EXHIBIT 10.9
SECURITY AGREEMENT
This Security Agreement is made as of April 12, 1999, between Kiva
Genetics, Inc., a Delaware corporation ("PLEDGEE") and Xxxx X. Xxxxxxxx, Xx.
("PLEDGOR").
RECITALS
Pursuant to the Employment Agreement dated as of March 9, 1999 (the
"EMPLOYMENT AGREEMENT") between Pledgor and Pledgee, Pledgee has made a
forgivable loan to Pledgor (the "LOAN") represented by the promissory note
attached hereto as EXHIBIT 1 (the "NOTE"), and Pledgor has agreed to pledge
his shares of Pledgee's Common Stock (the "SHARES").
NOW, THEREFORE, it is agreed as follows:
1. CREATION AND DESCRIPTION OF SECURITY INTEREST. In consideration of
the Loan made to Pledgor under the Employment Agreement, Pledgor,
pursuant to the California Commercial Code, hereby pledges all of
the Shares (herein sometimes referred to as the "COLLATERAL")
represented by certificates number 1 and 2, duly endorsed in blank
or with executed stock powers, and herewith delivers (or agrees to
deliver upon release from escrow) said certificate to the Secretary
of Pledgee ("PLEDGEHOLDER"), who shall hold said certificate subject
to the terms and conditions of this Security Agreement.
The pledged stock (together with an executed blank stock assignment
for use in transferring all or a portion of the Shares to Pledgee
if, as and when required pursuant to this Security Agreement) shall
be held by the Pledgeholder as security for the repayment of the
Note, and any extensions or renewals thereof, and the 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 Note secured hereby, together with interest thereon, at the
time and in the manner provided in the Note, unless forgiven
according to its terms.
b. ENCUMBRANCES. The Shares are free of all other encumbrances,
defenses and liens, and Pledgor will not further encumber the
Shares without the prior written consent of Pledgee.
c. MARGIN REGULATIONS. In the event that Pledgee's Common Stock is
now or later becomes margin-listed by the Federal Reserve Board
and Pledgee is classified as a "lender" within the meaning of
the regulations under Part 207 of Title 12 of the Code of
Federal Regulations ("REGULATION G"), Pledgor agrees to
cooperate with Pledgee in making any amendments to the Note or
providing any additional collateral as may be necessary to
comply with such regulations.
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 Note, 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 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 Note and of
this Security Agreement in the event:
a. Payment of principal or interest on the Note shall be delinquent
for a period of ten (10) days or more; or
b. Pledgor fails to perform any of the covenants contained in this
Security Agreement for a period of ten (10) days after written
notice thereof from Pledgee.
In the case of an event of Default, as set forth above, Pledgee
shall have the right to accelerate payment of the Note upon notice
to Pledgor, and Pledgee shall thereafter be
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entitled to pursue its remedies under the California 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 Note or forgiveness of principal
pursuant to the terms of the Note. 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 or forgiveness of principal bears to the
initial full principal amount of the Note.
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 pledge of Shares shall continue until the payment or
forgiveness of all indebtedness secured hereby, at which time the
remaining pledged stock shall be promptly delivered to Pledgor,
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 him, or if a receiver is
appointed for the property of Pledgor, or if Pledgor makes an
assignment for the benefit of creditors, the entire amount unpaid on
the Note shall become immediately due and payable, and Pledgee may
proceed as provided in the case of default.
11. PLEDGEHOLDER LIABILITY. In the absence of willful or gross
negligence, Pledgeholder shall not be liable to any party for any of
his acts, or omissions to act, as Pledgeholder.
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 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 internal laws of the State of California.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
"PLEDGOR" By: /s/ Xxxx X. Xxxxxxxx, Xx.
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Xxxx X. Xxxxxxxx, Xx.
Address:
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"PLEDGEE" KIVA GENETICS, INC.
a Delaware corporation
By: /s/ Xxxxxxx X'Xxxxxxx
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Name: Xxxxxxx X'Xxxxxxx
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Title: Secretary
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"PLEDGEHOLDER" ---------------------------------------
Xxxxxxx X'Xxxxxxx
Secretary of Kiva Genetics, Inc.
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EXHIBIT 1
NOTE
$137,000.00 As of April 12, 1999
FOR VALUE RECEIVED, the undersigned promises to pay to Kiva
Genetics, Inc., a Delaware corporation (the "COMPANY"), or order, the
principal sum of One Hundred Thirty Seven Thousand Dollars ($137,000.00),
together with interest on the unpaid principal hereof from the date hereof at
the rate of five and one-half percent (5.5%) per annum, compounded annually.
Principal and interest shall be due and payable on March 1, 2003.
Should the undersigned fail to make full payment of principal and interest
for a period of ten (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 four (4)
years, according to the following schedule: the Company shall forgive
twenty-five percent (25%) of the principal and accrued interest commencing on
March 1, 2000 and each March 1 thereafter for the following three (3) years.
Notwithstanding the foregoing, the whole unpaid balance on this Note of
principal and accrued interest shall be forgiven upon the Involuntary
Termination of the undersigned as defined in the Employment Agreement dated
as of March 9, 1999 between the Company and the undersigned (the "Employment
Agreement").
The undersigned may at any time prepay all or any portion of the
principal or interest owing hereunder.
This Note is secured in part 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.
Upon termination of employment with Cause or upon Voluntary
Termination (each as defined in the Employment Agreement), 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 immediately due and payable.
/s/ Xxxx X. Xxxxxxxx, Xx.
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Xxxx X. Xxxxxxxx, Xx.
