CONFIDENTIAL
March 3, 2010
CONFIDENTIAL
Xxxxx X.
Xxxxxx
Chief
Executive Officer
Interleukin
Genetics, Inc.
000
Xxxxxx Xxxxxx
Waltham,
MA 02452
Dear Xx.
Xxxxxx:
This
letter (the “Agreement”)
constitutes the agreement between Xxxxxx & Xxxxxxx, LLC (“Xxxxxx” or the “Placement Agent”) and
Interleukin Genetics, Inc. (the “Company”), that
Xxxxxx shall serve as the exclusive placement agent for the Company, on a
reasonable best efforts basis, in connection with the proposed placement (the
“Placement”) of
registered securities (the “Securities”) of the
Company, including shares (the “Shares”) of the
Company’s common stock, par value $0.001 per share (the “Common Stock”) and
warrants to purchase shares of Common Stock. The terms of such Placement and the
Securities shall be mutually agreed upon by the Company and the purchasers
(each, a “Purchaser” and
collectively, the “Purchasers”) and
nothing herein constitutes that Xxxxxx would have the power or authority to bind
the Company or any Purchaser or an obligation for the Company to issue any
Securities or complete the Placement. This Agreement and the documents executed
and delivered by the Company and the Purchasers in connection with the Placement
shall be collectively referred to herein as the “Transaction
Documents.” The date of the closing of the Placement shall be
referred to herein as the “Closing
Date.” The Company expressly acknowledges and agrees that the
execution of this Agreement does not constitute a commitment by Xxxxxx to
purchase the Securities and does not ensure the successful placement of the
Securities or any portion thereof or the success of Xxxxxx with respect to
securing any other financing on behalf of the Company.
SECTION
1. COMPENSATION AND OTHER
FEES.
As
compensation for the services provided by Xxxxxx xxxxxxxxx, the Company agrees
to pay to Xxxxxx:
(A) A
cash fee payable immediately upon the closing of the Placement and equal to 4.5%
of the aggregate gross proceeds from the sale of Securities sold on the Closing
Date.
(B) The
Company also agrees to reimburse Xxxxxx’x expenses (with supporting
invoices/receipts) up to a maximum of 0.75% of the aggregate gross proceeds
raised in the placement, but in no event more than $25,000. Such reimbursement
shall be payable immediately upon (but only in the event of) the closing of the
Placement.
SECTION
2. REGISTRATION
STATEMENT.
The
Company represents and warrants to, and agrees with, the Placement Agent
that:
Xxxxxx
& Xxxxxxx, LLC o 0000 Xxxxxx xx xxx
Xxxxxxxx, 00xx Xxxxx,
Xxx Xxxx, XX 00000
Tel: 000 000 0000 o Fax: 000 000 0000 o xxx.xxxx.xxx o Member: FINRA,
SIPC
(A) The
Company has filed with the Securities and Exchange Commission (the “Commission”) a
registration statement on Form S-3 (Registration File No. 333-163987) under the
Securities Act of 1933, as amended (the “Securities Act”),
which became effective on January 5, 2010, for the registration under the
Securities Act of the Shares. At the time of such filing, the Company met the
requirements of Form S-3 under the Securities Act. Such registration
statement meets the requirements set forth in Rule 415(a)(1)(x) under the
Securities Act and complies with said Rule. The Company will file with the
Commission pursuant to Rule 424(b) under the Securities Act, and the rules and
regulations (the “Rules and
Regulations”) of the Commission promulgated thereunder, a supplement to
the form of prospectus included in such registration statement relating to the
placement of the Shares and the plan of distribution thereof and has advised the
Placement Agent of all further information (financial and other) with respect to
the Company required to be set forth therein. Such registration statement,
including the exhibits thereto, as amended at the date of this Agreement, is
hereinafter called the “Registration
Statement”; such prospectus in the form in which it appears in the
Registration Statement is hereinafter called the “Base Prospectus”; and
the supplemented form of prospectus, in the form in which it will be filed with
the Commission pursuant to Rule 424(b) (including the Base Prospectus as so
supplemented) is hereinafter called the “Prospectus
Supplement.” Any reference in this Agreement to the Registration
Statement, the Base Prospectus or the Prospectus Supplement shall be deemed to
refer to and include the documents incorporated by reference therein (the “Incorporated
Documents”) pursuant to Item 12 of Form S-3 which were filed under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), on or before
the date of this Agreement, or the issue date of the Base Prospectus or the
Prospectus Supplement, as the case may be; and any reference in this Agreement
to the terms “amend,” “amendment” or “supplement” with respect to the
Registration Statement, the Base Prospectus or the Prospectus Supplement shall
be deemed to refer to and include the filing of any document under the Exchange
Act after the date of this Agreement, or the issue date of the Base Prospectus
or the Prospectus Supplement, as the case may be, deemed to be incorporated
therein by reference. All references in this Agreement to financial statements
and schedules and other information that is “contained,” “included,”
“described,” “referenced,” “set forth” or “stated” in the Registration
Statement, the Base Prospectus or the Prospectus Supplement (and all other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information that is or is deemed to
be incorporated by reference in the Registration Statement, the Base Prospectus
or the Prospectus Supplement, as the case may be. No stop order
suspending the effectiveness of the Registration Statement or the use of the
Base Prospectus or the Prospectus Supplement has been issued, and no proceeding
for any such purpose is pending or has been initiated or, to the Company's
knowledge, is threatened by the Commission. For purposes of this Agreement,
“free writing
prospectus” has the meaning set forth in Rule 405 under the Securities
Act and the “Time of
Sale Prospectus” means the preliminary prospectus, if any, together with
the free writing prospectuses and supplements, if any, used in connection with
the Placement, including any documents incorporated by reference
therein.
