Document:

Exhibit

Exhibit 10.128

EXECUTION VERSION

CONFIDENTIAL

February 15, 2017

Peabody Energy Corporation
701 Market St.
St. Louis, MO 63101-1826
Attention:  James A. Tichenor, Treasurer

P&L Receivables Company, LLC
c/o Peabody Energy Corporation
701 Market St.
St. Louis, MO 63101-1826
Attention:  James A. Tichenor, Treasurer

Re:    Notice under Receivables Purchase Facility Commitment Letter regarding Australian
Originators and Australian Receivables

Reference is hereby made to that certain Receivables Purchase Facility Commitment Letter (the “Commitment Letter”), dated as of January 27, 2017, by and among Peabody Energy Corporation, P&L Receivables Company, LLC, and PNC Bank, National Association, as administrator and as a committed purchaser.  Each capitalized term used but not defined herein shall have the meaning assigned to such term in, or by reference in, the Commitment Letter.

As contemplated by Section 1 of the Commitment Letter, we hereby inform you that we have completed our due diligence, legal structuring and credit approval of the Australian Originators and the Australian Receivables on the terms and subject to the conditions set forth in the revised Summary of Terms attached as Exhibit A to this letter (the “Revised Term Sheet”); provided, however, that the inclusion of any Australian Originators or Australian Receivables in the Amended Securitization Facility and our provision of any financing therefor under the Amended Securitization Facility are subject to all the terms and conditions set forth in the Commitment Letter (including, without limitation, the conditions precedent set forth in Section 4 thereof).  For the avoidance of doubt, our agreement to include the Australian Originators and Australian Receivables in the Amended Securitization Facility is also subject to the condition that the terms of the Amended Securitization Facility be as described in the Revised Term Sheet, rather than as described in the Term Sheet attached as Exhibit A to the Commitment Letter (the “Original Term Sheet”).

This letter expressly incorporates by reference all of the provisions of the Commitment Letter.  This letter shall not be deemed to be or constitute a waiver, amendment or modification of any provisions of the Commitment Letter or any right or obligations of any party thereunder.

[Signature pages follow]

723213949 05109795

	
				
	 
	 
	 
	 

	 
	 
	Sincerely,
	 

	 
	 
	 
	 

	 
	 
	PNC BANK, NATIONAL

	 
	 
	ASSOCIATION, as an Administrator

	 
	 
	 
	 

	 
	 
	By: /s/ Mark S. Falcione

	 
	 
	Name: Mark S. Falcione

	 
	 
	Title: Executive Vice President

	 
	 
	 
	 

	 
	 
	PNC BANK, NATIONAL

	 
	 
	ASSOCIATION, 

	 
	 
	As a Committed Purchaser

	 
	 
	 
	 

	 
	 
	By: /s/ Mark S. Falcione

	 
	 
	Name: Mark S. Falcione

	 
	 
	Title: Executive Vice President

723213949 05109795

EXHIBIT A

Revised Term Sheet

(attached)

723213949 05109795

SUMMARY OF TERMS
FOR THE
PROPOSED EXTENSION AND AMENDMENT
OF THE
PEABODY ENERGY CORPORATION / P&L RECEIVABLES COMPANY, LLC
TRADE RECEIVABLES SECURITIZATION

Disclaimer:  This preliminary summary of terms (“Term Sheet”) is not intended to define all of the terms and conditions of the amendments and other transactions described herein. Such terms and conditions will be contained in the final documentation executed by the parties to any such amendments or other transactions, and such documentation will supersede this Term Sheet. Closing of the amendments and other transactions described herein is subject to bankruptcy court approval and the execution and delivery of definitive documentation in form and substance satisfactory to PNC Bank, N.A. (“PNC”) and PNC Capital Markets LLC (“PNCCM”) as well as satisfaction of each of the other conditions precedent set forth in this Term Sheet.
Introduction:
This Term Sheet refers to, and describes proposed amendments (the “Amendments”) to the existing trade receivables securitization program (the “Existing Securitization Program”, and as amended by the Amendments, the “Securitization Program”) documented under the Fifth Amended and Restated Receivables Purchase Agreement, dated as of March 25, 2016, as amended on April 12, 2016 and on April 18, 2016 (collectively, the “5th A&R RPA”), among P&L Receivables Company, LLC (the “SPV”), as seller, Peabody Energy Corporation (“Peabody”), the various subsidiaries of Peabody party thereto as sub-servicers, and PNC, as the administrator and as the sole purchaser agent, committed purchaser, LC bank and LC participant.  In connection with the Amendments, PNC, PNCCM, the SPV and Peabody are entering into that certain commitment letter agreement (as amended, the “Commitment Letter”), dated as of January 27, 2017 (the “Commitment Letter Closing Date”).  Terms used herein but not defined herein shall have the meanings set forth in the 5th A&R RPA. 

