Exhibit 10.2

EXECUTION VERSION

 

STOCK PURCHASE AGREEMENT

by and among

TNK Therapeutics, Inc.,

BDL Products, Inc.

The Stockholders of BDL Products, Inc.,

Richard Junghans, M.D., PH.D., as the Stockholders’ Representative

And, solely with respect to Sections 1.6 and 1.7 and Article XII,

Sorrento Therapeutics, Inc.

 

Dated as of August 7, 2015

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

 

 

 

 

Page

 

ARTICLE I

 

DESCRIPTION OF TRANSACTION

 

1

 

 

 

 

 

Section 1.1

 

Agreement to Purchase and Sell

 

1

 

 

 

 

 

Section 1.2

 

Payment of Closing Consideration

 

1

 

 

 

 

 

Section 1.3

 

Net Debt Adjustment

 

1

 

 

 

 

 

Section 1.4

 

Issuance of Non-Escrow Shares

 

3

 

 

 

 

 

Section 1.5

 

Escrow

 

4

 

 

 

 

 

Section 1.6

 

Purchase of Purchaser Stock Consideration by Sorrento

 

4

 

 

 

 

 

Section 1.7

 

Definitions

 

5

 

 

 

 

 

ARTICLE II

 

Representations and Warranties of the COMPANY AND THE STOCKHOLDERS

 

5

 

 

 

 

 

Section 2.1

 

Organization and Good Standing

 

5

 

 

 

 

 

Section 2.2

 

Capitalization

 

6

 

 

 

 

 

Section 2.3

 

Subsidiaries

 

7

 

 

 

 

 

Section 2.4

 

Authority, No Conflict; Required Filings and Consents

 

7

 

 

 

 

 

Section 2.5

 

Company Financial Statements; No Undisclosed Liabilities

 

8

 

 

 

 

 

Section 2.6

 

No Company Material Adverse Effect

 

8

 

 

 

 

 

Section 2.7

 

Absence of Certain Changes or Events

 

8

 

 

 

 

 

Section 2.8

 

Taxes

 

10

 

 

 

 

 

Section 2.9

 

Real Property

 

12

 

 

 

 

 

Section 2.10

 

Personal Property

 

12

 

 

 

 

 

Section 2.11

 

Intellectual Property

 

12

 

 

 

 

 

Section 2.12

 

Agreements

 

14

 

 

 

 

 

Section 2.13

 

Litigation

 

17

 

 

 

 

 

Section 2.14

 

Employee Matters

 

17

 

 

 

 

 

Section 2.15

 

Compliance With Laws; Governmental Authorizations

 

18

 

 

 

 

 

Section 2.16

 

Brokerage and Transaction Bonuses

 

19

 

 

 

 

 

Section 2.17

 

Title to and Sufficiency of Assets

 

19

 

 

 

 

 

Section 2.18

 

Inventory

 

19

 

 

 

 

 

Section 2.19

 

Bank Accounts

 

19

 

 

 

 

 

Section 2.20

 

Product and Service Warranties

 

19

 

 

 

 

 

Section 2.21

 

Related Party Transactions

 

20

 

 

 

 

 

Section 2.22

 

Personal Information and Privacy

 

20

 

 

 

 

 

Section 2.23

 

Manufacturing

 

21

-i-

--------------------------------------------------------------------------------

TABLE OF CONTENTS

(continued)

 

 

 

 

 

Page

 

Section 2.24

 

Regulatory Filings

 

21

 

 

 

 

 

Section 2.25

 

Product Candidates

 

21

 

 

 

 

 

Section 2.26

 

Full Disclosure

 

22

 

 

 

 

 

ARTICLE III

 

Representations and Warranties of Each STOCKholder

 

22

 

 

 

 

 

Section 3.1

 

Authority, No Conflict; Required Filings and Consents

 

22

 

 

 

 

 

Section 3.2

 

Ownership; Title to Shares

 

22

 

 

 

 

 

Section 3.3

 

Litigation

 

23

 

 

 

 

 

Section 3.4

 

Brokerage and Transaction Bonuses

 

23

 

 

 

 

 

Section 3.5

 

Restricted Securities

 

23

 

 

 

 

 

Section 3.6

 

No Public Market

 

23

 

 

 

 

 

Section 3.7

 

Accredited Investor

 

23

 

 

 

 

 

Section 3.8

 

Investment Experience

 

24

 

 

 

 

 

Section 3.9

 

Foreign Investors

 

24

 

 

 

 

 

Section 3.10

 

No General Solicitation

 

24

 

 

 

 

 

Section 3.11

 

Residence

 

24

 

 

 

 

 

Section 3.12

 

Legends

 

24

 

 

 

 

 

Section 3.13

 

Investment Purpose; Disclosure of Information

 

24

 

 

 

 

 

Section 3.14

 

Assignment

 

24

 

 

 

 

 

ARTICLE IV

 

Representations and Warranties of the Purchaser

 

25

 

 

 

 

 

Section 4.1

 

Organization and Good Standing

 

25

 

 

 

 

 

Section 4.2

 

Authority, No Conflict; Required Filings and Consents

 

25

 

 

 

 

 

ARTICLE V

 

Certain Covenants and Agreements

 

26

 

 

 

 

 

Section 5.1

 

Access and Investigation

 

26

 

 

 

 

 

Section 5.2

 

Operation of the Company’s Business

 

26

 

 

 

 

 

Section 5.3

 

Notification

 

28

 

 

 

 

 

Section 5.4

 

No Negotiation

 

29

 

 

 

 

 

Section 5.5

 

Related Party Transactions

 

30

 

 

 

 

 

Section 5.6

 

Public Announcements

 

30

 

 

 

 

 

Section 5.7

 

Reasonable Efforts; Further Assurances; Cooperation

 

30

 

 

 

 

 

Section 5.8

 

Tax Matters

 

30

 

 

 

 

 

Section 5.9

 

Accounts and Notes Receivable

 

31

 

 

 

 

 

Section 5.10

 

Cooperation with Financial Reporting

 

31

 

 

 

 

 

-ii-

--------------------------------------------------------------------------------

TABLE OF CONTENTS

(continued)

 

 

 

 

 

Page

 

Section 5.11

 

Release

 

31

 

 

 

 

 

Section 5.12

 

Termination of Certain Agreements

 

32

 

 

 

 

 

Section 5.13

 

Casualty

 

32

 

 

 

 

 

Section 5.14

 

Restrictions on Transfers of Purchaser Common Stock

 

32

 

 

 

 

 

ARTICLE VI

 

Conditions Precedent to the Obligations of the Purchaser

 

32

 

 

 

 

 

Section 6.1

 

Accuracy of Representations

 

32

 

 

 

 

 

Section 6.2

 

Performance of Covenants

 

33

 

 

 

 

 

Section 6.3

 

Company Compliance Certificate

 

33

 

 

 

 

 

Section 6.4

 

Consents

 

33

 

 

 

 

 

Section 6.5

 

Secretary’s Certificate

 

33

 

 

 

 

 

Section 6.6

 

Ancillary Agreements and Deliveries

 

33

 

 

 

 

 

Section 6.7

 

Release of Liens

 

34

 

 

 

 

 

Section 6.8

 

Certain Covenants and Agreements

 

34

 

 

 

 

 

Section 6.9

 

No Material Adverse Effect

 

34

 

 

 

 

 

Section 6.10

 

No Restraints

 

34

 

 

 

 

 

Section 6.11

 

No Litigation

 

34

 

 

 

 

 

Section 6.12

 

Restrictive Agreement

 

34

 

 

 

 

 

Section 6.13

 

Due Diligence Review

 

34

 

 

 

 

 

Section 6.14

 

Purchaser Board Approval

 

34

 

 

 

 

 

Section 6.15

 

Company Rights

 

35

 

 

 

 

 

Section 6.16

 

Termination of Specified Agreements

 

35

 

 

 

 

 

Section 6.17

 

No Indebtedness

 

35

 

 

 

 

 

Section 6.18

 

CARgenix Closing

 

35

 

 

 

 

 

ARTICLE VII

 

Conditions Precedent to Obligations of the Company and the STOCKholders

 

35

 

 

 

 

 

Section 7.1

 

Accuracy of Representations

 

35

 

 

 

 

 

Section 7.2

 

Performance of Covenants

 

35

 

 

 

 

 

Section 7.3

 

Purchaser Compliance Certificate

 

35

 

 

 

 

 

Section 7.4

 

Ancillary Agreements and Deliveries

 

35

 

 

 

 

 

Section 7.5

 

No Restraints

 

35

 

 

 

 

 

Section 7.6

 

Consents

 

36

 

 

 

 

 

ARTICLE VIII

 

Closing

 

36

 

 

 

 

 

Section 8.1

 

Closing

 

36

-iii-

--------------------------------------------------------------------------------

TABLE OF CONTENTS

(continued)

 

 

 

 

 

Page

 

Section 8.2

 

Stockholder and Company Closing Deliveries

 

36

 

 

 

 

 

Section 8.3

 

Purchaser Closing Deliveries

 

36

 

 

 

 

 

ARTICLE IX

 

Termination

 

36

 

 

 

 

 

Section 9.1

 

Termination Events

 

36

 

 

 

 

 

ARTICLE X

 

Indemnification

 

37

 

 

 

 

 

Section 10.1

 

Indemnification Obligations of the Stockholders

 

37

 

 

 

 

 

Section 10.2

 

Indemnification Procedure

 

38

 

 

 

 

 

Section 10.3

 

Offset Against Escrow Amount

 

39

 

 

 

 

 

Section 10.4

 

Survival Period

 

40

 

 

 

 

 

Section 10.5

 

Investigations

 

40

 

 

 

 

 

Section 10.6

 

Set-Off

 

40

 

 

 

 

 

Section 10.7

 

Characterization of Indemnification Payments

 

40

 

 

 

 

 

ARTICLE XI

 

STockHOLDERS’ REPRESENTATIVE

 

40

 

 

 

 

 

Section 11.1

 

Stockholders’ Representative

 

40

 

 

 

 

 

ARTICLE XII

 

Miscellaneous Provisions

 

42

 

 

 

 

 

Section 12.1

 

Further Assurances

 

42

 

 

 

 

 

Section 12.2

 

Fees and Expenses

 

42

 

 

 

 

 

Section 12.3

 

Waiver; Amendment

 

42

 

 

 

 

 

Section 12.4

 

Entire Agreement

 

42

 

 

 

 

 

Section 12.5

 

Execution of Agreement; Counterparts; Electronic Signatures

 

42

 

 

 

 

 

Section 12.6

 

Governing Law; Venue

 

43

 

 

 

 

 

Section 12.7

 

WAIVER OF JURY TRIAL

 

44

 

 

 

 

 

Section 12.8

 

Attorneys’ Fees

 

44

 

 

 

 

 

Section 12.9

 

Assignment and Successors

 

44

 

 

 

 

 

Section 12.10

 

Parties in Interest

 

44

 

 

 

 

 

Section 12.11

 

Notices

 

44

 

 

 

 

 

Section 12.12

 

Construction; Usage

 

46

 

 

 

 

 

Section 12.13

 

Enforcement of Agreement

 

47

 

 

 

 

 

Section 12.14

 

Severability

 

47

 

 

 

 

 

Section 12.15

 

Time of Essence

 

47

 

 

 

 

 

Section 12.16

 

Disclosure Schedule

 

47

 

 

 

 

 

Section 12.17

 

Schedules and Exhibits

 

47

 

-iv-

--------------------------------------------------------------------------------

TABLE OF CONTENTS

(continued)

 

EXHIBITS

 

Exhibit A

 

Definitions

 

 

 

Exhibit B

 

Form of Restrictive Agreement

 

 

 

Exhibit C

 

Form of Escrow Agreement

 

SCHEDULES

 

Schedule 5.12

 

Excluded Contracts

 

 

 

-v-

--------------------------------------------------------------------------------

 

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT is made and entered into as of August 7, 2015, by
and among TNK Therapeutics, Inc., a Delaware corporation (the “Purchaser”), BDL
Products, Inc., a Delaware corporation (the “Company”), the stockholders of the
Company set forth on the signature pages to this Agreement (collectively, the
“Stockholders” and, individually, a “Stockholder”), Richard P. Junghans, M.D.,
Ph.D., an individual resident of 1 Lyndboro Place, Boston, Massachusetts 02116 ,
as representative of the Stockholders pursuant to Article XI (the “Stockholders’
Representative”), and, solely with respect to Sections 1.6 and 1.7 and Article
XII, Sorrento Therapeutics Inc., a Delaware corporation (“Sorrento”).

RECITALS

Whereas, the Stockholders own all of the issued and outstanding shares of
capital stock of the Company (the “Shares”); and

Whereas, upon the terms and conditions set forth in this Agreement, the
Stockholders propose to sell to the Purchaser and the Purchaser proposes to
purchase from the Stockholders, all of the Shares in exchange for the
consideration set forth in this Agreement.

Now, Therefore, in consideration of the respective covenants, agreements and
representations and warranties set forth in this Agreement, the parties to this
Agreement, intending to be legally bound, agree as follows:

ARTICLE I

DESCRIPTION OF TRANSACTION

Section 1.1 Agreement to Purchase and Sell. Subject to the terms and conditions
in this Agreement, at the Closing, the Stockholders shall sell, assign, transfer
and deliver to the Purchaser, and the Purchaser shall purchase and acquire from
the Stockholders, all right, title and interest in and to the Shares, free and
clear of all Liens.

Section 1.2 Payment of Closing Consideration.

(a) At the Closing, the Purchaser shall deliver the Closing Consideration, by
wire transfer of immediately available funds, to the Stockholders’
Representative for distribution to the Stockholders based on each Stockholder’s
pro rata ownership of the Shares.

(b) At the Closing, the Stockholders shall transfer, grant, convey, sell and
assign to the Purchaser all of the issued and outstanding Shares, including all
outstanding options, warrants, rights or other securities convertible into
shares of capital stock of the Company. At the Closing and thereafter, each
Stockholder shall enter into such instruments of transfer, including stock
powers and stock transfer agreements, as may be requested by the Purchaser to
evidence such transfer and shall deliver to the Purchaser all physical original
certificates evidencing all such securities or rights with stock transfer powers
appropriately completed and signed.

Section 1.3 Net Debt Adjustment.

(a) No later than 10 Business Days prior to the Closing Date, the Company shall
deliver to the Purchaser a calculation of the estimated Net Debt of the Company
at and as of immediately prior to the Closing, which sets forth a good faith
estimate of the Net Debt as of such time (the “Estimated Net Debt”).The
Estimated Net Debt calculation shall be prepared by the Company in accordance
with GAAP consistently applied. The Purchaser and its Representatives, including
the Purchaser’s independent accountants, shall have access to all work papers of
the Company and its Representatives, including its independent accountants,
relating to the Estimated Net Debt. If the Purchaser disputes the Estimated Net
Debt (or any portion thereof) prior to the Closing, then the Purchaser and the
Company shall negotiate in good faith to resolve any such dispute at or prior to
the Closing. For avoidance of doubt, if the Estimated Net Debt is a positive
number, then no Net Debt-related adjustment shall be made to the Purchaser Stock
Consideration.

1

--------------------------------------------------------------------------------

 

(b) As promptly as practicable, but no later than 90 days after the Closing
Date, the Purchaser shall cause to be prepared and delivered to the
Stockholders’ Representative a calculation of the Net Debt of the Company at and
as of immediately prior to the Closing, which shall set forth the Purchaser’s
good faith calculation of the Net Debt as of such time (the “Final Net Debt”).
The Final Net Debt calculation shall be prepared by the Purchaser or its
Representatives in accordance with GAAP consistently applied.

(c) If the Stockholders’ Representative disagrees with the Purchaser’s
calculation of the Final Net Debt delivered pursuant to Section 1.3(b), then the
Stockholders’ Representative may, within 45 days after delivery of the Final Net
Debt calculation, deliver a written statement (the “Statement of Objection”) to
the Purchaser disagreeing with such calculation that: (i) specifies the
Stockholders’ Representative’s calculation of the Final Net Debt, (ii) indicates
each item or amount in the calculation of the Net Debt disputed by the
Stockholders’ Representative, and (iii) sets forth in detail the Stockholders’
Representative’s grounds for disputing each individual item or amount in the
Final Net Debt calculation. The Stockholders’ Representative may only deliver
one Statement of Objection to the Purchaser, and the Stockholders’
Representative shall not raise any disagreements with the Final Net Debt
calculation other than the disagreements set forth in the Statement of
Objection, nor shall the Stockholders’ Representative assert any claims that the
value of any item or amount is greater or less than the value claimed in the
Statement of Objection. Failure by the Stockholders’ Representative to deliver a
Statement of Objection within such 45 day period shall be deemed to constitute
acceptance by the Stockholders’ Representative of the Purchaser’s calculation of
the Final Net Debt, and shall be final and binding upon, and non-appealable by,
the Purchaser, the Stockholders’ Representative and, for the avoidance of doubt,
the Stockholders.

(d) If a Statement of Objection shall be delivered to the Purchaser pursuant to
Section 1.3(c), the Purchaser and the Stockholders’ Representative shall, during
the 15 days following such delivery, use commercially reasonable, good faith
efforts to reach agreement on the disputed items or amounts in order to
determine, as may be required, the amount of the Final Net Debt. If the
Purchaser and the Stockholders’ Representative are able to reach such agreement
during such 15 day period, the Final Net Debt, with such changes as may have
been previously agreed in writing by the Purchaser and the Stockholders’
Representative, shall be final and binding upon, and non-appealable by, the
Purchaser, the Stockholders’ Representative and, for the avoidance of doubt, the
Stockholders.

(e) If the Purchaser and the Stockholders’ Representative are unable to reach
such agreement during such 15 day period, they shall promptly jointly retain a
firm of independent accountants of internationally recognized standing
reasonably satisfactory to the Stockholders’ Representative and the Purchaser
(who shall not have any material relationship with the Stockholders’
Representative or the Purchaser) (the “Accounting Referee”) and cause the
Accounting Referee promptly to review this Agreement and such disputed amounts.
The Accounting Referee shall be instructed to resolve such disputes within 60
days of retention of the Accounting Referee. The Accounting Referee shall
address only those matters in dispute and may not allow a value greater than the
greatest value for such item claimed by either party or smaller than the
smallest value for such item claimed by either party. The Accounting Referee
shall deliver to the Purchaser and the Stockholders’ Representative, as promptly
as practicable, a report setting forth such calculation. Such report shall be
final and binding upon, and non-appealable by, the Purchaser, the Stockholders’
Representative and, for the avoidance of doubt, the Stockholders. The cost of
such review and report shall be borne by the Purchaser, on the one hand, and the
Stockholders (payable by the Stockholders’ Representative on their behalf), on
the other, in inverse proportion as the Purchaser and the Stockholders’
Representative (on behalf of the Stockholders), respectively, may prevail on the
matters resolved by the Accounting Referee, which proportionate allocation shall
also be determined by the Accounting Referee and be included in the Accounting
Referee report.

(f) The Purchaser and the Stockholders’ Representative agree that they will, and
agree to cause their respective independent accountants to, cooperate and assist
in the preparation of the calculation of the Final Net Debt, including making
available, to the extent necessary, books, records, work papers and personnel.

(g) If the Final Net Debt is less (that is, more negative) than the Estimated
Net Debt, the Purchaser shall be entitled to recover, pursuant to the Escrow
Agreement, such number of Escrow Shares as is equal to the quotient obtained by
dividing: (i) the amount by which the Final Net Debt is less (that is, more
negative) than the Estimated Net Debt (such amount, the “Net Debt Adjustment
Amount”), by (ii) the Per Share Price, rounded up to the nearest whole share,
within five Business Days from when the Final Net Debt has become final, binding
and non-appealable in accordance with Sections 1.3(c), (d) or (e); provided,
however, that the Purchaser shall in no event be entitled to recover any Escrow

2

--------------------------------------------------------------------------------

 

Shares pursuant to this Section 1.3(g) if the Final Net Debt is a positive
number; and provided, further, that if, as of the date that the Final Net Debt
has become final, binding and non-appealable in accordance with Sections 1.3(c),
(d) or (e), the Purchaser has not yet delivered the Initial Escrow Shares in
accordance with Section 1.4(b), then the Initial Escrow Shares to be delivered
to the Escrow Agent in accordance with Section 1.4(b) shall be reduced by such
number of shares of Purchaser Common Stock as is equal to the quotient obtained
by dividing (i) the Net Debt Adjustment Amount, by (ii) the Per Share Price,
rounded up to the nearest whole share.

Section 1.4 Issuance of Non-Escrow Shares.

(a) In the event a Qualified Financing occurs, then on the date that is 10
Business Days after the closing of the Qualified Financing, the Purchaser shall:

(i) deliver to the Stockholders’ Representative (for distribution to the
Stockholders) the stock certificates representing the Non-Escrow Shares in the
name of each Stockholder, in each case for such number of shares of Purchaser
Common Stock as is equal to the product of the total number of Non-Escrow Shares
multiplied by the quotient obtained by dividing (A) the total number of Shares
owned by such Stockholder as of immediately prior to the Closing divided by (B)
the total number of Shares outstanding as of immediately prior to the Closing;
and

(ii) deliver to the Escrow Agent under the Escrow Agreement a stock certificate
in the name of the Escrow Agent representing the Initial Escrow Shares;

provided that the certificates representing Purchaser Common Stock to be
delivered to a Stockholder shall, in each case, represent only whole shares of
Purchaser Common Stock. In lieu of any fractional shares to which such
Stockholder would otherwise be entitled, after combining any fractional
interests of such Stockholder into as many whole shares as is possible, such
Stockholder shall be paid in cash an amount equal to the dollar amount (rounded
to the nearest whole cent) determined by multiplying the Per Share Price by the
fraction of a share of Purchaser Common Stock that would otherwise be
deliverable to such Stockholder under Section 1.4(a). Notwithstanding the
foregoing, the Purchaser may deliver to the Escrow Agent one certificate
representing the total number of shares of Purchaser Common Stock to be held in
escrow pursuant to this Section 1.4 in lieu of issuing separate certificates
representing such Stockholder’s pro rata portion of the Initial Escrow Shares
(such pro rata portion to be determined based on the amount of the Purchaser
Stock Consideration payable with respect to such Stockholder’s ownership of
Shares, relative to the aggregate Purchaser Stock Consideration payable with
respect to all Shares).

(b) In the event a Qualified Financing does not occur, then on or before April
15, 2016, the Purchaser shall, or shall cause Sorrento to:

(i) deliver to the Stockholders’ Representative (for distribution to the
Stockholders) the stock certificates representing the Non-Escrow Shares in the
name of each Stockholder, in each case for such number of shares of Sorrento
Common Stock as is equal to the product of the total number of Non-Escrow Shares
multiplied by the quotient obtained by dividing (A) the total number of Shares
owned by such Stockholder as of immediately prior to the Closing divided by (B)
the total number of Shares outstanding as of immediately prior to the Closing;
and

(ii) deliver to the Escrow Agent under the Escrow Agreement a stock certificate
in the name of the Escrow Agent representing the Initial Escrow Shares;

3

--------------------------------------------------------------------------------

 

provided that the certificates representing Sorrento Common Stock to be
delivered to a Stockholder shall, in each case, represent only whole shares of
Sorrento Common Stock. In lieu of any fractional shares to which such
Stockholder would otherwise be entitled, after combining any fractional
interests of such Stockholder into as many whole shares as is possible, such
Stockholder shall be paid in cash an amount equal to the dollar amount (rounded
to the nearest whole cent) determined by multiplying the Per Share Price by the
fraction of a share of Sorrento Common Stock that would otherwise be deliverable
to such Stockholder under Section 1.4(a). Notwithstanding the foregoing, the
Purchaser may deliver to the Escrow Agent one certificate representing the total
number of shares of Sorrento Common Stock to be held in escrow pursuant to this
Section 1.4 in lieu of issuing separate certificates representing such
Stockholder’s pro rata portion of the Initial Escrow Shares (such pro rata
portion to be determined based on the amount of the Purchaser Stock
Consideration payable with respect to such Stockholder’s ownership of Shares,
relative to the aggregate Purchaser Stock Consideration payable with respect to
all Shares).

Section 1.5 Escrow. Upon the issuance of the Non-Escrow Shares in accordance
with Section 1.4, the Purchaser shall withhold the Initial Escrow Shares and
deliver such shares of Purchaser Common Stock to Wilmington Trust N.A., as
escrow agent (the “Escrow Agent”), to be held by the Escrow Agent as collateral
to secure the rights of the Purchaser pursuant to Section 1.3(a) and of the
Indemnified Parties under Article X.  The Escrow Shares shall be held pursuant
to the provisions of an escrow agreement substantially in the form of Exhibit C
hereto (the “Escrow Agreement”). The Escrow Shares will be held by the Escrow
Agent until the date that is 12 months after the Closing Date (the “Escrow
Period”); provided, however, that in the event the Purchaser has made a claim
under Article X prior to the end of the Escrow Period, then, in accordance with
and subject to the terms and conditions of the Escrow Agreement, the Escrow
Period shall continue (and the Escrow Agent will continue to hold such number of
Escrow Shares in escrow as is equal to the quotient obtained by dividing: (a)
any claimed amounts by (b) the Per Share Price, rounded up to the nearest whole
share) until such claim is fully and finally resolved. By virtue of the
execution of this Agreement by a Stockholder, without any further act of any
Stockholder, such Stockholder shall be deemed to have consented to and approved
(i) the use of the Escrow Shares as collateral to secure the rights of the
Purchaser pursuant to Section 1.3(a) in the manner set forth herein and in the
Escrow Agreement, (ii) the use of the Escrow Shares as collateral to secure the
rights of the Indemnified Parties under Article X in the manner set forth herein
and in the Escrow Agreement, and (iii) the appointment of the Stockholders’
Representative as the representative under the Escrow Agreement of the
Stockholders under this Agreement and as the attorney-in-fact and agent for and
on behalf of such Stockholder.

