Exhibit 10.1

EXECUTION COPY

 

 

 

 

 

 

 SECURITIES PURCHASE AGREEMENT

 

by and between

 

Interleukin Genetics, Inc.

 

and

 

The Purchasers Identified on Schedule I Hereto

 

 

 

July 29, 2016

 

 

 

 

 

 

 

 

 

 

 

Table of Contents

 

      Page         1. PURCHASE AND SALE 1   (a) Authorization of Shares 1   (b)
Purchase of Shares and Warrants 1 2. CLOSING 1   (a) The Closing 1   (b) Form of
Payment 2   (c) Conditions to the Purchaser’s Obligation to Purchase on the
Closing Date 2   (d) Conditions to the Company’s Obligation to Issue and Sell on
the Closing Date 3 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 4   (a)
Organization and Qualification 4   (b) Subsidiaries 4   (c) Authorization;
Enforcement; Validity 4   (d) Capitalization 5   (e) Issuance of Shares 5   (f)
No Conflicts 6   (g) No Violation or Default 6   (h) SEC Documents 6   (i)
Financial Statements 7   (j) No Material Adverse Change 7   (k) Independent
Accountants 7   (l) Title to Intellectual Property 8   (m) Licenses and Permits;
Compliance with Law 8   (n) Insurance 8   (o) Related Party Transactions 9   (p)
Environmental Matters 9   (q) Tax Matters 9

 

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Table of Contents

(continued)

 

      Page           (r) Employees 9   (s) Internal Control over Financial
Reporting 10   (t) Disclosure Controls and Procedures 10   (u) Sarbanes-Oxley
Compliance 10   (v) Absence of Litigation 10   (w) Investment Company Act 11  
(x) No Market Manipulation 11   (y) Foreign Corrupt Practices 11   (z) Brokers
11   (aa) Regulation 11 4. PURCHASERS’ REPRESENTATIONS AND WARRANTIES 12   (a)
Transfer or Resale 12   (b) Investment Purpose 12   (c) General Solicitation 12
  (d) Information 12   (e) Reliance on Exemptions 12   (f) No Governmental
Review 13   (g) Authorization; Enforcement; Validity 13   (h) No Conflicts 13 5.
RESTRICTIONS ON TRANSFER 13   (a) Resales 13   (b) Rule 144 13   (c) Legends 14
  (d) Legend Removal 14 6. BOARD COMPOSITION 15   (a) Board Composition;
Appointment of Director Designees 15   (b) Nominations of Director Designees 15
  (c) Successor Director Designees 15

 

 

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 Table of Contents

(continued)

 

      Page           (d) Indemnification Agreements 16   (e) Committees of the
Board of Directors 16   (f) Amendment of this Section 6 16   (g) Board Observer
Rights 16 7. OTHER AGREEMENTS AND COVENANTS 17   (a) National Market Listing 17
  (b) Use of Proceeds 17   (c) Form D; Blue Sky Filings 17   (d) Reservation of
Shares 17   (e) Exchange Act Filings 17   (f) Integration 17   (g) Expenses 18  
(h) Purchaser/Director Designee Exchange Act Filings 18 8. PUBLIC STATEMENTS 18
9. MISCELLANEOUS 18   (a) Governing Law 18   (b) Entire Agreement 19   (c)
Amendments and Waivers 19   (d) Notices 19   (e) No Strict Construction 20   (f)
Further Assurances 20   (g) Severability 20   (h) Successors and Assigns 20  
(i) Survival 20   (j) No Third-Party Beneficiaries 21   (k) Replacement of
Securities 21   (l) Independent Nature of Purchasers’ Obligations and Rights 21
  (m) Business Day 21

 

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Table of Contents

(continued)

 

      Page           (n) Headings 21   (o) Execution 21

 

 

SCHEDULES

Schedule I – List of Purchasers

 

EXHIBITS

Exhibit A – Form of Warrant

 

Exhibit B – Registration Rights Agreement

 

 

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SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) dated as of July 29, 2016
is made by and between Interleukin Genetics, Inc., a Delaware corporation, (the
“Company”), and each purchaser identified on Schedule I hereto (each a
“Purchaser”), and together, the “Purchasers”).

 

RECITALS

 

In accordance with the terms and conditions of this Agreement and pursuant to
exemptions from registration under the Securities Act of 1933, as amended (the
“Securities Act”), the Company has agreed to issue and sell, and each Purchaser
has agreed, severally and not jointly, to purchase a number of shares of the
Company’s common stock, par value $0.001 per share (the “Common Stock”), and a
warrant to purchase a number of shares of Common Stock (the “Warrant”, and
together with all such warrants being issued to Purchasers under this Agreement,
the “Warrants”), each as set forth opposite such Purchaser’s name on Schedule I
to this Agreement.

 

NOW THEREFORE, in consideration of the promises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each Purchaser
hereby agree as follows:

 

1.PURCHASE AND SALE

 

(a)          Authorization of Shares and Warrants. The Company has authorized
(i) the sale and issuance to the Purchasers of the shares of Common Stock, (ii)
the sale and issuance to the Purchasers of the Warrants, and (iii) the issuance
of shares of Common Stock to be issued upon exercise of the Warrants (the
“Warrant Shares”).

 

(b)         Purchase of Shares and Warrants. At the Closing (as defined below),
the Company shall issue and sell to each Purchaser, and each Purchaser shall,
severally and not jointly, purchase from the Company, upon the terms and subject
to the conditions set forth in this Agreement, (i) the number of shares of
Common Stock set forth opposite such Purchaser’s name on Schedule I to this
Agreement (the “Shares”) and (ii) a Warrant to purchase the number of shares of
Common Stock set forth opposite such Purchaser’s name on Schedule I to this
Agreement, for an aggregate purchase price as set forth opposite such
Purchaser’s name on Schedule I to this Agreement (the “Purchase Price”), based
on a purchase price per Share of $0.0994 (the “Per Share Purchase Price”).

 

2.CLOSING

 

(a)          The Closing. The date and time of the Closing of the purchase and
sale of the Shares and the Warrants (the “Closing”) shall occur on July 29, 2016
at 12:00 p.m. Boston time, at the offices of Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C., One Financial Center, Boston, Massachusetts, 02111 (subject to
the satisfaction or waiver of the conditions set forth in Subsections (c) and
(d) of this Section 2), or at such other location, date and time as may be
agreed upon between the Company and the Purchasers (the “Closing Date”).

 

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(b)         Form of Payment. On the Closing Date, each Purchaser shall pay the
Company the Purchase Price for the Shares and the Warrant to be issued and sold
to such Purchaser on such Closing Date, by wire transfer of immediately
available funds in accordance with the Company’s written wire instructions
previously provided to the Purchasers, and the Company shall deliver to each
Purchaser the original certificate or certificates representing the Shares and
the original Warrant, duly executed on behalf of the Company and registered in
the name of such Purchaser.

