Document:

Exhibit 10.2

 

EXECUTION VERSION

 

MORTGAGE ASSET PURCHASE AGREEMENT

 

This MORTGAGE ASSET PURCHASE AGREEMENT (this “Agreement”) is made as of August 15, 2014 by and among ACRC Lender LLC, a Delaware limited liability company (the “Seller”), and ACRE Commercial Mortgage 2014-FL2 Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “Issuer”).

 

WITNESSETH:

 

WHEREAS, the Issuer desires to purchase from the Seller and the Seller desires to sell to the Issuer an initial portfolio of Mortgage Assets, each as identified on Annex A attached hereto (the “Closing Date Mortgage Assets”);

 

WHEREAS, in connection with the sale of such Closing Date Mortgage Assets to the Issuer, the Seller desires to release any interest it may have in the Closing Date Mortgage Assets and desires to make certain representations and warranties regarding the Closing Date Mortgage Assets;

 

WHEREAS, the Seller or an affiliate thereof may sell to the Issuer, from time to time, fully funded Pari Passu Participations or a funded portion thereof (the “Related Funded Companion Participations” and together with the Closing Date Mortgage Assets, the “Mortgage Assets”) and the Issuer may purchase the Related Funded Companion Participations, and all payments and collections thereon after the related Subsequent Seller Transfer Date (as defined herein) from the Seller;

 

WHEREAS, the Issuer and ACRE Commercial Mortgage 2014-FL2 LLC, a Delaware limited liability company (the “Co-Issuer”), intend to issue (a) the U.S.$223,857,000 Class A First Priority Secured Floating Rate Notes Due August 2031 (the “Class A Notes”), (b) the U.S.$10,038,000 Class A-S Second Priority Secured Floating Rate Notes Due August 2031 (the “Class A-S Notes”), (c) the U.S.$18,465,000 Class B Third Priority Secured Floating Rate Notes Due August 2031 (the “Class B Notes”), (d) the U.S.$24,147,000 Class C Fourth Priority Secured Floating Rate Notes Due August 2031 (the “Class C Notes”), (e) the U.S.$32,196,000 Class D Fifth Priority Secured Floating Rate Notes Due August 2031 (the “Class D Notes” and, together with the Class A Notes, the Class A-S Notes, the Class B Notes, the Class C Notes, the “Offered Notes”), and the Issuer intends to issue the (a) the U.S.$21,780,000 Class E Sixth Priority Secured Floating Rate Notes Due August 2031 (the “Class E Notes”), and (b) the U.S. $15,625,000 Class F Seventh Priority Secured Floating Rate Notes Due August 2031 (the “Class F Notes” and together with the Class E Notes and the Offered Notes, the “Notes”) pursuant to an indenture, dated as of August 15, 2014 (the “Indenture”), by and among the Issuer, the Co-Issuer, Wilmington Trust, National Association, as trustee (together with any successor trustee permitted under the Indenture, the “Trustee”) and Wells Fargo Bank, National Association, as note administrator (together with any successor note administrator permitted under the Indenture, in such capacity, the “Note Administrator”) and advancing agent;

 

 

WHEREAS, pursuant to its Governing Documents, certain resolutions of its Board of Directors and a preferred shares paying agency agreement, the Issuer also intends to issue the U.S.$32,669,686 aggregate notional amount preferred shares (the “Preferred Shares” and, together with the Notes, the “Securities”); and

 

WHEREAS, the Issuer intends to pledge the Mortgage Assets purchased hereunder by the Issuer to the Trustee as security for the Notes.

 

NOW, THEREFORE, the parties hereto agree as follows:

 

1.                                      Defined Terms.

 

Capitalized terms used and not otherwise defined herein shall have the same meanings ascribed to such terms in the Indenture.

 

“ACRE”: Ares Commercial Real Estate Corporation, a Maryland corporation.

 

“Asset Documents”:  The documents evidencing a Mortgage Asset.

 

“Assignment of Leases, Rents and Profits”:  With respect to any Mortgage, an assignment of leases, rents and profits 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 to the Mortgagee.

 

“Assignment of Mortgage”:  With respect to any Mortgage, an assignment of the Mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect the assignment of the Mortgage to the Mortgagee.

 

“Borrower”:  With respect to any Mortgage Loan, the related borrower or other obligor thereunder.

 

“Companion Participation Holder”:  The holder of any Unfunded Future Funding Participation.

 

“Cut-Off Date”:  With respect to each Mortgage Asset, the later of (i) July 16, 2014 and (ii) the origination date of such Mortgage Asset.

 

“Document Defect”: Any document or documents constituting a part of a Mortgage Asset File that has not been properly executed, has not been delivered within the time periods provided for herein, has not been properly executed, is missing, does not appear to be regular on its face or contains information that does not conform in any material respect with the corresponding information set forth in the Mortgage Asset Schedule on Schedule A of the Indenture or as set forth on an exhibit to a Subsequent Transfer Instrument.

 

“Exception Schedule”: The schedule identifying any exceptions to the representations and warranties made with respect to the Mortgage Assets to be conveyed

 

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hereunder, which is attached hereto as Schedule 1(a) or as attached to any Subsequent Transfer Instrument.

 

“Funded Companion Participations Purchase Price”: As defined in Section 2(b).

 

“Future Funding Amount”:  As defined in the Indenture.

 

“Material Breach”: As defined in Section 4(e).

 

“Material Document Defect”: A Document Defect that materially and adversely affects the value of a Mortgage Asset, the interest of the Noteholders or the ownership interests of the Issuer or any assignee thereof in such Mortgage Asset.

