SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
Amendment No. 1 on
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
--------------
Date of Report (Date of earliest event reported): MARCH 5, 2003
INTERLEUKIN GENETICS, INC.
--------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 000-23413 94-3123681
--------------- ------------ -------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation) 94-3123681
135 BEAVER STREET, WALTHAM, MA 02452
-------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 398-0700
Not Applicable
-------------------------------------------------------------
(Former name or former address, if changed since last report)
1
The purpose of this amendment to our Current Report on Form
8-K filed with the Securities Exchange Commission on March 5, 2003, is (i) to
change the number of shares of Common Stock into which the Amended and Restated
Notes are convertible, as reported under the captions "General" and
"Refinancing of Prior Debt/Promissory Notes," from 4,169,652 shares to
4,075,811 shares; and (ii) to correct the schedule to Exhibit 10.13, which
omitted one of the Director appointees who signed a Director Indemnity
Agreement with us.
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
We have entered into financing and related transactions that constitute a
change of control. The following summaries of our Series A Preferred Stock and
agreements that we have entered into are summaries and are qualified in their
entirety by references to the agreements and Certificate of Designations of the
Series A Preferred Stock that we are filing as exhibits with this Current Report
on Form 8-K and are incorporated herein by reference. You are urged to review
the full text of those documents that define the rights of the new investors.
GENERAL
In a private placement on March 5, 2003, we entered into a Stock Purchase
Agreement (the "Purchase Agreement") with Pyxis Innovations Inc., a Delaware
corporation and a subsidiary of Alticor Inc. ("Pyxis"), pursuant to which Pyxis
purchased from us 5,000,000 newly-issued shares of our Series A Preferred Stock,
par value $.001 per share (the "Series A Preferred Stock"), for $7,000,000 in
cash and $2,000,000 in cash to be paid, if at all, upon our reaching a milestone
pursuant to the terms of the Purchase Agreement. The offering was made to Pyxis
by way of a private placement exempt from registration under the Securities Act
of 1933, as amended (the "Securities Act"). We have been advised by Pyxis that
the source of the cash paid and to be paid was and will be capital contributions
from its sole shareholder, Alticor Inc.
The Series A Preferred Stock issued in the private placement is initially
convertible into 28,157,683 shares of our Common Stock reflecting a conversion
price of $.2486 per share (or $.3196 per share if the milestone payment is
received), subject to weighted average antidilution adjustments. Assuming the
conversion of all shares of Series A Preferred Stock, such shares would
represent 54.9% of the outstanding shares of our Common Stock.
Pursuant to the terms of the Purchase Agreement, Pyxis has agreed to
refinance certain of our indebtedness in the form of previously issued
promissory notes that are held by Pyxis and certain individuals. Convertible
promissory notes in the original aggregate principal amount of $2,000,000 issued
to Pyxis are convertible into shares of Common Stock at any time at a conversion
price equal to two times the conversion price of the Series A Preferred Stock in
effect at that time. As of March 5, 2003, the principal and accrued interest
under these convertible promissory notes was convertible into 4,075,811 shares
of Common Stock.
Concurrent with the closing of the Purchase Agreement, we entered into a
Research Agreement with an affiliate of Pyxis, governing the terms of developing
and validating nutrigenomic and dermagenomic tests and products. We also entered
into a License Agreement with another affiliate of Pyxis, granting an exclusive
license of all of our current and future intellectual property, limited to the
field of nutrigenomics and dermagenomics.
Pursuant to the terms of the Purchase Agreement, we agreed to reduce the
number of directors on our Board of Directors from six to five and granted
Pyxis, as the sole holder of shares of our Series A Preferred Stock, the right
to appoint four out of five members of our new Board of Directors. The election
of these Series A Directors is intended to be effective ten (10)
2
days after the date on which an Information Statement is filed with the SEC and
mailed to all holders of record of our Common Stock as required by Rule 14f-1 of
the Exchange Act. We will file and mail the Information Statement as soon as
reasonably practicable from the date hereof.
SERIES A PREFERRED STOCK
The Series A Preferred Stock was issued in return for a capital
contribution of $7,000,000 and is convertible into shares of Common Stock at a
initial conversion price of $.2486 per share. If we achieve the milestone of
entering into a genetics testing agreement with one or more customers with a
projected internal rate of return of at least twenty percent (20%) and a payback
period of three (3) years or less, Pyxis will make an additional capital
contribution of $2,000,000. This subsequent milestone payment will increase the
effective conversion price per Common Stock equivalent share to $.3196 per
share.