Facility Terms:
	
					
	●  Limit/Commitments/Term:
	 
	 

	 
	 
	 
	 
	 

	               ○  Purchase Limit
	 
	Purchase Limit:  $250,000,000 (the “Initial Purchase Limit”), subject to reductions prior to the Closing Date (as defined below) to an amount no less than $200,000,000; provided, that, any such reduction shall only be made at the request of Peabody in the event that U.S. and/or Australian dollar denominated trade receivables originated in Australia by certain Australian subsidiaries of Peabody (the “Australian Originators”) to U.S. residents or Eligible Foreign Obligors (“Australian Receivables”) are not included under the Securitization Program.

	 
	 
	 

	               ○  Commitments:
	 
	PNC:  100% of the Purchase Limit.

	 
	 
	 

	               ○  Facility Termination Date:
	 
	The earliest to occur of (i) the date that is 3-years from the effective date of a confirmed Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code for Peabody and its debtor subsidiaries (collectively and together with the rest of the consolidated subsidiaries of Peabody, the “Peabody Group”), which plan approves the Securitization Program, (ii) if Cash Liquidity is less than $450 million as of each Reporting Date occurring during any period of 30 consecutive days, if elected by PNC in its sole discretion within 30 days of such event, the date that is the 364th day following the date of PNC’s election to terminate, and (iii) the date the Facility Termination Date is deemed to have been accelerated due to the occurrence of a Termination Event or other predefined events to be mutually agreed upon prior to the Closing Date.  “Reporting Date” means each of the dates that Cash Liquidity is required to be reported under daily portfolio reports, weekly portfolio reports and monthly reports.  “Closing Date” means the date when the transactions contemplated in this Term Sheet are consummated.  The Closing Date is currently scheduled to occur on or about April 3, 2017.

	 
	 
	 
	 
	 

723213949 05109795

	
					
	 
	 
	 

	●  Pricing/Fees:
	 
	 

	 
	 
	 

	               ○  Program Fee and
LC Participation   Fee:         
	 
	400 bps per annum, or at any time after the 180th day following the Closing Date when Cash Liquidity (as defined below) as of the most recent Reporting Date exceeds the sum of (i) Qualifying One-Time Sale Proceeds (as defined below) and (ii) $500 million, 300 bps per annum, in either case, which fees shall be payable monthly pro rata by the SPV to each LC Participant and Purchaser based on the average daily face amount of LCs issued and outstanding Capital.

	 
	 
	 

	               ○  LC Fee:
	 
	15 bps per annum, payable monthly by the SPV to PNC as the LC Bank based on the average daily face amount of outstanding LCs.

	 
	 
	 

	               ○  Unused Fee:
	 
	80 bps per annum, payable monthly pro rata by the SPV to each LC Participant and Purchaser based on the unused portion of commitments.

	 
	 
	 

	               ○  Structuring Fee:1 
	 
	The sum of (i) the “Initial Structuring Fee” equal to 62.5 bps of the Initial Purchase Limit, which shall be a non-refundable fee payable by the SPV to PNCCM on the date that the Bankruptcy Court’s order approving the Commitment Letter becomes final, and (ii) the “Subsequent Structuring Fee” equal to 62.5 bps of the Purchase Limit on the Closing Date, which shall be an additional non-refundable fee payable by the SPV to PNCCM on the Closing Date.

	 
	 
	 

	               ○  Legal Fees:
	 
	Peabody shall pay or cause to be paid to Mayer Brown LLP, local Missouri counsel and local Australian counsel, respectively and in each case as special counsel for PNC, for such counsel’s own account, all reasonable and documented fees, costs, expenses and disbursements of such counsel incurred in connection with the preparation, negotiation, execution and delivery of the amendment documents, the Chapter 11 case and related court documents.

	 
	 
	 

	               ○  Other Fees &
                   Expenses:
	 
	Reimbursement of reasonable out-of-pocket fees and expenses in connection with the execution of the Securitization Program, including but not limited to field exam and diligence expenses.

