EXCHANGE AGREEMENT

 

This Exchange Agreement (the “Agreement”) is entered into this 29th day of June,
2012 by and among Interleukin Genetics, Inc., a corporation organized under the
laws of the State of Delaware (the “Company”), and Pyxis Innovations Inc.
(“Pyxis”).

 

WITNESSETH :

 

WHEREAS Pyxis holds 5,000,000 shares (the “Series A Shares”) of the Company’s
Series A Preferred Stock, par value $0.001 per share (the “Series A Preferred
Stock”);

 

WHEREAS the parties desire that Pyxis exchange (the “Exchange”) the Series A
Shares for 5,000,000 shares (the “Series A-1 Preferred Shares”) of the Company’s
Series A-1 Preferred Stock, par value $0.001 per share (the “Series A-1
Preferred Stock”), having the rights, privileges and preferences set forth in
the Certificate of Designations, Preferences, and Rights of Series A-1 Preferred
Stock and Series B Preferred Stock (the “Certificate of Designations”) set forth
on Exhibit A hereto; and

 

WHEREAS the parties desire that the Exchange be consummated substantially
contemporaneously with the closing (the “Closing”) of that certain preferred
stock equity investment (the “Series B Transaction”) contemplated between the
Company and Delta Dental Plan of Michigan, Inc.

 

NOW THEREFORE, in consideration of the premises and of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, intending to
be legally bound the parties hereby agree as follows:

 

ARTICLE I

EXCHANGE OF SECURITIES

 

SECTION 1.01         Authorization of Series A-1 Preferred Stock. On or prior to
the Closing Date (as defined below), the Company shall have authorized the
issuance to Pyxis, on the terms and conditions set forth in this Agreement, of
an aggregate of 5,000,000 shares (the “Series A-1 Shares”) of Series A-1
Preferred Stock having the rights, privileges and preferences set forth in the
Certificate of Designations.

 

SECTION 1.02         Transfer of the Series A Preferred Stock in Exchange for
Series A-1 Preferred Stock. Pyxis agrees to transfer and deliver to the Company,
on the Closing Date, free and clear of any and all liens, charges, pledges or
other encumbrances of any kind or nature (“Encumbrances”), the Series A Shares
to the Company and, in exchange therefor, the Company agrees to issue and
deliver to Pyxis the Series A-1 Shares immediately following the effectiveness
of the Certificate of Designations upon filing with the Office of the Secretary
of State of the State of Delaware (the “State Office”). For the avoidance of
doubt, notwithstanding anything to the contrary, “Encumbrances” shall not
include the Series A Preferred Contractual Rights (as defined below).

 

 

 

 

SECTION 1.03         Closing. The closing of the Exchange on the terms and
conditions set forth in this Agreement (the “Closing”) shall take place remotely
via the exchange of documents and signatures at 10:00 a.m. EST on the same date
as the closing of the Series B Transaction (the “Closing Date”).

 

SECTION 1.04          Closing Documents and Payments. At the Closing, (a) Pyxis
shall deliver to the Company a Stock Power substantially in the form attached
hereto as Exhibit B (the “Stock Power”) duly completed and executed in favor of
the Company (together with the certificate PA0001 representing the Series A
Shares), (b) the Company shall then file with the State Office a Certificate of
Elimination of the Series A Preferred Stock, in substantially the form attached
hereto as Exhibit C (the “Certificate of Elimination”); (c) the Company shall
then file the Certificate of Designations with the State Office; and (d) the
Company shall then issue and deliver to Pyxis a certificate registered in Pyxis’
name evidencing the Series A-1 Shares (the Stock Power, together with the
Certificate of Elimination, the Certificate of Designations and this Agreement,
the “Transaction Documents”). At the Closing, Pyxis shall also receive an
opinion of Morris, Nichols, Arsht & Tunnell LLP, special Delaware counsel to the
Company (“MNAT”), in substantially the form attached hereto as Exhibit C (the
“MNAT Opinion”).

