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  Exhibit 10.8    
    


 
 

MASTER LOAN AND SECURITY AGREEMENT    











 






Dated
as of December 8, 2011 










 






ACRC
LENDER C LLC

as Borrower 


and



CITIBANK,
N.A.

as Lender 









 








































 
 

  TABLE OF CONTENTS    
    

 






							
	 
	 	 
	 	Page 	 
	  SECTION 1.    DEFINITIONS AND ACCOUNTING MATTERS
	 	 	1	 
	 1.01
	 	 Certain Defined Terms
	 	 	

1	 
	 1.02
	 	 Accounting Terms and Determinations
	 	 	14	 
	

   SECTION 2.    LOANS; NOTE; FUNDING ACCOUNT; AND PREPAYMENTS
	
 	
 	
15	
 
	 2.01
	 	 Loans
	 	 	

15	 
	 2.02
	 	 Notes
	 	 	15	 
	 2.03
	 	 Funding Mechanics
	 	 	15	 
	 2.04
	 	 Repayment of Loans; Interest
	 	 	17	 
	 2.05
	 	 Mandatory Prepayment
	 	 	18	 
	 2.06
	 	 Optional Prepayments; Releases of Collateral
	 	 	18	 
	 2.07
	 	 Limitation on Types of Advances; Illegality
	 	 	18	 
	 2.08
	 	 Requirements of Law
	 	 	19	 
	 2.09
	 	 Purpose of Advances
	 	 	20	 
	 2.10
	 	 Taxes
	 	 	20	 
	 2.11
	 	 Fees
	 	 	21	 
	  SECTION 3.    PAYMENTS; COMPUTATIONS; ETC. 
	 	 	

21	 
	 3.01
	 	 Payments
	 	 	

21	 
	 3.02
	 	 Computations
	 	 	21	 
	 3.03
	 	 Establishment of Lender's Account
	 	 	21	 
	 3.04
	 	 Deposits into Lender's Account
	 	 	21	 
	 3.05
	 	 Application of Balloon Payments, Scheduled Principal Payments, Principal Prepayments and Net Sale Proceeds
	 	 	22	 
	 3.06
	 	 Distributions Subsequent to a Default or Event of Default
	 	 	23	 
	  SECTION 4.    COLLATERAL SECURITY
	 	 	

23	 
	 4.01
	 	 Collateral; Security Interest
	 	 	

23	 
	 4.02
	 	 Further Documentation
	 	 	24	 
	 4.03
	 	 Changes in Locations, Name, Etc. 
	 	 	25	 
	 4.04
	 	 Lender's Appointment as Attorney-in-Fact
	 	 	25	 
	 4.05
	 	 Performance by Lender of Borrower's Obligations
	 	 	26	 
	 4.06
	 	 Remedies
	 	 	26	 
	 4.07
	 	 Limitation on Duties Regarding Preservation of Collateral
	 	 	27	 
	 4.08
	 	 Powers Coupled with an Interest
	 	 	27	 
	 4.09
	 	 Release of Security Interest
	 	 	27	 
	  SECTION 5.    CONDITIONS PRECEDENT
	 	 	

28	 
	 5.01
	 	 Initial Loan
	 	 	

28	 
	 5.02
	 	 Initial and Subsequent Loans
	 	 	29	 
	  SECTION 6.    REPRESENTATIONS AND WARRANTIES
	 	 	

31	 
	 6.01
	 	 Financial Condition
	 	 	

31	 
	 6.02
	 	 Existence; Compliance with Law; Ownership of Borrower
	 	 	31	 
	 6.03
	 	 Authorization; Enforceable Obligations
	 	 	31	 
	 6.04
	 	 No Legal Bar
	 	 	32	 
	 6.05
	 	 No Material Litigation
	 	 	32	 




 

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	 	Page 	 
	 6.06
	 	 No Default
	 	 	32	 
	 6.07
	 	 Collateral; Collateral Security
	 	 	32	 
	 6.08
	 	 Chief Executive Office
	 	 	32	 
	 6.09
	 	 Location of Books and Records
	 	 	32	 
	 6.10
	 	 No Burdensome Restrictions
	 	 	33	 
	 6.11
	 	 Taxes
	 	 	33	 
	 6.12
	 	 Margin Regulations
	 	 	33	 
	 6.13
	 	 Investment Company Act; Other Regulations
	 	 	33	 
	 6.14
	 	 Special Purpose Entity
	 	 	33	 
	 6.15
	 	 Assets
	 	 	33	 
	 6.16
	 	 No Prohibited Persons
	 	 	33	 
	 6.17
	 	 Borrower Solvent; Fraudulent Conveyance
	 	 	33	 
	 6.18
	 	 ERISA
	 	 	33	 
	 6.19
	 	 True and Complete Disclosure
	 	 	34	 
	 6.20
	 	 True Sales
	 	 	34	 
	  SECTION 7.    COVENANTS OF BORROWER
	 	 	

34	 
	 7.01
	 	 Financial Statements
	 	 	

34	 
	 7.02
	 	 Litigation
	 	 	35	 
	 7.03
	 	 Existence, Etc. 
	 	 	35	 
	 7.04
	 	 Prohibition of Fundamental Changes
	 	 	35	 
	 7.05
	 	 Notices
	 	 	35	 
	 7.06
	 	 Special Purpose Entity
	 	 	36	 
	 7.07
	 	 Transactions with Affiliates
	 	 	36	 
	 7.08
	 	 Limitation on Sale or Other Disposition of Collateral
	 	 	36	 
	 7.09
	 	 Limitation on Liens on Collateral
	 	 	36	 
	 7.10
	 	 Limitations on Modifications, Waivers and Extensions of Asset Documents
	 	 	36	 
	 7.11
	 	 Limitation on Distributions
	 	 	36	 
	 7.12
	 	 Servicer; Servicing File
	 	 	37	 
	 7.13
	 	 ERISA
	 	 	37	 
	 7.14
	 	 Prohibited Persons
	 	 	37	 
	  SECTION 8.    EVENTS OF DEFAULT
	 	 	

37	 
	  SECTION 9.    REMEDIES UPON DEFAULT
	 	 	

39	 
	  SECTION 10.    NO DUTY OF LENDER
	 	 	

41	 
	  SECTION 11.    MISCELLANEOUS
	 	 	

41	 
	 11.01
	 	 Waiver
	 	 	

41	 
	 11.02
	 	 Notices
	 	 	41	 
	 11.03
	 	 Indemnification and Expenses
	 	 	42	 
	 11.04
	 	 Amendments
	 	 	42	 
	 11.05
	 	 Successors and Assigns
	 	 	43	 
	 11.06
	 	 Survival
	 	 	43	 
	 11.07
	 	 Captions
	 	 	43	 
	 11.08
	 	 Counterparts
	 	 	43	 
	 11.09
	 	 GOVERNING LAW; ETC. 
	 	 	43	 
	 11.10
	 	 SUBMISSION TO JURISDICTION; WAIVERS
	 	 	43	 
	 11.11
	 	 WAIVER OF JURY TRIAL
	 	 	44	 
	 11.12
	 	 Acknowledgments
	 	 	44	 




 

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	 	Page 	 
	 11.13
	 	 Assignments; Participations
	 	 	44	 
	 11.14
	 	 Hypothecation or Pledge of Loans
	 	 	45	 
	 11.15
	 	 Servicing
	 	 	45	 
	 11.16
	 	 Periodic Due Diligence Review
	 	 	46	 
	 11.17
	 	 Set-Off
	 	 	46	 
	 11.18
	 	 Substitution of Guarantor
	 	 	46	 
	 11.19
	 	 Registered Form
	 	 	47	 




 


 






					
	 SCHEDULES	 	 
	

 	
 	
SCHEDULE 1	
 	
Representations and Warranties re: Individual Mortgage Loans
	 	 	SCHEDULE 2	 	Special Purpose Bankruptcy Remote Entity
	 	 	SCHEDULE 3	 	Filing Jurisdictions and Offices
	 	 	SCHEDULE 4	 	Organizational Chart
	 	 	SCHEDULE 5	 	List of Direct Competitors
	
 EXHIBITS	
 	

 
	

 	
 	
EXHIBIT A	
 	
Form of Note
	 	 	EXHIBIT B	 	Intentionally Omitted
	 	 	EXHIBIT C	 	Funding Date File Data Fields
	 	 	EXHIBIT D	 	Form of Custodial Agreement
	 	 	EXHIBIT E	 	Intentionally Omitted
	 	 	EXHIBIT F	 	Form of Request for Borrowing
	 	 	EXHIBIT G	 	Form of Funding Confirmation
	 	 	EXHIBIT H	 	Form of Opinion of Counsel to Borrower and Guarantor
	 	 	EXHIBIT I	 	Form of Closing Certificate
	 	 	EXHIBIT J	 	Form of Officer's Certificate
	 	 	EXHIBIT K	 	Form of Irrevocable Redirection Notice
	 	 	EXHIBIT L	 	Form of Servicer Notice and Agreement




 

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  MASTER LOAN AND SECURITY AGREEMENT    
    


        MASTER LOAN AND SECURITY AGREEMENT, dated as of December 8, 2011 between ACRC LENDER C LLC, a Delaware limited liability
company ("Borrower"), and CITIBANK, N.A., a national banking association ("Lender"). 


RECITALS 


        Borrower
has requested that Lender from time to time make revolving credit loans to it to finance the origination of certain commercial mortgage loans, and Lender is prepared to make
such loans upon the terms and conditions hereof. Accordingly, the parties hereto agree as follows: 


        Section 1.    Definitions and Accounting Matters.    


        1.01    Certain Defined Terms.    As used herein, the following terms shall have the following meanings (all terms
defined in this Section 1.01 or in other provisions of this Loan Agreement in the singular to have the same meanings when used in the plural and
vice versa): 


        "Acceptable Hedge Counterparty" shall mean a Person that is regularly engaged in the business of entering into Interest Rate Protection
Agreements and is reasonably acceptable to Lender. 


        "Accepted Servicing Practices" shall have the meaning assigned thereto in  Section 11.15(a) hereof. 



        "Affiliate" shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person. A Person shall be deemed to control another Person if such first Person possesses, directly or indirectly, the power to direct or cause the direction of the
management and policies of such other Person, whether through ownership of voting securities, by contract or otherwise. 


        "Applicable Margin" shall mean, with respect to each Mortgage Loan, the applicable percentage set forth below which shall be determined by
Lender as of the initial Funding Date for such Mortgage Loan based upon the related Debt Yield for such Mortgage Loan as of such Funding Date (and shall not be subject to adjustment or modification
thereafter based upon changes in Debt Yield); provided, that notwithstanding the foregoing, commencing on the Business Day on which a Capital Markets
Event is consummated and thereafter, the Applicable Margin with respect to any Mortgage Loan which has an initial Funding Date prior to such Business Day shall be modified effective as of such
Business Day to equal the corresponding reduced Applicable Margin set forth below: 

 






								
	Debt Yield



 
	 	Pre-Capital

Markets Event 	 	Post-Capital

Markets Event 	 
	 36.0% and <7.0%
	 	 	4.00	%	 	3.50	%
	 37.0% and <8.0%
	 	 	3.75	%	 	3.00	%
	 38.0% and <10.0%
	 	 	3.50	%	 	2.75	%
	 310.0%
	 	 	3.25	%	 	2.50	%




 

         "Appraisal":    A FIRREA-compliant appraisal addressed to and reasonably satisfactory to Lender of the related Mortgaged
Property from an Independent Appraiser, which determines "as-is" appraised value at origination of the Eligible Loan utilizing a discounted cash flow analysis methodology, based on
stabilized occupancy and a five to ten year projection period adjusted for fiscal year inflation and discounting. 



        "ACRE Management" shall mean Ares Commercial Real Estate Management LLC, a Delaware limited liability company. 


        "Assignment of Leases" shall mean, with respect to any Mortgage, an assignment of leases thereunder, notice of transfer or equivalent
instrument in recordable form, sufficient under the laws of the jurisdiction wherein the Mortgaged Property is located to reflect the assignment of leases, subject to the terms, covenants and
provisions hereunder. 







 

        "Balloon Payment" shall mean, for any Mortgage Loan for which the final principal payment is substantially greater than periodic Scheduled
Principal Payments due thereunder, the payment due on its maturity date. 


        "Bankruptcy Code" shall mean the United States Bankruptcy Code of 1978, as amended from time to time. 


        "Borrower" shall have the meaning provided in the introductory paragraph hereof. 



        "Business Day"    Any day other than (a) a Saturday or a Sunday, (b) a day on which banks in the State of New York
and the State of Illinois are authorized or obligated by law or executive order to be closed, (c) any day on which the New York Stock Exchange, the Federal Reserve Bank of New York or the
Custodian is authorized or obligated by law or executive order to be closed, or (d) if the term "Business Day" is used in connection with the determination of LIBOR, a day dealings in Dollar
deposits are not carried on in the London interbank market. 


        "Capital Lease Obligations" shall mean, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP,
and, for purposes of this Loan Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP. 


        "Capital Markets Event" shall mean the occurrence of either a Public Capital Markets Event or a Private Capital Markets Event. 


        "Capital Stock" shall mean any and all shares, interests, participations or other equivalents (however designated) of capital stock of a
corporation, any and all similar ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing. 


        "Certified Operating Histories" shall have the meaning specified in Schedule 1. 


        "Change of Control"    The occurrence of any of the following events without the prior approval of Lender: 



        (a)   ACRE
Management is no longer the manager of substantially all (by face value) of the loan assets of Guarantor (or Substitute Guarantor, as applicable) or if the
Management Agreement is modified in any material respect; 


        (b)   any
merger, reorganization or consolidation of ACRE Management where the successor entity is not ACRE Management as of the date hereof; 


        (c)   a
change in control of ACRE Management from the Person or Persons who directly or indirectly control ACRE Management on the date hereof; or 



        (d)   Guarantor
(or after the occurrence of a Capital Markets Event, Substitute Guarantor) shall cease to own and control, of record and beneficially 100% of the Equity
Interests of Borrower. 




        "Closing Counsel" shall mean the attorney or law firm retained by Borrower for the origination or closing of any Mortgage Loan to be
pledged hereunder. 


        "Closing Counsel Letter" shall mean a letter delivered to Lender from a Closing Counsel with respect to any Mortgage Loan in connection
with the initial Funding Date for such Mortgage Loan, which states that all documents required to be delivered to the Custodian in respect of such Mortgage Loan pursuant to this Loan Agreement and the
Custodial Agreement (i) have been executed and delivered by the parties thereto (in partial reliance, if applicable, on an opinion of counsel to the 


2







 

applicable
Mortgagor), (ii) are in the possession of such Closing Counsel and (iii) will be delivered to the Custodian within three (3) Business Days after the applicable Funding
Date. 


        "Closing Data File" shall mean, with respect to any Loan as of any Funding Date, a computer file generated by Borrower or Servicer and
delivered to Lender and Custodian, which provides, with respect to each Mortgage Loan that is pledged or to be pledged to Lender on such Funding Date, each of the data fields set forth on  Exhibit C
attached hereto and the information responsive to each such field, as well as any and all new, modified or updated information with
respect to such Mortgage Loan that has been provided to Lender prior to the applicable Funding Date, in each case in a format that has previously been approved by Lender and is otherwise acceptable to
Lender. 


        "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. 


        "Collateral" shall have the meaning provided in Section 4.01(b) hereof. 


        "Collection Period" means, with respect to any Payment Date, the period from and including the immediately preceding Payment Date to but
excluding such Payment Date. 


        "Complete Submission" shall mean with respect to any Eligible Loan, the Summary Due Diligence Materials described on  Annex 2 to Exhibit F hereto for Eligible Loan proposed to be pledged to Lender in
accordance with, and subject to the terms and conditions of, this Loan Agreement. 


        "Contractual Obligation"    With respect to any Person, any provision of any securities issued by such Person or any indenture,
mortgage, deed of trust, deed to secure debt, contract, undertaking, agreement, instrument or other document to which such Person is a party or by which it or any of its property or assets are bound
or are subject. 


        "Controlled Account Agreement"    A control agreement with respect to the Lender's Account, dated as of the date of this
Agreement, among Borrower, Lender and Controlled Account Bank. 


        "Controlled Account Bank" shall mean Bank of America, National Association, or any other bank approved by Lender. 



        "Costs" shall have the meaning provided in Section 11.03(a) hereof. 


        "Custodial Agreement" shall mean the Custodial Agreement, dated as of the date hereof, among Borrower, Custodian and Lender, substantially
in the form of Exhibit D hereto, as the same shall be modified and supplemented and in effect from time to time. 



        "Custodian" shall mean U.S. Bank, National Association, a Delaware limited liability company as custodian under the Custodial Agreement,
and its successors and permitted assigns thereunder. 


        "Debt Yield" shall mean, with respect to any Mortgage Loan (or all Mortgage Loans, as applicable), the percentage equivalent of the
quotient obtained by dividing (i) the Underwritten Net Cash Flow for the most recent twelve month period for which such information is available by (ii) either: 



        (a)   for
purposes of the determination of whether a mortgage bridge loan satisfies the Debt Yield requirement to qualify as an Eligible Loan, the unpaid principal amount of
such mortgage bridge loan (but specifically including for this purpose the unpaid principal amount of all Junior Interests), or 


        (b)   for
purposes of the calculation of the Applicable Margin on the initial Funding Date on which an Eligible Loan is first pledged to Lender hereunder, the unpaid principal
amount of such Mortgage Loan (but specifically excluding for this purpose the unpaid principal amount of all Junior Interests), or 



3







 

        (c)   for
purposes of any request from Borrower to Lender to fund a portion of any future advance which Borrower is contractually obligated to fund (or any reborrowing of a
prior initial advance or future advance which has been prepaid by Borrower), the unpaid principal amount of such Mortgage Loan, inclusive of the full amount of such future advance (and specifically
including for this purpose the unpaid principal amount of all Junior Interests), or 



        (d)   for
purposes of clause (c) of the definition of "Servicing Transfer Event" and for purposes of the application of Balloon Payments, Scheduled Principal Payments,
Principal Prepayments and net sale proceeds in the event of a sale of a Mortgage Loan, in each case, pursuant to Section 3.05(b) of this Loan
Agreement, the aggregate outstanding principal amount of Loans with respect to such Mortgage Loan; or 


        (d)   for
purposes of Section 2.03(d), 2.03(e) and  2.05(c) of this Loan Agreement, the aggregate outstanding
principal amount of Loans with respect to all of the Mortgage Loans pledged hereunder. 




        "Default" shall mean an Event of Default or an event that with notice or lapse of time or both would become an Event of Default. 


        "Direct Competitor" shall mean any of the Persons listed on Schedule 5 attached
hereto as such Schedule 5 may be updated from time to time pursuant to a written notice delivered by Borrower to Lender in accordance with this Agreement;  provided, that any such Person listed on
Schedule 5 (including on any such written update) shall not be an Eligible Assignee of the type
described in clause (a) of the definition of Eligible Assignee. 


        "Dollars" and "$" shall mean lawful money of the United States of America. 


        "Due Diligence Review" shall mean the performance by Lender of any or all of the reviews permitted under  Section 11.17 hereof with respect to any or all of the
Mortgage Loans as desired by Lender from time to time. 



        "Effective Date" shall mean the date upon which the conditions precedent set forth in  Section 5.01 shall have been satisfied. 


        "Eligibility Breach" shall have the meaning provided in Section 2.05(a) hereof. 


        "Eligible Assignee" shall mean any of the following Persons designated by Lender for purposes of  Section 11.13; (a) a bank, financial institution, pension fund,
 insurance company or similar Person, an Affiliate of any of the foregoing,
and an Affiliate of Lender, and (b) any other Person to which Borrower has consented; provided, that such consent of Borrower shall not be
unreasonably withheld, delayed or conditioned, except in the case of a Direct Competitor of Borrower, and, provided further, Borrower's consent under
this subsection (b) shall not be required at any time when an Event of Default exists. Such Person shall provide to Borrower such duly executed IRS forms as Borrower reasonably requests. 


        "Eligible Loan" shall mean a newly originated performing senior floating rate mortgage bridge loan
(i.e., either a whole mortgage loan or an A note in an "A/B" structure) secured by a first lien which satisfies the following criteria: 



        (a)   such
loan has been approved by Lender in its sole discretion prior to being pledged to Lender hereunder, 


        (b)   such
loan conforms to the representations and warranties set forth in Schedule 1 hereto (other than for exceptions
approved by Lender), 


        (c)   such
loan is secured by underlying real estate which is an Eligible Property Type, 



4







 

        (d)   such
loan has a term (inclusive of the exercise of all extension options) not longer than thirty six (36) months (or after the consummation of a Capital Markets
Event, sixty (60) months), 


        (e)   such
loan has a Debt Yield equal to or greater than 6.0%, and 


        (f)    such
loan, at origination, has a Loan-to-Value Ratio equal to or less than 80.0%. 




        "Eligible Property Type" shall mean any of the following types of underlying real estate: (a) multi-family, (b) office,
(c) retail, (d) hospitality, (e) industrial, (f) self-storage or (g) student housing. 


        "Environmental Laws" shall mean any federal, state, foreign or local statute, law, rule, regulation, ordinance, code, guideline, written
policy and rule of common law now or hereafter in effect and in each case as amended, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent
decree or judgment, relating to the environment, employee health and safety or Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act,
33 U.S.C. § 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. § 2601  et seq.; the Clean Air Act, 42 U.S.C.
§ 7401 et seq.; the Safe Drinking Water
Act, 42 U.S.C. § 3803 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. § 2701  et seq.; the Emergency Planning and the
Community Right-to-Know Act of 1986, 42 U.S.C. § 11001  et seq.; the Hazardous Material Transportation Act, 49 U.S.C. § 1801 et
seq..
and the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq.; and any state and local or foreign counterparts or
equivalents, in each case as amended from time to time. 


        "E013224" shall have the meaning provided in Section 6.16. 


        "Equity Interests"    With respect to any Person, (a) any share, interest, participation and other equivalent (however
denominated) of Capital Stock of (or other ownership, equity or profit interests in) such Person, (b) any warrant, option or other right for the purchase or other acquisition from such Person
of any of the foregoing, (c) any security convertible into or exchangeable for any of the foregoing, and (d) any other ownership or profit interest in such Person (including partnership,
member or trust interests therein), whether voting or nonvoting, and whether or not such share, warrant, option, right or other interest is authorized or otherwise existing on any date. 


        "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. 


        "ERISA Affiliate" shall mean any corporation or trade or business that is a member of any group of organizations (i) described in
Section 414(b) or (c) of the Code of which Borrower is a member and (ii) solely for purposes of potential liability under Section 302(c)(11) of ERISA and
Section 412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of
which Borrower is a member. 


        "Event of Default" shall have the meaning provided in Section 8 hereof. 


        "Extended Funding Period" shall have the meaning given to such term in the definition of "Funding Period." 


        "Extension Fee" shall mean an amount equal to the product of (x) 0.25% and (y) (i) for purposes of the extension of the
Funding Period from the end of the Extended Funding Period to the end of the Second Extended Funding Period, the Maximum Credit and (ii) on each anniversary thereafter of such date which
concludes the Second Extended Funding Period, the aggregate outstanding principal amount of the Loans as of such anniversary date. 


        "Fee Letter" shall mean the letter agreement, dated as of September 14, 2011, between Borrower and Lender. 


5









 



































 


        "Final Repayment Date" shall mean, with respect to each Mortgage Loan, the latest date on which a payment of principal is contractually
obligated to be made in respect of such Mortgage Loan pledged hereunder. 


        "Funding Confirmation" shall have the meaning provided in Section 2.03(b) hereof. 


        "Funding Date" shall mean the date on which a Loan is made hereunder. 



        "Funding Period" shall mean the period commencing on the Effective Date and ending on the six (6) month anniversary of the
Effective Date (such period, the "Initial Funding Period"); provided, that notwithstanding the
foregoing, with respect to any Mortgage Loan originated during such Initial Funding Period which is the subject of a Loan hereunder and by its terms provides for future advances after the end of such
six (6) month period, the Funding Period with respect to such Mortgage Loan shall be deemed automatically extended to the time period during which such future advances are obligated to be
funded by Borrower under the terms of such Mortgage Loan. In the event a Capital Markets Event occurs within twelve (12) months after the Effective Date, the Funding Period shall be
automatically extended to the twenty-four (24) month anniversary of the Effective Date (such extended period, the "Extended Funding
Period"); provided, that notwithstanding the foregoing, so long as no Event of Default shall have occurred and be continuing,
the Funding Period shall be automatically further extended for a second time to the thirty six (36) month anniversary of the Effective Date (such further extended period, the
"Second Extended Funding Period") upon payment by Borrower of the Extension Fee in accordance with  Section 2.11 of this Agreement. 



        "GAAP" shall mean generally accepted accounting principles as in effect from time to time in the United States. 


        "Governing Documents" shall mean as to any Person, its articles or certificate of incorporation and by-laws, its partnership
agreement, its certificate of formation and operating agreement, and/or the other organizational or governing documents of such Person. 


        "Governmental Authority" shall mean any nation or government, any state or other political subdivision, agency or instrumentality thereof,
any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any court or arbitrator having jurisdiction over Borrower or any of
its properties. 


        "Ground Lease" shall mean any ground lease containing the following terms and conditions: (a) a remaining term (exclusive of any
unexercised extension options) of twenty (20) years or more from the final stated maturity date of the related loan; (b) the right of the lessee to mortgage and encumber its interest in
the leased property without the consent of the lessor or with such consent given; (c) the obligation of the lessor to give the holder of any mortgage lien on such leased property written notice
of any defaults on the part of the lessee and agreement of such lessor that such lease will not be terminated until such holder has had a reasonable opportunity to cure or complete foreclosures, and
fails to do so; (d) reasonable transferability of the lessee's interest under such lease, including ability to sublease; and (e) such other rights customarily required by mortgagees
making a loan secured by the interest of the holder of the leasehold estate demised pursuant to a ground lease. 


        "Guarantee Obligation" shall mean, as to any Person, any obligation of such Person directly or indirectly guaranteeing any Indebtedness of
any other Person or in any manner providing for the payment of any Indebtedness of any other Person or otherwise protecting the holder of such Indebtedness against loss (whether by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, or to take-or-pay or otherwise);  provided that the term "Guarantee" shall not include endorsements
for collection or deposit in the ordinary course of business. The amount of any
Guarantee of a Person shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof as 


6







 

determined
by such Person in good faith. The terms "Guarantee" and "Guaranteed" used as verbs shall have
correlative meanings. 


        "Guarantor" shall mean ACRC Holdings, LLC, a Delaware limited liability company;  provided, that upon the consummation of a Capital Markets Event, Substitute
Guarantor shall be substituted as Guarantor pursuant to and in accordance
with Section 11.18 of this Agreement. 


        "Guaranty" shall mean that certain Guaranty, dated as of the date hereof, given by Guarantor in favor of Lender, as the same may be
amended, modified, supplemented or restated from time to time. 


        "In Lieu of Policy" shall have the meaning specified in Schedule 1 hereto. 


        "Income" shall mean, with respect to any Mortgage Loan at any time, the sum of (x) any principal paid by or on behalf of Borrower
and all interest, thereon and (y) all net sale proceeds of a sale of such Mortgage Loan. Notwithstanding the foregoing, "Income" shall be deemed not to include any fees or other amounts
(i) payable to the Servicer under the Servicing Agreement, in the form of prepayment fees, extension fees, exit fees, defeasance fees, transfer fees, make-whole fees, late charges,
late fees, and all other fees or charges, and (ii) that are not applied in reduction of principal or to the payment of interest thereon (including, without limitation, due diligence and legal
or underwriting cost deposits, yield maintenance charges, penalties, default interest, dividends, gains, receipts, allocations, rents, interests, profits, payments in kind or returns or repayment of
contributions, net sale, foreclosure, liquidation, securitization or other disposition proceeds, insurance payments, settlements and proceeds). 



        "Indebtedness" shall mean, for any Person at any date, without duplication, (a) all then outstanding indebtedness of such Person
for borrowed money (whether by loan or the issuance and sale of debt securities) or for the deferred purchase price of property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary practices), (b) any other then outstanding indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, (c) all Capital Lease Obligations, (d) all then outstanding obligations of such Person in respect of letters of credit, acceptances or similar instruments issued or
created for the account of such Person and (e) all then outstanding liabilities secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise
become liable for the payment thereof. 


        "Indemnified Party" shall have the meaning specified in Section 11.03(a) hereto. 


        "Independent Appraiser"    An independent professional real estate appraiser reasonably satisfactory to Lender who is a member
in good standing of the American Appraisal Institute, and, if the state in which the subject Mortgaged Property is located certifies or licenses appraisers, is certified or licensed in such state, and
in each such case, who has a minimum of five years experience in the subject property type. 


        "Independent Director" shall mean a duly appointed manager or member of the board of directors (or managers) of the relevant entity who
shall not have been, at the time of such appointment or at any time while serving as a director or manager of the relevant entity and may not have been at any time in the preceding five
(5) years, (a) a direct or indirect legal or beneficial owner in such entity or any of its Affiliates, (b) a creditor, supplier, employee, officer, director (other than in its
capacity as Independent
Director), family member, manager or contractor (other than in its capacity as an Independent Director) of such entity or any of its Affiliates, or (c) a Person who controls (directly,
indirectly or otherwise) such entity or any of its Affiliates or any creditor, supplier, employee, officer, director, family member, manager or contractor of such Person or any of its Affiliates. 


