NONQUALIFIED STOCK OPTION AGREEMENT FOR QUIKBYTE SOFTWARE, INC. Agreement
Exhibit 10.11
Agreement
1. Grant
of Option. QuikByte Software, Inc. (the
“Company”) hereby grants, as of September 21, 2009
(“Date of Grant”), to (the “Optionee”) an option (the
“Option”) to purchase up to 40,000 shares of the Company’s common stock, $0.0001 par value
per share (the “Shares”), at an exercise price per share equal to $0.0448 (the
“Exercise Price”). The Option shall be subject to the terms and conditions set forth
herein. The Option is a nonqualified stock option, and not an incentive stock option under Section
422 of the Internal Revenue Code of 1986, as amended.
2. Exercise Schedule.
(a) Except as otherwise provided in this Section 2 and Sections 5 or 10 of this Agreement, the
Option is exercisable as provided below. To the extent that the Option has become exercisable as
provided below, the Option may thereafter be exercised by the Optionee, in whole or in part, at any
time or from time to time prior to the expiration of the Option as provided herein. The following
table indicates each date (the “Vesting Date”) upon which the Optionee shall be entitled to
exercise the Option with respect to the Shares granted as indicated beside the date, provided that
the Continuous Service of the Optionee continues through and on the applicable Vesting Date:
| Percentage of Shares | Vesting Date | |
| 100% | September 21, 2010 |
Except as otherwise specifically provided herein, there shall be no proportionate or partial
vesting in the periods prior to the Vesting Date, and all vesting shall occur only on the
appropriate Vesting Date.
Notwithstanding anything to the foregoing in this Section 2(a), including the Vesting Date,
the Option shall not be exercisable, in whole or in part, until the two year anniversary of the
Date of Grant, except as provided in Section 10(b)(i) of this Agreement.
(b) For purposes of this Agreement, the following terms shall have the meanings indicated:
(i) “Board” shall mean the Board of Directors of the Company.
(ii) “Continuous Service” shall mean the continuous service to the Company or a Related
Entity, without interruption, of the Optionee, in the Optionee’s capacity as a Director of the
Company. Continuous Service shall not be considered interrupted (or to have ceased or terminated)
in the case of transfers among the Company, any Related Entity, or any successor thereto, so long
as the Optionee continues in his capacity as a Director thereof .
(iii) “Director” shall mean a member of the Board or the board of directors of any Related
Entity.
(iv) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to
time, including rules thereunder and successor provisions and rules thereto.
(v) “Related Entity” shall mean any Subsidiary, and any business, corporation, partnership,
limited liability company, or other entity in which the Company, or a Subsidiary holds a
substantial ownership interest, directly or indirectly.
(vi) “Subsidiary” shall mean any corporation or other entity in which the Company has a direct
or indirect ownership interest of 50% or more of the total combined voting power of the then
outstanding securities or interests of such corporation or other entity entitled to vote generally
in the election of directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% or more of the assets on liquidation or dissolution.
3. Method of Exercise. The vested portion of this Option shall be exercisable in whole or in part in accordance
with the exercise schedule set forth in Section 2 hereof by written notice which shall state the
election to exercise the Option, the number of Shares in respect of which the Option is being
exercised, and such other representations and agreements as to the holder’s investment intent with
respect to such Shares as may be required by the Company. Such written notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the Secretary of the Company.
The written notice shall be accompanied by payment of the Exercise Price. This Option shall be
deemed to be exercised after both (a) receipt by the Company of such written notice accompanied by
the Exercise Price, and (b) arrangements that are satisfactory to the Company in its sole
discretion have been made for Optionee’s payment to the Company of the amount that is necessary to
be withheld in accordance with applicable Federal or state withholding requirements. No Shares
shall be issued pursuant to the Option unless and until such issuance and such exercise shall
comply with all relevant provisions of applicable law, including the requirements of any stock
exchange upon which the Shares then may be traded.
4. Method of Payment. Payment of the Exercise Price shall be by any of the following, or a combination thereof,
at the election of the Optionee: (a) cash; (b) check; (c) to the extent permitted by the Company,
with Shares owned by the Optionee, or the withholding of Shares that otherwise would be delivered
to the Optionee as a result of the exercise of the Option, (d) pursuant to a “cashless exercise”
procedure, by delivery of a properly executed exercise notice together with such other
documentation, and subject to such guidelines, as the Company shall require to effect an exercise
of the Option and delivery to the Company by a licensed broker acceptable to the Company of
proceeds from the sale of Shares or a margin loan sufficient to pay the Exercise Price and any
applicable income or employment taxes or (e) such other consideration or in such other manner as
may be determined by the Company in its absolute discretion.
