Exhibit 10.1

 

COMMON STOCK PURCHASE AGREEMENT

 

COMMON STOCK PURCHASE AGREEMENT (the “Agreement”), dated as of April 27, 2020 by
and between SORRENTO THERAPEUTICS, INC., a Delaware corporation (the “Company”),
and Arnaki Ltd., a British Virgin Islands corporation (including its successors
and assigns, the “Purchaser”).  Capitalized terms used herein and not otherwise
defined herein are defined in Section 10 hereof.

 

WHEREAS:

 

Subject to the terms and conditions set forth in this Agreement, the Company
wishes to sell to the Purchaser, and the Purchaser wishes to buy from the
Company, up to Two Hundred and Fifty Million Dollars ($250,000,000) of the
Company’s common stock, par value $0.0001 per share (the “Common Stock” or
“Securities”).  The shares of Common Stock to be purchased hereunder are
referred to herein as the “Purchase Shares.”

 

NOW THEREFORE, the Company and the Purchaser hereby agree as follows:

 

1.                                   PURCHASE OF COMMON STOCK.

 

Subject to the terms and conditions set forth in this Agreement, the Company has
the right to sell to the Purchaser, and the Purchaser has the obligation to
purchase from the Company, Purchase Shares as follows:

 

(a)                                 Commencement of Purchases of Common Stock. 
Any time after Commencement (as defined below), the purchase and sale of
Purchase Shares hereunder may occur from time to time upon written notices by
the Company to the Purchaser on the terms and conditions as set forth herein
following the satisfaction of the conditions (the “Commencement”) as set forth
in Sections 6 and 7 below (the date of satisfaction of such conditions, the
“Commencement Date”).

 

(b)                                 Fixed and Optional Purchases.  Subject to
the terms and conditions of this Agreement, on any given Business Day from and
after the Commencement Date and during the Facility Term, the Company shall have
the right but not the obligation to (i) direct the Purchaser by its delivery to
the Purchaser of a Purchase Notice, substantially in the form attached hereto
as Exhibit A, from time to time, and the Purchaser thereupon shall have the
obligation, subject to Section 1(d), to buy the number of Purchase Shares
specified in such notice, up to 650,000 Purchase Shares on such Business Day
(the “Fixed Request Amount”), and/or (ii) at the Company’s sole discretion,
grant the Purchaser an option to buy an additional amount of shares (the
“Optional Purchase,” collectively with the Fixed Request Amount, a “Regular
Purchase”) at the Purchase Price per Purchase Share on the Purchase Date. The
Company and the Purchaser may mutually agree to increase the number of Purchase
Shares for the Fixed Request Amount to as much as an additional 3,600,000
Purchase Shares on a Purchase Date.  In consideration of and in express reliance
upon the representations, warranties and covenants, and otherwise upon the terms
and subject to the conditions, of this Agreement, from and after the
Commencement Date and during the Facility Term (i) the Company shall issue and
sell to the Purchaser, and the Purchaser agrees to purchase from the Company,
the Purchase Shares in respect of each Fixed Request Amount and (ii) the
Purchaser may in its discretion elect to purchase Purchase Shares in respect of
each Optional Purchase.  The issuance and sale of Purchase Shares to the
Purchaser pursuant to any Fixed Request Amount or Optional Purchase shall occur
on the applicable Settlement Date in accordance with Section 1(i), provided that
all of the conditions precedent thereto set forth in Section 7 theretofore shall
have been fulfilled or (to the extent permitted by applicable law) waived.

 

The share amounts in this Section 1(b) shall be appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split, reverse stock
split or other similar transaction.

 

(c)                                 Payment for Purchase Shares.  For each
Regular Purchase, the Purchaser shall pay to the Company an amount equal to the
Purchase Amount as full payment for such Purchase Shares via wire transfer of
immediately available funds on the same Business Day that the Purchaser receives
such Purchase Shares.  All payments made under this Agreement shall be made in
lawful money of the United States of America via wire transfer of immediately
available funds to such account as the Company may from time to time designate
by written notice in accordance with the provisions of this Agreement.  Whenever
any amount expressed to be due by the terms of this Agreement is due on any day
that is not a Business Day, the same shall instead be due on the next succeeding
day that is a Business Day.

 

 

 

 

(d)                                  Purchase Price Floor.  The Purchaser shall
have the right but not the obligation to purchase any Purchase Shares at the
Floor Price on any Purchase Date where either (i) the VWAP is less than the
Floor Price or (ii) the Purchase Price is less than the Floor Price. “Floor
Price” means $1.10 per share of Common Stock, which shall not be adjusted for
any reorganization, recapitalization, non-cash dividend, stock split, reverse
stock split or other similar transaction. If trading in the Common Stock on the
Principal Market is suspended for any reason for more than three (3) hours on
the applicable Purchase Date (which, for the avoidance of doubt, shall not
include any reduced trading hours scheduled in advance by the Principal Market,
such as days surrounding or including holidays where the Principal Market closes
at 1:00 PM Eastern Time), the Purchaser may, at its option, purchase any
Purchase Shares on such Purchase Date at a price per Purchase Share that is
equal to the greater of (i) the Purchase Price on such Purchase Date and (ii)
the Floor Price. For each Purchase Date that has reduced trading hours scheduled
in advance by the Principal Market, the total amount of the Fixed Request Amount
shall be reduced proportionally (for example, on the days surrounding or
including holidays where the Principal Market closes at 1:00 PM Eastern Time,
the total amount of the Fixed Request Amount shall be reduced by 40%).  

 

(e)                                   Records of Purchases.  The Purchaser and
the Company shall each maintain records showing the remaining Available Amount
at any given time and the dates and Purchase Amounts for each purchase, or shall
use such other method reasonably satisfactory to the Purchaser and the Company
to reconcile the remaining Available Amount.

 

(f)                                  Taxes.  The Company shall pay any and all
transfer, stamp or similar taxes that may be payable with respect to the
issuance and delivery of any shares of Common Stock to the Purchaser made under
this Agreement.

 

(g)                                 Compliance with Principal Market Rules. 
Notwithstanding anything in this Agreement to the contrary, and in addition to
the limitations set forth in Section 1(h), the total number of shares of Common
Stock that may be issued under this Agreement shall be limited to 41,917,130
shares of Common Stock (the “Exchange Cap”), which equals 19.99% of the
Company’s outstanding shares of Common Stock as of the date hereof, unless
stockholder approval is obtained to issue more than such 19.99%.  The Exchange
Cap shall be appropriately adjusted for any reorganization, recapitalization,
non-cash dividend, stock split, reverse stock split or other similar
transaction.  The foregoing limitation shall not apply if stockholder approval
has not been obtained and at any time the Exchange Cap is reached and at all
times thereafter the average price paid for all shares of Common Stock issued
under this Agreement is equal to or greater than $2.37 (the “Minimum Price”), a
price equal to the lower of (1) the Closing Sale Price immediately preceding the
execution of this Agreement or (2) the arithmetic average of the five
(5) Closing Sale Prices for the Common Stock immediately preceding the execution
of this Agreement (in such circumstance, for purposes of the Principal Market,
the transaction contemplated hereby would not be “below market” and the Exchange
Cap would not apply). The Minimum Price shall be appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split, reverse stock
split or other similar transaction.  Notwithstanding the foregoing, the Company
shall not be required or permitted to issue, and the Purchaser shall not be
required to purchase, any shares of Common Stock under this Agreement if such
issuance would breach the Company’s obligations under the rules or regulations
of the Principal Market.  The Company may, in its sole discretion, determine
whether to obtain stockholder approval to issue more than 19.99% of its
outstanding shares of Common Stock hereunder if such issuance would require
stockholder approval under the rules or regulations of the Principal Market.

 

(h)                                     Beneficial Ownership Limitation. The
Company shall not issue, and the Purchaser shall not purchase any shares of
Common Stock under this Agreement, if such shares proposed to be issued and
sold, when aggregated with all other shares of Common Stock then owned
beneficially (as calculated pursuant to Section 13(d) of the Securities Exchange
Act of 1934, as amended (the “1934 Act”) and Rule 13d-3 promulgated thereunder)
by the Purchaser and its affiliates would result in the beneficial ownership by
the Purchaser and its affiliates of more than 4.99% of the then issued and
outstanding shares of Common Stock.

