Execution Version

Exhibit 10.32

*** Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4)

and 240.24b-2

 

FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as
of December 27, 2016 (the “Amendment Effective Date”), 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
thereto as Lender, constituting the Required Lenders, 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, together with its successors and
assigns in such capacity, “Agent”).

The Borrower, the Lender and Agent are parties to a Loan and Security Agreement
dated as of November 23, 2016 (as amended, restated or modified from time to
time, the “Loan and Security Agreement”).  The Borrower has requested that the
Lender agree to certain amendments to the Loan and Security Agreement.  The
Lender have agreed to such request, subject to the terms and conditions hereof.

Accordingly, the parties hereto agree as follows:

SECTION 1Definitions; Interpretation.

(a)Terms Defined in Loan and Security Agreement.  All capitalized terms used in
this Amendment (including in the recitals hereof) and not otherwise defined
herein shall have the meanings assigned to them in the Loan and Security
Agreement.

(b)Interpretation.  The rules of interpretation set forth in Section 1.1 of the
Loan and Security Agreement shall be applicable to this Amendment and are
incorporated herein by this reference.

SECTION 2Amendments to the Loan and Security Agreement.

(a)The Loan and Security Agreement shall be amended as follows effective as of
the Amendment Effective Date:

(i) Deleted Definitions.  are hereby deleted in their entirety: “2016 Year-End
Fundraising Requirement” and “2017 Q1 Fundraising Requirement”.

(ii)New Definitions.  The following definitions are added to Section 1.1 in
their proper alphabetical order:

“First Amendment Effective Date” means December 27, 2016.

“Initial 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 […***…].

 

*Confidential Treatment Requested

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(iii)Amended Definitions.  The following definition is hereby amended as
follows:

“Fundraising Milestone”.  The definition of “Fundraising Milestone” is hereby
amended by replacing “2016 Year-End Fundraising Requirement and the 2017 Q1
Fundraising Requirement” with “Initial Fundraising Requirement” therein.

(iv)Section 2.9.  Section 2.9 is hereby amended by replacing “December 31, 2016”
with “the First Amendment Effective Date” in each instance therein.

(v)Section 7.20.  Section 7.20 is hereby amended and restated as follows:

7.20 Initial Fundraising Requirement. Borrower shall achieve the Initial
Fundraising Requirement prior to […***…].

(vi)Section 7.21. Section 7.21 is hereby amended and restated as follows:

7.21 Minimum 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 […***…]; provided that at all times
prior to achievement of the Initial Fundraising Requirement, 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 (a) until […***…], (b) in each Compliance Certificate
and (c) upon request, in each case in form and substance acceptable to Agent and
with supporting documentation requested by Agent, including, without limitation,
evidence of bank statement activity from such week (including ending balances)
and certification of such compliance by the Chief Executive Officer or Chief
Financial Officer of Borrower.

(vii)Compliance Certificate.  Exhibit F (Compliance Certificate) of the Loan and
Security Agreement is hereby amended and restated in its entirety as set forth
in Addendum I hereto.

(b)References Within Loan and Security Agreement.  Each reference in the Loan
and Security Agreement to “this Agreement” and the words “hereof,” “herein,”
“hereunder,” or words of like import, shall mean and be a reference to the Loan
and Security Agreement as amended by this Amendment.

SECTION 3Conditions of Effectiveness.  The effectiveness of Section 2 of this
Amendment shall be subject to the satisfaction of each of the following
conditions precedent:

(a)Fees and Expenses.  The Borrower shall have paid (i) an amendment fee of
$250,000, which fee shall be due and payable and deemed fully earned as of the
Amendment Effective Date, (ii) the $210,000 fee set forth in Section 2.9 of the
Agreement, (iii) all attorney fees and other costs and expenses then due in
accordance with Section 5(e), and (iv) all other fees, costs and expenses, if
any, due and payable as of the Amendment Effective Date under the Loan and
Security Agreement.

(b)This Amendment.  Agent shall have received this Amendment, executed by Agent,
the Lender and the Borrower.

(c)Representations and Warranties; No Default.  On the Amendment Effective Date,
after giving effect to the amendment of the Loan and Security Agreement
contemplated hereby:

(i)The representations and warranties contained in Section 4 shall be true and
correct in all material respects on and as of the Amendment Effective Date as
though made on and as of such date; and

*Confidential Treatment Requested

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(ii)There exist no Events of Default or events that with the passage of time
would result in an Event of Default.

