February 14, 1997
Mercator Genetics, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: President
Re: $5,000,000 BRIDGE LINE OF CREDIT
Ladies and Gentlemen:
This letter agreement ("Agreement") sets forth the terms and
conditions of the bridge line of credit (the "Line") that Progenitor, Inc., a
Delaware corporation ("Lender"), hereby establishes in favor of Mercator
Genetics, Inc., a Delaware corporation ("Borrower"), and to which Borrower
hereby agrees as evidenced by Xxxxxxxx's signing and returning to Lender the
enclosed copy of this Agreement:
1. This Agreement is being entered into in connection with that
certain Agreement and Plan of Reorganization dated as of the date hereof among
Lender, Borrower and the other party thereto (the "Reorganization Agreement").
Capitalized terms not otherwise defined herein shall have the meanings as
defined in the Reorganization Agreement.
2. Subject to the terms and conditions of this Agreement and the
Reorganization Agreement, Xxxxxx agrees to make advances in accordance with the
terms of the Funding Schedule set forth on SCHEDULE A hereto (any such advance
or advances contemplated under Schedule A are collectively referred to as, the
"Advances" and, individually as, an "Advance") under the Line to Borrower;
provided, however, that the aggregate amount of Advances outstanding to Borrower
under the Line shall not exceed $5,000,000 at any time (the "Commitment Amount")
except to the extent that the Commitment Amount is increased pursuant to
SCHEDULE A hereto, up to an additional $1,600,000 for an aggregate maximum
commitment of $6,600,000 (the "Increased Commitment Amount").
3. All Advances made to Borrower hereunder shall be payable in full
on the date (the "Maturity Date") that is the earliest to occur of (i) any
acceleration thereof under Paragraph 12 of this Agreement, (ii) the consummation
by Borrower of an initial public offering, (iii) the occurrence of a "Change of
Control" as defined in SCHEDULE B or (iv) January 15, 1999.
Mercator Genetics, Inc.
February 14, 1997
4. Borrower may from time to time upon thirty (30) days' prior
written notice to Xxxxxx prepay all or any portion of the Advances made to
Borrower hereunder. Advances that have been prepaid may be reborrowed, subject
to the terms and conditions set forth in this Agreement.
5. Outstanding Advances under the Line will be evidenced by that
certain Convertible Bridge Promissory Note in an original principal amount equal
to the Increased Commitment Amount made by Borrower and payable to the order of
Lender (the "Mercator Note") prior to the initial Advance under which the
outstanding balance of the Advances will be recorded and maintained by Lender on
its books.
6. In order to induce Xxxxxx to enter into this Agreement, to engage
in the transactions contemplated herein and in the other Loan Documents
described on Annex I hereto and to make the Advances hereunder, (i) Xxxxxxxx
represents and warrants unto Lender as set forth in SCHEDULE G hereto and
(ii) Borrower makes the covenants and agreements set forth on SCHEDULE F hereto.
7. Borrower shall pay interest on Advances outstanding under the
Line at a fixed rate per annum equal to ten percent (10%). Interest shall
accrue from the date of each Advance and shall be payable on the Maturity Date,
or on such earlier date, if any, as any Advance or portion thereof is prepaid
(to the extent accrued on the amount being prepaid). Interest payable hereunder
shall be computed for the actual number of days elapsed on the basis of a year
consisting of 365 or, where appropriate, 366 days.
8. Each Advance shall be made to Borrower by wire transfer of
immediately available funds to such account as designated by Borrower in the
notice of Advance described in Section (ii)(b) of Schedule H of this Agreement.
All payments by Borrower to Lender hereunder shall be made by wire transfer of
immediately available funds to such account as designated in writing by Xxxxxx
to Borrower.
9. Xxxxxx's obligation to make Advances to Borrower shall terminate
upon the earlier of (i) the closing of the Reorganization and (ii) the Maturity
Date, unless earlier terminated pursuant to paragraph 12 of this Agreement.
Xxxxxx's obligation to make Advances shall also be conditioned upon Xxxxxxxx's
fulfillment to the satisfaction of Lender of the conditions set forth in
Schedule H.
10. All Advances under this Agreement shall be used in accordance
with the MGI Budget set forth in SCHEDULE D and the Reorganization Agreement
until the earlier of the consummation of the Reorganization or the termination
of the Reorganization Agreement in accordance with its terms.
