranties of tenants' obligations under any Lease, and (d) all security deposits, prepaid rents, and other sums held by the Mortgagor in connection with any Lease (collectively, the "Assigned Interests"). This assignment is a present, absolute, and unconditional assignment of the Leases and Rents and is not merely an assignment for additional security or a pledge thereof. The foregoing assignment shall be fully operative without any further action on the part of either party, and, specifically, the Mortgagee shall be entitled, subject to the terms hereof, to all Rents from the Mortgaged Property whether or not the Mortgagee takes possession of the Mortgaged Property.
Section 4.2 — Revocable License to Collect Rents
Notwithstanding the absolute assignment of Leases and Rents set forth in Section 4.1 above, the Mortgagee hereby grants to the Mortgagor a revocable license to collect, receive, use, and enjoy the Rents from the Mortgaged Property, subject to the terms and conditions of the Cash Management Agreement and the other Loan Documents. The license granted herein shall be revocable at the election of the Mortgagee and shall be automatically and immediately revoked, without the necessity of any notice, demand, or other action by the Mortgagee, upon the occurrence and during the continuance of any Event of Default, or upon the commencement of a Cash Management Period (as defined in the Cash Management Agreement). The Cash Management Period shall be triggered upon, among other things, the occurrence of an Event of Default or the Debt Service Coverage Ratio (as defined in the Loan Agreement) for the Mortgaged Property (or the portfolio of properties, as applicable) falling below the threshold specified in the Cash Management Agreement, constituting a springing lockbox arrangement. Upon the revocation of such license, the Mortgagor shall immediately deliver to the Mortgagee or its designee all Rents and other sums collected or received by the Mortgagor with respect to the Mortgaged Property.
Section 4.3 — Lease Covenants
(a) The Mortgagor shall not, without the prior written consent of the Mortgagee (which consent shall not be unreasonably withheld, conditioned, or delayed with respect to residential leases entered into in the ordinary course of business):
(i) enter into any lease, sublease, license, concession, or other occupancy agreement, or any material amendment, modification, extension, or renewal of any existing Lease, other than residential apartment leases entered into in the ordinary course of multifamily property management on then-current market terms and conditions for the applicable submarket;
(ii) accept prepayment of rent or other charges under any Lease for more than one (1) month in advance;
(iii) cancel, terminate, accept any surrender of, or consent to any assignment of, any Lease except in the ordinary course of multifamily property management and in accordance with the terms of such Lease; or
(iv) consent to any subordination of any Lease to any lien or encumbrance other than the lien of this Mortgage.
(b) All Leases entered into after the date hereof shall be subordinate to the lien of this Mortgage unless the Mortgagee shall elect otherwise in writing. Each such Lease shall contain such provisions as the Mortgagee may reasonably require, including, without limitation, provisions for tenant attornment and non-disturbance in a form acceptable to the Mortgagee.
(c) The Mortgagor shall faithfully perform all of the obligations of the landlord under each Lease and shall enforce all of the obligations of the tenants thereunder. The Mortgagor shall promptly deliver to the Mortgagee copies of any notices of default received from or sent to tenants, and copies of any Lease or amendment thereto that is not a residential lease entered into in the ordinary course.
Section 4.4 — Mortgagee's Rights Upon Default
(a) Upon the occurrence and during the continuance of an Event of Default, and without limiting any other rights or remedies of the Mortgagee hereunder, under the other Loan Documents, at law, or in equity, the Mortgagee may, at its option, without notice to or demand upon the Mortgagor (except as required by applicable law):
(i) enter upon and take possession of the Mortgaged Property, manage and operate the same, and collect all Rents directly from the tenants and other occupants thereof;
(ii) apply all Rents so collected to the payment of the Secured Obligations in such order and manner as the Mortgagee shall determine in its sole discretion, after deducting therefrom all costs and expenses of collection and management, including reasonable property management fees and reasonable attorneys' fees;
(iii) exercise all rights of the landlord under the Leases, including the right to enforce the Leases and to exercise any option or right of the landlord thereunder;
(iv) modify, extend, or renew any Lease on such terms as the Mortgagee shall deem advisable; and
(v) enter into new leases of the Mortgaged Property on such terms as the Mortgagee shall deem advisable.
(b) Each tenant and occupant of the Mortgaged Property is hereby authorized and directed, upon receipt of written notice from the Mortgagee stating that an Event of Default has occurred and is continuing and directing such tenant or occupant to pay all Rents to the Mortgagee, to pay all Rents directly to the Mortgagee without any obligation to inquire as to whether an Event of Default has in fact occurred or is continuing, and notwithstanding any contrary instruction, direction, or assertion of the Mortgagor. The Mortgagor agrees that any such tenant or occupant shall have the right to rely on any such notice from the Mortgagee and shall pay all Rents to the Mortgagee without any liability to the Mortgagor.
