Document:

EX-10.1

 Exhibit 10.1 

IQIYI, INC. 
 2010
EQUITY INCENTIVE PLAN 
  

	Article 1.	 Establishment & Purpose 

1.1 Establishment. iQIYI, Inc. (previously named “Qiyi.com, Inc.”), an exempted company incorporated under the laws of
the Cayman Islands (the “Company”), hereby establishes the 2010 Equity Incentive Plan (this “Plan”) as set forth herein. 

1.2 Purpose of this Plan. The purpose of this Plan is to attract, retain and motivate the officers, directors, employees and
consultants of the Company and its Subsidiaries and Affiliates, and to promote the success of the Company’s business by providing them with appropriate incentives and rewards either through a proprietary interest in the long-term success of the
Company or compensation based on fulfilling certain performance goals. 
  

	Article 2.	 Definitions 

Capitalized terms used and not otherwise defined herein shall have the meanings set forth below. 

2.1 “Affiliate” means any entity that the Company, either directly or indirectly, is in common control with, is
controlled by or controls or any entity in which the Company has a substantial direct or indirect equity interest, as determined by the Board. 

2.2 “Award” means any Option, Stock Appreciation Right, Restricted Stock, or Other Stock-Based Award that is
granted under this Plan. 
 2.3 “Award Agreement” means either (a) a written agreement entered into by
the Company and a Participant setting forth the terms and provisions applicable to an Award granted under this Plan, or (b) a written statement signed by an authorized officer of the Company to a Participant describing the terms and provisions
of the actual grant of such Award. 
 2.4 “Board” means the Board of Directors of the Company. 

2.5 “Change of Control” unless otherwise specified in the Award Agreement, means an event or series of events
that results in any of the following: 
  

	 	(a)	 Change in Ownership of the Company. A change in the ownership of the Company occurs on the date that any
one Person or more than one Person acting as a group, other than a Subsidiary, acquires ownership of stock of the Company that, together with stock held by such Person or group, constitutes more than fifty percent (50%) of the total voting power of
stock of the Company. However, if any one Person (or more than one Person acting as a group) is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the Company’s stock prior to the
acquisition, any acquisition of additional stock by the same Person or Persons is not considered to cause a change in the ownership of the Company; 

  

	 	(b)	 Change in Ownership of a Substantial Portion of the Company’s Assets. A change in the ownership of
a substantial portion of the Company’s assets occurs on the date that any one Person, or more than one Person acting as a group, other 

	 	
than any Subsidiary, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons)
assets from the Company that have a total gross fair market value of more than fifty percent (50%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions. For this purpose,
gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined in good faith by the Board without regard to any liabilities associated with such assets; or 

 

	 	(c)	 Change in Board of Directors of the Company. A change in the effective control of the Company occurs on
the date a majority of the individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) is replaced for any reason during any twelve month period, provided, however, that if the election, or nomination for
election by the Company’s shareholders, of any new director was approved by a vote of at least a majority of the Incumbent Board, such new director shall be considered a member of the Incumbent Board, and provided further that any reductions in
the size of the Board that are instituted voluntarily by the Incumbent Board shall not constitute a “Change of Control”, and after any such reduction the “Incumbent Board” shall mean the Board as so reduced.

 Change in State of Incorporation or Creation of a Holding Company. Notwithstanding the foregoing, a transaction
shall not constitute a Change of Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially similar proportions by the Persons who hold the Company’s
securities immediately before such transaction. 
 2.6 “Code” means the U.S. Internal Revenue Code of 1986,
as amended from time to time. 
 2.7 “Committee” means the Board, or any committee designated by the Board to
administer this Plan in accordance with Article 3 of this Plan. 
 2.8 “Consultant” means any natural
person who provides bona fide services to the Company or any Affiliate or Subsidiary as a consultant or advisor, excluding any Employee or Director. 

2.9 “Director” means a member of the Board who is not an Employee. 

2.10 “Effective Date” means the date on which the Plan is adopted and approved by the Board. 

2.11 “Employee” means an officer or other employee of the Company or any Subsidiary or Affiliate, including a
member of the Board who is such an employee. 
 2.12 “Exchange Act” means the Securities Exchange Act of
1934, as amended from time to time. 
 2.13 “Fair Market Value” means, as of any date, the per Share
value determined as follows: 
  

	 	(a)	 if the Shares are listed on any established stock exchange or a national market system, the per Share Fair
Market Value shall be the closing sales price (or the closing bid, if no sales were reported) on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing
sales price or closing bid was reported), as reported in The Wall Street Journal or such other source as the Committee deems reliable; 

  
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	 	(b)	 if the Shares are regularly quoted on an automated quotation system (including the OTC Bulletin Board and the
“Pink Sheets” published by the National Quotation Bureau, Inc.) or by a recognized securities dealer, but selling prices are not reported, the per Share Fair Market Value shall be the mean between the high bid and low asked prices for a
Share on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street Journal or such other source as the Committee deems reliable; 

 

	 	(c)	 in the absence of an established market for the Shares, the per Share Fair Market Value thereof, disregarding
any discount for minority interest, shall be determined in good faith by the Board. 

 2.14 “Incentive
Stock Option” means an Option intended to meet the requirements of an incentive stock option as defined in Section 422 of the Code and designated as an Incentive Stock Option in accordance with Article 6 of this Plan. 

2.15 “Nonqualified Stock Option” means an Option that is not an Incentive Stock Option. 

2.16 “Option” means any Option granted from time to time under Article 6 of this Plan. 

2.17 “Option Price” means the purchase price per Share subject to an Option, as determined pursuant to
Section 6.2 of this Plan. 
 2.18 “Other Stock-Based Award” means any right granted
under Article 9 of this Plan. 
 2.19 “Participant” means any eligible person as set forth in
Section 4.1 to whom an Award is granted. 
 2.20 “Person” means any natural person,
sole proprietorship, general partnership, limited partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, governmental authority, or any other organization, irrespective of whether it is a
legal entity and includes any successor (by merger or otherwise) of such entity. 
 2.21 “Restricted Stock”
means any Award granted under Article 8 of this Plan. 
 2.22 “Restriction Period” means the period
during which Restricted Stock awarded under Article 8 of this Plan is restricted. 
 2.23 “Service”
means service as an Employee, Director or Consultant. Service shall be deemed to continue while a Participant is on a bona fide leave of absence, if such leave was approved by the Company in writing or if continued crediting of Service for such
purpose is required by applicable law (as determined by the Company). 
 2.24 “Share” means an ordinary share
of the Company, par value $0.00001 per share, or such other class or kind of shares or other securities resulting from the application of Section 10.1 of this Plan. 

2.25 “Stock Appreciation Right” means any right granted under Article 7 of the Plan 

  
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 2.26 “Subsidiary” means any corporation, partnership, limited
liability company or other legal entity of which the Company, directly or indirectly, owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock or other equity interests. For purposes of this Plan,
Subsidiaries also include any consolidated variable interest entity of the Company. 
 2.27 “Ten Percent
Shareholder” means a person who on any given date owns, either directly or indirectly (taking into account the attribution rules contained in Section 424(d) of the Code), stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or a Subsidiary or Affiliate. 
  