 

(i)                                     Settlement. The Purchaser shall deliver
to the Company, via facsimile transmission or e-mail in accordance with this
Section 1(i), not later than 8:00 p.m. (New York time) on the Purchase Date, a
Purchaser Confirmation, substantially in the form attached hereto as Exhibit
B (the “Purchaser Confirmation”), which shall specify (i) the total Fixed
Request Amount to be purchased by the Purchaser on the applicable Settlement
Date, (ii) the Purchase Price at which the Purchaser will purchase the Purchase
Shares pursuant to the Purchase Notice, (iii) the total number of Purchase
Shares, if any, to be purchased by the Purchaser in respect of the applicable
Fixed Request Amount, and (iv) the total amount of the Optional Purchase, if
applicable, to be purchased by the Purchaser on the applicable Settlement Date.
The payment for, against subsequent delivery of, Purchase Shares in respect of
each Regular Purchase shall be settled on the second Business Day next following
the Purchase Date, or on such earlier date as the parties may mutually agree
(the “Settlement Date”).  On each Settlement Date, the Company shall, or shall
cause its transfer agent to, electronically transfer the Purchase Shares
purchased by the Purchaser by crediting the Purchaser’s or its designee(s)
account at DTC through its Deposit/Withdrawal at Custodian (DWAC) system, which
Purchase Shares shall be freely tradable and transferable and without
restriction on resale, against simultaneous payment therefor to the Company’s
designated account by wire transfer of immediately available funds.

 

 

 

 

(j)                                     Failure to Deliver. If the Company
issues a Purchase Notice and fails to deliver the Purchase Shares to the
Purchaser on the applicable Settlement Date, subject to simultaneous payment,
and such failure continues for five (5) Business Days, the Company shall pay the
Purchaser, in cash (or, at the option of the Purchaser, in shares of Common
Stock valued at the applicable Purchase Price of the Purchase Shares failed to
be delivered; provided that the issuance thereof by the Company would not
violate the Securities Act or any applicable U.S. federal or state securities
laws), as partial damages for such failure and not as a penalty, an amount equal
to 2.0% of the payment required to be paid by the Purchaser on such Settlement
Date (i.e., the sum of the Fixed Request Amount and the Optional Purchase) for
the initial thirty (30) days following such Settlement Date until the Purchase
Shares have been delivered, and an additional 2.0% for each additional 30-day
period thereafter until the Purchase Shares have been delivered, which amount
shall be prorated for such periods less than thirty (30) days. Nothing in this
Section 1(j) shall be deemed to release the Company from any liability for any
breach under this Agreement, or to impair the rights of the Purchaser to compel
specific performance by the Company of its obligations under this Agreement.

 

(k)                                     Purchase Notice. Upon the terms and
subject to the conditions of this Agreement, the Purchaser is obligated to
accept each Purchase Notice prepared and delivered in accordance with the
provisions of this Agreement. A valid Purchase Notice must be delivered on or
before 2:00 p.m. (New York time) on the Purchase Date specified in the Purchase
Notice; provided, however, that with respect to the Purchase Notice received
after 9:30 a.m. (New York time) but on or before 2:00 p.m. (New York time) (the
“Intraday Notice”), the total amount of the Fixed Request Amount shall be
reduced proportionally by 1/13th for each half-hour between 9:30 a.m. (New York
time) and the time at which the Purchase Notice is delivered (for example, if
the Intraday Notice is received by the Purchaser at 11:00 a.m. (New York time),
the total amount of the Fixed Request Amount shall be reduced by 3/13 or 150,000
shares).

 

For the avoidance of doubt, all calculations with respect to the timing of the
Intraday Notice shall be rounded up to the nearest half-hour (for example, 12:10
p.m. (New York time) would be rounded to 12:30 p.m. (New York time)). All
calculations with respect to Purchase Price of the Intraday Notice shall be
based on the intraday VWAP commencing from one minute after the timestamp on the
Purchaser’s receipt of an e-mail (or any equivalent means of communication
mutually agreed by the Purchaser and the Company) that contains a Purchase
Notice, or such other time mutually agreed by the Purchaser and the Company,
until 4:00 p.m. (New York time).

 

If the Company delivers the Purchase Notice to the Purchaser later than 2:00
p.m. (New York time) on a Purchase Date, then the Purchase Date shall not be the
Business Day on which the Purchaser received such Purchase Notice, but rather
shall be the next Business Day (unless a subsequent Business Day is therein
specified).

 

2.                                      PURCHASER’S REPRESENTATIONS AND
WARRANTIES.

 

The Purchaser represents and warrants to the Company that as of the date hereof
and as of the Commencement Date:

 

 

 

 

(a)                                Organization. The Purchaser is a company duly
organized, validly existing and in good standing under the laws of the British
Virgin Islands, and has the requisite organizational power and authority to own
its properties and to carry on its business as now being conducted.

 

(b)                                 Accredited Investor Status.  The Purchaser
is an “accredited investor” as that term is defined in Rule 501(a)(3) of
Regulation D of the 1933 Act.

  

(c)                                 Information.  The Purchaser has been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
that have been reasonably requested by the Purchaser, including, without
limitation, the SEC Documents (as defined in Section 3(f) hereof).  The
Purchaser understands that its investment in the Securities involves a high
degree of risk.  The Purchaser (i) is able to bear the economic risk of an
investment in the Securities including a total loss, (ii) has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the proposed investment in the Securities and (iii) has
had an opportunity to ask questions of and receive answers from the officers of
the Company concerning the financial condition and business of the Company and
other matters related to an investment in the Securities.  Neither such
inquiries nor any other due diligence investigations conducted by the Purchaser
or its representatives shall modify, amend or affect the Purchaser’s right to
rely on the Company’s representations and warranties contained in Section 3
below.  The Purchaser has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Securities.

 

(d)                                  No Governmental Review.  The Purchaser
understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation or
endorsement of the Securities or the fairness or suitability of the investment
in the Securities nor have such authorities passed upon or endorsed the merits
of the offering of the Securities.

  

(e)                                  [Intentionally Omitted.];

 

(f)                                 Validity; Enforcement.  This Agreement has
been duly and validly authorized, executed and delivered on behalf of the
Purchaser and is a valid and binding agreement of the Purchaser enforceable
against the Purchaser in accordance with its terms, subject as to enforceability
to (i) general principles of equity and to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies and (ii) public policy underlying any law, rule or regulation
(including any federal or state securities law, rule or regulation) with regards
to indemnification, contribution or exculpation. The execution and delivery of
the Transaction Documents (as defined in Section 3(b) hereof) by the Purchaser
and the consummation by it of the transactions contemplated hereby and thereby
do not conflict with the Purchaser’s certificate of organization or operating
agreement or similar documents, and do not require further consent or
authorization by the Purchaser, its managers or its members.

 

(g)                                No Short Selling. The Purchaser represents
and warrants to the Company that at no time during the course of the 6-month
period prior to the date hereof has any of the Purchaser, its agents,
representatives or affiliates engaged in or effected, in any manner whatsoever,
directly or indirectly, any (i) “short sale” (as such term is defined in
Section 242.200 of Regulation SHO of the 1934 Act) of the Common Stock or
(ii) hedging transaction, which establishes a net short position with respect to
the Common Stock.

  

3.                                      REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.

 

The Company represents and warrants to the Purchaser that as of the date hereof
and as of the Commencement Date:

 

(a)                                 Organization and Qualification.  The Company
and its “Subsidiaries” (which for purposes of this Agreement means any entity in
which the Company, directly or indirectly, owns more than 50% of the voting
stock or capital stock or other similar equity interests) are corporations or
limited liability companies duly organized and validly existing in good standing
under the laws of the jurisdiction in which they are incorporated or organized
(if a good standing concept exists in such jurisdiction), and have the requisite
corporate or organizational power and authority to own their properties and to
carry on their business as now being conducted.  Each of the Company and its
Subsidiaries is duly qualified as a foreign corporation or limited liability
company to do business and is in good standing in every jurisdiction in which
its ownership of property or the nature of the business conducted by it makes
such qualification necessary (if a good standing concept exists in such
jurisdiction), except to the extent that the failure to be so qualified or be in
good standing could not reasonably be expected to have a Material Adverse
Effect.  As used in this Agreement, “Material Adverse Effect” means any material
adverse effect on any of: (i) the business, properties, assets, operations,
results of operations or financial condition of the Company and its
Subsidiaries, if any, taken as a whole, or (ii) the authority or ability of the
Company to perform its obligations under the Transaction Documents.  All of the
direct and indirect subsidiaries of the Company that constitute significant
subsidiaries within the meaning of Item 601(b)(21)(ii) of Regulation S-K are set
forth on Schedule 3(a).

