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EXHIBIT 10.17
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement") is made and dated this 14th
day of June 1994, by and between SIGNAL PHARMACEUTICALS, INC. ("Secured Party")
and Xxxx X. Xxxxx ("Borrower").
RECITALS
A. In order to allow Borrower to purchase a residence, Secured
Party has accepted the promissory note of Borrower in the amount of two hundred
fifty thousand dollars ($250,000), dated concurrently herewith (the "Note"),
pursuant to which Secured Party has agreed to lend $250,000 to Borrower on the
terms and subject to the conditions set forth therein. All terms not otherwise
defined herein are used with the same meaning as set forth in the Note.
B. As security for the payment and performance of its obligations
to Secured Party under the Note and under this Security Agreement, it is the
intent of Borrower to grant to Secured Party and to create a security interest
in certain property of Borrower, as hereinafter provided.
AGREEMENT
NOW, THEREFORE, in consideration of the above Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Secured Party and Borrower hereby agree as follows:
1. Stock Pledge. As security for payment and performance of the
obligations of Borrower to Secured Party described in Paragraph 2 below
(collectively and severally, the "Obligations"), Borrower hereby assigns and
pledges to Secured Party all shares of the Common Stock of Signal
Pharmaceuticals, Inc. now or hereafter owned by Borrower (the "Pledged Shares").
Borrower shall deliver the Pledged Shares and a duly endorsed collateral stock
power relating to the Pledged Shares to Secured Party and Secured Party hereby
acknowledges receipt of the Pledged Shares and the endorsed collateral stock
power. Secured Party shall hold the Pledged Shares as security for repayment of
the Note in full.
(a) During the term of this pledge, all cash dividends paid in
respect of the Pledged Shares shall be delivered to Secured Party and applied to
payment of the Note and all stock dividends shall be delivered to and held by
Secured Party as though they were Pledged Shares (hereafter, collectively, the
"Shares").
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(b) During the term of this pledge, Borrower shall have all voting
rights, if any, with respect to the Pledged Shares or any other shares held by
Secured Party pursuant to this Agreement on all matters on which such shares may
from time to time be voted.
(c) Upon payment in full of the indebtedness evidenced by the Note,
Secured Party shall surrender the Pledged Shares to Borrower. Upon payment in
part of the indebtedness evidenced by the Note, and upon consent of Secured
Party to be given or withheld in the exercise of Secured Party's absolute
discretion, Secured Party shall surrender such Pledged Shares to Borrower as
Secured Party authorizes.
2. Obligations. The Obligations of Borrower secured by this
Security Agreement shall consist of the debt, obligations and liabilities of
Borrower to Secured Party arising out of, connected with or related to the Note
and this Security Agreement and all amendments or extensions or renewals of the
Note, and/or this Security Agreement, whether now existing or hereafter arising,
voluntary or involuntary, whether or not jointly owed with others, direct or
indirect, absolute or contingent, liquidated or unliquidated, and whether or not
from time to time decreased or extinguished and later increased, created or
incurred.
3. Additional Representations and Warranties. Borrower hereby
represents and warrants that except as heretofore disclosed to Secured Party in
writing, Borrower is the owner of the Shares and such other property as to which
Borrower may grant Secured Party a security interest pursuant to Paragraph 7
hereof (hereafter, collectively, the "Collateral") (or, in the case of
after-acquired Collateral, at the time Borrower acquires rights in the
Collateral, will be the owner thereof) and that, no other person has (or, in the
case of after-acquired Collateral, at the time Borrower acquires rights therein,
will have) any right, title, claim or interest (by way of security interest or
other lien or charge or otherwise) in, against or to the Collateral.
4. Covenants of Borrower. Borrower hereby agrees (a) to do all acts
that may be necessary to maintain, preserve and protect the Collateral and
Secured Party's interest in the Collateral; (b) not to use or permit any
Collateral to be used unlawfully or in violation of any provision of this
Security Agreement, or any applicable statute, regulation or ordinance or any
policy of insurance covering the Collateral; (c) to pay promptly when due all
taxes, assessments, charges, encumbrances and liens now or hereafter imposed
upon or affecting any Collateral; (d) to procure, execute and deliver from time
to time any endorsements, assignments, financing statements and other writing
deemed necessary or appropriate by Secured Party to perfect, maintain and
protect its security interest hereunder and the priority thereof and to deliver
promptly to Secured Party all originals of Collateral or proceeds consisting of
chattel paper or instruments; (e) to appear in and defend any action or
proceeding which may affect its title to or Secured Party's interest in the
Collateral; (f) if Secured Party gives value to enable Borrower to acquire
rights in or the use of any Collateral, to use such value for such purpose; (g)
to keep separate, accurate and
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complete records of the Collateral and to provide Secured Party with such
records and such other reports and information relating to the Collateral as
Secured Party may request from time to time; and (h) not to surrender or lose
possession of (other than to Secured Party), sell, encumber, lease, rent, or
otherwise dispose of or transfer any Collateral or right or interest therein,
and, notwithstanding any provision of the Agreement, to keep the Collateral free
of all levies and security interests or other liens or charges except those
approved in writing by Secured Party.