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5. Termination of Option. Any unexercised portion of the Option shall automatically and without notice terminate and
become null and void at the time of the earliest to occur of the following:
(a) if, prior to the Vesting Date, the Optionee’s Continuous Service is terminated for any
reason, the date on which the Optionee’s Continuous Service is terminated, unless the Company
otherwise determines in writing in its sole discretion to waive the termination of such Option;
(b) the tenth anniversary of the date as of which the Option is granted; or
(c) the liquidation or dissolution of the Company.
6. Restrictions While Stock is Not Registered.
(a) Restricted Shares. Any Shares acquired upon exercise of the Option specified in Section 1 and (i) all shares
of the Company’s capital stock received as a dividend or other distribution upon such shares and
(ii) all shares of capital stock or other securities of the Company into which such shares may be
changed or for which such shares shall be exchanged, whether through reorganization,
recapitalization, stock split-ups or the like, shall be subject to the provisions of this Section 6
at all times, and only at those times, that Shares are not registered under the Exchange Act (such
times during which the Stock is not so registered sometimes hereinafter being referred to as the
“Restricted Period”) and are during the Restricted Period hereinafter referred to as
“Restricted Shares.”
(b) No Sale or Pledge of Restricted Securities. Except as otherwise provided herein, the Optionee agrees and covenants that during the
Restricted Period he or she shall not sell, pledge, encumber or otherwise transfer or dispose of,
and shall not permit to be sold, encumbered, attached or otherwise disposed of or transferred in
any manner, either voluntarily or by operation of law (all hereinafter collectively referred to as
“transfers”), all or any portion of the Restricted Securities or any interest therein
unless such transfer is pursuant to an effective registration statement under the Securities Act of
1933, as amended, or an applicable exemption from registration thereunder.
(c) Legends. The certificate or certificates representing any Restricted Securities acquired
pursuant to the exercise of this Option prior to the last day of the Restricted Period shall bear
the following legends (as well as any legends required by applicable state and federal corporate
and securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE
OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
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THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AS SET FORTH IN A NONQUALIFIED STOCK OPTION
AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE
SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF
THE ISSUER. SUCH TRANSFER RESTRICTIONS RIGHTS ARE BINDING ON
TRANSFEREES OF THESE SHARES.
7. Transferability. Unless otherwise determined by the Company, the Option granted hereby is not transferable
otherwise than by will or under the applicable laws of descent and distribution, and during the
lifetime of the Optionee the Option shall be exercisable only by the Optionee, or the Optionee’s
guardian or legal representative. In addition, the Option shall not be assigned, negotiated,
pledged or hypothecated in any way (whether by operation of law or otherwise), and the Option shall
not be subject to execution, attachment or similar process. Upon any attempt to transfer, assign,
negotiate, pledge or hypothecate the Option, or in the event of any levy upon the Option by reason
of any execution, attachment or similar process contrary to the provisions hereof, the Option shall
immediately become null and void. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and permitted assigns of the Optionee.
8. Adjustment of Shares.
(a) If at any time while this Agreement is in effect, there shall be any increase or decrease
in the number of issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split-up, combination or exchange of shares, then
and in such event appropriate adjustment shall be made by the Company in the number of Shares and
the Exercise Price per share thereof then subject to any outstanding Options, so that the same
percentage of the Company’s issued and outstanding Shares shall remain subject to purchase at the
same aggregate Exercise Price.
(b) The Company may change the terms of this Option with respect to the Exercise Price or the
number of Shares subject to the Option, or both, when, in the Company’s sole discretion, such
adjustments become appropriate so as to preserve but not increase the benefits under the Option.
(c) In the event of a proposed sale of all or substantially all of the Company’s assets or any
reorganization, merger, consolidation or other form of corporate transaction in which the Company
does not survive, or where the securities of the another corporation, or its parent company, are
issued to the Company’s shareholders, then the other corporation or a parent of the other
corporation may, with the consent of the Company, assume each outstanding Option or substitute an
equivalent option or right. If the other corporation, or its parent, does not cause such an
assumption or substitution to occur, or the Company does not consent to such an
assumption or substitution, then each Option shall become immediately exercisable pursuant to
Section 10 hereof.