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(B) The
Registration Statement (and any further documents to be filed with the
Commission in connection with the Placement) contains or will contain, as
applicable, all exhibits and schedules as required by the Securities Act. Each
of the Registration Statement and any post-effective amendment thereto, at the
time it became effective, complied in all material respects with the Securities
Act and the Exchange Act and the applicable Rules and Regulations and did not
and, as amended or supplemented, if applicable, will not, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading. The
Base Prospectus, the Time of Sale Prospectus, if any, and the Prospectus
Supplement, each as of its respective date, comply in all material respects with
the Securities Act and the Exchange Act and the applicable Rules and
Regulations. Each of the Base Prospectus, the Time of Sale Prospectus, if any,
and the Prospectus Supplement, as amended or supplemented, did not and will not
contain as of the date thereof any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, the Company makes no representation or warranty
as to information contained in or omitted from the Registration Statement, the
Base Prospectus, the Time of Sale Prospectus, if any, or the Prospectus
Supplement, including any amendments or supplements thereto, in reliance upon,
and in conformity with, written information furnished to the Company by or on
behalf of Xxxxxx expressly for use in the preparation thereof. The Incorporated
Documents, when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act and the applicable Rules and
Regulations, and none of such documents, when they were filed with the
Commission, contained any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein (with respect to
Incorporated Documents incorporated by reference in the Base Prospectus or
Prospectus Supplement), in light of the circumstances under which they were made
not misleading; and any further documents so filed and incorporated by reference
in the Base Prospectus, the Time of Sale Prospectus, if any, or Prospectus
Supplement, when such documents are filed with the Commission, will conform in
all material respects to the requirements of the Exchange Act and the applicable
Rules and Regulations, as applicable, and will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No post-effective amendment to the Registration Statement
reflecting any facts or events arising after the date thereof which represent,
individually or in the aggregate, a fundamental change in the information set
forth therein is required to be filed with the Commission. There are
no documents required to be filed with the Commission in connection with the
transaction contemplated hereby that (x) have not been filed as required
pursuant to the Securities Act or (y) will not be filed within the requisite
time period. There are no contracts or other documents required to be described
in the Base Prospectus, the Time of Sale Prospectus, if any, or Prospectus
Supplement, or to be filed as exhibits or schedules to the Registration
Statement, that have not been described or filed as required.
(C) The
Company is eligible to use free writing prospectuses in connection with the
Placement pursuant to Rules 164 and 433 under the Securities Act. Any
free writing prospectus that the Company is required to file pursuant to Rule
433(d) under the Securities Act in connection with the Placement has been, or
will be, filed with the Commission in accordance with the requirements of the
Securities Act and the applicable rules and regulations of the Commission
thereunder. Each free writing prospectus that the Company has filed,
or is required to file, pursuant to Rule 433(d) under the Securities Act or that
was prepared by or behalf of or used by the Company in connection with the
Placement complies or will comply in all material respects with the requirements
of the Securities Act and the applicable rules and regulations of the Commission
thereunder. The Company will not, without the prior consent of the
Placement Agent, prepare, use or refer to, any free writing
prospectus.
(D) The
Company has delivered, or will as promptly as practicable deliver, to the
Placement Agent complete conformed copies of the Registration Statement and of
each consent and certificate of experts, as applicable, filed as a part thereof,
and conformed copies of the Registration Statement (without exhibits), the Base
Prospectus, the Time of Sale Prospectus, if any, and the Prospectus Supplement,
as amended or supplemented, in such quantities and at such places as the
Placement Agent reasonably requests. Neither the Company nor any of
its directors and officers has distributed and none of them will distribute,
prior to the Closing Date, any offering material in connection with the offering
and sale of the Shares other than the Base Prospectus, the Time of Sale
Prospectus, if any, the Prospectus Supplement, the Registration Statement,
copies of the documents incorporated by reference therein and any other
materials permitted by the Securities Act.