(c) The exercise by the Mortgagee of any rights under this Section 4.4 shall not be deemed to make the Mortgagee a "mortgagee in possession" or otherwise impose on the Mortgagee any obligation or liability for the management or operation of the Mortgaged Property.
Section 4.5 — Subordination, Non-Disturbance, and Attornment
The Mortgagee agrees to enter into subordination, non-disturbance, and attornment agreements ("SNDA Agreements") with tenants under commercial leases (if any) at the Mortgaged Property, on such terms and in such form as the Mortgagee may require, upon the reasonable request of the Mortgagor or such tenants. With respect to residential apartment leases, the Mortgagee acknowledges that the tenants' rights under such leases shall be subject to the provisions of applicable Texas law governing the rights of residential tenants upon foreclosure.
ARTICLE V
CASH MANAGEMENT
Section 5.1 — Cash Management Agreement
This Article V is subject to, and shall be interpreted in accordance with, the Cash Management Agreement of even date herewith, which sets forth the detailed terms and conditions governing the collection, deposit, and application of Rents and other revenues from the Mortgaged Property. To the extent of any conflict between this Article V and the Cash Management Agreement, the Cash Management Agreement shall control. All Rents and other revenues from the Mortgaged Property shall be deposited into lockbox accounts and other accounts as provided in the Cash Management Agreement. Prior to the commencement of a Cash Management Period (as defined in the Cash Management Agreement), the Mortgagor shall retain control of Rents, subject to the obligations and covenants set forth in the Loan Agreement and this Mortgage, provided that the Mortgagor shall at all times deposit Rents into the accounts designated in the Cash Management Agreement. The springing lockbox arrangement set forth in the Cash Management Agreement provides that active cash management (i.e., the Mortgagee's direct control over the application of Rents) shall be triggered upon the commencement of a Cash Management Period, which may occur upon the occurrence of an Event of Default, the failure to maintain a minimum Debt Service Coverage Ratio, or such other triggering events as are specified in the Cash Management Agreement.
Section 5.2 — Application of Rents During Cash Management Period
During any Cash Management Period, all Rents and other revenues from the Mortgaged Property shall be collected and applied in accordance with the waterfall order of priority set forth in the Cash Management Agreement, which generally provides for application in the following order: (a) first, to the payment of monthly debt service on the Loan (principal and interest); (b) second, to the funding of all required reserve accounts (including tax reserves, insurance reserves, capital expenditure reserves, and leasing commission reserves); (c) third, to the payment of budgeted operating expenses of the Mortgaged Property approved by the Mortgagee; and (d) fourth, all remaining excess cash flow to be deposited into a Mortgagee-controlled excess cash flow account, to be held as additional security for the Secured Obligations. The specific terms, conditions, thresholds, and mechanics of such waterfall are set forth in detail in the Cash Management Agreement.
ARTICLE VI
CASUALTY AND CONDEMNATION
Section 6.1 — Casualty
(a) Notice. The Mortgagor shall promptly notify the Mortgagee in writing of any fire, casualty, or other damage or destruction affecting the Mortgaged Property or any material portion thereof, and shall provide such information and documentation regarding the casualty as the Mortgagee may reasonably request.
(b) Insurance Proceeds. All insurance proceeds received or receivable on account of any casualty, damage, or destruction affecting the Mortgaged Property (other than liability insurance proceeds and workers' compensation insurance proceeds) shall be paid to the Mortgagee and held by the Mortgagee as additional security for the Secured Obligations, to be applied either to the restoration of the Mortgaged Property or to the reduction of the Secured Obligations, as determined by the Mortgagee in accordance with the terms of the Loan Agreement.
(c) Restoration. The Mortgagor shall be entitled to use insurance proceeds for the restoration of the Mortgaged Property, provided that all of the following conditions are satisfied: (i) no Event of Default shall exist at the time of the casualty or at any time during the restoration; (ii) the insurance proceeds, together with any additional funds deposited by the Mortgagor, are sufficient to complete the restoration in full; (iii) in the reasonable judgment of the Mortgagee, the restoration can be completed in a good and workmanlike manner and in accordance with all applicable laws, codes, and regulations; (iv) the restoration can be completed at least six (6) months prior to the Maturity Date; (v) the estimated restoration period does not exceed twelve (12) months; and (vi) such other conditions as may be specified in the Loan Agreement are satisfied. Insurance proceeds for restoration shall be disbursed in accordance with the disbursement procedures set forth in the Loan Agreement.
