Exhibit 10.7

 

CHANGE OF CONTROL SEVERANCE AGREEMENT

THIS CHANGE OF CONTROL SEVERANCE AGREEMENT (this “Agreement”), dated as of
November 5, 2020 (the “Effective Date”), is made by and between Sorrento
Therapeutics, Inc., a Delaware corporation (together with any successor thereto,
the “Company”), and Najjam Asghar (the “Executive”) (collectively referred to
herein as the “Parties”).

Whereas, the Board of Directors of the Company (the “Board”) has determined that
it is in the best interests of the Company and its stockholders to (i) assure
that the Company will have the continued dedication and objectivity of
Executive, notwithstanding the possibility, threat or occurrence of a Change of
Control (as defined below), and (ii) provide Executive with an incentive to
continue Executive’s employment prior to a Change of Control and to motivate
Executive to maximize the value of the Company upon a Change of Control for the
benefit of its stockholders;

Whereas, the Board believes that it is imperative to provide Executive with
certain severance benefits upon Executive’s termination of employment following
a Change of Control; and

Whereas, the benefits described in this Agreement are intended to provide
Executive with enhanced financial security, and incentive and encouragement to
remain with the Company, notwithstanding the possibility of a Change of Control.

Now, Therefore, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the Parties hereto agree as follows:

1.Duration of Agreement. The term of this Agreement will commence on the date
hereof and shall continue until the earliest of: (a) a termination by written
consent of the Parties; and (b) a termination of Executive’s employment for any
reason. Notwithstanding the previous sentence, if Executive becomes entitled to
benefits under this Agreement, this Agreement will terminate when all of the
obligations of the Parties with respect to this Agreement have been satisfied.

2.Certain Definitions. For purposes of this Agreement:

(a)“Cause” shall mean (i) Executive’s dishonesty that is intended to materially
injure the business of the Company or its affiliates; (ii) Executive’s
conviction of a felony; or (iii) Executive’s wanton or willful dereliction of
duties that is not cured within thirty (30) days after Executive is provided
written notice of such dereliction of duties by the Company.

(b)“Change of Control” shall mean: (i) a sale or exclusive license of all or
substantially all of the assets of the Company; (ii) a merger or consolidation
in which the Company is not the surviving corporation (other than a merger or
consolidation in which stockholders immediately before the merger or
consolidation own, immediately after the merger or consolidation, more than
fifty percent (50%) of the combined outstanding voting power of the surviving
entity or the parent company of the surviving entity in such merger or
consolidation); (iii) a merger or consolidation in which the Company is the
surviving corporation but the shares of the Company’s common stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise (other

 

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than a reverse merger in which stockholders immediately before the merger own,
immediately after the merger, more than fifty percent (50%) of the combined
outstanding voting power of the surviving entity or the parent company of the
surviving entity in such reverse merger); or (iv) any transaction or series of
related transactions in which in excess of fifty percent (50%) of the Company’s
voting power is transferred, other than the sale or issuance by the Company of
stock in a transaction or series of transactions (A) the primary purpose of
which is to raise capital for the Company’s operations and activities or (B) in
which such stock is issued for consideration other than cash pursuant to an
acquisition by the Company of one or more other entities.

(c)“Change of Control Window” means the period beginning three (3) months
immediately prior to a Change of Control and ending twelve (12) months
immediately following a Change of Control.

(d)“Code” shall mean the Internal Revenue Code of 1986, as amended.

(e)“Disability” shall mean, at any time the Company or any of its affiliates
sponsors a long-term disability plan for the Company’s employees, “disability”
as defined in such long-term disability plan for the purpose of determining a
participant’s eligibility for benefits; provided, however, if the long-term
disability plan contains multiple definitions of disability, “Disability” shall
refer to that definition of disability which, if Executive qualified for such
disability benefits, would provide coverage for the longest period of time.  The
determination of whether Executive has a Disability shall be made by the person
or persons required to make disability determinations under the long-term
disability plan.  At any time the Company does not sponsor a long-term
disability plan for its employees, Disability shall mean Executive’s inability
to perform, with reasonable accommodation, the essential functions of
Executive’s position hereunder for a total of ninety (90) days during any
one-year period as a result of incapacity due to mental or physical
illness.  Any refusal by Executive to submit to a medical examination for the
purpose of determining Disability shall be deemed to constitute conclusive
evidence of Executive’s Disability.  Should a dispute occur between Executive
and the Company concerning whether or not a Disability exists, a doctor selected
by Executive and a doctor selected by the Company shall be entitled to examine
Executive.  If the opinion of Executive’s doctor and the Company’s doctor
conflict, Executive’s doctor and the Company’s doctor shall agree upon a third
doctor, whose opinion shall be binding.

