Exhibit 10.1

 

*** Text Omitted and Filed Separately Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4)

and 240.24b-2

LICENSE AGREEMENT

by and between

THE SCRIPPS RESEARCH INSTITUTE,

a California nonprofit

public benefit corporation

and

SORRENTO THERAPEUTICS, INC.,

a Delaware corporation

*Confidential Treatment Requested

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LICENSE AGREEMENT

This License Agreement is entered into and made effective as of this 8th day of
January 2010 (the “Effective Date”), by and between THE SCRIPPS RESEARCH
INSTITUTE, a California nonprofit public benefit corporation (“TSRI”) located at
10550 North Torrey Pines Road, La Jolla, California 92037, and SORRENTO
THERAPEUTICS, INC., a Delaware corporation (“Licensee”) located at 6042
Cornerstone Ct., Suite B, San Diego, CA 92121, with respect to the facts set
forth below.

RECITALS

A. TSRI is engaged in fundamental scientific biomedical and biochemical research
including research relating to the development of antibodies and vaccines useful
against infectious disease.

B. Licensee is engaged in research and development of research, diagnostics and
therapeutic products for disease management and treatment.

C. TSRI has disclosed to Licensee certain technology and TSRI has the right to
grant a license to the technology, subject to certain rights of the U.S.
Government resulting from the receipt by TSRI of certain funding from the U.S.
Government.

D. TSRI desires to grant to Licensee, and Licensee wishes to acquire from TSRI,
an exclusive worldwide right and license, with the right to sublicense, to
certain patent rights and materials of TSRI, subject to the terms and conditions
set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth herein, TSRI and Licensee hereby agree as follows:

1. Definitions. Capitalized terms shall have the meaning set forth herein.

1.1 Affiliate. The term “Affiliate,” with respect to any Person, shall mean any
entity or individual which directly or indirectly controls, is controlled by, or
is under common control with, such Person. For purposes of the foregoing
sentence, the term “control” means (a) in the case of corporate entities, direct
or indirect ownership at least fifty percent (50%) (or the maximum allowed
percentage in a foreign country) of the stock or shares entitled to vote for the
election of directors; or (b) in the case of non-corporate entities, direct or
indirect ownership of at least fifty percent (50%) (or the maximum allowed
percentage in a foreign country) of the equity interest with the power to direct
the management and policies of such non-corporate entities. Unless otherwise
expressly specified, the term Licensee, as used in this Agreement, includes
Licensee’s Affiliates.

 

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1.2 Agreement. The term “Agreement” shall mean this License Agreement, as may be
amended or restated from time to time.

1.3 Confidential Information. The term “Confidential Information” shall mean any
and all proprietary or confidential information of TSRI or Licensee which may be
exchanged between the parties at any time and from time to time during the term
of this Agreement, including without limitation all correspondence related to
intellectual property. If disclosed in writing, the Confidential Information
shall be marked as confidential or proprietary. If disclosed orally, the
Confidential Information shall be reduced to writing that is identified as
confidential or proprietary within thirty (30) days of such oral disclosure.
Notwithstanding the foregoing, information shall not be considered confidential
to the extent that the receiving party can establish by competent proof that it:

(a) Is publicly disclosed through no fault of the receiving party, either before
or after it becomes known to the receiving party; or

(b) Was known to the receiving party prior to the date of this Agreement, which
knowledge was acquired independently and not from another party hereto (or such
party’s employees); or

(c) Is subsequently disclosed to the receiving party in good faith by a third
party who has a right to make such disclosure; or

(d) Has been published by a third party as a matter of right; or

(e) Has been developed by or on behalf of the receiving party independently
without the use of or access to the disclosing party’s Confidential Information.

If Confidential Information is required to be disclosed by law or court order,
the party required to make such disclosure shall limit the same to the minimum
required to comply with the law or court order, and shall use reasonable efforts
to attempt to seek confidential treatment for that disclosure, and prior to
making such disclosure that party shall notify the other party, not later than
ten (10) days (or such shorter period of time as may be reasonably practicable
under the circumstances) before the disclosure in order to allow that other
party to comment and/or to obtain a protective or other order, including
extensions of time and the like, with respect to such disclosure.

1.4 Field. The term “Field” shall mean [***…***]

1.5 Licensed Biological Materials. The term “Licensed Biological Materials”
shall mean the materials supplied by TSRI (identified in Exhibit A) together
with any progeny, mutants, or derivatives thereof supplied by TSRI or created by
Licensee. All Licensed Biological Materials shall be deemed TSRI’s Confidential
Information whether or not marked as “confidential”.

 

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1.6 Licensed Patent Rights. The term “Licensed Patent Rights” shall mean rights
arising out of or resulting from (a) the U.S./PCT patent application(s) set
forth on Exhibit B; (b) the foreign patent applications associated with the
application(s) referenced in sub clause (a) above; (c) the patents issued from
the application(s) referenced in sub clauses (a) and (b); (d) divisionals,
continuations, reissues, reexaminations, and extensions of any patent or
application set forth in sub clauses (a)- (c) above; and (e) all claims of
continuations-in-part that are entitled to the benefit of the priority date of
the application(s) referenced in sub clause (a) above.

1.7 Licensed Product. The term “Licensed Product” shall mean any product
(a) covered by a Valid Claim of the Licensed Patent Rights, or (b) that utilizes
or incorporates Licensed Biological Materials.

1.8 Major Market Country. The term “Major Market Country” shall mean any of the
following countries: the United States of America, the United Kingdom, Germany
or Japan.

1.9 Net Sales. The term “Net Sales” shall mean the gross amount invoiced by
Licensee, or Sublicensees, or any of them, on all sales of Licensed Products,
less (a) discounts actually given; (b) credits for claims, allowances,
retroactive price reductions or returned goods; (c) prepaid freight; and
(d) sales taxes or other governmental charges actually paid in connection with
sales of Licensed Products (but excluding what are commonly known as income
taxes and value-added taxes). Net Sales shall include all consideration charged
by Licensee or Sublicensees in exchange for any Licensed Products, including
without limitation any monetary payments or any other property whatsoever. For
purposes of determining Net Sales, a sale shall be deemed to have occurred when
an invoice therefore shall be generated or the Licensed Product shipped for
delivery. Sales of Licensed Products by Licensee to any Affiliate or Sublicensee
or by any Sublicensee to an Affiliate or other Sublicensee which is a reseller
thereof shall be excluded from calculating Net Sales, and only the subsequent
sale of such Licensed Products by such Affiliates or Sublicensees to unrelated
parties shall be deemed Net Sales hereunder.

1.10 Person. the term “Person” means any individual, corporation, partnership,
joint venture, limited liability company, trust, governmental body or other
organization.

1.11 Sublicensees. The term “Sublicensee” shall mean any third party to whom
Licensee grants a sublicense with respect to the rights conferred upon Licensee
under this Agreement, as permitted by Section 2.3.

1.12 Valid Claim. The term “Valid Claim” shall mean a claim of an issued patent
within the Licensed Patent Rights that has not lapsed, expired, been canceled,
or become abandoned, and has not been held invalid by a court or other
appropriate body of competent jurisdiction, unappealable or unappealed within
the time allowed for appeal and which has not been admitted to be invalid or
unenforceable through reissue or disclaimer or

 

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otherwise. The term “Valid Claim” shall also include the claims of a pending
patent application within the Licensed Patent Rights for a period of seven
(7) years from the date of first examination on the merits of that patent
application.

2. Grant of License.

2.1 Grant of License for Licensed Products. TSRI hereby grants and Licensee
accepts, subject to the terms and conditions of this Agreement, an exclusive
license, with the right to sublicense, under the Licensed Patent Rights to make
and have made, to use and have used, to offer to sell, to sell and have sold, to
offer to sell and to import Licensed Products in the Field.

2.2 Grant of License for Licensed Biological Materials. TSRI hereby grants and
Licensee accepts, subject to the terms and conditions of this Agreement a
non-exclusive license to the Licensed Biological Materials to make and have
made, to use and have used, to sell and have sold, to offer to sell and to
import any Licensed Biological Materials in the Field and to create any progeny,
mutant, or derivative work thereof. Except for the license and sub-license
rights granted pursuant to this Agreement, TSRI shall not grant a license to the
Licensed Biological Materials to any party except to other nonprofit or academic
institutions (collectively, the “Research Institutions”) solely for research and
educational use, provided that any such license to the Licensed Biological
Materials granted to the Research Institutions shall prohibit the
commercialization of such Licensed Biological Materials by such Research
Institutions and shall not in any way limit Licensee’s commercialization rights
under this Agreement.

2.3 Sublicensing. Licensee shall have the right to grant sublicenses to any
party with respect to the rights conferred upon Licensee under this Agreement,
provided, however, that any such sublicense shall be subject in all respects to
the provisions contained in this Agreement (excluding the payment of a License
Issue Royalty as defined in Section 3 hereof). A Sublicensee shall not further
sublicense to other than an Affiliate of Licensee or an Affiliate of such
Sublicensee without TSRI’s prior written consent, which approval shall not be
unreasonably withheld, conditioned or delayed. Licensee shall forward to TSRI a
copy of any and all fully executed sublicense agreements within thirty (30) days
of execution, which agreements shall be deemed Confidential Information of
Licensee.

2.4 No Other License. This Agreement confers no license or rights by
implication, estoppel, or otherwise under any patent applications or patents of
TSRI other than Licensed Patent Rights regardless of whether such patents are
dominant or subordinate to Licensed Patent Rights.

2.5 Governmental Interest. Licensee and TSRI acknowledge that TSRI has received,
and expects to continue to receive, funding from the United States Government in
support of TSRI’s research activities. Licensee and TSRI acknowledge and agree
that their respective rights and obligations pursuant to this Agreement shall be
subject to the rights of the United States Government, existing and as amended,
which may arise or result

 

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from TSRI’s receipt of research support from the United States Government,
including but not limited to, 37CFR401, the NIH Grants Policy Statement and the
NIH Guidelines for Obtaining and Disseminating Biomedical Research Resources.

