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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2013
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Delaware
(State or other jurisdiction of incorporation or organization) |
94-3123681
(I.R.S. Employer Identification No.) |
135 Beaver Street, Waltham, MA
(Address of principal executive offices) |
02452
(Zip Code) |
Registrant’s Telephone Number: (781) 398-0700
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Securities registered pursuant to Section 12(b) of the Act:
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value per share
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Large accelerated filer ¨
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Accelerated filer ¨
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Non-accelerated filer ¨
(Do not check if a smaller reporting company) |
Smaller reporting company x
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PART I
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||
Item 1.
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Business
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3
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Item 1A.
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Risk Factors
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16
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Item 1B.
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Unresolved Staff Comments
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25
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Item 2.
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Properties
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25
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Item 3.
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Legal Proceedings
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25
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Item 4.
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Mine Safety Disclosures
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25
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PART II
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||
Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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25
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Item 6.
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Selected Financial Data
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26
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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26
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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30
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Item 8.
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Financial Statements and Supplementary Data
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31
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Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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52
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Item 9A.
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Controls and Procedures
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53
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Item 9B.
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Other Information
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53
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PART III
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||
Item 10.
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Directors, Executive Officers and Corporate Governance
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53
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Item 11.
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Executive Compensation
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53
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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53
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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54
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Item 14.
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Principal Accountant Fees and Services
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54
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PART IV
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||
Item 15.
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Exhibits, Financial Statement Schedules
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54
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2 | ||
3 | ||
· | PerioPredict: This genetic test analyzes genetic variations associated with inflammation and identifies individuals who are at increased risk for more severe periodontal disease. In November 2013, we announced the introduction of PerioPredict, our next-generation version of the PST® genetic test. The genetic test utilizes an expansion of previous genetic markers that now cover all major ethnic groups. We no longer offer the PST® genetic test. |
· | Weight Management Genetic Test: This test determines whether a low fat, low carbohydrate or balanced diet may be best and whether normal or vigorous exercise is needed to most efficiently lose existing body fat. This test is marketed under our Inherent Health® brand. |
· | Bone Health Genetic Test: This test is designed to identify whether an individual is more likely to be susceptible to spine fractures and low bone mineral density associated with osteoporosis. This test is marketed under our Inherent Health® brand. |
· | Heart Health Genetic Test: This test is designed to identify genetic predisposition to excess inflammation, which is a risk factor for heart attack. This test is marketed under our Inherent Health® brand. | |
· | Nutritional Needs Genetic Test: This test is designed to identify DNA variations in genes crucial to B-vitamin metabolism and the ability to manage oxidative stress. This test is marketed under our Inherent Health® brand. |
· | Wellness Select Genetic Test: This allows buyers to purchase any combination of Inherent Health® genetic tests at a discounted price. This is marketed under our Inherent Health® brand. |
4 | ||
5 | ||
· | reimbursement for the processing of our PerioPredict® genetic test by insurance providers; |
· | sales of our Inherent Health® brand of genetic tests either directly to end users or through partnerships such as with Alticor affiliated companies; |
· | sales of our Inherent Health® brand of genetic tests to commercial distribution partners such as regional weight loss centers; and |
· | license fees and royalties for intellectual property used in the sale of partner genetic tests. |
6 | ||
7 | ||
8 | ||
9 | ||
10 | ||
11 | ||
12 | ||
13 | ||
14 | ||
· | increasing the group premium or contribution amounts (such as co-payments) based on genetic information; |
· | requesting or requiring an individual or family member to undergo a genetic test; or |
· | requesting, requiring or purchasing genetic information prior to or in connection with enrollment, or at any time for underwriting purposes. |
15 | ||
16 | ||
17 | ||
18 | ||
· | obtain patents; |
· | obtain licenses to the proprietary rights of others; |
· | prevent others from infringing on our proprietary rights; and |
· | protect trade secrets. |
19 | ||
20 | ||
21 | ||
· | warning letters; |
· | recalls, public notification or medical device safety alerts; |
· | restrictions on, or prohibitions against, marketing such tests or products; |
· | product seizures; |
22 | ||
· | injunctions; |
· | civil penalties, including monetary fines; and |
· | criminal penalties. |
· | the timing and commercial success of the launch of Reimbursed Dental Plans that use our PerioPredict test; |
· | demand for and acceptance of our products; |
23 | ||
· | our ability to develop new relationships and maintain and enhance existing relationships with strategic partners; |
· | regulatory developments or enforcement in the United States and foreign countries; |
· | developments or disputes concerning patents or other proprietary rights; |
· | introduction of technological innovations or new products or services by us or our competitors; |
· | failure to secure adequate capital to fund our operations, or the issuance of equity securities at prices below fair market price; |
· | changes in estimates or recommendations by securities analysts, if any cover our common stock; |
· | litigation; |
· | future sales of our common stock; |
· | general market conditions; |
· | economic and other external factors or other disasters or crises; |
· | period-to-period fluctuations in our financial results; and |
· | overall fluctuations in U.S. equity markets. |
24 | ||
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High
|
|
Low
|
|
||
2013:
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
0.52
|
|
$
|
0.23
|
|
Second Quarter
|
|
$
|
0.55
|
|
$
|
0.35
|
|
Third Quarter
|
|
$
|
0.50
|
|
$
|
0.31
|
|
Fourth Quarter
|
|
$
|
0.39
|
|
$
|
0.30
|
|
|
|
High
|
|
Low
|
|
||
2012:
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
0.35
|
|
$
|
0.17
|
|
Second Quarter
|
|
$
|
0.33
|
|
$
|
0.23
|
|
Third Quarter
|
|
$
|
0.55
|
|
$
|
0.28
|
|
Fourth Quarter
|
|
$
|
0.46
|
|
$
|
0.26
|
|
25 | ||
26 | ||
27 | ||
28 | ||
29 | ||
30 | ||
Report of Independent Registered Public Accounting Firm
|
32
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Balance Sheets
|
33
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Statements of Operations
|
34
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Statements of Stockholders’ Deficit
|
35
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Statements of Cash Flows
|
36
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Notes to Financial Statements
|
37
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31 | ||
32 | ||
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December 31,
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||||
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2013
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2012
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ASSETS
|
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Current assets:
|
|
|
|
|
|
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Cash and cash equivalents
|
|
$
|
7,542,281
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$
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1,225,426
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Accounts receivable from related party
|
|
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534,703
|
|
|
552,572
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|
Trade accounts receivable
|
|
|
8,817
|
|
|
47,560
|
|
Inventory
|
|
|
190,424
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|
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158,238
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Prepaid expenses
|
|
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676,358
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|
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417,772
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Total current assets
|
|
|
8,952,583
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|
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2,401,568
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Fixed assets, net
|
|
|
844,606
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|
|
126,946
|
|
Intangible assets, net
|
|
|
289,865
|
|
|
399,131
|
|
Other assets
|
|
|
38,001
|
|
|
38,001
|
|
Total assets
|
|
$
|
10,125,055
|
|
$
|
2,965,646
|
|
|
|
|
|
|
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|
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LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
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Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
835,439
|
|
$
|
479,182
|
|
Accrued expenses
|
|
|
252,953
|
|
|
165,745
|
|
Deferred revenue
|
|
|
3,783,441
|
|
|
1,628,264
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
4,871,833
|
|
|
2,273,191
|
|
Convertible long-term debt
|
|
|
|
|
|
14,316,255
|
|
Total liabilities
|
|
|
4,871,833
|
|
|
16,589,446
|
|
Stockholders’ deficit:
|
|
|
|
|
|
|
|
Convertible preferred stock, $0.001 par value 6,000,000 shares authorized; 0 and
5,500,000 shares issued and outstanding at December 31, 2013 and 2012, respectively; aggregate liquidation preference of $24,000,000 at December 31, 2012 |
|
|
|
|
|
5,500
|
|
Common stock, $0.001 par value 300,000,000 and 150,000,000 shares authorized;
122,448,707 and 36,761,864 shares issued and outstanding at December 31, 2013 and 2012, respectively |
|
|
122,449
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|
|
36,762
|
|
Additional paid-in capital
|
|
|
119,885,371
|
|
|
94,030,603
|
|
Accumulated deficit
|
|
|
(114,754,598)
|
|
|
(107,696,665)
|
|
Total stockholders’ equity (deficit)
|
|
|
5,253,222
|
|
|
(13,623,800)
|
|
Total liabilities and stockholders’ equity (deficit)
|
|
$
|
10,125,055
|
|
$
|
2,965,646
|
|
33 | ||
|
|