 

 

 

 

(b)                                 Authorization; Enforcement; Validity. 
(i) The Company has the requisite corporate power and authority to enter into
and perform its obligations under this Agreement and each of the other
agreements entered into by the parties on the Commencement Date and attached
hereto as exhibits to this Agreement (collectively, the “Transaction
Documents”), and to issue the Securities in accordance with the terms hereof and
thereof, (ii) the execution and delivery of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby and
thereby and the reservation for issuance and the issuance of the Purchase Shares
issuable under this Agreement, have been duly authorized by the Company’s Board
of Directors or duly authorized committee thereof, do not conflict with the
Company’s Certificate of Incorporation or Bylaws (as defined below), and do not
require further consent or authorization by the Company, its Board of Directors,
except as set forth in this Agreement, or its stockholders (other than as
contemplated by Section 1(g) hereof), (iii) this Agreement has been, and each
other Transaction Document shall be on the Commencement Date, duly executed and
delivered by the Company and (iv) this Agreement constitutes, and each other
Transaction Document upon its execution on behalf of the Company, shall
constitute, the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited by (y) general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally, the enforcement of creditors’ rights and remedies and
(z) public policy underlying any law, rule or regulation (including any federal
or state securities law, rule or regulation) with regards to indemnification,
contribution or exculpation.  The Board of Directors of the Company or duly
authorized committee thereof has approved the resolutions (the “Signing
Resolutions”) to authorize this Agreement and the transactions contemplated
hereby.  The Signing Resolutions are valid, in full force and effect and have
not been modified or supplemented in any material respect.  The Company has
delivered to the Purchaser a true and correct copy of the Signing Resolutions as
approved by the Board of Directors of the Company or an appropriate Board
committee.

 

(c)                                  Capitalization.  As of the date hereof, the
authorized capital stock of the Company consists of (i) 750,000,000 shares of
Common Stock, par value $0.0001, of which as of the date hereof, 209,690,497
shares are issued and outstanding, 7,568,182 shares are held as treasury shares,
20,313,363 shares are reserved for future issuance pursuant to the Company’s
equity incentive plans, of which approximately 7,014,700 shares remain available
for future option grants or stock awards, and 46,817,092 shares are issuable and
reserved for issuance pursuant to securities (other than stock options or
equity-based awards issued pursuant to the Company’s stock incentive plans)
exercisable or exchangeable for, or convertible into, shares of Common Stock,
and (ii) 100,000,000 shares of preferred stock, of which as of the date hereof
no shares are issued and outstanding.  All of such outstanding shares have been,
or upon issuance will be, validly issued and are fully paid and non-assessable. 
Except as disclosed in Schedule 3(c), (i) no shares of the Company’s capital
stock are subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company, (ii) there are no
outstanding debt securities of the Company or any of its Subsidiaries,
(iii) there are no outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into, any shares of capital stock of the Company or any of
its Subsidiaries, or contracts, commitments, understandings or arrangements by
which the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, (iv) there
are no material agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act, (v) there are no outstanding securities or instruments of the
Company or any of its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries, (vi) there
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities as described in this
Agreement and (vii) the Company does not have any stock appreciation rights or
“phantom stock” plans or agreements or any similar plan or agreement.  The
Company has furnished or made available to the Purchaser true and correct copies
of the Company’s Amended and Restated Certificate of Incorporation, as amended
and as in effect on the date hereof (the “Certificate of Incorporation”), and
the Company’s Amended and Restated Bylaws, as amended and as in effect on the
date hereof (the “Bylaws”).

 

 

 

 

(d)                                 Issuance of Securities.  Upon issuance and
payment therefore in accordance with the terms and conditions of this Agreement,
the Purchase Shares shall be validly issued, fully paid and non-assessable and
free from all taxes, liens and charges with respect to the issue thereof, with
the holders being entitled to all rights accorded to a holder of Common Stock.

 

(e)                                  No Conflicts.  Except as disclosed in
Schedule 3(e), the execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the reservation
for issuance and issuance of the Purchase Shares) will not (i) result in a
violation of the Certificate of Incorporation, any Certificate of Designations,
Preferences and Rights of any outstanding series of preferred stock of the
Company or the Bylaws or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party, or result, to the Company’s knowledge, in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and the rules and regulations
of the Principal Market applicable to the Company or any of its Subsidiaries) or
by which any property or asset of the Company or any of its Subsidiaries is
bound or affected, except in the case of conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations under clause (ii), which
could not reasonably be expected to result in a Material Adverse Effect.  Except
as disclosed in Schedule 3(e), neither the Company nor its Subsidiaries is in
violation of any term of or in default under its Certificate of Incorporation,
any Certificate of Designation, Preferences and Rights of any outstanding series
of preferred stock of the Company or Bylaws or their organizational charter or
bylaws, respectively.  Except as disclosed in Schedule 3(e), neither the Company
nor any of its Subsidiaries is in violation of any term of or is in default
under any material contract, agreement, mortgage, indebtedness, indenture,
instrument, judgment, decree or order or any statute, rule or regulation
applicable to the Company or its Subsidiaries, except for possible violations,
defaults, terminations or amendments that would not reasonably be expected to
have a Material Adverse Effect.  The business of the Company and its
Subsidiaries is not being conducted, and shall not be conducted, in violation of
any law, ordinance, or regulation of any governmental entity, except for
possible violations, the sanctions for which either individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect. 
Except as specifically contemplated by this Agreement, reporting obligations
under the 1934 Act, or as required under the 1933 Act or applicable state
securities laws or the filing of a Listing of Additional Shares Notification
Form with the Principal Market, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency or any regulatory or self-regulatory agency in
order for it to execute, deliver or perform any of its obligations under or
contemplated by the Transaction Documents in accordance with the terms hereof or
thereof.  Except as disclosed in Schedule 3(e) and for reporting obligations
under the 1934 Act, all consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence shall be obtained or effected on or prior to the Commencement Date. 
Except as disclosed in Schedule 3(e), the Company is not subject to any notices
or actions from or to the Principal Market other than routine matters incident
to listing on the Principal Market and not involving a violation of the rules of
the Principal Market.  Except as disclosed in Schedule 3(e), to the Company’s
knowledge, the Principal Market has not commenced any delisting proceedings
against the Company.

 

(f)                                   SEC Documents; Financial Statements.
Except as disclosed in Schedule 3(f), since December 31, 2019, the Company has
filed all reports, schedules, forms, statements and other documents required to
be filed by it with the SEC pursuant to the reporting requirements of the 1934
Act (all of the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the “SEC
Documents”).  As of their respective dates (except as they have been correctly
amended), the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC (except as they may have
been properly amended), contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.  As of their respective dates (except as they
have been properly amended), the financial statements of the Company included in
the SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto.  Such financial statements have been prepared in accordance
with generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).  Except as
disclosed in Schedule 3(f) or routine correspondence, such as comment letters
and notices of effectiveness in connection with previously filed registration
statements or periodic reports publicly available on EDGAR, to the Company’s
knowledge, the Company or any of its Subsidiaries are not on the date hereof the
subject of any inquiry, investigation or action by the SEC.

 

 

 

 

(g)                                    Absence of Certain Changes.  Except as
disclosed in Schedule 3(g), since December 31, 2019, there has been no material
adverse change in the business, properties, operations, financial condition or
results of operations of the Company or its Subsidiaries taken as a whole.  For
purposes of this Agreement, neither a decrease in cash or cash equivalents or in
the market price of the Common Stock nor losses incurred in the ordinary course
of the Company’s business shall be deemed or considered a material adverse
change.  The Company has not taken any steps, and does not currently expect to
take any steps, to seek protection pursuant to any Bankruptcy Law nor does the
Company or any of its Subsidiaries have any knowledge or reason to believe that
its creditors intend to initiate involuntary bankruptcy or insolvency
proceedings.  The Company is financially solvent and is generally able to pay
its debts as they become due.

 

(h)                                    Absence of Litigation. Except as
disclosed in Schedule 3(h), to the Company’s knowledge, there is no action,
suit, proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened against the
Company, the Common Stock or any of the Company’s Subsidiaries or any of the
Company’s or the Company’s Subsidiaries’ officers or directors in their
capacities as such, which could reasonably be expected to have a Material
Adverse Effect (each, an “Action”).  A description of each such Action, if any,
is set forth in Schedule 3(h).

 

(i)                                     Acknowledgment Regarding Purchaser’s
Status.  The Company acknowledges and agrees that the Purchaser is acting solely
in the capacity of arm’s length purchaser with respect to the Transaction
Documents and the transactions contemplated hereby and thereby.  The Company
further acknowledges that the Purchaser is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated hereby and thereby and
any advice given by the Purchaser or any of its representatives or agents in
connection with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to the Purchaser’s purchase of the
Securities.  The Company further represents to the Purchaser that the Company’s
decision to enter into the Transaction Documents has been based solely on the
independent evaluation by the Company and its representatives and advisors.

