Document:

Document

Exhibit 10.5

GUARANTY OF RECOURSE OBLIGATIONS
This GUARANTY OF RECOURSE OBLIGATIONS (this “Guaranty”) is entered into as of July 28, 2022, by ARES COMMERCIAL REAL ESTATE CORPORATION, a Maryland  corporation (whether one or more collectively referred to as “Guarantor”), for the benefit of CAPITAL ONE, NATIONAL ASSOCIATION, as administrative agent for the Lenders under the hereinafter described Credit Agreement (together with its successors and assigns in such capacity, “Administrative Agent”), for the benefit of the Lenders.
RECITALS
A.    Pursuant to the Credit and Security Agreement, dated as of even date herewith (as amended, restated, supplemented and otherwise modified from time to time, the “Credit Agreement”), between ACRC Lender CO LLC (“Borrower”), Administrative Agent and Lenders, Lenders made loan (as amended, supplemented, increased, renewed and otherwise modified from time to time, the “Loan”) available to Borrower on the terms and conditions set forth therein.  Initially capitalized terms used without definition herein have the meanings ascribed thereto in the Credit Agreement.
B.    WHEREAS, Lenders are not willing to make the Loan, or otherwise extend credit, to Borrower unless Guarantor unconditionally guarantees payment and performance to Lenders of the Guaranteed Obligations (as herein defined); and
WHEREAS, Guarantor is the owner of a direct or indirect interest in Borrower, and Guarantor will directly benefit from Lenders’ making the Loan to Borrower.
A G R E E M E N T S:
NOW, THEREFORE, as an inducement to Lenders to make the Loan to Borrower and to extend such additional credit as Lenders may from time to time agree to extend under the Credit Documents, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Guarantor does hereby agree as follows:
1.    DEFINED TERMS.  All capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement.
2.    THE GUARANTY.
2.1    Guaranty of Obligation.  Guarantor hereby irrevocably and unconditionally guarantees to Administrative Agent and Lenders and their respective successors and assigns the payment and performance of the Guaranteed Obligations as and when the same shall be due and payable, whether by lapse of time, by acceleration of maturity or otherwise.  Guarantor hereby irrevocably and unconditionally covenants and agrees that it is liable for the Guaranteed Obligations as a primary obligor, plus all reasonable, actual and documented fees and out-of-pocket expenses, including, without limitation, reasonable attorney's fees and disbursements, that are incurred by Administrative Agent and Lenders in the enforcement of any obligation of Guarantor hereunder.
2.2    Definition of Guaranteed Obligations.  As used herein, the term “Guaranteed Obligations” means the following: 
(a)    all losses, damages, liabilities, obligations, costs and expenses (including, without limitation, reasonable attorney’s fees), penalties, charges, fines, fees, 

causes of action, suits, claims, demands, judgments, and awards of any nature or description whatsoever, in each case, which are incurred by or awarded against Administrative Agent or any other Secured Party as a result of:  
(i)    fraud, willful misconduct or gross negligence by Borrower or Guarantor in connection with the execution, delivery and performance of this Guaranty, the Loan Agreement or any of the other Loan Documents, or any certificate, report, financial statement or document required to be delivered to Lender under the Loan Documents at the time of the closing of the Loan Agreement or during the term of the Loan Agreement; 
(ii)    the misappropriation by Borrower or Guarantor in violation of the Loan Documents of (A) any insurance proceeds, (B) condemnation proceeds, or (C) revenues generated after an Event of Default under the Underlying Loan; 
(iii)    any intentionally false representation or warranty made by Borrower under the Loan Documents; 
(iv)    if Borrower or Guarantor (or any Person comprising Borrower or Guarantor), in bad faith, interferes with any enforcement action or exercise or assertion of any right or remedy by or on behalf of Lender available to Lender under the Loan Documents, including, without limitation, seeking a defense or filing a petition for judicial intervention or injunctive or other equitable relief of any kind, or asserting in a pleading filed in connection with a judicial proceeding any defense against the Lender; provided, however, if the applicable enforcement action was commenced due to an Event of Default under Section 7.1 of this Agreement, any  such contest will be deemed to be in bad faith; 
(v)    exercise of any Conversion with respect to the Project by Borrower or an Affiliate of Borrower in violation of the Loan Agreement;
(vi)    if Borrower exercises its right as lender under the Underlying Loan Documents and forecloses on the Project, accepts a deed-in-lieu of foreclosure on the Project, or otherwise becomes a mortgagee-in-possession under applicable law with respect to the Project and (A) there is any failure to correct any environmental condition in violation of Environmental Laws, or any failure to remove any Hazardous Material pursuant to a requirement of Environmental Law, in each case, with respect to the Project, or any economic waste or (B) Borrower fails to maintain insurance required by the Underlying Loan Documents applicable to the Project (provided that Guarantor shall not have liability pursuant to this clause (B) to the extent that the Project fails to generate sufficient revenue to pay such insurance policies required by the Underlying Loan Documents (except insufficient revenue which results from the intentional misapplication or misappropriation by Borrower or any of its Affiliates of any revenue from the Project)); 
(b)    repayment of all Obligations under the Credit Documents in the event of:  
(i)    Borrower or Guarantor consents to or joins in any application for the appointment of a custodian, receiver, trustee or examiner for Borrower or Borrower's assets and liabilities in a federal or state bankruptcy or insolvency proceeding except for (x) he appointment of a receiver or trustee in 

bankruptcy in connection with a foreclosure of the Underlying Loan or (y) the appointment of a receiver or trustee in bankruptcy in connection with a foreclosure of the Collateral by Lender pursuant to the Loan Agreement; 
(ii)    Borrower commences a voluntary federal or state bankruptcy or insolvency proceeding;  
(iii)    Any breach by Borrower of the separateness covenants set forth in the Loan Agreement that result in the substantive consolidation of the assets and/or liabilities of Borrower with any other Person (including, without limitation, in connection with any insolvency law); or 
(iv)    an involuntary bankruptcy or insolvency proceeding is commenced against Borrower in connection with which Borrower or any subsidiary thereof (alone or in any combination) (A) has or have colluded or conspired in any way with the creditors commencing or filing such proceeding, (B) has solicited or caused to be solicited petition creditors for any involuntary bankruptcy or insolvency petition against Borrower from any Person, or (C) has filed an answer consenting to or joining in with respect to such involuntary bankruptcy or insolvency proceeding; provided, that nothing in this clause (iv) shall cause any recourse to Guarantor if any such proceeding is one filed by Lender (other than proceedings whereby Lender joined in solely to protect its rights under the Loan); 
2.3    Continuing Guaranty; Guaranty of Payment.  This Guaranty is a continuing guaranty of the Guaranteed Obligations, and Guarantor agrees that the obligations of Guarantor to Administrative Agent and Lenders hereunder shall be primary obligations, shall not be subject to any counterclaim, set-off, abatement, deferment or defense based upon any claim that Guarantor may have against Administrative Agent, any Lender, Borrower or any other Person.  Guarantor shall be regarded, and shall be in the same position, as the principal debtors with respect to the Guaranteed Obligations.  Guarantor agrees that any notice or directive given at any time to Administrative Agent or any Lender which is inconsistent with the first sentence of this Section 2.3 shall be null and void and may be ignored by Administrative Agent and Lenders, and, in addition, may not be pleaded or introduced as evidence in any litigation relating to this Guaranty for the reason that such pleading or introduction would be at variance with the written terms of this Guaranty, unless Administrative Agent and Lenders have specifically agreed otherwise in writing.  
2.4    Liability of Guarantor Not Affected.  This Guaranty shall remain in full force and effect without regard to, and shall not be released, discharged or affected in any way by any circumstances or condition, including, without limitation:
(a)    the attempt or the absence of any attempt by Administrative Agent (on behalf of Lenders) to obtain payment or performance by Borrower or Guarantor (this being a guaranty of payment and performance and not of collection);
(b)    delay by Administrative Agent (on behalf of Lenders) in enforcing or absence of action to enforce Guarantor's obligations hereunder or of any other party under the Credit Documents, or any prior partial exercise by Administrative Agent (on behalf of Lenders) of any right or remedy hereunder or under any of the other Credit Documents;
(c)    the fact that Borrower is not liable for the payment or performance of the Guaranteed Obligations, or any portion thereof, for any reason whatsoever, 

