EXHIBIT 10.4
AGREEMENT AND WAIVER
October 22, 2002
Reference is hereby made to that certain Purchase Agreement,
dated as of December 5, 2000 (the "Purchase Agreement"), by and between
Interleukin Genetics, Inc. (the "Company") and The Tail Wind Fund, Ltd.
(the "Investor") and the Registration Rights Agreement, dated as of
December 5, 2000, between the Company and the Investor (the
"Registration Rights Agreement").
WHEREAS, pursuant to the Purchase Agreement, the Investor
purchased and the Company issued and sold, (i) an aggregate of 800,000
shares of the Company's common stock, $0.001 par value per share (the
"Common Stock") at a purchase price of $2.50 per share and (ii) a
warrant to purchase an aggregate of up to 264,407 additional shares of
Common Stock at an exercise price of $3.15 per share (the "Warrant");
WHEREAS, the Company is negotiating a Strategic Transaction
(as defined below) and in order to facilitate the consummation thereof,
the Company and the Investor have agreed, among other things, that (i)
the Company will issue Additional Registrable Securities to the
Investor pursuant to Section 7.1 of the Purchase Agreement, (ii) the
Investor will surrender the Warrant for cancellation, (iii) the
Investor will waive certain rights under the Purchase Agreement and the
Registration Rights Agreement and (iv) certain terms and conditions of
the Purchase Agreement and the Registration Rights Agreement will be
amended upon the consummation of the Strategic Transaction; and
WHEREAS, contemporaneous with the execution hereof the Company
is entering into a Note Purchase Agreement (the "Note Purchase
Agreement") with the Strategic Partner (as defined below) providing
for, among other things, the Strategic Partner to advance up to
$1,500,000 to the Company.
NOW, THEREFORE, in consideration for the mutual covenants
contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company
and the Investor hereby agree as follows:
1. The Investor hereby represents and warrants to the Company
as a material inducement to the Company to enter into this Agreement
that it continues to hold, in the aggregate, at least 65% of the shares
of Common Stock originally issued to it pursuant to the Purchase
Agreement. The Company hereby represents and warrants to the Investor
that contemporaneous with the execution and delivery hereof, the
Company is entering into an Agreement and Waiver with Special
Situations Fund III, L.P., Special Situations Cayman Fund, L.P. and
Special Situations Private Equity Fund, L.P. in the form presented to
the Investor herewith (the "Other Investor Agreement").
2. Within five business days following the date hereof, the
Investor shall surrender the Warrant to the Company for cancellation
and exchange as set forth below. Within five business days following
such surrender, the Company shall issue and deliver to the Investor an
aggregate of 670,588 additional newly issued, fully paid and
non-assessable shares of Common Stock (the "Additional Shares"), which
Additional Shares shall be deemed to be issued pursuant to Section 7.1
of the Purchase Agreement (such that an aggregate of 1,470,588 shares
of
Common Stock shall have been issued under the Purchase Agreement and
the effective Purchase Price for all such shares of Common Stock shall
equal approximately $1.36). Such Additional Shares shall therefore be
"Additional Registrable Securities" (as defined in the Registration
Rights Agreement). Upon the delivery of certificates representing the
Additional Shares to the Investor as provided herein, the Warrants
shall terminate and no longer be outstanding. The Company hereby
represents and warrants to the Investor that the Additional Shares have
been duly authorized and, upon issuance pursuant to the terms of this
Agreement, will be validly issued, fully paid and non-assessable and
subject to no lien, claim, encumbrance or restriction whatsoever, other
than restrictions arising pursuant to applicable securities laws.
3. From the date hereof through April 1, 2003 (the "Waiver Termination
Date"), the Investor hereby waives (i) any and all rights under Section
7 of the Purchase Agreement and such section shall be of no force or
effect with respect to any securities issued or deemed to be issued by
the Company on or prior to the Waiver Termination Date, (ii) any and
all rights under Section 2(c)(i)(C) of the Registration Rights
Agreement and such section shall be of no further force or effect
through the Waiver Termination Date, and (iii) any and all rights under
Section 2(c)(i) of the Registration Rights Agreement to receive
additional shares of Common Stock in payment of liquidated damages
accruing through the Waiver Termination Date. Except as set forth in
Section 5 hereof, the waiver set forth in this Section 3 shall be of no
further force and effect from and after the Waiver Termination Date.
