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Full title: Ex Parte Motion Debtors' Ex Parte Application for Order in Aid of Proposed Sale of Property Filed by Debtor Professional Financial Investors, Inc. (Attachments: # 1 Declaration Declaration of Gregory Gotthardt in Support of Debtors' Ex Parte Application for Order in Aid of Proposed Sale of Property) (Marum, J.) (Entered: 07/03/2021)

Document posted on Jul 2, 2021 in the bankruptcy, 13 pages and 0 tables.

Bankrupt11 Summary (Automatically Generated)

As more fully described in section 1.1 of the Stalking Horse APA, the Debtors are selling 5 their “Property” consisting of (i) interests in 60 commercial and multifamily residential real 6 properties (collectively, “Real Property”); (ii) tangible personal property used by the Debtors in 7 the operation and management of the Real Property, including the books and records related to th8 Real Properties (collectively, “Personal Property”), (iii) certain intellectual and intangible 9 property, including by way of example, various software, service marks and trademarks, investor 10 lists (including, without limitation, contact information and email address) (collectively, 11 “Intellectual Property”), and (iv) certain Leases and Contracts that the Stalking Horse Bidder may12 elect to have the Debtors assume and assign to the Stalking Horse Bidder.Upon conclusion of the Opt-out Period, the Debtors will remove from their list of 4 Investors the Investor Contact Information of any Investor who has indicated that he or she does 5 not desire to be contacted by Hamilton Zanze or others in connection with investment 6 opportunities related to the proposed Sale of the Property.By this Application, the Debtors seek entry of the Sale Aid Order, substantially in the for10 attached hereto as Exhibit A: (a) approving the procedures by which Investors may opt-out of 11 being contacted by Hamilton Zanze and other Potential Bidders, including the form of Opt-out 12 By the Bid Procedures Order, the 18 Bankruptcy Court authorized the Debtors, through lead Debtor Professional Financial Investors, 19 Inc., to enter into the Stalking Horse APA with Hamilton Zanze & Company (“Hamilton Zanze”),20 for the proposed Sale of the Property, subject to overbid and Court approval.In connection with the proposed Sale, Hamilton Zanze has requested the following with 8 respect to each of the Investors, for the purpose of contacting the Investors about potential 9 investment opportunities in connection with the proposed Sale: 10 (i) email address(es); 11 (ii) telephone number(s); 12 (iii) the dollar amount invested with the Debtors, by Real Property if available; and 13 (iv) the type of investment held (i.e., deed of trust, note, or limited liability company or14 partnership interest) (collectively, “Investor Contact Information”).

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1 SHEPPARD, MULLIN, RICHTER & HAMPTON LLP A Limited Liability Partnership 2 Including Professional Corporations ORI KATZ, Cal. Bar No. 209561 3 J. BARRETT MARUM, Cal. Bar No. 228628 JEANNIE KIM, Cal. Bar No. 270713 4 MATT KLINGER, Cal. Bar No. 307362 Four Embarcadero Center, 17th Floor 5 San Francisco, California 94111-4109 Telephone: 415.434.9100 6 Facsimile: 415.434.3947 Email: okatz@sheppardmullin.com 7 bmarum@sheppardmullin.com jekim@sheppardmullin.com 8 mklinger@sheppardmullin.com Counsel for the Debtors 9 TRODELLA & LAPPING LLP 10 RICHARD A. LAPPING, Cal. Bar No. 107496 540 Pacific Avenue 11 San Francisco, CA 94133 Telephone: (415) 399-1015 12 Facsimile: (415) 651-9004 Email: Rich@TrodellaLapping.com 13 Conflicts Counsel for the Debtors and Counsel for Professional Investors 28, LLC and PFI Glenwood, LLC 14 15 UNITED STATES BANKRUPTCY COURT 16 NORTHERN DISTRICT OF CALIFORNIA 17 SAN FRANCISCO DIVISION 18 In re Case No. 20-30604 19 PROFESSIONAL FINANCIAL (Jointly Administered) INVESTORS, INC., et al., 20 Chapter 11 Debtors. 21 DEBTORS’ EX PARTE APPLICATION FOR ORDER IN AID OF PROPOSED SAL 22 OF PROPERTY 23 No Hearing Requested 24 Judge: Hon. Hannah L. Blumenstiel 25 26 27