 

(c)          Conditions to the Purchaser’s Obligation to Purchase on the Closing
Date. Each Purchaser’s obligation to purchase the Shares and the Warrant at the
Closing shall be subject to the satisfaction, on or before the Closing Date, of
each of the following conditions, provided that these conditions are for the
Purchaser’s sole benefit and may be waived by such Purchaser at any time in its
sole discretion:

 

(i)receipt of a copy of this Agreement executed by the Company;

 

(ii)evidence of irrevocable instructions from the Company to the transfer agent
for the Common Stock with respect to the issuance and delivery of one or more
certificates representing the Shares;

 

(iii)receipt of the Warrant in the form attached as Exhibit A;

 

(iv)all actions required by the Board of Directors of the Company (the “Board”)
to effect the provisions of Section 6 of this Agreement with respect to the
composition of the Board following the Closing shall have been taken;

 

(v)all consents, approvals and waivers required for the consummation of the
transactions contemplated hereby shall have been obtained;

 

(vi)the Company shall have delivered to the Purchasers a Compliance Certificate,
executed by the Chief Executive Officer of the Company, dated as of the Closing
Date, to the effect that the conditions specified in subsections (v), (viii),
and (ix) of this Section 2(c) have been satisfied;

 

(vii)the Company shall have delivered to the Purchasers a certificate of its
Secretary certifying as to (A) the resolutions of the Board approving this
Agreement and the transactions contemplated hereby, including the actions
required by the Company pursuant to this Section 2(c); and (B) good standing
certificates (including tax good standing) with respect to the Company from the
applicable authority(ies) in Delaware and any other jurisdiction in which the
Company is qualified to do business dated a recent date before the Closing;

 

(viii)the representations and warranties of the Company in this Agreement shall
be true, correct and complete as of the Closing Date (except for representations
and warranties that speak as of a specific date, which shall be true, correct
and complete as of such date) and the Company shall have performed, satisfied
and complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing;

 

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(ix)no temporary restraining order, preliminary or permanent injunction or other
order or decree, and no other legal restraint or prohibition, shall exist which
questions the validity of this Agreement or the right of the Company or any
Purchaser, as the case may be, to enter into this Agreement or prevents or could
reasonably be expected to prevent the consummation of the transactions
contemplated by this Agreement, nor shall any litigation or court or
administrative proceeding have been commenced or threatened with respect to the
foregoing;

 

(x)the Company shall have executed and delivered the Registration Rights
Agreement in substantially the form attached as Exhibit B (the “Registration
Rights Agreement”);

 

(xi)delivery of a legal opinion of Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, Company counsel, in form and substance reasonably satisfactory to the
Purchasers; and

 

(xii)receipt of such other information, certificates and documents as the
Purchasers may reasonably request.

 

(d)         Conditions to the Company’s Obligation to Issue and Sell on the
Closing Date. The Company’s obligation to issue and sell the Shares and the
Warrant at the Closing shall be subject to the satisfaction, on or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Company’s sole benefit and may be waived by the Company
at any time in its sole discretion:

 

(i)receipt of a copy of this Agreement executed by each Purchaser;

 

(ii)receipt of the Purchase Price from each Purchaser;

 

(iii)the representations and warranties of each Purchaser in this Agreement
shall be true, correct and complete as of the date of this Agreement and as of
the Closing Date (except for representations and warranties that speak as of a
specific date, which shall be true, correct and complete as of such date) and
each Purchaser shall have performed, satisfied and complied with in all material
respects the covenants, agreements and conditions of such Purchaser to be
performed, satisfied or complied with by it under this Agreement at or prior to
the Closing Date; and

 

(iv)no temporary restraining order, preliminary or permanent injunction or other
order or decree, and no other legal restraint or prohibition shall exist which
questions the validity of this Agreement or the right of the Company or any
Purchaser, as the case may be, to enter into this Agreement or prevents or could
reasonably be expected to prevent the consummation of the transactions
contemplated by this Agreement, nor shall any litigation or court or
administrative proceeding have been commenced or threatened with respect to the
foregoing.

 

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3.REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and warrants to each Purchaser, subject to such
exceptions as are set forth in the SEC Documents (as defined below) (other than
(x) those sections of the SEC Documents entitled or captioned “Risk Factors,”
(y) any disclosure of risks included in any forward-looking statements
disclaimer or other statements that are similarly non-specific and are
predictive or forward looking in nature and (z) specific disclosures contained
in those documents which are filed as exhibits to the SEC Documents), provided
that the relevance of such exceptions to the representations and warranties is
reasonably apparent, as follows:

 

(a)          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 and as described
in the SEC Documents. Copies of the Company’s Restated Certificate of
Incorporation, as amended (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 and have not
been further modified, and except as otherwise may be required by the
transactions contemplated hereby, 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 (i) the
condition (financial or otherwise), prospects, earnings, assets, results of
operations, business or properties of the Company, whether or not arising from
transactions in the ordinary course of business or (ii) the ability of the
Company to consummate the transactions contemplated by this Agreement (“Material
Adverse Effect”).

 

(b)Subsidiaries. The Company has no subsidiaries.

 

(c)          Authorization; Enforcement; Validity. The Company has the requisite
corporate power and authority to enter into and perform its obligations under
this Agreement, the Registration Rights Agreement and each of the other
agreements entered into by the parties hereto in connection with transactions
contemplated by this Agreement (collectively, the “Transaction Documents”) and
to issue the Shares and the Warrants in accordance with the terms hereof and
thereof. The execution and delivery of the Transaction Documents by the Company
and the consummation and performance by the Company of the transactions
contemplated hereby and thereby, including, without limitation, the issuance of
the Shares, Warrants and the Warrant Shares (collectively, the “Securities”),
have been duly authorized by all requisite corporate action. The Transaction
Documents have been duly executed and delivered by the Company. The Transaction
Documents constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their 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.