2.6 [***…***]

3. Royalties.

3.1 License Issue Royalty. Licensee agrees to provide and shall provide to TSRI
a non-creditable, nonrefundable license issue royalty (the “License Issue
Royalty”) in the form of [***…***] warrant shares to purchase common stock of
Sorrento Therapeutics, Inc. pursuant to the form of the Common Stock Warrant to
be attached hereto as Exhibit C (the “Warrant”). The Warrant shall have an
exercise price of $ [***…***] per share, [***…***]. If the Warrant is not
executed by Licensee and delivered to TSRI within thirty (30) days of the
Effective Date, this Agreement shall be void ab initio.

3.2 Minimum Annual Royalty. Licensee agrees to pay and shall pay to TSRI a
nonrefundable minimum annual royalty in the amount [***…***]. Such payments
shall be credited against Running Royalties (as defined in Section 3.3 below)
due for that calendar year and Licensee’s royalty reports shall reflect such a
credit. Such payments shall not be credited against milestone payments (if any),
Sublicense Payments (if any), nor against Running Royalties due for any
preceding or subsequent calendar year.

3.3 Running Royalties for Licensed Products. Licensee agrees to pay and shall
pay to TSRI a running royalty on a country by country basis, where the Licensed
Products are sold by Licensee or Sublicensees and where there are Valid Claims
in such country in the amount of [***…***] of Net Sales of Licensed Products
(the “Running Royalty”). If Licensee or Sublicensee sells Licensed Product in a
country in which there are no Valid Claims, but a Valid Claim exists in any
Major Market Country, Licensee

 

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agrees to pay and shall pay to TSRI a Running Royalty in the amount of
[***…***].

3.4 Notwithstanding Section 3.3, in the event Licensee or Sublicensee directly
or indirectly alleges in any action or proceeding that (i) any of the Licensed
Patent Rights are invalid or unenforceable, or (ii) no royalties, Sublicense
Payments, milestone payments, patent costs or other monies are due or required
to be paid to TSRI under this Agreement because some or all of the Licensed
Patent Rights are invalid or unenforceable (collectively “Challenges”), the
royalty rate specified in Section 3.3 shall be increased to [***…***] of Net
Sales of Licensed Products during and after the pendency of such Challenges from
the date Licensee or Sublicensee first institutes or makes such Challenges and
shall continue to apply after the conclusion of such Challenges in the event
that at least one (1) claim of the Licensed Patent Rights being challenged that
covers such Licensed Products is held to be valid and enforceble.

3.5 Arms-Length Transactions. On sales of Licensed Products which are made in
other than an arms-length transaction, the value of the Net Sales attributed
under this Section 3 to such a transaction shall be that which would have been
received in an arms-length transaction, based on sales of like quality and
quantity products on or about the time of such transaction.

3.6 Duration of Royalty Obligations. The royalty obligations of Licensee as to
each Licensed Product shall terminate on a country-by-country basis concurrently
with the expiration of the last to expire of a Valid Claim within the Licensed
Patent Rights that covers such Licensed Product or, if no patents issue
containing a Valid Claim within the Licensed Patent Rights in a given country or
if no patent applications are filed in that country of sale, then ten (10) years
from the first commercial sale in such country.

3.7 No Right to Recoup Royalty. In the event Licensee or Sublicensee directly or
indirectly institutes or makes any Challenges, neither Licensee nor Sublicensee
shall have any right to recoup, recover, set off or otherwise get reimbursement
of any royalties, Sublicense Payments, milestone payments, patent costs or other
monies paid hereunder during the period of such Challenges. Licensee hereby
voluntarily and irrevocably waives any right to seek return of such royalties,
Sublicense Payments, milestone payments, patent costs or other monies in the
event Licensee directly or indirectly institutes or makes any Challenges.

4. Non-royalty Revenues.

4.1 Sublicense Payments. Any and all payments due Licensee pursuant to the grant
of a sublicense to the Licensed Patent Rights or Licensed Biological Materials
(“Sublicense Revenues”) shall be reported to TSRI by Licensee within thirty (
30) days after the end of the calendar quarter in which the Licensee received
payment of such Sublicense Revenue (each, a “Notice”). Licensee shall pay to
TSRI a non-creditable, non-refundable percentage of these Sublicense Revenues
according to the following schedule concurrently

 

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with the delivery of the Notice relating to such Sublicense Revenue (“Sublicense
Payments”):

 

[***...***]    [***...***]

(a) [***...***]

   [***...***]

(b) [***...***]

   [***...***]

(c) [***...***]

   [***...***]

Any non-cash consideration received by Licensee from Sublicensees or other third
parties pursuant to the grant of a sublicense to the Licensed Patent Rights or
Licensed Biological Materials shall be valued at its fair market value as of the
date of receipt.

4.2 Increase in Sublicense Payments. Notwithstanding Section 4.1, in the event
Licensee or Sublicensee directly or indirectly institutes or makes any
Challenges, the percentages in Section 4.1 shall be doubled during and after the
pendency of such Challenges from the date Licensee or Sublicensee first
institutes or makes such Challenges and shall continue to apply after the
conclusion of such Challenges in the event that at least one (1) claim of the
Licensed Patent Rights being challenged that covers such Licensed Products is
held to be valid and enforceble.

4.3 Product Development Milestones. Licensee agrees to pay and shall pay to TSRI
the following one-time, non-creditable, non-refundable product development
milestones (each, a “Product Development Milestone Payment”) within sixty
(60) days of the end of the calendar quarter in which each milestone (or its
equivalent) in a Major Market Country first occurs as follows:

 

[***...***]    [***...***]

[***...***]

   [***...***]        

[***...***]

   [***...***]        

[***...***]

   [***...***]        

 

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[***...***]

 

For purposes of this Section 4 and Exhibit D:

 

(a) the term [***...***];

 

(b) the term [***...***];

 

(c) the term [***...***].

   [***...***]

5. Royalty Payments.

5.1 Sales by Licensee. Running Royalties payable pursuant to Section 3 herein,
shall be payable by Licensee quarterly, within sixty (60) days after the end of
each calendar quarter, based upon Net Sales during the immediately preceding
calendar quarter.

5.2 Sales by Sublicensees. Licensee agrees to pay and shall pay to TSRI, or
cause its Sublicensees to pay to TSRI all Running Royalties pursuant to
Section 3 herein resulting from the activities of its Sublicensees, within
sixty (60) days after the end of each calendar quarter.

6. Reports on Progress, Benchmarks, Sales or Payments.

6.1 Commercial Development Plan and Benchmarks. Licensee agrees to provide to
TSRI a commercial development plan within six (6) months of the Effective Date,
under which Licensee intends to bring the subject matter of the Licensed Patent
Rights to the point of commercial use (the “Commercial Development Plan”). The
Commercial Development Plan shall incorporate the target performance benchmarks
listed in Exhibit D, as may be amended from time to time (the “Benchmarks”).
Upon its completion, Licensee’s Commercial Development Plan shall be executed by
TSRI and Licensee and incorporated herein.

6.2 Progress Reports on Commercial Development Plan and Benchmarks.

 

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6.2.1 Licensee shall provide written annual reports on its product development
progress or efforts to commercialize under the Commercial Development Plan for
the Field within sixty (60) days after June 30 of each calendar year. These
progress reports shall include, but not be limited to: progress on research and
development, copies of Licensed Product Data generated during that year, status
of applications for regulatory approvals, manufacturing, sublicensing,
marketing, importing, and sales during the preceding calendar year, as well as
plans for the period ending June 30 of the following calendar year. TSRI also
encourages these reports to include information on any of Licensee’s public
service activities that relate to the Licensed Patent Rights. If reported
progress differs materially from that projected in the Commercial Development
Plan, Licensee shall explain the reasons for such differences. In any such
annual report, Licensee may propose amendments to the Commercial Development
Plan or Benchmarks, acceptance of which by TSRI may not be withheld,
conditioned, denied or delayed unreasonably. Licensee agrees to provide any
additional information reasonably required by TSRI to evaluate Licensee’s
performance under this Agreement. Licensee may amend the benchmarks set forth in
the Commercial Development Plan at any time upon written consent by TSRI. TSRI
shall not unreasonably withhold or delay approval of any request of Licensee to
extend the time periods of this schedule if such request is supported by a
reasonable showing by Licensee of diligence in its performance under the
Commercial Development Plan and toward bringing the Licensed Products to the
point of commercial use.

6.2.2 At any time after two (2) years from the Effective Date, TSRI may
terminate this Agreement if, in TSRI’s sole reasonable judgment, the progress
reports furnished by Licensee do not demonstrate that Licensee is engaged in
research, development, manufacturing, marketing or sublicensing activity
appropriate to achieving the goals described in Section 6.2.1; provided that
TSRI may not terminate this Agreement under this Section 6.2.2 in the event the
Licensee has achieved the Benchmarks specified in Exhibit D.

6.2.3 Licensee shall report to TSRI the dates for achieving Benchmarks specified
in Exhibit D and the first commercial sale of a Licensed Product in each country
within thirty (30) days of such occurrences.

6.3 Reports on Revenues and Payments. Commencing upon the first sale of the
first Licensed Product, Licensee shall submit to TSRI, no later than sixty (60)
days after the end of each calendar quarter, a royalty report (the “Royalty
Report”) setting forth for such quarter at least the following information:

(a) the number of Licensed Products sold by Licensee and its Sublicensees;

(b) the gross amounts due or charged for such Licensed Products;

(c) a detailed list of all deductions applicable to determine the Net Sales of
Licensed Products pursuant to Section 1.9;

 

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(d) the amount of Sublicense Revenues received by Licensee and the amount of
Sublicense Payments due under Section 4.1; and

(e) the amount of royalty due on all of the above, or if no royalties are due to
TSRI for any reporting period, the statement that no royalties are due and an
explanation why they are not due for that quarterly period.

Such Royalty Report shall be certified as correct by an officer of Licensee.

6.4 Royalty Payments. Licensee agrees to pay and shall pay to TSRI with each
Royalty Report the amount of royalty due with respect to such quarter. All
payments due hereunder shall be deemed received when funds are credited to
TSRI’s bank account and shall be payable by check or wire transfer in United
States Dollars.

6.5 Foreign Sales. The remittance of royalties payable on sales outside the
United States shall be payable to TSRI in United States Dollar equivalents at
the official rate of exchange of the currency of the country from which the
royalties are payable, as quoted in the Wall Street Journal for the last
business day of the calendar quarter in which the royalties are payable. If the
transfer of or the conversion into the United States Dollar equivalents of any
such remittance in any such instance is not lawful or possible, the payment of
such part of the royalties as is necessary shall be made by the deposit thereof,
in the currency of the country where the sale was made on which the royalty was
based to the credit and account of TSRI or its nominee in any commercial bank or
trust company of TSRI’s choice located in that country, prompt written notice of
which shall be given by Licensee to TSRI.