Section 1.6 Purchase of Purchaser Stock Consideration by Sorrento.

(a) In the event that a Qualified Financing has occurred and the closing of the
IPO has not occurred on or before March 31, 2016, as promptly as possible, and
in no event later than April 15, 2016 (the “Repurchase Closing”), Sorrento shall
purchase the Purchaser Stock Consideration from the Stockholders (the
“Repurchase”). The aggregate consideration payable to the Stockholders in
connection with the Repurchase shall be the Repurchase Sorrento Shares.

(b) At the Repurchase Closing, Sorrento shall:

(i) deliver to the Stockholders’ Representative (for distribution to the
Stockholders) the stock certificates representing the Non-Escrow Sorrento Shares
in the name of each Stockholder, in each case for such number of shares of
Sorrento Common Stock as is equal to the product of the total number of
Non-Escrow Sorrento Shares multiplied by the quotient obtained by dividing (A)
the total number of Shares owned by such Stockholder as of immediately prior to
the Closing divided by (B) the total number of Shares outstanding as of the
Closing; and

(ii) if the Escrow Period has not expired, deliver to the Escrow Agent, under
the Escrow Agreement a stock certificate in the name of the Escrow Agent
representing the Sorrento Escrow Shares;

provided that the certificates representing Sorrento Repurchase Shares to be
delivered to a Stockholder shall, in each case, represent only whole shares of
Sorrento Common Stock. In lieu of any fractional shares to which such
Stockholder would otherwise be entitled, after combining any fractional
interests of such Stockholder into as many whole shares as is possible, such
Stockholder shall be paid in cash an amount equal to the dollar amount (rounded
to the nearest whole cent) determined by multiplying the Sorrento Closing Price
by the fraction of a share of Sorrento Common Stock that would otherwise be
deliverable to such Stockholder under Section 1.6(b)(i). Notwithstanding the
foregoing, Sorrento may deliver

4

--------------------------------------------------------------------------------

 

to the Escrow Agent one certificate representing the total number of shares of
Sorrento Common Stock to be held in escrow pursuant to this Section 1.6 in lieu
of issuing separate certificates representing such Stockholder’s pro rata
portion of the Sorrento Escrow Shares (such pro rata portion to be determined
based on the amount of the Purchaser Stock Consideration payable with respect to
such Stockholder’s ownership of Shares, relative to the aggregate Repurchase
Sorrento Shares payable with respect to all Shares).

(c) At the Repurchase Closing, the Stockholders shall transfer, grant, convey,
sell and assign to Sorrento all of the Purchaser Stock Consideration. At the
Repurchase Closing and thereafter, each Stockholder shall enter into such
instruments of transfer, including stock powers and stock transfer agreements,
as may be requested by Sorrento to evidence such transfer and shall deliver to
Sorrento all physical original certificates evidencing all such securities or
rights with stock transfer powers appropriately completed and signed.

(d) Upon the Repurchase, the Stockholders’ Representative shall cause the Escrow
Agent to release the Initial Escrow Shares to Sorrento.

(c) If any certificate representing any portion of the Purchaser Stock
Consideration shall have been lost, stolen, mutilated or destroyed, at or prior
to the Repurchase Closing, the holder thereof must deliver an indemnity, in form
satisfactory to Sorrento, and, if requested by Sorrento, delivery of a bond in
such sum as Sorrento may reasonably direct.

Section 1.7 Definitions. Capitalized terms used in this Agreement but not
otherwise defined in this Agreement shall have the meanings set forth in Exhibit
A attached to this Agreement.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDERS

Except as set forth on the Disclosure Schedule, the Company and the Stockholders
hereby, jointly and severally, represent and warrant to the Purchaser as of the
date of this Agreement and as of the Closing Date, as set forth below.

Section 2.1 Organization and Good Standing.

(a) The Company is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has all
requisite and necessary power and authority to own, lease, use and operate its
properties and assets, to carry on and conduct its business as now being
conducted and as proposed to be conducted by the Company as of the Closing Date
and by the Purchaser after the Closing Date and to perform its obligations under
all Material Contracts, and is duly qualified or registered to do business and
is in good standing as a foreign corporation (or equivalent status in the
relevant jurisdiction) in each jurisdiction set forth on Section 2.1(a) of the
Disclosure Schedule, which jurisdictions constitute as of the date of this
Agreement the only jurisdictions in which the character of the properties it
owns, operates or leases or the nature of its activities makes such
qualification necessary or advisable. The Company has full corporate power and
authority to do and perform all acts and things to be done by it under this
Agreement.

(b) The Company has not conducted any business under or otherwise used, for any
purpose or in any jurisdiction, any fictitious name, assumed name, trade name or
other name.

(c) Section 2.1(c) of the Disclosure Schedule sets forth (i) the names of the
members of the board of directors of the Company, and (ii) the names and titles
of the officers of the Company.

(d) The Company has provided to the Purchaser true, correct and complete copies
of: (i) the Organizational Documents of the Company, as in effect on the date of
this Agreement, and such copies reflect all amendments made thereto at any time
prior to the date of this Agreement, (ii) the stock records of the Company,
(iii) the minutes and other records of the meetings and other proceedings
(including any actions taken by written consent or otherwise without a meeting)
of the stockholders of the Company, the board of directors of the Company and
all committees of the board of directors of the Company (subsections (i), (ii)
and (iii), collectively, the “Company Constituent Documents”). There have been
no formal meetings or other proceedings of the stockholders of the Company, the
board of directors of the Company

5

--------------------------------------------------------------------------------

 

or any committee of the board of directors of the Company that are not fully
reflected in the Company Constituent Documents. There has not been any violation
of the Company Constituent Documents, and the Company has not taken any action
that is inconsistent with the Company Constituent Documents. The Company is not
in default under or in violation of any provision of its Organizational
Documents. The books and records of the Company are up to date, true, correct
and complete in all material respects. All the records of the Company have been
maintained in accordance with applicable Laws and prudent business practices and
are in the actual possession and direct control of the Company.

Section 2.2 Capitalization.

(a) The authorized capital stock of the Company consists solely of 1,000 Company
Common Shares, of which 600 shares have been issued and are outstanding as of
the date of this Agreement. All of the outstanding Company Common Shares have
been duly authorized and validly issued, and are fully paid and non-assessable.
All of the outstanding Company Common Shares have been issued and granted in
compliance with (i) all applicable securities laws and other applicable Laws,
and (ii) all requirements set forth in the Company Constituent Documents and
applicable Contracts. None of the issued Company Common Shares were issued in
violation of any preemptive rights or other rights to subscribe for or purchase
securities of the Company. Section 2.2(a) of the Disclosure Schedule accurately
sets forth with respect to each Company Common Share outstanding as of the date
of this Agreement: (A) the name of the holder of such Company Common Share; and
(B) the date on which such Company Common was issued.

(b) There is no: (A) outstanding subscription, option, call, warrant or right
(whether or not currently exercisable) to acquire any capital stock or other
securities of the Company, (B) outstanding security, instrument or obligation
that is or may become convertible into or exchangeable for any capital stock or
other securities of the Company, (C) Contract under which the Company is or may
become obligated to sell or otherwise issue any of its capital stock or any
other securities of the Company, or (D) condition or circumstance that may give
rise to or provide a basis for the assertion of a claim by any Person to the
effect that such Person is entitled to acquire or receive any capital stock or
other securities of the Company (subsections (A) through (D), collectively,
“Company Rights”). The Company does not have any outstanding stock appreciation
rights, phantom stock, performance based stock or equity rights or similar stock
or equity rights or obligations. The Company has not issued any debt securities
which grant the holder thereof any right to vote on, or veto, any actions by the
Company.

(c) The Company has no issued or outstanding Company Common Shares that
constitute restricted shares or that are otherwise subject to a repurchase or
redemption right or right of first refusal in favor of the Company.

(d)The Company is not a party to or bound by any, and to the Knowledge of the
Company, there are no, agreements or understandings with respect to the voting
(including pooling agreements, voting trusts and proxies) or sale or transfer
(including agreements imposing transfer restrictions) of any capital stock or
other equity interests of the Company.

(e) None of the outstanding capital stock of the Company is entitled or subject
to any purchase option, call option, right of first refusal, preemptive right,
right of participation, subscription right or any similar right (whether
pursuant to the Company Constituent Documents or any Contract or any statute to
which the Company is subject) and there is no Contract relating to information
rights, financial statement requirements, the voting or registration of, or
restricting any Person from purchasing, selling, pledging, transferring or
otherwise disposing of (or granting any option or similar right with respect
to), any of the Company’s capital stock. The Company is not under any
obligation, or bound by any Contract pursuant to which it may become obligated
(i) to repurchase, redeem or otherwise acquire any outstanding capital stock of
the Company, or (ii) make any investment (in the form of a loan or capital
contribution) in any other Entity.

(f) The Company has never repurchased, redeemed or otherwise reacquired any of
its capital stock or other securities.

(g) The Company is not now, nor has it ever been, required to file any periodic
or other reports, or any registration statement, with any applicable securities
regulatory authority, including the United States Securities and Exchange
Commission, pursuant to any securities legislation, regulations or rules or
policies promulgated thereunder,

6

--------------------------------------------------------------------------------

 

including the Securities Act and the rules and regulations promulgated
thereunder, or the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.

Section 2.3 Subsidiaries. The Company has no Subsidiaries and has never had any
Subsidiaries.  The Company does not own, and has never owned, beneficially or
otherwise, any shares or other securities of, or any direct or indirect equity
or other financial interest in, any Entity. The Company has neither agreed nor
is obligated to make any future investment in or capital contribution to any
Entity. The Company has neither guaranteed nor is responsible or liable for any
obligation of any Entity. Neither the Company nor any of its stockholders has
ever approved or commenced any proceeding, or made any election contemplating,
the dissolution or liquidation of the business or affairs of the Company. There
are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights or other Contracts or
commitments that could require the Company to issue, sell or otherwise cause to
become outstanding any of its own capital stock or other equity interests or
that otherwise could affect rights or obligations of the holders of the capital
stock or other equity interests of the Company.

Section 2.4 Authority, No Conflict; Required Filings and Consents.

(a) The Company has all requisite corporate power and authority to enter into
this Agreement and any Stockholder Related Agreement to which it is a party,
perform its obligations under this Agreement and any Stockholder Related
Agreement to which it is a party and to consummate the transactions contemplated
by this Agreement and any Stockholder Related Agreement to which it is a party.
The execution and delivery of this Agreement and any Stockholder Related
Agreement to which it is a party and the consummation of the transactions
contemplated by this Agreement and any Stockholder Related Agreement to which it
is a party by the Company have been duly authorized by all necessary corporate
action on the part of the Company, and no other corporate action or proceeding
on the part of the Company or its board of directors is necessary to authorize
the execution, delivery or performance of this Agreement, any Stockholder
Related Agreement to which it is a party or the transactions contemplated by
this Agreement or any such Stockholder Related Agreement. This Agreement has
been duly executed and delivered by the Company and constitutes the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to creditors’ rights generally, and (ii) the availability
of injunctive relief and other equitable remedies.

(b) Neither the execution, delivery or performance by the Company or any of the
Stockholders of this Agreement or any of the Stockholder Related Agreements, nor
the consummation of the transactions contemplated by this Agreement or any of
the Stockholder Related Agreements, will directly or indirectly (with or without
notice or lapse of time, or both): (i) contravene, conflict with, or result in
any violation or breach of, any Company Constituent Document, (ii) contravene,
conflict with, or result in any violation or breach of, or constitute (with or
without notice or lapse of time, or both) a default (or give rise to a right of
modification, termination, cancellation or acceleration of any obligation or
loss of any material benefit) under, require notice to any Person or a consent
or waiver under, constitute a change in control under, require the payment of a
fee or penalty under or result in the creation or imposition of any Lien upon or
with respect to any asset owned or used by the Company under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
Contract or other agreement, instrument or obligation to which the Company is a
party or by which it or any of its properties or assets may be bound, (iii)
contravene, conflict with or violate, or give any Person the right to challenge
any of the transactions contemplated by this Agreement or any of the Stockholder
Related Agreements or to exercise any remedy or obtain any relief under, any Law
or any order, writ, injunction, judgment or decree to which the Company is
subject, or (iv) contravene, conflict with or result in a violation of any of
the terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by the Company or that otherwise relates to the business of the
Company or to any of the assets owned, used or controlled by the Company.

7

--------------------------------------------------------------------------------

 

(c) No Governmental Authorization, or registration, declaration, notice or
filing with any Governmental Body, is required by or with respect to the
Company: (i) in connection with the execution and delivery of this Agreement or
any of the Stockholder Related Agreements by the Company or the consummation by
the Company of the transactions contemplated by this Agreement or any of the
Stockholder Related Agreements, or (ii) necessary for the Company to operate its
business immediately after the Closing in the same manner as operated
immediately prior to the Closing after giving effect to the consummation of the
transactions contemplated by this Agreement and the Stockholder Related
Agreements.

Section 2.5 Company Financial Statements; No Undisclosed Liabilities .

(a) The Company has not prepared any balance sheet, income statement, statement
of operations, statement of changes in financial position and stockholders’
equity or other financial statements.  

(b) Neither the Company nor any predecessor entity of the Company have any
obligations or liabilities (whether or not absolute, accrued, contingent,
determined, determinable, unliquidated or otherwise, whether known or unknown,
whether due or to become due, whether or not required to be reflected in
financial statements in accordance with GAAP and regardless of when or by whom
asserted), and there is no existing condition, situation or set of circumstances
that could reasonably be expected to result in such an obligation or liability,
except for liabilities incurred in the ordinary course of business since the
date of the Company’s incorporation (none of which is a liability for breach of
contract, breach of warranty, tort, infringement, violation of law, claim or
lawsuit), which in the aggregate are not in excess of $12,500.

(c) Section 2.5(c) of the Disclosure Schedule sets forth a true, correct and
complete list of all loan or credit agreements, notes, bonds, mortgages,
indentures and other agreements and instruments pursuant to which any
Indebtedness is outstanding or may be incurred and the respective principal
amounts outstanding thereunder as of the date of this Agreement. All of the
outstanding Indebtedness may be prepaid by the Company at any time without the
consent or approval of, or prior notice to, any other Person, and without
payment of any premium or penalty.

Section 2.6 No Company Material Adverse Effect. Since the date of the Company’s
incorporation, the Company has conducted its business only in the ordinary
course of business and, since such date, there has not been (a) any event,
occurrence, development or state of circumstances or facts that has had, or
could reasonably be expected to result in, a Company Material Adverse Effect,
(b) any other action or event that would have required the consent of the
Purchaser pursuant to Section 5.2(b) had such action or event occurred after the
date of this Agreement, or (c) any event, occurrence, development or state of
circumstances or facts that has, or could reasonably be expected to have, the
effect of preventing, delaying, making illegal or otherwise interfering with the
transactions contemplated by this Agreement.

Section 2.7 Absence of Certain Changes or Events. Since the date of the
Company’s incorporation, the Company has not:

(a) issued (i) any notes, bonds or other debt securities, (ii) any capital stock
or other equity securities or any securities or rights convertible into or
exchangeable or exercisable for any capital stock or other equity securities, or
(iii) any Company Rights;

(b) amended or waived any of its rights under, or permitted the acceleration of
vesting under any restricted stock purchase agreement;

(c) borrowed any amount or incurred or become subject to any liabilities;

(d) discharged or satisfied any Lien or paid any obligation or liability;

(e) declared, accrued, set aside or made any payment or distribution of cash or
other property to any of its equityholders or its other Affiliates with respect
to such equityholder’s equity securities or otherwise, or purchased, redeemed or
otherwise acquired any shares of its capital stock or other equity securities
(including any warrants, options or other rights to acquire its capital stock or
other equity);

8

--------------------------------------------------------------------------------

 

(f) mortgaged or pledged any of its properties or assets or subjected them to
any Lien, except for Permitted Liens;

(g) (i) acquired, leased or licensed any right or other asset from any Person,
(ii) sold, assigned, transferred, leased or licensed to any Person, or otherwise
encumbered, any of its assets, or (iii) canceled any debts or claims;

(h) sold, assigned, transferred, leased, licensed or otherwise encumbered any
Intellectual Property Rights, disclosed any Confidential Information to any
Person (other than to the Purchaser and its Affiliates), or abandoned or
permitted to lapse any Intellectual Property Rights;

(i) (i) granted any severance or termination pay to any Person, (ii) entered
into any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any Person, or (iii) established,
adopted or amended (except as required by applicable Laws) any collective
bargaining, works council, stock option, restricted stock, bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, or any
other benefit plan, agreement or arrangement covering any Person;

(j) suffered any extraordinary losses or waived any rights of value in excess of
$12,500 in the aggregate;

(k) made capital expenditures or commitments therefor that exceed $12,500
individually or $25,000 in the aggregate;

(l) delayed or postponed the payment of any accounts payable or commissions or
any other liability or obligation or agreed or negotiated with any party to
extend the payment date of any accounts payable or commissions or any other
material liability or obligation or accelerated the collection of (or
discounted) any accounts or notes receivable;

(m) made any loans or advances to, guaranties for the benefit of, or any
investments in, any Person;

(n) suffered any damage, destruction or casualty loss exceeding in the aggregate
$12,500, whether or not covered by insurance;

(o) made any change in any method of accounting or accounting policies or made
any write-down in the value of its inventory or made any accruals for Tax
liability, or reversed any accruals;

(p) (i) written off as uncollectible, or established any extraordinary reserve
with respect to, any billed or unbilled account receivable or other Indebtedness
outside existing reserves, or (ii) increased any reserves for contingent
liabilities;

(q) made or changed any Tax election, changed any annual tax accounting period,
changed or adopted any method of tax accounting, filed any amended Tax Returns
or claims for Tax refunds, entered into any closing agreement, settled any Tax
claim, audit or assessment, or surrendered any right to claim a Tax refund,
offset or other reduction;

(r) threatened, commenced or settled any Legal Proceeding;

(s) made any investment in or taken any steps to incorporate or form any
Subsidiary or to acquire any equity interest or other interest in any other
Entity;

(t) amended any of its Organizational Documents or effected or been a party to
any Acquisition Transaction, recapitalization, reclassification of shares, stock
split, reverse stock split or similar transaction;

(u) entered into any agreement or arrangement prohibiting or restricting it from
freely engaging in any business, from competing with any Person in any line of
business that is material to the Company or otherwise restricting the conduct of
its business anywhere in the world;

(v) entered into, amended or terminated any material Contract;

9

--------------------------------------------------------------------------------

 

(w) received notice, whether written or oral, from any party to a Company
Contract of such party’s intention not to renew, not to extend, to cancel or
otherwise terminate or materially modify its business relationship with the
Company;

(x) entered into any transaction with its Affiliates;

(y) entered into any other material transaction (other than the entry into this
Agreement and the Stockholder Related Agreements and the agreements and
transactions contemplated by this Agreement and the Stockholder Related
Agreements), or materially changed any business practice;

(z) taken any action which, if taken after the date of this Agreement and prior
to the Closing Date, would constitute a breach of Section 5.2(b); or

(aa) agreed, whether orally or in writing, to do any of the foregoing.

Section 2.8 Taxes.

(a) Since the date of the Company’s incorporation, the Company has not filed,
and has not been required to file, any Tax Returns.

(b) Section 2.8(b) of the Disclosure Schedule sets forth a true, correct and
complete list of all jurisdictions (whether foreign or domestic) in which the
Company is required to file Tax Returns. No claim has ever been made by a
Governmental Body in a jurisdiction where the Company does not file Tax Returns
that it is or may be subject to taxation or to a requirement to file Tax Returns
in that jurisdiction.

(c) All Taxes, estimated Taxes, deposits and other payments due and owing by or
on behalf of the Company (whether or not shown on any Tax Return) have been or
will be timely paid in full through the date of this Agreement.

(d) The amounts so paid, together with all amounts accrued as liabilities for
Taxes (including Taxes accrued as currently payable but excluding any accrual to
reflect timing differences between book and Tax income) on the books of the
Company, shall be adequate based on the tax rates and applicable Laws in effect
to satisfy all liabilities for Taxes of the Company in any jurisdiction through
the Closing Date, including Taxes accruable upon income earned through the
Closing Date.

(e) The Company has withheld all amounts of Taxes required to be withheld from
its agents, contractors, creditors, Stockholders, members and third parties and
remitted such amounts to the proper Governmental Body and filed all federal,
state, local and foreign Tax Returns and reports with respect to income Tax
withholding, social security, unemployment, and other similar Taxes, all in
compliance with the withholding provisions of the Code, or any prior provision
of the Code and other applicable Laws.

(f) The Company has collected all material sales, value-added and use Taxes
required to be collected, and have remitted, or will remit on a timely basis,
such amounts to the appropriate Governmental Body (or have been furnished
properly completed exemption certificates and have maintained all such records
and supporting documents in the manner required by all applicable sales and use
Tax statutes and regulations).

(g) No claims have been asserted and no proposals or deficiencies for any Taxes
of the Company are being asserted, proposed or, to the Knowledge of the Company,
threatened, and no Legal Proceeding, audit, examination or investigation of any
Tax Return of the Company is currently underway, pending or, to the Knowledge of
the Company, threatened. There have been no examinations or audits of any Tax
Return of the Company. The Company has provided to the Purchaser true, correct
and complete copies of all audit reports, correspondence with Tax authorities
and similar documents (to which the Company has access) relating to the Tax
Returns of the Company.

(h) All Tax deficiencies asserted as a result of any examination by a
Governmental Body of a Tax Return of the Company have been paid in full, accrued
on the books of the Company, as applicable, or finally settled, and no

10

--------------------------------------------------------------------------------

 

indication of a Tax increase or other issue has been raised in any such
examination that, by application of the same or similar principles, could
reasonably be expected to result in a proposed Tax deficiency for any other
period not so examined.

(i) There are no outstanding waivers or agreements between any Governmental Body
and the Company for the extension of time for the assessment of any Taxes or
deficiency thereof, nor are there any requests for rulings, outstanding
subpoenas or requests for information, notices of proposed reassessment of any
property owned or leased by the Company or any other matter pending between the
Company and any Governmental Body.

(j) There are no Liens for Taxes with respect to the Company or the assets or
properties of the Company, nor is there any Lien that is pending or, to the
Knowledge of the Company, threatened.

(k) The Company has not been a member of an “affiliated group” of companies
(within the meaning of Section 1504 of the Code) filing a consolidated federal
income tax return (other than a group, the common parent of which was the
Company).

(l) The Company has no liability for the Taxes of any Person (other than for
itself) under Treasury Regulation Section 1.1502-6 (or any similar provision of
national, provincial, territorial, state, local or foreign Law), as a transferee
or successor, by Contract or otherwise.

(m) The Company is not a party to or bound by any Tax allocation,
indemnification or sharing agreement.

(n) The Company has not made any payments, is not obligated to make any
payments, and is not a party to any Contract that would obligate it to make any
payments that will not be deductible under Section 280G of the Code (or any
similar provision of national, provincial, territorial, state, local or foreign
Law).

(o) The Company has not constituted either a “distributing corporation” or a
“controlled corporation” in a distribution of stock qualifying for tax free
treatment under Section 355 of the Code (i) since the Company’s incorporation,
or (ii) in a distribution which would otherwise constitute part of a “plan” or
“series of related transactions” (within the meaning of Section 355(e) of the
Code) in connection with the transactions contemplated by this Agreement.

(p) The Company has no net operating losses or other tax attributes presently
subject to limitation under Sections 382, 383, 384 of the Code or the federal
consolidated return regulations (or any corresponding or similar provision of
state, local or foreign income Tax law).

(q) The Company will not be required to include any item of income in, or
exclude any item of deduction from, taxable income for any Tax period after the
date of this Agreement as a result of any (i) adjustment in taxable income for
any tax period (or portion thereof) pursuant to Section 481 or 263A of the Code
or any comparable provision under state or foreign tax Laws, (ii) “closing
agreement” as described in Section 7121 of the Code (or any corresponding or
similar provision of national, provincial, territorial, state, local or foreign
income Tax Law) executed on or prior to the date of this Agreement, (iii)
installment sale or open transaction disposition made on or prior to the date of
this Agreement,(iv) prepaid amount received on or prior to the date of this
Agreement, (v) reserve claimed in respect of a taxation year ending prior to the
date of this Agreement, or (vi) change in method of accounting for a Tax period
ending on or prior to the Closing Date.

