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EXHIBIT 10.5
CONSENT, WAIVER AND AMENDMENT AGREEMENT
This Consent, Waiver and Amendment Agreement is dated effective January
25, 2001 between Interleukin Genetics, Inc., a Delaware corporation (the
"Company") and The Tail Wind Fund Ltd. ("Tail Wind").
RECITALS
WHEREAS, the Company and Tail Wind are parties to that certain Purchase
Agreement dated December 5, 2000 (the "Purchase Agreement") pursuant to which
the Company issued $2,000,000 in aggregate purchase price of shares of its
Common Stock to Tail Wind (the "Tail Wind Offering");
WHEREAS, in order to provide funding for the Company's operations, the
Company wishes to issue up to $3,000,000 in aggregate purchase price of shares
of its Common Stock in an MFN Transaction (as defined in the Purchase Agreement)
(the "New Offering") pursuant to the Purchase Agreement to be entered into
between the Company and the Investors thereto substantially in the form attached
hereto as Exhibit A (the "New Purchase Agreement");
WHEREAS, to facilitate the consummation of the transactions
contemplated by the New Purchase Agreement, the Company desires (i) to obtain
from Tail Wind certain consents and waivers with respect to the Purchase
Agreement and that certain Registration Rights Agreement dated December 5, 2000
between the Company and Tail Wind (the "Rights Agreement") and (ii) to amend
certain provisions of the Purchase Agreement and the Rights Agreement;
WHEREAS, Tail Wind desires to grant such waivers and consents and to
amend the Purchase Agreement and the Rights Agreement in connection with the New
Offering;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and referred to herein, the adequacy, sufficiency and receipt
thereof which are hereby acknowledged, the parties hereby agree as follows:
1. Tail Wind hereby agrees that Annex A hereto accurately and
completely sets forth (i) the number of shares of Common Stock that the Company
is required to issue to Tail Wind pursuant to Section 7 of the Purchase
Agreement as a result of the New Offering; (ii) the adjusted exercise price of
the Warrant (as defined in the Purchase Agreement) as required under Section 7
of the Purchase Agreement as a result of the New Offering; and (iii) the number
of additional shares of Common Stock underlying the Warrant.
2. The Company hereby represents and warrants that the securities
issued pursuant to the Purchase Agreement and the securities to be initially
issued pursuant to the New Purchase Agreement constitute less than twenty
percent (20%) of the Company's outstanding Common Stock
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for purposes of the Nasdaq rules requiring shareholder approval. Tail Wind
hereby waives all of its rights under Section 7.2(c) with respect to the New
Offering, including, without limitation, its right to request that the Company
obtain from Nasdaq its assurance that the New Offering will not be integrated
with the Tail Wind Offering for purposes of the shareholder approval rules of
Nasdaq and its right to require the Company to redeem its Common Stock from Tail
Wind with respect to the New Offering.
3. Pursuant to Sections 7.2(a) and (b) of the Purchase Agreement,
Tail Wind hereby consents to the issuance of the securities of the Company in
the New Offering pursuant to the terms of the New Purchase Agreement.
4. Tail Wind hereby waives its rights under Section 7.3 of the
Purchase Agreement to purchase any securities offered in the New Offering and
waives all provisions under Section 7.3 of the Purchase Agreement related to the
exercise of such rights in connection with the New Offering, including, without
limitation, the right of Tail Wind to receive seven (7) business days advance
notice of the terms of the New Offering; provided, however, that if the terms of
the New Purchase Agreement or New Registration Rights Agreement attached hereto
as Exhibit B are changed from that attached hereto, the Company shall be
required to provide a new notice to Tail Wind and this Agreement may be null and
void at the sole discretion of Tail Wind.
5. Tail Wind hereby consents to the inclusion on the Registration
Statement (as defined in the Rights Agreement) of all securities to be issued
pursuant to the New Purchase Agreement and hereby waives the requirement in
Section 2(a)(i) of the Rights Agreement that the initial Registration Statement
be filed no later than thirty (30) days after the Closing Date (as defined in
the Purchase Agreement).