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(d) Except as otherwise expressly provided herein, the issuance by the Company of shares of
its capital stock of any class, or securities convertible into shares of capital stock of any
class, either in connection with a direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company convertible into
such shares or other securities, shall not affect, and no adjustment by reason thereof shall be
made to, the number of or Exercise Price for Shares then subject to outstanding Options granted
under this Agreement.
(e) Without limiting the generality of the foregoing, the existence of outstanding Options
granted under this Agreement shall not affect in any manner the right or power of the Company to
make, authorize or consummate (i) any or all adjustments, recapitalizations, reorganizations or
other changes in the Company’s capital structure or its business; (ii) any merger or consolidation
of the Company; (iii) any issue by the Company of debt securities, or preferred or preference stock
that would rank above the Shares subject to outstanding Options; (iv) the dissolution or
liquidation of the Company; (v) any sale, transfer or assignment of all or any part of the assets
or business of the Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
9. No Shareholder Rights. Neither the Optionee nor any personal representative (or beneficiary) shall be, or shall
have any of the rights and privileges of, a shareholder of the Company with respect to any Shares
issuable upon the exercise of the Option, in whole or in part, prior to the date on which the
Shares are issued.
10. Acceleration of Exercisability of Option.
(a) This Option shall become immediately fully exercisable in the event that, prior to the
termination of the Option pursuant to Section 5 hereof, there is a Change in Control. For purposes
of this provision, a “Change in Control” shall be deemed to occur upon:
(i) The acquisition by any Person of Beneficial Ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than fifty percent (50%) of either (A) the value of
then outstanding shares of common stock of the Company (the “Outstanding Company Common
Stock”) or (B) the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the “Outstanding Company
Voting Securities”) (the foregoing Beneficial Ownership hereinafter being referred to as a
“Controlling Interest”); provided, however, that for purposes of this
Section 10(b), the following acquisitions shall not constitute or result in a Change in Control:
(v) any acquisition directly from the Company; (w) any acquisition by the Company; (x) any
acquisition by any Person that as of the Date of Grant owns Beneficial Ownership of a Controlling
Interest; (y) any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Related Entity; or (z) any acquisition by any entity pursuant to a
transaction which complies with clauses (A), (B) and (C) of subsection (iii) below; or
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(ii) During any period of two (2) consecutive years (not including any period prior to the
Date of Grant) individuals who constitute the Board on the Date of Grant (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the Date of Grant whose
election, or nomination for election by the Company’s shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the Board; or
(iii) Consummation of a reorganization, merger, statutory share exchange or consolidation or
similar transaction involving the Company or any of its Related Entities, a sale or other
disposition of all or substantially all of the assets of the Company, or the acquisition of assets
or equity of another entity by the Company or any of its Related Entities (each a “Business
Combination”), in each case, unless, following such Business Combination, (A) all or
substantially all of the individuals and entities who were the Beneficial Owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%)
of the value of the then outstanding equity securities and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of members of the board of
directors (or comparable governing body of an entity that does not have such a board), as the case
may be, of the entity resulting from such Business Combination (including, without limitation, an
entity which as a result of such transaction owns the Company or all or substantially all of the
Company’s assets either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding any employee benefit plan (or related trust) of the Company or such entity resulting
from such Business Combination or any Person that as of the Date of Grant owns Beneficial Ownership
of a Controlling Interest) beneficially owns, directly or indirectly, fifty percent (50%) or more
of the value of the then outstanding equity securities of the entity resulting from such Business
Combination or the combined voting power of the then outstanding voting securities of such entity
except to the extent that such ownership existed prior to the Business Combination and (C) at least
a majority of the members of the Board of Directors or other governing body of the entity resulting
from such Business Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such Business Combination; or
(iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company.
Notwithstanding anything in the foregoing to the contrary, the transactions contemplated by
(A) that certain Merger Agreement, dated as of July 14, 2009, as amended, by and among the Company,
Sorrento Therapeutics, Inc., a Delaware corporation, Sorrento Merger Corp., Inc., a Delaware
corporation and wholly-owned subsidiary of the Company, Xxxxxxx Xxxxxxxx, as Stockholders’ Agent
thereunder, and Xxxxx Xxxxxxx, as Parent Representative
thereunder, and (B) that certain Stock Purchase Agreement, dated as of September 18, 2009, by
and between the Company and each of the Investors listed on Exhibit A thereto, shall not
(individually or together) constitute a Change of Control for purposes of this Agreement.