Guarantor being liable for the Guaranteed Obligations notwithstanding that Borrower may not be liable for such Guaranteed Obligations;
(d)    any renewal, extension, substitution, modification, settlement, compromise, replacement of or indulgence with respect to, the Obligations, all of which Administrative Agent (on behalf of Lenders) is hereby authorized to make;
(e)    any sale, exchange, release, surrender or other disposition of, or realization upon, any collateral securing the Obligations, or any amendment, waiver, settlement or compromise of any guaranties of the Obligations, or any other obligation of any Person with respect to the Credit Documents;
(f)    the acceptance by Administrative Agent (on behalf of Lenders) of any additional security for the Obligations;
(g)    the lack of genuineness, validity, regularity or enforceability of or amendment, waiver or consent by Administrative Agent (on behalf of Lenders) with respect to, any provision of any instrument evidencing, securing or otherwise relating to the Obligations, or any part thereof, including without limitation, the other Credit Documents;
(h)    the existence, value or condition of, or the failure by Administrative Agent (on behalf of Lenders) to take any steps to perfect, maintain, or enforce, the security interests or remedies under the Credit Documents, or to preserve the rights to or protect any security or collateral, for the Obligations granted to Administrative Agent (for the benefit of Lenders);
(i)    any voluntary or involuntary bankruptcy, insolvency, reorganization, arrangement, readjustment, assignment for the benefit of creditors, composition, receivership, liquidation, marshalling of assets and liabilities or similar event or proceedings with respect to Borrower or Guarantor or any other Person, as applicable, or any of their respective properties (each, an “Insolvency Proceeding”), or any action taken by Administrative Agent (on behalf of Lenders), any trustee or receiver or by any court in any such Insolvency Proceeding;
(j)    the failure by Administrative Agent (on behalf of Lenders) to file or enforce a claim against the estate (either in an Insolvency Proceeding or other proceeding) of Borrower or Guarantor or any other Person;
(k)    in any proceeding under the Bankruptcy Code:  (i) any election by Administrative Agent (on behalf of Lenders) under Section 1111(b)(2) of the Bankruptcy Code, (ii) any borrowing or grant of a security interest by Borrower as a debtor-in-possession under Section 364 of the Bankruptcy Code, (iii) the inability of Administrative Agent (on behalf of Lenders) to enforce the Obligations against Borrower by application of the automatic stay provisions of Section 362 of the Bankruptcy Code, or (iv) the disallowance, under Section 502 of the Bankruptcy Code, of all or any portion of Administrative Agent’s or any Lender's claim(s) against Borrower for repayment of the Obligations;
(l)    the failure of Guarantor to receive notice of any intended disposition of the collateral for the Obligations;

(m)    any merger or consolidation of Borrower into or with any other entity, or any sale, lease or transfer of any of the assets of Borrower or Guarantor to any other Person;
(n)    any change in the ownership of Borrower, or any change in the relationship between Borrower and Guarantor or any termination of any such relationship;
(o)    the death, incapacity, insanity, disability, dissolution or other change in status of Borrower or Guarantor;
(p)    the making of additional loans to Borrower, the increase or reduction of the maximum principal amount of the Obligations, the increase or reduction in the interest rate provided in the Notes, or any other modification, amendment, release or waiver of the terms of the Credit Documents;
(q)    the absence, impairment or loss of any right of reimbursement or subrogation or other right or remedy of Guarantor; and
(r)    any other action or circumstance which might otherwise constitute a legal or equitable discharge or defense of Borrower, Guarantor or any other guarantor.
Guarantor hereby expressly waives and surrenders any defense to its liability under this Guaranty based upon any of the foregoing acts, omissions, agreements, waivers or matters, whether or not Guarantor had notice or knowledge of same.  It is the purpose and intent of this Guaranty that the obligations of Guarantor hereunder shall be absolute and unconditional under any and all circumstances.  
2.5    Rights of Administrative Agent.  Administrative Agent is hereby authorized, without notice to or demand of Guarantor and without affecting the liability of Guarantor hereunder, to take any of the following actions from time to time on behalf of Lenders, and neither Administrative Agent nor any Lender shall incur any liability to Guarantor as a result thereof, and no such action shall impair or release the Guaranteed Obligations of Guarantor or any of them under this Guaranty:
(a)    increase or decrease the amount of, or renew, extend, accelerate or otherwise change the time, place or terms for payment of, or other terms relating to, the Obligations, or otherwise modify, amend or change the terms of any promissory note or other agreement evidencing, securing or otherwise relating to any of the Obligations, including, without limitation, the making of additional advances thereunder; 
(b)    accept and apply any payments on or recoveries against the Obligations from any source, and any proceeds of any security therefor, to the Obligations in such manner, order and priority as Administrative Agent may elect in Administrative Agent’s sole discretion;
(c)    take, hold, sell, exchange, release or otherwise dispose of all or any property pledged, mortgaged or conveyed, or in which Administrative Agent has been granted a lien (for the benefit of Lenders), as security for the Obligations or the payment of this Guaranty;
(d)    settle, release, compromise, collect or otherwise liquidate the Obligations or any portion thereof; 

(e)    accept, hold, substitute, add or release any other guaranty or endorsements of the Obligations;
(f)    take any action under or in respect of the Credit Documents in the exercise of any remedy, power or privilege contained therein or available to Administrative Agent at law, equity or otherwise, or waive or refrain from exercising any such remedies, powers or privileges;
(g)    amend or modify, in any manner whatsoever, the Credit Documents; 
(h)    extend or waive the time for any Person's performance of, or compliance with, any term, covenant or agreement on its part to be performed or observed under the Credit Documents, or waive such performance or compliance or consent to a failure of, or departure from, such performance or compliance;
(i)    release anyone who may be liable in any manner for the payment of any amounts owed by Borrower, Guarantor or any other Borrower Party to Administrative Agent or Lenders;
(j)    modify or terminate the terms of any intercreditor or subordination agreement pursuant to which claims of other creditors of Guarantor, Borrower or any Borrower Party are subordinated to the claims of Administrative Agent and Lenders; and
(k)    at any time after maturity of the Obligations, apply toward payment of the Guaranteed Obligations (i) any indebtedness due or to become due from Administrative Agent or any Lender to Guarantor, and (ii) any moneys, credits, or other property belonging to Guarantor at any time held by or coming into the possession of Administrative Agent or any Lender or any affiliates thereof, whether for deposit or otherwise. 
2.6    Subordination.  All indebtedness now or hereafter owing by Borrower to Guarantor for borrowed money or otherwise is hereby subordinated to the payment of the Obligations, and, following and during the continuance of any Event of Default hereunder or under any of the other Credit Documents, Guarantor shall not accept payment of all or any portion of such subordinated indebtedness until satisfaction in full of the Obligations.  All security interests, liens and encumbrances which Guarantor now or hereafter may have upon any of the assets of Borrower are hereby subordinated to all security interests, liens and encumbrances heretofore, now or hereafter granted to Administrative Agent (for the benefit of Lenders) pursuant to any of the Credit Documents.
2.7    [Reserved] 
3.    GUARANTOR'S ADDITIONAL WAIVERS
3.1    Statutes of Limitation.  Guarantor irrevocably waives all statutes of limitation as a defense to any action or proceeding brought against Guarantor, Borrower or any other Borrower Party by Administrative Agent or any Lender, to the fullest extent permitted by law.
3.2    Election of Remedies.  If Administrative Agent (on its own behalf or on behalf of Lenders) may, under applicable law, proceed to realize benefits under any of the Credit Documents giving Administrative Agent (for the benefit of Lenders) a lien upon any collateral owned by Borrower or any other Borrower Party, either by judicial foreclosure or by non-judicial 

