Execution Version

Exhibit 10.31

*** Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4)

and 240.24b-2

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT is made and dated as of November 23, 2016 and
is entered into by and among Sorrento Therapeutics, Inc., a Delaware corporation
(“Parent”), Concortis Biosystems, Corp., a Delaware corporation, Ark Animal
Health, Inc., a Delaware corporation, TNK Therapeutics, Inc., a Delaware
corporation, Sorrento Biologics, Inc., a Delaware corporation, Scintilla
Pharmaceuticals, Inc., a Delaware corporation, LA Cell, Inc., a Delaware
corporation, SiniWest Holding Corp., a Delaware corporation, Levena Biopharma
US, Inc., a Delaware corporation, Sorrento BioServices, Inc., a Delaware
corporation, Scilex Pharmaceuticals Inc., a Delaware corporation, and each of
their Qualified Subsidiaries (together with “Parent”, hereinafter collectively
referred to as the “Borrower”), the several banks and other financial
institutions or entities from time to time parties to this Agreement
(collectively, referred to as “Lender”) and HERCULES CAPITAL, INC., formerly
known as Hercules Technology Growth Capital, Inc., a Maryland corporation, in
its capacity as administrative agent and collateral agent for itself and the
Lender (in such capacity, the “Agent”).  

RECITALS

A.

Borrower has requested Lender to make available to Borrower a loan in an
aggregate principal amount of Fifty Million Dollars ($50,000,000) (the “Tranche
I Term Loan”);

B.

Subject to and conditioned, among other conditions as provided herein, on
Borrower’s achievement on or before September 30, 2017 of the Fundraising
Milestone and the Corporate Milestone (together, the “Milestones”), Lender will
make available to Borrower loans in the principal amount of up to Ten Million
Dollars ($10,000,000) (each a “Tranche II Term Loan” and collectively, “Tranche
II Term Loans”, and such amount, the “Maximum Tranche II Term Loan Amount”);

C.

Subject to and conditioned, among other conditions as provided herein, on
Borrower’s receipt on or before June 30, 2018 of the Committee Approval, Lender
may make available to Borrower loans in the principal amount of up to Fifteen
Million Dollars ($15,000,000) (each a “Tranche III Term Loan” and collectively,
“Tranche III Term Loans”, and such amount, the “Maximum Tranche III Term Loan
Amount”); and

D.

Lender (i) is willing to make the Tranche I Term Loan on the terms and
conditions set forth in this Agreement; (ii) is willing to make the Tranche II
Term Loan subject to and conditioned on Borrower’s achievement, among other
conditions as provided herein, of the Milestones; and (iii) is willing to make
the Tranche III Term Loan subject to and conditioned, among other conditions as
provided herein, on Borrower’s receipt of the Committee Approval.

 

 

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AGREEMENT

NOW, THEREFORE, Borrower, Agent and Lender agree as follows:

SECTION 1.  DEFINITIONS AND RULES OF CONSTRUCTION

1.1Unless otherwise defined herein, the following capitalized terms shall have
the following meanings:

“2016 PIPE Notes Receivable” means the Secured Notes (as defined in the Parent’s
form 10-Q for the quarterly period ending September 30, 2016).

“2016 Year-End Fundraising Requirement” means Borrower’s receipt after […***…]
and prior to […***…], of at least […***…] of unrestricted (including not subject
to any clawback, redemption, escrow or similar contractual restriction, but
excluding any restriction in favor of Agent) net cash proceeds from [(…***…].

“2017 Q1 Fundraising Requirement” means Borrower’s receipt after […***…] and
prior to […***…], of at least […***…] of unrestricted (including not subject to
any clawback, redemption, escrow or similar contractual restriction, but
excluding any restriction in favor of Agent) net cash proceeds (inclusive of any
amounts received from the 2016 Year-End Fundraising Requirement) from [(…***…].

“Account Control Agreement(s)” means any agreement entered into by and among
Agent, Borrower and a third party bank or other institution (including a
Securities Intermediary) in which Borrower maintains a Deposit Account or an
account holding Investment Property and pursuant to which Agent obtains
“control” (as such term is defined in the UCC) over the subject account or
accounts.

“ACH Authorization” means the ACH Debit Authorization Agreement in substantially
the form of Exhibit H, which account numbers shall be redacted for security
purposes if and when filed publicly by Parent.

“Advance” means any Term Loan Advance(s) made pursuant to this Agreement.

“Advance Date” means the funding date of any Advance.

“Advance Request” means a request for an Advance submitted by Parent to Agent in
substantially the form of Exhibit A, which request may omit account numbers for
security purposes if and when filed publicly by Parent.

 

*Confidential Treatment Requested

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“Affiliate” means (a) any Person that directly or indirectly controls, is
controlled by, or is under common control with the Person in question, (b) any
Person directly or indirectly owning, controlling or holding with power to vote
fifteen percent (15%) or more of the outstanding voting securities of another
Person or (c) any Person fifteen percent (15%) or more of whose outstanding
voting securities are directly or indirectly owned, controlled or held by
another Person with power to vote such securities.  As used in the definition of
“Affiliate,” the term “control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.

“Agent” has the meaning given to it in the preamble to this Agreement.

“Agreement” means this Loan and Security Agreement, as amended from time to
time.

“Amortization Date” means July 1, 2018; provided however, if the Interest Only
Extension Conditions are satisfied prior to July 1, 2018, then the Amortization
Date shall mean January 1, 2019.

“Assignee” has the meaning given to it in Section 11.13.

“Borrower” has the meaning given to it in the preamble to this Agreement.

“Borrower Products” means all products, software, service offerings, technical
data or technology currently being designed, manufactured or sold by Borrower or
which Borrower intends to sell, license, or distribute in the future including
any products or service offerings under development, collectively, together with
all products, software, service offerings, technical data or technology that
have been sold, licensed or distributed by Borrower since its incorporation.

“Business Day” means any day other than Saturday, Sunday and any other day on
which banking institutions in the State of California are closed for business.

“Capital Expenditures” means all expenditures (by the expenditure of cash or the
incurrence of Indebtedness) during the measuring period of Parent and its
consolidated Subsidiaries for any fixed asset or improvements or for
replacements, substitutions or additions thereto that have a useful life of more
than one year and that are required to be capitalized under GAAP, plus deposits
made during the measuring period in connection with fixed assets (less deposits
of a prior period included above).

“Cash” means all cash, cash equivalents and liquid funds.

“Celularity” means Celularity, Inc., a Delaware corporation.

“Change in Control” means, with respect to any Person described in the
definition of “Change in Control Percentage,”  any “person” or “group” (as such
terms are used in Sections 13(d) and 14(d) of the 1934 Act, but excluding any
employee benefit plan of such person or its subsidiaries, and any person or
entity acting in its capacity as trustee, agent or other fiduciary or

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administrator of any such plan) becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the 1934 Act) of more than the applicable Change of
Control Percentage of the equity interests of such Person entitled to vote for
members of such Person’s Board of Directors on a fully diluted basis (and taking
into account all such securities that such person or group has the right to
acquire pursuant to any option right).

“Change in Control Percentage” means:

(a) with respect to any Borrower and any Subsidiary (other than LA Cell), fifty
percent (50%),

(b) with respect to LA Cell (i) forty-seven percent 47% (provided that any
transaction that would lead to a Change in Control of LA Cell shall be subject
to Agent’s consent (not to be unreasonably withheld or delayed) as long as LA
Cell remains a co-Borrower under this Agreement) and (ii) the ability, by
contract or other voting arrangement, to control the management and operations
of LA Cell,

(c) with respect to each of the entities set forth on Schedule 1.1B hereto, the
percentage owned on the Closing Date by the applicable Person, and

(d) with respect to any equity interests in other entities held by any Borrower
or any Subsidiary at any time after the Closing Date, the applicable percentage
so acquired.  

“Claims” has the meaning given to it in Section 11.10.

“Closing Date” means the date of this Agreement.

“Closing Facility Charge” means Eight Hundred Ten Thousand Dollars ($810,000).

“Collateral” means the property described in Section 3.

“Committee Approval” has the meaning given to it in Section 2.2.

“Common Stock” means the Common Stock, $0.0001 par value per share, of Parent.

“Confidential Information” has the meaning given to it in Section 11.12.

“Contingent Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to (i) any
Indebtedness, lease, dividend, letter of credit or other obligation of another,
including any such obligation directly or indirectly guaranteed, endorsed,
co-made or discounted or sold with recourse by that Person, or in respect of
which that Person is otherwise directly or indirectly liable; (ii) any
obligations with respect to undrawn letters of credit, corporate credit cards or
merchant services issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other

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agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; provided, however,
that the term “Contingent Obligation” shall not include endorsements for
collection or deposit in the ordinary course of business.  The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith; provided, however, that such amount shall not in any event exceed the
maximum amount of the obligations under the guarantee or other support
arrangement.

“Copyright License” means any written agreement granting any right to use any
Copyright or Copyright registration, now owned or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest.

“Copyrights” means all copyrights, whether registered or unregistered, held
pursuant to the laws of the United States of America, any State thereof, or of
any other country.

“Corporate Milestone” means […***…].

“Deposit Accounts” means any “deposit accounts,” as such term is defined in the
UCC, and includes any checking account, savings account, or certificate of
deposit.

“Domestic Subsidiary” means any Subsidiary that is not a Foreign Subsidiary.

“Due Diligence Fee” means Fifty Five Thousand Dollars ($55,000), which fee is
due to Lender on or prior to the Closing Date, and shall be deemed fully earned
on such date regardless of the early termination of this Agreement.

“Eligible Foreign Subsidiary” means any Foreign Subsidiary whose execution of a
Joinder Agreement would not result in a material adverse tax consequence to
Borrower.

“End of Term Amount” means five and one half percent (5.50%) of all Term Loan
Advances.

“Equity Event” means, with respect to a Person, any sale or issuance of such
Person’s securities for financing purposes (whether in a private placement,
registered offering or otherwise).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations promulgated thereunder.

“Event of Default” has the meaning given to it in Section 9.

*Confidential Treatment Requested

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“Excluded Accounts” means (a) any Deposit Account of Borrower that is used by
such Borrower solely as a payroll account for the employees of Borrower or its
Subsidiaries or the funds in such Deposit Account consist solely of funds held
by Borrower in trust for any director, officer or employee of Borrower or any
employee benefit plan maintained by Borrower or funds representing deferred
compensation for the directors and employees of Borrower, collectively not to
exceed the amount to be paid in the ordinary course of business in the then-next
payroll cycle (b) escrow accounts, Deposit Accounts and trust accounts, in each
case holding assets that are pledged or otherwise encumbered pursuant to clauses
(vi) or (xv) of Permitted Liens; (c) Deposit Accounts and accounts holding
Investment Property held in jurisdictions outside the United States in an
aggregate amount not to exceed Fifteen Million Dollars ($15,000,000) at any
time; (d) accounts used to cover import or export duties, value added taxes,
duty bonds or similar payments, provided the value of such accounts in this
subclause (d) shall not exceed Five Hundred Thousand Dollars ($500,000) in any
fiscal year; and (e) until February 23, 2017, those accounts numbered
XXXX465849, XXXX465864, XXXX469189 maintained by Scilex Pharmaceuticals Inc. at
Wells Fargo Bank in an aggregate amount not to exceed Five Hundred Thousand
Dollars ($500,000) at any time.

“Financial Statements” has the meaning given to it in Section 7.1.

“Foreign Subsidiary” means any Subsidiary other than a Subsidiary organized
under the laws of any state or other jurisdiction within the United States of
America.

“Fundraising Milestone” means Borrower’s receipt after […***…] and prior to
[…***…], of at least […***…] of unrestricted (including not subject to any
clawback, redemption, escrow or similar contractual restriction, but excluding
any restriction in favor of Agent) net cash proceeds from […***…].  For the
avoidance of doubt, unrestricted (including not subject to any clawback,
redemption, escrow or similar contractual restriction, but excluding any
restriction in favor of Agent) net cash proceeds received from […***…] and,
without duplication, any amounts received under […***…] and […***…] shall be
included in the calculation of the Fundraising Milestone.

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

“Indebtedness” means indebtedness of any kind, including (a) all indebtedness
for borrowed money or the deferred purchase price of property or services
(excluding trade credit entered into in the ordinary course of business),
including reimbursement and other obligations with respect to surety bonds and
letters of credit, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all capital lease obligations, and (d) all Contingent
Obligations.

“Insolvency Proceeding” means any proceeding by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.

*Confidential Treatment Requested

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“Intellectual Property” means all of Borrower’s Copyrights, Trademarks, Patents,
Licenses, trade secrets and inventions, mask works, Borrower’s applications
therefor and reissues, extensions, or renewals thereof; and Borrower’s goodwill
associated with any of the foregoing, together with Borrower’s rights to sue for
past, present and future infringement of Intellectual Property and the goodwill
associated therewith.

“Interest Only Extension Conditions” shall mean satisfaction of each of the
following events:  (a) no default or Event of Default shall have occurred; and
(b) Borrower shall have drawn the Tranche II Term Loan Advance in its entirety.

“Investment” means any beneficial ownership (including stock, partnership or
limited liability company interests) of or in any Person, or any loan, advance
or capital contribution to any Person or the acquisition of all, or
substantially all, of the assets of another Person.

“Joinder Agreements” means for each Qualified Subsidiary, a completed and
executed Joinder Agreement in substantially the form attached hereto as Exhibit
G.

“Lender” has the meaning given to it in the preamble to this Agreement.

“Liabilities” has the meaning given to it in Section 6.3.

“License” means any Copyright License, Patent License, Trademark License or
other license of rights or interests.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for
security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
against any property, any conditional sale or other title retention agreement,
and any lease in the nature of a security interest.

“Loan” means the Advance(s) made under this Agreement.

“Loan Documents” means this Agreement, the Pledge Agreement, the Notes (if any),
the ACH Authorization, the Account Control Agreements, the Joinder Agreements,
all UCC Financing Statements, the Warrant and any other documents executed in
connection with the Secured Obligations or the transactions contemplated hereby,
as the same may from time to time be amended, modified, supplemented or
restated.

“Material Adverse Effect” means a material adverse effect upon: (i) the
business, operations, properties, assets or financial condition of Parent and
its Subsidiaries taken as a whole; or (ii) the ability of Borrower to perform or
pay the Secured Obligations in accordance with the terms of the Loan Documents,
or the ability of Agent or Lender to enforce any of its rights or remedies with
respect to the Secured Obligations; or (iii) the Collateral or Agent’s Liens on
the Collateral or the priority of such Liens.

“Maximum Rate” has the meaning given to it in Section 2.3.

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“Maximum Term Loan Amount” means Seventy Five Million Dollars ($75,000,000).

“Maximum Tranche II Term Loan Amount” has the meaning given to it in the
Recitals.

“Maximum Tranche III Term Loan Amount” has the meaning given to it in the
Recitals.

“Milestones” has the meaning given to it in the Recitals.

“Note” means any Term Note(s).

“Parent” has the meaning given to it in the preamble to this Agreement.

“Patent License” means any written agreement granting any right with respect to
any invention on which a Patent is in existence or a Patent application is
pending, in which agreement Borrower now holds or hereafter acquires any
interest.

