Exhibit 10.2

THIRD PARTY

SECURITY AGREEMENT

This Third Party Security Agreement (this “Agreement”) is made and entered into
as of June 11, 2008 by and between the undersigned (“Grantor”), and COMERICA
BANK (the “Bank”).

RECITALS

Bank proposes to enter into a transaction with TPTX, INC. (“Borrower”), which is
an affiliate of Grantor, pursuant to a Loan and Security Agreement dated as of
June 11, 2008, as amended from time to time (the “Loan Agreement”). Grantor
expects to derive economic benefit from Bank’s doing so and dealing with
Borrower in accordance with the Loan Agreement, and has entered into an
Unconditional Guaranty of even date herewith with respect to the present and
future obligations of Borrower to Bank (as amended from time to time, the
“Guaranty”). Grantor wishes to secure performance and payment of all obligations
to Bank under the Guaranty (the “Guarantor Obligations”) with substantially all
of its assets. All terms used without definition in this Agreement shall have
the meaning assigned to them in the Loan Agreement. All terms used without
definition in this Agreement or in the Loan Agreement shall have the meaning
assigned to them in the Uniform Commercial Code.

NOW, THEREFORE, Grantor and the Bank agree as follows:

1. Grant of Security Interest. To secure all of the Guarantor Obligations,
Grantor grants to the Bank a security interest in the property described in
Exhibit A (the “Collateral”).

2. Grantor’s Representations and Warranties. Grantor represents and warrants as
follows:

(a) Authorization. Grantor has authority and has obtained all approvals and
consents necessary to enter into this Agreement, and Grantor’s execution,
delivery and performance of this Agreement will not violate or conflict with the
terms of Grantor’s Certificate of Incorporation, Bylaws or other charter
document, or any law, agreement, or other instrument or writing to which Grantor
is party or by which is it bound.

(b) Title. The Collateral is owned by Grantor and is free of all liens,
encumbrances and other security interests, except for Permitted Liens.

(c) Solvency, Payment of Debts. Grantor, on a consolidated basis with its
Subsidiaries, is able to pay its debts (including trade debts) as they mature;
the fair saleable value of Grantor’s and its Subsidiaries’ consolidated assets
(including goodwill minus disposition costs) exceeds the fair value of their
liabilities; and Grantor, on a consolidated basis with its Subsidiaries, is not
left with unreasonably small capital after the transactions contemplated by this
Agreement.

(d) Further Representations. Grantor further represents, warrants, and covenants
that (i) neither Grantor nor any Subsidiary is in default under any material
agreement under which Grantor or such Subsidiary owes any money, or any
agreement, the violation or termination of which could reasonably be expected to
have a material adverse effect on Grantor on a consolidated or consolidating
basis; (ii) the information provided to Bank on or prior to the date of this
Agreement is true and correct in all material respects; (iii) all financial
statements and other information provided to Bank fairly present Grantor’s
financial condition, and there has not been a material adverse change in the
financial condition of Grantor since the date of the most recent of the
financial statements submitted to Bank; (iv) Grantor and each Subsidiary is in
compliance with all laws and orders applicable to it, except where the failure
to comply is not reasonably likely to have a Material Adverse Effect; (v) except
as disclosed in the Schedule to the Loan Agreement, neither Grantor nor any
Subsidiary is a party to any litigation or is the subject of any government
investigation, and neither Grantor nor any Subsidiary has any knowledge of any
pending litigation or investigation or the existence of circumstances that
reasonably could be expected to give rise to such litigation or investigation in
which a likely adverse decision could reasonably be expected to have a Material
Adverse Effect; (vi) Grantor’s principal place of business is located at the
address specified in Section 11; and (vii) no representation or other statement
made by Grantor to Bank contains any untrue statement of a material fact or
omits to state a material fact necessary to make any statements made to Bank not
misleading.

 

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3. Covenants.

(a) Encumbrances. Except with respect to Permitted Liens, Grantor shall not
grant a security interest in any of the Collateral other than to Bank or execute
any financing statements covering any of the Collateral in favor of any person
other than Bank.

(b) Use of Collateral. The Collateral will not be used for any unlawful purpose
or in any way that will void any insurance required to be carried in connection
therewith. Grantor will keep the Collateral free and clear of liens and adverse
claims (other than Permitted Liens) and, as appropriate and applicable, will
keep it in good condition and repair, normal wear and tear excepted, and will
clean, shelter, and otherwise care for the Collateral in all such ways as are
considered good practice by owners of like property.

(c) Indemnification. Grantor shall indemnify Bank against all losses, claims,
demands and liabilities of any kind caused by the Collateral, except to the
extent such losses, claims, demands and liabilities are caused by Bank’s gross
negligence or willful misconduct.

