Document:

f8k0710_x102-htlj.htm

    Exhibit
      10.2

    HEARTLAND,
      INC.

    EMPLOYEE
      NONSTATUTORY STOCK OPTION AGREEMENT

    
      

    

    

    This
      Stock Option Agreement ("Agreement") is made and
      entered into as of the date set forth below, by and between HEARTLAND,
      INC., a Maryland corporation (the "Company"), and
      Terry Lee ("Optionee")

    

    In
      consideration of the covenants herein set forth, the parties hereto agree as
      follows:

    

    1.  Option
      Information.

    
      	
               

            	
              (a)

            	
              Date
                of Option:

            	
              June
                27, 2007

            

    

    
      	
               

            	
              (b)

            	
              Optionee:

            	
              Terry
                Lee

            

    

    
      	
               

            	
              (c)

            	
              Number
                of Shares:

            	
              1,822,504

            

    

    
      	
               

            	
              (d)

            	
              Exercise
                Price:

            	
              $0.33
                per share

            

    

    

    2.  Acknowledgements.  The
      Board has authorized the granting to Optionee of a stock option
      ("Option") to purchase shares of common stock of the Company
      ("Stock") upon the terms and conditions hereinafter stated and
      pursuant to an exemption from registration under the Securities Act of 1933,
      as
      amended (the "Securities Act") provided by Section 4(2)
      thereunder.

    

    3.  Shares;
      Price.  Company hereby grants to Optionee the right to purchase,
      upon and subject to the terms and conditions herein stated, the number of shares
      of Stock set forth in Section 1(c) above (the "Shares") for
      cash (or on a cashless basis)  at the price per Share set forth in
      Section 1(d) above (the "Exercise Price"); which vest quarterly
      on a pro-rata basis over a period of five years commencing on the date
      hereof.  In the event that the Optionee is terminated for Cause, upon
      death or disability as set forth in Section 4.2 of Employment Agreement entered
      by and between the Company and Optionee dated June __, 2007 (the
“Employment Agreement”) or the Optionee terminates the
      Employment Agreement, then the Option shall terminate.  All shares
      issued upon exercise of the Option shall be affixed with a legend stating that
      they are restricted.

    

    4.  Term
      of Option; Continuation of Service.  This Option shall expire, and
      all rights hereunder to purchase the Shares shall terminate, five (5) years
      from
      the date hereof unless the Optionee is terminated for Cause pursuant to Section
      4 of the Employment Agreement entered by and between the Company and Optionee
      dated June 27, 2007.

    

    5.  Exercise.  This
      Option shall be exercised by delivery to the Company of (a) written notice
      of
      exercise stating the number of Shares being purchased (in whole shares only)
      and
      such other information set forth on the form of Notice of Exercise attached
      hereto as Appendix A, (b) a check or cash in the amount of the Exercise
      Price of the Shares covered by the notice (or such other consideration as has
      been approved by the Board of Directors) and (c) a written investment
      representation as provided for in Section 9 hereof.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    This
      Option shall not be assignable or transferable and shall be exercisable only
      by
      Optionee during his or her lifetime.

    

    At
      any
      time, the Optionee may, in his sole discretion, exercise this Option in whole
      or
      in part and, in lieu of making the cash payment otherwise contemplated to be
      made to the Company upon such exercise in payment of the Exercise Price, elect
      instead to receive upon such exercise the "Net Number" of shares of Common
      Stock
      determined according to the following formula:

     

    Net
      Number = (A x B) - (A x C)

     

    B

     

    For
      purposes of the foregoing formula:

     

    A=
      the
      total number of shares with respect to which this Warrant is then being
      exercised.

     

    B=
      the
      closing sale price of the shares of common stock (as reported by Bloomberg)
      on
      the date immediately preceding the date of Notice of Exercise.

     

    C=
      the
      Exercise Price then in effect at the time of such exercise.

    

    6.  No
      Rights as Shareholder.  Optionee shall have no rights as a
      shareholder with respect to the Shares covered by any installment of this Option
      until the effective date of issuance of the Shares following exercise of this
      Option, and no adjustment will be made for dividends or other rights for which
      the record date is prior to the date such stock certificate or certificates
      are
      issued.

    

    7.  Recapitalization.  Subject
      to any required action by the shareholders of the Company, the number of Shares
      covered by this Option, and the Exercise Price thereof, shall be proportionately
      adjusted for any increase or decrease in the number of issued shares resulting
      from a subdivision or consolidation of shares.