6.6 Foreign Taxes. Any tax required to be withheld by Licensee under the laws of
any foreign country for any royalties or other amounts due hereunder or for the
accounts of TSRI shall be promptly paid by Licensee for and on behalf of TSRI to
the appropriate governmental authority, and Licensee shall furnish TSRI with
proof of payment of such tax together with official or other appropriate
evidence issued by the applicable government authority. Any such tax actually
paid on TSRI’s behalf shall be deducted from royalty payments due TSRI.

6.7 Record Keeping. Licensee shall keep, and shall require its Affiliates and
Sublicensees to keep, accurate records (together with supporting documentation)
of Licensed Products sold under this Agreement, appropriate to determine the
amount of royalties, Sublicense Payments, Product Development Milestone Payments
and other monies due to TSRI hereunder. Such records shall be retained for at
least five (5) years following the end of the reporting period to which such
records relate. They shall be available during normal business hours for
examination and copying by an independent certified accountant selected by TSRI
and reasonably acceptable to Licensee (the “TSRI Accountant”) for the purpose of
verifying Licensee’s reports and payments hereunder and its compliance with this
Agreement; provided that reasonable advance notice of such examination and
copying shall be given by TSRI to Licensee. In conducting examinations pursuant
to this Section, the TSRI Accountant shall have access to, and may disclose to
TSRI, all records which TSRI

 

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reasonably believes to be relevant to the calculation of royalties under
Section 3, non-royalty revenues under Section 4 and Licensee’s compliance with
this Agreement. Except as set forth above, TSRI’s accountant shall not disclose
to TSRI any information other than information relating to the accuracy of
reports and payments made hereunder and to Licensee’s compliance with this
Agreement. Except as otherwise expressly provided herein, such examination by
the TSRI Accountant shall be at TSRI’s sole cost and expense. Notwithstanding
the foregoing, if the TSRI Accountant concludes in writing that Licensee
underreported or underpaid an amount in excess of five percent (5%) for any
twelve (12) month period (each, an “Alleged Underpayment”), such conclusion, and
the TSRI Accountant’s detail in support thereof, shall be delivered to Licensee.
Licensee shall pay the cost of such examination (including without limitation
TSRI’s attorney’s fees, accountant’s fees and other costs) as well as any
additional sum that would have been payable to TSRI had the Licensee reported
correctly (as set forth in the TSRI Accountant’s report), plus interest on said
sum at the rate of one percent (1.0%) per month (pro rated for a partial month)
accruing from the date such underpaid amount was initially due (collectively,
the “Penalty Payment”) within thirty (30) days of Licensee’s receipt of the
Alleged Underpayment.

7. Representations and Warranties.

7.1 Licensor. TSRI hereby represents and warrants to Licensee that as of the
Effective Date:

(a) All corporate action on the part of TSRI necessary for the authorization,
execution and delivery of this Agreement and the performance of its obligations
hereunder has been taken.

(b) This Agreement is the legal, valid and binding obligation of TSRI,
enforceable against it in accordance with its terms, except as such enforcement
may be limited by general equitable principles or by applicable bankruptcy,
insolvency, or similar laws affecting creditors’ rights generally.

(c) TSRI, to its actual knowledge, has the full right and power to enter into
this Agreement and has the full rights to grant to Licensee the licenses and
license rights granted to Licensee under the terms of this Agreement.

(d) Subject to the Rights of the U.S. Government as described in this Agreement,
TSRI, to its actual knowledge, is the sole owner of all Licensed Patent Rights
and TSRI has not granted to any third party any license, option or other rights
with respect to the Licensed Patent Rights (other than any such license, option
or other rights that has expired unexercised, or has been waived in writing such
that TSRI is free to grant licensee the license and rights it purports to grant
under this Agreement).

(e) TSRI’s general counsel has not received any written notice from a third
party challenging TSRI’s right to grant the licenses to Licensee pursuant to
this Agreement.

 

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7.2 Licensee. Licensee hereby represents and warrants to TSRI that as of the
Effective Date:

(a) All corporate action on the part of Licensee necessary for the
authorization, execution and delivery of this Agreement and the performance of
its obligations hereunder has been taken.

(b) This Agreement is the legal, valid and binding obligation of Licensee,
enforceable against it in accordance with its terms, except as such enforcement
may be limited by general equitable principles or by applicable bankruptcy,
insolvency, or similar laws affecting creditors’ rights generally.

(c) Licensee, to its actual knowledge, has the full right and power to enter
into this Agreement and to perform all of its obligations hereunder.

8. Patent Matters.

8.1 Patent Prosecution and Maintenance. From and after the date of this
Agreement, the provisions of this Section 8 shall control the prosecution of any
patent application and maintenance of any patent included within Licensed Patent
Rights. Subject to the requirements, limitations and conditions set forth in
this Agreement, TSRI shall (a) direct and control the preparation, filing and
prosecution of the United States and foreign patent applications within Licensed
Patent Rights (including without limitation any reissues, reexaminations,
appeals to appropriate patent offices and/or courts, interferences and foreign
oppositions); and (b) maintain the patents issuing therefrom. TSRI shall select
the patent attorney, subject to Licensee’s written approval, which approval
shall not be unreasonably withheld. Both parties agree that TSRI shall have the
right, at its sole discretion, to utilize TSRI’s Office of Patent Counsel in
lieu of or in addition to independent counsel for patent prosecution and
maintenance described herein, and the fees and expenses associated with the work
done by such Office of Patent Counsel and/or independent counsel shall be paid
as set forth below. Licensee shall have full rights of consultation with the
patent attorney so selected on all matters relating to Licensed Patent Rights
and Licensee, and its counsel, shall have the right to review and provide
comments on any and all filings, correspondence or other documents to be filed
with, or submitted to, any regulatory body, including, but not limited to the
U.S. Patent and Trademark Office, that relate to any Licensed Patent Rights, in
each case at least ten (10) business days prior, whenever reasonably possible,
to the filing or submission thereof. TSRI shall implement all reasonable and
timely requests made by Licensee with regard to such matters, provided, however,
that such requests are delivered within the first to occur of (a) fifteen
(15) days following TSRI’s written notification to Licensee or
(b) two (2) business days prior to the filing or submission thereof of any
correspondence with the U.S.P.T.O. by TSRI.

 

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8.2 Information to Licensee. TSRI shall keep Licensee timely informed in writing
with regard to the patent application and maintenance processes. TSRI shall
deliver to Licensee copies of all patent applications, amendments, office
actions, responses, related correspondence, and other related matters in a
timely matter.

8.3 Patent Costs. Licensee acknowledges and agrees that the license granted
hereunder is in partial consideration for Licensee’s assumption of patent costs
and expenses as described herein. Licensee agrees to pay and shall pay for all
expenses referenced in Section 8.1. Licensee also agrees to pay and shall pay
[***…***] according to schedule in Exhibit E, as well as all future patent
expenses associated with the work on the Licensed Patent Rights performed by
TSRI’s Office of Patent Counsel and/or its independent counsel selected in
accordance with Section 8.1 within thirty (30) days after Licensee receives an
itemized invoice therefor. Failure of Licensee to pay patent costs and expenses
as set forth in this Section 8.3 shall immediately relieve TSRI from its
obligation to incur any further patent costs and expenses. For the avoidance of
doubt, should Licensee be more than thirty (30) days in arrears for any patent
costs and expenses due to TSRI or independent counsel, TSRI shall have the
right, at its sole discretion, to cease all patent prosecution and allow
Licensed Patent Rights to go abandoned. Such action by TSRI shall not, by
itself, constitute a breach of this Agreement. Payment can be made directly to
independent counsel, or to TSRI, at Licensee’s sole election. Licensee may elect
with a minimum of thirty (30) days prior written notice to TSRI, to discontinue
payment for the filing, prosecution and/or maintenance of any patent application
and/or patent within Licensed Patent Rights. Licensee shall remain liable for
all patent prosecution and maintenance costs incurred prior to the date of
notice of election and for a thirty (30) day period following date of such
notice. Any such patent application or patent so elected shall immediately be
excluded from the definition of Licensed Patent Rights and from the scope of the
licenses granted under this Agreement, and all rights relating thereto shall
revert to TSRI and may be freely licensed by TSRI.

8.4 Reversion Rights. If TSRI decides not to file, prosecute or maintain any
patent included within the Licensed Patent Rights, it shall give Licensee
reasonable notice to that effect sufficiently in advance of any deadline for any
filing or submission with respect to any such patent to permit Licensee to carry
out such activity. After such notice, provided that Licensee is not in breach or
default under this Agreement, Licensee may file, prosecute and maintain each
such patent, and perform such acts as may be reasonably necessary for Licensee
or TSRI to file, prosecute or maintain such patent, in its sole discretion and
at its sole cost and expense. If Licensee does so elect, then TSRI shall provide
such full cooperation to Licensee, including the execution and filing of
appropriate instruments, as may reasonably be requested to facilitate the
transition of such patent activities.

8.5 Ownership. The patent applications filed and the patents obtained by TSRI
pursuant to Section 8.1 hereof shall be owned solely by TSRI, assigned solely to
TSRI and deemed a part of Licensed Patent Rights.

 

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8.6 TSRI Right to Pursue Patent. If at any time during the term of this
Agreement, Licensee’s rights with respect to Licensed Patent Rights are
terminated, TSRI shall have the right to take whatever action TSRI deems
appropriate to obtain or maintain the corresponding patent protection. If TSRI
pursues patents under this Section 8.6, Licensee agrees to cooperate fully,
including by providing, at no charge to TSRI, all appropriate technical data and
executing all necessary legal documents.

