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EXHIBIT 10.42
[Logo] Basler
Kantonalbank
GARANTIERT SICHER
Discovery Technologies
Attn. Dr. H. Zinsli
Gewerbestrasse 16
4123 Allschwil
December 22, 1999 K10/TRU
Thomas Ruedin
061 266 27 91
Dear Dr. Zinsli
Following our various discussions we herewith confirm the establishment of a new
credit line which will replace all previous credit agreements between Discovery
Technologies Ltd. and Basler Kantonalbank:
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BORROWER Discovery Technologies Ltd., Gewerbestrasse 16, 4123
Allschwil, the "Borrower"
LENDER Basler Kantonalbank, Spiegelgasse 2, 4002 Basel, the "Lender"
or "BKB"
AMOUNT CHF 2'000'000.-- (two million Swiss Francs)
DURATION until further notice, i.e. under the condition that the
pledged assets placed with BKB by the Borrower amount to at
least CHF 2'000'000.-- (see section "collateral").
UTILIZATION The Credit Line can be utilized up to a maximum amount of CHF
2'000'000.-- on a Current Account basis - as Fixed Term
Advances with minimum amounts of CHF 500'000.-- and durations
of 3 months up to 12 months
INTEREST RATES Current Account CHF
currently 4.75% per annum, variable + 0.25% per quarter
commission on average utilized amount
The Lender has the right to change the interest rate at any
time in case of changes of the market situation.
The interest is payable quarterly in arrear, as per March 31,
June 30,
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Kantonalbank
GARANTIERT SICHER
Discovery Technologies Ltd. Seite 2 22.12.99
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September 30 and December 31.
Fixed Term Advances
Interest rates for Fixed Term Advances will be fixed two
banking days prior to the drawdown of the advance based on the
LIBOR for the respective duration plus a margin of 0.75% per
annum.
Interest is payable at maturity of each advance if the
duration of the advance does not exceed six months. Interest
is payable semi-annually for durations of advances of more
than six months. Interest shall be calculated on the basis of
the actual number of days elapsed and a 360-days-year.
COLLATERAL - Pledge of cash accounts and/or time deposits placed with BKB
by the Borrower with a value of at least CHF 2'000'000.--
(as per enclosed form "Allgemeine Pfandbestellung")
- Pledge of Accounts Receivables (as per enclosed form
"Generelle Forderungsabtretung")
TERMINATION This Credit Facility is non-cancelable by the Borrower and the
Lender until December 31, 2000. However, an early termination
by the Lender is possible a) in case of default through
overdue interest or commission payments by the Borrower with
more than 30 days or b) if the value of pledged cash accounts
and/or time deposits placed with BKB by the Borrower is less
than CHF 2'000'000.-- or c) according to the General
Conditions of BKB
In case of an early termination by the Lender Fixed Term
Advances become due at once.
MISCELLANEOUS During the life time of this Credit Line the Borrower shall
provide the Lender with audited annual and unaudited quarterly
balance sheets and profit and loss accounts as soon as they
become available but not later than 3 months after the
respective year end and 1 month after the respective end of
the quarter.
The enclosed "General Conditions" of Basler Kantonalbank form
an integral part of this agreement.
This Credit Line will be operative after signing will replace
all existing credit agreements between Borrower and Lender.
GOVERNING LAW The present contract is GOVERNED BY SWISS LAW. Any disputes
shall fall within the jurisdiction of the COURT OF THE CANTON
BASAL-CITY.
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Kantonalbank
GARANTIERT SICHER
Discovery Technologies Ltd. Seite 3 22.12.99
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It is expressively agreed upon that the Lender shall also be
entitled to enforce its rights and to take legal action
against the Borrower in other Courts or any other jurisdiction
the Lender deems necessary, in which event, Swiss law shall
remain applicable.
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Please confirm your consent by signing and returning to us the enclosed
- Copy of this Credit Agreement
- Form "Allgemeine Pfandbestellung"
- Form "Generelle Forderungsabtretung"
as soon as possible but not later than December 30, 1999.
Thank you very much for your confidence. We are looking forward to a pleasant
continuation of the business relationship with your company.
Yours sincerely,
BASLER KANTONALBANK
/s/ Kurt H. Hercher /s/ Thomas Ruedin
------------------- -----------------
Kurt H. Hercher Thomas Ruedin
Enclosure
Agreed and Accepted:
Discovery Technologies Ltd.: /s/ illegible /s/ illegible
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Date/Place Jan 10, 2000
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[Logo] Basler
Kantonalbank
GARANTIERT SICHER
GENERAL BUSINESS CONDITIONS
Edition 1984
1. PURPOSES AND SCOPE
Under reserve of special arrangements, the general conditions set forth
herein govern the business relationship between the customer and the Bank.
In addition, separate regulations of the Bank and relevant customs and
usages apply to particular kinds of business.
2. AUTHORIZED SIGNATURES
The list of signatures of persons authorized to sign for the customer,
which has been deposited with the Bank, shall be effective for its
purposes until written notice of a change shall have been received by the
Bank, notwithstanding any entries in the Commercial Register for
publications with contrary effect. A deposit account and/or custody
account may be opened by several persons. In the absence of contrary
arrangements, the entitled persons may only jointly dispose of any
deposits with the Bank.
