Document:

Exhibit 10.2

 

EXECUTION

 

GUARANTY

 

GUARANTY, dated as of August 13, 2014 (as amended, restated, supplemented, or otherwise modified from time to time, this “Guaranty”), made by ARES COMMERCIAL REAL ESTATE CORPORATION, a Maryland corporation (the “Guarantor), in favor of METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation (“Buyer”).

 

RECITALS

 

Pursuant to that certain Master Repurchase Agreement, dated as of August 13, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “Repurchase Agreement”), by and among Buyer and ACRC Lender ML LLC, a Delaware limited liability company (“Seller”), Seller has agreed to sell, from time to time, to Buyer certain Eligible Assets, as defined in the Repurchase Agreement (collectively, the “Purchased Assets”), upon the terms and subject to the conditions as set forth therein.  Pursuant to the terms of that certain Custodial Agreement by and among Wells Fargo Bank, National Association (the “Custodian”), Buyer and Seller (the “Custodial Agreement”), the Custodian is required to take possession of the Purchased Assets, along with the documents specified in the Custodial Agreement, as the Custodian of Buyer and any future purchaser, on several delivery dates, in accordance with the terms and conditions of the Custodial Agreement.  The Repurchase Agreement, the Custodial Agreement, this Guaranty and any other agreements executed in connection with the Repurchase Agreement and the Custodial Agreement shall be referred to herein as the “Transaction Documents”.

 

It is a condition precedent to Buyer purchasing the Purchased Assets pursuant to the Repurchase Agreement that Guarantor shall have executed and delivered this Guaranty with respect to the due and punctual payment and performance when due, whether at stated maturity, by acceleration or otherwise, of all of the following:  (a) all payment obligations owing by Seller to Buyer under or in connection with the Repurchase Agreement and any other Transaction Documents; (b) any other obligations of Seller to Buyer under each of the Transaction Documents and (c) all actual, out-of-pocket expenses (including, without limitation, all reasonable fees and disbursements of counsel and those costs, fees and expenses provided for in Section 14(b)(v) of the Repurchase Agreement) which may be paid or incurred by Buyer in enforcing any rights with respect to, or collecting against, Guarantor under this Guaranty (collectively, the “Obligations”).

 

NOW, THEREFORE, in consideration of the foregoing premises, to induce Buyer to enter into the Repurchase Agreement and the other Transaction Documents and to enter into the transactions contemplated thereunder, Guarantor hereby agrees with Buyer, as follows:

 

1.                                      Defined Terms.  Unless otherwise defined herein, terms which are defined in the Repurchase Agreement and used herein are so used as so defined.

 

“Capital Lease Obligations”  means with respect to any Person, the amount of all obligations of such Person to pay rent or other amounts under a lease of property to the extent

 

 

and in the amount that such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person.

 

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

 

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

 

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

 

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

 

“Ground Lease” means a ground lease containing the following terms and conditions:  (a) a remaining term (exclusive of any unexercised extension options) of twenty (20) years or more from the date on which such leased property was financed, (b) the right of the lessee to mortgage and encumber its interest in the leased property without the consent of the lessor or with such consent given, (c) the obligation of the lessor to give the holder of any mortgage lien on such leased property written notice of any defaults on the part of the lessee and

 

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agreement of such lessor that such ground lease will not be terminated until the holder has had a reasonable opportunity to cure or complete foreclosure, and fails to do so, (d) reasonable transferability of the lessee’s interest under such ground lease, including ability to sublease, and (e) such other rights customarily required by mortgagees making a loan secured by the interest of the holder of the leasehold estate demised pursuant to a ground lease.

 

“Indebtedness” means with respect to any Person:  (i) all indebtedness, whether or not represented by bonds, debentures, notes, securities, or other evidences of indebtedness, for the repayment of money borrowed, (ii) all indebtedness representing deferred payment of the purchase price of property or assets, (iii) all indebtedness under any lease which, in conformity with GAAP, is required to be capitalized for balance sheet purposes, (iv) all indebtedness under guaranties, endorsements, assumptions, or other contingent obligations, in respect of, or to purchase or otherwise acquire, indebtedness of others, and (v) all indebtedness secured by a lien existing on property owned, subject to such lien, whether or not the indebtedness secured thereby shall have been assumed by the owner thereof.

 

“Interest Expense” means with respect to any Person and for any Test Period, the amount of total interest expense incurred by such Person, including capitalized or accruing interest (but excluding interest funded under a construction loan and the amortization of financing costs), plus such Person’s proportionate share of interest expense from the joint venture investments and unconsolidated Affiliates of such Person, all with respect to such period.

 

“Net Income” means, with respect to any Person for any period, the net income of such Person for such period as determined in accordance with GAAP.

 

“Recourse Debt” means Indebtedness of a consolidated Subsidiary of Guarantor for which Guarantor has provided a payment guarantee.

 

“Subsidiary” means with respect to any Person, any corporation, partnership, limited liability company or other entity (heretofore, now or hereafter established) of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership, limited liability company or other entity (without regard to the occurrence of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person, and shall include all Persons the accounts of which are with those of such Person pursuant to GAAP.

 

“Tangible Net Worth” means with respect to any Person and any date, all amounts that would be included under capital or shareholder’s equity (or any like caption) on the balance sheet of such Person, minus (a) amounts owing to that Person from any Affiliate thereof, or from officers, employees, partners, members, directors, shareholders or other Persons similarly affiliated with such Person or any Affiliate thereof, (b) intangible assets, and (c) prepaid taxes and/or expenses, plus deferred origination fees, net of deferred origination costs, all on or as of such date.  For sake of clarity, mortgage servicing rights shall not be deemed to be intangible assets.

 

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“Test Period” means the time period from the first day of each calendar quarter, through and including the last day of such calendar quarter.

 

2.                                      Guaranty.  (a) Guarantor hereby unconditionally and irrevocably, guarantees to Buyer the prompt and complete payment and performance by Seller when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations.