(r) The Company has not, directly or indirectly, transferred property to or
acquired property from a Person with whom it was not dealing at arm’s length for
consideration other than consideration equal to the fair market value of the
property at the time of the disposition or acquisition thereof and has complied
with all material transfer pricing disclosure, reporting and other similar
requirements under Section 482 of the Code (or any corresponding provision of
any state, local or foreign Tax Law).

(s) The Company has not been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code.

11

--------------------------------------------------------------------------------

 

(t) The Company (i) does not have a permanent establishment, office or other
fixed place of business, and (ii) has never filed or had any obligation to file,
and currently does not have any obligation to file, any Tax Return based on
income or otherwise, in each case in any jurisdiction other than the United
States.

(u) The Company is, and has at all times been, in compliance with the provisions
of Sections 6011, 6111 and 6112 of the Code relating to tax shelter disclosure,
registration and list maintenance and with the Treasury Regulations thereunder.

(v) The Company has not at any time engaged in or entered into a “listed
transaction” within the meaning of Treasury Regulation Sections 1.6011-4(b)(2),
301.6111-2(b)(2) or 301.6112-1(b)(2)(A), and no IRS Form 8886 has been filed
with respect to the Company, nor has the Company entered into any tax shelter or
listed transaction with the sole or dominant purpose of the avoidance or
reduction of a Tax liability with respect to which there is a significant risk
of challenge of such transaction by a Governmental Body.

Section 2.9 Real Property. The Company does not own, and has never owned, any
real property, and the Company is not obligated to and has no option to acquire
an ownership interest in any real property. Since the date of the Company’s
incorporation, the Company has not been, and is not currently, the lessee or
sublessee of any parcels of real property.

Section 2.10 Personal Property.

(a) All items of equipment and other tangible personal property and assets owned
by or leased to the Company: (i) are reasonably adequate for the uses to which
they are being put, (ii) are structurally sound, free of defects and
deficiencies and in good operating condition, maintenance and repair, subject to
ordinary wear and tear, (iii) comply in all material respects with, and are
being operated and otherwise used in compliance with, all applicable Laws, (iv)
were acquired and are usable in the ordinary course of business consistent with
past practice, and (v) are adequate for the conduct of the business of the
Company in the manner in which such business is being conducted and as proposed
to be conducted by the Company as of the Closing Date and by the Purchaser after
the Closing Date.

(b) No Person other than the Company owns any equipment or other tangible
personal property or asset that is necessary to the operation of the Company’s
business. Section 2.10(b) of the Disclosure Schedule sets forth all assets that
are material to the business of the Company and that are being leased or
licensed to the Company for which the annual rental payment for each such asset
exceeds $12,500.

(c) Section 2.10(c) of the Disclosure Schedule sets forth a true, correct and
complete list and general description of each item of tangible personal property
of the Company having a book value of greater than $12,500.

Section 2.11 Intellectual Property.

(a) Section 2.11(a) of the Disclosure Schedule sets forth all Company
Registrations, in each case enumerating specifically the applicable filing or
registration number, title, jurisdiction in which filing was made or from which
registration was issued, date of filing or issuance, and names of all current
applicant(s) and registered owners(s), as applicable. All assignments of Company
Registrations to the Company have been properly executed and recorded. All
issued Company Registrations are valid and enforceable, all pending patent
applications included in the Company Registrations if issued would be valid and
enforceable, and all issuance, renewal, maintenance and other payments and fees
that are or have become due with respect thereto have been timely paid by or on
behalf of the Company.

(b) There are no inventorship challenges, opposition or nullity proceedings or
interferences declared or commenced or, to the Knowledge of the Company,
threatened, and there is no fact that is reasonably likely to result in an
inventorship challenge, opposition or nullity proceeding or interference, with
respect to any Patent Rights included in the Company Registrations. The Company
has complied with its duty of candor and disclosure to the United States Patent
and Trademark Office and any relevant foreign patent office with respect to all
patent and trademark applications filed by or on behalf of the Company and has
made no misrepresentation in such applications.

12

--------------------------------------------------------------------------------

 

(c) The Company exclusively owns all right, title and interest in and to the
Company Owned Intellectual Property, free and clear of any Liens. The Company
owns or possesses sufficient legal rights to all Intellectual Property Rights
used in or necessary to the conduct of the Company’s business as now conducted
and as contemplated to be conducted by the Company as of the Closing and by the
Purchaser after the Closing, free and clear of any Liens.

(d) The Company has taken all reasonable measures to maintain and protect the
proprietary nature of each item of Company Intellectual Property, and to
maintain in confidence all trade secrets and Confidential Information comprising
a part thereof. The Company has complied with all applicable contractual and
legal requirements pertaining to data collection, use, privacy, protection and
security. No complaint relating to an improper use or disclosure of, or a breach
in the security of, any such information has been made or, to the Knowledge of
the Company, threatened against the Company. There has been no: (i) unauthorized
disclosure of any third-party proprietary or Confidential Information in the
possession, custody or control of the Company, or (ii) breach of the Company’s
security procedures wherein Confidential Information has been disclosed to a
third Person.

(e) No product, product candidate or service marketed or sold (or proposed to be
marketed or sold) by the Company or the conduct of the business of the Company,
as it is currently conducted and as it is contemplated to be conducted by the
Company as of the Closing and by the Purchaser after the Closing, infringes,
violates or constitutes a misappropriation, or will infringe, violate or
constitute a misappropriation, of any Intellectual Property Rights of any
third-party. The Company has not received any complaint, claim or notice (i)
alleging any such infringement, violation or misappropriation, or that, by
conducting its business, the Company would infringe, violate or misappropriate
any Intellectual Property Rights of any other Person, or (ii) advising that such
Person is challenging or threatening to challenge the ownership, use, legality,
validity or enforceability of any Company Intellectual Property.

(f) To the Knowledge of the Company, no Person has infringed, violated or
misappropriated, or is infringing, violating or misappropriating, any of the
Company Intellectual Property and there are no facts or circumstances that could
reasonably be expected to result in any of the foregoing or of any current or
anticipated claims against a third Person relating to the foregoing.

(g) Section 2.11(g) of the Disclosure Schedule sets forth each license, covenant
or other agreement pursuant to which the Company has assigned, transferred,
licensed, distributed or otherwise granted any right to any Person, or
covenanted not to assert any right, with respect to any past, existing or future
Company Intellectual Property. The Company has not agreed to indemnify any
Person against any infringement, violation or misappropriation of any
Intellectual Property Rights with respect to any third-party Intellectual
Property Rights. The Company is not a member of or party to any patent pool,
industry standards body, trade association or other organization pursuant to the
rules of which it is obligated to license any existing or future Intellectual
Property Rights to any Person.

(h) Section 2.11(h) of the Disclosure Schedule sets forth (i) each item of
Company Licensed Intellectual Property and the license or agreement pursuant to
which the Company Exploits it (excluding currently-available, off the shelf
software programs that are licensed by the Company pursuant to “shrink wrap”
licenses, the total fees associated with which are less than $2,500), and (ii)
each agreement, assignment or other instrument pursuant to which the Company has
obtained any joint or sole ownership interest in or to each item of Company
Owned Intellectual Property.

(i) The Company is not subject to any proceeding or outstanding decree, order,
judgment, agreement or stipulation (i) restricting in any manner the use,
transfer or licensing by the Company of any of the Company Intellectual
Property, or (ii) that may affect the validity, use or enforceability of the
Company Intellectual Property or any product, product candidate or service of
the Company related thereto.

(j) Each independent contractor of or consultant to the Company has executed a
valid and binding written agreement, substantially in the form or forms provided
to the Purchaser (each, an “Assignment Agreement”), expressly assigning to the
Company all right, title and interest in any inventions and works of authorship,
whether or not patentable, invented, created, developed, conceived and/or
reduced to practice during the term of such independent contractor’s or
consultant’s work for the Company, and all Intellectual Property Rights therein,
and has waived all moral rights therein to the extent legally permissible. All
Company Owned Intellectual Property was developed by agents, consultants,
contractors, or other Persons who have executed appropriate Assignment
Agreements. To the extent that any Company

13

--------------------------------------------------------------------------------

 

Intellectual Property has been developed or created by a third party for the
Company, the Company has a written agreement with such third party with respect
thereto and the Company thereby either (i) have obtained ownership of and are
the exclusive owner of, or (ii) have obtained a license (sufficient for the
conduct of its business as now conducted and as contemplated to be conducted by
the Company as of the Closing and by the Purchaser after the Closing) to, all of
such third party’s Intellectual Property in such work, material or invention by
operation of law or by valid assignment.

(k) The execution and delivery of this Agreement by the Company and the
Stockholders, the consummation by the Company and the Stockholders of the
transactions contemplated by this Agreement and the Stockholder Related
Agreements and the Company continuing to operate its business immediately after
the Closing in the same manner as operated immediately prior to the Closing
after giving effect to the consummation of the transactions contemplated by this
Agreement and the Stockholder Related Agreements will not result in the breach
of, or create on behalf of any third-party the right to terminate or modify, (i)
any license, sublicense or other agreement relating to any Company Intellectual
Property, or (ii) any license, sublicense and other agreement to which the
Company is a party and pursuant to which the Company is authorized to use any
third-party Intellectual Property Rights that are useful to the business of the
Company, as it is currently conducted and as it is contemplated to be conducted
by the Company as of the Closing and by the Purchaser after the Closing.

(l) The Company has obtained and possesses valid licenses to use all of the
software programs present on the computers and other software-enabled electronic
devices it owns or leases or that it has otherwise provided to Persons for their
use in connection with the Company’s business, free and clear of all Liens. All
software and systems owned or used by the Company and material to the conduct of
the Company’s business (i) are free from any material defect, bug, virus or
programming, design or documentation error or corruptant or other software
routines or hardware components that permit unauthorized access or the
unauthorized disablement or erasure of such, (ii) function, operate and run in a
reasonably efficient manner, (iii) are reasonably sufficient for the current and
currently contemplated needs of the business of the Company, (iv) have not had
any material failures, breakdowns or outages of any of the foregoing software or
systems since the date of the Company’s incorporation, (v) conform in all
material respects to the specifications and purposes thereof, and (vi) do not
contain, embody, use, copy, comprise or require the work of any third party.

(m) The Company holds all of the Intellectual Property Rights or other rights to
own, transfer, license and otherwise exploit any derivative products from any of
the research materials that are the subject of or related to the IP-Related
Agreements, free and clear of any Lien.

Section 2.12 Agreements.

(a) The Company is not a party to or bound by any written or oral:

(i) pension, profit sharing, stock option, employee stock purchase, bonus or
other plan or arrangement providing for deferred or other compensation to
employees, former employees or consultants, or any other employee benefit plan
or arrangement, or any collective bargaining agreement or any other Contract
with any labor union, or severance agreements, programs, policies or
arrangements;

(ii) contract for the employment of any Person on a full-time, part-time,
consulting or other basis or relating to loans to officers, directors, managers
or Affiliates;

(iii) Contract providing for indemnification of any officer, director, employee
or agent;

(iv) Contract under which the Company has advanced or loaned any other Person
amounts in the aggregate exceeding $12,500;

(v) agreement or indenture relating to borrowed money or other Indebtedness or
the mortgaging, pledging or otherwise placing or creating of a Lien on any asset
or group of assets of the Company;

(vi) guaranty, pledge, performance or completion bond, surety or similar
agreement or arrangement;

14

--------------------------------------------------------------------------------

 

(vii) Contract creating or relating to any partnership or joint venture or any
sharing of revenues, profits, losses, costs or liabilities;

(viii) lease or agreement under which the Company is lessee of or holds or
operates any property, real or personal, owned by any other party, except for
any lease of real or personal property under which the aggregate annual rental
payments do not exceed $12,500;

(ix) lease or agreement under which the Company is lessor of or permits any
third party to hold or operate any property, real or personal, owned or
controlled by the Company;

(x) Contract or group of related Contracts with the same party or group of
affiliated parties, the performance of which involves consideration in the
aggregate in excess of $25,000;

(xi) assignment, license, indemnification or agreement with respect to any
intangible property (including any Intellectual Property Rights);

(xii) Contract relating to the acquisition, transfer, use, development, sharing
or license of any technology or any Intellectual Property Rights, except for
licenses to use shrink-wrap or off-the-shelf software with a cost to the Company
of less than $5,000 per user or per copy, as applicable;

(xiii) warranty agreement with respect to its services rendered or its products
sold or leased;

(xiv) Contract relating to the purchase or sale of any product, product
candidate or other asset by or to, or the performance of any services by or for,
any Related Party;

(xv) sales, distribution, supply or franchise agreement or other agreement
involving an agency relationship;

(xvi) advertising, vendor rebate or product purchase or sale discount agreement;

(xvii) Contract for capital expenditures or the acquisition or construction of
fixed assets requiring the payment by the Company of an amount in excess of
$12,500;

(xviii) Contract constituting or relating to a Government Contract
or  Government Bid;

(xix) Contract providing for an “earn out”, “performance guarantee” or other
similar contingent payments by or to the Company;

(xx) Contract granting any Person an option or a right of first refusal,
first-offer or similar preferential right to purchase or acquire any assets of
the Company;

(xxi) Contract for the granting or receiving of a license, sublicense or
franchise or under which any Person is obligated to pay or has the right to
receive a royalty, license fee, franchise fee or similar payment, except for
Contracts relating to the use of shrink-wrap or off-the-shelf software with a
cost to the Company of less than $5,000 per user or per copy, as applicable;

(xxii) outstanding power of attorney empowering any Person to act on behalf of
the Company;

(xxiii) tax-sharing Contract;

(xxiv) Contract that was entered into outside the ordinary course of business or
was inconsistent with the Company’s past practices;

15

--------------------------------------------------------------------------------

 

(xxv) agreement with a term of more than 60 days which is not terminable by the
Company upon less than 30 days’ notice without penalty and involves a
consideration in excess of $25,000 annually;

(xxvi) Contract regarding voting, transfer, issuance or other arrangements
related to the Company’s capital stock or warrants, options or other rights to
acquire the Company’s capital stock;

(xxvii) Contract that (A) limits the ability of the Company, or any officers or
directors, employees, stockholders, members or other equityholders, agents or
Representatives of the Company (in their capacities as such) to compete in any
line of business or with any Person or in any geographic area or during any
period of time, (B) would by its terms purport to be binding upon or impose any
obligation upon the Purchaser or any of its Affiliates, (C) contains any so
called “most favored nation” provisions or any similar provision requiring the
Company to offer a third party terms or concessions (including levels of service
or content offerings) at least as favorable as offered to one or more other
parties, or (D) provides for “exclusivity,” preferred treatment or any similar
requirement or under which the Company is restricted, or which after the Closing
would restrict the Purchaser or any of its Affiliates, with respect to
distribution, licensing, marketing, co-marketing or development; or

(xxviii) other agreement which is material to its operations and business
prospects or involves a consideration in excess of $12,500 annually.

(b) All of the Contracts, leases, agreements and instruments set forth or
required to be set forth on Section 2.12(a) of the Disclosure Schedule (the
“Material Contracts”) are in full force and effect and are valid, binding and
enforceable in accordance with their respective terms and will be in full force
and effect, valid, binding and enforceable on identical terms without penalty in
accordance with their terms upon consummation of the transactions contemplated
by this Agreement. (i) The Company has performed all material obligations
required to be performed by it and is not in default under or in breach of nor
in receipt of any claim of default or breach under any Material Contract; (ii)
no event has occurred which (with or without the passage of time or the giving
of notice or both) would, or could reasonably be expected to, (A) result in a
default, breach or event of noncompliance by the Company under any Material
Contract, (B) give any Person the right to declare a default or exercise any
remedy under any Material Contract, (C) give any Person the right to accelerate
the maturity or performance of any Material Contract, or (D) give any Person the
right to cancel, terminate or modify any Material Contract; (iii) the Company
has no present expectation or intention of not fully performing all such
obligations; and (iv) there is no breach or anticipated breach by the other
parties to any Material Contract. The consummation of the transactions
contemplated by this Agreement and the Stockholder Related Agreements shall not
(either alone or upon the occurrence of additional acts or events) result in any
payment or payments becoming due from the Company or the Purchaser or any of its
Affiliates to any Person or give any Person the right to terminate or alter the
provisions of any Material Contract.

(c) The Company has not received any notice or other communication regarding any
actual or possible violation or breach of, or default under, any Material
Contract.

(d) The Company has not waived any of its rights under any Material Contract.

(e) The Company is not a party to any Contract, agreement or commitment the
performance of which could reasonably be expected to have a Company Material
Adverse Effect.

(f) There is no term, obligation, understanding or agreement that would modify
any term of a written Material Contract or any right or obligation of a party
thereunder which is not reflected on the face of such Material Contract.

(g) No Person is renegotiating, or has a right pursuant to the terms of any
Material Contract to renegotiate, any amount paid or payable to the Company
under any Material Contract or any other material term or provision of any
Material Contract. The Company is not a party to any Contract that obligates the
Company to provide products or services below the Company’s cost of such product
or service.

16

--------------------------------------------------------------------------------

 

(h) Section 2.12(h) of the Disclosure Schedule identifies and provides a brief
description of each proposed Contract or agreement as to which any bid, offer,
award, written proposal, term sheet or similar document has been submitted or
received by the Company.

(i) The Company has provided to the Purchaser a true, correct and complete copy
of each of the written Material Contracts and a written summary description of
each of the oral Material Contracts, together with all amendments, waivers or
other changes thereto.

Section 2.13 Litigation.

(a) There are no Legal Proceedings pending or, to the Knowledge of the Company,
threatened (i) against or affecting the Company or any of the assets owned, used
or controlled by the Company or any Person whose liability the Company has or
may have retained or assumed, either contractually or by operation of law (or
pending or, to the Knowledge of the Company, threatened against or affecting any
of the Stockholders or the officers, directors, managers or employees of the
Company with respect to its business or proposed business activities), or
pending or threatened by the Company against any Person, at law or in equity, or
before or by any Governmental Body (including any Legal Proceedings with respect
to the transactions contemplated by this Agreement), or (ii) that relate to the
ownership of any capital stock of the Company, or any option or other right to
the capital stock of the Company, or any right to receive consideration as a
result of this Agreement.

(b) The Company is not subject to any Legal Proceedings under collective
bargaining agreements or otherwise or any governmental investigations or
inquiries.

(c) There is no reasonable basis for any of the foregoing. The Company is fully
insured with respect to each of the matters set forth on Section 2.13 of the
Disclosure Schedule. The Company is not subject to any judgment, order or decree
of any court or other Governmental Body, and the Company has not received any
notice from legal counsel to the effect that it is exposed, from a legal
standpoint, to any material liabilities. There are no actions, suits,
proceedings (including any arbitration proceedings), orders, investigations or
claims pending or, to the Knowledge of the Company, threatened against or
affecting any Stockholder in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with the transactions contemplated
by this Agreement. The Company has provided to the Purchaser true, correct and
complete copies of all pleadings, correspondence and other written materials to
which the Company has access and that relate to any Legal Proceeding set forth
on Section 2.13 of the Disclosure Schedule.

Section 2.14 Employee Matters.

(a) Since the date of the Company’s incorporation, the Company has not had, and
does not currently have, any employees, including any temporary or leased
employees.

(b) Section 2.14(b) of the Disclosure Schedule sets forth a true, correct and
complete list of all consultants and independent contractors used by the Company
as of the date of this Agreement, specifying the name of the consultant or
independent contractor, type of services provided, fees paid to such consultant
or independent contractor since the date of the Company’s incorporation, work
location and address, and accurately reflects their wages, salaries or hourly
rates of pay and any other compensation payable to them, their dates of service,
their positions or titles and a true, correct and complete description of the
Company’s obligations to each such consultant and independent contractor. Each
consultant or independent contractor set forth on Section 2.14(b) of the
Disclosure Schedule has the requisite Governmental Authorizations required to
provide the services such consultant or independent contractor provides the
Company, as applicable. The Company has provided to the Purchaser a true,
correct and complete copy of each written agreement with each consultant and
independent contractor set forth on Section 2.14(b) of the Disclosure Schedule.
Each of the consultant and independent contractor relationships with the Persons
set forth on Section 2.14(b) of the Disclosure Schedule is terminable at will
without notice and without pay. The Company has never made use of consultants,
independent contractors or other non-employee service providers who performed
services of the type customarily performed by employees.

17

--------------------------------------------------------------------------------

 

(c) The Company has not made any written or verbal commitments to any officer,
employee, former employee, consultant or independent contractor of the Company
with respect to compensation, promotion, retention, termination, severance or
similar matter in connection with the transactions contemplated by this
Agreement or otherwise.

(d) Each Person classified as an independent contractor or other non-employee
service provider of the Company has, at all times, properly been classified and
treated as an independent contractor or other non-employee service provider for
all purposes including, but not limited to, Tax purposes. The Company is, and
has at all times been, in compliance with all applicable Laws and contracts
relating to its independent contractors and other non-employee service
providers. There are no claims pending or threatened against the Company, by any
independent contractor, other non-employee service provider or third party, in
respect of any accident or injury.

(e) All amounts due in relation to independent contractors or other non-employee
service providers of the Company have been paid.

(f) The Company is not a federal or state contractor.

(g) Since the date of the Company’s incorporation, the Company has not had, and
does not currently have, any bonus, pension, stock option, stock purchase,
benefit, welfare, profit-sharing, retirement, disability, vacation, severance,
hospitalization, insurance, incentive, deferred compensation and other similar
fringe or employee benefit plans, funds, programs or arrangements, whether
written or oral, in each of the foregoing cases which cover, are maintained for
the benefit of, or relate to any or all current or former employees of the
Company and any other Entity related to the Company under Sections 414(b), (c),
(m) and (o) of the Code (an “Employee Plan”). The Company has not announced or
entered into any plan or binding commitment to create, adopt or cause to exist
any Employee Plan.

Section 2.15 Compliance With Laws; Governmental Authorizations.

(a) The Company is, and has at all times been, in compliance with all applicable
Laws, except where non-compliance could not reasonably be expected to result in
a Company Material Adverse Effect. The Company has not received any notice or
other communication from any Governmental Body or any other Person regarding (i)
any actual, alleged, possible or potential material violation of, or failure to
materially comply with, any Law, or (ii) any actual, alleged, possible or
potential obligation on the part of the Company to undertake, or to bear all or
any portion of the cost of, any cleanup or any remedial, corrective or response
action of any nature under any applicable Law. The Company has provided to the
Purchaser a true, correct and complete copy of each report, study, survey or
other document to which the Company has access that addresses or otherwise
relates to the compliance of the Company with, or the applicability to the
Company of, any Laws. To the Knowledge of the Company, no Governmental Body has
proposed or is considering any Law that, if adopted or otherwise put into
effect, (A) may have an adverse effect on the business, condition, assets,
liabilities, operations, financial performance, net income or prospects of the
Company or on the ability of the Company to comply with or perform any covenant
or obligation under any of the Stockholder Related Agreements; or (B) may have
the effect of preventing, delaying, making illegal or otherwise interfering with
the transactions contemplated by this Agreement.

(b) Section 2.15(b) of the Disclosure Schedule sets forth each Governmental
Authorization held by the Company, and the Company has provided to the Purchaser
true, correct and complete copies of all such Governmental Authorizations. The
Governmental Authorizations held by the Company are valid and in full force and
effect, and collectively constitute all Governmental Authorizations necessary
(i) to enable the Company to conduct its business in the manner in which it is
now conducted and as contemplated to be conducted by the Company as of the
Closing and by the Purchaser after the Closing, and (ii) to permit the Company
to own and use its assets in the manner in which they are currently owned and
used. The Company is, and at all times since its incorporation has been, in
compliance with the terms and requirements of the respective Governmental
Authorizations held by the Company. The Company has not received any notice or
other communication from any Governmental Body regarding (A) any actual or
possible violation of or failure to comply with any term or requirement of any
Governmental Authorization, or (B) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization. All of Governmental Authorizations set forth or
required to be set forth on Section 2.15(b) of the Disclosure Schedule will be
available for use by the Company immediately after the Closing. In respect of
approvals, licenses or permits requisite for

18

--------------------------------------------------------------------------------

 

the conduct of any part of the business of the Company which are subject to
periodic renewal, the Company has no reason to believe that such renewals will
not be timely granted by the relevant Governmental Body.

