Exhibit 10.1

 

SECOND AMENDMENT TO

MASTER REVOLVING LINE OF CREDIT AGREEMENT

 

THIS SECOND AMENDMENT TO MASTER REVOLVING LINE OF CREDIT AGREEMENT, dated
July 26, 2013 (this “Amendment”), among ACRC LENDER ONE LLC, a Delaware limited
liability company (“Borrower”), ARES COMMERCIAL REAL ESTATE CORPORATION, a
Maryland corporation (“Guarantor”), and CAPITAL ONE, NATIONAL ASSOCIATION, a
national banking association (“Lender”).  Capitalized terms used but not
otherwise defined herein shall have the meanings given to them in the Loan
Agreement (as defined below).

 

RECITALS

 

WHEREAS, Borrower, Guarantor and Lender are parties to that certain Master
Revolving Line of Credit Agreement, dated as of May 18, 2012 (as may be amended,
restated, supplemented or otherwise modified from time to time, including,
without limitation, the amendments contained in the First Amendment (defined
below), the “Loan Agreement”);

 

WHEREAS, in connection with the Loan Agreement, Guarantor executed and delivered
to Lender a Guaranty Agreement, dated as of May 18, 2012 (the “Guaranty”);

 

WHEREAS, in connection with the Loan Agreement, Borrower, Guarantor and Lender
executed and delivered that certain Fee Letter (the “Fee Letter”) dated May 18,
2012;

 

WHEREAS, on or about September 27, 2012, Borrower, Guarantor and Lender executed
and delivered that certain First Amendment to Master Revolving Line of Credit
Agreement (the “First Amendment”); and

 

WHEREAS, as of the date hereof, pursuant to the terms of that certain Amendment
to Fee Letter (the “Fee Letter Amendment”), Borrower, Guarantor and Lender have
amended the Fee Letter.

 

Therefore, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Borrower, Guarantor and Lender each hereby agree as follows:

 

SECTION 1.     Amendments to Loan Agreement.

 

(a)        In Section 1.1 of the Loan Agreement, the defined terms “Committed
Sum”, “Debt Service”, “EBITDA”, “Fixed Charge Coverage Ratio”, “Fixed Charges”,
“Line Termination Date”, and “Tangible Net Worth” are each hereby amended and
restated in their entirety to read as follows:

 

“Committed Sum” means One Hundred Million and No/100 Dollars ($100,000,000.00).

 

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“Debt Service” means for any Test Period, the sum of (a) Interest Expense for
any Person for such period, determined on a consolidated basis, and (b) all
regularly scheduled principal payments made with respect to Debt of such Person
and its subsidiaries during such period, other than any voluntary prepayment or
prepayment occasioned by the repayment of an underlying asset, or any balloon,
bullet, margin or similar principal payment which repays such Debt in part or in
full.

 

“EBITDA” with respect to any Person and for any Test Period, means an amount
equal to the sum of (a) Net Income (or loss) of such Person (prior to any impact
from minority or non-controlling interests or joint venture net income and
before deduction of any dividends on preferred stock of such Person), plus the
following (but only to the extent actually included in determination of such Net
Income (or loss)): (i) depreciation and amortization expense (other than those
related to capital expenditures that have not been included in the calculation
of Fixed Charges), (ii) Interest Expense, (iii) income tax expense, and
(iv) extraordinary or non recurring gains, losses and expenses, including but
not limited to transaction expenses relating to business combinations, other
acquisitions and unconsummated transactions, (v) unrealized loan loss reserves,
impairments associated with owned real estate, and other similar charges,
including but not limited to reserves for loss sharing arrangement associated
with mortgage servicing rights, (vi) realized losses on loans and loss sharing
arrangements associated with mortgage servicing rights and (vii) unrealized
gains, losses and expenses associated with (A) derivative liabilities including
but not limited to convertible note issuances and (B) mortgage servicing rights
(other than the initial revenue recognition of recording an asset),  plus
(b) such Person’s proportionate share of Net Income (prior to any impact from
minority or non-controlling interests or joint venture net income and before
deduction of any dividends on preferred stock of such Person) of the joint
venture investments and unconsolidated Affiliates of such Person, all with
respect to such period.