8.7 Infringement Actions.

8.7.1 Consultation. TSRI and Licensee shall promptly notify the other in writing
of any alleged or threatened infringement of, or any challenge to the validity
or unenforceability of, Licensed Patent Rights of which it becomes aware. After
receiving notice from the other party of a possible infringement of the Licensed
Patent Rights by a third party, the parties will consult with each other about
whether and to what extent such third party’s products or activities are
infringing upon the Licensed Patent Rights in that country and the extent to
which the infringing products or activities are damaging sales of Licensed
Products in such country; provided, however, that promptly after delivery of
such notice, and in any event prior to engaging in any such consultation or
discussion, TSRI and Licensee shall enter into a mutually acceptable joint
defense/common interest agreement for the purpose of preserving all applicable
privileges attaching to the parties’ discussion and pursuit of their mutual
interest in the enforcement of the Licensed Patent Rights. In this way, the
parties will attempt to reach a mutual agreement regarding what, if any, action
should be taken against the third party.

If (i) such third party’s products or activities are literally infringing upon
the Licensed Patent Rights in a Major Market Country, and (ii) cumulative lost
sales of Licensed Products as a result of such infringing activity exceed
$[***…***], then, except as otherwise mutually agreed by the parties pursuant to
Section 8.7.1, Licensee shall have the obligation to prosecute such infringement
(including defense of actions for declaratory relief of non-infringement) by
that third party; provided that Licensee shall only have such obligation if it
has standing to prosecute such infringement. If the parties cannot agree on a
course of action to be taken against such third party infringer, and such third
party’s products or activities are occurring in a non-Major Market Country, then
Licensee shall have the first right, but not the obligation, to prosecute such
infringement. Licensee may enter into settlements, stipulated judgments or other
arrangements respecting such infringement, at its own expense, but only with the
prior written consent of TSRI, which consent shall not be unreasonably withheld,
conditioned or delayed. TSRI shall permit any action to be brought in its name
and/or join in such action if required by law, and Licensee shall hold TSRI
harmless from any costs, expenses or liability respecting such action. TSRI
agrees to provide reasonable assistance of a technical nature which Licensee may
require in any litigation arising in accordance with the provisions of this
Section 8.7.1, for which Licensee shall pay to TSRI a reasonable hourly rate of
compensation. In the event Licensee is not obligated to, pursuant to
Section 8.7.1, and decides not to, or the parties mutually agree not to,
pursuant to Section 8.7.1, prosecute any such infringement, then Licensee shall
notify TSRI in writing within ninety (90) days of initial consultation pursuant
to Section 8.7.1, and TSRI shall have the right, but not the

 

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obligation, to prosecute such infringement on its own behalf. If Licensee does
not have sufficient standing to prosecute any such infringement and requests
that TSRI prosecute such infringement, TSRI will prosecute such infringement
under its own name on behalf of Licensee at Licensee’s cost and expense. Failure
on the part of Licensee to prosecute any such infringement for which it has
standing to prosecute shall be grounds for conversion of the exclusive licenses
granted to Licensee hereunder to co-exclusive licenses with Licensee and with
such infringing third party(ies), with respect to the country in which such
infringement occurs, at the option of TSRI, provided, however, that TSRI may
only subsequently enter into subsequent license agreements with such infringing
third party(ies) (i.e., not any other third party) and, provided further, that
such license(s) shall not contain running royalty rates lower than the rates
specified in this Agreement nor grant such third parties the right to
sublicense. Licensee agrees to execute any and all necessary documents and
perform such acts as are reasonably requested by TSRI in order to effect such
grant to such third party. All fees, royalties, payments and any other
consideration to be paid by that third party under the co-exclusive license
shall be paid to TSRI.

8.7.2 Allocation of Recovery. Any damages or other recovery from an infringement
action undertaken by Licensee pursuant to Section 8.7.1 shall first be used to
reimburse the parties for the costs and expenses incurred in such action, and
shall thereafter be allocated between the parties as follows if Licensee has
prosecuted the action: (i) Fifteen Percent (15%) to TSRI and (ii) Eighty Five
Percent (85%) to Licensee. If TSRI, rather than Licensee, has prosecuted any
such action, then any damages or other recovery net of the parties’ costs and
expenses incurred in such infringement action shall be allocated: (i) Fifteen
Percent (15%) to Licensee and (ii) Eighty Five Percent (85%) to TSRI. If
Licensee and TSRI jointly prosecute any such action, then any damages or other
recovery net of the parties’ costs and expenses incurred in such infringement
action shall be allocated: (i) Fifty Percent (50%) to Licensee and (ii) Fifty
Percent (50%) to TSRI.

9. Indemnity and Insurance.

9.1 Indemnity.

9.1.1 Licensee hereby agrees to indemnify, defend (by counsel reasonably
acceptable to TSRI) and hold harmless TSRI and any parent, subsidiary or other
affiliated entity and their trustees, directors, officers, employees,
scientists, agents, successors, assigns and other representatives (collectively,
the “TSRI Indemnitees”) from and against all damages, claims, liabilities,
losses and other expenses, including without limitation reasonable attorney’s
fees, expert witness fees and costs, whether or not a lawsuit or other
proceeding is filed (“TSRI Claim”), that arise out of or relate to
(a) Licensee’s or any Sublicensee’s use of any of the Licensed Patent Rights or
Licensed Biological Materials, (b) alleged defects or other problems with any of
the Licensed Products or Licensed Biological Materials manufactured, sold,
distributed or rendered by Licensee or any Sublicensee, including without
limitation any personal injuries, death or property damages related thereto,
(c) any advertising or other promotion of the Licensed Products or Licensed
Biological Materials by Licensee or any Sublicensees, (d) any allegations that
the Licensed

 

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Products or Licensed Biological Materials developed, manufactured, sold,
distributed or rendered by Licensee or any Sublicensee and/or any trademarks,
service marks, logos, symbols, slogans or other materials used in connection
with or to market Licensed Products or Licensed Biological Materials violate or
infringe upon the trademarks, service marks, trade dress, trade names,
copyrights, patents, works of authorship, inventorship rights, trade secrets,
database rights, rights under unfair competition laws, rights of publicity,
privacy or defamation, or any other intellectual or industrial property rights
of any third party, (e) Licensee’s or any Sublicensee’s failure to comply with
any applicable laws, rules or regulations, (f) Licensee’s or any Sublicensee’s
transactions with third parties or the operation of their respective businesses,
and/or (g) the negligent or willful acts or omissions of Licensee or any
Sublicensee. Licensee’s indemnity obligation is subject to (i) TSRI promptly
notifying Licensee in writing of such TSRI Claim, (ii) Licensee having the sole
control of the defense and/or settlement thereof except as provided below, and
(iii) TSRI Indemnitee furnishing to Licensee, on request and at Licensee’s
expense, all relevant information available to the TSRI Indemnitee and
reasonable cooperation for such defense. Licensee shall not enter into any
settlement of such TSRI Claims that involve TSRI admitting any liability, paying
any money, taking any action that would have an adverse effect on TSRI’s
reputation or business or that does not unconditionally release TSRI from all
liability without TSRI’s prior written consent. Notwithstanding the above, TSRI
Indemnitees, at their sole cost and expense, shall have the right to retain
separate independent counsel to assist in defending any such TSRI Claims. In the
event Licensee fails to promptly indemnify and defend such Claims and/or pay
TSRI Indemnitees’ expenses as provided above, TSRI Indemnitees shall have the
right to defend themselves, and in that case, Licensee shall reimburse TSRI
Indemnitees for all of their reasonable, actual and documented attorney’s fees,
costs and damages incurred in settling or defending such Claims within
thirty (30) days of each of Indemnitees’ written requests, which requests shall
include such documentation. This indemnity shall be a direct payment obligation
and not merely a reimbursement obligation of Licensee to TSRI Indemnitees.

9.2 Insurance. Licensee shall supply copies of certificates to TSRI on any
commercial general liability and product liability insurance policies maintained
by Licensee, its Affiliates and Sublicensees applicable to the Licensed Products
and Licensed Biological Materials.

9.2.1 Prior to the commencement of clinical trials by the Licensee relating to
any such Licensed Product or Licensed Biological Material, Licensee shall, at
its sole cost and expense, procure and maintain commercial general liability
insurance in amounts not less than $1,000,000 per incident and $2,000,000 annual
aggregate and naming TSRI or, if permitted by the insurer, the TSRI Indemnitees,
as additional insured. Upon commencement of clinical trials by the Licensee
relating to any such Licensed Product or Licensed Biological Material, Licensee
shall, at its sole cost and expense, procure and maintain commercial general
liability insurance in amounts not less than $2,000,000 per incident and
$4,000,000 annual aggregate and naming TSRI or, if permitted by the insurer, the
TSRI Indemnitees, as additional insured. Upon commencement of commercial
distribution or sale of any such Licensed Product or Licensed Biological
Material by

 

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Licensee or by a Sublicensee, except for the purpose of seeking or obtaining
regulatory approvals or for any clinical or pre-clinical trials or testing
(including under third party collaborations), Licensee shall, at its sole cost
and expense, procure and maintain commercial general liability insurance in
amounts not less than $5,000,000 per incident and $10,000,000 annual aggregate
and naming TSRI or, if permitted by the insurer, the TSRI Indemnitees, as
additional insured. Such commercial general liability insurance shall provide
(i) product liability coverage; (ii) broad form contractual liability coverage
for Licensee’s indemnification under this Agreement; and (iii) coverage for
TSRI’s litigation costs. If Licensee elects to self insure all or part of the
limits described above (including deductibles or retentions which are in excess
of $250,000 annual aggregate) such self insurance program must be acceptable to
TSRI in its sole discretion. The insurance coverage amounts specified herein or
the maintenance of such insurance policies shall not in any way limit Licensee’s
indemnity or other liability under this Agreement.

9.2.2 In addition, Licensee, on behalf of itself and its insurance carriers,
waives any and all claims and rights of recovery against TSRI and the
Indemnitees, including without limitation all rights of subrogation, with
respect to either party’s performance under this Agreement or for any loss of or
damage to Licensee or its property or the property of others under its control.
Licensee’s commercial general liability insurance policy shall also include a
waiver of subrogation consistent with this paragraph in favor of TSRI and the
Indemnitees. Licensee shall be responsible for obtaining such waiver of
subrogation from its insurance carriers. Licensee’s insurance policies shall be
primary and not contributory to any insurance carried by its Sublicensees or by
TSRI. Upon TSRI’s request, Licensee shall deliver to TSRI copies of insurance
certificates or binders that comply with the requirements of this Section 9.