SECTION
3. REPRESENTATIONS AND
WARRANTIES. Except as disclosed in the SEC Reports (as defined below),
the Registration Statement, the Time of Sale Prospectus or other documents filed
by the Company under the Securities Act, the Company hereby makes the
representations and warranties set forth below to the Placement
Agent.
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(A) Organization and
Qualification. The Company has no direct and indirect
subsidiaries. The Company is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and assets and to
carry on its business as currently conducted. The Company is not in
violation or default of any of the provisions of its certificate of
incorporation or bylaws. The Company is duly qualified to conduct
business and is in good standing as a foreign corporation in each jurisdiction
in which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result
in (i) a material adverse effect on the legality, validity or enforceability of
any Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or otherwise) of
the Company, or (iii) a material adverse effect on the Company’s ability to
perform in any material respect on a timely basis its obligations under any
Transaction Document (any of (i), (ii) or (iii), a “Material Adverse
Effect”) and, to the Company’s knowledge, no “Proceeding” (which
for purposes of this Agreement shall mean any action, claim, suit, investigation
or proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened) has been
instituted in any such jurisdiction revoking, limiting or curtailing or seeking
to revoke, limit or curtail such power and authority or
qualification.
(B) Authorization;
Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company, its board of directors or its stockholders in connection therewith
other than in connection with the “Required Approvals”
(as defined in subsection 3(D) below). Each Transaction Document has
been (or upon delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof and thereof, will constitute the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally and (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies.
(C) No
Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company, the issuance and sale of the Securities
and the consummation by the Company of the other transactions contemplated
hereby and thereby do not and will not (i) conflict with or violate any
provision of the Company’s certificate of incorporation or bylaws, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, result in the creation of any “Lien” (which for
purposes of this Agreement shall mean a lien, charge, security interest,
encumbrance, right of first refusal, preemptive right or other restriction,
other than restrictions imposed by applicable securities laws) upon any of the
properties or assets of the Company, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company debt or otherwise) or other understanding to
which the Company is a party or by which any property or asset of the Company is
bound or affected, or (iii) subject to the Required Approvals, conflict with or
result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the
Company is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company is bound or
affected; except in the case of each of clauses (ii) and (iii), such as could
not have or reasonably be expected to result in a Material Adverse
Effect.
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(D) Filings, Consents and
Approvals. The Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other “Person” (defined as
an individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind,
including, without limitation, any Trading Market) in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
other than such consents as have been obtained or such filings as are required
to be made under applicable Federal and state securities laws, the rules and
regulations of the NYSE Amex and the rules and regulations of FINRA
(collectively, the “Required
Approvals”).
(E) Issuance of the Securities;
Registration. The Securities are duly authorized and, when
issued and paid for in accordance with the applicable Transaction Documents,
will be duly and validly issued, fully paid and nonassessable, free and clear of
all Liens imposed by the Company other than restrictions on transfer provided
for in the Transaction Documents. The Company has reserved from its
duly authorized capital stock the maximum number of shares of Common Stock
issuable pursuant to the Transaction Documents. The issuance by the
Company of the Securities has been registered under the Securities Act and all
of the Securities are freely transferable and tradable by the Purchasers without
restriction (other than any restrictions arising solely from an act or omission
of a Purchaser). The Securities are being issued pursuant to the
Registration Statement and the issuance of the Securities has been registered by
the Company under the Securities Act. The Registration Statement is
effective and available for the issuance of the Securities thereunder and the
Company has not received any notice that the Commission has issued or intends to
issue a stop-order with respect to the Registration Statement or that the
Commission otherwise has suspended or withdrawn the effectiveness of the
Registration Statement, either temporarily or permanently, or intends or has
threatened in writing to do so. The "Plan of Distribution" section
under the Registration Statement permits the issuance and sale of the Securities
hereunder. Upon receipt of the Securities, the Purchasers will have
good and marketable title to such Securities and the Shares will be freely
tradable on the NYSE Amex (the “Trading
Market”).