 

(j)                                     Intellectual Property Rights.  To the
Company’s knowledge, the Company and its Subsidiaries own or possess adequate
rights or licenses to use all material trademarks, trade names, service marks,
service mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and
other intellectual property rights (collectively, “Intellectual Property”)
necessary to conduct their respective businesses as now conducted, except as set
forth in Schedule 3(j) or to the extent that the failure to own, possess,
license or otherwise hold adequate rights to use Intellectual Property would
not, individually or in the aggregate, have a Material Adverse Effect.  Except
as disclosed in Schedule 3(j), to the Company’s knowledge, none of the Company’s
active and registered Intellectual Property have expired or terminated, or, by
the terms and conditions thereof, will expire or terminate within two years from
the date of this Agreement, except as would not reasonably be expected to have a
Material Adverse Effect.  The Company and its Subsidiaries do not have any
knowledge of any infringement by the Company or its Subsidiaries of any
Intellectual Property of others and, except as set forth on Schedule 3(j), there
is no claim, action or proceeding being made or brought against, or to the
Company’s knowledge, being threatened against, the Company or its Subsidiaries
regarding Intellectual Property, which could reasonably be expected to have a
Material Adverse Effect.

 

 

 

 

(k)                                     Environmental Laws.  To the Company’s
knowledge, the Company and its Subsidiaries (i) are in material compliance with
any and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety or the environment and
with respect to hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”), (ii) have received all material permits,
licenses or other approvals required of them under applicable Environmental Laws
to conduct their respective businesses and (iii) are in material compliance with
all terms and conditions of any such permit, license or approval, except where,
in each of the three foregoing clauses, the failure to so comply or receive such
approvals could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

 

(l)                                     Title.  The Company and its Subsidiaries
have good and marketable title to all personal property owned by them that is
material to the business of the Company and its Subsidiaries, in each case free
and clear of all liens, encumbrances and defects except such as are described in
Schedule 3(l) or such as do not materially affect the value of such property and
do not interfere with the use made and proposed to be made of such property by
the Company and any of its Subsidiaries or could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.  Any real
property and facilities held under lease by the Company and any of its
Subsidiaries, to the Company’s knowledge, are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries.

 

(m)                                    Insurance.  The Company and each of its
Subsidiaries are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as management of the Company
believes to be reasonable and customary in the businesses in which the Company
and its Subsidiaries are engaged.  To the Company’s knowledge, since January 1,
2019, neither the Company nor any such Subsidiary has been refused any insurance
coverage sought or applied for and neither the Company nor any such Subsidiary,
to the Company’s knowledge, will be unable to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not reasonably be expected to have a Material Adverse Effect.

 

(n)                                    Regulatory Permits.  The Company and its
Subsidiaries possess all material certificates, authorizations and permits
issued by the appropriate federal, state or foreign regulatory authorities
necessary to conduct their respective businesses as currently conducted, except
when the failure to so possess such certificates, authorizations or permits
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, and neither the Company nor any such Subsidiary has
received any written notice of proceedings relating to the revocation or
modification of any such material certificate, authorization or permit.

 

(o)                                    Tax Status.  The Company and each of its
Subsidiaries has made or filed all federal and state income and all other
material tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books reserves reasonably adequate for the
payment of all unpaid and unreported taxes or filed valid extensions) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on
its books reserves reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply. 
To the Company’s knowledge, there are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction.

 

(p)                                    Transactions With Affiliates.  Except as
set forth on Schedule 3(p), and other than (i) the grant or exercise of stock
options or any other equity securities offered pursuant to duly adopted stock or
incentive compensation plans as disclosed on Schedule 3(c) and (ii) employment
or indemnification agreements approved by the Board of Directors of the Company,
none of the officers, directors or employees of the Company is on the date
hereof a party to any transaction with the Company or any of its Subsidiaries
(other than for services as employees, officers and directors and reimbursement
for expenses incurred on behalf of the Company), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a material interest or is
an officer, director, trustee or general partner.

 

 

 

 

(q)                                    Application of Takeover Protections.  The
Company and its board of directors have taken or will take prior to the
Commencement Date all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Certificate of Incorporation or the laws of the state of its
incorporation, other than Section 203 of the General Corporation Law of the
State of Delaware, which is or could become applicable to the Purchaser as a
result of the transactions contemplated by this Agreement, including, without
limitation, the Company’s issuance of the Securities and the Purchaser’s
ownership of the Securities.

 

(r)                                     Registration Statement.  The Shelf
Registration Statement (as defined in Section 4(a) hereof) has been declared
effective by the SEC, and no stop order has been issued or is pending or, to the
knowledge of the Company, threatened by the SEC with respect thereto.  As of the
date hereof, the Company has a dollar amount of securities registered and unsold
under the Shelf Registration Statement, which is not less than the Available
Amount.

 

4.                                      COVENANTS.

 

(a)                                     Filing of Form 8-K and Prospectus
Supplement.  The Company agrees that it shall, within the time required under
the 1934 Act, file a Current Report on Form 8-K disclosing this Agreement and
the transaction contemplated hereby (the “Form 8-K”). The Company shall use its
reasonable best efforts to keep the existing shelf registration statement on
Form S-3 (File No. 333-237142) (the “Shelf Registration Statement”) effective
pursuant to Rule 415 promulgated under the 1933 Act and available for sales of
all Securities to the Purchaser until such time as (i) it no longer qualifies to
make sales under the Shelf Registration Statement (which shall be understood to
include the inability of the Company to immediately effectuate sales of
Securities to the Purchaser under the Shelf Registration Statement pursuant to
General Instruction I.B.1 of Form S-3), (ii) the date on which all the
Securities have been sold under this Agreement and no Available Amount remains
thereunder, or (iii) this Agreement has been terminated.  The Shelf Registration
Statement (including any amendments or supplements thereto and prospectuses or
prospectus supplements contained therein) shall not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading

 

(b)                                     Blue Sky. The Company shall take such
action, if any, as is reasonably necessary in order to obtain an exemption for
or to qualify (i) the initial sale of the Securities to the Purchaser under this
Agreement and (ii) any subsequent sale of the Securities by the Purchaser, in
each case, under applicable securities or “Blue Sky” laws of the states of the
United States in such states as is reasonably requested by the Purchaser from
time to time, and shall provide evidence of any such action so taken to the
Purchaser at its written request; provided, however, that the Company shall not
be obligated to file any general consent to service of process or to qualify as
a foreign corporation or as a dealer in securities in any jurisdiction in which
it is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.

 

(c)                                     Listing.  The Company shall promptly
secure the listing of all of the Securities upon each national securities
exchange and automated quotation system that requires an application by the
Company for listing, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and shall maintain such listing, so
long as any other shares of Common Stock shall be so listed.  The Company shall
use its reasonable best efforts to maintain the Common Stock’s listing on the
Principal Market.  Neither the Company nor any of its Subsidiaries shall take
any action that would be reasonably expected to result in the delisting or
suspension of the Common Stock on the Principal Market, unless the Common Stock
is immediately thereafter traded on the New York Stock Exchange, the NYSE
American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the
Nasdaq Capital Market.  The Company shall pay all fees and expenses in
connection with satisfying its obligations under this Section.

  

(d)                                    Due Diligence.  The Purchaser shall have
the right, from time to time as the Purchaser may reasonably request, to perform
reasonable due diligence on the Company during normal business hours and subject
to reasonable prior notice to the Company.  The Company and its officers and
employees shall provide information and reasonably cooperate with the Purchaser
in connection with any reasonable request by the Purchaser related to the
Purchaser’s due diligence of the Company, including, but not limited to, any
such request made by the Purchaser in connection with the Commencement;
provided, however, that at no time is the Company required to disclose material
nonpublic information to the Purchaser or breach any obligation of
confidentiality or non-disclosure to a third party or make any disclosure that
could cause a waiver of attorney-client privilege.  Except as may be required by
law, court order or governmental authority, each party hereto agrees not to
disclose any Confidential Information of the other party to any third party and
shall not use the Confidential Information of such other party for any purpose
other than in connection with, or in furtherance of, the transactions
contemplated hereby; provided, that to the extent such disclosure is required by
law, court order or governmental authority, the receiving party shall provide
the disclosing party with reasonable prior written notice of such disclosure and
make a reasonable effort to assist the disclosing party in obtaining a
protective order preventing or limiting the disclosure and/or requiring that the
Confidential Information so disclosed be used only for the purposes for which
the law, court order or governmental authority requires.  Each party hereto
acknowledges that the Confidential Information shall remain the property of the
disclosing party and agrees that it shall take all reasonable measures to
protect the secrecy of any Confidential Information disclosed by the other
party.