For The Year Ended December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Genetic testing
|
|
$
|
2,168,744
|
|
$
|
2,154,785
|
|
Other
|
|
|
260,868
|
|
|
81,602
|
|
Total revenue
|
|
|
2,429,612
|
|
|
2,236,387
|
|
Cost of revenue
|
|
|
1,632,497
|
|
|
1,328,538
|
|
Gross profit
|
|
|
797,115
|
|
|
907,849
|
|
Operating expenses:
|
|
|
|
|
|
|
|
Research and development
|
|
|
721,568
|
|
|
1,311,877
|
|
Selling, general and administrative
|
|
|
6,564,807
|
|
|
4,150,607
|
|
Amortization of intangibles
|
|
|
109,266
|
|
|
115,453
|
|
Total operating expenses
|
|
|
7,395,641
|
|
|
5,577,937
|
|
Loss from operations
|
|
|
(6,598,526)
|
|
|
(4,670,088)
|
|
Other income (expense):
|
|
|
|
|
|
|
|
Interest income
|
|
|
6,804
|
|
|
4,485
|
|
Interest expense
|
|
|
(472,186)
|
|
|
(454,481)
|
|
Gain on disposal of asset
|
|
|
5,975
|
|
|
|
|
Total other income (expense)
|
|
|
(459,407)
|
|
|
(449,996)
|
|
Loss before income taxes
|
|
|
(7,057,933)
|
|
|
(5,120,084)
|
|
Benefit for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(7,057,933)
|
|
$
|
(5,120,084)
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share
|
|
$
|
(0.08)
|
|
$
|
(0.14)
|
|
Weighted average common shares outstanding, basic and diluted
|
|
|
90,449,758
|
|
|
36,754,679
|
|
34 | ||
|
|
Convertible Preferred
Stock |
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
Shares
|
|
Par Value
|
|
Shares
|
|
Par Value
|
|
|
Additional
Paid-in Capital |
|
|
Accumulated
Deficit |
|
|
Total
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2011
|
|
|
5,000,000
|
|
$
|
5,000
|
|
36,709,706
|
|
$
|
36,710
|
|
$
|
91,111,640
|
|
$
|
(102,576,581)
|
|
$
|
(11,423,231)
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,120,084)
|
|
|
(5,120,084)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private placement of preferred stock, net
of offering costs of $386,030 |
|
|
500,000
|
|
|
500
|
|
|
|
|
|
|
|
2,613,470
|
|
|
|
|
|
2,613,970
|
|
Warrants issued in connection with
private placement of preferred stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
104,907
|
|
|
|
|
|
104,907
|
|
Common stock issued:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee stock purchase plan
|
|
|
|
|
|
|
|
52,158
|
|
|
52
|
|
|
8,758
|
|
|
|
|
|
8,810
|
|
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
191,828
|
|
|
|
|
|
191,828
|
|
Balance as of December 31, 2012
|
|
|
5,500,000
|
|
$
|
5,500
|
|
36,761,864
|
|
$
|
36,762
|
|
$
|
94,030,603
|
|
$
|
(107,696,665)
|
|
$
|
(13,623,800)
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,057,933)
|
|
|
(7,057,933)
|
|
Private placement of common stock, net of
offering costs of $1,735,000 |
|
|
|
|
|
|
|
43,715,847
|
|
|
43,716
|
|
|
11,265,204
|
|
|
|
|
|
11,308,920
|
|
Conversion of preferred stock
|
|
|
(5,500,000)
|
|
|
(5,500)
|
|
39,089,161
|
|
|
39,089
|
|
|
(33,589)
|
|
|
|
|
|
|
|
Conversion of convertible debt
|
|
|
|
|
|
|
|
2,521,222
|
|
|
2,521
|
|
|
14,313,734
|
|
|
|
|
|
14,316,255
|
|
Common stock issued: Exercise of stock
options |
|
|
|
|
|
|
|
252,000
|
|
|
252
|
|
|
80,268
|
|
|
|
|
|
80,520
|
|
Cancellation of restricted stock
|
|
|
|
|
|
|
|
(2,500)
|
|
|
(2)
|
|
|
2
|
|
|
|
|
|
|
|
Employee stock purchase plan
|
|
|
|
|
|
|
|
111,113
|
|
|
111
|
|
|
31,342
|
|
|
|
|
|
31,453
|
|
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
197,807
|
|
|
|
|
|
197,807
|
|
Balance as of December 31, 2013
|
|
|
|
|
|
|
|
122,448,707
|
|
$
|
122,449
|
|
$
|
119,885,371
|
|
$
|
(114,754,598)
|
|
$
|
5,253,222
|
|
35 | ||
|
|
For the Year Ended December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
CASH FLOW FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(7,057,933)
|
|
$
|
(5,120,084)
|
|
Adjustments to reconcile loss from continuing operations to net cash used in operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
229,301
|
|
|
282,518
|
|
Stock-based compensation expense
|
|
|
197,807
|
|
|
191,828
|
|
Change in fair value of warrants
|
|
|
297,547
|
|
|
|
|
Gain on disposal of fixed assets
|
|
|
(5,975)
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
Receivable from related party
|
|
|
17,869
|
|
|
(549,910)
|
|
Trade accounts receivable
|
|
|
38,743
|
|
|
8,332
|
|
Inventory
|
|
|
(32,186)
|
|
|
(50,480)
|
|
Prepaid expenses and other assets
|
|
|
(258,586)
|
|
|
(200,385)
|
|
Accounts payable
|
|
|
356,257
|
|
|
109,876
|
|
Accrued expenses
|
|
|
87,208
|
|
|
(16,852)
|
|
Deferred revenue
|
|
|
2,155,177
|
|
|
803,419
|
|
Net cash used in operating activities
|
|
|
(3,974,771)
|
|
|
(4,541,738)
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Capital additions
|
|
|
(837,696)
|
|
|
(5,000)
|
|
Proceeds from the disposal of fixed assets
|
|
|
5,975
|
|
|
|
|
Net cash used in investing activities
|
|
|
(831,721)
|
|
|
(5,000)
|
|
CASH FLOW FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Proceeds from issuance of notes receivable
|
|
|
|
|
|
1,316,255
|
|
Proceeds from private placement of preferred stock
|
|
|
|
|
|
3,000,000
|
|
Proceeds from private placement of common stock
|
|
|
12,000,000
|
|
|
|
|
Private placement offering costs
|
|
|
(988,626)
|
|
|
(281,123)
|
|
Proceeds from exercises of employee stock options
|
|
|
80,520
|
|
|
|
|
Proceeds from employee stock purchase plan
|
|
|
31,453
|
|
|
8,810
|
|
Net cash provided by financing activities
|
|
|
11,123,347
|
|
|
4,043,942
|
|
Net increase (decrease) in cash and equivalents
|
|
|
6,316,855
|
|
|
(502,796)
|
|
Cash and cash equivalents, beginning of period
|
|
|
1,225,426
|
|
|
1,728,222
|
|
Cash and cash equivalents, end of period
|
|
$
|
7,542,281
|
|
$
|
1,225,426
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
291,914
|
|
$
|
436,754
|
|
Supplemental disclosures of non-cash investing and financing activities:
|
|
|
|
|
|
|
|
Warrants issued in connection with preferred stock financing
|
|
$
|
|
|
$
|
104,907
|
|
Conversion of debt to common stock
|
|
$
|
14,316,255
|
|
|
|
|
Interest related to fair value of warrants market adjustment
|
|
$
|
297,547
|
|
$
|
|
|
36 | ||
37 | ||
38 | ||
|
|
December 31, 2013
|
|
December 31, 2012
|
|
||
|
|
|
|
|
|
|
|
Raw materials
|
|
$
|
180,948
|
|
$
|
154,485
|
|
Finished goods
|
|
|
9,476
|
|
|
3,753
|
|
Total inventory, net
|
|
$
|
190,424
|
|
$
|
158,238
|
|
39 | ||
40 | ||
|
|
As of December 31,
|
|
||
|
|
2013
|
|
2012
|
|
Options outstanding
|
|
5,884,050
|
|
2,302,000
|
|
Warrants outstanding
|
|
37,269,125
|
|
2,187,158
|
|
Convertible preferred stock
|
|
|
|
39,089,161
|
|
Convertible debt
|
|
|
|
2,521,222
|
|
Total
|
|
43,153,175
|
|
46,099,541
|
|
41 | ||
42 | ||
|
|
Useful Life
|
|
2013
|
|
2012
|
|
||
Computer software, computer equipment and office
equipment |
|
3 years
|
|
$
|
272,659
|
|
$
|
314,717
|
|
Laboratory equipment
|
|
5 years
|
|
|
1,452,669
|
|
|
1,225,770
|
|
Furniture and fixtures
|
|
5 years
|
|
|
40,349
|
|
|
40,349
|
|
Leasehold improvements
|
|
5 years
|
|
|
309,618
|
|
|
303,258
|
|
Website development
|
|
3 years
|
|
|
270,678
|
|
|
270,678
|
|
Projects in Progress
|
|
|
|
|
525,988
|
|
|
|
|
Equipment under capital leases
|
|
3 to 5 years
|
|
|
|
|
|
22,920
|
|
|
|
|
|
|
2,871,961
|
|
|
2,177,692
|
|
Less Accumulated depreciation and amortization
|
|
|
|
|
(2,027,355)
|
|
|
(2,050,746)
|
|
Total
|
|
|
|
$
|
844,606
|
|
$
|
126,946
|
|
43 | ||
|
|
2013
|
|
2012
|
|
||
|
|
|
|
|
|
|
|
Patent costs
|
|
$
|
1,154,523
|
|
$
|
1,154,523
|
|
Less Accumulated amortization
|
|
|
(864,658)
|
|
|
(755,392)
|
|
Total
|
|
$
|
289,865
|
|
$
|
399,131
|
|
Year Ending December 31,
|
|
|
|
|
2014
|
|
|
94,100
|
|
2015
|
|
|
77,656
|
|
2016
|
|
|
61,119
|
|
2017
|
|
|
42,229
|
|
2018
|
|
|
14,761
|
|
|
|
$
|
289,865
|
|
|
|
2013
|
|
2012
|
|
||
Payroll and vacation
|
|
$
|
198,968
|
|
$
|
121,362
|
|
Other
|
|
|
53,985
|
|
|
44,383
|
|
Total accrued expenses
|
|
$
|
252,953
|
|
$
|
165,745
|
|
44 | ||
|
1.
|
Executives are not entitled to a non-discretionary bonus for the year ending December 31, 2013.
|
|
2.
|
Provided the Company meets certain earnings and revenue targets for the six months ending June 30, 2014 and Executive is employed by the Company as of June 30, 2014, Executive shall receive a bonus equal to 30% of such Executive’s base salary.
|
|
3.
|
Provided the Company meets certain earnings and revenue targets for the year ending December 31, 2014 and Executive is employed by the Company as of December 31, 2014, Executive shall receive a bonus equal to 15% of such Executive’s base salary.
|
45 | ||
Year Ending
December 31, |
|
Master Space
Lease |
|
Sublease
|
|
Net Master
Space Lease |
|
Office
Equipment |
|
Total
Payments, Net |
|
|||||
2014
|
|
|
118,749
|
|
|
(37,569)
|
|
|
81,180
|
|
|
6,336
|
|
|
87,516
|
|
Thereafter
|
|
|
|
|
|
|
|
|
|
|
|
1,056
|
|
|
1,056
|
|
|
|
$
|
118,749
|
|
$
|
(37,569)
|
|
$
|
81,180
|
|
$
|
7,392
|
|
$
|
88,572
|
|
Risk-free interest rate
|
|
1
|
%
|
Expected life
|
|
5 years
|
|
Expected volatility
|
|
142.36
|
%
|
Dividend yield
|
|
0
|
%
|
46 | ||
47 | ||
|
|
May 17, 2013
|
|
June 30, 2013
|
|
August 9, 2013
|
|
Risk-free interest rate
|
|
1.35
|
%
|
1.58
|
%
|
2.53
|
%
|
Expected life
|
|
4 years
|
|
4 years
|
|
4 years
|
|
Expected volatility
|
|
144.63
|
%
|
145.62
|
%
|
146.19
|
%
|
Dividend Yield
|
|
0
|
%
|
0
|
%
|
0
|
%
|
48 | ||
|
|
2013
|
|
2012
|
|
Risk-free interest rate
|
|
1.56
|
%
|
0.66
|
%
|
Expected life
|
|
5.73 years
|
|
5.73 years
|
|
Expected volatility
|
|
144.35
|
%
|
140.32
|
%
|
Dividend yield
|
|
0
|
%
|
0
|
%
|
|
|
2013
|
|
2012
|
|
||||||
|
|
Shares
|
|
Weighted Avg.
Exercise Price |
|
Shares
|
|
Weighted Avg.
Exercise Price |
|
||
Outstanding, beginning of period
|
|
2,302,000
|
|
$
|
1.06
|
|
2,228,067
|
|
$
|
1.14
|
|
Granted
|
|
4,693,800
|
|
|
0.38
|
|
581,000
|
|
|
0.36
|
|
Stock options exercised
|
|
(252,000)
|
|
|
0.32
|
|
|
|
|
|
|
Restricted stock exercised
|
|
(2,500)
|
|
|
0.00
|
|
(2,500)
|
|
|
0.00
|
|
Forfeited/Expired
|
|
(857,250)
|
|
|
1.87
|
|
(504,567)
|
|
|
0.60
|
|
Outstanding, end of period
|
|
5,884,050
|
|
$
|
0.43
|
|
2,302,000
|
|
$
|
1.06
|
|
Exercisable, end of period
|
|
588,750
|
|
$
|
0.89
|
|
1,376,950
|
|
$
|
1.49
|
|
49 | ||
|
|
Stock Options/Restricted Stock Outstanding
|
|
|
Stock Options/Restricted Stock
Exercisable |
|
|||||||||
Range of Exercise Price:
|
|
Shares
|
|
Weighted Avg.
remaining contractual life (years) |
|
Weighted Avg.
Exercise Price |
|
Shares
|
|
Weighted Avg.
Exercise Price |
|
||||
$0.01$1.00
|
|
|
5,747,800
|
|
9.42
|
|
$
|
..38
|
|
|
452,500
|
|
$
|
0.45
|
|
$1.01$2.00
|
|
|
85,000
|
|
4.30
|
|
|
1.44
|
|
|
85,000
|
|
|
1.44
|
|
$2.01$3.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$3.01$4.00
|
|
|
30,000
|
|
0.96
|
|
|
3.65
|
|
|
30,000
|
|
|
3.65
|
|
$4.01$5.00
|
|
|
21,250
|
|
..50
|
|
|
4.10
|
|
|
21,250
|
|
|
4.10
|
|
|
|
|
5,884,050
|
|
9.27
|
|
$
|
0.43
|
|
|
588,750
|
|
$
|
0.88
|
|
Aggregate intrinsic value
|
|
$
|
22,485
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
|
|
2013
|
|
2012
|
|
||||||
|
|
Shares
|
|
Weighted Avg
Exercise Price |
|
Shares
|
|
|
Weighted Avg
Exercise Price |
|
|
Non-vested options,
beginning of year |
|
925,050
|
|
$
|
0.42
|
|
1,128,250
|
|
$
|
0.57
|
|
Granted
|
|
4,693,800
|
|
|
0.38
|
|
581,000
|
|
|
0.36
|
|
Vested
|
|
(270,300)
|
|
|
0.48
|
|
(367,600)
|
|
|
0.65
|
|
Forfeited
|
|
(53,250)
|
|
|
0.51
|
|
(416,600)
|
|
|
0.52
|
|
Non-vested options,
end of year |
|
5,295,300
|
|
$
|
0.38
|
|
925,050
|
|
$
|
0.42
|
|
|
|
Year Ended December 31,
|
|
||||
|
|
2013
|
|
2012
|
|
||
Stock option grants beginning of period
|
|
$
|
92,187
|
|
$
|
182,064
|
|
Stock-based arrangements during the period:
|
|
|
|
|
|
|
|
Stock option grants
|
|
|
100,638
|
|
|
6,188
|
|
Restricted stock issued:
|
|
|
|
|
|
|
|
Employee stock purchase plan
|
|
|
5,522
|
|
|
1,332
|
|
Director agreements
|
|
|
(540)
|
|
|
2,244
|
|
|
|
$
|
197,807
|
|
$
|
191,828
|
|
50 | ||
|
|
2013
|
|
2012
|
|
||
Deferred tax asset:
|
|
|
|
|
|
|
|
Tax effect of:
|
|
|
|
|
|
|
|
Net operating loss carryforwards
|
|
$
|
25,504,000
|
|
$
|
27,926,000
|
|
Accrued expenses
|
|
|
49,000
|
|
|
21,000
|
|
Amortization of definite lived intangible assets
|
|
|
15,000
|
|
|
16,000
|
|
Non-qualified stock option compensation
|
|
|
69,000
|
|
|
248,000
|
|
Depreciation
|
|
|
123,000
|
|
|
121,000
|
|
Other
|
|
|
297,000
|
|
|
227,000
|
|
Patents
|
|
|
(114,000)
|
|
|
(158,000)
|
|
State net operating loss carryforwards, net of federal tax benefit
|
|
|
19,000
|
|
|
428,000
|
|
Research tax credit carryforwards
|
|
|
2,223,000
|
|
|
2,080,000
|
|
Total deferred tax assets
|
|
|
28,185,000
|
|
|
30,909,000
|
|
Valuation allowance
|
|
|
(28,185,000)
|
|
|
(30,909,000)
|
|
Net deferred tax assets
|
|
$
|
-
|
|
$
|
-
|
|
51 | ||
|
|
2013
|
|
|
2012
|
|
Tax at statutory rate
|
|
(34.0)
|
%
|
|
(34.0)
|
%
|
State taxes, net of federal benefit
|
|
0.0
|
|
|
0.0
|
|
Research and development credit
|
|
(1.7)
|
|
|
0.1
|
|
Share based payment expense
|
|
0.7
|
|
|
0.9
|
|
Other
|
|
3.0
|
|
|
1.4
|
|
Removal of deferred tax asset on federal net operating losses
|
|
64.1
|
|
|
26.9
|
|
Establishment of deferred tax asset on state net operating
losses and state deferred taxes, net of federal income tax benefits |
|
6.4
|
|
|
(9.6)
|
|
Change in valuation allowance
|
|
(38.6)
|
|
|
14.3
|
|
Effective tax rate
|
|
0.0
|
%
|
|
0.0
|
%
|
52 | ||
53 | ||
Item 15(a).