 

(b)                                 For the avoidance of doubt, the Obligations shall include, and Guarantor shall be liable for, any and all Indemnified Amounts pursuant to Section 27 of the Repurchase Agreement, including, without limitation, Indemnified Amounts with respect to the following (and except for Indemnified Amounts resulting from the gross negligence or willful misconduct of any Indemnified Party):

 

(i)                                     any breach by Seller of the separateness covenants set forth in Section 13 of the Repurchase Agreement; or

 

(ii)                                  any Change of Control; or

 

(iii)                               any breach of any representations and warranties made by Seller or an Affiliate of Seller contained in any Transaction Document, including but not limited to any representations and warranties relating to Environmental Laws, or Indemnified Amounts relating to, arising out of or attributable to any violation or alleged violation of any Environmental Law (including, without limitation, the correction of any environmental condition, or the removal of any substances, materials, wastes, pollutants or contaminants defined as hazardous or toxic or regulated under any applicable Environmental Laws), in each case in any way affecting Seller’s or any of its Affiliate’s properties or any of the Purchased Assets;

 

(c)                                  Nothing herein shall be deemed to be a waiver of any right which Buyer may have under Section 506(a), 506(b), 1111(b) or any other provision of the Bankruptcy Code to file a claim for the full amount of the indebtedness secured by the Repurchase Agreement or to require that all collateral shall continue to secure all of the indebtedness owing to Buyer in accordance with the Repurchase Agreement or any other Transaction Documents.

 

(d)                                 No payment or payments made by Seller or any other Person (other than the Guarantor) or received or collected by Buyer from Seller or any other Person (other than the Guarantor) by virtue of any action or proceeding or any set-off or appropriation or application, at any time or from time to time, in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Guarantor under this Guaranty which shall, notwithstanding any such payment or payments, remain liable for the amount of the Obligations until the Obligations are paid in full; provided, that this provision is not intended to allow Buyer to recover an amount greater than the amount of the Obligations.

 

(e)                                  Guarantor agrees that whenever, at any time, or from time to time, Guarantor shall make any payment to Buyer on account of Guarantor’s liability under this Guaranty, Guarantor will notify Buyer in writing that such payment is made under this Guaranty for such purpose.

 

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3.                                      Subrogation.  Upon making any payment under this Guaranty, Guarantor shall be subrogated to the rights of Buyer against Seller and any collateral for any Obligations with respect to such payment; provided, that Guarantor shall not seek to enforce any right or receive any payment by way of subrogation until all amounts due and payable by Seller to Buyer under the Transaction Documents have been paid in full.

 

4.                                      Amendments, etc. with Respect to the Obligations.  Guarantor shall remain obligated under this Guaranty notwithstanding that, without any reservation of rights against Guarantor, and without notice to or further assent by Guarantor, any demand for payment of any of the Obligations made by Buyer may be rescinded by Buyer and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by Buyer, and any Transaction Document may be amended, modified, supplemented or terminated, in whole or in part, as Buyer may deem advisable from time to time in accordance with the terms thereof, and any collateral security, guarantee or right of offset at any time held by Buyer for the payment of the Obligations may be sold, exchanged, waived, surrendered or released.  Buyer shall have no obligation to protect, secure, perfect or insure any lien at any time held by it as security for the Obligations or for this Guaranty or any property subject thereto.  When making any demand under this Guaranty against Guarantor, Buyer may, but shall be under no obligation to, make a similar demand on Seller or any other guarantor, and any failure by Buyer to make any such demand or to collect any payments from Seller or any such other guarantor or any release of Seller or such other guarantor shall not relieve Guarantor of its Obligations or liabilities under this Guaranty, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of Buyer against Guarantor.  For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings.

 

5.                                      Guaranty Absolute and Unconditional.  (a) Guarantor hereby agrees that its obligations under this Guaranty constitute a guarantee of payment when due and not of collection.  Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by Buyer upon this Guaranty or acceptance of this Guaranty; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Guaranty; and all dealings between Seller or Guarantor, on the one hand, and Buyer, on the other hand, shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guaranty.  Guarantor waives promptness, diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon Seller or Guarantor with respect to the Obligations.  This Guaranty shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (i) the validity, regularity or enforceability of any Transaction Document, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by Buyer, (ii) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by Seller against Buyer, (iii) any requirement that Buyer exhaust any right to take any action against Seller or any other Person prior to or contemporaneously with proceeding to exercise any right against Guarantor under this Guaranty or (iv) any other circumstance whatsoever (with or without notice to or knowledge of Seller or Guarantor) which constitutes, or

 

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might be construed to constitute, an equitable or legal discharge of Seller for the Obligations or of Guarantor under this Guaranty, in bankruptcy or in any other instance (other than a defense of payment or performance).  When pursuing its rights and remedies under this Guaranty against Guarantor, Buyer may, but shall be under no obligation, to pursue such rights and remedies that Buyer may have against Seller or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by Buyer to pursue such other rights or remedies or to collect any payments from Seller or any such other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of Seller or any such other Person or any such collateral security, guarantee or right of offset, shall not relieve Guarantor of any liability under this Guaranty, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of Buyer against Guarantor.  This Guaranty shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon Guarantor and its successors and assigns, and shall inure to the benefit of Buyer, and its successors, endorsees, transferees and assigns, until all the Obligations and the obligations of Guarantor under this Guaranty shall have been satisfied by payment in full, notwithstanding that from time to time during the term of the Transaction Documents Seller may be free from any Obligations.

 

(b)                                 Without limiting the generality of the foregoing, Guarantor hereby agrees, acknowledges, and represents and warrants to Buyer as follows:

 

(i)                                     Guarantor hereby waives any defense arising by reason of, and any and all right to assert against Buyer any claim or defense based upon, an election of remedies by Buyer which in any manner impairs, affects, reduces, releases, destroys and/or extinguishes Guarantor’s subrogation rights, rights to proceed against Seller, or any other guarantor for reimbursement or contribution, and/or any other rights of Guarantor to proceed against Seller or against any other guarantor, or against any other person or security.

 

(ii)                                  Guarantor is presently informed of the financial condition of Seller and of all other circumstances which diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations.  Guarantor hereby covenants that it will make its own investigation and will continue to keep itself informed about Seller’s financial condition, the status of other guarantors, if any, of circumstances which bear upon the risk of nonpayment and that it will continue to rely upon sources other than Buyer for such information and will not rely upon Buyer for any such information.  Absent a written request for such information by Guarantor to Buyer, Guarantor hereby waives the right, if any, to require Buyer to disclose to Guarantor any information which Buyer may now or hereafter acquire concerning such condition or circumstances including, but not limited to, the release of or revocation by any other guarantor.

