Exhibit 10.2


 


PROMISSORY NOTE


 


	
   

  	
  June 10,
  2008

  
	
  $4,000,000

  	
  Ada, Michigan

  



 


FOR VALUE RECEIVED, the undersigned, INTERLEUKIN GENETICS,
INC., a Delaware corporation, of 135 Beaver Street, 2nd Floor,
Waltham, Massachusetts 02452 (the “Company”),
promises to pay to PYXIS INNOVATIONS INC., a Delaware corporation, of 7575
Fulton Street East, Ada, Michigan 49355-0001 (“Payee”),
the principal amount of $4,000,000 and interest on the unpaid principal balance
at the per annum rate equal to the Index Rate until maturity (adjusted on the
first day of each calendar quarter to the Index Rate in effect on the date of
adjustment) and the Index Rate plus 2% (adjusted on the first day of each
calendar quarter to the Index Rate in effect on the date of adjustment)  percent per annum after maturity.  As used in this Note, “Index Rate”
means the “Prime Rate” listed in the Money Rates section of the Wall Street Journal.


 


The principal of this Note shall be paid in
full on August 16, 2011.  Accrued
interest shall be paid on first day of each calendar quarter until the
principal balance shall be paid in full.


 


Prepayments.  The Company may not prepay the principal of
this Note without the prior written consent of the Payee, which may be given or
withheld in the Payee’s sole discretion.


 


Default and Acceleration.  Each of the following shall be an “event of
default” under this Note:  (1) if
default occurs in the payment of principal or interest under this Note or in
the payment of any other indebtedness or obligation that the Company now or in
the future owes to Payee, as and when it shall be or become due and payable; (2) if
default occurs in the performance of any other obligation to Payee under this
Note, the Purchase Agreement (as defined below), the Stock Purchase Agreement
dated March 5, 2003, the Stock Purchase Agreement dated August 17,
2006, or any other agreement that has been or in the future is entered into
between the Company and Payee, in each case as may be amended from time to
time, or if there occurs any other event of default under the Purchase
Agreement or any such other agreement; (3) if any warranty or
representation that the Company has made to Payee in any agreement, or if any
financial statement or other document given to Payee in connection with the
transactions contemplated by the Purchase Agreement, shall have been false in
any material respect; (4) if the Company dissolves, becomes insolvent, or
makes an assignment for the benefit of creditors; (5) if the Company
defaults in the payment of any other material indebtedness or performance of
material obligations owed to any other party or entity; or (6) a Change of
Control of the Company.  Upon the
occurrence of any event of default, all or any part of the indebtedness
evidenced by this Note and all or any part of all other indebtedness and
obligations that the Company then owes to Payee shall, at the option of Payee,
become immediately due and payable without notice or demand.  If a voluntary or involuntary case in
bankruptcy, receivership or insolvency shall at any time be begun by or against
the Company or if any levy, writ of attachment, garnishment, execution or
similar process shall be issued against or placed upon any property of the
Company, then all such indebtedness shall automatically become immediately due and
payable.  All or any part of the
indebtedness evidenced by this Note also may become, or may be declared to be,
immediately due and payable under the terms and conditions contained in the
Purchase Agreement or other agreement that has been or in the future is entered
into between the Company and Payee upon the terms and to the extent provided
therein.


 


“Change of Control” shall mean (a) a
dissolution or liquidation of the Company, (b) a merger or consolidation
in which the Company is not the surviving corporation, (c) a merger or
share 


 

















 


exchange in which the
Company is the surviving corporation but after which the stockholders of the
Company immediately prior to such merger cease to own at least 51% of the
outstanding shares of the Company, (d) the sale, license, or other
transfer of substantially all of the assets of the Company, or (e) the
acquisition, sale, or transfer (other than a transaction involving primarily
shares held by Payee or its affiliates) of more than 50% of the outstanding
shares of the Company, whether by tender offer, similar transaction, or newly
issued stock (other than to Payee or its affiliates).


