EXHIBIT 10.1
NOTE AND WARRANT SUBSCRIPTION AGREEMENT
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INTERLEUKIN GENETICS, INC.
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This Note and Warrant Subscription Agreement (this "Agreement") is made
between Interleukin Genetics, Inc., a Delaware corporation (the "Company"), and
the undersigned prospective purchaser (the "Investor") who is subscribing hereby
for a 15% one-year term note (the "Note") and a warrant (the "Warrant" and
together with the Note, the "Securities") to purchase shares of common stock,
$0.001 par value per share (the "Common Stock") of the Company. The Securities
shall have an aggregate purchase price equal to the Purchase Price (as defined
in Section P below. The original principal amount of the Note will be equal to
the Purchase Price. The number of shares of Common Stock which the Warrant will
entitle the holder to purchase (the "Warrant Shares") will be equal to the
Purchase Price DIVIDED BY $1.00, rounded down to the nearest whole number, and
the exercise price of the Warrant will be $2.50 per Warrant Share.
FOR EXAMPLE: if the Investor subscribes for $50,000 of Securities, the
Investor will purchase a Note in the original principal amount of $50,000
and will receive a Warrant to purchase 50,000 shares of Common Stock at an
exercise price of $2.50 per share.
This subscription is submitted to the Company in accordance with and
subject to the terms and conditions described in this Agreement. In
consideration of the Company's agreement to sell the Securities to the Investor
upon the terms and conditions contained herein, the Investor agrees and
represents as follows:
A. TERMS OF SUBSCRIPTION.
1. The Investor hereby irrevocably subscribes for and agrees to purchase
the Securities for the Purchase Price. The Investor encloses herewith a check or
has caused a wire transfer to be initiated, in each case payable to "Xxxxx Xxxxx
as Escrow Agent for Interleukin Genetics, Inc." in the full amount of the
Purchase Price (the "Payment").
2. The Investor understands that Payment by check or wire transfer as
provided in Paragraph 1 above shall be delivered to the Agent pursuant to the
terms of the Escrow Agreement in the form attached as EXHIBIT A hereto (the
"Escrow Agreement"). The Payment (or, in the case of the rejection of a portion
of the Investor's subscription, the part of the Payment relating to such
rejected portion) will be returned promptly, without interest, if the Investor's
subscription is rejected in whole or in part at any time prior to the closing
notwithstanding the Company's signature hereto. Upon receipt by the Company of
the requisite payments for all
Securities to be purchased by the subscribers whose subscriptions are accepted
(each, a "Purchaser") the Company may schedule a closing. At the closing, Notes
and Warrants will each be issued in the name of each such Purchaser, and the
name of such Purchaser will be registered on the books of the Company as the
record owner of such Note and Warrant and the Agent will release the aggregate
Payments to the Company. The Company will issue and deliver to each Purchaser a
Note in the form attached as EXHIBIT B hereto and a Warrant in the form attached
as EXHIBIT C hereto. The Investor understands that the Company is offering
certain registration rights with respect to the Warrant Shares as more fully set
forth in the Registration Rights Agreement in the form attached as EXHIBIT D
hereto (the "Registration Rights Agreement").
3. The Investor hereby agrees to be bound hereby and by the terms of the
Escrow Agreement and Registration Rights Agreement upon the (i) execution and
delivery to the Company of this Subscription Agreement and (ii) acceptance by
the Company of the Investor's subscription (the "Subscription").
4. The Investor agrees that the Company may, in its sole and absolute
discretion, reduce the Investor's subscription to any amount of Securities that
in the aggregate does not exceed the amount of Securities hereby applied for
without any prior notice to or further consent by the Investor. The Investor
hereby irrevocably constitutes and appoints the Company and each officer of the
Company, each of the foregoing acting singly, in each case with full power of
substitution, the true and lawful agent and attorney-in-fact of the Investor,
with full power and authority in the Investor's name, place and stead, to amend
this Subscription Agreement, to effect any of the foregoing provisions of this
Paragraph 4.