(F) Capitalization. The
authorized capitalization of the Company is as set forth in the SEC
Reports. The Company has not issued any capital stock since its most
recently filed periodic report under the Exchange Act, other than pursuant to
the exercise of employee stock options under the Company’s stock plans, the
issuance of shares of Common Stock to employees pursuant to the Company’s
employee stock purchase plan and pursuant to the conversion or exercise of
securities exercisable, exchangeable or convertible into Common Stock (“Common Stock
Equivalents”). Except for any such rights that have been
waived in writing, no Person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except pursuant to the
Company’s stock plans and as a result of the purchase and sale of the
Securities, there are no outstanding options, warrants, script rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company is or may become bound to issue additional
shares of Common Stock or Common Stock Equivalents. The issuance and
sale of the Securities will not obligate the Company to issue shares of Common
Stock or other securities to any Person (other than the Purchasers) and will not
result in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under such securities. All of the
outstanding shares of capital stock of the Company are validly issued, fully
paid and nonassessable, have been issued in compliance with all federal and
state securities laws, and none of such outstanding shares was issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase securities. No further approval or authorization of any
stockholder, the Board of Directors of the Company or others is required for the
issuance and sale of the Securities. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or, to the knowledge of
the Company, between or among any of the Company’s
stockholders.
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(G) SEC Reports; Financial
Statements. The Company has complied in all material respects
with requirements to file all reports, schedules, forms, statements and other
documents required to be filed by it under the Exchange Act, including pursuant
to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof
(or such shorter period as the Company was required by law to file such
material) (the foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, being collectively referred to herein as the
“SEC Reports”)
on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Exchange Act and the rules
and regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The financial statements of the
Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis during the periods involved (“GAAP”), except as may
be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.
(H) Material Changes;
Undisclosed Events, Liabilities or Developments. Since the
date of the latest audited financial statements included within the SEC Reports,
except as specifically disclosed in the SEC Reports, (i) there has been no
event, occurrence or development that has had or that could reasonably be
expected to result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or “Affiliate” (defined
as any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144 under the Securities Act), except
pursuant to existing Company stock option plans. The Company does not
have pending before the Commission any request for confidential treatment of
information. Except for the issuance of the Securities contemplated
by this Agreement, no event, liability or development has occurred or exists
with respect to the Company or its business, properties, operations or financial
condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made that has not
been disclosed in the Time of Sale Prospectus.
(I) Litigation. There
is no action, suit, inquiry, notice of violation, Proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state,
county, local or foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor, to the Company’s knowledge,
any director or officer of the Company, is or has been the subject of any Action
involving a claim of violation of or liability under federal or state securities
laws or a claim of breach of fiduciary duty. There has not been, and
to the knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current director or
officer of the Company. The Commission has not issued any stop order
or other order suspending the effectiveness of any registration statement filed
by the Company or any Subsidiary under the Exchange Act or the Securities
Act. None of the Company’s employees is a member of a union that
relates to such employee’s relationship with the Company, and the Company is not
a party to a collective bargaining agreement, and the Company believes that its
relationships with its employees are good. No executive officer, to
the knowledge of the Company, is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality, disclosure or
proprietary information agreement or non-competition agreement, or any other
contract or agreement or any restrictive covenant, and the continued employment
of each such executive officer does not subject the Company to any liability
with respect to any of the foregoing matters. The Company is in
compliance with all U.S. federal, state, local and foreign laws and regulations
relating to employment and employment practices, terms and conditions of
employment and wages and hours, except where the failure to be in compliance
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
6
(J)
Labor
Relations. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company which could reasonably be expected to result in a Material Adverse
Effect.
(K) Compliance. The
Company (i) is not in default under or in violation of (and no event has
occurred that has not been waived that, with notice or lapse of time or both,
would result in a default by the Company under), nor has the Company received
notice of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) is not in violation of any
order of any court, arbitrator or governmental body, or (iii) is not or has not
been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local
laws applicable to its business and all such laws that affect the environment,
except in each case as could not have a Material Adverse Effect.
(L) Regulatory
Permits. The Company possesses all certificates,
authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct its business as described in
the SEC Reports, except where the failure to possess such permits could not have
or reasonably be expected to result in a Material Adverse Effect (“Material Permits”),
and the Company has not received any notice of proceedings relating to the
revocation or modification of any Material Permit, except where such potential
revocation or modification would not reasonably be expected to result in a
Material Adverse Effect.
(M) Title to
Assets. The Company has good and marketable title in fee
simple to all real property owned by it that is material to its business and
good and marketable title in all personal property owned by it that is material
to its business, in each case free and clear of all Liens, except for Liens as
do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the
Company and Liens for the payment of federal, state or other taxes, the payment
of which is neither delinquent nor subject to penalties. Any real
property and facilities held under lease by the Company are held by it under
valid, subsisting and enforceable leases with which the Company is in
compliance, except where such non-compliance would not have or reasonably be
expected to result in a Material Adverse Effect.