    

    Subject
      to any required action by the shareholders of the Company, if the Company shall
      be the surviving entity in any merger or consolidation, this Option thereafter
      shall pertain to and apply to the securities to which a holder of Shares equal
      to the Shares subject to this Option would have been entitled by reason of
      such
      merger or consolidation, and the installment provisions of Section 5 shall
      continue to apply.  This Option is subject to the Change of Control
      provision set forth in section 1.6 of the Employment Agreement.

    

    In
      the
      event of a change in the shares of the Company as presently constituted, which
      is limited to a change of all of its authorized Stock without par value into
      the
      same number of shares of Stock with a par value, the shares resulting from
      any
      such change shall be deemed to be the Shares within the meaning of this
      Option.

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    To
      the
      extent that the foregoing adjustments relate to shares or securities of the
      Company, such adjustments shall be made by the Board, whose determination in
      that respect shall be final, binding and conclusive. Except as hereinbefore
      expressly provided, Optionee shall have no rights by reason of any subdivision
      or consolidation of shares of Stock of any class or the payment of any stock
      dividend or any other increase or decrease in the number of shares of stock
      of
      any class, and the number and price of Shares subject to this Option shall
      not
      be affected by, and no adjustments shall be made by reason of, any dissolution,
      liquidation, merger, consolidation or sale of assets or capital stock, or any
      issue by the Company of shares of stock of any class or securities convertible
      into shares of stock of any class.

    

    The
      grant
      of this Option shall not affect in any way the right or power of the Company
      to
      make adjustments, reclassifications, reorganizations or changes in its capital
      or business structure or to merge, consolidate, dissolve or liquidate or to
      sell
      or transfer all or any part of its business or assets.

    

    8.  Investment
      Intent; Restrictions on Transfer.

    

    (a)  Optionee
      represents and agrees that if Optionee exercises this Option in whole or in
      part, Optionee will in each case acquire the Shares upon such exercise for
      the
      purpose of investment and not with a view to, or for resale in connection with,
      any distribution thereof; and that upon such exercise of this Option in whole
      or
      in part, Optionee shall furnish to the Company a written statement to such
      effect, satisfactory to the Company in form and substance.

    

    (b)  Optionee
      further represents that Optionee has had access to the financial statements
      or
      books and records of the Company, has had the opportunity to ask questions
      of
      the Company concerning its business, operations and financial condition, and
      to
      obtain additional information reasonably necessary to verify the accuracy of
      such information

    

    (c)  Unless
      and until the Shares represented by this Option are registered under the
      Securities Act, all certificates representing the Shares and any certificates
      subsequently issued in substitution therefor and any certificate for any
      securities issued pursuant to any stock split, share reclassification, stock
      dividend or other similar capital event shall bear legends in substantially
      the
      following form:

    

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE SECURITIES
      ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE OR SECURITIES LAWS
      OF
      ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD,
      TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION
      UNDER THE SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY STATE, UNLESS
      PURSUANT TO EXEMPTIONS THEREFROM.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    THESE
      SECURITIES ARE SUBJECT TO RESTRICTIONS SET FORTH IN THE EMPLOYMENT AGREEMENT
      ENTERED BY AND BETWEEN THE COMPANY AND THE HOLDER DATED JUNE 27, 2007 AND
      THEREFORE MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN
      THE
      ABSENCE OF A LEGAL OPINION STATING THAT SUCH RESTRICTIONS SET FORTH IN SUCH
      EMPLOYMENT AGREEMENT ENTERED BY AND BETWEEN THE COMPANY AND THE HOLDER DO NOT
      PREVENT THE HOLDER FROM SELLING DISPOSING OF SUCH SECURITIES.

    

    and/or
      such other legend or legends as the Company and its counsel deem necessary
      or
      appropriate. Appropriate stop transfer instructions with respect to the Shares
      have been placed with the Company's transfer agent.

    

    9.  Notices.  Any
      notice required to be given pursuant to this Option shall be in writing and
      shall be deemed to be delivered upon receipt or, in the case of notices by
      the
      Company, five (5) days after deposit in the U.S. mail, postage prepaid,
      addressed to Optionee at the address last provided by Optionee.

    

    10.  Applicable
      Law.  This Option has been granted, executed and delivered in the
      State of New York, and the interpretation and enforcement shall be governed
      by
      the laws thereof and subject to the exclusive jurisdiction of the courts
      therein.

    

    In
      Witness Whereof, the parties hereto have executed this Option as of the
      date first above written.