 

“Fixed Charge Coverage Ratio” means EBITDA (as determined in accordance with
GAAP) for the immediately preceding twelve (12) month period ending on the last
date of the applicable Test Period, divided by the Fixed Charges for the
immediately preceding twelve (12) month period ending on the last date of the
applicable Test Period.

 

“Fixed Charges” means at any time, the sum of (a) Debt Service, (b) all
preferred dividends that such Person is required, pursuant to the terms of the
certificate of designation or other similar document governing the rights of
preferred shareholders, to pay and is not permitted to defer, (c) Capital Lease
Obligations paid or accrued during such period, and (d) any amounts payable
under any Ground Lease.

 

“Line Termination Date” means May 18, 2015; provided that Lender may in its sole
and absolute discretion extend the Line Termination Date for successive periods
of one (1) year each.

 

“Tangible Net Worth” means all amounts that would be included under capital or
shareholder’s equity (or any like caption) on the balance sheet of any Person,
minus (a) amounts owing to that Person from any Affiliate thereof, or from
officers, employees, partners, members, directors, shareholders or other Persons
similarly affiliated with such Person or any Affiliate thereof, (b) intangible
assets, and (c) prepaid taxes and/or

 

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expenses, plus deferred origination fees, net of deferred origination costs, all
on or as of such date. For sake of clarity, mortgage servicing rights shall not
be deemed to be intangible assets.

 

(b)       In Section 1.1 of the Loan Agreement and the Index of Defined Terms,
the defined term “Cash Liquidity” and “Total Liquidity” are hereby deleted in
their entirety.

 

(c)        Section 2.3.4 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:

 

2.3.4    The interest rate spread over LIBOR for each Individual Loan, which
will be between 200 and 350 basis points, will be determined by Lender in its
sole discretion.

 

(d)       The last bullet point in Section 5.1.2 of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:

 

·                                         Maximum Individual Loan Amount – the
maximum amount of an Individual Loan shall not exceed Thirty-Five Million and
No/100 Dollars ($35,000,000.00)

 

(e)        Section 7.12 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:

 

7.12     Intentionally deleted.

 

(f)        Section 7.13 of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:

 

7.13 Minimum Fixed Charge Coverage Ratio.  Commencing with the calendar quarter
ending on June 30, 2013, at the end of each Test Period while any Advances
remain outstanding hereunder, (a) Borrower shall maintain a Fixed Charge
Coverage Ratio for the immediately preceding twelve (12) month period ending on
the last day of the applicable Test Period of at least 1.50 to 1.00, with
compliance to be tested as of the end of each Test Period, and (b) Guarantor
shall maintain a Fixed Charge Coverage Ratio for the immediately preceding
twelve (12) month period ending on the last day of the applicable Test Period of
at least 1.25 to 1.00, with compliance to be tested as of the end of each Test
Period.

 

(g)        Borrower’s and Guarantor’s addresses in Section 10.10 of the Loan
Agreement are each amended and restated to read as follows:

 

c/o Ares Management

One North Wacker Drive, 48th Floor

Chicago, Illinois 60606

Attn: Sharon Ephraim

Telephone: (312) 252-7515

Telecopy: (312) 252-7501

 

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With a copy (which copy shall not constitute notice) to:

 

Ares Management

One North Wacker Drive, 48th Floor

Chicago, Illinois 60606

Attn: Legal

Telephone: (312) 252-7529

Telecopy: (312) 252-7501

 

SECTION 2.     Covenants.  Each of Borrower and Guarantor hereby represents and
warrants to Lender, as of the date hereof, that (i) each is in compliance in all
material respects with all of the terms and provisions set forth in Loan
Agreement on its part to be observed or performed, and (ii) no Event of Default
has occurred or is continuing.  Borrower and Guarantor each hereby confirms and
reaffirms the covenants and agreements applicable to it contained in the Loan
Agreement.

