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EXHIBIT 10.29
SENIOR LINE OF CREDIT AGREEMENT
THIS AGREEMENT is dated as of September 25, 1997, by and among
Aries Domestic Fund, L.P. (The "Partnership"), The Aries Fund, a Cayman Islands
Trust (the "Trust" and collectively with the Partnership, the "Funds") and
XENOMETRIX, INC. (the "Company").
WHEREAS, the Funds are substantial shareholders of the Company;
WHEREAS, the Company has requested that the Funds provide a line
of credit to the Company;
WHEREAS, the Funds have agreed to provide a line of credit on the
terms and conditions hereinafter set forth;
WHEREAS, the Company is preparing to commence a private placement
of the Company?s securities (the "Private Placement").
NOW, THEREFORE, in consideration of the foregoing premises and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. The Line of Credit. The Funds hereby agree to establish
a line of credit of up to One Million Five Hundred Thousand Dollars
($1,500,000) (the "Line of Credit") to fund the Company?s anticipated ordinary
research and operating expenses from the date of this letter until the earlier
of (a) March 25, 1998 and (b) the final closing (the "Final Closing Date") by
the Company of a minimum of Three Million Dollars ($3,000,000) in a private
placement of the Company's securities (the "Private Placement"). All loans
drawn under this Line of Credit shall be provided by the Aries Domestic Fund,
L.P. and The Aries Fund, a Cayman Islands Trust. The Company may draw-down
upon this Line of Credit as follows:
(a) Five Hundred Thousand dollars ($500,000) previously drawn-
down by the Company on June 23, 1997;
(b) Two Hundred Fifty Thousand dollars ($250,000) upon
execution of the Line of Credit; and
(c) One Hundred Thousand dollar ($100,000) increments
thereafter.
In the event that the Company determines that it shall require additional
bridge financing, it may request an additional $500,000 from the Funds under
this Line of Credit and, should the Funds agree to extend such financing to the
Company, the parties agree that such financing shall be on substantially the
same terms and conditions as the initial $1,500,000 including, without
limitation, granting to the Funds of warrants to acquire 33,333 shares of
Common Stock of the Company for every $100,000 of bridge financing extended.
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2. Repayment. The Company agrees to repay any loans drawn
under this Line of Credit, together with any accrued interest thereon, out of
proceeds received in the Private Placement. Such loans from the Funds will be
evidenced and governed by notes (the ?Note?), in the form of Exhibit A hereto
(the ?Notes?) which shall be payable upon the earlier of (a) March 25, 1998 and
(b) the Final Closing Date of the Private Placement.
3. Consideration.
(a) As consideration for the Line of Credit, for each
$100,000 drawn-down by the Company (including the $500,000 previously extended
to the Company), the Funds shall receive warrants (the "Warrants") to purchase
Thirty Three Thousand Three Hundred Thirty Three (33,333) shares of common
stock of the Company (the "Common Stock") at an exercise price equal to the
lesser of (a) seventy percent (70%) of the average closing bid price for the
Common Stock for the twenty (20) trading days preceding the execution of this
Line of Credit and (b) the price per share in the Private Placement.
(b) The shares of Common Stock underlying the Warrants
(the "Conversion Shares") shall be included in the next registration statement
filed by the Company in which these shares can legally be included (i.e.
excluding registrations on Form X-0, X-0 or any other limited purpose form),
such registration statement to be effective no later that 240 days from the
date of this Agreement.
(c) If requested by an underwriter of a future
securities offering conducted by the Company, and provided that the Company?s
officers and directors enter into an agreement with substantially the same
terms, the Funds shall enter into a "lock-up" agreement, which will provide
the Funds shall not sell, transfer or otherwise dispose of any Common Stock or
other securities of the Company held by the Funds for the period specified by
such underwriter; provided, however, that such period shall not exceed 180 days
following the effective date of the registration statement of the Company filed
in connection with such underwriting.
4. Covenants. The Company covenants and agrees that it
shall (i) in advance of any drawdown under this Line of Credit, provide the
Funds with a detailed schedule identifying the proposed use of proceeds of such
drawdown and the Company's projected budget for the month and six (6) month
period following such drawdown, (ii) in advance of any drawdown after the
Company's initial drawdown, provide the Funds with a schedule detailing the
actual use of proceeds from any prior drawdown, (iii) provide written notice to
the Funds of any material developments relating to the Company within five (5)
days of becoming aware of any such developments and provide the Funds on an
ongoing basis with such information as is necessary to keep them reasonably
informed of the Company's business and (iv) provide the Funds with any
information relating to the Company as may be requested.
5. Ranking of Note; Security. Except as provided on
Schedule A attached hereto and made a part hereof, the Company acknowledges and
agrees that the Line of Credit shall be senior to all other indebtedness or
other obligations of the Company and shall be secured by the assets of the
Company. The Company further acknowledges and agrees that none of the
Company's creditors shall have any claim on the
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Line of Credit. The Company will covenant not to create or permit the
imposition of any liens on any of its assets from and after the date above.