	Article 3.	 Administration 

3.1 Authority of the Committee. This Plan shall be administered by the Committee, which shall have full power to interpret and
administer this Plan and full authority to select the Directors, Employees and Consultants to whom Awards will be granted and determine the type and amount of Awards to be granted to each such Director, Employee or consultant, the terms and
conditions of Awards granted under this Plan and the terms of Award Agreements to be entered into with Participants. Without limiting the generality of the foregoing, the Committee may, in its sole discretion, interpret, clarify, construe or resolve
any ambiguity in any provision of this Plan or any Award Agreement, accelerate or waive vesting of Awards and exercisability of Awards, extend the term or period of exercisability of any Awards, modify the purchase price under any Award, or waive
any terms or conditions applicable to any Award, subject to the limitations set forth in Section 11.2 of this Plan. Awards may, in the discretion of the Committee, be made under this Plan in assumption of, or in
substitution for, outstanding awards previously granted by the Company or an Affiliate or a company acquired by the Company or with which the Company combines. The Committee shall have full and exclusive discretionary power to adopt rules, forms,
instruments and guidelines for administering this Plan as the Committee deems necessary or proper. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participants, the Company and
all other interested individuals. 
 3.2 Delegation. The Committee may delegate to one or more of its members, one or more
officers of the Company or any Subsidiary, and one or more agents or advisors such administrative duties or powers as it may deem advisable. 
  

	Article 4.	 Eligibility and Participation 

4.1 Eligibility. Participants will consist of such Employees, Directors and Consultants as the Committee in its sole discretion
determines and whom the Committee may designate from time to time to receive Awards under this Plan. Designation of a Participant in any year shall not require the Committee to designate such person to receive an Award in any other year or, once
designated, to receive the same type or amount of Award as granted to the Participant in any other year. 
 4.2 Type of Award.
Awards under this Plan may be granted in any one or a combination of: (a) Options; (b) Stock Appreciation Rights; (c) Restricted Stock; and (d) Other Stock-Based Awards. Awards granted under this Plan shall be evidenced by Award
Agreements (which need not be identical) that provide additional terms and conditions associated with such Awards, as determined by the Committee in its sole discretion; provided, however, that in the event of any conflict between the
provisions of this Plan and any such Award Agreement, the provisions of this Plan shall prevail. 

  
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	Article 5.	 Shares Subject to this Plan and Maximum Awards 

5.1 Number of Shares Available for Awards. 
  

	 	(a)	 Shares. Subject to adjustment as provided in this Article 5 and Article 10 of the Plan,
the maximum number of Shares available for issuance to Participants pursuant to Awards under the Plan shall be 589,729,714 Shares. The number of Shares available for granting Incentive Stock Options under the Plan shall not exceed 589,729,714
Shares, subject to Article 10 hereof and the provisions of Sections 422 and 424 of the Code and any successor provisions. The Shares available for issuance under the Plan may consist, in whole or in part, of authorized and unissued Shares.
Any Shares delivered to the Company as part or full payment for the purchase price of an Award granted under this Plan shall again be available for Awards under this Plan. 

 

	 	(b)	 Additional Shares. In the event that any outstanding Award expires, is forfeited, cancelled or otherwise
terminated without consideration (i.e., Shares or cash) therefor, the Shares subject to such Award, to the extent of any such forfeiture, cancellation, expiration, termination or settlement for cash, shall again be available for Awards under this
Plan. If the Committee authorizes the assumption under this Plan, in connection with any merger, consolidation, acquisition of property or stock, or reorganization, of awards granted under another plan, such assumption shall not reduce the maximum
number of Shares available for issuance under this Plan. 

  

	Article 6.	 Options 

6.1 Grant of Options. The Committee is hereby authorized to grant Options to Participants. Each Option shall permit a Participant
to purchase from the Company a stated number of Shares at an Option Price established by the Committee, subject to the terms and conditions described in this Article 6 and to such additional terms and conditions, as established by the
Committee, in its sole discretion, that are consistent with the provisions of the Plan. Options shall be designated as either Incentive Stock Options or Nonqualified Stock Options, provided, that, Options granted to Directors shall be
Nonqualified Stock Options. An Option granted as an Incentive Stock Option shall, to the extent it fails to qualify as an Incentive Stock Option, be treated as a Nonqualified Stock Option. Neither the Committee nor the Company or any of its
Affiliates shall be liable to any Participant or to any other Person if it is determined that an Option intended to be an Incentive Stock Option does not qualify as an Incentive Stock Option. Each option shall be evidenced by an Award Agreement
which shall state the number of Shares covered by such Option. Such agreements shall conform to the requirements of the Plan, and may contain such other provisions, as the Committee shall deem advisable. 

6.2 Terms of Option Grant. The Option Price shall be determined by the Committee at the time of grant, and, unless otherwise
determined by the Board, shall not be less than one-hundred percent (100%) of the Fair Market Value of a Share on the date of grant. In the case of any Incentive Stock Option granted to a Ten Percent
Shareholder, unless otherwise determined by the Board, the Option Price shall not be less than one-hundred-ten percent (110%) of the Fair Market Value of a Share on the
date of grant. 
 6.3 Option Term. The term of each Option shall be determined by the Committee at the time of grant and shall
be stated in the Award Agreement, but in no event shall such term be greater than ten (10) years (or, in the case on an Incentive Stock Option granted to a Ten Percent Shareholder, five (5) years), unless otherwise determined by the Board.

  
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 6.4 Time of Exercise. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which terms and restrictions need not be the same for each grant or for each Participant. 

6.5 Method of Exercise. Except as otherwise provided in the Plan or in an Award Agreement, an Option may be exercised for all,
or from time to time any part, of the Shares for which it is then exercisable. For purposes of this Article 6, the exercise date of an Option shall be the later of the date a notice of exercise is received by the Company and, if applicable,
the date full payment is received by the Company pursuant to clauses (a), (b), (c), (d), or (e) of the following sentence (including the applicable tax withholding pursuant to Section 12.3 of the Plan). The aggregate
Option Price for the Shares as to which an Option is exercised shall be paid to the Company at the election of the Participant: (a) in cash or its equivalent (e.g., by cashier’s check); (b) to the extent permitted by the Committee, in
Shares (whether or not previously owned by the Participant) having a Fair Market Value equal to the aggregate Option Price for the Shares being purchased and satisfying such other requirements as may be imposed by the Committee; (c) partly in
cash and, to the extent permitted by the Committee, partly in such Shares (as described in (b) above); (d) to the extent permitted by the Committee, by reducing the number of Shares otherwise deliverable upon the exercise of the Option by the
number of Shares having a Fair Market Value equal to the Option Price; or (e) if there is a public market for the Shares at such time, subject to such requirements as may be imposed by the Committee, through the delivery of irrevocable
instructions to a broker to sell Shares obtained upon the exercise of the Option and to deliver promptly to the Company an amount out of the proceeds of such sale equal to the aggregate Option Price for the Shares being purchased. The Committee may
prescribe any other method of payment (including in respect of the applicable cash currency) that it determines to be consistent with applicable law and the purpose of the Plan. In furtherance of the foregoing, the Committee may also require the
Participant to provide evidence that the funds were taken out of the People’s Republic of China in accordance with applicable foreign exchange control laws and regulations. 