 

“Mortgage”:  With respect to each Mortgage Loan, the mortgage, deed of trust, deed to secure debt or similar instrument that secures the Mortgage Note and creates a lien on the fee or leasehold interest in the related Mortgaged Property.

 

“Mortgage Asset File”:  As defined in the Indenture.

 

“Mortgage Loan”:  Any Whole Loan or Pari Passu Participated Mortgage Loan, as applicable and as the context may require.

 

“Mortgage Note”:  With respect to each Mortgage Loan, the promissory note evidencing the indebtedness of the related Borrower, together with any rider, addendum or amendment thereto, or any renewal, substitution or replacement of such note.

 

“Mortgage Rate”:  The stated rate of interest on a Mortgage Loan.

 

“Mortgaged Property”:  With respect to each Mortgage Loan, the real property securing such Mortgage Loan.

 

“Mortgagee”: With respect to each Mortgage Asset, the party secured by the related Mortgage.

 

“Pari Passu Participated Mortgage Loan”:  Any mortgage loan of which a Pari Passu Participation represents an interest.

 

“Pari Passu Participation”:  Any Mortgage Asset acquired by the Issuer on the Closing Date that is a fully funded pari passu participation interest in a whole loan secured by commercial real estate.

 

“Pari Passu Participation Agreement”: With respect to each Pari Passu Participated Mortgage Loan, the participation agreement that governs the rights and obligations of the holders of the related Pari Passu Participation and the Unfunded Future Funding Participation.

 

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“Participation”: Any Pari Passu Participation, Unfunded Future Funding Participation and/or Related Funded Companion Participation, as applicable and as the context may require.

 

“Related Funded Companion Participation”:  The funded portion of any Unfunded Future Funding Participation.

 

“Repurchase Price”: The sum of the following (in each case, without duplication) as of the date of such repurchase: (i) the then-Stated Principal Balance of such Mortgage Asset, plus (ii) accrued and unpaid interest on such Mortgage Asset, plus (iii) any unreimbursed advances made under the Indenture or the Servicing Agreement, plus (iv) accrued and unpaid interest on advances made under the Indenture or the Servicing Agreement on the Mortgage Asset, plus (v) any reasonable costs and expenses (including, but not limited to, the cost of any enforcement action incurred by the Issuer or the Trustee in connection with any such repurchase).

 

“Retained Interest”:  Any origination fees paid on the Mortgage Assets and any interest in respect of any Mortgage Asset that accrued prior to the Closing Date and has not been paid to Seller.

 

“Servicing File”:  The file maintained by the servicer with respect to each Mortgage Asset.

 

“Stated Principal Balance”:  With respect to each Mortgage Asset, the principal balance as of the Cut-off Date as reduced (to not less than zero) on each Payment Date by (i) all payments or other collections of principal of such Mortgage Asset received or deemed received thereon during the related Collection Period and (ii) any principal forgiven by the Special Servicer and other principal losses realized in respect of such Mortgage Asset during the related Collection Period.

 

“Subsequent Seller Transfer Date”: As defined in Section 2(b).

 

“Subsequent Transfer Instrument”: As defined in Section 2(b).

 

“Unfunded Future Funding Participation”: With respect to each Mortgage Asset that is a Pari Passu Participation, the future funding companion participation interest, which (unless it is acquired as a Related Funded Companion Participation after the Closing Date in accordance with the terms of this Indenture) is not an asset of the Issuer and is not part of the Collateral.

 

“Whole Loan”: A mortgage loan secured by a first mortgage lien on a commercial property or multi-family property.

 

2.                                      Purchase and Sale of the Mortgage Assets.

 

(a)                                 Set forth in Exhibit A hereto is a list of Closing Date Mortgage Assets and certain other information with respect to each of the Closing Date Mortgage Assets.  The Seller agrees to sell to the Issuer, and the Issuer agrees to purchase from the Seller, all of the Closing

 

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Date Mortgage Assets at an aggregate purchase price of U.S. $336,077,686 (the “Purchase Price”).  Immediately prior to such sale, the Seller hereby conveys and assigns all right, title and interest it may have in such Closing Date Mortgage Assets to the Issuer.  The sale and transfer of the Closing Date Mortgage Assets to the Issuer is conclusive of all rights and obligations from the Closing Date forward, with respect to such Mortgage Assets, provided, that the sale and transfer of Closing Date Mortgage Assets that are Pari Passu Participations are made subject to the rights and obligations of the Companion Participation Holder under the related Pari Passu Participation Agreement, and provided however, it expressly excludes any conveyance of any Retained Interest which shall remain the property of the Seller and shall not be conveyed to the Issuer.  The Issuer shall cause any Retained Interest to be paid to the Seller (or the Seller’s designee) promptly upon receipt in accordance with the terms and conditions hereof, the Servicing Agreement and the Indenture.  For the avoidance of doubt, the Seller is not transferring any obligation to fund any Future Funding Amounts under the Pari Passu Participated Mortgage Loans, all of which will remain the obligation of the party specified under the related Pari Passu Participation Agreement.  Delivery or transfer of the Closing Date Mortgage Assets shall be made on August 15, 2014 (the “Closing Date”), at the time and in the manner agreed upon by the parties. Upon receipt of evidence of the delivery or transfer of the Closing Date Mortgage Assets to the Issuer or its designee, the Issuer shall pay or cause to be paid to the Seller the Purchase Price in the manner agreed upon by the Seller and the Issuer.