(N) Patents and
Trademarks. The Company has, or has rights to use, all
patents, patent applications, trademarks, trademark applications, service marks,
trade names, trade secrets, inventions, copyrights, licenses and other similar
intellectual property rights necessary or material for use in connection with
its business as described in the SEC Reports and which the failure to so have
could have a Material Adverse Effect (collectively, the “Intellectual Property
Rights”). The Company has not received notice (written or
otherwise) that the Intellectual Property Rights used by the Company violates or
infringes upon the rights of any third party, except as could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect. To the knowledge of the Company, all such Intellectual
Property Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights. The Company has
taken reasonable security measures to protect the secrecy, confidentiality and
value of all of its intellectual properties, except where failure to do so could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
7
(O) Insurance. The
Company is insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent and customary in the
business in which the Company is engaged. The Company has no reason
to believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business without a significant
increase in cost.
(P) Transactions With Affiliates
and Employees. Except as set forth in the SEC Reports, none of
the officers or directors of the Company and, to the knowledge of the Company,
none of its employees are presently a party to any transaction with the Company
(other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner that would be required to be disclosed in the SEC
Reports or the Time of Sale Prospectus that is not so disclosed.
(Q) Xxxxxxxx-Xxxxx. The
Company is in material compliance with all provisions of the Xxxxxxxx-Xxxxx Act
of 2002 which are applicable to it as of the date hereof and of the closing date
of the Placement.
(R) Certain
Fees. Except as otherwise provided in this Agreement, no
brokerage or finder’s fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Purchasers shall have
no obligation with respect to any fees or with respect to any claims made by or
on behalf of other Persons for fees of a type contemplated in this Section that
may be due in connection with the transactions contemplated by the Transaction
Documents.
(S) Trading Market
Rules. The issuance and sale of the Securities hereunder does
not contravene the rules and regulations of the Trading Market.
(T) Investment Company.
The Company is not, and is not an Affiliate of, and immediately after receipt of
payment for the Securities, will not be or be an Affiliate of, an “investment
company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that
it will not become subject to the Investment Company Act.
(U) Registration
Rights. Except for any such rights that have been waived in
writing, no Person has any right to cause the Company to effect the registration
under the Securities Act of any securities of the Company.
(V) Listing and Maintenance
Requirements. The Company’s Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act nor has the Company received any notification that the Commission is
contemplating terminating such registration. Except as set forth in
the SEC Reports, the Company has not, in the 12 months preceding the date
hereof, received notice from the Trading Market on which the Common Stock is or
has been listed or quoted to the effect that the Company is not in compliance
with the listing or maintenance requirements of such Trading
Market.
8
(W) Application of Takeover
Protections. The Company and its Board of Directors have taken
all necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s
Certificate of Incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Purchasers as a
result of the Purchasers and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without
limitation as a result of the Company’s issuance of the Securities and the
Purchasers’ ownership of the Securities.
(X) Solvency. The
Company has no knowledge of any facts or circumstances which lead it to believe
that it will file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within 6 months from the Closing
Date.
(Y) Tax
Status. Except for matters that would not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company has filed all necessary federal, state and foreign income
and franchise tax returns and has paid or accrued all taxes shown as due
thereon, and the Company has no knowledge of a tax deficiency which has been
asserted or threatened against the Company.
(Z) Foreign Corrupt
Practices. Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has (i)
directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is in violation of law, or (iv)
violated in any material respect any provision of the Foreign Corrupt Practices
Act of 1977, as amended.
(AA) Accountants. To
the knowledge of the Company, Xxxxx Xxxxxxxx LLP, which shall express its
opinion with respect to the financial statements to be included in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2009, is a registered
public accounting firm as required by the Securities Act.
(BB) Regulation M
Compliance. The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed to
cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities (other than for Placement Agent’s
placement of the Securities), or (iii) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company.
(CC) Approvals. The
issuance and listing on the Trading Market of the Shares requires no further
approvals, including but not limited to, the approval of
shareholders.
(DD) FINRA
Affiliations. There are no affiliations with any FINRA member
firm among the Company’s officers, directors or, to the knowledge of the
Company, any five percent (5%) or greater stockholder of the Company, except as
set forth in the Base Prospectus.
SECTION
4. ENGAGEMENT
TERM. Xxxxxx'x engagement hereunder will be for the period of
30 days. The engagement may be terminated by either the Company or Xxxxxx at any
time upon 10 days' written notice. Notwithstanding anything to the contrary
contained herein, the provisions in this Agreement concerning confidentiality,
indemnification and contribution will survive any expiration or termination of
this Agreement. Upon any termination of this Agreement, the Company's
obligation to pay Xxxxxx any fees actually earned on closing of the Placement
and otherwise payable under Section 1(A), shall survive any expiration or
termination of this Agreement, as permitted by FINRA Rule
5110(f)(2)(d). Upon any termination of this Agreement, the Company's
obligation to reimburse Xxxxxx for out of pocket accountable expenses actually
incurred by Xxxxxx and reimbursable upon closing of the Offering pursuant to
Section 1(B), if any are otherwise due under Section 1(B) hereof, will survive
any expiration or termination of this Agreement, as permitted by FINRA Rule
5110(f)(2)(d). Xxxxxx agrees not to use any confidential information concerning
the Company provided to them by or on behalf of the Company for any purposes
other than those contemplated under this Agreement.