|
The following documents are filed as part of this Annual Report on Form 10-K:
|
|
|
Item 15(a)(1)
and (2).
|
See “Index to Financial Statements” at Item 8 to this Annual Report on Form 10-K. Other financial statement schedules have not been included because they are not applicable or the information is included in the financial statements or notes thereto.
|
|
|
Item 15(a)(3)
|
Exhibits:
|
Exhibit No.
|
|
Identification of Exhibit
|
3.1
|
|
Restated Certificate of Incorporation of the Company, as filed with the Delaware Secretary of State on October 23, 2013 (incorporated herein by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q filed November 14, 2013)
|
3.2
|
|
Amended and Restated Bylaws of the Company dated July 24, 2008 (incorporated by reference to the Current Report on Form 8-K filed on July 28, 2008)
|
4.1
|
|
Form of Stock Certificate representing Common Stock, $0.001 par value, of the Company (incorporated herein by reference to Exhibit 4.1 of the Company’s Quarterly Report on Form 10-Q filed August 14, 2000)
|
4.2
|
|
Form of Common Stock Purchase Warrant (incorporated herein by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on March 5, 2010)
|
4.3
|
|
Form of Warrant issued to Investors in the May 2013 Private Placement (incorporated herein by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on May 20, 2013)
|
4.4
|
|
Form of Warrant issued to the Placement Agent in the May 2013 Private Placement (incorporated herein by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed on May 20, 2013)
|
|
|
|
|
|
Leases
|
10.1
|
|
Commercial Lease Agreement between the Company and Clematis LLC dated February 13, 2004 (incorporated herein by reference to Exhibit 10.44 of the Company’s Annual Report on Form 10-K filed on March 29, 2004)
|
10.2
|
|
Sublease Agreement between the Company and Kala Pharmaceuticals, Inc. dated April 12, 2010 (incorporated herein by reference to Exhibit 10.2 of the Company’s Annual Report on Form 10-K filed on March 24, 2011)
|
10.3
|
|
Second Amendment to Commercial Lease, dated as of February 7, 2014, by and between the Company and Clematis, LLC (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on February 12, 2014)
|
54 | ||
Exhibit No.
|
|
Identification of Exhibit
|
|
|
Equity Compensation Plans
|
10.4.1@
|
|
2000 Employee Stock Compensation Plan for the Company (incorporated herein by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q filed August 14, 2000)
|
10.4.2@
|
|
Form of Nonqualified Stock Option Agreement under the 2000 Employee Stock Compensation Plan (incorporated herein by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q filed August 14, 2000)
|
10.4.3@
|
|
Form of Incentive Stock Option Agreement under the 2000 Employee Stock Compensation Plan (incorporated herein by reference to Exhibit 10.5 of the Company’s Quarterly Report on Form 10-Q filed August 14, 2000)
|
10.5.1@
|
|
Interleukin Genetics, Inc. 2004 Employee, Director and Consultant Stock Plan (incorporated by reference to Appendix A of the Company’s Definitive Proxy Statement filed on April 29, 2011)
|
10.5.2@
|
|
Form of Nonqualified Stock Option Agreement under the 2004 Employee, Director and Consultant Stock Plan (incorporated by reference to Exhibit 10.5.1 of the Company’s Annual Report on Form 10-K filed March 25, 2010)
|
10.5.3@
|
|
Form of Incentive Stock Option Agreement under the 2004 Employee, Director and Consultant Stock Plan (incorporated by reference to Exhibit 10.5.2 of the Company’s Annual Report on Form 10-K filed March 25, 2010)
|
10.6.1@
|
|
2013 Employee, Director and Consultant Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on August 13, 2013)
|
10.6.2@*
|
|
Form of Nonqualified Stock Option Agreement under the 2013 Employee, Director and Consultant Equity Incentive Plan
|
10.6.3@*
|
|
Form of Incentive Stock Option Agreement under the 2013 Employee, Director and Consultant Equity Incentive Plan
|
|
|
|
|
|
Agreements with Executive Officers and Directors
|
10.7.1@
|
|
Employment Agreement dated November 12, 2008 between the Company and Kenneth S. Kornman (incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q filed on November 13, 2008)
|
10.7.2
|
|
First Amendment, effective as of March 31, 2012, to the Employment Agreement, dated as of November 12, 2008, by and between Interleukin Genetics, Inc. and Kenneth S. Kornman (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on April 26, 2012)
|
10.7.3
|
|
Second Amendment, dated November 29, 2012, to the Employment Agreement, dated as of November 12, 2008, by and between Interleukin Genetics, Inc. and Kenneth S. Kornman (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on November 30, 2012)
|
10.8@
|
|
Employment agreement dated April 30, 2008 between the Company and Eliot M. Lurier (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on August 13, 2008)
|
10.9@
|
|
Form of Director Indemnity Agreement dated March 5, 2003 (incorporated herein by reference to Exhibit 10.13 of the Company’s Current Report on Form 8-K filed on March 5, 2003)
|
10.10@
|
|
Director Compensation Policy dated April 29, 2010 (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed August 12, 2010)
|
10.11@
|
|
Employment agreement dated December 26, 2012 between the Company and Scott Snyder (incorporated by reference to Exhibit 10.10 of the Company’s Annual Report on Form 10-K filed March 28, 2013)
|
|
|
|
|
|
Agreements with respect to Financings and Rights of Stockholders
|
10.12.1
|
|
Stock Purchase Agreement between the Company and Pyxis Innovations Inc. dated March 5, 2003 (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on March 5, 2003)
|
10.12.2
|
|
Amendment No. 1 to Stock Purchase Agreement between the Company and Pyxis Innovations Inc. dated May 20, 2003 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on May 30, 2003)
|
10.12.3
|
|
Second Amendment to Stock Purchase Agreement between the Company and Pyxis Innovations Inc. dated February 28, 2005 (incorporated by reference to Exhibit 10.41 of the Company’s Annual Report on Form 10-K filed on April 26, 2005)
|
10.12.4
|
|
Third Amendment, dated June 29, 2012, to the Stock Purchase Agreement, dated March 3, 2003, between Interleukin and Pyxis Innovations Inc. (incorporated by reference to Exhibit 10.5 of the Current Report on Form 8-K filed on July 2, 2012)
|
55 | ||
Exhibit No.
|
|
Identification of Exhibit
|
10.13
|
|
Stock Purchase Agreement Between the Company and Pyxis Innovations Inc. dated August 17, 2006 (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K/A filed on October 31, 2006)
|
10.14
|
|
Stock Purchase Agreement, dated June 29, between Interleukin and Delta Dental Plan of Michigan, Inc. (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed on July 2, 2012)
|
10.15
|
|
Common Stock Purchase Agreement, dated May 17, 2013, by and among Interleukin and the Investors in the May 2013 Private Placement (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on May 20, 2013)
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10.16
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Registration Rights Agreement, dated May 17, 2013, by and among Interleukin and the Investors in the May 2013 Private Placement, Pyxis Innovations Inc., Delta Dental Plan of Michigan, Inc. and BTIG, LLC (incorporated herein by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on May 20, 2013)
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10.17
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Voting Agreement and Irrevocable Proxy, dated May 17, 2013, between Interleukin and Pyxis Innovations Inc. (incorporated herein by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed on May 20, 2013)
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Agreements with respect to Collaborations, Licenses and Research and Development
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10.18.1
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Exclusive License Agreement between the Company and Access Business Group dated March 5, 2003 (incorporated herein by reference to Exhibit 10.7 of the Company’s Current Report on Form 8-K filed on March 5, 2003)
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10.18.2
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First Amendment to License Agreement by and between the Company and Access Business Group International, LLC, dated September 1, 2008 (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q filed on November 13, 2008)
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10.19
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Merchant Network and Channel Partner Agreement dated October 26, 2009 by and between the Company and Amway Corp. (incorporated by reference to Exhibit 10.23 of the Company’s Annual Report on Form 10-K filed on March 25, 2010)
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10.20+
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License Agreement, dated September 21, 2012, between Access Business Group International LLC and Interleukin Genetics, Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on November 14, 2012)
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10.21
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Professional Services Agreement, dated September 21, 2012, between Access Business Group International LLC and Interleukin Genetics, Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on November 14, 2012)
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10.22*!
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First Amended Preferred Participation Agreement, dated November 1, 2013, by and between Interleukin Genetics, Inc. and Renaissance Health Service Corporation and its affiliates and subsidiaries
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Consents, Certifications and Other Exhibits
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23.1*
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Consent of Grant Thornton LLP
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31.1*
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Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002
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31.2*
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Certification of Principal Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002
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32.1*
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Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002
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101
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The following materials from Interleukin Genetics Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statements of Stockholders’ Deficit, (iv) the Statements of Cash Flows, and (v) Notes to Financial Statements.
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*
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Filed herewith.
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+
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The Securities and Exchange Commission with respect to certain portions of this exhibit has previously granted confidential treatment. Omitted portions have been filed separately with the Securities and Exchange Commission.
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!
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Confidential portions of such document have been filed separately with the SEC pursuant to a request for confidential treatment.
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@
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Management contract or compensatory plan, contract or arrangement.
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56 | ||
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INTERLEUKIN GENETICS, INC.
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By:
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/s/ Kenneth S. Kornman
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Kenneth S. Kornman
Chief Executive Officer |
Signatures
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Title
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Date Signed
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/s/ Kenneth S. Kornman
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Chief Executive Officer, Director
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March 20, 2014
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Kenneth s. Kornman
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(Principal Executive Officer)
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/s/ Eliot M. Lurier
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Chief Financial Officer
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March 20, 2014
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Eliot M. Lurier
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(Principal Financial and Accounting Officer)
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/s/ Lionel Carnot
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Director
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March 20, 2014
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Lionel Carnot
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/s/ Roger c. colman
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Director
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March 20, 2014
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Roger C. Colman
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/s/ Goran Jurcovic
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Director
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March 20, 2014
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Goran Jurcovic
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/s/ William C. Mills III
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Director
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March 20, 2014
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William C. Mills III
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/s/ Dayton Misfeldt
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Director
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March 20, 2014
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Dayton Misfeldt
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EXHIBIT 10.6.2
NON-QUALIFIED STOCK OPTION AGREEMENT
INTERLEUKIN GENETICS, INC.
AGREEMENT made as of the [_____________], 20[__], between Interleukin Genetics, Inc. (the “Company”), a Delaware corporation having a principal place of business at 135 Beaver Street, Waltham, Massachusetts 02452, and, a [director/consultant/employee] of the Company (the “Participant”).
WHEREAS, the Company desires to grant to the Participant an Option to purchase shares of its common stock, $.001 par value per share (the “Shares”), under and for the purposes set forth in the Company’s 2013 Employee, Director and Consultant Equity Incentive Plan (the “Plan”);
WHEREAS, the Company and the Participant understand and agree that any terms used and not defined herein have the same meanings as in the Plan; and
WHEREAS, the Company and the Participant each intend that the Option granted herein shall be a Non-Qualified Option.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto agree as follows:
1. | GRANT OF OPTION. |
The Company hereby grants to the Participant the right and option to purchase all or any part of an aggregate of [_____________] Shares, on the terms and conditions and subject to all the limitations set forth herein, under United States securities and tax laws, and in the Plan, which is incorporated herein by reference. The Participant acknowledges receipt of a copy of the Plan.
2. | PURCHASE PRICE. |
The purchase price of the Shares covered by the Option shall be $[_____] per Share, subject to adjustment, as provided in the Plan, in the event of a stock split, reverse stock split or other events affecting the holders of Shares after the date hereof(the “Purchase Price”). Payment shall be made in accordance with Paragraph 9 of the Plan.
