This Escrow
Agreement (this “ Escrow Agreement ”), dated as
of September 18, 2009, by and among QuikByte Software, Inc., a
Colorado corporation (“ Parent ”), Stephen
Zaniboni, an individual, as the Stockholders’ Agent
hereunder, Glenn Halpryn, an individual, as the Parent
Representative hereunder, and Bank of America, N.A., as escrow
agent (“ Escrow Agent ”). Capitalized terms used
in this Agreement and not otherwise defined shall have the meanings
given to them in the Merger Agreement (as defined below), a copy of
which has been delivered to the Escrow Agent solely to enable it to
reference such meanings.
Whereas , Parent, Sorrento
Therapeutics, Inc., a Delaware corporation (‘ Sorrento
”), Sorrento Merger Corp., Inc., a Delaware corporation and
wholly-owned subsidiary of Parent (“ Merger Sub
”), Stephen Zaniboni, as the representative of the holders of
Sorrento Securities (the “ Stockholders ”), and
Glenn Halpryn, as Parent Representative thereunder, have entered
into a Merger Agreement, dated as of July 14, 2009 (the
“ Merger Agreement ”), attached hereto as
Exhibit A , pursuant to which, among other things,
Merger Sub will merge with and into Sorrento, with the result that
Sorrento survives the merger and becomes a wholly-owned subsidiary
of Parent in a transaction in which the consideration to the
Stockholders is common shares of Parent, par value $0.0001 per
share (the “ Parent Shares ”);
Whereas , the Merger Agreement
contemplates that Parent shall deposit the Sorrento Escrowed Shares
to secure the indemnification obligations of Sorrento under the
Merger Agreement;
Whereas , the Stockholders
have appointed the Stockholders’ Agent as their
representative for purposes of this Escrow Agreement and as
attorney-in-fact and agent for and on behalf of each Stockholder
with respect to the subject matter of this Escrow Agreement
(provided, however, that such Stockholders are not, and are not
intended to be, parties to this Escrow Agreement) and the taking by
the Stockholders’ Agent of any and all actions and the making
of any decision required or permitted to be taken or made by them
under this Escrow Agreement;
Whereas , Parent appointed the
Parent Representative as its representative for purposes of this
Escrow Agreement and as attorney-in-fact and agent for and on
behalf of Parent with respect to the subject matter of this Escrow
Agreement and the taking by the Parent Representative of any and
all actions and the making of any decision required or permitted to
be taken or made by Parent under this Escrow Agreement;
and
Whereas , the parties hereto
desire to set forth further terms and conditions in addition to
those set forth in the Merger Agreement relating to the operation
of the Escrow Fund (as defined below).
The parties
hereto, in consideration of the mutual covenants contained herein,
and intending to be legally bound, hereby agree as
follows:
Section 1.
Establishment of Escrow Fund .
1.1
Deposit of Consideration Shares . The Sorrento Escrowed
Securities shall be deposited into an escrow fund (the “
Escrow Fund ”) and held by the Escrow Agent in
accordance with the terms hereof. The Escrow Agent agrees to hold
the Escrow Fund in a separate and distinct account which is hereby
established. The Sorrento Escrowed Securities comprising the Escrow
Fund shall be referred to herein as the “ Escrow
Shares .” The Escrow Shares shall be issued in the name
of “Bank of America, N.A., as escrow agent for the Escrow
Agreement, dated September 18, 2009, by and among QuikByte
Software, Inc., Stephen Zaniboni, an individual, as the
Stockholders’ Agent thereunder, Glenn Halpryn, an individual,
as the Parent Representative thereunder, and Bank of America,
N.A.” and Parent shall deliver to Escrow Agent a stock
certificate representing the Escrow Shares of each Stockholder in
each such Stockholder’s proportionate interest in the Escrow
Fund as set forth on Exhibit B , attached hereto. The
Escrow Fund shall be held as collateral to secure the rights of
Parent as provided for in Article IX of the Merger
Agreement.
1.2
Appointment of Escrow Agent . Parent, the Parent
Representative, and the Stockholders’ Agent appoint the
Escrow Agent to serve as escrow agent, and Escrow Agent hereby
agrees to act as escrow agent hereunder and to hold, safeguard and
disburse the Escrow Fund pursuant to the terms and conditions
hereof. The Escrow Agent shall have no interest in the Escrow
Shares other than possession or control of the certificates
representing such Escrow Shares and related stock
powers.
1.3
Transferability . The interests of the Stockholders in the
Escrow Fund shall not be assignable or transferable, other than by
operation of law (in which case, the portion of the Escrow Fund so
assigned or transferred shall continue to be bound by the terms of
this Escrow Agreement) or by descent or distribution. No assignment
or transfer of any of such interests by operation of law shall be
recognized or given effect until Parent and the Escrow Agent shall
have received written notice of such assignment or
transfer.