        "Initial Funding Period" shall have the meaning given to such term in the definition of "Funding Period." 


7







 

        "Interest Period" means, with respect to each Loan, for each Payment Date, the period commencing on and including the first
(1st) day of the calendar month immediately prior to the calendar month of such Payment Date and ending on (and including) the last day of the calendar month immediately prior to the
calendar month of such Payment Date; provided that the initial Interest Period in respect of any Loan shall be the period from and including the date of
such Loan to and including the last day of the following calendar month and any Interest Period that would end after the Final Repayment Date for any Mortgage Loan shall end on such Final Repayment
Date. 


        "Interest Rate" shall mean with respect to each Loan, for any Interest Period, a rate per annum equal to the sum of (i) the greater
of (x) LIBOR as determined for such Interest Period and (y) 1.00% (or following the consummation of a Capital Markets Event, 0.50%) plus (ii) the Applicable Margin for such Loan. 


        "Interest Rate Protection Agreement" shall mean, with respect to any or all of the Mortgage Loans, any short sale of U.S. Treasury
Securities, futures contract, mortgage related security, Eurodollar futures contract, options related contract, interest rate swap, cap or collar agreement or similar arrangement providing for
protection against fluctuations in interest rates or the exchange of nominal interest obligations, either generally or under specific contingencies, entered into by Borrower and an Acceptable Hedge
Counterparty and otherwise reasonably acceptable to Lender. 


        "Interest Rate Reset Date"    (a) In the case of the first Interest Period for any Mortgage Loan, the Funding Date for
such Mortgage Loan, and (b) in the case of any subsequent Interest Period, two (2) Business Days prior to the Payment Date on which such Interest Period begins. 


        "Irrevocable Redirection Notice"    A notice in the form of Exhibit K
sent after the occurrence and during the continuance of an Event of Default directing the remittance of Income with respect to a Mortgage Loan to the Lender's Account, and executed by the Borrower
with respect to such Mortgage Loan. 


        "Junior Interest" shall mean (a) a "B-note" in an "A/B structure" in a Mortgage Loan, or (b) any other debt
subordinate to a Mortgage Loan pledged hereunder that is secured by (i) all or any portion of the Mortgaged Property and/or (ii) direct or indirect Equity Interests in the applicable
Mortgagor. 


        "Lender" shall have the meaning provided in the introductory paragraph hereto. 



        "Lender's Account" shall mean a segregated interest bearing account established at Controlled Account Bank, in the name of Borrower,
pledged to Lender and subject to a Controlled Account Agreement. 


        "LIBOR"    For any Interest Period, the rate (expressed as a percentage per annum) for deposits in Dollars, for a
one-month period, that appears on Reuters Screen LIBOR01 (or the successor thereto) as the London interbank offered rate for deposits in Dollars as of 11:00 a.m., London time, on
the Interest Rate Reset Date for such Interest Period. If such rate does not appear on Reuters Screen LIBOR01 as of 11:00 a.m., London time, on such Interest Rate Reset Date, Lender shall
request the principal London office of the Reference Banks selected by Lender to provide such banks' offered quotation (expressed as a percentage per annum) to leading banks in the international
Eurocurrency market for deposits in Dollars for a one-month period as of 11:00 a.m., London time, on such Interest Rate Reset Date for amounts of not less than the aggregate
outstanding principal amount of the Loans. If at least two such offered quotations are so provided, LIBOR shall be the arithmetic mean of such quotations. If fewer than two such quotations are so
provided, Lender shall request any three major banks in New York City selected by Lender to provide such banks' rate (expressed as a percentage per annum) for loans in Dollars to leading banks in the
international Eurocurrency market for a one-month period as of approximately 11:00 a.m., New York City time on the applicable Interest Rate Reset Date for amounts of not less than
the aggregate outstanding principal amount of the Loans. If at least two such rates are so provided, LIBOR shall be the arithmetic mean of such rates. 


8







 

        "Lien" shall mean any mortgage, lien, pledge, charge, security interest or similar encumbrance. 



        "Loan" shall have the meaning provided in Section 2.01(a) hereof. 


        "Loan Agreement" shall mean this Master Loan and Security Agreement, as the same may be amended, supplemented or otherwise modified from
time to time. 


        "Loan Documents" shall mean, collectively, this Loan Agreement, the Note, the Fee Letter, the Pledge and Security Agreement, the Custodial
Agreement, the Guaranty, the Controlled Account Agreement and any and all other documents and agreements now or hereafter evidencing, securing and/or delivered to Lender in connection with the Loans
hereunder, as each of the foregoing may be amended, modified, supplemented an/or restated from time to time. 


        "Loan-to-Value Ratio" or "LTV" shall mean, as of the initial
Funding Date in respect of any Mortgage Loan, the ratio of (a) the outstanding principal amount of such Mortgage Loan at such time (and specifically including for this purpose the unpaid
principal amount of all Junior Interests) to (b) the market value of the related Mortgaged Property at such time, as determined by reference to a third-party Appraisal of such Mortgaged
Property. 


        "Management Agreement" shall mean that certain Interim Management Agreement, dated as of December 8, 2011, between Guarantor and
ACRE Management. 


        "Market Disruption Event" shall mean any event or events which, as determined by Lender, acting in a reasonable manner, shall have
resulted in (i) the effective absence of a "lending market" for financing debt obligations secured by commercial mortgage loans, (ii) Lender not being able to finance mortgage assets
through the "lending market" with traditional counterparties at rates which would have been reasonable prior to the occurrence of such event or events, (iii) the effective absence of a
"securities market" for securities backed by mortgage assets or (iv) Lender not being able to sell securities backed by mortgage assets at prices which would have been reasonable prior to the
occurrence of such event or events. 


        "Material Adverse Effect" shall mean a material adverse effect on (a) the Property, business, operations, financial condition or
prospects of Borrower or Guarantor, (b) the ability of Borrower or Guarantor to perform its obligations under any of the Loan Documents to which it is a party, (c) the validity or
enforceability of any of the Loan Documents, (d) the rights and remedies of Lender under any of the Loan Documents, (e) the timely payment of the principal of or interest on the Mortgage
Loans or other amounts payable in connection therewith or (f) the Collateral taken as a whole. 


        "Maximum Borrowing Amount" shall mean with respect to any individual Mortgage Loan, $25,000,000 (or, after the consummation of a Capital
Markets Event, $35,000,000). 


        "Maximum Credit" shall mean $50,000,000; provided, that upon the consummation of a
successful Public Capital Markets Event, the Maximum Credit shall equal $100,000,000. 



        "Minimum Debt Yield" shall mean 10.00% (or, commencing on and after the fifth anniversary of the Effective Date, 11.50%). 


        "Moody's" shall mean Moody's Investors Service, Inc. 


        "Mortgage" shall mean the mortgage, assignment of rents, security agreement and fixture filing, or deed of trust, assignment of rents,
security agreement and fixture filing, or similar instrument creating and evidencing a lien on real property and other property and rights incidental thereto. 



        "Mortgage Asset Report" shall have the meaning provided in Section 7.12 hereof. 


        "Mortgage File" shall have the meaning specified in the Custodial Agreement. 


9







 

        "Mortgage Loan" shall mean a first mortgage loan on one or more multi-family or commercial real estate properties which is originated by
Borrower and which first mortgage loan is evidenced by a Mortgage Note and secured by one or more Mortgages, and in respect of which a Loan is outstanding hereunder. 


        "Mortgage Loan Documents" shall mean with respect to any Mortgage Loan, those documents executed in connection with, evidencing or
governing such Mortgage Loan and the related Mortgaged Property and which are required to be delivered to Custodian under the Custodial Agreement. 



        "Mortgage Loan Event of Default" shall mean an "Event of Default" as such term is used and defined in the Mortgage Loan Documents for any
Mortgage Loan. 


        "Mortgage Loan File" shall have the meaning specified in the Custodial Agreement. 


        "Mortgage Loan Schedule" shall have the meaning specified in the Custodial Agreement. 



        "Mortgage Note" shall mean the original executed promissory note or other evidence of the debt of a mortgagor/borrower with respect to a
Mortgage Loan. 


        "Mortgaged Property" shall mean the real property (including all improvements, buildings, fixtures, building equipment and personal
property thereon and all additions, alterations and replacements made at any time with respect to the foregoing) and all other collateral securing repayment of the debt evidenced by a Mortgage Note. 


        "Mortgagee" shall mean the record holder of a Mortgage Note secured by a Mortgage. 


        "Mortgagor" shall mean the obligor on a Mortgage Note. 


        "Multiemployer Plan" shall mean a multiemployer plan defined as such in Section 3(37) of ERISA to which contributions have been or
are required to be made by Borrower or any ERISA Affiliate and that is covered by Title IV of ERISA. 


        "1934 Act" shall mean the Securities and Exchange Act of 1934, as amended. 



        "Non-Excluded Taxes" shall have the meaning provided in Section 2.10(a)
hereof. 


        "Non-U.S. Person" shall have the meaning provided in Section 2.10(b). 


        "Note" shall mean the promissory note provided for in Section 2.02(a) hereof for
Loans and any promissory note delivered in substitution or exchange therefor, in each case as the same shall be modified and supplemented and in effect from time to time. 



        "OFAC" shall have the meaning provided in Section 6.16. 


        "Payment Date" shall mean the second (2nd) day of each calendar month, or if such day is not a Business Day, the next
succeeding Business Day. 


        "PBGC" shall mean the Pension Benefit Parent Guarantee Corporation or any entity succeeding to any or all of its functions under ERISA. 



        "Person" shall mean any individual, corporation, company, voluntary association, partnership, joint venture, limited liability company,
trust, unincorporated association or government (or any agency, instrumentality or political subdivision thereof). 


        "Plan" shall mean an employee benefit or other plan established or maintained by Borrower or any ERISA Affiliate and covered by Title IV
of ERISA, other than a Multiemployer Plan. 


        "Pledge and Security Agreement" shall mean the Pledge and Security Agreement, dated as of the date hereof, between Lender and Pledgor, as
amended, modified, waived, supplemented, extended, restated or replaced from time to time. 


10







 

        "Pledged Collateral" shall have the meaning given to such term in the Pledge and Security Agreement. 



        "Pledgor" shall mean ACRC Lender LLC, a Delaware limited liability company, together with its successors and permitted assigns. 


        "Post-Default Rate" shall mean, in respect of any principal of any Loan or any other amount under this Loan Agreement, the
Note or any other Loan Document that is not paid when due to Lender (whether at stated maturity, by acceleration, by optional or mandatory prepayment or otherwise), a rate per annum during the period
from and including the due date to but excluding the date on which such amount is paid in full equal to the interest rate otherwise applicable hereunder plus 4%. 



        "Preliminary Data File" shall mean a data file containing the information referenced on  Exhibit C attached hereto. 


        "Principal Prepayment" shall mean, for any Mortgage Loan, (i) any amount applied to reduce the principal or other invested amount
of such Mortgage Loan, other than a Scheduled Principal Payment, including, without limitation, (i) principal prepayments from any source and of any nature whatsoever, (ii) net insurance
or net condemnation proceeds, to the extent applied to reduce the principal amount or other invested amount of the related Mortgage Loan, and (iii) any net proceeds from any sale, refinancing,
liquidation or other disposition of the underlying Mortgaged Property or underlying interest relating to such Mortgage Loan to the extent applied to reduce the principal amount or the invested amount
of the related Mortgage Loan. 


        "Private Capital Markets Event" shall mean the consummation of a private equity raise resulting in at least $200,000,000 of total gross
new contributed capital (inclusive of the asset manager's initial contribution) to the Substitute Guarantor. 


        "Prohibited Person" shall have the meaning provided in Section 6.16. 



        "Property" shall mean any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible
or intangible. 


        "Public Capital Markets Event" shall mean the consummation of a public offering resulting in at least $200,000,000 of total gross new
contributed capital (inclusive of the asset manager's initial contribution) to the Substitute Guarantor. 


        "Rate of Return Reduction Event" shall have the meaning provided in Section 2.08(b)
hereof. 


        "REC" shall have the meaning specified in Schedule 1 hereto. 


        "REMIC" shall mean a real estate mortgage investment conduit, within the meaning of Section 860D(a) of the Code. 


        "Reference Banks"    Banks each of which shall (a) be a leading bank in the international Eurocurrency market, and
(b) have an established place of business in London. Initially, the Reference Banks shall be JPMorgan Chase Bank, Barclays Bank, PLC and Deutsche Bank AG. If any such Reference Bank
should be unwilling or unable to act as such or if Lender shall terminate the appointment of any such Reference Bank or if any of the Reference Banks should be removed from the Reuters Monitor Money
Rates Service or in any other way fail to meet the qualifications of a Reference Bank, Lender may designate alternative banks meeting the criteria specified in the preceding clauses (a) and
(b). 


        "Registrar" shall have the meaning provided in Section 11.19 hereof. 


        "Regulations T, U and X" shall mean Regulations T, U and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be modified and supplemented and in effect from time to time. 


11









 



































 


        "Remaining Paydown Amount" shall have the meaning provided in Section 3.05(b)
hereof. 


        "Reportable Event" shall mean a reportable event as defined in Title IV of ERISA, except actions of general applicability by the Secretary
of Labor under Section 110 of ERISA. 


        "Request for Borrowing" shall have the meaning provided in Section 2.03(a) hereof. 



        "Requirement of Law" shall mean as to any Person, the certificate of incorporation and by-laws or other organizational or
Governing Documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon
such Person or any of its property or to which such Person or any of its property is subject. 


        "Responsible Officer" shall mean, with respect to any Person, the chief executive officer, the chief financial officer, the chief
accounting officer, the treasurer or the chief operating officer of such Person or such other officer designated as an authorized signatory in such Person's Governing Documents. 



        "S&P" shall mean Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. 


        "Scheduled Principal Payment" shall mean any payment of principal on a Mortgage Loan that is required, pursuant to the Mortgage Loan
Documents for such Mortgage Loan as modified by any
amendments thereto, to be made at a specific time or upon the happening of a specific event, other than a Balloon Payment. 


        "Second Extended Funding Period" shall have the meaning given to such term in the definition of "Funding Period." 



        "Secured Obligations" shall have the meaning provided in Section 4.01(c) hereof. 


        "Servicer" shall have the meaning provided in Section 11.15(c) hereof. 


        "Servicer Notice and Agreement" shall have the meaning provided in Section 11.15(c)
hereof. 


        "Servicer's Account" shall mean an account established by Servicer in connection with the servicing of any Mortgage Loan. 


        "Servicing Agreement" shall have the meaning provided in Section 7.07 hereof. 


        "Servicing Records" shall have the meaning provided in Section 11.15(b) hereof. 



        "Servicing Transfer Event" shall mean all of the following events shall have occurred: 



        (a)   the
Servicer no longer either (i) has a servicer rating of "Average" or higher from S&P, (ii) has a servicer rating of "CPS3" or higher from Fitch or
(iii) is on the list of approved servicers maintained by Moody's; 


        (b)   a
Capital Markets Event shall not have occurred as of the first anniversary of the Effective Date; and 



        (c)   with
respect to any individual Mortgage Loan, the Debt Yield has declined by 25% from the Debt Yield as of the initial Funding Date for such Mortgage Loan. 




        "Significant Mortgage Loan Modification" means any written modification or amendment of a Mortgage Loan pledged to Lender hereunder which 



          (i)  reduces
the principal amount of the Mortgage Loan in question other than (1) with respect to a dollar-for-dollar principal payment or
(2) reductions of principal to the extent of deferred, accrued or capitalized interest added to principal which additional amount was not taken into account by Lender in determining the related
Debt Yield, 



12







 

         (ii)  increases
the principal amount of a Mortgage Loan other than increases which are derived from accrual or capitalization of deferred interest which is added to principal
or protective advances, 


        (iii)  modifies
the amount or timing of any regularly scheduled payments of principal and non-contingent interest of the Mortgage Loan in question, 


        (iv)  changes
the frequency of scheduled payments of principal and interest in respect of a Mortgage Loan, 


         (v)  subordinates
the lien priority of the Mortgage Loan in question or the payment priority of the Mortgage Loan in question other than subordinations required under the
then existing terms and conditions of the Mortgage Loan in question (provided, however, the foregoing shall not preclude the execution and delivery of subordination, nondisturbance and attornment
agreements with tenants, subordination to tenant leases, easements, plats of subdivision and condominium declarations and similar instruments which in the commercially reasonable judgment of Borrower
do not materially adversely affect the rights and interest of the holder of the Mortgage Loan in question), 


        (vi)  releases
any collateral for the Mortgage Loan in question other than releases required under the then existing Mortgage Loan documents or releases in connection with
eminent domain or under threat of eminent domain, 


       (vii)  waives,
amends or modifies any cash management or reserve account requirements of the Mortgage Loan other than changes required under the then existing Mortgage Loan
Documents, or 


      (viii)  waives
any due-on-sale or due-on-encumbrance provisions of the Mortgage Loan in question other than waivers required
to be given under the then existing Mortgage Loan documents, or 


        (ix)  waives,
amends or modifies the underlying insurance requirements of the Mortgage Loan. 




        "Single Employer Plan" shall mean as to any Person any Plan of such Person which is not a Multiemployer Plan. 



        "Special Purpose Bankruptcy Remote Entity" shall have the meaning set forth on  Schedule 2 attached hereto. 


        "Subsidiary" shall mean, with respect to any Person, any corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such
corporation, partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other
entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such
Person or by such Person and one or more Subsidiaries of such Person. 


        "Substitute Guarantor" shall mean Ares Commercial Real Estate Corporation, a Maryland corporation, or such other real estate investment
vehicle that is substituted as the Guarantor under the Guaranty. 


        "System" shall mean all hardware or software, or any system consisting of one or more thereof, including, without limitation, any and all
enhancements, upgrades, customizations, modifications and the like utilized by any Person for the benefit of such Person to perform its obligations and to administer and track, store, process,
provide, and where appropriate, insert, true and accurate dates and calculations for dates and spans with respect to the Mortgage Loan. 


13







 

        "Table-Funded Eligible Loan" shall mean an Eligible Loan originated by Borrower and pledged to Lender simultaneously with the origination
thereof by Borrower, and which origination is financed in part with the proceeds of a Loan hereunder. 


        "Testing Date" shall have the meaning specified in Schedule 1 hereof. 


        "Title Escrow Letter" shall mean with respect to any Mortgage Loan, a letter agreement in such form as shall be reasonably acceptable to
Lender, executed by the title insurance company obligating it to issue title insurance insuring the lien of the Mortgage for such Mortgage Loan as reflected in an attached marked-up title
commitment and to record or file such Mortgage and other certain security instruments securing such Mortgage Loan and addressing the mechanics of funding of such Mortgage Loan. 


        "Title Exceptions" shall have the meaning specified in Schedule 1 hereof. 


        "Title Policy" shall have the meaning specified in Schedule 1 hereof. 


        "Trust Receipt" shall have the meaning assigned to such term in the Custodial Agreement. 



        "UCC Financing Statement" shall mean a financing statement on Form UCC-1 or the proper national UCC form, naming Lender as
"Secured Party" and Borrower as "Debtor" and describing the Mortgage Loans. 


        "Underwritten Net Cash Flow" shall mean, with respect to any Mortgage Loan, in place underwritten net cash flow from the Mortgaged
Property securing such Mortgage Loan, as determined by Lender in its sole discretion (a) in connection with the initial Funding Date on which an Eligible Loan is first pledged to Lender
hereunder, (b) in connection with any request from Borrower to Lender to fund a portion of any future advance which Borrower is contractually obligated to fund (or any reborrowing of a prior
initial advance or future advance which has been prepaid by Borrower), and (c) for purposes of clause (c) of the definition of "Servicing Transfer Event" and for purposes of the
application of Balloon Payments, Scheduled Principal Payments, Principal Prepayments and net sale proceeds in the event of a sale of a Mortgage Loan made pursuant to  Section 3.05(b) of this Loan
Agreement, in each case subject to adjustments for, but not limited to, (i) a vacancy allowance,
(ii) projected increases in expenses, (iii) mark-to-market of in place rents and exclusion of non-sustainable income, (iv) market management
fees and (v) normalized reserves. 


        "Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect on the date hereof in the State of New York;  provided that if by reason of mandatory
provisions of law, the perfection or
the effect of perfection or non-perfection of the security interest or the renewal or enforcement thereof in any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, "Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes
of the provisions hereof relating to such perfection or effect of perfection or non-perfection. 



        "Utilization Fee" shall mean an amount equal to the product of (x) 0.25% multiplied by (y) the daily average of an amount
equal to the Maximum Credit minus the aggregate outstanding principal amount of the Loans for each day during the Collection Periods (or portion thereof) for which the Utilization Fee is payable
multiplied by (z) the number of days in the Collection Periods (or portion thereof) for which the Utilization Fee is payable divided by 365. 


        1.02    Accounting Terms and Determinations.    Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to Lender hereunder shall be prepared, in accordance with
GAAP. 


14







 

        Section 2.    Loans; Note; Funding Account; and Prepayments.    



        2.01    Loans.    (a) On the terms and subject to the conditions of this Loan Agreement, Lender agrees to make loans
(individually, a "Loan" and, collectively, the "Loans") to Borrower in Dollars on any Business Day, from
and including the Effective Date to and including the end of the Funding Period in an aggregate principal amount at any one time outstanding up to but not exceeding the Maximum Credit. This Loan
Agreement is not a commitment to lend but rather sets forth the procedures to be used in connection with periodic requests for Loans. Borrower hereby acknowledges that Lender is under no obligation to
agree to make, or to make, any Loan pursuant to this Loan Agreement. 



        (b)   Subject
to the terms and conditions of this Loan Agreement, during the Funding Period, Borrower may borrow, repay and reborrow Loans, in full or in part, without
penalty. 


        (c)   In
no event shall a Loan be made when any Default or Event of Default has occurred and is continuing. 




        2.02    Notes.    (a) The Loans made by Lender shall be evidenced by a single promissory note of Borrower
substantially in the form of Exhibit A hereto (the "Note"), dated the date hereof, payable to
Lender in a principal amount equal to the amount of the Maximum Credit as originally in effect and otherwise duly completed. Lender shall have the right to have its Note subdivided, by exchange for
promissory notes of lesser denominations or otherwise. 



        (b)   The
date, amount and Interest Rate of each Loan made by Lender to Borrower, and each payment made on account of the principal thereof, shall be recorded by Lender on its
books and, prior to any transfer of the Note, endorsed by Lender on the schedule attached to the Note or any continuation thereof; provided, that the
failure of Lender to make any such recordation or endorsement shall not affect the obligations of Borrower to make a payment when due of any amount owing hereunder or under the Note in respect of the
Loans. 




        2.03    Funding Mechanics.    (a) Borrower may request a borrowing hereunder, on any Business Day during the Funding
Period, by delivering to Lender a written request for borrowing, substantially in the form of Exhibit F hereto (a
"Request for Borrowing"). Each Request for Borrowing shall: 




          (i)  relate
to the funding of a Mortgage Loan to be pledged (or previously pledged) hereunder at the time of the making of the Loan that is the subject of such Request for
Borrowing (including any future advances of such Mortgage Loan), 


         (ii)  in
the case of the initial advance of a Mortgage Loan, (A) be accompanied by a Complete Submission, and (B) attach a schedule identifying the Eligible
Loan that Borrower proposes to fund and to pledge to Lender in connection with such borrowing substantially in the form of Annex 1 to  Exhibit G,




        (iii)  specify
the requested Funding Date and the amount requested to be borrowed, 


        (iv)  specify
any subsequent advances which may be required, 


         (v)  attach
an officer's certificate signed by a Responsible Officer of Borrower as required by Section 5.02(i) hereof, 


        (vi)  indicate
whether Borrower desires such Loan to be a Table Funded Eligible Loan, which table funding shall be subject to Lender's prior approval in Lender's sole
discretion, and 


       (vii)  contain
(by attachment) such other information reasonably requested by Lender from time to time. 




Lender
may from time to time waive certain requirements of a Complete Submission in its sole and absolute discretion if, at the time of the submission thereof, certain documents called for as 



15







 

part
of such Complete Submission are then unavailable; provided that Borrower shall use its best efforts to provide such documents as soon as they
become available. 


        (b)   Solely
with respect to an initial advance for a Mortgage Loan, following receipt of a Request for Borrowing and a Complete Submission, Lender shall inform Borrower in
its sole discretion of its election to proceed with a Loan hereunder by delivering to Borrower a funding confirmation, substantially in the form of  Exhibit G hereto (a "Funding Confirmation"), as follows. Within ten (10) Business Days
following receipt of a Complete Submission (and any other materials reasonably requested by Lender relating to a proposed funding in connection with Lender conducting its own due diligence
investigation of the Mortgage Loan proposed to be funded by Lender), Lender shall conduct its diligence review and notify Borrower in such Funding Confirmation as to whether it approves of such
Mortgage Loan (including in the case of a request for a Table Funded Eligible Loan, whether it approves of same) and its Schedule of Exceptions to Representations and Warranties. If, with respect to
any Mortgage Loan, Lender does not respond to Borrower within the time frames specified in the preceding sentence, Lender shall be deemed to have elected not to make a Loan secured by such Mortgage
Loan. 


        (c)   Following
receipt of a Funding Confirmation from Lender pursuant to Section 2.03(b), Borrower shall, not later
than 12:00 noon New York City time on the Business Day prior to the requested Funding Date, (i) in the case of a Table Funded Eligible Loan, deliver the Title Escrow Letter with respect thereto
to Custodian, with a copy to Lender, as provided in the Custodial Agreement, and (ii) deliver the Closing Counsel Letter to Lender. Following Lender's receipt of the Title Escrow Letter (if
applicable) and Closing Counsel Letter, and Lender's final determination that the Mortgage Loan is an Eligible Loan, subject to Section 5 hereof,
Lender shall transfer funds pursuant to the wiring instructions Borrower delivers to Lender or in the case of a Table Funded Eligible Loan, set forth in the Title Escrow Letter to partially fund the
applicable Mortgage Loan in an amount determined in accordance with Section 2.03(d) below, which transfer shall constitute the making of a Loan
hereunder in the amount so transferred. Pursuant to the Title Escrow Letter, the title insurance company party thereto shall return to Lender the funds so advanced if Borrower fails to advance its
portion of such Mortgage Loan on such Funding Date. A Title Escrow Letter shall not be required for Mortgage Loans which have been previously disbursed by Borrower. 



        (d)   The
amount of the initial advance with respect to any Mortgage Loan shall be an amount up to the least of (i) 70% of such Mortgage Loan's aggregate initial
principal amount or (ii) 56% of the value of the related Mortgaged Property as set forth in an Appraisal delivered to Lender or (iii) the amount that would cause the Debt Yield
calculated with respect to all of the Mortgage Loans to be less than the Minimum Debt Yield. 


        (e)   With
respect to any Mortgage Loan where Lender has funded the initial advance as provided for herein, following receipt of a Request for Borrowing, which shall be
delivered by Borrower no less than three (3) Business Days prior to the proposed Funding Date, and of
all items required to be delivered to Lender pursuant to this Loan Agreement (including, without limitation Section 5.02), Lender shall fund a
portion of any future advance which Borrower shall be contractually obligated to fund under the related Mortgage Loan Documents in an amount equal to the product of (x) the amount of such
future advance multiplied by (y) the percentage equal to the quotient of the Loan made by Lender in connection with the initial advance divided by the aggregate initial funded amount of such
Mortgage Loan, subject in each case to satisfaction of the following conditions precedent: 



          (i)  the
aggregate amount of Loans made by Lender with respect to any Mortgage Loan shall not exceed 70% of the outstanding principal balance of such Mortgage Loan and with
respect to all of the Mortgage Loans shall not be less than the Minimum Debt Yield, 




16







 


         (ii)  Lender
shall not have any obligation to fund such future advance unless the Debt Yield with respect to such Mortgage Loan as of the date of the future advance is
greater than the Debt Yield as of the date of the initial advance of such Mortgage Loan by 1.00% (or, solely with respect to Mortgage Loans that had a Debt Yield equal to or greater than 7.00% on the
date of the initial advance, by 0.75%), 


        (iii)  Borrower
shall not receive a Funding Date for future advances with respect to each Mortgage Loan more than one time during each calendar month or during the final
twelve months of the term of any Mortgage Loan, 


        (iv)  the
amount of each Loan for a future advance with respect to each Mortgage Loan shall be in an amount not less than $250,000, and 



         (v)  Borrower
shall have delivered to Lender evidence reasonably satisfactory to Lender that the underlying Mortgagor with respect to the applicable Mortgage Loan shall have
delivered all items
required to be delivered as conditions precedent to the making of such future advance and shall have given Lender a period of time reasonably satisfactory to Lender within which to review such items. 




        (f)    Notwithstanding
anything herein to the contrary, the aggregate amount of Loans with respect to any individual Mortgage Loan (inclusive of the initial advance and all
future advances) shall not exceed the Maximum Borrowing Amount. 