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1 I. 2 INTRODUCTION 3 The Debtors1 in these jointly administered cases hereby apply to the Court, on an ex parte 4 basis (the “Application”), for an order, in the form attached hereto as Exhibit A (the “Sale Aid 5 Order”), in aid of the sale of the portfolio sale of certain of the Debtors’ real and personal propert6 assets (the “Sale”). 7 On June 28, 2021, the Debtors filed a Motion for Order (A) Approving Bid Procedures for8 the Portfolio Sale of Certain Real and Personal Property Assets; (B) Approving Related Notice 9 Procedures; (C) Authorizing Debtors to Enter into Stalking Horse Agreement and Approving 10 Break-Up Fee; (D) Scheduling a Sale Hearing; and (E) Granting Certain Related Relief (“Bid 11 Procedures Motion”). Attached as Exhibit A to the declaration of Gregory Gotthardt filed in 12 support of the Bid Procedures Motion is a copy of the Purchase Agreement and Escrow 13 Instructions (“Stalking Horse APA”)2 by and between the Debtors and Hamilton Zanze & 14 Company (“Hamilton Zanze” or the “Stalking Horse Bidder”). See Docket No. 713-1. 15 As described more fully below, the Stalking Horse APA provides that the Debtors will sel16 their books and records relating to the Real Property and certain intellectual property, including 17 the contact information of the Debtors’ investors (as defined in the Plan, which is defined below) 18 (“Investors”) to the Stalking Horse Bidder, or Successful Bidder, if not the Stalking Horse Bidder19 at the Auction. While such a provision might raise concerns, the Debtors are unaware of any 20 Investors that have objected or may object to the transfer of their Investor Contact Information (as21 defined below) in connection with the Sale. Still, out of an abundance of caution the Debtors are 22 requesting approval of a procedure by which investors may “opt-out” of being contacted by 23 Hamilton Zanze and other Potential Bidders (“Opt-out Procedures”). 24 1 “Debtors” means, collectively, Professional Financial Investors, Inc. (“PFI”), Professional Investors Security Fund, Inc. (“PISF”), the affiliated debtors in the above-captioned jointly 25 administered chapter 11 case, and, subject to Court approval of the Debtors’ Motion to Amend Order Granting Substantive Consolidation of Non-Debtor Affiliates Professional Investors 28, 26 LLC And PFI Glenwood, LLC With Debtors (the “Motion for Amended Order”), 28 LLC and PFIGlenwood (each as defined therein). 27 2 Defined terms not defined herein shall have the meanings ascribed to them in the Stalking HorseAPA.

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1 This Application is made pursuant to section 105 of title 11 of the United States Code (the2 “Bankruptcy Code”). This Application is based on the discussion below, the supporting 3 declaration of Gregory Gotthardt (the “Gotthardt Declaration”) filed concurrently herewith, all 4 other relevant papers of record in this case, and any evidence or argument that may be presented t5 the Court prior to or at the hearing on the Application. 6 In support of the Application, the Debtors respectfully represent as follows: 7 II. 8 PRELIMINARY STATEMENT 9 By this Application, the Debtors seek entry of the Sale Aid Order: (a) approving the 10 procedures by which Investors may opt-out of being contacted by Hamilton Zanze and others, 11 including the form of notice, in substantially the form attached hereto as Exhibit B (the “Opt-out 12 Notice”), and (b) granting such other relief that the Court deems just and necessary. 13 The Debtors believe that the relief requested by this Application may be granted without 14 the need for a hearing as the requested relief is procedural in nature, has no material financial 15 impact on these cases, and is designed to be protective of Investors. To the extent that the Court 16 or any other party in interest believes it is appropriate to set this Application for hearing, the 17 Debtors respectfully request an opportunity to discuss a briefing and hearing schedule in open 18 Court at the hearing on the Bid Procedures Motion and the Motion for Amended Order currently 19 set for July 9, 2021, at 10:00 a.m. (the “Bid Procedures and Amended Order Hearing”). 20 III. 21 FACTUAL BACKGROUND 22 A. Background of the Debtors’ Bankruptcy 23 The Debtors incorporate herein by this reference the summary of the events, including 24 fraud by the Debtors’ former management, that culminated in the entry of orders for relief in each25 of the Debtors’ respective bankruptcy cases, whether voluntarily or by consent, as set forth in the 26 numerous pleadings and papers previously filed in these cases. On August 19, 2020, the Office o27 the United States Trustee appointed the Official Committee of Unsecured Creditors (“Official