(f)“Good Reason” shall mean if the Executive resigns within ninety (90) days
after any of the following events, unless Executive consents to the applicable
event: (i) a decrease in Executive’s annual base salary or annual target bonus
opportunity; (ii) a material decrease in the Executive’s duties, authority or
areas of responsibility as are commensurate with such Executive’s title or
position (other than in connection with a corporate transaction where the
Executive continues to hold the position with the Company held as of the date of
this Agreement with respect to the Company’s business, substantially as such
business exists prior to the date of consummation of such corporate transaction,
but does not hold such position with respect to the successor corporation);
(iii) a change in Executive’s title or Executive being required to report to
anyone other than directly to the Company’s Chief Executive Officer; or (iv) the
relocation of the Executive’s primary office to a location more than thirty-five
(35) miles from the Company’s then current headquarters.  Notwithstanding the
foregoing, no Good Reason will have occurred unless and until Executive
has: (A) provided the Company, within sixty (60) days of Executive’s

 

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knowledge of the occurrence of the facts and circumstances underlying the Good
Reason event, written-notice stating with specificity the applicable facts and
circumstances underlying such finding of Good Reason; and (B) provided the
Company with an opportunity to cure the same within thirty (30) days after the
receipt of such notice.

(g)“Qualifying Termination” shall mean a termination of Executive’s employment
by the Company without Cause or by Executive for Good Reason, in each case
during the Change of Control Window.

3.At Will Employment; Termination; Severance.

(a)At-Will Employment.  The Company and Executive acknowledge that Executive’s
employment is and will continue to be at-will, as defined under applicable law.
As an at-will employee, either the Company or the Executive may terminate the
employment relationship at any time, with or without Cause. If Executive’s
employment terminates for any reason other than a Qualifying Termination,
Executive will not be entitled to receive severance or other benefits except for
those (if any) as may then be established under the Company’s then existing
written severance and benefits plans and practices or pursuant to other written
agreements with the Company.

(b)Notice of Termination.  Any termination of Executive’s employment by the
Company for Cause or by Executive for Good Reason shall be communicated by a
written notice to the other Party (i) indicating the specific termination
provision in this Agreement relied upon, and (ii) specifying a Date of
Termination (as defined below) which, if submitted by Executive, shall be at
least thirty (30) days following the date of such notice (a “Notice of
Termination”); provided, however, that in the event that Executive delivers a
Notice of Termination to the Company, the Company may, in its sole discretion,
change the Date of Termination to any date that occurs following the date of
Company’s receipt of such Notice of Termination and is prior to the date
specified in such Notice of Termination.  A Notice of Termination submitted by
the Company may provide for a Date of Termination on the date Executive receives
the Notice of Termination, or any date thereafter elected by the Company in its
sole discretion.  For purposes of this Agreement, “Date of Termination” shall
mean either the date indicated in the Notice of Termination or the date
specified by the Company pursuant to this Section 3(b), whichever is earlier.

(c)Termination without Cause or for Good Reason in Connection with a Change of
Control. In the event of the termination of the Executive’s employment by the
Company without Cause or by Executive due to a resignation for Good Reason, in
either case during the Change of Control Window then, subject to Executive
signing on or before the forty-fifth (45th) day following Executive’s Separation
from Service (as defined below) and not revoking, a release of claims in
substantially the form attached hereto as Exhibit A (the “Release”), and
Executive’s continued compliance with Section 4, Executive shall receive the
following:

(i)an amount equal to the Executive’s then current annual base salary, payable
in a lump sum on the First Payment Date;

 

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(ii)an amount equal to the Executive’s target annual bonus for the fiscal year
in which the termination occurs, payable in a lump sum on the First Payment
Date; provided, however, that the aggregate amount of such payment shall in no
event be less than the annual bonus paid by the Company to Executive with
respect to the immediately prior fiscal year;

(iii)for the twelve (12) month period following Executive’s Separation from
Service (or, if earlier, the date on which the applicable continuation period
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
(“COBRA”) expires), the Company shall arrange to provide Executive and his
eligible dependents who were covered under the Company’s health insurance plans
as of the date of Executive’s Separation from Service with health (including
medical and dental) insurance benefits substantially similar to those provided
to such dependents immediately prior to the date of such Separation from
Service.  For the avoidance of doubt, the Company reimbursing Executive for
premiums to continue Executive’s Company health benefits under COBRA (for
Executive and those dependents covered immediately prior to the date of the
Separation from Service), if Executive validly elects such benefits, shall
satisfy the Company’s obligations to provide health insurance benefits under the
preceding sentence.  If the Company is not reasonably able to continue health
insurance benefits coverage under the Company’s insurance plans, the Company
shall provide substantially equivalent coverage under other third party
insurance sources.  If any of the Company’s health benefits are self-funded as
of the date of Executive’s Separation from Service, or if, in the Company’s sole
discretion, the Company cannot provide the foregoing benefits in a manner that
is exempt from Section 409A of the Code or that is otherwise compliant with
applicable law (including, without limitation, Section 2716 of the Public Health
Service Act), instead of providing continued health insurance benefits as set
forth above, the Company shall instead pay to Executive an amount equal to
twelve (12) multiplied by the monthly premium Executive would be required to pay
for continuation coverage pursuant to COBRA for his eligible dependents who were
covered under the Company’s health plans as of the date of Executive’s
Separation from Service (calculated by reference to the premium as of the date
of Separation from Service), which amount shall be paid on the First Payment
Date; and

(iv)full vesting of Executive’s outstanding awards of equity compensation
(including, without limitation, stock options, stock appreciation rights,
restricted stock awards, and restricted stock units), with all performance-based
vesting criteria, if any, deemed satisfied at target.