 


Agreement.  This Note is given under a certain Note
Purchase Agreement, dated October 23, 2002, as amended between  Payee and the Company (the “Purchase
Agreement”), and Payee shall have all of the rights and powers set
forth in the Agreement as though they were set forth fully in this Note.


 


Conversion.  Payee has the right, at its option, at any
time before the payment in full of this Note, to convert a portion or all of
the balance of this Note into fully paid and nonassessable common stock of the
Company.  The number of shares of common
stock into which the balance of this Note may be converted (“Conversion Shares”) shall be determined by dividing the
aggregate principal amount to be converted, together with all accrued interest
to the date of conversion, by $5.6783 (the “Conversion
Price”).  The Conversion Price is subject to
adjustment as follows:  if the Company (1) pays
a dividend or makes a distribution on its Common Stock in shares of its Common
Stock; (2) subdivides its outstanding shares of Common Stock into a
greater number of shares; (3) combines its outstanding shares of Common
Stock into a smaller number of shares; (4) makes a distribution on its
Common Stock in shares of its capital stock other than its Common Stock; or (5) issues
by reclassification of its Common Stock any shares of its capital stock; then
the Conversion Price in effect immediately prior to such action shall be
proportionately adjusted so that the Payee may receive the aggregate number and
kind of shares of capital stock of the Company that the Payee would have owned
immediately following such action if the Note had been converted immediately
prior to such action.  Each adjustment to
the Conversion Price shall be effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective date
in the case of a subdivision, combination, or reclassification.


 


Before Payee shall be entitled to convert some or all of the balance of
this Note into shares as provided above, it shall give written notice to the
Company of the election to convert, and shall state the amount of the balance
to be converted.  The Company shall, as
soon as practicable thereafter, issue and deliver to Payee a certificate for
the number of shares of common stock to which Payee shall be entitled.  Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of Company’s
receipt of the notice from Payee, and Payee shall be treated for all purposes
as the record holder of such shares of stock as of such date.


 


No fractional shares of stock shall be issued upon conversion of this
Note.  In lieu of the Company issuing any
fractional shares to Payee upon conversion, the number of shares issued shall
be rounded to the nearest whole number. 
If the entire balance of this Note is to be converted, then Payee shall
surrender this Note, duly endorsed, at the office of the Company.  If only a portion of the balance of this Note
is converted, then the balance of this Note shall be reduced by the amount
converted, with the remaining balance continuing as outstanding under this
Note.  Upon conversion, the Company
shall, at its expense, issue and deliver to Payee a certificate for the number
of shares of such stock to which Payee shall be entitled upon such conversion
(bearing such legends as are required by the Stock Purchase Agreement dated August 17,
2006), together with any other securities and property to which Payee is
entitled upon such conversion under the terms of this Note.


 


In the event of: (a) any taking by the Company of a record of
holders of any class of securities of the Company for the purpose of
determining holders thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase, or otherwise acquire
any  shares of 


 


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stock of any class or any
other securities or property, or to receive any other right; or (b) any
capital reorganization, any reclassification, or recapitalization of the
capital stock of the Company or any transfer of all or substantially all of the
assets of the Company to any other person or any consolidation or merger or
similar change of control transaction involving the Company; or (c) any
voluntary or involuntary dissolution, liquidation, or winding up of the
Company; then the Company will mail to Payee at least ten days prior to the
earliest date specified therein, a notice specifying: (i) the date on
which any such record is to be taken for the purpose of such dividend,
distribution, or right, and the amount and character of such dividend,
distribution, or right; and (ii) the date on which any such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation, or winding up is expected to become effective and the record date
for determining stockholders entitled to vote thereon.


 


The Company shall, at all times reserve and keep available out of its
authorized but unissued shares of common stock solely for the purpose of
effecting the full conversion of the Note such number of its shares of common
stock as shall from time to time be sufficient to effect the conversion of the
Note.  If at any time the number of
authorized by unissued shares of common stock shall not be sufficient to effect
the conversion of the entire outstanding principal amount of this Note, in
addition to such other remedies as shall be available to Payee, the Company
will use its best efforts to take such corporate action as may, in the opinion
of its counsel, be necessary to increase its authorized but unissued shares of
common stock to such number of shares as shall be sufficient for such purposes.