        (g)   On
the Business Day that Custodian receives the complete Mortgage Loan Documents, Custodian will notify Lender of its receipt of such Mortgage Loan Documents and deliver
to Lender a Trust Receipt, with a copy to Borrower. Borrower shall cause the Closing Counsel to deliver the Mortgage Loan Documents with respect to each Mortgage Loan within three (3) Business
Days following the Funding Date of the initial advance to the Custodian and shall deliver the Complete Submission with respect to such Mortgage Loan to Lender. 


        (h)   Notwithstanding
any other provision hereunder, the fact that Lender has conducted or has failed to conduct any partial or complete examination or any other due diligence
review of any Mortgage Loan shall in no way affect any rights Lender may have hereunder or otherwise with respect to any representations or warranties or other rights hereunder, including without
limitation, the right to determine at any time that such Mortgage Loan is the subject of an Eligibility Breach. 




        2.04    Repayment of Loans; Interest.    (a) Subject to Section 2.05(b), with respect to each Mortgage Loan,
Borrower hereby promises to repay in full on or prior to the Final Repayment Date the then aggregate outstanding principal amount of the Loans with respect to such Mortgage Loan. 



        (b)   Borrower
hereby promises to pay to Lender on each Payment Date until the date such Loan shall be paid in full interest on the unpaid principal amount of each Loan for
the period from and including the date of such Loan to but excluding the date such Loan shall be paid in full, at a rate per annum equal to the Interest Rate. Notwithstanding the foregoing, upon the
occurrence and during the continuance of an Event of Default hereunder, Borrower shall be required to pay to Lender interest at the Post-Default Rate on the outstanding principal amount of
each Loan and on any other amount payable by Borrower hereunder or under the Note that shall not be paid in full when due (whether at stated maturity, by acceleration or by mandatory prepayment or
otherwise) for the period from and including the due date thereof to but excluding the date the same is paid in full. Accrued interest on each Loan shall be payable monthly on each Payment Date and on
the Final Repayment Date. Notwithstanding the foregoing, interest accruing at the Post-Default Rate shall be payable to Lender on demand. Promptly after the determination of any Interest
Rate provided for herein or any change therein, Lender shall give notice thereof to Borrower. 



17









 



































 


        2.05    Mandatory Prepayment.    (a) If Borrower shall have made any representations and warranties set forth in  Schedule 1
without actual knowledge that they were materially false or misleading at the time made, and any such representations and warranties
shall have been determined by Lender in its reasonable discretion to be materially false or misleading with respect to a Mortgage Loan pledged hereunder (an "Eligibility
Breach"), Borrower shall within five (5) Business Days after notice of such determination from Lender prepay the principal amount of the Loans in an amount equal to the
amount advanced hereunder with respect to such Mortgage Loan, together with all interest thereon and fees and expenses accruing with respect thereto. 



        (b)   By
not later than sixty (60) days after the occurrence of a Mortgage Loan Event of Default (including, without limitation, a maturity default), Borrower shall
prepay the principal amount of the Loans in an amount equal to the amount advanced hereunder with respect to such Mortgage Loan, together with all interest thereon and fees and expenses accruing with
respect thereto. 


        (c)   If
at any time the Debt Yield calculated with respect to all of the Mortgage Loans is less than the Minimum Debt Yield, then Borrower shall within five
(5) Business Days after notice of such determination from Lender prepay the principal amount of the Loans in the amount necessary to cause the Debt Yield calculated with respect to all of the
Mortgage Loans to be equal to or greater than the Minimum Debt Yield. 




        2.06    Optional Prepayments; Releases of Collateral.    (a) Borrower may prepay the Loans, in whole or in part, on
any Payment Date without premium or penalty. If Borrower shall prepay any Loans on any day other than a Payment Date, Borrower shall be responsible for all breakage costs pursuant to  Section 2.06(b). Any amounts prepaid shall be applied to repay the outstanding principal amount of any Loans (together with interest thereon) so
designated by Borrower until paid in full. Amounts repaid may be reborrowed in accordance with the terms of this Loan Agreement. If Borrower intends to prepay a Loan in whole or in part from any
source, Borrower shall give at least two (2) Business Days' prior written notice thereof to Lender, specifying the date and amount of prepayment. If such notice is given, the amount specified
in such notice shall be due and payable on the date specified therein,
together with accrued interest to such date on the amount prepaid. Partial prepayments shall be in an aggregate principal amount of at least $100,000 or the outstanding balance of the designated
Mortgage Loan(s), if less. 



        (b)   If
Borrower makes a prepayment of any Loans on any day which is not a Payment Date, Borrower shall be required to pay Lender LIBOR breakage fees (but specifically
excluding lost profits, consequential and punitive damages) equal to the amount of interest on the amount being prepaid at the applicable interest rate payable by Lender on deposits from which such
funds were obtained for the period from the date of such payment through the following Payment Date less the amount of interest realized by Lender in
redeploying the funds not utilized by reason of such payment for such period. Lender shall, at the request of Borrower, notify Borrower of the amounts of costs to be paid by Borrower if a Loan is
prepaid. This Section 2.06 shall survive termination of this Loan Agreement and payment of the Note. 




        2.07    Limitation on Types of Advances; Illegality.    Anything herein to the contrary notwithstanding, if, on or
prior to the determination of LIBOR for any Interest Period: 



        (a)   Lender
determines in good faith, which determination shall be conclusive and binding upon Borrower, absent manifest error, that quotations of interest rates for the
relevant deposits referred to in the definition of "LIBOR" in Section 1.01 hereof are not being provided in the relevant amounts or for the
relevant maturities for purposes of determining rates of interest for Loans as provided herein; or 



18







 

        (b)   it
becomes unlawful for Lender to honor its obligation to make or maintain Loans hereunder using LIBOR, and Lender has determined in its sole good faith discretion that
it is unable to assign its rights and obligations hereunder to an Affiliate reasonably acceptable to Borrower to avoid any such restrictions or prohibitions; 



then
Lender shall give Borrower prompt notice thereof and, if the parties cannot agree on a substitute interest rate within fifteen (15) days of the commencement of such condition,
(i) Lender shall be under no obligation to make additional Loans, and Borrower shall, at its option, either prepay all such Loans as may be outstanding (and Borrower shall not be liable for any
LIBOR breakage fees associated therewith) or pay interest on such Loans at a rate per annum as reasonably determined by Lender taking into account the increased cost to Lender. 




        2.08    Requirements of Law.    



        (a)   If
any Requirement of Law or any change in the interpretation or application thereof or compliance by Lender with any request or directive (whether or not having the
force of law) from any central bank or other Governmental Authority made subsequent to the date hereof: 



          (i)  shall
subject Lender to any tax of any kind whatsoever with respect to this Loan Agreement, the Note or any Loan made by it (excluding net income taxes or any changes
in the rate of tax on Lender's overall net income) or change the basis of taxation of payments to Lender in respect thereof; 



         (ii)  shall
impose, modify or hold applicable any reserve, special deposit, compulsory Loan or similar requirement against assets held by, deposits or other liabilities in or
for the account of, advances, Loans or other extensions of credit by, or any other acquisition of funds by, any office of Lender which is not otherwise included in the determination of the LIBOR
hereunder; 


        (iii)  shall
impose on Lender any other condition; 





and
the result of any of the foregoing is to increase the cost to Lender, by an amount which Lender deems to be material, of making or maintaining any Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, Borrower shall, upon receipt of prior written notice of such fact and a reasonably detailed description of the circumstances, and in accordance
with Section 2.08(c), either (i) prepay all such Loans as may be outstanding (and Borrower shall not be liable for any LIBOR breakage fees
associated therewith) or (ii) pay Lender such additional amount or amounts as will compensate Lender for such increased cost or reduced amount receivable,  provided Lender will not treat Borrower
differently from similarly situated customers in requiring the payment of such amount or amounts. 



        (b)   If
Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof
or compliance by Lender or any corporation controlling Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made
subsequent to the date hereof shall have the effect of reducing the rate of return on Lender's or such corporation's capital as a consequence of its obligations hereunder by an amount deemed by Lender
to be material (taking into consideration Lender's or such corporation's policies with respect to capital adequacy) (a "Rate of Return Reduction
Event"), then from time to time, Borrower shall in accordance with Section 2.08(c) pay to Lender such additional amount
or amounts as will compensate Lender for such reduction, provided Lender will not treat Borrower differently from similarly situated customers in
requiring the payment of such amount or amounts. Borrower's obligation to pay such additional amounts shall terminate if the Rate of Return Reduction Event precipitating such obligation shall no
longer have the effect of reducing the rate of return on Lender's or such corporation's capital as a consequence of its obligations hereunder 



19







 

by
an amount deemed by Lender to be material (taking into consideration Lender's or such corporation's policies with respect to capital adequacy). 


        (c)   If
Lender becomes entitled to claim any additional amounts pursuant to this subsection, it shall promptly notify Borrower of the event by reason of which it has become
so entitled. A certificate as to any additional amounts payable pursuant to this subsection submitted by Lender to Borrower shall be conclusive in the absence of manifest error. All payments required
under this Section 2.08 shall be made by Borrower within ten (10) Business Days after notice thereof from Lender to Borrower. 




        2.09    Purpose of Advances.    Each Advance shall be used to originate and fund Eligible Loans identified to Lender
in a Request for Borrowing delivered in accordance with Section 2.03. 


        2.10    Taxes.    



        (a)   All
payments made by Borrower under this Loan Agreement and the Note shall be made free and clear of, and without deduction or withholding for or on account of, any
present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on Lender as a result of a present or former connection between Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from Lender having
executed, delivered or performed its obligations or received a payment under, or enforced, this Loan Agreement or any Note). If any such non-excluded taxes, levies, imposts, duties,
charges, fees deductions or withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts payable to Lender hereunder or
under the Note, the amounts so payable to Lender shall be increased to the extent necessary to yield to Lender (after payment of all Non-Excluded Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Loan Agreement; provided, however,
that Borrower shall not be required to increase any such amounts payable to Lender that is not organized under the laws of the United States of America or a state thereof if Lender fails to comply
with the requirements of clause (b) of this Section. Whenever any Non-Excluded Taxes are payable by Borrower, as promptly as reasonably possible thereafter Borrower shall send to
Lender, as the case may be, a certified copy of an original official receipt received by Borrower showing payment thereof. If Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fail to remit to
Lender the required receipts or other required documentary evidence, Borrower shall indemnify Lender for any incremental taxes, interest or penalties that are paid or that may become payable by Lender
as a result of any such failure. The agreements in this Section shall survive the termination of this Loan Agreement and the payment of the Loans and all other amounts payable hereunder. 



        (b)   If
a Person acquires the rights and obligations of a Lender under this Loan Agreement and the other Loan Documents pursuant to  Section 11.13(a) hereof or becomes a Participant as permitted hereunder,
and such Person is not organized under the laws of the United States,
any state thereof or the District of Columbia (a "Non-U.S. Person"), such Non-U.S. Person shall deliver to Borrower, or any
agent thereof, on or before the date on which such Person becomes a party to this Agreement or becomes such a Participant, two duly completed and executed copies of, as applicable, IRS
Form W-8BEN or IRS Form W-8ECI or any successor forms thereto designated as such by the IRS. Notwithstanding anything to the contrary in the preceding sentence,
the completion, execution and submission of such documentation shall not be required if in Lender's reasonable judgment such action would subject such Lender to any material unreimbursed cost or would
materially prejudice the legal or commercial position of such Lender. If the Non-U.S. Person is eligible for and wishes to claim exemption from or reduction in U.S. federal withholding 



20







 

tax
through benefit of a treaty, such Person shall deliver a Form W-8ECI. If the Non-U.S. Person is eligible for and wishes to claim exemption from U.S. federal
withholding tax under Section 871(h) or Section 881(c) of the Code with respect to payments of "portfolio interest," such Person shall deliver both the Form W-8BEN and
a statement certifying that such Person is not a bank, a "10 percent shareholder" or a "controlled foreign corporation" within the meaning of Section 881(c)(3) of the Code. If any
previously delivered form or statement becomes inaccurate with respect to the Non-U.S. Person that delivered it, the Non-U.S. Person shall promptly notify Borrower of this
fact. 




        2.11    Fees.    



        (a)   Borrower
shall pay those certain fees required to be paid pursuant to and in accordance with the Fee Letter. 


        (b)   On
the Payment Date occurring in each of April, July, October and January, Borrower shall pay to Lender the Utilization Fee with respect to the three Collection Periods
of the immediately preceding calendar quarter; provided, that no Utilization Fee shall accrue or be due and payable with respect to the initial three
months following the Effective Date (i.e., such fee shall be initially due and payable on the April 2012 Payment Date with respect to the period
commencing on March 2, 2012) or with respect to any period after the expiration of the Funding Period. 


        (c)   Borrower
shall pay to Lender the Extension Fee (i) on the last day of the Extended Funding Period (in the event Borrower desires to further extend the Funding
Period to the Second Extended Funding Period) and (ii) on each anniversary of such date thereafter until the Loans have been repaid in full and the Loan Agreement has been terminated. 




        Section 3.    Payments; Computations; Etc.    


        3.01    Payments.    (a) Except to the extent otherwise provided herein, all payments of principal, interest and other
amounts to be made by Borrower under this Loan Agreement and the Note, shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, to Lender at
the following account maintained by Lender: Account No. 40784524, for the account of Lender, Account Title: SSB, ABA No. 021000089, Ref: ARES, not later than 2:00 p.m., New York
City time, on the date on which such payment shall become due (and each such payment made after such time on such due date shall be deemed to have been made on the next succeeding Business Day).
Borrower acknowledges that it has no rights of withdrawal from the foregoing account. 



        (b)   Except
to the extent otherwise expressly provided herein, if the due date of any payment under this Loan Agreement or the Note would otherwise fall on a day that is not
a Business Day, such date shall be extended to the next succeeding Business Day, and interest shall be payable for any principal so extended for the period of such extension. 




        3.02    Computations.    Interest on the Loans shall be computed on the basis of a 360-day year for the
actual days elapsed (including the first day but excluding the last day) occurring in the period for which payable. 


        3.03    Establishment of Lender's Account.    The Lender's Account shall be established by Borrower subject to the
Controlled Account Agreement concurrently with or prior to the execution and delivery of this Loan Agreement. 



        3.04    Deposits into Lender's Account.    Pursuant to the Servicing Agreement, Borrower shall cause all Income in
respect of each Mortgage Loan to be collected by the Servicer and paid directly to the Servicer's Account. Any Income in respect of any Mortgage Loan paid directly to Borrower, shall be
deposited by Borrower into the Servicer's Account within two (2) Business Days of receipt. All such Income shall be held in trust for Lender and shall constitute the property of Lender.
Borrower 


21







 

covenants
and agrees that no payments shall be made by any obligor to Servicer (except as specifically permitted by the terms of the Servicing Agreement in respect of certain fees and other amounts to
which Servicer may be entitled), and if any such payment is made, Borrower shall cause Servicer to deposit such payment into the Servicer's Account within two (2) Business Days of receipt and,
pending such deposit, shall cause the Servicer to hold such amount in trust for Lender. Borrower shall cause Servicer to process any payments received in the Servicer's Account with respect to the
Mortgage Loans and to remit such payments to the Lender's Account. So long as an Event of Default has not occurred and is not continuing, any Income received on the Mortgage Loans (other than
Scheduled Principal Payments, Balloon Payments, Principal Prepayments and net sale proceeds of a sale of a Mortgage Loan) and transferred to Lender's Account as required hereunder shall be remitted
from the Lender's Account to an account designated in writing by Borrower on a daily basis. Notwithstanding the foregoing, upon the occurrence of an Event of Default or a Servicing Transfer Event,
Lender may send to each Mortgagor an Irrevocable Redirection Notice pursuant to which Borrower shall cause all Income in respect of each Mortgage Loan to be paid by the underlying Mortgagor directly
to the Lender's Account. The Lender's Account shall be under the sole dominion and control of the Lender and prior to an Event of Default, Borrower shall have rights of withdrawal therefrom subject to
the terms hereof and the Controlled Account Agreement. 


        3.05    Application of Balloon Payments, Scheduled Principal Payments, Principal Prepayments and Net Sale
Proceeds.    



        (a)   Subject
to Section 3.06, prior to the consummation of a Capital Markets Event (and after the consummation of a
Capital Markets Event, solely with respect to any Mortgage Loan as to which a Mortgage Loan Event of Default has occurred and is continuing), Lender shall apply the entire amount of Balloon Payments,
Scheduled Principal Payments, Principal Prepayments and net sale proceeds from the sale of a Mortgage Loan received in the Lender's Account during each Collection Period to repay on the related
Payment Date the outstanding principal amount of Loans made with respect to the related Mortgage Loan until such principal amount of such Loans has been reduced to zero. So long as a Default or an
Event of Default has not occurred and is not continuing, any Balloon Payments, Scheduled Principal Payments, Principal Prepayments and net sale proceeds from the sale of a Mortgage Loan received
during each Collection Period in excess of such outstanding principal amount of Loans shall be remitted to Borrower within one (1) Business Day. 


        (b)   Subject
to Section 3.06, after the consummation of a Capital Markets Event, except as otherwise provided in  Section 3.05(a) above, Lender shall apply the
entire amount of Balloon Payments, Scheduled Principal Payments, Principal Prepayments and net sale
proceeds from the sale of a Mortgage Loan received during each Collection Period to repay on the related Payment Date the outstanding principal
amount of Loans made with respect to the related Mortgage Loan until the Debt Yield (calculated for this purpose with reference to such Mortgage Loan and such outstanding principal amount of Loans
made with respect to such Mortgage Loan) is equal to the greater of (i) the original Debt Yield (calculated for this purpose with reference to such Mortgage Loan and such principal amount of
the Loan made on the initial Funding Date with respect to such Mortgage Loan) and (ii) 12.00%. Upon satisfaction of the Debt Yield requirement referred to in the preceding sentence, Lender
shall apply the remaining amount of such Balloon Payments, Scheduled Principal Payments, Principal Prepayments and net sale proceeds (such amount, the "Remaining Paydown
Amount") to repay the outstanding principal amount of the Loans made with respect to the related Mortgage Loan in an amount equal to (x) the Remaining Paydown Amount
multiplied by (y) the percentage equal to the quotient of the Loan made by Lender in connection with the initial advance with respect to such Mortgage Loan divided by the aggregate initial
funded amount of such Mortgage Loan until such principal amount of such Loans has been reduced to zero. So long as a Default or an Event of Default has not occurred and is not continuing, the 



22







 

excess
of such Remaining Paydown Amount after making the distribution described in the immediately preceding sentence shall be remitted to Borrower within one (1) Business Day. 




        3.06    Distributions Subsequent to a Default or Event of Default.    If a Default shall have occurred and is
continuing, Lender shall hold in the Lender's Account the entire amount of Balloon Payments, Scheduled Principal Payments, Principal Prepayments and net sale proceeds from the sale of a Mortgage Loan
until the earlier of the cure of the event that caused such Default or the occurrence of an Event of Default following which time such amount shall be applied in accordance with Sections 3.05
and 3.06. Upon the occurrence and during the continuation of an Event of Default, funds deposited in the Lender's Account, shall be held therein until the next Payment Date. On such Payment Date,
Lender shall withdraw any funds on deposit in the Lender's Account and apply such funds as follows: 



        (a)   first, to Lender in payment of any accrued and unpaid interest on the Loans and any fees then payable to Lender,
including the fees of any replacement Servicer retained by Lender, as notified by Lender to Borrower; 


        (b)   second, to the payment of all other costs and fees payable to Lender pursuant to this Loan Agreement; 



        (c)   third, any remaining amounts shall be applied to reduce unpaid principal amount of the Loans and any other obligations
owing to Lender hereunder in such manner, order or priority as Lender shall determine in its sole discretion, until such principal and other obligations shall have been paid in full; and 


        (d)   fourth, to pay the surplus, if any, to whoever may be lawfully entitled to receive such surplus. 




        Section 4.    Collateral Security.    



        4.01    Collateral; Security Interest.    (a) Pursuant to the Custodial Agreement, Custodian shall hold the
Mortgage Loan Documents as exclusive bailee and agent for the benefit of Lender pursuant to the terms of the Custodial Agreement and shall deliver to Lender Trust Receipts (as defined in the Custodial
Agreement) each to the effect that it has reviewed such Mortgage Loan Documents in the manner and to the extent required by the Custodial Agreement and identifying any deficiencies in such Mortgage
Loan Documents as so reviewed. 



        (b)   All
of Borrower's right, title and interest in, to and under each of the following items of property, whether now owned or hereafter acquired, now existing or hereafter
created and wherever located, is hereinafter referred to as the "Collateral": 



          (i)  each
Mortgage Loan; 


         (ii)  all
Mortgage Loan Documents, including without limitation all promissory notes, and all Servicing Records, Servicing Agreements and any other collateral pledged or
otherwise relating to such Mortgage Loan, together with all files, documents, instruments, surveys, certificates, correspondence, appraisals, computer programs, computer storage media, accounting
records and other books and records relating thereto; 


        (iii)  all
mortgage guaranties and insurance (issued by governmental agencies or otherwise) and any mortgage insurance certificate or other document evidencing such mortgage
guaranties or insurance relating to all Mortgage Loan and all claims and payments thereunder; 


        (iv)  all
other insurance policies and insurance proceeds relating to any Mortgage Loan or the related Mortgaged Property; 




23







 


         (v)  all
Interest Rate Protection Agreements, relating to or constituting any and all of the foregoing; 


        (vi)  the
Lender's Account and all monies from time to time on deposit in the Lender's Account; 


       (vii)  any
and all "securities accounts", as defined in the Uniform Commercial Code, relating to any of the foregoing and each "financial asset", as defined in the Uniform
Commercial Code, contained therein, including, without limitation, any accounts described in Section 3.03; 


      (viii)  all
collateral, however defined, under any other agreement between Borrower on the one hand and Lender or any of its Affiliates on the other hand; 


        (ix)  all
"general intangibles", "accounts," "instruments", "investment property", "deposit accounts" and "chattel paper" as defined in the Uniform Commercial Code relating
to or constituting any and all of the foregoing; and 


         (x)  any
and all replacements, substitutions, distributions on or proceeds of any and all of the foregoing. 




        (c)   Borrower
hereby assigns, pledges and grants a security interest in all of its right, title and interest in, to and under the Collateral to Lender, whether now owned or
hereafter acquired, now existing or hereafter created and wherever located, to secure the repayment of principal of and interest on all Loans and all other amounts owing to Lender hereunder, under the
Note and under the other Loan Documents and all other amounts owing by such Borrower to Lender (collectively, the "Secured Obligations"). Borrower
agrees to mark its computer records and tapes to evidence the interests granted to Lender hereunder. 


        (d)   Lender
acknowledges and agrees that, notwithstanding anything to the contrary contained herein, (i) the rights of Borrower as holder of the Collateral are subject
to the terms of the Mortgage Loan Documents; (ii) Lender's interest in the Collateral is subject to the terms of the Mortgage Loan Documents; (iii) unless an Event of Default shall have
occurred and be continuing, Lender shall permit Borrower to exercise any and all voting, consent or other rights with respect to the Collateral; and (iv) upon completion of any foreclosure of
the Collateral, Lender, its designee or transferee will assume all of the obligations of the holders of the applicable Mortgage Loan from and after such foreclosure. 




        4.02    Further Documentation.    At any time and from time to time, upon the written request of Lender, and at the
sole expense of Borrower, Borrower will promptly and duly execute and deliver, or will promptly cause to be executed and delivered, such further instruments and documents and take such further action
as Lender may reasonably request for the purpose of obtaining or preserving the full benefits of this Loan Agreement and of the rights and powers herein granted, including, without limitation, the
filing of any financing or continuation statements under the Uniform Commercial Code in effect in any jurisdiction with respect to the Liens created hereby. Borrower also hereby authorizes Lender to
file any such financing or continuation statement without the signature of Borrower to the extent permitted by applicable law. Borrower hereby authorizes Lender and its counsel to file Uniform
Commercial Code financing statements in form and substance satisfactory to Lender describing as the collateral covered thereby "all assets of the debtor, whether now owned or existing or hereafter
acquired or arising and all proceeds and products thereof" or words to that effect, and any limitations on such collateral description, notwithstanding that such collateral description may be broader
in scope than the Collateral described herein. 


24









 



































 


        4.03    Changes in Locations, Name, Etc.    Borrower shall not (i) change the location of its chief executive
office/chief place of business from that specified in Section 6.08 hereof, (ii) change its name, identity or corporate structure (or the
equivalent) or change the location where it maintains its records with respect to the Collateral or (iii) reincorporate or reorganize under the laws of another jurisdiction unless it shall have
given Lender at least 30 days prior written notice thereof and shall have delivered to Lender all Uniform Commercial Code financing statements and amendments thereto as Lender shall reasonably
request and taken all other actions deemed reasonably necessary by Lender to continue its perfected status in the Collateral with the same or better priority. Borrower's organizational identification
number is 5044234. Borrower shall promptly notify Lender of any change in such organizational identification number. 


        4.04    Lender's Appointment as Attorney-in-Fact.    (a) Borrower hereby irrevocably
constitutes and appoints Lender and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of Borrower and in the name of Borrower or in its own name, from time to time following the occurrence and during the continuance of an Event of Default to take any
and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Loan Agreement, and, without limiting the
generality of the foregoing, Borrower hereby gives Lender the power and right, on behalf of Borrower, without assent by, but with notice to, Borrower, if an Event of Default shall have occurred and be
continuing, to do the following: 



          (i)  in
the name of Borrower or its own name, or otherwise, to take possession of and endorse and collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any mortgage insurance or payable on or on account of any other Collateral and to file any claim or to take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by Lender for the purpose of collecting any and all such moneys due under any such mortgage insurance or with respect to any other Collateral whenever payable; 


         (ii)  to
pay or discharge taxes and Liens levied or placed on or threatened against the Collateral; and 


        (iii)  (A)
to direct any party liable for any payment under any Collateral to make payment of any and all moneys due or to become due thereunder directly to Lender or as
Lender shall direct; (B) to ask or demand for, collect, receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or
arising out of any Collateral; (C) to sign and endorse any invoices, assignments, verifications, notices and other documents in connection with any of the Collateral; (D) to commence and
prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action or proceeding brought against Borrower with respect to any Collateral; (F) to settle, compromise or adjust any suit, action or proceeding
described in clause (E) above and, in connection therewith, to give such discharges or releases as Lender may deem appropriate; and (G) generally, to sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though Lender were the absolute owner thereof for all purposes, and to do, at Lender's option and
Borrower's expense, at any time, and from time to time, all acts and things which Lender deems reasonably necessary to protect, preserve or realize upon the Collateral and Lender's Liens thereon and
to effect the intent of this Loan Agreement, all as fully and effectively as Borrower might do. 


Borrower
hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable until the
Secured Obligations shall have been irrevocably paid in full. 



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        (b)   Borrower
also authorizes Lender, at any time and from time to time, to execute, in connection with any sale provided for in  Section 9 hereof, any endorsements, assignments or other instruments of conveyance
or transfer with respect to the Collateral and to file any
initial financing statements amendments thereto and continuation statements with or without the signature of any Borrower as authorized by applicable law, as applicable to all or any part of the
Collateral and to file any initial financing statements, amendments thereto and continuation statements with or without the signature of any Borrower as authorized by applicable law, as applicable to
all or any part of the Collateral. 


        (c)   The
powers conferred on Lender are solely to protect Lender's interests in the Collateral and shall not impose any duty upon Lender to exercise any such powers. Lender
shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither Lender nor any of its officers, directors, or employees shall be responsible to
Borrower for any act or failure to act hereunder, except for its own gross negligence or willful misconduct. 




        4.05    Performance by Lender of Borrower's Obligations.    If Borrower fails to perform or comply with any of its
agreements contained in the Loan Documents beyond any notice or grace period contained herein Lender may itself perform or comply, or otherwise cause performance or compliance, with such agreement,
the out-of-pocket expenses of Lender incurred in connection with such performance or compliance, together with interest thereon at a rate per annum equal to the
Post-Default Rate, shall be payable by Borrower to Lender upon ten (10) days notice that such amounts are due and payable, unless an Event of Default shall have occurred and is
continuing, in which case such amounts shall be due and payable on demand and, in either case, shall constitute Secured Obligations. 