“Patents” means all letters patent of, or rights corresponding thereto, in the
United States of America or in any other country, all registrations and
recordings thereof, and all applications for letters patent of, or rights
corresponding thereto, in the United States of America or any other country.

“Permitted Acquisition” means any acquisition (including by way of merger) by
Borrower of all or substantially all of the assets of another Person, or of a
division or line of business of another Person, or capital stock of another
Person, in each case located entirely within the United States of America, which
is conducted in accordance with the following requirements:

(a)        such acquisition is of a business or Person engaged in a line of
business related to that of the Borrower or its Subsidiaries;

(b)        if such acquisition is structured as a stock acquisition, then the
Person so acquired shall either (i) become a wholly-owned Subsidiary of Borrower
or of a Subsidiary and the Borrower shall comply, or cause such Subsidiary to
comply, with 7.13 hereof or (ii) such Person shall be merged with and into
Borrower (with the Borrower being the surviving entity);

(c)        if such acquisition is structured as the acquisition of assets, such
assets shall be acquired by Borrower;

(d)        the Borrower shall have delivered to Lender not less than fifteen
(15) nor more than forty five (45) days prior to the date of such acquisition,
notice of such acquisition together with pro forma projected financial
information, copies of all material documents relating to such acquisition, and
historical financial statements for such acquired entity, division or line of
business, in each case in form and substance satisfactory to Lender and
demonstrating compliance with the covenants set forth in Section 7 hereof on a
pro forma basis as if the acquisition occurred on the first day of the most
recent measurement period;

 

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(e)        both immediately before and after such acquisition no default or
Event of Default shall have occurred and be continuing;

(f)        if such acquisition occurs from the Closing Date through December 31,
2016, the terms of such acquisition (including pricing) match the terms set
forth in the applicable term sheets listed in Schedule 1D[…***…]; and

(g)        the sum of the purchase price of such proposed new acquisition,
computed on the basis of total acquisition consideration paid or incurred, or to
be paid or incurred, by Borrower with respect thereto, including the amount of
Permitted Indebtedness assumed or to which such assets, businesses or business
or ownership interest or shares, or any Person so acquired, is subject, shall
not be greater than (i) with respect to any acquisition occurring from the
Closing Date through December 31, 2016, the amount set forth in the applicable
term sheet listed in Schedule 1D for any single acquisition or group of related
acquisitions or (ii) on and after January 1, 2017, $10,000,000 in the aggregate
for all acquisitions during any fiscal year.

“Permitted Indebtedness” means: (i) Indebtedness of Borrower in favor of Lender
or Agent arising under this Agreement or any other Loan Document; (ii)
Indebtedness existing on the Closing Date which is disclosed in Schedule 1A;
(iii) Indebtedness of up to One Million Dollars ($1,000,000) in the aggregate
outstanding at any time secured by a Lien described in clause (viii) of the
defined term “Permitted Liens,” provided such Indebtedness does not exceed the
cost of the Equipment financed with such Indebtedness; (iv) Indebtedness to
trade creditors incurred in the ordinary course of business, including
Indebtedness incurred in the ordinary course of business with corporate credit
cards; (v) Indebtedness that also constitutes a Permitted Investment; (vi)
Subordinated Indebtedness; (vii) reimbursement obligations in connection with
letters of credit and cash management services (including credit cards, debit
cards and other similar instruments) that are secured by Cash and issued on
behalf of Borrower or a Subsidiary thereof in an amount not to exceed Two
Million Dollars ($2,000,000) in the aggregate at any time outstanding; (viii)
other Indebtedness in an amount not to exceed One Million Dollars ($1,000,000)
at any time outstanding; (ix) intercompany Indebtedness that constitutes a
Permitted Investment; (x) up to One Million Dollars ($1,000,000) in the
aggregate in repayment obligations of Borrower under any foreign exchange
contract, currency swap agreement, interest rate swap, cap or collar agreement
or other similar agreement or arrangement designed to alter the risks to
Borrower arising from fluctuations in currency values or interest rates entered
into in the ordinary course of business and not for speculative purposes; (xi)
Indebtedness secured by a Lien described in clause (xii) of the defined term
Permitted Liens; (xii) Indebtedness consisting solely of fees, royalties,
advances for research and development activities, and other amounts paid by
third parties to Borrower, in each case in the ordinary course of Borrower’s
business and which, by the express terms of the applicable agreement, license,
contract or other instrument to which they relate, are payable in advance, and
with respect to the payment of which Borrower may have contingent liabilities;
(xiii) Indebtedness consisting solely of pre-paid fees, royalties, advances for
research and development activities, and other amounts payable by or obligations
of Borrower to third parties, in each case in the ordinary course of Borrower’s
business, under in-bound and out-bound licenses of Intellectual Property used to
improve Borrower’s product portfolio and competitive position; (xiv) (a)
guarantees of a Borrower of Indebtedness of another Borrower not to exceed the
principal amount of such Indebtedness, (b) unsecured guarantees by

*Confidential Treatment Requested

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a Borrower of Indebtedness of a Subsidiary that is not a Borrower; provided that
the aggregate outstanding principal amount of such Indebtedness does not exceed
One Million Dollars ($1,000,000), and (c) guarantees by a Subsidiary that is not
a Borrower of Indebtedness of any other Subsidiary that is not a Borrower; and
(xv) extensions, refinancings and renewals of any items of Permitted
Indebtedness, provided that the principal amount is not increased or the terms
modified to impose materially more burdensome terms upon Borrower or its
Subsidiary, as the case may be.

“Permitted Investment” means: (i) Investments existing on the Closing Date which
are disclosed in Schedule 1B; (ii) (a) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or any
State thereof maturing within one year from the date of acquisition thereof, (b)
commercial paper maturing no more than one year from the date of creation
thereof and currently having a rating of at least A-2 or P-2 from either
Standard & Poor’s Corporation or Moody’s Investors Service, (c) certificates of
deposit issued by any bank with assets of at least Five Hundred Million Dollars
($500,000,000) maturing no more than one year from the date of investment
therein, and (d) money market accounts; (iii) repurchases of stock from former
employees, directors, or consultants of Borrower under the terms of applicable
repurchase agreements at the original issuance price of such securities in an
aggregate amount not to exceed One Million Dollars ($1,000,000) in any fiscal
year, provided that no Event of Default has occurred, is continuing or could
exist after giving effect to the repurchases; (iv) Investments accepted in
connection with Permitted Transfers; (v) Investments (including debt
obligations) received in connection with the bankruptcy or reorganization of
customers or suppliers and in settlement of delinquent obligations of, and other
disputes with, customers or suppliers arising in the ordinary course of
Borrower’s business; (vi) Investments consisting of notes receivable of, or
prepaid royalties and other credit extensions, to customers and suppliers who
are not Affiliates, in the ordinary course of business, provided that this
subparagraph (vi) shall not apply to Investments of Borrower in any Subsidiary;
(vii) Investments consisting of loans not involving the net transfer on a
substantially contemporaneous basis of cash proceeds to employees, officers or
directors relating to the purchase of capital stock of Borrower pursuant to
employee stock purchase plans or other similar agreements approved by Borrower’s
Board of Directors; (viii) Investments consisting of travel advances and
relocation loans in the ordinary course of business; (ix) Investments in
newly-formed or acquired Domestic Subsidiaries, provided that each such Domestic
Subsidiary enters into a Joinder Agreement after its formation or acquisition by
Borrower and executes such other documents as shall be reasonably requested by
Agent in connection with the same; (x) Investments in Foreign Subsidiaries
approved in advance in writing by Agent; (xi) joint ventures or strategic
alliances in the ordinary course of Borrower’s business consisting of the
nonexclusive licensing of technology (provided that such licenses may be
exclusive in respects other than territory and may be exclusive as to territory
only as to discreet geographical areas outside the United States and may have
such other exclusivity terms as consented to in writing by Agent, which consent
shall not be unreasonably withheld), the development of technology or the
providing of technical support, provided that any Investments by Borrower do not
exceed One Million Dollars ($1,000,000) in the aggregate in any fiscal year;
(xii) Investments consisting of accounts receivable, endorsements for
collection, deposits or similar Investments arising in the ordinary course of
business; (xiii) Investments consisting of the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business; (xiv) such other Investments as are

 

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described in Borrower’s Board of Directors’ approved investment policy
guidelines as approved by Agent in writing, which such Agent approval shall not
be unreasonably withheld or delayed; (xv) Investments consisting of Permitted
Acquisitions; (xvi) Investments in Celularity pursuant to the terms as set forth
in that certain Non-Binding Term Sheet dated as of October 31, 2016 and
delivered to Agent on November 1, 2016 and not to exceed Five Million Dollars
($5,000,000) for fiscal year 2016 and Twelve Million Five Hundred Thousand
Dollars ($12,500,000) in the aggregate; (xvii) (a) Investments by a Borrower in
another Borrower, (b) Investments by a Subsidiary that is not a Borrower in a
Borrower or a Subsidiary that is not a Borrower; and (c) Investments by a
Borrower in a Subsidiary that is not a Borrower not to exceed One Million
Dollars ($1,000,000) in the aggregate; (xviii) Investments of a Person existing
at the time such Person becomes a Subsidiary of Borrower or merges with Borrower
or any Subsidiary so long as such Investments were not made in contemplation of
such Person becoming a Subsidiary or such merger, not to exceed One Million
Dollars ($1,000,000) in the aggregate; and (xix) additional Investments that do
not exceed One Million Dollars ($1,000,000) in the aggregate.

“Permitted Liens” means any and all of the following: (i) Liens in favor of
Agent or Lender; (ii) Liens existing on the Closing Date which are disclosed in
Schedule 1C; (iii) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings; provided, that Borrower maintains adequate reserves
therefor in accordance with GAAP (to the extent required thereby); (iv) Liens
securing claims or demands of materialmen, artisans, mechanics, carriers,
warehousemen, landlords and other like Persons arising in the ordinary course of
Borrower’s business and imposed without action of such parties; provided, that
the payment thereof is not yet required; (v) Liens arising from judgments,
decrees or attachments in circumstances which do not constitute an Event of
Default hereunder; (vi) deposits to secure the performance of obligations
(including by way deposits to secure letters of credit issued to secure the
same) under commercial supply and/or manufacturing agreements, in an aggregate
amount not to exceed Five Hundred Thousand Dollars ($500,000) at any time, (vii)
the following deposits, to the extent made in the ordinary course of
business:  deposits under worker’s compensation, unemployment insurance, social
security and other similar laws, or to secure the performance of bids, tenders
or contracts (other than for the repayment of borrowed money) or to secure
indemnity, performance or other similar bonds for the performance of bids,
tenders or contracts (other than for the repayment of borrowed money) or to
secure statutory obligations (other than Liens arising under ERISA or
environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds; (viii) Liens on Equipment or software or
other intellectual property constituting purchase money Liens and Liens in
connection with capital leases securing Indebtedness permitted in clause (iii)
of the definition of “Permitted Indebtedness”; (ix) Liens incurred in connection
with Subordinated Indebtedness; (x) leasehold interests in leases or subleases
and licenses and sublicenses granted in the ordinary course of business and not
interfering in any material respect with the business of the licensor; (xi)
Liens in favor of customs and revenue authorities arising as a matter of law to
secure payment of custom duties that are promptly paid on or before the date
they become due; (xii) Liens securing the payment of financed insurance premiums
that are promptly paid on or before the date they become due (provided that such
Liens extend only to the insurance policies and all money due Borrower
thereunder (including the return of premiums and dividends) and not to any other
property or assets) and incurred in the ordinary course of business; (xiii)
statutory and common law rights of set-off and other similar rights as to
deposits of cash and

 

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securities in favor of banks, other depository institutions and brokerage firms;
(xiv) easements, zoning restrictions, rights-of-way and similar encumbrances on
real property imposed by law or arising in the ordinary course of business so
long as they do not materially impair the value or marketability of the related
property; (xv) (A) Liens on Cash securing obligations permitted under clause
(vii) of the definition of Permitted Indebtedness and (B) security deposits in
connection with real property leases in an aggregate amount not to exceed One
Million Dollars ($1,000,000) at any time; (xvi) Liens of landlords (A) arising
by statute or (B) under any lease entered into in the ordinary course of
business, in each case solely with respect to fixtures and movable tangible
property located on the real property leased or subleased from such landlord and
securing amounts that are not yet due or that are being contested in good faith
by appropriate proceedings, provided that the Borrower maintains adequate
reserves therefor in accordance with GAAP, and which are subordinated to the
security interests of the Agent granted under this Agreement and pursuant to a
landlord waiver (or, with respect to clause (A) only, under any lease for which
no landlord waiver is required hereunder); (xvii) sales, transfers, licenses,
sublicenses, leases, subleases or other dispositions of assets permitted by
Section 7.8 and, in connection therewith, customary rights and restrictions
contained in agreements relating to such transactions pending the completion
thereof or during the term thereof, and any option or other agreement to sell,
transfer, license, sublicense, lease, sublease or dispose of an asset permitted
by Section 7.8 and (xviii) Liens incurred in connection with the extension,
renewal or refinancing of the Indebtedness secured by Liens of the type
described in clauses (i) through (xii) above; provided, that any extension,
renewal or replacement Lien shall be limited to the property encumbered by the
existing Lien and the principal amount of the Indebtedness being extended,
renewed or refinanced (as may have been reduced by any payment thereon) does not
increase.

“Permitted Transfers” means (i) sales, transfers or other dispositions of
Inventory in the ordinary course of business (which, for the avoidance of doubt,
shall not include any transfers or other dispositions of or from Borrower’s
proprietary G-MAB library platform or any other Intellectual Property), (ii) the
licenses listed on Schedule 7.8, (iii) (a) non-exclusive licenses, sublicenses
and similar arrangements for the use of Intellectual Property and related assets
in the ordinary course of business and other licenses and sublicenses that could
not result in a legal transfer of title of the licensed property but that may be
exclusive in respects other than territory and that may be exclusive to
territory only as to discreet geographical areas outside of the united States of
America in the ordinary course of business and (b) exclusive licenses existing
on the Closing Date and set forth in Schedule 1E, (iv) dispositions of worn-out,
obsolete or surplus Equipment at fair market value in the ordinary course of
business; (v) transfers expressly permitted under Sections 7.5, 7.6 and 7.7;
(vi) transfers by and among the Borrower and any other Borrower or a guarantor;
(vii) transfers by any Subsidiary to a Borrower or a guarantor, or if such
Subsidiary is not a Borrower or a guarantor, to another Subsidiary that is not a
Borrower or a guarantor; (viii) other transfers of assets (other than
Intellectual Property) having a fair market value of not more One Million
Dollars ($1,000,000) in the aggregate in any fiscal year; and (viii) for the
avoidance of doubt, sales by Borrower of its equity securities in an Equity
Event of Borrower.  

“Person” means any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, limited liability
company, institution, other entity or government.

 

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“Pledge Agreement” means the Pledge Agreement dated as of the Closing Date
between Borrower and Agent, as the same may from time to time be amended,
restated, modified or otherwise supplemented.

“Preferred Stock” means at any given time any equity security issued by Parent
that has any rights, preferences or privileges senior to Parent’s Common Stock.