 


Place and Application of Payments.  Each payment upon this Note shall be made at
Payee’s address set forth above or any other place that Payee directs in
writing.  Payee shall apply any payment
upon it first to any expenses (including expenses of collection) then due and
payable to Payee, then to any unpaid late charges, then to any accrued and
unpaid interest under this Note and then to the unpaid principal balance.  If the Company at any time owes Payee any indebtedness
or obligation in addition to the indebtedness that this Note evidences, and if
any indebtedness that the Company then owes to Payee is then in default, then
the Company shall not have any right to direct or designate the particular
indebtedness or obligation upon which any payment made by, or collected from,
the Company or from security shall be applied. 
The Company waives any such right and agrees that Payee shall determine,
in its sole discretion, the manner of application of any such payment, as
between or among such indebtedness and obligations.


 


Setoff.  Payee shall have the right at any time to set
off any indebtedness that this Note evidences and that is then due and payable
against any indebtedness that Payee then owes to the Company.


 


Remedies.  Payee shall have all rights and remedies that
the law and any agreement of the Company provide.  Any requirement of reasonable notice with
respect to any sale or other disposition of collateral shall be met if Payee
sends the notice at least ten days before the date of sale or other disposition.  The Company shall reimburse Payee for any and
all expenses, including reasonable attorney fees and legal expenses, that Payee
pays or incurs in protecting and enforcing the rights of and obligations to
Payee under any provision of this Note.


 


Waivers.  A delay by Payee in the exercise of any right
or remedy shall not be considered a waiver of it.  A single or partial exercise by Payee of any
right or remedy shall not preclude any other or future exercise of it or the
exercise of any other right or remedy.  A
waiver by Payee of any default or of any provision of this Note shall not be
effective unless it is in writing and signed by Payee.  A waiver of any right or remedy on one
occasion shall not be a waiver of that right or remedy on any future occasion.


 


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The Company waives demand for payment, presentment, notice of dishonor
and protest of this Note and waives all defenses based on suretyship or
impairment of collateral.  The Company
consents to any extension or postponement of time of payment of this Note, to
any substitution, exchange or release of all or any part of any security given
to secure it, to the addition of any party to it and to the release, discharge,
waiver, modification or suspension of any rights or remedies against any person
liable for the indebtedness that this Note evidences.


 


General.  In this Note, “maturity”
means the time when the entire remaining unpaid principal balance shall be or
shall become due and payable for any reason, including acceleration as provided
above.


 


Applicable Law and Jurisdiction.  This Note shall be governed by and
interpreted according to the laws of the State of Michigan, without giving
effect to conflict of laws rules.  The
Company irrevocably agrees and consents that any action against the Company for
collection or enforcement of this Note may be brought in any state or federal
court that has subject matter jurisdiction and is located in, or whose district
includes, Kent County, Michigan, and that any such court shall have personal
jurisdiction and venue over the Company for purposes of the action.


 


PAYEE AND OBLIGOR EACH IRREVOCABLY AND
UNCONDITIONALLY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION, INCLUDING
ANY CLAIM, COUNTERCLAIM, CROSS-CLAIM OR THIRD-PARTY CLAIM (“CLAIM”), THAT IS
BASED UPON, ARISES OUT OF OR RELATES TO THIS NOTE OR THE INDEBTEDNESS THAT IT
EVIDENCES, INCLUDING, WITHOUT LIMITATION, ANY CLAIM THAT IS BASED UPON, ARISES
OUT OF OR RELATES TO ANY ACTION OR INACTION OF PAYEE IN CONNECTION WITH ANY
ACCELERATION, ENFORCEMENT OR COLLECTION OF THIS NOTE OR SUCH INDEBTEDNESS.


 


 


	
   

  	
  INTERLEUKIN GENETICS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Lewis H. Bender

  
	
   

  	
   

  	
  Lewis H. Bender

  
	
   

  	
   

  	
  Chief Executive Officer

  



 


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