6.6 Limitations on Incentive Stock Options. Incentive Stock Options may be granted only to employees of the Company or of a
“parent corporation” or “subsidiary corporation” (as such terms are defined in Section 424 of the Code) at the date of grant. The aggregate Fair Market Value (generally determined as of the time the Option is granted) of the
Shares with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year under all plans of the Company and of any “parent corporation” or “subsidiary corporation” shall
not exceed one hundred thousand dollars ($100,000), or the Option shall be treated as a Nonqualified Stock Option. For purposes of the preceding sentence, Incentive Stock Options will be taken into account generally in the order in which they are
granted. Each provision of the Plan and each Award Agreement relating to an Incentive Stock Option shall be construed so that each Incentive Stock Option shall be an incentive stock option as defined in Section 422 of the Code, and any
provisions of the Award Agreement thereof that cannot be so construed shall be disregarded. 
  

	Article 7.	 Stock Appreciation Rights 

7.1 Grant of Stock Appreciation Rights. The Committee is hereby authorized to grant Stock Appreciation Rights to Participants.
Stock Appreciation Rights shall be evidenced by Award Agreements that shall conform to the requirements of the Plan and may contain such other provisions, as the Committee shall deem advisable. Subject to the terms of the Plan and any applicable
Award Agreement, a Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive, upon exercise thereof, the excess of: (a) the Fair Market Value of a specified number of Shares

  
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on the date of exercise over; (b) the grant price of the right as specified by the Committee on the date of the grant. Such payment may be in the form of cash, Shares, other property or any
combination thereof, as the Committee shall determine in its sole discretion (including in respect of the applicable cash currency payable to the Participant). 

7.2 Terms of Stock Appreciation Right. Each Stock Appreciation Right grant shall be evidenced by an Award Agreement which shall
state the grant price (which shall not be less than one-hundred percent (100%) of the Fair Market Value of a Share on the date of grant), term, methods of exercise, methods of settlement, and such other
provisions as the Committee shall determine. No Stock Appreciation Right shall have a term of more than ten (10) years from the date of grant. 
  

	Article 8.	 Restricted Shares 

8.1 Grant of Restricted Stock. The Committee is hereby authorized to grant Restricted Stock to Participants. An Award of
Restricted Stock is a grant by the Committee of a specified number of Shares to the Participant, which Shares are subject to forfeiture upon the occurrence of specified events. Participants shall be awarded Restricted Stock in exchange for
consideration not less than the minimum consideration required by applicable law. Restricted Stock shall be evidenced by an Award Agreement, which shall conform to the requirements of the Plan and may contain such other provisions, as the Committee
shall deem advisable. 
 8.2 Terms of Restricted Stock Awards. Each Award Agreement evidencing a Restricted Stock grant shall
specify the Restriction Period(s), the number of Shares of Restricted Stock subject to the Award, the purchase price, if any, of the Restricted Stock, the performance, employment, or other conditions (including the termination of a
Participant’s Service whether due to death, disability or other reason) under which the Restricted Stock may be forfeited to the Company and such other provisions as the Committee shall determine. Any Restricted Stock granted under the Plan
shall be evidenced in such manner as the Committee may deem appropriate, including book-entry registration or issuance of a stock certificate or certificates (in which case, the certificate(s) representing such Shares shall be legended as to sale,
transfer, assignment, pledge or other encumbrances during the Restriction Period and deposited by the Participant, together with a stock power endorsed in blank, with the Company, to be held in escrow during the Restriction Period). At the end of
the Restriction Period, the restrictions imposed hereunder and under the Award Agreement shall lapse with respect to the number of Shares of Restricted Stock as determined by the Committee, and the legend shall be removed and such number of Shares
delivered to the Participant (or, where appropriate, the Participant’s legal representative). 
 8.3 Voting and Dividend
Rights. The Committee shall determine and set forth in a Participant’s Award Agreement whether or not a Participant holding Restricted Stock granted hereunder shall have the right to exercise voting rights with respect to the Restricted
Stock during the Restriction Period (the Committee may require a Participant to grant an irrevocable proxy and power of substitution) and/or have the right to receive dividends on the Restricted Stock during the Restriction Period (and, if so, on
what terms). 
 8.4 Performance Goals. The Committee may condition the grant of Restricted Stock or the expiration of the
Restriction Period upon the Participant’s achievement of one or more performance goal(s) specified in the Award Agreement. If the Participant fails to achieve the specified performance goal(s), the Committee shall not grant the Restricted Stock
to such Participant or the Participant shall forfeit the Award of Restricted Stock to the Company, as applicable. 

  
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 8.5 Section 83(b) Election. If a Participant makes an election pursuant to
Section 83(b) of the Code concerning Restricted Stock, the Participant shall be required to file promptly a copy of such election with the Company. 
  

	Article 9.	 Other Stock-Based Awards 

The Committee, in its sole discretion, may grant Awards of Shares and Awards that are valued, in whole or in part, by reference to, or are
otherwise based on the Fair Market Value of, Shares (the “Other Stock-Based Awards”), including without limitation, restricted stock units, dividend equivalent rights, and other phantom awards. Such Other Stock-Based Awards shall be
in such form, and dependent on such conditions, as the Committee shall determine, including, without limitation, the right to receive one or more Shares (or the equivalent cash value of such Shares) upon the completion of a specified period of
Service, the occurrence of an event, and/or the attainment of performance objectives. Subject to the provisions of the Plan, the Committee shall determine to whom and when Other Stock-Based Awards will be made, the number of Shares to be awarded
under (or otherwise related to) such Other Stock-Based Awards, whether such Other Stock-Based Awards shall be settled in cash, Shares or a combination of cash and Shares, and all other terms and conditions of such Awards (including, without
limitation, the vesting provisions thereof and provisions ensuring that all Shares so awarded and issued shall be fully paid and non-assessable). Each Other Stock-Based Award grant shall be evidenced by an
Award Agreement, which shall conform to the requirements of the Plan. 
  

	Article 10.Adjustments	 

10.1 Adjustments in Authorized Shares. In the event of any corporate event or transaction involving the Company, a Subsidiary
and/or an Affiliate (including, but not limited to, a change in the Shares of the Company or the capitalization of the Company) such as a merger, consolidation, reorganization, recapitalization, separation, stock dividend, stock split, reverse stock
split, split up, spin-off, combination of Shares, exchange of Shares, dividend in kind, extraordinary cash dividend, amalgamation, or other like change in capital structure (other than normal cash dividends to
shareholders of the Company), or any similar corporate event or transaction, the Committee, to prevent dilution or enlargement of Participants’ rights under the Plan, shall substitute or adjust, in its sole discretion, the number and kind of
Shares or other property that may be issued under the Plan or under particular forms of Awards, the number and kind of Shares or other property subject to outstanding Awards, the Option Price, grant price or purchase price applicable to outstanding
Awards, the annual award limits, and/or other value determinations (including performance conditions) applicable to the Plan or outstanding Awards. 