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1 formed and controlled by PFI are represented by an Ad Hoc Committee of LLC Members while 2 certain lenders to the Debtors claiming liens secured by deeds of trust on property owned by one 3 of the Debtors have also formed into an Ad Hoc Committee of DOT Holders. On May 27, 2021, 4 the Court confirmed the Amended Joint Plan of Reorganization of the Debtors proposed by the 5 Debtors, the Official Committee, and the Ad Hoc LLC Members Committee and the Ad Hoc DOT 6 Noteholders Committee (“Plan”). In furtherance of the Debtors’ goals under the Plan, the Debtors7 are seeking to sell the Property (as described more fully below) to Hamilton Zanze, subject to 8 overbid at an Auction, in accordance with the terms of the Stalking Horse APA. 9 B. Hamilton Zanze 10 As more fully set forth in the Bid Procedures Motion, since 2001, Hamilton Zanze has 11 focused on multifamily investments by specializing in the pursuit, acquisition, and hands-on 12 operation of apartment communities in its target markets. In 2007, the principals of Hamilton 13 Zanze founded Graham Street Reality (“Graham Street”) to focus on the acquisition and operatio14 of commercial property assets. Graham Street currently owns over 1.1 million square feet of 15 commercial office and industrial properties in Northern California, Colorado, and Washington, 16 and, if the Debtors sell the Property to Hamilton Zanze, will be responsible for operating the 17 commercial assets of the portfolio. 18 C. Bid Procedures Motion 19 On June 28, 2021, the Debtors filed the Bid Procedures Motion setting forth the proposed 20 schedule and timing of the Sale of the Property to Hamilton Zanze, subject to overbid at an 21 Auction. More specifically, the Bid Procedures Motion sets forth the following proposed schedul22 with respect to the Sale: (i) August 16, 2021 – the date by which Hamilton Zanze is expected to 23 complete its due diligence, (ii) September 7, 2021 – the date by which Competing Bids are due, 24 (iii) September 13, 2021 – the date of the Auction if there is a Qualified Competing Bid, (iv) 25 September 15, 2021 – the date on the hearing to approve the Sale to the Successful Bidder, and (v26 September 30, 2021 – the date of the closing of the Sale. In connection with the proposed sale 27 process and subject to the execution of confidentiality/non-disclosure agreements, the Debtors are

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1 providing Hamilton Zanze and Potential Bidders with access to a data room containing all non-2 privileged materials relating to the Property (as described below). 3 D. Property Being Sold 4 As more fully described in section 1.1 of the Stalking Horse APA, the Debtors are selling 5 their “Property” consisting of (i) interests in 60 commercial and multifamily residential real 6 properties (collectively, “Real Property”); (ii) tangible personal property used by the Debtors in 7 the operation and management of the Real Property, including the books and records related to th8 Real Properties (collectively, “Personal Property”), (iii) certain intellectual and intangible 9 property, including by way of example, various software, service marks and trademarks, investor 10 lists (including, without limitation, contact information and email address) (collectively, 11 “Intellectual Property”), and (iv) certain Leases and Contracts that the Stalking Horse Bidder may12 elect to have the Debtors assume and assign to the Stalking Horse Bidder. 13 E. Investor Information 14 Under the Stalking Horse APA, Hamilton Zanze proposes to acquire (in addition to 15 Investors’ names and mailing addresses which are already in the public record) the following with16 respect to each of the Investors for the purpose of contacting them about potential investment 17 opportunities with Hamilton Zanze: 18 (i) email address(es); 19 (ii) telephone number(s); 20 (iii) the dollar amount invested with the Debtors, by Real Property if available; and 21 (iv) the type of investment held (i.e., deed of trust, note, or limited liability company or22 partnership interest) (collectively, “Investor Contact Information”). 23 Between the Debtors’ schedules and filed proofs of claim, almost all of this information 24 already is accessible via the dockets and claims registers of the Debtors’ respective bankruptcy 25 cases. However, the Debtors have informed Hamilton Zanze that it should not contact any 26 Investor until the Opt-out Period (as defined herein) has run (assuming the Court approves the 27 Opt-out Procedures) and the Debtors have removed from the Investor List all Investors who have