 

 

 

 

(e)                                     Selling Restrictions.  (i)  Except as
expressly set forth below, the Purchaser covenants that from and after the date
hereof through and including the termination of this Agreement (the “Restricted
Period”), neither the Purchaser nor any of its affiliates nor any entity managed
or controlled by the Purchaser (collectively, the “Restricted Persons” and each
of the foregoing is referred to herein as a “Restricted Person”) shall, directly
or indirectly, (x) engage in any Short Sales (as defined in Rule 200 promulgated
under Regulation SHO under the Exchange Act) involving the Company’s securities
or (y) grant any option to purchase, or acquire any right to dispose of or
otherwise dispose for value of, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for any shares of Common Stock,
or enter into any swap, hedge or other similar agreement that transfers, in
whole or in part, the economic risk of ownership of the Common Stock or
establishes a net short position with respect to the Common Stock.
Notwithstanding the foregoing, it is expressly understood and agreed that
nothing contained herein shall (without implication that the contrary would
otherwise be true) prohibit any Restricted Person during the Restricted Period
from:  (1) selling “long” (as defined under Rule 200 promulgated under
Regulation SHO) any shares of Common Stock; or (2) selling a number of shares of
Common Stock equal to (x) the number of shares of Common Stock that such
Restricted Person is or may be obligated to purchase under a pending Fixed
Request Amount and/or (y) the number of shares of Common Stock that such
Restricted Person may purchase under a pending Optional Purchase, but, in each
case, has not yet taken possession of so long as such Restricted Person (or a
broker-dealer of such Restricted Person, as applicable) delivers the Purchase
Shares purchased pursuant to such Fixed Request Amount and/or Optional Purchase
to the purchaser thereof or the applicable broker-dealer; provided, however,
such Restricted Person (or the applicable broker-dealer, as applicable) shall
not be required to so deliver any such shares of Common Stock subject to such
Fixed Request Amount or Optional Purchase, as the case may be, if (a) such Fixed
Request Amount or Optional Purchase, as the case may be, is terminated by mutual
agreement of the Company and the Purchaser and, as a result of such termination,
no such shares of Common Stock are delivered to the Purchaser under this
Agreement or (b) the Company otherwise fails to deliver such shares of Common
Stock to the Purchaser on the applicable Settlement Date upon the terms and
subject to the provisions of this Agreement.

 

(ii) In addition to the foregoing, in connection with any sale of Securities
(including any sale permitted by Section 4(e)(i) above), the Purchaser shall
comply in all respects with all applicable laws, rules, regulations and orders,
including, without limitation, the requirements of the Securities Act and the
Exchange Act.

  

5.                                      TRANSFER AGENT INSTRUCTIONS.

 

All of the Purchase Shares to be issued under this Agreement shall be issued
without any restrictive legend unless the Purchaser expressly consents
otherwise.  The Company shall issue irrevocable instructions to the Transfer
Agent, and any subsequent transfer agent, to issue Common Stock in the name of
the Purchaser for the Purchase Shares (the “Irrevocable Transfer Agent
Instructions”).  The Company warrants to the Purchaser that no instruction other
than the Irrevocable Transfer Agent Instructions referred to in this Section 5,
will be given by the Company to the Transfer Agent with respect to the Purchase
Shares and that the Purchase Shares shall otherwise be freely transferable on
the books and records of the Company as and to the extent provided in this
Agreement.

 

 

 

 

6.                                      CONDITIONS TO THE COMPANY’S RIGHT TO
COMMENCE SALES OF SHARES OF COMMON STOCK UNDER THIS AGREEMENT.

 

The right of the Company hereunder to commence sales of the Purchase Shares is
subject to the satisfaction of each of the following conditions on or before the
Commencement Date (the date that the Company may begin sales of Purchase
Shares):

 

(a)                                 The Purchaser shall have executed each of
the Transaction Documents and delivered the same to the Company;

 

(b)                                 The representations and warranties of the
Purchaser shall be true and correct as of the Commencement Date as though made
at that time (except for representations and warranties that speak as of a
specific date, which shall be true and correct in all material respects as of
such specific date) and the Purchaser shall have performed, satisfied and
complied in all material respects with the covenants and agreements required by
this Agreement to be performed, satisfied or complied with by the Purchaser at
or prior to the Commencement Date; and

 

(c)                                  The prospectus supplement covering the sale
of the Purchase Shares to the Purchaser pursuant to this Agreement (the
“Prospectus Supplement”) shall have been delivered to the Purchaser and no stop
order with respect to the registration statement covering the sale of shares to
the Purchaser shall be pending or threatened by the SEC.

 

7.                                      CONDITIONS TO THE PURCHASER’S OBLIGATION
TO MAKE PURCHASES OF SHARES OF COMMON STOCK.

 

The obligation of the Purchaser to buy Purchase Shares under this Agreement is
subject to the satisfaction of each of the following conditions on or before the
Commencement Date (the date that the Company may begin sales of Purchase Shares)
and once such conditions have been initially satisfied, there shall not be any
ongoing obligation to satisfy such conditions after the Commencement has
occurred:

 

(a)                                 The Company shall have executed each of the
Transaction Documents and delivered the same to the Purchaser;

 

(b)                                 [Intentionally Omitted.];

 

(c)                                  The Common Stock shall be authorized for
quotation on the Principal Market, trading in the Common Stock shall not have
been within the last 365 days suspended by the SEC or the Principal Market,
other than a general halt in trading in the Common Stock by the Principal Market
under halt codes indicating pending or released material news, and the
Securities shall be approved for listing upon the Principal Market;

 

(d)                                 The Purchaser shall have received the
opinion of the Company’s legal counsel dated as of the Commencement Date in
customary form and substance;

 

(e)                                  The representations and warranties of the
Company shall be true and correct in all material respects (except to the extent
that any of such representations and warranties is already qualified as to
materiality in Section 3 above, in which case, such representations and
warranties shall be true and correct without further qualification) as of the
date of this Agreement and as of the Commencement Date as though made at that
time (except for representations and warranties that speak as of a specific
date, which shall be true and correct in all material respects as of such
specific date) and the Company shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied with by the
Company at or prior to the Commencement Date.  The Purchaser shall have received
a certificate, executed by the CEO, President or CFO of the Company, dated as of
the Commencement Date, to the foregoing effect;

 

(f)                                   The Board of Directors of the Company or a
duly authorized committee thereof shall have adopted resolutions which shall be
in full force and effect without any amendment or supplement thereto as of the
Commencement Date;

 

 

 

 

(g)                                    As of the Commencement Date, the Company
shall have reserved out of its authorized and unissued Common Stock, solely for
the purpose of effecting future purchases of Purchase Shares hereunder,
41,917,130 shares of Common Stock;

 

(h)                                    The Irrevocable Transfer Agent
Instructions, in form acceptable to the Purchaser shall have been signed by the
Company and the Purchaser and shall have been delivered to the Transfer Agent;

 

(i)                                      The Company shall have delivered to the
Purchaser a certificate evidencing the incorporation and good standing of the
Company in the State of Delaware issued by the Secretary of State of the State
of Delaware as of a date within ten (10) Business Days of the Commencement Date;

 

(j)                                      [Intentionally Omitted.];

 

(k)                                     The Company shall have delivered to the
Purchaser a secretary’s certificate executed by the Secretary of the Company,
dated as of the Commencement Date;

 

(l)                                      The Shelf Registration Statement shall
have been declared effective under the 1933 Act by the SEC and no stop order
with respect thereto shall be pending or threatened by the SEC.  The Company
shall have prepared and delivered to the Purchaser a final and complete form of
Prospectus Supplement, dated and current as of the Commencement Date, to be used
in connection with any issuances of any Purchase Shares to the Purchaser, and to
be filed by the Company within one (1) Business Day after the Commencement Date
pursuant to Rule 424(b).  The Company shall have made all filings under all
applicable federal and state securities laws necessary to consummate the
issuance of the Purchase Shares pursuant to this Agreement in compliance with
such laws;

 

(m)                                     No Event of Default has occurred and is
continuing, or any event which, after notice and/or lapse of time, would become
an Event of Default has occurred;

 

(n)                                     On or prior to the Commencement Date,
the Company shall  take all necessary action, if any, and such actions as
reasonably requested by the Purchaser, in order to render inapplicable any
control share acquisition, business combination, stockholder rights plan or
poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Certificate of Incorporation or the
laws of the state of its incorporation, other than Section 203 of the Delaware
General Corporation Law, that is or could become applicable to the Purchaser as
a result of the transactions contemplated by this Agreement, including, without
limitation, the Company’s issuance of the Securities and the Purchaser’s
ownership of the Securities; and

 

(o)                                    The Company shall have provided the
Purchaser with the information reasonably requested by the Purchaser in
connection with its due diligence requests made prior to, or in connection with,
the Commencement, in accordance with the terms of Section 4(f) hereof.