 

(b)                                 From time to time, and at any time following the Closing Date and so long as any Note is outstanding, the Seller may present Related Funded Companion Participations to the Issuer for purchase hereunder.  If the conditions set forth in Section 3 below are satisfied with respect to the Related Funded Companion Participations, the Issuer may purchase and the Seller shall sell and assign without recourse, to the Issuer, but subject to the other terms and provisions of this Agreement, all of the right, title and interest of the Seller in and to (i) the Related Funded Companion Participations as identified on the schedule attached to the related subsequent transfer instrument (a “Subsequent Transfer Instrument”), which Subsequent Transfer Instrument shall be in the form of Annex A attached hereto and delivered by the Seller on the date of such sale (each, a “Subsequent Seller Transfer Date”), and (ii) all amounts received or receivable on the Related Funded Companion Participations, whether now existing or hereafter acquired, after the related Subsequent Seller Transfer Date (other than amounts due prior to the related Subsequent Seller Transfer Date).   Such sale and assignment of the Related Funded Companion Participations to the Issuer is conclusive of all rights and obligations from the Subsequent Seller Transfer Date forward, with respect to such Related Funded Companion Participations, provided however, it expressly excludes any conveyance of any Retained Interest which shall remain the property of the Seller and shall not be conveyed to the Issuer hereunder.  The purchase price with respect to each Related Funded Companion Participation (the “Funded Companion Participations Purchase Price”) shall be at a price equal to the outstanding principal balance of such Related Funded Companion Participation, as set forth in the related Subsequent Transfer Instrument.

 

The sale to the Issuer of the Related Funded Companion Participations identified on the schedule attached to the related Subsequent Transfer Instrument shall be absolute and is intended by the Seller and the Issuer to constitute and to be treated as an absolute sale of the Related Funded Companion Participations by the Seller to the Issuer, conveying good title free and clear of any liens, claims, encumbrances or rights of others from the Seller to the Issuer and the Related Funded Companion Participations shall not be part of the Seller’s estate in the event

 

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of the insolvency or bankruptcy of the Seller.  Each schedule of an Related Funded Companion Participation pursuant to a Subsequent Transfer Instrument shall be marked as Schedule A to the Subsequent Transfer Instrument and is hereby incorporated and made a part of this Agreement.

 

(c)                                  To the extent that the Seller has agreed to transfer and assign record title of any Mortgage Asset to the Issuer pursuant to the Indenture, within 45 days after the Closing Date, the Seller shall, or shall at the expense of the Seller cause a third party vendor to, (1) complete (to the extent necessary) and submit for recording (in favor of the Issuer) in the appropriate public recording office (a) each assignment of mortgage referred to in clause (i)(8) of the definition of “Mortgage Asset File” in the Indenture which has not yet been submitted for recording and (b) each assignment of assignment of leases and rents referred to in clause (i)(13) of the definition of “Mortgage Asset File” in the Indenture (if not otherwise included in the related assignment of mortgage) which has not yet been submitted for recordation; and (2) complete (to the extent necessary) and file in the appropriate public filing office each UCC assignment of financing statement referred to in clause (i)(14) of the definition of “Mortgage Asset File” in the Indenture which has not yet been submitted for filing or recording.  In the event that any such document or instrument is lost or returned unrecorded or unfiled, as the case may be, because of a defect therein, the Seller shall promptly prepare or cause the preparation of a substitute therefor or cure or cause the curing of such defect, as the case may be, and shall thereafter deliver the substitute or corrected document to or at the direction of the Issuer (or any subsequent owner of the affected Mortgage Asset, including, without limitation, the Trustee) for recording or filing, as appropriate, at the Seller’s expense.  In the event that the Seller receives the original recorded or filed copy, the Seller shall, or shall cause a third party vendor or any other party under its control to, promptly upon receipt of the original recorded or filed copy (and in no event later than 5 Business Days following such receipt) deliver such original to the Custodian, with evidence of filing or recording thereon.  Notwithstanding anything to the contrary contained in this Section 2, in those instances where the public recording office retains the original mortgage, assignment of mortgage, assignment of leases and rents or assignment of assignment of leases and rents, if applicable, after any has been recorded, the obligations hereunder of the Seller shall be deemed to have been satisfied upon delivery to the Issuer (or the Custodian) of a copy of the recorded original of such mortgage, assignment of mortgage, assignment of leases and rents or assignment of assignment of leases and rents.

 

3.                                      Conditions.

 

The obligations of the parties under this Agreement are subject to satisfaction of the following conditions:

 

(a)                                 the representations and warranties contained herein shall be accurate and complete (subject to any exception contained herein and in the Exception Schedule), with respect to the Closing Date Mortgage Assets and as of each Subsequent Seller Transfer Date, except as set forth in the Subsequent Transfer Instrument with respect to any Unfunded Future Funding Participations;

 

(b)                                 on the Closing Date and on each Subsequent Seller Transfer Date, as applicable, counsel for the Issuer shall have been furnished with all such documents, certificates and opinions as such counsel may reasonably request in order to evidence the accuracy and

 

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completeness of any of the representations, warranties or statements of the Seller, the performance of any of the Mortgage Assets of the Seller hereunder or the fulfillment of any of the conditions herein contained; and

 

(c)                                  with respect to the Closing Date Mortgage Assets, the issuance of the Securities and receipt by the Issuer of full payment therefor.

 

(d)                                 with respect to the Related Funded Companion Participations sold on a Subsequent Seller Transfer Date, such Related Funded Companion Participations, collectively and individually (as applicable, after giving effect to the Grant of such Related Funded Companion Participations to the Issuer) satisfy or are deemed to satisfy the Acquisition Criteria in accordance with the terms of the Indenture.