The Series A Preferred Stock accrues dividends at the rate of 8% of the
original purchase price per year, payable only when, as and if declared by the
Board of Directors and are non-cumulative. If we declare a distribution, with
certain exceptions, payable in securities of other persons, evidences of
indebtedness issued by us or other persons, assets (excluding cash dividends) or
options or rights to purchase any such securities or evidences of indebtedness,
then, in each such case the holders of the Series A Preferred Stock shall be
entitled to a proportionate share of any such distribution as though the holders
of the Series A Preferred Stock were the holders of the number of shares of our
Common Stock into which their respective shares of Series A Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
our Common Stock entitled to receive such distribution.
In the event of any liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, the holders of the Series A Preferred Stock
shall be entitled to receive, prior and in preference to any distribution of any
of our assets or surplus funds to the holders of our Common Stock by reason of
their ownership thereof, the amount of two times the then-effective purchase
price per share, as adjusted for any stock dividends, combinations or splits
with respect to such shares, plus all declared but unpaid dividends on such
share for each share of Series A Preferred Stock then held by them. After
receiving this amount, the holders of the Series A Preferred Stock shall
participate on an as-converted basis with the holders of Common Stock in any of
our remaining assets.
Each share of Series A Preferred Stock is convertible at any time at the
option of the holder into a number of shares of our Common Stock determined by
dividing the then-effective purchase price (originally $1.40, or $1.80 if the
milestone payment is received, and subject to further adjustment) by the
conversion price in effect on the date the certificate is surrendered for
conversion. The initial conversion price is $.2486 per share (or $.3196 per
share if the milestone payment is received), subject to weighted average
antidilution adjustment.
Pyxis has agreed that it will not sell or otherwise transfer its Series A
Preferred Stock (or shares of our Common Stock converted therefrom) to any
unrelated third-party until after March 5, 2005.
3
Each holder of Series A Preferred Stock is entitled to vote its shares of
Series A Preferred Stock on an as-converted basis with the holders of Common
Stock as a single class on all matters submitted to a vote of the stockholders,
except as otherwise required by applicable law or the Certificate of
Designations. This means that each share of Series A Preferred Stock will be
entitled to a number of votes equal to the number of shares of Common Stock into
which it is convertible on the applicable record date.
We have reserved all authorized but otherwise unissued or unreserved
shares of Common Stock for the conversion of the Series A Preferred Stock. We
currently do not have sufficient shares of Common Stock authorized under our
Certificate of Incorporation to cover all shares of Common Stock that we may be
required to issue upon conversion of the Series A Preferred Stock or any of the
shares that we may be required to issue upon the conversion of the promissory
notes described below. We have agreed to take all such corporate actions as may
be necessary to increase the number of authorized but unissued shares of Common
Stock, including engaging in our best efforts to obtain stockholder approval of
an amendment of our certificate of incorporation.
REFINANCING OF PRIOR DEBTS/PROMISSORY NOTES
Pursuant to the terms of the Purchase Agreement, Pyxis has agreed to
refinance certain of our indebtedness held by Pyxis and others in the form of
previously issued promissory notes. Upon the closing of the Purchase Agreement,
we amended and restated promissory notes previously issued to Pyxis, in
aggregate principal amount of $2,000,000, with a variable interest rate equal to
one percent above the "prime rate," payable on a quarterly basis in cash. These
amended and restated notes have a maturity date of December 31, 2007 and are
convertible at the option of Pyxis into shares of our Common Stock at a
conversion price of two times the then applicable conversion price of the Series
A Preferred Stock. As of March 5, 2003, outstanding principal and interest under
these notes would be convertible into 4,075,811 shares of Common Stock. As
previously reported, the terms of the original notes include that they are
secured by all of our intellectual property except intellectual property
relating to periodontal disease and sepsis.
In connection with issuing the amended and restated notes, we further
amended the Note Purchase Agreement and the Security Agreement relating thereto
to reflect the above described terms.
In addition, pursuant to the terms of the Purchase Agreement, Pyxis agreed
to advance to us prior to August 9, 2003, cash required to repay principal and
interest due under promissory notes previously issued in the original aggregate
principal amount of $525,000, that accrue interest at an annual rate of 15% and
are due on August 9, 2003. We are permitted to repay these notes at any time. At
such time as Pyxis advances us an amount equal to principal and interest due
under these notes, we will use the proceeds to repay the outstanding notes and
will issue to Pyxis a promissory note with the same material terms as the
amended and restated notes described above.
4
RESEARCH AND LICENSE AGREEMENTS
Concurrent with the closing of the Purchase Agreement, we entered into
a License Agreement with an affiliate of Pyxis, granting an exclusive, license
of all of our current and future intellectual property, limited to the field of
nutrigenomics and dermagenomics. Outside the field of nutrigenomics and
dermagenomics, we granted a right of first negotiation for the
commercialization of all of our current and future intellectual property into
products/services.