 

(iii)                               Guarantor has independently reviewed the Transaction Documents and related agreements and has made an independent determination as to the validity and enforceability thereof, and in executing and delivering this Guaranty to Buyer, Guarantor is not in any manner relying upon any other Person’s determination of the validity, and/or enforceability, and/or attachment, and/or

 

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perfection of any liens or security interests of any kind or nature granted by Seller or any other guarantor to Buyer, now or at any time and from time to time in the future.

 

6.                                      Reinstatement.  This Guaranty shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by Buyer upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Seller or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, any of Seller or any substantial part of Seller’s property, or otherwise, all as though such payments had not been made.

 

7.                                      Payments.  Guarantor hereby agrees that the Obligations will be paid to Buyer without set-off or counterclaim in U.S. Dollars at the address specified in writing by Buyer.

 

8.                                      Representations and Warranties.  Guarantor represents and warrants that:

 

(a)                                 Guarantor has the legal capacity and the legal right to execute and deliver this Guaranty and to perform Guarantor’s obligations under this Guaranty;

 

(b)                                 except those that have already been obtained, no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority and no consent of any other Person (including, without limitation, any creditor of Guarantor) is required in connection with the execution, delivery, performance, validity or enforceability of this Guaranty;

 

(c)                                  this Guaranty has been duly authorized, executed and delivered by Guarantor and constitutes a legal, valid and binding obligation of Guarantor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity (whether enforcement is sought in proceedings in equity or at law);

 

(d)                                 the execution, delivery and performance of this Guaranty by Guarantor will not violate any law, treaty, rule or regulation or determination of an arbitrator, a court or other governmental authority, applicable to or binding upon Guarantor or any of its property or to which Guarantor or any of its property is subject (“Requirement of Law”), or any provision of any security issued by Guarantor or of any agreement, instrument or other undertaking to which Guarantor is a party or by which it or any of its property is bound (“Contractual Obligation”), and will not result in or require the creation or imposition of any lien on any of the properties or revenues of Guarantor pursuant to any Requirement of Law or Contractual Obligation of Guarantor;

 

(e)                                  no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of Guarantor, threatened by or against Guarantor or against any of Guarantor’s properties or revenues which could reasonably be expected to result in a material adverse change in the business, operations, financial condition or

 

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properties of Guarantor or which may have a material adverse effect on the validity or enforceability of this Guaranty or on the ability of Guarantor to perform its obligations hereunder;

 

(f)                                   Guarantor has filed or caused to be filed all tax returns which are required to be filed and has paid all taxes shown to be due and payable on such returns or on any assessments made against Guarantor or any of Guarantor’s property and all other taxes, fees or other charges imposed on Guarantor or any of Guarantor’s property by any Governmental Authority (other than any such taxes, fees or charges the amount or validity of which are currently being contested in good faith by appropriate proceedings); no tax lien has been filed, and, to the knowledge of Guarantor, no claim has been asserted in writing, with respect to any such tax, fee or other charge;

 

(g)                                  as of the date delivered, the information and reports (other than any projections and information as to a general economic or industry nature) furnished in writing by or on behalf of Seller, Guarantor or Originator pursuant to the terms of the Transaction Documents, when taken as a whole, do not contain any untrue statement of a material fact or, to Seller’s knowledge, omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and

 

(g)                                  all financial statements of the Guarantor that have been delivered to Buyer hereunder fairly present, in all material respects, the consolidated financial condition of the Guarantor and its consolidated subsidiaries (including Originator and Seller) as of the dates and for the annual or quarterly periods, as applicable, specified therein, all in accordance with GAAP, subject in the case of quarterly financials to the absence of footnote and normal year-end adjustments.  Since the delivery of the most recent such financial statements, except as otherwise disclosed in writing to Buyer, there has been no change in the financial position of the Guarantor and its consolidated subsidiaries (including Originator and Seller), or in the results of operations of the Guarantor and its consolidated subsidiaries (including Originator and Seller), which change is reasonably likely to result in a Material Adverse Change.

 

Guarantor agrees that the foregoing representations and warranties shall be deemed to have been made by Guarantor on the date hereof and on the date of each Transaction under the Repurchase Agreement, on and as of such date of the Transaction, as though made under this Guaranty on and as of such date.

 

9.                                      Covenants.

 

(a)                                 Maximum Debt to Equity Ratio.  At the end of each Test Period, Guarantor (on a consolidated basis) shall maintain its ratio of Debt to Tangible Net Worth to be not more than 4.00 to 1.00.

 

(b)                                 Maximum Recourse Debt to Equity Ratio.  At the end of each Test Period, Guarantor shall maintain its ratio of Recourse Debt to Tangible Net Worth to be not more than 3.00 to 1.00.

 

(c)                                  Minimum Tangible Net Worth.  At the end of each Test Period, Guarantor shall maintain a minimum Tangible Net Worth of at least the sum of (i) eighty percent (80%) of

 

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Guarantor’s Tangible Net Worth as of September 30, 2013, which Tangible Net Worth is set forth on Schedule 1 attached hereto, plus (ii) eighty percent (80%) of the net proceeds (after deducting transaction costs) Guarantor receives from subsequent equity issuances.

 

(d)                                 Minimum Fixed Charge Coverage Ratio. Guarantor shall maintain a Fixed Charge Coverage Ratio for the immediately preceding twelve (12) month period ending on the last day of the applicable Test Period of at least 1.25 to 1.00, with compliance to be tested as of the end of each Test Period.

 

10.                               Severability.  Any provision of this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

11.                               Paragraph Headings.  The paragraph headings used in this Guaranty are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

 

12.                               No Waiver; Cumulative Remedies.  Buyer shall not by any act (except by a written instrument pursuant to Section 14), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy under this Guaranty or to have acquiesced in any default or event of default or in any breach of any of the terms and conditions hereof.  No failure to exercise, nor any delay in exercising, on the part of Buyer, any right, power or privilege under this Guaranty shall operate as a waiver thereof.  No single or partial exercise of any right, power or privilege under this Guaranty shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  A waiver by Buyer of any right or remedy under this Guaranty on any one occasion shall not be construed as a bar to any right or remedy which Buyer would otherwise have on any future occasion.  The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law.