“Prepayment Charge” has the meaning given to it in Section 2.5.

“Publicity Materials” has the meaning given to it in Section 11.18.

“Qualified Subsidiary” means any direct or indirect Domestic Subsidiary or
Eligible Foreign Subsidiary, except for Concortis, Inc., a Delaware corporation,
CARgenix Holdings, LLC, a Rhode Island limited liability company, and BDL
Products, Inc., a Delaware corporation.

“Receivables” means (i) all of Borrower’s Accounts, Instruments, Documents,
Chattel Paper, Supporting Obligations, letters of credit, proceeds of any letter
of credit, and Letter of Credit Rights, and (ii) all customer lists, software,
and business records related thereto.

“Required Lenders” means at any time, the holders of more than fifty percent
(50%) of the sum of the aggregate unpaid principal amount of the Term Loan then
outstanding.

“Rights to Payment” has the meaning given to it in Section 3.1.

“Roger Williams Litigation” means Immunomedics, Inc. v. Roger Williams Medical
Center et al., Civil Action No. 2:15-cv-04526-JLL-SCM (D.N.J.), filed on
September 26, 2016.

“SEC” means the Securities and Exchange Commission.

“Secured Obligations” means Borrower’s obligations under this Agreement and any
Loan Document (other than the Warrant), including any obligation to pay any
amount now owing or later arising.

“Subordinated Indebtedness” means Indebtedness subordinated to the Secured
Obligations in amounts and on terms and conditions satisfactory to Agent in its
sole discretion.

“Subsequent Financing” means the closing of any Equity Event of Borrower, any
Subsidiary or any Affiliate of Borrower after the Closing Date which results in
aggregate proceeds to such Person of at least Ten Million Dollars ($10,000,000).

“Subsidiary” means an entity, whether corporate, partnership, limited liability
company, joint venture or otherwise, in which Borrower owns or controls 50% or
more of the outstanding voting securities, including each entity listed on
Schedule 1 hereto.

“Term Commitment” means as to any Lender, the obligation of such Lender, if any,
to make a Term Loan Advance to the Borrower in a principal amount not to exceed
the

 

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amount set forth under the heading “Term Commitment” opposite such Lender’s name
on Schedule 1.1A.

“Term Loan” means the Tranche I Term Loan and, as applicable, the Tranche II
Term Loan and the Tranche III Term Loan.

“Term Loan Advance” means any Term Loan funds advanced under this Agreement.

“Term Loan Interest Rate” means for any day a per annum rate of interest equal
to the greater of either (i) 9.25% plus the prime rate as reported in The Wall
Street Journal minus 3.50% and (ii) 9.25%.

“Term Loan Maturity Date” means December 1, 2020.

“Term Note” means a Promissory Note in substantially the form of Exhibit B.

“Trademark License” means any written agreement granting any right to use any
Trademark or Trademark registration, now owned or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest.

“Trademarks” means all trademarks (registered, common law or otherwise) and any
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States of America, any State thereof or any other
country or any political subdivision thereof.

“Tranche I Term Loan” has the meaning given to it in the Recitals.

“Tranche I Term Loan Advance” has the meaning given to it in Section 2.2(a).

“Tranche II Term Loan(s)” has the meaning given to it in the Recitals.

“Tranche II Term Loan Advance” has the meaning given to it in Section 2.2(a).

“Tranche II Term Loan Advance Period” means the period commencing on the date
that Borrower has achieved all Milestones in accordance with the definition
thereof, through and including September 30, 2017.

“Tranche III Facility Charge” means an amount equal to one percent (1.00%) of
the Tranche III Term Loans advanced under this Agreement.

“Tranche III Term Loan(s)” has the meaning given to it in the Recitals.

“Tranche III Term Loan Advance” has the meaning given to it in Section 2.2(a).

“Tranche III Term Loan Advance Period” means the period commencing on the date
that Borrower has received the Committee Approval in accordance with the
definition thereof, through and including June 30, 2018.

 

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“Unrestricted Cash” means Cash held by Borrower in account(s) located in the
United States of America subject to an Account Control Agreement in favor of
Agent.

“UCC” means the Uniform Commercial Code as the same is, from time to time, in
effect in the State of California; provided, that in the event that, by reason
of mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to, Agent’s Lien on any Collateral is
governed by the Uniform Commercial Code as the same is, from time to time, in
effect in a jurisdiction other than the State of California, then the term “UCC”
shall mean the Uniform Commercial Code as in effect, from time to time, in such
other jurisdiction solely for purposes of the provisions thereof relating to
such attachment, perfection, priority or remedies and for purposes of
definitions related to such provisions.  

“Wildcat Litigation” means, individually and collectively, (i) Wildcat Liquid
Alpha, LLC v. Sorrento Therapeutics, Inc., C.A. No. 12254-VCMR (Del. Ch.), filed
on April 25, 2016; and (ii) Wildcat Liquid Alpha LLC v. Henry Ji, William S.
Marth, Kim D. Janda, Douglas Ebersole, Jaisim Shah, David H. Deming, and
Sorrento Therapeutics, Inc., C.A. No. 12338-VCMR (Del. Ch.), filed on May 13,
2016.

“Warrant” means any warrant entered into in connection with the Loan, as may be
amended, restated or modified from time to time.

Unless otherwise specified, all references in this Agreement or any Annex or
Schedule hereto to a “Section,” “subsection,” “Exhibit,” “Annex,” or “Schedule”
shall refer to the corresponding Section, subsection, Exhibit, Annex, or
Schedule in or to this Agreement.  Unless otherwise specifically provided
herein, any accounting term used in this Agreement or the other Loan Documents
shall have the meaning customarily given such term in accordance with GAAP, and
all financial computations hereunder shall be computed in accordance with GAAP,
consistently applied. Unless otherwise defined herein or in the other Loan
Documents, terms that are used herein or in the other Loan Documents and defined
in the UCC shall have the meanings given to them in the UCC.

SECTION 2.  THE LOAN

2.1[RESERVED]

2.2Term Loan.

(a)Tranche I Term Loan; Tranche II Term Loans; Tranche III Term Loans.

(i)Tranche I Term Loan.  Subject to the terms and conditions of this Agreement,
Lender will severally (and not jointly) make in an amount not to exceed its
respective Term Commitment, and Borrower agrees to draw, a Term Loan Advance of
Fifty Million Dollars ($50,000,000) on the Closing Date (the “Tranche I Term
Loan Advance”).

(ii)Tranche II Term Loan.  Subject to the terms and conditions of this Agreement
and conditioned on Borrower’s achievement of the Milestones in accordance with
the definition thereof, during the Tranche II Term Loan Advance Period, at
Borrower’s request, Lender will severally (and not jointly), subject to all of
the conditions required hereunder, make

 

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in an amount not to exceed its respective Term Loan Commitment, Tranche II Term
Loans in a principal amount up to Ten Million Dollars ($10,000,000) (the
“Tranche II Term Loan Advance”). The aggregate outstanding Tranche II Term Loan
Advance shall not exceed the Maximum Tranche II Term Loan Amount.

(iii)Tranche III Term Loan.  Subject to the terms and conditions of this
Agreement and conditioned on approval by Lender’s investment committee in its
sole and unfettered discretion (the “Committee Approval”), during the Tranche
III Term Loan Advance Period, at Borrower’s request, Lender may severally (and
not jointly), subject to all of the conditions required hereunder, make in an
amount not to exceed its respective Term Loan Commitment, Tranche III Term Loans
in an amount up to Fifteen Million Dollars ($15,000,000) (the “Tranche III Term
Loan Advance”). The aggregate outstanding Tranche III Term Loan Advance shall
not exceed the Maximum Tranche III Term Loan Amount.

(iv)In each case, Term Loan Advances must be in minimum increments of Five
Million Dollars ($5,000,000).  The aggregate outstanding Term Loan Advances
shall not exceed the Maximum Term Loan Amount.

(b)Advance Request.  To obtain a Term Loan Advance, Borrower shall complete,
sign and deliver an Advance Request (at least three (3) Business Days before an
Advance Date other than the Closing Date, which shall be at least one (1)
Business Day) to Agent.  Lender shall fund each Term Loan Advance in the manner
requested by the Advance Request provided that each of the conditions precedent
to such Term Loan Advance is satisfied as of the requested Advance Date.

(c)Interest.  The outstanding principal balance of each Term Loan Advance shall
bear interest thereon from the applicable Advance Date at the Term Loan Interest
Rate based on a year consisting of 360 days, with interest computed daily based
on the actual number of days elapsed.  The Term Loan Interest Rate will float
and change on the day the prime rate changes from time to time.

(d)Payment.  Borrower will pay interest on the outstanding principal amount of
each Term Loan Advance on the first Business Day of each month, beginning the
month after the Advance Date.  Borrower shall repay the aggregate Term Loan
principal balance that is outstanding on the day immediately preceding the
Amortization Date, in equal monthly installments of principal and interest
(mortgage style) beginning on the Amortization Date and continuing on the first
Business Day of each month thereafter until the Secured Obligations (other than
inchoate indemnity obligations and any other obligations which, by their
specific terms, are to survive the termination of this Agreement) are repaid,
with the payments for such schedule based on their being completed on the Term
Loan Maturity Date.  The entire Term Loan principal balance and all accrued but
unpaid interest hereunder, shall be due and payable on Term Loan Maturity
Date.  Borrower shall make all payments under this Agreement without setoff,
recoupment or deduction and regardless of any counterclaim or defense. Lender
will initiate debit entries to Borrower’s account as authorized on the ACH
Authorization (i) on each payment date of all periodic obligations payable to
Lender under each Term Advance and (ii) out-of-pocket legal fees and costs
incurred by Agent or Lender in connection with Section 11.11 of this Agreement.

 

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2.3Maximum Interest.  Notwithstanding any provision in this Agreement or any
other Loan Document, it is the parties’ intent not to contract for, charge or
receive interest at a rate that is greater than the maximum rate permissible by
law that a court of competent jurisdiction shall deem applicable hereto (which
under the laws of the State of California shall be deemed to be the laws
relating to permissible rates of interest on commercial loans) (the “Maximum
Rate”).  If a court of competent jurisdiction shall finally determine that
Borrower has actually paid to Lender an amount of interest in excess of the
amount that would have been payable if all of the Secured Obligations had at all
times borne interest at the Maximum Rate, then such excess interest actually
paid by Borrower shall be applied as follows:  first, to the payment of the
Secured Obligations consisting of the outstanding principal; second, after all
principal is repaid, to the payment of Lender’s accrued interest, costs,
expenses, professional fees and any other Secured Obligations; and third, after
all Secured Obligations are repaid, the excess (if any) shall be refunded to
Borrower.  

2.4Default Interest.  In the event any payment is not paid on the scheduled
payment date, an amount equal to five percent (5.00%) of the past due amount
shall be payable on demand. In addition, upon the occurrence and during the
continuation of an Event of Default hereunder, all Secured Obligations,
including principal, interest, compounded interest, and professional fees, shall
bear interest at a rate per annum equal to the rate set forth in Section 2.2(c),
plus five percent (5.00%) per annum.  In the event any interest is not paid when
due hereunder, delinquent interest shall be added to principal and shall bear
interest on interest, compounded at the rate set forth in Section 2.2(c) or
Section 2.4, as applicable.

2.5Prepayment.  At its option upon at least seven (7) Business Days prior notice
to Agent, Borrower may prepay all or part of the outstanding Advances by paying
all or part of the principal balance and all or part of the accrued and unpaid
interest thereon, together with a prepayment charge equal to the following
percentage of the Advance amount being prepaid: if such Advance amounts are
prepaid in any of the first twelve (12) months following the Closing Date,
3.00%; after twelve (12) months but prior to twenty four (24) months, 1.50%; and
thereafter, 0.50% (each, a “Prepayment Charge”).  Borrower agrees that the
Prepayment Charge is a reasonable calculation of Lender’s lost profits in view
of the difficulties and impracticality of determining actual damages resulting
from an early repayment of the Advances.  Borrower shall prepay the outstanding
amount of all principal and accrued interest through the prepayment date and the
Prepayment Charge upon the occurrence of a Change in Control . Notwithstanding
the foregoing, Agent and Lender agree to waive the Prepayment Charge if Agent
and Lender (in their sole and absolute discretion) agree in writing to refinance
the Advances prior to the Term Loan Maturity Date.  Any prepayment (other than a
prepayment of all of the outstanding Advances) must be in a minimum amount of
Five Million Dollars ($5,000,000).

2.6End of Term Charge.  On the earliest to occur of (i) the Term Loan Maturity
Date, (ii) the date that Borrower prepays the outstanding Secured Obligations
(other than any inchoate indemnity obligations and any other obligations which,
by their specific terms, are to survive the termination of this Agreement) in
full, or (iii) the date that the Secured Obligations become due and payable,
Borrower shall pay Lender the End of Term Amount. Notwithstanding the required
payment date of such charge, it shall be deemed earned by Lender as of the
Closing Date.

 

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2.7Notes.  If so requested by Lender by written notice to Borrower, then
Borrower shall execute and deliver to Lender (and/or, if applicable and if so
specified in such notice, to any Person who is an assignee of Lender pursuant to
Section 11.13) promptly after Borrower’s receipt of such notice a Note or Notes
to evidence Lender’s Loans.

2.8Pro Rata Treatment.  Each payment (including prepayment) on account of any
fee and any reduction of the Term Loan shall be made pro rata according to the
Term Commitments of the relevant Lender.

2.9If Borrower has not received after the Closing Date and prior to December 31,
2016, at least Forty Three Million Two Hundred Fifty Thousand Dollars
($43,250,000) of unrestricted (including not subject to any clawback,
redemption, escrow or similar contractual restriction, but excluding any
restriction in favor of Agent) net cash proceeds from (a) one or more Equity
Events of (x) Borrower with investors and with terms and conditions reasonably
satisfactory to Agent or (y) Parent, or (b) the collection of the 2016 PIPE
Notes Receivable outstanding as of the Closing Date, Borrower shall pay Agent
for the benefit of the Lenders a fee equal to Two Hundred Ten Thousand Dollars
($210,000), which fee shall be due and payable on December 31, 2016 and deemed
fully earned as of the date hereof.

SECTION 3.  SECURITY INTEREST

3.1As security for the prompt and complete payment when due (whether on the
payment dates or otherwise) of all the Secured Obligations, Borrower grants to
Agent a security interest in all of Borrower’s right, title, and interest in and
to the following personal property whether now owned or hereafter acquired
(collectively, the “Collateral”):  (a) Receivables; (b) Equipment; (c) Fixtures;
(d) General Intangibles (which, for the avoidance of doubt, shall exclude
Intellectual Property pursuant to Section 3.2); (e) Inventory; (f) Investment
Property; (g) Deposit Accounts; (h) Cash; (i) Goods; and all other tangible and
intangible personal property of Borrower whether now or hereafter owned or
existing, leased, consigned by or to, or acquired by, Borrower and wherever
located, and any of Borrower’s property in the possession or under the control
of Agent; and, to the extent not otherwise included, all Proceeds of each of the
foregoing and all accessions to, substitutions and replacements for, and rents,
profits and products of each of the foregoing; provided, however, that the
Collateral shall include all Accounts and General Intangibles that consist of
rights to payment and proceeds from the sale, licensing or disposition of all or
any part, or rights in, the Intellectual Property (the “Rights to
Payment”).  Notwithstanding the foregoing, if a judicial authority (including a
U.S. Bankruptcy Court) holds that a security interest in the underlying
Intellectual Property is necessary to have a security interest in the Rights to
Payment, then the Collateral shall automatically, and effective as of the date
of this Agreement, include the Intellectual Property to the extent necessary to
permit perfection of Agent’s security interest in the Rights to Payment.