(d)No Other Compensation. Except as otherwise expressly required by law (e.g.,
COBRA), in the event of a Qualifying Termination, the provisions of this
Section 3 are intended to be and are exclusive and in lieu of any other rights
or remedies to which Executive or the Company may otherwise be entitled, whether
at law, tort or contract, in equity, or under this Agreement. Executive will be
entitled to no benefits, compensation or other payments or rights upon a
Qualifying Termination other than as set forth in Section 3(c) and the sum
of: (i) the portion of Executive’s annual base salary earned through the Date of
Termination but not yet paid to Executive; (ii) any unreimbursed reimbursable
expenses; (iii) any amount accrued and arising from Executive’s participation
in, or vested benefits accrued under any employee benefit plans, programs or
arrangements, including, without limitation, any 401(k), profit sharing or
pension plan (collectively, the “Company Arrangements”), which amounts shall be
payable in accordance with the terms and conditions of such employee benefit
plans, programs or arrangements; and (iv) any other amounts required under
applicable law.

 

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(e)Deemed Resignation.  Upon a Qualifying Termination, Executive shall be deemed
to have resigned from all offices and directorships, if any, then held with the
Company or any of its affiliates.  Executive agrees to execute any paperwork
consistent with the foregoing that the Company may reasonably request.

(f)Best Pay Provision

(i)If any payment or benefit Executive would receive under this Agreement, when
combined with any other payment or benefit Executive receives pursuant to the
termination of Executive’s employment with the Company and its affiliates
(“Payment”), would (A) constitute a “parachute payment” within the meaning of
Section 280G of the Code, and (B) but for this sentence, be subject to the
excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such
Payment shall be either (1) the full amount of such Payment or (2) such lesser
amount (with cash Payments being reduced  first, in reverse order of receipt,
then reduction of equity award vesting acceleration, with performance-based
vesting acceleration reduced before time-based vesting, proportional to each
performance-based vesting award, and time-based vesting acceleration reduced in
reverse order of scheduled vesting, then all other Payments pro-rata) as would
result in no portion of any Payment being subject to the Excise Tax, whichever
of the foregoing amounts, taking into account the applicable federal, state and
local employment taxes, income taxes, and the Excise Tax, results in Executive’s
receipt, on an after-tax basis, of the greater amount of Payments
notwithstanding that all or some portion of the Payments may be subject to the
Excise Tax.

(ii)All determinations required to be made under this Section 3(f), including
whether and to what extent the Payments shall be reduced and the assumptions to
be utilized in arriving at such determination, shall be made by the nationally
recognized certified public accounting firm used by the Company immediately
prior to the effective date of the Change of Control or, if such firm declines
to serve, such other nationally recognized certified public accounting firm as
may be designated by the Company (the “Accounting Firm”).  The Accounting Firm
shall provide detailed supporting calculations both to Executive and the Company
at such time as is requested by the Company.  All fees and expenses of the
Accounting Firm shall be borne solely by the Company.  Any determination by the
Accounting Firm shall be binding upon Executive and the Company.  For purposes
of making the calculations required by this Section 3(f), the Accounting Firm
may make reasonable assumptions and approximations concerning applicable taxes
and may rely on reasonable, good-faith interpretations concerning the
application of Sections 280G and 4999 of the Code.

4.Restrictive Covenants.

(a)General.  Executive acknowledges that the Company has provided and, during
the term of this Agreement, the Company from time to time will continue to
provide Executive with, access to its proprietary information.  Ancillary to the
rights provided to Executive as set forth in this Agreement and the Company’s
provision of confidential information, and Executive’s agreements regarding the
use of same, in order to protect the value of any confidential information, the
Company and Executive agree to the following provisions (A) against unfair
competition, (B) respecting Executive’s use of proprietary information and the
protection of such information, and (C) the ownership of inventions developed by
Executive in the course of Executive’s

 

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engagement or employment by or relationship with the Company, which Executive
acknowledges represent a fair balance of the Company’s rights to protect its
business and Executive’s right to pursue employment.

(b)Noncompetition; Nonsolicitation.

(i)Noncompetition.  Executive shall not, at any time during the term of this
Agreement, directly or indirectly engage in, have any equity interest in,
manage, provide services to or operate any person, firm, corporation,
partnership or business (whether as director, officer, employee, agent,
representative, partner, security holder, consultant or otherwise) that engages
in any business which competes in any material respect with any portion of the
Business (as defined below) of the Company anywhere in the world.  Nothing
herein shall prohibit Executive from being a passive owner of not more than two
percent (2%) of the outstanding equity interest in any entity that is publicly
traded, so long as Executive has no active participation in the business of such
entity.  