 

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(d)         Capitalization. As of the date of this Agreement, the authorized
capital stock of the Company consists of (i) 450,000,000 shares of Common Stock
and (ii) 6,000,000 shares of undesignated preferred stock, $0.001 par value per
share. As of the date of this Agreement and prior to the issuance of the Shares
and Warrants under this Agreement, (i) 173,029,840 shares of Common Stock are
issued and outstanding; (ii) 22,062,770 shares of Common Stock are duly reserved
for future issuance pursuant to outstanding stock options; (iii) 88,301,079
shares of Common Stock are duly reserved for future issuance pursuant to
outstanding warrants; (iv) 30,044,509 shares of Common Stock are duly reserved
for future issuance pursuant to the Company’s stock plans; and (v) 157,454
shares of Common Stock are duly reserved for future issuance pursuant to the
Company’s employee stock purchase plan. All of the issued shares of capital
stock of the Company have been duly and validly authorized and issued, are fully
paid and non-assessable, and have been issued in compliance with federal and
state securities laws. Except as set forth above, (i) no shares of the Company’s
capital stock are subject to preemptive rights or any other similar rights or
any liens or encumbrances; (ii) there are no outstanding options, warrants,
rights to subscribe to, calls or commitments relating to, or securities or
rights convertible into, any shares of capital stock of the Company, or
contracts, commitments, understandings or arrangements by which the Company is
or may become bound to issue additional shares of capital stock of the Company
or options, warrants, rights to subscribe to, calls or commitments relating to,
or securities or rights convertible into, any shares of capital stock of the
Company. The Company has no knowledge of any voting agreements, buy-sell
agreements, option or right of first purchase agreements or other agreements of
any kind among any of the security holders of the Company relating to the
securities of the Company held by them. Other than (i) pursuant to the
Registration Rights Agreement, (ii) with respect to the shares of Common Stock
issuable upon exercise of the warrant to be issued pursuant to that certain
Venture Loan and Security Agreement, dated December 23, 2014, by and between
Interleukin and Horizon, (iii) except as set forth in that certain Registration
Rights Agreement, dated May 17, 2013, between the Company and the purchasers
signatory thereto, and (iv) except as set forth in that certain Registration
Rights Agreement, dated December 23, 2014, between the Company and the
purchasers signatory thereto, the Company has not granted any person the right
to require the Company to register any securities of the Company under the
Securities Act, whether on a demand basis or in connection with the registration
of securities of the Company for its own account or for the account of any other
person.

 

(e)          Issuance of Shares. The Shares and the Warrant Shares have been
duly and validly reserved for issuance. The Shares and the Warrant Shares are
duly authorized and, upon issuance in accordance with the terms hereof and the
Warrants, 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 the Purchaser, and not subject to preemptive, registration, right of
first refusal or other similar rights of stockholders of the Company. Except for
the filing of 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
Shares and Warrants, or for the performance by the Company of its obligations
under this Agreement. The Company has reserved from its duly authorized capital
stock the Shares and the Warrant Shares.

 

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(f)          No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not and will not (i) result in a
breach or 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, or give to others any rights of termination,
amendment, acceleration or cancellation of, or incremental, additional or varied
rights under, any agreement, indenture, or other instrument, obligation or
understanding to which the Company is a party; (iii) result in a violation of
any statute, law, rule, regulation, order, judgment or decree (including federal
and state securities laws) 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.

 

(g)         No Violation or Default. The Company is not (i) in violation of its
Charter or Bylaws; (ii) in default (or subject to 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; or (iii) in violation of any law,
rule, regulation, order, judgment or decree applicable to the Company; except
for such violations or defaults, as described in clauses (ii) or (iii) of this
sentence as would not, individually or in the aggregate, have or result in a
Material Adverse Effect.

 

(h)         SEC Documents. The Company has filed all reports, schedules, forms,
statements, exhibits (including certifications of the Company’s principal
executive and financial officers pursuant to Section 302 and 906 of
Sarbanes-Oxley (as defined below)) and other documents required to be filed by
it with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), since January 1, 2015 (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”). As of the date of filing of each such SEC Document, such SEC
Document, as it may have been subsequently amended by filings made by the
Company with the SEC prior to the date hereof, complied in all material respects
with the requirements of the Exchange Act and the rules and regulations of the
SEC promulgated thereunder applicable to such SEC Document. None of the SEC
Documents, as of the date filed and as they may have been subsequently amended
by filings made by the Company with the SEC prior to the date hereof, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

 

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(i)           Financial Statements. The financial statements and the related
notes thereto of the Company included or incorporated by reference in the SEC
Documents comply in all material respects with the applicable requirements of
the Exchange Act and present fairly and accurately in all material respects the
financial position of the Company as of the dates indicated and the results of
operations and the changes in cash flows for the periods specified. Such
financial statements have been prepared in conformity with United States
generally accepted accounting principles (“GAAP”) applied on a consistent basis
throughout the periods covered thereby, except as specifically stated therein,
and the supporting schedules included or incorporated by reference in the SEC
Documents present fairly the information required to be stated therein. The
Company does not have any material liability or obligation of any nature,
whether or not accrued, contingent or otherwise that would be required by GAAP
to be disclosed on a balance sheet of the Company or in the notes thereto. The
Company has not created any entities or entered into any transactions or created
any liabilities or obligations of any nature, whether or not accrued, contingent
or otherwise, for the purpose of avoiding disclosure required by GAAP.

 

(j)           No Material Adverse Change. Since the date of the most recent
financial statements of the Company included or incorporated by reference in the
SEC Documents, except as disclosed in the SEC Documents and as contemplated by
this Agreement, (i) there has not been any change in the capital stock (other
than pursuant to the Company's stock plans pursuant to the Company's existing
employee stock purchase plan (any such issuances, whenever issued or granted,
being collectively “Employee Equity Transactions”), pursuant to the conversion
or exercise of outstanding securities that are convertible into or exercisable
for Common Stock, or pursuant to publicly disclosed equity or debt financings)
or long-term debt of the Company, or any dividend or distribution of any kind
declared, set aside for payment, paid or made by the Company on any class of
capital stock; (ii) the Company has not entered into any transaction or
agreement that is material to the Company taken as a whole or incurred any
liability or obligation, direct or contingent, that is material to the Company
and, except as contemplated by this agreement, has not made any material change
or amendment to a material contract or arrangement by which the Company or any
of its assets or properties is bound or subject; (iii) the Company has not
sustained any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor disturbance or dispute or any action, order or decree of any court or
arbitrator or governmental or regulatory authority; and (iv) there has not been
the occurrence of any Material Adverse Effect.

 

(k)         Independent Accountants. Grant Thornton LLP, who have certified
certain financial statements of the Company, have advised the Company that they
are, and to the Company’s knowledge they are, independent registered public
accountants with respect to the Company as required by the Securities Act.
Except as pre-approved in accordance with the requirements set forth in Section
10A of the Exchange Act, to the Company’s knowledge, Grant Thornton LLP has not
engaged in any “prohibited activities” (as defined in Section 10A of the
Exchange Act) on behalf of the Company.