5. The Company shall not, without the consent of the holders of Notes
representing a majority of the outstanding indebtedness represented by all Notes
issued pursuant to Paragraph 2 above, grant a security interest in any of the
Company's Intellectual Property; PROVIDED, HOWEVER, that this Paragraph 5 shall
not apply to any Intellectual Property which is or becomes the subject of any
license, sublicense, research, collaboration, development, joint venture,
partnership, strategic alliance or other agreement or arrangement which is not
exclusively a financing transaction. The term "Intellectual Property" shall mean
the Company's existing patents, copyrights, trademarks, tradenames,
servicemarks, trade secrets and applications for any of the foregoing (as
applicable).
B. ACCREDITED INVESTOR. The Investor is an "accredited investor" as such term
is defined in Regulation D under the Securities Act of 1933, as amended (the
"Securities Act"), for the following reason (PLEASE INITIAL ONE OR MORE):
____ My individual income was in excess of $200,000 in each of the past two
years, or my joint income with my spouse was in excess of $300,000 in
each of those years, and I reasonably expect my income to reach the
same level in the current year.
____ My individual net worth or joint net worth with my spouse exceeds
$1,000,000.
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____ The Investor is a trust, corporation or partnership with total assets
in excess of $5,000,000, not formed for the specific purpose of
acquiring the Securities, whose purchase of the Securities will be
directed by a person whose knowledge and experience in financial and
business matters is such that he or she is capable of evaluating the
merits and risks of the investment in the Securities.
____ The Investor is an entity in which all of the equity owners are
accredited investors.
____ Other (Please specify):
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C. EXPERIENCE AND SUITABILITY. The Investor has such knowledge and experience
in financial and business matters to evaluate the merits and risks of an
investment in the Securities and to make an informed decision relating thereto.
The Investor has the financial capability for making and protecting the
investment and can afford a complete loss of the investment. The investment is a
suitable one for the Investor.
D. NO NEED FOR LIQUIDITY. The Investor is aware that this investment may not be
readily liquidated in case of an emergency and that the Securities being
purchased may have to be held for an indefinite period of time. The Investor's
overall commitment to investments which are not readily marketable is not
excessive in view of my/its net worth and financial circumstances and the
purchase of the Securities will not cause such commitment to become excessive.
In view of such facts, the Investor has adequate means of providing for any
current needs, anticipated future needs and possible contingencies and
emergencies and has no need for liquidity in the investment in the Securities.
The Investor is able to bear the economic risk of this investment.
E. OPPORTUNITY TO INVESTIGATE. Prior to the execution of this Agreement, the
Investor and/or the Investor's adviser(s) has/have had the opportunity to ask
questions of, and receive answers from, representatives of the Company
concerning the terms and conditions of this transaction, and the finances,
operations, business and prospects of the Company. The Investor and/or the
Investor's adviser(s) has/have also had the opportunity to obtain additional
information necessary to verify the accuracy of information furnished about the
Company. Accordingly, the Investor and/or the Investor's adviser(s) has/have
independently evaluated the risks of purchasing the Securities, and the Investor
has received information with respect to all matters which the Investor
considers material to the Investor's decision to make this investment. The
Investor has read the Private Placement Memorandum dated July 25, 2002,
accompanying this Subscription Agreement (the "Private Placement Memorandum").
F. RISK FACTORS. The Investor is aware that a public market does not exist for
the Securities and that the Securities may not be sold except in compliance with
applicable federal and state securities laws. The Investor understands that the
Company has made no assurances that a public market will ever exist for the
Securities and that, even if a public market exists in the future, the Investor
may not readily be able to sell the Securities. The Investor has considered
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each of these risks regarding an investment in the Company and the Securities,
and has carefully reviewed the description of certain risk factors described in
the Private Placement Memorandum,. The Investor understands that the risks
described in such Memorandum are not a complete list of risks involved in an
investment in the Company.
G. INVESTMENT PURPOSE. The Investor is acquiring the Securities for the
Investor's own account for the purpose of investment and not with a view to, or
for resale in connection with, the distribution thereof, nor with any present
intention of distributing or selling the Securities. The Investor understands
that neither the Securities nor the Warrant Shares have been registered under
the Securities Act or the securities laws of any state, and the Investor hereby
agrees not to make any sale, transfer or other disposition of any such
Securities or Warrant Shares unless either (i) the Securities or Warrant Shares,
as applicable, first shall have been registered under the Securities Act and all
applicable state securities laws, or (ii) an exemption from such registration is
available, and the Company has received such documents and agreements from the
Investor and the transferee as the Company requests at such time. In the event
of any such sale, transfer or other disposition of any of the Securities or
Warrant Shares, the Investor shall deliver to the Company's transfer agent, with
a copy to the Company, a Certificate of Subsequent Sale in the form attached as
SCHEDULE 1 hereto, so that the Note, Warrant and/or Warrant Shares may be
properly transferred.