        4.06    Remedies.    If an Event of Default shall occur and be continuing, Lender may exercise, in addition to all
other rights and remedies granted to it in this Loan Agreement and in any other instrument or agreement securing, evidencing or relating to the Secured Obligations, all rights and remedies of a
secured party under the Uniform Commercial Code. Without limiting the generality of the foregoing, Lender without demand of performance or other demand, presentment, protest, advertisement or notice
of any kind (except any notice required by law referred to below) to or upon Borrower or any other Person (each and all of which demands, presentments, protests, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell (on a servicing released basis, at Lender's
option), lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels or
as an entirety at public or private sale or sales, at any exchange, broker's board or office of Lender or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of any credit risk. Lender shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in Borrower, which right or equity is hereby waived or released.
Lender shall give Borrower ten (10) days advance notice of any such sale, whether public or private. Borrower further agrees, at Lender's request, to assemble the Collateral and make it
available to Lender at places which Lender shall reasonably select, whether at Borrower's premises or elsewhere. Lender shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and expenses of every kind incurred therein or incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of Lender hereunder, including without limitation reasonable attorneys' fees and disbursements, to the payment in whole or in part of the Secured Obligations,
in such order as Lender may elect, and only after such application and after the payment by Lender of any other amount required or permitted by any provision of law, including without limitation
Section 9-615 of the Uniform Commercial Code, need 


26







 

Lender
account for the surplus, if any, to Borrower. To the extent permitted by applicable law, Borrower waives all claims, damages and demands it may acquire against Lender arising out of the
exercise by Lender of any of its rights hereunder during the continuance of an Event of Default, other than those claims, damages and demands arising from the gross negligence or willful misconduct of
Lender. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such
sale or other
disposition. Borrower shall remain liable for any deficiency (plus accrued interest thereon as contemplated pursuant to Section 2.04(b) hereof)
if the proceeds of any sale or other disposition of the Collateral are insufficient to pay the Secured Obligations and the reasonable fees and disbursements of any attorneys employed by Lender to
collect such deficiency. 


        4.07    Limitation on Duties Regarding Preservation of Collateral.    Lender's duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the Uniform Commercial Code or otherwise, shall be to deal with it in the same
manner as Lender deals with similar property for its own account. Subject to the immediately preceding sentence, neither Lender nor any of its directors, officers or employees shall be liable for
failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the
request of Borrower or otherwise. 


        4.08    Powers Coupled with an Interest.    All authorizations and agencies herein contained with respect to the
Collateral are irrevocable until the Secured Obligations shall have been irrevocably paid in full and are powers coupled with an interest. 


        4.09    Release of Security Interest.    (a) Upon termination of this Loan Agreement and repayment to Lender of
all Secured Obligations and the performance of all obligations under the Loan Documents, Lender shall promptly release its security interest in any remaining Collateral; provided that if any payment, or
any part thereof, of any of the Secured Obligations is rescinded or must otherwise be restored or returned by Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any Borrower, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or a trustee or similar officer for,
Borrower or any substantial part of its property, or otherwise, this Loan Agreement, all rights hereunder and the Liens created hereby shall continue to be effective, or be reinstated, as though such
payments had not been made until such time as such payments have been indefeasibly made. Upon the release of the security interest in the Mortgage Loans pursuant to this Section, Lender shall promptly
release to Borrower the Mortgage Loan Files and execute, acknowledge and deliver to Borrower any and all documents, instruments and agreements necessary to release all security interests in such
Mortgage Loans. Upon repayment to Lender of all Loans with respect to a Mortgage Loan pursuant to Section 3.05 or 4.09(b)  hereof, Lender shall release
to Borrower the Mortgage Loan Files relating to the Mortgage Loans pledged in connection with such Loans and execute, acknowledge and deliver to
Borrower any and all documents, instruments and agreements necessary to release all Liens in the Mortgage Loans securing such Loans; provided, however,
that whether or not an Event of Default has occurred and is continuing hereunder, Lender shall be required to release the Mortgage Loan File relating to a Mortgage Loan and execute, acknowledge and
deliver all necessary release documents if (x) the related Mortgagor has paid the entire principal amount of such Mortgage Loan and all other amounts due to the applicable Borrower under the
related Mortgage Loan Documents and (y) the required prepayment of the Loans in respect of such Mortgage Loan has been made hereunder in accordance with Section 3.05. 



        (b)   From
time to time, so long as no Event of Default has occurred and is continuing, upon three (3) Business Days' prior written notice thereof to Lender, Borrower
may obtain a release of any Mortgage Loan which has been pledged to Lender hereunder, so long as Borrower pays to Lender the
outstanding unpaid principal amount of all Loans with respect to such Mortgage Loan, together with all interest accrued thereon at the Interest Rate up to and including the date of such release. 



27







 

        Section 5.    Conditions Precedent.    



        5.01    Initial Loan.    The obligation of Lender to consider its initial Loan hereunder is subject to the
satisfaction, immediately prior to or concurrently with the making of such Loan, of the condition precedent that Lender shall have received all of the following documents, each of which shall be
satisfactory to Lender and its counsel in form and substance: 



        (a)    Loan Documents.    



        (i)    Loan Agreement.    The Loan Agreement, duly executed and delivered by Borrower; 


        (ii)    Note.    The Note, duly executed and delivered by Borrower; 


        (iii)    Custodial Agreement.    The Custodial Agreement, duly executed and delivered by Borrower and Custodian; 



        (iv)    Controlled Account Agreement.    A Controlled Account Agreement, duly executed by the parties thereto; 


        (v)    Guaranty; Pledge and Security Agreement.    The Guaranty and the Pledge and Security Agreement, each duly
executed and delivered by Guarantor and Pledgor as applicable; 


        (b)    Organizational Documents.    A good standing certificate and certified copies of the charter and
by-laws (or equivalent documents) of Borrower and Guarantor and of all corporate or other authority for Borrower and Guarantor with respect to the execution, delivery and performance of
the Loan Documents and each other document to be delivered by Borrower and Guarantor from time
to time in connection herewith (and Lender may conclusively rely on such certificate until it receives notice in writing from Borrower to the contrary); 


        (c)    Legal Opinions.    A legal opinion of outside counsel to Borrower and Guarantor, substantially in the form
of Exhibit H; 



        (d)    Servicing Agreement(s).    Any Servicing Agreement, certified as a true, correct and complete copy of the
original together, with a fully executed Servicer Notice and Agreement; 


        (e)    Filings, Registrations, Recordings; Lien Searches.    


          (i)  Any
documents (including, without limitation, financing statements) required to be filed, registered or recorded in order to create, in favor of Lender, a perfected,
first priority security interest in the Collateral, subject to no Liens other than those created hereunder, shall have been properly prepared and executed for filing, registration or recording in each
office in each jurisdiction in which such filings, registrations and recordations are required to perfect such first priority security interest; 


         (ii)  UCC
lien searches in such jurisdictions as shall be applicable to Borrower and the Collateral, the results of which shall be satisfaction to Lender; 


        (f)    Fees.    Any fees then payable pursuant to the Fee Letter; 



        (g)    Financial Statements.    The financial statements referenced in the Guaranty; 


        (h)    Consents, Licenses, Approvals, Etc.    Copies certified by Borrower of all consents, licenses and approvals, if
any, required in connection with the execution, delivery and performance by Borrower of, and the validity and enforceability of, the Loan Documents, which consents, licenses and approvals shall be in
full force and effect; 


        (i)    Closing Certificate.    A certificate of the corporate secretary or assistant secretary or similar officer of
Borrower, substantially in the form of Exhibit I; and 



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        (j)    Other Documents.    Such other documents as Lender may reasonably request. 




        5.02    Initial and Subsequent Loans.    The obligation to consider each Request for Borrowing (including the initial
Loan) on any Business Day is subject to the satisfaction of the following further conditions precedent, both immediately prior to the making of such Loan and also after giving effect thereto and to
the intended use thereof: 



        (a)    No Default.    No Default or Event of Default shall have occurred and be continuing; 


        (b)    Representations and Warranties.    Both immediately prior to the making of such Loan and also after giving
effect thereto and to the intended use thereof, the representations and warranties made by Borrower in Section 6 hereof, and elsewhere in each of
the Loan Documents (other than Schedule 1 hereof), shall be true, correct and complete in all material respects on and as of the date of the
making of such Loan with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such
specific date) and in Schedule 1 hereof, shall be true, correct and complete in all material respects on and as of the date of the initial
advance and each future advance with respect to the related Mortgage Loan (and the date of any re-borrowing of a prior initial advance or future advance with respect to such Mortgage Loan)
with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date). 



        (c)    Request for Borrowing; Complete Submission.    Lender shall have received a Request for Borrowing and a
Complete Submission, and Borrower shall have pledged to deliver a complete Mortgage Loan File with respect to any Mortgage Loan identified on such Request for Borrowing within three
(3) Business Days of the related Funding Date; provided, that, if Lender's diligence review of the Mortgage Loan File requires the delivery of a
mortgage file, document or instrument or the equivalent that Borrower cannot deliver, or cause to be delivered, to Custodian at the time they are required to be delivered, solely because of a delay
caused by the public recording office where such document or instrument has been delivered for recordation, the delivery requirements set forth in this Loan Agreement and the Custodial Agreement shall
be deemed to have been satisfied as to such non-delivered Mortgage Loan File, document or instrument if a copy thereof (certified by Borrower or Closing Counsel to be a true and complete
copy of the original thereof submitted for recording) is delivered to the Custodian on or before the date on which such original is required to be delivered, and either the original of such
non-delivered document or instrument, or a photocopy thereof, with evidence of recording thereon, is delivered to Custodian within ninety (90) days of the related Funding Date, and,  provided,
further, that Lender may, but is not obligated to, consent to a later date for delivery of any
part of the Mortgage Loan File in its sole discretion; 


        (d)    Servicing Agreements.    With respect to any Mortgage Loan identified on the Request for Borrowing which is not
serviced pursuant to a Servicing Agreement that has been approved by Lender previously, Borrower shall have provided to Lender a copy of the related Servicing Agreement, certified as a true, correct
and complete copy of the original, together with the Servicer Notice and Agreement, fully executed by Borrower and the Servicer. 


        (e)    Funding Confirmation.    Lender shall have delivered to Borrower a Funding Confirmation, dated the date of the
requested borrowing, with a Mortgage Loan Funding Confirmation Schedule and an Exceptions to Representations and Warranties Schedule attached thereto; 


        (f)    Due Diligence.    Without limiting Lender's right to perform one or more supplemental Due Diligence Reviews
pursuant to Section 11.16 hereof, Lender shall have completed its due diligence review of the Mortgage Loan Documents for each Mortgage Loan and
such other 



29







 

documents,
records, agreements, instruments, mortgaged properties or information relating to such Mortgage Loan as Lender in its sole discretion deems appropriate to review and such review shall be
satisfactory to Lender in its sole discretion; 


        (g)    Title Escrow Letter, Closing Counsel Letter and Trust Receipt.    Borrower shall have delivered (i) the
Title Escrow Letter, if applicable, to the Custodian, with a copy to Lender, and (ii) the Closing Counsel Letter to Lender. Lender shall have received a Trust Receipt and an Irrevocable
Direction Notice with respect to the applicable Mortgage Loan. 


        (h)    Fees and Expenses.    Lender shall have received all fees and expenses of counsel to Lender for which an
invoice has been submitted as contemplated by Section 11.03, which amount, at Lender's option, may be netted from any Loan advanced under this
Loan Agreement; 


        (i)    Officer's Certificate.    Lender shall have received a certificate of a Responsible Officer of Borrower,
substantially in the form of Exhibit J, (i) stating that, to the best of such Responsible Officer's actual knowledge, each of Borrower,
Servicer and Guarantor (or Substitute Guarantor) has observed or
performed in all material respects all of its covenants and other agreements, and satisfied every condition, contained in this Loan Agreement and the related documents to be observed, performed or
satisfied by it and that such Responsible Officer has obtained no actual knowledge of any Default or Event of Default except as specified in such certificate, (ii) on the date of the initial
advance for a Mortgage Loan only, certifying that each Mortgage Loan File delivered by Borrower represents a true and correct copy of the documents contained therein, and that the applicable Mortgage
Loan Schedule and Closing Data File, together with all other information contained therein prepared by Borrower or its Affiliates and delivered by Borrower to Lender immediately prior to the Funding
Date, is true and correct and conforms in all material respects to the Summary Due Diligence Materials included in the Complete Submission and Preliminary Data File previously provided to Lender and
pursuant to which Lender has elected to make the requested Loan, and (iii) certifying as to the truth, accuracy and completeness of the representations and warranties made by Borrower in  Section 6 and in Schedule 1 hereof (limited in the case of  Schedule 1 to the applicable Mortgage Loan for which the Loan is being advanced);
 


        (j)    Maximum Borrowing Amount.    Each Request for Borrowing shall be in an amount not more than the Maximum
Borrowing Amount; 


        (k)    Interest Rate Protection Agreements.    Lender shall have received fully-executed copies of any Interest Rate
Protection Agreements, if any, to the extent assignable, each certified as a true, correct and complete copy of the original; 


        (l)    Additional Matters.    All corporate and other proceedings, and all documents, instruments and other legal
matters in connection with the transactions contemplated by this Loan Agreement and the other Loan Documents shall be reasonably satisfactory in form and substance to Lender, and Lender shall have
received such other documents in respect of any aspect or consequence of the transactions contemplated hereby or thereby as it shall reasonably request; 


        (m)    No Material Adverse Effect or Market Disruption Event.    There shall not have occurred one or more events
that, in the reasonable judgment of Lender, constitutes a Material Adverse Effect or Market Disruption Event; and 



        (n)    Substitute Guarantor.    Lender shall have received an officer's certificate, good standing certificate and
certified copies of organizational documents for the Substitute Guarantor contemplated pursuant to Section 11.18 in the circumstance described in
such Section. Lender shall have received legal opinions of outside counsel to Substitute Guarantor, substantially in the form attached hereto as Exhibit H. 



30







 

        Section 6.    Representations and Warranties.    Borrower represents and warrants to Lender that throughout the
term of this Loan Agreement and as long as any Loan funded by Lender to Borrower pursuant to this Loan Agreement is outstanding: 


        6.01    Financial Condition.    



        (a)   The
financial statements of Guarantor furnished to Lender are complete and correct and present fairly, in accordance with GAAP, the financial condition of Guarantor as
of the date(s) thereof and the results of operations of Guarantor for the period(s) covered thereby. 


        (b)   Such
financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods
involved. 


        (c)   Guarantor
did not have, as of the date(s) of such financial statements, any material Guarantee Obligation, known contingent liability or liability for taxes for which
adequate reserves have not been established, or any long-term lease or unusual forward or long-term commitment, including, without limitation, any interest rate or foreign
currency swap or exchange transaction, or other financial derivative, which is not reflected in the foregoing statements or in the notes thereto, to the extent required by GAAP. 


        (d)   From
and after the date of the financial statements referred to in Section 6.01(a), there has been no development
or event nor any prospective development or event which has had a Material Adverse Effect. 




        6.02    Existence; Compliance with Law; Ownership of Borrower.    Borrower (a) is an entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of organization, (b) (i) has all requisite organizational power and authority, and (ii) has all governmental
licenses, authorizations, consents and approvals necessary, to own and operate its property and to carry on its business as now being or as proposed to be conducted, except in the case of
clause (ii) where the lack of such license, authorization, consent or approval would not reasonably be expected to have a Material Adverse Effect, (c) is duly qualified to do business
and is in good standing under the laws of each jurisdiction in which the nature of the business conducted by it makes such qualification necessary and where the failure to be so qualified would
reasonably be expected to have a Material Adverse Effect, and (d) is in compliance in all material respects with all Requirements of Law and obligations under the Governing Documents. The
organizational chart attached hereto as Schedule 4 (or identified as an update thereto after the Effective Date and delivered to Lender) is
complete and accurate as of the Effective Date and illustrates all Persons who have a direct ownership interest in Borrower and Borrower's Sole Member set forth on such schedule. 



        6.03    Authorization; Enforceable Obligations.    



        (a)   Borrower
has all requisite organizational power and authority, and the legal right, to make, deliver and perform this Loan Agreement, the Note and each other Loan
Document, and to borrow and to grant Liens hereunder, and has taken all necessary action to authorize the borrowings and the granting of Liens on the terms and conditions of this Loan Agreement, the
Note, and each other Loan Document to which it is a party, and the execution, delivery and performance of this Loan Agreement, the Note and each other Loan Document. 



        (b)   No
consent or authorization of, approval by, notice to, filing with or other act by or in respect of, any Governmental Authority or any other Person is required or
necessary in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of this Loan Agreement or the Note or any other Loan Document, except
(i) for filings and recordings in respect of the Liens created pursuant to this Loan Agreement, and (ii) as previously obtained and currently in full force and effect. 



31









 



































 



        (c)   Each
Loan Document to which Borrower is a party has been duly and validly executed and delivered by Borrower and constitutes, a legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 




        6.04    No Legal Bar.    The execution, delivery and performance of this Loan Agreement and the Note, the borrowings
hereunder and the use of the proceeds thereof will not violate any Requirement of Law, any provision of the Governing Documents or Contractual Obligation of Borrower and will not result in, or
require, the creation or imposition of any Lien (other than the Liens created hereunder) on any of its property or revenues pursuant to any such Requirement of Law or Contractual Obligation. 


        6.05    No Material Litigation.    There are no actions, suits, arbitrations, investigations or proceedings of or
before any arbitrator or Governmental Authority pending or, to the actual knowledge of Borrower, threatened against Borrower or against any of its properties or revenues which would reasonably be
expected to have a Material Adverse Effect. 


        6.06    No Default.    Borrower is not in default under or with respect to any of its Contractual Obligations in any
respect which would reasonably be expected to have a Material Adverse Effect. No Event of Default has occurred and is continuing. 


        6.07    Collateral; Collateral Security.    



        (a)   Borrower
has not assigned, pledged, or otherwise conveyed or encumbered any of the Collateral to any Person other than Lender, and immediately prior to the pledge of
such Collateral, Borrower was the sole owner of its Collateral and had good and marketable title thereto, free and clear of all Liens, in each case except for Liens that have been released or are to
be released simultaneously with the Liens granted in favor of Lender hereunder. 


        (b)   The
provisions of this Loan Agreement are effective to create in favor of Lender a valid security interest in all right, title and interest of Borrower in, to and under
the Collateral. 


        (c)   Upon
(i) receipt by Custodian of each Mortgage Note, endorsed in blank by a duly authorized officer of Borrower and (ii) the issuance by Custodian to
Lender of a Trust Receipt therefor, Lender shall have a fully perfected first priority security interest therein, in the Mortgage Loan evidenced thereby and in Borrower's interest in the related
Mortgaged Property. 


        (d)   Upon
the filing of financing statements on Form UCC-1 naming Lender as "Secured Party" and Borrower as "Debtor", and describing the Collateral, in the
jurisdictions and recording offices listed on Schedule 3 attached hereto, the security interests granted hereunder in the Collateral will
constitute fully perfected first priority security interests under the Uniform Commercial Code in all right, title and interest of Borrower in, to and under such Collateral which can be perfected by
filing under the Uniform Commercial Code. 




        6.08    Chief Executive Office.    Borrower's chief executive office is located at c/o Ares Management LLC, Two
North LaSalle Street, Suite 925, Chicago, Illinois 60602, or such other location as may be notified to Lender. On the Effective Date, Borrower's jurisdiction of organization is Delaware. 


        6.09    Location of Books and Records.    The location where Borrower keeps its books and records, including all
computer tapes and records relating to the Collateral is its chief executive office or in another location identified by Borrower to Lender in writing. 


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        6.10    No Burdensome Restrictions.    No Requirement of Law to which Borrower or its Affiliates is subject or
Contractual Obligation of Borrower would reasonably be expected to have a Material Adverse Effect. 



        6.11    Taxes.    Borrower has filed all Federal and state income tax returns and all other material tax returns that
are required to be filed by it (subject to the timely filing of any extension thereof) and has paid all taxes due pursuant to such returns or pursuant to any assessment received by it, except for any
such taxes or assessments, if any, that are being appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves in conformity with
GAAP have been provided. No tax Lien has been filed, and, to the actual knowledge of Borrower, no claim is being asserted, with respect to any such tax or assessment. 



        6.12    Margin Regulations.    No part of the proceeds of any Loans will be used for "purchasing" or "carrying" any
"margin stock" within the respective meanings of each of the quoted terms under, or for any other purpose which violates or would be inconsistent with the provisions of, Regulation G, T, U or
X. 


        6.13    Investment Company Act; Other Regulations.    Borrower is not required to register as an "investment company",
or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. Borrower is not subject to regulation under any Federal or state statute or
regulation which limits its ability to incur Indebtedness, except in each case where such limitation would not be reasonably likely to have a Material Adverse Effect. 


        6.14    Special Purpose Entity.    Borrower is a Special Purpose Bankruptcy Remote Entity. 


        6.15    Assets.    At the time pledged, each Mortgage Loan initially included in the Collateral was an Eligible
Mortgage Loan (except with respect to any condition waived in writing by Lender; it being acknowledged that Lender shall be deemed to have waived compliance with any of the eligibility criteria or
other representations contained herein applicable to any Mortgage Loan, to the extent such non-compliance with same was disclosed as of the Funding Date for such Mortgage Loan.) 


        6.16    No Prohibited Persons.    Borrower or any of its officers, directors, partners, members, Affiliates or
shareholders is not an entity or person: (i) that is listed in the Annex to, or is otherwise subject to the provisions of Executive Order 13224 issued on September 24, 2001
("EO13224"); (ii) whose name appears on the United States Treasury Department's Office of Foreign Assets Control
("OFAC") most current list of "Specifically Designated National and Blocked Persons" (which list may be published from time to time in various mediums
including, but not limited to, the OFAC website, http:www.treas.gov/ofac/t11sdn.pdf); (iii) who commits, threatens to commit or supports "terrorism", as that term is defined in EO 13224; or
(iv) who is otherwise affiliated with any entity or person listed above (any and all parties or persons described in clauses (i) through (iv) above are herein referred to as a
"Prohibited Person"). 


        6.17    Borrower Solvent; Fraudulent Conveyance.    As of the date hereof and immediately after giving effect to each
Loan, the fair value of the assets of Borrower are and shall be greater than the fair value of the liabilities (including, without limitation, contingent liabilities if and to the extent required to
be
recorded as a liability on the financial statements of Borrower in accordance with GAAP) of Borrower and Borrower is and will be solvent, is and will be able to pay its debts as they mature and does
not and will not have an unreasonably small capital to engage in the business in which it is engaged and proposes to engage. Borrower does not intend to incur, or believes that it has incurred, debts
beyond its ability to pay such debts as they mature. Borrower is not transferring any Mortgage Loan with any intent to hinder, delay or defraud any of its creditors. 


        6.18    ERISA.    Borrower is not an "employee benefit plan," as defined in Section 3(3) of ERISA, subject to
Title I of ERISA, and none of the assets of Borrower constitutes or will constitute "plan assets" of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101. 


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        6.19    True and Complete Disclosure.    The information, reports, financial statements, exhibits and schedules
prepared by Borrower and furnished in writing by Borrower to Lender in connection with the negotiation, preparation or delivery of this Loan Agreement and the other Loan Documents or included herein
or therein or delivered pursuant hereto or thereto, do not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements herein or therein not
misleading. To the extent such information, reports, financial statements, exhibits and schedules were prepared by third parties, to the actual knowledge of Borrowers, none of the aforementioned
documents contain any untrue statement of material act nor do they omit to state any material fact necessary to make the statements therein not misleading. All written information furnished by
Borrower to Lender in connection with this Loan Agreement and the other Loan Documents and the transactions contemplated hereby and thereby are true, correct and accurate, in every material respect,
or (in the case of projections) based on reasonable estimates, on the date as of which such information is stated or certified. To the actual knowledge of Borrower, there is no fact that has not been
disclosed herein, in the other Loan Documents or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to Lender for use in connection with the transactions
contemplated hereby or thereby that would reasonably be expected to have a Material Adverse Effect. 


        6.20    True Sales.    Any Mortgage Loan originated by an originator other than Borrower has been conveyed to Borrower
pursuant to a true and legal sale. 


        Section 7.    Covenants of Borrower.    Borrower covenants and agrees with Lender that, so long as any Loan is
outstanding and until payment in full of all Secured Obligations: 


        7.01    Financial Statements.    Borrower shall cause Guarantor to deliver to Lender: 



        (a)   as
soon as available and in any event within sixty (60) days after the end of each of the first three quarterly fiscal periods of each fiscal year of Guarantor,
the balance sheet of Guarantor as at the end of such period and the related unaudited statements of income and of cash flows for Guarantor for such period and the portion of the fiscal year through
the end of such period, if applicable, setting forth in each case the figures for the previous year, accompanied by a certificate of a Responsible Officer of Guarantor, which certificate shall state
that said financial statements fairly present the financial condition and results of operations of Guarantor in accordance with GAAP, consistently applied, as at the end of, and for, such period
(subject to normal year-end adjustments); 


        (b)   as
soon as available and in any event within one hundred twenty (120) days after the end of each fiscal year of Guarantor, the audited balance sheets of Guarantor
as at the end of such fiscal year and the related statements of income and retained earnings and of cash flows for Guarantor for such year, if applicable, setting forth in each case the figures for
the previous year, prepared in accordance with GAAP, and certified by an independent certified public accountant of recognized national standing, without qualification as to scope of audit or going
concern; 


        (c)   on
or before one hundred and twenty (120) days after the end of each fiscal year of Borrower, Borrower shall provide Lender with a certificate certifying that, as
of the date thereof, there does or does not exist any Default or Event of Default or, if any Default or Event of Default exists specifying the nature thereof; and 


        (d)   promptly
and in any event within five (5) Business Days following request therefor by Lender directed to the persons to whom notice is to be given pursuant to  Section 11.02, from time to time such
other information regarding the financial condition, operations, or business of Borrower as Lender may
reasonably request (and provided same is in Borrower's possession or available to Borrower). 



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        7.02    Litigation.    Borrower will promptly, and in any event within 10 days after service of process on any
of the following, give to Lender notice of all litigation, actions, suits, arbitrations, investigations (including, without limitation, any of the foregoing which are pending or threatened) or other
legal or arbitrable proceedings affecting Borrower or affecting any of Borrower's Property before any Governmental Authority that (i) questions or challenges the validity or enforceability of
any of the Loan Documents or any action to be taken in connection with the transactions contemplated hereby, (ii) makes a claim or claims in an aggregate amount greater than $100,000, or
(iii) which, individually or in the aggregate, if adversely determined, could be reasonably likely to have a Material Adverse Effect. 


        7.03    Existence, Etc.    Borrower will: 



        (a)   preserve
and maintain its legal existence and all of its material rights, material privileges, material licenses and material franchises; 


        (b)   preserve
and maintain all of its material rights, privileges, licenses and franchises necessary to operate its business and perform its obligations hereunder; 


        (c)   comply
with the requirements of all applicable laws, rules, regulations and orders of Governmental Authorities (including, without limitation, all environmental laws,
all laws with respect to unfair and deceptive lending practices and predatory lending practices) if failure to comply with such requirements would be reasonably likely (either individually or in the
aggregate) to have a Material Adverse Effect; 


        (d)   keep
adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied; 


        (e)   not
move its chief executive office from the address referred to in Section 6.08 or change its jurisdiction of
organization from the jurisdiction referred to in Section 6.08 unless it shall have provided Lender thirty (30) days' prior written notice
of such change; 


        (f)    pay
and discharge all taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its Property prior to the date on
which penalties attach thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves
are being maintained in conformance with GAAP; and 


        (g)   permit
representatives of Lender, during normal business hours, on three (3) Business Days' prior notice to examine, copy and make extracts from its books and
records, to inspect any of its Properties, and to discuss its business and affairs with its officers, all to the extent reasonably requested by Lender. 




        7.04    Prohibition of Fundamental Changes.    Borrower shall not enter into any transaction of merger or
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or dissolution) or sell all or substantially all of its assets. 



        7.05    Notices.    Borrower shall give notice to Lender promptly, and in any event within two (2) Business
Days following receipt of notice or actual knowledge of any of the following: 



        (a)   the
occurrence of any Event of Default; 


        (b)   upon
service of process on Borrower, or any agent thereof for service of process, in respect of any legal or arbitrable proceedings affecting Borrower (a) that
questions or challenges the validity or enforceability of any of the Loan Documents or (b) which, if determined adversely to Borrower would give rise to a liability of Borrower of $100,000 or
more; 



35







 

        (c)   upon
Borrower becoming aware of any Mortgage Loan Event of Default under the Mortgage Loan Documents for any Mortgage Loan and any event or change in circumstances which
has or would reasonably be expected to have a Material Adverse Effect; 



        (d)   upon
Borrower becoming aware that the Mortgaged Property in respect of any Mortgage Loan has been damaged by waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty, or otherwise damaged, in any case so as to materially and adversely affect the value of such Mortgage Loan; 


        (e)   upon
Borrower's becoming aware of any Principal Prepayment of any Mortgage Loan, and in any event within two (2) Business Days after receipt thereof; 


        (f)    of
entry of a judgment or decree resulting in a liability to Borrower in an amount in excess of $100,000. 




Each
notice pursuant to this Section shall be accompanied by a statement setting forth details of the occurrence referred to therein and stating what action Borrower has taken or proposes to take with
respect thereto. 


        7.06    Special Purpose Entity.    Each Borrower shall at all times be a Special Purpose Bankruptcy Remote Entity. 


        7.07    Transactions with Affiliates.    Borrower will not enter into any transaction, including without limitation
any purchase, sale, loan, lease, exchange of property, or the rendering of any service, with any Affiliate unless such transaction is (a) otherwise permitted under this Loan Agreement,
(b) in the ordinary course of Borrower's business and (c) upon fair and reasonable terms no less favorable to Borrower than it would obtain in a comparable arm's length transaction with
a Person which is not an Affiliate, or make a payment that is not otherwise permitted by this Section 7.07 to any Affiliate. Notwithstanding the
foregoing, Lender hereby approves and authorizes the Management Agreement and that certain Interim Servicing Agreement by and among Lender, Borrower and ARES Commercial Real Estate Services LLC
dated as of the date hereof (the "Servicing Agreement"). 