sale or enforcement, Administrative Agent may, at its sole option, determine which of such remedies or rights it may pursue without affecting any of Administrative Agent’s rights and remedies under this Guaranty.  If, in the exercise of any of Administrative Agent’s rights and remedies against Borrower, Guarantor or any other Person liable with respect to the Obligations or the Guaranteed Obligations (as the case may be), Administrative Agent shall forfeit any of the rights or remedies available to Administrative Agent (on behalf of Lenders), including any right to enter a deficiency judgment against Borrower, whether because of any applicable laws pertaining to “election of remedies” or the like, Guarantor hereby consents to such action by Administrative Agent, as applicable, and waives any claim or defense based upon such action, even if such action by Administrative Agent shall result in a full or partial loss of any rights of subrogation which Guarantor might otherwise have had but for such action by Administrative Agent.  Any election of remedies which results in the denial or impairment of the right of Administrative Agent (on behalf of Lenders) to seek a deficiency judgment against Borrower shall not impair Guarantor's obligation to pay the full amount of the Guaranteed Obligations, and Guarantor hereby irrevocably waives any defense based upon an election of remedies made by Administrative Agent (on behalf of Lenders) or any other election afforded to Administrative Agent pursuant to applicable law, including, without limitation, (a) any election to proceed by judicial or nonjudicial foreclosure or by Uniform Commercial Code sale or by deed or assignment in lieu thereof, or any election of remedies which destroys or otherwise impairs the subrogation rights of the Guarantor or the rights of the Guarantor to proceed against Borrower or any other Person for reimbursement, or both, (b) the waiver by Administrative Agent or Lenders, either by action or inaction of Administrative Agent or Lenders or by operation of law, of a deficiency judgment against Borrower, and (c) any election pursuant to an Insolvency Proceeding.
3.3    Rights of Subrogation and Other Rights.  
(a)    Guarantor hereby expressly and irrevocably waives, on behalf of itself and its successors and assigns (including any surety) (i) any and all rights at law or in equity to seek subrogation, contribution, indemnification or any other form of reimbursement or repayment from Borrower or any other Person now or hereafter primarily or secondarily liable for any of the Guaranteed Obligations for any disbursements made by Guarantor under or in connection with this Guaranty, (ii) all claims of any kind or type against Borrower as a result of any payment made by Guarantor to Administrative Agent (for the account of Lenders) or Lenders, and (iii) any right to participate in any security now or hereafter held by Administrative Agent (for the benefit of Lenders).  In furtherance, and not in limitation, of the foregoing, Guarantor agrees that any payment to Administrative Agent for the account of Lenders pursuant to this Guaranty shall be deemed a contribution to the capital of Borrower or other obligated party and shall not constitute Guarantor a creditor of Borrower or such other party.
(b)    Guarantor hereby further acknowledges and agrees that (i) this waiver is intended to benefit Administrative Agent and Lenders and shall not limit or otherwise affect Guarantor's liability hereunder or the enforceability of this Guaranty (ii) Administrative Agent and Lenders and their respective successors and assigns are intended third party beneficiaries of the waivers and agreements set forth in this Section 3.3 and their rights under this Section 3.3 shall survive payment in full of the Guaranteed Obligations, and (iii) to the extent the waiver of its rights of subrogation as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation Guarantor may have against Borrower or against any collateral or security for any of the Guaranteed Obligations shall be junior and subordinate to any rights Administrative Agent and Lenders may have against Borrower and to all right, title and interest Administrative Agent (for the benefit of Lenders) may have in such collateral or security.  

3.4    Demands and Notices.  Guarantor irrevocably waives all presentments, demands for performance, protests, notices of protest, notices of dishonor, notice of acceleration to Borrower, any other Person or any other party with respect to the Loan or the Guaranteed Obligations, notices of acceptance of this Guaranty and of the existence, creation or incurring of new or additional Obligations, notices of defaults by Borrower or any other Person liable for all or any portion of the Guaranteed Obligations and demands and notices of every kind that may be required to be given by any statute or rule or law.
3.5    Borrower Information.  Guarantor irrevocably waives (a) any duty of Administrative Agent or Lenders to advise Guarantor of any facts that may now or hereafter be known to Administrative Agent or Lenders regarding Borrower regardless of whether Administrative Agent or Lenders have reason to believe that any such facts materially increase the risk beyond that which Guarantor intends to assume or has reason to believe that such facts are unknown to Guarantor, Guarantor acknowledging that Guarantor is fully responsible for being and keeping informed of the financial conditions and affairs of Borrower, and (b) any defense based on any claim that Guarantor's obligations exceed or are more burdensome than those of Borrower.
3.6    Limitation of Liability.  Guarantor irrevocably waives any impairment, modification, change, release or limitation of the liability of, or stay of actions or lien enforcement proceedings against Borrower or Guarantor, their property, or their estate in bankruptcy, resulting from the operation of any provision of the state or federal bankruptcy laws, or from the decision of any court.
3.7    Lack of Diligence.  Guarantor irrevocably waives any and all claims or defenses based upon lack of diligence in:  (a) collection of any Obligations; (b) protection of any collateral or other security for the Indebtedness or Obligations; or (c) realization upon any collateral or under any of the other Credit Documents.
3.8    Other Defenses.  Guarantor irrevocably waives any other defenses, set-offs or counterclaims which may be available to Borrower, or any other Guarantor, and any and all other defenses now or at any time hereafter available to Guarantor (including, without limitation, those given to sureties) at law or in equity, including but not limited to any defenses based upon:
(a)    the incapacity, lack of authority, death or disability of Borrower, any other Guarantor or Person;
(b)    the failure of Administrative Agent to commence (on behalf of Lenders) an action against Borrower or any other Person or to proceed against or exhaust any security held by Administrative Agent, for the benefit of Lenders, or by Lenders at any time or to pursue any other remedy whatsoever at any time;
(c)    the consideration for this Guaranty;
(d)    any acts or omissions of Administrative Agent or Lenders which vary, increase or decrease the risk of Guarantor;
(e)    the application by Borrower of the proceeds of the Loan for purposes other than the purposes represented by Borrower to Administrative Agent and Lenders or intended or understood by Administrative Agent, Lenders or Guarantor;

(f)    any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other aspects more burdensome than that of a principal;
(g)    Administrative Agent’s election (on behalf of Lenders), in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code or any successor statute; and
(h)    any borrowing or any grant of a security interest under Section 364 of the Bankruptcy Code.
3.9    Nature of Waivers.  It is agreed among Guarantor, Administrative Agent and Lenders that the waivers set forth in this Guaranty (both in this Section and elsewhere) are of the essence of the transaction contemplated by the Credit Documents and that, but for this Guaranty and such waivers, Administrative Agent and Lenders would decline to enter into the Credit Agreement.
4.    REPRESENTATIONS, WARRANTIES AND COVENANTS.  Guarantor represents, warrants and covenants to Administrative Agent and Lenders as follows:
4.1    Financial Statements.  All financial statements and other financial information furnished or to be furnished to Administrative Agent (a) are or will be true and correct in all material respects and do or will fairly represent the financial condition of Guarantor (including all contingent liabilities) in each case as of the date delivered, and (b) were or will be prepared in accordance with generally accepted accounting principles, consistently applied.  There has been no material adverse change in Guarantor's financial condition since the dates of the statements most recently furnished Administrative Agent.
4.2    No Defaults.  There is no existing event of default, and no event has occurred which with the passage of time and/or the giving of notice will constitute an event of default, under any agreement to which Guarantor is a party, which event of default could reasonably be expected to have a material adverse effect on Guarantor's ability to perform the Guaranteed Obligations under this Guaranty, and neither the execution and delivery of this Guaranty nor compliance with the terms and provisions hereof will violate any presently existing provision of law or any presently existing regulation, order, writ, injunction or decree of any court or governmental department, commission, board, bureau, agency or instrumentality, or constitute a default under, any agreement to which Guarantor is a party or by which Guarantor or its property is bound.
4.3    No Litigation.  There are no actions, suits or proceedings pending or threatened against Guarantor before any court or any governmental, administrative, regulatory, adjudicatory or arbitrational body or agency of any kind which, if decided adversely, could reasonably be expected to adversely affect performance by Guarantor of such Guarantor's obligations pursuant to and as contemplated by the terms and provisions of this Guaranty.
4.4    Accuracy.  Neither this Guaranty nor any document, financial statement, credit information, certificate or statement heretofore furnished or required herein to be furnished to Administrative Agent by Guarantor contains any untrue statement of fact or omits to state a fact material to this Guaranty, in each case as of the date of such document, financial statement, credit information or statement.
4.5    No Defenses.  As of the date of this Guaranty, Guarantor's obligations under this Guaranty are not subject to any offsets or defenses against Administrative Agent or Lenders of any kind. 