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Mercator Genetics, Inc.
February 14, 1997
11. All Advances under this Agreement shall be secured under that
certain Security Agreement between Borrower and Xxxxxx dated as of the date of
this Agreement (the "Mercator Security Agreement"). Xxxxxxxx acknowledges that,
contemporaneously herewith, Xxxxxx is collaterally assigning to Interneuron
Pharmaceuticals, Inc. ("Interneuron"), as collateral security for obligations of
Lender to Interneuron, all of its right, title and interest in and to the Loan
Documents described on Annex I hereto pursuant to an Assignment and Security
Agreement of even date herewith among Borrower, Lender and Interneuron (the
"Assignment and Security Agreement"). Borrower hereby consents to such
collateral assignment by Xxxxxx under the Assignment and Security Agreement.
12. The occurrence of any Event of Default referred to in SCHEDULE E
shall terminate any obligation on the part of Lender to make Advances under this
Agreement and, at the option of Lender, shall make all obligations of Borrower
to Lender under or in respect of this Agreement and any instrument or agreement
required under this Agreement immediately due and payable, in each case without
notice of default, presentment or demand for payment, protest or notice of
nonpayment or dishonor, or other notices or demands of any kind or character
(other than the expiration of any applicable cure period with respect to such
Event of Default), except that (other than with respect to the Maturity Date, or
an Event of Default under paragraphs 4, 5 and 7 in SCHEDULE E) demand for
payment shall be required prior to the such obligations of Borrower becoming
immediately due and payable.
13. The rights, powers and remedies of Lender hereunder are
cumulative and in addition to all rights, powers and remedies provided under any
and all agreements between Borrower and Lender relating hereto, at law, in
equity or otherwise. Any delay or failure by Lender to exercise any right,
power or remedy shall not constitute a waiver thereof by Lender, and no single
or partial exercise by Lender of any right, power or remedy shall preclude other
or further exercise thereof or any exercise of any other rights, powers or
remedies. No consent or waiver under this Agreement shall be effective unless
in writing. No waiver of any breach or default shall be deemed a waiver of any
breach or default thereafter occurring. Any waiver shall be effective only with
respect to the subject matter thereof and shall neither imply nor constitute nor
obligate Lender to grant a further or continuing waiver with respect to the
subject matter so waived or any other subject matter. No amendment to this
Agreement shall be effective unless in writing signed by Xxxxxx and Borrower.
From and after any termination of the Reorganization Agreement for so long as
any amounts under this Agreement remain outstanding (and any Series D Preferred
Stock issued as a result of conversion of the Mercator Note remains held by
Lender), (i) the provisions set forth in SCHEDULE F to this Agreement shall
continue to be binding upon Borrower and (ii) Lender shall be entitled to
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Mercator Genetics, Inc.
February 14, 1997
designate one person to serve upon, and Borrower shall cause such person to be
elected to serve as a member of, the Board of Directors of Borrower.
14. Borrower shall pay all reasonable costs and expenses of Lender
(including, without limitation, reasonable fees and expenses of Xxxxxx's
counsel) incurred by Xxxxxx in connection with the enforcement of Xxxxxx's
rights, powers and remedies hereunder and any instruments or agreements executed
in connection with this Agreement.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of California.
16. This Agreement may be executed in one or more counterparts each
of which shall be an original and all of which together shall be but one
agreement.
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Mercator Genetics, Inc.
February 14, 1997
If the above provisions accurately and completely reflect Xxxxxxxx's
understanding of the arrangements described, please so indicate by executing and
returning to Lender the enclosed copy of this Agreement.
Very truly yours,
PROGENITOR, INC.
By: /s/ Mark X.X. Xxxxxxx
-----------------------------
Title: Vice President and Chief Financial Officer
------------------------------------------
Address: 0000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Attn: Chief Executive Officer
Facsimile: (000) 000-0000
The foregoing is agreed to and
accepted this 14th day of February 1997.
MERCATOR GENETICS, INC.
By: /s/ Xxxxxxx Xxxxx
-----------------------------------------
Title: President and Chief Executive Officer
---------------------------------------
Address: 0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: President
Xxxxxxxxx: (000) 000-0000
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