(c) (i) The Company is, and has at all times been, in full compliance with all
of the terms and requirements of each Governmental Authorization set forth or
required to be set forth on Section 2.15(b) of the Disclosure Schedule; (ii) to
the Knowledge of the Company, no event has occurred, and no condition or
circumstance exists, that might (with or without notice or lapse of time or
both) (A) constitute or result directly or indirectly in a violation of or a
failure to comply with any term or requirement of any Governmental Authorization
set forth or required to be set forth on Section 2.15(b) of the Disclosure
Schedule, or (B) result directly or indirectly in the revocation, withdrawal,
suspension, cancellation, termination or modification of any Governmental
Authorization set forth or required to be set forth on Section 2.15(b) of the
Disclosure Schedule; (iii) the Company has never received any notice or other
communication from any Governmental Body or any other Person regarding (x) any
actual, alleged, possible or potential violation of or failure to comply with
any term or requirement of any Governmental Authorization; or (y) any actual,
proposed, possible or potential revocation, withdrawal, suspension,
cancellation, termination or modification of any Governmental Authorization; and
(iv) all applications required to have been filed for the renewal of the
Governmental Authorizations required to be set forth on Section 2.15(b) of the
Disclosure Schedule have been duly filed on a timely basis with the appropriate
Governmental Bodies, and each other notice or filing required to have been given
or made with respect to such Governmental Authorizations has been duly given or
made on a timely basis with the appropriate Governmental Body.

Section 2.16 Brokerage and Transaction Bonuses. There are no claims for
brokerage commissions, finders’ fees or similar compensation in connection with
the transactions contemplated by this Agreement based on any arrangement or
agreement binding upon the Company. There are no special bonuses or other
similar compensation payable to any Person in connection with the transactions
contemplated by this Agreement and the Stockholder Related Agreements. The
Stockholders shall pay, and hold the Company, the Purchaser and its Affiliates
harmless against, any liability, loss or expense (including  reasonable
attorneys’ fees and out of pocket expenses) arising in connection with any such
claim, brokerage commission, finders’ fee or special bonus or other similar
compensation.

Section 2.17 Title to and Sufficiency of Assets. The Company owns, and has good,
valid, transferable and marketable title to, or a valid leasehold interest in,
(a) all properties and assets used by it or acquired after the date thereof,
free and clear of all Liens (except for Permitted Liens), and (b) all of the
rights of the Company under the Material Contracts. Section 2.17 of the
Disclosure Schedule set forth a true, correct and complete list of all such
properties, assets and rights.  All such properties, assets and rights are
suitable for the purposes for which intended and are in good operating condition
and repair consistent with normal industry standards, except for ordinary wear
and tear. The Company owns, has a valid leasehold interest in or has the valid
and enforceable right to use all assets, tangible or intangible, necessary for
the conduct of its business as presently conducted and as contemplated to be
conducted by the Company as of the Closing and by the Purchaser after the
Closing.

Section 2.18 Inventory. The Company does not have, and has not since the date of
its incorporation had, any inventory.

Section 2.19 Bank Accounts. Section 2.19 of the Disclosure Schedule sets forth
true, correct and complete information with respect to each account maintained
by or for the benefit of the Company at any bank or other financial institution,
including the name of the bank or financial institution, the account number, the
balance as of the date of this Agreement (and whether any cash comprising such
balances is “restricted cash”) and the names of all individuals authorized to
draw on or make withdrawals from such accounts (and no changes to such
information shall have occurred as of the Closing Date).

Section 2.20 Product and Service Warranties. All products licensed or delivered
and services rendered by the Company have been in conformity with all applicable
contractual commitments and all express and implied warranties, and the Company
has no liability (and there is no reasonable basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim or
demand against it giving rise to any such liability) for curing or providing
additional services or other damages in connection therewith in excess of any
warranty reserve specifically to be included on the books of the Company as of
the Closing. No products licensed or delivered or services rendered by the

19

--------------------------------------------------------------------------------

 

Company are subject to any guaranty, warranty or other indemnity beyond the
applicable standard terms and conditions of such license, delivery or service
(including as a result of any course of conduct between the Company and any
Person or as a result of any statements in the Company’s product, service or
promotional literature). Section 2.20 of the Disclosure Schedule sets forth
true, correct and complete copies of such standard terms and conditions of
license, delivery or service for the Company (containing applicable guaranty,
warranty and indemnity provisions). The Company has not received any notice of
any claims for (and, to the Knowledge of the Company, there are no threatened
claims for), and the Company has not had, any extraordinary warranty obligations
or additional services relating to any of its products or services.

Section 2.21 Related Party Transactions. No Related Party has, or has at any
time had, any direct or indirect interest in any asset used in or otherwise
relating to the business of the Company. No Related Party is, or has been,
indebted to the Company. No Related Party has entered into, or has had any
direct or indirect financial interest in, any Material Contract, transaction or
business dealing involving the Company. No Related Party is competing, or has at
any time competed, directly or indirectly, with the Company. No Related Party
has any claim or right against the Company.

Section 2.22 Personal Information and Privacy.

(a) The Company has been and is now in compliance with the requirements of all
Privacy Laws applicable to it which govern the collection, use and disclosure of
Personal Information.

(b) Section 2.22(b) of the Disclosure Schedule sets forth and describes each
distinct electronic or other database containing (in whole or in part) Personal
Information maintained by or for the Company at any time (each, a “Company
Database”), the types of Personal Information in each such database, the means
by which the Personal Information was collected, and the security policies that
have been adopted and maintained with respect to each such database.

(c) Section 2.22(c) of the Disclosure Schedule sets forth each privacy policy of
the Company and any other industry privacy code or privacy procedures to which
the Company subscribes or is bound which governs its collection, use and
disclosure of Personal Information (each, a “Privacy Policy”) and identifies,
with respect to each Privacy Policy, (i) the period of time during which such
privacy policy was or has been in effect, (ii) whether the terms of a later
Privacy Policy apply to the data or information collected under such Privacy
Policy, and (iii) if applicable, the mechanism (such as opt-in, opt-out, or
notice only) used to apply a later Privacy Policy to data or information
previously collected under such Privacy Policy.

(d) There is no complaint to or audit, proceeding, investigation or claim
against, or threatened against, the Company by any Governmental Body, or by any
Person in respect of the collection, use or disclosure of Personal Information
by any Person in connection with the business of the Company.

(e) No breach or violation of any such Privacy Policy has occurred or, to the
Knowledge of the Company, is threatened.

(f) There has been no unauthorized or illegal uses of or access to any of the
data or information in any of the Company Databases.

(g) The Company has complied at all times and in all respects with all of the
Privacy Policies and all applicable Laws pertaining to privacy, User Data or
Personal Information.

(h) None of (i) the execution, delivery, or performance of this Agreement or the
Stockholder Related Agreements (or any of the other ancillary agreements), (ii)
the consummation of any of the transactions contemplated by this Agreement or
the Stockholder Related Agreements (or any of the other ancillary agreements),
or (iii) the Purchaser’s possession or use of the User Data or any data or
information in any of the Company Databases, will result in any breach or
violation of any Privacy Policy or any Laws pertaining to privacy, User Data or
Personal Information.

20

--------------------------------------------------------------------------------

 

Section 2.23 Manufacturing. All of the manufacturing facilities and operations
of the Company are in compliance in all material respects with applicable
standards and regulations of the International Organization for Standardization
(“ISO”) and the FDA, including current good manufacturing practices. No event
has occurred that allows, or with or without notice or lapse of time or both,
would allow, revocation or termination of any ISO or FDA certification or
registration of the Company’s manufacturing facilities. The Company has not
received any unresolved FDA Form 483, notice of adverse filing, warning letter,
untitled letter or other correspondence or notice from the FDA or any other
Governmental Body, alleging or asserting noncompliance with the Federal Food,
Drug and Cosmetic Act (21 U.S.C. § 301 et seq.).

Section 2.24 Regulatory Filings. The Company has made all required registrations
and filings with and submissions to all applicable Governmental Bodies relating
to the operation of the business of the Company, including without limitation.
There is no false or misleading information or significant omission in any
product application or other submission to the FDA or any other comparable
Governmental Body. All such registrations, filings and submissions were in
compliance in all material respects with all Laws and other requirements when
filed. No material deficiencies have been asserted by any such applicable
Governmental Bodies with respect to such registrations, filings or submissions
and no facts or circumstances exist which would indicate that a material
deficiency may be asserted by any such authority with respect to any such
registration, filing or submission. The Company has delivered to the Purchaser
copies of (a) all material reports of inspection observations, (b) all material
establishment inspection reports, (c) all material warning letters, and (d) any
other material documents received the Company from the FDA or any other
Governmental Body relating to the business of the Company that assert ongoing
material lack of compliance with any laws (including regulations promulgated by
the FDA and any other Governmental Body) by the Company.

Section 2.25 Product Candidates.

(a) Each of the Company’s products and product candidates is being, and at all
times has been, developed, tested, manufactured, processed, labeled, stored,
transported and distributed, as applicable, in compliance in all material
respects with all applicable Laws, including those requirements relating to
current good manufacturing practices, good laboratory practices and good
clinical practices.

(b) The pre-clinical and clinical trials (including any post-marketing studies)
conducted by or on behalf of the Company were, and if still pending, are, being
conducted in all material respects in accordance with all clinical protocols,
informed consents and applicable Laws. The Company has not been notified by the
FDA or any other Governmental Body of any restriction on the pre-clinical or
clinical trials conducted or currently being conducted by or on behalf of the
Company. The descriptions of, protocols for, and data and other results of, the
pre-clinical and clinical trials conducted or currently being conducted by or on
behalf of the Company that have been provided to the Purchaser are true, correct
and complete.

(c) The Company has fulfilled and performed its obligations under each FDA
Registration in all material respects, and no material event has occurred or
condition or state of facts exists which would constitute a breach or default or
would cause revocation, suspension, limitation or termination of any such FDA
Registration or would result in any other impairment of the rights of the holder
of any such FDA Registration. No loss or expiration of any FDA Registration is
pending or, to the Knowledge of the Company, threatened, other than expiration
of any FDA Registration in accordance with the terms thereof, and there is no
circumstance that would reasonably be expected to cause such FDA Registration to
not be renewable upon expiration to the extent permitted by law, as needed. To
the Knowledge of the Company, any third-party that is a supplier, manufacturer,
or contractor for the Company is in compliance with all FDA Registrations or any
comparable Governmental Body.

(d) Section 2.25(d) of the Disclosure Schedule sets forth a true, correct and
complete list of all of the Company’s products and product candidates, noting,
where applicable, (i) the phase as of the date of this Agreement of clinical
trial or development each product or product candidate is in, and (ii) those
products or product candidates where FDA and/or other regulatory approval,
including foreign approvals, has been applied for and/or received, and listing
the application made and/or the approval or decision thereon obtained. The
Company will, within 30 days of the date of this Agreement, provide to the
Purchaser true, correct and complete copies of, without limitation, (A) any
investigational new drug applications or new drug applications submitted to the
FDA or any other Governmental Body by or on behalf of the

21

--------------------------------------------------------------------------------

 

Company, including any supplements thereto, (B) all final study results and/or
reports relating to products or product candidates, (C) all correspondence to or
from the FDA or other Governmental Bodies, including meeting minutes and records
of material contacts, (D) all documents in the Company’s possession related to
inspections by the FDA or other Governmental Bodies, and (E) all information
relating to adverse drug experiences obtained or otherwise received by the
Company from any source with respect to the products or product candidates.

Section 2.26 Full Disclosure. Neither this Agreement nor the Disclosure Schedule
(a) contains any representation, warranty or information that is false or
misleading with respect to any fact, or (b) omits to state any fact necessary in
order to make the representations, warranties and information contained in this
Agreement and the Disclosure Schedule, in the light of the circumstances under
which such representations, warranties and information were or will be made or
provided, not false or misleading.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER

Except as set forth on the Disclosure Schedule, each Stockholder hereby,
severally and not jointly, represents and warrants to the Purchaser, as of the
date of this Agreement and as of the Closing Date, as set forth below; provided,
however, that the representations and warranties contained in Section 3.14 are
hereby made to the Purchaser solely by Dr. Junghans.

Section 3.1 Authority, No Conflict; Required Filings and Consents.

(a) The Stockholder has full power and authority to do and perform all acts and
things to be done by it under this Agreement. The Stockholder has all requisite
power and authority to enter into this Agreement and any Stockholder Related
Agreement to which it is a party, perform its obligations under this Agreement
and any Stockholder Related Agreement to which it is a party and to consummate
the transactions contemplated by this Agreement and any Stockholder Related
Agreement to which it is a party. This Agreement has been duly executed and
delivered by the Stockholder and constitutes the legal, valid and binding
obligation of the Stockholder, enforceable against the Stockholder in accordance
with its terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to creditors’ rights generally, and (ii) the availability of injunctive
relief and other equitable remedies.

(b) Neither the execution, delivery or performance by the Stockholder of this
Agreement or any of the Stockholder Related Agreements, nor the consummation of
the transactions contemplated by this Agreement or any of the Stockholder
Related Agreements, will directly or indirectly (with or without notice or lapse
of time, or both): (i) contravene, conflict with, or result in any violation or
breach of, or constitute (with or without notice or lapse of time, or both) a
default (or give rise to a right of modification, termination, cancellation or
acceleration of any obligation or loss of any material benefit) under, require
notice to any Person or a consent or waiver under, constitute a change in
control under, require the payment of a fee or penalty under or result in the
creation or imposition of any Lien upon or with respect to any asset owned or
used by the Stockholder under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, Contract or other agreement,
instrument or obligation to which the Stockholder is a party or by which it or
any of its properties or assets may be bound; (ii) contravene, conflict with or
violate, or give any Person the right to challenge any of the transactions
contemplated by this Agreement or any of the Stockholder Related Agreements or
to exercise any remedy or obtain any relief under, any Law or any order, writ,
injunction, judgment or decree to which the Stockholder is subject; or (iii)
contravene, conflict with or result in a violation of any of the terms or
requirements of, or give any Governmental Body the right to revoke, withdraw,
suspend, cancel, terminate or modify, any Governmental Authorization that is
held by the Stockholder or that otherwise relates to the business of the
Stockholder or to any of the assets owned, used or controlled by the
Stockholder.

Section 3.2 Ownership; Title to Shares.

(a) The Stockholder is the record and beneficial owner of the Shares shown as
owned by the Stockholder on Section 3.2 of the Disclosure Schedule. The
Stockholder has, and immediately prior to the Closing, will have, good and valid
title to the Shares to be sold by the Stockholder pursuant to this Agreement,
free and clear of all Liens.

22

--------------------------------------------------------------------------------

 

(b) Upon: (i) receipt by the Stockholder of the Stockholder’s portion of the
Purchaser Stock Consideration in accordance with Section 1.4, and (ii) transfer
of the Shares owned by the Stockholder to the Purchaser in accordance with the
terms of this Agreement, the Purchaser will receive good and valid title to such
Shares, free and clear of all Liens.

(c) There are no options, warrants, equity securities, calls, rights,
commitments or agreements of any character to which the Stockholder is a party
or by which the Stockholder is bound obligating the Stockholder to exchange,
transfer, deliver or sell, or cause to be exchanged, transferred, delivered or
sold, the Shares or other equity interests of the Company owned by the
Stockholder or any security or rights convertible into or exchangeable or
exercisable for any such Shares or other equity interests. The Stockholder is
not a party to or bound by any agreements or understandings with respect to the
voting (including pooling agreements, voting trusts and proxies) or sale or
transfer (including agreements imposing transfer restrictions) of any of the
Shares or other equity interests of the Company owned by the Stockholder.

Section 3.3 Litigation. There are no Legal Proceedings pending or, to the
Knowledge of the Stockholder, threatened that relate to the ownership of any
capital stock of the Company, or any option or other right to the capital stock
of the Company, or any right to receive consideration as a result of this
Agreement, and there is no reasonable basis for any of the foregoing. There are
no actions, suits, proceedings (including any arbitration proceedings), orders,
investigations or claims pending or, to the Knowledge of the Stockholder,
threatened against or affecting the Stockholder in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with the
transactions contemplated by this Agreement.

Section 3.4 Brokerage and Transaction Bonuses. There are no claims for brokerage
commissions, finders’ fees or similar compensation in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreement binding upon the Stockholder. The Stockholder shall pay, and hold the
Company, the Purchaser and its Affiliates harmless against, any liability, loss
or expense (including  reasonable attorneys’ fees and out of pocket expenses)
arising in connection with any such claim, brokerage commission, finders’ fee or
special bonus or other similar compensation.

Section 3.5 Restricted Securities. The Stockholder understands that the shares
of Purchaser Common Stock and the Sorrento Common Stock have not been, and will
not be, registered under the Securities Act, by reason of a specific exemption
from the registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
the Stockholder’s representations as expressed herein.  The Stockholder
understands that the shares of Purchaser Common Stock and Sorrento Common Stock
are “restricted securities” under applicable U.S. federal and state securities
laws and that, pursuant to these laws, the Stockholder must hold the shares of
Purchaser Common Stock and Sorrento Common Stock indefinitely unless they are
registered with the Securities and Exchange Commission and qualified by state
authorities, or an exemption from such registration and qualification
requirements is available.  The Stockholder acknowledges that the Purchaser and
Sorrento have no obligation to register or qualify the Purchaser Common Stock or
the Sorrento Common Stock for resale.  The Stockholder further acknowledges that
if an exemption from registration or qualification is available, it may be
conditioned on various requirements including, but not limited to, the time and
manner of sale, the holding period for the Purchaser Common Stock and the
Sorrento Common Stock, and on requirements relating to the Purchaser and
Sorrento which are outside of the Stockholder’s control, and which the Purchaser
and Sorrento are under no obligation and may not be able to satisfy.

Section 3.6 No Public Market. The Stockholder understands that no public market
now exists for the Purchaser Common Stock, and that the Company has made no
assurances that a public market will ever exist for the Purchaser Common Stock.

Section 3.7 Accredited Investor. The Stockholder is an “accredited investor” as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

23

--------------------------------------------------------------------------------

 

Section 3.8 Investment Experience. The Stockholder represents that he, she or it
is a sophisticated investor experienced in evaluating and investing in private
placement transactions of securities of companies in similar stage of
development as the Purchaser and Sorrento and acknowledges that the Stockholder
can bear the economic risk of its investment for an indefinite period of time,
and has such knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks of the investment in the Purchaser
Common Stock and the Sorrento Common Stock.  

Section 3.9 Foreign Investors. If the Stockholder is not a United States person
(as defined by Section 7701(a)(30) of the Code), the Stockholder hereby
represents that he, she or it has satisfied himself, herself or itself as to the
full observance of the laws of his, her or its jurisdiction in connection with
any invitation to subscribe for the Purchaser Common Stock or the Sorrento
Common Stock or any use of this Agreement, including (a) the legal requirements
within its jurisdiction for the purchase of the Purchaser Common Stock and the
Sorrento Common Stock, (b) any foreign exchange restrictions applicable to such
purchase, (c) any governmental or other consents that may need to be obtained,
and (d) the income tax and other tax consequences, if any, that may be relevant
to the purchase, holding, redemption, sale or transfer of the Purchaser Common
Stock and the Sorrento Common Stock.  The Stockholder’s beneficial ownership of
the Purchaser Common Stock or the Sorrento Common Stock will not violate any
applicable securities or other laws of the Stockholder’s jurisdiction.

Section 3.10 No General Solicitation. Neither the Stockholder, nor any of his,
her or its officers, managers, employees, agents, members or partners has either
directly or indirectly, including through a broker or finder (a) engaged in any
general solicitation, or (b) published any advertisement in connection with the
offer and sale of the Purchaser Common Stock or the Sorrento Common Stock.

Section 3.11 Residence. The Stockholder resides in the state or province
identified in the address of the Stockholder set forth on Section 3.11 of the
Disclosure Schedule. The state or province in which the Stockholder resides is
not a community property state.

Section 3.12 Legends. The Stockholder understands that the Purchaser Common
Stock and the Sorrento Common Stock acquired hereunder and any securities issued
in respect of or exchange therefor may bear any one or more of the following
legends:  (a) any legend required by the securities laws of any state to the
extent such laws are applicable to the Purchaser Common Stock or the Sorrento
Common Stock represented by the certificate so legended, (b) customary legends
to the effect that the Purchaser Common Stock and the Sorrento Common Stock have
not been registered under the Securities Act and that the transfer thereof may
be accordingly restricted, and (c) the legend set forth in Section 5.14.

Section 3.13 Investment Purpose; Disclosure of Information.

(a) The Stockholder has requested, received, reviewed and considered all the
information the Stockholder deems necessary, appropriate or relevant as a
prudent and knowledgeable investor in evaluating the investment in Purchaser
Common Stock and the Sorrento Common Stock. The Stockholder further represents
that the Stockholder has had an opportunity to ask questions of and receive
answers from the Purchaser regarding the terms and conditions of the offering of
the shares of Purchaser Common Stock and the Sorrento Common Stock and the
business, prospects and financial condition of the Purchaser and Sorrento
necessary to verify the accuracy of any information furnished to the Stockholder
or to which the Stockholder had access.

(b) The Stockholder is acquiring the shares of Purchaser Common Stock or
Sorrento Common Stock pursuant to this Agreement in the ordinary course of the
Stockholder’s business and for the Stockholder’s own account for investment
purposes only and with no present intention of distributing any Purchaser Common
Stock or Sorrento Common Stock, and no arrangement or understanding exists with
any other persons regarding the distribution of Purchaser Common Stock or
Sorrento Common Stock.

Section 3.14 Assignment.  

(a) The Stockholder has assigned to the Company all of the Stockholder’s rights,
title and interest in and to any rights to “Research Products” (as defined in
the 1993 IM MTA and the 1998 MTA), “Materials” (as defined in the 1993

24

--------------------------------------------------------------------------------

 

Repligen MTA) and “Inventions” (as defined in the Assignment of Rights
Agreement) and all related Intellectual Property Rights or other rights to own,
transfer, license and otherwise exploit any derivative products from any of the
research materials that the Stockholder may have rights to under the following
agreements:

(i) Material Transfer Agreement between New England Deaconess Hospital and
Immunomedics, Inc. of September 17, 1993 (the “1993 IM MTA”);

(ii) Materials Transfer Agreement between Beth Israel Deaconess Medical Center
and Northwest Biotherapeutics, L.L.C. of April 9, 1998 (the “1998 MTA”);

(iii) Materials Transfer Agreement among New England Deaconess Hospital, The
Scripps Research Institute and Repligen Corporation of April, 1993 (the “1993
Repligen MTA”); and

(iv) Assignment of Rights and Reimbursement of Legal Expenses Agreement of April
14, 2015 between Beth Israel Deaconess Medical Center, Inc. and Richard
Junghans, M.D., Ph.D. (the “Assignment of Rights Agreement” and, together with
the 1993 IM MTA, the 1998 MTA and the 1993 Repligen MTA, the “IP-Related
Agreements”).

To the extent required by any of the IP-Related Agreements, and as directed by
the Purchaser, the Stockholder shall seek the issuance of waivers or declination
of licensing and other rights by (A) Immunomedics, Inc. under the 1993 IM MTA;
(B) Northwest Biotherapeutics, L.L.C. under the 1998 MTA; (C) Repligen/TSRI
under the 1993 Repligen MTA; and (D) Beth Israel Deaconess Medical Center, Inc.
under the Assignment of Rights Agreement; provided that the consummation of the
transactions set forth herein, including without limitation the issuance of the
Purchaser Stock Consideration shall not be conditioned upon obtaining any such
waiver or declination.

(b) All of the Stockholder’s right, title and interest in and to Intellectual
Property Rights or other rights to own, transfer, license and otherwise exploit
any derivative products from any of the research materials that are the subject
of or related to the IP-Related Agreements have been assigned to the Company,
free and clear of any Lien.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser represents and warrants to the Company and each of the
Stockholders, as of the date of this Agreement and as of the Closing Date, as
set forth below.

Section 4.1 Organization and Good Standing. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has all requisite and necessary power and
authority to own, lease, use and operate its properties and assets and to carry
on and conduct its business as now being conducted and as proposed to be
conducted as of the Closing Date and is in good standing as a foreign
corporation (or equivalent status in the relevant jurisdiction) in each
jurisdiction in which the character of the properties it owns, operates or
leases or the nature of its activities makes such qualification necessary or
advisable. The Purchaser has full corporate power and authority to do and
perform all acts and things to be done by it under this Agreement.

Section 4.2 Authority, No Conflict; Required Filings and Consents.

(a) The Purchaser has all requisite corporate power and authority to enter into
this Agreement and any Purchaser Related Agreement to which it is a party,
perform its obligations under this Agreement and any Purchaser Related Agreement
to which it is a party and to consummate the transactions contemplated by this
Agreement and any Purchaser Related Agreement to which it is a party. The
execution and delivery of this Agreement and any Purchaser Related Agreement to
which it is a party and the consummation of the transactions contemplated by
this Agreement and any Purchaser Related Agreement to which it is a party by the
Purchaser have been duly authorized by all necessary corporate action on the
part of the Purchaser, and no other corporate action or proceeding on the part
of the Purchaser or its board of directors is necessary to authorize the
execution, delivery or performance of this Agreement, any Purchaser Related
Agreement to which it is a party or the transactions contemplated by this
Agreement or any Purchaser Related Agreement to which it is a party. This
Agreement has been duly executed and delivered by the Purchaser and constitutes

25

--------------------------------------------------------------------------------

 

the legal, valid and binding obligation of the Purchaser, enforceable against
the Purchaser in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to creditors’ rights generally, and (ii) the
availability of injunctive relief and other equitable remedies.