3. | EXERCISABILITY OF OPTION. |
Subject to the terms and conditions set forth in this Agreement and the Plan, the Option granted hereby shall become exercisable as follows:
On the first anniversary of the date of this Agreement | up to [________] Shares | |
On the second anniversary of the date of this Agreement | an additional [________] Shares | |
On the third anniversary of the date of this Agreement | an additional [________] Shares | |
On the fourth anniversary of the date of this Agreement | an additional [________] Shares |
The foregoing rights are cumulative and are subject to the other terms and conditions of this Agreement and the Plan.
4. | TERM OF OPTION. |
This Option shall terminate ten years from the date of this Agreement, but shall be subject to earlier termination as provided herein or in the Plan.
If the Participant ceases to be an employee, director or consultant of the Company or of an Affiliate (for any reason other than the death or Disability of the Participant or termination of the Participant for “Cause” (as defined in the Plan)), the Option may be exercised, if it has not previously terminated, within three months after the date the Participant ceases to be an employee, director or consultant of the Company or an Affiliate, or within the originally prescribed term of the Option, whichever is earlier, but may not be exercised thereafter. In such event, the Option shall be exercisable only to the extent that the Option has become exercisable and is in effect at the date of such cessation of service.
Notwithstanding the foregoing, in the event of the Participant’s Disability or death within three months after the termination of service, the Participant or the Participant’s Survivors may exercise the Option within one year after the date of the Participant’s termination of service, but in no event after the date of expiration of the term of the Option.
In the event the Participant’s service is terminated by the Company or an Affiliate for “Cause” (as defined in the Plan), the Participant’s right to exercise any unexercised portion of this Option shall cease immediately as of the time the Participant is notified his or her service is terminated for “Cause,” and this Option shall thereupon terminate. Notwithstanding anything herein to the contrary, if subsequent to the Participant’s termination, but prior to the exercise of the Option, the Board of Directors of the Company determines that, either prior or subsequent to the Participant’s termination, the Participant engaged in conduct which would constitute “Cause,” then the Participant shall immediately cease to have any right to exercise the Option and this Option shall thereupon terminate.
In the event of the Disability of the Participant, as determined in accordance with the Plan, the Option shall be exercisable within one year after the Participant’s termination of service or, if earlier, within the term originally prescribed by the Option. In such event, the Option shall be exercisable:
2 |
(a) | to the extent that the Option has become exercisable but has not been exercised as of the date of Disability; and |
(b) | in the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of Disability of any additional vesting rights that would have accrued on the next vesting date had the Participant not become Disabled. The proration shall be based upon the number of days accrued in the current vesting period prior to the date of Disability. |
In the event of the death of the Participant while an employee, director or consultant of the Company or of an Affiliate, the Option shall be exercisable by the Participant’s Survivors within one year after the date of death of the Participant or, if earlier, within the originally prescribed term of the Option. In such event, the Option shall be exercisable:
(x) | to the extent that the Option has become exercisable but has not been exercised as of the date of death; and |
(y) | in the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of death of any additional vesting rights that would have accrued on the next vesting date had the Participant not died. The proration shall be based upon the number of days accrued in the current vesting period prior to the Participant’s date of death. |
5. | METHOD OF EXERCISING OPTION. |
Subject to the terms and conditions of this Agreement, the Option may be exercised by written notice to the Company or its designee, in substantially the form of Exhibit A attached hereto. Such notice shall state the number of Shares with respect to which the Option is being exercised and shall be signed by the person exercising the Option. Payment of the purchase price for such Shares shall be made in accordance with Paragraph 9 of the Plan. The Company shall deliver such Shares as soon as practicable after the notice shall be received, provided, however, that the Company may delay issuance of such Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including, without limitation, state securities or “blue sky” laws). The Shares as to which the Option shall have been so exercised shall be registered in the name of the person so exercising the Option (or, if the Option shall be exercised by the Participant and if the Participant shall so request in the notice exercising the Option, shall be registered in the Company’s share register in the name of the Participant and another person jointly, with right of survivorship) and shall be delivered as provided above to or upon the written order of the person exercising the Option. In the event the Option shall be exercised, pursuant to Section 4 hereof, by any person other than the Participant, such notice shall be accompanied by appropriate proof of the right of such person to exercise the Option. All Shares that shall be purchased upon the exercise of the Option as provided herein shall be fully paid and nonassessable.
3 |
6. | PARTIAL EXERCISE. |
Exercise of this Option to the extent above stated may be made in part at any time and from time to time within the above limits, except that no fractional share shall be issued pursuant to this Option.
7. | NON-ASSIGNABILITY. |
The Option shall not be transferable by the Participant otherwise than by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act or the rules thereunder. Except as provided in the previous sentence, the Option shall be exercisable, during the Participant’s lifetime, only by the Participant (or, in the event of legal incapacity or incompetency, by the Participant’s guardian or representative) and shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of the Option or of any rights granted hereunder contrary to the provisions of this Section 7, or the levy of any attachment or similar process upon the Option shall be null and void.
8. | NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. |
The Participant shall have no rights as a stockholder with respect to Shares subject to this Agreement until registration of the Shares in the Company’s share register in the name of the Participant. Except as is expressly provided in the Plan with respect to certain changes in the capitalization of the Company, no adjustment shall be made for dividends or similar rights for which the record date is prior to the date of such registration.
9. | ADJUSTMENTS. |
The Plan contains provisions covering the treatment of Options in a number of contingencies such as stock splits and mergers. Provisions in the Plan for adjustment with respect to stock subject to Options and the related provisions with respect to successors to the business of the Company are hereby made applicable hereunder and are incorporated herein by reference.
10. | TAXES. |
The Participant acknowledges that upon exercise of the Option the Participant will be deemed to have taxable income measured by the difference between the then fair market value of the Shares received upon exercise and the price paid for such Shares pursuant to this Agreement. The Participant acknowledges that any income or other taxes due from him or her with respect to this Option or the Shares issuable pursuant to this Option shall be the Participant’s responsibility.
The Participant agrees that the Company may withhold from the Participant’s remuneration, if any, the minimum statutory amount of federal, state and local withholding taxes attributable to such amount that is considered compensation includable in such person’s gross income. At the Company’s discretion, the amount required to be withheld may be withheld in cash from such remuneration, or in kind from the Shares otherwise deliverable to the Participant on exercise of the Option. The Participant further agrees that, if the Company does not withhold an amount from the Participant’s remuneration sufficient to satisfy the Company’s income tax withholding obligation, the Participant will reimburse the Company on demand, in cash, for the amount under-withheld.
4 |
11. | PURCHASE FOR INVESTMENT. |
Unless the offering and sale of the Shares to be issued upon the particular exercise of the Option shall have been effectively registered under the Securities Act of 1933, as now in force or hereafter amended (the “1933 Act”), the Company shall be under no obligation to issue the Shares covered by such exercise unless and until the following conditions have been fulfilled:
(a) | The person(s) who exercise the Option shall warrant to the Company, at the time of such exercise, that such person(s) are acquiring such Shares for their own respective accounts, for investment, and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring such Shares shall be bound by the provisions of the following legend which shall be endorsed upon the certificate(s) evidencing the Shares issued pursuant to such exercise: |
“The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws;” and
(b) | If the Company so requires, the Company shall have received an opinion of its counsel that the Shares may be issued upon such particular exercise in compliance with the 1933 Act without registration thereunder. Without limiting the generality of the foregoing, the Company may delay issuance of the Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including without limitation state securities or “blue sky” laws). |
12. | RESTRICTIONS ON TRANSFER OF SHARES. |
12.1 The Participant agrees that in the event the Company proposes to offer for sale to the public any of its equity securities and such Participant is requested by the Company and any underwriter engaged by the Company in connection with such offering to sign an agreement restricting the sale or other transfer of Shares, then it will promptly sign such agreement and will not transfer, whether in privately negotiated transactions or to the public in open market transactions or otherwise, any Shares or other securities of the Company held by him or her during such period as is determined by the Company and the underwriters, not to exceed 180 days following the closing of the offering, plus such additional period of time as may be required to comply with Marketplace Rule 2711 of the National Association of Securities Dealers, Inc. or similar rules thereto (such period, the “Lock-Up Period”). Such agreement shall be in writing and in form and substance reasonably satisfactory to the Company and such underwriter and pursuant to customary and prevailing terms and conditions. Notwithstanding whether the Participant has signed such an agreement, the Company may impose stop-transfer instructions with respect to the Shares or other securities of the Company subject to the foregoing restrictions until the end of the Lock-Up Period.
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12.2 The Participant acknowledges and agrees that neither the Company, its shareholders nor its directors and officers, has any duty or obligation to disclose to the Participant any material information regarding the business of the Company or affecting the value of the Shares before, at the time of, or following a termination of the employment of the Participant by the Company, including, without limitation, any information concerning plans for the Company to make a public offering of its securities or to be acquired by or merged with or into another firm or entity.
13. | NO OBLIGATION TO MAINTAIN RELATIONSHIP. |
The Company is not by the Plan or this Option obligated to continue the Participant as an employee, director or consultant of the Company or an Affiliate. The Participant acknowledges: (i) that the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (ii) that the grant of the Option is a one-time benefit which does not create any contractual or other right to receive future grants of options, or benefits in lieu of options; (iii) that all determinations with respect to any such future grants, including, but not limited to, the times when options shall be granted, the number of shares subject to each option, the option price, and the time or times when each option shall be exercisable, will be at the sole discretion of the Company; (iv) that the Participant’s participation in the Plan is voluntary; (v) that the value of the Option is an extraordinary item of compensation which is outside the scope of the Participant’s employment contract, if any; and (vi) that the Option is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.
14. | NOTICES. |
Any notices required or permitted by the terms of this Agreement or the Plan shall be given by recognized courier service, facsimile, registered or certified mail, return receipt requested, addressed as follows:
If to the Company:
Interleukin Genetics, Inc. |
135 Beaver Street |
Waltham, MA 02454 |
Attention: Chief Financial Officer |
6 |
If to the Participant:
or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given upon the earlier of receipt, one business day following delivery to a recognized courier service or three business days following mailing by registered or certified mail.
15. | GOVERNING LAW. |
This Agreement shall be construed and enforced in accordance with the law of the State of Delaware, without giving effect to the conflict of law principles thereof. For the purpose of litigating any dispute that arises under this Agreement, the parties hereby consent to exclusive jurisdiction in Massachusetts and agree that such litigation shall be conducted in the courts of Suffolk County, Massachusetts or the federal courts of the United States for the District of Massachusetts.
16. | BENEFIT OF AGREEMENT. |
Subject to the provisions of the Plan and the other provisions hereof, this Agreement shall be for the benefit of and shall be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto.
17. | ENTIRE AGREEMENT. |
This Agreement, together with the Plan, embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement 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, provided, however, in any event, this Agreement shall be subject to and governed by the Plan.
18. | MODIFICATIONS AND AMENDMENTS. |
The terms and provisions of this Agreement may be modified or amended as provided in the Plan.
19. | WAIVERS AND CONSENTS. |
Except as provided in the Plan, the terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.
7 |
20. DATA PRIVACY.
By entering into this Agreement, the Participant: (i) authorizes the Company and each Affiliate, and any agent of the Company or any Affiliate administering the Plan or providing Plan recordkeeping services, to disclose to the Company or any of its Affiliates such information and data as the Company or any such Affiliate shall request in order to facilitate the grant of options and the administration of the Plan; (ii) waives any data privacy rights he or she may have with respect to such information; and (iii) authorizes the Company and each Affiliate to store and transmit such information in electronic form.
[Remainder of Page Intentionally Left Blank]
8 |
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Participant has hereunto set his or her hand, all as of the day and year first above written.
INTERLEUKIN GENETICS, INC. | ||
By: | ||
Name: Title: | ||
Participant: |
9 |
Exhibit A
NOTICE OF EXERCISE OF NON-QUALIFIED STOCK OPTION
TO: Interleukin Genetics, Inc.
IMPORTANT NOTICE: This form of Notice of Exercise may only be used at such time as the Company has filed a Registration Statement with the Securities and Exchange Commission under which the issuance of the Shares for which this exercise is being made is registered and such Registration Statement remains effective.
Ladies and Gentlemen:
I hereby exercise my Non-Qualified Stock Option to purchase _________ shares (the “Shares”) of the common stock, $.001 par value, of Interleukin Genetics, Inc. (the “Company”), at the exercise price of $_______ per share, pursuant to and subject to the terms of that certain Non-Qualified Stock Option Agreement between the undersigned and the Company dated _______________.
I understand the nature of the investment I am making and the financial risks thereof. I am aware that it is my responsibility to have consulted with competent tax and legal advisors about the relevant national, state and local income tax and securities laws affecting the exercise of the Option and the purchase and subsequent sale of the Shares.
I am paying the option exercise price for the Shares as follows:
Please issue the Shares (check one):
¨ to me; or
¨ to me and ____________________________, as joint tenants with right of survivorship,
at the following address:
A-1 |
My mailing address for shareholder communications, if different from the address listed above, is:
Very truly yours, | ||
Participant (signature) | ||
Print Name | ||
Date | ||
Social Security Number |
A-2 |
EXHIBIT 10.6.3
INCENTIVE STOCK OPTION AGREEMENT
INTERLEUKIN GENETICS, INC.