9.2.3 Licensee shall provide TSRI with written notice at least thirty (30) days
prior to the cancellation, non renewal or material change in such insurance. If
Licensee does not obtain replacement insurance providing comparable coverage
within such thirty (30) day period, TSRI shall have the right to terminate this
Agreement effective at the end of such thirty (30) day period without notice or
any additional waiting periods.

9.2.4 Licensee shall maintain such commercial general liability insurance beyond
the expiration or termination of this Agreement during (a) the period that any
Licensed Product or Licensed Biological Material relating to, or developed
pursuant to, this Agreement is being commercially distributed or sold by
Licensee or by a Sublicensee, Affiliate or agent of Licensee; and (b) a
reasonable period after the period referred to in Section 9.2.4(a) which in no
event shall be less than five (5) years.

9.3 Pre-Challenge Requirements. Licensee will provide written notice to TSRI at
least one hundred eighty (180) days prior to instituting or making any
Challenges. Licensee will include with such written notice a list of all prior
art and a description of the other facts and arguments that supports its
contention that any of the Licensed Patent Rights are invalid or unenforceable
to enable the parties to attempt in good faith to mutually resolve such issues.

 

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10. Warranty Disclaimer.

10.1 Warranty Disclaimer. EXCEPT AS SPECIFICALLY SET FORTH IN SECTION 7.1 OF
THIS AGREEMENT, TSRI MAKES NO WARRANTIES CONCERNING LICENSED PATENT RIGHTS,
LICENSED BIOLOGICAL MATERIALS OR ANY OTHER MATTER WHATSOEVER, INCLUDING WITHOUT
LIMITATION ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR ARISING OUT OF
COURSE OF CONDUCT OR TRADE CUSTOM OR USAGE, AND TSRI DISCLAIMS ALL SUCH EXPRESS
OR IMPLIED WARRANTIES. EXCEPT AS SET FORTH IN THIS AGREEMENT, TSRI MAKES NO
WARRANTY OR REPRESENTATION AS TO THE VALIDITY OR SCOPE OF LICENSED PATENT
RIGHTS, OR THAT ANY LICENSED PRODUCT OR LICENSED BIOLOGICAL MATERIAL WILL BE
FREE FROM AN INFRINGEMENT ON PATENTS OR OTHER INTELLECTUAL PROPERTY RIGHTS OF
THIRD PARTIES, OR THAT NO THIRD PARTIES ARE IN ANY WAY INFRINGING UPON ANY
LICENSED PATENT RIGHTS OR LICENSED BIOLOGICAL MATERIALS COVERED BY THIS
AGREEMENT. FURTHER, TSRI HAS MADE NO INVESTIGATION AND MAKES NO REPRESENTATION
THAT THE LICENSED PATENT RIGHTS OR LICENSED BIOLOGICAL MATERIALS ARE SUITABLE
FOR LICENSEE’S PURPOSES.

10.2 IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, SPECIAL,
INCIDENTAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT LIMITATION
DAMAGES FOR LOSS OF PROFITS OR EXPECTED SAVINGS OR OTHER ECONOMIC LOSSES, OR FOR
INJURY TO PERSONS OR PROPERTY) ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ITS SUBJECT MATTER. TSRI’S AGGREGATE LIABILITY, IF ANY, FOR ALL
DAMAGES OF ANY KIND RELATING TO THIS AGREEMENT OR ITS SUBJECT MATTER SHALL NOT
EXCEED THE AMOUNT PAID BY LICENSEE TO TSRI UNDER THIS AGREEMENT. THE FOREGOING
EXCLUSIONS AND LIMITATIONS SHALL APPLY TO ALL CLAIMS AND ACTIONS OF ANY KIND AND
ON ANY THEORY OF LIABILITY, WHETHER BASED ON CONTRACT, TORT (INCLUDING, BUT NOT
LIMITED TO NEGLIGENCE OR STRICT LIABILITY), OR ANY OTHER GROUNDS, AND REGARDLESS
OF WHETHER TSRI HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. THE
PARTIES FURTHER AGREE THAT EACH WARRANTY DISCLAIMER, EXCLUSION OF DAMAGES OR
OTHER LIMITATION OF LIABILITY HEREIN IS INTENDED TO BE SEVERABLE AND INDEPENDENT
OF THE OTHER PROVISIONS SINCE THEY EACH REPRESENT SEPARATE ELEMENTS OF RISK
ALLOCATION BETWEEN THE PARTIES.

 

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11. Confidentiality and Publication.

11.1 Treatment of Confidential Information. The parties agree that during the
term of this Agreement, and for a period of five (5) years after this Agreement
terminates or expires, a party receiving Confidential Information of the other
party will (a) maintain in confidence such Confidential Information to the same
extent such party maintains its own proprietary information; (b) not disclose
such Confidential Information to any third party without prior written consent
of the other party; and (c) not use such Confidential Information for any
purpose except those permitted by this Agreement.

11.2 Publications. Each party agrees that the other party shall have a right to
publish in accordance with its general policies, and that this Agreement shall
not restrict, in any fashion, either party’s right to publish. Each party shall
take reasonable steps to provide the other party with a copy of any manuscript
related to the Licensed Patent Rights prior to publication. The parties agree to
follow standard scientific practices with respect to authorship and the
provision of materials on any such publication.

11.3 Publicity. Except as otherwise provided herein or required by law, no party
shall originate any publication, news release or other public announcement,
written or oral, whether in the public press, stockholders’ reports, or
otherwise, relating to this Agreement or to any sublicense hereunder, or to the
performance hereunder or under any such sublicense agreements, without the prior
written approval of the other party, which approval shall not be unreasonably
withheld. Scientific publications published in accordance with Section 11.2 of
this Agreement shall not be construed as publicity governed by this
Section 11.3. Notwithstanding anything herein to the contrary, Licensee (or any
successor or parent company thereof) shall be permitted to file this Agreement
publicly with the Securities and Exchange Commission and any national securities
exchange, as well as the public announcement in a form of a press release of
such official fillings, without the prior consent of TSRI and shall be permitted
to include a summary of the material terms thereof in any filing therewith.
Notwithstanding the foregoing, any such filing or announcement shall be redacted
to prevent disclosure of any confidential information to the maximum extent
permissible by the applicable regulatory agency. In addition, Licensee may
disclose the terms of this Agreement to a third party under a duty of
confidentiality in connection with the potential or actual financing or sale of
any portion of Licensee’s business related to this Agreement.

12. Term and Termination.

12.1 Term. Unless terminated sooner in accordance with the terms set forth
herein, this Agreement, and the license granted hereunder, shall terminate as
provided in Section 3.6 hereof.

12.2 Termination Upon Mutual Agreement. This Agreement may be terminated by
mutual written consent of both parties.

 

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12.3 Termination by TSRI. TSRI may terminate this Agreement as follows:

(a) If Licensee does not make an undisputed payment due hereunder and fails to
cure such undisputed non-payment (including the payment of interest in
accordance with Section 14.2 hereof) within thirty (30) days after the date of
notice in writing of such non-payment by TSRI;

(b) If Licensee defaults in its indemnification and insurance obligations under
Section 9 and does not cure such default within thirty (30) days after the date
of notice in writing of such default by TSRI to Licensee;

(c) If, at any time after two (2) years from the date of this Agreement, TSRI
determines that the Agreement should be terminated pursuant to Section 6.2;

(d) If Licensee shall become insolvent, shall make an assignment for the benefit
of creditors, or shall have a petition in bankruptcy filed for or against it.
Such termination shall be effective immediately upon TSRI giving written notice
to Licensee;

(e) If an examination by TSRI’s accountant pursuant to Section 6.7 shows a
second occurrence of an underreporting or underpayment by Licensee in excess of
twenty percent (20%) for any twelve (12) month period;

(f) If Licensee is convicted of a felony relating to the manufacture, use or
sale of Licensed Products or Licensed Biological Materials; or

(g) Except as provided in subparagraphs (a) – (f) above, if Licensee defaults in
the performance of any material obligation under this Agreement and the default
has not been remedied within sixty (60) days after the date of notice in writing
of such default by TSRI to Licensee;

12.4 Termination by Licensee. Licensee may terminate this Agreement by giving
sixty (60) days advance written notice of termination to TSRI.

12.5 Licensed Product Data. Should this Agreement be terminated by either party
prior to the expiration of the license term, Licensee hereby grants to TSRI a
royalty-free and fully paid up non-exclusive license to use all animal and
clinical data previously collected and owned or controlled by Licensee in
connection with the Licensed Patent Rights for use with exercising the Licensed
Patent Rights and to cross-reference such Licensed Product Data in any FDA
filing(s).

12.6 Rights Upon Expiration. Neither party shall have any further rights or
obligations upon the expiration of this Agreement upon its regularly scheduled
expiration date other than the obligation of Licensee to make any and all
reports and payments for the final quarterly period. Sections 2.4, 2.5, 6.3,
6.4, 6.5, 6.6, 6.7, 8.3, 8.4, 9.1, 9.2, 10, 11, 12.5,

 

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12.6, 12.9, 13.2 and 14 and all defined terms used therein shall survive the
expiration of this Agreement.

12.7 Rights Upon Termination. Notwithstanding any other provision of this
Agreement, upon any termination of this Agreement prior to the regularly
scheduled expiration date of this Agreement, the licenses granted hereunder
shall terminate and revert to TSRI, and all sublicenses granted by Licensee
shall also automatically transfer to TSRI. Except as otherwise provided in
Section 12.7 of this Agreement with respect to inventory and work in progress,
upon such termination, Licensee shall have no further right to develop,
manufacture or market any Licensed Product or Licensed Biological Material, or
to otherwise use any Licensed Patent Rights or any Licensed Biological
Materials. Upon any such termination, Licensee shall promptly return or destroy
all materials, samples, documents, information, and other materials which embody
or disclose Licensed Patent Rights or any Licensed Biological Materials;
provided, however, that Licensee shall retain one full set of aforementioned
items for archive purposes and shall not be obligated to provide TSRI with
proprietary information which Licensee can show that it independently developed,
except for Licensed Product Data as required under Section 12.4. Any such
termination shall not relieve either party from any obligations accrued to the
date of such termination. Sections 2.4, 2.5, 6.3, 6.4, 6.5, 6.6, 6.7, 8.3, 8.4,
9.1, 9.2, 10, 11, 12.5, 12.6, 12.7, 12.9, 13.2 and 14 and all defined terms used
therein shall survive the termination of this Agreement for any reason.