3. CUSTOMER'S COMPLAINTS, DELAYS
Customer's complaints referring to the carrying out of instructions given
to the Bank must be lodged immediately to facilitate a prompt inquiry; the
same also applies to objections concerning statements of deposit accounts
and custody accounts and to other communications or advices. Losses
resulting from a delay in making a complaint shall be borne by the
customer.
In case of delay in carrying out payment transactions, the Bank shall be
liable solely for payment of interest for the period involved, except in
cases where its attention has been specifically directed to the danger of
particular damage.
4. EXAMINATION OF SIGNATURES AND LAWFUL ENTITLEMENT
Losses resulting from failure by the Bank to discover forgeries or defects
with respect to identification shall be borne by the customer unless the
Bank is guilty of gross negligence.
5. INCAPACITY TO ACT
The customer shall bear losses arising from his own incapacity to act or
the incapacity of third persons unless the fact of his incapacity has been
published in the KANTONALBANK BASAL-STADT as well as if the incapacity to
act of his authorized agents and third persons has been notified to the
Bank in writing.
6. ERRORS IN TRANSMISSION
The Bank shall not be responsible for damages arising from the use of the
postal, telegraph, telephone or telex services or other systems of
communication, in particular as a result of misunderstandings, loss,
delay, mutilations or duplications, except where the Bank is guilty of
gross negligence.
7. COMMUNICATIONS
All communications by the Bank shall be deemed to have been validly made
if sent to the last address given by the customer or otherwise held at his
disposal in accordance with his instructions.
The date of the copies or mailing lists in the possession of the Bank
shall be deemed to be the date of dispatch.
8. LIEN AND SET-OFF
The Bank shall have a lien as to all assets which are held at any time for
the customer at its offices or elsewhere and shall be entitled to set off
against each other the balances of all accounts of the customer in
satisfaction of all claims irrespective of the due date and currency
involved.
This shall also apply to credits and loans whether or not they are secured
by specific collateral. In the event of default by the customer, the Bank
shall be entitled at its discretion to realize the assets by court order
or in whatever manner it chooses.
9. CURRENT ACCOUNT TRANSACTIONS
The usual interest rates or those fixed by the Bank, delay interest since
the last maturity, commissions, as well as charges, expenses and taxes,
etc. are credited or debited at the Bank's choice on a quarterly,
semi-annual or annual basis unless otherwise arranged with the customer.
The Bank shall be entitled to adjust its interest and commission rates at
any time, particularly in conformity with charges in money market
conditions; the customer shall be notified thereof by circular or in any
other appropriate manner.
Statements of account which are sent to the customer by the Bank and to
which no objection has been raised within one month, shall be deemed to
have been accepted by the customer even if a signed reconciliation
statement has not been received by the Bank. The explicit or implied
approval of a statement of account shall be deemed also to include all
items entered therein and all reservations made by the Bank.
10. FOREIGN CURRENCY ACCOUNTS
The assets of the Bank relative to customer's accounts in foreign
currencies shall be held in the name of the Bank, but for the account and
risk of the customer, with correspondents considered by the Bank as
appropriate, inside or outside the currency area in question. The risk of
legal or governmental restrictions and charges shall be borne by the
customer.
The customer is entitled to dispose of foreign currency credit balances by
selling, drawing a cheque on his own account or buying a banker's cheque
(cashier's cheque) for debit to his account and by ordering transfers;
other disposals require the consent of the Bank.
11. CREDITING OF SUMS IN FOREIGN CURRENCY
Sums received in foreign currencies shall be credited in Swiss francs at
the rate of exchange obtained on the day in question unless the customer
has given instructions to the contrary or has an account in the
corresponding foreign currency. If the customer's accounts are only in
currencies other than Swiss francs, the Bank may credit the sum in one of
these currencies.
12. REDEBITING OF CHEQUES, DRAFTS, ETC.
If drafts, cheques and other instruments received for collection or
discounted, are not paid, or if the proceeds thereof cannot be freely
disposed of, the Bank shall be entitled to cancel credit advices; all
claims against any liable person, arising from these instruments, remain
nevertheless with the Bank until the payment of all indebtedness.
13. TERMINATION OF A BUSINESS RELATIONSHIP
The Bank reserves the right to terminate business relationships at
anytime, especially to cancel agreed upon or granted credit facilities and
to demand immediate payment of its claims without further notice. This
applies also to credit facilities and loans with fixed maturities or
cancellation periods, provided the economic situation of the customer, as
judged by the Bank, no longer justifies a continuation of existing
business deals.
14. HOLIDAYS
In all business relationships with the Bank, Saturday shall be treated as
a public holiday.
15. CHANGES OF GENERAL BUSINESS CONDITIONS
The Bank reserves the right to change the general business conditions.
Customers shall be notified of such changes by circular or in another
appropriate manner. The Bank considers the new conditions as accepted by
the customer if no notice to the contrary is received within one month.
16. APPLICABLE LAW, JURISDICTION, PLACE OF PERFORMANCE AND FOR DEBT COLLECTION
PROCEEDINGS
All the legal relationships between the customer and the Bank shall be
governed by Swiss law.
The place of performance, and in the case of customers domiciled abroad,
also the place for special proceedings for the collection of debts shall
be the Bank's place of business in Basel.
In the case of litigation the courts of Basel City shall have exclusive
jurisdiction.
The Bank is also entitled to bring proceedings against the customer at the
competent court in his domicile or in any other competent jurisdiction.
The german version is decisive in case of differences that may occur in the
interpretation of the german and english version of this document.
BASLER KANTONALBANK
Basel. lst July 1984