 

13.                               Waivers and Amendments; Successors and Assigns; Governing Law.  None of the terms or provisions of this Guaranty may be waived, amended, supplemented or otherwise modified except by a written instrument executed by Guarantor and Buyer; provided, that, subject to any limitations set forth in the Repurchase Agreement, any provision of this Guaranty may be waived by Buyer in a letter or agreement executed by Buyer or by facsimile transmission from Buyer.  This Guaranty shall be binding upon the heirs, personal representatives, successors and assigns of Guarantor and shall inure to the benefit of Buyer and its successors and assigns.  THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF EXCEPT FOR SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK.

 

14.                               Notices.  Unless otherwise provided in this Guaranty, all notices, consents, approvals and requests required or permitted to be given to Guarantor under this Guaranty shall

 

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be given in writing and shall be effective for all purposes if hand delivered or sent by (a) hand delivery, with proof of attempted delivery, (b) certified or registered United States mail, postage prepaid, (c) expedited prepaid delivery service, either commercial or United States Postal Service, with proof of attempted delivery, or (d) by telecopier (with answerback acknowledged); provided, that such telecopied notice must also be delivered by one of the means set forth in (a), (b) or (c) above, to the address specified under its signature below or at such other address and person as shall be designated from time to time by Guarantor, in a written notice to Buyer in the manner provided for in Section 17 of the Repurchase Agreement.  A notice shall be deemed to have been given: (a) in the case of hand delivery, at the time of delivery, (b) in the case of registered or certified mail, when delivered or first attempted delivery on a Business Day, (c) in the case of expedited prepaid delivery upon the first attempted delivery on a Business Day, or (d) in the case of telecopier, upon receipt of answerback confirmation; provided, that such telecopied notice was also delivered as required in this Section 14.  A party receiving a notice which does not comply with the technical requirements for notice under this Section 14 may elect to waive any deficiencies and treat the notice as having been properly given.

 

15.                               SUBMISSION TO JURISDICTION; WAIVERS.  GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY:

 

(A)                               SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTY AND THE OTHER TRANSACTION DOCUMENTS TO WHICH GUARANTOR IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;

 

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

 

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

 

(D)                               AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER

 

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PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

 

16.                               Integration.  This Guaranty represents the agreement of Guarantor with respect to the subject matter hereof and there are no promises or representations by Buyer relative to the subject matter hereof not reflected herein.

 

17.                               Acknowledgments.  Guarantor hereby acknowledges that:

 

(a)                                 Guarantor has been advised by counsel in the negotiation, execution and delivery of this Guaranty and the related documents;

 

(b)                                 Buyer has no fiduciary relationship to Guarantor, and the relationship between Buyer and Guarantor is solely that of surety and creditor;

 

(c)                                  no joint venture exists between or among any of Buyer, Guarantor and Seller; and

 

(d)                                 (i) Guarantor is entering into this Guaranty to induce Buyer to enter into the Repurchase Agreement and (ii) this Guaranty relates to the Repurchase Agreement and the Transactions thereunder as part of an integrated, simultaneously-closing suite of secured financial contracts.

 

18.                               WAIVERS OF JURY TRIAL.  GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTY OR ANY RELATED DOCUMENT AND FOR ANY COUNTERCLAIM HEREIN OR THEREIN.

 

[SIGNATURES COMMENCE ON THE FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, the undersigned have caused this Guaranty Agreement to be duly executed and delivered as of the date first above written.

 

	
 
    	
ARES   COMMERCIAL REAL ESTATE 
   CORPORATION, a Maryland corporation, as 
   Guarantor
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Michael D. Weiner
    
	
 
    	
 
    	
Name:   Michael D. Weiner
    
	
 
    	
 
    	
Title:   Vice President and General Counsel
    

 

[Address for Notices Set Forth on Following Page]

 

Metlife/ACRE — Guaranty Agreement

 

 

Address for Notices:

 

Ares Commercial Real Estate Corporation

c/o Ares Management LLC

2000 Avenue of the Stars, 12th Floor

Los Angeles, CA 90067

Attention: Chief Accounting Officer

Telephone:     310-201-4100

Telecopy:        310-203-8820

 

With a copy to:

 

Ares Commercial Real Estate Corporation

c/o Ares Management LLC

One North Wacker Drive, 48th Floor

Chicago, Illinois  60606

Attention:  Legal Department and Capital Markets Group

Telephone:     312-252-7500

Telecopy:        312-252-7501

 

 

Schedule 1

 

Guarantor’s Tangible Net Worth as of September 30, 2013

 

$409,972Ohr Pharmaceutical, Inc. 10-Q

 

Exhibit 10.45

 

SECOND
RESEARCH AGREEMENT

 

THIS
Second Research Agreement (this “Agreement”) is made and
entered into effective as of July 30, 2013 (the “Effective Date”), by and between SKS Ocular, LLC, a
Delaware limited liability company and its subsidiary, C Therapeutics, LLC, having a principal place of business at 57 Meadow
Woods Road, Great Neck, New York 11020 (collectively “SKS”) and [redacted]*. SKS and [redacted] may be
referred to in this Agreement individually as a “Party” or collectively as the “Parties.”

Recitals

WHEREAS
SKS owns or has rights in and to technology relating to formulating active agents for sustained release.

WHEREAS
SKS desires to develop and apply SKS’s technology to create sustained release formulations of [redacted]’s proprietary
compound, [redacted].

WHEREAS
SKS and [redacted] entered into a Research Agreement dated effective October 25, 2012 (the “First Research Agreement”)
to provide for the funding and performance of such research, as further described therein.

WHEREAS
SKS and [redacted] now desire to enter into this Second Research Agreement to provide for further research and collaboration related
to the application of SKS’s technology to create sustained release formulations of [redacted].

WHEREAS
[REDACTED] desires to conduct, with assistance from SKS, a pharmacokinetics and safety study (the “PK Study”) to generate
data for the purpose of testing three sustained release formulations containing [redacted] against certain performance criteria
established by the Parties.