(ii)Nonsolicitation.  Executive shall not, at any time during the Restriction
Period, directly or indirectly, recruit or otherwise solicit or induce any
non-customer/client business relation of the Company to (A) terminate or reduce
its arrangement or business with the Company, or (B) to otherwise change its
relationship with the Company.  Subject to applicable law, Executive shall not,
at any time during the Restriction Period, directly or indirectly, either for
Executive or for any other person or entity, intentionally solicit any employee
or independent contractor of the Company to terminate his or her employment or
arrangement with the Company.  Notwithstanding the foregoing, this
Section 4(b)(ii) shall not prohibit Executive from, directly or indirectly,
either for Executive or for any other person or entity, (i) engaging in general
solicitation efforts not specifically targeting employees of the Company or
participating in job fair events or (ii) hiring any employee or independent
contractor of the Company who responds to any such general employment
solicitation effort.

(iii)Blue Penciling.  In the event the terms of this Section 4(b) shall be
determined by any court of competent jurisdiction to be unenforceable by reason
of its extending for too great a period of time or over too great a geographical
area or by reason of its being too extensive in any other respect, it will be
interpreted to extend only over the maximum period of time for which it may be
enforceable, over the maximum geographical area as to which it may be
enforceable, or to the maximum extent in all other respects as to which it may
be enforceable, all as determined by such court in such action.

(c)Proprietary Information and Inventions Agreement.  Executive and the Company
have executed the Company’s standard Proprietary Information and Inventions
Agreement, which agreement is attached hereto as Exhibit B and incorporated
herein by reference (the “Proprietary Information and Inventions
Agreement”).  Executive agrees to perform each and every obligation of his
therein contained.

(d)Return of Property.  Upon a Qualifying Termination, Executive will promptly
deliver to the Company all correspondence, drawings, manuals, letters, notes,
notebooks, reports, programs, plans, proposals, financial documents, or any
other documents or property concerning the Company’s customers, business plans,
marketing strategies, products, property or processes.

 

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(e)Non-Disparagement.  Each Party (which, in the case of the Company, shall mean
its officers and the members of the Board) agrees, during the term of this
Agreement and following the Date of Termination, to refrain from Disparaging (as
defined below) the other Party and its affiliates, including, in the case of the
Company, any of its services, technologies or practices, or any of its
directors, officers, agents, representatives or stockholders, either orally or
in writing.  Nothing in this paragraph shall preclude any Party from making
truthful statements that are reasonably necessary to comply with applicable law,
regulation or legal process, or to defend or enforce a Party’s rights under this
Agreement, and nothing herein shall preclude any Party from reporting a
suspected violation of law to the appropriate governmental authority or
agency.  For purposes of this Agreement, “Disparaging” means remarks, comments
or statements, whether written or oral, that are intended to impugn the
character, integrity, reputation or abilities of the person or entity being
disparaged.

(f)Definitions.  As used in this Section 4, (i) the term “Company” shall include
the Company and its direct and indirect parents and subsidiaries; (ii) the term
“Business” shall mean the business of the Company, as such business may be
expanded or altered by the Company during the term of this Agreement; and
(iii) the term “Restriction Period” shall mean the period beginning on the
Effective Date and ending on the date that is twelve (12) months following the
Date of Termination.

(g)Rights and Remedies Upon Breach.  It is recognized and acknowledged by
Executive that a breach of the covenants contained in this Section 4 may cause
irreparable damage to Company and its goodwill, the exact amount of which will
be difficult or impossible to ascertain, and that the remedies at law for any
such breach will be inadequate.  Accordingly, Executive agrees that in the event
of a breach of any of the covenants contained in this Section 4, in addition to
any other remedy which may be available at law or in equity, the Company will be
entitled to specific performance and injunctive relief.  In addition, in the
event Executive breaches any of the provisions of this Section 4, as finally
determined by a court of competent jurisdiction, and such breach is not cured
within thirty (30) days after receipt by Executive of written notice thereof
from the Company, the Company shall be entitled to immediately cease all
payments under Section 3(c).

(h)Acknowledgment by Executive.  Executive has carefully read and considered the
provisions of this Section 4, and, having done so, agrees that the restrictions
set forth in this Section 4, including, but not limited to, the Restriction
Period, are fair and reasonable and are reasonably required for the protection
of the interests of the Company and its parent or subsidiary corporations,
officers, directors, shareholders, and other employees.

5.Assignment and Successors. The Company may assign its rights and obligations
under this Agreement to any affiliate or to any successor to all or
substantially all of the business or the assets of the Company (by merger or
otherwise), and may collaterally assign or encumber this Agreement and its
rights hereunder as security for indebtedness of the Company and its
affiliates.  The Company shall require any successor (whether direct or
indirect, by purchase, merger or otherwise) to all or substantially all of the
business or assets of the Company expressly to assume and to agree in writing to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place;
provided, however, that no such assumption shall relieve the Company of its
obligations hereunder. This Agreement shall be binding upon and inure to the
benefit of the Company, Executive and

 

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their respective successors, assigns, personnel and legal representatives,
executors, administrators, heirs, distributees, devisees, and legatees, as
applicable.  None of Executive’s rights or obligations may be assigned or
transferred by Executive, other than Executive’s rights to payments hereunder,
which may be transferred only by will or operation of law.  Notwithstanding the
foregoing, Executive shall be entitled, to the extent permitted under applicable
law and applicable Company Arrangements, to select and change a beneficiary or
beneficiaries to receive compensation hereunder following Executive’s death by
giving written notice thereof to the Company.