3.2Notwithstanding the broad grant of the security interest set forth in Section
3.1, above, the Collateral shall not include: (a) more than 65% of the presently
existing and hereafter arising issued and outstanding shares of capital stock
owned by Borrower of any Foreign Subsidiary (other than an Eligible Foreign
Subsidiary) which shares entitle the holder thereof to vote for directors or any
other matter; (b) any property, right or asset held by Borrower or any
Subsidiary to the extent that a grant of a security interest therein is
prohibited by applicable law

 

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or constitutes a breach or default under or results in the termination of or
requires any consent not obtained under, any contract, license, agreement,
instrument or other document evidencing or giving rise to such property, except
(A) to the extent that the terms in such contract, license, instrument or other
document providing for such prohibition, breach, default or termination, or
requiring such consent are not permitted under this Agreement, (B) to the extent
that such applicable law or the term in such contract, license, agreement,
instrument or other document providing for such prohibition, breach, default or
termination or requiring such consent is ineffective under Section 9406, 9407,
9408 or 9409 of the UCC (or any successor provision or provisions) of any
relevant jurisdiction or any other applicable law (including the United States
Bankruptcy Code) or principles of equity; provided, however, that such security
interest shall attach immediately at such time as such applicable law is no
longer effective or applicable, or such prohibition, breach, default or
termination is no longer applicable or is waived, and to the extent severable,
shall attach immediately to any portion of the Collateral that does not result
in such consequences or (C) any equity interest required to be pledged under any
Loan Document; (c) Cash securing obligations permitted under clause (vii) of the
definition of Permitted Indebtedness; (d) Excluded Accounts; (e) any
Intellectual Property, whether now owned or hereafter acquired (other than any
Rights to Payment in respect thereof), in each case only to the extent and for
so long as the prohibition on such Lien or pledge is in effect under the
document(s) governing such prohibition, if applicable and (f) subject to Section
5.(h)(ii) of the Pledge Agreement, the LLC Units (as defined in the Pledge
Agreement).

3.3The lien and security interest created hereunder shall be promptly released
(a) with respect to all Collateral upon the payment in full of all Secured
Obligations in accordance with this Agreement (other than inchoate indemnity
obligations and any other obligations which, by their terms, are to survive the
termination of this Agreement), (b) with respect to Collateral that is sold or
to be sold as part of or in connection with any Permitted Transfer to a Person
who is not a Borrower, or (c) if otherwise approved, authorized or ratified in
writing by Agent in accordance with this Agreement. Upon such release, Agent
shall, upon the reasonable request and at the sole cost and expense of Borrower,
assign, transfer and deliver to Borrower, against receipt and without recourse
to or warranty by Agent, except as to the fact that Agent has not encumbered the
released assets, such of the Collateral or any part thereof to be released as is
in possession of Agent and as shall not have been sold or otherwise applied
pursuant to the terms hereof and customary documents and instruments (including
UCC-3 termination financing statements or releases) acknowledging the release of
such Collateral.

SECTION 4.   CONDITIONS PRECEDENT TO LOAN

The obligations of Lender to make the Loan hereunder are subject to the
satisfaction by Borrower of the following conditions:

4.1Initial Tranche I Term Loan Advance.  On or prior to the Closing Date,
Borrower shall have delivered to Agent the following:

(a)executed copies of the Loan Documents (other than the Warrant, which shall be
an original), Account Control Agreements, a legal opinion of Borrower’s counsel,
and all other documents and instruments reasonably required by Agent to
effectuate the transactions

 

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contemplated hereby or to create and perfect the Liens of Agent with respect to
all Collateral, in all cases in form and substance reasonably acceptable to
Agent;

(b)certified copy of resolutions of Borrower’s board of directors evidencing
approval of (i) the Loan and other transactions evidenced by the Loan Documents;
and (ii) the Warrant and transactions evidenced thereby;

(c)certified copies of the Certificate of Incorporation and the Bylaws, as
amended through the Closing Date, of Borrower;

(d)a certificate of good standing for Borrower from its state of incorporation
and similar certificates from all other jurisdictions in which it does business
and where the failure to be qualified could have a Material Adverse Effect;

(e)payment of the Due Diligence Fee (to the extent not already paid), the
Closing Facility Charge and reimbursement of Agent’s and Lender’s current
expenses reimbursable pursuant to this Agreement, which amounts may be deducted
from the initial Advance (Agent and Lenders acknowledge that, prior to the date
hereof, they have received the Due Diligence Fee to be applied in its entirety
toward the payment of any non-legal transaction costs and non-legal due
diligence expenses incurred by Agent and Lenders through the Closing Date);

(f)an assignment form executed in blank with respect to that certain Common
Stock Purchase Warrant issued August 5, 2016 by Medovex Corporation in favor of
Sorrento Therapeutics (as amended, supplemented or modified) and in the form of
Exhibit B to such warrant; and

(g)such other documents as Agent may reasonably request.

4.2All Advances.  On each Advance Date:

(a)Agent shall have received (i) an Advance Request for the relevant Advance as
required by Section 2.2(b), duly executed by Borrower’s Chief Executive Officer
or Chief Financial Officer, and (ii) any other documents Agent may reasonably
request.

(b)The representations and warranties set forth in this Agreement shall be true
and correct in all material respects on and as of the Advance Date with the same
effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date.

(c)Borrower shall be in compliance with all the terms and provisions set forth
herein and in each other Loan Document on its part to be observed or performed,
and at the time of and immediately after such Advance no Event of Default shall
have occurred and be continuing.  For the avoidance of doubt, Borrower shall
have paid the fee set forth in Section 2.9 if and as required.

 

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(d)With respect to any Tranche III Term Loan Advance, Borrower shall have paid
to Lender the Tranche III Facility Charge, which amount may be deducted from
such Tranche III Term Loan Advance.

(e)Each Advance Request shall be deemed to constitute a representation and
warranty by Borrower on the relevant Advance Date as to the matters specified in
paragraphs (b) and (c) of this Section 4.2 and as to the matters set forth in
the Advance Request.

4.3[RESERVED]

4.4No Default.  As of the Closing Date and each Advance Date, (i) no fact or
condition exists that could (or could, with the passage of time, the giving of
notice, or both) constitute an Event of Default and (ii) no event that has had
or could reasonably be expected to have a Material Adverse Effect has occurred
and is continuing.

SECTION 5.  REPRESENTATIONS AND WARRANTIES OF BORROWER

Borrower represents and warrants that:

5.1Corporate Status.  Borrower is duly organized, legally existing and in good
standing under the laws of its jurisdiction of incorporation or formation, and
is duly qualified as a foreign corporation in all jurisdictions in which the
nature of its business or location of its properties require such qualifications
and where the failure to be qualified could reasonably be expected to have a
Material Adverse Effect.  Borrower’s present name, former names (if any),
locations, place of formation, tax identification number, organizational
identification number and other information are correctly set forth in Exhibit
C, as may be updated by Borrower in a written notice (including any Compliance
Certificate) provided to Agent after the Closing Date.

5.2Collateral.  Borrower owns the Collateral and the Intellectual Property, free
of all Liens, except for Permitted Liens.  Borrower has the power and authority
to grant to Agent a Lien in the Collateral as security for the Secured
Obligations .  

5.3Consents.  Borrower’s execution, delivery and performance of this Agreement
and all other Loan Documents, and Borrower’s execution of the Warrant, (i) have
been duly authorized by all necessary corporate action of Borrower, (ii) will
not result in the creation or imposition of any Lien upon the Collateral, other
than Permitted Liens and the Liens created by this Agreement and the other Loan
Documents, (iii) do not violate any provisions of Borrower’s Certificate or
Articles of Incorporation (as applicable), bylaws, or any, law, regulation,
order, injunction, judgment, decree or writ to which Borrower is subject and
(iv) except as described on Schedule 5.3, do not violate any material contract
or material agreement or require the consent or approval of any other Person
which has not already been obtained.  The individual or individuals executing
the Loan Documents and the Warrant are duly authorized to do so.

5.4Material Adverse Effect.  No event that has had or could reasonably be
expected to have a Material Adverse Effect has occurred and is
continuing.  Borrower is not aware of any event likely to occur that is
reasonably expected to result in a Material Adverse Effect.

 

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5.5Actions Before Governmental Authorities.  There are no actions, suits or
proceedings at law or in equity or by or before any governmental authority now
pending or, to the knowledge of Borrower, threatened against or affecting
Borrower or its property, that is reasonably expected to result in a Material
Adverse Effect.

5.6Laws.  Borrower is not in violation of any law, rule or regulation, or in
default with respect to any judgment, writ, injunction or decree of any
governmental authority, where such violation or default is reasonably expected
to result in a Material Adverse Effect.  Borrower is not in default in any
manner under any provision of any agreement or instrument evidencing material
Indebtedness, or any other material agreement to which it is a party or by which
it is bound.  Borrower, its Affiliates and, to the knowledge of Borrower and its
Affiliates, any agent or other party acting on behalf of Borrower or its
Affiliates are in compliance with all applicable anti-money laundering, economic
sanctions and anti-bribery laws and regulations, and none of the funds to be
provided under this Agreement will be used, directly or indirectly, for any
activities in violation of such laws and regulations.

5.7Information Correct and Current.  No information, report, Advance Request,
financial statement, exhibit or schedule furnished, by or on behalf of Borrower
to Agent in connection with any Loan Document or included therein or delivered
pursuant thereto contained, or, when taken as a whole, contains or will contain
any material misstatement of fact or, when taken together with all other such
information or documents, omitted, omits or will omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were, are or will be made, not materially misleading at the
time such statement was made or deemed made. Additionally, any and all financial
or business projections provided by Borrower to Agent, whether prior to or after
the Closing Date, shall be (i) provided in good faith and based on the most
current data and information available to Borrower, and (ii) the most current of
such projections provided to Borrower’s Board of Directors (it being understood
that such projections are subject to significant uncertainties and
contingencies, many of which are beyond the control of Borrower, that no
assurance is given that any particular projections will be realized, and that
actual results may differ).

5.8Tax Matters.  Except as described on Schedule 5.8 and except those being
contested in good faith with adequate reserves under GAAP, (a) Borrower has
filed all material federal, state and local tax returns that it is required to
file, (b) Borrower has duly paid or fully reserved for all material taxes or
installments thereof (including any interest or penalties) as and when due,
which have or may become due pursuant to such returns, and (c) Borrower has paid
or fully reserved for any material tax assessment received by Borrower for the
three (3) years preceding the Closing Date, if any (including any taxes being
contested in good faith and by appropriate proceedings).

5.9Intellectual Property Claims.  Borrower is the sole owner of, or otherwise
has the right to use, the Intellectual Property material to Borrower’s
business.  Except as described on Schedule 5.9, to the best of Borrower’s
knowledge, (i) each of the material Copyrights, Trademarks and Patents is valid
and enforceable, (ii) no material part of the Intellectual Property has been
judged invalid or unenforceable, in whole or in part, and (iii) no claim has
been made to Borrower that any material part of the Intellectual Property
violates the rights of any third party. Exhibit D is a true, correct and
complete list of each of Borrower’s Patents, registered

 

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Trademarks, registered Copyrights, and material agreements under which Borrower
licenses Intellectual Property from third parties (other than shrink-wrap
software licenses), together with application or registration numbers, as
applicable, owned by Borrower or any Subsidiary, in each case as of the Closing
Date. Borrower is not in material breach of, nor has Borrower failed to perform
any material obligations under, any of the foregoing contracts, licenses or
agreements and, to Borrower’s knowledge, no third party to any such contract,
license or agreement is in material breach thereof or has failed to perform any
material obligations thereunder.  

5.10Intellectual Property.  Except as described on Schedule 5.10, Borrower has
all material rights with respect to Intellectual Property necessary or material
in the operation or conduct of Borrower’s business as currently conducted and
proposed to be conducted by Borrower.  Without limiting the generality of the
foregoing, and in the case of Licenses, except for restrictions that are
unenforceable under Division 9 of the UCC, Borrower has the right, to the extent
required to operate Borrower’s business, to freely transfer, license or assign
Intellectual Property necessary or material in the operation or conduct of
Borrower’s business as currently conducted and proposed to be conducted by
Borrower, without condition, restriction or payment of any kind (other than
license payments in the ordinary course of business) to any third party, except
for Intellectual Property subject to Licenses to the extent such Licenses
constitute Permitted Transfers of the type described in clause (iii) of the
definition thereof and Borrower owns or has the right to use, pursuant to valid
licenses, all software development tools, library functions, compilers and all
other third-party software and other items that are material to Borrower’s
business and used in the design, development, promotion, sale, license,
manufacture, import, export, use or distribution of Borrower Products except
customary covenants in inbound license agreements and equipment leases where
Borrower is the licensee or lessee.  

5.11Borrower Products.  Except as described on Schedule 5.11, no material
Intellectual Property owned by Borrower or Borrower Product has been or is
subject to any actual or, to the knowledge of Borrower, threatened in writing
litigation, proceeding (including any proceeding in the United States Patent and
Trademark Office or any corresponding foreign office or agency) or outstanding
decree, order, judgment, settlement agreement or stipulation that restricts in
any manner Borrower’s use, transfer or licensing thereof or that may affect the
validity, use or enforceability thereof. There is no decree, order, judgment,
agreement, stipulation, arbitral award or other provision entered into in
connection with any litigation or proceeding that obligates Borrower to grant
licenses or ownership interest in any future Intellectual Property related to
the operation or conduct of the business of Borrower or Borrower
Products.  Borrower has not received any written notice or claim, or, to the
knowledge of Borrower, oral notice or claim, challenging or questioning
Borrower’s ownership in any material Intellectual Property (or written notice of
any claim challenging or questioning the ownership in any licensed Intellectual
Property of the owner thereof) or suggesting that any third party has any claim
of legal or beneficial ownership with respect thereto nor, to Borrower’s
knowledge, is there a reasonable basis for any such claim.  Neither Borrower’s
use of its Intellectual Property nor the production and sale of Borrower
Products infringes the Intellectual Property or other rights of others in any
material respect.

5.12Financial Accounts.  Exhibit E, as may be updated by Borrower in a written
notice provided to Agent after the Closing Date, is a true, correct and complete
list of (a) all banks and other financial institutions at which Borrower or any
Subsidiary maintains Deposit

 

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Accounts and (b) all institutions at which Borrower or any Subsidiary maintains
an account holding Investment Property, and such exhibit correctly identifies
the name, address and telephone number of each bank or other institution, the
name in which the account is held, a description of the purpose of the account,
and the complete account number therefor.