(b) Neither the execution, delivery or performance by the Purchaser of this
Agreement or any of the Purchaser Related Agreements, nor the consummation of
the transactions contemplated by this Agreement or any of the Purchaser Related
Agreements, will directly or indirectly (with or without notice or lapse of
time, or both): (i) contravene, conflict with, or result in any violation or
breach of, any of the Purchaser’s Organizational Documents, (ii) contravene,
conflict with, or result in any violation or breach of, or constitute (with or
without notice or lapse of time, or both) a default (or give rise to a right of
modification, termination, cancellation or acceleration of any obligation or
loss of any material benefit) under, require notice to any Person or a consent
or waiver under, constitute a change in control under, require the payment of a
fee or penalty under or result in the creation or imposition of any Lien upon or
with respect to any asset owned or used by the Purchaser under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease,
license, Contract or other agreement, instrument or obligation to which the
Purchaser is a party or by which it or any of its properties or assets may be
bound, (iii) contravene, conflict with or violate, or give any Person the right
to challenge any of the transactions contemplated by this Agreement or any of
the Purchaser Related Agreements or to exercise any remedy or obtain any relief
under, any Law or any order, writ, injunction, judgment or decree to which the
Purchaser is subject, or (iv) contravene, conflict with or result in a violation
of any of the terms or requirements of, or give any Governmental Body the right
to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is held by the Purchaser or that otherwise relates to the
business of the Purchaser or to any of the assets owned, used or controlled by
the Purchaser.

(c) No Governmental Authorization, or registration, declaration, notice or
filing with, any Governmental Body is required by or with respect to the
Purchaser: (i) in connection with the execution and delivery of this Agreement
or any of the Purchaser Related Agreements by the Purchaser or the consummation
by the Purchaser of the transactions contemplated by this Agreement or any of
the Purchaser Related Agreements, or (ii) necessary for the Purchaser to operate
its business immediately after the Closing in the same manner as operated
immediately prior to the Closing after giving effect to the consummation of the
transactions contemplated by this Agreement and the Purchaser Related
Agreements.

ARTICLE V

CERTAIN COVENANTS AND AGREEMENTS

Section 5.1 Access and Investigation. During the period from the date of this
Agreement to the Closing Date (the “Pre‑Closing Period”), the Company shall (and
the Stockholders hereby covenant with and undertake to the Purchaser that they
shall, and shall cause their Affiliates and Representatives to cause the Company
to): (a) provide the Purchaser and the Purchaser’s Representatives with
reasonable access to the Company’s Representatives, personnel, properties and
assets and to all existing books, records, Tax Returns, work papers and other
documents and information relating to the Company, and (b) provide the Purchaser
and the Purchaser’s Representatives with copies of such books, records, Tax
Returns, work papers and other documents and information and such additional
financial, operating and other data and information regarding the Company as the
Purchaser may reasonably request.

Section 5.2 Operation of the Company’s Business.

(a) During the Pre-Closing Period, the Company shall (and the Stockholders shall
cause the Company to):  (i) ensure that the Company conducts its business and
operations (A) in the ordinary course of business consistent with past practice,
and (B) in compliance with all applicable Laws and the requirements of all
Material Contracts and Governmental Authorizations held by the Company; (ii) use
best efforts to ensure that the Company preserves intact its current business
organization, keep available the services of its current officers, directors and
consultants and maintain its relations and goodwill with all suppliers,
customers, landlords, creditors, licensors, licensees, consultants and other
Persons having business relationships with the Company; (iii) maintain the
books, records and consolidated financial statements of the Company in
accordance with GAAP and consistent with past practice; (iv) provide all
notices, assurances and support required by any Company Contract in order to
ensure that no condition under such Company Contract occurs which could

26

--------------------------------------------------------------------------------

 

result in, or could increase the likelihood of any transfer or disclosure by the
Company of any Intellectual Property Rights; and (v) keep in full force and
effect (with the same scope and limits of coverage) all insurance policies in
effect as of the date of this Agreement covering all material assets of the
Company.

(b) During the Pre-Closing Period, the Company shall not, and the Stockholders
shall cause the Company not to (without the prior written consent of the
Purchaser):

(i) (A) declare, accrue, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock, shares or property) in respect of, any of
its capital stock or other equity or voting interests, (B) authorize for
issuance or issue and deliver any additional shares of its capital stock or
securities convertible into or exchangeable for shares of its capital stock, or
grant any right, option or other commitment for the issuance of its capital
stock or of such securities, (C) split, combine or reclassify any of its shares
of capital stock or other equity or voting interests, or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or other equity or voting interests, (D)
purchase, redeem or otherwise acquire any of its capital stock or any other
securities of the Company or any Company Rights (including any restricted stock
except pursuant to forfeiture conditions of such restricted stock), or (E) take
any action that would result in any change of any term (including any conversion
price thereof) of any debt security of the Company;

(ii) amend or permit the adoption of any amendment to the Organizational
Documents of the Company, or effect, become a party to or authorize any
Acquisition Transaction, recapitalization, reclassification of shares, stock
split, reverse stock split or similar transaction;

(iii) recognize any labor union or adopt or enter into any collective bargaining
agreement or other labor union Contract;

(iv) adopt a plan of complete or partial liquidation or dissolution or
resolutions providing for or authorizing such a liquidation or a dissolution;

(v) form any Subsidiary or acquire any equity interest or other interest in any
other Entity;

(vi) make any capital expenditure outside the ordinary course of business or
make any single capital expenditure in excess of $5,000; provided, however, that
the maximum amount of all capital expenditures made on behalf of the Company,
taken as a whole, during the Pre-Closing Period shall not exceed $10,000 in the
aggregate;

(vii) enter into or become bound by, or permit any of the assets owned or used
by it to become bound by, any Material Contract or any Contract, lease,
agreement or instrument that would be required to be set forth on Section
2.12(a) of the Disclosure Schedule if it were entered into on or prior to the
date of this Agreement, or amend or terminate, or waive or exercise any material
right or remedy under, any Material Contract or any Contract, lease, agreement
or instrument that would be required to be set forth on Section 2.12(a) of the
Disclosure Schedule if it were entered into on or prior to the date of this
Agreement;

(viii) acquire, lease or license any right or other asset from any other Person
or sell or otherwise dispose of, or lease, license or encumber, any right or
other asset to any other Person (except in each case for assets acquired,
leased, licensed, encumbered or disposed of by the Company in the ordinary
course of business consistent with past practice and not having a value, or not
requiring payments to be made or received, in excess of $5,000 individually, or
$10,000 in the aggregate), or waive or relinquish any claim or right;

(ix) delay any regularly-scheduled maintenance of the Company’s assets, or
otherwise take any action with respect to such assets outside of the ordinary
course of business or inconsistent with the Company’s past practice;

(x) repurchase, repay or prepay any Indebtedness, or incur any Indebtedness in
excess of $5,000, or guarantee any Indebtedness of another Person, guarantee any
debt securities of another Person, enter into any “keep well” or other agreement
to maintain any financial statement condition of another Person or enter into
any arrangement having the economic effect of any of the foregoing;

27

--------------------------------------------------------------------------------

 

(xi) grant, create, incur or suffer to exist any Lien on the assets of the
Company that did not exist on the date of this Agreement or write down the value
of any asset or investment on the books or records of the Company, except for
depreciation and amortization in the ordinary course of business consistent with
the Company’s past practice;

(xii) make any loans, advances or capital contributions to, or investments in,
any other Person;

(xiii) increase in any manner the compensation or benefits of, or pay any bonus
to, any employee, officer, director or independent contractor of the Company;

(xiv) except as required to comply with applicable Laws (A) pay to any employee,
officer, director or independent contractor of the Company any benefit not
provided for under any Contract in effect on the date of this Agreement, (B)
adopt any Employee Plan, (C) take any action to fund or in any other way secure
the payment of compensation or benefits under any Contract or Employee Plan, or
(D) take any action to accelerate the vesting or payment of any compensation or
benefit under any Contract or Employee Plan;

(xv) hire any employee, or engage any independent contractor whose relationship
may not be terminated by the Company on 30 days’ notice or less;

(xvi) except as required by GAAP or applicable Laws, make or change any Tax
election, change its fiscal year, revalue any of its material assets or adopt or
make any changes in financial or Tax accounting methods, principles or
practices;

(xvii) enter into any closing agreement or Tax ruling, settle or compromise any
Tax claim or assessment, consent to any extension or waiver of the limitation
period applicable to any Tax claim or assessment, or file any Tax Return
(including any amended Tax Return) unless such Tax Return has been provided to
the Purchaser for review within a reasonable period prior to the due date for
filing and the Purchaser has consented to such filing;

(xviii) commence, settle or compromise any Legal Proceedings related to or in
connection with the Company’s business;

(xix) (A) dispose of or permit to lapse any ownership and/or right to the use
of, or fail to protect, defend and maintain the ownership, validity and
registration of, the Company Intellectual Property, or (B) dispose of or
disclose to any Person, any Confidential Information;

(xx) take or omit to take any action that could, or is reasonably likely to, (A)
result in any of its representations and warranties set forth in this Agreement
or any Stockholder Related Agreement to which it is a party being or becoming
untrue in any material respect at any time at or prior to the Closing, (B)
result in any of the conditions to the consummation of the transactions
contemplated by this Agreement not being satisfied, (C) cause the Company to be
unable to conduct its business after the Closing in accordance with its past
practice and as contemplated to be conducted as of the Closing after giving
effect to the transactions contemplated by this Agreement, or (D) constitute or
result in a breach of any of the provisions of this Agreement; or

(xxi) authorize, agree, commit or enter into any Contract to take any of the
actions described in clauses (i) through (xx) of this Section 5.2(b).

Section 5.3 Notification. During the Pre‑Closing Period, the Company and the
Stockholders shall promptly notify the Purchaser in writing of:

(a) the discovery by the Company or any Stockholder of any event, condition,
fact or circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes an inaccuracy in or breach of any
representation or warranty made by the Company or any Stockholder in this
Agreement;

(b) any event, condition, fact or circumstance that occurs, arises or exists
after the date of this Agreement and that would cause or constitute an
inaccuracy in or breach of any representation or warranty made by the Company or
any

28

--------------------------------------------------------------------------------

 

Stockholder in this Agreement if (i) such representation or warranty had been
made as of the time of the occurrence, existence or discovery of such event,
condition, fact or circumstance, or (ii) such event, condition, fact or
circumstance had occurred, arisen or existed on or prior to the date of this
Agreement;

(c) any breach of any covenant or obligation of the Company or any Stockholder
under this Agreement, any Stockholder Related Agreement or any agreements
contemplated by this Agreement or the Stockholder Related Agreements;

(d) any event, condition, fact or circumstance that has made, could reasonably
be expected to make, or is likely to make, the timely satisfaction of any
condition set forth in this Agreement impossible or unlikely or that has had or
could reasonably be expected to have a Company Material Adverse Effect; and

(e) (i) any notice or other communication from any Person alleging that the
consent or approval of such Person is or may be required in connection with the
transactions contemplated by this Agreement, and (ii) any Legal Proceeding or
claim threatened, commenced or asserted against or with respect to the Company
or the transactions contemplated by this Agreement.

No notification given to the Purchaser pursuant to this Section 5.3 shall limit
or otherwise affect any of the representations, warranties, covenants or
obligations of the Company or the Stockholders, or any of the rights of the
Purchaser, contained in this Agreement.

Section 5.4 No Negotiation.

(a) Until the earlier of the Closing or the termination of this Agreement
pursuant to Article IX, neither the Company nor any of the Stockholders shall
directly or indirectly, and shall not authorize or permit the Company or any
Representative of the Company to, directly or indirectly (i) solicit, initiate,
encourage, induce or facilitate the making, submission or announcement of any
inquiries or the making of any proposal or offer contemplating or otherwise
relating to an Acquisition Transaction (an “Acquisition Proposal”) or take any
action that could reasonably be expected to lead to an Acquisition Proposal,
(ii) furnish any information regarding the Company to any Person in connection
with or in response to an Acquisition Proposal or an inquiry or indication of
interest that could reasonably be expected to lead to an Acquisition Proposal,
(iii) engage in discussions or negotiations with any Person with respect to a
potential Acquisition Transaction or an Acquisition Proposal, (iv) approve,
endorse or recommend any Acquisition Proposal or Acquisition Transaction, or (v)
enter into any letter of intent or similar document or any Contract
contemplating or otherwise relating to any Acquisition Proposal or Acquisition
Transaction. Without limiting the generality of the foregoing, the Company and
the Stockholders acknowledge and agree that any violation of or the taking of
any action inconsistent with any of the restrictions set forth in the preceding
sentence by any Representative of the Company, whether or not such
Representative is purporting to act on behalf of the Company, shall be deemed to
constitute a breach of this Section 5.4 by the Company.

(b) The Company and the Stockholders shall promptly (and in no event later than
24 hours after receipt of any Acquisition Proposal, any inquiry or indication of
interest that could lead to an Acquisition Proposal or any request for nonpublic
information) advise the Purchaser orally and in writing of any Acquisition
Proposal, any inquiry or indication of interest that could lead to an
Acquisition Proposal or any request for nonpublic information relating to the
Company (including the identity of the Person making or submitting such
Acquisition Proposal, inquiry, indication of interest or request, and the terms
thereof) that is made or submitted by any Person during the Pre-Closing Period.
The Company and the Stockholders shall keep the Purchaser fully informed with
respect to the status of any such Acquisition Proposal, inquiry, indication of
interest or request and any modification or proposed modification thereto.

(c) The Company and the Stockholders shall, and shall cause each of their
Representatives to, immediately cease and cause to be terminated any existing
discussions with any Person (other than the Purchaser) that relate to any
Acquisition Proposal. The Company shall promptly request each Person that has
executed, within 12 months prior to the date of this Agreement, a
confidentiality, standstill or similar agreement in connection with its
consideration of a possible Acquisition Transaction to return or certify the
destruction of all Confidential Information previously furnished to such Person
by or on behalf of the Company.

29

--------------------------------------------------------------------------------

 

Section 5.5 Related Party Transactions. The Company shall, prior to the Closing,
cause to be paid to the Company all amounts owed to the Company by any
Stockholder or any Related Party. At and as of the Closing Date, any debts of
the Company owed to any of the Stockholders or to any Related Party shall be
canceled.

Section 5.6 Public Announcements. During the Pre-Closing Period, the Company and
the Stockholders shall not (and the Company shall not permit any of its
Representatives to) issue any press release or make any public statement
regarding this Agreement or any of the transactions contemplated by this
Agreement without the Purchaser’s prior written consent; provided, however, that
nothing in this Agreement shall be deemed to prohibit the Company from making
any public disclosure that the Company deems necessary or appropriate under
applicable Law; provided, further, without the prior written consent of the
Purchaser, neither the Company nor any Stockholder shall at any time disclose to
any Person the fact that this Agreement has been entered into or any of the
terms of this Agreement other than to such parties’ advisors who the Company or
any Stockholder, as applicable, reasonably determines needs to know such
information for the purpose of advising the Company or such Stockholder, it
being understood that such advisor will be informed of the confidential nature
of this Agreement and the terms of this Agreement and will be directed to treat
such information as confidential in accordance with the terms of this Agreement.

Section 5.7 Reasonable Efforts; Further Assurances; Cooperation. Subject to the
other provisions of this Agreement, each party shall use its reasonable, good
faith efforts to perform its obligations under this Agreement and to take, or
cause to be taken, and do, or cause to be done, all things necessary, proper or
advisable under applicable Law to cause the transactions contemplated by this
Agreement to be effected as soon as practicable, but in any event on or prior to
the Expiration Date, in accordance with the terms of this Agreement, and shall
cooperate fully with each other party and its Representatives in connection with
any step required to be taken as a part of its obligations under this Agreement,
including the following:

(a) Each party shall promptly make its filings and submissions and shall take
all actions necessary, proper or advisable under applicable Laws to obtain any
required approval of any Governmental Body with jurisdiction over the
transactions contemplated by this Agreement (except that the Purchaser shall
have no obligation to take or consent to the taking of any action required by
any such Governmental Body that could adversely affect the business or assets of
the Purchaser or the transactions contemplated by this Agreement or the
Purchaser Related Agreements). The Company shall provide to the Purchaser all
information required for any application or other filing to be made by the
Company pursuant to any applicable Law in connection with the transactions
contemplated by this Agreement;

(b) Each party shall promptly notify the other parties of (and provide written
copies of) any communications from or with any Governmental Body in connection
with the transactions contemplated by this Agreement;

(c) In the event any claim, action, suit, investigation or other proceeding by
any Governmental Body or other Person is commenced that questions the validity
or legality of the transactions contemplated by this Agreement or seeks damages
in connection therewith, the parties shall (i) cooperate and use all reasonable
efforts to defend against such claim, action, suit, investigation or other
proceeding, (ii) in the event an injunction or other order is issued in any such
action, suit or other proceeding, use all reasonable efforts to have such
injunction or other order lifted, and (iii) cooperate reasonably regarding any
other impediment to the consummation of the transactions contemplated by this
Agreement; and

(d) The Company shall, at the Company’s sole cost and expense, give all notices
to third parties and use its best efforts (in consultation with the Purchaser)
to obtain all third-party consents, as directed by the Purchaser or Sorrento,
(i) necessary, proper or advisable to consummate the transactions contemplated
by this Agreement, (ii) required to be given or obtained, or (iii) required to
prevent a Company Material Adverse Effect, whether prior to, on or following the
Closing Date.

Section 5.8 Tax Matters.

(a) Tax Periods Ending on or Before the Closing Date. The Purchaser shall
prepare or cause to be prepared and timely file or cause to be timely filed all
Tax Returns for the Company for all Tax periods ending on or prior to the
Closing Date that are due after the Closing Date (each, a “Pre-Closing Tax
Period”).

30

--------------------------------------------------------------------------------

 

(b) Tax Periods Beginning Before and Ending After the Closing Date. The
Purchaser shall prepare or cause to be prepared and timely file or cause to be
timely filed any Tax Returns of the Company for Tax periods that begin before
the Closing Date and end after the Closing Date (each, a “Straddle Tax
Period”).  

(c) Payment of Taxes. The Stockholders shall be responsible for, and shall
indemnify the Purchaser from and against, any Tax with respect to the Company
that is attributable to a Pre-Closing Tax Period or to that portion of a
Straddle Tax Period that ends on the Closing Date. Within five days prior to the
due date for the payment of any such Tax, the Stockholders shall pay to the
Purchaser an amount equal to such excess. For purposes of this Section 5.8, in
the case of any Taxes that are imposed on a periodic basis and are payable for a
Straddle Tax Period, the portion of such Tax that relates to the portion of such
Taxable period ending on the Closing Date shall (i) in the case of any Taxes
other than Taxes based upon or related to income or receipts, be deemed to be
the amount of such Tax for the entire Tax period multiplied by a fraction the
numerator of which is the number of days in the Tax period ending on the Closing
Date and the denominator of which is the number of days in the entire Tax
period, and (ii) in the case of any Tax based upon or related to income or
receipts be deemed equal to the amount that would be payable if the relevant Tax
period ended on the Closing Date.

(d) Cooperation on Tax Matters. The Purchaser, the Company and the Stockholders
shall cooperate as and to the extent reasonably requested by the other party, in
connection with the filing of Tax Returns pursuant to this Section 5.8 and any
audit, litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party’s request) the provision
of records and information that are reasonably relevant to any such audit,
litigation or other proceeding and making employees or agents available on a
mutually convenient basis to provide additional information and explanation of
any material provided under this Section 5.8(d).

(e) Transfer Taxes. Any Taxes or recording fees payable as a result of the
purchase and sale of the Shares or any other action contemplated by this
Agreement (other than any federal, state, local or foreign Taxes measured by or
based upon income or gains imposed upon the Purchaser) shall be paid by the
Stockholders. The parties shall cooperate in the preparation, execution and
filing of all returns, questionnaires, applications and other documents
regarding Taxes and all transfer, recording, registration and other fees that
become payable in connection with the transactions contemplated by this
Agreement that are required or permitted to be filed at or prior to the Closing.

Section 5.9 Accounts and Notes Receivable. From and after the Closing, if any
Stockholder receives or collects any Receivables, the Stockholder shall remit
any such amounts to the Purchaser or the Company within five days of each day on
which the Stockholder receives such sum.

Section 5.10 Cooperation with Financial Reporting. The Stockholders shall
cooperate to the extent reasonably requested by the Purchaser after the Closing,
in connection with the preparation and auditing of financials for the Company.
The Stockholders shall provide all of the financial records and supporting
documentation of the Company within 10 days following the Closing and shall make
employees or agents available on a mutually convenient basis to provide
additional information and explanation of any information provided under this
Section 5.10.

Section 5.11 Release. In consideration for the Closing Consideration, as of and
following the Closing Date, each Stockholder knowingly, voluntarily and
unconditionally releases, forever discharges, and covenants not to sue the
Company from or for any and all claims, causes of action, demands, suits, debts,
obligations, liabilities, damages, losses, costs and expenses (including
attorneys’ fees) of every kind or nature whatsoever, known or unknown, actual or
potential, suspected or unsuspected, fixed or contingent, that such Stockholder
has or may have, now or in the future, arising out of, relating to, or resulting
from any act or omission, error, negligence, breach of contract, tort, violation
of law, matter or cause whatsoever from the beginning of time to the Closing
Date, including without limitation any claim related to Company Rights held by
such Stockholder that are terminated as of the Closing; provided, however, that
the foregoing release shall not apply to any claims arising out of this
Agreement.

31

--------------------------------------------------------------------------------

 

Section 5.12 Termination of Certain Agreements. Prior to the Closing, the
Company shall terminate, or cause to be terminated, the agreements and
arrangements set forth on Schedule 5.12 (the “Excluded Contracts”), such that
the Company shall not have any liability following the Closing related to such
Excluded Contracts. Each such termination shall include a release of the
Company, as applicable, from any and all liabilities and obligations arising out
of, or related to, such Excluded Contract.

Section 5.13 Casualty. In the event of any loss, damage, or destruction to the
assets or properties of the Company resulting in losses of $25,000 or greater,
after the date of this Agreement and prior to the Closing, whether by fire,
theft, vandalism, terrorism, flood, earthquake, force majeure or other cause or
casualty (a “Casualty”), the Company shall promptly notify the Purchaser of the
occurrence thereof. Upon receipt of such notice, the Purchaser shall have the
right to terminate this Agreement in accordance with the provisions of Section
9.1(a)(iv). In the event of such Casualty, if the Purchaser chooses not to
terminate the Agreement, at the option of the Stockholders’ Representative, the
Stockholders shall have the right to (a) cause the Company to repair and restore
the loss, damage or destruction before the Closing, in which event (i) the
Stockholders shall cause the Company to restore such assets or properties to
substantially the condition in which they existed immediately prior to the
Casualty, (ii) the Stockholders shall be entitled, but not obligated, to
postpone the Closing for up to 30 Business Days upon written notice of such
postponement to the Purchaser, which notice shall specify a new date for the
Closing, and (iii) if such repair and restoration work is not completed at the
Closing, the Purchaser shall have the right to terminate this Agreement or
proceed to the Closing, in which event the Estimated Purchase Price shall be
reduced by the amount of the estimated cost of repair and restoration for such
assets or properties, or (b) without repairing the Casualty, and without
recourse or warranty, cause the Company to pay the Purchaser the amount of the
deductible (or the self-insured retainage) under the insurance policy of the
Company covering such assets or properties, whereupon the Closing shall take
place as if no Casualty had occurred and without any reduction in the Estimated
Purchase Price. Notwithstanding any other provision of this Agreement to the
contrary, any amount withheld from the Purchaser Stock Consideration pursuant to
this Section 5.13 shall not also be recoverable pursuant to Article X.

Section 5.14 Restrictions on Transfers of Purchaser Common Stock. Each
Stockholder hereby agrees that such Stockholder may not, in addition to any
other applicable restrictions on transfer, without the Purchaser’s prior written
consent, at any time on or prior to April 30, 2016, Transfer all or any portion
of the shares of Purchaser Common Stock issued to such Stockholder pursuant to
this Agreement.  In furtherance of the foregoing, each Stockholder acknowledges
and agrees that, until April 30, 2016, the shares of Purchaser Common Stock
acquired under this Agreement and any securities issued in respect of or
exchange therefor will bear the following legend:

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE, AS SET FORTH IN A STOCK PURCHASE AGREEMENT AMONG THE
COMPANY AND THE ORIGINAL HOLDERS OF THESE SHARES, A COPY OF WHICH MAY BE
OBTAINED AT THE PRINCIPAL OFFICE OF THE COMPANY.”

ARTICLE VI

CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER

The obligations of the Purchaser to consummate the transactions contemplated by
this Agreement are subject to the satisfaction (or written waiver by the
Purchaser), at or prior to the Closing, of each of the following conditions:

Section 6.1 Accuracy of Representations. Each of the representations and
warranties of the Company and the Stockholders contained in this Agreement and
the Stockholder Related Agreements that are qualified as to materiality shall be
true and correct in all respects, and each of the representations and warranties
of the Company and each of the Stockholders contained in this Agreement and the
Stockholder Related Agreements that are not so qualified shall be true and
correct in all material respects, in each case as of the date of this Agreement
and as of the Closing Date with the same force and effect as though made as of
the Closing Date (except to the extent that any such representation and warranty
expressly speaks as of a specific date, in which case the accuracy of such
representation and warranty shall be determined as of such date).

