Security Agreement between Kiva Genetics, Inc. and Hugh Y. Rienhoff, Jr. dated April 12, 1999

Summary

This agreement is between Kiva Genetics, Inc. and Hugh Y. Rienhoff, Jr. It secures a loan made by Kiva Genetics to Rienhoff by pledging Rienhoff’s shares of Kiva Genetics’ common stock as collateral. The shares are held by the company’s secretary until the loan is repaid or forgiven. If Rienhoff defaults or becomes insolvent, Kiva Genetics can claim the shares. The agreement also covers voting rights, stock adjustments, and the release of shares as the loan is repaid or forgiven. It is governed by California law.

EX-10.9 7 a2033717zex-10_9.txt EXHIBIT 10.9 EXHIBIT 10.9 SECURITY AGREEMENT This Security Agreement is made as of April 12, 1999, between Kiva Genetics, Inc., a Delaware corporation ("PLEDGEE") and Hugh Y. Rienhoff, Jr. ("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 -2- 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. -3- IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above. "PLEDGOR" By: /s/ Hugh Y. Rienhoff, Jr. ----------------------------------- Hugh Y. Rienhoff, Jr. Address: ------------------------------ ------------------------------ "PLEDGEE" KIVA GENETICS, INC. a Delaware corporation By: /s/ Michael O'Donnell ---------------------------------- Name: Michael O'Donnell --------------------------------- Title: Secretary --------------------------------- "PLEDGEHOLDER" --------------------------------------- Michael O'Donnell Secretary of Kiva Genetics, Inc. -4- 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/ Hugh Y. Rienhoff, Jr. --------------------------------------- Hugh Y. Rienhoff, Jr.