EXHIBIT 10.2

March 24, 2005

Lee Cole
Chief Executive Officer
Bioaccelerate Holdings, Inc.
712 Fifth Avenue, 19th Floor
New York, NY 10019-4108

Bernard Ross
Chief Executive Officer
Inncardio, Inc.
712 Fifth Avenue, 19th Floor
New York, NY, 10019-4108

Dear Mssrs. Cole and Ross:

This letter sets forth our understanding of certain terms and conditions
regarding the investment by Bioaccelerate Holdings, Inc. (“Bioaccelerate”),
parent of Inncardio, Inc. (“Inncardio”), in Cengent Therapeutics, Inc.
(“Cengent”) as contemplated in that certain letter of intent dated February 9,
2005 and executed by Inncardio, Bioaccelerate and Cengent (the “LOI”) and that
certain Agreement and Plan of Merger executed the date hereof by Cengent,
Inncardio and Cengent Acquisition Corp. (the “Merger Agreement”).

Bioaccelerate hereby agrees to invest a minimum of $500,000 per month in Cengent
to fund working capital and other needs until the earlier to occur of (i) the
termination of the Merger Agreement or (ii) the date of the Closing (as defined
in the Merger Agreement) (individually, a “Working Capital Advance”;
collectively, the “Working Capital Advances”) in senior secured convertible
promissory notes (the “Notes”) and warrants to purchase Common Stock of Cengent
(the “Warrants”) pursuant to the terms and conditions of that certain Note and
Warrant Purchase Agreement dated October 29, 2004 by and between Cengent and the
lenders listed therein, as amended by Amendment No. 1 to Note and Warrant
Purchase Agreement dated January 31, 2005 and Amendment No. 2 to Note and
Warrant Purchase Agreement dated February 24, 2005 (collectively, the “Purchase
Agreement”). Bioaccelerate has agreed to the Company’s budget for ordinary
course of business expenditures, which is attached to this letter agreement and
is deemed incorporated herein by reference (the “Company Budget”), provided,
that in no event shall Bioaccelerate be obligated to invest more than $500,000
per month in Cengent pursuant to this Agreement. Other than the Company Budget,
Bioaccelerate shall have no obligation to make any investment whatsoever except
upon mutual agreement with the Company concerning the budget for the succeeding
month and the application of Bioaccelerate’s investment for those budgeted
items. 

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Bioaccelerate shall deliver to Cengent via wire transfer to a bank account
designated by Cengent each Working Capital Advance, with the first Working
Capital Advance due upon the execution of the Merger Agreement by Cengent,
Inncardio and Cengent Acquisition Corp. and each Working Capital Advance
thereafter due on the same date of the succeeding month(each, a “Payment Date”).
Bioaccelerate acknowledges and agrees that nothing herein prevents or limits
Cengent’s existing investors from providing additional investments in Cengent
pursuant to the Purchase Agreement.

Upon the Closing, Bioaccelerate shall (1) transfer the full amount of the
principal and interest under the Notes for the Working Capital Advances to the
Convertible Credit Line Facility, (2) any such Notes shall be deemed paid in
full, cancelled and be of no further force and effect, and (3) any Warrants
issued under the Purchase Agreement shall be cancelled and be of no further
force and effect. In addition, upon the Closing, Bioaccelerate shall have no
rights under, or be considered a party to, the Purchase Agreement or other
transactions agreements set forth therein, including, without limitation, the
right to participate in a 2.5 times liquidation preference upon any change of
control of Cengent as set forth in the Notes. In the event the Closing does not
occur, Bioaccelerate shall retain the full rights of a lender set forth in the
Purchase Agreement and as a holder of the Notes and Warrants, subject to the
limitations set forth below in this letter agreement.

In the event Bioaccelerate fails to deliver the Working Capital Advances on each
Payment Date as it is required to do pursuant to this letter agreement, and such
failure shall continue, without cure, for three (3) business days after receipt
by Bioaccelerate of written notice of such failure, the Merger Agreement shall
automatically and immediately terminate without any notice or action required by
Cengent; provided, that, Cengent may provide written notice to Bioaccelerate and
Inncardio, before such termination takes effect, that Cengent desires that the
Merger Agreement remain in effect. In the event such written notice is provided
by Cengent to continue the Merger Agreement, the parties hereby agree that the
Merger Agreement shall not have been considered terminated and shall be deemed
to continue in full force and effect. If, prior to Closing, the Merger Agreement
is terminated due to Bioaccelerate’s breach of its obligation to deliver any
Working Capital Advance in accordance with the terms of this letter agreement,
the parties hereby agree that (1) the Company shall retain the initial Working
Capital Advance in full satisfaction of any damages the Company may have
suffered due to Bioaccelerate’s breach and the Company shall have no obligation
to repay the initial Working Capital Advance or any interest on such Working
Capital Advance and any Note evidencing such Working Capital Advance shall be
cancelled and be of no further force and effect; (2) any Warrants issued in
connection with such initial Working Capital Advance (but no other Warrants
issued in connection with Working Capital Advances by Bioaccelerate) shall be
cancelled and be of no further force and effect; (3) Bioaccelerate shall have no
obligation to make any further Working Capital Advance; (4) the Company shall
repay all other Working Capital Advances and any interest thereon upon
termination of the Merger Agreement in accordance with the terms and conditions
of the Purchase Agreement; and (5) Bioaccelerate shall have no further
obligations or liabilities under or in respect of this letter agreement or the
Purchase Agreement. If, prior to Closing, the Merger Agreement is terminated for
any other reason, the parties hereby agree that (1) Bioaccelerate shall have no
obligation to make any further Working Capital Advance; (2) the Company shall
repay all Working Capital Advances by Bioaccelerate and any interest thereon
upon termination of the Merger Agreement in accordance with the terms and
conditions of the Purchase Agreement; and (3) Bioaccelerate shall have no
further obligations or liabilities under or in respect of this letter agreement
or the Purchase Agreement.

This letter agreement may be executed in two or more counterparts, each of which
taken together will constitute one letter agreement among the parties hereto and
their successors and assigns. This letter agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
transactions negotiated, executed, delivered and wholly performed within such
State without reference to the conflicts of laws provisions thereof. None of the
parties hereto may assign its rights hereunder without the consent of the other
parties. All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (i) upon personal delivery to the party to be
notified, (ii) when sent by confirmed telex or facsimile if sent during normal
business hours of the recipient, if not, then on the next business day; (iii)
five days after having been sent by registered or certified mail, return receipt
requested, postage prepaid; or (iv) one day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the address as set
forth in this letter agreement or at such other address as such party may
designate by five (5) days advance written notice to the other parties hereto.
Each party hereto agrees to execute and deliver all such other and additional
instruments and documents and do all such other acts and things as may be
reasonably necessary to effectuate the transactions contemplated by this letter
agreement.

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If the terms of our understanding have been correctly set forth, please confirm
this by executing this letter agreement and returning to us the an executed copy
of this letter agreement.

 
Very truly yours,

Cengent Therapeutics Inc.
 
By: _________________________________
Gordon Foulkes, Ph.D.
President

Agreed and Acknowledged:

Bioaccelerate Holdings, Inc.
 
By: _________________________________
Lee Cole
Chief Executive Officer

 
Inncardio, Inc.
 
By: _________________________________
Bernard Ross
Chief Executive Officer

 

 

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