10.2 Change of Control. Upon the occurrence of a Change of Control after the Effective Date, unless otherwise specifically
prohibited under applicable laws or by the rules and regulations of any governing governmental agencies or national securities exchanges, or unless the Committee shall determine otherwise in the Award Agreement, the Committee is authorized (but not
obligated) to make adjustments in the terms and conditions of outstanding Awards, including without limitation the following (or any combination thereof), provided, that, the Committee’s decision shall be fair and equitable to
each Participant: 
  

	 	(a)	 continuation or assumption of such outstanding Awards under the Plan by the Company (if it is the surviving
company or corporation) or by the surviving company or corporation or its parent; 

  
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	 	(b)	 substitution by the surviving company or corporation or its parent of awards with substantially the same terms
for outstanding Awards (excluding the consideration payable upon settlement of the Awards); 

  

	 	(c)	 accelerated exercisability, vesting and/or lapse of restrictions under outstanding Awards immediately prior to
the occurrence of such event; 

  

	 	(d)	 upon written notice, provide that any outstanding Awards must be exercised, to the extent then exercisable,
during a reasonable period of time immediately prior to the scheduled consummation of the event or such other period as determined by the Committee (contingent upon the consummation of the event), and at the end of such period, such Awards shall
terminate to the extent not so exercised within the relevant period; and 

  

	 	(e)	 cancellation of all or any portion of outstanding Awards for fair value (in the form of cash, Shares, other
property or any combination thereof) as determined in the sole discretion of the Committee and which value may be zero, provided, that, in the case of Options and Stock Appreciation Rights or similar Awards, the fair value may equal the excess, if
any, of the value of the consideration to be paid in the Change of Control transaction to holders of the same number of Shares subject to such Awards (or, if no such consideration is paid, Fair Market Value of the Shares subject to such outstanding
Awards or portion thereof being cancelled) over the aggregate Option Price or grant price, as applicable, with respect to such Awards or portion thereof being cancelled. 

 

	Article 11.Duration;	 Amendment, Modification, Suspension and Termination 

11.1 Duration of Plan. Unless sooner terminated as provided in Section 11.2, this Plan shall
terminate on the twentieth anniversary of the Effective Date. 
 11.2 Amendment, Modification, Suspension and Termination of
Plan. Subject to the terms of the Plan, the Committee may amend, alter, suspend, discontinue or terminate this Plan or any portion thereof or any Award (or Award Agreement) hereunder at any time, in its sole discretion, provided,
that, no action taken by the Committee shall adversely affect in any material respect the rights granted to any Participant under any outstanding Awards (other than pursuant to Article 10) without the Participant’s written
consent. 
 Article 12.General Provisions 

12.1 No Right to Service or Award. The granting of an Award under the Plan shall impose no obligation on the Company, any
Subsidiary or any Affiliate to continue the service of a Participant and shall not lessen or affect any right that the Company, any Subsidiary or any Affiliate may have to terminate the service of such Participant. No Participant or other Person
shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries of Awards. The terms and conditions of Awards and the Committee’s determinations and
interpretations with respect thereto need not be the same with respect to each Participant (whether or not such Participants are similarly situated). 

12.2 Settlement of Awards. Each Award Agreement shall establish the form in which the Award shall be settled. The
Committee shall determine whether cash, Awards, other securities or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be issued, rounded, forfeited, or otherwise
eliminated. 

  
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 12.3 Tax Withholding. The Company shall have the power and the right to
deduct or withhold automatically from any amount deliverable under the Award or otherwise, or require a Participant to remit to the Company (or its Subsidiary or Affiliate, as applicable), the minimum statutory amount to satisfy foreign, federal,
state, and/or local taxes, required by law or regulation to be withheld with respect to any taxable event arising as a result of the Plan, including without limitation, the applicable tax laws and regulations of the People’s Republic of China.
With respect to any required withholdings, Participants may elect (subject to the Company’s automatic withholding right set out above), subject to the approval of the Committee and compliance with applicable laws, to satisfy the withholding
requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction. 

12.4 No Guarantees Regarding Tax Treatment. Participants (or their beneficiaries) shall be responsible for all taxes with
respect to any Awards under the Plan. The Committee and the Company make no guarantees to any Person regarding the tax treatment of Awards or payments made under the Plan. 

12.5 Non-Transferability of Awards. Unless otherwise determined by the Committee,
an Award shall not be transferable or assignable by the Participant except in the event of his death (subject to the applicable laws of descent and distribution) and any such purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the Company or any Affiliate. No transfer shall be permitted for value or consideration. An award exercisable after the death of a Participant may be exercised by the legatees, personal
representatives or distributees of the Participant. Any permitted transfer of the Awards to heirs or legatees of the Participant shall not be effective to bind the Company unless the Committee shall have been furnished with written notice thereof
and a copy of such evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions hereof. 

12.6 Conditions and Restrictions on Shares. The Committee may impose such other conditions or restrictions on any Shares
received in connection with an Award as it may deem advisable or desirable. These restrictions may include, but shall not be limited to, requirements that the Participant: (a) become a signatory to the Company’s then-existing shareholders
agreement; (b) hold the Shares received for a specified period of time; or (c) represent and warrant in writing that the Participant is acquiring the Shares for investment and without any present intention to sell or distribute such
Shares. The certificates for Shares may include any legend which the Committee deems appropriate to reflect any conditions and restrictions applicable to such Shares. 

12.7 Shares Not Registered. Shares and Awards shall not be issued under this Plan unless the issuance and delivery of such
Shares and any Awards comply with (or are exempt from) all applicable requirements of law, including, without limitation, the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and
regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded. The Company shall not be obligated to file any registration statement under any applicable securities laws
to permit the purchase or issuance of any Shares or any Awards under this Plan, and accordingly any certificates for Shares or documents granting Awards may have an appropriate legend or statement of applicable restrictions endorsed thereon. If the
Company deems it necessary to ensure that the issuance of securities under this Plan is not required to be registered under any applicable securities laws, each Participant to whom such security would be purchased or issued shall deliver to the
Company an agreement or certificate containing such representations, warranties and covenants as the Company reasonably requires. 

  
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 12.8 Compliance with Applicable Laws. To comply with applicable laws in
countries in which the Company or any Subsidiary or Affiliate operates or has Employees, Directors or Consultants, the Committee, in its sole discretion, shall have the power and authority to: (a) determine which Subsidiaries or Affiliates
shall be covered by the Plan; (b) determine which Employees, Directors or Consultants are eligible to participate in the Plan; (c) modify the terms and conditions of any Award granted to Employees, Directors or Consultants to comply with
applicable laws; (d) take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local government regulatory exemptions or approvals; and (e) establish subplans and modify
exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable. 
 12.9 Rights as a
Shareholder. Except as otherwise provided herein or in the applicable Award Agreement, a Participant shall have none of the rights of a shareholder with respect to Shares covered by any Award until the Participant becomes the record
holder of such Shares. 
 12.10 Severability. If any provision of the Plan or any Award is or becomes or is deemed to
be invalid, illegal, or unenforceable in any jurisdiction, or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person, or Award,
and the remainder of the Plan and any such Award shall remain in full force and effect. 
 12.11 Unfunded Plan.
Participants shall have no right, title, or interest whatsoever in or to any investments that the Company or any of its Subsidiaries or Affiliates may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan,
and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative, or any other Person. To the extent
that any Person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general
funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts. The Plan is not subject to the U.S. Employee Retirement Income Security Act of 1974, as amended
from time to time. 
 12.12 No Constraint on Corporate Action. Nothing in the Plan shall be construed to: (a) limit,
impair, or otherwise affect the Company’s right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any
part of its business or assets; or (b) limit the right or power of the Company to take any action which such entity deems to be necessary or appropriate. 

12.13 Successors. All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any
successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business or assets of the Company. 

