EXHIBIT 10.3
FORM OF PROMISSORY NOTE
[________ ___, 2002]
$500,000 Ada, Michigan
FOR VALUE RECEIVED, the undersigned, INTERLEUKIN GENETICS,
INC., a Delaware corporation, of 135 Beaver Street, 2nd Floor, Waltham,
Massachusetts 02452 (the "COMPANY"), promises to pay to PYXIS
INNOVATIONS INC., a Delaware corporation, of 7575 Fulton Street East,
Ada, Michigan 49355-0001 ("PAYEE"), the principal amount of Five
Hundred Thousand Dollars ($500,000.00) and interest on the unpaid
principal balance at a rate per annum of 15 percent until maturity and
18 percent after maturity.
The principal of and accrued interest on this Note shall be
paid on December 31, 2003. If any portion of the principal or interest
is not paid when due, then the Company shall immediately pay to Payee a
late charge in an amount equal to two percent of the principal amount.
This is in addition to Payee's other rights and remedies for default in
payment.
PREPAYMENTS. The Company may prepay without penalty all or
part of the principal of this Note at any time.
SECURITY. This Note and all obligations of the Company under
it are secured by a certain Security Agreement, dated October 18, 2002,
given by the Company to Payee ("SECURITY DOCUMENTS"). Payee shall have
all of the rights and powers set forth in the Security Documents as
though they were fully set forth in this Note.
DEFAULT AND ACCELERATION. Each of the following shall be an
"event of default" under this Note and the Security Agreement: (1) if
default occurs in the payment of principal or interest under this Note
or of any late charge or out-of-pocket expense that the Company at any
time owes to Payee under this Note or in the payment of any other
indebtedness or obligation that the Company now or in the future owes
to Payee, as and when it shall be or become due and payable; (2) if
default occurs in the performance of any other obligation to Payee
under this Note, any Security Document, the Purchase Agreement (as
defined below) or any other agreement that has been or in the future is
entered into between the Company and Payee or if there occurs any other
event of default under any Security Document, the Purchase Agreement,
or any such other agreement; (3) if any warranty or representation that
the Company has made or in the future makes to Payee in any Security
Document or in any financial statement or other document given to
Payee, shall have been false in any material respect; (4) if the
Company dissolves, becomes insolvent, or makes an assignment for the
benefit of creditors; (5) if the Company defaults in the payment of any
other indebtedness or performance of obligations owed to any other
party or entity; or (6) a Change of Control of the Company. Upon the
occurrence of any event of default, all or any part of the indebtedness
evidenced by this Note and all or any part of all other indebtedness
and obligations that the Company then owes to Payee shall, at the
option of Payee, become immediately due and payable without notice or
demand. If a voluntary or involuntary case in bankruptcy, receivership
or insolvency shall at any time be begun by or against the Company or
if any levy, writ of attachment, garnishment, execution or similar
process shall be issued against or placed upon any property of the
Company, then all such indebtedness shall automatically become
immediately due and payable. All or any part of the indebtedness
evidenced by this Note also may become, or may be declared to be,
immediately due and payable under the terms and conditions contained in
any Security Document, the Purchase Agreement, or other agreement that
has been or in the future is entered into between the Company and
Payee.
"CHANGE OF CONTROL" shall mean (a) a dissolution or
liquidation of the Company, (b) a merger or consolidation in which the
Company is not the surviving corporation, (c) a merger or share
exchange in which the Company is the surviving corporation but after
which the stockholders of the Company
immediately prior to such merger cease to own at least 51% of the
outstanding shares of the Company, (d) the sale, license, or other
transfer of substantially all of the assets of the Company, or (e) the
acquisition, sale, or transfer of more than 50% of the outstanding
shares of the Company by tender offer or similar transaction.
AGREEMENT. This Note is given under a certain Note Purchase
Agreement, dated October 18, 2002, between Payee and the Company (the
"PURCHASE AGREEMENT"), and Payee shall have all of the rights and
powers set forth in the Agreement as though they were set forth fully
in this Note.
