Document:

exv10w28

 

EXHIBIT 10.28

FOURTH ALLONGE TO PROMISSORY NOTE

     THIS FOURTH ALLONGE TO PROMISSORY NOTE (“Fourth Allonge”), is made as of January 1, 2005 on
this 28th day of April, 2005, by and between METAMORPHIX, INC., a Delaware corporation
with a business address of 8000 Virginia Manor Road – Suite 140, Beltsville, Maryland 20705 (the
“Maker”) and GENETICS INSTITUTE, LLC, a Delaware limited liability company, successor-in-interest
to Genetic Institute, Inc., a Delaware corporation (the “Lender”).

     WHEREAS, on or about February 9, 1998, Maker executed and delivered a Promissory Note (the
“Original Note”) to Genetics Institute, Inc. in the original principal sum of Two Million Dollars
($2,000,000), which was repayable by the Maker on demand at any time after December 31, 1998
(“Original Demand Date”) and which, in the event certain conditions are met, provided for the
conversion of the debt represented by the Note to equity on or before December 31, 1998 (“Original
Conversion Date”); and

     WHEREAS, on or about August 18, 1998, Maker executed and delivered a First Allonge to
Promissory Note (“First Allonge”) to Genetics Institute, Inc. modifying the Note such that the
principal sum due and owing on account of the Note as of the date of the First Allonge was, and is,
Two Million Two Hundred Thousand Dollars ($2,200,000), plus any and all interest that has accrued
in accordance with the terms of the Note; and

     WHEREAS, on or about October 30, 1998, Maker executed and delivered a Second Allonge to
Promissory Note (“Second Allonge”) to Genetics Institute, Inc. modifying the Note, as modified by
the First Allonge, such that: (1) the principal sum, plus any and all interest, was to be paid by
Maker to Lender on demand at any time on or after June 30, 1999 (the “Second Demand Date”); (2) the
debt created by the Note, and the payment of principal and interest thereunder, was, and is, to be
subordinate to any new debt incurred by Maker up to One Million Dollars ($1,000,000) provided that
certain conditions were, and are, met; and (3) if Maker closed an equity financing such that it
raised Two Million Dollars ($2,000,000) from investors other than the Lender on or before June 30,
1999 (the “Second Conversion Date”) in a transaction approved by Maker’s Board of Directors, the
unpaid balance of the Note, plus any and all interest, was to be converted into fully paid and
non-assessable shares of the capital stock of Maker issued in connection with such equity
financing, concurrently with the first closing of such equity financing, at the same price as is
paid by the investors in such financing; and

     WHEREAS, on or about January 26, 1999, Maker executed and delivered a Third Allonge to
Promissory Note (“Third Allonge”) to Genetics Institute, Inc. modifying the Note, as modified by
the First and Second Allonge such that: (1) the principal sum, plus any and all interest, was to be
paid by Maker without any notice or demand on January 1, 2005 (“Third Due Date”), if not sooner
paid; (2) upon the Third Due Date, in lieu of payment of cash, the Maker may have paid the
principal balance of the Note, plus any and all accrued interest, by issuing to Lender fully paid
and non-assessable share of the common stock of Maker, if such stock was then publicly traded, at
the then market price of such stock; (3) on or before December 31, 2004, Genetics Institute, Inc.,
at its sole election, with at least ninety (90) days prior written notice to

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Maker of such election, may have converted the outstanding principal and interest under this Note
to fully paid and non-assessable share of common stock of Maker, at a per-share price valued at
either (a) one hundred twenty-five percent (125%) of the IPO price if the stock were then publicly
traded, or (b) a price to be negotiated in good faith by the Maker and Genetics Institute, Inc. if
the stock were not then publicly traded; (4) the third and fourth paragraphs of the Original Note,
i.e., the provisions for automatic conversion upon a certain equity financing, were thereafter null
and void and of no effect; and