4.6    Organization.  Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland with its principal place of business at 245 Park Avenue, 42nd Floor, New York, NY 10167.  Guarantor owns one hundred percent (100%) of the indirect membership interests in Borrower clear of all liens, claims and encumbrances.  Guarantor has full right, power and authority to execute the Credit Documents to which it is a party on its own behalf.
4.7    Governing Documents.  A true, complete and correct copy of the certificate of incorporation and any amendments thereto and all other documents creating and governing  Guarantor (collectively, the “Guarantor Documents”) have been furnished to Administrative Agent.  The Guarantor Documents constitute the entire agreement among the members of Guarantor and are binding upon and enforceable against each of the members in accordance with their terms, subject to bankruptcy and other laws affecting the rights of creditors, generally.  There are no other agreements, oral or written, among the members of Guarantor.  No breach exists under any of the Guarantor Documents and no condition exists which, with the giving of notice or the passage of time, would constitute a breach under any of the Guarantor Documents.
4.8    Existence.  Guarantor shall preserve and keep in full force and effect its existence, entity status, franchises, rights and privileges under the laws of its state of formation.   Guarantor shall not wind up, liquidate, dissolve, reorganize, merge, or consolidate with or into, or convey, sell, assign, transfer, lease or otherwise dispose of all or substantially all of its assets, or acquire all or substantially all of the assets of the business of any Person, or permit any subsidiary or Affiliate of Borrower to do so.  Guarantor shall not amend or terminate or permit the amendment or termination of the Guarantor Documents without the prior written consent of Administrative Agent.  Guarantor shall not change its name, identity, or organizational structure, the location of its chief executive office or its place of business or its state of organization unless Administrative Agent has been notified in writing in advance. 
5.    COVENANTS
5.1    No Defenses.  Guarantor agrees that its obligations under this Guaranty shall not be subject to any counterclaims, offsets or defenses against Administrative Agent or any Lender of any kind which may arise in the future.
5.2    Financial Information.  Guarantor hereby agrees, as a material inducement to Lenders to make the Loan to Borrower, to furnish to Administrative Agent the financial statements required of Guarantor under the Credit Agreement.  Guarantor hereby warrants and represents unto Administrative Agent and Lenders that any and all balance sheets, net worth statements and other financial data which may hereafter be given to Administrative Agent with respect to Guarantor will, at the time of such delivery, fairly and accurately present the financial condition of Guarantor.
5.3    Minimum Tangible Net Worth and Liquidity Covenants.  Until the Obligations have been finally and indefeasibly paid in full, Guarantor shall maintain, as of the last day of each calendar quarter: (a) tangible net worth, determined in accordance with GAAP (but excluding goodwill, other intangible assets and any Affiliate note receivables), is now and shall, at all times during the term of this Guaranty, in an amount not less than the sum of (7) 80% of Guarantor's tangible net worth as of June 30, 2022, plus (2) 80% of the total net contributed capital actually received (after deducting transaction costs) as a result of the issuance of equity interest in the Guarantor subsequent to June 30, 2022; and (b) Liquid Assets having a market value of at least the greater of (1) $5,000,000 and (2) 50% of the Guarantor's recourse debt (not to exceed $10,000,000).  As used in this Section 5.3, “Liquid Assets” means, as of the applicable date, Guarantor’s unrestricted and unencumbered (whether by Liens, negative pledges, or 

otherwise) (i) cash, and (ii) stocks, bonds, and mutual fund shares, in each instance that can be readily sold for cash on stock exchanges or over-the-counter markets provided that if the Guarantor's liquid assets equal or exceed $5,000,000 then for purposes of clause (b)(2) above, Guarantor may include Guarantor's available borrowing capacity in the calculation of liquid assets under clause (b)(2) above.
5.4    Determination of Compliance by Administrative Agent. Administrative Agent shall determine, in its reasonable discretion, whether Guarantor has complied with each of the foregoing covenants in this Section 5.
6.    MISCELLANEOUS
6.1    Enforcement.  Administrative Agent shall have the right to enforce this Guaranty in a separate action against one or more Persons comprising Guarantor, or by an action against Guarantor and some or all of the other Persons obligated under the Credit Documents, or any combination of the foregoing.
6.2    Revival and Reinstatement.  This Guaranty shall remain in full force and effect and continue to be effective should any petition be filed by or against Borrower or any other Borrower Party for liquidation or reorganization, should Borrower or any other Borrower Party become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of Borrower or such Borrower Party's assets.  This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Guaranteed Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by Administrative Agent or Lenders, whether as a “voidable preference”, “fraudulent conveyance”, or otherwise, all as though such payment or performance had not been made to Administrative Agent (for the account of Lenders) or to any Lender in the first place.  In the event that any payment of any Obligation, or any part thereof, is rescinded, reduced, restored or returned, the Guaranteed Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.
6.3    No Marshaling.  Administrative Agent has no obligation to marshal any assets in favor of Guarantor, or against or in payment of (a) any of the Guaranteed Obligations, or (b) any other obligation owed to Administrative Agent or Lenders by Guarantor, Borrower or any other Person.
6.4    No Modification, Waiver or Release Without Writing.  Except as may otherwise be expressly set forth herein, this Guaranty may not be modified, amended, revised, revoked, terminated, changed or varied in any way whatsoever, nor shall any waiver of any of the provisions of this Guaranty be binding upon Administrative Agent or Lenders, except as expressly set forth in a writing duly executed by Administrative Agent (on behalf of Lenders).  No waiver by Administrative Agent (on behalf of Lenders) of any default shall operate as a waiver of any other default or the same default on a future occasion, and no action by Administrative Agent (on behalf of Lenders) permitted hereunder shall in any way affect or impair Administrative Agent’s or any Lender's rights or the obligations of Guarantor under this Guaranty.
6.5    Assignment; Successors and Assigns.  Guarantor may not assign its obligations or liability under this Guaranty.  Subject to the preceding sentence, this Guaranty shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and their respective successors and assigns.  Lenders may, without notice to anyone, sell or assign the Guaranteed Obligations, the Notes or other Credit Documents or any part thereof, or grant participations therein, and in any such event each 

and every assignee or holder of, or participant in, all or any of the Guaranteed Obligations shall have the right to enforce this Guaranty, by suit or otherwise for the benefit of such assignee, holder, or participant, as fully as if herein by name specifically given such right, but Administrative Agent shall have an unimpaired right, prior and superior to that of any such assignee, holder or participant, to enforce this Guaranty for the benefit of Lenders.
6.6    Integration.  This Guaranty is the entire agreement of Guarantor with respect to the subject matter of this Guaranty, provided that this Guaranty shall not in any way limit or abrogate the obligations of Guarantor under any other Credit Documents to which Guarantor is party. 
6.7    Rights Cumulative.  All of Administrative Agent’s and each Lender's rights under this Guaranty and the other Credit Documents are cumulative.  The exercise of any one right does not exclude the exercise of any other right given in this Guaranty or the other Credit Documents or any other right of Administrative Agent or Lenders not set forth in this Guaranty or the other Credit Documents.  
6.8    Severability.  Whenever possible, each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Guaranty shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Guaranty.
6.9    Material Inducement; Consideration.  Guarantor acknowledges and agrees that Administrative Agent and Lenders are specifically relying upon the representations, warranties, agreements and waivers contained herein and that such representations, warranties, agreements and waivers constitute a material inducement to Administrative Agent and Lenders to accept this Guaranty and to enter into the Credit Agreement and the transaction contemplated therein.  Guarantor further acknowledges that it expects to benefit from Lenders’ extension of financing accommodations to Borrower because of its relationship to Borrower, and that it is executing this Guaranty in consideration of that anticipated benefit.
6.10    Cooperation.  Guarantor acknowledges that Lenders and their successors and assigns may (i) sell, transfer or assign all or a portion of the Loan to one or more investors, or (ii) participate the Loan secured by this Guaranty to one or more investors.  Guarantor shall cooperate with Administrative Agent in effecting any such transaction and shall provide such information and documents relating to Guarantor, as Administrative Agent may reasonably request in connection therewith, including information concerning its business and operations that Administrative Agent may reasonably request.  Administrative Agent shall be permitted to share all such information with the proposed transferees and participants, provided such parties agree to keep such information confidential.
6.11    Counterparts.  This Guaranty may be executed in counterparts, each of which shall be deemed an original, but all of which, when taken together, shall be deemed one and the same agreement.  This Guaranty may be delivered by facsimile transmission, by electronic mail, or by other electronic transmission, in portable document format (.pdf), or other electronic or facsimile format, and each such executed facsimile, .pdf, or other electronic record shall be considered an original executed counterpart for purposes of this Guaranty.  Guarantor (a) agrees that it will be bound by its own Electronic Signature (as defined below), (b) accepts the Electronic Signature of each other party to this Guaranty, and (c) agrees that such Electronic Signatures shall be the legal equivalent of manual signatures.  The term “Electronic Signature” means (i) the signing party’s manual signature on a signature page, converted by the signing party (or its agent) to facsimile or digital form (such as a .pdf file) and received from the customary email address or customary facsimile number of the signing party (or its counsel or 