Now,
Therefore, in consideration of the premises and of the performance
of the covenants contained in this Agreement, and of other good and valuable consideration the receipt and sufficiency of which
is hereby acknowledged, the Parties agree as follows:

		1.	Definitions

When
used in this Agreement, capitalized terms will have the meanings as defined below and throughout this Agreement.

1.1             
“Affiliate” As utilized herein, the term
“Affiliate” means, with respect to a Party, any entity or person that, directly or indirectly, controls, is controlled
by, or is under common control with that Party. For the purpose of this definition, “control” or “controlled”
means, direct or indirect, ownership of fifty percent (50%) or more of the shares of stock entitled to vote for the election of
directors in the case of a corporation or fifty percent (50%) or more of the equity interest in the case of any other type of
legal entity; status as a general partner in any partnership; or any other arrangement whereby the entity or person controls or
has the right to control the board of directors or equivalent governing body of a corporation or other entity or the ability to
cause the direction of the management or policies of a corporation or other entity. The Parties acknowledge that in the case of
entities organized under the laws of certain countries where the maximum percentage ownership permitted by law for a foreign investor
is less than fifty percent (50%), such lower percentage shall be substituted in the preceding sentence, provided that such foreign
investor has the power to direct the management and policies of such entity.

*The confidential portions of this exhibit have been omitted, as indicated by the [redacted] notation, and filed separately
with the Securities and Exchange Commission.

    	

    	 

    

1.2             
“[Redacted] Know-How” means all unpatented
technical, scientific, business, trade secret, and other information related to the Compound, including Results, whether patentable
or not, that (a) is controlled by [redacted] or an Affiliate of [redacted] (and not controlled by SKS or an Affiliate of SKS)
and (b) (i) is disclosed by [redacted] to SKS during the term of the Agreement for use in connection with SKS’s performance
of the Research Plan, (ii) or arises from activities under this Agreement or the First Research Agreement.

1.3             
“Combined Materials” means any materials
produced in the collaboration under the First Research Agreement or this Agreement that incorporate both the Compound on the one
hand, and SKS Technology or SKS Background TP on the other hand, including without limitation all formulations incorporating both
(a) such Compound and (b) SKS Technology (or SKS Background IP). It is understood that the term Combined Materials shall include
any and all formulations of the Compound delivered by SKS to [redacted] hereunder.

1.4             
“Compound” means the proprietary compound
owned or controlled by [redacted] or an Affiliate of [redacted] known as [redacted].

1.5             
“Confidential Information” means any information
relating to SKS Technology, SKS Background IP, [redacted] Know-How, the Combined Materials, the Placebo Materials or the Compound,
in each case disclosed by or on behalf of one Party to the other Party hereunder, including, without limitation, any information
relating to regulatory documentation, clinical studies and tests performed on the Compound, data, or processes used in the performance
of the Research Plan, disclosed in any form including, without limitation, oral and written form, software stored and samples
provided.

1.6             
“Field” means the treatment of human ophthalmologic
diseases and conditions via locally applied pharmaceutical compositions.

1.7             
“Intellectual Property” means all
right, title and interest in all inventions, discoveries, concepts, improvements, processes, developments, designs, trade secrets,
know- how, systems, methods, techniques, equipment specifications, descriptions, drawings, technical information, data, and materials,
in each case whether patentable or unpatentable, and all Patents claiming any of the foregoing, and all other intellectual property
rights.

1.8             
“Materials” means the Compound, the
Combined Materials (including the Study Formulations) and the Placebo Materials.

1.9             
“Patent” means any patent or patent
application, together with all additions, divisionals, continuations, continuations-in-part, substitutions, reissues, re-examinations,
extensions, registrations, patent term extensions, supplemental protection certificates, and renewals of any of the foregoing.

    	2

    	 

    

1.10         
“Placebo Materials” means the placebo
formulations delivered by SKS to [redacted] hereunder. 

1.11         
“Research Plan” means the program
of research set forth in Appendix 2, as may be amended from time to time pursuant to the terms of this Agreement, which the Parties
desire to conduct as further research activities designed to help pursue the development of a sustained release formulation containing
the Compound meeting criteria established by the Parties.

1.12         
“SKS Background IP” means any Intellectual
Property (i) owned or controlled by SKS as of the Effective Date or (ii) owned or controlled by SKS independent of this Agreement
during the term of this Agreement.

1.13         
“SKS Competitor” means any Third Party
engaged in the business of developing sustained release drug formulations.

1.14         
“SKS Technology” means the SKS proprietary
sustained release formulation technology described in Appendix 1.

1.15         
“Study Formulations” means the following
formulations of Combined Materials containing the Compound: (a) SKS-7-F37-22; (b) SKS-7-F353; and (c) 55-50-13.

1.16         
“Third Party” means any party other
than [redacted], SKS and their Affiliates.

		2.	Research;
                                         The PK Study

2.1             
Within thirty (30) days from the Effective Date, SKS
shall provide to [redacted] sufficient quantities of the Study Formulations to complete the PK Study. SKS shall also provide thereafter
such additional quantities of the Study Formulations as [redacted] may reasonably request to complete the PK Study. During the
term of this agreement, SKS shall provide to [redacted], for no additional consideration, any assistance and technical expertise
reasonably requested by [redacted] to support the PK Study.

2.2             
To the extent necessary, [redacted] will upon SKS’s
request provide additional quantities of the Compound reasonably required to facilitate the PK Study.

2.3             
SKS will use the Compound solely for the performance
of the Research Plan and SKS shall not use such Compound or the Combined Materials for any other purpose (including use alone
or in combination with other compounds in humans) without [redacted]’s prior written consent. [Redacted] will use the Combined
Materials (including the Study Formulations) and the Placebo Materials, as well as any related material or substance that is developed
or derived therefrom, solely for purposes of conducting the activities assigned to [redacted] under this Agreement and the Research
Plan. [Redacted] agrees that it will not undertake to reverse engineer or otherwise produce the Combined Materials or the Placebo
Materials or any related material or substance that is developed or derived therefrom, without SKS’s prior written consent.