5.13Employee Loans.  Except for Permitted Investments of the type described in
clauses (i), (vii) or (viii) of the definition thereof, Borrower has no
outstanding loans to any employee, officer or director of Borrower nor has
Borrower guaranteed the payment of any loan made to an employee, officer or
director of Borrower by a third party.

5.14Capitalization and Subsidiaries.  Each privately-held Borrower’s
capitalization as of the Closing Date is set forth on Schedule 5.14 annexed
hereto. Borrower does not own any stock, partnership interest or other
securities of any Person, except for Permitted Investments.  Attached as
Schedule 5.14, as may be updated by Borrower in a written notice provided after
the Closing Date, is a true, correct and complete list of each Subsidiary.

5.15Foreign Subsidiary Voting Rights. No decision or action in any governing
document of any Foreign Subsidiary (other than an Eligible Foreign Subsidiary)
requires a vote of greater than 50.1% of the equity interests or voting rights
of such Foreign Subsidiary.

SECTION 6.  INSURANCE; INDEMNIFICATION

6.1Coverage.  Borrower shall cause to be carried and maintained commercial
general liability insurance, on an occurrence form, against risks customarily
insured against in Borrower’s line of business.  Such risks shall include the
risks of bodily injury, including death, property damage, personal injury,
advertising injury, and contractual liability per the terms of the
indemnification agreement found in Section 6.3.  Borrower must maintain a
minimum of Two Million Dollars ($2,000,000) of commercial general liability
insurance for each occurrence.  Borrower has and agrees to maintain a minimum of
Two Million Dollars ($2,000,000) of directors’ and officers’ insurance for each
occurrence and Five Million Dollars ($5,000,000) in the aggregate.  So long as
there are any Secured Obligations outstanding (other than inchoate indemnity
obligations and any other obligations which, by their specific terms, are to
survive the termination of this Agreement), Borrower shall also cause to be
carried and maintained insurance upon the Collateral, insuring against all risks
of physical loss or damage howsoever caused, in an amount not less than the full
replacement cost of the Collateral, provided that such insurance may be subject
to standard exceptions and deductibles.  Borrower shall deliver to Agent copies
of all insurance policy binders with respect to the insurance policies required
under this Section 6.

6.2Certificates.  Borrower shall deliver to Agent certificates of insurance that
evidence Borrower’s compliance with its insurance obligations in Section 6.1 and
the obligations contained in this Section 6.2.  Borrower’s insurance certificate
shall state Agent (shown as “Hercules Capital, Inc.”, as Agent”) is an
additional insured for commercial general liability, a loss payee for all risk
property damage insurance, subject to the insurer’s approval, and a loss payee
for property insurance and additional insured for liability insurance for any
future insurance that Borrower may acquire from such insurer.  Attached to the
certificates of insurance will be additional insured endorsements for liability
and lender’s loss payable endorsements for

 

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all risk property damage insurance.  All certificates of insurance will provide
for a minimum of thirty (30) days advance written notice to Agent of
cancellation (other than cancellation for non-payment of premiums, for which ten
(10) days’ advance written notice shall be sufficient). Borrower shall promptly
notify Agent of any other policy changes materially adverse to Agent’s
interests.  Any failure of Agent to scrutinize such insurance certificates for
compliance is not a waiver of any of Agent’s rights, all of which are reserved.

6.3Indemnity.  Borrower agrees to indemnify and hold Agent, Lender and their
officers, directors, employees, agents, in-house attorneys, representatives and
shareholders (each, an “Indemnified Person”) harmless from and against any and
all claims, costs, expenses, damages and liabilities (including such claims,
costs, expenses, damages and liabilities based on liability in tort, including
strict liability in tort), including reasonable attorneys’ fees and
disbursements and other costs of investigation or defense (including those
incurred upon any appeal) (collectively, “Liabilities”), that may be instituted
or asserted against or incurred by such Indemnified Person as the result of
credit having been extended, suspended or terminated under this Agreement and
the other Loan Documents or the administration of such credit, or in connection
with or arising out of the transactions contemplated hereunder and thereunder,
or any actions or failures to act in connection therewith, or arising out of the
disposition or utilization of the Collateral, excluding in all cases Liabilities
to the extent resulting  from any Indemnified Person’s gross negligence or
willful misconduct. Borrower agrees to pay, and to save Agent and Lender
harmless from, any and all liabilities with respect to, or resulting solely from
any delay in paying, any and all excise, sales or other similar taxes (excluding
taxes imposed on or measured by the net income of Agent or Lender) that may be
payable or determined to be payable with respect to any of the Collateral or
this Agreement.  In no event shall Borrower or any Indemnified Person be liable
on any theory of liability for any special, indirect, consequential or punitive
damages (including any loss of profits, business or anticipated savings). This
Section 6.3 shall survive the repayment of indebtedness under, and otherwise
shall survive the expiration or other termination of, this Agreement.

SECTION 7.  COVENANTS OF BORROWER

Each Borrower agrees as follows:

7.1Financial Reports.  Borrower shall furnish to Agent the financial statements
and reports listed hereinafter (the “Financial Statements”):

(a)as soon as practicable (and in any event within 45 days) after the end of
each month, (i) if Parent’s market capitalization is at least Three Hundred
Million Dollars ($300,000,000), an unaudited interim and year-to-date balance
sheet as of the end of such month (prepared on a consolidating basis) or (ii) if
Parent’s market capitalization is less than Three Hundred Million Dollars
($300,000,000), unaudited interim and year-to-date financial statements as of
the end of such month (prepared on a consolidated basis), including balance
sheet and related statements of income and cash flows, in each case in the form
reviewed by management, accompanied by a report detailing any material
contingencies (including the commencement of any material litigation by or
against Borrower) or any other occurrence that could reasonably be expected to
have a Material Adverse Effect, all certified by Borrower’s Chief Executive
Officer or Chief Financial Officer to the effect that they have been prepared in
accordance with GAAP,

 

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except (i) for the absence of footnotes, (ii) that they are subject to normal
year-end adjustments, and (iii) they do not contain certain non-cash items that
are customarily included in quarterly and annual financial statements;

(b)within forty five (45) days after the end of each of the first three (3)
calendar quarters in each fiscal year, unaudited interim and year-to-date
financial statements as of the end of such calendar quarter (prepared on a
consolidated and consolidating basis), including balance sheet and related
statements of income and cash flows accompanied by a report detailing any
material contingencies (including the commencement of any material litigation by
or against Borrower) or any other occurrence that would reasonably be expected
to have a Material Adverse Effect, certified by Borrower’s Chief Executive
Officer or Chief Financial Officer to the effect that they have been prepared in
accordance with GAAP, except (i) for the absence of footnotes, and (ii) that
they are subject to normal year-end adjustments to the extent required by Form
10-Q; as well as the most recent capitalization table for Borrower, including
the weighted average exercise price of employee stock options;

(c)within ninety (90) days after the end of each fiscal year, unqualified
audited financial statements as of the end of such year (prepared on a
consolidated basis), including balance sheet and related statements of income
and cash flows, and setting forth in comparative form the corresponding figures
for the preceding fiscal year, certified by a firm of independent certified
public accountants selected by Borrower and reasonably acceptable to Agent,
accompanied by any management report from such accountants;

(d) within forty five (45) days after the end of each month, a Compliance
Certificate in the form of Exhibit F;

(e)promptly after the sending or filing thereof, as the case may be, copies of
any proxy statements, financial statements or reports that Parent has made
available to holders of its Preferred Stock and copies of any regular, periodic
and special reports or registration statements that Borrower files with the SEC
or any governmental authority that may be substituted therefor, or any national
securities exchange;

(f)promptly following each meeting of Borrower’s Board of Directors, copies of
all presentation materials that Borrower provides to its directors in connection
with meetings of the Board of Directors shall be made available for inspection
by Agent at Borrower’s premises at reasonable times and upon reasonable notice,
provided that in all cases Borrower may exclude any information or materials
related to executive compensation, executive sessions, debt refinancings,
confidential information, any attorney-client privileged information and any
information that would raise a conflict of interest with Agent or Lenders;

(g)promptly following receipt thereof by Borrower, copies of any material
reports, plans and other statements or documents provided by NantCell, Inc.;

(h)annual financial and business projections within ten (10) days after their
approval by Borrower’s Board of Directors, and in any event, within thirty (30)
days after the end of Borrower’s fiscal year, as well as budgets, operating
plans and other financial information reasonably requested by Agent.

 

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Borrower shall not (without the consent of Agent, such consent not to be
unreasonably withheld or delayed) make any change in its accounting policies or
reporting practices, except as required by GAAP, the SEC the PCAOB or other
applicable regulatory requirements.

Notwithstanding anything to the contrary in this Section 7.1, Borrower shall not
be required to deliver any financial statements to the Agent under clauses (a),
(b), (c) or (e) above with respect to any period for which it timely files such
reports in the period required above with the SEC; provided that such report is
publicly available on the SEC’s website (or a similar website) within the time
periods permitted by this Section 7.1 and Borrower promptly notifies Agent in
writing (which may be by electronic mail) of the posting of any such documents.
To the extent any documents required to be delivered pursuant to the terms
hereof are included in materials otherwise filed with the SEC, Borrower may
deliver such documents by e-mailing to Agent a link to the applicable filing
posted on the SEC website currently located at www.sec.gov.

The executed Compliance Certificate may be sent via email to Agent at
legal@herculestech.com and lmcguire@htgc.com.  All Financial Statements required
to be delivered pursuant to clauses (a), (b) and (c) shall be sent via e-mail to
financialstatements@herculestech.com and lmcguire@htgc.com with a copy to
legal@herculestech.com provided, that if e-mail is not available or sending such
Financial Statements via e-mail is not possible, they shall be faxed to Agent
at: (650) 473-9194, attention Chief Credit Officer.

7.2Management Rights.  Borrower shall permit any representative that Agent or
Lender authorizes, including its attorneys and accountants, to inspect the
Collateral and examine and make copies and abstracts of the books of account and
records of Borrower at reasonable times and upon reasonable notice during normal
business hours; provided, however, that so long as no Event of Default has
occurred and is continuing, such examinations shall be limited to no more often
than twice per fiscal year.  In addition, any such representative shall have the
right to meet with management and officers of Borrower to discuss such books of
account and records.  In addition, Agent or Lender shall be entitled at
reasonable times and intervals to consult with and advise the management and
officers of Borrower concerning significant business issues affecting
Borrower.  Such consultations shall not unreasonably interfere with Borrower’s
business operations.  The parties intend that the rights granted Agent and
Lender shall constitute “management rights” within the meaning of 29 C.F.R.
Section 2510.3-101(d)(3)(ii), but that any advice, recommendations or
participation by Agent or Lender with respect to any business issues shall not
be deemed to give Agent or Lender, nor be deemed an exercise by Agent or Lender
of, control over Borrower’s management or policies.

7.3Further Assurances.  Borrower shall from time to time execute, deliver and
file, alone or with Agent, any financing statements, security agreements,
collateral assignments, notices, control agreements, or other documents to
perfect or give the highest priority to Agent’s Lien on the Collateral, subject
to Permitted Liens.  Borrower shall from time to time procure any instruments or
documents as may be reasonably requested by Agent, and take all further action
that may be necessary, or that Agent may reasonably request, to perfect and
protect the Liens granted hereby and thereby.  In addition, and for such
purposes only, Borrower hereby authorizes Agent to execute and deliver on behalf
of Borrower and to file such financing statements (including an indication that
the financing statement covers “all assets or all personal property”

 

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of Borrower in accordance with Section 9-504 of the UCC), collateral
assignments, notices, control agreements, security agreements and other
documents without the signature of Borrower either in Agent’s name or in the
name of Agent as agent and attorney-in-fact for Borrower.  Borrower shall
protect and defend Borrower’s title to the Collateral and Agent’s Lien thereon
against all Persons claiming any interest adverse to Borrower or Agent other
than Permitted Liens.  

7.4Indebtedness.  Borrower shall not create, incur, assume, guarantee or be or
remain liable with respect to any Indebtedness, or permit any Subsidiary so to
do, other than Permitted Indebtedness, or prepay any Indebtedness (other than
Secured Obligations) or take any actions which impose on Borrower an obligation
to prepay any Indebtedness, except for (a) the conversion of Indebtedness into
equity securities and the payment of cash in lieu of fractional shares in
connection with such conversion, (b) purchase money Indebtedness pursuant to its
then applicable payment schedule, (c) prepayment by any Subsidiary of (i)
inter-company Indebtedness owed by such Subsidiary to any Borrower, or (ii) if
such Subsidiary is not a Borrower, intercompany Indebtedness owed by such
Subsidiary to another Subsidiary that is not a Borrower or (d) as otherwise
permitted hereunder or approved in writing by Agent.

7.5Collateral.  Borrower shall at all times keep the Collateral, the
Intellectual Property and all other property and assets used in Borrower’s
business or in which Borrower now or hereafter holds any interest free and clear
from any legal process or Liens whatsoever (except for Permitted Liens), and
shall give Agent prompt written notice of any legal process affecting the
Collateral, the Intellectual Property, such other property and assets, or any
Liens thereon, provided however, that the Collateral and such other property and
assets may be subject to Permitted Liens except that there shall be no Liens
whatsoever on Intellectual Property.  Borrower shall not agree with any Person
other than Agent or Lender not to encumber its property other than such negative
pledges that relate solely to the asset or assets subject to a Permitted Lien or
that relate solely to in-bound license agreements that by their terms expressly
prohibit assignment of the related license(s) by Borrower. Borrower shall not
enter into or suffer to exist or become effective any agreement that prohibits
or limits the ability of any Borrower to create, incur, assume or suffer to
exist any Lien upon any of its Intellectual Property, whether now owned or
hereafter acquired, to secure its obligations under the Loan Documents to which
it is a party other than (a) this Agreement and the other Loan Documents, (b)
any agreements governing any purchase money Liens or capital lease obligations
otherwise permitted hereby (in which case, any prohibition or limitation shall
only be effective against the assets financed thereby) and (c) customary
restrictions on the assignment of leases, licenses and other agreements.
Borrower shall cause its Subsidiaries to protect and defend such Subsidiary’s
title to its assets from and against all Persons claiming any interest adverse
to such Subsidiary, and Borrower shall cause its Subsidiaries at all times to
keep such Subsidiary’s property and assets free and clear from any legal process
or Liens whatsoever (except for Permitted Liens, provided however, that there
shall be no Liens whatsoever on Intellectual Property), and shall give Agent
prompt written notice of any legal process affecting such Subsidiary’s assets.

7.6Investments.  Borrower shall not directly or indirectly acquire or own, or
make any Investment in or to any Person, or permit any of its Subsidiaries so to
do, other than Permitted Investments.

 

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7.7Distributions.  Borrower shall not, and shall not allow any Subsidiary to,
(a) repurchase or redeem any class of stock or other equity interest other than
(i) pursuant to employee, director or consultant stock purchase or repurchase
plans or other similar agreements; provided, however, in each case the
repurchase or redemption price does not exceed the original consideration paid
for such stock or equity interest, and (ii) the conversion of any of its
convertible equity securities into other securities pursuant to the terms of
such convertible securities and without any cash payments except cash in lieu of
fractional shares paid in the ordinary course of business, or (b) declare or pay
any cash dividend or make a cash distribution on any class of stock or other
equity interest, except that a Subsidiary may pay dividends or make
distributions to Borrower, or (c) lend money to any employees, officers or
directors or guarantee the payment of any such loans granted by a third party in
excess of Five Hundred Thousand Dollars ($500,000) in the aggregate or (d)
waive, release or forgive any Indebtedness owed by any employees, officers or
directors in excess of Five Hundred Thousand Dollars ($500,000) in the
aggregate.