12.14 Governing Law. This Plan and each Award Agreement and all claims or causes of action or other matters (whether in
contract, tort or otherwise) that may be based upon, arise out of or relate to this Plan or any Award Agreement or the negotiation, execution or performance of this Plan or 

  
 11 

 
any Award Agreement shall be governed by and construed in accordance with the laws of the Cayman Islands, excluding any conflict or choice of law rule or principle that might otherwise refer
construction or interpretation of this Plan to the substantive law of another jurisdiction. 
 12.15 Effective Date. The Plan
shall become effective as of the Effective Date. 
 12.16 Shareholder Approval. The Plan will be submitted for approval by the
shareholders of the Company at an annual meeting or any special meeting of shareholders of the Company within 12 months of the Effective Date. Any Awards granted under the Plan prior to such approval of shareholders shall be effective as of the date
of grant, but no such Award may be exercised or settled and no restrictions relating to any Award may lapse prior to such shareholder approval, and if shareholders fail to approve the Plan as specified hereunder, the Plan and any Award shall be
terminated and cancelled without consideration. 
 *     *    * 

This Plan was duly adopted and approved by the Board of Directors of the Company on Oct
18th, 2010 and was amended and restated on November 3, 2014 and further amended and restated on August 6, 2016 and further amended and restated on September 15, 2020. 

  
 12srne-ex101_33.htm

Exhibit 10.1

CONSENT UNDER AND AMENDMENT NO. 3 TO INDENTURE AND LETTER OF CREDIT

This CONSENT UNDER AND AMENDMENT NO. 3 TO INDENTURE AND LETTER OF CREDIT is entered into as of December 14, 2020 (this “Consent and Amendment”) by and among SCILEX PHARMACEUTICALS INC., a Delaware corporation (the “Issuer”), SORRENTO THERAPEUTICS, INC., a Delaware corporation (the “Parent Guarantor”), U.S. BANK NATIONAL ASSOCIATION, as trustee (in such capacity, together with its successors and assigns in such capacity, the “Trustee”) and collateral agent (in such capacity, together with its successors and assigns in such capacity, the “Collateral Agent”) under the Indenture (as defined below), and the beneficial owners of the Securities and the Holders listed on the signature pages hereof (collectively, the “Holders”). 

RECITALS

WHEREAS, the Issuer, the Parent Guarantor, the Trustee and the Collateral Agent are parties to that certain Indenture, dated as of September 7, 2018 (as modified and supplemented and in effect from time to time, the “Indenture”), pursuant to which the Issuer issued Senior Secured Notes due 2026 in the aggregate principal amount of $224,000,000;

WHEREAS, the Issuer proposes to enter into that certain Credit and Security Agreement with CNH Finance Fund I, L.P. (together with its successors and permitted assignees, the “Lender”), in the form attached hereto as Exhibit A (as may be amended, restated, supplemented, or otherwise modified from time to time, subject to the terms of the CNH Intercreditor Agreement (defined below), the “Credit Agreement”), which provides, inter alia, Issuer with the ability to incur revolving loans (each such loan, a “Loan”) in an aggregate amount of up to $10,000,000, subject to the terms and conditions set forth in the Credit Agreement and the other Loan Documents (as defined therein); 

WHEREAS, pursuant to Section 4.03 of the Indenture, the Issuer shall not, directly or indirectly, incur Indebtedness, except as provided therein;

WHEREAS, pursuant to Section 9.02(a) of the Indenture, the parties to the Indenture may waive any provision thereof with the written consent of the Holders of at least two-thirds of the aggregate principal amount of the Notes then outstanding voting as a single class; 

WHEREAS, pursuant to Section 9.02(a)(v) of the Indenture, without the consent of each Holder of an outstanding Note affected, an amendment, supplement or waiver may not affect the priority of any Liens securing the Notes;

WHEREAS, the Issuer requests (a) the consent of the Holders to (i) Issuer’s incurrence and performance (including, without limitation, the payment of Loans as they become due) of payment and performance obligations to the Lender under the Credit Agreement and the other Loan Documents, (ii) Issuer’s securing such payment and performance obligations by granting to the Lender a continuing security interest in the Collateral as such term is defined in the Credit Agreement (such Collateral, the “CNH Collateral”; the security interest in such CNH Collateral, the “CNH Lien”) and (iii) the subordination of the Securities and Collateral Agent’s Lien in the CNH Collateral to the extent provided in that certain Intercreditor Agreement to be entered into by and among Lender, Trustee and the Issuer in the form attached hereto as Exhibit B (as may be 

 

 

amended, restated, supplemented, or otherwise modified from time to time subject to the terms and provisions thereof and the Indenture, the “CNH Intercreditor Agreement”), pursuant to which, inter alia, the Lender shall have a first and prior security interest in, upon and to the CNH Collateral to secure the Loan and (b) the Holders to instruct the Trustee to execute and deliver the CNH Intercreditor Agreement; and

WHEREAS, the Issuer has requested that the Holders, the Trustee and the Collateral Agent agree to amend the Indenture and the Letter of Credit in certain respects, in each case as set forth in this Consent and Amendment.

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:

SECTION 1.Definitions.  Except as otherwise defined in this Consent and Amendment, terms defined in the Indenture are used herein as defined therein.  

SECTION 2.Consents.  Each of the parties hereto agrees that, effective on the Effective Date (as defined in Section 6), the Holders consent to (a) Issuer’s incurrence and performance (including, without limitation, the payment of Loans as they become due) of payment and performance obligations to the Lender under the Credit Agreement and the other Loan Documents including all AR Loan Obligations as defined in the CNH Intercreditor Agreement in the maximum principal amount of up to $10,000,000, (b) Issuer’s securing such payment and performance obligations pursuant to the grant of the CNH Lien to the Lender and (c) the subordination of the Securities and Collateral Agent’s Lien in the CNH Collateral to the extent provided in the CNH Intercreditor Agreement.

SECTION 3.Amendments.  Each of the parties hereto agrees that, effective on the Effective Date:

(a)The term “Additional Amount” is hereby deleted in Section 1.01 of the Indenture.

(b)The term “Amendment No. 3” is hereby added to Section 1.01 of the Indenture in the appropriate alphabetical order:

“Amendment No. 3” shall mean that certain Consent Under and Amendment No. 3 to Indenture and letter of Credit, dated as of December 14, 2020, by and among the Issuer, the Parent Guarantor, the Trustee, the Collateral Agent and the Holders party thereto.

(c)The term “Revolving Loan” is hereby added to Section 1.01 of the Indenture in the appropriate alphabetical order:

“Revolving Loan” shall mean the AR Loan Obligations as defined in the Intercreditor Agreement among CNH Finance Fund I, L.P., Trustee and the Issuer, as the same may be amended, restated, supplemented or otherwise modified from time to time.

(d)The term “Minimum Cash Provision” is hereby amended and restated in its entirety as follows:

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“Minimum Cash Provision” means the provision set forth in the Letter of Credit specifying the amount that the Issuer is required to hold in Cash Equivalents in bank accounts, as of the end of any calendar month, in order not to trigger a drawing condition under the Letter of Credit, which amount is at least $4,000,000 in the aggregate commencing with the month ending December 31, 2020; provided that if the Issuer does not satisfy each of (i) the December Optional Repurchase Conditions (as defined in Amendment No. 3) and (ii) at least one of either (x) the February Optional Repurchase Conditions (as defined in Amendment No. 3) or (y) the April Optional Repurchase Conditions (as defined in Amendment No. 3), then, commencing with the month ending April 30, 2021 and for each month thereafter, such amount shall be $10,000,000 in the aggregate.