    	3

    	 

    

2.4             
SKS will not permit the Compound, or any Combined Materials,
to come into the possession or control of any other person except those directly engaged in the Research Plan. [Redacted] shall
not permit the Combined Materials or the Placebo Materials or any related material or substance that is developed or derived therefrom
to come into the possession or control of any other person except those [redacted] employees directly engaged in the Research
Plan, and such employees shall be given possession of the Combined Materials and/or the Placebo Materials solely for the purposes
of conducting the activities assigned to [redacted] under the Research Plan.

2.5             
During the term of this Agreement, SKS shall not make
the Materials available to any Third Party for the purpose of evaluating the possible use of the Materials in the Field. During
the period commencing on the Effective Date and ending on the date that is sixty (60) days after the date [redacted] delivers
to SKS the Results created during the PK Study, SKS shall not license or sell the SKS Technology to a Third Party for use with
the Compound in the Field.

2.6             
In handling the Compound, the Placebo Materials and any
Combined Materials, the Parties shall comply with all local laws and requirements and shall ensure that all permitted users comply
with all local laws and requirements.

2.7             
The Parties shall jointly own the data generated during
the course of the conduct of the Research Plan hereunder; provided that (a) each of SKS and [redacted] agrees not to license the
data to any Third Party, and (b) [redacted] agrees not to disclose the data to any SKS Competitor.

2.8             
[redacted] agrees to provide SKS with a written summary
of the results and data arising from the PK Study and the activities conducted by [redacted] under the Research Plan (“[Redacted]
Results” and together with the Results generated under the First Research Agreements, the “Results”)
following the completion of the activities assigned to [redacted] under the Research Plan. Neither Party may disclose the Results
to any Third Party without the other Party’s prior written approval.

2.9             
If requested by [redacted] during the Term of this Agreement,
the Parties shall negotiate in good faith a separate agreement to cover a potential licensing transaction, acquisition or the
conduct of further research and development activities through proof of concept of a sustained release formulation containing
the Compound that meets product performance criteria to be established by the Parties. It is understood that neither Party shall
be under any obligation to conduct any research or development activities beyond those set forth under this Agreement until this
separate agreement is mutually agreed and executed by the Parties.

    	4

    	 

    

		3.	Goverence.

3.1             
Formation and Function of JSC.
Within thirty (30) days of the Effective Date, the Parties will form a committee (the “Joint Scientific Committee”
or “JSC”) to govern the research collaboration under the terms of this Agreement. The JSC will initially consist of
two (2) representatives from each of the Parties; thereafter, the JSC may approve changes in the size of the JSC. provided that
it shall at all times consist of an equal number of representatives of each Party. A Party may change its respective appointments
to the ISC at any time upon giving written notice to the other Party. All actions taken and decisions made by the JSC shall be
by unanimous agreement, with the representatives of [redacted] having one vole collectively and the representatives of SKS having
one vote collectively. The JSC shall review, comment upon, approve and oversee the implementation of the Research Plan Taking
into account all relevant factors, the JSC shall also have the authority to approve changes to and deviations from the Research
Plan, provided that no such changes shall impose obligations on SKS or require any expenditures by SKS greater than outlined in
this agreement. For clarity, in no case will the changes to the Research Plan require SKS to deliver any Combined Materials In
excess of amounts agreed in the initial Research Plan (as described in the SKS Confidential Presentation dated May 20, 2013).
The JSC shall have no authority to amend or otherwise modify this Agreement. The JSC will name two operational coordinators (which
may be one of a Party’s JSC representatives), one from each Party, to coordinate the day-to-day activities associated with
the research collaboration under the terms of this Agreement. The JSC will meet at least once every sixty (60 days, or more frequently
if mutually agreed. The JSC may meet by telephone, in person or by video conference or other acceptable means as are agreeable
to the members of the JSC. No JSC meeting may be convened unless at least one representative of each Party is participating. Attendance
at meetings shall be at the respective expense of the participating Parties. [Redacted] and SKS shall alternate the right to determine
the location of each meeting of the JSC, with [redacted] determining the location of the first meeting of such committee. The
first meeting of the JSC shall occur within thirty (30) days after the Effective Date. The JSC will assure that agendas and minutes
are prepared for each of its meetings.

3.2             
JSC Decision-Making.
If the JSC is unable to reach a unanimous vote on any matter within its authority, then the matter shall be referred to the Chief
Executive Officer of SKS and the Senior Vice President of Research and Development, Chief Medical Officer of [redacted] (each,
the “Senior Officer” of the applicable Party), and they shall have ten (10) days to attempt in good faith to resolve
the matter and thereby make the decision on behalf of the JSC. If the Senior Officers cannot resolve the matter within twenty
(20) days, then the matter will be finally and bindingly resolved by the Division Head of [redacted] in his or her sole discretion.

		4.	Confidentiality.

4.1             
Each Party shall (a) only use the Confidential Information
of the other Party for the purpose of carrying out the Research Plan and exercising its rights or fulfilling its obligations hereunder,
and (b) keep confidential and not publish, make available or otherwise disclose such Confidential Information, except to its directors,
officers, employees, contractors, advisor, Affiliates, or representatives with a need to know such Confidential Information to
carry out or otherwise achieve the purpose of the Research Plan and who are bound by confidentiality and non-use obligations in
all material respects equal to those hereunder. Each Party will maintain the other Party’s Confidential Information consistent
with the policies and procedures that it uses to protect its own confidential information of a similar nature and will notify
the other Party immediately, and cooperate fully, at such other Party’s reasonable request, upon the discovery of any loss
or compromise of such other Party’s Confidential Information.

    	5

    	 

    

4.2             
Notwithstanding the foregoing, Confidential Information
shall not be deemed to include information or materials to the extent that it can be established by written documentation by the
receiving Party that such information or material:

		a.	was
                                         already known to or possessed by the receiving Party, other than under an obligation
                                         of confidentiality (except to the extent such obligation has expired or an exception
                                         is applicable under the relevant agreement pursuant to which such obligation was established),
                                         at the time of disclosure;

		b.	was
                                         generally available to the public or otherwise part of the public domain at the time
                                         of its disclosure to the receiving Party;

		c.	became
                                         generally available to the public or otherwise part of the public domain after its disclosure
                                         and other than through any act or omission of the receiving Party in breach of this Agreement;

		d.	was
                                         independently developed by the receiving Party without use of the other Party’s
                                         Confidential Information as demonstrated by documented evidence prepared contemporaneously
                                         with such independent development; or 

		e.	was
                                         disclosed to the receiving Party, other than under an obligation of confidentiality,
                                         by a Third Party who had no obligation to the disclosing Party not to disclose such information
                                         to others.