6.Miscellaneous Provisions.

(a)Governing Law; Venue.  This Agreement shall be governed, construed,
interpreted and enforced in accordance with its express terms, and otherwise in
accordance with the substantive laws of the State of California without
reference to the principles of conflicts of law of the State of California or
any other jurisdiction, and where applicable, the laws of the United
States.  Any suit brought hereon shall be brought in the state or federal courts
sitting in San Diego, California, the Parties hereby waiving any claim or
defense that such forum is not convenient or proper.  Each Party hereby agrees
that any such court shall have in personam jurisdiction over him or it and
consents to service of process in any manner authorized by California law.

(b)Validity.  The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

(c)Notices. Any notice, request, claim, demand, document and other communication
hereunder to any Party shall be effective upon receipt (or refusal of receipt)
and shall be in writing and delivered personally or sent by facsimile or
certified or registered mail, postage prepaid, as follows:

(i)If to the Company:

Sorrento Therapeutics, Inc.

4955 Directors Place

San Diego, CA 92121

Attention: Chief Executive Officer

Facsimile: (858) 203-4028

 

(ii)If to Executive, at the last address that the Company has in its personnel
records for Executive.

(iii)At any other address as any Party shall have specified by notice in writing
to the other Party.

(d)Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.  Signatures delivered by facsimile shall
be deemed effective for all purposes.

(e)Entire Agreement. The terms of this Agreement, together with the Proprietary
Information and Inventions Agreement, are intended by the Parties to be the
final expression of

 

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their agreement with respect to the subject matter hereof and supersede all
prior understandings and agreements, whether written or oral, including, without
limitation, any offer letter, employment or consulting agreement between the
Company and Executive with respect to severance benefits upon a Change of
Control. The Company shall be entitled to enforce any and all such agreements
against Executive to ensure that the Company receives the benefit of all such
agreements.  The Parties further intend that this Agreement shall constitute the
complete and exclusive statement of their terms and that no extrinsic evidence
whatsoever may be introduced in any judicial, administrative, or other legal
proceeding to vary the terms of this Agreement.

(f)Amendments; Waivers.  This Agreement may not be modified, amended, or
terminated except by an instrument in writing, signed by Executive and a duly
authorized officer of Company.  By an instrument in writing similarly executed,
Executive or a duly authorized officer of the Company may waive compliance by
the other Party with any specifically identified provision of this Agreement
that such other Party was or is obligated to comply with or
perform; provided, however, that such waiver shall not operate as a waiver of,
or estoppel with respect to, any other or subsequent failure.  No failure to
exercise and no delay in exercising any right, remedy, or power hereunder
preclude any other or further exercise of any other right, remedy, or power
provided herein or by law or in equity.

(g)No Inconsistent Actions.  The Parties hereto shall not voluntarily undertake
or fail to undertake any action or course of action inconsistent with the
provisions or essential intent of this Agreement.  Furthermore, it is the intent
of the Parties hereto to act in a fair and reasonable manner with respect to the
interpretation and application of the provisions of this Agreement.

(h)Construction.  This Agreement shall be deemed drafted equally by both the
Parties.  Its language shall be construed as a whole and according to its fair
meaning.  Any presumption or principle that the language is to be construed
against any Party shall not apply.  The headings in this Agreement are only for
convenience and are not intended to affect construction or interpretation.  Any
references to paragraphs, subparagraphs, sections or subsections are to those
parts of this Agreement, unless the context clearly indicates to the
contrary.  Also, unless the context clearly indicates to the contrary, (i) the
plural includes the singular and the singular includes the plural; (ii) “and”
and “or” are each used both conjunctively and disjunctively; (iii) “any,” “all,”
“each,” or “every” means “any and all,” and “each and every”; (iv) “includes”
and “including” are each “without limitation”; (v) “herein,” “hereof,”
“hereunder” and other similar compounds of the word “here” refer to the entire
Agreement and not to any particular paragraph, subparagraph, section or
subsection; and (vi) all pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine, neuter, singular or plural as the identity of
the entities or persons referred to may require.

(i)Arbitration.  Both Executive and the Company agree to submit any and all
disputes, controversies, or claims based upon, relating to, or arising from your
employment by the Company (other than workers’ compensation claims) or the
terms, interpretation, performance, breach, or arbitrability of this Agreement
to final and binding arbitration before a single neutral arbitrator in San Diego
County, California.  Subject to the terms of this paragraph, the arbitration
proceedings shall be initiated in accordance with, and governed by, the
applicable rules (the “Rules”) for the resolution of employment disputes of the
American Arbitration Association (“AAA”) (such rules previously referred to as
the National Rules for the Resolution of Employment Disputes).  The

 