        7.08    Limitation on Sale or Other Disposition of Collateral.    Borrower will not transfer, assign, sell or
otherwise dispose of any Collateral other than in connection with obtaining a release of a Mortgage Loan pledged hereunder in accordance with Section 4.09(b) hereof. 


        7.09    Limitation on Liens on Collateral.    Borrower will not, nor will it permit or allow any other Person, to
create, incur or permit to exist any Lien on the Collateral, except for Liens on the Collateral created hereunder. Borrower will defend the Collateral against, and will take such other action as is
necessary to remove any Lien on or to the Collateral, other than Liens created under this Loan Agreement, and Borrower will defend the right, title and interest of Lender in and to any of the
Collateral against the claims and demands of all Persons whomsoever, other than Persons claiming through Lender. 



        7.10    Limitations on Modifications, Waivers and Extensions of Asset Documents.    Borrower will not, nor will it
permit or allow others to, enter into or permit a Significant Mortgage Loan Modification to occur, without Lender's prior written consent, which consent shall not be unreasonably withheld or delayed. 


        7.11    Limitation on Distributions.    After the occurrence and during the continuation of any Event of Default,
Borrower shall not declare any dividends upon any shares of Borrower's stock now or hereafter outstanding, except dividends payable in the Capital Stock of Borrower, nor shall Borrower set apart
assets for, a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of any equity or partnership interest of Borrower, whether now or hereafter
outstanding, or make any other distribution in respect of any of the foregoing or to any shareholder or equity owner of Borrower, either directly or indirectly, whether in cash or property or in 


36







 

obligations
of Borrower. Notwithstanding the foregoing, Borrower shall at all times be entitled to pay any dividends or distributions necessary to maintain the status of the Guarantor as a real estate
investment trust. 


        7.12    Servicer; Servicing File.    (a) Borrower shall provide to Lender no later than the tenth (10th)
Business Day of each month a report, in a form acceptable to Lender (such report, a "Mortgage Asset Report"), containing (i) copies of all
financial statements, operating statements, rent rolls, budgets and material notices received by Borrower from any Mortgagor, any property manager or other party pursuant to the terms of any of the
Mortgage Loan Documents for any Mortgage Loan relating to such Mortgagor, any guarantor with respect to such Mortgage Loan or any Mortgaged Property (and Borrower hereby covenants and agrees to use
reasonable efforts to cause each Mortgagor to comply in all material respects with the financial reporting requirements of their respective Mortgage Loan Documents), (ii) an updated Closing
Data File on a loan-by-loan basis and in the aggregate, with respect to any Mortgage Loan serviced hereunder by Borrower or any Servicer, and (iii) reporting on any
material damage to any Mortgaged Property by waste, fire, earthquake or earth movement, windstorm, hurricane, flood, tornado or other casualty, or otherwise so as to affect adversely the collateral
value of such pledged Mortgage Loan. 



        (b)   Borrower
shall not cause or permit the Mortgage Loan to be serviced or sub-serviced by any Servicer other than a Servicer expressly approved in writing by
Lender. 




        7.13    ERISA.    Borrower shall not establish any employee benefit plans or other plans pursuant to ERISA, the Code
or any other Federal or State Law. 


        7.14    Prohibited Persons.    Borrower covenants and agrees that neither Borrower nor any of its Affiliates,
officers, directors, partners or members will knowingly: (i) conduct any business, nor engage in any transaction or dealing, with any Prohibited Person, including, but not limited to, the
making or receiving of any contribution of funds, goods, or services, to or for the benefit of a Prohibited Person; or (ii) engage in or conspire to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in EO13224. Borrower further covenants and agrees to deliver (from time to time) to Lender
any such certification or other evidence as may be requested by Lender in its sole and absolute discretion, confirming that: (i) neither Borrower nor any of its officers, directors, partners,
members or Affiliates is a Prohibited Person; and (ii) neither Borrower nor its officers, directors, partners, members or Affiliates has to its knowledge engaged in any business, transaction or
dealings with a Prohibited Person, including, but not limited to, the making or receiving of any contribution of funds, goods, or services, to or for the benefit of a Prohibited Person. 



        Section 8.    Events of Default.    Each of the following events shall constitute an event of default (an
"Event of Default") hereunder: 



        (a)   Borrower
shall default in the payment of any principal of or interest on any Loan when due (whether at stated maturity, upon acceleration, at mandatory prepayment, or in
accordance with Section 2.05(b) hereof), and in the case of a default with respect to the payment of interest, such default shall remain
unremedied for two (2) Business Days; or 


        (b)   Borrower
shall default in the payment of any other amount payable by it hereunder or under any other Loan Document after notification by Lender of such default, and such
default shall have continued unremedied for five (5) Business Days; or 


        (c)   If
(A) any representation, warranty or statement contained in this Agreement or any of the Loan Documents or in any affidavit or other instrument executed or
delivered pursuant to the Loan Documents or with respect to the Loans (other than breaches of the representations or warranties in Schedule 1 to
this Agreement made without knowledge of the Borrower that they were materially false or misleading at the time made) is determined by Lender to be false or 



37







 

misleading
in any material respect as of the date hereof or thereof or shall become so at any time prior to the repayment in full of the Loans and such false or misleading statement continues
unremedied for ten (10) Business Days after the earlier of receipt of notice thereof from Lender or the discovery of such false or misleading statement by Borrower, or (B) any material
representation, warranty or statement contained in Schedule 1 to this Agreement is determined by Lender to be false or misleading in any material
respect with respect to a Mortgage Loan and such representation, warranty or statement was made by the Borrower with knowledge of the Borrower that it was materially false or misleading at the time
made; or 


        (d)   Borrower
shall fail to comply with the requirements of Section 7.03(a),  Section 7.04, Sections 7.05(a),
 (c) or  (d), Section 7.07, Section 7.11, or 
Section 7.13 hereof; or Borrower shall fail to observe or perform any other covenant or agreement contained in this Loan Agreement or any other
Loan Document and such failure to observe or perform shall continue unremedied for a period of ten (10) Business Days following the earlier of notice or actual knowledge of such failure; 


        (e)   Either
of the following shall occur: 



          (i)  the
commencement of any enforcement action (including, but not limited to, the giving of a notice of acceleration) by an obligee against Borrower or Guarantor with
respect to any Indebtedness, Guarantee Obligation and/or Contractual Obligation, provided that the aggregate amount of the Indebtedness, Guarantee Obligations and/or Contractual Obligations in respect
of which such enforcement action is commenced (either individually or in the aggregate) is in excess of $500,000 with respect to Borrower, or $5,000,000 with respect to Guarantor; or 


         (ii)  (x)
Borrower or Guarantor shall default in making any payment required to be made under one of more agreements for borrowed money to which it is a party in an aggregate
amount in excess of $500,000 with respect to Borrower, or $15,000,000 with respect to Guarantor, and any such failure is not cured within the applicable cure period, if any, provided for under the
related agreement, or (y) Borrower or Guarantor shall default in making any payment required to be made under one of more agreements for borrowed money to which it is a party in an aggregate
amount in excess of $500,000 with respect to Borrower, or $5,000,000 with respect to Guarantor and such default shall remain uncured for a period of forty-five (45) days. 




        (f)    A
default, after notice and beyond the expiration of applicable grace periods, shall have occurred and be continuing under any other Loan Document which has not been
waived by Lender in writing; or 


        (g)   a
final judgment or judgments for the payment of money shall be rendered against Borrower in excess of $250,000 or shall be rendered against Guarantor in excess of
$5,000,000 by one or more courts, administrative tribunals or other bodies having jurisdiction and the same shall not be satisfied, discharged (or provision shall not be made for such discharge) or
bonded, or a stay of execution thereof shall not be procured, within 30 days from the date of entry thereof, and Borrower or Guarantor shall not, within said period of 30 days, or such
longer period during which execution of the same shall have been stayed or bonded, appeal therefrom and cause the execution thereof to be stayed during such appeal; or 



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        (h)   Borrower
or Guarantor shall admit in writing its inability to pay its debts as such debts become due; or 


        (i)    Borrower
or Guarantor shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, examiner or liquidator
or the like of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the
Bankruptcy Code, (iv) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or
winding-up, or composition or readjustment of debts, (v) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an
involuntary case under the Bankruptcy Code or (vi) take any corporate or other action for the purpose of effecting any of the foregoing; or 


        (j)    a
proceeding or case shall be commenced, without the application or consent of Borrower or Guarantor, in any court of competent jurisdiction, seeking (i) its
reorganization, liquidation, dissolution, arrangement or winding-up, or the composition or readjustment of its debts, (ii) the appointment of, or the taking of possession by, a
receiver, custodian, trustee, examiner, liquidator or the like of Borrower or Guarantor or of all or any substantial part of its property, or (iii) similar relief in respect of Borrower or
Guarantor under any law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or winding-up, or composition or adjustment of debts, and such proceeding
or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of sixty
(60) or more days; or an order for relief against Borrower or Guarantor shall be entered in an involuntary case under the Bankruptcy Code; or 


        (k)   the
Custodial Agreement (but not if terminated in accordance with its terms), the Guaranty or any other Loan Document shall for whatever reason be terminated or cease to
be in full force and effect, or the enforceability thereof shall be contested by Borrower or Guarantor; or 



        (l)    Borrower
shall grant, or suffer to exist, any Lien on any Collateral except the Liens contemplated hereby, or the Liens contemplated hereby shall cease to be first
priority perfected Liens on the Collateral in favor of Lender or shall be Liens in favor of any Person other than Lender; or 


        (m)  a
Change of Control shall have occurred. 




        Section 9.    Remedies Upon Default.    An Event of Default shall be deemed to be continuing unless expressly
waived by Lender in writing. Upon the occurrence and during the continuance of one or more Events of Default hereunder, Lender's obligation to make additional Loans to Borrower shall automatically
terminate without further action by any Person. If an Event of Default shall occur and be continuing, the following rights and remedies shall be available to Lender: 



        (a)    Acceleration.    Upon the occurrence and during the continuance of one or more Events of Default other than
those referred to in Section 8(i) or (j) Lender may immediately declare the principal amount of
the Loans then outstanding under the Note to be immediately due and payable, together with all interest thereon and fees and expenses accruing under this Loan Agreement. Upon the occurrence and during
the continuance of an Event of Default referred to in Sections 8(i) or (j), and in addition to
the remedies provided in Section 4.06 hereof and otherwise provided in this Loan Agreement, such amounts shall immediately and automatically
become due and payable without any further action by any Person. Upon such declaration or such automatic acceleration, the balance then outstanding on the Note shall become immediately due and
payable, without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by Borrower. 



39







 

        (b)    Possession.    Upon the occurrence and during the continuance of one or more Events of Default, and in addition
to the remedies provided in Section 4.06 hereof and otherwise provided in this Loan Agreement, Lender shall have the right to obtain physical
possession of the Servicing Records and all other files of Borrower relating to the Collateral and all documents relating to the Collateral which are then or may thereafter come in to the possession
of Borrower or any third party acting for Borrower and Borrower shall deliver to Lender such assignments as Lender shall request. Borrower shall be responsible for paying any fees of any servicer
resulting from the termination of a servicer due to an Event of Default. Lender shall have the right to demand transfer of all servicing rights and obligations to a new servicer acceptable to Lender.
Lender shall be entitled to specific performance of all agreements of Borrower contained in this Loan Agreement. 


        (c)    Collections.    Lender shall have the right to direct all Servicers then servicing any Mortgage Loan to remit
all collections thereon to Lender, and if any payments are received by Borrower, Borrower shall
not commingle the amounts received with other funds of Borrower and shall promptly pay them over to Lender. Lender shall also have the right to terminate any one or all of the Servicers then servicing
any Mortgage Loan with or without cause. 


        (d)    Costs.    Borrower shall be liable to Lender for (i) the amount of all reasonable legal or other
expenses, including, without limitation, all costs and expenses of Lender in connection with the enforcement of this Loan Agreement or any other agreement evidencing a Loan, whether in action, suit or
litigation or bankruptcy, insolvency or other similar proceeding affecting creditors' rights generally, further including, without limitation, the reasonable fees and expenses of counsel incurred in
connection with or as a result of an Event of Default, (ii) damages in an amount equal to the cost (including all fees, expenses and commissions) of entering into or terminating hedge
transactions in connection with or as a result of an Event of Default, and (iii) any other loss, damage, cost or expense directly arising or resulting from the occurrence of an Event of Default
in respect of a Loan. 


        (e)    Interest.    To the extent permitted by applicable law, Borrower shall be liable to Lender for interest on any
amounts owing by Borrower hereunder, from the date Borrower becomes liable for such amounts hereunder until such amounts are (i) paid in full by Borrower or (ii) satisfied in full by the
exercise of Lender's rights hereunder. Interest on any sum payable by Borrower under this Section 9 shall be at a rate equal to the Post Default
Rate. 


        (f)    Further Remedies.    Lender shall have, in addition to its rights and remedies under the Loan Documents, all of
the rights and remedies provided by applicable federal, state, foreign, and local laws (including, without limitation, the rights and remedies of a secured party under the Uniform Commercial Code of
the State of New York, to the extent that the Uniform Commercial Code is applicable, and the right to offset any mutual debt and claim), in equity, and under any other agreement between Lender and
Borrower. Without limiting the generality of the foregoing, Lender shall be entitled to set off the proceeds of the liquidation of the Mortgage Loan against all of Borrower's obligations to Lender,
only if such obligations are then due, without prejudice to Lender's right to recover any deficiency. 


        (g)    Remedies Cumulative; Waiver.    Subject to the notice and grace periods set forth herein, each party to this
Loan Agreement may exercise any or all of the remedies available to such party immediately upon the occurrence of an Event of Default and at any time during the continuance thereof without prior
notice to the other parties hereto. Except as expressly provided herein, all rights and remedies arising under the Loan Documents, as amended from time to time, are cumulative and not exclusive of any
other rights or remedies which each party to this Loan Agreement may have. No modification, amendment, extension, discharge, termination or waiver of any provision of this Loan Agreement or of any
other Loan Document, nor consent to any 



40







 

departure
by any party to this Loan Agreement therefrom, shall in any event be effective unless the same shall be in a writing signed by the party against whom enforcement is sought, and then such
waiver or consent shall be effective only in the specific instance, and for the purpose, for which given. Except as otherwise expressly provided herein, no notice to, or demand on any party to this
Loan Agreement, shall entitle such party to any other or future notice or demand in the same, similar or other circumstances. Neither any failure nor any delay on the part of any party to this Loan
Agreement in insisting upon strict performance of any term, condition, covenant or agreement, or exercising any right, power, remedy or privilege hereunder, or under any other Loan Document shall
operate as or constitute a waiver thereof, nor shall a single or partial exercise thereof preclude any other future exercise, or the exercise of any other right, power, remedy or privilege. 



        (h)    Non-judicial Remedies.    Lender may enforce its rights and remedies hereunder without prior
judicial process or hearing, and Borrower hereby expressly waives any defenses Borrower might otherwise have to require Lender to enforce its rights by judicial process. Borrower also waives any
defense Borrower might otherwise have arising from the use of non-judicial process, disposition of any or all of the Mortgage Loan, or from any other election of remedies. Borrower
recognizes that non-judicial remedies are consistent with the usages of the trade, are responsive to commercial necessity and are the result of a bargain at arm's length. 



        (i)    Appointment of Receiver.    Upon the occurrence of an Event of Default, Lender shall without regard to the
adequacy of the security for the Loans, be entitled to the appointment of a receiver by any court having jurisdiction, without notice, to take possession of and protect, collect, manage, liquidate,
and sell the Mortgage Loan or any portion thereof, collect the payments due with respect to the Mortgage Loan or any portion thereof, and do anything that Lender is authorized hereunder to do.
Borrower shall pay all reasonable costs and expenses incurred by Lender in connection with the appointment and activities of such receiver. 




        Section 10.    No Duty of Lender.    The powers conferred on Lender hereunder are solely to protect Lender's
interests in the Collateral and shall not impose any duty upon it to exercise any such powers. Lender shall be accountable only for amounts that it actually receives as a result of the exercise of
such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to Borrower for any act or failure to act hereunder, except for its or their own gross
negligence or willful misconduct. 


        Section 11.    Miscellaneous.    



        11.01    Waiver.    No failure on the part of Lender to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege under any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under any Loan
Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The remedies provided herein are cumulative and not exclusive of any remedies provided
by law. 


        11.02    Notices.    Except as otherwise expressly permitted by this Loan Agreement, all notices, requests and other
communications provided for herein (including without limitation any modifications of, or waivers, requests or consents under, this Loan Agreement) shall be given or made in writing (including without
limitation by telecopy) delivered to the intended recipient at the "Address for Notices" specified below its name on the signature pages hereof); or, as to any party, at such other address as shall be
designated by such party in a written notice to each other party. Except as otherwise provided in this Loan Agreement and except for notices given under  Section 2 (which shall be effective only on
receipt), all such communications shall be deemed to have been duly given when transmitted by
telecopy before 5:30 p.m. recipient local time on a Business Day, and otherwise on the next 


41







 

succeeding
Business Day, or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as aforesaid. 


        11.03    Indemnification and Expenses.    (a) Borrower agrees to hold Lender, and its Affiliates and their officers,
directors, employees, agents and advisors (each an "Indemnified Party") harmless from and indemnify any Indemnified Party against all liabilities,
losses, damages, judgments, costs and expenses of any kind which may be imposed on, incurred by or assessed against such Indemnified Party (collectively, the
"Costs") relating to or arising out of this Loan Agreement, the Note, any other Loan Document or any transaction contemplated hereby or thereby, or any
amendment, supplement or modification of, or any waiver or consent under or in respect of, this Loan Agreement, the Note, any other Loan Document or any transaction contemplated hereby or thereby,
that, in each case, results from anything other than any Indemnified Party's gross negligence or willful misconduct. In any suit, proceeding or action brought by Lender in connection with any Mortgage
Loan for any sum owing thereunder, or to enforce any provisions of any such Mortgage Loan, Borrower will save, indemnify and hold Lender harmless from and against all expense, loss or damage suffered
by reason of any defense, set-off, counterclaim, recoupment or reduction or liability whatsoever of the account debtor or obligor thereunder, arising out of a breach by Borrower of any
obligation of Borrower thereunder which occurs prior to the date upon which Lender acquires record title to such Mortgage Loan or succeeds to be the absolute owner and holder of such Mortgage Loan.
Without limiting the generality of the foregoing, Borrower, agrees to hold any Indemnified Party harmless from and indemnify such Indemnified Party against all Costs with respect to all Mortgage Loan
relating to or arising out of any violation or alleged violation of any environmental law, rule or regulation that, in each case, results from anything other than such Indemnified Party's gross
negligence or willful misconduct. 



        (b)   Borrower
also agrees to reimburse an Indemnified Party for all such Indemnified Party's costs and expenses incurred in connection with the enforcement or the
preservation of such Indemnified Party's rights under this Loan Agreement, the Note, any other Loan Document or any transaction contemplated hereby or thereby, including without limitation the fees
and disbursements of its counsel as and when billed by such Indemnified Party. Borrower hereby acknowledges that, notwithstanding the fact that the Note is secured by the Collateral, the obligation of
Borrower under the Note is a recourse obligation of Borrower. 


        (c)   Borrower
agrees to pay as and when billed by Lender all of the reasonable out-of-pocket costs and expenses incurred by Lender in connection with
the development, preparation and execution of, and any amendment, supplement or modification to, this Loan Agreement, the Note, any other Loan Document or any other documents prepared in connection
herewith or therewith. Borrower agrees to pay as and when billed by Lender all of the reasonable out-of-pocket costs and expenses incurred in connection with the consummation
and administration of the transactions contemplated hereby and thereby including without limitation (i) all the fees, disbursements and expenses of counsel to Lender and (ii) all the due
diligence, inspection, testing and review costs and expenses incurred by Lender with respect to Collateral under this Loan Agreement, including, but not limited to, those costs and expenses incurred
by Lender pursuant to Sections 11.03(a) and 11.17 hereof,  provided that such fees and expenses shall
not exceed (x) $5,000 for the pre-funding diligence review for each Eligible Loan
submitted by Borrower pursuant to a Request for Borrowing and (y) so long as an Event of Default has not occurred and is not continuing, $3,000 per Mortgage Loan per annum for ongoing
administration and surveillance of each Mortgage Loan. 




        11.04    Amendments.    Except as otherwise expressly provided in this Loan Agreement, any provision of this Loan
Agreement may be modified or supplemented only by an instrument in writing signed by Borrower and Lender and any provision of this Loan Agreement may be waived by Lender. 


42







 

        11.05    Successors and Assigns.    This Loan Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. 


        11.06    Survival.    The obligations of Borrower under  Sections 2.08 and 11.03
hereof shall survive the repayment of the Loans and the termination of
this Loan Agreement for a period of six (6) months. In addition, each representation and warranty made or deemed to be made by a request for a borrowing, herein or pursuant hereto shall survive
the making of such representation and warranty, and Lender shall not be deemed to have waived, by reason of making any Loan, any Default that may arise because any such representation or warranty
shall have proved to be false or misleading, notwithstanding that
Lender may have had notice or knowledge or reason to believe that such representation or warranty was false or misleading at the time such Loan was made. 


        11.07    Captions.    The table of contents and captions and section headings appearing herein are included solely for
convenience of reference and are not intended to affect the interpretation of any provision of this Loan Agreement. 


        11.08    Counterparts.    This Loan Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any of the parties hereto may execute this Loan Agreement by signing any such counterpart. 


        11.09    GOVERNING LAW; ETC.    THIS LOAN
AGREEMENT SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE (BUT WITH REFERENCE TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW, WHICH BY ITS TERMS APPLIES TO THIS LOAN AGREEMENT), AND SHALL CONSTITUTE A SECURITY AGREEMENT WITHIN THE MEANING OF THE UNIFORM COMMERCIAL CODE.


        11.10    SUBMISSION TO JURISDICTION;
WAIVERS.    EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY:



        (A)  SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS LOAN AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS, OR
FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;


        (B)  CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE
SAME;


        (C)  AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY
SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH LENDER SHALL HAVE BEEN NOTIFIED; AND


        (D)  AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO
SUE IN ANY OTHER JURISDICTION.



43









 



































 


        11.11    WAIVER OF JURY TRIAL.    BORROWER AND
LENDER HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS LOAN AGREEMENT, ANY
OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.


        11.12    Acknowledgments.    Borrower hereby acknowledges that: 



        (a)   it
has been advised by counsel in the negotiation, execution and delivery of this Loan Agreement, the Note and the other Loan Documents; 


        (b)   Lender
has no fiduciary relationship to Borrower, and the relationship between Borrower and Lender is solely that of debtor and creditor, and Guarantor and guaranteed
party, respectively; and 


        (c)   no
joint venture exists between Lender and Borrower. 




        11.13    Assignments; Participations.    



        (a)   Borrower
may assign any of its rights or obligations hereunder or under the Note only with the prior written consent of Lender in its sole discretion. Lender may assign
or transfer all or any of its rights or obligations under this Loan Agreement and the other Loan Documents to any Eligible Assignee; provided, that, so
long as an Event of Default has not occurred and is not continuing, following any such assignment or transfer, the initial Lender shall remain as the sole party which Borrower shall be
required to interact with as the agent for the Loans (irrespective of whether such Lender retains any ownership interest in the Loans). Subject to  Section 11.13(a)(i), Lender may furnish any
information concerning Borrower in the possession of Lender from time to time to assignees (including
prospective assignees), without any representation or recourse except as expressly provided in this Loan Agreement. Such assignee or transferee shall provide to Borrower or any agent thereof the
appropriate forms, certificates and statements described in Section 2.10 of this Loan Agreement. 



          (i)  All
information regarding the terms set forth in any of the Loan Documents or the Mortgage Loans shall be kept confidential and shall not be disclosed by Lender or
Lender's assignee to any Person (including prospective assignees) except (a) to the Affiliates of Lender or its assignee or the respective directors, officers, employees, agents, advisors and
other representatives of either who are informed of the confidential nature of such information and instructed to keep it confidential, (b) to the extent requested by any regulatory authority
or required by Requirements of Law, (c) to the extent required to be included in the financial statements of Lender, Lender's assignee or an Affiliate thereof, (d) to the extent required
to exercise any rights or remedies under the Loan Documents or Mortgaged Properties, (e) to the extent required to consummate and administer a Mortgage Loan, or (f) to any actual or
prospective Eligible Assignee that agrees to comply with this Section 11.13(a)(i). 




        (b)   Lender
may, in accordance with applicable law, at any time sell to one or more lenders or other entities ("Participants")
participating interests in any Loan, the Note, its commitment to make Loans, or any other interest of Lender hereunder and under the other Loan Documents. In the event of any such sale by Lender of
participating interests to a Participant, Lender's obligations under this Loan Agreement to Borrower shall remain unchanged, Lender shall remain solely responsible for the performance thereof, Lender
shall remain the holder of the Note for all purposes under this Loan Agreement and the other Loan Documents, and Borrower shall continue to deal solely and directly with Lender in connection with
Lender's rights and obligations under this Loan Agreement and the other Loan Documents. 



44







 

        (c)   Borrower
agrees to cooperate, at no expense to Borrower, with Lender in connection with any such assignment and/or participation, to execute and deliver such replacement
notes, and to enter into such restatements of, and amendments, supplements and other modifications to, this Loan Agreement and the other Loan Documents in order to give effect to such assignment
and/or participation. 


        11.14    Hypothecation or Pledge of Loans.    Subject to the terms of the Custodial Agreement, Lender shall have free
and unrestricted use of all of Lender's interest in the Collateral and nothing in this Loan Agreement shall preclude Lender from engaging in repurchase transactions with Lender's interest in the
Collateral or otherwise pledging, repledging, transferring, hypothecating, or rehypothecating Lender's interest in the Collateral, on terms, and subject to conditions, within Lender's absolute
discretion. Nothing contained in this Loan Agreement shall obligate Lender to segregate any Collateral delivered to Lender by Borrower. 


        11.15    Servicing.    


        (a)   Borrower
covenants to maintain or cause the servicing of the Mortgage Loans to be maintained in conformity with accepted customary and prudent servicing practices in the
industry for the same type of assets as the Mortgage Loans and in a manner at least equal in quality to the servicing Guarantor provides for Mortgage Loans which it owns
("Accepted Servicing Practices"). In the event that the preceding language is interpreted as constituting one or more servicing contracts, each such
servicing contract shall terminate at Lender's option immediately upon written notice to Borrower, upon the occurrence and during the continuance of an Event of Default. Lender hereby acknowledges
that Borrower may engage ARES Commercial Real Estate Servicer LLC, a Delaware limited liability company to service the Mortgage Loans. 


        (b)   If
any Mortgage Loan is serviced by Borrower, (i) Borrower agrees that Lender is the collateral assignee of all servicing records, including but not limited to
any and all servicing agreements, files, documents, records, data bases, computer tapes, copies of computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing
documentation, payment history records, and any other records relating to or evidencing the servicing of Mortgage Loan (the "Servicing Records"), and
(ii) Borrower grants Lender a security interest in all servicing fees and rights relating to the Mortgage Loan and all Servicing Records to secure the obligation of Borrower or its designee to
service in conformity with this Section and any other obligation of Borrower to Lender. Borrower covenants to safeguard such Servicing Records and to deliver them promptly to Lender or its designee
(including Custodian) at Lender's request. 


        (c)   If
any Mortgage Loan is, at any time during the term of this Loan Agreement, serviced by a third party servicer (including any Affiliate of Borrower) (such third party
servicer, the "Servicer"), Borrower (i) shall provide a copy of the Servicing Agreement to Lender, which shall be in form and substance
reasonably acceptable to Lender, and (ii) shall provide a Servicer Notice and Agreement to Servicer substantially in the form of Exhibit L
hereto (a "Servicer Notice and Agreement") and shall cause Servicer to acknowledge and agree to the same. Any successor or assignee of a Servicer shall
be reasonably approved in writing by Lender and shall acknowledge and agree to a Servicer Notice and Agreement prior to such successor's assumption of servicing obligations with respect to the
Mortgage Loan. Upon any transfer of servicing of the Mortgage Loan to a Servicer that is not an Affiliate of Borrower in accordance with this  Section 11.15(c), Lender hereby releases all of its
right, interest, lien or claim of any kind with respect to the servicing rights so
transferred (including, without limitation, the security interest created under Section 4.01(b)), such release to be effective automatically
without any further action by any party; provided, however, that (i) such release does not
include Lender's security interest in any payments received or to be received by Borrower in connection with such transfer or to any payments of any kind with respect to the Mortgage Loan being
serviced by Servicer and (ii) such release is subject 



45







 

to
Lender's right to terminate the Servicing Agreement with such transferee and to cause such transferee to transfer the servicing rights to Lender's designee, in each case as more particularly set
forth in this Section 11.15(c). 


