EXHIBIT 10.14
SECURITY AGREEMENT
This Security Agreement is made as of December 30, 1999 between Kiva
Genetics, Inc., a Delaware corporation ("Pledgee"), Xxxxxx X. Xxxxxx
("Pledgor"), and Secretary of Pledgee, as the agent of Pledgee and holder of
the Securities pledged hereunder ("Pledgeholder").
RECITALS
Pursuant to the Restricted Stock Purchase Agreement dated December
30, 1999 (the "Purchase Agreement"), between Pledgor and Pledgee under
Pledgee's 1998 Incentive Stock Plan, Pledgor has purchased 150,000 shares of
Pledgee's Common Stock (the "Shares") in exchange for a promissory note (the
"Prior Note"). Pledgor has agreed to pledge the Shares as security for the
housing loan (the "Loan") made to Pledgor in the amount of $300,000.00, as
evidenced by Pledgor's promissory note attached as EXHIBIT A to this Security
Agreement (the "Note" and, together with the Prior Note, the "Notes").
NOW, THEREFORE, it is agreed as follows:
1. CREATION AND DESCRIPTION OF SECURITY INTEREST. In consideration
of the Loan, Pledgor, pursuant to the California Uniform Commercial Code,
hereby pledges all of the Shares (herein sometimes referred to as the
"Collateral") represented by certificate number __________, and has delivered
said certificate to Pledgeholder, who shall hold said certificate on behalf
of Pledgee subject to the terms and conditions of this Security Agreement.
The Shares (together with an executed blank stock assignment or
assignments) shall be held by Pledgeholder on behalf of Pledgee as security
for the repayment of the Notes and any extensions or renewals thereof, and
Pledgeholder shall not encumber or dispose of such Shares except in
accordance with the provisions of this Security Agreement.
2. PLEDGOR'S REPRESENTATIONS AND COVENANTS. To induce Pledgee to
enter into this Security Agreement, Pledgor represents and covenants to
Pledgee, its successors and assigns, as follows:
(a) PAYMENT OF INDEBTEDNESS. Pledgor will pay the principal
sum of the Notes secured hereby, and interest thereon, at the time and in the
manner provided in the Notes.
(b) ENCUMBRANCES. The Shares are free of all other adverse
claims, encumbrances, defenses and liens (other than restrictions on transfer
imposed by applicable securities laws), except for (i) Pledgee's rights to
repurchase Shares pursuant to Section 3 of the Purchase Agreement and (ii)
the pledge of the Shares hereunder as security for payment of the Notes, and
Pledgor will not further encumber the Shares without the prior written
consent of Pledgee.
3. VOTING RIGHTS. During the term of this pledge and so long as
all payments of principal and interest are made as they become due under the
terms of the Notes, Pledgor shall have the right to vote all of the Shares
pledged hereunder.
4. STOCK ADJUSTMENTS. In the event that during the term of the
pledge any stock dividend, reclassification, readjustment or other changes
are declared or made in the capital structure of Pledgee, all new,
substituted and additional shares or other securities issued by reason of any
such change shall be delivered to and held by the Pledgee under the terms of
this Security Agreement in the same manner as the Shares originally pledged
hereunder. In the event of substitution of such securities, Pledgor, Pledgee
and Pledgeholder shall cooperate and execute such documents as are reasonable
so as to provide for the substitution of such Collateral and, upon such
substitution, references to "Shares" in this Security Agreement shall include
the substituted shares of capital stock of Pledgor as a result thereof.
5. OPTIONS AND RIGHTS. In the event that, during the term of this
pledge, subscription Options or other rights or options shall be issued in
connection with the pledged Shares, such rights, Options and options shall be
the property of Pledgor and, if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor as it relates to the pledged Shares then
held by Pledgeholder shall be immediately delivered to Pledgeholder, to be
held under the terms of this Security Agreement in the same manner as the
Shares pledged.
6. DEFAULT. Pledgor shall be deemed to be in default of the Notes
and of this Security Agreement in the event:
(a) Payment of principal or interest on the Notes shall be
delinquent for a period of 10 days or more; or
(b) Pledgor fails to perform any of the covenants set forth in
the Purchase Agreement or contained in this Security Agreement for a period
of 10 days after written notice thereof from Pledgee; or
(c) A bankruptcy or insolvency proceeding is instituted by or
against Pledgor, or if a receiver is appointed for the property of Pledgor; or
(d) Pledgor makes an assignment for the benefit of creditors.
In the case of a default, as set forth above, Pledgee shall have the
right to accelerate payment of the Notes, and Pledgee shall thereafter be
entitled to pursue its remedies under the California Uniform Commercial Code.
7. RELEASE OF COLLATERAL. Subject to any applicable contrary rules
under Regulation G, there shall be released from this pledge a portion of the
pledged Shares held by Pledgeholder hereunder upon payments of the principal
of the Notes. The number of the pledged Shares which shall be released shall
be that number of full Shares which bears the same proportion to the initial
number of Shares pledged hereunder as the payment of principal bears to the
initial full principal amount of the Notes. Notwithstanding the foregoing,
upon any release of pledged Shares hereunder any such Shares which shall
continue to constitute Unreleased Shares as defined in the Purchase Agreement
shall continue to be held in escrow pursuant to Sections 3 and 6 of the
Purchase Agreement.