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Executive acknowledges that a copy of the current Rules have been provided to
him.  The arbitrator shall be appointed by agreement of the Parties hereto or,
if no agreement can be reached, by the AAA pursuant to its
Rules.  Notwithstanding the Rules, the Parties may take discovery in accordance
with Sections 1283.05(a)-(d) of the California Code of Civil Procedure (but not
subject to the restrictions of Section 1283.05(e)), and prior to the arbitration
hearing the Parties may file, and the arbitrator shall rule on, pre-trial
motions such as demurrers and motions for summary judgment (applying the
procedural standard embodied in Rule 56 of the Federal Rules of Civil
Procedure).  The time for filing such motions shall be determined by the
arbitrator.  The arbitrator will rule on all pre-trial motions at least ten
(10) business days prior to the scheduled hearing date.  Arbitration may be
compelled, the arbitration award shall be enforced, and judgment thereon shall
be entered, pursuant to the California Arbitration Act (Code of Civil Procedure
§§ 1280 et seq.).  Each Party shall bear his or its own attorneys’ fees and
costs (including expert witness fees) incurred in connection with the
arbitration; provided, however, Executive and the Company agree that, to the
extent permitted by law, the arbitrator may, in his or her discretion, award
reasonable attorneys’ fees to the prevailing party.  The Company shall bear all
other costs and expenses of arbitration, including AAA’s administrative fees and
the arbitrator’s fees and costs.  If either Party is required to compel
arbitration of a dispute governed by this paragraph, the Party prevailing in
that proceeding shall be entitled to recover from the other Party reasonable
costs and attorneys’ fees incurred to compel arbitration.  This Section 6(i) is
intended to be the exclusive method for resolving any and all claims by
Executive or the Company against each other for payment of damages under this
Agreement or relating to Executive’s employment or service; provided, however,
that neither this Agreement nor the submission to arbitration shall limit
Executive’s or the Company’s right to seek provisional relief, including without
limitation injunctive relief, in any court of competent jurisdiction.  Both
Executive and the Company expressly waive their respective rights to a jury
trial.

(j)Enforcement.  If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws effective during the term
of this Agreement, such provision shall be fully severable; this Agreement shall
be construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a portion of this Agreement; and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance from this
Agreement.  Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.

(k)Withholding.  The Company shall be entitled to withhold from any amounts
payable under this Agreement any federal, state, local or foreign withholding or
other taxes or charges which the Company is required to withhold.  The Company
shall be entitled to rely on an opinion of counsel if any questions as to the
amount or requirement of withholding shall arise.

(l)Survival.  The covenants, agreements, representations and warranties
contained in or made in Sections 3, 4 and 6 shall survive any termination of
this Agreement, subject to any time limits set forth therein.

 

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(m)Section 409A.

(i)General.  The intent of the Parties is that the payments and benefits under
this Agreement comply with or be exempt from Section 409A of the Internal
Revenue Code of 1986, as amended, and the regulations and guidance promulgated
thereunder (collectively, “Section 409A”) and, accordingly, to the maximum
extent permitted, this Agreement shall be interpreted to be in compliance
therewith.

(ii)Separation from Service.  Notwithstanding anything in this Agreement to the
contrary, any compensation or benefits payable under this Agreement that is
considered nonqualified deferred compensation under Section 409A and is
designated under this Agreement as payable upon Executive’s termination of
employment shall be payable only upon Executive’s “separation from service” with
the Company within the meaning of Section 409A (a “Separation from Service”)
and, except as provided below, any such compensation or benefits described in
Section 3(c) shall not be paid until the fifty-fifth (55th) day following
Executive’s Separation from Service (the “First Payment Date”).

(iii)Specified Employee.  Notwithstanding anything in this Agreement to the
contrary, if Executive is deemed by the Company at the time of Executive’s
Separation from Service to be a “specified employee” for purposes of
Section 409A, to the extent delayed commencement of any portion of the benefits
to which Executive is entitled under this Agreement is required in order to
avoid a prohibited distribution under Section 409A, such portion of Executive’s
benefits shall not be provided to Executive prior to the earlier of (i) the
expiration of the six-month period measured from the date of Executive’s
Separation from Service with the Company or (ii) the date of Executive’s
death.  Upon the first business day following the expiration of the applicable
Section 409A period, all payments deferred pursuant to the preceding sentence
shall be paid in a lump sum to Executive (or Executive’s estate or
beneficiaries), without interest, and any remaining payments due to Executive
under this Agreement shall be paid as otherwise provided herein.

(iv)Expense Reimbursements.  To the extent that any reimbursements under this
Agreement are subject to Section 409A, any such reimbursements payable to
Executive shall be paid to Executive no later than December 31 of the calendar
year following the calendar year in which the expense was incurred; provided,
that Executive submits Executive’s reimbursement request promptly following the
date the expense is incurred, the amount of expenses reimbursed in one calendar
year shall not affect the amount eligible for reimbursement in any subsequent
calendar year, other than medical expenses referred to in Section 105(b) of the
Code, and Executive’s right to reimbursement under this Agreement will not be
subject to liquidation or exchange for another benefit.