4.3             
Each Party may disclose Confidential Information of the
other Party to government or other regulatory authorities to the extent that such disclosure is required by applicable law, regulation,
agency or court order; provided that the party making such disclosure shall provide reasonable advance notice to the Party from
whom the Confidential Information was received, if possible, to allow that Party to oppose such disclosure or to request confidential
treatment of such Confidential Information.

4.4             
The foregoing obligations of confidentiality and non-use
shall survive the expiration or termination of this Agreement. The duration of said obligations shall be determined as follows:
(i) relative to trade secret information that is identified as such by the disclosing Party, the obligations shall remain in effect
either indefinitely or until the obligations no longer apply as a result of events falling within subparagraphs (c), (d), or (e)
above; and (ii) relative to all other types of Confidential Information, the obligations shall remain in effect for a period of
five (5) years from the date of disclosure.

    	6

    	 

    

		5.	Publication.

5.1             
No written publication or oral or written disclosure
of the Research Plan or any Results will be made by either Party, without the prior written approval of the other Party; provided
that SKS may disclose the Research Plan and Results, subject to confidentiality and limited-use provisions at least as stringent
as the provisions contained in this Agreement, to its or its Affiliates’ Board of Directors or Investment Advisory Board.

5.2             
Notwithstanding the foregoing, SKS may, subject to confidentiality
and limited- use provisions at least as stringent as the provisions contained in this Agreement, disclose the existence of this
Agreement and SKS’s financial relationship with [redacted] to its or its Affiliates’ current or potential investors
or potential acquirers; provided, that, under no circumstance shall SKS disclose the Research Plan and/or Results to a current
or potential investor, unless [redacted]’s prior written consent is first obtained.

		6.	OWNERSHIP.

6.1             
All right, title and interest in and to the SKS Background
TP and the Placebo Materials (including any Intellectual Property relating thereto) are and shall be vested in SKS. All right,
title and interest in and to the [redacted] Know-How and the Compound are and shall be vested in [redacted].

6.2             
With respect to inventions which may arise hereunder,
the following shall apply:

6.2.1      
Inventions, patentable or not, which: (i) are made solely
by employees of SKS or its Affiliates or other parties under obligation to assign their inventions to SKS or its Affiliates, and
(ii) result from activities pursuant to this Agreement, shall be the exclusive property of SKS or its designated Affiliate;

6.2.2      
Inventions, patentable or not, which: (i) are made jointly
by employees of SKS or its Affiliates and employees of [redacted] or its Affiliates, or other parties under obligation to assign
their inventions to SKS or [redacted] (or their Affiliates), and (ii) result from activities pursuant to this Agreement, shall
be the joint property of SKS or its designated Affiliate and [redacted] or its designated Affiliate (“Joint Inventions”);
however, [redacted] or its designated Affiliate shall have the right to negotiate a royalty bearing, exclusive, worldwide license
to such Joint Inventions for purposes of researching and commercializing formulations of the Compound in the Field. It is understood
that the foregoing sentence shall not obligate either Party to accept or agree to any agreement regarding such a license to the
Joint Inventions or any terms or conditions in connection therewith, and that any such license to the Joint Inventions shall only
be granted on terms that are mutually agreed by both Parties. The parties agree to keep each other informed of any Joint Inventions.
The Parties shall mutually agree on the course for preparing, filing, prosecuting and maintaining any Patents directed to or covering
any Joint Inventions.

    	7

    	 

    

6.2.3      
Inventions, patentable or not, which: (i) are made solely
by employees of [redacted] or its Affiliates, and (ii) result from activities pursuant to this Agreement, shall be the exclusive
property of [redacted] or its designated Affiliate.

6.2.4      
Each Party agrees not to seek or obtain any patent rights
in any invention made in performing the Research Plan without the prior written consent of the other Party. [redacted] and SKS
each agree to obtain the cooperation of their arid their Affiliates’ respective employees and/or obligated parties in the
preparation, filing, and prosecution of patent applications directed to any inventions which may arise hereunder. Each Party,
at its sole discretion and expense, shall control the preparation, filing, prosecution and maintenance of any Patents directed
to or covering any Invention that is the exclusive property of such Party pursuant to Section 6.2.1 or 6.2.3.

6.3             
Subject to each Party’s obligations hereunder regarding
the other Party’s Materials and Confidential Information, during the term of the Research Plan each Party shall have a non-exclusive,
royalty-free license, without the right to sublicense, to use the Materials received from the other Party and the other Party’s
Confidential Information solely for the purpose of performing the Research Plan.

6.4             
No Implied Rights In Intellectual Properly. Except as
expressly set forth in Section 6.3 hereof, nothing herein shall be deemed to grant either [redacted] or SKS any rights under the
other Party’s Intellectual Property. Inventorship of Intellectual Property resulting from activities pursuant to this Agreement
will be determined according to U.S. law, unless otherwise agreed in writing by the Parties.

		7.	Payment.

[Redacted].

		8.	Warranty.

8.1             
[Redacted] gives no warranty and makes no representation
concerning the properties or fitness for any purpose of the Compound. 

8.2             
SKS SPECIFICALLY DISCLAIMS ANY GUARANTEE THAT THE RESEARCH
PLAN WILL BE SUCCESSFUL, IN WHOLE OR IN PART. THE FAILURE OF THE RESEARCH PLAN TO SUCCESSFULLY DEVELOP A SUSTAINED RELEASE FORMULATION
OF THE COMPOUND THAT MEETS THE CRITERIA ESTABLISHED BY THE PARTIES WILL NOT CONSTITUTE A BREACH OF ANY REPRESENTATION OR WARRANTY
OR OTHER OBLIGATION UNDER THIS AGREEMENT. SKS MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OR CONDITIONS OF ANY KIND, EITHER
EXPRESS OR IMPLIED, WITH RESPECT TO THE SKS BACKGROUND IP, TFIE COMBINED MATERIALS, THE PLACEBO MATERIALS, OR INFORMATION DISCLOSED
HEREUNDER, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NONINFRINGEMENT OF
THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

    	8

    	 

    

		9.	Term/Termination.

This
Agreement shall commence on the Effective Date and shall continue in full force and effect until the earlier of (i) sixty (60)
days after the later of SKS’s receipt of the [Redacted] Results, or (ii) immediate termination by either Party upon written
notice to the other Party in the event of a breach of this Agreement by the other Party that has not been cured within thirty
(30) days after notice of said breach.