	 
	 
	 
	 
	 

	●  Amendments:
	The 5th A&R RPA will be amended and restated to include the amendments set forth below. The other Transaction Documents will, to the extent reasonably determined by PNC, be either amended or amended and restated in connection with the transactions contemplated by this Term Sheet.

	 
	 
	 
	 
	 

	               ○  Increase the Purchase Limit and Commitments, and extend the scheduled Facility Termination Date per above.

	 
	 
	 

	               ○  Pricing/Fees to be adjusted per above, and fees will move from the 5th A&R RPA to a separate fee letter.

	 
	 
	 

	               ○  Amendments to bring the SPV’s receivables back onto the Peabody Group’s consolidated balance sheet under GAAP

	                   (e.g., replacing the DPP mechanics with an undivided interest concept and/or adding a call/repurchase right in favor of 

	                   the SPV on such terms that are satisfactory to PNC).

__________________________________

                1 The Anniversary Fee under the existing Securitization Program shall remain payable in accordance with the terms thereof.

723213949 05109795

	
					
	 
	 
	 
	 
	 

	               ○  The Lock-Box Agreement with PNC will be amended from “full cash dominion” to a “springing control”

	                   arrangement, under which the SPV will have the right to manage the collection account until such time as PNC

	                   exercises its right to assume exclusive dominion and control of the collection account following the occurrence

	                   of a Termination Event, an Unmatured Termination Event or  Cash Liquidity is less than the sum of (i) 

	                   Qualifying One-Time Sale Proceeds and (ii) $500 million as of each Reporting Date occurring during any period 

	                   of 30 consecutive days.

	 
	 
	 
	 
	 

	               ○  A measurement of the Peabody Group’s Cash Liquidity will be added.  “Cash Liquidity” will mean the U.S. 

	                   dollar equivalent of Peabody Group’s unrestricted cash and permitted investments. “Qualifying One-Time 

	                   Sale Proceeds” will mean the U.S. dollar equivalent of the sum of the net cash proceeds received by the

	                   Peabody Group from the sale of Peabody’s Australian subsidiary, Metropolitan Mine net of transaction costs,

	                   any related repayment of debt in connection with such disposition and net of taxes paid or reasonably estimated to

	                   be payable as a result thereof.

	 
	 
	 
	 
	 

	               ○  Peabody will be required to deliver weekly portfolio reports and, if Cash Liquidity is less than the sum of

	                   (i) Qualifying One-Time Sale Proceeds and (ii) $500 million as of each Reporting Date occurring during

	                   any period of 30 consecutive days, PNC may require Peabody to deliver daily portfolio reports.

	 
	 
	 
	 
	 

	               ○  Reinstate daily reinvestments of cash collections without requiring “Qualifying Interim Reports” and, if Cash

	                   Liquidity is less than the sum of (i) Qualifying One-Time Sale Proceeds and (ii) $500 million as of each Reporting

	                   Date occurring during any period of 30 consecutive days, PNC may require Peabody to deliver “Qualifying Interim

	                   Reports” as a condition for daily reinvestments of cash collections.

	 
	 
	 
	 
	 

	               ○  Update “Change in Control” and related provisions in order to permit the pledge of the equity in the SPV

	                   as collateral for the Peabody Group’s credit facilities, subject to execution of appropriate intercreditor agreements

	                   in form and substance reasonably satisfactory to PNC.

	 
	 
	 
	 
	 

	               ○  Reinstate cross-default/BK filing as Termination Events (cross-default thresholds to be mutually agreed upon).

	 
	 
	 
	 
	 

	               ○  Amendments and intercreditor arrangements in form and substance reasonably satisfactory to PNC that

	                   are necessary to accommodate the Peabody Group’s other financings.

	 
	 
	 
	 
	 

	               ○  Removal of provisions related to the Peabody Group’s Chapter 11 case to the extent no longer relevant after

	                   confirmation of the Chapter 11 plan.

	 
	 
	 
	 
	 

	               ○  Amendments to acknowledge that, for purposes of calculating Excess Concentrations and the Concentration

	                   Reserve, if any Receivable is guaranteed by a letter of credit in form and substance reasonably satisfactory to the 

	                   Administrator, the Obligor thereof for purposes of such calculations will be viewed as the related letter of credit 

	                   provider.