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company hereby represents and warrants the following to Pyxis as of date
hereof and as of the Closing Date:

 

SECTION 2.01         Organization and Qualification. The Company is a
corporation, duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has the requisite corporate power and
authority to own its properties and to carry on its business as now being
conducted. Copies of the Company’s Certificate of Incorporation, as amended
(including the Certificate of Designation for the Series A Preferred Stock, the
“Charter”) and Amended and Restated Bylaws of the Company, as amended (the
“Bylaws”), and in each case, all amendments thereto, have been filed as exhibits
to the Company’s SEC Documents (as defined below) and have not been further
modified, and except as required by the transactions contemplated hereby and by
the Series B Transaction, the Company has no present intention to modify the
Charter and Bylaws. The Company is duly qualified as a foreign corporation to do
business, and is in good standing, in every jurisdiction in which its ownership
of property or the nature of the business conducted and proposed to be conducted
by it makes such qualification necessary, except where the failure to be so
qualified or in good standing would not, individually or in the aggregate, have
or reasonably be expected to result in a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or properties
of the Company, whether or not arising from transactions in the ordinary course
of business (“Material Adverse Effect”). For purposes hereof, “SEC Documents”
shall mean all reports, schedules, forms, statements, exhibits (including
certifications of the Company’s principal executive and financial officers
pursuant to Section 302 and 906 of the Sarbanes-Oxley Act of 2002 and other
documents required to be filed by it with the Securities and Exchange Commission
(the “SEC”) pursuant to the reporting requirements of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), for the twelve (12) months
preceding the date hereof (all of the foregoing filed prior to or on the date
hereof, or prior to the Closing Date, and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being referred to in this Agreement as the “SEC Documents”).

 

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SECTION 2.02         Authorization; Enforcement; Validity. The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement and to issue the Series A-1 Shares in
accordance with the terms hereof. The execution and delivery of this Agreement
by the Company and the consummation and performance by the Company of the
transactions contemplated hereby, including, without limitation, the issuance of
the Series A-1 Shares and of the shares of Common Stock issuable upon conversion
of the Series A-1 Shares (the “Common Shares” and together with the Series A-1
Shares, the “Securities”), have been duly authorized by all requisite corporate
action. This Agreement has been duly executed and delivered by the Company. This
Agreement constitutes the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors’ rights and
remedies.

 

SECTION 2.03         Issuance of Shares. The Series A-1 Shares and the Common
Shares are duly authorized and, upon issuance in accordance with the terms
hereof and the Certificate of Designations set forth on Exhibit A hereto, (i)
will be (A) validly issued, fully paid and non-assessable and (B) free from all
taxes, liens and charges in the United States of America with respect to the
issuance thereof, other than any liens or encumbrances created by or imposed by
Pyxis, and not subject to preemptive rights or other similar rights of
stockholders of the Company and (ii) shall be afforded the rights and otherwise
be subject to (a) the provisions of Sections 5.3, 5.4, 5.6, 5.7, 5.8, 6.7 and
6.8 of that certain Stock Purchase Agreement, dated March 5, 2003, between the
Company and Pyxis, as amended, and (b) the Registration Rights Agreement, dated
March 5, 2003, between the Company and Pyxis (the “Series A Preferred
Contractual Rights”), which rights shall apply to the Series A-1 Preferred Stock
as such provisions and agreement applied to the Series A Preferred Stock prior
to the Exchange. Except for the filing of the Certificate of Elimination and the
Certificate of Designations with the State Office, and any notice prior or
subsequent to the Closing that may be required under applicable state and/or
federal securities laws (or comparable laws of any other jurisdiction), no
authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
bureau, agency, instrumentality or other third party, is or will be necessary
for, or in connection with, the execution and delivery by the Company of this
Agreement, for the offer, issue, sale, execution or delivery of the Series A-1
Shares, or for the performance by the Company of its obligations under this
Agreement. The Company has reserved from its duly authorized capital stock the
Common Shares issuable upon conversion of the Series A-1 Shares.

 

SECTION 2.04         No Conflicts. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby do not and will not (i) result in a violation
of the Company’s Charter or Bylaws; (ii) conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under any agreement, indenture or instrument to which the Company is a party;
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree applicable to the Company; or (iv) result in the imposition of a
mortgage, pledge, security interest, encumbrance, charge or other lien on any
asset of the Company, except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations, violations and impositions as
described in clauses (ii), (iii) or (iv) of this sentence as would not,
individually or in the aggregate, have or result in a Material Adverse Effect.

 

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ARTICLE III

REPRESENTATIONS, WARRANTIES AND COVENANTS OF PYXIS

 

Pyxis hereby represents and warrants to and agrees with the Company as of date
hereof and as of the Closing Date:

 

SECTION 3.01         Title to the Series A Shares. Pyxis owns the Series A
Shares beneficially and of record, free and clear of all Encumbrances. There is
no restriction affecting the ability of Pyxis to transfer the legal and
beneficial title and ownership of such Series A Shares to the Company and, upon
delivery thereof to the Company pursuant to the terms of this Agreement at the
Closing, the Company will acquire record and beneficial title to such Series A
Shares free and clear of all Encumbrances.