7.8Transfers.  Except for Permitted Transfers and pursuant to customary equity
incentive plans in the ordinary course of business, Borrower shall not, and
shall not allow any Subsidiary to, voluntarily or involuntarily transfer, sell,
lease, license, lend or in any other manner convey any equitable, beneficial or
legal interest in any material portion of its assets (including, without
limitation, any equity interests in other entities held by any Borrower or any
Subsidiary of Borrower that would result in a Change in Control).

7.9Mergers or Acquisitions.  Borrower shall not merge or consolidate, or permit
any of its Subsidiaries to merge or consolidate, with or into any other business
organization (other than mergers or consolidations of (a) a Subsidiary which is
not a Borrower into another Subsidiary or into Borrower, (b) a Borrower into
another Borrower) or (c) acquire, or permit any of its Subsidiaries to acquire,
all or substantially all of the capital stock or property of another Person,
except for Permitted Acquisitions and as permitted by Section 7.6.

7.10Taxes.  Borrower and its Subsidiaries shall pay when due all material taxes,
fees or other charges of any nature whatsoever (together with any related
interest or penalties) now or hereafter imposed or assessed against Borrower,
Agent, Lender (to the extent assessed in connection with any Loan Document, but
excluding taxes on Lender’s net income) or the Collateral or upon Borrower’s
ownership, possession, use, operation or disposition thereof or upon Borrower’s
rents, receipts or earnings arising therefrom.  Borrower shall file on or before
the due date therefor all material personal property tax returns in respect of
the Collateral.  Notwithstanding the foregoing, Borrower may contest, in good
faith and by appropriate proceedings, taxes for which Borrower maintains
adequate reserves therefor in accordance with GAAP.

7.11Corporate Changes.  Neither Borrower nor any Subsidiary shall change its
corporate name, legal form or jurisdiction of formation without twenty (20)
days’ prior written notice to Agent.  Neither Borrower nor any Qualified
Subsidiary shall suffer a Change in Control unless and until the Secured
Obligations (other than inchoate indemnity obligations) are repaid, including
any applicable Prepayment Charge and the End of Term Charge in accordance with
Sections 2.5 and 2.6. Neither Borrower nor any Qualified Subsidiary shall
relocate its chief executive office or its principal place of business unless:
(i) it has provided prior written notice to

 

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Agent; and (ii) such relocation shall be within the continental United States of
America.  Neither Borrower nor any Qualified Subsidiary shall relocate any item
of Collateral (other than (x) sales of Inventory in the ordinary course of
business, (y) relocations of Equipment having an aggregate value of up to One
Million Dollars ($1,000,000) in any fiscal year, and (z) relocations of
Collateral from a location described on Exhibit C to another location described
on Exhibit C) unless (i) it has provided prompt written notice to Agent, (ii)
such relocation is within the continental United States of America and, (iii) if
such relocation is to a third party bailee, it has delivered a bailee agreement
in form and substance reasonably acceptable to Agent.

7.12Deposit Accounts.  Neither Borrower nor any Qualified Subsidiary shall
maintain any Deposit Accounts, or accounts holding Investment Property, except
(i) Excluded Accounts  and (ii) with respect to which Agent has an Account
Control Agreement.

7.13Subsidiaries.  Borrower shall notify Agent of each Subsidiary formed or
acquired subsequent to the Closing Date and, within fifteen (15) days of
formation, shall cause any such Qualified Subsidiary to execute and deliver to
Agent a Joinder Agreement.

7.14Use of Proceeds.  Borrower agrees that the proceeds of the Term Loans shall
be used solely to pay related fees and expenses in connection with this
Agreement and for working capital and general corporate purposes.

7.15Notification of Event of Default.  Borrower shall notify Agent promptly upon
the occurrence of any Event of Default.

7.16Parent and its Subsidiaries on a consolidated basis shall not make Capital
Expenditures during the following periods that exceed in the aggregate the
amounts set forth opposite each such period:

Period

Maximum Capital Expenditures per Period

fiscal year 2017

$12,500,000

fiscal year 2018 and each fiscal year thereafter

$10,000,000

7.17Foreign Subsidiary Voting Rights. Borrower shall not, and shall not permit
any Subsidiary, to amend or modify any governing document of any Foreign
Subsidiary of Borrower (other than an Eligible Foreign Subsidiary) the effect of
which is to require a vote of greater than 50.1% of the equity interests or
voting rights of such entity for any decision or action of such entity.

7.18Limited Subsidiaries. Borrower agrees that the entities set forth on
Schedule 7.18 shall collectively have no assets in excess of One Million Dollars
($1,000,000) and none shall incur any liabilities, and (b) any Subsidiary that
is or becomes a Qualified Subsidiary shall enter into a Joinder Agreement within
15 days and become a co-borrower under this Agreement.

7.19Ownership Interests.  Borrower shall not, and shall not permit any
Subsidiary to, suffer a Change in Control.  Any Cash held by any entity in which
Borrower has full or partial

 

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ownership rights that is consolidated, dissolved or sold, in each case, as
permitted hereunder, shall be distributed to Sorrento Therapeutics, Inc. within
five (5) Business Days, in an amount equal to the Cash amount multiplied by the
applicable Change in Control Percentage.

7.20Fundraising Requirements.  Borrower shall achieve the 2016 Year-End
Fundraising Requirement prior to […***…], and Borrower shall achieve the 2017 Q1
Fundraising Requirement prior to […***…].

7.21Minimum Cash. At all times prior to achievement of both the Corporate
Milestone and the Fundraising Milestone, Borrower shall maintain Unrestricted
Cash in an amount greater than or equal to […***…].  Borrower shall provide
Agent evidence of compliance with the financial covenants under this Section
7.21 in each Compliance Certificate and upon request in form and substance
reasonably acceptable to Agent and supporting documentation reasonably requested
by Agent, including certification of such compliance by the Chief Executive
Officer or Chief Financial Officer of Borrower.

 

7.22Post-Closing Obligations. Notwithstanding any provision herein or in any
other Loan Document to the contrary, to the extent not actually delivered on or
prior to the Closing Date, Borrower shall deliver to Agent (a) fully executed
copies of each Account Control Agreement with Silicon Valley Bank in form and
substance satisfactory to Agent within three (3) Business Days after the Closing
Date, (b) full copies of all directors and officers insurance policies within
thirty (30) days after the Closing Date, (c) fully executed copies of landlord
waivers with respect to Borrower’s leased locations at 8395 Camino Santa Fe, San
Diego, CA 92121 and  9380 Judicial Drive, San Diego CA 92121, each in form and
substance satisfactory to Agent within ten (10) Business Days after the Closing
Date and (d) insurance endorsements as required pursuant to Section 6.2 within
thirty (30) days after the Closing Date .

SECTION 8.  RIGHT TO invest

8.1Lender or its assignee or nominee shall have the right, in its discretion, to
participate in the Subsequent Financing in an amount of up to One Million Five
Hundred Thousand Dollars ($1,500,000) on the same terms, conditions and pricing
afforded to others participating in the Subsequent Financing. This Section 8.1,
and all rights and obligations hereunder, shall survive for so long this
Agreement remains in effect.

SECTION 9.  EVENTS OF DEFAULT

The occurrence of any one or more of the following events shall be an Event of
Default:

9.1Payments.  Borrower fails to pay any amount due under this Agreement or any
of the other Loan Documents on the applicable due date; provided, however, that
an Event of Default shall not occur on account of a failure to pay due solely to
an administrative or operational error of Agent or Lender or Borrower’s bank if
Borrower had the funds to make the

*Confidential Treatment Requested

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payment when due and makes the payment within three (3) Business Days following
Borrower’s knowledge of such failure to pay; or

9.2Covenants.  Borrower breaches or defaults in the performance of any covenant
or Secured Obligation under this Agreement, or any of the other Loan Documents
or any other agreement among Borrower, Agent and Lender, and (a) with respect to
a default under any covenant under this Agreement (other than under Sections 6,
7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.15, 7.16, 7.17, 7.18, 7.19, 7.20, 7.21 and
7.22), any other Loan Document (other than under Section 5.(h) of the Pledge
Agreement) or any other agreement among Borrower, Agent and Lender, such default
continues for more than ten (10) days after the earlier of the date on which (i)
Agent or Lender has given notice of such default to Borrower and (ii) Borrower
has actual knowledge of such default or (b) with respect to a default under any
of Sections 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.15, 7.16, 7.17, 7.18, 7.19, 7.20,
7.21 and 7.22 of this Agreement and Section 5.(h) of the Pledge Agreement, the
occurrence of such default; or

9.3Material Adverse Effect.  A circumstance has occurred that would reasonably
be expected to have a Material Adverse Effect;

9.4Representations.  Any representation or warranty made by Borrower in any Loan
Document shall have been false or misleading in any material respect when made
or when deemed made; or

9.5Insolvency.  Borrower (A) (i) shall make an assignment for the benefit of
creditors; or (ii) shall be unable to pay its debts as they become due, or be
unable to pay or perform under the Loan Documents, or shall become insolvent; or
(iii) shall file a voluntary petition in bankruptcy; or (iv) shall file any
petition, answer, or document seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation pertinent to such
circumstances; or (v) shall seek or consent to or acquiesce in the appointment
of any trustee, receiver, or liquidator of Borrower or of all or any substantial
part (i.e., 33-1/3% or more) of the assets or property of Borrower; or
(vi) shall cease operations of its business as its business has normally been
conducted, or terminate substantially all of its employees; or (vii) Borrower or
its directors or majority shareholders shall take any action initiating any of
the foregoing actions described in clauses (i) through (vi); or (B) either
(i) forty-five (45) days shall have expired after the commencement of an
involuntary action against Borrower seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, without such action being
dismissed or all orders or proceedings thereunder affecting the operations or
the business of Borrower being stayed; or (ii) a stay of any such order or
proceedings shall thereafter be set aside and the action setting it aside shall
not be timely appealed; or (iii) Borrower shall file any answer admitting or not
contesting the material allegations of a petition filed against Borrower in any
such proceedings; or (iv) the court in which such proceedings are pending shall
enter a decree or order granting the relief sought in any such proceedings; or
(v) thirty (30) days shall have expired after the appointment, without the
consent or acquiescence of Borrower, of any trustee, receiver or liquidator of
Borrower or of all or any substantial part of the properties of Borrower without
such appointment being vacated; or

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9.6Attachments; Judgments; Settlement.  Any portion of Borrower’s assets is
attached or seized, or a levy is filed against any such assets, or a judgment or
judgments is/are entered for the payment of money (not covered by independent
third party insurance as to which liability has been accepted by such insurance
carrier), individually or in the aggregate, of at least One Million Two Hundred
Fifty Thousand Dollars ($1,250,000), and such judgment remains unsatisfied,
unvacated, or unstayed for a period of twenty (20) days after the entry thereof,
or Borrower is enjoined or in any way prevented by court order from conducting
any material part of its business or a settlement or similar agreement is
entered into with respect to the Wildcat Litigation or the Roger Williams
Litigation requiring the payment by Borrower of greater than the respective
amounts set forth in Schedule 9.6; or

9.7Other Obligations.  The occurrence of any default (after giving effect to any
grace or cure period) under any agreement or obligation of Borrower involving
any Indebtedness in excess of One Million Two Hundred Fifty Thousand Dollars
($1,250,000), which has resulted in a right by a third party, whether or not
exercised, to accelerate the maturity of such Indebtedness.

9.8[RESERVED]

SECTION 10.  REMEDIES

10.1General.  Upon and during the continuance of any one or more Events of
Default, (i) Agent may, and at the direction of the Required Lenders shall,
accelerate and demand payment of all or any part of the Secured Obligations
together with a Prepayment Charge and declare them to be immediately due and
payable (provided, that upon the occurrence of an Event of Default of the type
described in Section 9.5, all of the Secured Obligations shall automatically be
accelerated and made due and payable, in each case without any further notice or
act), (ii) Agent may, at its option, sign and file in Borrower’s name any and
all collateral assignments, notices, control agreements, security agreements and
other documents it deems necessary or appropriate to perfect or protect the
repayment of the Secured Obligations, and in furtherance thereof, Borrower
hereby grants Agent an irrevocable power of attorney coupled with an interest,
and (iii) Agent may notify any of Borrower’s account debtors to make payment
directly to Agent, compromise the amount of any such account on Borrower’s
behalf and endorse Agent’s name without recourse on any such payment for deposit
directly to Agent’s account.  Agent may, and at the direction of the Required
Lenders shall, exercise all rights and remedies with respect to the Collateral
under the Loan Documents or otherwise available to it under the UCC and other
applicable law, including the right to release, hold, sell, lease, liquidate,
collect, realize upon, or otherwise dispose of all or any part of the Collateral
and the right to occupy, utilize, process and commingle the Collateral.  All
Agent’s rights and remedies shall be cumulative and not exclusive.  

10.2Collection; Foreclosure.  Upon the occurrence and during the continuance of
any Event of Default, Agent may, and at the direction of the Required Lenders
shall, at any time or from time to time, apply, collect, liquidate, sell in one
or more sales, lease or otherwise dispose of, any or all of the Collateral, in
its then condition or following any commercially reasonable preparation or
processing, in such order as Agent may elect.  Any such sale may be made either
at public or private sale at its place of business or elsewhere.  Borrower
agrees that any such public or private sale may occur upon ten (10) calendar
days’ prior written notice to Borrower.  

 

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Agent may require Borrower to assemble the Collateral and make it available to
Agent at a place designated by Agent that is reasonably convenient to Agent and
Borrower.  The proceeds of any sale, disposition or other realization upon all
or any part of the Collateral shall be applied by Agent in the following order
of priorities:

First, to Agent and Lender in an amount sufficient to pay in full Agent’s and
Lender’s reasonable costs and professionals’ and advisors’ fees and expenses as
described in Section 11.11;

Second, to Lender in an amount equal to the then unpaid amount of the Secured
Obligations (including principal, interest, and the Default Rate interest), in
such order and priority as Agent may choose in its sole discretion; and

Finally, after the full and final payment in Cash of all of the Secured
Obligations (other than inchoate obligations and any other obligations which, by
their specific terms, are to survive the termination of this Agreement), to any
creditor holding a junior Lien on the Collateral, or to Borrower or its
representatives or as a court of competent jurisdiction may direct.

Agent shall be deemed to have acted reasonably in the custody, preservation and
disposition of any of the Collateral if it complies with the obligations of a
secured party under the UCC.

10.3No Waiver.  Agent shall be under no obligation to marshal any of the
Collateral for the benefit of Borrower or any other Person, and Borrower
expressly waives all rights, if any, to require Agent to marshal any
Collateral.  