representative), or other mutually agreed-upon authenticated source; or (ii) the signing party’s digital signature executed using a mutually agreed-upon digital signature service provider and digital signature process.  The words “execution,” “executed”, “signed,” “signature,” and words of like import in this paragraph shall, for the avoidance of doubt, be deemed to include Electronic Signatures and the use and keeping of records in electronic form, each of which shall have the same legal effect, validity and enforceability as manually executed signatures and the use of paper records and paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, state laws based on the Uniform Electronic Transactions Act, the New York State Electronic Signatures and Records Act, the Illinois Electronic Commerce Security Act, or any other similar state law
6.12    Governing Law.  This Guaranty shall be governed by and construed in accordance with the internal laws of the State of Illinois (the “State”), without regard to conflicts of law principles.
6.13    Assignment of Rights in Insolvency Proceedings.  In the event any Insolvency Proceeding is instituted by or against Borrower, whether voluntary or involuntary, Administrative Agent (on behalf of Lenders) shall have the right to: (a) file claims in any such proceeding on behalf of Guarantor and (b) vote Guarantor's claims in any such proceeding.
6.14    Time of Essence.  Time is of the essence in this Guaranty.
6.15    Notice.  Any notice or other communication required or permitted to be given under this Guaranty shall be in writing addressed to the respective party as set forth below and shall be delivered in accordance with Section 10.1 of the Credit Agreement.  
If to Guarantor:    245 Park Avenue, 42nd Floor
New York, New York 10167
Attn: Capital Markets and Legal
Email: ssasidharan@aresmgmt.com;
AREGDEBTLEGAL@aresmgmt.com

With a copy to: Latham & Watkins LLP
1271 Avenue of the Americas
New York, New York 10020
Attention: Loren N. Finegold
Telephone: (212) 906-1327
Email: loren.finegold@lw.com

If to Administrative Agent:    Capital One, National Association
77 W. Wacker Drive, 10th Floor
Chicago, Illinois  60601
Attention: Jason LaGrippe
Facsimile:  888-722-5146
Reference:  Ares Briarcliff
with a copy to:    Capital One, National Association
500 W. Wacker Drive, 10th Floor
Chicago, Illinois 60601

Attention: Jeffrey M. Muchmore, 
Managing Director
Facsimile: (855) 332-1699
Reference:  Ares Briarcliff

with a copy to:    Capital One, National Association
5804 Trailridge Drive 
Austin, Texas  78731
Attention:  Diana Pennington,
Chief Counsel-Real Estate
Facsimile: (855) 438-1132
Reference:  Ares Briarcliff
Any party may change its respective address for the giving of notice to another address by giving at least ten (10) business days’ notice of such change. 
6.16    Parties in Interest.  Except as expressly set forth herein, nothing in this Guaranty, whether express or implied, is intended to confer any rights or remedies under or by reason of this Guaranty on any person other than Administrative Agent and Lenders and their respective successors and assigns, nor is anything in this Guaranty intended to relieve or discharge the obligations or liability of any third persons to Administrative Agent and Lenders, nor shall any provision give any third persons other than Administrative Agent and Lenders and their respective successors and assigns any right of subrogation over or against Guarantor.
6.17    VENUE.  GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF ILLINOIS AND IRREVOCABLY AGREES THAT, SUBJECT TO ADMINISTRATIVE AGENT’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY MAY BE LITIGATED IN SUCH COURTS.  GUARANTOR EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS.  GUARANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON GUARANTOR BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO GUARANTOR, AT THE ADDRESS SET FORTH IN THIS GUARANTY AND SERVICE SO MADE SHALL BE DEEMED COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.
6.18    WAIVER OF JURY TRIAL.  GUARANTOR AND, BY THEIR ACCEPTANCE OF THIS GUARANTY, ADMINISTRATIVE AGENT AND LENDERS, HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS GUARANTY AND THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED.  THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY GUARANTOR AND, BY THEIR ACCEPTANCE OF THIS GUARANTY, ADMINISTRATIVE AGENT AND LENDERS.  GUARANTOR ACKNOWLEDGES THAT NONE OF ADMINISTRATIVE AGENT AND LENDERS, NOR ANY PERSON ACTING ON BEHALF OF ADMINISTRATIVE AGENT OR ANY LENDER, HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.  GUARANTOR, ADMINISTRATIVE AGENT AND LENDERS ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT 

GUARANTOR, ADMINISTRATIVE AGENT AND LENDERS HAVE ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS GUARANTY AND THAT EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS.  GUARANTOR, ADMINISTRATIVE AGENT AND LENDERS FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS GUARANTY AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.
6.19    WAIVERS.  THE WAIVERS SET FORTH IN THIS GUARANTY (INCLUDING, WITHOUT LIMITATION, SECTIONS 7.17 AND 7.18 ABOVE) ARE KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE BY GUARANTOR, AND GUARANTOR ACKNOWLEDGES THAT NEITHER ANY LENDER, NOR ADMINISTRATIVE AGENT, NOR ANY PERSON ACTING ON BEHALF OF ANY OF THEM, HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THESE WAIVERS OR IN ANY WAY TO MODIFY OR NULLIFY THEIR EFFECT.  GUARANTOR FURTHER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS GUARANTY AND IN THE MAKING OF THESE WAIVERS BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THESE WAIVERS WITH COUNSEL. 
[SIGNATURES BEGIN ON NEXT PAGE]

EXECUTED as of the day and year first above written.

															
				GUARANTOR:

					
				ARES COMMERCIAL REAL ESTATE CORPORATION,
a Maryland Corporation 

					
					
				By:	/s/ Elaine McKay
				Name:	Elaine McKay
				Title	Vice PresidentDocument

EXHIBIT 10.1
EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of July 27, 2022, between AppFolio, Inc., a Delaware corporation (the “Company”), and Jason Randall (“Randall”).
W I T N E S S E T H
WHEREAS, the Company and Randall desire to enter into this Agreement as to the terms of Randall’s employment with the Company.
NOW, THEREFORE, the parties to this Agreement agree as follows:
1.Employment Term. The Company agrees to employ Randall pursuant to the terms of this Agreement, and Randall agrees to be so employed, commencing as of July 27, 2022 (the “Effective Date”). Randall’s employment may be terminated in accordance with Section 3 of this Agreement. The period of time between the Effective Date and the termination of Randall’s employment is the “Employment Term.”
2.Position and Duties.
(1)During the Employment Term, Randall will serve as the Chief Executive Officer of the Company, reporting to the Company’s Board of Directors. In this capacity, Randall will have the duties, authorities and responsibilities as are consistent with that position.
(2)During the Employment Term, Randall shall devote all of his business time, energy, business judgment, knowledge and skill and his best efforts to the performance of his duties with the Company. Notwithstanding the foregoing, Randall may: (i) serve on boards of directors of non-profit organizations and, in a manner consistent with the Company’s applicable policies and procedures and practices, of other for-profit companies, (ii) participate in charitable, civic, educational, professional, community or industry affairs, (iii) manage Randall’s passive personal investments, provided, however, that in each case of clauses (i)-(iii), so long as such activities in the aggregate do not interfere or conflict with Randall’s duties under this Agreement or create a potential business or fiduciary conflict.
3.Termination. Randall’s employment and the Employment Term shall terminate on the first of the following to occur:
(3)Cause. Immediately upon written notice by the Company to Randall of a termination for Cause.
(4)Without Good Reason. Upon thirty (30) days’ prior written notice by Randall to the Company of Randall’s voluntary termination of employment without Good Reason (which the Company may, in its sole discretion, make effective earlier than any notice date).
(5)Without Cause. Immediately upon written notice by the Company to Randall of an involuntary termination without Cause (other than for death or Disability).
(6)Good Reason. Upon written notice by the Randall to the Company of a termination for Good Reason.
(7)Death. Automatically upon the date of death of Randall.