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1 Investor’s personally identifiable information, such as social security numbers, bank account or 2 investment account information, wiring instructions, beneficiary information, or the like. 3 Although the Bid Procedures Motion has now been filed, neither the Debtors nor the 4 Official Committee have yet learned of any Investor who has objected, or may object, to the 5 conveyance of his or her respective Investor Contact Information. In fact, the Debtors and Offici6 Committee are aware that certain Investors would like to engage in discussions with Hamilton 7 Zanze about investing in the Property.3 Although no objections have yet been received from 8 Investors nor any concerns raised, the Debtors, along with the Official Committee, request, out of9 abundance of caution, that the Court establish procedures by which an Investor may opt-out of 10 being contacted by Hamilton Zanze or anyone else with respect to an investment in the Property o11 any other property. 12 IV. 13 THE OPT-OUT PROCEDURES 14 Acknowledging the possible privacy concerns of Investors, the Debtors propose the 15 following Opt-out Procedures: 16 1. The Debtors will provide the Opt-out Notice to all Investors either via email or U.S. 17 First Class Mail and publicly post the same notice on the Debtors’ website 18 (www.donlinrecano.com/pfi) stating that there will be a fifteen (15)-day period (the “Opt-out 19 Period”) in which each Investor may (a) determine whether he or she desires to be contacted by 20 Hamilton Zanze or another Potential Bidder regarding investment opportunities in connection wit21 the proposed Sale of the Property at Auction, and (b) notify the Debtors whether he or she desires22 not to be contacted, via email to investors@investpfi.com. The Opt-out Notice also shall make 23 clear that the Debtors will not be sharing any Investor’s personally identifiable information such 24 25 3 The Debtors, in consultation with the Official Committee, selected Hamilton Zanze as the stalking horse bidder, in part, because the Debtors’ initial negotiations with Hamilton Zanze 26 included a provision that Investors would have the opportunity to invest in the Property. Ultimately, the Debtors and Hamilton Zanze determined not to include such a provision in the 27 Stalking Horse APA due to timing and other logistical considerations, but Hamilton Zanze remains open to discussing investment opportunities with the Investors.

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1 as social security numbers, bank or investment account information, or beneficiary information, 2 with Hamilton Zanze or anyone else. 3 2. Upon conclusion of the Opt-out Period, the Debtors will remove from their list of 4 Investors the Investor Contact Information of any Investor who has indicated that he or she does 5 not desire to be contacted by Hamilton Zanze or others in connection with investment 6 opportunities related to the proposed Sale of the Property. 7 V. 8 RELIEF REQUESTED 9 By this Application, the Debtors seek entry of the Sale Aid Order, substantially in the for10 attached hereto as Exhibit A: (a) approving the procedures by which Investors may opt-out of 11 being contacted by Hamilton Zanze and other Potential Bidders, including the form of Opt-out 12 Notice attached hereto as Exhibit B, and (b) granting such other relief that the Court deems just 13 and necessary. The Debtors further request that, to the extent that the relief requested by this 14 Application may not be granted on an ex parte basis in connection with the relief requested by the15 Bid Procedures Motion and Motion for Amended Order, the Court set a briefing and hearing 16 schedule at the Bid Procedures and Amended Order Hearing. 17 VI. 18 THE OPT-OUT PROCEDURES ARE ADEQUATE AND 19 REASONABLE UNDER THE CIRCUMSTANCES 20 “The Court may issue any order, process or judgment that is necessary or appropriate to 21 carry out the provisions of [the Bankruptcy Code].” 11 U.S.C. § 105(a); In re Chinichian, 784 22 F.2d 1440, 1443 (9th Cir. 1986); accord In re Geothermal Res. Int'l, 93 F.3d 648, 651 (9th Cir. 23 1996); In re Lionel Corp., 722 F.2d 1063, 1069 (2nd Cir. 1983) (noting a bankruptcy judge’s 24 “broad administrative power” and “substantial freedom to tailor [his or her] orders” to a case at 25 hand). 26 Here, the Opt-out Procedures comport with the Debtors’ sound business judgment and are 27 reasonable under circumstances. By this Application, the Debtors are not seeking to share