SECTION 4Representations and Warranties.  To induce Agent and Lender to enter
into this Amendment, the Borrower hereby confirms, as of the date hereof, (a)
that the representations and warranties made by it in Section 5 of the Loan and
Security Agreement and in the other Loan Documents are true and correct in all
material respects; provided, however, that such materiality qualifier shall not
be applicable to any representations and warranties that already are qualified
or modified by materiality in the text thereof; (b) that there has not been and
there does not exist a Material Adverse Change; and (c) that the information
included in the Perfection Certificate delivered to Agent on the Effective Date
remains true and correct.   For the purposes of this Section 4, (i) each
reference in Section 5 of the Loan and Security Agreement to “this Agreement,”
and the words “hereof,” “herein,” “hereunder,” or words of like import in such
Section, shall mean and be a reference to the Loan and Security Agreement as
amended by this Amendment, and (ii) any representations and warranties which
relate solely to an earlier date shall not be deemed confirmed and restated as
of the date hereof (provided that such representations and warranties shall be
true, correct and complete in all material respects as of such earlier date).

SECTION 5Miscellaneous.

(a)Loan Documents Otherwise Not Affected; Reaffirmation.  Except as expressly
amended pursuant hereto or referenced herein, the Loan and Security Agreement
and the other Loan Documents shall remain unchanged and in full force and effect
and are hereby ratified and confirmed in all respects.  The Lender’s and Agent’s
execution and delivery of, or acceptance of, this Amendment shall not be deemed
to create a course of dealing or otherwise create any express or implied duty by
any of them to provide any other or further amendments, consents or waivers in
the future.  The Borrower hereby reaffirms the grant of security under Section
3.1 of the Loan and Security Agreement and hereby reaffirms that such grant of
security in the Collateral secures all Secured Obligations under the Loan and
Security Agreement, including without limitation any Term Loans funded on or
after the Amendment Effective Date, as of the date hereof.

(b)Conditions.  For purposes of determining compliance with the conditions
specified in Section 3, each Lender that has signed this Amendment shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to a Lender unless Agent shall have received
notice from such Lender prior to the Amendment Effective Date specifying its
objection thereto.

(c)Release.  In consideration of the agreements of Agent and each Lender
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower, on behalf of itself and
its successors, assigns, and other legal representatives, hereby fully,
absolutely, unconditionally and irrevocably releases, remises and forever
discharges Agent and each Lender, and its successors and assigns, and its
present and former shareholders, affiliates, subsidiaries, divisions,
predecessors, directors, officers, attorneys, employees, agents and other
representatives (Agent, Lenders and all such other persons being hereinafter
referred to collectively as the “Releasees” and individually as a “Releasee”),
of and from all demands, actions, causes of action, suits, covenants, contracts,
controversies, agreements, promises, sums of money, accounts, bills, reckonings,
damages and any and all other claims, counterclaims, defenses, rights of
set-off, demands and liabilities whatsoever of every name and nature, known or
unknown, suspected or unsuspected, both at law and in equity, which Borrower, or
any of its successors, assigns, or other legal representatives may now or
hereafter own, hold, have or claim to have against the Releasees or any of them
for, upon, or by reason of any circumstance, action, cause or thing whatsoever
which arises at any time on or prior to the day and date of this Amendment,
including, without limitation, for or on account of, or in relation to, or in
any way in connection with the Loan Agreement, or any of the other Loan
Documents or transactions thereunder or related thereto.  Borrower understands,
acknowledges and agrees that the release set forth above may be pleaded as a
full and complete defense and may be used as a basis for an injunction against
any action, suit or other proceeding which may be instituted, prosecuted or
attempted in breach of the provisions of such release.  Borrower agrees that no
fact, event, circumstance, evidence or transaction which could now be asserted
or which may hereafter be discovered shall affect in any manner the final,
absolute and unconditional nature of the release set forth above.

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(d)No Reliance.  The Borrower hereby acknowledges and confirms to Agent and the
Lender that the Borrower is executing this Amendment on the basis of its own
investigation and for its own reasons without reliance upon any agreement,
representation, understanding or communication by or on behalf of any other
Person.

(e)Costs and Expenses.  The Borrower agrees to pay to Agent on the Amendment
Effective Date the out-of-pocket costs and expenses of Agent and the Lenders
party hereto, and the fees and disbursements of counsel to Agent and the Lenders
party hereto (including allocated costs of internal counsel), in connection with
the negotiation, preparation, execution and delivery of this Amendment and any
other documents to be delivered in connection herewith on the Amendment
Effective Date or after such date.

(f)Binding Effect.  This Amendment binds and is for the benefit of the
successors and permitted assigns of each party.  

(g)Governing Law.  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.

(h)Complete Agreement; Amendments.  This Amendment and the Loan Documents
represent the entire agreement about this subject matter and supersede prior
negotiations or agreements with respect to such subject matter.  All prior
agreements, understandings, representations, warranties, and negotiations
between the parties about the subject matter of this Amendment and the Loan
Documents merge into this Amendment and the Loan Documents.  

(i)Severability of Provisions.  Each provision of this Amendment is severable
from every other provision in determining the enforceability of any provision.

(j)Counterparts.  This Amendment may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, is an original, and all taken together, constitute one
Amendment.  Delivery of an executed counterpart of a signature page of this
Amendment by facsimile, portable document format (.pdf) or other electronic
transmission will be as effective as delivery of a manually executed counterpart
hereof.