    

    
      
        
          	
                  COMPANY:

                	
                                                                           
                    HEARTLAND, INC.,

                                                                           
                    a Maryland corporation

                   

                   

                  By:                                                    /s/Trent
                    Sommerville

                  Name:                                                    Trent
                    Sommerville

                  Title:                                                    Chief
                    Executive Officer

                
	 	 
	
                  OPTIONEE:

                	
                   

                  By:                                                     /s/Terry
                    Lee

                                                             (signature)

                  Name:                                                    Terry
                    Lee

                

        

      

    

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    Appendix
      A

    

    NOTICE
      OF EXERCISE

    

    HEARTLAND,
      INC.

    ______________________

    ______________________

    

    Re:
      Stock
      Option

    

    Notice
      is
      hereby given pursuant to Section 5 of my Stock Option Agreement that I elect
      to
      purchase the number of shares set forth below at the exercise price set forth
      in
      my option agreement:

    

    Stock
      Option Agreement dated: ____________

    

    
      	
               

            	
              __

            	
              a
                "Cash Exercise" with respect to _________________ Option Shares;
                and/or

            

    

    

    
      	
               

            	
              __

            	
              a
                "Cashless Exercise" with respect to _______________ Option
                Shares.

            

    

    

    

    In
      the
      event of a Cash Exercise, a check in the amount of the aggregate price of the
      shares being purchased is attached.

    

    I
      hereby
      confirm that such shares are being acquired by me for my own account for
      investment purposes, and not with a view to, or for resale in connection with,
      any distribution thereof. I will not sell or dispose of my Shares in violation
      of the Securities Act of 1933, as amended, or any applicable federal or state
      securities laws. Further, I understand that the exemption from taxable income
      at
      the time of exercise is dependent upon my holding such stock for a period of
      at
      least one year from the date of exercise and two years from the date of grant
      of
      the Option.

    

    I
      understand that the certificate representing the Option Shares will bear a
      restrictive legend within the contemplation of the Securities Act and as
      required by such other state or federal law or regulation applicable to the
      issuance or delivery of the Option Shares.

    

    

    
      
        	
                 

                By:           

                (signature)

                Name:                                                    

              

      

    

    

    

    
      
         

      

      
        5DC2031.pdf -- Converted by SEC Publisher 4.2, created by BCL Technologies Inc., for SEC Filing

	
GE Commercial Finance

Healthcare Financial Services

Life Science Finance

83 Wooster Heights Road

Danbury, CT 06810

203-205-5216 / FAX: 203-205-2193

	
June 27, 2007

	
CONFIDENTIAL LOAN PROPOSAL FOR:

CombinatoRx, Incorporated

	
Submitted By: William B. Stickle

	
CombinatoRx, Incorporated

Mr. Justin A. Renz

Vice President, Finance and Treasurer

CombinatoRx, Incorporated

245 First Street, 16th Floor

Cambridge, MA 02142 

	
Dear Mr. Renz:

     General Electric Capital Corporation (“GE Capital”) has reviewed the information provided by you in connection with the requested financing for CombinatoRx, Inc. (referred to as
“CombinatoRx“ or the “Company”). Based on the review to date and subject to the timely receipt of a signed copy of this proposal letter as indicated below, GE Capital is pleased to consider arranging and providing a
$4,000,000 financing (the “Financing”) as outlined in the attached Term Sheet incorporated herein by reference, subject to the general terms and conditions in this proposal letter and the Term Sheet.

     GE Capital is one of the largest and most diversified financial services companies in the world with assets exceeding $300 billion and operations in over 45 countries.  We have been actively
providing equipment financing for Life Science companies for over a decade and it is our privilege to be a financial partner to hundreds of Life Science companies.

     This proposal letter, including the attached Term Sheet (together, the “Proposal”), is being provided to the Company on a confidential basis and is merely an indication of interest
regarding the Financing transaction on the general terms and conditions outlined below and should not be construed as a commitment. GE Capital may change the terms of this Proposal or cease future consideration of the Financing at any time in its
sole discretion. The attached Term Sheet summarizes only the principal terms and conditions under which the proposed Financing will be considered and does not purport to set forth all of the terms and conditions applicable to such Financing, which
terms and conditions will be fully contained in the final documentation.

     The Company may not use this Proposal to solicit other offers or to modify, renegotiate or otherwise improve the terms and conditions of any other offer heretofore or hereafter received by the
Company but is not restricted from making any disclosure or dissemination of the United States federal income tax structure or aspects of the transactions contemplated by this proposal or any documents executed pursuant to this Proposal.  Further,
each of GE Capital and the Company acknowledges that it has no proprietary rights to any United States federal income tax elements or structure of this Proposal. In addition, the Company shall not, except as required by law, use the name of, or
refer to GE Capital, in any correspondence, discussions, advertisement, press release or disclosure made in connection with the Financing without the prior written consent of GE Capital.

