Item 1.02. Termination of a Material
Definitive Agreement.
On June 12, 2020, Sorrento Therapeutics, Inc. (the “Company”)
paid off all obligations owing under, and terminated, the Term Loan Agreement, dated as of
November 7, 2018, by and among the Company, certain of the Company’s domestic subsidiaries (the “Guarantors”),
certain funds affiliated with Oaktree Capital Management, L.P. (“Oaktree” and such funds, the “Lenders”)
and Oaktree Fund Administration, LLC, as administrative and collateral agent (the
“Agent”) (such Term Loan Agreement, as amended, the “Terminated Loan Agreement”).
Pursuant to the Terminated Loan Agreement, the Lenders previously provided a senior secured first lien term loan facility
to the Company, consisting of an initial term loan of $100.0 million on November 7, 2018 and an additional term loan of $20.0 million
on May 3, 2019 (collectively, the “Term Loans”). The Terminated Loan Agreement was secured by substantially all of
the Company’s and the Guarantors’ assets, and a pledge of 100% of the equity interests in the Guarantors and other
entities that each of the Company and the Guarantors holds (subject to certain limitations and exceptions). The security interests
and liens granted in connection with the Terminated Loan Agreement were terminated in connection with the Company’s discharge
of indebtedness thereunder.
Pursuant to the Terminated Loan
Agreement, upon the prepayment of the amounts outstanding under the Terminated Loan Agreement, the Company paid a prepayment fee in
an amount equal to 5% of the principal amount of the Term Loans prepaid, plus an exit fee in an amount equal to 1.25% of the
principal amount of the Term Loans prepaid.
In connection with the Terminated Loan
Agreement, the Company issued certain warrants to purchase (1) an aggregate of 6,288,985 shares of the Company’s common stock
on November 7, 2018, (2) an aggregate of 1,333,304 shares of the Company’s common stock on May 3, 2019, and (3) an aggregate
of 2,000,000 shares of the Company’s common stock on December 6, 2019 (collectively, the “Warrants”). The Company
and the Lenders are also party to that certain Registration Rights Agreement, dated as of November 7, 2018, as amended by that
certain Amendment No. 1 to the Registration Rights Agreement, dated as of May 3, 2019, by and among the Company and the persons
party thereto, as amended by that certain Amendment No. 2 to the Registration Rights Agreement, dated as of December 9, 2019, by
and among the Company and the persons party thereto, pursuant to which the Company agreed to file one or more registration statements
with the Securities and Exchange Commission for the purpose of registering for resale the shares issuable upon exercise of the
Warrants.
Certain entities affiliated with Oaktree
also purchased $80.0 million aggregate principal amount of the senior secured notes due 2026 (the “Scilex Notes”) issued
and sold by Scilex Pharmaceuticals Inc. (“Scilex Pharma”), a majority owned subsidiary of the Company, on September
7, 2018 (the “Offering”). In connection with the Offering, Scilex Pharma also entered into an indenture governing the
Scilex Notes with U.S. Bank National Association, as trustee and collateral agent, and the Company (the “Indenture”),
and, pursuant to the Indenture, the Company agreed to irrevocably and unconditionally guarantee, on a senior unsecured basis, the
punctual performance and payment when due of all obligations of Scilex Pharma under the Indenture.