		10.	Miscellaneous.

10.1         
The provisions set out in Sections 2.3, 2.4, 2.6, 2.7,
6.1, 62, and 6.4 and Articles 4, 5, 6, 8 and 10 of this Agreement shall remain in full force and effect following the expiration
of this Agreement or any earlier termination of this Agreement under Article 9.

10.2         
The construction, validity and performance of this Agreement
shall be governed by the laws of the State of New York and the parties hereto agree that all disputes relating to this Agreement
shall be subject to the exclusive jurisdiction of the courts of the State of New York.

10.3         
This Agreement may not be assigned by either Party without
the prior written consent of the other Party except that SKS may assign this agreement without such consent to an Affiliate or
in connection with a merger, consolidation, change in control, transfer or sale of all or substantially all of the assets or business
to which this Agreement relates. [Redacted] may assign this agreement without such consent to an Affiliate or in connection with
a merger, consolidation, change in control, transfer or sale of all or substantially all of the assets or business to which this
Agreement relates; provided that notwithstanding the foregoing, in no event may [redacted] assign this agreement to an SKS Competitor
without SKS’s prior written consent. Notwithstanding the foregoing, this Agreement shall also be binding upon and inure
to the benefit of SKS’s or [redacted]’s permitted successors and assigns and either Party shall be entitled hereunder
to disclose or supply the Confidential Information to its Affiliates for purposes of pertbrming the Research Plan; provided that
such party shall be responsible for and shall remain primarily liable for all acts and omissions of its Affiliates with respect
to such Confidential Information as if such acts and omissions were its own.

10.4         
Any notice or communication required or permitted to
be given by either Party hereunder, shall be deemed sufficiently given, if sent by registered mail or express courier providing
evidence of receipt, and addressed to the party to whom notice is given as follows:

	 	IF TO [REDACTED]:	[redacted] 
	 	 	 
	 	IF TO SKS:	SKS Ocular, LLC
	 	 	57 Meadow Woods Road
	 	 	Great Neck, NY  11020
	 	 	 
	 	With a copy to:	Kenneth A. Clark
	 	 	Wilson Sonsini Goodrich & Rosati
	 	 	650 Page Mill Road
	 	 	Palo Alto, CA  94304

 

    	9

    	 

    

 

10.5         
The status of a Party under this Agreement shall be that
of an independent contractor. Nothing contained in this Agreement shall be construed as creating a partnership, joint venture
or agency relationship between the Parties or, except as otherwise expressly provided in this Agreement, as granting either Party
the authority to bind or contract any obligation in the name of or on the account of the other Party or to make any statements,
representations, warranties or commitments on behalf of the other Party.

10.6         
If any provision of this Agreement is held to be invalid,
illegal or unenforceable, in any respect, then, to the fullest extent permitted by applicable law and if the rights and obligations
of any Party will not be materially and adversely affected: (a) such provision will be given no effect by the Parties and shall
not form part of this Agreement, (b) all other provisions of this Agreement shall remain in full force and effect, and (c) the
Parties shall use their best efforts to negotiate a provision in replacement of the provision held invalid, illegal or unenforceable
that is consistent with applicable law and achieves, as nearly as possible, the original intention of the Parties. To the fullest
extent permitted by applicable law, the Parties waive any provision of law that would render any provision in this Agreement invalid,
illegal or unenforceable in any respect.

10.7         
This Agreement (together with the First Research Agreement)
constitutes the entire agreement between the Parties with respect to the subject matter of the Agreement. This Agreement (together
with the First Research Agreement) supersedes all prior agreements, whether written or oral, with respect to the subject matter
of the Agreement, except for the Confidentiality Agreement between the Parties dated May 25, 2011 and amended on April 19, 2012
(“Confidentiality Agreement”). The term of the Confidentiality Agreement is hereby extended to coincide with the term
of this Agreement. For clarity, each Party’s rights and obligations with respect to any Confidential Information disclosed
by the other Party to it after the Effective Date of this Agreement relating to the subject matter of this Agreement shall be
governed by the terms of Article 4 of this Agreement, and not by the terms of the Confidentiality Agreement. Each Party confirms
that it is not relying on any representations, warranties or covenants of the other Party except as specifically set out in this
Agreement. Nothing in this Agreement is intended to limit or exclude any liability for fraud. All Appendices (and Exhibits thereto)
referred to in this Agreement are intended to be and are hereby specifically incorporated into and made a part of this Agreement.
No modification will be effective unless in writing and signed by authorized representatives of both Parties.

    	10

    	 

    

 

IN
WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their authorized representative:

 

	SKS
    OCULAR, LLC	[REDACTED]
    
	 	 
	 	 
	By:____________________________	By:____________________________
	     Jason
    Slaker, MD	     [Redacted]
	     President
    and CEO	      
	 	     
	 	 
	Date:
    _________________________	Date:___________________________
	 	 
	 	 
	 	 
	 	 
	C
    THERAPEUTICS, LLC	 
	 	 
	 	 
	By:____________________________	 
	     Jason
    Slaker, MD	 
	     President
    and CEO	 
	 	 
	 	 
	Date:
    _________________________	 
	 	 

    	11

    	 

    

 

Appendix
1

SKS
Technology

 

Sol-Gel Phase-Reversible Hydorgel
Templates and Uses Thereof (US Serial No. 12/286,147)

Microcapsules Containing Filling
Material (Filed 20 September 2012)

Methods for Forming Multilayer
Microparticles for Drug Delivery (Filed 20 September 2012)

    	Appendix 1-1

    	 

    

 

Appendix
2

[Redacted]

    	Appendix 2-1

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