(d) Perfection of Security Interest. Grantor shall execute and deliver such
documents as Bank reasonably deems necessary to create, perfect and continue the
security interest in the Collateral contemplated hereby. Grantor shall deliver
to Bank the share certificate(s) evidencing all of the shares of capital stock
of Borrower, together with a stock power in a form acceptable to Bank.

(e) Insurance of Collateral.

(i) Grantor, at its expense, shall keep the Collateral insured against loss or
damage by fire, theft, explosion, sprinklers, and all other hazards and risks,
and in such amounts, as ordinarily insured against by other owners in similar
businesses conducted in the locations where Grantor’s business is conducted on
the date hereof. Grantor shall also maintain insurance relating to Grantor’s
ownership and use of the Collateral in amounts and of a type that are customary
to businesses similar to Grantor’s.

(ii) All such policies of insurance shall be in such form, with such companies,
and in such amounts as reasonably satisfactory to Bank. All such policies of
property insurance shall contain a Bank’s loss payable endorsement, in a form
reasonably satisfactory to Bank, showing Bank as an additional loss payee
thereof and all liability insurance policies shall show Bank as an additional
insured, and shall specify that the insurer must give at least twenty (20) days
notice to Bank before canceling its policy for any reason. Upon Bank’s request,
Grantor shall deliver to Bank certificates of such policies of insurance and
evidence of the payments of all premiums therefor. All proceeds payable under
any such policy shall, at the option of Bank, be payable to Bank to be applied
on account of the Guarantor Obligations.

(f) Inventory and Equipment.

(i) Except for mobile personal property, including laptop computers, having an
aggregate book value of not more than One Hundred Thousand Dollars ($100,000),
Grantor shall not store its Inventory or the Equipment with a bailee,
warehouseman, or other third party unless the third party has been notified of
Bank’s security interest and Bank (a) has received an acknowledgment from the
third party that it is holding or will hold the Inventory or Equipment for
Bank’s benefit or (b) is in pledge possession of the warehouse receipt, where
negotiable, covering such Inventory or Equipment. Except for the mobile personal
property described in the preceding sentence, Grantor shall not store or
maintain any Equipment or Inventory at a location other than the location set
forth in Section 11 of this Agreement.

(ii) Grantor shall maintain the Collateral in good and saleable condition,
repair it if necessary and otherwise deal with the Collateral in all such ways
as are considered good practice by owners of like property, use it lawfully and
only as permitted by insurance policies, and permit Bank to inspect the
Collateral at any reasonable time.

 

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(iii) Not sell, contract to sell, lease, encumber or transfer the Collateral
(other than Permitted Transfers or Permitted Liens) until the Obligations and
the Guarantor Obligations have been paid or performed in full, even though Bank
has a security interest in the proceeds of such Collateral.

(g) Binding Agreement. Anything herein to the contrary notwithstanding,
(a) Grantor shall remain liable under the contracts and agreements included in
the Collateral to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed; (b) the exercise by Bank of any of the rights granted hereunder shall
not release Grantor from any of its duties or obligations under the contracts
and agreements included in the Collateral; and (c) Bank shall not have any
obligation or liability under the contracts and agreements included in the
Collateral by reason of this Agreement, nor shall Bank be obligated to perform
any of the obligations or duties of Grantor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.

(h) Instruments. Grantor will deliver and pledge to Bank all Instruments that
are part of the Collateral duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance reasonably
satisfactory to Bank.

(i) Records. Grantor shall prepare and keep, in accordance with generally
accepted accounting principles consistently applied, complete and accurate
records regarding the Collateral and, if and when requested by Bank, shall
prepare and deliver a complete and accurate schedule of all the Collateral in
such detail as Bank may reasonably require.

(j) Inspection of Grantor’s Books. Grantor shall permit Bank or its designee at
reasonable times during Grantor’s usual business hours but no more than once a
year (unless an Event of Default has occurred and is continuing) and from time
to time to inspect Grantor’s books, records and properties and to audit and to
make copies of extracts from such books and records.

(k) Fees and Costs. Grantor shall pay all expenses, including reasonable
attorneys’ fees, incurred by Bank in the preservation, realization, enforcement
or exercise of any Bank’s rights under this Agreement.

(l) Accounts. Grantor shall maintain its primary depository, operating, and
investment accounts with Bank and/or Comerica Securities, Inc.

(m) Corporate Existence. Grantor will maintain its corporate existence and good
standing in its jurisdiction of formation and will maintain in force all
material licenses and agreements, the loss of which could reasonably be expected
to have a material adverse effect on Grantor’s business. Grantor will pay all
material taxes on or before the date such taxes are due, and will comply with
all laws and orders applicable to it, provided that Grantor need not make any
payment if the amount or validity of such payment is contested in good faith by
appropriate proceedings and is reserved against (to the extent required by GAAP)
by Grantor.