        (d)   After
the Funding Date, until the pledge of any Mortgage Loan is relinquished by Custodian, Borrower will have no obligation or right to repossess such Mortgage Loan or
substitute another Mortgage Loan. 


        (e)   In
the event Borrower or its Affiliate is servicing the Mortgage Loan, Borrower shall permit Lender from time to time to inspect Borrower's or its Affiliate's servicing
facilities, as the case may be, for the purpose of satisfying Lender that Borrower or its Affiliate, as the case may be, during normal business hours and upon reasonable prior notice, has the ability
to service the Mortgage Loan as provided in this Loan Agreement. 




        11.16    Periodic Due Diligence Review.    Borrower acknowledges that Lender has the right to perform continuing due
diligence reviews with respect to the Mortgage Loan and the manner in which the were originated, for purposes of verifying compliance with the representations, warranties and specifications made
hereunder, or otherwise, and Borrower agrees that, unless a Default has occurred (in which case no notice is required), upon reasonable (but no less than three (3) Business Day's) prior notice
to Borrower, Lender or its authorized representatives will be permitted during normal business hours to examine, inspect, and make copies and extracts of, the Mortgage Loan Files and any and all
documents, records, agreements, instruments or information relating to such Mortgage Loan in the possession or under the control of Borrower and/or Custodian. Borrower also shall make available to
Lender a knowledgeable financial or accounting officer for the purpose of answering questions respecting the Mortgage Loan Files and the Mortgage Loan. Borrower further agrees that Borrower shall
reimburse Lender for any and all out-of-pocket costs and expenses incurred by Lender in connection with Lender's activities pursuant to this  Section 11.16 as and when billed by Lender, provided that an Event of Default has occurred and is
continuing hereunder. 


        11.17    Set-Off.    In addition to any rights and remedies of Lender provided by this Loan Agreement and
by law, Lender shall have the right, without prior notice to Borrower, any such notice being expressly waived by Borrower to the extent permitted by applicable law, upon any amount becoming due and
payable by Borrower hereunder (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other credits or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by Lender or any Affiliate thereof to or for the credit or the
account of Borrower. Lender agrees to notify Borrower at the time of any such set-off and application made by Lender; provided that the
failure to give such notice shall not affect the validity of such set-off and application. 


        11.18    Substitution of Guarantor.    Lender shall release Guarantor from Guarantor's obligations under the Guaranty
only upon the occurrence of a Capital Markets Event and Lender's receipt of the following, each of which shall be satisfactory to Lender in form and substance: 



        (a)   a
substitute Guaranty; 


        (b)   an
opinion of counsel to Substitute Guarantor substantially in the form of Exhibit H;


        (c)   certified
copies of the resolutions of the Board of Directors of Substitute Guarantor approving the transactions contemplated by the Substitute Guaranty and other
documents to which Substitute Guarantor is or is to be a party, and of all documents evidencing other necessary corporate action and governmental and other third party approvals and consents, if any,
with respect to the transactions under the Substitute Guaranty and the other documents to which it or such Loan Party is or is to be a party; 



46







 

        (d)   a
copy of a certificate of the Secretary of State (or equivalent authority) of the jurisdiction of incorporation of Substitute Guarantor dated reasonably near the
Guarantor Substitution Date, certifying, if and to the extent such certification is generally available for entities of the type of Substitute Guarantor, (A) as to a true and correct copy of
the charter, certificate of incorporation and other organizational documents of Substitute Guarantor, and each amendment thereto on file in such Secretary's office, (B) that (1) such
amendments are the only amendments to the charter, certificate of incorporation or other organizational documents of Substitute Guarantor on file in such Secretary's office, (2) Substitute
Guarantor has paid all franchise taxes to the date of such certificate and (C) Substitute Guarantor, is duly incorporated and in good standing or presently subsisting under the laws of the
jurisdiction of its incorporation; 


        (e)   A
certificate of Substitute Guarantor certifying as to (A) the absence of any amendments to the constitutive documents of Substitute Guarantor, since the date of
the certificate referred to in Section 11.18(d), (B) a true and correct copy of the bylaws or other Governing Documents of Substitute
Guarantor as in effect on the date on which the resolutions referred to in Section 11.18(c) were adopted, (C) the due incorporation or
valid existence of Substitute Guarantor as a corporation
organized under the laws of the jurisdiction of its incorporation and the absence of any proceeding for the dissolution or liquidation of Substitute Guarantor, (D) the truth of the
representations and warranties contained in the Substitute Guaranty and (E) the absence of any event occurring and continuing, or resulting from the closing hereunder or the Guarantor
Substitution Date that constitutes a Default; 


        (f)    a
certificate of the Secretary or an Assistant Secretary of Substitute Guarantor (or Responsible Officer of Substitute Guarantor) certifying the names and true
signatures of the officers of Substitute Guarantor, authorized to sign the Substitute Guaranty and the other documents to which Substitute Guarantor is or is to be a party; 


        (g)   such
financial, business and other information regarding Substitute Guarantor as Lender shall have requested, including, without limitation, information as to possible
contingent liabilities, tax matters, environmental matters, obligations under Plans, Multiemployer Plans and Single Employer Plans, collective bargaining agreements and other arrangements with
employees, historical operating statements (if any), audited annual financial statements, interim financial statements dated the end of the most recent fiscal quarter for which financial statements
are available and financial projections for Substitute Guarantor's consolidated operations; 


        (h)   confirmation
that no action, suit, investigation, litigation or proceeding affecting Substitute Guarantor is pending or has been threatened before any court,
governmental agency or arbitrator that (i) could reasonably be expected to result in a Material Adverse Effect or (ii) purports to affect the legality, validity or enforceability of the
Substitute Guaranty or the Loan Documents or the consummation of the transactions contemplated thereby; and 



        (i)    all
governmental and third party consents and approvals necessary in connection with the transactions contemplated by Substitute Guaranty and the Loan Documents shall
have been obtained (without the imposition of any conditions that are not acceptable to Lender) and shall remain in effect, and no law or regulation shall be applicable in the reasonable judgment of
Lender that restrains, prevents or imposes materially adverse conditions upon the transactions contemplated by the Substitute Guaranty and the Loan Documents. 




        11.19    Registered Form.    Borrower shall appoint, as its agent, a registrar and transfer agent (the
"Registrar") reasonably acceptable to Lender which shall maintain, subject to such reasonable regulations as it shall provide, such books and records as
are necessary for the registration and transfer of the Note in a manner that shall cause the Note to be considered to be in registered form for purposes of Section 163(f) of the Code. Any
agreement setting out the rights and obligation of the Registrar shall be subject to the reasonable approval of Lender. Borrower may revoke the appointment of any particular person as Registrar,
effective upon the effectiveness of the appointment of a replacement Registrar. The Registrar shall not be entitled to any fee from Borrower or Lender or any other lender in respect of transfers of
the Note and other Loan Documents. 


47







 
[SIGNATURE
PAGE FOLLOWS] 


48

















































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

 






							
	 	 	BORROWER
	

 	
 	
ACRC LENDER C LLC,

a Delaware limited liability company
	

 	
 	
By:	
 	
/s/ Timothy B. Smith







 
	 	 	 	 	Name:	 	Timothy B. Smith
	 	 	 	 	Title:	 	Vice President
	

 	
 	
Address for Notices:
	

 	
 	
Two North LaSalle Street, Suite 925

Chicago, IL 60602

Attention: Sharon Ephraim

Telecopier No.: (312) 324-5901

Telephone No.: (312) 324-5900
	

 	
 	
With a copy to:
	

 	
 	
Two North LaSalle Street, Suite 925

Chicago, IL 60602

Attention: Legal Department

Telecopier No.: (312) 324-5901

Telephone No.: (312) 324-5900




 

 [SIGNATURES
CONTINUE ON NEXT PAGE] 

   


   

 
SIGNATURE PAGE TO MASTER LOAN AND SECURITY AGREEMENT 







 






							
	 	 	LENDER
	

 	
 	
CITIBANK, N.A.,

a national banking association
	

 	
 	
By:	
 	
/s/ Richard B. Schlenger







 
	 	 	 	 	Name:	 	Richard B. Schlenger
	 	 	 	 	Title:	 	Authorized Signatory
	

 	
 	
Address for Notices:
	

 	
 	
CITIBANK, N.A.

388 Greenwich Street

New York, NY 10013

Attention: Richard Schlenger

Telecopier No.: 212-816-8307

Telephone No.: 212-816-7806
	

 	
 	
With a copy to:
	

 	
 	
Sidley Austin LLP

787 Seventh Avenue

New York, NY 10019

Attention: Brian Krisberg, Esq.

Telecopier No.: 212-839-5599

Telephone No.: 212-839-8735




 


   

   

  
SIGNATURE PAGE TO MASTER LOAN AND SECURITY AGREEMENT 









 








































 
 

Schedule 1
  
    REPRESENTATIONS AND WARRANTIES
  RE: INDIVIDUAL MORTGAGE LOANS    



	(1)
	Mortgage Loan Schedule.    The information pertaining to each Mortgage Loan set forth in the
Mortgage Loan Schedule is true and accurate in all material respects as of the Funding Date.



	(2)
	Legal Compliance—Origination.    The origination practices of Borrower (or the related
originator if Borrower was not the originator) have been, in all material respects, legal and as of the date of its origination, such Mortgage Loan and the origination thereof complied in all material
respects with, or was exempt from, all requirements of federal, state or local law relating to the origination of such Mortgage Loan; provided that such
representation and warranty does not address or otherwise cover any matters with respect to federal, state or local law otherwise covered in this Schedule 1.



	(3)
	Good Title; Conveyance.    Immediately prior to the pledge to Lender, Borrower had good title to,
and was the sole owner of, each Mortgage Loan, and Borrower is pledging such Mortgage Loan free and clear of any and all liens, pledges, charges or security interests of any nature encumbering such
Mortgage Loan (other than the rights of the holder of a related Junior Interest). Upon consummation of the transactions contemplated hereunder and the other Loan Documents, Borrower will have validly
and effectively pledged to Lender all legal and beneficial interest in and to such Mortgage Loan free and clear of any pledge, lien or security interest (other than the rights of a holder of a Junior
Interest).



	(4)
	Future Advances.    Except as disclosed to Lender the proceeds of such Mortgage Loan have been
fully disbursed (except in those cases where the full amount of the Mortgage Loan has been disbursed but a portion thereof is being held in escrow or reserve accounts pending the satisfaction of
certain conditions relating to leasing, repairs or other matters with respect to the Mortgaged Property), and there is no requirement for future advances thereunder by the mortgagee.



	(5)
	Legal, Valid and Binding Obligation.    Each related Mortgage Note, Mortgage, Assignment of Leases
(if contained in a document separate from a Mortgage) and any other agreement that evidences or secures such Mortgage Loan and was executed in connection with such Mortgage Loan by or on behalf of the
related Mortgagor is the legal, valid and binding obligation of the related Mortgagor (subject to any non-recourse provisions therein and any state anti-deficiency or market value limit deficiency
legislation), enforceable in accordance with its terms, except (i) that certain provisions contained in such Mortgage Loan Documents are or may be unenforceable in whole or in part under
applicable state or federal laws, but neither the application of any such laws to any such provision nor the inclusion of any such provisions renders any of the Mortgage Loan documents invalid as a
whole and such Mortgage Loan documents taken as a whole are enforceable to the extent necessary and customary for the practical realization of the rights and benefits afforded thereby and
(ii) as such enforcement may be limited by bankruptcy, insolvency, receivership, reorganization, moratorium, redemption, liquidation or other laws affecting the enforcement of creditors' rights
generally, or by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law). The Assignment of Leases (as set forth in the Mortgage or in a
document separate from the related Mortgage and related to and delivered in connection with each Mortgage Loan) establishes and creates a valid and enforceable first priority assignment of, or a valid
first priority security interest in, the related Mortgagor's right to receive payments due under all leases, subleases, licenses or other agreements pursuant to which any Person is entitled to occupy,
use or possess all or any portion of the Mortgaged Property, subject to any license granted to the related Mortgagor to exercise certain rights and to perform certain obligations of the lessor under
such leases, and subject to the limitations set forth above and the Title Exceptions. The related Mortgage Note, Mortgage and Assignment of Leases (if 


Sch. 1-1







 

contained
in a document separate from the Mortgage) contain no provision limiting the right or ability of Borrower to assign, transfer and convey the related Mortgage Loan to any other Person. 



	(6)
	No Offset or Defense.    Subject to the limitations set forth in paragraph (5) and to
Borrower's actual knowledge, as of the date of its origination there was, and as of the Funding Date there is, no valid right of offset and no valid defense, counterclaim, abatement or right to
rescission with respect to any of the related Mortgage Notes, Mortgage(s) or other agreements executed in connection therewith, except in each case, with respect to the enforceability of any
provisions requiring the payment of default interest, late fees, additional interest, prepayment premiums or yield maintenance charges.



	(7)
	Assignment of Mortgage and Assignment of Assignment of Leases.    Subject to the limitations and
exceptions set forth in paragraph (5), each assignment of Mortgage and assignment of Assignment of Leases from Borrower constitutes the legal, valid and binding assignment from Borrower. Each
related Mortgage and Assignment of Leases is freely assignable upon notice to but without the consent of the related Mortgagor.



	(8)
	Mortgage Lien.    The Mortgagor has good indefeasible fee simple title (or with respect to
Mortgage Loans described in paragraph (48), leasehold title) to the related Mortgaged Property and each related Mortgage is a valid and enforceable first lien on the related Mortgaged Property
(and/or Ground Lease, if applicable), subject to the limitations and exceptions set forth in paragraph (5) and the following title exceptions (each such title exception, a
"Title Exception", and collectively, the "Title Exceptions"): (a) the lien of current real
property taxes, ground rents, water charges, sewer rents and assessments not yet due and payable, (b) covenants, conditions and restrictions, rights of way, easements and other matters of
public record, (c) the exceptions (general and specific) and exclusions set forth in the applicable Title Policy (described in paragraph (11) below) or appearing of record,
(d) other matters to which like properties are commonly subject, (e) the right of tenants (whether under ground leases, space leases or operating leases) pertaining to the related
Mortgaged Property and condominium declarations, (f) if such Mortgage Loan is cross-collateralized and cross-defaulted with any other Mortgage Loan, the lien of the Mortgage for such other
Mortgage Loan and (g)the rights of the holder of any related Junior Interest, none of which exceptions described in clauses (a)—(g) above, individually or in the aggregate,
materially and adversely interferes with (1) the current use of the Mortgaged Property, (2) the security intended to be provided by such Mortgage, (3) the Mortgagor's ability to
pay its obligations under the Mortgage Loan when they become due or (4) the value of the Mortgaged Property. The Mortgaged Property is free and clear of any mechanics' or other similar liens or
claims which are prior to or equal with the lien of the related Mortgage, except those which are insured against by a lender's title insurance policy. To Borrower's actual knowledge no rights are
outstanding that under applicable law could give rise to any such lien that would be prior or equal to the lien of the related Mortgage, unless such lien is bonded over, escrowed for or covered by
insurance.



	(9)
	Taxes and Assessments.    All real estate taxes and governmental assessments, or installments
thereof, which could be a lien on the related Mortgaged Property and that prior to the Funding Date have become delinquent in respect of each related Mortgaged Property have been paid, or an escrow of
funds in an amount sufficient to cover such payments has been established. For purposes of this representation and warranty, real estate taxes and governmental assessments and installments thereof
shall not be considered delinquent until the earlier of (a) the date on which interest and/or penalties would first be payable thereon and (b) the date on which enforcement action is
entitled to be taken by the related taxing authority.



	(10)
	Condition of Mortgaged Property; No Condemnation.    To Borrower's actual knowledge, based solely
upon due diligence customarily performed in connection with the origination of comparable Mortgage Loans, as of the Funding Date, (a) each related Mortgaged Property was free and clear 


Sch. 1-2







 

of
any material damage (other than deferred maintenance for which escrows were established at origination) that would affect materially and adversely the value of such Mortgaged Property as security
for the Mortgage Loan and (b) there was no proceeding pending for the total or partial condemnation of such Mortgaged Property of which Borrower has received notice.  



	(11)
	Title Insurance.    The lien of each related Mortgage as a first priority lien in the original
principal amount of such Mortgage Loan, or, in the case of a Mortgage Loan secured by multiple Mortgaged Properties an allocable portion thereof) is insured by an ALTA lender's title insurance policy
(or a binding commitment therefor), or its equivalent as adopted in the applicable jurisdiction (the "Title Policy"), insuring the originator of the
Mortgage Loan, its successors and assigns, subject only to the Title Exceptions; such originator or its successors or assigns is the named insured of such policy; such policy is assignable without
consent of the insurer and will inure to the benefit of Lender as mortgagee of record; such policy, if issued, is in full force and effect and all premiums thereon have been paid; no claims have been
made under such policy and Borrower has not done anything, by act or omission, and to Borrower's actual knowledge there is no matter, which would impair or diminish the coverage of such policy. The
insurer issuing such policy is either (x) a nationally-recognized title insurance company or (y) qualified to do business in the jurisdiction in which the related Mortgaged Property is
located to the extent required. The Title Policy contains no material exclusion for, or alternatively it insures (unless such coverage is unavailable in the relevant jurisdiction) (a) access to
a public road or (b) against any loss due to encroachment of any material portion of the improvements thereon.



	(12)
	Insurance.    As of the origination date of each Mortgage Loan, and to Borrower's actual
knowledge, as of the Funding Date, all insurance coverage required under the related Mortgage Loan Documents was in full force and effect. Each Mortgage Loan requires insurance in such amounts and
covering such risks as were customarily acceptable to prudent commercial and multifamily mortgage lending institutions lending on the security of property comparable to the related Mortgaged Property
in the jurisdiction in which such Mortgaged Property is located, including requirements for (a) a fire and extended perils insurance policy, in an amount (subject to a customary deductible) at
least equal to the lesser of (i) the replacement cost of improvements located on such Mortgaged Property, or (ii) the outstanding principal balance of the Mortgage Loan, and in any
event, the amount necessary to prevent operation of any co-insurance provisions (except with respect to a Mortgage Loan secured by mobile home parks or manufactured housing communities, in
which case such coverage is required only with respect to buildings owned by the related Mortgagor that are permanently located on the related Mortgaged Property), (b) except if such Mortgaged
Property is operated as a mobile home park, business interruption or rental loss insurance, in an amount at least equal to 12 months of operations of the related Mortgaged Property,
(c) commercial general liability insurance against claims for personal and bodily injury, death or property damage occurring on, in or about the related Mortgaged Property, in an amount
customarily required by prudent institutional lenders and (d) if such Mortgage Loan is secured by a Mortgaged Property (other than a manufactured housing property) located in "seismic zones" 3
or 4, a seismic assessment by an independent third party provider was conducted and if the seismic assessment (based on a 450-year lookback with a 10% probability of exceedance in a
50-year period) revealed a probable maximum loss equal to 20% or higher, earthquake insurance; provided that for purposes of compliance with
the foregoing requirement, the probable maximum loss shall be deemed to be the scenario expected loss (SEL) based on ASTM standard E2026-99 for seismic evaluations as reflected in the
seismic report for such Mortgaged Property. If the Mortgaged Property is located within 25 miles of the coast of the Gulf of Mexico or the Atlantic coast of Florida, Georgia, South Carolina or North
Carolina, such Mortgaged Property is insured by windstorm insurance in an amount at least equal to the lesser of (i) the outstanding principal balance of such Mortgage Loan and (ii) 100%
of the full insurable value, or 100% of the replacement cost, of the improvements located on the related Mortgaged Property. To Borrower's 


Sch. 1-3







 

actual
knowledge, as of the Funding Date, all premiums due and payable through the Funding Date have been paid and no notice of termination or cancellation with respect to any such insurance policy
has been received by Borrower. Except for certain amounts not greater than amounts which would be considered prudent by an institutional commercial mortgage lender with respect to a similar Mortgage
Loan and which are set forth in the related Mortgage, the related Mortgage Loan documents require that any insurance proceeds in respect of a casualty loss, will be applied either (i) to the
repair or restoration of all or part of the related Mortgaged Property or (ii) the reduction of the outstanding principal balance of the Mortgage Loan, subject in either case to requirements
with respect to leases at the related Mortgaged Property and to other exceptions customarily provided for by prudent institutional lenders for similar loans. The hazard insurance policies each contain
a standard mortgagee clause naming Borrower and its successors and assigns as loss payee or additional insured, as
applicable, and each insurance policy provides that they are not terminable without 30 days prior written notice to the mortgagee (or, with respect to non-payment, 10 days prior written
notice to the mortgagee) or such lesser period as prescribed by applicable law. The loan documents for each Mortgage Loan (a) require that the Mortgagor maintain insurance as described above or
permit the mortgagee to require that the Mortgagor maintain insurance as described above, and (b) permit the mortgagee to purchase such insurance at the Mortgagor's expense if the Mortgagor
fails to do so. The insurer with respect to each policy is qualified to write insurance in the relevant jurisdiction to the extent required.  



	(13)
	No Material Default.    Other than payments due but not yet 30 days or more delinquent,
there is no monetary event of default existing under the related Mortgage or the related Mortgage Note and, to Borrower's actual knowledge, (i) there is no material default, breach, violation
or event of acceleration existing under the related Mortgage or the related Mortgage Note, and (ii) there is no event (other than payments due but not yet delinquent) which, with the passage of
time or with notice and the expiration of any grace or cure period, would constitute a material default, breach, violation or event of acceleration,  provided, however, that this representation and warranty does not address or otherwise cover any
default, breach, violation or event of acceleration that specifically pertains to any matter otherwise covered in this Schedule I (including any
schedule or exhibit hereto). Borrower has not waived any material default, breach, violation or event of acceleration under such Mortgage or Mortgage Note, unless a written waiver to that effect is
contained in the related Mortgage Loan File being delivered, and pursuant to the terms of the related Mortgage or the related Mortgage Note and other documents in the related Mortgage Loan File, no
Person or party other than the holder of such Mortgage Note may declare any event of default or accelerate the related indebtedness under either of such Mortgage or Mortgage Note.



	(14)
	Payment Record.    As of the Funding Date, each Mortgage Loan is not, and in the prior
12 months (or since the date of origination if such Mortgage Loan has been originated within the past 12 months), has not been, 30 days or more past due in respect of any
scheduled payment.



	(15)
	Servicing.    The servicing and collection practices used by Borrower with respect to the
Mortgage Loan have been, in all respects, legal and have met customary industry standards for servicing of commercial loans.



	(16)
	Environmental Conditions and Compliance.    One or more environmental site assessments or updates
thereof were performed by an environmental consulting firm independent of Borrower or Borrower's Affiliates with respect to each related Mortgaged Property during the 18-months preceding
the origination of the related Mortgage Loan, and Borrower, having made no independent inquiry other than to review the report(s) prepared in connection with the assessment(s) referenced herein, has
no actual knowledge and has received no notice of any material and adverse environmental condition or circumstance affecting such Mortgaged Property that was not disclosed in such report(s). If any
such environmental report identified any Recognized Environmental Condition ("REC"), as that term is defined in the Standard
Practice for  


Sch. 1-4







 

 Environmental Site Assessments: Phase I Environmental Site Assessment Process Designation: E 1527-05, as recommended by the American Society for Testing and
Materials ("ASTM"), with respect to the related Mortgaged Property and the same have not been subsequently addressed in all material respects, then
either one or a combination of (i) an escrow greater than or equal to 100% of the amount identified as necessary by the environmental consulting firm to address the REC is held by Borrower for
purposes of effecting same (and the Mortgagor has covenanted in the Mortgage Loan documents to perform such work), (ii) a responsible party, other than the Mortgagor, having financial resources
reasonably estimated to be adequate to address the REC is required to take such actions or is liable for the failure to take such actions, if any, with respect to such circumstances or conditions as
have been required by the applicable governmental regulatory authority or any environmental law or regulation, (iii) the Mortgagor has provided an environmental insurance policy, (iv) an
operations and maintenance plan was the only action recommended and such plan has been or will be implemented or (v) such conditions or circumstances were investigated further and a qualified
environmental consulting firm recommended no further investigation or remediation. Each of the Mortgage Loans which is covered by a lender's environmental insurance policy obtained in lieu of an
Environmental Site Assessment ("In Lieu of Policy") is in an amount equal to 125% of the outstanding principal balance of the related Mortgage Loan and
has a term ending no sooner than the date which is five years after the maturity date of the related Mortgage Loan, is non-cancelable by the insurer during such term and the premium for such policy
has been paid in full. All environmental assessments or updates that were in the possession of Borrower and that relate to a Mortgaged Property identified as being insured by an In Lieu of Policy have
been delivered to or disclosed to the In Lieu of Policy carrier issuing such policy prior to the issuance of such policy.  



	(17)
	Customary Mortgage Provisions.    Each related Mortgage Note, Mortgage and Assignment of Leases
(if contained in a document separate from the Mortgage) contain customary and, subject to the limitations and exceptions set forth in paragraph (5) and applicable state law, enforceable
provisions for comparable mortgaged properties similarly situated such as to render the rights and remedies of the holder thereof adequate for the practical realization against the Mortgaged Property
of the benefits of the security intended to be provided thereby, including realization by judicial or, if applicable, non-judicial foreclosure.



	(18)
	Bankruptcy.    No Mortgagor is a debtor in, and no Mortgaged Property (other than any tenants of
such Mortgaged Property) is the subject of, any state or federal bankruptcy or insolvency proceeding.



	(19)
	Whole Loan; No Equity Participation, Contingent Interest or Negative Amortization.    Except with
respect to a Mortgage Loan that is part of a A/B structure, each Mortgage Loan is a whole loan. None of the Mortgage Loans contain any equity participation, preferred equity component or shared
appreciation feature by the mortgagee nor does any Mortgage Loan provide the mortgagee with any contingent or additional interest in the form of participation in the cash flow of the related Mortgaged
Property.



	(20)
	Transfers and Subordinate Debt.    Subject to specific exceptions set forth below, each Mortgage
Loan contains a "due on sale" or other such provision for the acceleration of the payment of the unpaid principal balance of such Mortgage Loan if, without the consent of the holder of the Mortgage
(which consent, in some cases, may not be unreasonably withheld) and/or complying with the requirements of the related Mortgage Loan documents (which may provide for transfers without the consent of
the lender which are customarily acceptable to prudent commercial and multifamily mortgage lending institutions lending on the security of property comparable to the related Mortgaged Property such as
transfers of worn out or obsolete furnishings, fixtures, or equipment promptly replaced with property of equivalent value and functionality and transfers of leases entered into in accordance with the
Mortgage Loan documents), (a) the related Mortgaged 


Sch. 1-5







 

Property,
or any controlling equity interest in the related Mortgagor, is directly or indirectly pledged, transferred or sold, other than as related to (i) family and estate planning transfers,
(ii) transfers to certain affiliates as defined in the related Mortgage Loan documents, (iii) transfers of less than a
controlling interest in a Mortgagor, (iv) transfers to another holder of direct or indirect equity in the Mortgagor, a specific Person designated in the related Mortgage Loan documents or a
Person satisfying specific criteria identified in the related Mortgage Loan documents, (v) transfers of common stock in publicly traded companies, (vi) a substitution or release of
collateral within the parameters of paragraph (24) below or, (vii) by reason of any mezzanine debt that existed at the origination of the related Mortgage Loan or that was permitted
after origination of the related Mortgage Loan or may be permitted in the future under the related Mortgage Loan documents, or (b) the related Mortgaged Property is encumbered with a
subordinate lien or security interest against the related Mortgaged Property, other than (i) any Junior Interest of any Mortgage Loan or any subordinate debt that existed at origination and is
permitted under the related Mortgage Loan documents, (ii) trade debt and equipment or other personal property financing in the ordinary course of business or (iii) any Mortgage Loan that
is cross-collateralized and cross-defaulted with another Mortgage Loan. Except as related to (a)(i), (ii), (iii), (iv), (v), (vi) or (vii) above or (b)(i), (ii) or
(iii) above, no Mortgage Loan may be assigned to another entity without the mortgagee's consent. The Mortgage or other Mortgage Loan document provides that the Mortgagor is required to pay all
reasonable out-of-pocket expenses of the lender incurred with respect to any transfer or encumbrance.  



	(21)
	Waivers and Modification.    Except as set forth in the related Mortgage Loan File, the terms of
the related Mortgage Note and Mortgage have not been waived, modified, altered, satisfied, impaired, canceled, subordinated or rescinded in any manner which materially interferes with the security
intended to be provided by such Mortgage.



	(22)
	Inspection.    Each related Mortgaged Property was inspected by or on behalf of the related
originator or an affiliate of the originator during the 12 month period prior to the related origination date.