    1

(8)Disability. Immediately upon written notice by the Company to Randall of termination due to Disability (capitalized terms in this Section 3 that have not been previously defined in this Agreement are defined in Section 11 below).
4.Base Salary. During the Employment Term, the Company will pay Randall a base salary (the “Base Salary”) at an annual rate of $500,000 in accordance with the Company’s regular payroll practices. The Base Salary is subject to annual review by the Company’s Board of Directors (the “Board”).
5.Corporate Bonus Program. For each fiscal year of the Company completed during the Employment Term, Randall will be eligible to earn an annual bonus (each annual bonus, an “Annual Bonus”) under the Company’s Corporate Bonus Program. The Annual Bonus is subject to the Board’s approval and Randall’s execution of the applicable participation agreement under the Corporate Bonus Program. For fiscal year 2022, Randall will be eligible for an Annual Bonus of $500,000 at target (subject to a possible increase or decrease relative to certain performance metrics). In each case, the Annual Bonus will be subject to the terms and conditions of this Section 5 and the applicable plan documents.
6.Long-Term Cash Incentive. Randall is eligible for cash bonus opportunities under the Long-Term Cash Incentive Plan and its Exhibits, (the “Incentive Plan”) adopted by the AppFolio Board of Directors on February 20, 2018, and the Long-Term Cash Incentive Award Offer of the same date (the “Incentive Offer”), subject to the following additional terms:
(1)The Payout Formula (as defined in the Incentive Plan) for Randall will be as set forth in Exhibit B of the Incentive Plan, but the payout percentage will be as follows: .5% for an annual Internal Rate of Return (“IRR”) at 10% and below 15%; 1% (one percent) for IRR at 15% and below 20%; 1.5% for IRR at 20% and below 25%; and at 2.5% for IRR at 25% or above.
(2)In the event of voluntary resignation or termination of employment by the Company with Cause whenever such resignation or termination occurs during the calendar year, Randall will receive no payment from the Company other than what it may have already paid to him which he shall retain.  
(3)In the event of termination of employment by the Company without Cause or by Randall for Good Reason occurring during the calendar year 2022 the Company will pay Randall the sum of $5,000,000; and if such a termination occurs during calendar years 2023, 2024 or 2025, the Company will pay Randall a pro-rated amount, based on the number of full months Randall worked between January 1, 2018 and the date of the event, to be paid if and when such amounts are earned under the Payout Formula, in each case subject to Randall’s continued compliance with Sections 9 and 10 of this Agreement.  (For illustration, if such termination or resignation occurs on July 10, 2024, Randall would be entitled to 78 months over 96 months which is .8125 of the 2024 and 2025 payments, if and to the extent the thresholds for those payments are met.)
(4)In the event of termination of employment other than for Cause or Randall’s resignation with Good Reason, in each case within 12 months of a Change of Control (as that term is defined in the Incentive Plan), the Company will pay Randall $5,000,000 if such termination or resignation occurs in 2022, and if such termination or resignation occurs in 2023, 2024 or 2025, Randall would be entitled to payment of the pro-rated amount as set forth in subsection (c) above, in each case subject to Randall’s continued compliance with Sections 9 and 10 of this Agreement.
(5)In the event of termination of employment as a result of Randall’s death or Disability occurring in 2022 the Company will pay Randall or his estate $5,000,000 and for such a termination occurring in 2023, 2024 or 2025 the Company will pay Randall or his estate the 

    2

greater of $5,000,000 or the pro-rated amount set forth in (c) above; provided, however, for purposes of that pro-rated payment 12 months will be added to his time of service at his death.  For a termination for Disability, 12 months will be added to his time of service but it shall be measured from the first date Randall is continuously unable to work as a result of that disability.  (For example, if Randall’s employment terminated as a result of death on July 10, 2023, or for Disability that began on that date, his estate would be entitled to 78 months over 96 months or .8125 of the 2024 and 2025 payments if, and to the extent, the thresholds are met, less any amount already paid in previous years; or $5,000,000, whichever is greater.)
7.Employee Benefits.
(1)Benefit Plans; Vacation. During the Employment Term, Randall will be eligible to participate in any employee benefit plan adopted by the Company for the benefit of its executive employees, subject to satisfying the applicable eligibility requirements, except to the extent such plans are duplicative of the benefits otherwise provided under this Agreement. Randall shall be entitled to the same vacation policy for executive employees of the Company as in effect from time to time. Notwithstanding the foregoing, the Company may modify or terminate any employee benefit plan at any time.
(2)Business Expenses. The Company will reimburse Randall for all reasonable and necessary out-of-pocket business expenses incurred in connection with the performance of Randall’s duties under this Agreement, in accordance with the Company’s expense reimbursement policy.
8.Other Benefits On Termination.
(a)Termination For Cause Or Voluntary Termination By Randall. If Randall’s employment is terminated: (x) by the Company for Cause, or (y) by Randall other than by reason of death, Disability or resignation for Good Reason, then the Company shall pay to Randall the Accrued Benefits.
(b)Termination Without Cause or Resignation for Good Reason. If Randall’s employment by the Company is terminated by the Company other than for Cause or Randall resigns for Good Reason, the Company shall pay or provide Randall with the following:
(1)the Accrued Benefits; and
(2)subject to Randall’s continued compliance with Sections 9 and 10 of this Agreement, (1) an amount equal to Randall’s monthly Base Salary paid in accordance with the Company’s normal payroll practices for a period of twelve (12) months following such termination; (2) a pro-rated portion of the Annual Bonus for the fiscal year in which such termination occurs, with such pro-rated portion determined based on the number of days Randall was employed by the Company during such year, and achievement of the applicable performance goals determined by the Board at the time of such termination based on forecasted results (but no greater than target-level performance), payable on the first regularly scheduled pay period following the sixtieth (60th) day following such termination; (3) payment of COBRA premiums (through premium reimbursement or direct payment to the insurer) for twelve (12) months following termination; and (4) payment of any earned but unpaid Annual Award for the prior completed fiscal year. Notwithstanding the foregoing, any such payment scheduled to occur pursuant to this Section 8(b)(ii) during the first sixty (60) days following the termination will not be paid until the first regularly scheduled pay period following the sixtieth (60th) day following such termination and will include payment of any amount that was otherwise scheduled to be paid prior thereto.
(a)Death; Disability. In the event that Randall’s employment and/or the Employment Term ends on account of Randall’s death or Disability, the Company shall pay to 