	 
	 
	 
	 
	 

	               ○  Amendments to certain definitions as set forth below:

	 
	 
	 
	 
	 

723213949 05109795

	
					
	 
	 
	 
	 
	 

	                   ■  Amend clause (i) of the definition of Loss Reserve Percentage by replacing 2.50 with 2.25

	 
	 
	 
	 
	 

	                   ■  Amend clause (iii) of the definition of Loss Reserve Percentage by replacing clause (A) thereof with the

	                       following: “the sum of (x) aggregate credit sales made by the Originators during the four most recent calendar

	                       months plus (y) the product of 0.25 and the aggregate credit sales made by the Originators during the fifth most

	                       recent calendar months divided by”

	 
	 
	 
	 
	 

	                   ■  Amend clause (ii) (x) of the definition of Dilution Reserve Percentage by replacing 2.50 with 2.25

	 
	 
	 
	 
	 

	                   ■  Replace clause (a) of the definition of Dilution Horizon with the following “(a) the sum of (x) the aggregate credit

	                       sales made by the Originators during the most recent calendar month plus (y) the product of 0.25 and the aggregate

	                       credit sales made by the Originators during the second most recent calendar month”

	 
	 
	 
	 
	 

	                   ■  Amend the definition of Concentration Percentage to reflect the revisions shown below:

“Concentration Percentage” means:  (a) for any Group A Obligor, 15%, (b) for any Group B Obligor, 12%,               (c) for any Group C Obligor, 7.0% and (d) for any Group D Obligor, 5.0%.
	
					
	 
	 
	 
	 
	 

	                   ■  Amend clauses (b) and (c) of the definition of Excess Concentration to reflect the revisions shown below:

(b)    the amount (if any) by which the aggregate Outstanding Balance of all Eligible Receivables then in               the Receivables Pool, the Obligors of which are residents of any single country (other than United States of America),               exceeds (i) in the case of Australia, 15.00%, (ii) in the case of any  country (other than Australia) that has a foreign               currency rating of at least “AA” by Standard and Poor’s and “Aa2” by Moody’s, 20.00%, or (iii) in any other case,               15.00% , in each case, of the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool;               plus

(c)    the amount (if any) by which the aggregate Outstanding Balance of all Eligible Receivables then in               the Receivables Pool, the Obligors of which are Eligible Foreign Obligors but which are not residents of Australia,               exceeds 30.00% of the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus

723213949 05109795

	
					
	               ○  Australian Originators will be joined to the Securitization Facility, and the Securitization Facility will be amended to

	                   (i) effect such joinder, (ii) provide eligibility for the Australian Receivables and (iii) provide for the issuance of

	                   Letters of Credit denominated in Australian dollars.  The following provides a non-exclusive summary of those

	                   amendments and sets forth certain applicable terms and conditions.

	 
	 
	 
	 
	 

	                   ■  The initial Australian Originators will be Peabody COALSALES Pacific Pty Ltd, Millennium Coal Pty Ltd,

	                       Wambo Coal Pty Ltd,  Wilpinjong Coal Pty Ltd and  Peabody (Bowen) Pty Ltd.

	 
	 
	 
	 
	 

	                   ■  The Australian Originators will sell their Australian Receivables (or 100% of the beneficial and equitable

	                       interest therein) to Peabody upon origination, and Peabody will in turn transfer such Australian Receivables

	                       (or 100% of the beneficial and equitable interest therein) to the SPV.  Except as described herein, the terms and

	                       conditions applicable to such sales and transfers will be substantially similar to those set forth in the existing Sale

	                       Agreement and Contribution Agreement with such modifications as are reasonably determined by the Administrator

	                       (it being understood that the agreement governing such sales by the Australian Originators will be governed by

	                       Australian law) and the definitive documentation with respect to such sales and transfers shall be in form and

	                       substance reasonably satisfactory to the Administrator.

	 
	 
	 
	 
	 

	
					
	 
	 
	 
	 
	 

	                   ■  The definition of Eligible Receivable will be amended to (a) include Australian Receivables that (i) are

	                       denominated and payable in Australian dollars, (ii) are payable to Lockbox Accounts in Australia and (iii)

	                       result from goods sold and shipped from an Australian Originator in Australia, (b) allow for Australian

	                       Receivables that have been transferred via a declaration of trust whereby 100% of the beneficial and equitable

	                       interest therein has been transferred to the SPV and bare legal title remains with the relevant Australian Originator

	                       and (c) require that eligible Australian Receivables not be subject to the National Consumer Credit Protection Act

	                       2009 (Cwth) or the National Credit Code contained in Schedule 1 of that Act and (d) require that eligible

	                       Australian Receivables arise under Contracts that have been reviewed and approved by the Administrator and that

	                       are governed by the laws of a jurisdiction approved by the Administrator.  For the avoidance of doubt,

	                       eligible Australian Receivables will be required to meet the other requirements set forth in the current definition

	                       of Eligible Receivable.