9
SECTION
5. XXXXXX
INFORMATION. The Company agrees that any information or advice
rendered by Xxxxxx to the Company in connection with this engagement is for the
confidential use of the Company only in their evaluation of the Placement and,
except as otherwise required by law, the Company will not disclose or otherwise
refer to the advice or information in any manner without Xxxxxx’x prior written
consent.
SECTION
6. NO FIDUCIARY
RELATIONSHIP. This Agreement does not create, and shall not be
construed as creating rights enforceable by any person or entity not a party
hereto, except those entitled hereto by virtue of the indemnification provisions
hereof. The Company acknowledges and agrees that Xxxxxx is not and
shall not be construed as a fiduciary of the Company and shall have no duties or
liabilities to the equity holders or the creditors of the Company or any other
person by virtue of this Agreement or the retention of Xxxxxx hereunder, all of
which are hereby expressly waived.
SECTION
7. CLOSING. The
obligations of the Placement Agent and the Purchasers, and the closing of the
sale of the Securities hereunder are subject to the accuracy, when made and on
the Closing Date, of the representations and warranties on the part of the
Company contained herein, to the accuracy of the statements of the Company made
in any certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder, and to each of the following additional
terms and conditions:
(A) No
stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been initiated or
threatened by the Commission, and any request for additional information on the
part of the Commission (to be included in the Registration Statement, the Base
Prospectus or the Prospectus Supplement or otherwise) shall have been complied
with to the reasonable satisfaction of the Placement Agent.
(B) The
Placement Agent shall not have discovered and disclosed to the Company on or
prior to the Closing Date that the Registration Statement, the Base Prospectus
or the Prospectus Supplement or any amendment or supplement thereto contains an
untrue statement of a fact which, in the opinion of counsel for the Placement
Agent, is material or omits to state any fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary to
make the statements therein not misleading.
(C) All
corporate proceedings and other legal matters incident to the authorization,
form, execution, delivery and validity of each of this Agreement, the
Securities, the Registration Statement, the Base Prospectus and the Prospectus
Supplement and all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Placement Agent, and the Company shall have
furnished to such counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.
(D) The
Placement Agent shall have received from outside counsel to the Company such
counsel’s written opinion, addressed to the Placement Agent and the Purchasers
dated as of the Closing Date, in form and substance reasonably satisfactory to
the Placement Agent, which opinion shall include a “10b-5” representation from
such counsel.
10
(E) Except
as disclosed in the Time of Sale Prospectus, the Company (i) shall not have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Base Prospectus, any material loss or
interference with its business from fire, explosion, flood, terrorist act or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set forth in
or contemplated by the Base Prospectus and (ii) since such date there shall not
have been any change in the capital stock (other than pursuant to the exercise
of employee stock options under the Company’s stock plans, the issuance of
Common Stock to employees pursuant to the Company’s employee stock purchase plan
and pursuant to the conversion or exercise of securities exercisable,
exchangeable or convertible into Common Stock or as otherwise disclosed in the
SEC Reports) or long-term debt of the Company or any change, or any development
involving a prospective change, in or affecting the business, general affairs,
management, financial position, stockholders’ equity, results of operations or
prospects of the Company, otherwise than as set forth in or contemplated by the
Base Prospectus, the effect of which, in any such case described in clause (i)
or (ii), is, in the judgment of the Placement Agent, so material and adverse as
to make it impracticable or inadvisable to proceed with the sale or delivery of
the Securities on the terms and in the manner contemplated by the Base
Prospectus, the Time of Sale Prospectus, if any, and the Prospectus
Supplement.
(F) The
Common Stock is registered under the Exchange Act and, as of the Closing Date,
the Shares shall be listed and admitted and authorized for trading on the
Trading Market, and satisfactory evidence of such actions shall have been
provided to the Placement Agent. The Company shall have taken no
action designed to, or likely to have the effect of terminating the registration
of the Common Stock under the Exchange Act or delisting or suspending from
trading the Common Stock from the Trading Market, nor has the Company received
any information suggesting that the Commission or the Trading Market is
contemplating terminating such registration or listing.