8. WITHDRAWAL OR SUBSTITUTION OF COLLATERAL. Pledgor shall not
sell, withdraw, pledge, substitute or otherwise dispose of all or any part of
the Collateral without the prior written consent of Pledgee.
9. TERM. The within pledge of Shares shall continue until the
payment of all indebtedness secured hereby, subject to the provisions for
prior release of a portion of the Collateral as provided in paragraph 7 above.
10. INSOLVENCY. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against Pledgor, or if a receiver is appointed
for the property of Pledgor, or the Pledgor makes an assignment for the
benefit of creditors, the entire amount unpaid on the Notes shall become
immediately due and payable, and Pledgee may proceed as provided in the case
of default.
11. PLEDGEHOLDER LIABILITY.
(a) Pledgeholder shall not be liable to any party for any of
his acts, or omissions to act, as Pledgeholder unless Pledgeholder is proved
to have acted in bad faith. Any act done or omitted pursuant to the advice of
legal counsel, other than an act or omission involving gross or willful
negligence, shall be deemed to be done or omitted in good faith.
(b) Pledgeholder shall be entitled to employ such legal counsel
and other experts as Pledgeholder may deem necessary properly to advise
Pledgeholder in connection with its obligations hereunder, and Pledgeholder
may rely upon the advice of such counsel. Such counsel's reasonable fees and
costs shall be borne 50% by Pledgor and 50% by Pledgee.
(c) It is understood and agreed that should any dispute arise
with respect to the delivery and/or ownership or right of possession of the
securities held by Pledgeholder hereunder, Pledgeholder is authorized and
directed to retain in Pledgeholder's possession as agent of Pledgee without
liability to anyone all or any part of said securities until such disputes
shall have been settled either by mutual written agreement of the parties
concerned or by a final order, decree or judgment of the arbitrator provided
for in Section 13 of the Purchase Agreement or of a court of competent
jurisdiction after the time for appeal has expired and no appeal has been
perfected, by Pledgeholder shall be under no duty whatsoever to institute or
defend any such proceedings.
In addition, upon any dispute Pledgeholder should be entitled to
engage legal counsel, one-half of whose fees and expenses shall be borne by
Pledgor and one-half by Pledgee.
12. INVALIDITY OF PARTICULAR PROVISIONS. Pledgor and Pledgee agree
that the enforceability or invalidity of any provision or provisions of this
Security Agreement shall not render any other provision or provisions herein
contained unenforceable or invalid.
13. SUCCESSORS OR ASSIGNS. Pledgor and Pledgee agree that all of
the terms of this Security Agreement shall be binding on their respective
successors and assigns, and that the term "Pledgor" and the term "Pledgee" as
used herein shall be deemed to include, for all purposes, the respective
designees, successors, assigns, heirs, executors and administrators.
14. GOVERNING LAW. This Security Agreement shall be interpreted
and governed under the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
"PLEDGOR" By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxx
(Address) ------------------
Xxxx xxx Xxxxxxx, XX 00000
----------
"PLEDGEE" Kiva Genetics, Inc.
a Delaware corporation
By: /s/ Xxxx Xxxxxxxx, Xx.
---------------------------------
Title: CEO
------------------------------
"PLEDGEHOLDER" /s/ Xxxxxxx X'Xxxxxxx
-------------------------------------
Secretary of Pledgee
EXHIBIT A
PROMISSORY NOTE
December 30, 1999
$300,000.00
For value received, the undersigned promises to pay to Kiva
Genetics, Inc., a Delaware corporation (the "Company"), or order, at its
principal office the principal sum of $300,000.00 with interest thereof at
the rate of 6.2% per annum, compounded annually.
Principal and interest shall be due and payable on February 1, 2005.
Should the undersigned fail to make full payment of principal or interest for
a period of 10 days or more after the due date thereof, the whole unpaid
balance on this Note of principal and interest shall become immediately due
at the option of the holder of this Note. Payments of principal and interest
shall be made in lawful money of the United States of America.
So long as the undersigned remains an employee or consultant of the
Company, the Company shall forgive the loan over the course of five (5)
years, according to the following schedule: the Company shall forgive ten
percent (10%) of the principal and accrued interest commencing February 1,
2001, twenty percent (20%) of the principal and accrued interest on each
February 1 thereafter for the following three (3) years and thirty percent
(30%) of the principal and accrued interest on February 1, 2005.
The undersigned may at any time repay all or any portion of the
principal or interest owing hereunder.
This Note is secured by a pledge of the Company's Common Stock under
the terms of a Security Agreement of even date herewith and is subject to all
the provisions thereof.
The holder of this Note shall have full recourse against the
undersigned, and shall not be required to proceed against the collateral
securing this Note in the event of default.
In the event of any voluntary or involuntary termination of the
undersigned's employment by or services to the Company for any or no reason,
or upon the sale or transfer of the pledged shares of Common Stock, this Note
shall, at the option of the Company, be accelerated, and the whole unpaid
balance on this Note (to the extent not forgiven) of principal and accrued
interest shall be due and payable within 12 months.
Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by
the undersigned.
/s/ Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxx X. Xxxxxx
