Line of Credit Agreement (2000)Full Document 

Start of Preview
                            LINE OF CREDIT AGREEMENT

        THIS LINE OF CREDIT AGREEMENT (the "Agreement"), is entered into as of
the 10th day of November, 2000, by and between Hyseq, Inc., a Nevada corporation
("Borrower"), and Dr. George B. Rathmann ("Lender").

                                     RECITAL

        Borrower desires to obtain from Lender a line of credit (the "Line of
Credit"), making available to Borrower a principal amount of twenty million
dollars ($20,000,000).

                                    AGREEMENT

        NOW, THEREFORE, Lender and Borrower hereby agree as follows:

                                   ARTICLE I.

                                 LINE OF CREDIT

        1.1 Advances. Subject to the terms and conditions of this Agreement,
Lender hereby agrees to make advances (each, an "Advance", and collectively, the
"Advances"), to Borrower from time to time up to and including November 29,
2002. The aggregate amount of all outstanding Advances shall not exceed twenty
million dollars ($20,000,000) (the "Credit Limit"). Proceeds of Advances shall
be used for working capital and general corporate purposes of Borrower.

        1.2 Borrowing and Repayment. Borrower may from time to time during the
term of this Agreement borrow, partially or wholly repay its outstanding
borrowings, and reborrow; provided however, that the total outstanding Advances
shall not at any time exceed the Credit Limit. Each time Borrower desires an
Advance, Borrower shall submit to Lender a drawing request in substantially the
form of Exhibit B attached hereto ("Drawing Request"), setting forth the amount
requested to be borrowed. Borrower may submit Drawing Requests no more
frequently than once each week.

        1.3 Promissory Note. Borrower's obligation to repay the Advances and
accrued interest thereon shall be evidenced by a convertible promissory notice
substantially in the form attached hereto as Exhibit A (the "Note"), which may
be converted into shares of Borrower's common stock, par value $0.001 per share
(the "Common Stock"), at any time up to and including the Maturity Date (as
defined in Section 1.7 herein). The shares of Common Stock to be issued upon the
conversion of the Note are the "Note Shares". Borrower shall execute and deliver
to Lender the Note concurrently with the execution and delivery of this
Agreement. Borrower authorizes Lender to record on the schedule annexed to the
Note, the date and amount of each Advance made by Lender, the Prime Rate (as
defined in Section 1.4 herein) when each Advance is made, and each payment or
prepayment of the Advances, and agrees that all such notations shall constitute
prima facie evidence of the matters noted. Borrower further authorizes Lender to
attach to and make a part of the Note continuations of the schedule as
necessary. No failure to make any such notations, nor any errors in making any
such notations, shall affect the validity of Borrower's obligations to



                                       1
   2

repay the Advances or Borrower's obligations under any of the Loan Documents (as
defined in Section 2.1 herein).

        1.4 Interest and Fees. Subject to Section 1.5, the outstanding principal
balance of the Line of Credit shall bear interest at a rate per annum equal to
one percent (1%) above the Prime Rate in effect from time to time. The term
"Prime Rate" shall mean at any time the rate of interest most recently announced
by Bank of America National Trust and Savings Association (or such other
financial institution as may be designated by Lender with Borrower's consent,
which consent will not be unreasonably withheld) (the "Reference Bank"), as its
Prime Rate. Each change in the rate of interest shall become effective on the
date each Prime Rate change is announced by the Reference Bank.

        1.5 Default Interest. At all times when an Event of Default has occurred
and is continuing, the outstanding principal balance of the Line of Credit shall
bear interest at a rate per annum equal to two percent (2%) above the Prime Rate
in effect from time to time (the "Default Rate"). In addition, to the extent
permitted by applicable law, any interest payments, fees or other amounts owed
hereunder and not paid when due, in each case whether at stated maturity, by
notice of prepayment, by acceleration or otherwise, shall bear interest at the
Default Rate. Payment or acceptance of the Default Rate is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of
Default or otherwise prejudice or limit any rights or remedies of Lender.

        1.6 Expiration Date. The Line of Credit shall expire, and Lender shall
have no further obligation to make any Advances to Borrower upon the earlier of
(i) a Change of Control, or (ii) November 30, 2002, the "Expiration Date". The
passage of the Expiration Date does not affect Borrower's repayment obligation.
For purposes of this Section 1.6, a "Change of Control" means (i) Borrower's
sale of all or substantially all of its assets, or (ii) any transaction or
series of related transactions to which Borrower is a party (including, without
limitation, any reorganization, merger or consolidation) that will result in the
holders of Borrower's outstanding voting equity securities immediately prior to
such transaction holding fewer than fifty per cent (50%) of the voting equity
securities of the surviving entity immediately following such transaction(s).

        1.7 Computation and Repayment. Borrower shall pay to the order of
Lender, at any place which Lender designates from time to time in writing, in
lawful money of the United States of America, the principal amount of the
Advances and accrued interest thereon. Interest on the principal amount

End of Preview