 

8.                                      INDEMNIFICATION.

 

(a)                                    Indemnification by the Company. The
Company shall indemnify and hold harmless the Purchaser, each of its directors,
officers, partners, employees, investment managers, investment advisors, agents,
representatives and affiliates, and each Person, if any, who controls the
Purchaser within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act from and against all losses, claims, damages,
liabilities and expenses (including reasonable and documented costs of defense
and investigation and all reasonable and documented attorneys’ fees) to which
the Purchaser and each such other Person may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities and expenses arise out of or are based upon (i) any violation by the
Company of United States federal or state securities laws in connection with the
transactions contemplated by this Agreement by the Company or any of its
Subsidiaries, affiliates, officers, directors or employees, (ii) any untrue
statement or alleged untrue statement of a material fact contained, or
incorporated by reference, in the Shelf Registration Statement or any amendment
thereto or any omission or alleged omission to state therein, or in any document
incorporated by reference therein, a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (iii) any untrue
statement or alleged untrue statement of a material fact contained, or
incorporated by reference, in any “issuer free writing prospectus” (as defined
in Rule 433 under the Securities Act), or in any amendment thereof or supplement
thereto, in each case in connection with the transactions contemplated by this
Agreement, or the omission or alleged omission to state therein any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which the statements therein were made, not
misleading; provided, however, that (A) the Company shall not be liable under
this Section 8(a) to the extent that such loss, claim, damage, liability or
expense resulted directly and solely from any such acts or failures to act,
undertaken or omitted to be taken by the Purchaser or such Person through its
bad faith or willful misconduct, (B) the foregoing indemnity shall not apply to
any loss, claim, damage, liability or expense to the extent, but only to the
extent, arising out of or based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
the Purchaser expressly for use in the Form 8-K or any prospectus supplement or
free writing prospectus, or any amendment thereof or supplement thereto,
including, without limitation, the information set forth on Exhibit C hereto for
inclusion in the Prospectus Supplement in the sections captioned “The
Transaction” and “Plan of Distribution”, and (C) with respect to the prospectus,
the foregoing indemnity shall not inure to the benefit of the Purchaser or any
such Person from whom the Person asserting any loss, claim, damage, liability or
expense purchased Common Stock, if copies of all prospectus supplements required
to be filed pursuant to Section 7(l), together with the base prospectus, were
timely delivered or made available to the Purchaser pursuant hereto and a copy
of the base prospectus, together with a prospectus supplement (as applicable),
was not sent or given by or on behalf of the Purchaser or any such Person to
such Person, if required by law to have been delivered, at or prior to the
written confirmation of the sale of the Common Stock to such Person, and if
delivery of the base prospectus, together with a prospectus supplement (as
applicable), would have cured the defect giving rise to such loss, claim,
damage, liability or expense.

 

 

 

 

The Company shall reimburse the Purchaser and each such director, officer,
partner, employee, agent, representative and affiliate or controlling Person
promptly upon demand (with accompanying presentation of documentary evidence)
for all legal and other costs and expenses reasonably incurred by the Purchaser
or such indemnified Persons in investigating, defending against, or preparing to
defend against any such claim, action, suit or proceeding with respect to which
it is entitled to indemnification.

 

(b)                                     Indemnification by the Purchaser.  The
Purchaser shall indemnify and hold harmless the Company, each of its directors,
officers, partners, employees, agents, representatives and affiliates, and each
Person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act from and against all losses,
claims, damages, liabilities and expenses (including reasonable and documented
costs of defense and investigation and all reasonable and documented attorneys’
fees) to which the Company and each such other Person may become subject, under
the Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities and expenses arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Form 8-K, the Shelf
Registration Statement or any prospectus supplement or free writing prospectus,
or any amendment thereof or supplement thereto, or the omission or alleged
omission to state therein any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which the statements therein were made, not misleading, in each case, to the
extent, and only to the extent, that such untrue statement, alleged untrue
statement, omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
the Purchaser expressly for use in the Form 8-K or any prospectus supplement or
free writing prospectus, or any amendment thereof or supplement thereto,
including, without limitation, the information set forth on Exhibit C hereto for
inclusion in the Prospectus Supplement in the sections captioned “The
Transaction” and “Plan of Distribution” or updated from time to time in writing
by the Purchaser and furnished to the Company by the Purchaser expressly for
inclusion in the Form 8-K, the Shelf Registration Statement a prospectus or any
new registration statement or from the failure of the Purchaser to deliver or to
cause to be delivered the prospectus made available by the Company, if such
prospectus was timely made available by the Company pursuant to this Agreement.

 

The Purchaser shall reimburse the Company and each such director, officer,
partner, employee, agent, representative and affiliate or controlling Person
promptly upon demand (with accompanying presentation of documentary evidence)
for all legal and other costs and expenses reasonably incurred by the Company or
such indemnified Persons in investigating, defending against, or preparing to
defend against any such claim, action, suit or proceeding with respect to which
it is entitled to indemnification.

 

 

 

 

(c)                                      Promptly after a Person receives notice
of a claim or the commencement of an action for which the Person intends to seek
indemnification under Section 8(a) or (b), the Person will notify the
indemnifying party in writing of the claim or commencement of the action, suit
or proceeding; provided, however, that failure to notify the indemnifying party
will not relieve the indemnifying party from liability under Section 8(a) or
(b), except to the extent it has been materially prejudiced by the failure to
give notice.  The indemnifying party will be entitled to participate in the
defense of any claim, action, suit or proceeding as to which indemnification is
being sought, and if the indemnifying party acknowledges in writing the
obligation to indemnify the party against whom the claim or action is brought,
the indemnifying party may (but will not be required to) assume the defense
against the claim, action, suit or proceeding with counsel satisfactory to it. 
After an indemnifying party notifies an indemnified party that the indemnifying
party wishes to assume the defense of a claim, action, suit or proceeding, the
indemnifying party will not be liable for any legal or other expenses incurred
by the indemnified party in connection with the defense against the claim,
action, suit or proceeding except that if, in the opinion of counsel to the
indemnifying party, one or more of the indemnified parties should be separately
represented in connection with a claim, action, suit or proceeding, the
indemnifying party will pay the reasonable fees and expenses of one separate
counsel for the indemnified parties.  Each indemnified party, as a condition to
receiving indemnification as provided in Section 8(a) or (b), will cooperate in
all reasonable respects with the indemnifying party in the defense of any action
or claim as to which indemnification is sought.  No indemnifying party will be
liable for any settlement of any action effected without its prior written
consent.  Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested (by written notice provided in accordance with
Section 11(f)) an indemnifying party to reimburse the indemnified party for fees
and expenses of counsel, such indemnifying party agrees that it shall be liable
for any settlement of the nature contemplated hereby effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received written notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.  No
indemnifying party will, without the prior written consent of the indemnified
party, effect any settlement of a pending or threatened action with respect to
which an indemnified party is, or is informed that it may be, made a party and
for which it would be entitled to indemnification, unless the settlement
includes an unconditional release of the indemnified party from all liability
and claims which are the subject matter of the pending or threatened action.

 

If for any reason the indemnification provided for in this Agreement is not
available to, or is not sufficient to hold harmless, an indemnified party in
respect of any loss or liability referred to in Section 8(a) or (b) as to which
such indemnified party is entitled to indemnification thereunder, each
indemnifying party shall, in lieu of indemnifying the indemnified party,
contribute to the amount paid or payable by the indemnified party as a result of
such loss or liability, (i) in the proportion which is appropriate to reflect
the relative benefits received by the indemnifying party, on the one hand, and
by the indemnified party, on the other hand, from the sale of Securities which
is the subject of the claim, action, suit or proceeding which resulted in the
loss or liability or (ii) if the allocation provided by clause (i) is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above, but also the
relative fault of the indemnifying party, on the one hand, and the indemnified
party, on the other hand, with respect to the statements or omissions which are
the subject of the claim, action, suit or proceeding that resulted in the loss
or liability, as well as any other relevant equitable considerations.

 

The remedies provided for in Section 8 are not exclusive and shall not limit any
rights or remedies which may otherwise be available to any indemnified Person at
law or in equity.

 

9.                                      EVENTS OF DEFAULT.

 

An “Event of Default” shall be deemed to have occurred at any time as any of the
following events occurs:

 

(a)                                    during any period in which the
effectiveness of any registration statement is required to be maintained
pursuant to the terms of this Agreement, the effectiveness of such registration
statement lapses for any reason (including, without limitation, the issuance of
a stop order) or is unavailable to the Company for the sale of all of the
Purchase Shares to the Purchaser, and such lapse or unavailability continues for
a period of ten (10) consecutive Business Days or for more than an aggregate of
thirty (30) Business Days in any 365-day period, which is not in connection with
a post-effective amendment to any such registration statement or the filing of a
new registration statement; provided, however, that in connection with any
post-effective amendment to such registration statement or filing of a new
registration statement that is required to be declared effective by the SEC,
such lapse or unavailability may continue for a period of no more than thirty
(30) consecutive Business Days, which such period shall be extended for an
additional thirty (30) Business Days if the Company receives a comment letter
from the SEC in connection therewith;

 

 

 

 

(b)                                 the suspension from trading or failure of
the Common Stock to be listed on a Principal Market for a period of three
(3) consecutive Business Days;

 

(c)                                  the delisting of the Common Stock from the
Principal Market, and the Common Stock is not immediately thereafter trading on
the New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market,
the Nasdaq Global Market, or the Nasdaq Capital Market;

 