(v)Installments.  Executive’s right to receive any installment payments under
this Agreement, including without limitation any continuation salary payments
that are payable on Company payroll dates, shall be treated as a right to
receive a series of separate payments and, accordingly, each such installment
payment shall at all times be considered a separate and distinct payment as
permitted under Section 409A.  Except as otherwise permitted under Section 409A,
no payment hereunder shall be accelerated or deferred unless such acceleration
or deferral would not result in additional tax or interest pursuant to
Section 409A.

 

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7.Executive Acknowledgement.

Executive acknowledges that Executive has read and understands this Agreement,
is fully aware of its legal effect, has not acted in reliance upon any
representations or promises made by the Company other than those contained in
writing herein, and has entered into this Agreement freely based on Executive’s
own judgment.

[Signature Page Follows]

 

 

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the date and
year first above written.

 

COMPANY:

SORRENTO THERAPEUTICS, INC.

 

 

 

By:

/s/ Henry Ji, Ph.D.

 

 

Name:

Henry Ji, Ph.D.

 

 

Title:

Chief Executive Officer

 

 

 

EXECUTIVE:

 

 

 

/s/ Najjam Asghar

Najjam Asghar

 

 

 

 

 

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Exhibit  A – Release Agreement

GENERAL RELEASE OF ALL CLAIMS

This General Release of all Claims (this “Agreement”) is entered into by Najjam
Asghar (the “Employee”) and Sorrento Therapeutics, Inc., a Delaware corporation
(together with any successor thereto, the “Company”), effective as of
_____________________, but subject to the Employee’s right to revoke as set
forth in Paragraph 3(c).  In consideration of the promises set forth herein, the
Employee and the Company agree as follows:

1.Return of Property.  All files, access keys and codes, desk keys, ID badges,
computers, records, manuals, electronic devices, computer programs, papers,
electronically stored information or documents, telephones and credit cards, and
any other property of the Company or any affiliate thereof previously in the
Employee’s possession or control has been returned to the Company.

2.Severance.  The Company shall pay/provide to the Employee the amounts/benefits
set forth in Section 3(c) of that certain Change of Control Severance Agreement
between the Company and the Employee dated as of November 5, 2020 (as may be
amended or restated from time to time) (the “Severance Agreement”) in accordance
with, and subject to, the provisions of the Severance Agreement.

3.General Release and Waiver of Claims.

(a)Release.  Having consulted with counsel, the Employee, on behalf of
him/herself  and each of his/her respective heirs, executors, administrators,
representatives, agents, insurers, successors and assigns (collectively, and
including the Employee, the “Releasors”) hereby irrevocably and unconditionally
releases and forever discharges the Company, its subsidiaries and affiliates and
each of their respective officers, employees, directors, members, shareholders,
parents, subsidiaries and agents (“Releasees”) from any and all claims, actions,
causes of action, rights, judgments, obligations, damages, demands, accountings
or liabilities of whatever kind or character (collectively, “Claims”),
including, without limitation, any Claims under any federal, state, local or
foreign law, that the Releasors may have, or in the future may possess, whether
known or unknown, arising out of (i) the Employee’s employment relationship with
and service as an employee, officer or director of the Company or any parents,
subsidiaries or other affiliated companies and the termination of such
relationship or service, and (ii) any event, condition, circumstance or
obligation that occurred, existed or arose on or prior to the date hereof;
provided, however, that the Employee does not release, discharge or waive any
rights to (i) payments and benefits provided under this Agreement, (ii) benefit
claims under any employee benefit plans in which Employee is a participant by
virtue of his/her employment with the Company arising after the execution of
this Agreement by Employee, and (iii) any indemnification rights the Employee
may have in accordance with applicable law or under any director and officer
liability insurance maintained by the Company with respect to liabilities
arising as a result of the Employee’s service as an officer, if applicable, and
employee of the Company.  This Paragraph 3(a) does not apply to any Claims that
the Releasors may have as of the date the Employee signs this Agreement arising

 

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under the Federal Age Discrimination in Employment Act of 1967, as amended, and
the applicable rules and regulations promulgated thereunder (“ADEA”) or any
other claims that may not be released as a matter of law.  Claims arising under
ADEA are addressed in Paragraph 3(c) of this Agreement.

(b)Unknown Claims.  The Employee acknowledges that he/she may hereafter discover
Claims or facts in addition to or different from those which the Employee now
knows or believes to exist with respect to the subject matter of this release
and which, if known or suspected at the time of executing this release, may have
materially affected this release or the Employee’s decision to enter into
it.  Nevertheless, the Employee, on behalf of him/herself and the other
Releasors, hereby waives any right or Claim that might arise as a result of such
different or additional Claims or facts.  In addition, the Employee, on behalf
of him/herself and the other Releasors, hereby waives any and all rights and
benefits conferred upon him/her and the other Releasors by the provisions of
Section 1542 of the Civil Code of the State of California, which provides as
follows:

A general release does not extend to claims that the creditor or releasing party
does not know or suspect to exist in his or her favor at the time of executing
the release, and that, if known by him or her, would have materially affected
his or her settlement with the debtor or released party.

