Document:

Unassociated Document

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. 

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.

******

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 OfficerUnassociated Document

EXHIBIT
10.3 

BIOACCELERATE,
INC.

 

March
9th, 2005

 

Inncardio
Inc

712 Fifth
Avenue

New York,
NY, 10019

Attn:
President and CEO

 

Re: Credit
Facility

 

Gentlemen:

 

BIOACCELERATE,
INC (“BIOACCELERATE, INC”) is pleased to make available to Inncardio, Inc. (the
“Company”) a senior, secured credit facility (the “Credit Facility”), pursuant
to which BIOACCELERATE, INC shall provide the Company one or more loans (each, a
“Tranche”) in the aggregate principal amount of up to Twelve Million Dollars
($12,000,000) dollars (the “Maximum Funded Amount”), subject to the terms and
conditions as hereinafter provided in this letter agreement (this “Letter
Agreement”).

 

The First
Tranche (the “Initial Tranche”) will be payable to the Company or its Creditors
on an as needed basis and will be provided and funded to the Company upon
receipt of the following documents from the Company: (i) a grid promissory note
(the “Note”), executed by an authorized officer of the Company evidencing the
principal amount of funds available under the Credit Facility and the draw down
of the Initial Tranche (in the form attached hereto as Exhibit
A), (ii) a
security agreement (the “Security Agreement”) and other collateral documents
pursuant to which certain assets and subsequently acquired assets of the Company
shall be pledged to secure the repayment of the indebtedness evidenced by the
Note (the “Security Documents”), executed by an authorized officer of the
Company (in the form attached hereto as Exhibit
B), (iii)
the warrant (as defined herein), executed by an authorized officer of the
Company, (iv) such other documents, each in form and substance satisfactory to
BIOACCELERATE, INC, as BIOACCELERATE, INC shall reasonably request.

 

Subject
to the conditions specified herein, additional Tranches shall be made available
on as needed basis (each a “Funding Date”). Each Additional Tranche will be
funded within two (2) business days following receipt by BIOACCELERATE, INC on a
Funding Date of a request for the funding of an Additional Tranche (each, a
“Request”) from the Company.

 

The
Company covenants to use the proceeds of each Tranche solely for the purposes as
agreed with BIOACCELERATE, INC. In connection with the foregoing covenant,
BIOACCELERATE, INC shall have the right (the “Audit and Demand Right”), subject
to customary confidentiality provisions, at any time during the term of the Note
and for such extended period of time as indebtedness remains outstanding under
any Note to (a) audit and inspect the books and records of the Company for the
purpose of determining the use of proceeds from any Tranche at reasonable times
and with reasonable prior notice in accordance with the terms and conditions of
the Note or (b) demand reasonable evidence from the Company that the Company is
in compliance with the foregoing covenant, which evidence the Company shall
provide to BIOACCELERATE, INC promptly upon written request. 

 

The
repayment of this credit facility along with any interest due shall be via the
conversion of any outstanding amounts into equities of Inncardio Inc in the
event of a qualified financing.

 

Notwithstanding
anything to the contrary provided herein or elsewhere, BIOACCELERATE, INC shall
have no obligation to fund a Tranche if at the time a Request is received by
BIOACCELERATE, INC and prior to when the funds requested in the Tranche are
sent, one or more of the following events shall have occurred:

 

(i) There
shall be any material change in the business, properties, assets, results of
operations, prospects or financial condition of the Company since January 31,
2004;

 

(ii) The
Company shall be in breach of or default under any material contract, license or
other agreement or instrument; or

 

(iii)
There shall have occurred (a) any domestic or international event, act or
occurrence which has materially disrupted, or is likely in the immediate future
to materially disrupt, the securities markets; (b) a general suspension of, or a
general limitation on prices for, trading in securities on the New York Stock
Exchange or the American Stock Exchange or in the over-the-counter market; (c)
any outbreak of major hostilities or other national or international calamity;
(d) any banking moratorium declared by a state or federal authority; (e) any
moratorium declared in foreign exchange trading by major international banks or
other persons; (f) any material interruption in the mail service or other means
of communication within the United States; (g) any change in the market for
securities in general or in political, financial, or economic conditions; or (h)
neither the Company nor any of its officers, directors and/or controlling
shareholders have become the subject of or a named party in any investigation or
action involving any regulatory or self-regulatory organization including, but
not limited to, the SEC, the NASD or any state and/or federal agency (each as
set forth in this clause (iii), a “Pro Rata Event”).

 

This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York without regard to the conflicts of laws principles
thereof. The parties hereto hereby agree that any suit or proceeding arising
directly and/or indirectly pursuant to or under this instrument or the
consummation of the transactions contemplated hereby, shall be brought solely in
a federal or state court located in the City, County and State of New York. By
its execution hereof, the parties hereby covenant and irrevocably submit to the
in personam jurisdiction of the federal and state courts located in the City,
County and State of New York and agree that any process in any such action may
be served upon any of them personally, or by certified mail or registered mail
upon them or their agent, return receipt requested, with the same fall force and
effect as if personally served upon them in New York City. The parties hereto
waive any claim that any such jurisdiction is not a convenient forum for any
such suit or proceeding and any defense or lack of in personam jurisdiction with
respect thereto. In the event of any such action or proceeding, the party
prevailing therein shall be entitled to payment from the other party hereto of
its reasonable counsel fees and disbursements in an amount judicially
determined.

 

Any
notice, consent, request, or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested addressed to the Company, at its principal office as first
provided above, Attention: CEO . And to BIOACCELERATE, INC at its addressed
provided above (or to such other address as either the Company and/or
BIOACCELERATE, INC shall provide in writing to the other party). Notices shall
be deemed to have been given on the date of receipt by the other
party.

 

Very
truly yours,

 

BIOACCELERATE,
INC

 

By: /s/
Lee Cole  

Name: Lee
Cole

Title:
CEO

Accepted
and agreed as of the 

 

date
first appearing above

 

INNCARDIO,
INC.

 

By: /s/
Bernard Ross______ 

Name:
Bernard Ross

Title:
Chief Executive Officer

EXHIBIT
A

FORM
OF NOTEEXHIBIT
B

FORM OF
SECURITY AGREEMENT

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