1.4
Distribution . Any securities comprising the Escrow Fund,
including, but not limited to, any property distributable in
respect of or in exchange for any Escrow Shares (any such
distribution shall be referred to herein as “Additional
Property”) as a result of a stock split, stock dividend,
recapitalization, merger, asset purchase, sale of assets or similar
transaction shall, upon receipt by the Stockholder, be promptly
distributed to and held by Escrow Agent as part of the Escrow Fund
and any such Additional Property shall become part of the Escrow
Fund for purposes of this Escrow Agreement. At any time any Escrow
Shares are required to be released from the Escrow Fund to the
Stockholders pursuant to this Escrow Agreement, any Additional
Property previously received by Escrow Agent in respect of or in
exchange for such Escrow Shares shall be released from the Escrow
Fund to the Stockholders.
1.5
Escrow Fund . The Escrow Fund shall not be subject to any
lien, attachment, trustee process or any other judicial process of
any creditor of any Stockholder or of any party hereto. The Escrow
Agent shall hold and safeguard the Escrow Fund until it is released
in accordance with Section 3 below; provided,
however, that if the Escrow Agent has received from Parent
Representative a Claim Notice (as defined below) setting forth a
claim that has not been resolved by the Termination Date (as
defined below), then the Escrow Agent shall
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hold and
safeguard that portion of the Escrow Fund equal to 100% of the
amount claimed as Losses in the Claim Notice (the “
Retained Amount ”), and promptly after the resolution
thereof that portion of the Escrow Fund held back shall be released
in accordance with this Escrow Agreement.
1.6
Voting of Escrow Shares . The Stockholders shall have the
right, in their sole discretion, to exercise any voting rights
pertaining to the Escrow Shares, and if required Escrow Agent shall
comply with, and be entitled to rely on, any applicable Stockholder
written instructions. At every annual, special or adjourned meeting
of the stockholders of Parent and in every written consent of the
stockholders of Parent in lieu of any such meeting, in the absence
of written instructions from any individual Stockholder (directly
or through a proxy), Escrow Agent shall not vote any of the Escrow
Shares being held in the Escrow Fund on behalf of that individual
Stockholder. The Stockholders shall further have the right, in
their sole discretion, to direct Escrow Agent in writing to cause
the tender of such Escrow Shares in a tender offer for Common
Stock.
Section 2.
Administration of Escrow Fund . Except as otherwise provided
herein, the Escrow Agent shall administer the Escrow Fund as
follows:
2.1
If Parent has or claims to have incurred or suffered Losses for
which it is or may be entitled to indemnification under
Article IX of the Merger Agreement, Parent Representative
shall promptly deliver to the Stockholders’ Agent and the
Escrow Agent a written claim notice (a “ Claim Notice
”). Each Claim Notice shall contain a reasonably detailed
summary of the basis for the claim, the provision or provisions of
the Merger Agreement alleged to have been inaccurate or breached
and, if known, the estimated amount of the Losses incurred or
reasonably expected to be incurred by Parent as a result of such
inaccuracy or breach under which such indemnification is sought
(the “ Claimed Amount ”).
2.2
Within fifteen (15) calendar days after receipt by the
Stockholders’ Agent of a Claim Notice, the
Stockholders’ Agent may deliver to Parent Representative and
to the Escrow Agent a written response (the “ Response
Notice ”) in which the Stockholders’ Agent:
(a) agrees that an amount of Escrow Shares equal to the full
Claimed Amount may be released from the Escrow Fund to Parent;
(b) agrees that an amount of Escrow Shares equal to part, but
not all, of the Claimed Amount (the “ Agreed Amount
”) may be released from the Escrow Fund to Parent; or (c)
indicates that no part of the Escrow Fund may be released from the
Escrow Fund to Parent in respect of the Claimed Amount. Any part of
the Claimed Amount that is not agreed to be released to Parent
pursuant to the Response Notice, which determination shall be made
in good faith by the Stockholders’ Agent, shall be the
“ Contested Amount .” If a Response Notice is
not received by the Escrow Agent within such fifteen (15) day
period, then the Stockholders’ Agent shall be conclusively
deemed to have agreed that an amount of Escrow Shares equal to the
full Claimed Amount may be released to Parent from the Escrow Fund
and the Escrow Agent shall release such amount to Parent as
provided in Section 2.3 . The Escrow Agent may assume
that any Claim Notice required to be delivered to the Escrow Agent
and the Stockholders’ Agent has been received by the
Stockholders’ Agent on the date it has been received by the
Escrow Agent, but the Escrow Agent need not inquire into or verify
such receipt.
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2.3
If the Stockholders’ Agent delivers a Response Notice
agreeing that an amount of Escrow Shares equal to the full
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