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1 account information, beneficiary information or the like. Rather, the Debtors seek, out of an 2 abundance of caution, Court approval of a procedure by which Investors may decide whether he o3 she wants Hamilton Zanze or another Potential Bidder to contact him or her regarding investment4 opportunities in connection with the proposed Sale. Should an Investor not want to be contacted, 5 the Opt-out Procedures provide an adequate mechanism to accommodate such Investor’s wishes 6 while, at the same time, allowing the Debtors to honor the commitments made to Hamilton Zanze7 under the Stalking Horse APA. 8 The Debtors further believe that the relief requested by this Application may be granted 9 without the need for a hearing as the relief requested is procedural in nature, in the interest of 10 judicial and financial economy, without prejudice to any party in interest, and being made out of 11 an abundance of caution to respect the desires and rights of the Investors. If the Court or any othe12 party in interest believes it is appropriate to set this Application for hearing, the Debtors 13 respectfully request that the Court establish a briefing and hearing schedule at the Bid Procedures 14 and Amended Order Hearing. 15 / / / 16 / / / 17 / / / 18 / / / 19 / / / 20 / / / 21 / / / 22 / / / 23 / / / 24 / / / 25 / / / 26 / / / 27 / / /

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1 VII. 2 CONCLUSION 3 For the foregoing reasons, the Debtors request that this Court enter an order, in the 4 substantially the form attached as Exhibit A hereto: (a) approving the procedures by which 5 Investors may opt-out of being contacted by Hamilton Zanze and others, including the form of 6 Opt-out Notice attached hereto as Exhibit B, and (b) granting such other relief that the Court 7 deems just and necessary. 8 Dated: July 3, 2021 9 SHEPPARD, MULLIN, RICHTER & HAMPTON LLP 10 By /s/ J. Barrett Marum 11 ORI KATZ 12 J. BARRETT MARUM JEANNIE KIM 13 MATT KLINGER 14 Counsel for the Debtors 15 16 17 18 19 20 21 22 23 24 25 26 27

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1 Exhibit A 2 (Proposed Sale Aid Order) 3 In re Case No. 20-30604 4 (Jointly Administered) PROFESSIONAL FINANCIAL Chapter 11 5 INVESTORS, INC., et al., [PROPOSED] ORDER IN AID OF 6 Debtors. PROPOSED SALE OF PROPERTY 7 No Hearing Requested 8 Judge: Hon. Hannah L. Blumenstiel 9 Upon the Debtors’ Ex Parte Application for Order in Aid of Proposed Sale of Propert10 (the “Motion”)1 filed by the above-captioned debtors and debtors in possession (collectively, th11 “Debtors”) on July [•], 2021, as Docket No. [•], and the Court having reviewed the Applicatio12 and the Court having determined that the relief requested by the Application may be granted on a13 ex parte basis, and that the relief provided by this Order is in the best interests of the Debtors, thei14 estates, their creditors, and other parties in interest; and upon the record herein; and after du15 deliberation thereon; and good and sufficient cause appearing therefor; 16 IT IS ORDERED that: 17 1. The Application is GRANTED in its entirety. 18 2. The Opt-out Procedures, including the Opt-out Notice, are approved. 19 3. The Debtors shall implement promptly such Opt-out Procedures. 20 *** END OF [PROPOSED] ORDER *** 21 22 23 24 25 26 27 1 Capitalized terms used but not defined herein have the meaning ascribed to them in the Application.