     By signing below, the Company acknowledges the terms and conditions of this Proposal and agrees to pay to GE Capital a Good Faith Deposit of $20,000 (“Deposit”). Upon receipt of the
executed Proposal and accompanying Deposit, GE Capital shall commence the investment and credit approval process. Upon acceptance by GE Capital the Good Faith Deposit will be earned by GE Capital as a non-recurring upfront fee.  In the event the
funded transaction materially differs from the terms of this Proposal, the documentation charge may be adjusted to correspond with GE Capital’s actual out-of-pocket expenses.  The Deposit is not refundable except in the event that the
transaction represented by this Proposal and any amendment to it

2

	
CombinatoRx, Incorporated

is not approved by GE Capital. In such case, GE Capital shall promptly return the Deposit (less the cost of credit verification and investigation and any out of pocket expenses incurred such as appraisal fees, legal fees,
etc.). Before funding can take place, all proper documentation of title and UCC releases from other lenders shall be in place and approved by GE Capital. We thank you for your consideration and look forward to working with you toward completing this
transaction.

     By signing this Proposal Letter, regardless of whether the Financing is approved or closes, the  Company agrees to pay upon demand to GE Capital all fees and expenses (including but not limited
to all costs and fees of external legal counsel, environmental consultants, appraisers, inspectors, auditors and other consultants and advisors selected by GEHFS, due diligence reports, UCC, tax and judgment lien search and filing costs, escrow
costs (if applicable), recording and transfer fees and taxes, title charges and survey costs and the allocated cost of internal legal counsel) incurred in connection with this Proposal Letter and the Financing (and the negotiation, documentation and
closing thereof).

     I would appreciate the opportunity to discuss this proposal with you at your earliest convenience. Please do not hesitate to contact me at 203-205-5216 if you have any questions or if I may be of
further assistance. 

	
Sincerely,

	
/s/ William B. Stickle

William B. Stickle

	
PROPOSAL ACCEPTED BY:

CombinatoRx, Incorporated

Name: /s/ Justin Renz

Justin Renz

Title: Vice President, Finance

Date: June 27, 2007

Federal Tax ID#: 04-3514457

Email Address: jrenz@combinatorx.com

Contact Name for Inspection: Justin Renz Phone #: 617-301-7220

3

CombinatoRx, Incorporated

Term Sheet

	
Transaction: 
		
 		
Loan 
	
	
 
	
	
Borrower: 
		
 		
CombinatoRx, Incorporated 
	
	
 
	
	
Lender: 
		
 		
General Electric Capital Corporation its affiliates or its assignee (“GE 
	
	
 
		
 		
Capital”) 
	
	
 
	
	
Loan Amount: 
		
 		
Up to $4,000,000 
	
	
 
	
	
Loan Term and Payment: 
		
 		
Laboratory/Manufacturing equipment: 48 months of Principal and 
	
	
 
		
 		
Interest at 2.558889% of financed cost (Payment Factor), paid 
	
	
 
		
 		
monthly in arrears for each loan schedule, based on an interest 
	
	
 
		
 		
rate of 10.47%. 
	
	
 
	
	
 
		
 		
All Other Equipment and soft cost: 36 months of Principal and 
	
	
 
		
 		
Interest at 3.247887% of financed cost (Payment Factor), paid 
	
	
 
		
 		
monthly in arrears for each loan schedule, based on an interest rate 
	
	
 
		
 		
of 10.45%. 
	
	
Anticipated Funding 
		
 		
 
	
	
Period: 
		
 		
June 2007 through May 2008. 
	
	
Line Mechanics: 
		
 		
Equipment with invoice dates older than 90 days will be subject to 
	
	
 
		
 		
appropriate discount. 
	
	
 
	
	
 
		
 		
Amortization begins on the start date, which is the first day of the 
	
	
 
		
 		
month following the funding date. Interim interest will be charged 
	
	
 
		
 		
for any period between the funding date and the start date. 
	
	
 
	
	
Collateral: 
		
 		
A fully perfected first priority security interest in various Equipment 
	
	
 
		
 		
as detailed in the attached Addendum A. All Equipment must be 
	
	
 
		
 		
acceptable to GE Capital and located at Company owned or leased 
	
	
 
		
 		
facilities within the continental United States. All collateral shall be 
	
	
 
		
 		
free and clear of all liens, claims and encumbrances. 
	
	
 
	
	
Other Conditions: 
		
 		
All other terms and conditions as presently exist shall continue to 
	
	
 
		
 		
apply. 
	