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(b) Notwithstanding the foregoing, if in the event of a Change in Control the successor
company assumes or substitutes for the Option, the vesting of the Option shall not be accelerated
as described in Section 10(a). For the purposes of this paragraph, the Option shall be considered
assumed or substituted for if following the Change in Control the Option or substituted option
confers the right to purchase, for each Share subject to the Option immediately prior to the Change
in Control, the consideration (whether stock, cash or other securities or property) received in the
transaction constituting a Change in Control by holders of Shares for each Share held on the
effective date of such transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding shares); provided,
however, that if such consideration received in the transaction constituting a Change in
Control is not solely common stock of the successor company or its parent or subsidiary, the
Committee may, with the consent of the successor company, or its parent or subsidiary, provide that
the consideration to be received upon the exercise or vesting of the Option will be solely common
stock of the successor company or its parent or subsidiary substantially equal in Fair Market Value
to the per share consideration received by holders of Shares in the transaction constituting a
Change in Control. The determination of such substantial equality of value of consideration shall
be made by the Committee in its sole discretion and its determination shall be conclusive and
binding. Notwithstanding the foregoing, on such terms and conditions as may be set forth in an
Award Agreement, in the event of a termination of the Optionee’s employment in such successor
company (other than for Cause) within 24 months following such Change in Control, the option held
by the Optionee at the time of the Change in Control shall be accelerated as described in paragraph
(a) of this Section 10.
(c) The Company shall give written notice of any proposed transaction referred to in this
Section 10 a reasonable period of time prior to the closing date for such transaction (which notice
may be given either before or after approval of such transaction), in order that the Optionee may
have a reasonable period of time prior to the closing date of such transaction within which to
exercise the Option if and to the extent that it then is exercisable (including any portion of the
Option that may become exercisable upon the closing date of such transaction). The Optionee may
condition his exercise of the Option upon the consummation of a transaction referred to in this
Section 10.
11. Withholding or Deduction for Taxes. If at any time specified herein for the making of any issuance or delivery of any Option or
Shares to the Optionee or any beneficiary, any law or regulation of any governmental authority
having jurisdiction in the premises shall require the Company to withhold, or to make any deduction
for, any taxes or take any other action in connection with the issuance or delivery then to be
made, such issuance or delivery shall be deferred until such withholding or deduction shall have
been provided for by the Optionee or beneficiary, or other appropriate action shall have been
taken.
12. No Right to Continued Service. Neither the Option nor this Agreement shall confer upon the Optionee any right to continued
service with the Company.
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13. Law Governing. This Agreement shall be governed in accordance with and governed by the internal laws of
the State of Delaware without regard to conflicts of laws principles.
14. Interpretation. The Optionee accepts the Option subject to all of the terms and provisions of this
Agreement. The undersigned Optionee hereby accepts as binding, conclusive and final all decisions
or interpretations of the Company upon any questions arising under this Agreement, unless shown to
have been made in an arbitrary and capricious manner.
15. Notices. Any notice under this Agreement shall be in writing and shall be deemed to have been duly
given when delivered personally or three days after being deposited in the United States mail,
registered, postage prepaid, and addressed, in the case of the Company, to the Company’s Secretary
at 0000 Xxxxxxxx Xxxx., Xxxxx 000, Xxxxx, Xxxxxxx 00000, or if the Company should move its
principal office, to such principal office, and, in the case of the Optionee, to the Optionee’s
last permanent address as shown on the Company’s records, subject to the right of either party to
designate some other address at any time hereafter in a notice satisfying the requirements of this
Section 15.
Signatures Follow on Next Page
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IN WITNESS WHEREOF, the undersigned have executed this Option Agreement as of the date first
set forth above.
| COMPANY: QUIKBYTE SOFTWARE, INC. |
||||
| By: | /s/ | |||
| Name: | ||||
| Title: | ||||
The Optionee represents that he has reviewed the provisions of this Option Agreement in its
entirety, is familiar with the terms and provisions thereof, and hereby accepts this Option subject
to all of the terms and provisions thereof. The Optionee further represents that he or she has had
an opportunity to obtain the advice of counsel prior to executing this Option Agreement.
| OPTIONEE: |
||||
| /s/ | ||||
| Name: | ||||
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