	 
	 
	 
	 
	 

	                   ■  The definition of Total Reserves will be amended to reflect the revisions shown below, and the related defined

	                       terms shown below will be added (together with relevant component definitions):

“Total Reserves” means, at any time the sum of:  (a) the Yield Reserve, plus the greater of (b) (i) the Performance Reserve, or (ii) the sum of the Concentration Reserve plus the Dilution Component Reserve, plus (c) the AUD AR Volatility Reserve, plus (d) the AUD LC Volatility Reserve.
“AUD” means Australian dollars, the lawful currency of the Commonwealth of Australia.
“AUD AR Volatility Reserve” means, at any time of determination, the product of (a) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables denominated in AUD, multiplied by (b) the AUD VaR Percentage.
“AUD LC Volatility Reserve” means, at any time of determination, the product of (a) the U.S. Dollar Equivalent of the Adjusted AUD LC Participation Amount, multiplied by (b) the AUD VaR Percentage.
 “AUD VaR Percentage” means the value at risk percentage determined by the Administrator in its commercially reasonable judgment from time to time with respect to AUD, and which shall on the Closing Date be 10.00%.2 

723213949 05109795

	
					
	 
	 
	 
	 
	 

	                   ■  Each of the Australian Originators shall provide a power of attorney to Peabody and its assigns, in form

	                       and substance reasonably satisfactory to PNC.

	 
	 
	 
	 
	 

	                   ■  No Australian Originator shall be required to guaranty the obligations of any entity that is not an Australian

	                       Originator, but the Performance Guaranty will provide that Peabody will guaranty the obligations of each

	                       Australian Originator.

__________________________________

            2 The above reference to 10.00% is subject to adjustment on or prior to the Closing Date.

		
	•
	Confirmation Order Requirements “Confirmation Order” means that certain order of the United States Bankruptcy Court for the Eastern District of Missouri (the “Bankruptcy Court”) authorizing, among other things, the Peabody Group to enter into the Securitization Program. 

	
					
	               ○  The Confirmation Order shall approve the Amendments and any provisions relevant to the Securitization Program

	                   to be in form and substance reasonably satisfactory to PNC

	 
	 
	 
	 
	 

	               ○  The Confirmation Order shall include, to the extent reasonably required by PNC, the following findings of fact

	                   and conclusions of law pertaining to the Securitization Program:

	 
	 
	 
	 
	 

	                   ■  True sales and contributions of receivables into the Securitization Program, free and clear of liens,

	                       claims and encumbrances;

	 
	 
	 
	 
	 

	                   ■  The SPV is a good faith purchaser of receivables;

	 
	 
	 
	 
	 

	                   ■  The SPV is an entity independent from reorganized debtor(s), not subject to substantive consolidation;

	                       performance of the transactions contemplated by the Securitization Program does not give rise to a basis

	                       for substantive consolidation;

	 
	 
	 
	 
	 

	                   ■  Authorization of Peabody and the subservicers to continue servicing receivables and reaffirmation and

	                       approval of continuation of Peabody’s obligations under the Performance Guaranty; and

	 
	 
	 
	 
	 

	                   ■  Validity of PNC’s liens on the SPV’s assets and validity of the SPV’s liens on Receivables and ancillary

	                       assets of originating Peabody Group entities, and approval of assignment of these liens to PNC.

		
	•
	Additional Conditions Precedent

723213949 05109795

	
					
	               ○  Executed definitive documentation;

	 
	 
	 
	 
	 

	               ○  Delivery of customary closing certifications and legal opinions of counsel to the Peabody Group (or, if applicable,

	                   counsel to PNC) covering all customary matters for securitizations of this type (including general corporate

	                   matters, no conflicts with laws and material agreements, enforceability, the Volcker Rule, ‘40 Act matters,

	                   security interest matters, substantive consolidation and true sale), plus any relevant matters arising under

	                   Australian law (such as Personal Property Securities Act 2009 (Cwth) filings), to the extent applicable, and any 

	                   tax matters arising from the inclusion of the Australian Originators and Australian Receivables (such as Australian

	                   goods and services tax and stamp duty), in each case as applicable, and in each case, reasonably acceptable to PNC;