(G) Subsequent
to the execution and delivery of this Agreement, there shall not have occurred
any of the following: (i) trading in securities generally on the New York Stock
Exchange, the Nasdaq National Market or the NYSE Amex or in the over-the-counter
market, or trading in any securities of the Company on any exchange or in the
over-the-counter market, shall have been suspended or minimum or maximum prices
or maximum ranges for prices shall have been established on any such exchange or
such market by the Commission, by such exchange or by any other regulatory body
or governmental authority having jurisdiction, (ii) a banking moratorium shall
have been declared by federal or state authorities or a material disruption has
occurred in commercial banking or securities settlement or clearance services in
the United States, (iii) the United States shall have become engaged in
hostilities in which it is not currently engaged, the subject of an act of
terrorism, there shall have been an escalation in hostilities involving the
United States, or there shall have been a declaration of a national emergency or
war by the United States, or (iv) there shall have occurred any other calamity
or crisis or any change in general economic, political or financial conditions
in the United States or elsewhere, if the effect of any such event in clause
(iii) or (iv) makes it, in the sole judgment of the Placement Agent,
impracticable or inadvisable to proceed with the sale or delivery of the
Securities on the terms and in the manner contemplated by the Base Prospectus
and the Prospectus Supplement.
(H) No
action shall have been taken and no statute, rule, regulation or order shall
have been enacted, adopted or issued by any governmental agency or body which
would, as of the Closing Date, prevent the issuance or sale of the Securities or
result in or reasonably be expected to result in a Material Adverse Effect; and
no injunction, restraining order or order of any other nature by any federal or
state court of competent jurisdiction shall have been issued as of the Closing
Date which would prevent the issuance or sale of the Securities or reasonably be
expect to result in a Material Adverse Effect.
(I)
The Company shall
have prepared and filed with the Commission a Current Report on Form 8-K with
respect to the Placement, including as an exhibit thereto this
Agreement.
11
(J) The
Company shall have entered into subscription agreements with each of the
Purchasers and such agreements shall be in full force and effect and shall
contain representations and warranties of the Company as agreed between the
Company and the Purchasers.
(K) FINRA
shall have raised no objection to the fairness and reasonableness of the terms
and arrangements of this Agreement. In addition, the Company shall,
if requested by the Placement Agent, make or authorize Placement Agent’s counsel
to make on the Company’s behalf, an Issuer Filing with FINRA pursuant to FINRA
Rule 5110 with respect to the Registration Statement and pay all filing fees
required in connection therewith.
(L) Prior
to the Closing Date, the Company shall have furnished to the Placement Agent
such further information, certificates and documents as the Placement Agent may
reasonably request.
All
opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Placement Agent.
SECTION
8. INDEMNIFICATION. (A) To
the extent permitted by law, the Company will indemnify Xxxxxx and its
affiliates, stockholders, directors, officers, employees and controlling persons
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) against all losses, claims, damages, expenses and liabilities, as
the same are incurred (including the reasonable fees and expenses of counsel),
relating to or arising out of its activities hereunder or pursuant to this
engagement letter, except to the extent that any losses, claims, damages,
expenses or liabilities (or actions in respect thereof) are found in a final
judgment (not subject to appeal) by a court of law to have resulted primarily
and directly from Xxxxxx’x willful misconduct or gross negligence in performing
the services described herein, or from information supplied in writing by Xxxxxx
expressly for inclusion in the Registration Statement. Notwithstanding the
foregoing, Xxxxxx shall repay to the Company any reimbursements or other amounts
paid hereunder to the extent they are attributable to losses, claims, damages,
expenses or liabilities finally judicially determined to have resulted primarily
from Xxxxxx’x willful misconduct or gross negligence or from such information
supplied in writing by Xxxxxx.
(B) Promptly
after receipt by Xxxxxx of notice of any claim or the commencement of any action
or proceeding with respect to which Xxxxxx is entitled to indemnity hereunder,
Xxxxxx will notify the Company in writing of such claim or of the commencement
of such action or proceeding, and the Company will assume the defense of such
action or proceeding and will employ counsel reasonably satisfactory to Xxxxxx
and will pay the fees and expenses of such counsel. Notwithstanding
the preceding sentence, Xxxxxx will be entitled to employ counsel separate from
counsel for the Company and from any other party in such action if counsel for
Xxxxxx reasonably determines that it would be inappropriate under the applicable
rules of professional responsibility for the same counsel to represent both the
Company and Xxxxxx. In such event, the reasonable fees and
disbursements of no more than one such separate counsel will be paid by the
Company. The Company will have the exclusive right to settle the
claim or proceeding provided that the Company will not settle any such claim,
action or proceeding without the prior written consent of Xxxxxx, which will not
be unreasonably withheld; provided, however, that such consent shall not be
required if the settlement (i) includes a full and unconditional release of
Xxxxxx from all liability arising or that may arise out of such claim or
proceeding and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of Xxxxxx.