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1 Exhibit B 2 (Proposed Opt-out Notice) 3 4 In re Case No. 20-30604 (Jointly Administered) 5 PROFESSIONAL FINANCIAL Chapter 11 INVESTORS, INC., et al., 6 [PROPOSED] NOTICE OF Debtors. OPPORTUNITY TO INVESTORS TO 7 DIRECT DEBTORS NOT TO BE CONTACTED BY STALKING HORSE 8 BIDDER AND OTHERS 9 No Hearing Requested 10 Judge: Hon. Hannah L. Blumenstiel 11 PLEASE TAKE NOTICE1 that on July [•], 2021, the United States Bankruptcy Court fo12 the Northern District of California, San Francisco Division (the “Bankruptcy Court”)2, entered an13 order approving, among other things, the Bid Procedures set forth in that Order (A) Approving Bi14 Procedures for the Portfolio Sale of Certain Real and Personal Property Assets; (B) Approving 15 Related Notice Procedures; (C) Authorizing Debtors to Enter into Stalking Horse Agreement and 16 Approving Break-Up Fee; (D) Scheduling a Sale Hearing; and (E) Granting Certain Related 17 Relief [Docket No. [•]] (the “Bid Procedures Order”). By the Bid Procedures Order, the 18 Bankruptcy Court authorized the Debtors, through lead Debtor Professional Financial Investors, 19 Inc., to enter into the Stalking Horse APA with Hamilton Zanze & Company (“Hamilton Zanze”),20 for the proposed Sale of the Property, subject to overbid and Court approval. 21 22 23 1 A copy of this Notice of Opportunity to Investors to Direct Debtors Not to Be Contacted By Stalking Horse Bidder and Others (the “Notice”) may be found at 24 www.donlinrecano.com/Clients/pfi/index. 25 2 Capitalized terms not otherwise defined in this Notice shall have the same meanings ascribed to them in the Debtors’ Motion for Order (A) Approving Bid Procedures for the Portfolio Sale of 26 Certain Real and Personal Property Assets; (B) Approving Related Notice Procedures; (C) Authorizing Debtors to Enter into Stalking Horse Agreement and Approving Break-Up Fee; 27 (D) Scheduling a Sale Hearing; and (E) Granting Certain Related Relief [Docket No. 713] (the “Bid Procedures Motion”).

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1 PLEASE TAKE FURTHER NOTICE that under the Stalking Horse APA, Hamilton 2 Zanze proposes to acquire the Property, which includes the Debtors’ Real Property, Personal 3 Property, and Intellectual Property (each as defined in the Stalking Horse APA), subject to overbi4 at an Auction. The proposed Sale of, among other things, the Debtors’ Intellectual Property, 5 provides for the sale of the Debtors’ investor lists, which includes in addition to Investors’ names 6 and mailing addresses that already are of public record in the Debtors’ respective bankruptcy 7 cases. In connection with the proposed Sale, Hamilton Zanze has requested the following with 8 respect to each of the Investors, for the purpose of contacting the Investors about potential 9 investment opportunities in connection with the proposed Sale: 10 (i) email address(es); 11 (ii) telephone number(s); 12 (iii) the dollar amount invested with the Debtors, by Real Property if available; and 13 (iv) the type of investment held (i.e., deed of trust, note, or limited liability company or14 partnership interest) (collectively, “Investor Contact Information”). 15 PLEASE TAKE FURTHER NOTICE that Investors shall have a fifteen (15)-day perio16 (the “Opt-out Period”) during which each Investor may: (1) determine whether he or she desires 17 to be contacted by Hamilton Zanze as the Stalking Horse Bidder or another Potential Bidder 18 regarding investment opportunities in connection with the proposed Sale of the Property at 19 Auction, and (2) notify the Debtors whether he or she desires not to be contacted, via email to 20 investors@investpfi.com. The Opt-out Period shall commence on July [•], 2021, and end at 21 11:59 p.m., prevailing Pacific Time, on [July/August] [•], 2021. 22 PLEASE TAKE FURTHER NOTICE that the Debtors will not be sharing any 23 Investor’s personally identifiable information such as social security numbers, bank or investment24 account information, or beneficiary information, with Hamilton Zanze or any other party. 25 PLEASE TAKE FURTHER NOTICE that beginning on [July/August] [•], 2021 [the 26 day after the Opt-out Period concludes], the Debtors will remove from their list of Investors th27 Investor Contact Information of any Investor who has indicated that he or she does not desire to b

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1 contacted by Hamilton Zanze or others in connection with investment opportunities related to the 2 proposed Sale of the Property. 3 Should you have any questions or concerns regarding the foregoing, please contact the 4 Debtors’ financial advisor, FTI Consulting, Inc., at investors@investpfi.com. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

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