AGREEMENT made as of the [_____] day of [_______] 20[___], between Interleukin Genetics, Inc. (the “Company”), a Delaware corporation having a principal place of business in Waltham, Massachusetts, and [_________________], an employee of the Company (the “Employee”).
WHEREAS, the Company desires to grant to the Employee an Option to purchase shares of its common stock, $.001 par value per share (the “Shares”), under and for the purposes set forth in the Company’s 2013 Employee, Director and Consultant Equity Incentive Plan (the “Plan”);
WHEREAS, the Company and the Employee understand and agree that any terms used and not defined herein have the same meanings as in the Plan; and
WHEREAS, the Company and the Employee each intend that the Option granted herein qualify as an ISO.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto agree as follows:
1. GRANT OF OPTION.
The Company hereby grants to the Employee the right and option to purchase all or any part of an aggregate of [_______________] Shares, on the terms and conditions and subject to all the limitations set forth herein, under United States securities and tax laws, and in the Plan, which is incorporated herein by reference. The Employee acknowledges receipt of a copy of the Plan.
2. PURCHASE PRICE.
The purchase price of the Shares covered by the Option shall be $[______] per Share, subject to adjustment, as provided in the Plan, in the event of a stock split, reverse stock split or other events affecting the holders of Shares after the date hereof (the “Purchase Price”). Payment shall be made in accordance with Paragraph 9 of the Plan.
3. EXERCISABILITY OF OPTION.
Subject to the terms and conditions set forth in this Agreement and the Plan, the Option granted hereby shall become exercisable as follows:
On the first anniversary of the date of this Agreement | up to [_________] Shares | |
On the second anniversary of the date of this Agreement | an additional [_________] Shares | |
On the third anniversary of the date of this Agreement | an additional [_________] Shares | |
On the fourth anniversary of the date of this Agreement | an additional [_________] Shares |
The foregoing rights are cumulative and are subject to the other terms and conditions of this Agreement and the Plan.
4. | TERM OF OPTION. |
This Option shall terminate ten years from the date of this Agreement or, if the Employee owns as of the date hereof more than 10% of the total combined voting power of all classes of capital stock of the Company or an Affiliate, five years from the date of this Agreement, but shall be subject to earlier termination as provided herein or in the Plan.
If the Employee ceases to be an employee of the Company or of an Affiliate (for any reason other than the death or Disability of the Employee or termination of the Employee’s employment for “Cause” (as defined in the Plan)), the Option may be exercised, if it has not previously terminated, within three months after the date the Employee ceases to be an employee of the Company or an Affiliate, or within the originally prescribed term of the Option, whichever is earlier, but may not be exercised thereafter except as set forth below. In such event, the Option shall be exercisable only to the extent that the Option has become exercisable and is in effect at the date of such cessation of employment.
If the Employee ceases to be an employee of the Company or of an Affiliate but continues after termination of employment to provide service to the Company or an Affiliate as a consultant, this Option shall continue to vest in accordance with Section 3 above as if this Option had not terminated until the Employee is no longer providing services to the Company. In such case, this Option shall automatically convert and be deemed a Non-Qualified Option as of the date that is three months from termination of the Employee's employment and this Option shall continue on the same terms and conditions set forth herein until such Employee is no longer providing service to the Company or an Affiliate.
Notwithstanding the foregoing, in the event of the Employee’s Disability or death within three months after the termination of employment, the Employee or the Employee’s Survivors may exercise the Option within one year after the date of the Employee’s termination of employment, but in no event after the date of expiration of the term of the Option.
In the event the Employee’s employment is terminated by the Employee’s employer for “Cause” (as defined in the Plan), the Employee’s right to exercise any unexercised portion of this Option shall cease immediately as of the time the Employee is notified his or her employment is terminated for “Cause,” and this Option shall thereupon terminate. Notwithstanding anything herein to the contrary, if subsequent to the Employee’s termination as an employee, but prior to the exercise of the Option, the Board of Directors of the Company determines that, either prior or subsequent to the Employee’s termination, the Employee engaged in conduct which would constitute “Cause,” then the Employee shall immediately cease to have any right to exercise the Option and this Option shall thereupon terminate.
In the event of the Disability of the Employee, as determined in accordance with the Plan, the Option shall be exercisable within one year after the Employee’s termination of employment or, if earlier, within the term originally prescribed by the Option. In such event, the Option shall be exercisable:
2 |
(a) | to the extent that the Option has become exercisable but has not been exercised as of the date of Disability; and |
(b) | in the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of Disability of any additional vesting rights that would have accrued on the next vesting date had the Employee not become Disabled. The proration shall be based upon the number of days accrued in the current vesting period prior to the date of Disability. |
In the event of the death of the Employee while an employee of the Company or of an Affiliate, the Option shall be exercisable by the Employee’s Survivors within one year after the date of death of the Employee or, if earlier, within the originally prescribed term of the Option. In such event, the Option shall be exercisable:
(x) | to the extent that the Option has become exercisable but has not been exercised as of the date of death; and |
(y) | in the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of death of any additional vesting rights that would have accrued on the next vesting date had the Employee not died. The proration shall be based upon the number of days accrued in the current vesting period prior to the Employee’s date of death. |
5. | METHOD OF EXERCISING OPTION. |
Subject to the terms and conditions of this Agreement, the Option may be exercised by written notice to the Company or its designee, in substantially the form of Exhibit A attached hereto. Such notice shall state the number of Shares with respect to which the Option is being exercised and shall be signed by the person exercising the Option. Payment of the purchase price for such Shares shall be made in accordance with Paragraph 9 of the Plan. The Company shall deliver such Shares as soon as practicable after the notice shall be received, provided, however, that the Company may delay issuance of such Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including, without limitation, state securities or “blue sky” laws). The Shares as to which the Option shall have been so exercised shall be registered in the Company’s share register in the name of the person so exercising the Option (or, if the Option shall be exercised by the Employee and if the Employee shall so request in the notice exercising the Option, shall be registered in the name of the Employee and another person jointly, with right of survivorship) and shall be delivered as provided above to or upon the written order of the person exercising the Option. In the event the Option shall be exercised, pursuant to Section 4 hereof, by any person other than the Employee, such notice shall be accompanied by appropriate proof of the right of such person to exercise the Option. All Shares that shall be purchased upon the exercise of the Option as provided herein shall be fully paid and nonassessable.
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6. | PARTIAL EXERCISE. |
Exercise of this Option to the extent above stated may be made in part at any time and from time to time within the above limits, except that no fractional share shall be issued pursuant to this Option.
7. | NON-ASSIGNABILITY. |
The Option shall not be transferable by the Employee otherwise than by will or by the laws of descent and distribution. The Option shall be exercisable, during the Employee’s lifetime, only by the Employee (or, in the event of legal incapacity or incompetency, by the Employee’s guardian or representative) and shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of the Option or of any rights granted hereunder contrary to the provisions of this Section 7, or the levy of any attachment or similar process upon the Option shall be null and void.
8. | NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. |
The Employee shall have no rights as a stockholder with respect to Shares subject to this Agreement until registration of the Shares in the Company’s share register in the name of the Employee. Except as is expressly provided in the Plan with respect to certain changes in the capitalization of the Company, no adjustment shall be made for dividends or similar rights for which the record date is prior to the date of such registration.
9. | ADJUSTMENTS. |
The Plan contains provisions covering the treatment of Options in a number of contingencies such as stock splits and mergers. Provisions in the Plan for adjustment with respect to stock subject to Options and the related provisions with respect to successors to the business of the Company are hereby made applicable hereunder and are incorporated herein by reference.
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10. | TAXES. |
The Employee acknowledges that any income or other taxes due from him or her with respect to this Option or the Shares issuable pursuant to this Option shall be the Employee’s responsibility.
In the event of a Disqualifying Disposition (as defined in Section 15 below) or if the Option is converted into a Non-Qualified Option and such Non-Qualified Option is exercised, the Company may withhold from the Employee’s remuneration, if any, the minimum statutory amount of federal, state and local withholding taxes attributable to such amount that is considered compensation includable in such person’s gross income. At the Company’s discretion, the amount required to be withheld may be withheld in cash from such remuneration, or in kind from the Shares otherwise deliverable to the Employee on exercise of the Option. The Employee further agrees that, if the Company does not withhold an amount from the Employee’s remuneration sufficient to satisfy the Company’s income tax withholding obligation, the Employee will reimburse the Company on demand, in cash, for the amount under-withheld.
11. | PURCHASE FOR INVESTMENT. |
Unless the offering and sale of the Shares to be issued upon the particular exercise of the Option shall have been effectively registered under the Securities Act of 1933, as now in force or hereafter amended (the “1933 Act”), the Company shall be under no obligation to issue the Shares covered by such exercise unless and until the following conditions have been fulfilled:
(a) | The person(s) who exercise the Option shall warrant to the Company, at the time of such exercise, that such person(s) are acquiring such Shares for their own respective accounts, for investment, and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring such Shares shall be bound by the provisions of the following legend which shall be endorsed upon the certificate(s) evidencing the Shares issued pursuant to such exercise: |
“The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws;” and
(b) | If the Company so requires, the Company shall have received an opinion of its counsel that the Shares may be issued upon such particular exercise in compliance with the 1933 Act without registration thereunder. Without limiting the generality of the foregoing, the Company may delay issuance of the Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including without limitation state securities or “blue sky” laws). |
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12. | RESTRICTIONS ON TRANSFER OF SHARES. |
12.1 The Employee agrees that in the event the Company proposes to offer for sale to the public any of its equity securities and such Employee is requested by the Company and any underwriter engaged by the Company in connection with such offering to sign an agreement restricting the sale or other transfer of Shares, then it will promptly sign such agreement and will not transfer, whether in privately negotiated transactions or to the public in open market transactions or otherwise, any Shares or other securities of the Company held by him or her during such period as is determined by the Company and the underwriters, not to exceed 180 days following the closing of the offering, plus such additional period of time as may be required to comply with Marketplace Rule 2711 of the National Association of Securities Dealers, Inc. or similar rules thereto (such period, the “Lock-Up Period”). Such agreement shall be in writing and in form and substance reasonably satisfactory to the Company and such underwriter and pursuant to customary and prevailing terms and conditions. Notwithstanding whether the Employee has signed such an agreement, the Company may impose stop-transfer instructions with respect to the Shares or other securities of the Company subject to the foregoing restrictions until the end of the Lock-Up Period.
12.2 The Employee acknowledges and agrees that neither the Company, its shareholders nor its directors and officers, has any duty or obligation to disclose to the Employee any material information regarding the business of the Company or affecting the value of the Shares before, at the time of, or following a termination of the employment of the Employee by the Company, including, without limitation, any information concerning plans for the Company to make a public offering of its securities or to be acquired by or merged with or into another firm or entity.
13. | NO OBLIGATION TO EMPLOY. |
The Company is not by the Plan or this Option obligated to continue the Employee as an employee of the Company or an Affiliate. The Employee acknowledges: (i) that the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (ii) that the grant of the Option is a one-time benefit which does not create any contractual or other right to receive future grants of options, or benefits in lieu of options; (iii) that all determinations with respect to any such future grants, including, but not limited to, the times when options shall be granted, the number of shares subject to each option, the option price, and the time or times when each option shall be exercisable, will be at the sole discretion of the Company; (iv) that the Employee’s participation in the Plan is voluntary; (v) that the value of the Option is an extraordinary item of compensation which is outside the scope of the Employee’s employment contract, if any; and (vi) that the Option is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.
14. | OPTION IS INTENDED TO BE AN ISO. |
The parties each intend that the Option be an ISO so that the Employee (or the Employee’s Survivors) may qualify for the favorable tax treatment provided to holders of Options that meet the standards of Section 422 of the Code. Any provision of this Agreement or the Plan which conflicts with the Code so that this Option would not be deemed an ISO is null and void and any ambiguities shall be resolved so that the Option qualifies as an ISO. Nonetheless, if the Option is determined not to be an ISO, the Employee understands that neither the Company nor any Affiliate is responsible to compensate him or her or otherwise make up for the treatment of the Option as a Non-Qualified Option and not as an ISO. The Employee should consult with the Employee’s own tax advisors regarding the tax effects of the Option and the requirements necessary to obtain favorable tax treatment under Section 422 of the Code, including, but not limited to, holding period requirements.
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Notwithstanding the foregoing, to the extent that the Option is not deemed to be an ISO pursuant to Section 422(d) of the Code because the aggregate fair market value (determined as of the date hereof) of any of the Shares with respect to which this ISO is granted becomes exercisable for the first time during any calendar year in excess of $100,000, the portion of the Option representing such excess value shall be treated as a Non-Qualified Option and the Employee shall be deemed to have taxable income measured by the difference between the then fair market value of the Shares received upon exercise and the price paid for such Shares pursuant to this Agreement.
15. | NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. |
The Employee agrees to notify the Company in writing immediately after the Employee makes a Disqualifying Disposition of any of the Shares acquired pursuant to the exercise of the Option. A Disqualifying Disposition is defined in Section 424(c) of the Code and includes any disposition (including any sale) of such Shares before the later of (a) two years after the date the Employee was granted the Option or (b) one year after the date the Employee acquired Shares by exercising the Option, except as otherwise provided in Section 424(c) of the Code. If the Employee has died before the Shares are sold, these holding period requirements do not apply and no Disqualifying Disposition can occur thereafter.
16. | NOTICES. |
Any notices required or permitted by the terms of this Agreement or the Plan shall be given by recognized courier service, facsimile, registered or certified mail, return receipt requested, addressed as follows:
If to the Company:
Interleukin Genetics, Inc. |
135 Beaver Street |
Waltham, MA 02452 |
Attention: Chief Financial Officer |
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If to the Employee:
or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given upon the earlier of receipt, one business day following delivery to a recognized courier service or three business days following mailing by registered or certified mail.
17. | GOVERNING LAW. |
This Agreement shall be construed and enforced in accordance with the law of the State of Delaware, without giving effect to the conflict of law principles thereof. For the purpose of litigating any dispute that arises under this Agreement, the parties hereby consent to exclusive jurisdiction in Massachusetts and agree that such litigation shall be conducted in the courts of Suffolk County, Massachusetts or the federal courts of the United States for the District of Massachusetts.
18. | BENEFIT OF AGREEMENT. |
Subject to the provisions of the Plan and the other provisions hereof, this Agreement shall be for the benefit of and shall be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto.
19. | ENTIRE AGREEMENT. |
This Agreement, together with the Plan, embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement 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, provided, however, in any event, this Agreement shall be subject to and governed by the Plan.
20. | MODIFICATIONS AND AMENDMENTS. |
The terms and provisions of this Agreement may be modified or amended as provided in the Plan.
21. | WAIVERS AND CONSENTS. |
Except as provided in the Plan, the terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.
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22. DATA PRIVACY.
By entering into this Agreement, the Employee: (i) authorizes the Company and each Affiliate, and any agent of the Company or any Affiliate administering the Plan or providing Plan recordkeeping services, to disclose to the Company or any of its Affiliates such information and data as the Company or any such Affiliate shall request in order to facilitate the grant of options and the administration of the Plan; (ii) waives any data privacy rights he or she may have with respect to such information; and (iii) authorizes the Company and each Affiliate to store and transmit such information in electronic form.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Employee has hereunto set his or her hand, all as of the day and year first above written.
INTERLEUKIN GENETICS, INC. | ||
By: | ||
Name: Title: | ||
[Employee] |
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Exhibit A
NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION
TO: Interleukin Genetics, Inc.
IMPORTANT NOTICE: This form of Notice of Exercise may only be used at such time as the Company has filed a Registration Statement with the Securities and Exchange Commission under which the issuance of the Shares for which this exercise is being made is registered and such Registration Statement remains effective.
Ladies and Gentlemen:
I hereby exercise my Incentive Stock Option to purchase ____________ shares (the “Shares”) of the common stock, $.001 par value, of Interleukin Genetics, Inc. (the “Company”), at the exercise price of $______ per share, pursuant to and subject to the terms of that certain Incentive Stock Option Agreement between the undersigned and the Company dated __________________.
I understand the nature of the investment I am making and the financial risks thereof. I am aware that it is my responsibility to have consulted with competent tax and legal advisors about the relevant national, state and local income tax and securities laws affecting the exercise of the Option and the purchase and subsequent sale of the Shares.
I am paying the option exercise price for the Shares as follows:
Please issue the Shares (check one):
¨ to me; or
¨ to me and ____________________________, as joint tenants with right of survivorship,
at the following address:
A-1 |
My mailing address for shareholder communications, if different from the address listed above, is:
Very truly yours, | ||
Employee (signature) | ||
Print Name | ||
Date | ||
Social Security Number |
A-2 |
EXHIBIT 10.22
FIRST AMENDED PREFERRED
PARTICIPATION AGREEMENT
This FIRST AMENDED PREFERRED PARTICIPATION AGREEMENT (this “First Amended Agreement”) is entered into as of November 1, 2013 (“Effective Date”), by and between Interleukin Genetics, Inc., a Delaware corporation with an address of 135 Beaver Street, Waltham, MA 02452, (“Interleukin”), and Renaissance Health Service Corporation, and on behalf of its affiliates, with its principal place of business at 4100 Okemos Road, Okemos, Michigan 48864, (collectively, “RHSC”). Interleukin and RHSC may be referred to herein individually as a “Party” and collectively as the “Parties.”
WHEREAS, Interleukin is the owner of or otherwise controls certain patents and technology related to its proprietary Tests (defined below) that may be used for the identification of persons at risk for developing periodontal disease; and
WHEREAS, RHSC desires to utilize the Tests in conjunction with dental benefit plans it offers and/or administrates to identify individual periodontal disease and tooth loss risk patterns in RHSC Customers; and WHEREAS, the Parties previously entered into an initial Preferred Participation Agreement, which established terms for the provision of the Tests to RHSC Customers and the associated payment to Interleukin by RHSC for such Tests, which initial Preferred Participation Agreement had an effective date of February 25, 2013 (the “Initial Preferred Participation Agreement”); and
WHEREAS, the Parties now desire to amend and restate the terms of that Initial Preferred Participation Agreement, as set forth in this First Amended Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the Parties hereto, intending to be legally bound, hereby agree to enter into this First Amended Agreement.
SECTION 1
DEFINITIONS
Whenever used in this First Amended Agreement with an initial capital letter, the following terms defined in this Section 1 shall have the meanings specified.
1.1 | “Affiliate” means, with respect to any person or entity, any other person or entity which controls, is controlled by, or is under common control with such person or entity. An entity shall only be deemed an Affiliate for the period that such control exists. For purposes of this definition, the following entities shall be deemed “Affiliates” of RHSC as of the Effective Date: Delta Dental Plan of Michigan, Inc.; Delta Dental Plan of Ohio, Inc.; Delta Dental Plan of Indiana, Inc.; Delta Dental of Tennessee; Delta Dental Plan of New Mexico, Inc.; Delta Dental of Kentucky, Inc.; Delta Dental of North Carolina; Delta Dental Plan of Arkansas, Inc.; Renaissance Life & Health Insurance Company of America; and, Renaissance Health Insurance Company of New York. The Parties acknowledge and agree that RHSC may subsequently acquire or otherwise affiliate with one or more additional entities involved in the sale and/or administration of dental benefit plans and that such additional entity shall constitute an “Affiliate” within the meaning of this definition provided the entity controls, is controlled by, or is under common control by RHSC. |
Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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1.2 | “Applicable Laws and Standards” means all laws, rules, regulations, and licensing requirements that are now or hereafter promulgated by any local, state, and federal governmental authority or agency that governs or applies to their respective duties and obligations hereunder and with any and all rules and/or standards that are now or hereafter promulgated by any accrediting or administrative body that governs or applies to their respective duties and obligations hereunder. |
1.3 | “Beneficial Use” means that reimbursement for selected preventive and therapeutic procedures for a specific patient in the covered group beyond the standard coverage in the plan are guided in part by results of the Test. |
1.4 | “Client” means an organization or corporation that purchases dental benefit policies on behalf of its employees or members. “Client” may also include an individual who purchases a dental benefit policy from an Affiliate of RHSC. |
1.5 | “Clinical Information” means all relevant medical information associated with each Sample. |
1.6 | “Confidential Information” means all information designated confidential or proprietary by a Party, or that otherwise should be reasonably understood from the nature of the information itself or the circumstances of such information’s disclosure to be confidential, whether written, oral or otherwise, and including, but not limited to, know-how or other information, whether or not patentable, regarding a Party’s technology, products, business information or objectives that are designated or marked as “CONFIDENTIAL” or orally or visually identified as “CONFIDENTIAL” and confirmed as such in writing within thirty (30) days after such disclosure. |
1.7 | “Customer” means any person who receives dental benefits from a policy issued by an Affiliate of RHSC or is covered by a self-funded dental benefits plan administered by an Affiliate of RHSC and that reimburses for the Licensed Product, whether as part of an employer group or via an individual policy. |
1.8 | “RHSC Entity” means any of the RHSC Affiliate member companies, as defined herein. |
1.9 | “Dentist” means a doctor of dentistry duly licensed and qualified under the applicable laws of the jurisdiction where services are being rendered and who has executed a Participating Dentist Agreement with an Affiliate of RHSC. |
Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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1.10 | “Kit” means the package containing the needed sampling materials, consent forms and other needed information to permit the collection of a Sample. |
1.11 | “Licensed Product” means any Test that uses, incorporates, is comprised of, or contains a Licensed Technology. |
1.12 | “Licensed Technology” means any technology or intellectual property controlled by Interleukin at any time during the Term that is related to the Genetic Risk Assessment Test for periodontal disease, including various versions of PST®. |
1.13 | “Processed Test” means a Test performed on a Sample that has been processed by Interleukin or its agent or contractor under this First Amended Agreement and the subsequent reporting of the results of such Test. |
1.14 | “Reimbursement Code” means the American Dental Association Code on Dental Procedures and Nomenclature (CDT) procedure code by which the Tests are referenced by Dentists for reimbursement, as may be amended (currently 0421). |
1.15 | “Sample” means genetic information collected from Customers on properly stored cheek swabs or other materials provided to Interleukin by a Dentist or a Customer under this First Amended Agreement. |
1.16 | “Territory” means any state or jurisdiction in which RHSC and/or its applicable affiliate is licensed or otherwise authorized to sell or administer dental benefit programs, whether group or individual and whether insurance or administrative services only. |
1.17 | “Test” means proprietary multi-locus single nucleotide polymorphism(s) (“SNPs”) genetic risk assessment tests for periodontal disease and tooth loss including Interleukin’s PST® tests, including as any such Test may be altered, improved or otherwise modified by Interleukin and/or its agents, without limitation. |
SECTION 2
PRICING AND REIMBURSEMENT
2.1 | Preferred Pricing Terms. |
(a) During the Term (as defined in Section 7.1) of this First Amended Agreement and subject to Sections 2.1(b) and 2.1(c), Interleukin agrees that it shall provide the following initial reimbursement pricing for the Processed Tests for Customers: $[***] per Processed Test (“Preferred Pricing”). The Preferred Pricing may be amended upon mutual written agreement of Interleukin and RHSC.
Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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(b) Interleukin agrees that, so long as RHSC and its Affiliates comply with the terms and conditions of this First Amended Agreement, Interleukin shall provide the Preferred Pricing detailed in Section 2.1(a). In the event that Interleukin negotiates pricing for the Processed Test relative to any third party that is more favorable than the Preferred Pricing, Interleukin shall also extend the more favorable pricing to RHSC and its Affiliates. The Parties agree that RHSC and its Affiliates shall thus always be offered during the term of this First Amended Agreement the lowest market price offered by Interleukin to any person or party, without limitation, relative to the Processed Test, whether the Preferred Pricing or a lower market price.
(c) RHSC and its Affiliates will continue to receive the Preferred Pricing (or any lower market price as set forth above in Section 2.1(b)) during the Term, as defined below, only for so long as the following milestones are satisfied (“Preferred Pricing Milestones”):
(i) Affiliates of RHSC continue to (a) work to develop and to offer dental benefit plans for which a significant portion of employees of RHSC’s Affiliates’ Clients are eligible that provides for Beneficial Use of the Test and full reimbursement (at the prices herein) of the Tests (the “Reimbursement Plan”) and (b) exercise their commercially-reasonable best efforts to maximize the number of Customers that offer a Reimbursement Plan.
(ii) RHSC and its Affiliates are not incorporating in a Reimbursement Plan any third party’s test technology for stratifying preventive care needs during the Term.
2.2 | Reimbursement for Tests. Unless prohibited by applicable state or federal law, RHSC will, using the Reimbursement Code, reimburse Interleukin for each Processed Test. All payments shall be made by RHSC within thirty (30) days after the end of each calendar month commencing with the calendar month in which the first Processed Test is completed. All payments shall be made by wire transfer in accordance with instructions given to RHSC in writing from time to time by Interleukin. |
2.3 | Overdue Payments. Any payments not made by RHSC within the time period set forth in this Section shall bear interest at a rate of one percent (1%) per month from the due date until paid in full; provided that, in the case of audit adjustments pursuant to Section 4 of this First Amended Agreement, such interest shall only be payable to the extent of underpayments in excess of ten percent (10%). |
2.4 | Taxes. Any payments made by RHSC under this First Amended Agreement shall be free and clear of any taxes, duties, levies, fees or charges that may be owed by RHSC, and such amounts shall be the sole responsibility of RHSC and be paid pursuant to any Applicable Laws and Standards, including, but not limited to, United States federal, state or local tax law (“Taxes”). Upon either Party’s request, the other Party shall submit to the requesting Party reasonable proof of payment of the Taxes to the proper authority, together with an accounting of the calculations of such Taxes, within ten (10) days after such request. The Parties will cooperate reasonably in completing and filing documents required under the provisions of any Applicable Laws and Standards in connection with making any required tax payment, or in connection with any claim to a refund of or credit for any such payment. |
Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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SECTION 3
OBLIGATIONS OF THE PARTIES
3.1 RHSC. In order to receive Preferred Pricing (or any lower market price as set forth above in Section 2.1(b)) under this First Amended Agreement, RHSC agrees to:
(a) reimburse Interleukin for Processed Tests in accordance with Section 2 of this First Amended Agreement;
(b) work to develop Customer dental benefits plans that offer the Test to Customers (“Policies”), consistent with Applicable laws and Standards;
(c) make commercially-reasonable best efforts to implement and begin to sell the Policies to potential Customers; and
(d) make commercially-reasonable best efforts to sell Policies to Customers.