	 
	 
	 
	 
	 

	               ○  Lien searches and confirmation of the lenders/purchasers’ first-priority perfected security interests (it being

	                   understood that the Confirmation Order described above will confirm the continuation and effectiveness of

	                   the existing UCC-1 financing statements and real property filings currently on file with respect to the

	                   securitization contemplated hereby);

	 
	 
	 
	 
	 

	
					
	               ○  Payment of reasonable fees and expenses specified herein; and

	 
	 
	 
	 
	 

	               ○  There shall have been no supplement, modification, waiver or amendment to the Peabody Group’s debt

	                   and capital structure as contemplated by that certain Plan Support Agreement, dated as of December 22,

	                   2016 (together with all exhibits, schedules, annexes, supplements and other attachments thereto, in each case,

	                   as amended, supplemented or otherwise modified on or prior to the date hereof), as in effect on the date of the

	                   Commitment Letter, in the good faith judgment of PNC, that is adverse in any material respects to PNC and/or

	                   its affiliates, unless PNC shall have consented thereto in writing.

723213949 05109795srne-ex1029_688.htm

Exhibit 10.29

PROMISSORY NOTE

		
	
Up to $10,000,000
	
San Diego, CA

	
 
	
October 31, 2016

 

1.Principal and Interest. For value received, as herein provided, Celularity, Inc., a Delaware corporation (“Borrower”), promises to pay to Sorrento Therapeutics, Inc., a Delaware corporation (“Lender”), the principal sum of up to $10,000,000.  Concurrent with the date hereof, Lender shall advance $5,000,000 as principal to Borrower (the “Initial Loan”).  In the event that at any time prior to the Maturity Date (as defined below), Borrower’s available cash-on-hand is less than $1,000,000, as certified in writing by Borrower’s Chief Executive Officer to Lender, Lender shall loan Borrower (at Borrower’s request) up to an additional $5,000,000 of principal, in such amounts and on such dates, as elected by Borrower in writing following the date hereof and prior to the Maturity Date (each, a “Subsequent Loan” and collectively with the Initial Loan, the “Loan”); in each case provided that (a) no Event of Default (as defined below) has occurred at or prior to such request by Borrower for a Subsequent Loan, and (b) no individual Subsequent Loan shall exceed $1,000,000. Interest shall accrue on the Initial Loan, and each Subsequent Loan, as applicable, from the date of such advance at a per annum rate equal to the lesser of (i) 10.0%, and (ii) the maximum interest rate permitted under law.

2.Maturity; Payment of the Loan. Unless this Loan is forgiven pursuant to Section 4, the outstanding principal of the Loan (including accrued interest thereon pursuant to the terms hereof) shall be due and payable in full on the earlier to occur of (i) 5:00 p.m. PT on the first day immediately following the Deadline (as defined below), and (iii) an Event of Default (as defined below) (the “Maturity Date”). The outstanding principal and accrued interest thereon under the Loan shall be paid in lawful money of the United States of America.

3.Prepayment. This Promissory Note may not be prepaid in full or in part without the prior written consent of Lender.

4.Forgiveness. The Loan, and all amounts owing by Borrower pursuant to this Note shall automatically be deemed forgiven, discharged, cancelled and satisfied in full (and no further amounts shall thereupon be owing by Borrower pursuant to this Note), upon the occurrence of the following events (provided that no Event of Default shall have previously occurred):  (i) Borrower raises at least $100 million in gross proceeds after the initial date of issuance of this Note based on the Initial Loan (the “Issue Date”) and on or prior to the one-year anniversary of the Issue Date (the “Deadline”), excluding proceeds from the Loan, through the sale of capital stock of Borrower in one or more private placement capital-raising transactions, and (ii) Borrower consummates a firm commitment underwritten initial public offering of common stock of Borrower on or before the Deadline in which Borrower is valued as of immediately prior to the IPO, based on an initial offering price to the public in the IPO, at $1 billion or more.  Lender and Borrower acknowledge and agree that Lender is a shareholder in Borrower and the Loan has been made in connection with the Lender’s acquisition of capital stock in the Borrower.  Accordingly, to the extent that and in the event that the amounts owing pursuant to this Note are properly treated and classified as “indebtedness” for U.S. federal tax purposes, any forgiveness, discharge, cancellation and satisfaction of all amounts owing pursuant 

 

 

to this Note pursuant to this Section 4 or otherwise shall be treated and accounted for by Borrower and Lender for all U.S. federal and applicable state and local tax purposes as described in Section 108(e)(6) of the Internal Revenue Code of 1986, as amended (and any comparable provisions of any applicable state and local tax laws), and in no event shall either the Borrower or Lender report or account for such events as giving rise to any taxable income to Borrower from the cancellation of indebtedness or similar characterization for U.S. federal income and applicable state and local tax purposes.    