We also entered into a Research Agreement with another affiliate of
Pyxis, governing the terms of developing and validating nutrigenomic and
dermagenomic tests and products. The resulting intellectual property relating
to nutrigenomic and dermagenomic products would be owned by the affiliate of
Pyxis and we would retain the ownership of its underlying intellectual property
and resulting intellectual property relating to dermagenomic tests. In
addition, we agreed with Pyxis to establish a "science committee" with equal
representation from each party to exchange non-confidential information in
anticipation of developing mutually beneficial opportunities.
REGISTRATION RIGHTS
We have entered into a Registration Rights Agreement with Pyxis. Under
this agreement, we are obligated to register for resale the Common Stock
issuable upon the conversion of the Series A Preferred Stock upon demand by
Pyxis at any time following the second anniversary of the closing of the
Purchase Agreement. Upon such demand, we are obligated to use our reasonable
best efforts to have the registration statement registering such securities
declared effective within one hundred and twenty (120) days of filing it with
the SEC. In addition, we have agreed to grant Pyxis unlimited "piggyback"
registration rights following the second anniversary of the closing of the
Purchase Agreement along with priority for such registration in certain
circumstances.
CHANGES TO THE BOARD OF DIRECTORS
Pursuant to the terms of the Purchase Agreement, we agreed to reduce the
number of directors on our Board of Directors from six to five and granted
Pyxis, as the sole holder of Series A Preferred Stock, the right to appoint four
out of five members of our new Board of Directors. Effective immediately prior
to the closing under the Purchase Agreement, Edward M. Blair, Jr., Gary L.
Crocker, John Garofalo and Thomas A. Moore, each resigned from the Board of
Directors. These resignations were a condition to Pyxis entering into the
Purchase Agreement and the related transactions. Kenneth S. Kornman also
resigned, effective ten (10) days after the date on which the information
statement is filed with the SEC and mailed to all holders of record of our
Common Stock as required by Rule 14f-1 of the Exchange Act. Bert Crandell,
George D. Calvert, Beto Guajardo and Thomas R. Curran, Jr. have been elected to
our Board of Directors as Series A Directors effective ten (10) days after the
date on which such information statement is filed with the SEC and mailed to all
holders of record of our Common Stock. Philip Reilly, our Chief Executive
Officer, will continue to serve as a Director.
5
AGREEMENT REGARDING CORPORATE OPPORTUNITY
We have agreed to certain terms for allocating opportunities as permitted
under Section 122(17) of the Delaware General Corporation Law. This agreement,
as set forth in the Purchase Agreement, regulates and defines the conduct of
certain of our affairs as they may involve Pyxis as our majority stockholder and
its affiliates, and the powers, rights, duties and liabilities of us and our
officers and directors in connection with corporate opportunities.
Except under certain circumstances, Pyxis and its affiliates have the
right to engage in the same or similar activities or lines of business or have
an interest in the same classes or categories of corporate opportunities as we
do. If Pyxis or one of our directors appointed by Pyxis, and its affiliates
acquire knowledge of a potential transaction or matter that may be a corporate
opportunity for both Pyxis and its affiliates and us, to the fullest extent
permitted by law, Pyxis and its affiliates will not have a duty to inform us
about the corporate opportunity or be liable to us or to you for breach of any
fiduciary duty as a stockholder of ours for not informing us of the corporate
opportunity, keeping it for its own account, or referring it to a another
person.
Additionally, except under limited circumstances, if an officer or
employee of Pyxis who is also one of our directors is offered a corporate
opportunity, such opportunity shall not belong to us. In addition, we agreed
that such director will have satisfied his duties to us and not be liable to us
or to you in connection with such opportunity.
The terms of this agreement will terminate on the date that no person who
is a director, officer or employee of ours is also a director, officer, or
employee of Pyxis.
SAFE HARBOR
This Current Report on Form 8-K contains forward-looking statements
within the meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, including statements regarding our ability to
combine our intellectual property and expertise with Alticor's manufacturing
and distribution capabilities, the development and validation of nutrigenomic
and dermagenomic tests and products, the marketing of products and milestone
payments that we may receive. Because such statements include risks and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements. Factors that could cause actual
results to differ materially from those expressed or implied by such
forward-looking statements include, but are not limited to, our ability to
develop diagnostic products for nutrigenomic and dermagenomic care uses, Pyxis
and its affiliates' ability to market nutritional and skin care products used
in conjunction with our diagnostic tests, our ability to achieve the milestone
that would result in an additional $2.0 million payment from Alticor, our
ability to complete clinical research and data analysis, meeting our clinical
studies' endpoints, risk of market acceptance of our products, risk of
technology and products obsolescence, delays in development of products,
reliance on partners, competitive risks
6
and those risks and uncertainties described in our Form 10-Q for the quarter
ended September 30, 2002, as filed on November 7, 2002, and in other filings
made by us with the Securities and Exchange Commission. We disclaim any
obligation to update these forward-looking statements, unless required by law.