12.8 Work in Progress. Upon any such early termination of the license granted
hereunder in accordance with this Agreement, Licensee shall be entitled to
finish any work in progress and to sell any completed inventory of a Licensed
Product covered by such license which remain on hand as of the date of the
termination, so long as Licensee sells such inventory in the normal course of
business and at regular selling prices and pays to TSRI the royalties applicable
to said subsequent sales in accordance with the terms and conditions as set
forth in this Agreement, provided that no such sales shall be permitted after
the expiration of six (6) months after the date of termination in accordance
with the terms hereof.

12.9 Final Royalty Report. In the event of the termination or expiration of this
Agreement, Licensee shall submit a final report to TSRI within sixty (60) days
of such termination or expiration, and any payments due TSRI and unreimbursed
patent expenses invoiced by TSRI shall become immediately payable.

13. Assignment; Successors.

13.1 Assignment. Any and all assignments of this Agreement or any rights granted
hereunder by Licensee without the prior written consent of TSRI are void, except
that Licensee has the right to assign this Agreement to any entity (or a parent
company thereof) that acquires all or substantially all of Licensee’s business
related to this Agreement, whether by sale of assets, sale of stock, merger,
consolidation, joint venture or otherwise, without the consent of TSRI.

 

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13.2 Binding Upon Successors and Assigns. Subject to the limitations on
assignment herein, this Agreement shall be binding upon and inure to the benefit
of any successors in interest and assigns of TSRI and Licensee (and any parent
company of such successors). Any such successor or assignee of Licensee’s
interest shall expressly assume in writing the performance of all the terms and
conditions of this Agreement to be performed by Licensee and such written
assumption shall be delivered to TSRI as a condition to TSRI’s agreement to
consent to any such assignment if TSRI’s consent is required hereunder.

14. General Provisions.

14.1 Independent Contractors. The relationship between TSRI and Licensee is that
of independent contractors. TSRI and Licensee are not joint venturers, partners,
principal and agent, master and servant, employer or employee, and have no other
relationship other than independent contracting parties. TSRI and Licensee shall
have no power to bind or obligate each other in any manner, other than as is
expressly set forth in this Agreement.

14.2 Late Payments. Late payments of any and all payments due hereunder shall be
subject to a charge of One Percent (1.0%) per month or the highest rate
permitted by law, whichever is lower, pro rated for the portion of any month in
which an undisputed payment is late.

14.3 Governmental Approvals and Marketing of Licensed Products. Licensee shall
be responsible for obtaining all necessary governmental approvals for the
development, production, distribution, performance, sale and use of any Licensed
Product or Licensed Biological Material, at Licensee’s expense, including,
without limitation, any safety studies. Licensee shall have sole responsibility
for any warning labels, packaging and instructions as to the use of Licensed
Products and for the quality control for any Licensed Products.

14.4 Patent Marking. To the extent required by applicable law, Licensee shall
mark all Licensed Products or their containers in accordance with the applicable
patent marking laws.

14.5 No Use of Name. The use of the name “The Scripps Research Institute,”
“Scripps,” “TSRI” or any variation thereof in connection with the advertising,
sale or performance of Licensed Products or Licensed Biological Materials is
expressly prohibited.

14.6 U.S. Manufacture. To the extent required, Licensee agrees to abide by the
Preference for United States Industry as set forth in 37 CFR 401.14 (I) and
exemptions and exceptions thereof, each as may be amended or restated from time
to time.

14.7 Foreign Registration. Licensee agrees to register this Agreement with any
foreign governmental agency which requires such registration, and Licensee shall
pay all costs and legal fees in connection therewith. In addition, Licensee
shall ensure that all

 

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foreign laws affecting this Agreement or the sale of Licensed Products or
Licensed Biological Materials are satisfied.

14.8 Use of Biological Materials. Licensee agrees that its use of any Licensed
Biological Materials shall comply with all applicable statutes, regulations, and
guidelines. Licensee agrees not to use the Licensed Biological Materials for
research involving human subjects or clinical trials in the United States
without complying with 21 CFR 50 and 45 CFR 46, each as may be amended or
restated from time to time. Licensee agrees not to use the Licensed Biological
Materials for research involving human subjects or clinical trials outside of
the United States without complying with the applicable regulations of the
appropriate national control authorities.

14.9 Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof shall be settled by binding confidential
arbitration in accordance with the Commercial Arbitration Rules of the AAA, and
the procedures set forth below. In the event of any inconsistency between the
Rules of AAA and the procedures set forth below, the procedures set forth below
shall control. Judgment upon the award rendered by the arbitrators may be
enforced in any court having jurisdiction thereof.

14.9.1 Location. The location of the arbitration shall be in the County of San
Diego. TSRI and Licensee hereby irrevocably submit to the exclusive jurisdiction
and venue of the AAA arbitration panel selected by the parties and located in
San Diego County, California for any dispute regarding this Agreement, and to
the exclusive jurisdiction and venue of the federal and state courts located in
San Diego County, California for any action or proceeding to enforce an
arbitration award or as otherwise provided in Section 14.9.5 below, and waive
any right to contest or otherwise object to such jurisdiction or venue.

14.9.2 Selection of Arbitrators. The arbitration shall be conducted by a panel
of three neutral arbitrators who are independent and disinterested with respect
to the parties, this Agreement, and the outcome of the arbitration. Each party
shall appoint one neutral arbitrator, and these two arbitrators so selected by
the parties shall then select the third arbitrator, and all arbitrators must
have at least ten (10) years experience in mediating or arbitrating cases
regarding the same or substantially similar subject matter as the dispute
between Licensee and TSRI. If one party has given written notice to the other
party as to the identity of the arbitrator appointed by the party, and the party
thereafter makes a written demand on the other party to appoint its designated
arbitrator within the next ten (10) days, and the other party fails to appoint
its designated arbitrator within ten (10) days after receiving said written
demand, then the arbitrator who has already been designated shall appoint the
other two arbitrators.

14.9.3 Discovery. The arbitrators shall decide any disputes and shall control
the process concerning these pre-hearing discovery matters. Pursuant to the
Rules of AAA, the parties may subpoena witnesses and documents for presentation
at the hearing.

 

23

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14.9.4 Case Management. Prompt resolution of any dispute is important to both
parties; and the parties agree that the arbitration of any dispute shall be
conducted expeditiously. The arbitrators are instructed and directed to assume
case management initiative and control over the arbitration process (including
scheduling of events, pre-hearing discovery and activities, and the conduct of
the hearing), in order to complete the arbitration as expeditiously as is
reasonably practical for obtaining a just resolution of the dispute.

14.9.5 Remedies. The arbitrators may grant any legal or equitable remedy or
relief that the arbitrators deem just and equitable, to the same extent that
remedies or relief could be granted by a state or federal court, provided
however, that no punitive damages may be awarded. No court action shall be
maintained seeking punitive damages. The decision of any two of the three
arbitrators appointed shall be binding upon the parties. Notwithstanding
anything to the contrary in this Agreement, prior to or while an arbitration
proceeding is pending, either party has the right to seek and obtain injunctive
and other equitable relief from a court of competent jurisdiction to enforce
that party’s rights hereunder.

14.9.6 Expenses. The expenses of the arbitration, including the arbitrators’
fees, expert witness fees, and attorney’s fees, may be awarded to the prevailing
party, in the discretion of the arbitrators, or may be apportioned between the
parties in any manner deemed appropriate by the arbitrators. Unless and until
the arbitrators decide that one party is to pay for all (or a share) of such
expenses, both parties shall share equally in the payment of the arbitrators’
fees as and when billed by the arbitrators.

14.9.7 Confidentiality. Except as set forth below, and as necessary to obtain or
enforce a judgment upon any arbitration award, the parties shall keep
confidential the fact of the arbitration, the dispute being arbitrated, and the
decision of the arbitrators. Notwithstanding the foregoing, the parties may
disclose information about the arbitration to persons who have a need to know,
such as directors, trustees, management employees, witnesses, experts,
investors, attorneys, lenders, insurers, and others who may be directly
affected. Additionally, if a party has stock which is publicly traded, the party
may make such disclosures as required by applicable securities laws, rules and
regulations.

14.10 Entire Agreement; Modification. This Agreement and all of the attached
Exhibits set forth the entire agreement and understanding between the parties as
to the subject matter hereof, and supersede all prior or contemporaneous
agreements or understandings, whether oral or written. There shall be no
amendments or modifications to this Agreement, except by a written document
which is signed by both parties.

14.11 California Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of California without regard to its
conflicts or choice of laws principles.

 

24

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14.12 Headings. The headings for each article and section in this Agreement have
been inserted for convenience of reference only and are not intended to limit or
expand on the meaning of the language contained in the particular article or
section.

14.13 Severability. Should any one or more of the provisions of this Agreement
be held invalid or unenforceable by a court of competent jurisdiction, it shall
be considered severed from this Agreement and shall not serve to invalidate the
remaining provisions thereof. The parties shall make a good faith effort to
replace any invalid or unenforceable provision with a valid and enforceable one
such that the objectives contemplated by them when entering this Agreement may
be realized.

14.14 No Waiver. Any delay in enforcing a party’s rights under this Agreement or
any waiver as to a particular default or other matter shall not constitute a
waiver of such party’s rights to the future enforcement of its rights under this
Agreement, excepting only as to an express written and signed waiver as to a
particular matter for a particular period of time.

14.15 Name. Whenever there has been an assignment by Licensee as permitted by
this Agreement, the term “Licensee” as used in this Agreement shall also include
and refer to, if appropriate, such assignee.

14.16 Attorneys’ Fees. In the event of a dispute between the parties hereto or
in the event of any default hereunder, the party prevailing in the resolution of
any such dispute or default shall be entitled to recover its reasonable
attorneys’ fees and other costs incurred in connection with resolving such
dispute or default.

14.17 Notices. Any notices required by this Agreement shall be in writing, shall
specifically refer to this Agreement and shall be sent by registered or
certified airmail, postage prepaid, or by facsimile, or by overnight courier,
postage prepaid and shall be forwarded to the respective addresses set forth
below unless subsequently changed by written notice to the other party:

For TSRI:

The Scripps Research Institute

10550 North Torrey Pines Road, TPC-9

La Jolla, California 92037

Attention: Director, Technology Development

Fax No.: (858) 784 9910

with a copy to:

 

25

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The Scripps Research Institute

10550 North Torrey Pines Road, TPC-8

La Jolla, California 92037

Attention: Chief Business Counsel

Fax No.: (858) 784 9399

For Licensee:

Sorrento Therapeutics, Inc.