5.Seniority. Borrower’s obligations under this Promissory Note are and shall at all times be senior in right of repayment to Borrower’s other outstanding obligations. Borrower hereby represents and warrants to Lender that Borrower has no outstanding loan or similar obligations. Borrower shall not borrow any funds, or incur any other loan or similar debt obligation, prior to the repayment of Borrower’s obligations under this Promissory Note in full without Lender’s prior written consent.

6.Default. The occurrence of any of the following shall constitute an “Event of Default” under this Promissory Note: (a) Borrower shall fail to pay (i) when due any principal or interest payment on the due date hereunder or (ii) any other payment required under the terms of this Promissory Note on the date due and such payment shall not have been made within five days of Borrower’s receipt of Lender’s written notice to Borrower of such failure to pay; (b) Borrower shall (1) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (2) make a general assignment for the benefit of its or any of its creditors, (3) be dissolved or liquidated, (4) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it, or (5) take any action for the purpose of effecting any of the foregoing; (c) proceedings for the appointment of a receiver, trustee, liquidator or custodian of Borrower or of all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect to Borrower or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter in effect shall be commenced and an order for relief entered or such proceeding shall not be dismissed or discharged within 30 days of commencement; (d) Borrower shall breach any material term of this Promissory Note or any other material agreement of Borrower (including, without limitation, a breach of any of the representations, warranties and covenants set forth in Section 14 or Section 15); (e) Borrower shall default under any loan, extension of credit, security agreement, purchase or sale agreements, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s property or Borrower’s ability to repay this Promissory Note or perform Borrower’s obligation under this Promissory Note, or (f) Borrower shall become unable to timely pay its bills as they become due and payable.  

7.Attorneys’ Fees. If any attorney is engaged by Lender or if Lender incurs any costs or expenses because of any default hereunder or as the result of actions to enforce or defend any provision of this Promissory Note, Borrower shall pay upon demand Lender’s reasonable attorneys’ fees and all costs and expenses so incurred by Lender.

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8.No Waiver By Lender. No waiver of any default shall be implied from any failure of Lender to take any action or any delay by Lender in taking action with respect to any such default or from any previous waiver of any similar or unrelated default. A waiver of any term of this Promissory Note must be made in writing and shall be limited to the express written terms of such waiver.

9.Certain Waivers. Borrower and all endorsers jointly and severally waive diligence, grace, demand, presentment for payment, exhibition of this Promissory Note, protest, notice of protest, notice of dishonor, notice of demand, notice of nonpayment, notice of default or delinquency, notice of acceleration, notice of costs or expenses and interest thereon, and notice of any late charges and any and all exemption rights against the indebtedness evidenced by this Promissory Note, and agree to any and all extensions or renewals from time to time without notice and to any partial payments of this Promissory Note made before or after maturity, and that no such extension, renewal or partial payment shall release any one or all of them from the obligation of payment of this Promissory Note or any installment of this Promissory Note, and consent to offsets of any sums owed to any one or all of them by Lender at any time.

10.Loss, Theft, Destruction or Mutilation of Promissory Note. In the event of the loss, theft or destruction of this Promissory Note, upon Borrower’s receipt of a reasonably satisfactory indemnification agreement executed in favor of Borrower by the party who held this Promissory Note immediately prior to its loss, theft or destruction, or in the event of the mutilation of this Promissory Note, upon Lender’s surrender to Borrower of the mutilated Promissory Note, Borrower shall execute and deliver to such party or Lender, as the case may be, a new promissory note in form and content identical to this Promissory Note in lieu of the lost, stolen, destroyed or mutilated Promissory Note.

11.Time. Time is of the essence with respect to each and every provision hereof.

12.Choice of Law; Venue. This Promissory Note shall be construed and enforced in accordance with the laws of the State of California without regard to conflicts of interest principles. Borrower and Lender consent to the jurisdiction of the County of San Diego, State of California, for any action arising out of matters related to this Promissory Note. Borrower and Lender hereby waive the right to commence an action in connection with this Promissory Note in any court outside of that specified in this provision.