(d) Self-Managed Restoration. If the total cost of restoration is less than Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) (or such other threshold amount as may be specified in the Loan Agreement), and no Event of Default then exists, the Mortgagor may undertake restoration without Mortgagee consent and may receive insurance proceeds directly, provided that the Mortgagor completes such restoration in a good and workmanlike manner and in accordance with applicable law.
(e) Application to Indebtedness. If the conditions for restoration set forth in Section 6.1(c) above are not satisfied, or if the Mortgagor fails to commence or complete restoration within the time periods specified in the Loan Agreement, the Mortgagee may apply all or any portion of the insurance proceeds to the reduction of the Secured Obligations in such order and manner as the Mortgagee shall determine.
Section 6.2 — Condemnation
(a) Notice. The Mortgagor shall promptly notify the Mortgagee in writing of any actual, threatened, or contemplated taking, condemnation, or exercise of the power of eminent domain (whether temporary or permanent, partial or complete) affecting the Mortgaged Property or any portion thereof, and of the institution of any proceedings therefor, and shall deliver to the Mortgagee copies of all notices, pleadings, and other documents received by the Mortgagor in connection therewith.
(b) Participation. The Mortgagee shall have the right to participate in, and to approve the settlement of, any condemnation or eminent domain proceedings affecting the Mortgaged Property. The Mortgagor shall not, without the prior written consent of the Mortgagee, settle, compromise, agree to, or otherwise dispose of any claim or award in any condemnation proceedings.
(c) Application of Awards. All awards, payments, and compensation received or receivable in connection with any condemnation or taking affecting the Mortgaged Property shall be paid to the Mortgagee and held by the Mortgagee. Condemnation awards in excess of Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) (or such other threshold as may be specified in the Loan Agreement) shall be applied, at the Mortgagee's option, either to the restoration of the Mortgaged Property (subject to the conditions set forth in Section 6.1(c) above, applied mutatis mutandis) or to the reduction of the Secured Obligations.
(d) Partial Taking. In the event of a partial taking that does not render the remaining Mortgaged Property unsuitable for its intended use (as reasonably determined by the Mortgagee), the Mortgagee may permit the Mortgagor to use the condemnation proceeds to restore the remaining Mortgaged Property, subject to the conditions and procedures set forth in the Loan Agreement.
Section 6.3 — Application of Proceeds
(a) All insurance proceeds and condemnation awards held by the Mortgagee shall be invested in such investments as the Mortgagee may approve and shall be disbursed, to the extent applied to restoration, in accordance with the disbursement procedures set forth in the Loan Agreement.
(b) To the extent that insurance proceeds or condemnation awards are applied to the reduction of the Secured Obligations, such amounts shall be applied in inverse order of maturity (i.e., to the last maturing installments of principal), unless the Loan Agreement provides otherwise.
(c) The application of insurance proceeds or condemnation awards to the Secured Obligations shall not cure or waive any Event of Default or notice of default hereunder, and shall not postpone the due date of any monthly installment of principal and interest.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 — Events of Default
Each of the following shall constitute an "Event of Default" hereunder: (a) any "Event of Default" as defined in the Loan Agreement; and (b) without limiting the generality of the foregoing, the following Texas-law specific defaults: (i) failure of the Mortgagor to pay any real property taxes, assessments, or other Impositions prior to such taxes or assessments becoming delinquent, resulting in a tax lien that is or may become prior to the lien of this Mortgage; (ii) the commission or permitting of waste on or to the Mortgaged Property; and (iii) any sale, conveyance, transfer, assignment, pledge, encumbrance, or other disposition of the Mortgaged Property or any interest therein in violation of Section 3.10 hereof.
Section 7.2 — Acceleration
Upon the occurrence and during the continuance of an Event of Default, the Mortgagee may, at its option, by written notice to the Mortgagor, declare all Secured Obligations to be immediately due and payable, without presentment, demand, protest, notice of intent to accelerate, notice of acceleration, or other notice of any kind (all of which are hereby expressly waived by the Mortgagor to the extent permitted by applicable law), and thereupon all Secured Obligations shall become and be immediately due and payable.
Section 7.3 — Foreclosure
(a) Generally. Upon the occurrence and during the continuance of an Event of Default, the Mortgagee may institute proceedings to foreclose this Mortgage pursuant to the laws of the State of Texas, including, at the Mortgagee's

RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, AND SECURITY AGREEMENT

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, AND SECURITY AGREEMENT

RECITALS

ARTICLE I

DEFINITIONS

ARTICLE II

GRANTING CLAUSES

ARTICLE III

REPRESENTATIONS, WARRANTIES, AND COVENANTS OF MORTGAGOR

ARTICLE IV

ASSIGNMENT OF LEASES AND RENTS

ARTICLE V

CASH MANAGEMENT

ARTICLE VI

CASUALTY AND CONDEMNATION

ARTICLE VII

EVENTS OF DEFAULT AND REMEDIES

Record

Parties

Dates

Amounts