H. LEGENDS. The Investor understands that until the Securities and Warrant
Shares have been registered under the Securities Act and applicable state
securities laws each certificate representing such Securities or Warrant Shares
shall bear a legend substantially similar to the following:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW
AND THEY MAY NOT BE SOLD OR OTHERWISE TRANSFERRED BY ANY PERSON, INCLUDING
A PLEDGEE, UNLESS EITHER A REGISTRATION STATEMENT WITH RESPECT TO SUCH
SHARES SHALL BE EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE CORPORATION SHALL HAVE RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO
THE CORPORATION THAT THE TRANSACTION IS EXEMPT FROM REGISTRATION UNDER SUCH
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
The Investor further understands that until the Warrant Shares have been
registered under the Securities Act and applicable state securities laws each
certificate representing such Warrant Shares shall also bear a legend
substantially similar to the following:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A REGISTRATION
RIGHTS AGREEMENT DATED JULY __, 2002, A COPY OF WHICH IS AVAILABLE FOR
INSPECTION AT THE OFFICES OF THE COMPANY OR WILL BE MADE AVAILABLE UPON
REQUEST.
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H. NO REGULATORY APPROVAL OF MERITS. The Investor understands that neither the
Securities and Exchange Commission nor the commissioner or department of
securities or attorney general of any state has passed upon the merits or
qualifications of, nor recommended nor approved, the Securities. Any
representation to the contrary is a criminal offense.
I. INDEPENDENT ADVICE. The Investor understands that the Investor is urged to
seek independent advice from professional advisors relating to the suitability
for the Investor of an investment in the Company in view of the Investor's
overall financial needs and with respect to the legal and tax implications of
such an investment.
J. RESTRICTIONS ON TRANSFER. The Investor shall not, directly or indirectly,
sell, transfer, assign, pledge, bequeath, hypothecate, mortgage, grant any proxy
with respect to, or in any way encumber or otherwise dispose of the Securities
except in compliance with this Agreement.
K. INDEMNIFICATION. The Investor understands the meaning and legal consequences
of this Agreement and agrees to indemnify and hold harmless the Company and each
director and officer thereof from and against any and all loss, damage or
liability due to or arising out of a breach of any representation, warranty or
agreement of the Investor contained in this Agreement.
L. AUTHORITY AND NONCONTRAVENTION. The execution and performance hereof
violates no order, judgment, injunction, agreement or controlling document to
which the Investor is a party or by which the Investor is bound. If an
organization, (i) the Investor is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it has been formed; (ii)
the Investor has the right and power under its organizational instruments to
execute, deliver and perform its obligations hereunder; and (iii) this Agreement
has been duly authorized by all necessary action on the part of all officers,
directors, partners, stockholders and trustees and will not violate any
agreement to which the Investor is a party; and (iv) the individual executing
and delivering this Agreement has the requisite right, power, capacity and
authority to do so on behalf of the organization. The Investor has not been
organized for the purpose of subscribing for the Securities.
M. DURATION. The Investor understands that the Investor may not cancel,
terminate or revoke this Agreement or any agreement made by the Investor
hereunder and that this Agreement shall survive the Investor's death or
disability and shall be binding upon the Investor's heirs, executors,
administrators, successors and assigns.
N. CONFIDENTIAL INFORMATION. The Investor represents to the Company that, at
all times during the Company's offering of the Securities, the Investor has
maintained in confidence all non-public information regarding the Company
received by the Investor from the Company or its agents, and covenants that it
will continue to maintain in confidence such information until such information
(a) becomes generally publicly available other than through a violation of this
provision by the Investor or its agents or (b) is required to be disclosed in
legal proceedings (such as by deposition, interrogatory, request for documents,
subpoena, civil investigation demand, filing with any governmental authority or
similar process), provided, however, that before making any use or disclosure in
reliance on this subparagraph (b) the Investor shall give the Company at least
fifteen (15) days prior written notice (or such shorter period as required by
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law) specifying the circumstances giving rise thereto and will furnish only that
portion of the non-public information which is legally required and will
exercise its best efforts to obtain reliable assurance that confidential
treatment will be accorded any non-public information so furnished.
