Loan Proposal Agreement between GE Capital Corporation and Combinatorx, Incorporated (April 2005)

Contract Categories: Business Finance › Loan Agreements
Summary

This agreement is a loan proposal from GE Capital Corporation to Combinatorx, Incorporated for a $1,000,000 loan to be used for lab equipment, office equipment, and related improvements. The loan has a 36-month term, a 9.76% interest rate, and requires Combinatorx to issue preferred stock warrants to GE Capital. Combinatorx must maintain insurance and cover transaction costs. The proposal is not a binding commitment and is subject to GE Capital’s internal approval, due diligence, and final documentation. The offer expires if not accepted by May 3, 2005.

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EX-10.8 5 a2168276zex-10_8.txt EXHIBIT 10.8 EXHIBIT 10.8 GE CAPITAL CORPORATION LIFE SCIENCE AND TECHNOLOGY FINANCE 83 WOOSTER HEIGHTS ROAD DANBURY, CT 06810 ###-###-#### / FAX: 203 ###-###-#### APRIL 14, 2005 CONFIDENTIAL LOAN PROPOSAL FOR - -------------------------------------------------------------------------------- COMBINATORX, INCORPORATED - -------------------------------------------------------------------------------- SUBMITTED BY: Bill Stickle COMBINATORX, INCORPORATED - -------------------------------------------------------------------------------- MR. ROBERT FORRESTER CHIEF FINANCIAL OFFICER COMBINATORX, INCORPORATED 650 ALBANY STREET BOSTON, MA 02118 Dear Mr. Forrester: Pursuant to your request, General Electric Capital Corporation ("GE Capital") is pleased to submit the following revised loan proposal for your consideration:
TRANSACTION: LOAN BORROWER: COMBINATORX, INCORPORATED LENDER: GENERAL ELECTRIC CAPITAL CORPORATION ITS AFFILIATES OR ITS ASSIGNEE ("GE CAPITAL") LOAN AMOUNT: $1,000,000.00 ANTICIPATED FUNDING PERIOD: APRIL 2005 THROUGH MARCH 2006 TERM: 36 MONTHS PAYMENT FACTOR AND INTERVAL: 3.215463%, MONTHLY IN ARREARS INTEREST RATE: 9.76% EQUIPMENT (COLLATERAL): NEW LAB AND LAB SUPPORT EQUIPMENT, COMPUTER HARDWARE AND GENERAL OFFICE EQUIPMENT, FURNITURE, AND SOFTWARE AND TENANT IMPROVEMENTS FOR THE INTERNAL USE OF THE BORROWER. SOFT COSTS SUCH AS SOFTWARE AND TENANT IMPROVEMENTS SHALL BE LIMITED TO 30% OF THE LOAN AMOUNT. ALL SUCH EQUIPMENT MUST BE ACCEPTABLE TO GE CAPITAL AND LOCATED WITHIN THE CONTINENTAL UNITED STATES AT BORROWER OWNED OR LEASED PROPERTIES. WARRANTS: BORROWER SHALL ISSUE TO GE CAPITAL PREFERRED STOCK WARRANTS IN THE AMOUNT OF 2.00% OF THE ACTUAL LOAN AMOUNT ADVANCED AT A STRIKE PRICE EQUAL TO THE MOST RECENT ROUND'S PREFERRED SHARE PRICE. OTHER CONSIDERATION: BORROWER SHALL PROVIDE LENDER WITH A NEGATIVE PLEDGE ON INTELLECTUAL PROPERTY. LENDER ACKNOWLEDGES THE EXISTENCE OF A NEGATIVE PLEDGE BETWEEN BORROWER AND LIGHTHOUSE CAPITAL PARTNERS ("LIGHTHOUSE"). LENDER INTENDS TO ALLOW ITS NEGATIVE PLEDGE WITH BORROWER TO MIRROR THE NEGATIVE PLEDGE THAT BORROWER HAS WITH LIGHTHOUSE.
GENERAL TERMS AND CONDITIONS OUR PROPOSAL CONTAINS THE FOLLOWING PROVISIONS AND THE LOAN PAYMENTS WE PROPOSE ARE SPECIFICALLY BASED UPON THESE PROVISIONS AND OUR ASSUMPTIONS. 1. MAINTENANCE AND INSURANCE: All maintenance and insurance (fire and theft, extended coverage and liability) are the responsibility of the Borrower. Borrower will be responsible for maintaining in force, all risk damage, and liability insurance in amounts and coverages satisfactory to GE Capital. 2. DOCUMENTATION: GE Capital's current standard loan documentation for this type of collateralized loan will be used. 2 3. INDEXING: The Interest Rate and Payment Factor will be adjusted at the time of funding to reflect any increase in the Lender's cost of funds, which shall be tied to the Federal Reserve's Three (3) year Treasury Constant Maturities Rate. The rate, and therefore the payment factor, assumes an index of 3.91%. 4. TRANSACTION COSTS: The Borrower shall be responsible for all closing and transaction costs including any legal fees and inspection and/or appraisal costs. 5. PROPOSAL FEE: $10,000.00. Of this Fee, $5,000.00 shall be credited on a prorata basis to schedules as financed and the remainder retained by GE Capital for application processing, underwriting and documentation. All or a portion of the proposal fee will be forfeited if this transaction is approved by GE Capital and not executed by Borrower as called for in this proposal. If investment approval is not obtained, the fee will be promptly returned to Borrower (less the cost of credit verification and investigation and any out of pocket expenses incurred such as appraisal fees, legal fees, etc.). 6. ACCEPTANCE: By signing below, the Borrower acknowledges the terms and conditions of this proposal. Upon receipt of the executed proposal letter and accompanying fee, GE Capital shall commence its investment approval process. 7. EXPIRATION: This proposal shall expire on May 3, 2005, if GE Capital has not received your acceptance hereof by such date. This proposal expresses GE Capital's willingness to seek internal approval for the transaction contemplated herein. By signing and returning this letter both parties acknowledge that: The above proposed terms and conditions do not constitute a commitment by GE Capital, (ii) GE Capital's senior management may seek changes to the above terms and conditions, and (iii) GE Capital may decline further consideration of this transaction at any point in the approval process. GE Capital's agreement to fund the proposed transaction remains subject to and would be preceded by completion of a legal and business due diligence, as well as collateral and credit review and analysis, all with results satisfactory to GE Capital and the closing of an initial funding under such transaction would be conditioned upon the prior execution and delivery of final legal documentation and all conditions precedent acceptable to GE Capital and its counsel and no material adverse change in the business condition or prospects of the Company ("Material Adverse Change"). For transactions that contemplate more than one funding, GE Capital's obligation to make each such subsequent funding would be subject to confirmation that no Material Adverse Change has occurred. I look forward to your early review and response. If there are any questions, I would appreciate the opportunity to discuss this proposal in more detail at your earliest convenience. Please do not hesitate to contact me directly at ###-###-####. Sincerely, PROPOSAL ACCEPTED BY: COMBINATORX, INCORPORATED Name: /s/ Robert Forrester ------------------------------- Title: Chief Financial Officer ------------------------------- Date: May 3, 2005 ------------------------------- Federal Tax ID#: 3