13.Waiver of Jury Trial. Each of Lender and Borrower hereby waive trial by jury in any action or other proceeding (including counterclaims), whether at law or equity, brought by Borrower or Lender against the other on matters arising out of or in any way related to or connected with this Promissory Note, any other document executed in connection with the Loan or any transaction contemplated by and between Borrower and Lender with respect to the Loan.

14.Representations and Warranties. Borrower hereby represents and warrants to Lender as follows:

(a)Lender has all requisite power and authority to execute and deliver this Promissory Note;

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(b)All action on Lender’s part required for the lawful execution, delivery and performance of this Promissory Note has been taken;

(c)Upon its execution and delivery, this Promissory Note will be a valid and binding obligation of Lender, enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies; and

(d)Henry Ji, Ph.D. (“Dr. Ji”), David Deming and Jaisim Shah have been, as of the Initial Loan, appointed to Borrower’s Board of Directors (the “Board”) and each committee of the Board, in each case to serve until (i) this Promissory Note is repaid in full or no longer outstanding (the “Termination Date”), at which time one such member shall resign from the Board; provided, however, that Dr. Ji and one other designee of Lender shall remain as members of the Board provided that the contribution of TNK Therapeutics, Inc. (“TNK”) by Lender to Borrower is consummated by the later to occur of (a) ninety (90) days following the Termination Date, and the (b) the date Celgene Corporation completes its entire contribution of the assets to Borrower in accordance with that certain Non-Binding Term Sheet, made as of September 8, 2016, by and between Cellularity, Inc. and Celgene (in the form provided to Lender on October 16, 2016), or (ii) his successor is duly elected or qualified or until his earlier death, disqualification, resignation or removal. 

15.Covenants. So long as this Promissory Note remains unpaid or outstanding, Borrower covenants that Borrower shall take all actions necessary to ensure that: (a) the Board appoints each of Henry Ji, Ph.D., David Deming and Jaisim Shah to any future committee of the Board, in each case so long as such individual is a member of the Board, and (b) the Board maintains the authorized number of members of the Board at no more than seven members.

16.Entire Agreement. This instrument contains the entire agreement between the parties relating to the subject matter contained herein. This Promissory Note supersedes any prior oral or written agreement between the parties relating to the subject matter contained herein. No term of this Promissory Note may be waived, modified or amended except by an instrument in writing signed by Lender and Borrower. Any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given.

17.No Impairment. Borrower will not, by amendment of its certificate of incorporation or bylaws, as each may be amended or restated from time to time, or through reorganization, consolidation, merger, dissolution, sale of assets or another voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Promissory Note (including, without limitation, the covenants set forth in Section 15), but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of Lender under this Promissory Note against impairment.

18.Successors and Assigns. This Promissory Note may not be assigned or transferred (a) by Borrower to any person at any time without the written consent of Lender, or (b) by 

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Lender to any person at any time without the written consent of Borrower, except to an Affiliate of Borrower. For purposes of this Promissory Note, an “Affiliate” means any individual, entity or trust who or which, directly or indirectly, controls, is controlled by, or is under common control with Lender. This Promissory Note shall inure to the benefit of and be binding upon the parties hereto and their permitted assigns.

19.Headings. The headings of the various Sections herein are for reference only and shall not define, modify, expand or limit any of the terms or provisions of this Promissory Note.

20.Counterparts. This Promissory Note may be executed in one or more counterparts, each of which shall be enforceable against the parties that execute such counterparts, and all of which together shall constitute one and the same instrument.

21.Severability. If any term or provision of this Promissory Note is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Promissory Note or invalidate or render unenforceable such term or provision in any other jurisdiction.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, Borrower and Lender have executed this Promissory Note as of the date first above written.

 

	
BORROWER:
	
 
	
LENDER:

	
 
	
 
	
 
	
 
	
 

	
Celularity, Inc.
	
 
	
Sorrento Therapeutics, Inc.

	
 
	
 
	
 
	
 
	
 

	
By:
	
/s/ Robert Hariri, MD, Ph.D.
	
 
	
By:
	
/s/ Henry Ji, Ph.D.

	
Name:
	
Robert Hariri, MD, Ph.D.
	
 
	
Name:
	
Henry Ji, Ph.D.

	
Its:
	
CEO
	
 
	
Its:
	
President and CEO

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

 

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