32

--------------------------------------------------------------------------------

 

Section 6.2 Performance of Covenants. Each of the covenants and obligations set
forth in this Agreement that the Company and each of the Stockholders is
required to comply with or perform at or prior to the Closing shall have been
complied with or performed in all material respects.

Section 6.3 Company Compliance Certificate. The Company shall have delivered, or
caused to be delivered, to the Purchaser a certificate executed by the President
of the Company as to compliance with the conditions set forth in Sections 6.1,
6.2, 6.9 and 6.16 (the “Company Compliance Certificate”).

Section 6.4 Consents. All consents, approvals, orders or authorizations of, or
registrations, declarations or filings with, any Person required in connection
with the execution, delivery or performance of this Agreement or any of the
Stockholder Related Agreements shall have been obtained by the Company, or made
by or on behalf of the Company, at the Company’s sole cost and expense, and
shall be in full force and effect, in each case in form and substance reasonably
satisfactory to the Purchaser.

Section 6.5 Secretary’s Certificate. The Company shall have delivered a
certificate, dated as of the Closing Date, signed by the Secretary of the
Company, (a) attaching copies of the Organizational Documents, and any
amendments thereto, of the Company, (b) attaching a true, correct and complete
copy of the stock ledger of the Company from the date of its incorporation
through the Closing Date, (c) certifying that attached thereto are true, correct
and complete copies of actions by written consent or resolutions duly adopted by
the board of directors of the Company which adopt this Agreement and authorize
and approve the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement, (d) certifying
that attached thereto are true, correct and complete copies of actions by
written consent or resolutions duly adopted by the Stockholders of the Company
which adopt this Agreement and any Stockholder Related Agreement and authorize
and approve the execution, delivery and performance of this Agreement and each
Stockholder Related Agreement and the consummation of the transactions
contemplated by this Agreement and the Stockholder Related Agreements, (e)
certifying the good standing (or equivalent status in the relevant jurisdiction)
of the Company in its jurisdiction of incorporation or organization and in each
other jurisdiction where it is qualified to do business (or equivalent status in
the relevant jurisdiction) and that there are no proceedings for the dissolution
or liquidation of the Company, and (f) certifying the incumbency, signature and
authority of the officers of the Company authorized to execute, deliver and
perform this Agreement and all other documents, instruments or agreements
related thereto executed or to be executed by the Company.

Section 6.6 Ancillary Agreements and Deliveries. The Company and the
Stockholders shall have delivered, or caused to be delivered, to the Purchaser
the following agreements and documents, each of which shall be in full force and
effect as of the Closing and shall not have been amended or modified as of the
Closing:

(a) certificates representing the Shares, duly endorsed in blank or accompanied
by duly executed stock powers or other instruments of assignment requested by
and in form and substance reasonably satisfactory to the Purchaser;

(b) the organizational record books, minute books and corporate seal of the
Company;

(c) written resignations of the directors and officers of the Company, effective
as of the Closing Date;

(d) a certificate in such form as may be reasonably requested by counsel to the
Purchaser that complies with Treasury Regulation Section 1.1445-2(c)(3),
accompanied by any appropriate notice to the Internal Revenue Service pursuant
to Treasury Regulations Section 1.897-2(h);

(e) evidence, in form and substance reasonably satisfactory to the Purchaser,
that each consent, approval, order or authorization of, or registration,
declaration or filing with any Person required in connection with the execution,
delivery or performance of this Agreement has been obtained or made and is in
full force and effect;

(f) written evidence, reasonably satisfactory to the Purchaser, that the Company
shall have complied with the covenants and agreements set forth in Section 5.5;

33

--------------------------------------------------------------------------------

 

(g) duly executed stock powers and stock transfers in respect of all of the
Shares together with the relevant share certificate in respect thereof (or, in
the case of any lost, stolen, mutilated or destroyed certificates, an indemnity,
in form satisfactory to the Purchaser, and, if requested by the Purchaser,
delivery of a bond in such sum as the Purchaser may reasonably direct);

(h) an accredited investor questionnaire, in form reasonably satisfactory to the
Purchaser, executed by each Stockholder; and

(i) all other documents required to be entered into by the Company and the
Stockholders pursuant to this Agreement or reasonably requested by the Purchaser
to convey the Shares to the Purchaser or to otherwise consummate the
transactions contemplated by this Agreement or any Stockholder Related
Agreement.

Section 6.7 Release of Liens. The Stockholders shall have delivered, or caused
to be delivered, to the Purchaser evidence reasonably satisfactory to the
Purchaser that all Liens (other than Permitted Liens) affecting any of the
assets of the Company have been released.

Section 6.8 Certain Covenants and Agreements. The Stockholders shall have
delivered, or caused to be delivered, to the Purchaser evidence, reasonably
satisfactory to the Purchaser, that the Company shall have complied with the
covenants and agreements set forth in Sections 5.5 and 5.12.

Section 6.9 No Material Adverse Effect. There shall not have occurred a Company
Material Adverse Effect, and no event shall have occurred or circumstance exist
that, in combination with any other events or circumstances, could reasonably be
expected to have a Company Material Adverse Effect.

Section 6.10 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the
transactions contemplated by this Agreement shall have been issued by any
Governmental Body, and there shall not be any Law enacted or deemed applicable
to the transactions contemplated by this Agreement that makes the transactions
contemplated by this Agreement illegal or unduly burdensome to the Purchaser or
would subject the Purchaser or the Company to sanctions if this transactions
contemplated by this Agreement are consummated.

Section 6.11 No Litigation. There shall not be pending or threatened any Legal
Proceeding by or before any Governmental Body or any other Person against the
Purchaser, a Stockholder or the Company (a) seeking to restrain or prohibit the
consummation of the transactions contemplated by this Agreement or any agreement
entered into in connection with this Agreement, (b) seeking to restrain or
prohibit the Purchaser’s direct or indirect ownership or operation of all or a
significant portion of the business and assets of the Company, or to compel the
Purchaser or any of its Subsidiaries or Affiliates to dispose of or hold
separate any significant portion of the business or assets of the Company, (c)
seeking to restrain or prohibit or make materially more costly the consummation
of the transactions contemplated by this Agreement, or seeking to obtain from
the Purchaser or the Company any damages in excess of $12,500, (d) seeking to
impose limitations on the ability of the Purchaser to acquire or hold, or
exercise full rights of ownership of the Shares, or (e) which otherwise could
reasonably be expected to have a Company Material Adverse Effect.

Section 6.12 Restrictive Agreement. The Company shall have delivered to the
Purchaser a restrictive agreement, in substantially the form of Exhibit B
attached to this Agreement, executed by Dr. Junghans, and such restrictive
agreement shall be in full force and effect as of the Closing, shall not have
been amended or modified and shall not provide for or require the payment of any
consideration to Dr. Junghans.

Section 6.13 Due Diligence Review. The Purchaser shall have completed the due
diligence review of the business, results of operations, condition (financial
and otherwise), prospects, assets and liabilities of the Company and its
business and the results of such due diligence shall be satisfactory to the
Purchaser in its sole and absolute discretion.

Section 6.14 Purchaser Board Approval. The board of directors of the Purchaser
shall have authorized and approved the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated by this
Agreement.

34

--------------------------------------------------------------------------------

 

Section 6.15 Company Rights. All Company Rights shall have been exercised for
Company Common Shares or shall have been cancelled with no liability to the
Purchaser, the Company or their Affiliates, and the Purchaser shall have
received evidence satisfactory to it of such exercise or cancellation.

Section 6.16 Termination of Specified Agreements. The Company shall cause all
Excluded Contracts to be terminated effective as of the Closing Date without any
further obligation of the Company or the Purchaser.

Section 6.17 No Indebtedness. As of the Closing Date, the outstanding
Indebtedness of the Company shall be zero.

Section 6.18 CARgenix Closing. As of the Closing Date, all conditions to closing
(the “CARgenix Closing”) the transactions contemplated by that certain
Membership Interests Purchase Agreement (the “CARgenix Agreement”), by and among
the Purchaser, CARgenix Holdings LLC, a Rhode Island and Providence Plantations
limited liability company (“CARgenix”), the holders of membership interests of
CARgenix, Jaymin Patel, an individual, as representative of the holders of
membership interests of CARgenix, and Sorrento shall have been satisfied or
waived, and the CARgenix Closing shall have occurred or will occur
simultaneously with the Closing.

ARTICLE VII

CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE STOCKHOLDERS

The obligations of the Company and the Stockholders to consummate the
transactions contemplated by this Agreement are subject to the satisfaction (or
written waiver by the Stockholders’ Representative), at or prior to the Closing,
of the following conditions:

Section 7.1 Accuracy of Representations. Each of the representations and
warranties of the Purchaser contained in this Agreement that are qualified as to
materiality shall be true and correct in all respects, and each of the
representations and warranties of the Company contained in this Agreement that
are not so qualified shall be true and correct in all material respects, in each
case as of the date of this Agreement and as of the Closing Date with the same
force and effect as though made as of the Closing Date (except to the extent
that any such representation and warranty expressly speaks as of a specific
date, in which case the accuracy of such representation and warranty shall be
determined as of such date).

Section 7.2 Performance of Covenants. Each of the covenants and obligations set
forth in this Agreement that the Purchaser is required to comply with or perform
at or prior to the Closing shall have been complied with or performed in all
material respects.

Section 7.3 Purchaser Compliance Certificate. The Purchaser shall have
delivered, or caused to be delivered, to the Stockholders’ Representative a
certificate executed by the Chief Executive Officer or Chief Financial Officer
of the Purchaser as to compliance with the conditions set forth in Sections 7.1
and 7.2.

Section 7.4 Ancillary Agreements and Deliveries. The Purchaser shall have
delivered, or caused to be delivered, to the Stockholders’ Representative the
following deliverables, agreements and documents:

(a) the Closing Consideration, delivered in accordance with Section 1.2; and

(b) all other documents required to be entered into or delivered by the
Purchaser at or prior to the Closing pursuant to this Agreement, each of which
shall be in full force and effect as of the Closing and shall not have been
amended or modified as of the Closing.

Section 7.5 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the
transactions contemplated by this Agreement shall have been issued by any
Governmental Body, and there shall not be any Law enacted or deemed applicable
to the transactions contemplated by this Agreement that makes the transactions
contemplated by this Agreement illegal or unduly burdensome to the Purchaser or
would subject the Purchaser or the Company to sanctions if this transactions
contemplated by this Agreement are consummated.

35

--------------------------------------------------------------------------------

 

Section 7.6 Consents. All consents approvals, orders or authorizations of, or
registrations, declarations or filings with, any Governmental Body shall have
been obtained.

ARTICLE VIII

CLOSING

Section 8.1 Closing. Unless otherwise mutually agreed in writing between the
Purchaser and the Stockholders’ Representative, the Closing shall take place at
the offices of Paul Hastings LLP, 1117 S. California Avenue, Palo Alto,
California 94304, at 9:00 A.M. (Pacific Time) on the 2nd Business Day following
the day on which the last to be satisfied or waived of the conditions set forth
in Articles VI and VII shall be satisfied or waived in accordance with this
Agreement (other than those conditions that by their terms are to be satisfied
at the Closing, it being understood that the occurrence of the Closing shall
remain subject to the satisfaction or waiver of such conditions at the Closing)
and that the Company, the Stockholders and their legal counsels may participate
remotely. The date on which the Closing actually takes place is referred to in
this Agreement as the “Closing Date”.

Section 8.2 Stockholder and Company Closing Deliveries. At the Closing, the
Stockholders and the Company, as applicable, shall deliver, or cause to be
delivered, to the Purchaser, the deliverables, agreements and documents required
pursuant to Section 6.6, each of which shall be in full force and effect.

Section 8.3 Purchaser Closing Deliveries. At the Closing, the Purchaser shall
deliver, or cause to be delivered, to the Stockholders’ Representative the
deliverables, agreements and documents required by Section 7.4, each of which
shall be in full force and effect.

ARTICLE IX

TERMINATION

Section 9.1 Termination Events.

(a) This Agreement may be terminated prior to the Closing:

(i) by mutual written consent of the Purchaser and the Stockholders’
Representative;

(ii) by written notice from the Purchaser to the Stockholders’ Representative,
if there has been a breach of any representation, warranty, covenant or
agreement by the Company or the Stockholders, or any such representation or
warranty shall become untrue after the date of this Agreement, such that the
conditions in Sections 6.1 or 6.2 would not be satisfied and such breach is not
curable or, if curable, is not cured within the earlier of (A) 10 days after
written notice thereof is given by the Purchaser to the Stockholders’
Representative, and (B) the Expiration Date;

(iii) by written notice from the Stockholders’ Representative to the Purchaser,
if there has been a breach of any representation, warranty, covenant or
agreement by the Purchaser, or any such representation or warranty shall become
untrue after the date of this Agreement, such that the conditions in Sections
7.1 or 7.2 would not be satisfied and such breach is not curable or, if curable,
is not cured within the earlier of (A) 10 days after written notice thereof is
given by the Stockholders’ Representative to the Purchaser, and (B) the
Expiration Date;

(iv) by written notice from the Purchaser to the Stockholders’ Representative
under the circumstances described in Section 5.13; or

(v) by written notice by the Stockholders’ Representative to the Purchaser or
the Purchaser to the Stockholders’ Representative, as the case may be, in the
event the Closing has not occurred on or prior to September 30, 2015 (the
“Expiration Date”) for any reason other than delay or nonperformance of or
breach by the party seeking such termination.

(b) Effect of Termination. In the event of termination of this Agreement
pursuant to this Article IX, this Agreement shall forthwith become void and
there shall be no liability on the part of any party to this Agreement or its

36

--------------------------------------------------------------------------------

 

partners, officers, directors, Stockholders or members, except for obligations
under Section 5.6 (Public Announcements), Section 12.2 (Fees and Expenses),
Section 12.3 (Waiver; Amendment), Section 12.4 (Entire Agreement), Section 12.5
(Execution of Agreement; Counterparts; Electronic Signatures), Section 12.6
(Governing Law; Venue), Section 12.7 (WAIVER OF JURY TRIAL), Section 12.8
(Attorneys’ Fees), Section 12.9 (Assignment and Successors), Section 12.11
(Notices), Section 12.12 (Construction; Usage), Section 12.13 (Enforcement of
Agreement), Section 12.14 (Severability), Section 12.17 (Schedules and Exhibits)
and this Section 9.1, and the definitions used in each of the foregoing
sections, including those set forth in Exhibit A attached to this Agreement, all
of which shall survive such termination and the Termination Date.
Notwithstanding the foregoing, nothing contained in this Agreement shall relieve
any party from liability for any breach of this Agreement. Upon termination of
this Agreement, each of the parties to this Agreement shall, in all events, be
bound by and be subject to that certain Confidentiality Agreement, dated as of
March 4, 2015, by and between Sorrento and Dr. Junghans (the “Confidentiality
Agreement”); the terms of which each of the Purchaser and the Company has
previously ratified and approved.

ARTICLE X

INDEMNIFICATION

Section 10.1 Indemnification Obligations of the Stockholders.

(a) The Stockholders, jointly and severally (collectively, the “Indemnifying
Parties”), shall indemnify the Purchaser and its Affiliates (including the
Company after the Closing), stockholders, officers, directors, managers,
employees, agents, partners, Representatives, successors and assigns
(collectively, the “Indemnified Parties”) and save and hold each of them
harmless against and pay on behalf of or reimburse such Indemnified Parties as
and when incurred for any loss, liability, demand, claim, action, cause of
action, cost, damage, deficiency, Tax, penalty, fine or expense, whether or not
arising out of third-party claims (including interest, penalties, reasonable
attorneys’ fees and expenses and all amounts paid in investigation, defense or
settlement of any of the foregoing) (collectively, “Losses”), which any such
Indemnified Party may suffer, sustain or become subject to, as a result of, in
connection with, arising out of, relating or incidental to or by virtue of:

(i) any inaccuracy in or breach of any representation or warranty of the Company
or the Stockholders set forth in this Agreement or any of the Schedules or
Exhibits attached to this Agreement, the Company Compliance Certificate or any
other Stockholder Related Agreement, whether such representation or warranty is
made as of the date of this Agreement or as of the Closing Date (without giving
effect to any materiality, Company Material Adverse Effect or other similar
qualification contained in such representation or warranty);

(ii) any non-fulfillment or breach of any covenant, agreement or undertaking
made by the Company or the Stockholders in this Agreement or any of the
Schedules or Exhibits attached to this Agreement, or in any Stockholder Related
Agreement;

(iii) the Net Debt Adjustment Amount;

(iv) any fraud or intentional misrepresentation of the Company with respect to
any representation, warranty or covenant of the Company contained in this
Agreement, the Company Compliance Certificate or any other Stockholder Related
Agreement;

(v) any liability or obligation of the Company for (i) any Taxes that are the
responsibility of the Stockholders pursuant to Section 5.8(c), (ii) any Taxes
incurred in any Tax period beginning after the Closing Date but arising from the
settlement or other resolution with any Governmental Body of an asserted Tax
liability which relates to any Tax period or portion thereof ending on or before
the Closing Date, or (iii) the unpaid Taxes of any Person under Treasury
Regulations Section 1.1502-6 (or any similar provision of other federal,
provincial, state, local or foreign Law), as a transferee or successor, by
Contract or otherwise, in each case whether or not disclosed to the Purchaser in
any Exhibits or Schedules to this Agreement or otherwise;

(vi) the operations, actions or omissions of the Company prior to the Closing,
other than the obligations of the Company under any Material Contracts or
Governmental Authorizations held by the Company solely to the extent

37

--------------------------------------------------------------------------------

 

such obligations were not required to be performed on or prior to the Closing
Date and accrue and relate to the operation of the business of the Company
subsequent to the Closing Date; and

(vii) any Legal Proceedings directly or indirectly relating to any breach,
alleged breach, liability or other matter of the type referred to in clauses (i)
through (vii) above (including any Legal Proceeding commenced by any Indemnified
Party for the purpose of enforcing any of its rights under this Section 10.1).

(b) In the event that the Company suffers, incurs or otherwise becomes subject
to any Losses as a result of or in connection with any inaccuracy in or breach
or alleged breach of any representation, warranty, covenant or obligation of the
Company or the Stockholders or other matter referred to in Section 10.1(a), then
(without limiting any of the rights of the Purchaser as an Indemnified Party)
the Purchaser shall also be deemed, by virtue of their ownership of the Shares,
to have suffered, incurred or otherwise become subject to Losses as a result of
and in connection with such inaccuracy, breach, alleged breach or other matter.

(c) The current or former stockholders of the Company shall not have and shall
not exercise or assert (or attempt to exercise or assert), any right of
contribution, right of indemnity or other right or remedy against the Company in
connection with any indemnification obligation or any liability to which such
current or former stockholders of the Company may become subject under or in
connection with this Agreement or any other agreement or document delivered to
the Purchaser in connection with this Agreement.

Section 10.2 Indemnification Procedure.

(a) Promptly following receipt by an Indemnified Party of notice by a
third-party (including any Governmental Body) of any complaint, dispute or claim
or the commencement of any audit, investigation, action or proceeding with
respect to which such Indemnified Party may be entitled to indemnification
pursuant to this Agreement (a “Third-Party Claim”), or upon realization of a
Loss by an Indemnified Party for which the Indemnified Party is entitled to
indemnification under this Article X, such Indemnified Party shall provide
written notice thereof to the Stockholders’ Representative; provided, however,
that the failure to so notify the Stockholders’ Representative shall relieve the
Indemnifying Party from liability under this Article X with respect to such
Third-Party Claim only if, and only to the extent that, such failure to so
notify the Stockholders’ Representative materially prejudices the rights and
defenses otherwise available to the Indemnifying Party with respect to such
Third-Party Claim. The Indemnifying Party shall have the right, upon written
notice from the Stockholders’ Representative delivered to the Indemnified Party
within 20 days thereafter assuming full responsibility for any Losses resulting
from such Third-Party Claim, to assume the defense of such Third-Party Claim,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of the fees and disbursements of such counsel; provided,
however, that the Indemnifying Party shall not have the right to assume the
defense of any Third-Party Claim that (i) affects any Intellectual Property
Rights that the Company owns or has a right to use in the conduct of its
business as currently conducted and as proposed to be conducted by the Company
as of the Closing and by the Purchaser after the Closing, (ii) is asserted
directly by or on behalf of any Person that is a supplier or a customer of the
Company, the Indemnified Party or their Affiliates, (iii) seeks an injunction or
other equitable relief against the Indemnified Party or its Affiliates, (iv)
involves a finding of any violation of Law or other wrongdoing by the
Indemnified Party, the Company or their Affiliates, (v) relates to or arises in
connection with any criminal proceeding, action, indictment, allegation or
investigation, or (vi) does not seek only monetary damages and, in the case of
this clause (vi), the Indemnified Party reasonably believes an adverse
determination with respect to the Third-Party Claim would be detrimental to or
materially injure the reputation or future business prospects of the Indemnified
Party. In the event, however, that the Indemnifying Party declines or fails to
assume the defense of such Third-Party Claim on the terms of this Section
10.2(a) or to employ counsel reasonably satisfactory to the Indemnified Party,
in either case within such 10 day period, or thereafter defaults in continuing
to defend the Indemnified Party, then any Losses shall include the reasonable
fees and disbursements of counsel for the Indemnified Party as incurred. In
addition, Losses shall include, as incurred, the reasonable fees and
disbursements of counsel for the Indemnified Party: (A) that are incurred prior
to the date the Indemnifying Party effectively assumes control of such defense,
(B) if the Indemnified Party employs separate counsel due to the Indemnified
Party being advised by counsel that a reasonable likelihood exists of a conflict
of interest between the Indemnified Party and the Indemnifying Party, (C) if the
Indemnified Party employs separate counsel because there are one or more legal
or equitable defenses available to the Indemnified Party that are different from
or in addition to those available to the Indemnifying Party, or (D) if the
Indemnified Party employs separate counsel because

38

--------------------------------------------------------------------------------

 

such audit, investigation, action or proceeding involves, or could have a
material effect on, any matter beyond the scope of the indemnification or
defense obligations of the Indemnifying Party.

(b) In any Third-Party Claim for which indemnification is being sought under
this Article X, the Indemnified Party or the Indemnifying Party, whichever is
not assuming the defense of such Third-Party Claim, shall have the right to
participate in such matter and to retain its own counsel at such party’s own
expense. The Indemnifying Party or the Indemnified Party (as the case may be)
shall at all times use reasonable efforts to keep the Stockholders’
Representative or Indemnified Party (as the case may be) reasonably apprised of
the status of the defense of any matter, the defense of which it is maintaining,
and to cooperate in good faith with the other party with respect to the defense
of any such matter.

(c) No Indemnified Party may settle or compromise any Third-Party Claim or
consent to the entry of any judgment with respect to which indemnification is
being sought under this Article X without the prior written consent of the
Stockholders’ Representative (which may not be unreasonably withheld,
conditioned or delayed), unless (i) the Indemnifying Party fails to assume and
maintain diligently the defense of such Third-Party Claim pursuant to Section
10.2(a) or fails to reimburse the Indemnified Party within 30 days for expenses
incurred by the Indemnified Party in defending itself against any Third-Party
Claim in the circumstance where the Indemnifying Party fails to assume the
defense of the Indemnified Party or as required under the last sentence of
Section 10.2(a) or, having assumed the defense, thereafter defaults in pursuing
such defense, or (ii) such settlement, compromise or consent includes an
unconditional release of the Indemnifying Party and its officers, directors,
employees and Affiliates from all liability arising out of, or related to, such
Third-Party Claim without further monetary liability to the Indemnifying Party.
An Indemnifying Party may not, without the prior written consent of the
Indemnified Party, settle or compromise any Third-Party Claim or consent to the
entry of any judgment with respect to which indemnification is being sought
under this Article X unless such settlement, compromise or consent (A) includes
an unconditional release of the Indemnified Party and its officers, directors,
employees and Affiliates from all liability arising out of, or related to, such
Third-Party Claim, (B) does not contain any admission or statement suggesting
any wrongdoing or liability on behalf of the Indemnified Party, and (C) does not
contain any equitable order, judgment or term that in any manner affects,
restrains or interferes with the business of the Indemnified Party or any of the
Indemnified Party’s Affiliates.