	(23)
	Releases of Mortgaged Property.    (A) Since origination, no material portion of the
related Mortgaged Property has been released from the lien of the related Mortgage in any manner that materially and adversely affects the value of the Mortgage Loan or materially interferes with the
security intended to be provided by such Mortgage; and (B) the terms of the related Mortgage Loan documents do not permit the release of any portion of the Mortgaged Property from the lien of
the Mortgage except (i) in consideration of payment in full (or in certain cases, the allocated loan amount) therefor, (ii) in connection with the substitution of all or a portion of the
Mortgaged Property in exchange for delivery of U.S."government securities" within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, in a defeasance (or a
partial defeasance, in the case of a release of a portion of the Mortgaged Property) meeting the requirements of paragraph (42) below, (iii) where such portion to be released was not
considered material for purposes of underwriting the Mortgage Loan and such release was contemplated at origination, (iv) conditioned on the satisfaction of certain underwriting and other
requirements, including payment of (or partial defeasance in the amount of) a release price in an amount equal to not less than the greater of (x) 90% of the net sales proceeds and (y) a
minimum amount equal to 125% of the allocated loan amount for such Mortgaged Property or the portion thereof to be released, or (v) in connection with the substitution of a replacement property
acceptable to mortgagee pursuant to its underwriting standards. The Mortgage Loan documents require the Mortgagor to pay all related reasonable out-of-pocket expenses of the lender in connection with
any release described in this paragraph (24). 


Sch. 1-6









 







































	(24)
	Compliance with Applicable Law.    To Borrower's actual knowledge, based upon a letter from
governmental authorities, a legal opinion, an endorsement to the related title policy, or other due diligence considered reasonable by prudent commercial mortgage lenders taking into account the
location, type and use of the Mortgaged Property, as of the date of origination of such Mortgage Loan and as of the Funding Date, there are no material violations of any applicable zoning ordinances,
building codes and land laws applicable to the Mortgaged Property or the use and occupancy thereof other than those which (i) are insured by the Title Policy or a law and ordinance insurance
policy or (ii) would not have a material adverse effect on the value, operation or net operating income of the Mortgaged Property. The terms of the Mortgage Loan documents evidencing such
Mortgage Loan require the Mortgagor to comply in all material respects with all applicable local, state and federal laws and regulations.



	(25)
	Improvements.    To Borrower's actual knowledge based on the Title Policy or surveys obtained in
connection with the origination of each Mortgage Loan, none of the material improvements which were included for the purposes of determining the appraised value of the related Mortgaged Property at
the time of the origination of the Mortgage Loan lies outside of the boundaries and building restriction lines of such property nor encroaches upon any easements (except Mortgaged Properties, in each
case, which are legal non-conforming improvements or uses), to an extent which would have a material adverse affect on the value of the Mortgaged Property or related Mortgagor's use and operation of
such Mortgaged Property (unless affirmatively covered by the related Title Policy) and no improvements on adjoining properties encroached upon such Mortgaged Property to any material and adverse
extent (unless affirmatively covered by the related Title Policy).



	(26)
	Single Purpose Entity.    With respect to each Mortgage Loan with a unpaid principal balance in
excess of $5,000,000 the related Mortgagor has covenanted in its organizational documents and/or the Mortgage Loan documents to own no significant asset other than the related Mortgaged Property and
assets incidental to its ownership and operation of such Mortgaged Property, and to hold itself out as being a legal entity, separate and apart from any other Person. For each Mortgage Loan for which
the related Mortgagor has covenanted in its organizational documents and/or the Mortgage Loan documents to own no significant asset other than the related Mortgaged Property and assets incidental to
its ownership and operation of such Mortgaged Property, at the time of origination of the Mortgage Loan, to Borrower's actual knowledge, the Mortgagor was in compliance with such requirements.



	(27)
	Advance of Funds.    (A) After origination, Borrower has not, directly or indirectly,
advanced any funds to the Mortgagor, other than pursuant to the related Mortgage Loan documents; and (B) to Borrower's actual knowledge, no funds have been received from any Person other than
the Mortgagor or another recourse party or Mortgagor's property manager, for or on account of payments due on the Mortgage Note (other than amounts paid by the tenant into a lender-controlled lockbox
as specifically required under the related lease).



	(28)
	Litigation or Other Proceedings.    As of the date of origination and, to Borrower's actual
knowledge, as of the Funding Date, there was no pending action, suit or proceeding, or governmental investigation of which it has received notice, against the Mortgagor or the related Mortgaged
Property the adverse outcome of which could reasonably be expected to materially and adversely affect (i) such Mortgagor's ability to pay its obligations under the Mortgage Loan,
(ii) the security intended to be provided by the Mortgage Loan documents or (iii) the current use of the Mortgaged Property.



	(29)
	Trustee Under Deed of Trust.    As of the date of origination, and, to Borrower's actual
knowledge, as of the Funding Date, if the related Mortgage is a deed of trust, a trustee, duly qualified under 


Sch. 1-7







 

applicable
law to serve as such, has either been properly designated and serving under such Mortgage or may be substituted in accordance with the Mortgage and applicable law. 



	(30)
	Usury.    The Mortgage Loan accrues interest (exclusive of any default interest, late charges,
yield maintenance charges or prepayment premiums) at a rate, and complied as of the date of origination with, or is exempt from, applicable state or federal laws, regulations and other requirements
pertaining to usury.



	(31)
	Other Collateral.    Except with respect to the Junior Interest or any Mortgage Loan that is
cross-collateralized and cross-defaulted with another Mortgage Loan, to Borrower's actual knowledge, the related Mortgage Note is not secured by any collateral that secures a loan that is not a
Mortgage Loan, except for loans permitted pursuant to paragraph (21)(b)(ii).



	(32)
	Flood Insurance.    If the improvements on the Mortgaged Property are located in a federally
designated special flood hazard area, the Mortgagor is required to maintain flood insurance with respect to such improvements and such policy is in full force and effect.



	(33)
	Escrow Deposits.    All escrow deposits and payments required to be deposited with Borrower or
its agent in accordance with the Mortgage Loan documents have been (or by the Funding Date will be) so deposited, are in the possession of or under the control of Borrower or its agent, and there are
no deficiencies in connection therewith, other than amounts released from such escrows in accordance with the terms of the related Mortgage Loan.



	(34)
	Licenses and Permits.    To Borrower's actual knowledge, based on the due diligence customarily
performed in the origination of comparable Mortgage Loans by prudent commercial lending institutions considering the related geographic area and properties comparable to the related Mortgaged
Property, (i) as of the date of origination of the Mortgage Loan, the related Mortgagor, the related lessee, franchisor or operator was in possession of all material licenses, permits and
authorizations then required for use of the related Mortgaged Property, and, (ii) as of the Funding Date, Borrower has no actual knowledge that the related Mortgagor, the related lessee,
franchisor or operator was not in possession of such licenses, permits and authorizations. The Mortgage Loan documents require the Mortgagor to maintain all such material licenses, permits and
authorizations.



	(35)
	Organization of Mortgagors.    With respect to each Mortgage Loan, in reliance on certified
copies of the organizational documents of the Mortgagor delivered by the Mortgagor in connection with the origination of such Mortgage Loan, the Mortgagor is an entity organized under the laws of a
state of the United States of America, the District of Columbia or the Commonwealth of Puerto Rico. Except with respect to any Mortgage Loan that is cross-collateralized and cross defaulted with
another Mortgage Loan, no Mortgage Loan has a Mortgagor that is an affiliate of another Mortgagor.



	(36)
	Fee Simple Interest.    Except with respect to the Mortgage Loans covered by
paragraph (48), the Mortgage Loan is secured in whole or in material part by the fee simple interest in the related Mortgaged Property.



	(37)
	Recourse.    Each Mortgage Loan is non-recourse to the related Mortgagor except that the
Mortgagor and a natural person (or an entity with assets other than an interest in the Mortgagor) as guarantor have agreed to be liable with respect to losses incurred due to (i) fraud and/or
other intentional material misrepresentation, (ii) misappropriation of rents collected in advance or received by the related Mortgagor after the occurrence of an event of default and not paid
to the mortgagee or applied to the Mortgaged Property in the ordinary course of business, (iii) misapplication or conversion by the Mortgagor of insurance proceeds or condemnation awards,
(iv) breach of the environmental covenants in the related Mortgage Loan documents, (v) the voluntary or collusive bankruptcy of the Mortgagor, or (vi) other carveouts acceptable
to Borrower. 


Sch. 1-8







 
	(38)
	Access; Tax Parcels.    To Borrower's actual knowledge, each Mortgaged Property (a) is
located on or adjacent to a dedicated road, or has access to an irrevocable easement permitting ingress and egress, (b) is served by public utilities, water and sewer (or septic facilities) and
(c) constitutes one or more separate tax parcels.



	(39)
	Financial Statements.    Each Mortgage or loan agreement requires the Mortgagor to provide the
mortgagee with (i) quarterly (other than for single-tenant properties) and annual operating statements, (ii) quarterly (other than for single-tenant properties) rent rolls listing each
lease contributing more than 5% of the in-place base rent and (iii) annual financial statements, which annual financial statements (a) with respect to each Mortgage Loan with more than
one Mortgagor are in the form of an annual combined balance sheet of the Mortgagor entities (and no other entities), together with the related combined statements of operations, members' capital and
cash flows, including a combined balance sheet and statement of income for the Mortgaged Properties on a combined basis and (b) for each Mortgage Loan with an original principal balance greater
than $75 million are required to be audited by an independent certified public accountant upon the request of the mortgagee.



	(40)
	Rent Rolls; Operating Histories.    Except with respect to Mortgage Loans secured by one or more
hospitality properties, Borrower has obtained a rent roll certified by the related Mortgagor or the related guarantor(s) as accurate and complete in all material respects as of a date within
180 days of the date of origination of the related Mortgage Loan. With respect to each Mortgaged Property, Borrower has obtained operating histories (the "Certified
Operating Histories") certified by the related Mortgagor or the related guarantor(s) as accurate and complete in all material respects as of a date within 180 days of
the date of origination of the related Mortgage Loan. The Certified Operating Histories collectively report on operations for (a) a continuous period of at least three years or (b) in
the event the Mortgaged Property was owned or operated in its current form by the Mortgagor or an affiliate for less than three years prior to origination, then for a continuous period from the date
that such Mortgaged Property was first owned or operated in its current form by the Mortgagor or an affiliate through the end of the calendar month most recently ended prior to origination, it being
understood however that for Mortgaged Properties acquired with the proceeds of a Mortgage Loan, Certified Operating Histories may not have been available.



	(41)
	Authorization in Jurisdiction.    To the extent required under applicable law, as of the date of
origination and at all times it held the Mortgage Loan, the originator of such Mortgage Loan was authorized to do business in the jurisdiction in which the related Mortgaged Property is located.



	(42)
	Capital Contributions.    Neither Borrower nor any affiliate thereof has any obligation to make
any capital contributions to the Mortgagor under the Mortgage Loan documents.



	(43)
	Subordinate Debt.    Except with respect to the Junior Interest of any Mortgage Loan or any
Mortgage Loan that is cross-collateralized and cross-defaulted with another Mortgage Loan, none of the Mortgaged Properties are encumbered by any lien securing the payment of money of equal priority
with, or superior to, the lien of the related Mortgage (other than Title Exceptions, taxes, assessments and contested mechanics and materialmens liens that become payable after the Funding Date) and
debt permitted pursuant to paragraph (21)(b)(ii). As of the date of origination of the related Mortgage Loan and, to Borrower's knowledge, as of the Funding Date, except with respect to the
Junior Interest of any Mortgage Loan or any Mortgage Loan that is cross-collateralized and cross-defaulted with another Mortgage Loan, none of the Mortgaged Properties are encumbered by any lien
securing the payment of money junior to the lien of the related Mortgage (other than Title Exceptions, taxes, assessments and contested mechanics and materialmens liens that become payable after the
Funding Date) and debt permitted pursuant to paragraph (21)(b)(ii). 


Sch. 1-9







 
	(44)
	Ground Lease Representations and Warranties.    With respect to each Mortgage Loan secured by a
leasehold interest (except with respect to any Mortgage Loan also secured by the corresponding fee interest in the related Mortgaged Property), Borrower represents and warrants the following with
respect to the related Ground Lease:



	(a)
	Such
Ground Lease or a memorandum thereof has been or will be duly recorded and such Ground Lease permits the interest of the lessee thereunder to be
encumbered by the related Mortgage or, if consent of the lessor thereunder is required, it has been obtained prior to the Funding Date.



	(b)
	Upon
the foreclosure of the Mortgage Loan (or acceptance of a deed in lieu thereof), the Mortgagor's interest in such Ground Lease is assignable to the
mortgagee and its assigns without the consent of the lessor thereunder (or, if any such consent is required, it has been obtained prior to the Funding Date).



	(c)
	Subject
to the limitations on and exceptions to enforceability set forth in paragraph (5), such Ground Lease may not be amended, modified, canceled
or terminated without the prior written consent of the mortgagee and any such action without such consent is not binding on the mortgagee, its successors or assigns, except that termination or
cancellation without such consent may be binding on the mortgagee if (i) an event of default occurs under the Ground Lease, (ii) notice is provided to the mortgagee and (iii) such
default is curable by the mortgagee as provided in the Ground Lease but remains uncured beyond the applicable cure period.



	(d)
	Such
Ground Lease is in full force and effect and other than payments due but not yet thirty (30) days or more delinquent and to the actual knowledge
of Borrower, (i) there is no material default, and (ii) to the actual knowledge of Borrower, there is no event which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a material default under such Ground Lease; provided, however, that this representation and warranty does not address or otherwise cover any default, breach,
violation or event of acceleration that specifically pertains to any matter otherwise covered by any other representation and warranty made by Borrower elsewhere in this  Schedule 1 or in any of the
exceptions to the representations and warranties submitted by Borrower.



	(e)
	The
Ground Lease or ancillary agreement between the lessor and the lessee (i) requires the lessor to give notice of any default by the lessee to the
mortgagee and (ii) provides that no notice of termination given is effective against the mortgagee unless a copy has been delivered to the mortgagee in the manner described in the ground lease
or ancillary agreement.



	(f)
	The
Ground Lease (i) is not subject to any liens or encumbrances superior to, or of equal priority with, the Mortgage, other than the ground lessor's
fee interest and Title Exceptions or (ii) is subject to a subordination, non-disturbance and attornment agreement to which the mortgagee on the lessor's fee interest in the Mortgaged Property
is subject.



	(g)
	The
mortgagee is permitted a reasonable opportunity (including, where necessary, sufficient time to gain possession of the interest of the lessee under the
ground lease) to cure any curable default under such Ground Lease after receipt of notice of such default before the lessor thereunder may terminate such Ground Lease.



	(h)
	Such
Ground Lease has an original term (together with any extension options, whether or not currently exercised, set forth therein all of which can be
exercised by the mortgagee if the mortgagee acquires the lessee's rights under the Ground Lease) that extends not less than 20 years beyond the final stated maturity date of the related
Mortgage Loan or if such Mortgage Loan is fully amortizing, extends not less than 10 years after the amortization term for the Mortgage Loan. 





Sch. 1-10







 

	(i)
	Under
the terms of the Ground Lease and the related Mortgage Loan documents (including, without limitation, any estoppel or consent letter received by the
mortgagee from the lessor), taken together, any related insurance proceeds or condemnation award (other than de minimis amounts for minor casualties or in respect of a total or substantially total
loss or taking) will be applied either to the repair or restoration of all or part of the related Mortgaged Property, with the mortgagee or a trustee appointed by it having the right to hold and
disburse such proceeds as repair or restoration progresses, or to the payment or defeasance of the outstanding principal balance of the Mortgage Loan, together with any accrued interest (except in
cases where a different allocation would not be viewed as commercially unreasonable by any commercial mortgage lender, taking into account the relative duration of the ground lease and the related
Mortgage and the ratio of the market value of the related Mortgaged Property to the outstanding principal balance of such Mortgage Loan).



	(j)
	The
Ground Lease does not restrict the use of the related Mortgaged Property by the lessee or its successors or assigns in a manner that would materially
adversely affect the security provided by the related mortgage.



	(k)
	The
Ground Lease does not impose any restrictions on subletting that would be viewed as commercially unreasonable by a prudent commercial mortgage lender.



	(l)
	The
ground lessor under such Ground Lease is required to enter into a new lease upon termination of the Ground Lease for any reason, including the rejection
of the Ground Lease in bankruptcy. 




         Other.    For purposes of this Agreement, with respect to Borrower, the term "actual knowledge" shall mean that an officer, employee or
agent of
Borrower responsible for the underwriting, origination and sale or servicing of the Mortgage Loans does not actually know of any facts or circumstances that would cause such person to believe that
such representation or warranty was inaccurate. The "actual knowledge" of any such Borrower shall be deemed to include the actual knowledge of any Servicer that is an Affiliate of Borrower servicing a
Mortgage Loan on behalf of Borrower. The "actual knowledge of any servicer" shall mean that an officer or employee of the servicer responsible for the servicing of the Mortgage Loans does not actually
know of any facts or circumstances that would cause such person to believe that such representation or warranty was inaccurate. 


Sch. 1-11









 








































 
 

Schedule 2
  
    SPECIAL PURPOSE ENTITY
  
    Definition of Special Purpose Bankruptcy Remote Entity    





        A "Special Purpose Bankruptcy Remote Entity" means a corporation, limited partnership
or limited liability company which at all times since its formation and at all times thereafter: 



          (i)  was
and will be organized solely for the purpose of engaging in (a) the origination, purchase, ownership, servicing, sale and securitization, directly or
indirectly, of one or more Mortgage Loans to be pledged as Collateral hereunder and (b) any and all activities necessary, convenient or incidental to the foregoing; 



         (ii)  has
not engaged and will not engage in any business unrelated to the purposes enumerated in paragraph (i) herein; 


        (iii)  has
not had and will not have any assets other than one or more Mortgage Loans, cash, cash equivalents and assets of a similar nature; 


        (iv)  has
not engaged, sought or consented to and will not engage in, seek or consent to any dissolution, winding up, liquidation, consolidation, merger, asset sale (except
as expressly permitted by the Loan
Documents), transfer of partnership or membership interests or the like, or material amendment of its limited partnership agreement, articles of incorporation, articles of organization, certificate of
formation or operating agreement (as applicable) (except as expressly permitted by the Loan Documents); 


         (v)  has
an Independent Director whose affirmative vote is required for any Bankruptcy Action; 


        (vi)  has
not, and without the unanimous consent of all of its partners, directors or members, as applicable, will not take any Bankruptcy Action; 


       (vii)  as
of the date hereof maintains and intends to maintain adequate capital in light of its contemplated business operations; 


      (viii)  has
not failed and will not fail to correct any known misunderstanding regarding the separate identity of such entity; 


        (ix)  has
maintained and will maintain its accounts (other than the Servicer's Account), books and records separate from any other Person and will file its own tax returns,
except as expressly required under the Loan Documents and except to the extent such entity is treated as a "disregarded entity" for tax purposes; 


         (x)  has
maintained and will maintain its books, records, resolutions and agreements as official records; 



        (xi)  has
not commingled and will not commingle its funds or assets with those of any other Person, except as expressly required under the Loan Documents; 


       (xii)  has
held and will hold its assets in its own name; 


      (xiii)  has
conducted and will conduct its business in its name only, and has not and will not use any trade name, except as expressly disclosed to Lender in writing; 


      (xiv)  has
maintained and will maintain its financial statements, accounting records and other entity documents separate from any other Person, provided that any Borrower may
be included in a consolidated financial statement of an Affiliate provided that such Borrower's separate legal existence and assets and liabilities are adequately disclosed therein; 



Sch. 2-1







 

       (xv)  has
paid and will pay its own liabilities, including the salaries of its own employees, out of its own funds and assets; 


      (xvi)  has
observed and will observe all partnership, corporate or limited liability company formalities, as applicable; 



     (xvii)  has
maintained and will maintain an arm's-length relationship with its Affiliates, except for contractual arrangements approved by Lender or contemplated by this
Agreement (including, without limitation, the Management Agreement); 


    (xviii)  has
and will have no Indebtedness other than unsecured trade payables in the ordinary course of business which (1) do not exceed, at any time, $10,000 in the
aggregate and (2) are paid within forty-five (45) days of the date incurred; 


      (xix)  has
not and will not assume or guarantee or become obligated for any Guarantee Obligation; 



       (xx)  has
not and will not acquire obligations or securities of its partners, members or shareholders, except as otherwise expressly required pursuant to the Loan Documents; 


      (xxi)  has
allocated and will allocate fairly and reasonably shared expenses, if any, including shared office space (if any); 


     (xxii)  if
such entity shares any employees with other Persons, the salaries of and the expenses related to providing benefits to such employees have been fairly and
non-arbitrarily allocated among such Persons, with the result that each such Person bears its fair share of the salary and benefit costs associated with all such common employees; 



    (xxiii)  except
in connection with the Loans hereunder, has not pledged and will not pledge its assets for the benefit of any other Person; 


    (xxiv)  has
held itself out and identified itself and will hold itself out and identify itself as a separate and distinct entity under its own name and not as a division or
part of any other Person; 


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


    (xxvi)  has
not made and will not make loans to any Person, except for any Mortgage Loan now or hereafter pledged hereunder; 


   (xxvii)  has
not identified and will not identify its partners, members or shareholders, or any Affiliate of any of them, as a division or part of it; 


  (xxviii)  has
not entered into or been a party to, and will not enter into or be a party to, any transaction with its partners, members, shareholders or Affiliates except in
the ordinary course of its business and on terms which are no less favorable to it than would be obtained in a comparable arm's-length transaction with an unrelated third party; and 



     (xxix)  will
consider the interests of its creditors in connection with all corporate, partnership or limited liability company actions, as applicable. 




        "Bankruptcy Action" means, with respect to any Person, if such Person 



          (i)  makes
an assignment for the benefit of creditors, 


         (ii)  files a
voluntary petition in bankruptcy, 


        (iii)  is
adjudged a bankrupt or insolvent, or has entered against it an order for relief, in any bankruptcy or insolvency proceedings, 



Sch. 2-2







 

        (iv)  consents
to or files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation, 


         (v)  files
an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any bankruptcy or insolvency proceeding, 


        (vi)  seeks,
consents to or acquiesces in the appointment of a trustee, receiver, liquidator, sequestrator, custodian or any similar official of or for such Person or of all
or any substantial part of its properties, 


       (vii)  has
not had a bankruptcy proceeding dismissed one hundred twenty (120) days after the commencement of any proceeding against such Person seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, 


      (viii)  without
such Person's consent or acquiescence, has a trustee, receiver or liquidator be appointed with respect to such Person or of all or any substantial part of its
properties, and such appointment is not vacated or stayed within ninety (90) days, or within ninety (90) days after the expiration of any such stay, the appointment is not vacated or 



        (ix)  takes
any action in furtherance of any of the foregoing. 



Sch. 2-3









 








































 
 

  Schedule 3
  
    FILING JURISDICTIONS AND OFFICES    
    


	1.
	Secretary
of State of the State of Delaware 


Sch. 3-1









 








































 
 

  Schedule 4
  
    ORGANIZATIONAL CHART OF BORROWER
  
    [SEE ATTACHED]    
    


Sch. 4-1









 








































 
 

  Schedule 5
  
    LIST OF DIRECT COMPETITORS    
    


Public REITs (or affiliates of their managers)



Starwood
Property Trust, Inc.

Colony Financial, Inc.

Apollo Commercial Real Estate Finance, Inc.

Crexus Investment Corp.

iStar Financial Inc.

NorthStar Realty Finance Corp.

Resource Capital Corp. 


RE Debt Providers  


General Electric Capital Corporation

NXT Capital, Inc.

Mesa West Capital, LLC

Ladder Capital Securities LLC

Prime Finance LLC and related parties

LoanCore LLC 


Sch. 5-1









 








































 
 

  EXHIBIT A
  
    [FORM OF NOTE]    
    

 






			
	$50,000,000

(or after a Public Capital

Markets Event, $100,000,000)	 	December 8, 2011

New York, New York






 

         FOR
VALUE RECEIVED, ACRC Lender C LLC, an Delaware limited liability company ("Borrower"), hereby promises to pay to the order of
CITIBANK, N.A. ("Lender"), at the principal office of Lender at 388 Greenwich Street, New York, New York 10013 in lawful money of the United States, and
in immediately available funds, the principal sum of FIFTY MILLION DOLLARS ($50,000,000) (or after a Public Capital Markets Event, One Hundred Million Dollars ($100,000,000)) (or such lesser amount as
shall equal the aggregate unpaid principal amount of the Loans made by Lender to Borrower under the Loan Agreement), on the dates and in the principal amounts provided in the Loan Agreement, and to
pay interest on the unpaid principal amount of each such Loan, at such office, in like money and funds, for the period commencing on the date of such Loan until such Loan shall be paid in full, at the
rates per annum and on the dates provided in the Loan Agreement. 


        The
date, the amount and interest rate of each Loan made by Lender to Borrower, and each payment made on account of the principal thereof, shall be recorded by Lender on its books and,
prior to any transfer of this Note, endorsed by Lender on the schedule attached hereto or any continuation thereof; provided, that the failure of Lender
to make any such recordation or endorsement shall not affect the obligations of Borrower to make a payment when due of any amount owing under the Loan Agreement or hereunder in respect of the Loans
made by Lender. 


        This
Note is the Note referred to in the Master Loan and Security Agreement dated as of December 8, 2011 (as amended, supplemented or otherwise modified and in effect from time to
time, the "Loan Agreement") between Borrower and Lender, and evidences Loans made by Lender thereunder. Terms used but not defined in this Note have the
respective meanings assigned to them in the Loan Agreement. 


        Borrower
agrees to pay all of Lender's costs of collection and enforcement (including reasonable attorneys' fees and disbursements of Lender's counsel) in respect of this Note in
accordance with the Loan Agreement, including, without limitation, reasonable attorneys' fees through appellate proceedings. 


        Notwithstanding
the pledge of the Collateral, Borrower hereby acknowledges, admits and agrees that Borrower's obligations under this Note are recourse obligations of Borrower to which
Borrower pledges its full faith and credit. 


        Borrower,
and any endorsers or guarantors hereof, (a) severally waive diligence, presentment, protest and demand and also notice of protest, demand, dishonor and nonpayments of
this Note, (b) expressly agree that this Note, or any payment hereunder, may be extended from time to time, and consent to the acceptance of further Collateral, the release of any Collateral
for this Note, the release of any party primarily or secondarily liable hereon, and (c) expressly agree that it will not be necessary for Lender, in order to enforce payment of this Note, to
first institute or exhaust Lender's remedies against Borrower or any other party liable hereon or against any Collateral for this Note. No extension of time for the payment of this Note, or any
installment hereof, made by agreement by Lender with any person now or hereafter liable for the payment of this Note, shall affect the liability under this Note of Borrower, even if Borrower is not a
party to such agreement; provided, however, that Lender and Borrower, by written agreement between them,
may affect the liability of Borrower. 


A-1







 

        Any
reference herein to Lender shall be deemed to include and apply to every subsequent holder of this Note. Reference is made to the Loan Agreement for provisions concerning optional
and mandatory prepayments, Collateral, acceleration and other material terms affecting this Note. 



        This Note shall be governed by and construed under the laws of the State of New York whose laws Borrower expressly elects to apply to this Note. Borrower agrees
that any action or proceeding brought to enforce or arising out of this Note may be commenced in the Supreme Court of the State of New York, Borough of Manhattan, or in the District Court of the
United States for the Southern District of New York.

 






					
	 	 	ACRC LENDER C LLC
	

 	
 	
By:	
 	
  






  Name:

Title:






 

 A-2









 








































 
 

  EXHIBIT B
  
    [INTENTIONALLY OMITTED]    
    


B-1









 








































 
 

  EXHIBIT C
  
    [FUNDING DATE FILE DATA FIELDS]    
    

 






			
	 Control Number
	 	 
	 Loan Number
	 	 
	 Loan / Property Flag
	 	 
	 Number of Properties
	 	 
	 Borrower
	 	 
	 Property Name
	 	 
	 Street Address
	 	 
	 City
	 	 
	 State
	 	 
	 County
	 	 
	 Zip Code
	 	 
	 Property Type
	 	 
	 Property Type Detail
	 	 
	 Year Built
	 	 
	 Year Renovated
	 	 
	 Number of Units
	 	 
	 Unit Description
	 	 
	 Loan per Unit
	 	 
	 Original Balance
	 	 
	 Cut-off Date Balance as of [[    ]/[    ]/2011]
	 	 
	 Allocated Cut-off Date Balance (multi-property)
	 	 
	 % of Initial Pool Balance
	 	 
	 Pari Passu Split (Y/N)
	 	 
	 Interest Rate
	 	 
	 Administrative Fee
	 	 
	 Monthly Payment
	 	 
	 Annual Debt Service
	 	 
	 Interest Accrual Method
	 	 
	 Origination Date
	 	 
	 First Payment Date
	 	 
	 Last IO Payment Date
	 	 
	 First P&I Payment Date
	 	 
	 Payment Date
	 	 
	 Grace Days—Late Fee
	 	 
	 Grace Days—Default
	 	 
	 Amort Type
	 	 
	 Original Interest Only Term
	 	 
	 Remaining Interest Only Term
	 	 
	 Original Loan Term
	 	 
	 Remaining Loan Term
	 	 
	 Original Amortization Term
	 	 
	 Remaining Amortization Term
	 	 
	 Seasoning
	 	 
	 Maturity Date
	 	 
	 Hyper Amortizing Loan
	 	 
	 Hyper Am Loan Maturity Date
	 	 
	 Balloon Balance
	 	 




 

 C-1







 
 






			
	 Lockbox
	 	 
	 Cash Management
	 	 
	 Cross Collateralized (Y/N)
	 	 
	 Cross Collateralized Group
	 	 
	 Lockout Period
	 	 
	 Lockout Expiration Date
	 	 
	 Prepayment / Defeasance Begin Date
	 	 
	 Prepayment / Defeasance End Date
	 	 
	 Open Period Begin Date
	 	 
	 Open Period
	 	 
	 Prepayment Type
	 	 
	 Prepay Description
	 	 
	 YM Index
	 	 
	 YM Discount
	 	 
	 YM Margin
	 	 
	 YM Calculation Method
	 	 
	 Day Prepayment Permitted
	 	 
	 Due On Sale
	 	 
	 Due on Encumbrance
	 	 
	 B Note Original Amount
	 	 
	 B Note Cut-Off Date Balance
	 	 
	 B Note Interest Rate
	 	 
	 B Note Annual Payment
	 	 
	 B Note Maturity Date
	 	 
	 Mortgage Loan Original Balance
	 	 
	 Mortgage Loan Cut-Off Date Balance
	 	 
	 Mortgage Loan Interest Rate
	 	 
	 Mortgage Loan Annual Payment
	 	 
	 Mortgage Loan LTV
	 	 
	 Mortgage Loan DSCR
	 	 
	 Name of Mezzanine Lender
	 	 
	 Mezzanine Debt Original Amount
	 	 
	 Mezzanine Debt Cut-Off Date Balance
	 	 
	 Mezzanine Debt Interest Rate
	 	 
	 Mezzanine Debt Annual Payment
	 	 
	 Mezzanine Debt Maturity Date
	 	 
	 Total Loan Original Balance
	 	 
	 Total Loan Cut-Off Date Balance
	 	 
	 Total Loan Interest Rate
	 	 
	 Total Loan Annual Payment
	 	 
	 Total Loan LTV
	 	 
	 Total Loan DSCR
	 	 
	 Other Subordinate Debt Balance
	 	 
	 Other Subordinate Debt Type
	 	 
	 Future Debt Allowed?
	 	 