 

SECTION 3.02         Pyxis’ Authority to Execute and Perform Agreement. Pyxis
has the legal capacity and full legal right and power and all authority and
approval required by law to enter into this Agreement and to perform its
obligations hereunder. Pyxis has duly executed and delivered this Agreement, and
this Agreement is the legal, valid and binding obligation of Pyxis enforceable
in accordance with its terms. The execution, delivery and performance of this
Agreement by Pyxis does not and will not result in any violation of or conflict
with, or constitute a default under (i) any contract, agreement, document or
instrument to which Pyxis is party or by which Pyxis or any of Pyxis’ properties
are bound, or (ii) any law, rule, regulation, judgment or order to which Pyxis
is subject.

 

SECTION 3.03         Accredited Investor. Pyxis is an "accredited investor" as
such term is defined in Regulation D under the Securities Act of 1933, as
amended (“Securities Act”).

 

SECTION 3.04         Purchase For Investment. Pyxis is acquiring the Series A-1
Shares for investment for his, her or its own account and not with a view to the
distribution or public offering thereof within the meaning of the Securities
Act. Pyxis understands that the Series A-1 Shares have not been registered under
the Securities Act and may not be sold or transferred without such registration
or an exemption therefrom.

 

ARTICLE IV

CONDITIONS

 

SECTION 4.01         The Company Conditions. The obligations of the Company to
issue the Series A-1 Shares on the Closing Date and to consummate the other
transactions contemplated hereby are subject to the satisfaction, on or before
the Closing Date (unless otherwise specified herein), of the following
conditions each of which may be waived by the Company in its sole discretion:

 

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(a)         Representations and Warranties. All of the representations and
warranties of Pyxis contained in this Agreement shall be true, correct and
complete in all material respects on and as of the date hereof and on and as of
the Closing Date, as if made on and as of the Closing Date.

 

(b)         Performance. Pyxis shall have performed and complied in all material
respects with all covenants and agreements contained herein required to be
performed or complied with by them prior to or at the Closing Date, including
delivery of the documents set forth in Section 1.04 above.

 

(c)         Filing and Effectiveness of Certificate of Elimination and
Certificate of Designations. The Certificate of Elimination and Certificate of
Designations shall have been filed with the State Office and become effective.

 

(d)         Series B Transaction Closing. The closing of the Series B
Transaction shall occur substantially contemporaneously with the Closing.

 

(e)         Director Resignation. Effective as of the Closing Date, Catherine
Ehrenberger, a designee of the Series A Preferred Stock to the Board of
Directors of the Company, shall have resigned from the Board.

 

(f)         Amendment to Note Purchase Agreement. The Amended and Restated Note
Purchase Agreement , dated March 10, 2009, between the Company and Pyxis, as
amended on August 10, 2009, February 1, 2010 and September 30, 2010, shall have
been further amended to extend the Maturity Date (as defined therein) on which
the principal amount of all notes issued thereunder shall be payable to November
30, 2012.

 

SECTION 4.02         Pyxis Conditions. The obligations of Pyxis to consummate
the transactions contemplated hereby are subject to the satisfaction, on or
before the Closing Date, of the following conditions, each of which may be
waived by Pyxis:

 

(a)         Representations and Warranties. All of the representations and
warranties of the Company contained in this Agreement shall be true, complete
and correct in all material respects, on and as of the date hereof and on and as
of the Closing Date, as if made on and as of such date.

 

(b)         Performance. The Company shall have performed and complied in all
material respects with all covenants and agreements contained herein required to
be performed or complied with by them prior to or at the Closing Date, including
delivery of the documents set forth in Section 1.04 above.

 

(c)         Opinion. Pyxis shall have received the MNAT Opinion from MNAT dated
as of the Closing Date.

 

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(d)         Series B Transaction Closing. The closing of the Series B
Transaction shall occur substantially contemporaneously with the Closing.

 

ARTICLE V

MISCELLANEOUS

 

SECTION 5.01         Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party’s address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) sent by recognized overnight courier, or (iii) sent by registered or
certified mail, return receipt requested, postage prepaid.

 

If to the Company:

 

Interleukin Genetics, Inc.

135 Beaver Street

Waltham, MA 02452

Attention: Chief Financial Officer

 

If to Pyxis:

Pyxis Innovations Inc.