6042 Cornerstone Ct., Suite B

San Diego, CA 92121

Attention: Chief Executive Officer

Fax No.: (858) 210-3759

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

Paul, Hastings, Janofsky & Walker LLP

4747 Executive Drive, 12th Floor

San Diego, CA 92121

Attention: Jeffrey T. Hartlin, Esq.

Fax No.: (858) 458-3122

Notices shall be deemed delivered upon the earlier of (a) when received;
(b) three (3) days after deposit into the U.S. mail; (c) the date notice is sent
via facsimile; or (d) the day immediately following delivery to an overnight
courier guaranteeing next-day delivery (except Sunday and holidays).

14.18 Compliance with U.S. Laws. Nothing contained in this Agreement shall
require or permit TSRI or Licensee to do any act inconsistent with the
requirements of any United States law, regulation or executive order as the same
may be in effect from time to time.

—Signatures appear on the following page—

 

26

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IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized representatives as of the date set forth above.

 

TSRI:     LICENSEE: THE SCRIPPS RESEARCH INSTITUTE     SORRENTO THERAPEUTICS,
INC. By:  

/s/ Thomas E. Northrup

    By:  

/s/ Antonius Schuh

Title:   Thomas E. Northrup, Ph.D., J.D.     Title:   Antonius Schuh, CEO  
Chief Business Counsel         The Scripps Research Institute      

 

27

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EXHIBIT A

LICENSED BIOLOGICAL MATERIALS

[***…***]

1. [***…***]

 

[***…***]   [***…***]   [***…***]    

[***…***]

 

[***…***]

 

[***…***]

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[***…***]

 

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[***…***]

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[***…***]

[***…***]  

[***…***]

 

[***…***]

[***…***]  

[***…***]

 

[***…***]

[***…***]  

[***…***]

 

[***…***]

[***…***]  

[***…***]

 

[***…***]

[***…***]  

[***…***]

 

[***…***]

[***…***]  

[***…***]

 

[***…***]

[***…***]  

[***…***]

 

[***…***]

[***…***]  

[***…***]

 

[***…***]

[***…***]  

[***…***]

 

[***…***]

[***…***]  

[***…***]

 

[***…***]

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[***…***]

 

[***…***]

[***…***]  

[***…***]

 

[***…***]

[***…***]  

[***…***]

 

[***…***]

[***…***]  

[***…***]

 

[***…***]

[***…***]  

[***…***]

 

[***…***]

[***…***]  

[***…***]

 

[***…***]

[***…***]  

[***…***]

  [***…***]  

[***…***]

  [***…***]  

[***…***]

  [***…***]  

[***…***]

  [***…***]  

[***…***]

  [***…***]  

[***…***]

  [***…***]     [***…***]    

2. [***…***]

 

  •  

[***…***]

 

   A-1    *Confidential Treatment Requested

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

  •  

[***…***]

 

  •  

[***…***]

 

  •  

[***…***]

3. [***…***]

 

   A-2    *Confidential Treatment Requested

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EXHIBIT B

LICENSED PATENT RIGHTS

 

[***…***]

  

[***…***]

  

[***…***]

[***…***]

  

[***…***]

  

[***…***]

[***…***]

  

[***…***]

  

[***…***]

 

   B-1    *Confidential Treatment Requested

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EXHIBIT C

THIS WARRANT AND THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION
THEREOF MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH SAID ACT OR AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION.

COMMON STOCK WARRANT

SORRENTO THERAPEUTICS, INC.

 

Warrant Shares: [***…***]

   Issuance Date: January 8, 2010

THIS IS TO CERTIFY that, for value received and subject to the provisions
hereinafter set forth, THE SCRIPPS RESEARCH INSTITUTE, a California nonprofit
public benefit corporation (“TSRI”), is entitled to purchase from SORRENTO
THERAPEUTICS, INC., a Delaware corporation (the “Company”), the Number of
Warrant Shares (as hereinafter defined) of common stock of the Company, par
value $0.0001 per share (the “Common Stock”), in accordance with Section 2
hereof, at the per share exercise price of $ [***…***] (the “Exercise Price”),
payable as provided herein, subject to the provisions and adjustments and on the
terms and conditions hereinafter set forth. This Common Stock Warrant (this
“Warrant”) is being issued pursuant to that certain License Agreement, dated as
of January 8, 2010 by and between the Company and TSRI.

1. Definitions. In addition to the terms defined elsewhere in this Warrant, the
following terms have the following respective meanings:

(a) “Company Sale” shall mean the sale of all or substantially all of the assets
of the Company to another corporation or entity, or the merger or consolidation
of the Company into or with another corporation or entity, with the result that
upon conclusion of the transaction less than fifty-one percent (51%) of the
outstanding securities entitled to vote generally in the election of managers or
directors or other capital interests of the acquiring corporation or entity is
owned, directly or indirectly, by the stockholders of the Company as of
immediately prior to such transaction.

(b) “Number of Warrant Shares” shall mean, at the time of any determination
thereof (i) if no adjustments have theretofore been made pursuant to the
provisions of Section 6 hereof, the Original Number of Warrant Shares, and
(ii) if any one or more such adjustments have been so made, the amount to which
the Original Number of Warrant Shares shall have been so adjusted pursuant to
the terms of this Warrant, in each case reduced

 

   C-1    *Confidential Treatment Requested

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

appropriately by the number of shares of Common Stock theretofore purchased
pursuant to the exercise of this Warrant.

(c) “Original Number of Warrant Shares” shall mean [***…***] fully paid and
nonassessable shares of Common Stock (as adjusted, if applicable, pursuant to
the terms hereof).

(d) “Principal Market” means The New York Stock Exchange, Inc., the American
Stock Exchange, The NASDAQ Global Market, The NASDAQ Global Select Market, The
NASDAQ Capital Market, the OTC Bulletin Board or Pink OTC Markets Inc., or any
successor national securities exchange to the foregoing.

(e) “Termination Date” shall mean the earlier to occur of: (i) the closing of a
Company Sale; and (ii) the close of business on [***…***].

(f) “Trading Day” means any day on which the Common Stock is traded on the
Principal Market, or, if the stock is not trading on the Principal Market, any
day on which the New York Stock Exchange is open for trading; provided that
“Trading Day” shall not include any day on which the Common Stock are scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the
Common Stock are suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance
the closing time of trading on such exchange or market, then during the hour
ending at 4:00:00 p.m., New York time).

(g) “Warrant Shares” shall mean shares of Common Stock purchased or purchasable
by TSRI upon exercise of this Warrant.

2. Exercise of Warrant.

(a) Mechanics.

(i) The purchase rights represented by this Warrant are exercisable by TSRI in
whole or in part, at any time on or before the Termination Date, or from time to
time, by delivery of the following at the office of the Company (or such other
office or agency of the Company as it may designate by notice in writing to TSRI
at the address of TSRI appearing on the books of the Company): (a) this Warrant;
(b) the Notice of Exercise attached as EXHIBIT A hereto (the “Notice of
Exercise”) completed and executed on behalf of TSRI; and (c) payment of the
applicable Exercise Price for the shares being exercised.

(ii) [***…***]

 

[***…***]

  

[***…***]

 

   C-2    *Confidential Treatment Requested

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[***…***]

      [***…***]    [***…***]    [***…***]    [***…***]    [***…***]    [***…***]
   [***…***]    [***…***]    [***…***]    [***…***]   

(b) Certificates; Escrow.

(i) As promptly as practicable after the delivery to the Company of a properly
completed and executed Notice of Exercise, the surrender of this Warrant to the
Company and either payment to the Company of the aggregate Exercise Price as set
forth above or designating on the Notice of Exercise that TSRI elects to use a
Cashless Exercise, at TSRI’s sole option, a certificate for shares purchased
hereunder shall be transmitted by the Company or by the transfer agent of the
Company to TSRI by, upon TSRI’s instructions, crediting the account of TSRI’s
designated brokerage account or otherwise by physical delivery to the address of
TSRI specified on the Notice of Exercise; and

(ii) In the event that this Warrant is exercised in part, the Company will
execute and deliver a new warrant of like tenor exercisable for the Original
Number of Warrant Shares less the aggregate Number of Warrant Shares theretofore
purchased pursuant to the exercise of this Warrant; provided, however, that this
Warrant and all rights and options hereunder shall expire and be void as of the
Termination Date.

3. [***…***]

 

   C-3    *Confidential Treatment Requested

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4. Reservation of Stock. The Company covenants and agrees that during the period
within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized, and in reserve, and available for
issuance, free of any preemptive rights, rights of first refusal or similar
rights, a sufficient number of shares of its Common Stock to provide for the
exercise of the rights represented by this Warrant in whole.

5. Compliance with Securities Act.

(a) TSRI, by acceptance of this Warrant, agrees that this Warrant and the
Warrant Shares to be purchased upon exercise hereof are being acquired for
investment for its own account and that TSRI will not offer, sell or otherwise
transfer any Warrant Shares to be issued upon exercise hereof, in whole or in
part, except under circumstances that will not result in a violation of the
Securities Act or any state securities laws. The Warrant Shares shall be stamped
or imprinted with legends in substantially the following forms:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, ASSIGNED,
PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER SAID ACT AND, IF REQUESTED BY THE COMPANY IN CONNECTION WITH
SUCH A DISPOSITION PURSUANT TO AN EXEMPTION.”

(b) By acceptance of this Warrant, TSRI specifically represents and warrants to
the Company as of the Issuance Date as follows:

(i) TSRI believes it has received all the information it considers necessary or
appropriate for deciding whether to acquire this Warrant. TSRI further
represents that it has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
Warrant and the business, properties and financial condition of the Company.

(ii) TSRI understands that this Warrant is, and the Warrant Shares will be upon
issuance, “restricted securities” under the federal securities laws inasmuch as
they are being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such securities may
be resold without registration under the Securities Act only in certain limited
circumstances. In addition, TSRI represents that it is familiar with Rule 144
promulgated under the Securities Act, and understands the resale limitations
imposed thereby and by the Securities Act.