4. In the event that the Company has not entered into a Strategic
Transaction prior to the Waiver Termination Date, but has reached an
agreement in principal with the Strategic Partner for a Strategic
Transaction prior to such date, the Company shall provide the Investor
with reasonably prompt notice thereof and the Waiver Termination Date
shall be automatically extended to May 1, 2003 without any further
action on the part of the parties hereto.
5. In the event that the Company enters into a Strategic Transaction on
or prior to the Waiver Termination Date, the Company shall provide the
Investor with reasonably prompt notice thereof, and from and after the
Waiver Termination Date, (i) Section 7 shall be deleted in its entirety
from the Purchase Agreement, (ii) Section 2(c)(i)(C) shall be deleted
in its entirety from the Registration Rights Agreement and (iii) in
Section 2(c)(i) of the Registration Rights Agreement the phrase ", at
the option of the Investor, in lawful money of the United States or in
shares of Common Stock at the Market Price (as defined in the Purchase
Agreement)," shall be replaced by the phrase " in lawful money of the
United States".
6. In the event that the Company has not entered into a Strategic
Transaction on or prior to the Waiver Termination Date (as the same may
be extended as provided in Section 4 above), within five business days
thereafter the Company shall issue to the Investor a new warrants to
purchase an aggregate of 264,407 shares of Common Stock at an exercise
price of $1.70 per share and otherwise in substantially the same form
as the Warrant (the "New Warrant"). The shares of Common Stock issuable
upon exercise of the New Warrant shall be deemed to be "Additional
Registrable Securities" under the Registration Rights Agreement. In the
event that stockholder approval of the issuance of the New Warrant is
then required under the rules and regulation of any stock exchange or
stock market on which the Company's securities are then listed, quoted
or admitted to trading, the Company shall use its best efforts to
obtain such stockholder approval at the first annual meeting of
stockholders held after the Waiver Termination Date and the New Warrant
shall not be issued until such stockholder approval is obtained.
7. For purposes of this Agreement, the term "Strategic Transaction"
shall mean the sale and issuance by the Company to the Strategic
Partner of the Company's equity or equity-
related securities resulting in gross proceeds to the Company on or
prior to the Waiver Termination Date of at least Three Million Dollars
($3,000,000). For purposes of this Agreement, the term "Strategic
Partner" shall mean the major Consumer Products company with whom the
Company is contemporaneously herewith entering into the Note Purchase
Agreement and its affiliates and related parties.
8. Miscellaneous.
a. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, and given in accordance
with Section 9.4 of the Purchase Agreement.
b. Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be governed by and construed
in accordance with the laws of New York, without giving effect to the
conflict of law principles thereof.
c. Effect on Prior Agreements. Except as expressly modified as
set forth herein, the Purchase Agreement and the Registration Rights
Agreement shall remain in full force and effect.
d. Severability. If any court of competent jurisdiction
determines any provision, or any portion thereof, of this Agreement to
be unenforceable or invalid, then such provision shall be deemed
limited to the extent that such court deems it valid or enforceable and
the remaining provisions of this Agreement shall nevertheless remain in
full force and effect.
e. Counterparts. This Agreement may be executed in any number
of counterparts, and by different parties hereto on separate
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
f. Expenses. Not later than one business day after the date
hereof, the Company shall pay the reasonable legal fees and
disbursements of counsel to the Investor incurred in connection with
the negotiation and documentation of this Agreement; provided that such
fees and disbursements shall in no event exceed $3,000.
g. Amendment. The Company agrees that it shall not amend or
modify, or enter into any transaction which directly or indirectly
amends or modifies, or has the effect of amending or modifying, the
Other Investor Agreement unless the Investor is afforded equivalent
treatment.
h. SEC Reporting. The Company shall prepare and file with the
Securities and Exchange Commission a Current Report on Form 8-K (the
"8-K") disclosing and attaching this Agreement within five business
days of the date hereof. The Company represents and warrants to the
Investor that it has not provided, and covenants that it will not
provide, any non-public information to the Investor (except for the
existence of this Agreement, the Other Investor Agreement and the Note
Purchase Agreement, all of which will be disclosed in the 8-K).
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IN WITNESS WHEREOF, the undersigned have executed this
Agreement and Waiver as of the date first written above.
INTERLEUKIN GENETICS, INC.
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Title: Chief Financial Officer and
Chief Operating Officer
THE TAIL WIND FUND, LTD.
BY: TAIL WIND ADVISORY AND
MANAGEMENT, LTD.
AS INVESTMENT MANAGER
By: /s/ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
Title: Chief Executive Officer