4

	
CombinatoRx, Incorporated

	
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
Company. Company will be responsible for maintaining in force, all risk damage, and liability insurance in amounts and coverages satisfactory to GE Capital.	
	 
	
2.      		
Documentation: Standard GE Capital Master Loan and Schedule Documentation for this type of Loan (“Loan Documents”). Any changes to
the Loan Documents must be approved by GE Capital legal counsel.	
	 
	
3.      		
Indexing: The Interest Rate, Payment Factor and corresponding Loan Payments are based on the Federal Reserve’s 3 and 4 year Treasury
Constant Maturities Rate (H.15/ “Treasury Rate”) as of 06/26/2007 currently 4.95% and 4.97%, respectively, and will be adjusted effective as of the date of funding of any Financing to reflect any increases in the Treasury
Rate.	
	 
	
4.      		
Transaction Costs: By execution and return of this proposal letter, the Company will be responsible for (i) all of its closing costs, (ii) all out of pocket fees and expenses
incurred by GE Capital in connection with the Financing under consideration including, without limitation, actual out-of-pocket expenses associated with engagement of outside counsel, UCC searches and filings costs, inspection and appraisal fees and
similar costs (iii) the Company will indemnify and hold harmless GE Capital and its affiliates, officers, directors, employees and agents (each an “Indemnified Person”) against all claims, costs, damages, liabilities and expenses (each a
“Claim”) which may be incurred by or asserted against any of them in connection with this letter, the Financing, or the matters contemplated in this proposal letter, and will reimburse each Indemnified Person, upon demand, for any legal or
other expenses incurred in connection with investigating, defending or participating in any Claim, or any action proceeding relating to such Claim, and (iv) the Company waives any right to a jury trial in any action or proceeding brought against GE
Capital.	
	 
	
5.      		
Electronic Payment System: GE Capital’s standard payment collection method is through an electronic payment system. An enrollment form
will be provided with the Loan Documents.	
	 
	
6.      		
Confidentiality: This proposal letter is being provided to the Company on a confidential basis. Except as required by law, neither this proposal nor its contents may be disclosed,
except to individuals who are the Company’s officers, employees or advisors who have a need to know of such matters and then only on the condition that such matters remain confidential. In addition, none of such persons shall, except as
required by law, use the name of, or refer to GE Capital, in any correspondence, discussions, advertisement, press release or disclosure made in connection with the Financing without the prior written consent of GE Capital.	
	 
	
7.      		
Expiration: This proposal will expire 06/30/2007, if not accepted prior to that date.	
	 

5

	
CombinatoRx, Incorporated

	
8.      		
Other Conditions: 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 Loan Documents and satisfaction of 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 default has occurred and is continuing under the Loan Documents, that all representations and warranties of the Company in the Loan Documents continue to be true and correct and that no
Material Adverse Change has occurred since the prior funding. If a commitment were to be given it would be subject to and preceded by a 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 any Financing 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 confirmation that
no Material Adverse Change has occurred since the issuance of such commitment.	
	 

6

	
CombinatoRx, Incorporated

AUTHORIZATION FOR RELEASE OF INFORMATION

The undersigned hereby authorizes past and present depositing institutions, creditors, vendors and suppliers of the undersigned to provide such information pertaining to any loans, leases, lines of credit, account balances,
and payment histories of the undersigned to General Electric Capital Corporation as it may request.

	
CombinatoRx, Incorporated

	
By: /s/Justin Renz

Justin Renz

Title: Vice President, Finance

7

	
CombinatoRx, Incorporated

Addendum A - Expected Equipment Composition

	
By end of term: 
		
 		
 
		
 		
 
		
 		
 
	
	
Equipment Class 
		
 		
Amount 
		
 		
Concentration Requirement 
	
	
Laboratory & scientific equipment: 
		
 		
$2,000,000 
		
 		
Minimum of 50% 
	
	
Lab and office furniture, office equipment, 
		
 		
$320,000 
		
 		
Maximum of 
		
 		
8% 
	
	
& similar: 
		
 		
 
		
 		
 
		
 		
 
	
	
Computers, networking equipment, 
		
 		
$400,000 
		
 		
Maximum of 
		
 		
10% 
	
	
& similar: 
		
 		
 
		
 		
 
		
 		
 
	
	
Soft costs (leaseholds, software, 
		
 		
$1,280,000 
		
 		
Maximum of 
		
 		
32% 
	
	
tax, freight & similar): 
		
 		
 
		
 		
 
		
 		
 
	

	
Total

	
$4,000,000

	
100%

8

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