7575 Fulton Street East

Ada, Michigan 49333

Attention: Vice President and General Counsel

 

All notices, requests, consents and other communications hereunder shall be
deemed to have been received (i) if by hand, at the time of the delivery thereof
to the receiving party at the address of such party set forth above, (ii) if
sent by overnight courier, on the next business day following the day such
notice is delivered to the courier service, or (iii) if sent by registered or
certified mail, on the 5th business day following the day such mailing is made.

 

SECTION 5.02         Entire Agreement; Previous Agreements. The Transaction
Documents embody the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersede all prior oral or
written agreements and understandings relating to the subject matter hereof. No
statement, representation, warranty, covenant or agreement of any kind not
expressly set forth in the Transaction Documents shall affect, or be used to
interpret, change or restrict, the express terms and provisions of this
Agreement. Notwithstanding the foregoing, Series A Preferred Contractual Rights
shall apply to the Series A-1 Preferred Stock as such provisions and agreement
applied to the Series A Preferred Stock prior to the Exchange.

 

SECTION 5.03         Modifications, Amendments and Waivers. The terms and
conditions of this Agreement may be modified, amended or waived, or consent for
the departure therefrom granted, only by written agreement executed by the
Company and Pyxis.

 

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SECTION 5.04         Assignment. Neither this Agreement, nor any right
hereunder, may be assigned by any of the parties hereto without the prior
written consent of the other parties.

 

SECTION 5.05         Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and their successors and
permitted assigns, and nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement. Nothing in this Agreement shall
be construed to create any rights or obligations except among the parties
hereto, and no person or entity shall be regarded as a third party beneficiary
of this Agreement.

 

SECTION 5.06         Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance with and
governed by the internal laws of the State of Delaware, without giving effect to
the conflict of law principles thereof.

 

SECTION 5.07         Jurisdiction and Service of Process. Any legal action or
proceeding with respect to this Agreement shall be brought in the courts of the
Commonwealth of Massachusetts or of the United States of America for the
District of Massachusetts. By execution and delivery of this Agreement, each of
the parties hereto accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts.

 

SECTION 5.08         Severability. In the event that any court of competent
jurisdiction shall finally determine that any provision, or any portion thereof,
contained in this Agreement shall be void or unenforceable in any respect, then
such provision shall be deemed limited to the extent that such court determines
it enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall determine any such provision, or portion thereof,
wholly unenforceable, the remaining provisions of this Agreement shall
nevertheless remain in full force and effect.

 

SECTION 5.09         Survival. The representations and warranties of the Company
and Pyxis contained in Articles II and III, respectively, shall be deemed to be
representations and warranties as of the date hereof and shall survive the
Closing and delivery of the Series A-1 Shares, provided that all such
representations and warranties shall terminate three (3) years following the
Closing, except for Section 3.01, which shall survive indefinitely.

 

SECTION 5.10         Headings and Captions. The headings and captions of the
various subdivisions of this Agreement are for convenience of reference only and
shall in no way modify, or affect, or be considered in construing or
interpreting the meaning or construction of any of the terms or provisions
hereof.

 

SECTION 5.11         Enforcement. Each of the parties hereto acknowledges and
agrees that the rights acquired by each party hereunder are unique and that
irreparable damage would occur in the event that any of the provisions of this
Agreement to be performed by the other party were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, in addition
to any other remedy to which the parties hereto are entitled at law or in
equity, each party hereto shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement by the other party and to enforce
specifically the terms and provisions hereof in any federal or state court to
which the parties have agreed hereunder to submit to jurisdiction.

 

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SECTION 5.12         Reliance. The parties hereto agree that, notwithstanding
any right of any party to this Agreement to investigate the affairs of any other
party to this Agreement, the party having such right to investigate shall have
the right to rely fully upon the representations and warranties of the other
party expressly contained in this Agreement and on the accuracy of any schedule
or other document attached hereto or referred to herein or delivered by such
other party or pursuant to this Agreement.

 

SECTION 5.13         Expenses. Each of the parties hereto shall pay its own fees
and expenses (including the fees of any attorneys, accountants, appraisers or
others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated.

 

SECTION 5.14         Counterparts. This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

 

[Remainder of Page Intentionally Left Blank.]

 

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IN WITNESS WHEREOF, the Company and Pyxis have executed this Agreement as of the
day and year first above written.

 

  INTERLEUKIN GENETICS, INC.       By: /s/ Lewis H. Bender   Name: Lewis H.
Bender   Title: Chief Executive Officer       PYXIS INNOVATIONS INC.       By:
/s/ David J. Tuit   Name: David J. Tuit   Title:  Assistant Treasurer

 

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