(n) Negative Covenants. Grantor will not (i) make any investments in, or loans
or advances to, any person other than in the ordinary course of business as
currently conducted other than Permitted Investments or as permitted under
Section 7.7 of the Loan Agreement, (ii) acquire any assets other than in the
ordinary course of business as currently conducted or as permitted under
Section 7.3 of the Loan Agreement, (iii) make any distributions or pay any
dividends to any person on account of Grantor’s shares, except that Grantor may
(a) pay dividends in capital stock, (b) repurchase the stock of employees,
officers or directors pursuant to stock repurchase agreements or stock purchase
plans as long as an Event of Default does not exist prior to such repurchase or
would not exist after giving effect to such repurchase, (c) repurchase the stock
of employees, officers or directors pursuant to stock repurchase agreements or
stock purchase plans by the cancellation of indebtedness owed by such former
employees to Grantor regardless of whether an Event of Default exists,
(d) convert any of its convertible securities (including warrants) into other
securities pursuant to the terms of such convertible securities and
(e) distribute securities to employees, officers or directors on the exercise of
their options, (iv) create, incur, assume or be or remain liable with respect to
any Indebtedness other than Permitted Indebtedness, (v) move, dispose of or
encumber any portion of its assets, other than Permitted Transfers, (vi) merge
or consolidate with or into any person or entity (other than mergers or
consolidations of a Subsidiary into another Subsidiary or into Borrower, and
other than Permitted Investments or as permitted under Section 7.3 of

 

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the Loan Agreement), (vii) create, incur, assume or suffer to exist any lien
with respect to any of its property other than Permitted Liens, or assign or
otherwise convey any right to receive income, including the sale of any of
Grantor’s accounts, (viii) keep Inventory or Equipment at a location other than
the address specified in Section 11 hereof except as set forth in Section 3(f)
hereof; (ix) relocate its chief executive office or state of incorporation
without thirty days prior written notification to Bank, (x) or maintain or
invest any of its property with a Person, other than Permitted Investments, or
other than Bank unless such Person has entered into an account control agreement
with Bank in form and substance reasonably satisfactory to Bank, or suffer or
permit any Subsidiary to be a party to, or be bound by, an agreement that
restricts such Subsidiary from paying dividends or otherwise distributing
property to Grantor, or (xi) permit the inclusion in any contract to which it
becomes a party of any provisions that restricts or invalidates the creation of
a security interest in any of Grantor’s property.

(o) Further Assurances. At any time and from time to time, upon the written
request of Bank, and at the sole expense of Grantor, Grantor shall promptly and
duly execute and deliver any and all such further instruments and documents and
take such further action as Bank may reasonably deem desirable to obtain the
full benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, (a) to secure all consents and approvals
necessary or appropriate for the grant of a security interest to Bank in any
Collateral held by Grantor or in which Grantor has any rights not heretofore
assigned, (b) filing any financing or continuation statements under the UCC with
respect to the security interests granted hereby, (c) transferring Collateral to
Bank’s possession (if a security interest in such Collateral can be perfected by
possession), (d) placing the interest of Bank as lienholder on the certificate
of title (or other evidence of ownership) of any vehicle owned by Grantor or in
or with respect to which Grantor holds a beneficial interest and (e) using its
best efforts to obtain waivers of liens from landlords and mortgagees. Grantor
also hereby authorizes Bank to file any such financing or continuation statement
without the signature of Grantor. If any amount payable under or in connection
with any of the Collateral is or shall become evidenced by any Instrument, such
Instrument, other than checks and notes received in the ordinary course of
business, shall be duly endorsed in a manner satisfactory to Bank and delivered
to Bank promptly upon Grantor’s receipt thereof.

4. Events of Default. The occurrence of any Event of Default under the Loan
Agreement, or the failure by Grantor to perform any obligations under the
Guaranty, or the breach of any representation under this Agreement, or the
failure to perform any obligation under Section 3 of this Agreement, shall
constitute an “Event of Default” under this Agreement.

5. Remedies on Default. Upon the occurrence of an Event of Default, Bank shall
have all rights, privileges, powers and remedies provided by law, including, but
not limited to, exercise of any or all of the following remedies.

(a) Bank may declare all amounts outstanding under the Loan Agreement and the
Guaranty to be immediately due and payable, and thereupon all such amounts shall
be and become immediately due and payable to the Bank.

(b) Bank may dispose of the Collateral in accordance with applicable law.