(d) In the event an Indemnified Party claims a right to payment pursuant to this
Agreement with respect to any Loss or other matter not involving a Third-Party
Claim (a “Direct Claim”), such Indemnified Party shall send written notice of
such claim to the Stockholders’ Representative (a “Notice of Claim”). Such
Notice of Claim shall specify the basis for such Direct Claim. The failure by
any Indemnified Party to so notify the Stockholders’ Representative shall not
relieve the Indemnifying Party from any liability that it may have to such
Indemnified Party with respect to any Direct Claim made pursuant to this Section
10.2(d), it being understood that Notices of Claim in respect of a breach of a
representation or warranty must be delivered prior to the expiration of the
survival period for such representation or warranty under Section 10.4. In the
event the Stockholders’ Representative does not notify the Indemnified Party
within 20 days following its receipt of such Notice of Claim that the
Stockholders’ Representative disputes the Indemnifying Parties’ liability to the
Indemnified Party under this Article X or the amount thereof, the Direct Claim
specified by the Indemnified Party in such Notice of Claim shall be conclusively
deemed a liability of the Indemnifying Party under this Article X, and the
Indemnifying Party shall pay the amount of such liability to the Indemnified
Party on demand or, in the case of any notice in which the amount of the Direct
Claim (or any portion of the Direct Claim) is estimated, on such later date when
the amount of such Direct Claim (or such portion of such Direct Claim) becomes
finally determined. In the event the Stockholders’ Representative has timely
disputed its liability with respect to such Direct Claim as provided in this
Section 10.2(d), as promptly as reasonably practicable, such Indemnified Party
and the Stockholders’ Representative shall establish the merits and amount of
such Direct Claim (by mutual agreement, litigation or otherwise) and, within
five Business Days following the final determination of the merits and amount of
such Direct Claim, the Indemnifying Party shall pay to the Indemnified Party in
immediately available funds an amount equal to such Direct Claim as determined
pursuant to this Section 10.2(d). If a dispute exists as to the amount of any
Direct Claim, the prevailing party shall be entitled to all legal and other fees
paid in asserting or defending such Direct Claim, as the case may be.

Section 10.3 Offset Against Escrow Amount. In the event any Indemnified Party
shall suffer any Losses for which such Indemnified Party is entitled to
indemnification under this Article X, such Indemnified Party shall be entitled
to recover such Losses by offsetting such Losses against the Escrow Shares until
the Escrow Shares are wholly exhausted and, thereafter, any remaining portion of
such Loss shall be satisfied by the Indemnifying Party. In no event shall the

39

--------------------------------------------------------------------------------

 

aggregate amount of the indemnification obligation of the Indemnifying Parties
pursuant to this Article X exceed the Base Price; provided that the foregoing
limitation shall not apply in cases of fraud, bad faith, willful misconduct or
willful misrepresentation on the part of the Company or any of the
Stockholders.  

Section 10.4 Survival Period. The representations, warranties and covenants made
by the Company and the Stockholders in this Agreement shall not be extinguished
by the Closing, but shall survive the Closing for, and all claims for
indemnification in connection therewith shall be asserted not later than, 18
months following the Closing Date; provided, however, that (a) each of the
representations and warranties contained in Section 2.1 (Organization and Good
Standing), Section 2.2 (Capitalization), Section 2.3 (Subsidiaries), Section 2.4
(Authority; No Conflict; Required Filings and Consents), Section 2.16 (Brokerage
and Transaction Bonuses), Section 2.17 (Title to and Sufficiency of Assets),
Section 2.21 (Related Party Transactions), Section 3.1 (Authority; No Conflict;
Required Filings and Consents), Section 3.2 (Ownership; Title to Shares) and
Section 3.4 (Brokerage and Transaction Bonuses), shall survive the Closing
without limitation as to time, and the period during which a claim for
indemnification may be asserted in connection therewith shall continue
indefinitely; (b) each of the representations and warranties contained in
Section 2.11 (Intellectual Property), Section 2.14 (Employee Matters) and
Section 3.14 (Assignment) shall survive the Closing until, and all claims for
indemnification in connection therewith shall be asserted not later than 60 days
following, the expiration of any statute of limitations applicable to the rights
of any Person to bring any claim with respect to such matters; and (c) each of
the representations and warranties contained in Section 2.8 (Taxes) shall
survive until, and all claims for indemnification in connection therewith shall
be asserted not later than the later to occur of: (i) the 180th day following
the end of the period, if any, during which an assessment, reassessment or other
form of document assessing liability for Taxes in respect of any taxation year
to which these representations and warranties extend could be issued to the
Company, and (ii) 60 days following the expiration of any statute of limitations
applicable to the rights of any Person to bring any claim with respect to such
matters. Notwithstanding the foregoing, if, prior to the close of business on
the last day a claim for indemnification may be asserted under this Article X,
the Stockholders’ Representative shall have been properly notified of a claim
for indemnity under this Article X and such claim shall not have been finally
resolved or disposed of as of such date, such claim shall continue to survive
and shall remain a basis for indemnity under this Article X until such claim is
finally resolved or disposed of in accordance with the terms of this Agreement.
All representations, warranties and covenants made by the Purchaser shall
terminate and expire as of the Closing, and any liability of the Purchaser with
respect to such representations and warranties shall thereupon cease. The
covenants and agreements of the parties pursuant to this Article X shall survive
without limitation as to time, and the period during which a claim for
indemnification may be asserted in connection therewith shall continue
indefinitely.

Section 10.5 Investigations. The respective representations and warranties of
the parties contained in this Agreement or any certificate or other document
delivered by any party at or prior to the Closing and the rights to
indemnification set forth in this Article X shall not be deemed waived or
otherwise affected by any investigation made, or Knowledge acquired, by a party.

Section 10.6 Set-Off. The Purchaser shall be entitled to set-off any amount or
right it may be entitled to pursuant to this Agreement against any amount, right
or obligations owed to any Stockholder under this Agreement or any Stockholder
Related Agreement; provided, however, that, for avoidance of doubt, and without
limiting any of the Indemnified Parties’ rights to indemnification under this
Agreement or pursuant to the Escrow Agreement, the foregoing set-off rights
shall not apply with respect to any obligation of the Purchaser or Sorrento
solely pursuant to that certain letter agreement, dated as of even date
herewith, by and between the Purchaser and Richard P. Junghans, M.D., Ph.D.

Section 10.7 Characterization of Indemnification Payments. The Purchaser and the
Stockholders agree to treat any payment made under this Article X as an
adjustment to the Purchaser Stock Consideration.

ARTICLE XI

STOCKHOLDERS’ REPRESENTATIVE

Section 11.1 Stockholders’ Representative.

(a) The Stockholders, by the approval and adoption of this Agreement, hereby
irrevocably appoint the Stockholders’ Representative as agent and attorney in
fact for the Company and each Stockholder, and authorize the

40

--------------------------------------------------------------------------------

 

Stockholders’ Representative (i) to take all action necessary to consummate the
transactions contemplated by this Agreement and the Escrow Agreement, or the
defense and/or settlement of any claims for which the Stockholders may be
required to indemnify the Purchaser or any other Indemnified Party pursuant to
Article X, (ii) to give and receive all notices required to be given under this
Agreement, the Escrow Agreement or the Stockholder Related Agreements, (iii) to
authorize delivery to the Purchaser of the Escrow Shares in satisfaction of
claims by the Purchaser, including with respect to the Net Debt Adjustment
Amount, (iv) to make decisions on behalf of the Company and the Stockholders and
take any and all additional action as is contemplated to be taken by or on
behalf of the Stockholders by the terms of this Agreement or the Escrow
Agreement, including, without limitation regarding (A) indemnification claims,
Direct Claims, Third-Party Claims and Notices of Claims, (B) amendments to this
Agreement, the Escrow Agreement or the Stockholder Related Agreements, and (C)
the Estimated Net Debt, the Final Net Debt and the Net Debt Adjustment Amount.

(b) All decisions and actions by the Stockholders’ Representative, including
without limitation (i) any agreement between the Stockholders’ Representative
and the Purchaser relating to the defense or settlement of any claims for which
the Stockholders may be required to indemnify the Purchaser pursuant to Article
X, (ii) any agreement between the Stockholders’ Representative and the Purchaser
relating to the Estimated Net Debt, the Final Net Debt or the Net Debt
Adjustment Amount, and (iii) any agreement between the Stockholders’
Representative and the Purchaser relating to the Escrow Agreement or the
determination of the Purchaser’s payment obligations under Sections 1.3 or 1.5
or any other matter relating to Article I, shall be binding upon all of the
Stockholders, and no Stockholder shall have the right to object, dissent,
protest or otherwise contest the same.

(c) The Stockholders’ Representative shall not have any liability to any of the
parties to this Agreement or to the Stockholders for any act done or omitted
pursuant to this Agreement as the Stockholders’ Representative while acting in
good faith and in the exercise of reasonable judgment, and any act done or
omitted pursuant to the advice of counsel shall be conclusive evidence of such
good faith. The Stockholders shall severally indemnify the Stockholders’
Representative and hold the Stockholders’ Representative harmless against any
loss, liability or expense incurred without gross negligence or bad faith on the
part of the Stockholders’ Representative and arising out of or in connection
with the acceptance or administration of the Stockholders’ Representative’s
duties under this Agreement.

(d) The Stockholders’ Representative shall have full power and authority on
behalf of each Stockholder to take any and all actions on behalf of, execute any
and all instruments on behalf of, and execute or waive any and all rights of,
the Stockholders under this Agreement, the Escrow Agreement and the Stockholder
Related Agreements.

(e) By his, her or its approval of this Agreement and the transactions
contemplated by this Agreement, each Stockholder agrees, in addition to the
foregoing, that:

(i) the Purchaser shall be entitled to rely conclusively on the instructions and
decisions of the Stockholders’ Representative as to (A) the settlement of any
claims for indemnification by the Purchaser pursuant to Article X, (B) actions
taken in respect of indemnification claims, Direct Claims, Third-Party Claims
and Notices of Claims, and (C) any other actions required or permitted to be
taken by the Stockholders’ Representative under this Agreement, the Escrow
Agreement and any Stockholder Related Agreement, and no Stockholder shall have
any cause of action against the Purchaser for any action taken by the Purchaser
in reliance upon the instructions or decisions of the Stockholders’
Representative;

(ii) all actions, decisions and instructions of the Stockholders’ Representative
shall be conclusive and binding upon the Company and all of the Stockholders and
no Stockholder shall have any cause of action against the Stockholders’
Representative for any action taken, decision made or instruction given by the
Stockholders’ Representative under this Agreement or the Escrow Agreement except
for fraud or willful misconduct by the Stockholders’ Representative in
connection with the matters described in this Article XI;

(iii) the provisions of this Article XI are independent and severable, are
irrevocable and coupled with an interest and shall be enforceable
notwithstanding any rights or remedies that any Stockholder may have in
connection with the transactions contemplated by this Agreement, the Escrow
Agreement and the Stockholder Related Agreements; and

41

--------------------------------------------------------------------------------

 

(f) the provisions of this Article XI shall be binding upon the executors,
heirs, legal Representatives, personal Representatives, successor trustees and
successors of each Stockholder, and any reference in this Agreement or the
Escrow Agreement to a Stockholder or the Stockholders shall mean and include the
successors to the rights of the Stockholders under this Agreement, whether
pursuant to testamentary disposition, the laws of descent and distribution or
otherwise.

ARTICLE XII

MISCELLANEOUS PROVISIONS

Section 12.1 Further Assurances. Each party to this Agreement shall execute and
cause to be delivered to each other party to this Agreement such instruments and
other documents, and shall take such other actions, as such other parties may
reasonably request (prior to, at or after the Closing) for the purpose of
carrying out or evidencing any of the transactions contemplated by this
Agreement.

Section 12.2 Fees and Expenses. Each party to this Agreement shall bear and pay
all fees, costs and expenses (including legal fees and accounting fees) that
have been incurred or that are incurred by such party in connection with the
transactions contemplated by this Agreement; provided, however, that the
Stockholders shall be responsible for all Transaction Expenses.

Section 12.3 Waiver; Amendment. Any agreement on the part of a party to this
Agreement to any extension or waiver of any provision of this Agreement shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. A waiver by a party to this Agreement of the performance of any covenant,
agreement, obligation, condition, representation or warranty shall not be
construed as a waiver of any other covenant, agreement, obligation, condition,
representation or warranty. A waiver by any party to this Agreement of the
performance of any act shall not constitute a waiver of the performance of any
other act or an identical act required to be performed at a later time. Prior to
the Closing, this Agreement may not be amended, modified or supplemented except
by written agreement among the Purchaser, the Company and the Stockholders’
Representative; provided, however, that the provisions of Section 1.6 and
Article XII cannot be amended without the consent of Sorrento. Following the
Closing, this Agreement may not be amended, modified, altered or supplemented
except by written agreement between the Purchaser and the Stockholders’
Representative; provided, however, that the provisions of Section 1.6 and
Article XII cannot be amended without the consent of Sorrento.

Section 12.4 Entire Agreement. This Agreement and the other agreements referred
to in this Agreement constitute the entire agreement among the parties to this
Agreement and supersede all other prior agreements and understandings, both
written and oral, among or between any of the parties with respect to the
subject matter of this Agreement and thereof; provided, however, that the
Confidentiality Agreement shall not be superseded by this Agreement and shall
remain in effect in accordance with its terms until the earlier of: (a) the
Closing Date, or (b) the date on which the Confidentiality Agreement is
terminated in accordance with its terms.

Section 12.5 Execution of Agreement; Counterparts; Electronic Signatures.

(a) This Agreement may be executed in several counterparts, each of which shall
be deemed an original and all of which, when taken together, shall constitute
one and the same instrument, and shall become effective when counterparts have
been signed by each of the parties to this Agreement and delivered to the other
parties to this Agreement; it being understood that all parties to this
Agreement need not sign the same counterparts.

(b) This Agreement and any amendments to this Agreement may be executed in one
or more counterparts, each of which shall be enforceable against the parties to
this Agreement that execute such counterparts, and all of which together shall
constitute one and the same instrument. Facsimile and “.pdf” copies of signed
signature pages shall be deemed binding originals and no party to this Agreement
shall raise the use of facsimile machine or electronic transmission in “.pdf” as
a defense to the formation of a contract.

42

--------------------------------------------------------------------------------

 

Section 12.6 Governing Law; Venue.

(a) This Agreement shall be governed by and construed in accordance with the
internal laws (and not the law of conflicts) of the State of California.

(b) Any legal action or other legal proceeding relating to this Agreement or the
enforcement of any provision of this Agreement shall be finally settled under
the Rules of Arbitration of the International Chamber of Commerce (the “ICC”) in
accordance with such rules. The place of arbitration shall be San Diego,
California. The arbitration shall be conducted in the English language.

(c) The party to this Agreement that initiates the arbitration process (the
“Claimant”) shall appoint an arbitrator in its request for arbitration (the
“Request”). The other party to this Agreement (or the other parties to this
Agreement, acting jointly, if there are more than one) that is a party to the
arbitration (the “Respondent”) shall appoint an arbitrator within 30 days of
receipt of the Request and shall notify the Claimant of such appointment in
writing. If within 30 days of receipt of the Request by the Respondent, either
the Claimant or the Respondent has not appointed an arbitrator, then that
arbitrator shall be appointed by the ICC. The first two arbitrators appointed in
accordance with this Section 12.6(c) shall appoint a third arbitrator within 30
days after the Respondent has notified the Claimant of the appointment of the
Respondent’s arbitrator or, in the event of a failure by a party to appoint an
arbitrator, within 30 days after the ICC has notified the parties and any
arbitrator already appointed of the appointment of an arbitrator on behalf of
the party failing to appoint an arbitrator. When the third arbitrator has
accepted the appointment, the two arbitrators making the appointment shall
promptly notify the parties of the appointment. If the first two arbitrators
appointed fail to appoint a third arbitrator or to so notify the parties within
the time period prescribed above, then the ICC shall appoint the third
arbitrator and shall promptly notify the parties of the appointment. The third
arbitrator shall act as chairperson of the arbitration.

(d) The arbitral tribunal shall render an award within six months from the date
of the appointment of the arbitral tribunal, unless the parties to this
Agreement otherwise agree in writing or the arbitral tribunal determines that an
extension is necessary. The arbitral award shall be in writing, state the
reasons for the award, and be final and binding upon, and non-appealable by, the
parties to this Agreement. The award may include an award of costs, including,
without limitation, reasonable attorneys’ fees and disbursements. In addition to
monetary damages, the arbitral tribunal shall be empowered to award equitable
relief, including, but not limited to, an injunction and specific performance of
any obligation under this Agreement. Notwithstanding the foregoing, the parties
to this Agreement agree that any of them may seek equitable relief, including,
but not limited to, an injunction and specific performance of any obligation
under this Agreement from any court of competent jurisdiction, but that the
final resolution of any disputes will be settled solely by the arbitral
tribunal.

(e) The arbitral tribunal shall not be empowered to award damages in excess of
compensatory damages, and each party to this Agreement hereby irrevocably waives
any right to recover special, punitive, exemplary, consequential or similar
damages with respect to any dispute, except insofar as a claim is for
indemnification for an award of such damages awarded against a party in an
action brought against it by an independent third party. The arbitral tribunal
shall be authorized in its discretion to grant pre-award and post-award interest
at commercial rates. Judgment upon the award may be entered by any court having
jurisdiction thereof or having jurisdiction over the relevant party or its
assets.

(f) The arbitral tribunal, in its discretion, may consolidate two or more
arbitrations or claims between any of the parties to this Agreement arising
under this Agreement or any other agreement among the parties to this Agreement
into one arbitration, or terminate any such consolidation and/or establish other
arbitration proceedings for different claims that may arise in any one
arbitration.  Notwithstanding the foregoing, the arbitral tribunal shall
consolidate arbitrations and/or claims, if it determines that it would be more
efficient to consolidate such arbitrations and/or claims than to continue them
separately and (i) there are matters of fact or law that are common to the
arbitrations and/or claims to be consolidated, (ii) there are related payment
and performance obligations considered in the arbitrations and/or claims to be
consolidated, or (iii) there is a danger of inconsistent awards.

(g) The arbitral tribunal shall render any monetary award and interest related
to such award in US Dollars.

43

--------------------------------------------------------------------------------

 

(h) The parties to this Agreement agree that the arbitration shall be kept
confidential and that the existence of the proceeding and any element of it
(including but not limited to any pleadings, briefs or other documents submitted
or exchanged, any testimony or other oral submissions, and any awards) shall not
be disclosed beyond the tribunal, the ICC, the parties, their counsel and any
person necessary to the conduct of the proceeding, except as may be lawfully
required in judicial proceedings relating to the arbitration or otherwise, or as
required by the rules of any other quotation system or exchange on which the
disclosing party’s securities are listed or applicable Laws.

(i) The costs of arbitration shall be borne by the losing party unless otherwise
determined by the arbitration award.

(j) Each party to this Agreement agrees not to assert (by way of motion, as a
defense or otherwise), in any such dispute that any claim arising out of,
relating to, or in connection with the interpretation or performance of this
Agreement is not subject to the jurisdiction of the arbitrators or that this
Agreement may not be enforced by the arbitrators.

Section 12.7 WAIVER OF JURY TRIAL. EACH OF THE PARTIES OF THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDINGS OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 12.8 Attorneys’ Fees. If any Legal Proceeding relating to this Agreement
or the enforcement of any provision of this Agreement is brought against any
party to this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys’ fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).

Section 12.9 Assignment and Successors. No party to this Agreement may assign
any of its rights or delegate any of its obligations under this Agreement
without the prior written consent of the other parties to this Agreement.
Subject to the preceding sentence, this Agreement shall apply to, be binding in
all respects upon and inure to the benefit of the successors and permitted
assigns of the parties to this Agreement.

Section 12.10 Parties in Interest. Except for the provisions of Article X, none
of the provisions of this Agreement is intended to provide any rights or
remedies to any Person other than the parties to this Agreement and their
respective successors and assigns (if any). Each of the Indemnified Parties is
an express third party beneficiary of Article X.

Section 12.11 Notices. All notices, requests, claims, demands, consents, waivers
and other communications required or permitted by this Agreement shall be in
writing and shall be deemed given to a party to this Agreement when (a)
delivered to the appropriate address by hand or by nationally recognized
overnight courier service (costs prepaid), or (b) sent e-mail with confirmation
of transmission by the transmitting equipment confirmed with a copy delivered as
provided in clause (a), in each case to the following addresses, facsimile
numbers or e-mail addresses and marked to the attention of the Person (by name
or title) designated below (or to such other address, facsimile number, e-mail
address or Person as a party may designate by notice to the other parties to
this Agreement):

If to the Company (before the Closing):

BDL Products, Inc.

1209 Orange Street

Wilmington, DE 197801

Attention: Richard P. Junghans, M.D., Ph.D.

Email: rich32323@yahoo.com

44

--------------------------------------------------------------------------------

 

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

William M. Mandell, Esq.

Pierce & Mandell, P.C.

11 Beacon Street, Suite 800

Boston, MA 02108

Email: bill@piercemandell.com

If to the Stockholders’ Representative (on its own behalf and for the benefit of
the Company (prior to the Closing) and the Stockholders):

Richard P. Junghans, M.D., Ph.D.

1 Lyndboro Place

Boston, MA 02116

Email: rich32323@yahoo.com

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

William M. Mandell, Esq.

Pierce & Mandell, P.C.

11 Beacon Street, Suite 800

Boston, MA 02108

Email: bill@piercemandell.com

If to the Purchaser:

TNK Therapeutics, Inc.

c/o Sorrento Therapeutics, Inc.

9380 Judicial Drive

San Diego, CA 92121

Attention: Henry Ji

Email: hji@sorrentotherapeutics.com

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

Paul Hastings LLP

1117 S. California Avenue

Palo Alto, CA 94304

Attention: Jeffrey T. Hartlin, Esq.

Email: jeffhartlin@paulhastings.com

If to Sorrento:

Sorrento Therapeutics, Inc.

9380 Judicial Drive

San Diego, CA 92121

Attention: George Ng

Email: gng@sorrentotherapeutics.com

45

--------------------------------------------------------------------------------

 

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

Paul Hastings LLP

1117 S. California Avenue

Palo Alto, CA 94304

Attention: Jeffrey T. Hartlin, Esq.

Email: jeffhartlin@paulhastings.com

Section 12.12 Construction; Usage.

(a) Interpretation. In this Agreement, unless a clear contrary intention
appears:

(i) the singular number includes the plural number and vice versa;

(ii) reference to any Person includes such Person’s successors and assigns but,
if applicable, only if such successors and assigns are not prohibited by this
Agreement, and reference to a Person in a particular capacity excludes such
Person in any other capacity or individually;

(iii) reference to any gender includes each other gender;

(iv) reference to any agreement, document or instrument means such agreement,
document or instrument as amended or modified and in effect from time to time in
accordance with the terms thereof;

(v) reference to any Law means such Law as amended, modified, codified, replaced
or reenacted, in whole or in part, and in effect from time to time, including
rules and regulations promulgated thereunder, and reference to any section or
other provision of any Law means that provision of such Law from time to time in
effect and constituting the substantive amendment, modification, codification,
replacement or reenactment of such section or other provision;

(vi) “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed
references to this Agreement as a whole and not to any particular Article,
Section or other provision of this Agreement;

(vii) “including” means including without limiting the generality of any
description preceding such term;

(viii) references to documents, instruments or agreements shall be deemed to
refer as well to all addenda, exhibits, schedules or amendments thereto; and

(ix) reference to a “Section” or “Article” in this Agreement shall mean a
Section or Article, respectively, of this Agreement unless otherwise provided.

(b) Legal Representation of the Parties. This Agreement was negotiated by the
parties to this Agreement with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring this Agreement to be
construed or interpreted against any party to this Agreement shall not apply to
any construction or interpretation of this Agreement.

(c) Headings. The headings contained in this Agreement are for the convenience
of reference only, shall not be deemed to be a part of this Agreement and shall
not be referred to in connection with the construction or interpretation of this
Agreement.

(d) Accounting Terms. All accounting terms not specifically defined in this
Agreement shall be construed in accordance with GAAP.

(e) Dollar Amounts. All references to “$” contained in this Agreement shall
refer to United States Dollars unless otherwise stated.

46

--------------------------------------------------------------------------------

 

Section 12.13 Enforcement of Agreement. The parties to this Agreement
acknowledge and agree that the Purchaser and Sorrento may be irreparably damaged
if any of the provisions of this Agreement are not performed in accordance with
their specific terms and that any breach of this Agreement by the Company, the
Stockholders’ Representative or the Stockholders may not be adequately
compensated in all cases by monetary damages alone. Accordingly, in addition to
any other right or remedy to which the Purchaser or Sorrento may be entitled, at
law or in equity, each shall be entitled to enforce any provision of this
Agreement by a decree of specific performance and temporary, preliminary and
permanent injunctive relief to prevent breaches or threatened breaches of any of
the provisions of this Agreement, without posting any bond or other undertaking.
The rights and remedies of the parties to this Agreement shall be cumulative
(and not alternative).

Section 12.14 Severability. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement shall remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree shall remain in
full force and effect to the extent not held invalid or unenforceable.

Section 12.15 Time of Essence. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.