 

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(l)           Title to Intellectual Property. The Company owns or possesses
adequate rights to use all patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service mark registrations,
copyrights, licenses, inventions, know-how and all other intellectual property
rights (including trade secrets and other unpatented or unpatentable proprietary
or confidential compounds, genes, information, systems or procedures)
(collectively, the “Intellectual Property”), used in or necessary for the
conduct of the Company’s business as now, or as contemplated to be, conducted.
Except as set forth in the SEC Documents, (i) there are no rights of third
parties to any such Intellectual Property except through licensing or
cross-licensing agreements; (ii) to the Company’s knowledge, there is no
infringement by third parties of any Intellectual Property to which the Company
can assert a claim of infringement; (iii) there is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or claim by others
challenging the Company’s ownership of or licensing rights in or to any such
Intellectual Property; (iv) there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others challenging the validity
or scope of any such Intellectual Property, other than ordinary patent,
trademark, service mark and copyright prosecution disclosed in the SEC
Documents; (v) there is no pending or, to the Company’s knowledge, threatened
action, suit, proceeding or claim by others that the Company infringes or
otherwise violates any Intellectual Property of others, and the Company is
unaware of any reasonable basis for any such claim; (vi) the Company has not
been and will not be required to utilize any inventions, trade secrets or
proprietary information of any of its employees made prior to their employment
by the Company; (vii) the Company has taken all steps required to perfect its
ownership of and interest in its Intellectual Property; and (viii) the Company
has taken reasonable security measures to protect the secrecy, confidentiality
and value of all of its Intellectual Property.

 

(m)       Licenses and Permits; Compliance with Law. The Company possesses all
licenses, certificates, permits and other authorizations issued by, and has made
all declarations and filings with, the appropriate federal, state, local or
foreign governmental or regulatory authorities, that are necessary for the
ownership or lease of its properties and assets or the conduct of its business
as conducted or as contemplated to be conducted. The Company has not received
notice of any revocation or modification of any such license, certificate,
permit or authorization, or of any proceeding relating to any such revocation or
modification, or has any reason to believe that any such license, certificate,
permit or authorization will not be renewed in the ordinary course. The Company
has complied in all material respects with and is not in default or violation in
any material respect of, and is not, to the Company’s knowledge, under
investigation with respect to or has not been, to the knowledge of the Company,
threatened to be charged with or given notice of any violation of, any
applicable federal, state, local or foreign law, statute, ordinance, license,
rule, regulation, policy or guideline, order, demand, writ, injunction, decree
or judgment of any federal, state, local or foreign governmental or regulatory
authority. Except for statutory or regulatory restrictions of general
application, no federal, state, local or foreign governmental or regulatory
authority has placed any material restriction on the business or properties of
the Company.

 

(n)         Insurance. The Company maintains insurance of the types and in the
amounts that the Company reasonably believes are adequate for its businesses and
consistent with insurance coverage maintained by similar companies in similar
businesses, including, but not limited to, insurance covering real and personal
property owned or leased by the Company against theft, damage, destruction, acts
of vandalism, insurance covering the acts and omissions of directors and
officers, and insurance covering all other risks customarily insured against by
similarly situated companies, all of which insurance is in full force and
effect. The Company has not received any written notice that the Company will
not be able to renew its existing insurance coverage as and when such coverage
expires.

 

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(o)         Related Party Transactions. Except as contemplated by this
Agreement, none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company is presently a
party to any transaction with the Company (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner, in each case in excess
of $120,000 other than (i) for payment of salary or consulting fees for services
rendered, (ii) reimbursement for expenses incurred on behalf of the Company and
(iii) for other employee benefits, including stock option agreements under any
stock option plan of the Company.

 

(p)         Environmental Matters. The Company is in compliance with all
foreign, federal, state and local rules, laws and regulations relating to the
use, treatment, storage and disposal of hazardous or toxic substances or waste
and protection of health and safety or the environment which are applicable to
their businesses. To the Company’s knowledge, there has been no storage,
generation, transportation, handling, treatment, disposal, discharge, emission,
or other release of any kind of toxic or other wastes or other hazardous
substances by, due to, or caused by the Company (or, to the Company’s knowledge,
any other entity for whose acts or omissions the Company is or may be liable)
upon any of the property now or previously owned or leased by the Company, or
upon any other property, in violation of any statute or any ordinance, rule,
regulation, order, judgment, decree or permit or which would, under any statute
or any ordinance, rule (including rule of common law), regulation, order,
judgment, decree or permit, give rise to any liability. There has been no
disposal, discharge, emission or other release of any kind onto such property or
into the environment surrounding such property of any toxic or other wastes or
other hazardous substances with respect to which the Company has knowledge.

 

(q)         Tax Matters. The Company (i) has timely filed all necessary federal,
state, local and foreign income and franchise tax returns or has requested
extensions thereof, (ii) has paid all federal state, local and foreign taxes due
and payable for which it is liable, except for any such taxes currently being
contested in good faith, and (iii) does not have any tax deficiency or claims
outstanding or assessed or, to the best of the Company’s knowledge, proposed
against it. All material taxes and other assessments and levies that the Company
is required to withhold or to collect for payment have been duly withheld and
collected and paid to the proper government entity or third party when due.
There are no tax liens or claims pending or, to the Company’s knowledge,
threatened against the Company or any of its respective assets or property.
Except as set forth in the SEC Documents, there are no outstanding tax sharing
agreements or other such arrangements between the Company and any other Person.

 

(r)           Employees. All current and former employees of the Company have
executed and delivered a confidential information and inventions assignment
agreement (a “CIIA”) to the Company. All current and former consultants of the
Company that had access to confidential or proprietary information of the
Company have executed and delivered a CIIA to the Company or other form of
written contract or agreement with the Company that requires such consultants to
maintain the confidentiality of such information and assigns to the Company all
rights to any inventions, improvements, discoveries or information relating to
the business of the Company. The Company is not aware that any executive officer
of the Company has plans to terminate his or her employment relationship with
the Company. The Company has complied in all material respects with all
applicable laws relating to wages, hours, equal opportunity, collective
bargaining, workers’ compensation insurance and the payment of social security
and other taxes. None of the employees of the Company is represented by any
labor union, and there is no labor strike or other labor trouble pending or, to
the Company’s knowledge, threatened with respect to the Company. To the
Company’s knowledge, no employee of the Company is obligated under any contract
or subject to any judgment, decree or administrative order that would conflict
or interfere with (i) the performance of the employee’s duties as an employee,
director or officer of the Company, or (ii) the Company’s business as conducted
or proposed to be conducted.

 

-9- 

 

 

(s)          Internal Control over Financial Reporting. The Company maintains a
system of internal control over financial reporting (as such is defined in Rule
13a-15(f) of the Exchange Act) that complies with the requirements of the
Exchange Act and has been designed by the Company’s principal executive officer
and principal financial officer, or under their supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
GAAP. The Company does not have any material weaknesses in its internal control
over financial reporting. Since the date of the latest audited financial
statements included in the SEC Documents, there has been no change in the
Company’s internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting.