6. The Company and Tail Wind agree that Section 1.5 of the
Purchase Agreement shall be deleted in its entirety and replaced and superseded
with the following Section 1.5:
"1.5 "Exempt Issuances" means (i) sales of shares of
Common Stock by the Company upon conversion or exercise of any
convertible securities, options or warrants outstanding prior to
December 5, 2000 (ii) securities issued to employees, officers or
directors of the Company pursuant to any stock option, stock purchase
or stock bonus plan, agreement or arrangement as existing on December
5, 2000 or subsequently adopted upon approval of the shareholders of
the Company; (iii) securities issued to universities provided such
securities are issued for other than primarily equity financing
purposes and is limited to an aggregate value of no more than
$5,000,000; (iv) up to $500,000 in the aggregate of the Company's
securities issued to consultants of the Company; (v) securities issued
to vendors, customers, suppliers, consultants, financial advisors or to
other persons in similar commercial situations with the Company if such
issuance is approved by the Board of Directors, provided such
securities are issued for other than primarily equity financing
purposes and is limited to an aggregate value of $500,000; and (vi)
shares of Common Stock issued pursuant to Section 7 of that certain
Purchase Agreement dated January 26, 2001 between the Company and
certain investors thereto."
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7. The Company and Tail Wind agree that Section 7.3 of the
Purchase Agreement shall be deleted in its entirety and replaced and superseded
with the following Section 7.3:
"7.3 Right of the Investor to Participate in Future
Transactions. Until the expiration of the MFN Period, the Investor will
have a right to participate in future capital raising transactions
(which would not include an Exempt Issuance) on the terms and
conditions set forth in this Section 7.3. During such period, the
Company shall give seven (7) business days advance written notice to
the Investor prior to any non-public offer or sale of any of the
Company's equity securities or any securities convertible into or
exchangeable or exercisable for such securities by providing to the
Investor a comprehensive term sheet containing all significant business
terms of such a proposed transaction. The Investor shall have the right
to purchase up to forty-percent (40%) of such securities which are the
subject of such a proposed transaction for the same consideration and
on the same terms and conditions as contemplated for such third-party
sale. The Investor's rights hereunder must be exercised in writing by
the Investor within five (5) business days following receipt of the
notice from the Company. If, subsequent to the Company giving notice to
the Investor hereunder but prior to the Investor exercising its right
to participate (or the expiration of the five-day period without
response from the Investor), the terms and conditions of the proposed
third-party sale are changed from that disclosed in the comprehensive
term sheet provided to the Investor, the Company shall be required to
provide a new notice to the Investor hereunder and the Investor shall
have the right, which must be exercised within five (5) business days
of such new notice, to exercise its rights to purchase the securities
on such changed terms and conditions as provided hereunder. In the
event other investors with participation rights similar to the rights
of the Investor hereunder do not exercise their participation rights
with respect to the proposed third-party sale, the Investor hereunder
shall have the right to purchase up to all of the securities not
purchased by such other investors. In the event the Investor does not
exercise its rights hereunder, or affirmatively declines to engage in
the proposed transaction with the Company, then the Company may proceed
with such proposed transaction on the same terms and conditions as
noticed to the Investor (assuming the Investor has consented to the
transaction, if required, pursuant to Section 7.2 of this Agreement).
The rights and obligations of this Section 7.3 shall in no way diminish
the other rights of the Investor pursuant to this Section 7."
8. In all other respects the Purchase Agreement, the Rights
Agreement and the Warrant shall remain unchanged and in full force and effect.
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IN WITNESS WHEREOF the parties have caused this Consent, Waiver and
Amendment Agreement to be duly executed as of the date first above written.
INTERLEUKIN GENETICS, INC.
By:
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Name:
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Title:
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THE TAIL WIND FUND LTD.
By:
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Name:
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Title:
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ANNEX A
Additional shares of Common Stock to be issued to The Tail Wind Fund Ltd.:
257,627
Adjusted Exercise Price of Warrant: $3.125
Number of additional shares of Common Stock underlying the Warrant: 128,814