(c) Bank may use, operate, consume and sell the Collateral in its possession as
appropriate for the purpose of performing Grantor’s obligations with respect
thereto to the extent necessary to satisfy the obligations of Grantor.

(d) All payments received and amounts realized by Bank shall be promptly applied
and distributed by the Bank in the following order of priority:

(i) first, to the payment of all costs and expenses, including reasonable legal
expenses and attorneys fees, incurred or made hereunder by Bank, including any
such costs and expenses of foreclosure or suit, if any, and of any sale or the
exercise of any other remedy under this Section 5, and of all taxes, assessments
or liens superior to the lien granted under this Agreement; and

 

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(ii) second, to the payment to Bank of the amount then owing under the Loan
Agreement.

6. Power of Attorney. Grantor hereby appoints Bank, its attorney-in-fact to
prepare, sign and file or record, for Grantor in Grantor’s name, any financing
statements, applications for registration and like papers and to take any other
action deemed by Bank necessary or desirable in order to perfect the security
interest of the Bank hereunder, to dispose of any Collateral, and to perform any
obligations of Grantor hereunder, at Grantor’s expense, but without obligation
to do so.

7. Remedies Cumulative. Bank’s rights and remedies under this Agreement, the
Loan Documents, and all other agreements shall be cumulative. Bank shall have
all other rights and remedies not inconsistent herewith as provided under the
California Uniform Commercial Code (the “UCC”), by law, or in equity. No
exercise by Bank of one right or remedy shall be deemed an election, and no
waiver by Bank of any Event of Default on Borrower’s or Grantor’s part shall be
deemed a continuing waiver. No delay by Bank shall constitute a waiver,
election, or acquiescence by it. No waiver by Bank shall be effective unless
made in a written document signed on behalf of Bank and then shall be effective
only in the specific instance and for the specific purpose for which it was
given.

8. Amendment of Loan Documents. Grantor authorizes Bank, without notice or
demand and without affecting its liability hereunder, from time to time to
(a) renew, extend, or otherwise change the terms of any Loan Document, or any
part thereof; (b) take and hold security for the payment of any Loan Document,
and exchange, enforce, waive and release any such security; and (c) apply such
security and direct the order or manner of sale thereof as Bank in its sole
discretion may determine.

9. Grantor Waivers. Grantor waives any right to require Bank to (a) proceed
against Borrower, any other guarantor or any other person; (b) proceed against
or exhaust any security held from Borrower; (c) marshal any assets of Borrower;
or (d) pursue any other remedy in Bank’s power whatsoever. Bank may, at its
election, exercise or decline or fail to exercise any right or remedy it may
have against Borrower or any security held by Bank, including without limitation
the right to foreclose upon any such security by judicial or nonjudicial sale,
without affecting or impairing in any way the liability of Grantor hereunder.
Grantor waives any defense arising by reason of any disability or other defense
of Borrower or by reason of the cessation from any cause whatsoever of the
liability of Borrower. Grantor waives any setoff, defense or counterclaim that
Borrower may have against Bank. Grantor waives any defense arising out of the
absence, impairment or loss of any right of reimbursement or subrogation or any
other rights against Borrower. Until all obligations under the Guaranty have
been satisfied, Grantor shall have no right of subrogation or reimbursement,
contribution or other rights against Borrower, and Grantor waives any right to
enforce any remedy that Bank now has or may hereafter have against Borrower.
Grantor waives all rights to participate in any security now or hereafter held
by Bank. Grantor waives all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, and notices
of acceptance of this Agreement and of the existence, creation, or incurring of
new or additional indebtedness. Grantor assumes the responsibility for being and
keeping itself informed of the financial condition of Borrower and of all other
circumstances bearing upon the risk of nonpayment of any indebtedness or
nonperformance of any obligation of Borrower, warrants to Bank that it will keep
so informed, and agrees that absent a request for particular information by
Grantor, Bank shall have no duty to advise Grantor of information known to Bank
regarding such condition or any such circumstances. Grantor waives the benefits
of California Civil Code sections 2809, 2810, 2819, 2845, 2847, 2848, 2849,
2850, 2899 and 3433.

10. Borrower Insolvency. If Borrower becomes insolvent or is adjudicated
bankrupt or files a petition for reorganization, arrangement, composition or
similar relief under any present or future provision of the United States
Bankruptcy Code, or if such a petition is filed against Borrower, and in any
such proceeding some or all of any indebtedness or obligations under the Loan
Documents are terminated or rejected or any obligation of Borrower is modified
or abrogated, or if Borrower’s obligations are otherwise avoided for insolvency,
bankruptcy or any similar reason, Grantor agrees that Grantor’s liability
hereunder shall not thereby be affected or modified and such liability shall
continue in full force and effect as if no such action or proceeding had
occurred. This Agreement shall continue to be effective or be reinstated, as the
case may be, if any payment must be returned by Bank upon the insolvency,
bankruptcy or reorganization of Borrower, Grantor, any other person, or
otherwise, as though such payment had not been made.