3.2 | Submission of Samples. Unless prohibited by Applicable Laws and Standards, Customers obtaining Tests directly from Interleukin or from Dentists using the Test in their practice for Customers will submit Samples and Clinical Information to Interleukin, as needed. RHSC acknowledges and agrees that Interleukin may, in Interleukin’s reasonable discretion, require that the Dentists undertake certain activities and procure certain signed documents from Customers before processing any Tests. |
3.3 | Processed Tests. Unless prohibited by Applicable Laws and Standards, Interleukin or designees will process and report to the individual submitting a sample, and/or a requesting Dentist, the Test results of a Sample within ten (10) business days of receipt of such Sample. |
3.4 | Test Results. Customers will be given the opportunity to have the outcome results of their Test communicated to RHSC for the purpose of becoming potentially eligible for increased preventive care coverage from an Affiliate of RHSC. RHSC agrees that Interleukin Genetics shall send no genetic information to RHSC without the prior consent of any Customers, as provided for by Applicable Laws and Standards. |
Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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3.5 | Identification of Customers. RHSC and Interleukin or its designees shall install, at RHSC’s expense, the appropriate systems and communications necessary to permit Interleukin or its designees to identify Customers, consistent with Applicable Laws and Standards. |
3.6 | Compliance with Law. Both Parties and their Affiliates shall comply with applicable statutory and regulatory requirements, including but not limited to those relating to confidentiality of Customers’ protected health information. |
3.7 | Confidential Information. Any Confidential Information disclosed by a Party (the “Disclosing Party”) to another Party (the “Receiving Party”) pursuant to this First Amended Agreement shall be protected by the Receiving Party using the same degree of care as the Receiving Party uses to protect its own confidential information of a like nature, but no less than a reasonable degree of care, to prevent unauthorized use or disclosure of the Confidential Information. The Receiving Party shall not use any Confidential Information of the Disclosing Party without the written consent of the Disclosing Party, except as permitted under this First Amended Agreement. Notwithstanding the foregoing, the Receiving Party may only disclose and disseminate Confidential Information of the Disclosing Party to those of its employees or contractors who have a bona fide need to know for the purposes of this First Amended Agreement, provided such employees or contractors have been advised of the confidential nature of such information and are bound by an obligation of confidentiality substantially similar to the confidentiality obligations in this First Amended Agreement. The Receiving Party's obligations of confidentiality will continue during the Term and for a period of five (5) years from the termination date of this First Amended Agreement unless a longer period is otherwise agreed to by the Parties. Promptly following the termination date, the Receiving Party shall return all Confidential Information to the Disclosing Party. The Receiving Party will have no obligations under this Section with respect to information which: |
(a) | was known to it prior to receipt hereunder, as demonstrated by written records; or |
(b) | at the time of disclosure was generally available to the public, or which after disclosure becomes generally available to the public through no action or inaction attributable to the Receiving Party; or |
(c) | is hereafter made available to the Receiving Party for use or disclosure from any third party having a right to do so; or |
(d) | is independently developed by the Receiving Party, as demonstrated by written records; or |
(e) | the Receiving Party is required to divulge either by a court of law or in order to comply with any federal, national, state, provincial or local law or regulation (after providing the Disclosing Party with reasonable notice of such requirement and with an opportunity to oppose or limit such disclosure or to obtain a protective order). |
Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
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This Section 3.7 shall survive the expiration or termination of this First Amended Agreement.
3.8 | NO WARRANTY TO RHSC. FOR AVOIDANCE OF DOUBT, INTERLEUKIN MAKES NO REPRESENTATIONS OR WARRANTIES TO RHSC, AND RHSC MAY NOT MAKE ANY REPRESENTATIONS OR WARRANTIES ON BEHALF OF INTERLEUKIN, WITH RESPECT TO THE TESTS OR SERVICES. |
SECTION 4
MAINTENANCE OF RECORDS
4.1 | Records; Audit Rights. Both Parties shall keep and maintain, and shall require their respective Affiliates and agents to keep and maintain accurate and complete books and records in connection with the reimbursement of Processed Tests hereunder, as are necessary to allow the accurate calculation consistent with generally accepted accounting principles of the payments due to Interleukin under this First Amended Agreement. Either Party has the right to engage an independent certified public accounting firm reasonably acceptable to the other Party, at such Party’s own expense. Such firm shall have the right to examine the relevant books and records of the audited Party as may be reasonably necessary to determine and/or verify the amount of payments due hereunder. Such examination shall be conducted, and each Party shall make its records available, during normal business hours upon at least thirty (30) days prior written notice, which shall take place at the facility(ies) where such records are maintained. Such audit rights shall not be exercised by either Party more than once per calendar year. Each such audit shall be limited to pertinent books and records for any year ending not more than twenty four (24) months prior to the date of request; provided, that, neither Party shall be permitted to audit the same period of time more than once. The independent accounting firm will prepare and provide to each Party a written report stating whether the reports submitted and payments made are correct or incorrect and the specific details concerning any discrepancies and may not reveal to either Party any information learned in the course of such audit other than the amount of any such discrepancies. Both Parties agree to hold in strict confidence all information disclosed to it, except to the extent necessary for either Party to enforce its rights under this First Amended Agreement or if disclosure is required by Applicable Laws and Standards. |
4.2 | Audit Adjustments. In the event there was an underpayment by RHSC hereunder, RHSC shall promptly (but in no event later than thirty (30) days after RHSC’s receipt of the independent auditor’s report) make payment to Interleukin of any additional amounts due. In the event that there was an overpayment by RHSC hereunder, Interleukin shall promptly (but in no event later than thirty (30) days after Interleukin’s receipt of the independent auditor’s report) refund to RHSC the excess amount. Receipt of any such independent auditor’s report shall not bar a Party from contesting the results of any underlying audit. Each Party shall bear the full cost of any audit the Party initiates. |
Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
7 |
SECTION 5
REPRESENTATIONS AND WARRANTIES
5.1 | RHSC Representations and Warranties. RHSC hereby represents and warrants, on behalf of itself and its Affiliates, that: |
(a) | it is duly organized and validly existing under the laws of its jurisdiction of incorporation, and has the full corporate power and authority to enter into this First Amended Agreement and to carry out the provisions hereof and thereof, and the person executing this First Amended Agreement on its behalf has been duly authorized to do so by all requisite corporate action; |
(b) | it and each Affiliate is duly licensed and certified to perform its obligations under this First Amended Agreement, to the extent applicable; |
(c) | this First Amended Agreement is legally binding upon it and upon its successors, heirs and permitted assigns, and is enforceable in accordance with its terms; |
(d) | the execution, delivery and performance of this First Amended Agreement and the obligations hereunder and thereunder by it does not conflict with any agreement, instrument or understanding, oral or written, now existing or to be entered into during the term of this First Amended Agreement, to which it or an Affiliate is a party or by which it or an Affiliate is a party or by which it or an Affiliate may be bound, nor violate any material law or regulation of any court, governmental body or administrative or other agency having jurisdiction over it or an Affiliate; |
(e) | it has taken the appropriate legal and/or contractual steps to ensure that its employees and/or contractors comply fully with the terms of this First Amended Agreement. |
5.2 | Interleukin Representations and Warranties. Interleukin hereby represents and warrants that: |
(f) | it is duly organized and validly existing under the laws of its jurisdiction of incorporation, and has the full corporate power and authority to enter into this First Amended Agreement and to carry out the provisions hereof and thereof, and the person executing this First Amended Agreement on its behalf has been duly authorized to do so by all requisite corporate action; |
Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
8 |
(g) | it is duly licensed and certified to perform its obligations under this First Amended Agreement; |
(h) | this First Amended Agreement is legally binding upon it and upon its successors, heirs and permitted assigns, and is enforceable in accordance with its terms; and |
(i) | the execution, delivery and performance of this First Amended Agreement and the obligations hereunder and thereunder by it does not conflict with any agreement, instrument or understanding, oral or written, now existing or to be entered into during the term of this First Amended Agreement, to which it is a party or by which it is a party or by which it may be bound, nor violate any material law or regulation of any court, governmental body or administrative or other agency having jurisdiction over it. |
SECTION 6
THIRD PARTY INFRINGEMENT
6.1 | Infringement Notice. In the event RHSC or Interleukin becomes aware of any possible infringement of any Licensed Technology relative to the effectuation of this First Amended Agreement (an “Infringement”), such Party shall promptly notify the other Party and provide it with all details of such Infringement of which it is aware (each, an “Infringement Notice”). |
6.2 | Enforcement. Interleukin shall have the right and option, at its discretion, to address any such Infringement of the Licensed Technology, which may include the institution of legal proceedings or other action. Unless RHSC was the proximate cause of any such Infringement, and in such event only to the extent to which RHSC was the proximate cause, Interleukin shall bear its own costs relative to any such enforcement action. |
6.3 | Recoveries. Any amounts recovered pursuant to this Section with respect to Licensed Technology, whether by settlement or judgment, shall be allocated in the following order: (i) first, to reimburse Interleukin and RHSC for their reasonable out-of-pocket expenses in making such recovery (which amounts shall be allocated pro rata according to such expenses if insufficient to cover the totality of such expenses); and (ii) one hundred percent (100%) to Interleukin. |
Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
9 |
SECTION 7
TERM AND TERMINATION
7.1 | Term. This First Amended Agreement shall remain in full force and effect for three (3) years from February 25, 2013 (“Term”), unless terminated earlier pursuant to Section 7.2. |
7.2 | Termination. This Agreement can be terminated by: |
(a) | the mutual written agreement of the Parties; |
(b) | either Party becoming the subject of any voluntary or involuntary bankruptcy or other insolvency, liquidation or other similar proceeding, or making any composition or arrangement for the benefit of its creditors, or having a receiver, administrative receiver, liquidator or administrator appointed over all or any part of its assets or business; or |
(c) | in the event of a breach of this First Amended Agreement, which remains uncured by the non-breaching Party for a period of thirty (30) days from receipt of notice to effect a cure of the breach. |
7.3 | Effect of Termination; Rights and Obligations. In the event that this First Amended Agreement expires or is terminated by either Party pursuant to Section 7.2, all further rights and obligations of the Parties under this First Amended Agreement shall terminate immediately, without any further action required by either Party. Notwithstanding the foregoing, the expiration or termination of this First Amended Agreement by either Party will not affect the rights and obligations of the Parties accrued prior to the termination date. Sections 3.7, 7.3, 8, 9 and 10 shall survive the expiration or termination of this First Amended Agreement. |
SECTION 8
DISPUTE RESOLUTION
In the event that any dispute relating to this First Amended Agreement arises between Interleukin and RHSC, either Party may, by written notice, call a meeting regarding the dispute to be attended by executive officers of each Party who shall attempt in good faith to resolve the dispute. If the dispute cannot be resolved through executive negotiation as described in the preceding sentence within thirty (30) days from the date of the initial notice, and if any Party wishes to pursue the dispute, the dispute shall be submitted to binding arbitration in accordance with the rules of the American Arbitration Association for commercial arbitration. In no event may the arbitration be initiated more than one year after the date one Party gave written notice of the dispute to the other Party. The arbitrators shall have no power to award any punitive damages or exemplary damages or to ignore or vary the terms of this First Amended Agreement and shall be bound by the laws of the Commonwealth of Massachusetts, without regard to provisions relating to the conflict of laws. Each Party acknowledges that it is knowingly and voluntarily waiving its right to judicial action (except to enforce the decision of the arbitrator(s)) and to a trial by jury, and that all arbitration proceedings shall be exclusively between the two Parties to this First Amended Agreement.
Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
10 |
SECTION 9
INDEMNIFICATION
9.1 | Indemnification by RHSC. RHSC will indemnify and hold harmless Interleukin, its affiliates and their respective directors, officers, employees and agents (“Interleukin Indemnities”) from and against all losses, liabilities, damages and expenses, including reasonable attorneys' fees and costs (collectively, “Liabilities”), arising out of (a) the breach of any representation, warranty, or covenant by RHSC under this First Amended Agreement; (b) the use by RHSC of any Interleukin Confidential Information not permitted hereunder; or (c) the gross negligence or willful misconduct of RHSC. The obligation to indemnify pursuant to this Section 9.1 will continue so long as a cause of action giving rise to the right of indemnification may be brought by the Interleukin Indemnities. |
9.2 | Indemnification by Interleukin. Interleukin will indemnify and hold harmless RHSC, its Affiliates and their respective directors, officers, employees and agents (“RHSC Indemnities”) from and against all Liabilities, arising out of (a) the breach of any representation, warranty or covenant by Interleukin under this First Amended Agreement; (b) the use by Interleukin of any RHSC Confidential Information not permitted hereunder; or (c) the gross negligence or willful misconduct of Interleukin. The obligation to indemnify pursuant to this Section 9.2 will continue so long as a cause of action giving rise to the right of indemnification may be brought by the RHSC Indemnitees. |
SECTION 10
GENERAL PROVISIONS
10.1 | Nature of Relationship. The Parties will perform all the work under this First Amended Agreement as independent contractors. The Parties are not agents, employees, partners, representatives or joint venturers. Nothing in this First Amended Agreement will be construed to give either Party the power or authority to act or make representations for, or on behalf of, or to bind or commit the other Party. |
10.2 | Publicity. Neither Party will use the name of the other Party in connection with any products, promotion, or advertising without the prior written consent of the other Party. |
Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
11 |
10.3 | Governing Law. This First Amended Agreement will be construed in accordance with, and all the rights, powers and liabilities of the Parties hereunder will be governed by the laws of the Commonwealth of Massachusetts without reference to its conflict of law rules. |
10.4 | Force Majeure. Neither Party shall be liable nor be able to terminate this contract for any failure to perform hereunder where such failure is proximately caused by a Force Majeure Occurrence. A "Force Majeure Occurrence" shall mean an occurrence beyond the control and without the fault or negligence of the party affected and which by exercise or reasonable diligence the said party is unable to prevent or provide against. Without limiting the generality of the foregoing, force majeure occurrences shall include: acts of nature (including fire, flood, earthquake, storm, hurricane or other natural disaster), war, invasion, acts of foreign combatants, terrorists acts, military or other usurped political power or confiscation, nationalization, government sanction or embargo, labor disputes of third parties to this contract, or the prolonged failure of electricity or other vital utility service. Any Party asserting Force Majeure as an excuse to performance shall have the burden of proving proximate cause, that reasonable steps were taken to minimize the delay and damages caused by events when known, and that the other Party was timely notified of the likelihood or actual occurrence which is claimed as grounds for a defense under this clause. |
10.5 | Entire Agreement. This First Amended Agreement sets forth the entire agreement and understanding of the Parties relating to the subject matter hereof and thereof and supersedes and merges all prior discussions and agreements between them prior to the Effective Date including the Initial Preferred Participation Agreement (which shall be of no further effect). |
10.6 | Nonwaiver. The waiver of either Party of any breach of any provision of this First Amended Agreement shall not operate as a waiver of any subsequent breach of the same or any other provision. |
10.7 | Severability. Any provision of this First Amended Agreement that is unlawful, invalid, or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining provisions of this Agreement or the lawfulness, validity, or enforceability of the offending provision in any other situation or jurisdiction. |
10.8 | Modifications and Amendments. No modification or amendment to this First Amended Agreement or any waiver of any rights or obligations under this Agreement will be effective unless in writing and signed by representatives of both RHSC and Interleukin. |
Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
12 |
10.9 | Assignment. Neither RHSC nor Interleukin may assign any rights or delegate any duties under this First Amended Agreement without the other Party's prior written consent, not to be unreasonably withheld, and any attempt to assign or delegate such rights or duties without that consent shall be void; provided, however, that either Party may, without such consent, assign any rights and obligations hereunder to any Affiliate or in connection with the transfer or sale of all or substantially all of its business relating to the subject matter hereunder, or in the event of its merger or consolidation or change in control or similar transaction. Any permitted assignee will assume all obligations of its assignor under the corresponding assignment. |
10.10 | Notices. Any notices given pursuant to this First Amended Agreement will be in writing and delivered personally, by first-class mail or nationally recognized overnight courier service, postage prepaid, or by facsimile addressed to the Parties as follows: |
To Interleukin: | Interleukin Genetics, Inc. | |
135 Beaver Street | ||
Waltham, MA 02452 | ||
Attention: Kenneth Kornman | ||
Facsimile: 781-394-0720 | ||
With a Copy to | Mintz Levin Cohn Ferris Glovsky and Popeo, P.C. | |
One Financial Center | ||
Boston, MA 02111 | ||
Attention: Brian Keane, Esq. | ||
Facsimile: 617-542-2241 | ||
To RHSC: | Renaissance Health Services Corporation | |
4100 Okemos Road, Okemos, Michigan 48864 | ||
Attention: General Counsel/Legal Department | ||
Facsimile: 517.347.5433 |
Any notice or other communication or deliveries hereunder 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 telephone number specified in this Section prior to 4:30 p.m. (Eastern Standard time), (b) the date after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section later than 4:30 p.m. (Eastern Standard time) on any date and earlier than 11:59 p.m. (Eastern Standard time) on such date, (c) three (3) Business Days after deposit in the United States mail, (d) the Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (e) upon actual receipt by the party to whom such notice is required to be given.
10.11 | Counterparts. This First Amended Agreement may be executed in one or more counterparts, each of which shall constitute an original and all of which together shall constitute one and the same instrument. The Parties further agree that signatures exchanged via electronic mail or facsimile shall have full force and effect to bind the Parties as if originals. |
Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
13 |
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
14 |
IN WITNESS WHEREOF, the Parties have executed this Agreement through their respective duly authorized officers or agents on the dates first set forth above.
INTERLEUKIN GENETICS, INC. | RENAISSANCE HEALTH | |||
SERVICES CORPORATION | ||||
By: | /s/ Kenneth S. Kornman | By: | /s/ Jed Jacobson | |
Name: | Kenneth Kornman | Name: | Jed Jacobson | |
Title: | Chief Executive Officer | Title: | Chief Scientific Officer, Sr. VP |
Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
15 |
1. | I have reviewed this annual report on Form 10-K of Interleukin Genetics, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: March 20, 2014
|
/s/ Kenneth S. Kornman
|
|
Kenneth S. Kornman
|
|
Chief Executive Officer
|
1. | I have reviewed this annual report on Form 10-K of Interleukin Genetics, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: March 20, 2014
|
/s/ Eliot M. Lurier
|
|
Eliot M. Lurier
|
|
Principal Financial and Accounting Officer
|
Date: March 20, 2014
|
/s/ Kenneth S. Kornman
|
|
Kenneth S. Kornman
|
|
Chief Executive Officer
|
|
|
|
/s/ Eliot M. Lurier
|
Date: March 20, 2014
|
Eliot M. Lurier
|
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
Fixed Assets - Additional Information (Detail) (USD $)
|
12 Months Ended | |
---|---|---|
Dec. 31, 2013
|
Dec. 31, 2012
|
|
Fixed Assets [Line Items] | ||
Utilities Operating Expense, Depreciation and Amortization | $ 120,033 | $ 167,065 |
Property, Plant and Equipment, Disposals | $ 143,000 |
Stock-based compensation arrangements (Detail) (USD $)
|
12 Months Ended | |
---|---|---|
Dec. 31, 2013
|
Dec. 31, 2012
|
|
Stock-based compensation expense | $ 197,807 | $ 191,828 |
Stock option grants beginning of period [Member]
|
||
Stock-based compensation expense | 92,187 | 182,064 |
Stock option grants [Member]
|
||
Stock-based compensation expense | 100,638 | 6,188 |
Employee Stock Purchase Plan [Member]
|
||
Stock-based compensation expense | 5,522 | 1,332 |
Director Agreements [Member]
|
||
Stock-based compensation expense | $ (540) | $ 2,244 |
Capital Stock - Additional Information (Detail) (USD $)
|
0 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 12 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 09, 2013
|
May 17, 2013
|
Dec. 31, 2013
|
Jun. 30, 2013
|
Dec. 31, 2012
|
Jun. 29, 2012
|
May 17, 2013
Common Stock [Member]
|
Dec. 31, 2013
Common Stock [Member]
|
Dec. 31, 2012
Common Stock [Member]
|
Dec. 31, 2013
Convertible Preferred Stock [Member]
|
Dec. 31, 2013
Employee Stock Purchase Plan [Member]
|
Dec. 31, 2013
Warrant 2 [Member]
|
Dec. 31, 2013
Warrant 3 [Member]
|
Dec. 31, 2013
Warrant 4 [Member]
|
Dec. 31, 2013
Series A-1 Preferred Stock [Member]
|
May 17, 2013
Series A-1 Preferred Stock [Member]
|
Jun. 29, 2012
Series A-1 Preferred Stock [Member]
|
Jun. 29, 2012
Series B Preferred Stock [Member]
|
Dec. 31, 2013
Series B Preferred Stock [Member]
|
May 17, 2013
Series B Preferred Stock [Member]
|
Dec. 31, 2013
Placement Agent Warrants [Member]
|
Aug. 09, 2013
Placement Agent Warrants [Member]
|
May 17, 2013
Placement Agent Warrants [Member]
|
|
Stockholders Equity [Line Items] | |||||||||||||||||||||||
Convertible preferred stock, par value | $ 0.001 | $ 0.001 | |||||||||||||||||||||
Convertible preferred stock, shares authorized | 6,000,000 | 6,000,000 | |||||||||||||||||||||
Convertible preferred stock, shares issued | 0 | 5,500,000 | 5,000,000 | 500,000 | |||||||||||||||||||
Common stock, shares authorized | 150,000,000 | 150,000,000 | 300,000,000 | 150,000,000 | |||||||||||||||||||
Common stock, par value | $ 0.001 | $ 0.001 | |||||||||||||||||||||
Common stock, outstanding or reserved for issuance | 198,521,806 | ||||||||||||||||||||||
Common stock, shares outstanding | 122,448,707 | 36,761,864 | |||||||||||||||||||||
Shares reserved for conversion of Preferred to common stock | 28,160,200 | ||||||||||||||||||||||
Shares reserved for potential exercise | 6,288,950 | ||||||||||||||||||||||
Shares reserved for exercise of outstanding warrants | 437,158 | 1,750,000 | 437,158 | 35,081,967 | |||||||||||||||||||
Warrants exercise price per share | 0.2745 | 0.2745 | 1.30 | 0.2745 | 0.2745 | 0.2745 | |||||||||||||||||
Expiration date of warrants | Mar. 05, 2015 | Jun. 29, 2017 | |||||||||||||||||||||
Proceeds from private placement of preferred stock | $ 12,000,000 | $ 12,000,000 | $ 12,000,000 | $ 3,000,000 | |||||||||||||||||||
Convertible preferred stock current conversion price | $ 0.3196 | $ 0.2745 | |||||||||||||||||||||
Net Proceeds from issuance of Series B Convertible preferred Stock | 2,700,000 | ||||||||||||||||||||||
Convertible preferred stock, liquidation preference | 24,000,000 | 24,000,000 | 18,000,000 | 6,000,000 | |||||||||||||||||||
Convertible preferred stock, effective purchase price | $ 1.80 | $ 6.00 | |||||||||||||||||||||
Shares Reserved For Exercise Of Rights | 638,887 | ||||||||||||||||||||||
Class Of Warrant Or Right Exercisable Number Of Warrants Or Rights | 32,786,885 | 20,655,737 | |||||||||||||||||||||
Warrant Exercisable Expiration Date | Jun. 30, 2014 | May 17, 2020 | |||||||||||||||||||||
Warrant Exercisable Remaining Expiration Date | Aug. 09, 2020 | ||||||||||||||||||||||
Shares Reserved For Issuance Of Common Stock And Warrants | 31,876,137 | ||||||||||||||||||||||
Additional Pro Rata InvestmentIn Common Stock And Warrants | 5,000,000 | 5,000,000 | |||||||||||||||||||||
Fair Value Adjustment of Warrants | 104,907 | ||||||||||||||||||||||
Conversion of Stock, Shares Converted | 39,089,161 | 10,928,961 | |||||||||||||||||||||
Convertible Preferred Stock, Shares Issued upon Conversion | 39,089,161 | ||||||||||||||||||||||
Stock Issued During Period Shares New Issues | 43,715,847 | 0 | |||||||||||||||||||||
Share Price | $ 0.2745 | ||||||||||||||||||||||
Percentage Of Warrants Exercisable | 63.00% | ||||||||||||||||||||||
Percentage Of Warrants Exercisable After Shareholder Approval | 37.00% | ||||||||||||||||||||||
NoncashInterest Expense | 286,579 | ||||||||||||||||||||||
Increase In Common Stock Shares Authorized | 300,000,000 | 300,000,000 | |||||||||||||||||||||
Increase In Interest Expense | 11,000 | ||||||||||||||||||||||
Allocated Share-based Compensation Expense | 780,000 | ||||||||||||||||||||||
Warrants To Purchase Of Common Stock | 2,295,082 | ||||||||||||||||||||||
Warrants Fair Value Disclosure | $ 5,358,708 | $ 5,369,676 | $ 5,072,129 |
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