 

4.                                      Covenants, Representations and Warranties.

 

(a)                                 Each party to this Agreement hereby represents and warrants to the other party that (i) it is duly organized or incorporated, as the case may be, and validly existing as an entity under the laws of the jurisdiction in which it is incorporated, chartered or organized, (ii) it has the requisite power and authority to enter into and perform this Agreement, and (iii) this Agreement has been duly authorized by all necessary action, has been duly executed by one or more duly authorized officers and is the valid and binding agreement of such party enforceable against such party in accordance with its terms.

 

(b)                                 The Seller further represents and warrants to the Issuer as of the Closing Date and as of each Subsequent Seller Transfer Date, as applicable, that:

 

(i)                                     immediately prior to the sale of the Mortgage Assets to the Issuer, the Seller shall own the Mortgage Assets, shall have good and marketable title thereto, free and clear of any pledge, lien, security interest, charge, claim, equity, or encumbrance of any kind, and upon the delivery or transfer of the Mortgage Assets to the Issuer as contemplated herein, the Issuer shall receive good and marketable title to the Mortgage Assets, free and clear of any pledge, lien, security interest, charge, claim, equity or encumbrance of any kind;

 

(ii)                                  the Seller acquired its ownership in the Mortgage Assets in good faith without notice of any adverse claim, and upon the delivery or transfer of the Mortgage Assets to the Issuer as contemplated herein, the Issuer shall acquire ownership in the Mortgage Assets in good faith without notice of any adverse claim;

 

(iii)                               the Seller has not assigned, pledged or otherwise encumbered any interest in the Mortgage Assets (or, if any such interest has been assigned, pledged or otherwise encumbered, it has been released);

 

(iv)                              none of the execution, delivery or performance by the Seller of this Agreement shall (x) conflict with, result in any breach of or constitute a default (or an event which, with the giving of notice or passage of time, or both, would constitute a default) under, any term or provision of the organizational documents of the Seller, or any material indenture, agreement, order, decree or other material instrument to which

 

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the Seller is party or by which the Seller is bound which materially adversely affects the Seller’s ability to perform its obligations hereunder or (y) violate any provision of any law, rule or regulation applicable to the Seller of any regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Seller or its properties which has a material adverse effect;

 

(v)                                 no consent, license, approval or authorization from, or registration or qualification with, any governmental body, agency or authority, nor any consent, approval, waiver or notification of any creditor or lessor is required in connection with the execution, delivery and performance by the Seller of this Agreement the failure of which to obtain would have a material adverse effect except such as have been obtained and are in full force and effect;

 

(vi)                              it has adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations.  It is generally able to pay, and as of the date hereof is paying, its debts as they come due.  It has not become or is not presently, financially insolvent nor will it be made insolvent by virtue of its execution of or performance under any of the provisions of this Agreement within the meaning of the bankruptcy laws or the insolvency laws of any jurisdiction.  It has not entered into this Agreement or the transactions effectuated hereby in contemplation of insolvency or with intent to hinder, delay or defraud any creditor;

 

(vii)                           no proceedings are pending or, to its knowledge, threatened against it before any federal, state or other governmental agency, authority, administrative or regulatory body, arbitrator, court or other tribunal, foreign or domestic, which, singularly or in the aggregate, could reasonably be expected to materially and adversely affect the ability of the Seller to perform any of its obligations under this Agreement; and

 

(viii)                        the consideration received by it upon the sale of the Mortgage Assets owned by it constitutes fair consideration and reasonably equivalent value for such Mortgage Assets.

 

(c)                                  The Seller further represents and warrants to the Issuer as of the Closing Date and as of each Subsequent Seller Transfer Date, as applicable, that:

 

(i)                                     the Asset Documents with respect to each Mortgage Asset do not prohibit the Issuer from granting a security interest in and assigning and pledging such Mortgage Asset to the Trustee;

 

(ii)                                  none of the Mortgage Assets will cause the Issuer to have payments subject to foreign or United States withholding tax;

 

(iii)                               with respect to each Closing Date Mortgage Asset, except as set forth in the Exception Schedule, and with respect to each Unfunded Future Funding Participation, except as set forth in the Subsequent Transfer Instrument, the representations and warranties set forth in Exhibit B are true and correct in all material respects; and

 

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(iv)                              the Seller has delivered to the Issuer or its designee (A) the original of any Mortgage Note (or a copy of such Mortgage Note together with a lost note affidavit and indemnity), participation certificate, certificate or other instrument, if any, constituting or evidencing such Mortgage Asset (and, in the case of a Participation, the related Mortgage Loan) together with an assignment in blank and all other assignment documents reasonably necessary to evidence the transfer of the Mortgage Asset (and, in the case of a Participation, the related Mortgage Loan, subject to the rights and obligations of the related Companion Participation Holder) including, where applicable, UCC assignments and any other Asset Documents and copies of any other documents related to the Mortgage Asset (and, in the case of a Participation, the related Mortgage Loan, subject to the rights and obligations of the related Companion Participation Holder) in the Seller’s possession, the delivery of which is necessary to perfect the security interest of the Trustee in such Mortgage Asset and (B) copies of the Asset Documents.

