EXHIBIT 10.4
FORM OF AMENDED AND RESTATED PROMISSORY NOTE
[DATE]
$500,000.00 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 the per annum rate equal to the
Index Rate plus 1% until maturity (adjusted on the first day of each calendar
quarter to the Index Rate in effect on the date of adjustment) and 18 percent
after maturity. As used in this Note, "INDEX RATE" means the "Prime Rate" listed
in the Money Rates section of the Wall Street Journal.
The principal of this Note shall be paid in full on December
31, 2007. Accrued interest shall be paid on first day of each calendar quarter
(January, April, July and October) until the principal balance shall be paid in
full.
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 then due. This is in addition to
Payee's other rights and remedies for default in payment.
PREPAYMENTS. The Company may not prepay the principal of this
Note.
SECURITY. This Note and all obligations of the Company under
it are secured by a certain Security Agreement, dated October 23, 2002, as
amended, 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 (other than a transaction involving primarily shares held by Payee) of
more than 50% of the outstanding shares of the Company, whether by tender offer,
similar transaction, or newly issued stock (other than to Payee).
AGREEMENT. This Note is given under a certain Note Purchase
Agreement, dated October 23, 2002, as amended 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.
CONVERSION. Payee has the right, at its option, at any time
prior to the payment in full of this Note, to convert a portion or all of the
balance of this Note into fully paid and nonassessable common stock of the
Company. The number of shares of common stock into which the balance of this
Note may be converted ("CONVERSION SHARES") shall be determined by dividing the
aggregate principal amount to be converted, together with all accrued interest
to the date of conversion, by 2.0 times the Conversion Price in effect at the
time of such conversion. The "CONVERSION PRICE" shall be the Conversion Price,
as determined and adjusted as set forth in Section 4 of the Certificate of
Designations, Preferences and Rights of Series A Preferred Stock as filed with
the Delaware Secretary of State on March 5, 2003, regardless of whether any
shares of the Series A Preferred Stock shares are outstanding at the time of
conversion.
Before Payee shall be entitled to convert some or all of the
balance of this Note into shares as provided above, it shall give written notice
to the Company of the election to convert, and shall state the amount of the
balance to be converted. The Company shall, as soon as practicable thereafter,
issue and deliver to Payee a certificate for the number of shares of common
stock to which Payee shall be entitled. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of Company's
receipt of the notice from Payee, and Payee shall be treated for all purposes as
the record holder of such shares of stock as of such date.
No fractional shares of stock shall be issued upon conversion
of this Note. In lieu of the Company issuing any fractional shares to Payee upon
conversion, the number of shares issued shall be rounded to the nearest whole
number. If the entire balance of this Note is to be converted, then Payee shall
surrender this Note, duly endorsed, at the office of the Company. If only a
portion of the balance of this Note is converted, then the balance of this Note
shall be reduced by the amount converted, with the remaining balance continuing
as outstanding under this Note. Upon conversion, the Company shall, at its
expense, issue and deliver to Payee a certificate for the number of shares of
such stock to which Payee shall be entitled upon such conversion (bearing such
legends as are required by applicable state and federal securities laws and the
opinion of counsel to the Company), together with any other securities and
property to which Payee is entitled upon such conversion under the terms of this
Note.
In the event of: (a) any taking by the Company of a record of
holders of any class of securities of the Company for the purpose of determining
holders thereof who are entitled to receive any
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dividend or other distribution, or any right to subscribe for, purchase, or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right; or (b) any capital reorganization, any
reclassification, or recapitalization of the capital stock of the Company or any
transfer of all or substantially all of the assets of the Company to any other
person or any consolidation or merger or similar change of control transaction
involving the Company; or (c) any voluntary or involuntary dissolution,
liquidation, or winding up of the Company; then the Company will mail to Payee
at least ten days prior to the earliest date specified therein, a notice
specifying: (i) the date on which any such record is to be taken for the purpose
of such dividend, distribution, or right, and the amount and character of such
dividend, distribution, or right; and (ii) the date on which any such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation, or winding up is expected to become effective and the record date
for determining stockholders entitled to vote thereon.
Following the approval at a meeting of the Company's
stockholders and the subsequent filing of a Certificate of Amendment of the
Company's Certificate of Incorporation that increases the authorized Common
Stock of the Company in an amount sufficient to permit the Board of Directors to
reserve for issuance upon conversion of this Note the number of shares of Common
Stock to which the Note is then convertible, the Company shall, at all times
reserve and keep available out of its authorized but unissued shares of common
stock solely for the purpose of effecting the full conversion of the Note such
number of its shares of common stock as shall from time to time be sufficient to
effect the conversion of the Note. If at any time the number of authorized by
unissued shares of common stock shall not be sufficient to effect the conversion
of the entire outstanding principal amount of this Note, in addition to such
other remedies as shall be available to Payee, the Company will use its best
efforts to take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of common stock to such
number of shares as shall be sufficient for such purposes.
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
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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.
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.
AMENDS AND RESTATES. This Note amends, restates and replaces
in its entirety that certain Promissory Note dated [DATE], made by the Company
to the order of Payee in the original, principal amount of $500,000.00.
INTERLEUKIN GENETICS, INC.
By
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Name: Fenel M. Eloi
Title: Chief Financial Officer
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SCHEDULE TO FORM OF AMENDED AND RESTATED SECURED PROMISSORY NOTE
This schedule is filed pursuant to Instruction 2 of Item 601 of Regulation S-K.
We state that the Form of Amended and Restated Note filed as Exhibit 10.4 to
our Current Report on Form 8-K dated March 5, 2003, is identical in all
material respects with Amended and Restated Notes we issued to Pyxis
Innovations Inc., other than with respect only to the date of each Amended and
Restated Note, which are as follows:
Dates of Amended and Restated Promissory Notes
October 23, 2002
November 14, 2002
December 16, 2002
January 28, 2003
We hereby undertake to file copies of any or all of such Amended and Restated
Notes pursuant to an amendment to our Current Report on Form 8-K dated March 5,
2003, upon the request of the Commission.