 

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11. Notices. Unless otherwise provided in this Agreement, all notices or demands
by any party relating to this Agreement or any other agreement entered into in
connection herewith shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by a recognized overnight
delivery service, certified mail, postage prepaid, return receipt requested, or
by telefacsimile to Grantor or to Bank, as the case may be, at its addresses set
forth below:

 

If to Grantor:    TORREYPINES THERAPEUTICS, INC.    11085 N. Torrey Pines Road,
Suite 300    La Jolla, California 92037    Attn: Chief Financial Officer    Fax:
(858) 623-5666 If to Bank:    Comerica Bank    75 East Trimble Road, M/C 4770   
San Jose, California 95131    Attn: Manager    FAX: (408) 556-5091 with a copy
to:    Comerica Bank    11943 El Camino Real, Suite 110B    San Diego,
California 92130    Attn: Greg Park    Fax: (858) 509-2365

The parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other.

12. Choice of Law and Venue; Jury Trial Waiver.

This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of California, without regard to principles of
conflicts of law. Each of Borrower and Bank hereby submits to the exclusive
jurisdiction of the state and Federal courts located in the County of Santa
Clara, State of California. THE UNDERSIGNED ACKNOWLEDGE THAT THE RIGHT TO TRIAL
BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN
CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER CHOICE,
KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, WAIVES ANY
RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION ARISING OUT OF OR RELATED TO
THIS AGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT OR AGREEMENT BETWEEN THE
UNDERSIGNED PARTIES.

13. Reference Provision.

In the event the Jury Trial Waiver set forth above is not enforceable, the
parties elect to proceed under this Judicial Reference Provision.

13.1 Mechanics.

(a) With the exception of the items specified in clause (c), below, any
controversy, dispute or claim (each, a “Claim”) between the parties arising out
of or relating to this Agreement or any other document, instrument or agreement
between the undersigned parties (collectively in this Section, the “Comerica
Documents”), will be resolved by a reference proceeding in California in
accordance with the provisions of Sections 638 et seq. of the California Code of
Civil Procedure (“CCP”), or their successor sections, which shall constitute the
exclusive remedy for the resolution of any Claim, including whether the Claim is
subject to the reference proceeding. Except as otherwise provided in the
Comerica Documents, venue for the reference proceeding will be in the state or
federal court in the county or district where the real property involved in the
action, if any, is located or in the state or federal court in the county or
district where venue is otherwise appropriate under applicable law (the
“Court”).

 

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(b) The matters that shall not be subject to a reference are the following:
(i) nonjudicial foreclosure of any security interests in real or personal
property, (ii) exercise of self-help remedies (including, without limitation,
set-off), (iii) appointment of a receiver and (iv) temporary, provisional or
ancillary remedies (including, without limitation, writs of attachment, writs of
possession, temporary restraining orders or preliminary injunctions). This
reference provision does not limit the right of any party to exercise or oppose
any of the rights and remedies described in clauses (i) and (ii) or to seek or
oppose from a court of competent jurisdiction any of the items described in
clauses (iii) and (iv). The exercise of, or opposition to, any of those items
does not waive the right of any party to a reference pursuant to this reference
provision as provided herein.

(c) The referee shall be a retired judge or justice selected by mutual written
agreement of the parties. If the parties do not agree within ten (10) days of a
written request to do so by any party, then, upon request of any party, the
referee shall be selected by the Presiding Judge of the Court (or his or her
representative). A request for appointment of a referee may be heard on an ex
parte or expedited basis, and the parties agree that irreparable harm would
result if ex parte relief is not granted. Pursuant to CCP § 170.6, each party
shall have one peremptory challenge to the referee selected by the Presiding
Judge of the Court (or his or her representative).

(d) The parties agree that time is of the essence in conducting the reference
proceedings. Accordingly, the referee shall be requested, subject to change in
the time periods specified herein for good cause shown, to (i) set the matter
for a status and trial-setting conference within fifteen (15) days after the
date of selection of the referee, (ii) if practicable, try all issues of law or
fact within one hundred twenty (120) days after the date of the conference and
(iii) report a statement of decision within twenty (20) days after the matter
has been submitted for decision.