PLACE AND APPLICATION OF PAYMENTS. Each payment upon this Note
shall be made at Payee's address set forth above or any other place
that Payee directs in writing. Payee shall apply any payment upon it
first to any expenses (including expenses of collection) then due and
payable to Payee, then to any unpaid late charges, then to any accrued
and unpaid interest under this Note and then to the unpaid principal
balance. If the Company at any time owes Payee any indebtedness or
obligation in addition to the indebtedness that this Note evidences,
and if any indebtedness that the Company then owes to Payee is then in
default, then the Company shall not have any right to direct or
designate the particular indebtedness or obligation upon which any
payment made by, or collected from, the Company or from security shall
be applied. The Company waives any such right and agrees that Payee
shall determine, in its sole discretion, the manner of application of
any such payment, as between or among such indebtedness and
obligations.
SETOFF. Payee shall have the right at any time to set off any
indebtedness that this Note evidences and that is then due and payable
against any indebtedness that Payee then owes to the Company.
REMEDIES. Payee shall have all rights and remedies that the
law and any agreement of the Company provide. Any requirement of
reasonable notice with respect to any sale or other disposition of
collateral shall be met if Payee sends the notice at least ten days
before the date of sale or other disposition. The Company shall
reimburse Payee for any and all expenses, including reasonable attorney
fees and legal expenses, that Payee pays or incurs in protecting and
enforcing the rights of and obligations to Payee under any provision of
this Note or any Security Document.
WAIVERS. A delay by Payee in the exercise of any right or
remedy shall not be considered a waiver of it. A single or partial
exercise by Payee of any right or remedy shall not preclude any other
or future exercise of it or the exercise of any other right or remedy.
A waiver by Payee of any default or of any provision of this Note shall
not be effective unless it is in writing and signed by Payee. A waiver
of any right or remedy on one occasion shall not be a waiver of that
right or remedy on any future occasion.
The Company waives demand for payment, presentment, notice of
dishonor and protest of this Note and waives all defenses based on
suretyship or impairment of collateral. The Company consents to any
extension or postponement of time of payment of this Note, to any
substitution, exchange or release of all or any part of any security
given to secure it, to the addition of any party to it and to the
release, discharge, waiver, modification or suspension of any rights or
remedies against any person liable for the indebtedness that this Note
evidences.
GENERAL. In this Note, "MATURITY" means the time when the
entire remaining unpaid principal balance shall be or shall become due
and payable for any reason, including acceleration as provided above.
APPLICABLE LAW AND JURISDICTION. This Note shall be governed
by and interpreted according to the laws of the State of Michigan,
without giving effect to conflict of laws rules. The Company
irrevocably agrees and consents that any action against the Company for
collection or enforcement of this Note may be brought in any state or
federal court that has subject matter jurisdiction and is located in,
or whose district includes, Kent County, Michigan, and that any such
court shall have personal jurisdiction and venue over the Company for
purposes of the action.
-2-
PAYEE AND OBLIGOR EACH IRREVOCABLY AND UNCONDITIONALLY WAIVES
ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION, INCLUDING ANY CLAIM,
COUNTERCLAIM, CROSS-CLAIM OR THIRD-PARTY CLAIM ("CLAIM"), THAT IS BASED
UPON, ARISES OUT OF OR RELATES TO THIS NOTE OR THE INDEBTEDNESS THAT IT
EVIDENCES, INCLUDING, WITHOUT LIMITATION, ANY CLAIM THAT IS BASED UPON,
ARISES OUT OF OR RELATES TO ANY ACTION OR INACTION OF PAYEE IN
CONNECTION WITH ANY ACCELERATION, ENFORCEMENT OR COLLECTION OF THIS
NOTE OR SUCH INDEBTEDNESS.
INTERLEUKIN GENETICS, INC.
By: /s/ Fenel Eloi
-----------------------------------
Name: Fenel Eloi
Title: Chief Financial Officer
-3-