 

(d)                                 For purposes of the representations and warranties set forth in Exhibit B, the phrases “to the knowledge of the Seller” or “to the Seller’s knowledge” shall mean, except where otherwise expressly set forth in a particular representation and warranty, the actual state of knowledge of the Seller or any servicer acting on its behalf regarding the matters referred to, in each case:  (i) at the time of the Seller’s origination or acquisition of the particular Mortgage Asset, after the Seller having conducted such inquiry and due diligence into such matters as would be customarily performed by a prudent institutional commercial or multifamily, as applicable, mortgage lender; and (ii) subsequent to such origination, the Seller having utilized monitoring practices that would be utilized by a prudent commercial or multifamily, as applicable, mortgage lender and having made prudent inquiry as to the knowledge of the servicer servicing such Mortgage Asset on its behalf.  Also, for purposes of such representations and warranties, the phrases “to the actual knowledge of the Seller” or “to the Seller’s actual knowledge” shall mean, except where otherwise expressly set forth below, the actual state of knowledge of the Seller or any servicer acting on its behalf without any express or implied obligation to make inquiry.  All information contained in documents which are part of or required to be part of a Mortgage Asset File shall be deemed to be within the knowledge and the actual knowledge of the Seller.  Wherever there is a reference to receipt by, or possession of, the Seller of any information or documents, or to any action taken by the Seller or not taken by the Seller, such reference shall include the receipt or possession of such information or documents by, or the taking of such action or the failure to take such action by, the Seller or any servicer acting on its behalf.

 

(e)                                  The Seller shall not later than ninety (90) days from discovery by the Seller or receipt of written notice from any party to the Indenture of (i) its breach of a representation or a warranty pursuant to this Agreement that materially and adversely affects the ownership interests of the Issuer (or the Trustee as its assignee) in a Mortgage Asset or the value of a Mortgage Asset (a “Material Breach”), or (ii) any Material Document Defect relating to any Mortgage Asset, (1) cure such Material Breach or Material Document Defect, provided, that, if such Material Breach or Material Document Defect cannot be cured within such 90-day period, the Seller shall repurchase the affected Mortgage Loan not later than the end of such 90-day period at the Repurchase Price; provided, however, that if the Seller certifies to the Issuer and the Trustee in writing that (x) any such Material Breach or Material Document Defect, as the case may be, is capable of being cured in all material respects but not within the initial 90-day period

 

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and (y) the Seller has commenced and is diligently proceeding with the cure of such Material Breach or Material Document Defect, as the case may be, then the Seller shall have an additional 90-day period to complete such cure or, failing such, to repurchase the affected Mortgage Asset (or the related Mortgaged Property); and provided, further, that, if any such Material Document Defect is still not cured in all material respects after the initial 90-day period and any such additional 90-day period solely due to the failure of the Seller to have received the recorded or filed document, then the Seller shall be entitled to continue to defer its cure and repurchase obligations in respect of such Material Document Defect so long as the Seller certifies to the Trustee every 30 days thereafter that such Material Document Defect is still in effect solely because of its failure to have received the recorded or filed document and that the Seller is diligently pursuing the cure of such Material Document Defect (specifying the actions being taken), or (2) subject to the consent of a majority of the holders of each Class of Notes (excluding any Note held by the Seller or any of its affiliates), the Seller shall make a cash payment to the Issuer in an amount that the Special Servicer on behalf of the Issuer determines is sufficient to compensate the Issuer for such breach of representation or warranty or defect (such payment, a “Loss Value Payment”), which Loss Value Payment will be deemed to cure such Material Breach or Material Document Defect.  Such repurchase or cure obligation by the Seller shall be the Issuer’s sole remedy for any Material Breach or Material Document Defect pursuant to this Agreement with respect to any Mortgage Asset sold to the Issuer by the Seller.

 

(f)                                   The Seller hereby acknowledges and consents to the collateral assignment by the Issuer of this Agreement and all right, title and interest thereto to the Trustee, for the benefit of the Secured Parties, as required in Sections 15.1(f)(i) and (ii) of the Indenture.

 

(g)                                  The Seller hereby covenants and agrees that it shall perform any provisions of the Indenture made expressly applicable to the Seller by the Indenture, as required by Section 15.1(f)(i)  of the Indenture.

 

(h)                                 The Seller hereby covenants and agrees that all of the representations, covenants and agreements made by or otherwise entered into by it in this Agreement shall also be for the benefit of the Secured Parties, as required by Section 15.1(f)(ii) of the Indenture and agrees that enforcement of any rights hereunder by the Trustee, the Note Administrator, the Servicer, or the Special Servicer, as the case may be, shall have the same force and effect as if the right or remedy had been enforced or executed by the Issuer but that such rights and remedies shall not be any greater than the rights and remedies of the Issuer under Section 4(e) above.

 

(i)                                     On or prior to the Closing Date, or each Subsequent Seller Transfer Date, as applicable, the Seller shall deliver the Asset Documents to the Issuer or, at the direction of the Issuer, to the Custodian, with respect to each Mortgage Asset sold to the Issuer hereunder.  The Seller hereby covenants and agrees, as required by Section 15.1(f)(iii) of the Indenture, that it shall deliver to the Trustee duplicate original copies of all notices, statements, communications and instruments delivered or required to be delivered to the Issuer by each party pursuant to this Agreement.

 

(j)                                    The Seller hereby covenants and agrees, as required by Section 15.1(f)(iv) of the Indenture, that it shall not enter into any agreement amending, modifying or terminating this Agreement (other than in respect of an amendment or modification to cure any

 

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inconsistency, ambiguity or manifest error, in each case, so long as such amendment or modification does not affect in any material respects the interests of any Secured Party), without notifying the Rating Agencies through the 17g-5 Website as set forth in the Indenture..