(d)                                 the failure for any reason by the Transfer
Agent to issue Purchase Shares to the Purchaser after the applicable Settlement
Date that the Purchaser is entitled to receive, and such failure continues for
five (5) Business Days;

 

(e)                                  the Company’s breach of any representation
or warranty (as of the dates made), covenant or other term or condition under
any Transaction Document if such breach could reasonably be expected to have a
Material Adverse Effect and except, in the case of a breach of a covenant which
is reasonably curable, only if such breach continues uncured for a period of at
least five (5) Business Days;

 

(f)                                   if any Person commences a proceeding
against the Company pursuant to or within the meaning of any Bankruptcy Law;

 

(g)                                  if the Company pursuant to or within the
meaning of any Bankruptcy Law; (A) commences a voluntary case, (B) consents to
the entry of an order for relief against it in an involuntary case, (C) consents
to the appointment of a Custodian of it or for all or substantially all of its
property, (D) makes a general assignment for the benefit of its creditors or
(E) becomes insolvent;

 

(h)                                   a court of competent jurisdiction enters
an order or decree under any Bankruptcy Law that (A) is for relief against the
Company in an involuntary case, (B) appoints a Custodian of the Company or for
all or substantially all of its property, or (C) orders the liquidation of the
Company or any Subsidiary; or

 

(i)                                    if at any time after the Commencement
Date, the Exchange Cap is reached unless and until stockholder approval has been
obtained pursuant to Section 1(h) hereof.  The Exchange Cap shall be deemed to
be reached at such time if, upon submission of a Purchase Notice under this
Agreement, the issuance of such shares of Common Stock would exceed the number
of shares of Common Stock which the Company may issue under this Agreement
without breaching the Company’s obligations under the rules or regulations of
the Principal Market.

 

In addition to any other rights and remedies under applicable law and this
Agreement, including the Purchaser termination rights under
Section 11(k) hereof, so long as an Event of Default has occurred and is
continuing, or if any event which, after notice and/or lapse of time, would
become an Event of Default, has occurred and is continuing, or so long as the
VWAP is below the Floor Price, the Company may not require and the Purchaser
shall not be obligated to purchase any shares of Common Stock under this
Agreement.  If pursuant to or within the meaning of any Bankruptcy Law, the
Company commences a voluntary case or any Person commences a proceeding against
the Company, a Custodian is appointed for the Company or for all or
substantially all of its property, or the Company makes a general assignment for
the benefit of its creditors, (any of which would be an Event of Default as
described in Sections 9(f), 9(g) and 9(h) hereof) this Agreement shall
automatically terminate without any liability or payment to the Company without
further action or notice by any Person.  No such termination of this Agreement
under Section 11(k)(i) shall affect the Company’s or the Purchaser’s obligations
under this Agreement with respect to pending purchases and the Company and the
Purchaser shall complete their respective obligations with respect to any
pending purchases under this Agreement.

 

 

 

 

10.                                  CERTAIN DEFINED TERMS.

 

For purposes of this Agreement, the following terms shall have the following
meanings:

 

(a)                                 “1933 Act” means the Securities Act of 1933,
as amended.

 

(b)                                 “Available Amount” means initially Two
Hundred and Fifty Million Dollars ($250,000,000) in the aggregate which amount
shall be reduced by the Purchase Amount each time the Purchaser purchases shares
of Common Stock pursuant to Section 1 hereof.

 

(c)                                  “Bankruptcy Law” means Title 11, U.S. Code,
or any similar federal or state law for the relief of debtors.

 

(d)                                 “Business Day” means any day on which the
Principal Market is open for trading during normal trading hours (i.e., 9:30
a.m. to 4:00 p.m. Eastern Time), including any day on which the Principal Market
is open for trading for a period of time less than the customary time.

 

(e)                                  “Closing Sale Price” means the last closing
trade price for the Common Stock on the Principal Market as reported by the
Principal Market.

 

(f)                                   “Confidential Information” means any
information disclosed by either party to the other party, either directly or
indirectly, in writing, orally or by inspection of tangible objects (including,
without limitation, documents, prototypes, samples, protocols, development
plans, commercialization plans, compounds, formulations, preclinical study and
clinical trial results, plant and equipment), which is designated as
“Confidential,” “Proprietary” or some similar designation. Information
communicated orally shall be considered Confidential Information if such
information is expressly identified as Confidential Information at the time of
such initial disclosure and confirmed in writing as being Confidential
Information within ten (10) Business Days after the initial disclosure.
Confidential Information may also include information disclosed to a disclosing
party by third parties. Confidential Information shall not, however, include any
information which (i) was publicly known and made generally available in the
public domain prior to the time of disclosure by the disclosing party;
(ii) becomes publicly known and made generally available after disclosure by the
disclosing party to the receiving party through no action or inaction of the
receiving party or its affiliates; (iii) is already in the possession of the
receiving party at the time of disclosure by the disclosing party as shown by
the receiving party’s files and records immediately prior to the time of
disclosure; (iv) is obtained by the receiving party from a third party without a
breach of such third party’s obligations of confidentiality; or (v) is
independently developed by the receiving party without use of or reference to
the disclosing party’s Confidential Information, as shown by documents and other
competent evidence in the receiving party’s possession.

 

(g)                                  “Custodian” means any receiver, trustee,
assignee, liquidator or similar official under any Bankruptcy Law.

 

(h)                                  “Facility Term” means the date that is
thirty-six (36) months from the Commencement Date.

 

(i)                                   “Optional Purchase” means, with respect to
any Purchase Date, the Company may in its sole discretion grant to the Purchaser
the right to exercise, from time to time (but not more than once on any Pricing
Date), all or any portion of the Available Amount. The maximum amount of the
Optional Purchase shall be set forth in the Purchase Notice. Any unexercised
portion of the Optional Purchase expires at the end of the Purchase Date.

 

(j)                                   “Person” means an individual or entity
including any limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.

 

 

(k)                                  “Principal Market” means the Nasdaq Capital
Market; provided however, that in the event the Company’s Common Stock is ever
listed or traded on the New York Stock Exchange, the NYSE American, the Nasdaq
Global Market, or the Nasdaq Global Select Market, then the “Principal Market”
means such other market or exchange on which the Company’s Common Stock is then
listed or traded.

 

 

 

 

(l)                                  “Purchase Amount” means, with respect to
any particular Regular Purchase made hereunder, (i) the portion of the Available
Amount that the Purchaser is required to purchase, up to 650,000 Purchase Shares
on each Purchase Date, pursuant to Section 1 hereof and (ii) the amount of any
Optional Purchase purchased by the Purchaser, in each case as set forth in a
valid Purchase Notice which the Company delivers to the Purchaser and as
confirmed in a Purchaser Confirmation; provided, however, in no event shall the
Purchase Amount exceed $5,000,000 on a Purchase Date, unless the Purchaser and
the Company mutually agree.  

 

(m)                                 “Purchase Date” means the Business Day of
receipt by the Purchaser of a valid Purchase Notice that the Purchaser is to buy
Purchase Shares pursuant to Section 1(b) hereof.

 

(n)                                 “Purchase Notice” means an irrevocable
written notice, substantially in the form attached hereto as Exhibit A, from the
Company to the Purchaser directing the Purchaser to buy Purchase Shares pursuant
to Section 1(b). The Purchase Notice shall specify (i) the Fixed Request Amount
(which shall not exceed 650,000 shares unless otherwise mutually agreed by the
Purchaser and the Company), (ii) the Purchase Date, and (iii) the amount of
Optional Purchase, if any. 

 

(o)                                 “Purchase Price” means 97.5% of the VWAP on
the Purchase Date, calculated at the end of the Purchase Date.

 

(q)                                 “SEC” means the U.S. Securities and Exchange
Commission.

 

(r)                                 “Transfer Agent” means the transfer agent of
the Company as set forth in Section 11(f) hereof or such other person who is
then serving as the transfer agent for the Company in respect of the Common
Stock.

 

(s)                                 “VWAP” means the daily volume weighted
average price (based on a trading day from 9:30 a.m. to 4:00 p.m. eastern time)
per share of the Common Stock on the Principal Market as reported by Bloomberg
Financial LP using the AQR function.

 

11.                               MISCELLANEOUS.

 

(a)                                 Governing Law; Jurisdiction; Jury Trial. 
The corporate laws of the State of Delaware shall govern all issues concerning
the relative rights of the Company and its stockholders.  All other questions
concerning the construction, validity, enforcement and interpretation of this
Agreement and the other Transaction Documents shall be governed by the internal
laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New York.  Each party hereby irrevocably submits to the
non-exclusive jurisdiction of the state and federal courts sitting in the City
of New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or under the other Transaction Documents or in connection herewith or therewith,
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper.  Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law.  EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(b)                                 Counterparts.  This Agreement may be
executed in two or more identical counterparts, all of which shall be considered
one and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party; provided that a
facsimile or pdf (or other electronic reproduction) signature shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile
or PDF (or other electronic reproduction) signature.