(e)Upon the Effective Date Repurchase (as defined below), each of Section 4.08(b) and Section 4.08(c) of the Indenture is hereby amended and restated to read as follows:

Intentionally Deleted.

(f)Section 4.23 of the Indenture is hereby amended and restated in its entirety as follows:

Letter of Credit. The Issuer shall make a timely drawing under the Letter of Credit at such time, if any, that the Issuer is permitted to make such a drawing under the Letter of Credit.   After such time (if any) that the Letter of Credit is drawn by the Issuer, the Issuer shall maintain at all times thereafter at least $10,000,000 in aggregate unrestricted Cash Equivalents held by or in the name of the Issuer. In addition, within five (5) Business Days after the Letter of Credit is drawn by the Issuer, the Issuer shall complete the “LC Repurchase” as defined in, and in accordance with, Amendment No. 3.

(g)The reference to “$25,000,000 plus the Additional Amount (if any)” in the second sentence of clause (c) of Section 4.25 of the Indenture and in the second sentence of clause (d) of Section 4.25 of the Indenture is hereby deleted and replaced in both sentences with the phrase “$25,000,000”. 

(h)Section 4.25(e) of the Indenture is hereby deleted in its entirety.

(i)Clause (B1) of Exhibit 1 of the Letter of Credit is hereby amended and restated in its entirety as follows with the following two paragraphs, each of which shall be an independent drawing condition for the Letter of Credit:

[(B1a)Scilex has failed to hold, as of the end of the most recently ended calendar month, commencing with the month ending December 31, 2020, at least US$4,000,000 in the aggregate of unrestricted Cash Equivalents in bank accounts.]

or

 

[(B1b)Scilex (a) either (i) did not satisfy the December Optional Repurchase Conditions (as defined in Amendment No. 3) or (ii) did not satisfy at least one of (x) the February Optional Repurchase Conditions or (y) the April Optional Repurchase Conditions and (b) has failed to hold, as of the end of the most recently ended calendar month, commencing 

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with the month ending April 30, 2021, at least US$10,000,000 in the aggregate of unrestricted Cash Equivalents in bank accounts.]

SECTION 4.Representations and Warranties of the Issuer and the Parent Guarantor.  Each of the Issuer and the Parent Guarantor represents and warrants as follows:

(a)as of the date hereof, the representations and warranties contained in the Indenture, the Securities, the Collateral Agreement, the Purchase Agreements or in any Security Document (each as amended hereby) are true and correct in all material respects as though made on and as of such date (except where such representations and warranties expressly relate to an earlier date, in which case such representations and warranties are true and correct in all material respects as of such earlier date); provided that any representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct in all respects on such respective dates;

(b)as of the date hereof, no event has occurred and is continuing that constitutes a “Default” or “Event of Default” under the Indenture, the Securities or any Security Document, and the execution, delivery and performance of this Consent and Amendment will not cause or constitute any such Default or Event of Default under the Indenture, the Securities or any Security Document, as amended hereby; and

(c)each of the Issuer and the Parent Guarantor has duly authorized, executed and delivered this Consent and Amendment, and this Consent and Amendment constitutes the legal, valid and binding obligation of the Issuer and the Parent Guarantor enforceable against such person in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, moratorium, reorganization and other similar laws relating to or affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding in equity or law).

SECTION 5.Representations and Warranties, and Covenant, of the Holders.

(a)Representations and Warranties.  Each Holder hereby represents and warrants, with respect to itself, to each of the Trustee and the Collateral Agent that as of the date hereof (i) such Holder owns or beneficially owns, respectively, the principal amount of the Securities set forth opposite such Holder’s name under the column heading “Principal Amount of Securities” in Schedule 1 attached hereto and, if such Securities are beneficially owned through the book-entry system of The Depository Trust Company, then such Securities are held through The Depository Trust Company participant set forth opposite such Holder’s name under the column heading “Depository Trust Company Participant Name and Number” in Schedule 1 attached hereto (and if nothing is set forth opposite such Holder’s name under the column heading “Depository Trust Company Participant Name and Number” in Schedule 1 attached hereto then such Holder does not hold such Securities through the book-entry system of The Depository Trust Company), (ii) the CUSIP Number of such Securities that are beneficially owned by such Holder are set forth opposite such Holder’s name under the column heading “CUSIP No.” in Schedule 1 attached hereto, (iii) such Holder is not the Issuer, the Parent Guarantor or a Subsidiary of the Issuer or the Parent Guarantor, (iv) such Holder has the full power and authority to provide this Consent and Amendment with respect to such Securities that are owned or beneficially owned by such Holder and (v) this Consent and Amendment has been duly executed and delivered by such Holder, and 

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this Consent and Amendment constitutes a legal, valid and binding obligation of such Holder enforceable against such Holder in accordance with its terms.  

(b)Covenant.  Each Holder (on a several and not joint basis) agrees to indemnify and hold harmless the Trustee and the Collateral Agent from and against any and all damages, losses, costs and expenses (including, without limitation, legal fees and expenses) arising or resulting from reliance upon the representations and warranties by such Holder set forth in this Section 5.

SECTION 6.Effectiveness.  This Consent and Amendment shall become effective as of the date (such date, the “Effective Date”) that:

(a)the Trustee shall have received counterparts of this Consent and Amendment executed by the Trustee, the Issuer, the Parent Guarantor, Collateral Agent and all the Holders of the then outstanding Securities;

(b)the Issuer shall have repurchased from each Holder Securities in a principal amount equal to (i) $45,000,000 multiplied by (ii) a fraction the numerator of which is the then outstanding principal amount of the Securities held by such Holder and the denominator of which is the then outstanding principal amount of all of the outstanding Securities, at a purchase price in cash equal to 100% of the principal amount thereof (such repurchase, the “Effective Date Repurchase”); and

(c)the Issuer shall have executed and delivered a letter agreement with Oaktree Capital Management, L.P. (“Oaktree”) amending Oaktree’s board representation rights with respect to Scilex Holding Company and the Issuer, in form and substance satisfactory to Oaktree and the Issuer; 

(d)the Issuer shall have paid the actual, reasonable and documented fees and expenses of the Trustee associated with the negotiation and performance of this Consent and Amendment in the amount of $1,500.00, and the actual, reasonable and documented fees of its counsel, Shipman & Goodwin LLP, in the amount of $7,020.00; and

(e)the Issuer shall have paid the actual, reasonable and documented fees and expenses of counsel to North Haven Tactical Value Fund LP, Pillsbury Winthrop Shaw Pittman, LLP, in the amount of $70,054.

SECTION 7.Repurchases.  

(a)Notwithstanding Sections 4.08(c), 4.24 or 4.25 of the Indenture, the Holders (i) hereby agree that the Issuer may effectuate the Effective Date Repurchase and shall use the funds in the Collateral Account and the Reserve Account for the purpose of consummating the Effective Date Repurchase, (ii) hereby instruct the Trustee and the Collateral Agent to release funds in the Collateral Account and the Reserve Account in an aggregate amount of up to $45,000,000 (the “Released Funds”) to the order of the Issuer (free and clear of any Lien under the Collateral Agreement and any other Security Document) for such purpose, (iii) hereby agree that any remaining funds in the Collateral Account and the Reserve Account after the consummation of the Effective Date Repurchase shall be released to the Issuer by the Trustee and the Collateral Agent (free and clear of any Lien under the Collateral Agreement and any other Security Document and the Holders hereby instruct the Trustee and the Collateral Agent to release such funds accordingly) and (iv) after the consummation of the Effective Date Repurchase, hereby 

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agree that Sections 4.08(c), 4.24 and 4.25 of the Indenture shall have no further force and effect and the Collateral Account and the Reserve Account shall each be closed. 