(e) The referee will have power to expand or limit the amount and duration of
discovery. The referee may set or extend discovery deadlines or cutoffs for good
cause, including a party’s failure to provide requested discovery for any reason
whatsoever. Unless otherwise ordered based upon good cause shown, no party shall
be entitled to “priority” in conducting discovery, depositions may be taken by
either party upon seven (7) days written notice, and all other discovery shall
be responded to within fifteen (15) days after service. All disputes relating to
discovery which cannot be resolved by the parties shall be submitted to the
referee whose decision shall be final and binding.

13.2 Procedures. Except as expressly set forth herein, the referee shall
determine the manner in which the reference proceeding is conducted including
the time and place of hearings, the order of presentation of evidence, and all
other questions that arise with respect to the course of the reference
proceeding. All proceedings and hearings conducted before the referee, except
for trial, shall be conducted without a court reporter, except that when any
party so requests, a court reporter will be used at any hearing conducted before
the referee, and the referee will be provided a courtesy copy of the transcript.
The party making such a request shall have the obligation to arrange for and pay
the court reporter. Subject to the referee’s power to award costs to the
prevailing party, the parties will equally share the cost of the referee and the
court reporter at trial.

13.3 Application of Law. The referee shall be required to determine all issues
in accordance with existing case law and the statutory laws of the State of
California. The rules of evidence applicable to proceedings at law in the State
of California will be applicable to the reference proceeding. The referee shall
be empowered to enter equitable as well as legal relief, enter equitable orders
that will be binding on the parties and rule on any motion which would be
authorized in a court proceeding, including without limitation motions for
summary judgment or summary adjudication. The referee shall issue a decision at
the close of the reference proceeding which disposes of all claims of the
parties that are the subject of the reference. Pursuant to CCP § 644, such
decision shall be entered by the Court as a judgment or an order in the same
manner as if the action had been tried by the Court and any such decision will
be final, binding and conclusive. The parties reserve the right to appeal from
the final judgment or order or from any appealable decision or order entered by
the referee. The parties reserve the right to findings of fact, conclusions of
laws, a written statement of decision, and the right to move for a new trial or
a different judgment, which new trial, if granted, is also to be a reference
proceeding under this provision.

 

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13.4 Repeal. If the enabling legislation which provides for appointment of a
referee is repealed (and no successor statute is enacted), any dispute between
the parties that would otherwise be determined by reference procedure will be
resolved and determined by arbitration. The arbitration will be conducted by a
retired judge or justice, in accordance with the California Arbitration Act
§1280 through §1294.2 of the CCP as amended from time to time. The limitations
with respect to discovery set forth above shall apply to any such arbitration
proceeding.

13.5 THE PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS
RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY
A JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL
OF ITS, HIS OR HER OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE
MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL APPLY
TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF OR IN
ANY WAY RELATED TO, THIS AGREEMENT OR THE OTHER COMERICA DOCUMENTS.

14. General Provisions.

14.1 Successors and Assigns. This Agreement shall bind and inure to the benefit
of the respective successors and permitted assigns of each of the parties;
provided, however, that neither this Agreement nor any rights hereunder may be
assigned by Grantor without Bank’s prior written consent, which consent may be
granted or withheld in Bank’s sole discretion. Bank shall have the right without
the consent of or notice to Grantor to sell, transfer, negotiate, or grant
participation in all or any part of, or any interest in, Bank’s obligations,
rights and benefits hereunder.

14.2 Indemnification. Grantor shall defend, indemnify and hold harmless Bank and
its officers, employees, and agents against: (a) all obligations, demands,
claims, and liabilities claimed or asserted by any other party in connection
with the transactions contemplated by this Agreement; and (b) all losses or Bank
Expenses in any way suffered, incurred, or paid by Bank as a result of or in any
way arising out of, following, or consequential to transactions between Bank and
Grantor whether under this Agreement, or otherwise (including without limitation
reasonable attorneys’ fees and expenses), except for losses caused by Bank’s
gross negligence or willful misconduct.

14.3 Time of Essence. Time is of the essence for the performance of all
obligations set forth in this Agreement.

14.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

14.5 Amendments in Writing, Integration. This Agreement cannot be amended or
terminated orally. All prior agreements, understandings, representations,
warranties, and negotiations between the parties hereto with respect to the
subject matter of this Agreement, if any, are merged into this Agreement and the
Loan Documents.

14.6 Counterparts. This Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement.

14.7 Survival. All covenants, representations and warranties made in this
Agreement shall continue in full force and effect so long as any Obligations
remain outstanding, any Guarantor Obligations remain outstanding, or Bank has
any obligation to make Credit Extensions to Borrower. The obligations of Grantor
to indemnify Bank with respect to the expenses, damages, losses, costs and
liabilities described in Section 14.2 shall survive until all applicable statute
of limitations periods with respect to actions that may be brought against Bank
have run.

 

8

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IN WITNESS WHEREOF, the parties have executed this Agreement on the date set
forth above.