    3

Randall or Randall’s estate, as the case may be, the Accrued Benefits, any earned but unpaid Annual Award, and a pro-rated portion of the then current year’s Annual Award at target. Also, if the Employment Term ends because of Randall’s death, the Company will pay COBRA premiums for twelve (12) months for any family members covered by the Company’s plans subject to COBRA and any required timely elections for COBRA coverage.  Notwithstanding the foregoing, all right and obligations to the Accrued Benefits shall be subject to state and federal laws governing disabilities and leaves of absence as well as the Company’s applicable policies.
(b)Resignation From All Other Positions. Upon any termination of the Employment Term, Randall will promptly resign, and will be deemed to have automatically resigned, from all positions, if any, that Randall holds as a member of the Board (including any committees), officer, director, manager or fiduciary of the Company or any of its affiliates or subsidiaries. Randall will take all actions reasonably requested by the Company to give effect to this Section (e).
(c)Exclusive Remedy. The amounts payable to Randall following termination of employment and the Employment Term pursuant to Sections 6 and 8 of this Agreement shall be in full and complete satisfaction of Randall’s rights under this Agreement and any other claims that Randall may have in respect of Randall’s employment with the Company or any of its affiliates. Randall acknowledges that such amounts are fair and reasonable and are Randall’s sole and exclusive remedy, in lieu of all other remedies at law or in equity, with respect to the termination of Randall’s employment or any breach of this Agreement.
9.Release; Continued Compliance. Any and all payments and benefits provided Randall pursuant to Sections 6 and 8 of this Agreement beyond the Accrued Benefits (the “Additional Payments and Benefits”) shall be payable only if Randall delivers to the Company, and does not revoke, a general release of claims in favor of the Company in substantially the form attached hereto as Exhibit A. Such release will be executed and delivered (and no longer subject to revocation, if applicable) within sixty (60) days following termination. During such time that Randall is receiving the Additional Payments and Benefits, if (a) the Company discovers grounds constituting Cause existed before Randall’s termination or (b) Randall breaches any of the restrictive covenants set forth in the Employee Proprietary Information and Invention Assignment Agreement attached to this Agreement as Exhibit B, Randall’s right to receive the Additional Payment and Benefits, including without limitation those pursuant to Section 6 of this Agreement, will immediately cease and become null and void, and any previously paid Additional Payments and Benefits shall be repaid to the Company by Randall.
10.Restrictive Covenants. Randall acknowledges and agrees to be bound by the restrictive covenants set forth in the Employee Proprietary Information and Invention Assignment Agreement attached to this Agreement as Exhibit B.
11.Certain Defined Terms. As used in this Agreement, the following terms have the meanings set forth below:
(1)“Accrued Benefits” means: (i) any accrued but unpaid Base Salary through the date of termination; (ii) any other amount already earned but not yet paid; and (iii) reimbursement for any unreimbursed business expenses incurred through the date of termination.
(2)“Cause” means Randall’s: (i) theft, dishonesty, misconduct, falsification of any employment or Company records or any other act or omission that has a material detrimental effect on the Company’s reputation or business; (ii) conviction (including any plea of guilty or no contest) for any felony, or for any criminal act that materially impairs Randall’s ability to perform Randall’s duties to the Company; (iii) breach of fiduciary duty; (iv) material breach of this Agreement any other agreement between Randall and the Company; or (v) material violation of any Company policy, including but not limited to the harassment policy; or (vi) Randall’s willful 

    4

failure to perform, or willful misconduct or gross negligence in the performance of, Randall’s duties to the Company or Randall’s failure to follow the lawful directives of the Board (other than as a result of death or Disability); provided that, in the case of clauses (iv), (v) and (vi), Randall shall have an opportunity to cure, if susceptible to cure, for a period of thirty (30) days following notice by the Board.
(3)“Disability” or “Disabled” means Randall becomes “disabled” or suffers from a “disability” as defined in Section 409A, or in any successor regulation, as determined by the Board in good faith.
(4)“Good Reason” means, without Randall’s prior written consent: (i) a material reduction in Randall’s base salary (other than a reduction pertaining to all similarly situated employees of the Company); (ii) a material diminution of Randall’s duties inconsistent with Randall’s position, including a change of the title of his position to one of less responsibility or scope; (iii) an adverse change in Randall’s reporting line to other than the Company’s Board of Directors; (iv) a material breach by the Company or its affiliate of the Agreement or any other material written agreement with the Company; or (v) the relocation of Randall’s principal work location by more than thirty-five (35) miles when either virtual work or a flexible hybrid work arrangement involving both off-site services and in-person services at the Company’s headquarters is not available to Randall; provided that, “Good Reason” shall exist only if Randall tenders written objection to the Company within thirty (30) days of the initial occurrence of such Good Reason setting forth in reasonable detail the circumstances alleged to give rise to Good Reason, the Company fails to remedy the condition within thirty (30) days after receiving such written objection notice, and Randall gives notice of resignation from employment within thirty (30) days after the end of such cure period.
(5)“Section 409A” means Section 409A of the Internal Revenue Code and the regulations and guidance promulgated under the Internal Revenue Code.
12.No Assignments. This Agreement is personal to each of the parties. Except as provided below, no party may assign or delegate any rights or obligations under this Agreement without first obtaining the written consent of the other party. The Company may assign this Agreement to any successor to all or substantially all of its business or assets.
13.Notice. All communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of delivery, if delivered by hand, (b) on the date of transmission, if delivered by electronic mail, or (c) on the first business day following the date of deposit, if delivered by guaranteed overnight delivery service:
If to Randall:
At the address (or to the email address) shown in the books and records of the Company.
If to the Company:
70 Castillan Drive
Santa Barbara, CA 93117
Attention: Chief Legal Officer
or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

    5

14.Interpretation. The section headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement. In the event of any inconsistency between the terms of this Agreement and any form, award, plan or policy of the Company, the terms of this Agreement shall govern and control.
15.Severability. The provisions of this Agreement shall be deemed severable. The invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties shall be enforceable to the fullest extent permitted by applicable law.
16.Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
17.Arbitration. Any dispute or controversy arising under or in connection with this Agreement or Randall’s employment with the Company shall be settled exclusively by arbitration, conducted before a single arbitrator in Santa Barbara, California in accordance with the JAMS Employment Rules and Procedures then in effect (available at www.jamsdr.com). The decision of the arbitrator will be final and binding upon the parties. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. In connection with any such arbitration and regardless of outcome, (a) each party shall pay all its own costs and expenses, including, without limitation, its own legal fees and expenses, and (b) the arbitration costs shall be borne by the Company.
18.Governing Law. This Agreement, the rights and obligations of the parties, and all claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State of California (without regard to its choice of law provisions).
19.Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Randall and such officer or director as may be designated by the Board. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement, together with all exhibits attached to this Agreement, sets forth the entire agreement of the parties in respect of the subject matter contained in this Agreement and supersedes any and all prior agreements or understandings between Randall and the Company with respect to the subject matter of this Agreement. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. In the event of any inconsistency between the terms of this Agreement and any equity award, the terms of this Agreement shall govern and control.
20.Representations. Randall represents and warrants to the Company that:  (a) Randall has the legal right to enter into this Agreement and to perform all of the obligations on Randall’s part to be performed under this Agreement; and (b) Randall is not a party to any agreement or understanding, written or oral, and is not subject to any restriction, which, in either case, could prevent or impair Randall from entering into this Agreement or performing Randall’s duties and obligations under this Agreement.
21.Tax Matters.

    6

(1)Withholding. The Company may withhold from any and all amounts payable under this Agreement or otherwise such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.
(2)Section 409A Compliance.
(a)The intent of the parties is that payments and benefits under this Agreement comply with, or are exempt from, Section 409A. Accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith or exempt therefrom. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on Randall by Section 409A or damages for failing to comply with Section 409A.
(b)A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Section 409A. For purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” Notwithstanding anything to the contrary in this Agreement, if Randall is deemed on the date of termination to be a “specified employee” within the meaning of that term under Section 409A, then with regard to any payment or the provision of any benefit that is considered deferred compensation under Section 409A payable on account of a “separation from service,” such payment or benefit shall not be made or provided until the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such “separation from service” of Randall, and (B) the date of Randall’s death, to the extent required under Section 409A. Upon the expiration of the foregoing delay period, all payments and benefits delayed pursuant to this Section 22.(ii) (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to Randall in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.
(c)To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred compensation” for purposes of Section 409A, (A) all expenses or other reimbursements under this Agreement shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by Randall, (B) any right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (C) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.
(d)For purposes of Section 409A, Randall’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.
(e)Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment under this Agreement that constitutes “nonqualified deferred compensation” for purposes of Section 409A be subject to offset by any other amount unless otherwise permitted by Section 409A.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

    7

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
                        
									
			APPFOLIO, INC.