(b)In the event that any Securities remain outstanding on December 16, 2020, on December 16, 2020, the Issuer may, in its sole and absolute discretion, provide notice substantially in the form attached hereto as Exhibit C (the “December Repurchase Notice”) to the Trustee and the Holders that the Issuer intends to repurchase from each Holder Securities in a principal amount equal to (i) $20,000,000 (or, if less, the remaining outstanding principal amount of the Securities) multiplied by (ii) a fraction the numerator of which is the then outstanding principal amount of the Securities held by such Holder and the denominator of which is the then outstanding principal amount of all of the outstanding Securities (such amount with respect to each Holder, such Holder’s “Pro Rata Share”), at a purchase price in cash equal to 100% of the principal amount thereof (such repurchase, the “December 2020 Repurchase”). If delivered, the December Repurchase Notice shall be binding, irrevocable and unconditional. If the Issuer provides the Holders with a December Repurchase Notice, the Issuer will, no later than December 16, 2020, also deposit or cause to be deposited with the Trustee to the account specified on Exhibit D attached hereto an amount equal to $20,000,000 (or, if less, the remaining outstanding principal amount of the Securities) (the “December Repurchase Amount”, and the delivery of the December Repurchase Notice and such deposit of the December Repurchase Amount with the Trustee shall be referred to herein as the “December Optional Repurchase Conditions”) to be held in escrow by the Trustee for the sole purpose of effectuating the December 2020 Repurchase.  The Trustee shall apply the December Repurchase Amount to repurchase from each Holder such Holder’s Pro Rata Share of the Securities not later than two (2) Business Days after the later of the date of receipt by the Trustee of the (x) December Repurchase Notice and (y) December Repurchase Amount.

(c)In the event that any Securities remain outstanding on February 12, 2021, on February 12, 2021, the Issuer may, in its sole and absolute discretion, provide notice substantially in the form attached hereto as Exhibit C (the “February Repurchase Notice”) to the Trustee and the Holders that the Issuer intends to repurchase from each Holder Securities in a principal amount equal to (i) $20,000,000 (or, if less, the remaining outstanding principal amount of the Securities) multiplied by (ii) a fraction the numerator of which is the then outstanding principal amount of the Securities held by such Holder and the denominator of which is the then outstanding principal amount of all of the outstanding Securities, at a purchase price in cash equal to 100% of the principal amount thereof (such repurchase, the “February 2021 Repurchase”). If delivered, the February Repurchase Notice shall be binding, irrevocable and unconditional. If the Issuer provides the Holders with a February Repurchase Notice, the Issuer will, no later than February 12, 2021, also deposit or cause to be deposited with the Trustee to the account specified on Exhibit D attached hereto an amount equal to $20,000,000 (or, if less, the remaining outstanding principal amount of the Securities) (the “February Repurchase Amount”, and the delivery of the February Repurchase Notice and such deposit of the February Repurchase Amount with the Trustee shall be referred to herein as the “February Optional Repurchase Conditions”) to be held in escrow by the Trustee for the sole purpose of effectuating the February 2021 Repurchase.  The Trustee shall apply the February Repurchase Amount to repurchase from each Holder such Holder’s Pro Rata Share of the Securities not later than two (2) Business Days after the later of the date of receipt by the Trustee of the (x) February Repurchase Notice and (y) the February Repurchase Amount.

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(d)In the event that any Securities remain outstanding on April 13, 2021, on April 13, 2021, the Issuer may, in its sole and absolute discretion, provide notice substantially in the form attached hereto as Exhibit C (the “April Repurchase Notice”) to the Trustee and the Holders that the Issuer intends to repurchase from each Holder Securities in a principal amount equal to (i) $20,000,000 (or, if less, the remaining outstanding principal amount of the Securities) multiplied by (ii) a fraction the numerator of which is the then outstanding principal amount of the Securities held by such Holder and the denominator of which is the then outstanding principal amount of all of the outstanding Securities, at a purchase price in cash equal to 100% of the principal amount thereof (such repurchase, the “April 2021 Repurchase”). If delivered, the April Repurchase Notice shall be binding, irrevocable and unconditional. If the Issuer provides the Holders with an April Repurchase Notice, the Issuer will, no later than April 13, 2021, also deposit or cause to be deposited with the Trustee to the account specified on Exhibit D attached hereto an amount equal to $20,000,000 (or, if less, the remaining outstanding principal amount of the Securities) (the “April Repurchase Amount”, and the delivery of the April Repurchase Notice and such deposit of the April Repurchase Amount with the Trustee shall be referred to herein as the “April Optional Repurchase Conditions” and, together with the December Optional Repurchase Conditions and the February Optional Repurchase Conditions, the “Optional Repurchase Conditions”) to be held in escrow by the Trustee for the sole purpose of effectuating the April 2021 Repurchase.  The Trustee shall apply the April Repurchase Amount to repurchase from each Holder such Holder’s Pro Rata Share of the Securities not later than two (2) Business Days after the later of the date of receipt by the Trustee of the (x) April Repurchase Notice and (y) the April Repurchase Amount.

(e)In the event that the Letter of Credit is drawn by the Issuer, the Issuer shall, within five (5) Business Days after the date of such drawing, repurchase from each Holder Securities in a principal amount equal to (i) $20,000,000 (or, if less, the remaining outstanding principal amount of the Securities) multiplied by (ii) a fraction the numerator of which is the then outstanding principal amount of the Securities held by such Holder and the denominator of which is the then outstanding principal amount of all of the outstanding Securities, at a purchase price in cash equal to 100% of the principal amount thereof (such repurchase, the “LC Repurchase” and, together with the Effective Date Repurchase, the December 2020 Repurchase, the February 2021 Repurchase and the April 2021 Repurchase, each a “Repurchase” and collectively the “Repurchases”).  Notwithstanding anything to the contrary in the Indenture, any failure by the Issuer to complete the LC Repurchase on or prior to the fifth (5th) Business Day following the date on which the Letter of Credit is drawn shall constitute an immediate Event of Default on and after such date.

(f)In connection with each Repurchase, the applicable Holder shall surrender the Security to or pursuant to the order of the Issuer.  If a Holder’s Securities are repurchased only in part, the Issuer shall execute, and order the Trustee to authenticate in accordance with Section 2.07 of the Indenture, new Securities equal in principal amount to the portion of the Securities surrendered but not repurchased.  If the Securities are Global Securities held by the Depository, then the Issuer shall cause the surrendered beneficial interests in such Global Securities so purchased to be transferred to the account of the Trustee pursuant to the applicable operational procedures of the Depository for tendering and withdrawing securities, and deliver a cancellation order to the Trustee with respect to such beneficial interests in accordance with Section 2.11 of the Indenture.

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(g)On the date of each Repurchase, the Issuer shall pay the repurchase price to the Holders entitled thereto and all Securities repurchased by the Issuer pursuant to such Repurchase shall be delivered to the Trustee for cancellation in accordance with Section 7(f) above and Section 2.11 of the Indenture.  