(k)Loan Documents. This Amendment shall constitute a Loan Document.

[Balance of Page Intentionally Left Blank; Signature Pages Follow]

 

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment, as of
the date 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

 

 

TNK THERAPEUTICS, INC.

 

Signature:

 

/s/Henry Ji, Ph.D.

 

 

 

Print Name:

 

Henry Ji, Ph.D.

 

 

 

Title:

 

President and Chief Executive Officer

 

[Signature Page to First Amendment to Loan and Security Agreement]

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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

 

 

 

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 Page to First Amendment to Loan and Security Agreement]

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AGENT:

 

HERCULES CAPITAL, INC.

 

 

 

Signature:

 

/s/Zhuo Huang

 

 

 

Print Name:

 

Zhuo Huang

 

 

 

Title:

 

Associate General Counsel

 

 

LENDER:

 

HERCULES CAPITAL, INC.

 

 

 

Signature:

 

/s/Zhuo Huang

 

 

 

Print Name:

 

Zhuo Huang

 

 

 

Title:

 

Associate General Counsel

 

 

 

[Signature Page to First Amendment to Loan and Security Agreement]

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Addendum I

EXHIBIT F

COMPLIANCE CERTIFICATE

Hercules Capital, Inc. (as “Agent”)
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301

Reference is made to that certain Loan and Security Agreement dated November 23,
2016 and the Loan Documents (as defined therein) entered into in connection with
such Loan and Security Agreement all as may be amended from time to time
(hereinafter referred to collectively as the “Loan Agreement”) by and among
Hercules Capital, Inc. (the “Agent”), the several banks and other financial
institutions or entities from time to time party thereto (collectively, the
“Lender”) and Hercules Capital, Inc., as agent for the Lender (the “Agent”) and
Sorrento Therapeutics, Inc. (the “Company”) and each other Qualified Subsidiary
as Borrower. All capitalized terms not defined herein shall have the same
meaning as defined in the Loan Agreement.

The undersigned is an Officer of the Company, knowledgeable of all Company
financial matters, and is authorized to provide certification of information
regarding the Company; hereby certifies, in such capacity, that in accordance
with the terms and conditions of the Loan Agreement, the Company is in
compliance for the period ending ___________ of all covenants, conditions and
terms of the Loan Agreement and hereby reaffirms that all representations and
warranties contained therein are true and correct in all material respects on
and as of the date of this Compliance Certificate 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, after giving effect in all cases
to any standard(s) of materiality contained in the Loan Agreement as to such
representations and warranties.  Attached are the required documents supporting
the above certification.  The undersigned further certifies that these are
prepared in accordance with GAAP (except for the absence of footnotes with
respect to unaudited financial statements and subject to normal year-end
adjustments) and are consistent from one period to the next except as explained
below.

REPORTING REQUIREMENT

REQUIRED

CHECK IF ATTACHED

Interim Balance Sheet and/or Financial Statements (as required pursuant to
Section 7.1(a))

Monthly within 45 days

 

Interim Financial Statements

Quarterly within 45 days

 

Audited Financial Statements

FYE within 90 days

 

 

7.21 – Minimum Cash

(I) Has the Corporate Milestone been achieved? __ Yes; __ No

(II) Has the Fundraising Milestone been achieved? __ Yes; __ No

If Yes on both (I) and (II), in compliance.

 

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If No on either (I) or (II):

(A) Unrestricted Cash: $___________

(B) amount of Borrower’s accounts payable under GAAP and not paid after the 90th
day following the invoice date for such accounts payable: $___________

(C) item (A) minus item (B): $___________

Is item (C) greater than or equal to:

If prior to achievement of the Initial Fundraising Requirement: $[…***…]?

If after to achievement of the Initial Fundraising Requirement: $[…***…]?

__ Yes (in compliance); __ No (not in compliance)

 

The undersigned hereby also confirms the below disclosed accounts represent all
depository accounts and securities accounts presently open in the name of each
Borrower or Borrower Subsidiary/Affiliate, as applicable.

 

 

 

Depository AC #

Financial Institution

Account Type (Depository / Securities)

Last Month Ending Account Balance

Purpose of Account

BORROWER Name/Address:

 

 

1

 

 

 

 

 

2

 

 

 

 

 

3

 

 

 

 

 

4

 

 

 

 

 

5

 

 

 

 

 

6

 

 

 

 

 

7

 

 

 

 

 

 

BORROWER SUBSIDIARY / AFFILIATE COMPANY Name/Address

 

 

1

 

 

 

 

 

2

 

 

 

 

 

3

 

 

 

 

 

4

 

 

 

 

 

5

 

 

 

 

 

6

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

*Confidential Treatment Requested

 

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Very Truly Yours,

 

Sorrento Therapeutics, Inc.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Its: