Exhibit 10.3
SECURITY DEPOSIT PLEDGE AGREEMENT
(Loan)
           This Security Deposit Pledge Agreement (this “Agreement”) is made and
entered into as of the 31st day of October, 2006, by and between Genitope
Corporation a Delaware corporation with its principal place of business at 6900
Dumbarton Circle, Fremont, CA 94555, (“Debtor”) and General Electric Capital
Corporation, a Delaware corporation, with its principal place of business at 83
Wooster Heights Road, 5th Floor, Danbury, CT 06810 (“Secured Party”).
     In consideration of, and as an inducement for Secured Party to lend funds
to Debtor under the Master Security Agreement, dated as of October 31, 2006, and
any Collateral Schedules and Promissory Notes thereunder (the “Master Security
Agreement and all Collateral Schedules and Promissory Notes thereto being
referred to as the “Loan Documents”), and to secure the payment and performance
of all of Debtor’s obligations under the Loan Documents, Debtor hereby deposits
and pledges with Secured Party the sum of Nine Hundred Seventy-Six Thousand Two
Hundred Ninety-Nine and 26/100 Dollars $976,299.26 (the “Security Deposit”),
such pledge to be upon the terms and conditions set forth below (all capitalized
terms not otherwise defined herein shall have the meanings set forth in the Loan
Documents):
     1. Debtor delivers the Security Deposit to Secured Party to secure Debtor’s
performance of its obligations under the Loan Documents, including, but not
limited to, the timely payment of the Periodic Installments.
     2. The Security Deposit deposited with Secured Party shall accrue interest
at 4% simple interest per annum from the date of deposit through the date such
Security Deposit is returned to Debtor in connection with Section 5 hereof.
Secured Party may commingle the Security Deposit with its other funds.
     3. Upon any default by Debtor under the Loan Documents, interest accrual on
the Security Deposit shall cease and Secured Party may, at its option, apply the
Security Deposit towards the satisfaction of Debtor’s obligations under the Loan
Documents and the payment of all costs and expenses incurred by Secured Party as
a result of such default, including but not limited to, costs of repossessing
equipment and reasonable attorneys’ fees. Such application shall not excuse the
performance at the time and in the manner prescribed of any obligation of Debtor
or cure a default of Debtor. Upon the application by Secured Party of any amount
of the Security Deposit pursuant to the terms of this paragraph, Debtor shall be
obligated to immediately pay to Secured Party an amount sufficient to cause the
Security Deposit to equal the amount first set forth above as reduced in
accordance with Section 5 herein.
     4. Secured Party shall have no duty to first commence an action against or
seek recourse from Debtor, in the event of a default under the Loan Documents,
before enforcing the provisions of, and proceedings under the provisions of this
Agreement. The obligations of Debtor under this Agreement shall be absolute and
unconditional and shall remain in full force and effect without regard to, and
shall not be released or discharged or in any way affected by:

  (a)   any amendment or modification of or supplement to the Loan Documents;  
  (b)   any exercise or non-exercise of any right, remedy or privilege under or
in respect to this Agreement, the Loan Documents, or any other instrument
provided for in the Loan Documents, or any waiver, consent, explanation,
indulgence or actions or inaction with respect to any such instrument; or

 

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  (c)   any bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or similar proceeding of Debtor.

     5. So long as Debtor is not in default under the Loan Documents or under
any other material financial obligation, Secured Party agrees to reduce the
Security Deposit to an amount equivalent to 25% of the outstanding principal
balance of the Loan. The Secured Party shall then refund to Debtor any Security
Deposit in excess of the reduced Security Deposit and accrued interest on the
refunded amount (less any portion of same cashed, sold, assigned or delivered
pursuant to, and under the circumstances specified in Paragraph 3 hereof). The
refunds will take place every six months commencing January 1, 2007.
     6. So long as Debtor is not in default under the Loan Documents, and in the
event Debtor has (i) borrowed $6,666,666.00 from Secured Party prior to
November 30, 2006 and (ii) received the Food and Drug Administration’s (“FDA”)
approval of the marketing and use of Debtor’s drug, MyVax personalized
immunotherapy, Secured Party agrees to deliver to Debtor the Security Deposit
and accrued interest thereon (less any portion of same cashed, sold, assigned or
delivered pursuant to and under the conditions specified in paragraphs 3 and 5
hereof), but in no event will said refund occur prior to August 31, 2007. Prior
to the refund, Debtor shall supply Secured Party with documented proof of the
FDA approval acceptable to Secured Party in its sole discretion. Nothing in this
Section shall be deemed to require Secured Party to refund to Debtor any amount
greater than the amount of the Security Deposit on the date of such scheduled
refund. Upon such refund, Debtor will no longer be required to deposit any
Security Deposit with Secured Party, and this Agreement shall thereupon be
without further effect.
     7. So long as Debtor is not in default under the Loan Documents, and in the
event Debtor has (i) borrowed $6,666,666.00 from Secured Party after
November 30, 2006 and prior to December 30, 2006, and (ii) received the Food and
Drug Administration’s (“FDA”) approval of the marketing and use of Debtor’s
drug, MyVax personalized immunotherapy, Secured Party agrees to deliver to
Debtor the Security Deposit and accrued interest thereon (less any portion of
same cashed, sold, assigned or delivered pursuant to and under the conditions
specified in paragraphs 3 and 5 hereof), but in no event will said refund occur
prior to October 30, 2007. Prior to the refund, Debtor shall supply Secured
Party with documented proof of the FDA approval acceptable to Secured Party in
its sole discretion. Nothing in this Section shall be deemed to require Secured
Party to refund to Debtor any amount greater than the amount of the Security
Deposit on the date of such scheduled refund. Upon such refund, Debtor will no
longer be required to deposit any Security Deposit with Secured Party, and this
Agreement shall thereupon be without further effect.
     8. Upon the termination of the Loan Documents and the satisfaction of all
of the obligations of Debtor thereunder, Secured Party shall deliver to Debtor
the Security Deposit and accrued interest thereon (less any portion of same
cashed, sold, assigned or delivered pursuant to and under the conditions
specified in paragraphs 3 and 5 hereof), and this Agreement shall thereupon be
without further effect.
     9. Secured Party may, without the consent of Debtor, assign this Agreement
to another financial institution reasonably acceptable to Debtor. Debtor agrees
that if Debtor receives written notice of an assignment from Secured Party,
Debtor will pay all amounts due hereunder to such assignee or as instructed by
Secured Party. Debtor also agrees to confirm in writing receipt of the notice of
assignment as may be reasonably requested by assignee. Debtor hereby waives and
agrees not to assert against any such assignee any defense, set-off, recoupment
claim or counterclaim, which Debtor has or may at any time have against Secured
Party for any reason whatsoever.

 

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.

                  SECURED PARTY:   DEBTOR:   General Electric Capital
Corporation   Genitope Corporation
 
               
By:
  /s/ Diane Earle        By:   /s/ John Vuko 
 
               
 
               
Name:
  Diane Earle        Name:   John Vuko 
 
               
 
               
Title:
  Duly Authorized Signatory        Title:   Vice President and CFO