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE.
On March 5, 2003, we publicly disseminated a press release announcing that
the we entered into the above described transaction with Pyxis. The information
contained in the press release is incorporated herein by reference and filed as
Exhibit 99.1 hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
3.1* Certificate of Designations, Preferences, and Rights of Series A
Preferred Stock
10.1* Stock Purchase Agreement between Interleukin Genetics, Inc. and
Pyxis Innovations Inc., dated as of March 5, 2003
10.2* Amendment No. 3 to Note Purchase Agreement, dated as of March 5,
2003
10.3* Amendment No. 2 to Security Agreement, dated as of March 5, 2003
10.4* Form of Amended and Restated Secured Promissory Note to Pyxis
Innovations Inc.
10.5* Amendment No. 2 to Note Purchase Agreement, dated as of January
28, 2003
10.6+* Research Agreement, by and between Interleukin Genetics, Inc. and
Access Business Group International LLC, dated as of March 5, 2003
10.7+* Exclusive License Agreement, by and between Interleukin Genetics,
Inc. and Access Business Group International LLC, dated as of
March 5, 2003
10.8* Registration Rights Agreement by and between Interleukin
Genetics, Inc. and Pyxis Innovations Inc., dated as of March 5,
2003
10.9* Amendment No. 1 to Employment Agreement, by and between
Interleukin Genetics, Inc. and Phillip R. Reilly, dated as of
March 5, 2003
10.10* Amendment to Employment Agreement, by and between Interleukin
Genetics, Inc. and Fenel Eloi, dated as of March 5, 2003
10.11* Amendment to Employment Agreement, by and between Interleukin
Genetics, Inc. and Kenneth S. Kornman, dated as of March 5, 2003
7
10.12* Amendment to Employment Agreement, by and between Interleukin
Genetics, Inc. and Paul Martha, M.D., dated as of March 5, 2003
10.13 Form of Director Indemnity Agreement, dated as of March 5, 2003
10.14* Letter of Guaranty from Alticor Inc., dated March 5, 2003
99.1* Press Release, dated March 5, 2003
----------------------------
+ Confidential treatment has been requested with respect to certain portions of
this exhibit. Omitted portions have been filed separately with the Securities
and Exchange Commission.
* Previously filed as the same exhibit number to our Current Report on Form
8-K, filed with the Securities Exchange Commission on March 5, 2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Interleukin Genetics, Inc.
--------------------------
(Registrant)
Date: March 11, 2003 /s/ Philip R. Reilly
---------------------------------
PHILIP R. REILLY
CHIEF EXECUTIVE OFFICER
8
EXHIBIT INDEX
Exhibit
Number Description
3.1* Certificate of Designations, Preferences, and Rights of Series A
Preferred Stock
10.1* Stock Purchase Agreement between Interleukin Genetics, Inc. and
Pyxis Innovations Inc., dated as of March 5, 2003
10.2* Amendment No. 3 to Note Purchase Agreement, dated as of March 5,
2003
10.3* Amendment No. 2 to Security Agreement, dated as of March 5, 2003
10.4* Form of Amended and Restated Secured Promissory Note to Pyxis
Innovations Inc.
10.5* Amendment No. 2 to Note Purchase Agreement, dated as of January
28, 2003
10.6+* Research Agreement, by and between Interleukin Genetics, Inc. and
Access Business Group International LLC, dated as of March 5, 2003
10.7+* Exclusive License Agreement, by and between Interleukin Genetics,
Inc. and Access Business Group International LLC, dated as of
March 5, 2003
10.8* Registration Rights Agreement by and between Interleukin
Genetics, Inc. and Pyxis Innovations Inc., dated as of March 5,
2003
10.9* Amendment No. 1 to Employment Agreement, by and between
Interleukin Genetics, Inc. and Phillip R. Reilly, dated as of
March 5, 2003
10.10* Amendment to Employment Agreement, by and between Interleukin
Genetics, Inc. and Fenel Eloi, dated as of March 5, 2003
10.11* Amendment to Employment Agreement, by and between Interleukin
Genetics, Inc. and Kenneth S. Kornman, dated as of March 5, 2003
10.12* Amendment to Employment Agreement, by and between Interleukin
Genetics, Inc. and Paul Martha, M.D., dated as of March 5, 2003
10.13* Form of Director Indemnity Agreement, dated as of March 5, 2003
10.14* Letter of Guaranty from Alticor Inc., dated March 5, 2003
99.1* Press Release, dated March 5, 2003
----------------------------
9
+ Confidential treatment has been requested with respect to certain portions of
this exhibit. Omitted portions have been filed separately with the Securities
and Exchange Commission.
* Previously filed as the same exhibit number to our Current Report on Form
8-K, filed with the Securities Exchange Commission on March 5, 2003.
10