     WHEREAS, on or about December 28, 2001, a Certificate of Conversion was filed with the
Secretary of State of the State of Delaware changing the name and status of Genetics Institute,
Inc. to Genetics Institute, LLC; and

     WHEREAS, as of January 1, 2005, Two Million Two Hundred Thousand Dollars ($2,200,000) in
principal remained unpaid and Nine Hundred Eighty-eight Thousand Six Hundred One Dollars and
Thirty-nine Cents ($988,601.39) of interest had accrued and remained unpaid (collectively, the
“January 1, 2005 Amount Due”); and

     WHEREAS, Maker has requested, and Lender has agreed, to extend the Third Due Date, provided
that the Maker agrees to the execution of this Fourth Allonge so set forth herein;

     WHEREFORE, Maker and Lender now agree to modify the Original Note, as modified by the First,
Second, and Third Allonges (hereinafter collectively the “Note”), as follows:

     1. The Maker may prepay the principal sum, plus any and all interest that has accrued in
accordance with the terms of the Note and this Fourth Allonge, in part or in whole, at any time
without penalty.

     2. Interest shall accrue on the January 1, 2005 Amount Due (i.e., not only on the original
principal amount) at the rate and in the manner specified in the Note.

     3. The principal sum, plus any and all interest that has accrued in accordance with the terms
of the Note and this Fourth Allonge, shall be paid by Maker to Lender, without any notice or
demand, on January 1, 2008 (“Fourth Due Date”), if not sooner paid; provided, however, that (a) all
principal outstanding and any and all interest accrued and unpaid as of the closing of an
underwritten initial public offering by Maker shall be paid in full by the Maker to the Lender upon
the date of such closing, without notice or demand, and (b) at the option of Lender, Lender may
offset against any principal outstanding and/or any interest accrued and unpaid at any given time
(i) any amount(s) due at that time by Wyeth to Maker under Section 7.2 and Schedule 7.2B of that
January 26, 1999 Amended and Restated Collaboration Agreement by and among Genetics Institute,
Inc., The Johns Hopkins University, and Maker, (ii) any and all Royalties due at that time by Wyeth
to Maker under Section 7.3 of such Agreement, and (iii) any and all Royalties due at that time by
Wyeth to Maker under Section 4.1 of that October 14, 2002 Cross-License Agreement by and between
Wyeth, acting through Genetics Institute, LLC, and Maker (collectively, the “Amounts for Offset” or
“Collateral”). Upon and in consideration of the execution and delivery of this Fourth Allonge, the
Maker grants the Lender a security interest in the Collateral (as defined in that Security
Agreement of even date herewith by and between the

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Maker and the Lender (the “Security Agreement”)) to secure the Obligations (as defined in the
Security Agreement). The right of offset and the security interest described in this paragraph
shall be in addition to and shall not adversely affect any other contractual, equitable, and
statutory rights that the Lender may have against the Maker, including without limitation any
recoupment rights and common-law rights of setoff and any rights under 11 U.S.C. § 101 et seq. (the
“Bankruptcy Code”).

     4. The right of Maker to repay this Note by issuing stock to Lender (as set forth in Paragraph
no. 3 of the Third Allonge) be and hereby is terminated.

     5. The parties hereto do not intend that a novation of the loan shall be created or
effectuated because of the modifications described in this Fourth Allonge. The parties hereto do
not intend that the execution of this Fourth Allonge and the transaction described herein shall
affect the validity or priority of any indebtedness created by the Note. This Fourth Allonge (a)
is being physically attached to the Note simultaneously with the entry into this Fourth Allonge by
the parties hereto to evidence the modification of the provisions of the Note, and (b) shall upon
such attachment be deemed to be a part of the Note as fully and completely as if the provisions
were set forth at length in the body of the Note. This Fourth Allonge shall be effective as of
January 1, 2005.

     6. All other terms, covenants, and conditions contained in the Note, except as herein
modified, shall remain in full force and effect and the Maker by the execution hereof hereby
ratifies and confirms each and every other term, covenant, and condition of the Note.