(iii) TSRI (a) is an “accredited investor” as defined in Regulation D under the
Securities Act, (b) can bear the economic risk of its investment in the Warrant
and the Warrant Shares, and (c) has such knowledge and experience in financial
or business matters that

 

C-4

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it is capable of evaluating the merits and risks of the investment in the
Warrant and the Warrant Shares.

(iv) This Warrant and the Warrant Shares are being acquired for investment for
TSRI’s own account, not as a nominee or agent for any other person, and without
a view to the distribution of this Warrant or the Warrant Shares or any interest
therein in violation of the Securities Act, and neither this Warrant nor the
Warrant Shares will be disposed of in contravention of the Securities Act or any
applicable state securities laws.

(v) TSRI has reviewed with its own tax advisors the federal, state and local tax
consequences of TSRI’s investment in this Warrant and the Warrant Shares. With
respect to such matters, TSRI relies solely on such tax advisors and not on any
statements or representations of the Company or its agents, written or oral.
TSRI understands that it (and not the Company) shall be responsible for its own
tax liability that may arise as a result of TSRI’s investment in this Warrant
and the Warrant Shares.

(vi) TSRI has had the opportunity to consult with its own legal counsel in
connection with TSRI’s investment in this Warrant and the Warrant Shares. TSRI
acknowledges that it is relying solely on its own legal counsel and not on the
Company or its agents for legal advice with respect to such matters.

6. Stock Dividends, Subdivisions and Combinations. In the event that after the
initial date of issuance of this Warrant the Company shall:

(a) subdivide its outstanding shares of Common Stock into a larger number of
shares of Common Stock or issue a stock dividend to all the holders of Common
Stock; or

(b) combine its outstanding shares of Common Stock into a smaller number of
shares of Common Stock;

then (y) the Number of Warrant Shares shall be adjusted to that Number of
Warrant Shares determined by multiplying the Number of Warrant Shares that could
be purchased hereunder immediately prior to such event by a fraction (A) the
numerator of which shall be the total number of outstanding shares of Common
Stock immediately after such event and (B) the denominator of which shall be the
total number of outstanding shares of Common Stock immediately prior to such
event and (z) the Exercise Price shall be adjusted to equal (i) the Exercise
Price in effect immediately prior to such event multiplied by (ii) the quotient
obtained by dividing (I) the Number of Warrant Shares as of immediately prior to
such event by (II) the Number of Warrant Shares immediately after such
adjustment (as calculated under clause (y) hereof). Whenever the Number of
Warrant Shares or the Exercise Price is adjusted as provided herein, the Company
shall provide written notice to TSRI explaining such adjustments and the
calculations used to reach such adjustments.

7. Notice of Extraordinary Dividends. If the Board of Directors of the Company
shall declare any dividend or other distribution on its Common Stock except out
of earned surplus or by way of a stock dividend payable on its Common Stock, the
Company shall mail notice thereof to TSRI not less than fifteen (15) days prior
to the record date fixed for determining stockholders entitled to participate in
such dividend or other distribution and TSRI

 

C-5

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shall not participate in such dividend or other distribution or be entitled to
any rights on account or as a result thereof unless and to the extent the
Warrant is exercised prior to such record date.

8. Fractional Shares. Fractional shares shall not be issued upon the exercise of
this Warrant but in any case where TSRI would, except for the provisions of this
Section 8, be entitled under the terms hereof to receive a fractional share upon
the complete exercise of this Warrant, the Company shall, upon the exercise of
this Warrant for the largest number of whole shares then called for, pay a sum
in cash equal to the excess of the value of such fractional share (determined
based on the closing price of the Common Stock as reported on the Principal
Market or, if the Common Stock is not listed on the Principal Market, determined
by the Company’s Board of Directors in good faith, in any case as of the trading
day immediately prior to the date of such exercise) over the proportional part
of the Exercise Price represented by such fractional share.

9. Fully Paid Stock; Authority; Taxes. The Company covenants and agrees that the
shares of Common Stock issued upon exercise of this Warrant in accordance with
its terms shall, at the time of such delivery, be validly issued and outstanding
and be fully paid and nonassessable. The Company represents and warrants that
this Warrant has been duly authorized by all necessary corporate action, has
been duly executed and delivered, is a legal and binding obligation of the
Company and the Company has all requisite corporate power and authority to issue
this Warrant and to perform all of its obligations hereunder. TSRI covenants and
agrees that it shall pay when due and payable any and all federal and state
taxes (other than income taxes) that may be payable in respect of this Warrant
or any Common Stock or certificates issued upon the exercise of this Warrant in
accordance with its terms.

10. Restriction on Transferability of Warrant. In addition to any other
limitation on transfer created by applicable securities laws, this Warrant is
not transferable.

11. Noncircumvention. The Company hereby covenants and agrees that the Company
will not, by amendment of its Certificate of Incorporation, Bylaws or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, and
will at all times in good faith carry out all the provisions of this Warrant and
not take any actions that would impair TSRI’s rights under this Warrant.

12. Mutilated, Lost, Stolen or Destroyed Warrant. In case this Warrant shall be
mutilated, lost, stolen or destroyed, the Company shall issue a new Warrant of
like date, tenor and denomination and deliver the same in exchange and
substitution for and upon surrender and cancellation of any mutilated Warrant,
or in lieu of any Warrant lost, stolen or destroyed, upon receipt of evidence
satisfactory to the Company of the loss, theft or destruction of such Warrant,
and upon receipt of indemnity in favor of the Company that is satisfactory to
the Company.

13. Warrant Holder Not Stockholder. This Warrant does not confer upon TSRI any
right to vote or to consent as a stockholder of the Company, as such, in respect
of any matters whatsoever, or any other rights as a stockholder, prior to the
exercise of this Warrant as hereinbefore provided.

 

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14. Severability. Should any part of this Warrant for any reason be declared
invalid, such decision shall not affect the validity of any remaining portion,
which remaining portion shall remain in full force and effect as if this Warrant
had been executed with the invalid portion thereof eliminated, and it is hereby
declared the intention of the parties hereto that they would have executed and
accepted the remaining portion of this Warrant without including therein any
such part, parts or portion which may, for any reason, be hereafter declared
invalid.

15. Notices. Any notice or other communication required or permitted to be
delivered to either party shall be in writing and shall be deemed properly
delivered, given and received (a) when received if hand delivered, (b) on
confirmation by sender of receipt if sent by facsimile, or (c) on the first
business day after being sent by registered overnight mail, return receipt
requested, by overnight courier or by overnight express delivery service, to the
address set forth beneath the name of such party below (or to such other address
as such party shall have specified in a written notice given to the other
parties hereto):

 

  (i) if to the Company:

C/O SORRENTO THERAPEUTICS, INC.

6042 Cornerstone Ct., West, Suite B

San Diego, CA 92121

Attn: Chief Executive Officer

Fax: (858) 210-3759

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

PAUL, HASTINGS, JANOFSKY & WALKER LLP

55 Second Street, 24th Floor

San Francisco, CA 94105

Attn: Jeffrey T. Hartlin, Esq.

Fax: (415) 856-7124

 

  (ii) if to TSRI:

The Scripps Research Institute

10550 North Torrey Pines Road, TPC-8

La Jolla, California 92037

Attn: Chief Business Counsel

Fax: (858) 784-9399

16. Governing Law. This Warrant shall be governed by and construed and enforced
in accordance with the laws of the State of California, without giving effect to
any choice of law or conflict of law provisions.

17. Company Sale. The Company shall deliver written notice of any Company Sale
to TSRI at least twenty (20) days prior to the consummation of such Company
Sale.

18. Entire Agreement. This Agreement, including Exhibit A, constitutes the
entire agreement between the parties regarding the subject matter hereof and
supersedes all prior or

 

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contemporaneous understandings between the parties, whether oral or written,
regarding this subject matter. This Agreement can only be modified or amended by
a written document signed by the Company and TSRI.

19. Financial Reports. In the event the Common Stock is no longer being traded
on the Principal Market, from and after that time and until the earlier of
(i) the Termination Date, (ii) the complete exercise of this Warrant, or
(iii) the time when the Common Stock resumes being traded on the Principal
Market, the Company shall deliver to TSRI within 150 days after the close of
each fiscal year of the Company an audited financial statement, including an
audited balance sheet and statement of changes in financial position at and as
of the end of such fiscal year and an audited statement of income for such
fiscal year (the “Financial Statements”). Unless and until the Financial
Statements are made publicly available by the Company through one or more
filings with the Securities and Exchange Commission or otherwise, TSRI shall
maintain the confidentiality of the information contained in such Financial
Statements delivered to TSRI.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

C-8

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IN WITNESS WHEREOF, SORRENTO THERAPEUTICS, INC. has caused this Common Stock
Warrant to be signed by a duly authorized officer as of the Issuance Date.

 

SORRENTO THERAPEUTICS, INC. By:  

 

Name:   Antonius Schuh, Ph.D. Its:   Chief Executive Officer

 

C-9

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EXHIBIT A

NOTICE OF EXERCISE

(1) The undersigned hereby elects to exercise the attached Common Stock Warrant
for a total of          shares of Common Stock of SORRENTO THERAPEUTICS, INC.

(2) Payment for the Warrant Shares shall be as follows (check one):

[    ] Payment of the Exercise Price therefor is included herewith.

[    ] The undersigned elects to purchase the Warrant Shares with a Cashless
Exercise pursuant to Section 2(a)(ii) of the Warrant.

(3) Please issue a certificate or certificates representing said shares of
Common Stock in the name of THE SCRIPPS RESEARCH INSTITUTE by (check one):

 

  [    ] physical delivery of a certificate to: The Scripps Research Institute
at 10550 North Torrey Pines Road, TPC-8, La Jolla, California 92037.

 

  [    ] arranging for the credit of such shares to The Scripps Research
Institute’s following prime brokerage account:                 
                                        
                                         
                                         
                                                                   

(4) Please issue and deliver a new warrant for the unexercised portion (if
applicable) of the attached Warrant in the name of THE SCRIPPS RESEARCH
INSTITUTE.

THE SCRIPPS RESEARCH INSTITUTE

 

By:  

 

Name:  

 

Its:  

 

Date:                               

 

C-10

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EXHIBIT D BENCHMARKS

 

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   D-1    *Confidential Treatment Requested

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EXHIBIT E

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      *Confidential Treatment Requested