 

 

 

  

(c)                                  Headings.  The headings of this Agreement
are for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.

 

(d)                                 Severability.  If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.

 

(e)                                  Entire Agreement.  This Agreement supersede
all other prior oral or written agreements between the Purchaser, the Company,
their affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement, the other Transaction Documents and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Purchaser
makes any representation, warranty, covenant or undertaking with respect to such
matters.  Each of the Company and the Purchaser acknowledges and agrees that it
has not relied on, in any manner whatsoever, any representations or statements,
written or oral, other than as expressly set forth in this Agreement.

 

(f)                                   Notices.  Any notices, consents or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); (iii) upon receipt, when sent
by electronic message (provided the recipient responds to the message and
confirmation of both electronic messages are kept on file by the sending party);
or (iv) one (1) Business Day after timely deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:

 

If to the Company:

 

Sorrento Therapeutics, Inc.

4955 Directors Place

San Diego, CA 92121

Attention: Chief Executive Officer and General Counsel

 

 

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

 

Paul Hastings LLP

1117 S. California Avenue

Palo Alto, CA 94304-1106

Attention: Jeffrey T. Hartlin and Samantha H. Eldredge

  

If to the Purchaser:

 

Arnaki Ltd.
Rodus Building, 4th floor
Road Reef, P.O. Box 756 Road Town
Tortola, VG1110, British Virgin Islands
Attention: Ariel Samuel Belilo

 

 

 

 

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

 

Sullivan & Worcester LLP
1633 Broadway
New York, NY 10019
Attention: David E. Danovitch
 

If to the Transfer Agent:

 

Philadelphia Stock Transfer, Inc.
2320 Haverford Road
Suite 230
Ardmore, PA 19003

Attention: Bob Winterle

 

or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party at least one (1) Business Day prior to the effectiveness of
such change.  Written confirmation of receipt (A) given by the recipient of such
notice, consent or other communication, (B) mechanically or electronically
generated by the sender’s facsimile machine containing the time, date, and
recipient facsimile number, (C) electronically generated by the sender’s
electronic mail containing the time, date and recipient email address or
(D) provided by a nationally recognized overnight delivery service, shall be
rebuttable evidence of receipt in accordance with clause (i), (ii), (iii) or
(iv) above, respectively.

 

(g)                                    Successors and Assigns.  This Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns.  The Company shall not assign this Agreement
or any rights or obligations hereunder without the prior written consent of the
Purchaser, including by merger or consolidation; provided, however, that any
transaction, whether by merger, reorganization, restructuring, consolidation,
financing or otherwise, whereby the Company remains the surviving entity
immediately after such transaction shall not be deemed a succession or
assignment.  The Purchaser may not assign its rights or obligations under this
Agreement.

 

(h)                                    No Third-Party Beneficiaries.  This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.

 

(i)                                     Publicity.  The Purchaser shall have the
right to approve before issuance any press release, SEC filing or any other
public disclosure made by or on behalf of the Company whatsoever with respect
to, in any manner, the Purchaser, its purchases hereunder or any aspect of this
Agreement or the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of the Purchaser, to make
any press release or other public disclosure (including any filings with the
SEC) with respect to such transactions as is required by applicable law and
regulations so long as the Company and its counsel consult with the Purchaser in
connection with any such press release or other public disclosure at least one
(1) Business Day prior to its release; provided, however, that the Company’s
obligations pursuant to this Section 11(i) shall not apply if the material
provisions of such press release, SEC filing, or other public disclosure
previously has been publicly disclosed by the Company in accordance with this
Section 11(i).  The Purchaser must be provided with a copy thereof at least one
(1) Business Day prior to any release or use by the Company thereof.

 

(j)                                    Further Assurances.  Each party shall do
and perform, or cause to be done and performed, all such further acts and
things, and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.

 

(k)                                  Termination.  This Agreement may be
terminated only as follows:

 

(i)                                     By the Purchaser any time an Event of
Default exists without any liability or payment to the Company.  However, if
pursuant to or within the meaning of any Bankruptcy Law, the Company commences a
voluntary case or any Person commences a proceeding against the Company, a
Custodian is appointed for the Company or for all or substantially all of its
property, or the Company makes a general assignment for the benefit of its
creditors, (any of which would be an Event of Default as described in Sections
9(f), 9(g) and 9(h) hereof) this Agreement shall automatically terminate without
any liability or payment to the Company without further action or notice by any
Person.  No such termination of this Agreement under this Section 11(k)(i) shall
affect the Company’s or the Purchaser’s obligations under this Agreement with
respect to pending purchases and the Company and the Purchaser shall complete
their respective obligations with respect to any pending purchases under this
Agreement.

 

 

 

 

(ii)                                  In the event that the Commencement shall
not have occurred the Company shall have the option to terminate this Agreement
for any reason or for no reason without any liability whatsoever of either party
to the other party under this Agreement.

 

(iii)                                 In the event that the Commencement shall
not have occurred within ten (10) Business Days of the date of this Agreement,
due to the failure to satisfy any of the conditions set forth in Sections 6 and
7 above with respect to the Commencement, either party shall have the option to
terminate this Agreement at the close of business on such date or thereafter
without liability of either party to any other party; provided, however, that
the right to terminate this Agreement under this Section 11(k)(iii) shall not be
available to either party if such failure to satisfy any of the conditions set
forth in Sections 6 and 7 is the result of a breach of this Agreement by such
party or the failure of any representation or warranty of such party included in
this Agreement to be true and correct in all material respects.

 

(iv)                                At any time after the Commencement Date, the
Company shall have the option to terminate this Agreement for any reason or for
no reason by delivering notice (a “Company Termination Notice”) to the Purchaser
electing to terminate this Agreement without any liability whatsoever of either
party to the other party under this Agreement.  The Company Termination Notice
shall not be effective until one (1) Business Day after it has been received by
the Purchaser.

 

(v)                                 This Agreement shall automatically terminate
on the date that the Company sells and the Purchaser purchases the full
Available Amount as provided herein, without any action or notice on the part of
any party and without any liability whatsoever of any party to any other party
under this Agreement.

 

(vi)                                If by the conclusion of the Facility Term
for any reason or for no reason the full Available Amount under this Agreement
has not been purchased as provided for in Section 1 of this Agreement, this
Agreement shall automatically terminate on the date that is 36 months from the
Commencement Date, without any action or notice on the part of any party and
without any liability whatsoever of any party to any other party under this
Agreement.

 

Except as set forth in Sections 11(k)(i) (in respect of an Event of Default
under Sections 9(f), 9(g) and 9(h)), 11(k)(v) and 11(k)(vi), any termination of
this Agreement pursuant to this Section 11(k) shall be effected by written
notice from the Company to the Purchaser, or the Purchaser to the Company, as
the case may be, setting forth the basis for the termination hereof.  The
representations and warranties of the Company and the Purchaser contained in
Sections 2, 3 and 5 hereof, the indemnification provisions set forth in
Section 8 hereof and the agreements and covenants set forth in Sections 4(e) and
11, shall survive the Commencement and any termination of this Agreement.  No
termination of this Agreement shall affect the Company’s or the Purchaser’s
rights or obligations under this Agreement with respect to pending purchases and
the Company and the Purchaser shall complete their respective obligations with
respect to any pending purchases under this Agreement.

 

(l)                                     No Financial Advisor, Placement Agent,
Broker or Finder.  The Company represents and warrants to the Purchaser that it
has not engaged any financial advisor, placement agent, broker or finder in
connection with the transactions contemplated hereby.  The Purchaser represents
and warrants to the Company that it has not engaged any financial advisor,
placement agent, broker or finder in connection with the transactions
contemplated hereby.  Each party shall be responsible for the payment of any
fees or commissions, if any, of any financial advisor, placement agent, broker
or finder engaged by such party relating to or arising out of the transactions
contemplated hereby.  Each party shall pay, and hold the other party harmless
against, any liability, loss or expense (including, without limitation,
attorneys’ fees and out of pocket expenses) arising in connection with any such
claim.

 

 

 

 

(m)                                No Strict Construction.  The language used in
this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied
against any party.

 

(n)                                 Failure or Indulgence Not Waiver.  No
failure or delay in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege.

 

 

[Signature Page Follows]

 

 

 

 

IN WITNESS WHEREOF, the Purchaser and the Company have caused this Common Stock
Purchase Agreement to be duly executed as of the date first written above.

 

  THE COMPANY:       SORRENTO THERAPEUTICS, INC.       By: /s/ Henry Ji, Ph.D.  
Name: Henry Ji, Ph.D.   Title: Chairman of the Board, President and Chief
Executive Officer           PURCHASER:       ARNAKI LTD.       By: /s/ Ariel
Samuel Belilo   Name: Ariel Samuel Belilo   Title: Director