10.4Cumulative Remedies.  The rights, powers and remedies of Agent hereunder
shall be in addition to all rights, powers and remedies given by statute or rule
of law and are cumulative.  The exercise of any one or more of the rights,
powers and remedies provided herein shall not be construed as a waiver of or
election of remedies with respect to any other rights, powers and remedies of
Agent.

SECTION 11.  MISCELLANEOUS

11.1Severability.  Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective only to the extent and duration of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

 

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11.2Notice.  Except as otherwise provided herein, any notice, demand, request,
consent, approval, declaration, service of process or other communication
(including the delivery of Financial Statements) that is required, contemplated,
or permitted under the Loan Documents or with respect to the subject matter
hereof shall be in writing, and shall be deemed to have been validly served,
given, delivered, and received upon the earlier of: (i) the day of transmission
by electronic mail or hand delivery or delivery by an overnight express service
or overnight mail delivery service; or (ii) the third calendar day after deposit
in the United States of America mails, with proper first class postage prepaid,
in each case addressed to the party to be notified as follows:

(a)If to Agent:

HERCULES CAPITAL, INC.
Legal Department
Attention:  Chief Legal Officer and Lake McGuire
400 Hamilton Avenue, Suite 310
Palo Alto, CA  94301
email: legal@herculestech.com; lmcguire@htgc.com
Telephone:  650-289-3060

(b)If to Lender:

HERCULES CAPITAL, INC.
Legal Department
Attention:  Chief Legal Officer and Lake McGuire
400 Hamilton Avenue, Suite 310
Palo Alto, CA  94301
email: legal@herculestech.com; lmcguire@htgc.com
Telephone:  650-289-3060

(c)If to Borrower:

Sorrento Therapeutics, Inc.

Attention:  Kevin Herde
9380 Judicial Drive,

San Diego, CA  92121

email:  kherde@sorrentotherapeutics.com
Telephone:  858-210-3736

 

or to such other address as each party may designate for itself by like notice.

11.3Entire Agreement; Amendments.  

(a)This Agreement and the other Loan Documents constitute the entire agreement
and understanding of the parties hereto in respect of the subject matter hereof
and thereof, and supersede and replace in their entirety any prior proposals,
term sheets, non-disclosure or confidentiality agreements, letters, negotiations
or other documents or agreements,

 

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whether written or oral, with respect to the subject matter hereof or thereof
(including Agent’s proposal letter dated October 11, 2016).  

(b)Neither this Agreement, any other Loan Document, nor any terms hereof or
thereof may be amended, supplemented or modified except in accordance with the
provisions of this Section 11.3(b).  The Required Lenders and Borrower party to
the relevant Loan Document may, or, with the written consent of the Required
Lenders, Agent and Borrower party to the relevant Loan Document may, from time
to time, (i) enter into written amendments, supplements or modifications hereto
and to the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of Borrower hereunder or thereunder or (ii) waive, on such terms
and conditions as the Required Lenders or the Agent, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall (A) forgive the principal amount or extend the final
scheduled date of maturity of any Loan, extend the scheduled date of any
amortization payment in respect of any Term Loan, reduce the stated rate of any
interest or fee payable hereunder) or extend the scheduled date of any payment
thereof, or increase the amount, in each case without the written consent of
each Lender directly affected thereby; (B) eliminate or reduce the voting rights
of any Lender under this Section 11.3(b) without the written consent of such
Lender; (C) reduce any percentage specified in the definition of Required
Lenders, consent to the assignment or transfer by Borrower of any of its rights
and obligations under this Agreement and the other Loan Documents, release all
or substantially all of the Collateral or release a Borrower from its
obligations under the Loan Documents, in each case without the written consent
of all Lenders; or (D) amend, modify or waive any provision of Section 11.17
without the written consent of the Agent.  Any such waiver and any such
amendment, supplement or modification shall apply equally to each Lender and
shall be binding upon Borrower, the Lender, the Agent and all future holders of
the Loans.

11.4No Strict Construction.  The parties hereto have participated jointly in the
negotiation and drafting of this Agreement.  In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.

11.5No Waiver.  The powers conferred upon Agent and Lender by this Agreement are
solely to protect its rights hereunder and under the other Loan Documents and
its interest in the Collateral and shall not impose any duty upon Agent or
Lender to exercise any such powers.  No omission or delay by Agent or Lender at
any time to enforce any right or remedy reserved to it, or to require
performance of any of the terms, covenants or provisions hereof by Borrower at
any time designated, shall be a waiver of any such right or remedy to which
Agent or Lender is entitled, nor shall it in any way affect the right of Agent
or Lender to enforce such provisions thereafter.

11.6Survival.  All agreements, representations and warranties contained in this
Agreement and the other Loan Documents or in any document delivered pursuant
hereto or

 

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thereto shall be for the benefit of Agent and Lender and shall survive the
execution and delivery of this Agreement. Sections 6.3 and 8.1 shall survive the
termination of this Agreement.

11.7Successors and Assigns.  The provisions of this Agreement and the other Loan
Documents shall inure to the benefit of and be binding on Borrower and its
permitted assigns (if any).  Borrower shall not assign its obligations under
this Agreement or any of the other Loan Documents without Agent’s express prior
written consent, and any such attempted assignment shall be void and of no
effect.  Agent and Lender may assign, transfer, or endorse its rights hereunder
and under the other Loan Documents without prior notice to Borrower, and all of
such rights shall inure to the benefit of Agent’s and Lender’s successors and
assigns; provided that as long as no Event of Default has occurred and is
continuing, neither Agent nor any Lender may assign, transfer or endorse its
rights hereunder or under the Loan Documents to any party that is a direct
competitor of Borrower (as reasonably determined by Agent), it being
acknowledged that in all cases, any transfer to an Affiliate of any Lender or
Agent shall be allowed.

11.8Governing Law.  This Agreement and the other Loan Documents have been
negotiated and delivered to Agent and Lender in the State of California, and
shall have been accepted by Agent and Lender in the State of
California.  Payment to Agent and Lender by Borrower of the Secured Obligations
is due in the State of California.  This Agreement and the other Loan Documents
shall be governed by, and construed and enforced in accordance with, the laws of
the State of California, excluding conflict of laws principles that would cause
the application of laws of any other jurisdiction.

11.9Consent to Jurisdiction and Venue.  All judicial proceedings (to the extent
that the reference requirement of Section 11.10 is not applicable) arising in or
under or related to this Agreement or any of the other Loan Documents may be
brought in any state or federal court located in the State of California.  By
execution and delivery of this Agreement, each party hereto generally and
unconditionally: (a) consents to nonexclusive personal jurisdiction in Santa
Clara County, State of California; (b) waives any objection as to jurisdiction
or venue in Santa Clara County, State of California; (c) agrees not to assert
any defense based on lack of jurisdiction or venue in the aforesaid courts; and
(d) irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Agreement or the other Loan Documents.  Service of process
on any party hereto in any action arising out of or relating to this Agreement
shall be effective if given in accordance with the requirements for notice set
forth in Section 11.2, and shall be deemed effective and received as set forth
in Section 11.2.  Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of either party to bring
proceedings in the courts of any other jurisdiction.

11.10Mutual Waiver of Jury Trial / Judicial Reference.  

(a)Because disputes arising in connection with complex financial transactions
are most quickly and economically resolved by an experienced and expert Person
and the parties wish applicable state and federal laws to apply (rather than
arbitration rules), the parties desire that their disputes be resolved by a
judge applying such applicable laws.  EACH OF BORROWER, AGENT AND LENDER
SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF
ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM
(COLLECTIVELY,

 

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“CLAIMS”) ASSERTED BY BORROWER AGAINST AGENT, LENDER OR THEIR RESPECTIVE
ASSIGNEE OR BY AGENT, LENDER OR THEIR RESPECTIVE ASSIGNEE AGAINST
BORROWER.  This waiver extends to all such Claims, including Claims that involve
Persons other than Agent, Borrower and Lender; Claims that arise out of or are
in any way connected to the relationship among Borrower, Agent and Lender; and
any Claims for damages, breach of contract, tort, specific performance, or any
equitable or legal relief of any kind, arising out of this Agreement, any other
Loan Document.  

(b)If the waiver of jury trial set forth in Section 11.10(a) is ineffective or
unenforceable, the parties agree that all Claims shall be resolved by reference
to a private judge sitting without a jury, pursuant to Code of Civil Procedure
Section 638, before a mutually acceptable referee or, if the parties cannot
agree, a referee selected by the Presiding Judge of Santa Clara County,
California.  Such proceeding shall be conducted in Santa Clara County,
California, with California rules of evidence and discovery applicable to such
proceeding.    

(c)In the event Claims are to be resolved by judicial reference, either party
may seek from a court identified in Section 11.9, any prejudgment order, writ or
other relief and have such prejudgment order, writ or other relief enforced to
the fullest extent permitted by law notwithstanding that all Claims are
otherwise subject to resolution by judicial reference.

11.11Professional Fees.  Borrower promises to pay Agent’s and Lender’s fees and
expenses necessary to finalize the loan documentation, including but not limited
to reasonable attorneys fees, UCC searches, filing costs, and other
miscellaneous expenses. In addition, Borrower promises to pay any and all
reasonable attorneys’ and other professionals’ fees and expenses incurred by
Agent and Lender after the Closing Date in connection with or related
to:  (a) the Loan; (b) the administration, collection, or enforcement of the
Loan; (c) the amendment or modification of the Loan Documents; (d) any waiver,
consent, release, or termination under the Loan Documents; (e) the protection,
preservation, audit, field exam, sale, lease, liquidation, or disposition of
Collateral or the exercise of remedies with respect to the Collateral; (f) any
legal, litigation, administrative, arbitration, or out of court proceeding in
connection with or related to Borrower or the Collateral, and any appeal or
review thereof, in each case that constitutes a Liability for which Borrower is
obligated to indemnify an Indemnified Person under Section 6.3; and (g) any
bankruptcy, restructuring, reorganization, assignment for the benefit of
creditors, workout, foreclosure, or other action related to Borrower, the
Collateral, the Loan Documents, including representing Agent or Lender in any
adversary proceeding or contested matter commenced or continued by or on behalf
of Borrower’s estate, and any appeal or review thereof.

11.12Confidentiality.  Agent and Lender acknowledge that certain items of
Collateral and information provided to Agent and Lender by Borrower are
confidential and proprietary information of Borrower, if and to the extent such
information either (x) is marked as confidential by Borrower at the time of
disclosure, or (y) should reasonably be understood to be confidential (the
“Confidential Information”).  Accordingly, Agent and Lender agree that any
Confidential Information it may obtain  shall not be disclosed to any other
Person or entity in any manner whatsoever, in whole or in part, without the
prior written consent of Borrower, except that Agent and Lender may disclose any
such information:  (a) to its own directors, officers, employees, accountants,
counsel and other professional advisors and to its Affiliates if Agent or

 

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Lender in their sole discretion determines that any such party should have
access to such information in connection with such party’s responsibilities in
connection with the Loan or this Agreement and, provided that such recipient of
such Confidential Information either (i) agrees to be bound by the
confidentiality provisions of this paragraph or (ii) is otherwise subject to
confidentiality restrictions that reasonably protect against the disclosure of
Confidential Information; (b) if such information is generally available to the
public through no fault of Agent or Lender; (c) if required or appropriate in
any report, statement or testimony submitted to any governmental authority
having or claiming to have jurisdiction over Agent or Lender; (d) if required or
appropriate in response to any summons or subpoena or in connection with any
litigation, to the extent permitted or deemed advisable by Agent’s or Lender’s
counsel; (e) to comply with any legal requirement or law applicable to Agent or
Lender; (f) to the extent reasonably necessary in connection with the exercise
of any right or remedy under any Loan Document, including Agent’s sale, lease,
or other disposition of Collateral after default; (g) to any participant or
assignee of Agent or Lender or any prospective participant or assignee;
provided, that such participant or assignee or prospective participant or
assignee agrees in writing to be bound by this Section prior to disclosure; or
(h) otherwise with the prior consent of Borrower; provided, that any disclosure
made in violation of this Agreement shall not affect the obligations of Borrower
or any of its Affiliates or any guarantor under this Agreement or the other Loan
Documents.

11.13 Assignment of Rights.  Borrower acknowledges and understands that Agent or
Lender may, subject to Section 11.7, sell and assign all or part of its interest
hereunder and under the Loan Documents to any Person or entity (an
“Assignee”).  After such assignment the term “Agent” or “Lender” as used in the
Loan Documents shall mean and include such Assignee, and such Assignee shall be
vested with all rights, powers and remedies of Agent and Lender hereunder with
respect to the interest so assigned; but with respect to any such interest not
so transferred, Agent and Lender shall retain all rights, powers and remedies
hereby given.  No such assignment by Agent or Lender shall relieve Borrower of
any of its obligations hereunder.  Lender agrees that in the event of any
transfer by it of the Note(s)(if any), it will endorse thereon a notation as to
the portion of the principal of the Note(s), which shall have been paid at the
time of such transfer and as to the date to which interest shall have been last
paid thereon.

11.14Revival of Secured Obligations.  This Agreement and the Loan Documents
shall remain in full force and effect and continue to be effective if any
petition is filed by or against Borrower for liquidation or reorganization, if
Borrower becomes insolvent or makes an assignment for the benefit of creditors,
if a receiver or trustee is appointed for all or any significant part of
Borrower’s assets, or if any payment or transfer of Collateral is recovered from
Agent or Lender.  The Loan Documents and the Secured Obligations and Collateral
security shall continue to be effective, or shall be revived or reinstated, as
the case may be, if at any time payment and performance of the Secured
Obligations or any transfer of Collateral to Agent, or any part thereof is
rescinded, avoided or avoidable, reduced in amount, or must otherwise be
restored or returned by, or is recovered from, Agent, Lender or by any obligee
of the Secured Obligations, whether as a “voidable preference,” “fraudulent
conveyance,” or otherwise, all as though such payment, performance, or transfer
of Collateral had not been made.  In the event that any payment, or any part
thereof, is rescinded, reduced, avoided, avoidable, restored, returned, or
recovered, the Loan Documents and the Secured Obligations shall be

 

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deemed, without any further action or documentation, to have been revived and
reinstated except to the extent of the full, final, and indefeasible payment to
Agent or Lender in Cash.

11.15Counterparts.  This Agreement and any amendments, waivers, consents or
supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.

11.16No Third Party Beneficiaries.  No provisions of the Loan Documents are
intended, nor will be interpreted, to provide or create any third-party
beneficiary rights or any other rights of any kind in any Person other than
Agent, Lender and Borrower unless specifically provided otherwise herein, and,
except as otherwise so provided, all provisions of the Loan Documents will be
personal and solely among Agent, the Lender and Borrower.

11.17Agency.  

(a)Lender hereby irrevocably appoints Hercules Capital, Inc. to act on its
behalf as Agent hereunder and under the other Loan Documents and authorizes the
Agent to take such actions on its behalf and to exercise such powers as are
delegated to Agent by the terms hereof or thereof, together with such actions
and powers as are reasonably incidental thereto.