 

(t)           Disclosure Controls and Procedures. The Company maintains
disclosure controls and procedures (as such term is defined in Rule 13a-15(e) of
the Exchange Act) that comply with the requirements of the Exchange Act. Such
disclosure controls and procedures have been designed to ensure that material
information relating to the Company is accumulated and communicated to the
Company’s management, including the Company’s principal executive officer and
principal financial officer, by others within those entities.

 

(u)         Sarbanes-Oxley Compliance. The Company and the Company’s directors
and officers, in their capacities as such, are in compliance with any provision
of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in
connection therewith (“Sarbanes-Oxley”), including Section 402 related to loans
and Sections 302 and 906 related to certifications, and neither the Company nor
any of its officers has received notice from any governmental entity questioning
or challenging the accuracy, completeness, content, form or manner of filing or
submission of such certifications. The Company has no reasonable basis to
believe that it will not continue to be in compliance with Sarbanes-Oxley as in
effect on the Closing Date (including, without limitation, the requirements of
Section 404 thereof).

 

(v)         Absence of Litigation. There is no action, suit, proceeding, inquiry
or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the
Company, threatened in writing against the Company which (i) adversely affects
or challenges the legality, validity or enforceability of this Agreement or the
Securities or (ii) would reasonably be expected to result in a Material Adverse
Effect.

 

-10- 

 

 

(w)       Investment Company Act. The Company is not, nor, after giving effect
to the sale of the Shares and the Warrants and the application of the proceeds
therefrom, will it become, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations of the
SEC thereunder.

 

(x)         No Market Manipulation. Neither the Company nor, to the knowledge of
the Company, any of the Company’s directors, officers, employees, agents or
controlling persons have taken, directly or indirectly, any action designed, or
that might reasonably be expected, to cause or result in, under the Securities
Act or otherwise, or that has constituted, stabilization or manipulation of the
price of the Common Stock.

 

(y)         Foreign Corrupt Practices. Neither the Company nor, to the Company’s
knowledge, any director, officer, agent, employee or other person acting on
behalf of the Company has, in the course of its actions for, or on behalf of,
the Company, (i) directly or indirectly, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of in any material respect any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government official or employee.

 

(z)          Brokers. Neither the Company nor any of the Company's officers,
directors, employees or stockholders has employed or engaged any broker or
finder in connection with the transactions contemplated by this Agreement and no
other fee or other compensation is or will be due and owing to any broker,
finder, underwriter, placement agent or similar person in connection with the
transactions contemplated by this Agreement.

 

(aa)      Regulation. Assuming the accuracy of the representations and
warranties made by the Purchasers in Section 4 of this Agreement, the offer,
issuance, sale and delivery of the Securities are or will be exempt from the
registration requirements of the Securities Act and the qualification or
registration provisions of applicable state securities laws. Neither the Company
nor its authorized agents have taken or will take any action that would cause
the loss of such exemption. Neither the Company nor any person acting on its
behalf has conducted any general solicitation or general advertising (as those
terms are used in Regulation D) in connection with the offer or sale of any of
the Securities. Neither the Company nor any of its affiliates, nor any person
acting on its or their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under
circumstances that would adversely affect reliance by the Company on
Section 4(2) of the Securities Act for the exemption from registration for the
contemplated transactions under this Agreement or would require registration of
the Shares or the Common Shares under the Securities Act.

 

-11- 

 

 

4.PURCHASERS’ REPRESENTATIONS AND WARRANTIES

 

Each Purchaser, for itself and for no other Purchaser, hereby represents and
warrants to the Company as follows:

 

(a)          Transfer or Resale. The Purchaser understands that the Securities
have not been registered under the Securities Act or any state securities laws,
and may not be offered for sale, sold, assigned or transferred without
registration under the Securities Act or an exemption therefrom and that, in the
absence of an effective registration statement under the Securities Act, such
Securities may only be sold under certain circumstances as set forth in the
Securities Act.

 

(b)         Investment Purpose. The Purchaser is acquiring the Securities for
its own account for investment only and not with a view towards, or for resale
in connection with, the public sale or distribution thereof. The Purchaser does
not have any agreement or understanding, directly or indirectly, with any person
to distribute any of the Securities.

 

(c)          General Solicitation. The Purchaser was contacted regarding the
sale of the Securities by an authorized representative of the Company or an
agent of the Company with whom the Purchaser has a prior substantial
pre-existing relationship and the Purchaser is not purchasing the Securities as
a result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.

 

(d)         Information. The Purchaser (directly or through its advisors, if
any) (i) has been furnished with or has had full access to all of the publicly
available information that it considers necessary or appropriate for deciding
whether to purchase the Securities, (ii) has had an opportunity to ask questions
and receive answers from the Company regarding the terms and conditions of the
offering of the Securities, (iii) can bear the economic risk of a total loss of
its investment in the Securities and (iv) has such knowledge and experience in
business and financial matters so as to enable it to understand the risks of and
form an investment decision with respect to its investment in the Securities.
The Purchaser has received no representation or warranties from the Company, its
employees, agents, or attorneys in making this investment decision other than as
set forth in the Transaction Documents.

 

(e)          Reliance on Exemptions. At the time such Purchaser was offered the
Securities, it was, and as of the date hereof it is, and on each date on which
it exercises any Warrants, it will be either: (i) an “accredited investor” as
defined in Rule 501(a) under the Securities Act or (ii) a “qualified
institutional buyer” as defined in Rule 144A(a) under the Securities Act. The
Purchaser understands that the Securities are being offered and sold to it in
reliance on specific exemptions from the registration requirements of the
Securities Act and that the Company is relying upon the truth and accuracy of,
and the Purchaser’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Purchaser set forth in
this Agreement in order to determine the availability of such exemptions and the
eligibility of the Purchaser to acquire the Securities.

 

-12- 

 

 

(f)          No Governmental Review. The Purchaser understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

 

(g)         Authorization; Enforcement; Validity. The Purchaser is an entity
duly organized and validly existing under the laws of the jurisdiction of its
organization with full right, corporate or limited partnership power and
authority to enter into and to consummate the transactions contemplated by this
Agreement and otherwise to carry out its obligations hereunder. The execution,
delivery and performance by the Purchaser of the transactions contemplated by
this Agreement has been duly authorized by all necessary corporate or limited
partnership action on the part of the Purchaser and any other governmental
action with respect to the Purchaser. This Agreement has been duly executed by
the Purchaser, and when delivered by the Purchaser in accordance with terms
hereof, will constitute the valid and legally binding obligation of the
Purchaser, enforceable against it 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.