 

GRANTOR:     BANK: TORREYPINES THERAPEUTICS, INC.     COMERICA BANK By:   /s/
Craig A. Johnson     By:   /s/ Greg Park Name:   Craig A. Johnson     Name:   

Greg Park

Title:   Vice President and Chief Financial Officer     Title:  

Vice President

[Signature Page to Third Party Security Agreement]

 

9

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DEBTOR:    TORREYPINES THERAPEUTICS, INC. SECURED PARTY:    COMERICA BANK

EXHIBIT A

COLLATERAL DESCRIPTION ATTACHMENT

TO THIRD PARTY SECURITY AGREEMENT

All personal property of Grantor (herein referred to as “Grantor” or “Debtor”)
whether presently existing or hereafter created or acquired, and wherever
located, including, but not limited to:

(a) all accounts (including health-care-insurance receivables), chattel paper
(including tangible and electronic chattel paper), deposit accounts, documents
(including negotiable documents), equipment (including all accessions and
additions thereto), general intangibles (including payment intangibles and
software), goods (including fixtures), instruments (including promissory notes),
inventory (including all goods held for sale or lease or to be furnished under a
contract of service, and including returns and repossessions), investment
property (including securities and securities entitlements), letter of credit
rights, money, and all of Debtor’s books and records with respect to any of the
foregoing, and the computers and equipment containing said books and records;
and

(b) any and all cash proceeds and/or noncash proceeds of any of the foregoing,
including, without limitation, insurance proceeds, and all supporting
obligations and the security therefor or for any right to payment.

All terms above have the meanings given to them in the California Uniform
Commercial Code, as amended or supplemented from time to time, including revised
Division 9 of the Uniform Commercial Code-Secured Transactions, added by Stats.
1999, c.991 (S.B. 45), Section 35, operative July 1, 2001.

Notwithstanding the foregoing, the Collateral shall not include any copyrights,
patents, trademarks, servicemarks and applications therefor, now owned or
hereafter acquired, or any claims for damages by way of any past, present and
future infringement of any of the foregoing (collectively, the “Intellectual
Property”); provided, however, that the Collateral shall include all accounts
and general intangibles that consist of rights to payment and proceeds from the
sale, licensing or disposition of all or any part, or rights in, the foregoing
(the “Rights to Payment”). Notwithstanding the foregoing, if a judicial
authority (including a U.S. Bankruptcy Court) holds that a security interest in
the underlying Intellectual Property is necessary to have a security interest in
the Rights to Payment, then the Collateral shall automatically, and effective as
of June 11, 2008, include the Intellectual Property to the extent necessary to
permit perfection of Bank’s security interest in the Rights to Payment.

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LOGO [g62660img01.jpg]

Agreement to Furnish Insurance

(Herein called “Bank”)

Guarantor(s): TORREYPINES THERAPEUTICS, INC.

I understand that the Security Agreement or Deed of Trust which I executed in
connection with this transaction requires me to provide a physical damage
insurance policy including a Lenders Loss Payable Endorsement in favor of the
Bank as shown below, within ten (10) days from the date of this agreement.

The following minimum insurance must be provided according to the terms of the
security documents.

 

¨

  AUTOMOBILES, TRUCKS, RECREATIONAL VEHICLES    ¨    MACHINERY & EQUIPMENT:
MISCELLANEOUS PERSONAL PROPERTY  

Comprehensive & Collision

     

Fire & Extended Coverage

 

Lender’s Loss Payable Endorsement

     

Lender’s Loss Payable Endorsement

       

¨        Breach of Warranty Endorsement

¨

  BOATS    ¨    AIRCRAFT  

All Risk Hull Insurance

     

All Risk Ground & Flight Insurance

 

Lender’s Loss Payable Endorsement

     

Lender’s Loss Payable Endorsement

 

¨        Breach of Warranty Endorsement

     

¨        Breach of Warranty Endorsement

¨

  MOBILE HOMES    ¨    REAL PROPERTY  

Fire, Theft & Combined Additional Coverage

     

Fire & Extended Coverage

 

Lender’s Loss Payable Endorsement

     

Lender’s Loss Payable Endorsement

 

¨        Earthquake

     

¨        All Risk Coverage

       

¨        Special Form Risk Coverage

       

¨        

       

¨        Earthquake

¨

  INVENTORY      

¨        Other _____________________________

¨

 
Other _______________________________________________________________________________________________
 
            _______________________________________________________________________________________________
 
            _______________________________________________________________________________________________

I may obtain the required insurance from any company that is acceptable to the
Bank, and will deliver proof of such coverage with an effective date of June 11,
2008 or earlier.