	 Assumable?
	 	 
	 Assumption Fee
	 	 
	 Appraiser Designation
	 	 
	 Appraisal FIRREA (Y/N)
	 	 
	 Appraisal Date
	 	 
	 Appraisal Value
	 	 




 

 C-2







 
 






			
	 Stabilized Appraisal Date
	 	 
	 Stabilized Appraised Value
	 	 
	 Cut-off Date LTV
	 	 
	 Scheduled Maturity Date LTV
	 	 
	 Occupancy %
	 	 
	 Occupancy As of Date
	 	 
	 Largest Tenant (Based on Square Footage)
	 	 
	 Largest Tenant Sq. Ft.
	 	 
	 Largest Tenant Lease Expiration
	 	 
	 Second Largest Tenant
	 	 
	 Second Largest Tenant Sq. Ft.
	 	 
	 Second Largest Tenant Lease Expiration
	 	 
	 Third Largest Tenant
	 	 
	 Third Largest Tenant Sq. Ft.
	 	 
	 Third Largest Tenant Lease Expiration
	 	 
	 Fourth Largest Tenant
	 	 
	 Fourth Largest Tenant Sq. Ft.
	 	 
	 Fourth Largest Tenant Lease Expiration
	 	 
	 Fifth Largest Tenant
	 	 
	 Fifth Largest Tenant Sq. Ft.
	 	 
	 Fifth Largest Tenant Lease Expiration
	 	 
	 Single Tenant (Y/N)
	 	 
	 Engineering Report Date
	 	 
	 Phase I Date
	 	 
	 Phase II Performed (Y/N)
	 	 
	 Phase II Date
	 	 
	 SEL %
	 	 
	 Seismic Report Date
	 	 
	 Earthquake Insurance Required (Y/N)
	 	 
	 Terrorism Insurance Required (Y/N)
	 	 
	 Lien Position
	 	 
	 Ownership Interest
	 	 
	 Ground Lease (Y/N)
	 	 
	 Ground Lease Payment (Annual)
	 	 
	 Ground Lease Expiration Date
	 	 
	 Ground Lease Extension (Y/N)
	 	 
	 # of Ground Lease Extension Options
	 	 
	 Ground Lease Expiration Date with Extension
	 	 
	 2008 NOI Date
	 	 
	 2008 NOI
	 	 
	 2008 NCF
	 	 
	 2008 NCF DSCR
	 	 
	 2009 NOI Date
	 	 
	 2009 NOI
	 	 
	 2009 NCF
	 	 
	 2009 NCF DSCR
	 	 
	 2010 NOI Date
	 	 
	 2010 NOI
	 	 
	 2010 NCF
	 	 
	 2010 NCF DSCR
	 	 
	 Partial Year Date (if past 2010)
	 	 




 

 C-3







 
 






			
	 Partial Year # of months
	 	 
	 Partial Year Description
	 	 
	 Partial Year NOI
	 	 
	 Partial Year NCF
	 	 
	 Partial Year NCF DSCR
	 	 
	 Underwritten Revenue
	 	 
	 Underwritten Expenses
	 	 
	 Underwritten NOI
	 	 
	 Underwritten NOI DSCR
	 	 
	 Debt Yield on Underwritten NOI
	 	 
	 Underwritten Replacement Reserve
	 	 
	 Underwritten TI/LC Reserve
	 	 
	 Underwritten Other Reserve
	 	 
	 Underwritten NCF
	 	 
	 Underwritten NCF DSCR
	 	 
	 Debt Yield on Underwritten NCF
	 	 
	 Upfront RE Tax Reserve
	 	 
	 Ongoing RE Tax Reserve
	 	 
	 Upfront Insurance Reserve
	 	 
	 Ongoing Insurance Reserve
	 	 
	 Upfront Replacement Reserve
	 	 
	 Ongoing Replacement Reserve
	 	 
	 Replacement Reserve Caps
	 	 
	 Upfront TI/LC Reserve
	 	 
	 Ongoing TI/LC Reserve
	 	 
	 TI/LC Caps
	 	 
	 Upfront Debt Service Reserve
	 	 
	 Ongoing Debt Service Reserve
	 	 
	 Upfront Deferred Maintenance Reserve
	 	 
	 Ongoing Deferred Maintenance Reserve
	 	 
	 Upfront Environmental Reserve
	 	 
	 Ongoing Environmental Reserve
	 	 
	 Upfront Other Reserve
	 	 
	 Ongoing Other Reserve
	 	 
	 Other Reserve Detail / Description
	 	 
	 Letter of Credit?
	 	 
	 LOC Balance
	 	 
	 Letter of Credit Description
	 	 
	 Release Provisions (Y/N)
	 	 
	 Loan Purpose
	 	 
	 If Acquisition, Purchase Price
	 	 
	 Borrower Name
	 	 
	 Principal / Sponsor
	 	 
	 Recourse
	 	 
	 Related Sponsor
	 	 
	 Borrower SPE (Y/N)
	 	 
	 Property Manager
	 	 
	 Franchise Flag (Hotel Only)
	 	 
	 Utilities Paid by Tenant
	 	 
	 # of Studios
	 	 
	 Studio Avg. Rents
	 	 




 

 C-4







 
 






			
	 # of One Bedroom Units
	 	 
	 One Bedroom Avg. Rents
	 	 
	 # of Two Bedroom Units
	 	 
	 Two Bedroom Avg. Rents
	 	 
	 # of Three Bedroom Units
	 	 
	 Three Bedroom Avg. Rents
	 	 
	 # of Four Bedroom Units
	 	 
	 Four Bedroom Avg. Rents
	 	 
	 # of Five Bedroom Units
	 	 
	 Five Bedroom Avg. Rents
	 	 
	 Elevators (Y/N)
	 	 
	 Section 42 Units? (Y/N)
	 	 
	 Section 8 Units? (Y/N)
	 	 
	 Student / Military / Other Concentration? (Y/N)
	 	 
	 # of Sponsor Owned Units that are Rented or Available for Rent
	 	 
	 Sponsor Owned Units Avg. Rent
	 	 
	 # of Owner Occupied or Vacant Units Not Available For Rent
	 	 
	 # of Manufactured Housing Pads
	 	 
	 Average Rent Per Pad
	 	 
	 Total Gross Income of Park
	 	 
	 Total Gross Income of MH Pads Only
	 	 
	 Total Gross Income From All Sources
	 	 
	 Total Gross Income Retail and Commercial Only
	 	 
	 Loan Group
	 	 
	 ADR
	 	 
	 RevPar
	 	 




 

 C-5









 








































 
 

  EXHIBIT D
  
    [FORM OF CUSTODIAL AGREEMENT]
  
    [SEE ATTACHED]    
    


D-1









 








































 
 

  EXHIBIT E
  
    [INTENTIONALLY OMITTED]    
    


E-1









 








































 
 

  EXHIBIT F
  
    [FORM OF REQUEST FOR BORROWING]
  
    [Date]    



CITIBANK,
N.A.

388 Greenwich Street

New York, N.Y. 10013

Attention: Richard Schlenger 

 






			
	Re:	 	Master Loan and Security Agreement, dated as of December 8, 2011 (the "Agreement") by and between Citibank, N.A. ("Lender"), and ACRC Lender C LLC ("Borrower").




 

 Ladies
and Gentlemen: 


        Pursuant
to Section 2.03 of the Agreement, Borrower hereby requests a borrowing from Lender secured by the Mortgage Loan listed on
the Mortgage Loan Schedule attached hereto as Annex 1. 

 






			
	 Amount of underlying Mortgage Loan:
	 	[$              ]
	 Requested Loan:
	 	[                ]
	 Requested Funding Date:
	 	[                ]




 

         In
connection with this Request for Borrowing, the undersigned encloses herewith the Summary Due Diligence Materials described on  Annex 2 hereto relating to the Mortgage Loan described on Annex 1 hereto. 


        With
respect to the representations and warranties of Borrower made pursuant to Section 6 of the Agreement and  Schedule 1 thereto, Borrower hereby
informs Lender of the exceptions to such representations and warranties, if any, set forth on
Annex 3 hereto. 


        All
capitalized terms used but not defined herein shall have the meanings specified in the Agreement. 

 






					
	 	 	ACRC LENDER C LLC
	

 	
 	
  By:	
 	
 







 
	 	 	 	 	Name:
	 	 	 	 	Title:




 

 	cc:
	U.S.
Bank National Association, as Custodian

Ares Commercial Real Estate Servicer LLC, as Servicer 


F-1









 



































 



 
 

  Annex 1 to Exhibit F    
    


 
    [FORM OF MORTGAGE LOAN SCHEDULE(1)]
  (Annexed to Request for Borrowing)    


 






																					
	 	Loan

Number 	 	Property

Name 	 	Name of

Borrower 	 	Proposed

Funding

Date 	 	Type 	 	Principal

Amount of

Mortgage

Loan 	 	Appraised

Value of

Underlying

Property 	 
	 	      	 	 	      	 	 	      	 	 	      	 	 	      	 	 	      	 	 	      	 
	 	      	 	 	      	 	 	      	 	 	      	 	 	      	 	 	      	 	 	      	 
	 	      	 	 	      	 	 	      	 	 	      	 	 	      	 	 	      	 	 	      	 




 


   

   


 

 	(1)
	Any
Mortgage Loan Schedule attached electronically to any Request for Borrowing shall be attached as a "pdf" file. 


Annex 1 to Exhibit F









 








































 
 

  Annex 2 to Exhibit F    
    


 
    SUMMARY DUE DILIGENCE MATERIALS    
    


        Set forth below is a list of required information to be delivered to Lender as part of a Complete Submission with respect to any
Purchased Assets: 



	(a)
	[                    ]
Credit Approval Memo



	(b)
	Current
Rent Roll



	(c)
	Operating
statements—last two years (at least) and current year to date



	(d)
	Third
Party Reports—The most current appraisal, engineering and environmental report (Phase I & II)



	(e)
	Mortgage
Loan Documents(1):    Note, Mortgage, all Escrow Agreements, a copy of any Ground Lease, any additional advance or future funding
agreements and any letters of credit



	(f)
	Guarantee
Agreements—Any recourse guarantee beyond standard carveouts



	(g)
	Mortgagor's
and Key Principal's most current financial statements



	(h)
	Preliminary
Data File containing the fields set forth on Exhibit C to the Loan Agreement



	(i)
	Evidence
of the in-place insurance coverage



	(j)
	Monthly
Occupancy history and ADR over the past 24 months (hotels only)



	(k)
	Any
recent market studies (if available)



	(l)
	Such
other materials requested by Lender 



   

   


 

 	(1)
	Include
all amendments, modifications, etc. and may include additional items based on the review of the following documents. 


Annex 2 to Exhibit F









 








































 
 

  Annex 3 to Exhibit F    
    


[Attach
proposed exceptions to representations and warranties, if any.] 


Annex 3 to Exhibit F









 








































 
 

  Exhibit G
  
    [FORM OF FUNDING CONFIRMATION]
  
    [Date]    



ACRC
Lender C LLC

Two North LaSalle Street, Suite 925

Chicago, Illinois 60602

Attention: 



	Re:
	Master
Loan and Security Agreement, dated as of December 8, 2011 (the "Agreement") by and between
Citibank, N.A. ("Lender") and ACRC Lender C LLC ("Borrower"). 




Ladies
and Gentlemen: 


        Reference
is made to the Request for Borrowing dated [date] and attached hereto as Annex 1 (the
"Borrowing Request"). Lender hereby confirms that, subject to the terms
and conditions of the Agreement, Lender shall make a Loan to Borrower in connection with the funding of the Eligible Loan as follows: 




Amount
of Loan:

Debt Yield:

Applicable Margin: 





        With
respect to the representations and warranties of Borrower made pursuant to Section 6 of the Agreement and  Schedule 1 thereto, Lender hereby
acknowledges and consents to the exceptions to such representations and warranties, if any, set forth on
Annex 1 hereto. 


        All
capitalized terms used herein but not otherwise defined shall have the meanings specified in the Agreement. 

 






					
	 	 	CITIBANK, N.A.
	

 	
 	
  By:	
 	
 







 
	 	 	 	 	Name:
	 	 	 	 	Title:




 


 






							
	  Accepted and agreed to:
	 	 
	  ACRC LENDER C LLC
	 	 
	 By:
	 	 	 	 	 	 
	 	 	





  	 	 
	 
	 	Name:	 	 	 	 
	 
	 	Title:	 	 	 	 




 

 	cc:
	Ares
Commercial Real Estate Servicer LLC, as Servicer 


G-1









 








































 
 

  Annex 1 to Exhibit G    
    


[Attach
list of exceptions to representations and warranties to which Lender consents, if any.] 


Annex 1 to Exhibit G









 








































 
 

  EXHIBIT H    
    
    [FORM OF OPINION OF COUNSEL TO BORROWER AND GUARANTOR]    
    
    [SEE ATTACHED]    
    


H-1









 








































 
 

  EXHIBIT I
  
    [FORM OF CLOSING CERTIFICATE]    
    


        The undersigned,
[                              ], the [NAME OF RESPONSIBLE OFFICER] of ACRC LENDER
C LLC ("Borrower"), pursuant to Section 5.01(b) and (i) of the Master Loan and Security Agreement, dated as of December 8,
2011 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the "Loan Agreement"; capitalized terms used but not
otherwise defined herein shall have the meanings assigned thereto in the Loan Agreement) between Borrower and CITIBANK, N.A. ("Lender"), does hereby
certify in such capacity and on behalf of Borrower that: 



        (a)    No Consents.    As of the date hereof, (i) no consents, licenses or approvals are required in connection
with the execution, delivery and performance by Borrower of, and the validity and enforceability of, the Loan Documents or (ii) all consents, licenses and filings, copies of which are attached
hereto, are in full force and effect. 


        (b)    Representations and Warranties.    Each of the representations and warranties made by Borrower contained in the
Loan Agreement are true and correct on and as of such date, as though made on and as of such date, except for those representations and warranties that by their terms were made as of a specified date,
which shall be true and correct on and as of such date. 


        (c)    No Default.    No Default or Event of Default exists. 


        (d)    Charter.    Attached hereto as "Exhibit A" is a true,
correct and complete copy of the [Charter] of Borrower, together with any and all amendments thereto, as on file with the Secretary of State of the State of Illinois, and no
action has been taken to amend, modify or repeal such Charter, the same being in full force and effect in the attached form as of the date hereof. 



        (e)    By-laws.    Attached hereto as "Exhibit B"
is a true, correct and complete copy of the By-laws of Borrower, together with any and all amendments thereto, and no action has been taken to amend, modify or repeal such
[By-laws], the same being in full force and effect in the attached form as of the date hereof. 


        (f)    Resolutions.    Attached hereto as "Exhibit C" is a true
and correct copy of the resolutions that have been duly adopted at a meeting of, or by the written consent of, Borrower, and none of such resolutions have been amended, modified, revoked or rescinded
in any respect since their respective dates of execution, and all of such resolutions are in full force and effect on the date hereof in the form adopted. 


        (g)    Incumbency.    The following named individuals are duly elected, qualified and acting officers of Borrower,
each such individual holding the office(s) set forth opposite his respective name as of the date hereof, and the signatures set forth beside the respective name and title of said officers and
authorized signatories are true, authentic signatures: 



 






								
	Name 	 	Title 	 	Signature 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 




 

 
        (h)    Good Standing.    Attached hereto as "Exhibit D" are
original certificates dated as of a recent date from the Secretary of State or other appropriate authority of each jurisdiction in which Borrower was formed or is qualified to do business, such
certificates evidencing the good standing of Borrower in such jurisdictions. 



[SIGNATURES
FOLLOW] 


I-1







 

        IN
WITNESS WHEREOF, the undersigned has hereunto executed this Closing Certificate as of this [    ]day of [                ],
20[    ]. 

 






			
	 
	 	 






  Name:

Title:






 

         The
undersigned,
[                                         
       ], does hereby certify that he is the duly elected and presently incumbent
[                              ] of the
Company referred to above, and in such capacity does] is the duly [RESPONSIBLE OFFICER] of the Company. 

 






			
	 
	 	 






  Name:

Title:






 

 I-2









 








































 
 

  Annex 1 to Exhibit I    
    


 
    CHARTER    
    


Annex 1 to Exhibit I









 








































 
 

  Annex 2 to Exhibit I    
    


 
    BY-LAWS    
    


Annex 2 to Exhibit I









 








































 
 

  Annex 3 to Exhibit I    
    


 
    RESOLUTIONS    
    


Annex 3 to Exhibit I









 



































 



 
 

  Annex 4 to Exhibit I    
    


 
    GOOD STANDING CERTIFICATES    
    


Annex 4 to Exhibit I









 








































 
 

  EXHIBIT J
  
    [FORM OF OFFICER'S CERTIFICATE]    
    


        The undersigned,
[                                    ], the [NAME OF RESPONSIBLE
OFFICER] of ACRC LENDER
C LLC ("Borrower"), pursuant to Sections 5.02(b) and (j) of the Master Loan and Security Agreement, dated as of December 8,
2011 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the "Loan Agreement"; capitalized terms used but not
otherwise defined herein shall have the meanings assigned thereto in the Loan Agreement) between Borrower and CITIBANK, N.A. ("Lender"), does hereby
certify in such capacity and on behalf of Borrower, as of the date hereof: 



        (a)    Compliance.    To the best of such Responsible Officer's actual knowledge each of Borrower, Servicer and
Guarantor (or Substitute Guarantor) has observed or performed in all material respects all of its covenants and other agreements, and satisfied every condition, contained in the Loan Agreement and the
related documents to be observed, performed or satisfied by it. 


        (b)    No Default.    Such Responsible Officer has obtained no actual knowledge of any Default or Event of Default
except                                    . 



        (c)    Mortgage Loan Files.    Each Mortgage Loan File delivered by Borrower represents a true and correct copy of the
documents contained therein, and that the applicable Mortgage Loan Schedule and Closing Data File, together with all other information contained therein prepared by Borrower or its Affiliates and
delivered by Borrower to Lender immediately prior to the Funding Date, is true and correct and conforms in all material respects to the Summary Due Diligence Materials included in the Complete
Submission and Preliminary Data File previously provided to Lender and pursuant to which Lender has elected to make the requested Loan. 



        (d)    Representations and Warranties.    Each of the representations and warranties made by Borrower in  Section 6 and in
Schedule 1 of the Loan Agreement (limited in the case of  Schedule 1 to the applicable Mortgage Loan for which the Loan is being advanced) are
true, accurate and complete as of the date hereof, as though
made on and as of this date, except for those representations and warranties that by their terms were made as of a specified date, which shall be true and correct on and as of such date. 



[SIGNATURES
FOLLOW] 


J-1







 

        IN
WITNESS WHEREOF, the undersigned has hereunto executed this Compliance Certificate as of this [    ] day of [                ]
20[    ]. 

 






			
	 	 	







 
	 	 	Name:
	 	 	Title:




 

         The
undersigned, [                                    ], does hereby
certify that he is the duly elected and presently incumbent
[                                    ] of the
Company referred to above, and in such capacity does hereby certify to Lender that
[                                    ] is the duly elected and
presently incumbent [RESPONSIBLE
OFFICER] of the Company. 

 






			
	 	 	







 
	 	 	Name:
	 	 	Title:




 

 J-2









 








































 
 

  EXHIBIT K    
    
    [FORM OF IRREVOCABLE REDIRECTION NOTICE]    
    
    [BORROWER LETTERHEAD]    
    
    IRREVOCABLE DIRECTION LETTER    
    
    AS OF 
[            ], 20[    ]    




Ladies
and Gentlemen: 


        Reference
is made to (a) that certain [Loan Agreement], dated [                ], 20[    ], by and
among
[                    ] (the "Borrower"), as borrower, and ACRC Lender C, LLC (the "Lender"), as lender; and (b) all documents securing or
relating to that certain
$[            ] loan made by the Lender to the Borrower on [                ], 20[    ]
(the "Loan"). 



        You
are advised as follows, effective as of the date of this letter. 


         Assignment of the Loan.    The Lender has entered into a Master Loan and Security Agreement, dated as
[                    ], 2011
(as the same may be amended and/or restated from time to time, the "Security Agreement"), with Citibank, N.A. ("Citi"), who has an addresss of 388 Greenwich Street, New York, New York 10013, and has
assigned its rights and interests in the Loan (and all of its rights and remedies in respect of the Loan) to Citi. This assignment shall remain in effect unless and until Citi has notified Borrower
otherwise in writing. 


        Direction of Funds.    In connection with Lender's obligations under the Security Agreement, Lender hereby directs Borrower to disburse, by
wire
transfer, any and all payments to be made under or in respect of the Loan to the following account at [                    ] for the benefit of Citi:


 






					
	 







 	 	 
	  







 	 	 
	  







 	 	 
	Account:	 	 







 	 	 
	Attn:	 	  







 	 	 



 

         This
direction shall remain in effect unless and until Citi has notified Borrower otherwise in writing. 


        Please
acknowledge your acceptance of the terms and directions contained in this correspondence by executing a counterpart of this correspondence and returning it to the undersigned. 


[Signature
Page Follows] 


K-1







 
 






					
	 
	 	Very truly yours,
	 
	 	   ACRC LENDER C, LLC,

a Delaware limited liability company

	 
	 	 By:
	 	   








 
	 
	 	Name:	 	 
	 
	 	Title:	 	 
	 
	 	  Date: [                    ],
20[    ]





 


 






					
	Agreed and accepted this [    ]

day of [                ], 20[    ]	 	 
	[                    ]	 	 
	
By:	
 	
 







 	
 	
 
	Name:	 	  







 	 	 
	Title:	 	 







 	 	 



 

 K-2









 








































 
 

  EXHIBIT L    
    
    [FORM OF SERVICER NOTICE AND AGREEMENT]    
    
    
[                        ] [    ], 200[    ]    




[SERVICER],
as Servicer

[ADDRESS]

Attention: [                          ] 



	Re:
	Master
Loan and Security Agreement, dated as of December 8, 2011 (the "Loan Agreement"), by and
between ACRC LENDER C LLC ("Borrower") and CITIBANK, N.A. (the "Lender"). 




Ladies
and Gentlemen: 


        [SERVICER]
(the "Servicer") is servicing certain mortgage loans for Borrower pursuant to certain Servicing
Agreements between Servicer and Borrower. Pursuant to the Loan Agreement between Lender and Borrower, Servicer is hereby notified that Borrower has granted a security interest to Lender in certain
mortgage loans which are serviced by Servicer. Capitalized terms used herein but not defined herein shall have the meanings given in the Loan Agreement. 


        Upon
receipt of a Notice of Event of Default from Lender in which Lender shall identify the Mortgage Loan which is then pledged to Lender under the Loan Agreement (the
"Pledged Mortgage Loan"), Servicer shall segregate all amounts collected on account of such Pledged Mortgage Loan, hold them in trust for the sole and
exclusive benefit of Lender, and remit such collections in accordance with Lender's written instructions. Following such Notice of Event of Default, Servicer shall follow the instructions of Lender
with respect to the Pledged Mortgage Loan, and shall deliver to Lender any information with respect to the Pledged Mortgage Loan reasonably requested by Lender. 


        Upon
the occurrence of an Event of Default, Lender may terminate the servicing of any Pledged Mortgage Loan under any Servicing Agreement and in any event transfer servicing to Lender's
designee, at no cost or expense to Lender, it being agreed that Borrower will pay any and all fees required to terminate the Servicing Agreement and to effectuate the transfer of servicing to the
designee of Lender 


        Notwithstanding
any contrary information or direction which may be delivered to Servicer by Borrower, Servicer may conclusively rely on any information, direction or notice of an Event
of Default delivered by Lender, and Borrower shall indemnify, and hold Servicer harmless for any and all claims asserted against Servicer for any actions taken in good faith by Servicer in connection
with the delivery of such information or Notice of Event of Default. 


        No
provision of this letter may be amended, countermanded or otherwise modified without the prior written consent of Lender. The Lender is an intended third party beneficiary of this
letter. 


L-1







 

        Please
acknowledge receipt and your agreement to the terms of this instruction letter by signing in the signature block below and forwarding an executed copy to Lender promptly upon
receipt. Any notices to Lender should be delivered to the following address: 




CITIBANK,
N.A.

388 Greenwich Street

New York, N.Y. 10013

Attention: Richard Schlenger

Telecopier No.: 212-816-8307

Telephone No.: 212-816-7806 




 






					
	 	 	Very truly yours,
	

 	
 	
ACRC LENDER C LLC
	

 	
 	
By:	
 	
 







 
	 	 	 	 	Name:

Title:



 

  


 






					
	ACKNOWLEDGED AND AGREED TO:	 	 
	

  






  as Servicer	
 	

 
	
 By:	
 	
 







 	
 	
 
	 	 	Title:	 	 
	

CITIBANK, N.A.	
 	

 
	
 By:	
 	
  







 	
 	
 
	 	 	Title:	 	 



 

 L-2











QuickLinks



Exhibit 10.8


MASTER LOAN AND SECURITY AGREEMENT


TABLE OF CONTENTS


MASTER LOAN AND SECURITY AGREEMENT


Schedule 1 REPRESENTATIONS AND WARRANTIES RE: INDIVIDUAL MORTGAGE LOANS


Schedule 2 SPECIAL PURPOSE ENTITY Definition of Special Purpose Bankruptcy Remote Entity


Schedule 3 FILING JURISDICTIONS AND OFFICES


Schedule 4 ORGANIZATIONAL CHART OF BORROWER [SEE ATTACHED]


Schedule 5 LIST OF DIRECT COMPETITORS


EXHIBIT A [FORM OF NOTE]


EXHIBIT B [INTENTIONALLY OMITTED]


EXHIBIT C [FUNDING DATE FILE DATA FIELDS]


EXHIBIT D [FORM OF CUSTODIAL AGREEMENT] [SEE ATTACHED]


EXHIBIT E [INTENTIONALLY OMITTED]


EXHIBIT F [FORM OF REQUEST FOR BORROWING] [Date]



Annex 1 to Exhibit F


[FORM OF MORTGAGE LOAN SCHEDULE(1)] (Annexed to Request for Borrowing)



Annex 2 to Exhibit F


SUMMARY DUE DILIGENCE MATERIALS



Annex 3 to Exhibit F



Exhibit G [FORM OF FUNDING CONFIRMATION] [Date]



Annex 1 to Exhibit G



EXHIBIT H [FORM OF OPINION OF COUNSEL TO BORROWER AND GUARANTOR] [SEE ATTACHED]


EXHIBIT I [FORM OF CLOSING CERTIFICATE]



Annex 1 to Exhibit I


CHARTER



Annex 2 to Exhibit I


BY-LAWS



Annex 3 to Exhibit I


RESOLUTIONS



Annex 4 to Exhibit I


GOOD STANDING CERTIFICATES


EXHIBIT J [FORM OF OFFICER'S CERTIFICATE]


EXHIBIT K [FORM OF IRREVOCABLE REDIRECTION NOTICE] [BORROWER LETTERHEAD] IRREVOCABLE DIRECTION LETTER AS OF [ ], 20[ ]


EXHIBIT L [FORM OF SERVICER NOTICE AND AGREEMENT] [ ] [ ], 200[ ]