On September 12, 2022, Sorrento Therapeutics, Inc. ("Sorrento") reported that it entered into a Contribution and Satisfaction of Indebtedness Agreement (the "Debt Exchange Agreement") with Scilex Holding Company, a majority-owned subsidiary of Sorrento ("Scilex"), and Scilex Pharmaceuticals, Inc., an indirect wholly owned subsidiary of Sorrento and direct wholly owned subsidiary of Scilex ("Scilex Pharma") (Filing, 8-K, Sorrento Therapeutics, SEP 12, 2022, View Source [SID1234619555]). The Debt Exchange Agreement relates to certain amounts owed to Sorrento by Scilex and Scilex Pharma, including accrued interest thereon, if any, as of the date of the Debt Exchange Agreement and as additional amounts may be incurred between the date of the Debt Exchange Agreement and the closing of the transactions contemplated by the Merger Agreement (as defined below), for certain loans and other amounts provided (or to be provided) by Sorrento to Scilex and Scilex Pharma (the "Outstanding Indebtedness"), which indebtedness is currently approximately $276,000,000, but which will not exceed $310,000,000 as of immediately prior to the closing of the transactions contemplated by the Merger Agreement.
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Pursuant to the Debt Exchange Agreement, (i) Sorrento agreed to contribute the Outstanding Indebtedness (as set forth in the Debt Exchange Agreement) to Scilex in exchange for the issuance by Scilex to Sorrento of that number of shares of to be designated Series A Preferred Stock, par value $0.0001 per share, of Scilex (subject to adjustment for recapitalizations, stock splits, stock dividends and similar transactions) (the "Shares" and such transaction, the "Contribution") that is equal to (a) the sum of the aggregate amount of the Outstanding Indebtedness plus the amount that is equal to 10% of such aggregate amount of the Outstanding Indebtedness divided by (b) $11.00 (rounded up to the nearest whole share); and (ii) immediately following the Contribution, Scilex agreed to further contribute the portion of such Outstanding Indebtedness that is owed by Scilex Pharma to Sorrento as a capital contribution to Scilex Pharma for no consideration. Further, pursuant to the Debt Exchange Agreement, prior to the Contribution, Scilex agreed to file, with the Secretary of State of the State of Delaware, (1) a Certificate of Amendment to its Amended and Restated Certificate of Incorporation in order to increase the number of authorized shares of preferred stock of Scilex from 20,000,000 shares to 45,000,000 shares; and (2) a certificate of designations, in the form attached as Exhibit B to the Debt Exchange Agreement, to set forth the designations, powers, rights and preferences and qualifications, limitations and restrictions of the Shares. Upon the occurrence of the Contribution and issuance of the Shares to Sorrento, the Outstanding Indebtedness of Scilex and Scilex Pharma owed to Sorrento shall be extinguished in its entirety and shall be of no further force or effect and shall be deemed satisfied in full.
The foregoing description of the Debt Exchange Agreement does not purport to be complete and is qualified in its entirety by reference to the Debt Exchange Agreement, a copy of which is filed with this Current Report on Form 8-K as Exhibit 10.1 hereto and is incorporated herein by reference.