     IN WITNESS WHEREOF, the parties hereto have set their hands and seals to this Fourth Allonge
to Promissory Note upon the day hereinabove first written.

[SEAL]

	 	 	 	 	 
	ATTEST:	 	METAMORPHIX, INC.
	 
	 	 	 	 
	/ s / Thomas P. Russo	 	/ s / Edwin C. Quattlebaum
	

	 	By:	 	 
	

	 	 	 	

	Thomas P. Russo, Chief Financial Officer,

	 	 	 	Edwin C. Quattlebaum
	          Executive Vice President, and Treasurer

	 	 	 	President and Chief Executive Officer
	 
	 	 	 	 
	 
	 	 	 	 
	WITNESS:	 	GENETICS INSTITUTE, LLC
	 
	 	 	 	 
	/ s / Garrett L. Stackman	 	/ s / William M. Haskel
	

	 	By:
	 	(SEAL)
	

	 	 	 	

	

	 	 	 	Name: William M. Haskel
	

	 	 	 	

	

	 	 	 	Title:   Vice President
	

	 	 	 	

Page 3exv10w29

 

EXHIBIT 10.29

SECURITY AGREEMENT

     THIS SECURITY AGREEMENT (the “Agreement”) is made this 28th day of April, 2005,
between GENETICS INSTITUTE, LLC, a Delaware limited liability company, its successors and assigns
(the “Lender”), and METAMORPHIX, INC., a Delaware corporation, its successors and assigns (the
“Debtor”).

Explanatory Statement

     WHEREAS, on or about February 9, 1998, the Debtor executed and delivered a Promissory
Note (the “Original Note”) to the Lender, which was modified (i) on or about August 18, 1998, by a
First Allonge to Promissory Note (“First Allonge”); (ii) on or about October 30, 1998, by a Second
Allonge to Promissory Note (“Second Allonge”); (iii) on or about January 26, 1999, by a Third
Allonge to Promissory Note (“Third Allonge”); and (iv) on or about the date hereof by a Fourth
Allonge to Promissory Note (the “Fourth Allonge”) (the Original Note, as modified by the First
Allonge, Second Allonge, Third Allonge, and Fourth Allonge being referred to herein as the “Note”);
and

     WHEREAS, upon and in consideration of the Lender’s agreeing to the Fourth Allonge,
Debtor has agreed to grant to Lender a security interest in all of Debtor’s right, title, and
interest, whether presently existing or hereafter acquired, in, to, and under all of the
Collateral, as hereinafter defined, subject to the terms and conditions hereinafter set forth, as
security for the Obligations (defined below).

     NOW, THEREFORE, in consideration of the Explanatory Statement, which is incorporated herein by
reference, of the covenants, agreements, warranties and representations contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:

     1. Grant of Security Interest. To secure the Obligations (defined below), the Debtor
hereby grants to the Lender a continuing security interest in all of Debtor’s right, title, and
interest, whether presently existing or hereafter acquired, in, to, and under any and all
Additional License Fees to be paid by Wyeth to Debtor under Section 7.2 and Schedule 7.2B of that
January 26, 1999 Amended and Restated Collaboration Agreement by and among Genetics Institute,
Inc., The Johns Hopkins University, and the Debtor, any and all Royalties to be paid by Wyeth to
Debtor under Section 7.3 of such Agreement, and any and all Royalties to be paid by Wyeth to Debtor
under Section 4.1 of that October 14, 2002 Cross-License Agreement by and between Wyeth, acting
through Genetics Institute, LLC, and Debtor (collectively, the “Collateral”). This security
interest granted to Lender herein is junior to previously granted security interests in all now
owned or hereafter acquired, tangible and intangible, assets of the Debtor including intellectual
property, accounts receivable, notes, patents, contracts, and all products and proceeds of the
foregoing. A UCC-1 Financing Statement shall promptly be filed with the Secretary of State of the
State of Delaware by the Debtor; notwithstanding the Debtor’s agreement to make such filing, the
Debtor hereby authorizes the Lender, without notice to the Debtor, to file any financing statements
or similar documents or filings required or appropriate to perfect or protect the security interest
granted to the Lender hereunder.