O. MISCELLANEOUS.
1. NOTICES. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given only upon delivery to each party to be notified by (i) personal delivery,
(ii) telex or telecopier, upon receipt of confirmation of complete transmittal,
or (iii) an internationally recognized overnight air courier, addressed to the
party to be notified at the address as follows, or at such other address as such
party may designate by ten days' advance written notice to the other party: (i)
if to the Company, to: Interleukin Genetics, Inc., 000 Xxxxxx Xxxxxx, Xxxxxxx,
XX 00000, Attention: Chief Financial Officer, with a copy to Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., Xxx Xxxxxxxxx Xxxxxx, Xxxxxx, XX 00000,
Attention: Stanford X. Xxxxxxx, Xx., Esq. or (ii) if to the Investor, at the
address set forth in Section P below, or at such other address as may have been
specified by written notice given in accordance with this paragraph.
2. ENTIRE AGREEMENT. This Agreement, the Registration Rights Agreement and
the Escrow Agreement embody the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and thereof and
supersedes all prior oral or written agreements and understandings relating to
the subject matter hereof and thereof. No statement, representation, warranty,
covenant or agreement of any kind not expressly set forth in this Agreement
shall affect, or be used to interpret, change or restrict, the express terms and
provisions of this Agreement.
3. MODIFICATIONS AND AMENDMENTS. The terms and provisions of this
Agreement may be modified or amended only by written agreement executed by the
parties hereto.
4. WAIVERS AND CONSENTS. Failure of the Company to exercise any right or
remedy under this Agreement or any other agreement between the Company and the
Investor, or otherwise, or delay by the Company in exercising such right or
remedy, will not operate as a waiver thereof. No waiver by the Company will be
effective unless and until it is in writing and signed by the Company.
5. GOVERNING LAW. This Agreement shall be enforced, governed and construed
in all respects in accordance with the laws of The Commonwealth of Massachusetts
as such laws are applied by Massachusetts courts to agreements entered into and
to be performed in Massachusetts by and between residents of Massachusetts, and
shall be binding upon the Investor, the Investor's heirs, estate, legal
representatives, successors and assigns and shall inure to the benefit of the
Company, its successors and assigns. If any provision of this Agreement is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any provision hereof that may prove invalid or
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unenforceable under any law shall not affect the validity or enforceability of
any other provision hereof.
P. The Investor is purchasing the Securities as follows (please check as
appropriate):
______ individually ______ in trust
______ joint tenants ______ as a partnership
______ tenants in common ______ other:_______________________
Name:______________________________________________________________________
Telephone:_________________________________________________________________
Home Address:______________________________________________________________
City:______________________________ State:____________________________
Zip: ______________________________
Contact Name (if Investor is an entity):___________________________________
Business:__________________________________________________________________
Address:___________________________________________________________________
City:______________________________ State:____________________________
Zip: ______________________________
Business Telephone:_________________________________________
Communications should be sent to: ______________ business or
______________ home address
Federal Income Tax I.D. No. (Social Security Number for
Individual Investors) ______________________________
AMOUNT SUBSCRIBED FOR: $__________________ (the "Purchase Price")
Q. UNDER PENALTIES OF PERJURY, THE INVESTOR CERTIFIES THAT:
A. The number shown above is my correct Taxpayer Identification
Number;
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B. The Investor is not subject to backup withholding either because
the Investor has not been notified by the Internal Revenue Service (the "IRS")
that the Investor is subject to backup withholding as a result of a failure to
report all interest or dividends, or the IRS has notified the Investor that the
Investor is no longer subject to backup withholding.
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IN WITNESS WHEREOF, the Investor has executed this Subscription Agreement
as of this ____ day of July, 2002.
Investor Name:
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(For Co-owners, if applicable)
By:
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Signature Signature
Name Name:
Title: Title:
ACCEPTED:
INTERLEUKIN GENETICS, INC.
By:
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Name:
Title:
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