(C) The
Company agrees to notify Xxxxxx promptly of the assertion against it or any
other person of any claim or the commencement of any action or proceeding
relating to a transaction contemplated by this engagement
letter.
12
(D) If
for any reason the foregoing indemnity is unavailable to Xxxxxx or insufficient
to hold Xxxxxx harmless, then the Company shall contribute to the amount paid or
payable by Xxxxxx as a result of such losses, claims, damages or liabilities in
such proportion as is appropriate to reflect not only the relative benefits
received by the Company on the one hand and Xxxxxx on the other, but also the
relative fault of the Company on the one hand and Xxxxxx on the other that
resulted in such losses, claims, damages or liabilities, as well as any relevant
equitable considerations. The amounts paid or payable by a party in
respect of losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees and expenses incurred in defending any
litigation, proceeding or other action or claim. Notwithstanding the
provisions hereof, Xxxxxx’x share of the liability hereunder shall not be in
excess of the amount of fees actually received, or to be received, by Xxxxxx
under this engagement letter (excluding any amounts received as reimbursement of
expenses incurred by Xxxxxx).
(E) These
indemnification provisions shall remain in full force and effect whether or not
the transaction contemplated by this engagement letter is completed and shall
survive the termination of this engagement letter, and shall be in addition to
any liability that the Company might otherwise have to any indemnified party
under this engagement letter or otherwise.
SECTION
9. GOVERNING
LAW. This Agreement will be governed by, and construed in
accordance with, the laws of the State of New York applicable to agreements made
and to be performed entirely in such State. This Agreement may not be
assigned by either party without the prior written consent of the other
party. This Agreement shall be binding upon and inure to the benefit
of the parties hereto, and their respective successors and permitted assigns.
Any right to trial by jury with respect to any dispute arising under this
Agreement or any transaction or conduct in connection herewith is
waived. Any dispute arising under this Agreement may be brought into
the courts of the State of New York or into the Federal Court located in New
York, New York and, by execution and delivery of this Agreement, the Company
hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of aforesaid courts. Each party
hereto hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by delivering a copy
thereof via overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law. If either party shall
commence an action or proceeding to enforce any provisions of a Transaction
Document, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its attorneys’ fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
action or proceeding.
SECTION
10. ENTIRE
AGREEMENT/MISC. This Agreement embodies the entire agreement
and understanding between the parties hereto, and supersedes all prior
agreements and understandings, relating to the subject matter
hereof. If any provision of this Agreement is determined to be
invalid or unenforceable in any respect, such determination will not affect such
provision in any other respect or any other provision of this Agreement, which
will remain in full force and effect. This Agreement may not be
amended or otherwise modified or waived except by an instrument in writing
signed by both Xxxxxx and the Company. The representations,
warranties, agreements and covenants contained herein shall survive the closing
of the Placement and delivery and/or exercise of the Securities, as
applicable. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission or a .pdf format file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or .pdf signature page were an original thereof.
13
SECTION
11. NOTICES. Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified on
the signature pages attached hereto prior to 6:30 p.m. (New York City time) on a
business day, (b) the next business day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number on
the signature pages attached hereto on a day that is not a business day or later
than 6:30 p.m. (New York City time) on any business day, (c) the business day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications
shall be as set forth on the signature pages hereto.
Please
confirm that the foregoing correctly sets forth our agreement by signing and
returning to Xxxxxx a copy of this Agreement.
Very
truly yours,
|
||
XXXXXX
& XXXXXXX, LLC
|
||
By:
|
/s/ Xxxx Xxxxx
|
|
Name: Xxxx
Xxxxx
|
||
Title: Senior
Managing Director
|
||
Address for notice:
|
||
0000
Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
|
||
New
York, NY, 10020
|
||
Fax
(000) 000-0000
|
||
Attention: General
Counsel
|
Accepted
and Agreed to as of
|
||
the
date first written above:
|
||
INTERLEUKIN
GENETICS, INC.
|
||
By:
|
/s/ Xxxxx X. Xxxxxx
|
|
Name: Xxxxx
X. Xxxxxx
|
||
Title: CEO
|
||
Address for notice:
|
||
000
Xxxxxx Xxxxxx
|
||
Waltham,
MA 02452
|
||
With
a copy to:
|
||
Mintz,
Xxxxx, Xxxx, Xxxxxx, Xxxxxxx and Xxxxx, P.C.
|
||
One
Financial Center
|
||
Boston,
MA 02111
|
||
Fax:
(000) 000-0000
|
||
Attention: Xxxxx
X. Xxxxx
|
14