 

SECTION 3.     Acknowledgement.  Borrower and Guarantor hereby (i) acknowledge
that Lender is in compliance with its undertakings and obligations under the
Loan Agreement and the other Loan Documents, and (ii) release, remise, acquit
and forever discharge Lender, together with its employees, agents,
representatives, consultants, attorneys, fiduciaries, servants, officers,
directors, partners, predecessors, successors and assigns, subsidiaries, parents
and affiliates (all of the foregoing being herein called the “Released
Parties”), from any and all actions and causes of action, judgments, executions,
suits, debts, claims, demands, liabilities, obligations, damages and expenses of
any and every character, known or unknown, direct and/or indirect, at law or in
equity, of whatever kind or nature, whether heretofore or hereafter accruing,
for or because of any matter or things done, omitted or suffered to be done by
any of the Released Parties prior to and including the date hereof, and in any
way directly or indirectly arising out of or in any way connected to this
Amendment, the Loan Agreement, the guaranty, any other Loan Document, or any of
the transactions associated therewith, or any collateral, including
specifically, but not limited to claims of usury.

 

SECTION 4.     Limited Effect.  Except as expressly amended and modified by this
Amendment and the Fee Letter Amendment, the Loan Agreement and each of the other
Loan Documents shall continue to be, and shall remain, in full force and effect
in accordance with their respective terms; provided, however, that upon the date
hereof, each (w) reference therein and herein to the “Loan Documents” shall be
deemed to include, in any event, this Amendment, (x) each reference to the “Loan
Agreement” in any of the Loan Documents shall be deemed to be a reference to the
Loan Agreement as amended hereby, (y) each reference in the Loan Agreement to
“this Agreement”, this “Loan Agreement”, “hereof”, “herein” or words of similar
effect in referring to the Loan Agreement shall be deemed to be references to
the Loan Agreement as amended by this Amendment, and (z) each reference to the
“Fee Letter” in any of the Loan Documents shall be deemed to be a reference to
the Fee Letter as amended by the Fee Letter Amendment.

 

SECTION 5.     Counterparts.  This Amendment may be executed by each of the
parties hereto on any number of separate counterparts, each of which shall be an
original and all of which taken together shall constitute one and the same
instrument.  Delivery of an executed counterpart of a signature page to this
Amendment in Portable Document Format

 

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(PDF) or by facsimile transmission shall be effective as delivery of a manually
executed original counterpart thereof.

 

SECTION 6.     GOVERNING LAW.

 

THIS AMENDMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO
OR IN CONNECTION WITH THIS AGREEMENT, THE RELATIONSHIP OF THE PARTIES, AND/OR
THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES WILL
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS
OF LAW PRINCIPLES OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the day and year first above written.

 

 

 

BORROWER

 

 

 

 

 

ACRC LENDER ONE LLC, a Delaware limited liability company

 

 

 

 

 

By:

/s/ Timothy B. Smith

 

 

Name: Timothy B. Smith

 

 

Title: Vice President

 

 

 

 

 

GUARANTOR

 

 

 

 

 

ARES COMMERCIAL REAL ESTATE CORPORATION, a Maryland corporation

 

 

 

 

 

By:

/s/ Timothy B. Smith

 

 

Name: Timothy B. Smith

 

 

Title: Vice President

 

 

 

 

 

LENDER

 

 

 

 

 

CAPITAL ONE, NATIONAL ASSOCIATION, a national banking association

 

 

 

 

 

By:

/s/ Ryan Matthews

 

 

Name: Ryan Matthews

 

 

Title: Vice President

 

SIGNATURE PAGE

 

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