 

(h)         No Conflicts. The execution, delivery and performance of this
Agreement by the Purchaser and the consummation by the Purchaser of the
transactions contemplated hereby do not and will not (i) result in a violation
of the Purchaser’s charter, bylaws, or other similar organizational documents;
(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
other instrument, obligation or understanding to which the Purchaser is a party;
or (iii) result in a violation of any law, rule, regulation, order, judgment or
decree applicable to the Purchaser, except for such conflicts, defaults and
violations as described in clauses (ii) or (iii) of this sentence as would not,
individually or in the aggregate, have or result in a material adverse effect on
the Purchaser.

 

5.RESTRICTIONS ON TRANSFER

 

(a)          Resales. Each Purchaser agrees that the Securities may only be sold
or transferred (i) pursuant to an effective registration statement under the
Securities Act (including the Registration Statement (as defined in the
Registration Rights Agreement)), or (ii) pursuant to an exemption from
registration under the Securities Act.

 

(b)         Rule 144. Each Purchaser is aware of Rule 144 promulgated by the SEC
pursuant to the Securities Act (as such rule may be amended or interpreted from
time to time, or any similar rule or regulation hereafter adopted by the SEC
having substantially the same purpose and effect as such rule, “Rule 144”) and
the restrictions imposed thereby and further understands and agrees that so long
as such Purchaser beneficially owns 10% or more of the Company’s then
outstanding securities or has a designee selected by the Purchaser serving on
the Board, the Company will deem the Purchaser to be an “affiliate” as defined
in Rule 144(a)(1) and any transfers of the Securities by the Purchaser shall be
subject to the limitations applicable to affiliates set forth in the Securities
Act and the rules promulgated thereunder, including without limitation Rule 144.

 

-13- 

 

 

(c)          Legends. Each Purchaser agrees to the imprinting, so long as is
required by this Section 5, of a legend on any of the Securities in
substantially the following form:

 

“THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a)
UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.”

 

The Company acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and the Registration Rights Agreement and, if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured Securities to the
pledgees or secured parties. Such a pledge or transfer would not be subject to
approval of the Company and no legal opinion of legal counsel of the pledgee,
secured party or pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the appropriate Purchaser’s expense,
the Company will execute and deliver such reasonable documentation as a pledgee
or secured party of Securities may reasonably request in connection with a
pledge or transfer of the Securities, including, if the Securities are subject
to registration pursuant to the Registration Rights Agreement, the preparation
and filing of any required prospectus supplement under Rule 424(b)(3) under the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders (as defined in the
Registration Rights Agreement) thereunder.

 

(d)         Legend Removal. The Company shall cause its counsel to promptly
issue a legal opinion to the transfer agent for the Common Stock with respect to
removal of the legend set forth in Section 5(c) above, (i) following any sale of
such Shares or Warrant Shares pursuant to an effective registration statement,
(ii) following any sale of such Shares or Warrant Shares pursuant to Rule 144,
or (iii) when such Shares or Warrant Shares may be sold under Rule 144, without
the requirement for the Company to be in compliance with the current public
information required under Rule 144 as to such Shares and Warrant Shares and
without volume or manner-of-sale restrictions.

 

-14- 

 

 

6.BOARD COMPOSITION

 

(a)          Board Composition; Appointment of Director Designees. The Board
shall take all actions necessary such that the Board shall consist of eight (8)
members and shall be composed as follows:

 

(i) the Class I directors with a term ending at the 2016 annual meeting of
stockholders shall consist of one independent director (currently William C.
Mills III) and one director designated by Pyxis Innovations Inc. (currently
Joseph M. Landstra) (a “Pyxis Designee”);

 

(ii) the Class II directors with a term ending at the 2017 annual meeting of
stockholders shall consist of the Company’s Chief Executive Officer (currently
Mark B. Carbeau), Kenneth S. Kornman, Ph.D., the Company’s founder and Chief
Scientific Officer (for so long as Dr. Kornman remains employed by the Company),
and one director designated by Bay City Capital Fund V, L.P. (currently Dayton
Misfeldt) (a “BCC Designee”); and

 

(iii) the Class III directors with a term ending at the 2018 annual meeting of
stockholders shall consist of one director designated by Pyxis Innovations Inc.
(currently Roger C. Colman) (a “Pyxis Designee”), one independent director
(currently James Weaver), and one director designated by Bay City Capital Fund
V, L.P. (currently Lionel Carnot) (a “BCC Designee”).

 

The Pyxis Designees and the BCC Designees, shall be collectively referred to
herein as the “Director Designees.” Each of the shareholders entitled to
designate a director hereunder is referred to herein as a “Designor.” The rights
provided under this Section 6 are the exclusive rights of each such Designor and
are not transferable.

 

(b)         Nominations of Director Designees. For so long as a Designor’s
ownership of the outstanding Common Stock of the Company is at least five
percent (5%), any Director Designee (including any successor pursuant to
Subsection 6(c) below) designated by such Designor shall be nominated by the
Board of Directors (or a committee thereof) for election at the annual meeting
of stockholders at which such Director Designee’s term will expire. At least
ninety (90) days prior to any such annual meeting at or by which directors are
to be elected, such Designor shall notify the Company in writing of the Director
Designee to be nominated for election as a director. The Company shall disclose
in its proxy the nominated Director Designee(s). In the absence of any such
notification, it shall be presumed that the Designor’s then incumbent Director
Designee(s) has been designated.

 

(c)          Successor Director Designees. If a Director Designee shall cease to
serve as a director for any reason, the Designor of such Director Designee shall
notify the Company in writing of the individual to replace such Director
Designee, and the Company’s Board of Directors shall appoint and elect such
replacement director to serve out the remaining term of the existing director.

 

-15- 

 

 

(d)         Indemnification Agreements. The Company shall enter into an
Indemnification Agreement with each successor Director Designee prior to the
commencement of his or her service on the Board.

 

(e)          Committees of the Board of Directors. For so long as the Designor
of the BCC Designees has the right to designate Director Designees and provided
that such individuals meet the requirements imposed by the SEC or any exchange
upon which the Common Stock may be traded for membership on such committees, the
Board shall appoint a BCC Designee to the Audit Committee, the Compensation
Committee and the Nominating and Governance Committee. For so long as the
Designor of the Pyxis Designees has the right to designate Director Designees
and provided that such individual meets the requirements imposed by the SEC or
any exchange upon which the Common Stock may be traded for membership on such
committee, the Board shall appoint a Pyxis Designee to the Audit Committee.