 

(k)                                 ACRE and the Issuer hereby covenant, that at all times (1) ACRE will qualify as a REIT for federal income tax purposes and the Issuer will qualify as a Qualified REIT Subsidiary or other disregarded entity of ACRE for federal income tax purposes, or (2) based on an Opinion of Counsel, the Issuer will be treated as a Qualified REIT Subsidiary or other disregarded entity of a REIT other than ACRE, or (3) based on an Opinion of Counsel, the Issuer will be treated as a foreign corporation that is not engaged in a trade or business in the United States for U.S. federal income tax purposes (which Opinion may be conditioned on compliance with certain restrictions on the investment or other activities of the Issuer and/or the Servicer on behalf of the Issuer).

 

5.                                      Sale.

 

It is the intention of the parties hereto that the transfer and assignment contemplated by this Agreement shall constitute a sale of the Mortgage Assets from the Seller to the Issuer and the beneficial interest in and title to the Mortgage Assets shall not be part of the Seller’s estate in the event of the filing of a bankruptcy petition by or against the Seller under any bankruptcy law. In the event that, notwithstanding the intent of the parties hereto, the transfer and assignment contemplated hereby is held not to be a sale (for non-tax purposes), this Agreement shall constitute a security agreement under applicable law, and, in such event, the Seller shall be deemed to have granted, and the Seller hereby grants, to the Issuer a security interest in the Mortgage Assets for the benefit of the Secured Parties and its assignees as security for the Seller’s obligations hereunder and the Seller consents to the pledge of the Mortgage Assets to the Trustee.

 

6.                                      Non-Petition.

 

The Seller agrees not to institute against, or join any other Person in instituting against the Issuer any bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation proceedings or other proceedings under U.S. federal or state bankruptcy or similar laws in any jurisdiction until at least one year and one day or, if longer, the applicable preference period then in effect after the payment in full of all Notes issued under the Indenture.  This Section 6 shall survive the termination of this Agreement for any reason whatsoever.

 

7.                                      Amendments.

 

This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement by the parties hereto and satisfaction of the Rating Agency Condition.

 

8.                                      Communications.

 

Except as may be otherwise agreed between the parties, all communications hereunder shall be made in writing to the relevant party by personal delivery or by courier or

 

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first-class registered mail, or the closest local equivalent thereto, or by facsimile transmission confirmed by personal delivery or by courier or first-class registered mail as follows:

 

	
To   the Seller:
    	
 
    	
ACRC   Lender LLC
    
	
 
    	
 
    	
c/o   Ares Management LLC
    
	
 
    	
 
    	
One   North Wacker Drive, 48th Floor
    
	
 
    	
 
    	
Chicago, IL   60606
    
	
 
    	
 
    	
Attention:   Capital Markets and Legal
    
	
 
    	
 
    	
 
    
	
To   the Issuer:
    	
 
    	
ACRE   Commercial Mortgage 2014-FL2 Ltd.
    
	
 
    	
 
    	
c/o   MaplesFS Limited
    
	
 
    	
 
    	
Boundary   Hall, Cricket Square
    
	
 
    	
 
    	
Grand   Cayman KY1-1102
    
	
 
    	
 
    	
Cayman   Islands
    
	
 
    	
 
    	
Facsimile   number: +1 345 945 7100
    
	
 
    	
 
    	
Attention:   The Directors
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
with   a copy to the Seller (as addressed above);
    

 

or to such other address, telephone number or facsimile number as either party may notify to the other in accordance with the terms hereof from time to time. Any communications hereunder shall be effective upon receipt.

 

9.                                      Governing Law and Consent to Jurisdiction.

 

(a)                                 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF (OTHER THAN TITLE 14 OF ARTICLE 5 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

(b)                                 The parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York and any court in the State of New York located in the City and County of New York, and any appellate court hearing appeals from the Courts mentioned above, in any action, suit or proceeding brought against it and to or in connection with this Agreement or the transaction contemplated hereunder or for recognition or enforcement of any judgment, and the parties hereto hereby irrevocably and unconditionally agree that all claims in respect of any such action or proceeding may be heard or determined in such New York State court or, to the extent permitted by law, in such federal court. The parties hereto agree that a final judgment in any such action, suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. To the extent permitted by applicable law, the parties hereto hereby waive and agree not to assert by way of motion, as a defense or otherwise in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such courts, that the suit, action or proceeding is brought in any inconvenient forum, that the venue of the suit, action or proceeding is improper or that the subject matter thereof may not be litigated in or by such courts.

 

12

 

(c)                                  To the extent permitted by applicable law, the parties hereto shall not seek and hereby waive the right to any review of the judgment of any such court by any court of any other nation or jurisdiction which may be called upon to grant an enforcement of such judgment.

 

(d)                                 The Issuer irrevocably appoints Corporation Services Company, as its agent for service of process in New York in respect of any such suit, action or proceeding. The Issuer agrees that service of such process upon such agent shall constitute personal service of such process upon it.

 

(e)                                  The Seller irrevocably consents to the service of any and all process in any action or proceeding by the mailing by certified mail, return receipt requested, or delivery requiring proof of delivery of copies of such process to it at the address set forth in Section 8 hereof.

 

10.                               Counterparts.

 

This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement.