5. Authorized Action By Secured Party. Borrower hereby irrevocably
appoints Secured Party as its attorney-in-fact to do (but Secured Party shall
not be obligated to and shall incur no liability to Borrower or any third party
for failure so to do) any act which Borrower is obligated by this Security
Agreement to do, and to exercise such rights and powers as Borrower might
exercise with respect to the Collateral, including, without limitation, the
right to (a) collect by legal proceedings or otherwise and endorse, receive and
receipt for all dividends, interest, payments, proceeds and other sums and
property now or hereafter payable on or on account of the Collateral; (b) enter
into any extension, reorganization, deposit, merger, consolidation or other
agreement pertaining to, or deposit, surrender, accept, hold or apply other
property in exchange for the Collateral; (c) insure, process and preserve the
Collateral; (d) transfer the Collateral to its own or its nominee's name; and
(e) make any compromise or settlement, and take any action it deems advisable,
with respect to the Collateral. Borrower agrees to reimburse Secured Party upon
demand for any costs and expenses, including, without limitation, attorneys'
fees, Secured Party may incur while acting as Borrower's attorney-in-fact
hereunder, all of which costs and expenses are included in the Obligations
secured hereby. It is further agreed and understood between the parties hereto
that such care as Secured Party gives to the safekeeping of its own property of
like kind shall constitute reasonable care of the Collateral when in Secured
Party's possession; provided, however, that Secured Party shall not be required
to make any presentment, demand or protest, or give any notice and need not take
any action to preserve any rights against any prior party or any other person in
connection with the Obligations or with respect to the Collateral.
6. Default and Remedies. The occurrence of one or more of the
following events shall constitute an event of default under this Agreement: (a)
failure of Borrower to pay when due under the Note principal or accrued
interest; (b) the occurrence of any event of default specified in the Note; (c)
the failure of Borrower to perform any obligation imposed upon Borrower by
reason of this Agreement; or (d) the breach of any warranty of the Borrower
contained in this Agreement. Upon the occurrence of any such event of default,
Secured Party may, at its option, and without notice to or demand on Borrower
and in addition to all rights and remedies available to Secured Party under the
Agreement, declare the Note to become immediately due and payable and do any of
the following: (a) transfer record ownership of the Shares to itself and
receive, endorse and give receipt for, or collect by legal proceedings or
otherwise, dividends or other distributions made or paid with respect to the
Shares; (b) sell, lease or otherwise dispose of any Collateral at one or more
public or private sales, whether or not such Collateral is present
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at the place of sale, for cash or credit or future delivery, on such terms and
in such manner as Secured Party may determine; and (c) apply any proceeds
realized from the disposition of the Collateral pursuant to the power of sale
hereby granted to Secured Party first to the payment of expenses incurred by
Secured Party in connection with the disposition, and the balance to the payment
of the Note. Any surplus proceeds shall be paid over to the Borrower.
7. Deemed Insecure. In the event and at such time as Secured Party
reasonably deems the security interest in the Shares granted pursuant to
Paragraph 2 of this Agreement to be insufficient to secure payment and
performance of the Obligations, Secured Party may, pursuant to the terms of this
Agreement, require Borrower and Borrower hereby agrees (a) to grant Secured
Party a security interest in such additional property as Secured Party in its
sole discretion may designate; and (b) to procure, execute and deliver any
endorsements, assignments, financing statements and any other writing or
instrument deemed necessary and appropriate by Secured Party to perfect,
maintain and protect its security interest in such additional property and the
priority thereof. Such additional property shall be considered Collateral for
all purposes of this Agreement.
8. Cumulative Rights. The rights, powers and remedies of Secured
Party under this Security Agreement shall be in addition to all rights, powers
and remedies given to Secured Party by virtue of any statute or rule of law, the
Note or any other agreement, all of which rights, powers and remedies shall be
cumulative and may be exercised successively or concurrently without impairing
Secured Party's security interest in the Collateral.
9. Waiver. Any forbearance or failure to delay by Secured Party in
exercising any right, power or remedy shall not preclude the further exercise
thereof and every right, power or remedy of Secured Party shall continue in full
force and effect until such right, power or remedy is specifically waived in a
writing executed by Secured Party. Borrower waives any right to require Secured
Party to proceed against any person or to exhaust any Collateral or to pursue
any remedy in Secured Party's power.
10. Setoff. Borrower agrees that Secured Party may exercise its
rights of setoff with respect to the Obligations in the same manner as if the
Obligations were unsecured.
11. Binding Upon Successors. All rights of Secured Party under this
Security Agreement shall inure to the benefit of its successors and assigns, and
all obligations of Borrower shall bind its heirs, executors, administrators,
successors and assigns.
12. Entire Agreement: Severability. This Security Agreement contains
the entire security agreement between Secured Party and Borrower. If any of the
provisions of this Security Agreement shall be held invalid or unenforceable,
this Security Agreement
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shall be construed as if not containing those provisions and the rights and
obligations of the parties hereto shall be construed and enforced accordingly.
13. References. The singular includes the plural. If more than one
executes this Security Agreement, the term Borrower shall be deemed to refer to
each of the undersigned as well as to all of them and their obligations and
agreements hereunder shall be joint and several. If any of the undersigned is a
married person, recourse may be had against his or her separate property for the
Obligations.
14. Choice of Law. This Security Agreement shall be construed in
accordance with and governed by the laws of the State of California, and, where
applicable and except as otherwise defined herein, terms used herein shall have
the meanings given them in the California Uniform Commercial Code.
15. Notice. Any written notice, consent or other communication
provided for in this Security Agreement shall be delivered or sent by registered
U.S. mail, with postage prepaid, to the following addresses:
Secured Party: Signal Pharmaceuticals, Inc.
0000 Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
with a copy to: J. Xxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx & Xxxxxxxx
Two Embarcadero Place
0000 Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Borrower: Xxxx X. Xxxxx
c/o Signal Pharmaceuticals, Inc.
0000 Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Such addresses may be changed by written notice given as provided
herein.
/s/ XXXX X. XXXXX
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Borrower
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