 

(f)          Amendment of this Section 6. For so long as Pyxis Innovations Inc.
has the right to designate a Pyxis Designee, no provision of this Section 6 may
be waived, modified, supplemented or amended except in a written instrument
signed, in the case of an amendment, by the Company, the Purchasers holding at
least a majority in interest of the Shares then outstanding (which amendment
shall be binding on all Purchasers) and Pyxis Innovations Inc. or, in the case
of a waiver, by the party against whom enforcement of any such waived provision
is sought. For so long as Bay City Capital Fund V, L.P. has the right to
designate a BCC Designee, no provision of this Section 6 may be waived,
modified, supplemented or amended except in a written instrument signed, in the
case of an amendment, by the Company, the Purchasers holding at least a majority
in interest of the Shares then outstanding (which amendment shall be binding on
all Purchasers) and Bay City Capital Fund V, L.P. or, in the case of a waiver,
by the party against whom enforcement of any such waived provision is sought.

 

(g)         Board Observer Rights. For so long as a Growth Equity Opportunities
Fund III, LLC’s (“GEOF”) ownership of the outstanding Common Stock of the
Company is at least five percent (5%), GEOF shall have the right to have a
representative (the “Observer”) attend each meeting of the Board. The Company
shall deliver to the Observer notice of such meetings in accordance with the
Company’s Bylaws. Copies of any materials distributed to members of the Board
shall likewise be provided to the Observer in a timely fashion. The Company
shall not be required to deliver to the Observer specific information, and may
preclude the Observer from specific discussions of the Board of Directors
concerning specific information, that (i) is determined by the Board of
Directors of the Company to be competitively sensitive, (ii) the Board of
Directors of the Company determines is attorney-client privileged and should
not, therefore, be disclosed or (iii) the Board of Directors of the Company
determines is reasonably necessary to preserve or protect the exercise of the
Board of Directors’ fiduciary duty or to avoid a possible conflict of interest.
GEOF agrees, and any representative of GEOF, including the Observer, will agree,
to hold in confidence and trust and not disclose (other than to GEOF or its
affiliates) or use any confidential information provided to or learned by it in
connection with its rights under this letter, provided, that GEOF may give
access to such confidential information to its officers, directors, employees,
accountants, counsel and other representatives (collectively, “Representatives”)
if each such Representative is informed of the confidential nature of the
information and that the information is subject to a confidentiality agreement
and each such Representative is otherwise under an obligation to keep such
confidential information confidential. Each Observer shall execute a
non-disclosure agreement with the Company in form and substance reasonably
satisfactory to the Company prior to commencing his or her role as an Observer.
The rights set forth in this Section 6(g) may not be assigned by GEOF without
the prior written consent of the Company.

 

-16- 

 

 

7.OTHER AGREEMENTS AND COVENANTS

 

(a)          National Market Listing. Following the Closing, the Company will
work with the Purchasers and advisors to qualify for and obtain a full national
market listing of its Common Stock on either the NASDAQ Capital Market or the
NYSE MKT. The Company will use commercially reasonable efforts to qualify and
apply for such listing, including effecting a reverse split of its common stock,
subject to shareholder approval, if deemed advisable by a majority of the Board.

 

(b)         Use of Proceeds. The proceeds from the sale of the Shares and
Warrants under this Agreement shall be used for working capital and general
corporate purposes.

 

(c)          Form D; Blue Sky Filings. The Company agrees to timely file a Form
D with respect to the Securities as required under Regulation D and, promptly
upon request of any Purchaser, to provide a copy thereof. The Company shall take
such action as the Company shall reasonably determine is necessary in order to
obtain an exemption for, or to qualify the Securities for, sale to the
Purchasers at each Closing under applicable securities or “Blue Sky” laws of the
states of the United States, and shall provide evidence of such actions promptly
upon request of any Purchaser. The Company shall make all filings and reports
relating to the offer and sale of the Securities to the Purchasers required
under applicable securities or “Blue Sky” laws of the states of the United
States following each Closing Date.

 

(d)         Reservation of Shares. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue Shares pursuant to this
Agreement and Warrant Shares pursuant to any exercise of the Warrants, in each
case issued as of the Closing. 

 

(e)          Exchange Act Filings. Until such time that all of the Securities
may be sold without the requirement for the Company to be in compliance with
Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule
144, the Company covenants to use commercially reasonable efforts to timely file
(or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act.

 

(f)          Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities or that would be integrated with
the offer or sale of the Securities for purposes of the rules and regulations of
any trading market such that it would require shareholder approval prior to the
closing of such other transaction unless shareholder approval is obtained before
the closing of such subsequent transaction.

 

-17- 

 

 

(g)         Expenses. The Company shall pay the reasonable legal and other fees
and expenses of the Purchasers incurred in connection with the transactions
contemplated by this Agreement, up to a maximum of $25,000 in the aggregate,
whether or not the Closing occurs. In the event the Closing occurs, the Company
shall pay the reasonable legal fees and expenses of the Purchasers incurred in
connection with the transactions contemplated by this Agreement, up to a maximum
of $50,000 in the aggregate. Each party shall otherwise bear all costs and
expenses incurred by such party in connection with the transactions contemplated
by this Agreement.

 

(h)         Purchaser/Director Designee Exchange Act Filings. Each Purchaser and
each Director Designee shall be responsible for the filing (and for all expenses
in connection therewith) of required filings under the Exchange Act and all
required amendments thereto relating to ownership of the Securities and
appointment as a member of the Board, including any required Forms 3, 4 and 5
and Schedules 13D or 13G (as applicable). Each Purchaser and each Director
Designee shall use commercially reasonable efforts to file such forms within the
time period allowed for such forms under the rules and regulations promulgated
by the SEC.

 

8.PUBLIC STATEMENTS

 

The Company shall, by 9:00 a.m. (New York City time) on the trading day
immediately following the date of this Agreement, issue a press release
disclosing the material terms of the transactions contemplated hereby. The
Company shall file a Current Report on Form 8-K within the time required by Form
8-K disclosing the material terms of the transactions contemplated hereby, which
Form 8-K shall include this Agreement (including conformed signature pages
thereto), the Registration Rights Agreement (including conformed signature pages
thereto) and the form of Warrant as exhibits thereto. The Company and each
Purchaser shall consult with each other in issuing any other press releases with
respect to the transactions contemplated hereby, and neither the Company nor any
Purchaser shall issue any such press release nor otherwise make any such public
statement without the prior consent of the Company, with respect to any press
release of any Purchaser, or without the prior consent of each Purchaser, with
respect to any press release of the Company, which consent shall not
unreasonably be withheld or delayed, except if such disclosure is required by
law.

 

9.MISCELLANEOUS

 

(a)          Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of Delaware, United States of America, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of Delaware. If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.