(c)Specific Release of ADEA Claims.  In further consideration of the payments
and benefits provided to the Employee under this Agreement, the Employee, on
behalf of him/herself and the other Releasors, hereby unconditionally releases
and forever discharges the Releasees from any and all Claims arising under ADEA
that the Releasors may have as of the date the Employee signs this
Agreement.  By signing this Agreement, the Employee hereby acknowledges and
confirms the following: (i) the Employee was advised by the Company in
connection with his/her termination to consult with an attorney of his/her
choice prior to signing this Agreement and to have such attorney explain to the
Employee the terms of this Agreement, including, without limitation, the terms
relating to the Employee’s release of claims arising under ADEA, and the
Employee has in fact consulted with an attorney; (ii) the Employee was given a
period of not fewer than 45 days to consider the terms of this Agreement and to
consult with an attorney of his/her choosing with respect thereto; (iii) the
Employee knowingly and voluntarily accepts the terms of this Agreement; and (iv)
the Employee is providing this release and discharge only in exchange for
consideration in addition to anything of value to which the Employee is already
entitled.  The Employee also understands that he/she has seven days following
the date on which he/she signs this Agreement within which to revoke the release
contained in this paragraph, by providing the Company with a written notice of
his/her revocation of the release and waiver contained in this paragraph.

(d)No Assignment.  The Employee represents and warrants that he/she has not
assigned any of the Claims being released under this Agreement.  The Company may
assign this

 

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Agreement, in whole or in part, to any affiliated company, including
subsidiaries of the Company, or any successor in interest to the Company.

4.Proceedings.

(a)General Agreement Relating to Proceedings.  The Employee has not filed, and
except as provided in Paragraphs 4(b) and 4(c), the Employee agrees not to
initiate or cause to be initiated on his/her behalf, any complaint, charge,
claim or proceeding against the Releasees before any local, state or federal
agency, court or other body relating to his/her employment or the termination of
his/her employment, other than with respect to the obligations of the Company to
the Employee under this Agreement or any indemnification rights the Employee may
have as listed in Paragraph 3(a) (each, individually, a “Proceeding”), and
agrees not to participate voluntarily in any Proceeding.  The Employee waives
any right he/she may have to benefit in any manner from any relief (whether
monetary or otherwise) arising out of any Proceeding.

(b)Proceedings Under ADEA.  Paragraph 4(a) shall not preclude the Employee from
filing any complaint, charge, claim or proceeding challenging the validity of
the Employee’s waiver of Claims arising under ADEA (which is set forth in
Paragraph 3(c) of this Agreement).  However, both the Employee and the Company
confirm their belief that the Employee’s waiver of claims under ADEA is valid
and enforceable, and that their intention is that all claims under ADEA will be
waived.

(c)Certain Administrative Proceedings.  In addition, Paragraph 4(a) shall not
preclude the Employee from filing a charge with, or participating in any
administrative investigation or proceeding by, the Equal Employment Opportunity
Commission, National Labor Relations Board, or another fair employment practices
agency.  The Employee is, however, waiving his/her right to recover money in
connection with any such charge or investigation.  The Employee is also waiving
his/her right to recover money in connection with a charge filed by any other
entity or individual, or by any federal, state or local agency.

5.Severability Clause.  In the event that any provision or part of this
Agreement is found to be invalid or unenforceable, only that particular
provision or part so found, and not the entire Agreement, shall be inoperative.

6.Nonadmission.  Nothing contained in this Agreement shall be deemed or
construed as an admission of wrongdoing or liability on the part of the Company.

7.Governing Law and Forum.  This Agreement and all matters or issues arising out
of or relating to your employment with the Company shall be governed by the laws
of the State of California applicable to contracts entered into and performed
entirely therein.  Any action to enforce this Agreement shall be brought solely
in the state or federal courts located in San Diego County, California.

8.Arbitration.  Any dispute or controversy arising under or in connection with
this Agreement or otherwise in connection with the Executive’s employment by the
Company that

 

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cannot be mutually resolved by the parties to this Agreement and their
respective advisors and representatives shall be settled exclusively by
arbitration in accordance with the provisions of Section 6(i) of the Severance
Agreement.

9.Notices.  Notices under this Agreement must be given as is specified in
Section 6(c) of the Severance Agreement.

 

THE EMPLOYEE ACKNOWLEDGES THAT HE/SHE HAS READ THIS AGREEMENT AND THAT HE/SHE
FULLY KNOWS, UNDERSTANDS AND APPRECIATES ITS CONTENTS, AND THAT HE/SHE HEREBY
EXECUTES THE SAME AND MAKES THIS AGREEMENT AND THE RELEASE AND AGREEMENTS
PROVIDED FOR HEREIN VOLUNTARILY AND OF HIS/HER OWN FREE WILL.

[The remainder of this page has intentionally been left blank]

 

 

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the dates set
forth below.

 

“COMPANY”

 

 

 

By:

 

 

 

Its:

 

 

 

Dated:  

 

 

 

 

“EMPLOYEE”

 

 

 

 

 

 

Dated:

 

 

 

 

 

 

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Exhibit B- Proprietary Information and Inventions Agreement