(b)Lender  agrees to indemnify Agent in its capacity as such (to the extent not
reimbursed by Borrower and without limiting the obligation of Borrower to do
so), according to its respective Term Commitment percentages (based upon the
total outstanding Term Loan Commitments) in effect on the date on which
indemnification is sought under this Section 11.17, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever that may at any time be
imposed on, incurred by or asserted against Agent in any way relating to or
arising out of, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by Agent under or
in connection with any of the foregoing; The agreements in this Section shall
survive the payment of the Loans and all other amounts payable hereunder.

(c)Agent in Its Individual Capacity.  The Person serving as Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not Agent and the term
“Lender” shall, unless otherwise expressly indicated or unless the context
otherwise requires, include each such Person serving as Agent hereunder in its
individual capacity.

(d)Exculpatory Provisions.  The Agent shall have no duties or obligations except
those expressly set forth herein and in the other Loan Documents.  Without
limiting the generality of the foregoing, Agent shall not:

(i)be subject to any fiduciary or other implied duties, regardless of whether
any default or any Event of Default has occurred and is continuing;

 

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(ii)have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby or
by the other Loan Documents that Agent is required to exercise as directed in
writing by the Lender, provided that Agent shall not be required to take any
action that, in its opinion or the opinion of its counsel, may expose Agent to
liability or that is contrary to any Loan Document or applicable law; and

(iii)except as expressly set forth herein and in the other Loan Documents, have
any duty to disclose, and Agent shall not be liable for the failure to disclose,
any information relating to Borrower or any of its Affiliates that is
communicated to or obtained by any Person serving as Agent or any of its
Affiliates in any capacity.

(e)The Agent shall not be liable for any action taken or not taken by it (i)
with the consent or at the request of the Lender or as Agent shall believe in
good faith shall be necessary, under the circumstances or (ii) in the absence of
its own gross negligence or willful misconduct.

(f)The Agent shall not be responsible for or have any duty to ascertain or
inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement or any other Loan Document, (ii) the contents of
any certificate, report or other document delivered hereunder or thereunder or
in connection herewith or therewith, (iii) the performance or observance of any
of the covenants, agreements or other terms or conditions set forth herein or
therein or the occurrence of any default or Event of Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or (v) the satisfaction
of any condition set forth in Section 4 or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to Agent.

(g)Reliance by Agent.  Agent may rely, and shall be fully protected in acting,
or refraining to act, upon, any resolution, statement, certificate, instrument,
opinion, report, notice, request, consent, order, bond or other paper or
document that it has no reason to believe to be other than genuine and to have
been signed or presented by the proper party or parties or, in the case of
cables, telecopies and telexes, to have been sent by the proper party or
parties.  In the absence of its gross negligence or willful misconduct, Agent
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished to
Agent and conforming to the requirements of the Loan Agreement or any of the
other Loan Documents.  Agent may consult with counsel, and any opinion or legal
advice of such counsel shall be full and complete authorization and protection
in respect of any action taken, not taken or suffered by Agent hereunder or
under any Loan Documents in accordance therewith.  Agent shall have the right at
any time to seek instructions concerning the administration of the Collateral
from any court of competent jurisdiction.  Agent shall not be under any
obligation to exercise any of the rights or powers granted to Agent by this
Agreement, the Loan Agreement and the other Loan Documents at the request or
direction of Lenders unless Agent shall have been provided by Lender with
adequate security and indemnity against the costs, expenses and liabilities that
may be incurred by it in compliance with such request or direction.

 

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11.18Publicity.  None of the parties hereto nor any of its respective member
businesses and Affiliates shall, without the other parties’ prior written
consent (which shall not be unreasonably withheld or delayed), publicize or use
(a) the other party's name (including a brief description of the relationship
among the parties hereto), logo or hyperlink to such other parties’ web site,
separately or together, in written and oral presentations, advertising,
promotional and marketing materials, client lists, public relations materials or
on its web site (together, the “ Publicity Materials”); (b) the names of
officers of such other parties in the Publicity Materials; and (c) such other
parties’ name, trademarks, servicemarks in any news or press release concerning
such party; provided however, notwithstanding anything to the contrary herein,
no such consent shall be required (i) to the extent necessary to comply with the
requests of any regulators, legal requirements or laws applicable to such party,
pursuant to any listing agreement with any national securities exchange (so long
as such party provides prior notice to the other party hereto to the extent
reasonably practicable) and (ii) to comply with Section 11.12.  

11.19Multiple Borrowers.

(a)

Borrower’s Agent. Each Borrower hereby irrevocably appoints Sorrento
Therapeutics, Inc. as its agent, attorney-in-fact and legal representative for
all purposes, including requesting disbursement of the Term Loan and receiving
account statements and other notices and communications to Borrowers (or any of
them) from Agent or any Lender. The Agent may rely, and shall be fully protected
in relying, on any request for the Term Loan, disbursement instruction, report,
information or any other notice or communication made or given by the Company,
whether in its own name or on behalf of one or more of the other Borrowers, and
Agent shall not have any obligation to make any inquiry or request any
confirmation from or on behalf of any other Borrower as to the binding effect on
it of any such request, instruction, report, information, other notice or
communication, nor shall the joint and several character of Borrowers’
obligations hereunder be affected thereby.

(b)

Waivers.  Each Borrower hereby waives:  (i) any right to require Agent to
institute suit against, or to exhaust its rights and remedies against, any other
Borrower or any other person, or to proceed against any property of any kind
which secures all or any part of the Secured Obligations, or to exercise any
right of offset or other right with respect to any reserves, credits or deposit
accounts held by or maintained with Agent or any Indebtedness of Agent or any
Lender to any other Borrower, or to exercise any other right or power, or pursue
any other remedy Agent or any Lender may have; (ii) any defense arising by
reason of any disability or other defense of any other Borrower or any guarantor
or any endorser, co-maker or other person, or by reason of the cessation from
any cause whatsoever of any liability of any other Borrower or any guarantor or
any endorser, co-maker or other person, with respect to all or any part of the
Secured Obligations, or by reason of any act or omission of Agent or others
which directly or indirectly results in the discharge or release of any other
Borrower or any guarantor or any other person or any Secured Obligations or any
security therefor, whether by operation of law or otherwise; (iii) any defense
arising by reason of any failure of Agent to obtain, perfect, maintain or keep
in force any Lien on, any property of any Borrower or any other person; (iv) any
defense based upon or arising out of any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, liquidation or dissolution proceeding
commenced by or against any other Borrower or any guarantor or any endorser,
co-maker or other person, including without limitation any discharge of, or bar
against collecting, any of the Secured Obligations (including

 

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without limitation any interest thereon), in or as a result of any such
proceeding.  Until all of the Secured Obligations have been paid, performed, and
discharged in full, nothing shall discharge or satisfy the liability of any
Borrower hereunder except the full performance and payment of all of the Secured
Obligations.  If any claim is ever made upon Agent for repayment or recovery of
any amount or amounts received by Agent in payment of or on account of any of
the Secured Obligations, because of any claim that any such payment constituted
a preferential transfer or fraudulent conveyance, or for any other reason
whatsoever, and Agent repays all or part of said amount by reason of any
judgment, decree or order of any court or administrative body having
jurisdiction over Agent or any of its property, or by reason of any settlement
or compromise of any such claim effected by Agent with any such claimant
(including without limitation any other Borrower), then and in any such event,
each Borrower agrees that any such judgment, decree, order, settlement and
compromise shall be binding upon such Borrower, notwithstanding any revocation
or release of this Agreement or the cancellation of any note or other instrument
evidencing any of the Secured Obligations, or any release of any of the Secured
Obligations, and each Borrower shall be and remain liable to Agent and the
Lenders under this Agreement for the amount so repaid or recovered, to the same
extent as if such amount had never originally been received by Agent or any
Lender, and the provisions of this sentence shall survive, and continue in
effect, notwithstanding any revocation or release of this Agreement.  Each
Borrower hereby expressly and unconditionally waives all rights of subrogation,
reimbursement and indemnity of every kind against any other Borrower, and all
rights of recourse to any assets or property of any other Borrower, and all
rights to any collateral or security held for the payment and performance of any
Secured Obligations, including (but not limited to) any of the foregoing rights
which Borrower may have under any present or future document or agreement with
any other Borrower or other person, and including (but not limited to) any of
the foregoing rights which any Borrower may have under any equitable doctrine of
subrogation, implied contract, or unjust enrichment, or any other equitable or
legal doctrine.

(c)

Consents.  Each Borrower hereby consents and agrees that, without notice to or
by Borrower and without affecting or impairing in any way the obligations or
liability of Borrower hereunder, Agent may, from time to time before or after
revocation of this Agreement, do any one or more of the following in its sole
and absolute discretion:  (i) accept partial payments of, compromise or settle,
renew, extend the time for the payment, discharge, or performance of, refuse to
enforce, and release all or any parties to, any or all of the Obligations; (ii)
grant any other indulgence to any Borrower or any other Person in respect of any
or all of the Secured Obligations or any other matter; (iii) accept, release,
waive, surrender, enforce, exchange, modify, impair, or extend the time for the
performance, discharge, or payment of, any and all property of any kind securing
any or all of the Secured Obligations or any guaranty of any or all of the
Secured Obligations, or on which Agent at any time may have a Lien, or refuse to
enforce its rights or make any compromise or settlement or agreement therefor in
respect of any or all of such property; (iv) substitute or add, or take any
action or omit to take any action which results in the release of, any one or
more other Borrowers or any endorsers or guarantors of all or any part of the
Secured Obligations, including, without limitation one or more parties to this
Agreement, regardless of any destruction or impairment of any right of
contribution or other right of Borrower; (v) apply any sums received from any
other Borrower, any guarantor, endorser, or co-signer, or from the disposition
of any Collateral or security, to any Indebtedness whatsoever owing from such
person or secured by such Collateral or security, in such manner

 

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and order as Agent determines in its sole discretion, and regardless of whether
such Indebtedness is part of the Secured Obligations, is secured, or is due and
payable.  Each Borrower consents and agrees that Agent shall be under no
obligation to marshal any assets in favor of Borrower, or against or in payment
of any or all of the Secured Obligations.  Each Borrower further consents and
agrees that Agent shall have no duties or responsibilities whatsoever with
respect to any property securing any or all of the Secured Obligations.  Without
limiting the generality of the foregoing, Agent shall have no obligation to
monitor, verify, audit, examine, or obtain or maintain any insurance with
respect to, any property securing any or all of the Secured Obligations.

(d)

Independent Liability.  Each Borrower hereby agrees that one or more successive
or concurrent actions may be brought hereon against such Borrower, in the same
action in which any other Borrower may be sued or in separate actions, as often
as deemed advisable by Agent. Each Borrower is fully aware of the financial
condition of each other Borrower and is executing and delivering this Agreement
based solely upon its own independent investigation of all matters pertinent
hereto, and such Borrower is not relying in any manner upon any representation
or statement of Agent or any Lender with respect thereto.  Each Borrower
represents and warrants that it is in a position to obtain, and each Borrower
hereby assumes full responsibility for obtaining, any additional information
concerning any other Borrower’s financial condition and any other matter
pertinent hereto as such Borrower may desire, and such Borrower is not relying
upon or expecting Agent to furnish to it any information now or hereafter in
Agent’s possession concerning the same or any other matter.

(e)

Subordination.  All Indebtedness of a Borrower now or hereafter arising held by
another Borrower is subordinated to the Secured Obligations and Borrower holding
the Indebtedness shall take all actions reasonably requested by Agent to effect,
to enforce and to give notice of such subordination.

(SIGNATURES TO FOLLOW)

 

 

44

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In Witness Whereof, Borrower, Agent and Lender have duly executed and delivered
this Loan and Security Agreement as of the day and year first above written.

 

BORROWER:

 

 

 

SORRENTO THERAPEUTICS, INC.

 

 

 

 

 

 

Signature:

 

/s/ Henry Ji, Ph.D.

Print Name:

 

Henry Ji, Ph.D.

Title:

 

President and Chief Executive Officer

 

 

 

 

 

 

CONCORTIS BIOSYSTEMS, CORP.

 

 

 

 

 

 

Signature:

 

/s/ Henry Ji, Ph.D.

Print Name:

 

Henry Ji, Ph.D.

Title:

 

President and Chief Executive Officer

 

 

 

 

 

 

ARK ANIMAL HEALTH, INC.

 

 

 

 

 

 

Signature:

 

/s/ Henry Ji, Ph.D.

Print Name:

 

Henry Ji, Ph.D.

Title:

 

President and Chief Executive Officer

 

 

 

 

 

 

SORRENTO BIOLOGICS, INC.

 

 

 

 

 

 

Signature:

 

/s/ Henry Ji, Ph.D.

Print Name:

 

Henry Ji, Ph.D.

Title:

 

President and Chief Executive Officer

[Signature Pages to Loan and Security Agreement (Sorrento-Hercules)]

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

TNK THERAPEUTICS, INC.

 

 

 

 

 

 

Signature:

 

/s/ Henry Ji, Ph.D.

Print Name:

 

Henry Ji, Ph.D.

Title:

 

President and Chief Executive Officer

 

 

 

 

 

 

SCINTILLA PHARMACEUTICALS, INC.

 

 

 

 

 

 

Signature:

 

/s/ Henry Ji, Ph.D.

Print Name:

 

Henry Ji, Ph.D.

Title:

 

President and Chief Executive Officer

 

 

 

 

 

 

LA CELL, INC.

 

 

 

 

 

 

Signature:

 

/s/ Henry Ji, Ph.D.

Print Name:

 

Henry Ji, Ph.D.

Title:

 

Chief Executive Officer

 

 

 

 

 

 

SINIWEST HOLDING CORP.

 

 

 

 

 

 

Signature:

 

/s/ Henry Ji, Ph.D.

Print Name:

 

Henry Ji, Ph.D.

Title:

 

President

[Signature Pages to Loan and Security Agreement (Sorrento-Hercules)]

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

LEVENA BIOPHARMA US, INC.

 

 

 

 

 

 

Signature:

 

/s/ Henry Ji, Ph.D.

Print Name:

 

Henry Ji, Ph.D.

Title:

 

President and Chief Executive Officer

 

 

 

 

 

 

SORRENTO BIOSERVICES, INC.

 

 

 

 

 

 

Signature:

 

/s/ Henry Ji, Ph.D.

Print Name:

 

Henry Ji, Ph.D.

Title:

 

President

 

 

 

 

 

 

SCILEX PHARMACEUTICALS INC.

 

 

 

 

 

 

Signature:

 

/s/ Henry Ji, Ph.D.

Print Name:

 

Henry Ji, Ph.D.

Title:

 

Chief Executive Officer

[Signature Pages to Loan and Security Agreement (Sorrento-Hercules)]

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Accepted in Palo Alto, California:

AGENT:

 

 

HERCULES CAPITAL, INC.

 

 

 

 

 

 

Signature:

 

/s/ Jennifer Choe

Print Name:

 

Jennifer Choe

Title:

 

Assistant General Counsel

 

 

 

 

 

 

LENDER:

 

 

 

 

 

 

HERCULES CAPITAL, INC.

 

 

 

 

 

 

Signature:

 

/s/ Jennifer Choe

Print Name:

 

Jennifer Choe

Title:

 

Assistant General Counsel

 

[Signature Pages to Loan and Security Agreement (Sorrento-Hercules)]