I understand and agree that if I fail to deliver proof of insurance to the Bank
at the address below, or upon the lapse or cancellation of such insurance, the
Bank may procure Lender’s Single Interest Insurance or other similar coverage on
the property. If the Bank procures insurance to protect its interest in the
property described in the security documents, the cost for the insurance will be
added to my indebtedness as provided in the security documents. Lender’s Single
Interest Insurance shall cover only the Bank’s interest as a secured party, and
shall become effective at the earlier of the funding date of this transaction or
the date my insurance was canceled or expired. I UNDERSTAND THAT LENDER’S SINGLE
INTEREST INSURANCE WILL PROVIDE ME WITH ONLY LIMITED PROTECTION AGAINST PHYSICAL
DAMAGE TO THE COLLATERAL, UP TO THE BALANCE OF THE LOAN, HOWEVER, MY EQUITY IN
THE PROPERTY WILL NOT BE INSURED. FURTHER, THE INSURANCE WILL NOT PROVIDE
MINIMUM PUBLIC LIABILITY OR PROPERTY DAMAGE INDEMNIFICATION AND DOES NOT MEET
THE REQUIREMENTS OF THE FINANCIAL RESPONSIBILITY LAW.

CALIFORNIA CIVIL CODE SECTION 2955.5. HAZARD INSURANCE DISCLOSURE: No lender
shall require a borrower, as a condition of receiving or maintaining a loan
secured by real property, to provide hazard insurance coverage against risks to
the improvements on that real property in an amount exceeding the replacement
value of the improvements on the property.

 

Bank Address for Insurance Documents:

 

Comerica Bank – Collateral Operations, Mail Code 4770

75 East Trimble Road San Jose, California 95131

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I acknowledge having read the provisions of this agreement, and agree to its
terms. I authorize the Bank to provide to any person (including any insurance
agent or company) any information necessary to obtain the insurance coverage
required.

 

OWNER(S) OF COLLATERAL:

TORREYPINES THERAPEUTICS, INC.

    DATED: June 11, 2008                    

 

INSURANCE VERIFICATION     Date _________________________  
Phone                                             Agents
Name _______________________________________  
Person Talked To                        
Agents Address ______________________________________________________________________________________________
Insurance Company ___________________________________________________________________________________________
Policy Number(s) ____________________________________________________________________________________________
Effective Dates: From _________________________________________  
To: __________________________________________  
Deductible $ ________________________________________________  
Comments: ____________________________________      

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DEBTOR:    TORREYPINES THERAPEUTICS, INC. SECURED PARTY:    COMERICA BANK

EXHIBIT A

COLLATERAL DESCRIPTION ATTACHMENT

TO UCC NATIONAL FORM FINANCING STATEMENT

All personal property of Grantor (herein referred to as “Grantor” or “Debtor”)
whether presently existing or hereafter created or acquired, and wherever
located, including, but not limited to:

(a) all accounts (including health-care-insurance receivables), chattel paper
(including tangible and electronic chattel paper), deposit accounts, documents
(including negotiable documents), equipment (including all accessions and
additions thereto), general intangibles (including payment intangibles and
software), goods (including fixtures), instruments (including promissory notes),
inventory (including all goods held for sale or lease or to be furnished under a
contract of service, and including returns and repossessions), investment
property (including securities and securities entitlements), letter of credit
rights, money, and all of Debtor’s books and records with respect to any of the
foregoing, and the computers and equipment containing said books and records;
and

(b) any and all cash proceeds and/or noncash proceeds of any of the foregoing,
including, without limitation, insurance proceeds, and all supporting
obligations and the security therefor or for any right to payment.

All terms above have the meanings given to them in the California Uniform
Commercial Code, as amended or supplemented from time to time, including revised
Division 9 of the Uniform Commercial Code-Secured Transactions, added by Stats.
1999, c.991 (S.B. 45), Section 35, operative July 1, 2001.

Notwithstanding the foregoing, the Collateral shall not include any copyrights,
patents, trademarks, servicemarks and applications therefor, now owned or
hereafter acquired, or any claims for damages by way of any past, present and
future infringement of any of the foregoing (collectively, the “Intellectual
Property”); provided, however, that the Collateral shall include all accounts
and general intangibles that consist of rights to payment and proceeds from the
sale, licensing or disposition of all or any part, or rights in, the foregoing
(the “Rights to Payment”). Notwithstanding the foregoing, if a judicial
authority (including a U.S. Bankruptcy Court) holds that a security interest in
the underlying Intellectual Property is necessary to have a security interest in
the Rights to Payment, then the Collateral shall automatically, and effective as
of June 11, 2008, include the Intellectual Property to the extent necessary to
permit perfection of Bank’s security interest in the Rights to Payment.