Exhibit 10.8
Credit Facility Letter dated as of August 11, 2004 between Enhance Biotech, Inc.
and Bioaccelerate, Inc.
Bioaccelerate Inc.
August 11, 2004
Enhance Biotech, Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX, 00000
Attn: Xxxxx Every, President and CEO
Re: Credit Facility
Gentlemen:
BIOACCELERATE INC ("BIOACCELERATE INC") is pleased to make available to Enhance
Biotech, 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 Four
Million Dollars ($4,000,000) 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 set forth in the budget approved by the Company's Board and attached
to the note on Annex A or as otherwise 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.
1
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
and be continuing:
(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 and such breach has not been
cured within 30 days of the Company's receipt of written notice of such breach;
or
(iii) There shall not have occurred and be continuing (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 banking moratorium declared by a state or
federal authority; (d) any moratorium declared in foreign exchange trading by
major international banks or other persons ; (e) any material interruption in
the mail service or other means of communication within the United States; or
(f) 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").
As an inducement to BIOACCELERATE INC to provide the Credit Facility to the
Company, the Company shall issue to BIOACCELERATE INC (on the date of the
funding of the Initial Tranche) five (5) year warrants (the "Warrants") to
purchase 1,500,000 shares of the Company's common stock (the "Common Stock"), at
an exercise price of $3.00 per share (subject to adjustment for anti-dilution
and other customary adjustments).
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.
2
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: Xxxxx Every . 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/ Xxx Xxxx
-------------------
Name: Xxx Xxxx
Title: CEO
Accepted and agreed as of the
date first appearing above
ENHANCE BIOTECH, INC.
By: /s/ Xxxxxxxxxxx Every
-------------------------------
Name: Xxxxxxxxxxx Every
Title: President and CEO
3
EXHIBIT A
FORM OF NOTE
4
EXHIBIT B
FORM OF SECURITY AGREEMENT
5