 

11.                               Limited Recourse Agreement.

 

All obligations of the Issuer arising hereunder or in connection herewith are limited in recourse to the Collateral and to the extent the proceeds of the Collateral, when applied in accordance with the Priority of Payments, are insufficient to meet the obligations of the Issuer hereunder in full, the Issuer shall have no further liability in respect of any such outstanding obligations and any obligations of, and claims against, the Issuer, arising hereunder or in connection herewith, shall be extinguished and shall not thereafter revive.  The obligations of the Issuer hereunder or in connection herewith will be solely the corporate obligations of the Issuer and the Seller will not have recourse to any of the directors, officers, employees, shareholders or affiliates of the Issuer with respect to any claims, losses, damages, liabilities, indemnities or other obligations in connection with any transactions contemplated hereby or in connection herewith.  This Section 11 shall survive the termination of this Agreement for any reason whatsoever.

 

12.                               Assignment and Assumption.

 

With respect to the Mortgage Assets that are subject to a Pari Passu Participation Agreement, the parties hereto intend that the provisions of this Section 12 serve as an assignment and assumption agreement between the Seller, as the assignor, and the Issuer, as the assignee.  Accordingly, the Seller hereby (and in accordance with and subject to all other applicable provisions of this Agreement) assigns, grants, sells, transfers, delivers, sets over, and conveys to the Issuer all right, title and interest of the Seller in, to and arising out of the related Pari Passu Participation Agreement and the Issuer hereby accepts (subject to applicable provisions of this Agreement) the foregoing assignment and assumes all of the rights and obligations of the Seller with respect to related Pari Passu Participation Agreement from and after the Closing Date.  In addition, the Issuer acknowledges that each of such Mortgage Assets will be serviced by, and agrees to be

 

13

 

bound by, the terms of the applicable Servicing Agreement (as defined in the related or Pari Passu Participation Agreement).

 

14

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Mortgage Asset Purchase Agreement as of the day and year first above written.

 

	
 
    	
ACRC   LENDER LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Thomas A. Jaekel
    
	
 
    	
 
    	
Name:   
    	
Thomas   A. Jaekel
    
	
 
    	
 
    	
Title:   
    	
Vice   President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ACRE   COMMERCIAL MORTGAGE 2014-FL2 LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Betsy Mortel
    
	
 
    	
 
    	
Name:   
    	
Betsy   Mortel
    
	
 
    	
 
    	
Title:   
    	
Director
    
	
 
    	
 
    
	
Agreed   and Acknowledged, solely as to Section 4(k), by:
    	
 
    
	
 
    	
 
    
	
ARES   COMMERCIAL REAL ESTATE CORPORATION
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:   
    	
/s/   Maria T. Scherer
    	
 
    
	
 
    	
Name:   
    	
Maria   T. Scherer
    	
 
    
	
 
    	
Title:   
    	
Vice   PresidentCASH AWARD AGREEMENT

THIS AGREEMENT (the “Agreement”)
is made as of this [●] day of August, 2014 between Higher One Holdings, Inc. (the “Company”) and [●]
(the “Participant”).

WHEREAS, the Company wishes to promote
the interests of the Company and its shareholders by providing the Company’s key employees with an appropriate incentive
to encourage them to continue in the employ of the Company and to improve the growth and profitability of the Company;

NOW, THEREFORE, in consideration of the
promises and the mutual covenants hereinafter set forth, the parties hereto hereby agree as follows:

1.                 
Grant of Cash Award. Pursuant to, and subject to, the terms and conditions set forth herein, the Company hereby grants
to the Participant a cash award in the amount of $[●] (the “Cash Award”).
The Cash Award represents an unfunded and unsecured promise of the Company to make cash payments as provided herein to the Participant.
Until such payment, the Participant has only the rights of a general unsecured creditor.

2.                 
Grant Date. The grant date of the Cash Award hereby granted is August [●], 2014.

3.                 
Vesting. Subject to Section 4, the Cash Award held by the Participant shall vest in accordance with the vesting schedule
set forth in Schedule A hereto (each date listed in Schedule A, a “Scheduled Vesting Date”), provided that the
Participant is continuously employed through the applicable Scheduled Vesting Date, and shall be paid in accordance with Section
5 hereof.

4.                 
Termination of Employment. (a) In the event that the Participant’s employment is terminated (i) by the Company
without Cause, (ii) by the Participant for Good Reason or (iii) as a result of the Participant’s death, any unvested portion
of the Cash Award will immediately and fully vest and be paid in accordance with Section 5 hereof. In the event that the Participant’s
employment is terminated as a result of the Participant’s Disability prior to any applicable Scheduled Vesting Date, the
unvested portion of the Cash Award will continue to vest on the applicable Scheduled Vesting Date(s) in accordance with the vesting
schedule set forth in Schedule A and be paid in accordance with Section 5 hereof. Upon termination of the Participant’s employment
voluntarily (other than for Good Reason) or upon termination of the Participant’s employment by the Company for Cause, any
unvested portion of the Cash Award shall be immediately forfeited by the Participant on the date of such termination and the Participant
shall have no further rights with respect thereto without any payment or consideration by the Company.

(b) For purposes of this Agreement, the
terms “Cause”, “Good Reason” and “Disability have the following meanings:

“Cause” shall mean
(i) the Participant’s material breach of any of his or her obligations under any written agreement with the Company or any
of its subsidiaries, (ii) the Participant’s material violation of any of the Company’s policies, procedures, rules
and regulations applicable

    	 

    	 

    

to employees generally or to employees at his or her grade
level, in each case, as they may be amended from time to time in the Company’s sole discretion, (iii) the Participant’s
failure to substantially perform his or her duties to the Company or its subsidiaries (other than as a result of physical or mental
illness or injury), (iv) the Participant’s willful misconduct or gross negligence that has caused or is reasonably expected
to result in material injury to the business, reputation or prospects of the Company or any of its subsidiaries, (v) the Participant’s
fraud or misappropriation of funds, or (vi) the Participant’s commission of a felony or other serious crime involving moral
turpitude .