(h)The Holders hereby acknowledge and agree to accept the repurchase of the Securities pursuant to the Effective Date Repurchase in accordance with the terms of this Section 7 on the Effective Date.

(i)After the Effective Date, in the event that the Issuer wishes to redeem all of the remaining outstanding Securities under the Indenture on or prior to December 31, 2021 and requests that the Holders agree to an amendment to the Indenture in connection with such full redemption, the Holders shall consider such request in good faith, taking the Effective Date Repurchase into account.

(j)Notwithstanding anything to the contrary herein or otherwise, in the event that the Holders agree, in their sole discretion, that the Issuer may in the future redeem, repay, repurchase or otherwise retire Securities (a “Future Redemption”) in exchange for an amount to be repaid to the Holders of such Securities that is less than 100% of the principal balance of such Securities immediately prior to giving effect to such Future Redemption (such amount, expressed as a fraction, the numerator of which is the aggregate purchase price of such Securities in such Future Redemption and the denominator of which is the then outstanding principal amount of all such Securities, the “Below Par Exercise Rate”), the Holders hereby agree that the principal amount of such Future Redemption shall be reduced dollar-for-dollar by an amount equal to (i) the aggregate principal amount of the Securities repurchased in the Repurchases prior to such Future Redemption multiplied by (ii) one (1) minus the Below Par Exercise Rate.  For the avoidance of doubt, (x) as of the date hereof, the Holders have not agreed that any Future Redemption may be made at a Below Par Exercise Rate, or in any other manner other than in accordance with the Indenture, and (y) any such Future Redemption shall not be made at a Below Par Exercise Rate without the prior written consent of the Holders, which may be granted or withheld in the Holders’ sole and absolute discretion.

SECTION 8.Effect on the Indenture, Letter of Credit, Securities, Purchase Agreement and Security Documents.

(a)On and after the Effective Date each reference in the Indenture to “this Indenture,” “hereunder,” “hereof,” “herein” or words of like import, and each reference in the Letter of Credit, the Securities, the Purchase Agreement or any Security Documents to the Indenture, shall mean and be a reference to the Indenture as amended hereby.

(b)On and after the Effective Date each reference in the Letter of Credit to “this Letter of Credit,” “hereunder,” “hereof,” “herein” or words of like import, and each reference in the Indenture, the Securities, the Purchase Agreement or any Security Documents to the Letter of Credit, shall mean and be a reference to the Letter of Credit as amended hereby.

(c)Except as specifically amended above, the Indenture, the Letter of Credit, the Securities, the Purchase Agreement and the Security Documents shall remain in full force and effect and are hereby ratified and confirmed.  

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(d)Except as set forth in this Consent and Amendment, the execution, delivery and effectiveness of this Consent and Amendment shall not operate as a waiver of any right, power or remedy of the Trustee, the Collateral Agent or any of the Holders under the Indenture, the Letter of Credit, the Securities, the Purchase Agreement or any of the Security Documents, nor constitute a waiver of any provision thereof.

(e)None of the Trustee, the Collateral Agent or any Holder is under any obligation to enter into or consent to this Consent and Amendment.  The entering into of this Consent and Amendment by the Trustee and the Collateral Agent and any consent to this Consent and Amendment by any Holder shall not be deemed to limit or hinder any rights of any such party under the Indenture, the Letter of Credit, the Securities, the Purchase Agreement or any Security Document, nor shall it be deemed to create or infer a course of dealing between any such party, on the one hand, and the Parent Guarantor or the Issuer, on the other hand, with regard to any provision thereof.

SECTION 9.Authorization of Trustee and Collateral Agent.  Each of the Trustee and the Collateral Agent is hereby authorized, empowered and directed by the undersigned to execute and deliver this Consent and Amendment and the CNH Intercreditor Agreement and to execute any documents or take any actions reasonably necessary in order to effectuate this Consent and Amendment.

SECTION 10.General Authorization.  Any and all actions heretofore or hereafter taken by the Trustee, the Collateral Agent, the Issuer, the Parent Guarantor and/or any officer, director, member, manager, partner, employee, contractor, Affiliate, attorney, representative and/or agent of any of the foregoing consistent with the intent and purpose of the matters approved or consented to in this Consent and Amendment are hereby ratified, confirmed, approved and consented to in all respects.

SECTION 11.Execution in Counterparts; Facsimile Signatures.  The parties may sign any number of copies of this Consent and Amendment.  Each signed copy shall be an original, but all of them together represent the same agreement.  The exchange of copies of this Consent and Amendment and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Consent and Amendment as to the parties hereto and may be used in lieu of the original Consent and Amendment for all purposes.  Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes. Electronic signatures believed by the Trustee  to comply with the ESIGN Act of 2000 or other applicable law (including electronic images of handwritten signatures and digital signatures provided by DocuSign, Orbit, Adobe Sign or any other digital signature provider acceptable to the Trustee) shall also be deemed original signatures for all purposes hereunder.

SECTION 12.Governing Law.  This Consent and Amendment shall be governed by, and construed in accordance with, the laws of the State of New York without regard to principles of conflicts of law.

SECTION 13.Severability.  In case any provision in this Consent and Amendment shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.

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SECTION 14.Headings.  The headings of the Sections of this Consent and Amendment have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

SECTION 15.Binding Effect and Notice.  After the Effective Date, this Consent and Amendment shall bind each Holder (and such Holder’s successors and assigns) and every subsequent owner or beneficial owner of the Securities described on Schedule 1 attached hereto (or portion thereof that evidences the same debt as such Securities).  Any and all notices required to take any action in adopting this Consent and Amendment are hereby waived.  Each Holder acknowledges that this Consent and Amendment constitutes the required notice of this Consent and Amendment pursuant to Section 9.02(b) of the Indenture.  Each Holder and beneficial owner signatory hereto further agrees that such Holder’s or beneficial owner’s consent to this Consent and Amendment, and waiver of the applicable Indenture provisions expressly provided herein, shall not be revoked by such Holder or beneficial owner, and may not be revoked by any successors or assigns of such Holder or beneficial owner, prior to the Effective Date, notwithstanding the provisions of Section 9.03 of the Indenture.

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Consent and Amendment to be duly executed and delivered as of the date first above written.

ISSUER:

SCILEX PHARMACEUTICALS INC.

By: /s/ Jaisim Shah
     Name: Jaisim Shah
     Title: Chief Executive Officer

PARENT GUARANTOR:

 

SORRENTO THERAPEUTICS, INC.

By: /s/ Henry Ji, Ph.D.

     Name: Henry Ji, PhD.
     Title: President, Chief Executive Officer and Chairman of the Board

 

[Signature Page to Consent Under and Amendment No. 3 to Indenture and Letter of Credit]

 

IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Consent and Amendment to be duly executed and delivered as of the date first above written.

TRUSTEE:

U.S. BANK NATIONAL ASSOCIATION,
as Trustee

By: /s/ Alison D. B. Nadeau
     Name: Alison D. B. Nadeau
     Title: Vice President

COLLATERAL AGENT:

 

U.S. BANK NATIONAL ASSOCIATION,
as Collateral Agent

By: /s/ Alison D. B. Nadeau
     Name: Alison D. B. Nadeau
     Title: Vice President

[Signature Page to Consent Under and Amendment No. 3 to Indenture and Letter of Credit]

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