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     2. Definition of Obligations. As used herein, the term “Obligations” shall mean all
liabilities, obligations, advances, covenants, and duties owing, arising, due, or payable by the
Debtor to the Lender now or later under the Note, this Agreement, or any other document,
instrument, or agreement related thereto, including without limitation all principal and interest
due under the Note.

     3. Rights and Remedies under Note and UCC. Upon a failure to pay any amount due or
any other default under the Note, the Lender shall have all rights and remedies set forth under
such Note and as may be provided under applicable law, including, but not limited to, the Uniform
Commercial Code of the State of Delaware. The security interest described in this paragraph
shall be in addition to and shall not adversely affect any other contractual, equitable, and
statutory rights that the Lender may have against the Debtor, including without limitation any
recoupment rights and rights of setoff and any rights under 11 U.S.C. § 101 et seq. (the
“Bankruptcy Code”).

     4. Notices. All notices, certificates, or other communications hereunder shall
be sufficiently given and shall be deemed given when delivered or when mailed by either (a) first
class, certified mail, postage prepaid, return receipt requested, or (b) nationally recognized
overnight delivery service, addressed to the Debtor, the Lender or to any other Person to whom any
such notice or certificate or other communication is to be given, at the following addresses:

	 	 	 
	     If to the Lender:

	 	Genetics Institute, LLC
	

	 	87 Cambridge Park Drive
	

	 	Cambridge, MA 02140-2387
	 
	 	 
	     with a copy to:

	 	Garrett L. Stackman, Corporate Counsel
	

	 	Wyeth
	

	 	5 Giralda Farms
	

	 	Madison, New Jersey 07940
	 
	 	 
	     If to the Debtor:

	 	MetaMorphix, Inc.
	

	 	8000 Virginia Manor Road, Suite 140
	

	 	Beltsville, Maryland 20705
	

	 	Attn: Edwin C. Quattlebaum, Ph.D., President and CEO
	 
	 	 
	     with a copy to:

	 	William E. Carlson, Esquire
	

	 	Shapiro Sher Guinot & Sandler
	

	 	36 S. Charles Street, Suite 2000
	

	 	Baltimore, Maryland 21201

4. Miscellaneous

	 	4.1  	Amendments, Changes and Modifications. This Agreement
may not be amended, changed, modified, altered or terminated except by a
written instrument executed by the Lender.
	 
	 	4.2  	Execution of Counterparts. This Agreement may be
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
	 
	 	4.3  	Law Governing. This Agreement is prepared and entered
into with the

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	 	   	intention that the law of the State of Delaware shall govern its
construction and interpretation.

     IN WITNESS WHEREOF, the parties hereto have executed and sealed this Security Agreement as of
the day and year first above written.

	 	 	 	 	 
	ATTEST:	 	METAMORPHIX, INC.
	 
	 	 	 	 
	/ s / Thomas P. Russo

	 	 	 	/ s / Edwin C. Quattlebaum
	

	 	By:
	 	(SEAL)
	

	 	 	 	

	Thomas P. Russo, Chief Financial Officer,

	 	 	 	Edwin C. Quattlebaum, President and CEO
	     Executive Vice President, and Treasurer
	 	 	 	 
	 
	 	 	 	 
	ATTEST/WITNESS:	 	GENETICS INSTITUTE, LLC
	 
	 	 	 	 
	/ s / Garrett L. Stackman

	 	 	 	/ s / William M. Haskel
	

	 	By:
	 	(SEAL)
	

	 	 	 	

	

	 	 	 	Name: William M. Haskel
	

	 	 	 	Title: Vice President

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