“Good Reason” shall
mean the occurrence of any of the following events without the Participant’s written consent: (i) a material reduction in
the Participant’s base salary, (ii) a material reduction in all of the Participant’s responsibilities at the Company,
(iii) a relocation of the Participant’s principal place of business to a location more than fifty (50) miles from his or
her designated office location, or (iv) a material breach by the Company of any provision of this Agreement; provided that,
within ninety (90) days following the occurrence of any of the events described in clauses (i)-(iv) above, the Participant shall
have delivered written notice to the Company of his or her intention to terminate employment for Good Reason, which notice shall
specify in reasonable detail the circumstances claimed to give rise to his or her right to terminate employment for Good Reason,
and the Company shall not have cured such circumstances within thirty (30) days following the Company’s receipt of such notice.

“Disability” shall
mean the Participant’s incapacity due to physical or mental illness or injury resulting in the Participant being unable,
due to such incapacity or physical or mental illness, to perform the essential duties of his or her employment with reasonable
accommodation for a period not less than one hundred eighty (180) days and shall be determined by the Company in its sole discretion.

5.                 
Payment of Cash Award. Within 90 days of (i) a Scheduled Vesting Date, or (ii) the termination of the Participant’s
employment with the Company (x) by the Company without Cause, (y) by the Participant for Good Reason or (z) as a result of the
Participant’s death, the Company will pay to the Participant any vested (including by reason of Section 4 hereof) but not
previously paid Cash Award; provided that any such payment shall be made no later than March 15th of the year
following the year in which such Scheduled Vesting Date or such termination of employment, as applicable, occurs.

6.                 
Transfer. The Cash Award or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by the Participant. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer
or encumber the Cash Award or the rights relating shall be wholly ineffective and, if any such attempt is made, the Cash Award
will be forfeited by the Participant.

7.                 
Taxes. Whenever payment is made in respect of the Cash Award hereunder, the Company shall have the right to require
the Participant to remit to the Company an amount sufficient to satisfy any federal, state and local withholding tax requirements
or to withhold such amount from the cash otherwise to be delivered.

    	2

    	 

    

8.                 
Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party hereto upon
any breach or default of any party under this Agreement, shall impair any such right, power or remedy of such party nor shall it
be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach
or default under this Agreement, or any waiver on the part of any party or any provisions or conditions of this Agreement, shall
be in writing and shall be effective only to the extent specifically set forth in such writing.

9.                 
No Rights to Awards or Employment. This Agreement is not a contract between the Company and the Participant.
Nothing in this Agreement shall confer upon the Participant any right to continued employment with the Company or interfere in
any way with the right of the Company to terminate the employment of the Participant, in accordance with the laws of the applicable
jurisdiction, at any time, with or without Cause.

10.             
Other Compensation. Nothing in this Agreement shall preclude or limit the ability of the Company to pay any compensation
to the Participant under the Company’s other compensation and benefit plans and programs, including without limitation any
cash bonus plan, program or arrangement.

11.             
Integration; Amendment. This Agreement contains the entire understanding of the parties with respect to its subject
matter. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to
the subject matter hereof other than those expressly set forth herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to the subject matter of this Agreement. This Agreement may be amended only by an instrument in
writing signed by the parties hereto, and any provision hereof may be waived only by an instrument in writing signed by the party
or parties against whom or which enforcement of such waiver is sought.

12.             
Notice. Any notice or other communication required or permitted under this Agreement shall be effective only if it
is in writing and shall be deemed to be given when delivered personally or four days after it is mailed by registered or certified
mail, postage prepaid, return receipt requested or one day after it is sent by a reputable overnight courier service and, in each
case, addressed as follows (or if it is sent through any other method agreed upon by the parties):

If to the Company:

 

Thomas Kavanaugh

Vice President and General Counsel

Higher One Holdings, Inc.

115 Munson Street

New Haven, CT 06511

 

    	3

    	 

    

If to the Participant:

 

At his most recent address shown on the payroll records
of the Company or to such other address as any party hereto may designate by notice to the others.

 

13.             
Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original,
but all of which shall constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile
transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the
original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing
an original signature.

14.             
Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the
State of Delaware, without regard to the provisions governing conflict of laws.

15.             
Participant Acknowledgment. The Participant hereby acknowledges that all decisions, determinations and interpretations
of the Committee in respect of this Agreement and the Cash Award shall be final and conclusive. The Participant hereby acknowledges
that there may be tax consequences upon vesting or payment of the Cash Award and that the Participant should consult a tax advisor
prior to such vesting or payment. The Participant further acknowledges that he is responsible for the payment of all taxes that
arise in respect of the Cash Award.

    	4

    	 

    

IN WITNESS WHEREOF, the Company has caused
this Agreement to be duly executed by its duly authorized officer and said Participant has hereunto signed this Agreement on the
Participant’s own behalf, thereby representing that the Participant has carefully read and understands this Agreement as
of the day and year first written above.

	Higher One Holdings, Inc.
	 
	By:                                          
	 
	Title:                                        
	 
	
        PARTICIPANT

         

	
        Participant Signature:

         

        

                                                      

 

    	5

    	 

    

 

Schedule A

 

	Scheduled Vesting Date	Cash Amount Vested
	March 31, 2015	[●]
	October 31, 2015	[●]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	6

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