6. Appointment of Directors Upon Default. In the event of
a default on the Notes, in addition to any and all remedies set forth herein,
in the Notes or at law or at equity, the Partnership and the Trust shall be
entitled to appoint a majority of the members of the Board of Directors of the
Company. The Directors of the Company will elect each such person selected by
the Partnership and the Trust to the Board of Directors of the Company by
creating a new position on the Board of Directors promptly following such
person?s nomination by the Partnership and the Trust and shall nominate such
person for election in connection with any stockholder vote for Directors, and
the Company will use its best efforts to ensure that the stockholders of the
Company agree to vote all their securities in favor of such persons? election.
The Company agrees to vote all voting securities for which the Company holds
proxies, granting it voting discretion, or is otherwise entitled to vote, in
favor of, and to use its best efforts in all respect to cause, the election of
each such individual proposed by the Partnership and the Trust. In the event
that a vacancy is created on the Board of Directors at any time by the death,
disability, resignation or removal (with or without cause) of any such
individual proposed and nominated by the Partnership and the Trust, pursuant to
this Agreement, the Company will, and will use its best efforts to ensure that
the stockholders of the Company, vote all its voting securities to elect each
individual proposed by the Partnership and the Trust and approved by the
Company and nominated for election by the Partnership and the Trusts to fill
such vacancy and serve as a voting Director.
7. Amendment Option. In the event that any investor(s)
makes an investment on terms that are more favorable to such investor(s) than
those set forth herein, then the Funds shall have the option of amending this
Agreement, the Notes and the Warrants to incorporate any more favorable terms,
as identified by the Funds, into any of the foregoing agreements.
8. Indemnification. The Company shall indemnify and hold
harmless the Funds and their respective partners, affiliates, shareholders,
directors, officers, agents, advisors, representatives, employees, counsel and
controlling persons within the meaning of Section 15 of the Securities Act of
1933 as amended, and the successors and assigns of any of the foregoing against
any and all losses, liabilities, claims, damages and expenses whatsoever (and
all actions in respect thereof), and to reimburse the Funds for legal fees and
related expenses as incurred (including, but not limited to the costs of giving
testimony or furnishing documents in response to a subpoena or otherwise, the
costs of investigating, preparing, pursuing or defending any such action or
claim whether or not pending or threatened and whether or not either Fund is a
party thereto), in so far as such losses, liabilities, claims, damages or
expenses arise out of, relate to, are incurred in connection with or are in any
way a result of (i) the transactions contemplated by this Agreement, the
Private Placement or the Secured Notes and Warrants, including any
modifications or future additions to such agreement or documents and related
activities prior to the date hereof, (ii) any act by the Funds taken in
connection with this Agreement of the Secured Notes and Warrants, (iii) a
breach of any representation, warranty, covenant, or agreement of the Company
contained in this Agreement, (iv) the employment by the Company of any device,
scheme or artifice to defraud, or the engaging by the
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Company in any act, practice or course of business which operates or would
operate as a fraud or deceit, or any conspiracy with respect thereto, in
connection with the sale of the Secured Notes or Warrants, or (v) any untrue
statement or alleged untrue statement of a material fact contained in the Line
of Credit Agreement, the Secured Notes and Warrants or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
9. Modification. This Agreement may not be modified, amended
or waived in any manner except by an instrument in writing signed by the
Paramount Capital Asset Management, Inc., the Investment Manager of The Aries
Fund, a Cayman Island Trust and the General Partner of the Aries Domestic Fund,
L.P., and the Company. The waiver by either party of compliance with any
provision of this Agreement by the other party shall not operate or be
construed as a waiver of such party of a provision of this Agreement.
10. Expenses. In addition to, and not to be conditioned
upon, any amounts due and/or owing to the Funds by the Company pursuant to any
of the provisions contained above, the Company hereby agrees to reimburse to
the Funds, immediately upon demand made by the Funds all direct costs
associated with entering into, and performance of, this Agreement and the
funding of the Line of Credit, including any bank or legal fees or charges
associated therewith; provided, however, that any payments pursuant to this
paragraph shall not exceed $10,000.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be executed by their respective duly authorized representatives as of the
day and year first written above.
THE ARIES FUND, A CAYMAN ISLAND
TRUST
By: its Investment Manager, PARAMOUNT
CAPITAL ASSET MANAGEMENT, INC.
By:
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Name: Xxxxxxx X. Xxxxxxxxx, M.D.
Title: President
THE ARIES DOMESTIC FUND, L.P.
By: its General Partner, PARAMOUNT
CAPITAL ASSET MANAGEMENT, INC..
By:
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Name: Xxxxxxx X. Xxxxxxxxx, M.D.
Title: President
XENOMETRIX, INC.
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By:
Its:
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