		By: 	/s/ Andreas von Blottnitz
		Name: 	Andreas von Blottnitz
		Title: 	Chairperson of the Board of Directors
			
			JASON RANDALL

			/s/ Jason Randall
			Jason Randall

[Signature Page to Employment Agreement]

    8

Exhibit A GENERAL RELEASE

I, ________________, in consideration of and subject to the performance by AppFolio, Inc. (together with its subsidiaries, the “Company”) of its obligations under that Employment Agreement, dated as of                 ,     , 2022 (the “Agreement”), do hereby release and forever discharge as of the date hereof the Company and its respective affiliates and all present, former and future managers, directors, officers, employees, successors and assigns of the Company and its affiliates and direct or indirect owners (collectively, the “Released Parties”) to the extent provided below (this “General Release”). The Released Parties are intended to be third-party beneficiaries of this General Release, and this General Release may be enforced by each of them in accordance with the terms hereof in respect of the rights granted to such Released Parties hereunder. Terms used herein but not otherwise defined shall have the meanings given to them in the Agreement.

1.My employment or service with the Company and its affiliates terminated as of    , and I hereby resign from any position as an officer, member of the board of managers or directors (as applicable) or fiduciary of the Company or its affiliates (or reaffirm any such resignation that may have already occurred). I understand that the Additional Payments and Benefits represent, in part, consideration for signing this General Release and are not salary, wages or benefits to which I was already entitled. I understand and agree that I will not receive the Additional Payments and Benefits unless I execute this General Release and do not revoke this General Release within the time period permitted hereafter. I understand and agree that such payments and benefits are subject to the restrictive covenants set forth in Exhibit B attached to the Agreement, which (as noted below) expressly survive my termination of employment and the execution of this General Release. Such payments and benefits will not be considered compensation for purposes of any employee benefit plan, program, policy or arrangement maintained or hereafter established by the Company or its affiliates.

2.Except as provided in paragraphs 5. and 6. below and except for the provisions of the Agreement which expressly survive the termination of my employment with the Company, I knowingly and voluntarily (for myself, my heirs, executors, administrators and assigns) release and forever discharge the Company and the other Released Parties from any and all claims, suits, controversies, actions, causes of action, cross-claims, counter-claims, demands, debts, compensatory damages, liquidated damages, punitive or exemplary damages, other damages, claims for costs and attorneys’ fees, or liabilities of any nature whatsoever in law and in equity, both past and present (through the date that this General Release becomes effective and enforceable) and whether known or unknown, suspected, or claimed against the Company or any of the Released Parties which I, my spouse, or any of my heirs, executors, administrators or assigns, may have, which arise out of or are connected with my employment with, or my separation or termination from, the Company, including, but not limited to, any allegation, claim or violation, arising under: Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended (including the Older Workers Benefit Protection Act); the Equal Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the Worker Adjustment Retraining and Notification Act; the Employee Retirement Income Security Act of 1974; the California Fair Labor Standards Act; any applicable regulations or Executive Order Programs; or the state or local counterparts of all of the foregoing, including without limitation, the Fair Employment and Housing Act, as amended, the California Labor Code; the California Equal Pay Act, and the California False Claims Act; or under any public policy, contract or tort, or under common law; or arising under any policies, practices or procedures of the Company; or any claim for wrongful discharge, breach of contract, infliction of emotional 
    Exhibit A - 9

distress, defamation; or any claim for costs, fees, or other expenses, including attorneys’ fees incurred in these matters) (all of the foregoing collectively referred to herein as the “Claims”).

3.The released claims described in paragraph 2. hereof include all such claims, whether known or unknown by me. Therefore, I waive the effect of California Civil Code § 1542 and any other analogous provision of applicable law of any jurisdiction. Section 1542 states:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”

Notwithstanding the provisions of Section 1542, and for the purpose of implementing a full and complete release and discharge, I expressly acknowledge that the Separation Agreement is intended to include, and does include in its effect, without limitation, all claims which I do not know or suspect to exist in my favor against Releasees at the time of execution hereof, and that the settlement agreed upon expressly contemplates the extinguishment of all such claims, except as otherwise provided herein.

4.I represent that I have made no assignment or transfer of any right, claim, demand, cause of action, or other matter covered by paragraph 2. above.

5.I agree that this General Release does not waive or release any rights or claims that may arise under the Age Discrimination in Employment Act of 1967 after the date I execute this General Release. I acknowledge and agree that my separation from employment with the Company in compliance with the terms of the Agreement shall not serve as the basis for any claim or action (including, without limitation, any claim under the Age Discrimination in Employment Act of 1967).

6.I agree that I hereby waive all rights to sue or obtain equitable, remedial or punitive relief from any or all Released Parties of any kind whatsoever in respect of any Claim, including, without limitation, reinstatement, back pay, front pay, and any form of injunctive relief. Notwithstanding the above, I further acknowledge that I am not waiving and am not being required to waive any right that cannot be waived under law, including the right to file an administrative charge or participate in an administrative investigation or proceeding; provided, however, that I disclaim and waive any right to share or participate in any monetary award resulting from the prosecution of such charge or investigation or proceeding. Additionally, I am not waiving (i) any right to the Accrued Benefits or any Additional Payments and Benefits to which I am entitled under the Agreement, (ii) any claim relating to directors’ and officers’ liability insurance coverage or any right of indemnification under the Company’s organizational documents or otherwise, or (iii) my rights as an equity or security holder in the Company or its affiliates.

7.In signing this General Release, I acknowledge and intend that it shall be effective as a bar to each and every one of the Claims hereinabove mentioned or implied. I expressly consent that this General Release shall be given full force and effect according to each and all of its express terms and provisions, including those relating to unknown and unsuspected Claims (notwithstanding any state or local statute that expressly limits the effectiveness of a general release of unknown, unsuspected and unanticipated Claims), if any, as well as those relating to any other Claims hereinabove mentioned or implied. I acknowledge and agree that this waiver is an essential and material term of this General Release and that without such waiver the Company would not have agreed to the terms of the Agreement. I further agree that in the event I should 
    Exhibit A - 10

bring a Claim seeking damages against the Company, or in the event I should seek to recover against the Company in any Claim brought by a governmental agency on my behalf, this General Release shall serve as a complete defense to such Claims to the maximum extent permitted by law. I further agree that I am not aware of any pending claim of the type described in paragraph 2. above as of the execution of this General Release.

a.I agree that neither this General Release, nor the furnishing of the consideration for this General Release, shall be deemed or construed at any time to be an admission by the Company, any Released Party or myself of any improper or unlawful conduct.

b.I agree that if I violate this General Release by suing the Company or the other Released Parties, I will pay all costs and expenses of defending against the suit incurred by the Released Parties, including reasonable attorneys’ fees.

c.Any non-disclosure provision in this General Release does not prohibit or restrict me (or my attorney) from responding to any inquiry about this General Release or its underlying facts and circumstances by the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), any other self-regulatory organization or any governmental entity.

d.I hereby acknowledge that Exhibit B of the Agreement shall survive as applicable therein my execution of this General Release.

e.Notwithstanding anything in this General Release to the contrary, this General Release shall not relinquish, diminish, or in any way affect any rights or claims arising out of any breach by the Company or by any Released Party of the Agreement after the date hereof.

f.Whenever possible, each provision of this General Release shall be interpreted in, such manner as to be effective and valid under applicable law, but if any provision of this General Release is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this General Release shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

1.I HAVE READ IT CAREFULLY;

2.I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS;

3.I VOLUNTARILY CONSENT TO EVERYTHING IN IT;

4.I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND I HAVE DONE SO OR, AFTER CAREFUL READING AND CONSIDERATION, I HAVE CHOSEN NOT TO DO SO OF MY OWN VOLITION;

5.I HAVE HAD AT LEAST 21 DAYS FROM THE DATE OF MY RECEIPT OF THIS RELEASE TO CONSIDER IT, AND THE CHANGES MADE SINCE MY RECEIPT OF THIS RELEASE ARE NOT MATERIAL OR WERE MADE AT MY REQUEST AND WILL NOT RESTART THE REQUIRED 21-DAY PERIOD;
    Exhibit A - 11

6.I UNDERSTAND THAT I HAVE SEVEN (7) DAYS AFTER THE EXECUTION OF THIS RELEASE TO REVOKE IT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED;

7.I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND

8.I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED, WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME.

SIGNED:__________________________    DATED:_________________
    Exhibit A - 12

Exhibit B

[Employee Proprietary Information and Invention Assignment Agreement]
(Attached)

Exhibit B - 1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00346-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00346-of-00352.parquet"}]]