Section 12.16 Disclosure Schedule. Nothing in the Disclosure Schedule shall be
adequate to disclose an exception to a representation or warranty made in this
Agreement except to the extent the Section thereof identifies the exception and
describes the facts. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be
adequate to disclose an exception to a representation or warranty made in this
Agreement unless the representation or warranty has to do with the existence of
the document or other item itself. No exceptions to any representations or
warranties disclosed on one Section of the Disclosure Schedule shall constitute
an exception to any other representations or warranties made in this Agreement
except to the extent the disclosure is clear in its disclosure or
cross-referenced in such other applicable Section.

Section 12.17 Schedules and Exhibits. The Schedules and Exhibits (including the
Disclosure Schedule) are hereby incorporated into this Agreement and are hereby
made a part of this Agreement as if set out in full in this Agreement.

*       *       *

 

 

 

47

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement
to be duly executed, as of the date first above written.

 

THE PURCHASER:

 

TNK Therapeutics, Inc.

 

 

 

By:

 

 

 

 

Name:

 

Henry Ji, Ph.D.

 

 

Title:

 

Chief Executive Officer

 

THE COMPANY:

 

BDL Products, Inc.

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

SORRENTO:

 

Sorrento Therapeutics, Inc.

 

 

 

By:

 

 

 

 

Name:

 

Henry Ji, Ph.D.

 

 

Title:

 

President & Chief Executive Officer

 

STOCKHOLDERS’ REPRESENTATIVE:

 

 

Richard Junghans, M.D., Ph.D.

 

 

 

[Signature Page to Stock Purchase Agreement]

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement
to be duly executed, as of the date first above written.

 

Stockholders:

 

 

Richard P. Junghans, M.D., Ph.D.

 

 

Qiangzhong Ma

 

 

 

[Signature Page to Stock Purchase Agreement]

--------------------------------------------------------------------------------

 

INDEX OF DEFINED TERMS

 

Term

 

Section

 

 

 

1993 IM MTA

 

3.14(a)(i)

1993 Repligen MTA

 

3.14(a)(iii)

1998 MTA

 

3.14(a)(ii)

Accounting Referee

 

1.3(e)

Acquisition Proposal

 

5.3(a)

Assignment Agreement

 

2.11(j)

Assignment of Rights Agreement

 

3.14(a)(iv)

CARgenix

 

6.18

CARgenix Agreement

 

6.18

CARgenix Closing

 

6.18

Casualty

 

5.13

Claimant

 

12.6(c)

Closing Date

 

8.1

Company

 

Preamble

Company Compliance Certificate

 

6.3

Company Constituent Documents

 

2.1(d)

Company Database

 

2.22(b)

Company Rights

 

2.2(b)

Confidentiality Agreement

 

9.1(b)

Direct Claim

 

10.2(a)

Employee Plan

 

2.14(g)

Escrow Agent

 

1.5

Escrow Period

 

1.5

Estimated Net Debt

 

1.3(a)

Excluded Contracts

 

5.12

Expiration Date

 

9.1(a)

Final Net Debt

 

1.3(b)

Indemnified Parties

 

10.1

Indemnifying Parties

 

10.1

ICC

 

12.6(b)

IP-Related Agreements

 

3.14(a)(iv)

ISO

 

2.23

Losses

 

10.1(a)

Material Contracts

 

2.12(b)

Net Debt Adjustment Amount

 

1.3(g)

Notice of Claim

 

10.2(d)

Pre-Closing Period

 

5.1

Pre-Closing Tax Period

 

5.8(a)

Privacy Policy

 

2.22(c)

Purchaser

 

Preamble

Repurchase

 

1.6(a)

Repurchase Closing

 

1.6(a)

Request

 

12.6(c)

Respondent

 

12.6(c)

Shares

 

Recitals

Sorrento

 

Preamble

Statement of Objection

 

1.3(c)

Stockholders

 

Preamble

Stockholders’ Representative

 

Preamble

Straddle Tax Period

 

5.8(b)

Third-Party Claim

 

10.2(a)

 

 

 

 

--------------------------------------------------------------------------------

 

Exhibit A

Definitions

For purposes of the Agreement (including this Exhibit A):

“Acquisition Transaction” means any transaction or series of transactions
involving:

(a) any merger, consolidation, share exchange, business combination, issuance of
securities, direct or indirect acquisition of securities, recapitalization,
tender offer, exchange offer or other similar transaction involving the Company;

(b) any direct or indirect sale, lease, exchange, transfer, license, acquisition
or disposition of a material portion of the business or assets of the Company;
or

(c) any liquidation or dissolution of the Company.

“Affiliate” means, with respect to any specified Person, any other Person who or
which, directly or indirectly, controls, is controlled by, or is under common
control with such specified Person, including, without limitation, any general
partner, limited partner, member, officer, director or manager of such Person
and any venture capital or private equity fund now or hereafter existing that is
controlled by one or more general partners or managing members of, or shares the
same management company with, such Person. For purposes of this definition, the
terms “controls,” “controlled by,” or “under common control with” means the
possession, direct or indirect, of power to direct or cause the direction of
management or policies (whether through ownership of voting securities, by
contract or otherwise).

“Agreement” means this Stock Purchase Agreement, as amended or restated from
time to time.

“Base Price” means six million United States Dollars ($6,000,000).

“Business Day” means a weekday on which banks are open for general banking
business in San Diego, California.

“Cash” means the cash and cash equivalents of the Company unrestricted and
readily available at no cost, calculated in accordance with GAAP, less any
amount advanced by the Purchaser or its Affiliates to the Company in connection
with the transactions contemplated under the Agreement.

“Closing” means the consummation of the purchase and sale of the Shares, as set
forth in Article VIII of the Agreement.

“Closing Consideration” means one hundred United States Dollars ($100).

“Code” means the United States Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.

“Company Common Shares” means the shares of common stock, par value $0.01 per
share, of the Company.

“Company Contract” means any Contract, including any amendment or supplement
thereto: (a) to which the Company is a party, (b) by which the Company or any of
its assets is or may become bound or under which the Company has, or may become
subject to, any obligation, or (c) under which the Company has or may acquire
any right or interest.

“Company Intellectual Property” means the Company Owned Intellectual Property
and the Company Licensed Intellectual Property.

“Company Licensed Intellectual Property” means all Intellectual Property Rights
that are licensed to the Company by any other third-party and are material to
the Company.

 

 

 

 

--------------------------------------------------------------------------------

 

“Company Material Adverse Effect” means any state of facts, change, event,
effect, occurrence or circumstance that, individually or in the aggregate
(considered together with all other state of facts, change, event, effect,
occurrence or circumstance) has, has had or could reasonably be expected to have
or give rise to a material adverse effect on (a) the business, condition
(financial or otherwise), results of operations, prospects, capitalization,
assets, liabilities, operations or financial performance of the Company, (b) the
ability of the Company to consummate the transactions contemplated by the
Agreement or to perform any of its obligations under the Agreement prior to the
Termination Date, or (c) the Purchaser’s ability to vote, receive dividends with
respect to or otherwise exercise ownership rights with respect to the shares of
the Company.

“Company Owned Intellectual Property” means all Intellectual Property Rights
that are owned or purported to be owned by the Company, in whole or in part, and
are material to the Company.

“Company Registrations” means Patent Rights, registered trademarks and service
marks, registered copyrights and designs, domain name registrations and
applications (including intent to use applications) for each of the foregoing
that are registered or filed or recorded with any Person in the name of or
licensed by the Company, alone or jointly with others.

“Confidential Information” means any data or information concerning the Company
(including trade secrets), without regard to form, regarding (for example and
including) (a) business process models, (b) proprietary software, (c) research,
development, products, services, marketing, selling, business plans, budgets,
unpublished financial statements, licenses, prices, costs, contracts, suppliers,
customers, and customer lists, (d) the identity, skills and compensation of
employees, contractors, and consultants, (e) specialized training, or (f)
discoveries, developments, trade secrets, processes, formulas, data, lists, and
all other works of authorship, mask works, ideas, concepts, know-how, designs,
and techniques, whether or not any of the foregoing is or are patentable,
copyrightable, or registrable under any intellectual property Laws or industrial
property Laws in the United States or elsewhere. Notwithstanding the foregoing,
no data or information constitutes “Confidential Information” if such data or
information is publicly known and in the public domain through means that do not
involve a breach by the Company or a Stockholder of any covenant or obligation
set forth in the Agreement.

“Contract” means any written, oral or other agreement, contract, subcontract,
lease, understanding, instrument, note, warranty, license, sublicense, insurance
policy, benefit plan or legally binding commitment or undertaking of any nature,
whether express or implied.

“Disclosure Schedule” means the disclosure schedule (dated as of the date of the
Agreement) delivered to the Purchaser on behalf of the Company and the
Stockholders on the date of the Agreement.

“Entity” means any corporation (including any non‑profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization or entity.

“Escrow Shares” means, as of a particular time, whichever of the Initial Escrow
Shares or the Sorrento Escrow Shares that are then held by the Escrow Agent
pursuant to the terms of the Escrow Agreement.

“Estimated Purchase Price” means, if as of the time of calculation: (a) the
Final Net Debt has not been determined in accordance with Section 1.3, the Base
Price minus the Estimated Net Debt minus any amounts deducted pursuant to
Section 5.13; and (b) the Final Net Debt has been determined in accordance with
Section 1.3, the Base Price minus the Final Net Debt minus any amounts deducted
pursuant to Section 5.13.

“Exploit” means develop, design, test, modify, make, use, sell, have made, used
and sold, import, reproduce, market, distribute, commercialize, support,
maintain, correct and create derivative works of.

“FDA” means the U.S. Food and Drug Administration or any successor thereto.

“FDA Registrations” means authorizations, approvals, licenses, permits,
certificates, or exemptions issued by the FDA (including, without limitation,
pre-market approval applications, pre-market notifications, investigational new
drug

 

--------------------------------------------------------------------------------

 

applications, new drug applications, biologic license applications,
manufacturing approvals and authorizations, pricing and reimbursement approvals,
labeling approvals or their foreign equivalent) held by the Company that are
required for, among other things, the research, development, manufacture,
processing, labeling, distribution, marketing, storage, transportation, use,
sale and provision of the products and services of the Company.

“GAAP” means United States generally accepted accounting principles as in effect
from time to time.

“Government Bid” means any quotation, bid or proposal submitted to any
Governmental Body or any proposed prime contractor or higher-tier subcontractor
of any Governmental Body.

“Government Contract” means any prime contract, subcontract, letter contract,
purchase order or delivery order executed or submitted to or on behalf of any
Governmental Body or any prime contractor or higher-tier subcontractor, or under
which any Governmental Body or any such prime contractor or subcontractor
otherwise has or may acquire any right or interest.

“Governmental Authorization” means any (a) approval, permit, license,
certificate, certificate of approval, franchise, permission, clearance,
registration, qualification or other authorization issued, granted, given or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Law, or (b) right under any Contract with any Governmental Body.

“Governmental Body” means any domestic or foreign multinational, federal, state,
provincial, municipal or local government (or any political subdivision thereof)
or any domestic or foreign governmental, regulatory or administrative authority
or any department, commission, board, agency, court, tribunal, judicial body or
instrumentality thereof, or any other body exercising, or entitled to exercise,
any administrative, executive, judicial, legislative, police, regulatory or
taxing authority or power of any nature (including any arbitral body).

“Indebtedness” means, without duplication, the aggregate of the following: (a)
all obligations for borrowed money (including the current portion thereof and
all sums due on early termination and repayment or redemption calculated to the
Closing Date), whether or not contingent, or issued or incurred in substitution
or exchange for any such liability for borrowed money, or extensions of credit
(including under credit cards, bank overdrafts and advances), (b) all
obligations evidenced by bonds, debentures, notes or other similar instruments
(and including all sums due on early termination and repayment or redemption
calculated to the Closing Date), (c) all obligations to pay the deferred
purchase price of property or services, except trade accounts payable arising in
the ordinary course of business consistent with past practice, (d) all
obligations as lessee under leases that have been or should be, in accordance
with GAAP, recorded as capital leases in respect of which the Company is liable
as a lessee; (e) all obligations of others secured by a Lien on any asset of the
Company (including accounts and contract rights), whether or not such
obligations are assumed; (f) all obligations, contingent or otherwise, directly
or indirectly guaranteeing any obligations of any other Person, all obligations
to reimburse the issuer in respect of letters of credit or under performance or
surety bonds, or other similar obligations; all obligations under which the
Company has agreed (contingently or otherwise) to purchase or otherwise acquire
the liability of any other Person or in respect of which the Company has
otherwise assured a creditor against loss, (g) all obligations in respect of
bankers’ acceptances, note purchases or similar facilities and under reverse
repurchase agreements, (h) all obligations in respect of futures contracts,
other financial contracts and other similar obligations (determined on a net
basis as if such contract or obligation was being terminated early on such
date), (i) the amount of any termination payments in connection with the payment
in full of any obligations, (j) accrued employment obligations, including
without limitation, accrued salary, accrued vacation and accrued bonuses, (k)
deferred revenue, (l) all obligations created or arising under any conditional
sale or other title retention agreement with respect to property acquired by the
Company or any of its Subsidiaries (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (m) all obligations to purchase, redeem,
retire or otherwise acquire for value any ownership interests or capital stock
of the Company or any rights to acquire any ownership interests or capital stock
of the Company, valued, in the case of redeemable ownership interests or capital
stock, at the greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends, and (n) any obligations under any interest
rate, foreign exchange, currency, commodity, credit or equity swap, cap, collar,
floor, option, forward or other hedging agreement or derivative contract, net of
any obligations to the Company thereunder. For purposes of the Agreement,
“Indebtedness” includes (i) any and all accrued interest, fees, change of
control payments, prepayment premiums, make whole premiums or penalties and fees
or expenses actually incurred (including attorneys’ fees)

 

--------------------------------------------------------------------------------

 

associated with the repayment of any Indebtedness, and (ii) any and all amounts
of the nature described in clauses (a)-(n) above owed by the Company to any of
its Affiliates, including any of the Stockholders. Notwithstanding anything
herein to the contrary, no indebtedness arising from any claim, cost, expense or
other liability covered by that certain letter agreement, dated as of even date
herewith, by and between the Purchaser and Richard P. Junghans, M.D., Ph.D.,
shall be included in this definition of “Indebtedness” for purposes of
calculating the “Net Debt”.

“Initial Escrow Shares” means the number of shares of Purchaser Common Stock or
Sorrento Common Stock, as applicable, equal to 20% of the Purchaser Stock
Consideration, rounded down to the nearest whole share.

“Intellectual Property Rights” means all (a) foreign and domestic patents,
patent applications, patent disclosures and inventions, (b) Internet domain
names, trademarks, service marks, trade dress, trade names, logos and corporate
or company names (both foreign and domestic) and registrations and applications
for registration thereof together with all of the goodwill associated therewith,
(c) copyrights (registered or unregistered) and copyrightable works (both
foreign and domestic) and registrations and applications for registration
thereof, (d) mask works and registrations and applications for registration
thereof, (e) computer software, data, data bases and documentation thereof,
including rights to third party software used in the business, (f) trade secrets
and other Confidential Information (including ideas, formulas, compositions,
inventions (whether patentable or unpatentable and whether or not reduced to
practice), know‑how, manufacturing and production processes and techniques,
research and development information, drawings, specifications, designs, plans,
proposals, technical data, copyrightable works, financial and marketing plans
and customer and supplier lists and information), (g) other intellectual
property rights, and (h) copies and tangible embodiments thereof (in whatever
form or medium).

“IPO” means the Purchaser’s first firm commitment underwritten public offering
of common stock of the Purchaser registered under the Securities Act, pursuant
to which such shares are approved for listing on a national securities exchange.

“Knowledge” An individual shall be deemed to have “Knowledge” of a particular
fact or other matter if:

(a) such individual is actually aware of such fact or other matter after due
inquiry and investigation of the matter; or

(b) such individual would have had knowledge of such fact following a reasonable
investigation, if under the circumstances a reasonable person would have
determined such investigation was required or appropriate in the normal course
of fulfillment of such individual’s duties.

The Company shall be deemed to have “Knowledge” of a particular fact or other
matter if any officer, director, management employee or other Representative of
the Company, as applicable, has Knowledge of such fact or other matter.

“Law” means any federal, national, state, provincial, territorial, local,
municipal, foreign or international, multinational other law, statute,
constitution, principle of common law, resolution, ordinance, code, edict,
decree, rule, regulation, ruling or requirement issued, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the authority
of any Governmental Body.

“Legal Proceeding” means any ongoing or threatened action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding), hearing, order, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.

“Lien” means any lien, pledge, hypothecation, charge, mortgage, security
interest, encumbrance, claim, infringement, interference, option, right of first
refusal, preemptive right, community property interest or restriction of any
nature affecting property, real or personal, tangible or intangible, including
any restriction on the voting of any security, any restriction on the transfer
of any security or other asset, any restriction on the receipt of any income
derived from any asset, any restriction on the use of any asset, any restriction
on the possession, exercise or transfer of any other attribute of

 

--------------------------------------------------------------------------------

 

ownership of any asset, any lease in the nature thereof and any filing of or
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statute of any jurisdiction).

“Net Debt” means an amount equal to Cash minus Indebtedness.

“Non-Escrow Shares” means the number of shares of Purchaser Common Stock or
Sorrento Common Stock, as applicable, equal to (a) the Purchaser Stock
Consideration less (b) the Initial Escrow Shares.

“Non-Escrow Sorrento Shares” means such number of shares of Sorrento Common
Stock as is equal to (a) the Repurchase Sorrento Shares less (b) the Sorrento
Escrow Shares.

“Organizational Documents” means, with respect to any Entity, the constitution,
certificate of incorporation, articles of incorporation, by-laws, articles of
organization, articles of association, partnership agreement, limited liability
company agreement, trust deed, formation agreement, joint venture agreement or
other similar organizational documents of such Entity (in each case, as amended
through the date of the Agreement).

“Patent Rights” means all patents, patent applications, utility models, design
registrations and certificates of invention and other governmental grants for
the protection of inventions or industrial designs (including all related
continuations, continuations-in-part, divisionals, reissues and reexaminations).

“Per Share Price” means (a) with respect to the issuance of Purchaser Common
Stock, the lowest price per share paid by investors in the Qualified Financing,
and (b) with respect to the issuance of Sorrento Common Stock, the Sorrento
Closing Price.

“Permitted Lien” means any (a) Lien for Taxes not yet due and payable (excluding
Liens arising under the Code), (b) Liens of carriers, warehousemen, mechanics,
materialmen and repairmen incurred in the ordinary course of business consistent
with past practice and not yet delinquent, and (c) in the case of real property,
zoning, building, occupancy or other restrictions, variances, covenants, rights
of way, encumbrances, easements and other minor irregularities in title, none of
which, individually or in the aggregate, (i) interfere in any material respect
with the present use of or occupancy of the affected parcel by the Company, (ii)
have more than an immaterial effect on the value thereof or its use, or (iii)
would impair the ability of such parcel to be sold for its present use.

“Person” means any individual, Entity, trust, Governmental Body or other
organization.

“Personal Information” means any “personal information” (as defined in the
Privacy Laws) about an identifiable individual in the possession, custody or
control of the Company.

“Privacy Laws” means any national, provincial, territorial, state, local or
foreign Law now in force or that may in the future come into force governing
individual privacy and/or access to Personal Information, or  the collection,
use, disclosure, access and management of Personal Information, including
without limitation, the Health Insurance Portability and Accountability Act of
1996, as amended, the Health Information Technology for Economic and Clinical
Health Act, state data breach notification Laws, state social security number
protection Laws, the Federal Trade Commission Act, the Financial Services
Modernization Act of 1999, the Fair Credit Reporting Act, the Fair and Accurate
Credit Transactions Act and state consumer protection Laws.

“Purchaser Common Stock” means the shares of the Class A common stock, par value
$0.0001 per share, of the Purchaser.

“Purchaser Related Agreement” means any certificate, agreement, document or
other instrument, other than the Agreement, to be executed and delivered by the
Purchaser in connection with the transactions contemplated by the Agreement.

“Purchaser Stock Consideration” means the number of shares of Purchaser Common
Stock or Sorrento Common Stock, as applicable, equal to the quotient obtained by
dividing (a) the Estimated Purchase Price by (b) the applicable Per Share Price,
rounded down to the nearest whole share.

 

--------------------------------------------------------------------------------

 

“Qualified Financing” means the Purchaser’s first issuance of shares of
Purchaser Common Stock or shares of a previously unissued series of preferred
stock, par value $0.0001 per share, of the Purchaser, completed after the date
of the Agreement and prior to March 15, 2016, for the principal purpose of
capital-raising resulting in gross proceeds (individually or in the aggregate)
to the Purchaser of at least $50,000,000.

“Receivables” means the accounts receivable, notes receivable and other
receivables of the Company as of the close of business on the Closing Date.

“Related Party” means  (a) each individual who is, or who has at any time been,
an officer or director of the Company; (b) each member of the immediate family
of each of the individuals referred to in clause (a) above; and (c) any trust or
other Entity (other than the Company) in which any one of the individuals
referred to in clauses (a) and (b) above holds (or in which more than one of
such individuals collectively hold), beneficially or otherwise, a material
voting, proprietary, equity or other financial interest.

“Representatives” means, with respect to a Person, the officers, directors,
employees, agents, attorneys, accountants, advisors and representatives of such
Person.

“Repurchase Sorrento Shares” means such number of shares of Sorrento Common
Stock as is equal to the lesser of (a) the quotient obtained by dividing six
million United States Dollars ($6,000,000) by the Sorrento Closing Price,
rounded down to the nearest whole share, and (b) five hundred thousand (500,000)
shares (subject to adjustment for stock splits recapitalizations and similar
transactions occurring on or after the date of the Agreement).

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

“Sorrento Closing Price” means the closing price per share of the Sorrento
Common Stock, as reported on the Nasdaq Capital Market as of the Business Day
immediately prior to the Closing Date.

“Sorrento Common Stock” means the common stock, par value $0.0001 per share, of
Sorrento.

“Sorrento Escrow Shares” means the number of shares of Sorrento Common Stock
equal to the product of: (a) the Repurchase Sorrento Shares multiplied by (b)
the quotient obtained by dividing (i) the Escrow Shares as of the date of the
Repurchase Closing by (ii) the Purchaser Stock Consideration, rounded down to
the nearest whole share.

“Stockholder Related Agreement” means any certificate, agreement, document or
other instrument, other than the Agreement, to be executed and delivered by the
Company or a Stockholder in connection with the transactions contemplated the
Agreement, including without limitation the certificates, agreements, documents
and other instruments set forth in Section 6.6.

“Subsidiary” means, with respect to any party, any corporation, partnership,
trust, limited liability company or other non-corporate business enterprise in
which such party (or another Subsidiary of such party) holds stock or other
ownership interests representing (a) more that 50% of the voting power of all
outstanding stock or ownership interests of such Entity, or (b) the right to
receive more than 50% of the net assets of such Entity available for
distribution to the holders of outstanding stock or ownership interests upon a
liquidation or dissolution of such Entity.

“Taxes” means any and all taxes, charges, fees, levies or other similar
assessments or liabilities in the nature of a tax, including income, gross
receipts, ad valorem, premium, value-added, net worth, capital stock, capital
gains, documentary, recapture, alternative or add-on minimum, disability,
estimated, registration, recording, excise, real property, personal property,
sales, use, license, lease, service, service use, transfer, withholding,
employment, unemployment, insurance, employment insurance, social security,
business license, business organization, environmental, worker’s compensation,
pension, payroll, profits, severance, stamp, occupation, windfall profits,
customs, franchise and other taxes of any kind whatsoever imposed by the United
States, or any state, provincial, local or foreign government, or any agency or
political subdivision thereof, and any interest, penalties or additions to tax
imposed with respect to such items or any contest or dispute thereof.

 

--------------------------------------------------------------------------------

 

“Tax Returns” means any and all reports, returns, or declarations relating to
Taxes filed or required to be filed with any Governmental Body, including any
schedule or attachment thereto, including any amendment thereof.

“Termination Date” means the date prior to the Closing on which the Agreement is
terminated in accordance with Article IX of the Agreement.

“Transaction Expenses” means the sum of all fees, costs and expenses (including
legal fees and accounting fees and including the amount of all special bonuses
and other amounts that may become payable to any officers of the Company or
other Persons in connection with the consummation of the transactions
contemplated by the Agreement) that are incurred by the Company for the benefit
of the Company or a Stockholder in connection with the transactions contemplated
by the Agreement, including, without limitation, the costs of obtaining any
consents required to be obtained pursuant to the Agreement.

“Transfer” means any sale, assignment, encumbrance, hypothecation, pledge,
conveyance in trust, gift, transfer by request, devise, or descent, or other
transfer or disposition of any kind, including, but not limited to, transfers to
receivers, levying creditors, trustees, or receivers in bankruptcy proceedings
or general assignees for the benefit of creditors, whether voluntary or by
operation of law, directly or indirectly, of any of the shares of Purchaser
Common Stock acquired pursuant to the Agreement and any securities issued in
respect of or exchange therefor.

“Treasury Regulations” means the temporary and final income Tax regulations
promulgated under the Code.

“User Data” means any Personal Information or other data or information
collected by or on behalf of the Company from users of the Company’s products or
of any website or service operated or maintained by the Company.