 

-18- 

 

 

(b)         Entire Agreement. This Agreement and the documents referenced herein
and therein constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement and the documents referenced herein and
therein supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and thereof. Without limiting
the foregoing, it is acknowledged and agreed that Section 6 of this Agreement
(as it may be amended from time to time) shall supersede and replace (i) Section
6 of the Common Stock Purchase Agreement, dated May 17, 2013, by and among the
Company and the purchasers signatory thereto, as amended on March 31, 2014, May
30, 2014 and April 6, 2015 and (ii) Section 6 of the Common Stock Purchase
Agreement, dated December 23, 2014, by and among the Company and the purchasers
signatory thereto, as amended on April 6, 2015. Notwithstanding the foregoing,
the terms of any confidentiality agreement entered into between the Company and
any Purchaser shall remain in full force and effect.

 

(c)          Amendments and Waivers. Except as otherwise set forth herein, no
provision of this Agreement may be waived, modified, supplemented or amended
except in a written instrument signed, in the case of an amendment, by the
Company and the Purchasers holding at least a majority in interest of the Shares
then outstanding (which amendment shall be binding on all Purchasers) or, in the
case of a waiver, by the party against whom enforcement of any such waived
provision is sought. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right.

 

(d)         Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); (iii) upon receipt when delivered by email
delivery of a “.pdf” format data file or (iv) upon receipt, when sent via a
nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses, facsimile numbers and
email addresses for such communications shall be:

 

  If to the Company: Interleukin Genetics, Inc.     135 Beaver Street    
Waltham, MA 02452     Telephone:   (781) 398-0700     Facsimile: (781) 398-0720
    email: mcarbeau@ilgenetics.com     Attention: Mark B. Carbeau       Chief
Executive Officer   with a copy to:                 Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.     One Financial Center Boston, MA 02111     Tel: (617)
542-6000     Fax: (617) 542-2241     email: bkeane@mintz.com     Attn: Brian P.
Keane, Esq.             If to a Purchaser: To the address set forth on the
signature page to this Agreement.

 

-19- 

 

 

(e)          No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

 

(f)          Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

 

(g)         Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

 

(h)         Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser (other than by merger,
consolidation or sale of all or substantially all of the Company’s assets).
Except as specifically set forth herein, any Purchaser may assign any or all of
its rights under this Agreement to any Person to whom such Purchaser assigns or
transfers any Securities, provided that such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the provisions of this
Agreement and the documents referenced herein that apply to the Purchasers.

 

(i)           Survival. Subject to applicable statute of limitations, the
representations and warranties contained herein shall survive the Closing and
the delivery of the Securities hereunder. No investigation by or knowledge of a
party or its representatives, before or after the date of this Agreement, will
affect in any manner the representations, warranties, covenants or agreements of
another party set forth in this Agreement (or in any document to be delivered in
connection with the consummation of the transactions contemplated by this
Agreement) or the rights to rely thereon, and such representations, warranties,
covenants and agreements will survive any such investigation.

 

-20- 

 

 

(j)           No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person or entity.

 

(k)         Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction. The
applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity or
bond) associated with the issuance of such replacement Securities.

 

(l)           Independent Nature of Purchasers’ Obligations and Rights. The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance or non-performance of the obligations
of any other Purchaser under this Agreement. Nothing contained herein or in any
other document referred to herein, and no action taken by any Purchaser pursuant
hereof or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by
this Agreement. Each Purchaser shall be entitled to independently protect and
enforce its rights, including, without limitation, the rights arising out of
this Agreement, and it shall not be necessary for any other Purchaser to be
joined as an additional party in any proceeding for such purpose. Each Purchaser
has been represented by its own separate legal counsel in its review and
negotiation of this Agreement and the other documents referred to herein.

 

(m)       Business Day. “Business Day” means any day except any Saturday, any
Sunday, any day which is a federal legal holiday in the United States or any day
on which banking institutions in the State of New York are authorized or
required by law or other governmental action to close. If the last or appointed
day for the taking of any action or the expiration of any right required or
granted herein or in the Registration Rights Agreement shall not be a Business
Day, then such action may be taken or such right may be exercised on the next
succeeding Business Day.

 

(n)         Headings. The headings of this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

 

(o)         Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to each other party, it being understood that the
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature page were an original
thereof.

 

-21- 

 

 

[Remainder of page intentionally left blank. Signature pages follow.]

 

-22- 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

  COMPANY:   INTERLEUKIN GENETICS, Inc.           By: /s/ Mark B. Carbeau    
Name:  Mark B. Carbeau
Title:  Chief Executive Officer

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.

SIGNATURE PAGES FOR PURCHASERS FOLLOW.]

 

 

 

[PURCHASER SIGNATURE PAGES TO INTERLEUKIN GENETICS, INC.

SECURITIES PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

Name of Purchaser:    

 

Signature of Authorized Signatory of Purchaser:     

 

Name of Authorized Signatory:    

 

Title of Authorized Signatory:    

 

Email Address for Notice to Purchaser:    

 

Facsimile Number for Notice to Purchaser:    

 

Address for Notice to Purchaser:    

 

 

Address for Delivery of Securities to Purchaser (if not same as address for
notice):

 

  

 

Purchase Price: $_________________

 

Shares of Common Stock: _________________

 

Warrant Shares: __________________

 

EIN Number: __________________

 

 

 

[SIGNATURE PAGES CONTINUE]

 

 

 

SCHEDULE I

 

The Purchasers

 

Purchaser

 

Shares

  

Warrants

   Purchase Price  Bay City Capital Fund V, L.P   29,616,700    29,616,700  
$2,943,899.98  Bay City Capital Fund V Co-Investment Fund, L.P.   564,386  
 564,386   $56,099.97  Growth Equity Opportunities Fund III, LLC   20,120,724  
 20,120,724   $1,999,999.97  Pyxis Innovations, Inc.   5,030,181    5,030,181  
$499,999.99  William Alan Jolley   503,018    503,018   $49,999,99  Weaver Asset
Management, LLC   100,603    100,603   $9,999.94  Mark B. Carbeau   100,603  
 100,603   $9,999.94  Kenneth S. Kornman   25,150    25,150   $2,499.91  Lynn
Doucette-Stamm   100,603    100,603   $9,999.94  Stephen DiPalma   100,603  
 100,603   $9,999.94  Total   56,262,571    56,262,571   $5,592,499.57 

 

 

 

EXHIBIT A

 

See Exhibit 4.1 to the Form 8-K filed on August 1, 2016 (File No. 001-32715)

 

 

 

EXHIBIT B

 

See Exhibit 10.2 to the Form 8-K filed on August 1, 2016 (File No. 001-32715)